Citizen's Advisory Committee
Meeting Minutes
 January 20, 2005

CAC members in attendance: Myrna Poticha (Chair), Michael Buchenau, Russell Burton, Tim Flynn, Theresa Jehn-Dellaport, Larry Keesen, Jim Legas, Rick Sackbauer, Roberta Simonton

DW staff: Marie Bassett, Elizabeth Gardener, Kerry Kuykendoll, Josalyn Coleman, Joe Sloan

Guests: Steven Warfel

Presenters: Don Wojcik, Western Resource Advocates

Agenda, Minutes & Opening Remarks

The agenda and minutes were approved as presented.

Comments from the Public

Mr. Steven Warfel stated he was interested in water issues. He wanted to know what Denver Water would have done with the water from the Two Forks project and why it had not been built. Tim responded Denver Water was one of over 40 water utilities involved in Two Forks. The water would have been used by many south suburban water districts. Myrna stated many groups and individuals did not think Two Forks was a good project. The CAC is made up of representatives from various groups and each would have their own views on Two Forks as well as on a wide range of topics which come before the CAC. After further discussion Mr. Warfel stated he would be meeting with Greg Fisher, Planning, to discuss some of his questions and concerns about future water resource projects.

Jim stated the smallest proposed Two Forks dam and reservoir would still be the least expensive project for Denver Water. Denver Water should continue to look at a Two Forks project.

Contact with Constituents of CAC Members

Rick reported he has attended numerous meetings in Summit County on the proposed agreements between Denver Water and Summit. There has been an extension on the negotiations until March 31st before moving to litigation. Rick also attended a meeting in Grand Junction. There is work being done to create a headwaters county forum. The goal is to come up with one proposal to Denver Water which covers all the issues in counties such as Eagle, Summit and Grand. Currently DW has different proposal in front of each county and the counties would rather place all the proposals together for a complete review of everything which is occurring in the headwater counties.

Rick is a member of the board for the Colorado Foundation for Water Education (CFWE). He distributed copies of four Citizen Guides which have been produced by the CFWE and encouraged fellow CAC members to join the CFWE. Joe concurred with Rick and copies of the most recent Headwaters Magazine, from the CFWE, were also distributed.

Denver Water Update - Marie Bassett, Director of Public Affairs

Copies of the Marie's Denver Water Update were distributed in the mailing packet. As part of a new meeting structure Marie will cover a couple topics then answer questions.

The Manager of Conservation, Liz Gardener, will host a Metro Mayors forum on water conservation and BMPs. Conservation is waiting to see what type of response they will receive from this group.

The Board instituted a new format for its meetings with the first meeting of the month designated for taking care of all business-related items and the second meeting of the month to review policy matters. The next Board meeting, scheduled for January 26, will be a workshop to discuss the IRP and conservation issues. In general, at these second meetings of the month, there will be neither consent items nor the opportunity for public comment.

Larry requested information on the status of Moffat Funds. Marie explained that the funds have been spent by Parks and DW has asked for a report stating how the funds were used.

Roberta requested that the agenda and information distributed at the Board workshops be made available to the CAC and the general public. Some documents, Board minutes and agendas are available on Denver Water's internal Intranet. In the near future the web site will have the Board minutes and agendas available. The minutes may be posted in a draft form.

Action: Joe will see if the CAC can have access to the Intranet and will have the Board agendas e-mailed to the members of the CAC. He will collect copies of documents provided at the meeting and send them to the CAC.

Rates Information - Don Wojcik, Western Resource Advocates

Myrna requested Don speak to the CAC. She distributed copies of a document produced by John Bermingham titled A Review of Denver Water's Ratemaking and Accounting to all the members of the CAC.

Western Resource Advocates created Smart Water, a report on water use in several western states. Don offered to send a copy of the report to any member interested. A follow up report, Water Rate Structures in Colorado, was distributed to CAC members. This report reviewed various types of rate structures used in 12 Colorado cities. Nine of the 12 cities had an increasing block rate structure. Don believes this type of structure encourages conservation. This design assigns the costs of operation and creation of new supplies on those customers who place the most demand on the water system. Those who use the most pay the most. It is a system which delivers a constant message to customers, whether in drought or not, to conserve water.

The report found that of the nine cities using an increasing block rate structure Denver Water had the weakest message for encouraging conservation. Western Resource Advocates would like to see a steeper increase in Denver Water's block rate structure. If Denver Water does not want to create additional blocks, currently there are three for residential customers, then DW should raise the rates for the high end user to send a message to those who use the most water.

Water utilities can be critical of rate increases for conservation as the increase could reduce demand and thus reduce income. This can be overcome, as was done in Westminster, by creating a stabilization fund. The stabilization fund uses savings to cover cost when there are decreases in demand due to restrictions or wet weather. Surcharges may not have been necessary if Denver Water had used this type of a structure prior to the drought. Staff from Denver Water has stated that rate increases, which are solely done to encourage conservation, cannot be justified because the Charter allows for the rates to cover the cost of service. This should not be an issue if the additional revenues are used to pay for conservation programs or a stabilization fund.

Don requested the CAC look at the reports and forward a recommendation to the Board to increase Denver Water block rate structure.

Michael asked if Don had any research on how high the price signal would need to be to create the desired conservation effect. Don responded that each community is different. There was no one price signal as each community has different socio-economic factors and politics which play a part in their rate structure.

Myrna requested Don return next year with results from the utilities which have instituted higher block rates. Don stated it would take several years to see the effects of the changes but cities in other part of the west that have aggressive block structures did see the greatest conservation.

Roberta requested information on Boulder's water budgets. Don's understanding is the budgets are based on ET rates for bluegrass, lot size and occupancy of the property. The customer has a flat rate if they stay within the water budget. If they exceed the budget their rate increases aggressively. That increase is essentially a block rate structure.

Tim requested Don's definition of efficiency. Don responded it was taking waste out of water use. Water is subsidized to a point where many users don't see the need to conserve. The majority of customers do not understand that the true price of water includes permitting, long term-planning, regulatory agencies and economic and social impacts on the West Slope. If these true costs were understood customers would become more efficient and conserve more water.

Myrna invited Kerry Kuykendoll, Manager of Rate Administration to respond briefly to the presentation. Kerry stated there are many theories on how to price water. DW has the Charter which governs how rates are set. Rates must cover the cost of service and the costs must be assigned to the rate classes which cause those costs to occur. DW can not charge one class more unless costs can be assigned to that class. The majority of customers do not know about rate structure. They do know how much they paid for their last water bill. Seventy-five percent of Denver Water customers use 40,000 gallons or less in an average billing cycle (2 months). That is a significant number of customers using a medium amount of water. It is unclear, at this time, how much more this group can conserve.

Correspondence to the CAC

The CAC discussed a letter from Mr. Oletski regarding a water contract.

Action: Joe will draft a letter to Mr. Oletski and have it reviewed by Michael and Theresa.

CAC Business

Subcommittees - three subcommittees were established with the intent to focus of a few areas and be more proactive. The subcommittees will work outside of the regular meetings. All work products will be brought back to the entire CAC for approval. Tim stated in the past subcommittees included people from outside the CAC. Those outside of the CAC were the motivators for the work as they were committed to a specific issue.

Myrna will chair a subcommittee on Best Management Practices (BMPs) and Michael and Russell will serve on the subcommittee. Larry will be involved as he often works with and has helped create BMPs for the landscape industry. Roberta will chair a subcommittee on Rates and Theresa will serve on the subcommittee. Jim and Rick are interested in Future Supply & West Slope Issues. They will act as a standing committee on these issues. Reports from subcommittees will be on future CAC agendas.

Proposed Changes to the Bylaws - Tabled until the next meeting.

Contact with Constituents - Tim suggested that this report by members be voluntary as to allow more time to those who have the most relevant information to share. Myrna concurred. Russell stated water issues are still a high priority for the members of the HBA. He will continue to sit on the governmental affairs committee of the HBA as this committee is working on various water related issues.

Board Communication & Attending Board Meetings

Future CAC Agenda Items

Adjournment

The meeting was adjourned at 7:10 p.m.

CAC Meeting Actions for Next Meeting - February 17, 2005

Motion/Action Who By what date? Action Done? Follow up?
CAC access to intranet or some form to access Board minutes Joe Feb 17, 2005    
Draft Letter to Mr. Oletski Joe Jan 27, 2005 yes