My Turn: Tahoe City Public Utility District charges for services it does not provide
November 3, 2008
Quite accidentally I came across the information that some customers who do not get their water service are still being charged for water service by Tahoe City Public Utility District and are thus subsidizing the rest of the district’s water customers.
The charge is about $5 per month and the district is making nebulous statements that such charges are for stand-by water service which presumably would be made available to the fire protection districts in an emergency.
There apparently is no record of how often Tahoe City Public Utility District has done so, much less of what such service cost the district. Talking to the district rate designer it appeared to me that he does not have any idea of how rates are designed. The district says it will for that purpose retain an out-of-state consultant. I could get no meaningful explanation of TCPUD’s rate design or how does it plan to go about it.
Perhaps the public should be reminded that originally ” in ancient times ” public utilities and public service districts were established as regulated monopolies for which the guiding principle was that they must provide service at cost. In case of investor-owned utilities the cost included a reasonable rate or return on the investment periodically established by the regulators. It is apparent that TCPUD’s governing board does not have the remotest idea how this is done. Its operating principle appears to be establishing what their expense is going to be or, perhaps, just what they think they will need and then they distribute that cost over the maximum number of residents they can find subject to their jurisdiction.
Utility services such as water consist basically of two components, that is, fixed costs of maintaining the plant and distribution network and the variable cost of commodity supplied such as water, gas and electricity. In cases, such as that of TCPUD district customers who do not receive water service are presumably charged for the plant construction and maintenance. How the allocation is made is, for the time being, a book with seven seals ” the district is not telling. But at least one of the directors did make the observation that sewer-only service customers are subsidizing the rest of TCPUD customers (sewer and water) to the tune of some $15,000 to $20,000 annually. The district cannot justify this but is confident that the apathetic public and the absentee homeowners will put up with its unjustified charges which in my opinion have not been shown to be cost supported.
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