Douglas County commissioners consider moving forward with a consolidation of its Cave Rock, Skyland and Zephyr Water Utility District water systems Thursday — but they’re expected to get opposition to part of the plan.
“If the board approves moving forward, we would officially notice the rates in April and come back to the board in May most likely for formal adoption,” said County Manager Steve Mokrohisky, adding that the idea of consolidating the three small water systems in the Tahoe Basin has been in the works for several years.
Many customers in the Skyland and Zephyr utility districts, accounting for three-quarters of the total 1,000-plus customers in all three districts, oppose a new base rate structure that’s part of the change.
“I don’t see how you can with one wave of a magic wand say we are all equal. We are not,” said Roy Pike of Marla Bay, a customer of Zephyr Water Utility District.
The proposed consolidation would impose a $96.61 monthly base rate to cover operations and maintenance and existing debt service of all three water systems starting in July. That monthly base rate would increase by about $4 each year to $113.02 in 2019 as more than $100,000 in annual county general fund subsidies for the water systems are phased out.
Each system then would separately pay for its share of $14.2 million in proposed capital improvements. Split among the three systems, those costs would boost total monthly residential rates to an estimated $252.19 in Cave Rock, $200.53 in Skyland and $114.53 in Zephyr Water Utility District.
Pike said he’s not opposed to moving forward with the proposed capital improvements and splitting their costs among the three systems. Instead, he argues it’s simply not equitable to lump the three utilities’ differing existing debt service and operational costs into one shared monthly base rate.
As a result of the consolidation, Cave Rock, which has higher existing debt service and operational costs, would see its existing monthly base rate of $202 cut by more than half, while Zephyr Water Utility District would sees its monthly base rate increase from $80 to $96, Pike said.
“Throw them all together, divide by the number of members and say that’s a fair rate? Our accountant calls that cost-shifting. The pooling and averaging just doesn’t work,” Pike said.
Without consolidation, monthly residential rates in Cave Rock would increase from $202 to $244 in July. Residential rates would increase from $114 to $123 in Skyland and from $80 to $105 in Zephyr Water Utility District. Those increases would not pay for any of the $14.2 million in proposed capital improvements — work the county argues is needed for aging system components.
Proposed capital improvement work includes pumping and treatment plant upgrades, storage upgrades, computer control upgrades and replacement of old and undersized water lines that don’t meet fire flow standards and have excessive leak problems.
About $8 million of the capital improvement projects would be in the Cave Rock system, with $4.5 million in Skyland and $1.6 million in Zephyr Water Utility District.
Thursday’s meeting starts at 1:30 p.m. in the Tahoe Transportation Center, 169 Highway 50, in Stateline.