The Sonoma County Water Agency is proposing to use $6.6 million, more than half its reserve fund, to prevent drought-related conservation measures from causing steep rate hikes for more than 600,000 customers in Sonoma and Marin counties.
Two key Water Agency advisory panels passed a non-binding resolution Monday calling on the agency's municipal water system contractors to ask their customers to cut residential water use by at least 20 percent to preserve the dwindling supply in Lake Sonoma, the region's main reservoir.
As of Monday morning, the reservoir was down to about 65 percent of its normal capacity. Without significant rainfall or major conservation efforts, the reservoir is less than a year away from the point at which the agency would be forced by the state to ration water to the cities downstream, engineers say.
But that conservation effort could have a perverse effect on water rates, causing them to go up. Rates are set by a simple calculation, agency Administrative Services Manager Michael Gossman said, dividing the costs of operations every year by the amount of water sold. Selling less water saves little on operational costs, meaning each gallon sold must become more expensive to pay the bills.
Previous dry spells have led to such rate hikes, causing "consternation and angst" among ratepayers, who were surprised to find their conservation efforts rewarded only by higher bills, Cotati Public Works Director Damien O'Bid said.
In the face of a record-setting drought, the Water Agency decided to head off that possibility this time by using some of its reserves to subsidize the lost revenue from water conservation.
In this unusual situation, "we thought it was prudent to go to the reserves," agency General Manager Grant Davis said at the joint meeting Monday of the Water Advisory Committee and the Technical Advisory Committee in Santa Rosa.
Before the drought, Gossman said, the agency had been projecting wholesale rate hikes of about 4.38 percent to its municipal water customers in the 2014-15 budget, which the cities might pass on to local ratepayers. But the agency now expects to see water deliveries drop about 10 percent in response to the drought, including the cut in residential use recommended by the two panels Monday.
Using the normal rate calculation, that would force a rate hike of up to 13 percent, Gossman said.
"That was a bit steep and it would be pretty hard for people to handle," he said.