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PRII~T ~ CI.OSL WinDO~'
It's time for Boulder to re-examine its tougher water budget
stance
And I[hought my wa[er bill was high
Last Friday, Boulder utilities chief Ned Williams admitted his department had overbilled one customer, although he co~ld
not say who, by $1 million.
The million-dollar mistake caused the city's numbers to be off drastically when water offiaals initially told the Boulder
County Business Report that first-quarter water revenues were up 52 percent from a year ago under the new budget
system.
A bungled revenue report, however, may be just one of the headaches surrounding the city's move into a new
computerized water budgeting system.
Businesses continue to be upset with higher bills, and now we're reporting that apartment and condo owners are in the
same boat. We've heard directly from sources that some apartment owners and condo homeowner groups are considering
ways to pass those increased costs onto their tenants.
The Business Report frst inquired about the higher revenues under the new system, reporting the alleged 52 percent
increase in our April 13 issue. The Camera followed with a similar page one story two weeks later on April 29.
The storm over the water budget is building.
Under the aty's revised numbers, Boulder says revenues climbed 9 percent from a year ago - and remember, this is for
the cold, snowy winter months before anyone was even thinking of watering lawns.
Williams also has been unable to provide current numbers on how much water has been used in the city. Blaming a
"learning curve" using new software, he has said those frs[-quarter numbers should be out sometime this month.
It seems incredible [o believe tha[ a city utili[y department, which efficiently makes sure you ge[ your monthly wa[er bill,
cannot say how much water is being used. Williams told the Camera he wasn't sure how the million-dollar error was
caught. If you ran a city department, and someone sent out a million-dollar bill, wouldn't you want to know?
The idea behind [he city's water budge[ is conservation, so knowing ac[ual water use seems pretty important
It's time for Boulder to think twice about Rs new system - at least until bugs are worked out. It's time for someone on city
counal to call for an immediate investigation into the water budget rates. In the meantime, any new rate increase should
be rolled back.
If you're unhappy - as a business or resident - with your water allocation, you're allowed to submit reasons for a higher
household water budget. But there are no rebates. If the city agrees, and increases your allocation, you do not recerve any
refund on the higher bills you already paid.
As the Business Report reported, other Northern Colorado ci[ies also have incorporeted water budgeting.
Boulder, it seems, decided to take a more aggressive and tougher stance on how much water it allocates per square foot
http://www.bcbr.com/print_article.asp?aID=86352 5/21 /2007
5/9/2007 - 3:08:07 PM
Editor's Column
_ 13y ieny W lewis
• Boulder County Business Report - Online! Page 2 of 2
Other cities have used 17 gallons per square foot; Boulder chose to go with 15 gallons per square foot.
These tougher measures indeed have residents and businesses scrambling to increase tonservation efforts
There's nothing like a big fat water bill [o get you checking [hat leaking toilet.
Public deba[e is intensifying on the water budget, with opinions both pro and con
In the recent past Williams has contended the new water budget "is not" a rate increase. In the latest city press release,
however, Williams said the city "implemented a 4 percent water rate increase."
I'm confused. The numbers are not adding up. Some water bills are increasing far more than 4 percent. And Boulder
admits its water revenues increased 9 percent. The city PR also said further data on water use and information "will
provide a better idea of how the new water budget rate structure is working."
Shouldn't someone have run these numbers "before" raising rates? The time to fine-tune a new water budget is not aker
you've billed your customers and raked in the dough.
It's noc often you see conservatrve former city councilman Bob Greenlee and liberal former councilman Steve Pomerance
on the same base, but both have had strong words against the new water budget.
As the debate rages, Boulder put out one more press release on May 3. 7he headline reads "City declares no water use
restrictions; encourages continued water conservation."
Snowpack and the city's water supply are "healthy," Williams said in [he PR.
Water conservation is important. Businesses increasingly are on board with new sustainable prac[ices to conserve natural
resources. '
But the new water budget is Flawed, and iYs hitting residents and businesses in their wallet right when gas prices are
busting above $3. Bad timing.
Time for someone in the city to admi[ mistakes have been made
http://www.bcbr.com/print_article.asp?aID=86352 5/21 /2007
~ Boulder County Business Report - Online! ~,,~ ~2R ~ c~~ a~Jo7 Page 1 of 2
Landlords seek relief from water bills
ISy ;ett Jamas
PRI'.~IT ~ CLOSF•, WINDO~,S'
BOULDER - Landlords hit with rising wa[er bills are trying to negotiate some relief from the nry of Boulder's controversial
new water budget system.
"One of our members saw his water bill ~ump from roughly $150 per unit to more than g600 per unit under the new rate
struc[ure," said Sheila Horton, executive director of the Boulder Area Rental Housing Association.
7he association represents owners anA managers of more than 8,000 rental units in Boultler County and the city of
Boulder. Horton said several assoaation members are negotiating with the aty to try to lower their water costs under the
new system, which Horton argues has several Flaws that end up costing her group's members substantial amounts of
money.
"We're very concerned about the new water rate system. We think it has some significant problems, particularly as it
applies to rental units," Horton argued. "FOr ezample, the current water system doesn't differentlate between unit sizes. A
one-bedroom lok gets [he same water allocation as a four-bedroom rental unit.
"we've also seen Droblems with allocation no[ being made for Irrigable land from the sidewalk to the curb. Boulder owns
that land, but [he closest property owner is expected [o maintain it."
Other aspects of [he new rate struc[ure have drawn criticism as well, such as aerial photography, the method the city useA
to determine the amount of irrigable land on each lot.
According to Horton, this calcula[ion Aidn't factor in building overhangs and wasn't very effective at assessing che true
amount of irrigable land on mixed-surface lots, such as in areas where trees and shrubs are growing in areas primarily
covered by concrete.
Many of these concerns abou[ the new water rate system were presented [o [he a[y [ouncil before implementation of the
new rate structure, bu[ [he tlty wasn't overly coopera[IVe, Horton said. "The aty seems [o have [he attitude tha[ water
users should try living wrth the new system for a year, antl only then would the oty consider changes," Morton said.
The stated goal of the new water rate structure was to encourage people to conserve more water. But the lack of data
showing the amount of water used in the Flrs[ quarter of [he year compared with the same period a year ago, and the
city's inability to provide information about how much water has been used, is drawing complaints.
Boultler's Direc[or of Public Works for U[ilities Ned Williams said informa[ion conceming the amount ot water used In the
city of Boulder since the new rates wenc into effect Jan. 1 will be availahle sometime between May 15 and 30.
Boulder City Manager Frank Bruno agrees that having detailed water-use information is Imporcant, and he said the rate
system is new anA Is simply going through a shakedown period.
"The new water fate structure i5 a b~and nEw 5y5[em that ha5 }U5[ been in place for One qudrtef," Bruno explaineA. "Any
time a new system is brought online, there's a perlod where the capabilities of the system are being brought up to full
speed. We always envisioned a phased rollout of the water-use da[a. This new system will provide us with more wa[er-
usage data on a month-to-month basis than we've had in the past."
Some critics of the new water rate system agree with the stated principle behind the water rate system changes - that of
entouraging water conservation - bu[ fault the researth and eventual implementation behind the system's rollout.
"The general concept behind the new rate system is one way - but not [he only way -[o address water conserva[ion," said
Steve Pomerance, a former Boulder city [ouncil member. "The problem is that the way the system was implemented
stinks, because the city ignored a critical number of issues."
httn://www.bcbr.com/nrintl article.asn?aID=86357 5/21/2007
5/10/2007 - 12:06:55 PM
• Boulder County Business Report - Online!
Page 2 of 2
Pomerance points [o several Flaws in the system, including the diffculty in setting water budgets by month when ac[ual
rainfall in any given month tan vary signiflwntly from historical averages, forcing tustomers to pay penalty rates even
when thev overall consumption is within budget.
"In addinon, [he a[y ha5 no system in place for adjusting for wet and dry years," Pomerance said. "In [heory, water
budgets should be ad7usted for how much actual runofi is forecasted. W hy penalize people for using more water when
there is plenty of water available?"
Like Horton, Pomerance argues that elements of che system are Inconsistent and unfair. "AS an example, let's say that two
houses are built in Martln Acres at [he same time, and they paid the same plant investment fee, or PIF. The two lots are
Oifferent sizes, so the water budgets [hey get are different," Pomerance said. "HOw can the city charge one fee based on
their having a righ[ to the same amount of water, and then a second fee - the water budget rate - based on different
amounts of water to each? Fees are supposed to be based on cos[. Either the water budge[s or the PIF are illegal. What is
clear is that the water system is grossly unfair."
Boulder says S3 million error led to overstated water revenues
BOULDER - The [ity of 8oulder is revising Rs first-quarter water revenues aRer it found one city customer was incorrectly
charged more than $1 million.
City util2ies staff found and correc[eC the billing error antl adJus[ed frst-quarter water revenues from $4.36 million to
$3.12 million.
With the billing error corrected, city water revenues for the perlod are 9 percent higher than they were for the same
penod last year instead of a 52 Oercent increase prevlously reported. The city partially attributes the increase to the water
rate increase introduced in Jaouary.
City Manager Frank Bruno said [he water billing system was fundamenWlly "working as I[ should", but expla~ned, "... one
of our staff members made a misUke that wasn't caugh[ as it should have been. I hold myself and all city staff to a high
standard, and we are working to evaluate and improve our work processes to avoid mistakes such as [his in the future."
http://www.bcbr.com/printLarticle.asp?aID=86357 5/21 /2007
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City of Boulder
Department of Public Works
Utility Billing
P.O. Box 791
1777 Broadway
Boulder, Colorado 80306-0791
(303) 441-3260 Fax (303)441-4089
November 16, 2006
TEBO DEVELOPMF.NT
PO BOX T
BOULDER CO 60306-1966
Custamer Class: COMMERCIAL / INDUSTR
Customer Number: 0000871
'o-10°° Account Number: 0000065249
Re: IMPORTANT INFORMATION - Please retain for your records.
Dear TEBO DEVELOPMENT
Effecdve January 2007, city of Boulder water customers will be billed using a new rate structure that uses
"water budgets". The water budget approach is a unique method of computing monthly water bills that
~ives each water customer a monthlv water budget that is tailored to reflect a customer's water needs. The ~
purpose of tlvs letter is to provide you with your estimated* water budget for each month throughout
2007. These budgets are specific to the service location shown below.
Water budgets for commereiaUindustrial accounts are calculated using 100 percent of your average
monthly water usage (AMU) during calendar year 2005.
Service Location: 1966 13TH ST AMU (in 1,000 of eallonsl: 34
Month 2007 Estimated Water Budget
in 1,OOOs of allons Prior 12 months Actual Usage
in 1 OOOs of allons
Janua 33 23
Febru 37 30
Mazch 33 28
A ril 35 33
Ma 32 19
June 37 143
Jul 34 111
Au st 34 62
Se tember 35 44
October 33 37
November 36 32
December 34 26
~'~13
~5$~
lf you feel your water budget does not accurately reflect the amount of water you need, you may be able
to request an adjustment to your budget. More information is available online at www.boulderwater.net.
Submit yow water budget questions on our Web site or by calling the water information line at 303-441-
4H2O (303~41-4426). We will answer your questions promptly. The Utility Billing Office can be
reached at 1777 Broadway, 303-441-3260.
*Monthly water budgets are shown as estimates because actual budget amounts could change
depending on what date your meter is read each month.
~
Account Type: Commercial/industrial
Year Allocation under 2007 AMU system: 366
Avg. Annual Usage 2003 - 2006: 347.67
In November 2006, the City of Boulder sent this account a letter stating that: "(t)he water
budget approach is a unique method of computing monthly water bills that gives each
water customer a monthly water budget lhut is tailored to reflec! u custorncr's ti+~uter
needs." However, there is no accommodatio~ in the AMU calculation for known
and historic usa~e natterns.
1) In 7 out of 12 months, the Property has been allocated/budgeted far more water than it
needs or has historically used. For this particular property, the historic water usage -
for the months of January - May, November, and December - has been 127 (1,000
gallons). However, for this period, the City has allocated 213 (1,000 gallons). 40%,
or 86 (1,000 gallons), of the water budget for those months is unusable.
2) In 4 out of 12 months, the Property has been allocatedlbud~eted substantially less
water than it needs and has historically used. This budgeting system will drive the
charges for these months into the upper (pcnalty) tiers - blocks 3, 4, and 5.
Account Type: CommerciaUlndustrial
Year Allocation under 2007 AMU systcm: 413
Avg. Annual Usage 2003 - 2006: 518
For this commercial account, 2005 usage was substantially less than historic water usage
at the property. This causes two problems for the account:
1) in 10 out of 12 months, the property will be over budget.
2) During the summer months, when seasonal usage is higher, the straight-line AMU
allocation, pushes the charges For these months into the upper (penalty) tiers - blocks
3, 4, and 5. This is not a problem that reasonable conservation - or even rollover (of
unused budget) would fix.
Account Type: Irrigation
Monthly Allocation vs. Historic Pattern
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I'roblem: Allocation of Irrigation water is not consistent with historic usage (the focus
here is not on how much, but on when cu.stomer gets the water that has been budgeted for
the reasonable needs of the property).
1) This account has been allocated water for four months that it does not use water
(irrigation system is turned off).
2) The account has been allocated too much water in April, May, June, October, and
November.
3) The above deprives the account of needed water during months of historically
heaviest usage, and therefore pushes the charges for these months into the upper
(penalty) tiers - blocks 3, 4, and 5.
rage 1 oT 3
Ned Williams - RE: Water Budgets and Rate Structure
t.~-~f~r~6 t~l~g/o~
From: Frank Bruno
To: Ageton, Suzy; Bohannan, Robin; Grainger, Stephanie; Gray,
Crystal; McGrath , Shaun; Polk, Richard; Ruzzin, Mark;
Schultheiss , Andy; Stoakes, Jack; Williams, Ned;
wrab @ bouldercolorado. g ov
Date: 6/28/2007 5:16 PM
Subject: RE: Water Budgets and Rate Structure
Attachments:
Dear Council:
Frank is currently at CML and in his absence asked that I forward the following information to you.
Water Budaets and Rate Structure
Dear Mayor Ruzzin and Members of Council
I want to pass on two recommendations that WRAB made at its May 21, 2007 meeting regazding water
budgets for commercial and industrial and multi-faxnily categories and my response to these requests.
Also, I want to update you on the water use and revenues for the period January -1Vfay 2007.
As you know, since last January the city has been using the new utility billing system and water rate
structure to bill for water use. The new rate structure uses water budgets as a way to establish
individualized monthly budgets for each customer. On June l, the city released data about water
revenue and use for the period January through Aoril, along with the comparative data from 2006. At
that time, the data showed that there had been a six percent increase in revenue and a two percent
decrease in water usage as compazed to the same timeframe last year.
Tomorrow we will release updated year-to-date data for the period January through Mav, along with
compazative data for the same time period in 2006. The data is now showing that our customers aze
using about 12 percent less water than a year ago, and the associated water revenue is about six percent
less than a year ago. These numbers are expected to fluctuate throughout the year, depending on
weather, usage and water budget adjustments (Please note: January - May 2006 was significantly drier
and hotter than yeaz-to-date 2007). For more detailed information, go to www.boulderwater.net and
click on "Water Budgets."
CurrenUy, water budgets were established based on the direction staff received from City Council in
December 2004 when the decision to implement the new rate structure was approved. In November
2006, City Council approved the new block rates. Recently, you may have read about or heard direcUy
from some customers who would like to change some elements or approaches to the way water budgets
were established. In addition, at its May 21 meeting, the Water Resources Advisory Board (WRAB)
approved the following two recommendations:
Recommendation 1: WRAB recommends the City Manager/City Counci] implement rules changes as
soon as practical in the water budgets to 1) provide for monthly variations in commercial,
industrial and institutiona] water budgets, 2) to allow for variation in commerciaU industrial/
institutional irrigation use for accounts not having irrigation meters, and 3) to provide for
retroactive credits to all users that receive adjustments to their budgets, credits calculated from
r[l~'C L Ul J
the beginning of January 2007.
Recommendation 2: WRAB recommends the City Manager/City Council implement rules changes as
soon as practica] in the water budgets to allow for amendments to multifamily water budgets to
accommodate indoor common area usages. Further that any credits issued for amendments be
calculated retroactively to the beginning of January 2007.
Prior to the May 21, 2007 meeting, the WRAB's review and recommendations included the following:
October 2004 - recommended the water budget rate structure, including the
CommerciaUindustrial methodology, which was based upon 90% of Average Monthly
Use (ANIiJ), as calculated as the total annual consumption divided by 12. (In December
2004, Council approved this methodology as a starting point and directed staff to collect
data that is necessary for a more tailored approach to commerciaUindustrial customers and
utilize a public process to work with the WRAB and the business community to look at
the data and deternune if there is a better way to set rates beyond using historical data, and
to bring the proposal/recommendation back to City Council for a fina] decision.)
July 2006 - recommended rates for each of the five billing blocks and recommended that 100%
AMCJ be used.
November 2006 - WRAB meeting agenda item update about billing system, rate structure and
water budget adjustment process.
Apri12007 - WRAB "Matters from the Board" discussed the commerciaUindustriat water
budgets.
Staff and I are committed to continuing to examine and assess the rate structure and make any needed
changes and revisions in order to improve how budgets are deternuned and to ensure a fair and
equitable system. Since we have just begun using water budgets and have not been through an
irrigation season yet (and outdoor water use accounts for approximately 35% of our overall annual
water use), I do not have enough information at this time to recommend changes to the system.
However, as we move through the balance of this year, if the data begins to show a sienificant
deviation from what was anticipated, I am prepazed to move quickly in making mid-year changes if
necessary. For example, if at the end of August, the city is collecting significantly more or ]ess
revenue than anticipated (for exampie 25% or more) changes can be implemented to respond
accordingly.
I have reviewed the WRAB recommendations and have asked staff to proceed as follows:
1. Continue to work with the Chamber of Commerce staff and members, the Boulder Tomonow
members and other C/I customers to review data to determine impacts on customers (i.e., are bills
increasing beyond projected increases?) and, if so, to develop water budget calculation alternatives for
C/I customers for consideration by WRAB and City Council. Staff will fully evaluate the cost and
impact of any proposed alternatives.
2. Staff will examine the use/billing data to determine whether the monthly indoor allocation for multi-
family residential customers of 4,000 gallons per unit is sufficient. If not, staff will develop water
budget alternatives for the multifamily residential customers for consideration.
3. Staff will examine the use/billing data to determine whether an outdoor allocation for single-family
residential customers is needed for December, January and Februazy. And, if so, staff will develop
alternatives for consideration. T6is approach also may include an adjustment to the indoor allocation
amount (7,000 gallons).
All the alternatives need to be developed, reviewed and analyzed in a comprehensive and integrated
manner in order to make an informed decision about next steps. Included in this analysis wiil be the
financial impacts on each customer class and on future water revenues of each alternative. Also, since
. ~.b.. .~ vi .i
the original recommended rates and methodology approaches went through a public review and
comment, a public process would be undeRaken to review any possible changes. It is important that
we consider potential unintended consequences of the various alternatives as best we can. For
example, a change that results in collecting less revenue from one customer class may need to be
coupled with a rate increase (if the system needs to remain revenue neutral).
If the methodology for establishing water budgets is the main concern, staff is open to further
discussing this as part of any review process to consider rate, AMU or other changes. Any substantial
changes to the methodology or the system would be brought to City Council for review and approval.
As I mentioned earlier, I believe it is too soon to make informed decisions about potential changes
because with only six months into water budgets, there is simply not much data available to review and
analyae. Staff continues to receive and process water budget adjustment requests and anticipates
another wave of submittals through the summer as outdoor watering increases. Staff has received
about 1,400 water budget adjustment requests to-date and has approved approximately 89°l0 of the
requests for a variety of reasons - the majority of which were for amendments to the irrigable area.
This summer's weather will also play a major part in customer's outdoor water usage, which accounts
for about 35% of our overall annual water use.
The WRAB recommended that any changes be implemented "as soon as practical." I feel we need to
get through the outdoor imgation season first so we can review data and see how water usage -
compazes to water budgets, especially in our high-use season. Staff will update City Council on the
January - August 2007 data in September and will be pfepazed to recommend any potenUal changes to
water budgets for Council's consideration at that time.
Cc: Members of the Water Advisory Board
Stephanie Grainger, Deputy City Manager
Ned Williams, Director of Public Works for Utilities
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