April 14, 2025

Re:       NOTICE OF PUBLIC HEARING REGARDING PROPOSED INCREASE IN CHARGES UNDER PROPOSITION 218 FOR WATER PURCHASED FROM SOUTH FEATHER WATER AND POWER AGENCY

 Dear Property Owner and/or Water Customer:

The Purpose of this Notice is to advise you that the Board of Directors of the South Feather Water and Power Agency has proposed increases in water rates subject to the Proposition 218 protest and hearing procedures described in this Notice.  If approved, customers will experience an increase in monthly water rates. This Notice will also advise you that the Agency’s Board of Directors will conduct a public hearing on the proposed water rates increase on June 26, 2025, commencing at the hour of 2:00 p.m., as a part of its regularly scheduled Board of Directors meeting held at that time.  The meeting will be held at the Agency’s office located at 2310 Oro-Quincy Highway, Oroville, California.

Why is the increase necessary?

South Feather Water and Power Agency’s rates to provide water have been kept artificially low. The current low water rates rely upon a significant financial contribution from the generation and sale of hydroelectric power each year through a power purchase agreement. This subsidy, however, has diminished over time and is forecasted to diminish further in the future due to increases in costs to own and operate the power project, including dam safety and regulatory license requirements from the State of California and Federal Energy Regulatory Commission (FERC). In addition, cost of material, services, and employee salaries and benefits have increased significantly over recent years without any adjustment to the cost of water service and financially can no longer be absorbed without an increase in rates.  

The basis of the proposed changes in fees. 

Hydroelectric power revenue is used first and foremost to fund expenses associated with owning and operating the power project and ensuring compliance with the various laws, licenses, and legal requirements applicable to the power project.  In some years, there is revenue in excess of these expenses and this surplus revenue is available to finance the capital requirements of the Agency’s water system, including treatment, storage, and distribution.  Historically, revenues above these capital and operational requirements have been used by the Agency to offset (subsidize) the cost of delivered water. From a customer’s standpoint, this means that hydroelectric revenues provide funds to the Agency which it can use to offset the cost of its water operations.  However, as noted, the amount of this historic subsidy is decreasing and expected to continue to decrease given various factors outside of the Agency’s control.

The proposed changes in water rates will still reflect a subsidy from hydroelectric power revenue.  This means that even with this proposed rate change the rates for water service will still be less than the actual cost of providing the service. Additional information on the basis for the proposed water rate changes, supporting documentation, and other background information can be found at www.southfeather.com.

The amount of the proposed fee or charge proposed to be imposed. 

Reason for the proposed change in fees. 

Due to the diminished ability subsidize water rates, the Agency’s Board of Directors has determined that  its costs of transmission, treatment, and distribution of water be more closely aligned with actual cost of service.  Article XIII D, section 6, of the California Constitution, approved by the voters as Proposition 218 in 1996, sets forth numerous procedural and substantive requirements on the Agency’s water rates.  Among other requirements, the Agency may charge its customers no more than the cost to provide water service.  The Agency is proposing an increase in its current water rates, but with forecasted surplus power revenue, those new rates will still be below the actual cost of service.  The Board believes the fairest approach is to moderately subsidize the cost of domestic and raw water with hydroelectric power revenues.   

How does the proposed increase benefit me?

The proposed increase to water rates provide funds to allow South Feather Water and Power Agency to continue operating as an independent, not-for-profit special district locally governed by individuals chosen and elected by this community. The proposed fees will help reduce the reliance on hydroelectric power revenue as costs and regulatory compliance escalate and California continues to migrate towards mainstream solar.        

How to Participate in the Proposition 218 process.

 The proposed water rate increases are governed by Proposition 218, which provides multiple opportunities for property owners and ratepayers to participate in the rate-setting process.  First, if you wish to learn more about the proposed rate changes, a cost-of-service study was commissioned by the Agency to assess its actual cost of service without any surplus hydroelectric power revenue.  The cost-of -service study, as well as other supporting documentation and information, is available at www.southfeather.com.

Second, the Agency will hold a public hearing on June 26, 2025, at 2:00 p.m., to receive public feedback, including written protests, on the proposed rate change. 

Third, Proposition 218 is subject to a “majority protest” process where any property owner or ratepayer may submit one written protest per parcel subject to the proposed increase.  Immediately following the close of the public hearing on June 26, 2025, all submitted protests will be counted and if a majority of the parcels subject to the proposed rate increases have submitted valid protests, then the rates will not be levied, and the Agency will continue to charge its current water rates.  Additional details on submitting a protest are set forth below.

Fourth, parties that wish to preserve the ability to legally challenge the rate change must submit a timely written objection by 5:00 p.m. on May 30, 2025.  This is known as Proposition 218’s exhaustion of administrative remedies requirement and is a separate legal requirement from the written protest.  Prior to the public hearing on June 26, 2025, the Agency’s Board of Directors will review written objections and determine whether (1) amendments or clarifications are necessary; (2) to reduce the proposed new rates; (3) to review further prior to making a determination; and/or (4) to proceed with the public hearing.  Additional details on submitting a written objection are set forth below. 

How to submit a written objection to the proposed rates.

Pursuant to Government Code section 53759.1, any person or entity may wish to challenge any new, increased, or extended fee adopted, modified, or amended by the Agency pursuant to this Notice must first exhaust administrative remedies.  To exhaust administrative remedies, you must do the following:

1. Obtain a written objection form and complete all portions of the form.  Oral objections will not be considered.  Written objection forms are available at www.southfeather.com and will be mailed to any interested party upon request by contacting the Agency office at 530-533-4578. 

1. Timely submit, either by mail or via hand delivery, the completed written objection by 5:00 p.m. on May 30, 2025 to the Agency office at 2310 Oro Quincy Highway, Oroville, CA 95966.  Mailed objection forms must be received (not postmarked) by 5:00 p.m. on May 30, 2025.  Failure to timely object, or failure to submit a proper objection form, will prevent any right to challenge the proposed rate increase through a legal proceeding. 

Late-filed, noncompliant, or incomplete written objections will not be considered as satisfying the exhaustion of administrative remedies requirement.  All substantive and procedural requirements for submitting a written objection form are set forth in this Notice and the written objection form. 

Pursuant to Government Code section 53759.1, subdivision (c)(2), the Agency has posted at www.southfeather.com the written basis for the rate change, including a copy of the Agency’s cost of service report.  Additionally, the written basis will be mailed to any person upon request by contacting the Agency office at 530-533-4578.

How to file a protest or participate in the public hearing.

The provisions of Proposition 218 provide that certain types of “property related fees” such as these proposed water rates are subject to a “majority protest” process.  Under the majority protest process, any property owner or ratepayer may submit a written protest to the proposed increases; provided, however, that only one protest will be counted per identified parcel.  If protests are filed on behalf of a majority of the parcels subject to the rates, the Agency cannot adopt the proposed rates.  A sample protest form is provided at www.southfeather.com and is available upon request by contacting the Agency office at 530-533-4578, but all property owners/ratepayers are not required to use the protest form. 

Every written protest must include all the following to the counted:

1. A statement against the proposed water rates;
2. Name of the record owner or ratepayer who is submitting the protest;
3. Identification of the assessor’s parcel number or street address (service address) of the parcel for which protest is made; and
4. An original signature and legibly printed name of the record owner or ratepayer who is submitting the protest.

Written protests may be submitted by:

1. Mail to:  Proposition 218 Protest, 2310 Oro Quincy Highway, Oroville, CA 95966; or
2. In-person delivery during normal business hours to 2310 Oro Quincy Highway, Oroville, CA; or
3. In-person prior to the close of the public hearing that will begin at 2:00 p.m. on June 26, 2025.

Regardless of how the written protest is submitted, it must be received by the Agency prior to the conclusion of the public hearing portion of the Board Meeting to be held on June 26, 2025, beginning at 2:00 p.m. at 2310 Oro Quincy Highway, Oroville, CA.  Any protest submitted via email or other electronic means will not be accepted.  Please identify on the front of the envelope for any written protest, whether mailed or submitted in-person, that the enclosed protest is for the public hearing on water rate increases.  Oral comments at the public hearing will not qualify as formal protests unless accompanied by a written protest. 

At the conclusion of the public hearing, protests will be publicly counted and validated.  If protests are filed on behalf of a majority of the parcels subject to the proposed rates before the end of the public hearing, then the Agency cannot adopt the proposed rates and the Agency will continue to levy its current rates.  If a majority of the parcels do not protest the proposed increase, the Agency has the authority to adopt the proposed rates.  The rate change for 2025, if approved, will go into effect on or after July 1, 2025.

Please carefully review the following additional legal notice:

The proposed rate increase contemplated by this Notice is subject to a 120-day statute of limitations for challenging any new, increased, or extended fee or charge South Feather Water and Power Agency may adopt.

The Agency’s General Manager is available to hear and answer any questions you may have.  The General Manager’s contact information is provided in the header on the first page of this Notice.

                                                                        Sincerely,

                                                                        RATH T. MOSELEY

                                                                        General Manager