Zone 7 Water Agency

How does Zone 7

impact your water rates?

As a water wholesaler, Zone 7 purchases, treats and delivers water to four water retailers -- the cities of Pleasanton and Livermore, Dublin San Ramon Services District, and the California Water Service Company (serving parts of Livermore). These retailers in turn sell that water directly to business and household customers, factoring in their own costs of service before sending you the final bill.

Board Approves Increase in Treated Wholesale Water Rate

Zone 7's Board of Directors at its October 21, 2009 meeting approved a 9.25 percent increase in treated wholesale water rates for 2010. For a news release on the action, click here.

• For the staff report on rates from the Oct. 21 Board meeting, click here.
• For the staff report on rates from the Sept. 16 Board meeting, click here. 

The potential impact on your water bill is smaller than 9.25 percent because wholesale water costs are only a portion of the water bill charged by your retailer. The increase will boost the monthly bill for the typical household by $3.08, if fully passed on to customers by retailers.

How it Works

The increase will bring the charge for treated water sold to our water retailers to $878 per acre-foot. The $74-per-acre-foot increase breaks down as follows:

The biggest components in the rate increase are 1) skyrocketing costs of water treatment chemicals, 2) cost to operate a new plant that is helping to soften (demineralize) our groundwater supplies, and 3) increased utility costs for operating our wells and treatment plants.

Although personnel costs are increasing, this is due largely to a cost-efficiency measure that is shifting maintenance services from contracts to in-house personnel.

Zone 7 minimized the rate increase by:

1. Not filling eight vacant positions at a savings of nearly $1 million this fiscal year and again in FY 2010-11
2. taking $6.2 million from approximately $21.7 million in reserves this fiscal year, and another $1.4 million in reserves during FY 2010-11
3. deferring capital improvement projects and equipment purchases.

Unprecedented challenges

Water agencies statewide are experiencing unprecedented rate pressures due to drought, environmental regulations, soaring chemical costs and increased water quality regulations. Indeed, Zone 7 is faced with a costly and evolving set of problems in the Delta, in a recessionary economy, and dealing with the needs of an aging infrastructure.

Reduced water sales due both to the slowed economy and to calls for water conservation are affecting revenues needed to cover our largely fixed costs of operations.

The rate structure for 2010 includes investing an additional $400,000 on water conservation programs in furtherance of efforts to meet the governor's call for a 20 percent reduction in per-capita water use by the year 2020.

Cost of Addressing Delta Fixes

Zone 7 water rates reflect continued costs to cover the Agency's contribution to a statewide effort to address alternatives for a long-term fix to the Delta, through which most of our water supply is conveyed and which faces serious ecological decline and court orders for reduced pumping. The Bay Delta Conservation Plan aims to improve long-term reliability of our water supplies from the State Water Project, and to improve the quality of those supplies.

Untreated water rates 

The Board also approved a decrease in the rate for untreated water to agricultural customers by 6 percent, from $181 per acre-foot to $171 per acre-foot. The decrease is primarily due to lower charges for transporting water by the state Department of Water Resources, and to reduced Zone 7 staff time spent on the untreated water program. To view the Oct. 21 staff report that went to  the Board, click here.

New development pays its own way

Zone 7 imposes connection fees on development to ensure that new growth, not the existing customer base, pays all costs of expanding the water system. Water rates, meanwhile, pay to operate and maintain the existing treated-water system, and for renewal/replacement projects.

Water System Revenue FY 2009-10

Water Expense Breakdown FY 2009-10

Will rates go up in future years?

Given the current condition and unreliability of the Delta, we expect substantial investments by water users will be required in future years to build and improve water supply facilities and help with ecosystem restoration. Indeed, a longterm Delta fix is going to cost money whether it involves strengthening the existing system of through-Delta conveyance or providing a new conveyance facility.

What is Zone 7's financial track record?

For the decade up to 2007, our overall rate changes consistently averaged below the annual Bay Area Regional Consumer Price Index (CPI). There were no rate increases in 2004 and 2005. In 2006, there was a 5.2 percent increase. In 2007, when pressures mounted due to higher state water costs and to improve drought protection by expanding our underground water-banking program, there was a 7.5 percent increase. In 2008, there was an 8 percent general increase along with a 0.4 percent special Delta water charge. In 2009, rates increased by 11.6 percent, plus a Delta charge of 4.6 percent, for a total increase of 16.2 percent.

What does Zone 7 do to hold down costs? 

As much as possible, we avoid borrowing money for needed projects by using a pay-as-you-go approach because borrowing money only adds costs that eventually have to be paid by you, the customer.