By Louis Martin, RCAC staff writer
Like many rural American towns, Gooding Idaho walks a fine line when managing its water and wastewater systems. Gooding’s systems have many of the same needs as a larger city, less the greater number of connections that help spread the costs. It maintains a wastewater treatment plant to ensure clean water discharges from the plant into the Little Wood River. The town must also balance the residents’ irrigation needs with an affordable rate structure.
In 2017, Gooding took out a USDA Rural Development loan to combine its aging irrigation water system with its drinking water system. With most systems, irrigation water is separated and billed differently. It needs less treatment and often larger pipes to deliver it in higher volumes. But in Gooding, all water was combined and billed on the same metered connection. The irrigation water was given the same treatment level for contaminants as regular drinking water. To prepare for the upcoming loan payments, Gooding raised its monthly drinking water rates from $11.19 to $31.19 for the combined water. When residents realized they would soon be billed on a meter for watering their lawns, they opted to conserve instead. Many residents stopped irrigation completely, which led to brown lawns in town.
For RCAC rural development specialist Jeremy Peirsol, conducting a comprehensive rate study can be equal parts financial analysis and creative thinking.
From 2017 to 2018, after Gooding combined irrigation and drinking water, revenue from drinking water plummeted $74,000. The revenue drop raised the possibility that Gooding would not be able to maintain its “short-lived assets reserves” at levels required to maintain the U.S. Department of Agriculture (USDA) grants and loans it received for the project. Gooding asked Rural Community Assistance Corporation (RCAC) to conduct a rate study.
For RCAC rural development specialist Jeremy Peirsol, conducting a comprehensive rate study can be equal parts financial analysis and creative thinking. Peirsol offers several different scenarios for rate changes to towns’ governing bodies, each with projections based on complex data and many variables. These are designed to meet each system’s unique needs. Peirsol came up with a rate structure that would keep prices low for the majority of residents, while still increasing revenue for the town.
He presented various models the town could adopt. Most of the models raised the town’s base rate by approximately 20 percent but provided a customer’s first 5,000 gallons at a simple base rate, called an “allowance.” After 5,000 gallons, use rates would be around 12 cents per 100 gallons, up to 200,000 gallons. After 200,000, the rate would drop to four cents per 100 gallons. Previously, Gooding had a lower base rate and a 1,200-gallon allowance. Peirsol’s more generous 5,000-gallon allowance would provide enough water for everyday use and hopefully encourage residents to water their lawns more. It would also make water revenue less dependent on customer behavior, which would have a stabilizing effect on the drinking water system’s revenue.
It was a compromise that everyone could live with. Base rates would go up across the board, but the 5,000-gallon allowance would translate into monthly savings for the average resident. Even for local shops, the rate increases would be negligible until water usage approached 50,000 gallons. For heavy water users, such as the town’s state medical clinic and carwash, an increase in usage rates would encourage conservation and would also bring in more revenue for the system. After Gooding adopted one of Peirsol’s rate structure proposals, Peirsol coordinated town hall meetings to explain the changes to the townspeople and answer their questions. The final adopted rate was projected to increase revenue by close to $100,000 annually.
The Gooding drinking water project was successful. Months later, Gooding asked RCAC to return to complete another rate study, this time for wastewater. The city’s wastewater treatment facility evaluation showed system deficiencies that required action to stay in compliance with its Idaho Pollutant Discharge Elimination System Program (IPDES) permit. The required upgrade costs would be significant, close to $9 million dollars. A loan from the state revolving fund would cover most of the cost, but Gooding had to fund the rest of the project, along with future debt service. Once again, Gooding faced the need for rate hikes.
Peirsol knew that wastewater would require a very different model, but RCAC’s basic focus would stay the same: sustainability, fairness and justifiability. This time, Peirsol would have much more community input, because of the model he employed. For wastewater, the rate study would use an equivalent dwelling unit (EDU) model. In an EDU model, the wastewater quality, in addition to the volume, determines the rates. For example, a gallon of wastewater from an RV dump station at a campground would require far more treatment than a gallon of wastewater from a single-family home.
“Working with RCAC was great. Jeremy made the process easy. Not only did he go above and beyond he was at our side the entire way,” said Hollye Lierman, Gooding city clerk
RCAC uses U.S. Environmental Protection Agency-based guidance on what EDU rates should be for various business types, but the guidelines still require some on-the-ground research. To set fair rates, Peirsol had to have a clear understanding of each Gooding business. So, he teamed with Gooding’s city clerk, Hollye Lierman, and city treasurer, Brenda Aquino. Lierman said that RCAC’s help was critical,
“Working with RCAC was great. Jeremy made the process easy. Not only did he go above and beyond he was at our side the entire way. We were unable to determine how to place some of the businesses with the EDU chart. Jeremy came to Gooding and we went to those businesses to get a better idea of what they did, how many customers they serve, how many auto bays they had, how many beds they had in the facility. Jeremy was here when we had to face the citizens to explain the rate increase,” Lierman said. “Without him, we would have not gotten through the study. We appreciate all the hard work he put in and the patience he had with us.”
The three of them went door-to-door to more than 40 local businesses to assess their wastewater usage. Peirsol recalls doing everything from counting tables at restaurants to tallying lanes at the local bowling alley.
“There’s a lot of local knowledge. The clerks are billing these people already. They know them all by name,” Peirsol said. “This is a town where they don’t tell you the address. It’s just, ‘Oh the Jones live down by the Harpers.’”
There were some businesses in Gooding that EPA had never categorized, such as a school for the deaf and blind or a butcher’s market. For these, Peirsol had to create his own EDU categories together with local input. There were 59 different customer categories in the final EDU model. Some of the metrics used to track usage were car spaces, hair salon seats, gas pumps and laundry machines. During the process, Peirsol met dozens of local business owners and community members.
“The community had that input in there. They helped me create [the EDU table], so the process went a lot smoother,” Peirsol said.
Gooding adopted Peirsol’s wastewater rate recommendations. Peirsol recommended raising the base rate from $35.20 to $44 per EDU. Most wastewater bills would increase, but residents would see more modest increases than commercial users. In combination with the new drinking water rate structure, the additional revenue from both systems will amount to $377,000 annually. In addition to recommending EDU rates, RCAC also gave Gooding the EDU table it had developed with the town’s input to provide supporting documents for new accounts and billing. The town clerk was grateful for a tool that allowed Gooding to be more transparent with its customers.
RCAC’s recommended rates are now in place in Gooding. Using the new revenue in combination with state revolving fund loans Gooding will begin construction on wastewater treatment plant upgrades later this year. Peirsol reflected on the experience, noting that he feels RCAC struck a balance during the process. In Gooding, there was a real need for a sustainable rate structure, but also a concern that residents would face steep rate hikes. Peirsol learned that local governments must balance the various needs of their communities and how to tailor his presentation for each audience.
“This project has changed how I approach rate studies … I learned from this,” Peirsol said.
Feature photo: Aerial view of Gooding, Idaho (Wikimedia Commons)