I had planned to write a post dedicated to fairness next, but I just came across some new information that citizens need to know.
The City of Norman has evidently discovered a new super-well technology! In a flyer that is soon to appear on your doorstep, the City now claims that it can supply “up to 2 million gallons per day” of well capacity for $9 million dollars by drilling only “5 to 7 new wells”:
(Fig. 1: draft of the flyer the City plans to send out on the water rate increase)
These new super-wells would produce 1.5 to 2 times the average amount of water per day as Norman’s current wells.* (Weird that I couldn’t find anything about this breakthrough in water well technology when I searched the web. ….)
Of course, there is not actually a technological advancement here: the City is just trying to ‘muddy up’ the discussion of well costs. (“[U]p to 2 million gallons a day”? It would be equally accurate to say ‘up to 2 BILLION gallons per day’. A City official can dream, right?) To keep things clear, I will treat these numbers more seriously than they deserve below and show that even if they were true, there would still be a subsidy for new development - and an overcharge for current ratepayers.
Before I move to new numbers, however, a point about credibility. In fudging the budget numbers for well field expansion, the City of Norman has been caught trying to hide the subsidy it provides to new development. That is probably all you need to know about (1) the fairness of the subsidy and (2) the trust you should put in City pronouncements about the water rate election.
In order to assess the new super-well scenario, you need to remember that the rate increase proposal was calculated using non-super-well numbers. The rate increase proposal hasn’t changed; if water capacity were cheaper than the City originally thought, it rates should go down to reflect that fact. Current ratepayers, then, would be overcharged for the 1.5 MGD water capacity the City previously said they need.
Would super-wells make the connection fee subsidy go away? No. On the assumption that new development gets super-wells too, the cost per ¾” connection would fall to $1,148.** The subsidy for 2015, then, would be $348 per connection ($1,148 cost - $800 fee) and the 2016 and on subsidy would be $148 ($1,148 cost - $1000 fee).
The super-well scenario wouldn’t be any more fair than reality: it merely turns part of the development subsidy into an excess charge to ratepayers. This should be no surprise. the problem with the way Norman is developing water capacity is that it uses different ways of calculating prices for utility customers and new development. As long as that asymmetry remains, the fairness issue will remain.
[UPDATE: The final draft of the flyer is out (see here: http://www.ci.norman.ok.us/sites/default/files/Features/City%20of%20Norman%20Water%20Rate%20Increase%20Special%20Election%20January%2013%2C%202015.pdf) . The City scaled back on the 'fudge' - the $9 million might bring in 1.75 MGD - but we're still talking super wells that produce from 1.8 to 1.3 times the average well. So much for "just the facts" ....]
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* 2 MGD over 5 wells is a well average of 400,000 GD; over 7 wells is a well average of 285,714. Given that our current well average now is a little below 193,000, that is pretty remarkable.
** Until we develop new super-customers, a ¾” water connection still requires 255 GD, so 2 MGD still supports 7843 connections. At a cost of $9 million for 2 MGD, the cost of a connection is $1,148 (= $9,000,000/7843 connections).
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