Differences between Cal Water & South Feather’s Rates
Accounting for Key Cost Drivers Shows Cal Water’s Rates are Comparable to South Feather’s
Cal Water has released an independent study that concludes the water utility rates paid by its customers in Oroville are comparable to those paid by customers of South Feather Water & Power Agency (South Feather), a nearby water supplier. The study explains that simplistic comparisons of water utility rates that do not account for key differences between water suppliers are inaccurate and misleading.
In the case of Cal Water and South Feather, the study identified three key differences between the two water suppliers that materially affect water rates. First, unlike South Feather, Cal Water pays taxes that provide other benefits to the residents of Oroville. Second, Cal Water’s rates are reflective of regular reinvestment in facilities necessary to maintain the long-term reliability and safety of the water system in Oroville, while South Feather’s do not. Finally, South Feather’s rates are heavily subsidized by non-water revenue from power sales, whereas Cal Water’s rates represent only the actual cost of serving its customers in Oroville. After accounting for these differences, a single-family residential customer with a 5/8-inch water meter using 10 Ccf (7,480 gallons) of water in one month would have a water bill of approximately $54 as a Cal Water customer and $64 as a South Feather customer.
“Cal Water commissioned this study in response to questions about rates that some of our customers in Oroville have raised,” Cal Water spokesperson Shannon Dean said. “Our hope is that it will help our customers better understand the key differences between Cal Water and South Feather, and that Cal Water’s rates are reasonable when those differences are factored in.”
Cal Water commissioned the independent study by Dr. David Sosa, who holds a Ph.D. in agricultural and resource economics from the University of California at Davis and is a Principal at Analysis Group, Inc. While Cal Water commissioned the study, it did not participate in the analysis.
“We wanted to provide our customers with a fair, unbiased, and accurate study on a subject as important as water rates,” Dean said. “We are committed to providing quality, service, and value to our customers, and this study helps explain how we are accomplishing that goal.”
About Cal Water
Cal Water serves about 10,400 people through 3,600 service connections in Oroville and about 2 million people through 480,300 service connections in California. The company, which has provided water service in the area since 1927, was ranked “Highest in Customer Satisfaction among Water Utilities in the West” in 2016 by J.D. Power in its inaugural Water Utility Residential Customer Satisfaction Study. Additional information may be obtained online at www.calwater.com.
About Dr. David Sosa
Dr. David W. Sosa is a Principal at Analysis Group, Inc. and holds a Ph.D. in agricultural and resource economics from the University of California at Davis. Dr. Sosa specializes in the economics of network industries, law and economics, and industrial organization. Dr. Sosa has consulted on a broad range of litigation and regulatory issues, including industry restructuring, technical standardization, operational and financial benchmarking, mergers and acquisitions, market power analysis, and competitive strategy. He has served as an expert witness before several state and federal agencies. Dr. Sosa is a member of the American Economic Association and the Federal Communications Bar Association. Before joining Analysis Group, he consulted to the California Energy Commission and Telcordia.
About Analysis Group
Analysis Group, Inc. (AGI) provides economic, financial, and business strategy consulting to leading law firms, corporations, and government agencies. The firm has more than 600 professionals, with offices in Boston, Chicago, Dallas, Denver, Los Angeles, Menlo Park, New York, San Francisco, Washington, D.C., Montreal, and Beijing. AGI’s utility and environment practice is distinguished by expertise in economics, finance, market analysis, regulatory issues, and public policy, as well as significant experience in environmental economics and infrastructure development. AGI has consulted to a wide variety of clients including water suppliers and consumers; water and electric utilities; regulatory commissions and other public agencies; tribal governments; power system operators; foundations; financial institutions; and start-up companies.