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08-03-2000WaterRightsPMtg Water Rights Public Meeting City Council Chambers August 3,2000 Meeting convened at approximately 6 00 p.m. Robert Monday introduced himself and staff present: Pat Dominguez,Administrative Services Director, Manny Carrasco, Chief Rate Analyst; Jim Ericson, City Manager; David Casillas, Budget Director, Councillor Trowbridge; Cyndi Davis, Recording Secretary Monday stated that back in June when the Rate Ordinance was passed by City Council, the Council requested public comment on an inclining block rate for Industrial, Off-Peak Commercial and Parks rate classes in an effort to promote water conservation. Monday stated rates are based on cost of service(COS)which is the cost to serve a rate class,be it residential or industrial. Rates are also based on customers' desires. The fact is that it costs much less to serve a large user than a small user Marginal cost is also involved and is the next increment/component of something being sold that is already paid for by your base rate. Monday explained COS as being the accepted method of cost allocation by the Public Regulatory Commission. The Federal Energy Regulatory Commission also demands this in rate setting procedures Monday stated that COS does not set rates,but rather shows where the costs are incurred in different rate categories. Monday commented on customers' desires and what they would like from their utility Price is dependent on service and reliability Price could be reduced if service was reduced. Decreased amount of water crews available to service/clean Ines would reduce price and quality of water which may not be acceptable from a consumer standpoint. Customers will pay more for clean water and good service. Monday said it is a fact of life that industrial and commercial customers generally subsidize residential customers. COS does not show inclining block rate. In fact, it shows a declining block rate. Inclining block rates that promote conservation are policy decisions. Whether we become a city of residential customers or one that has a strong industrial/commercial base is dependent on decisions made by the City Council. Monday proceeded to explain marginal cost siting a hamburger stand as an example. Monday reviewed the uniform/flat industrial rate which is $120/monthly access charge and$130 per thousand gallons One of the problems with an inclining rate is that Memorial Medical Center who uses 54 million gallons of water is in the same rate class as American Linen who only uses 8 million. That's a big difference. Under the inclining block rate, Memorial Medical Center would increase 17%and American Linen's would decrease approximately 6%. Gilroy Foods and other seasonal industries might show a 16%increase and only a 7%increase under a seasonal rate. Page 1 of 4 An unidentified audience member questioned whether Sonoma Ranch was an industrial rate user Monday stated Sonoma Ranch is more of an agricultural type user They have a contract which stipulates the rate. Monday stated that Sonoma Ranch could/would have received water from someone else. Moongate Water was a supplier ready to sell them water It all comes from the same aquifer no matter who is selling it. Their COS is cheaper because of the volume of water they use. An unidentified audience member questioned whether there was a plan in place to bring water in from the Gulf or in a pipeline from the Great Lakes in five or ten years to accommodate the 300,000 population forecast and industrial complexes the area is accommodating. Monday stated that we are not running out of water The usage for that water may change. Currently,we have applications for 14,000 acre feet of groundwater on the East Mesa. We are asking for another 8,000 on the West Mesa. Historically, Las Cruces has used 18,000 acre feet of our existing 22,000 acre feet. We anticipate needing 70,000 acre feet 40-50 years from now The amount of water we have under application right now is in the 70,000 acre foot area. We are getting rights out of the river from Elephant Butte Imgation District(EBID). The next 10-15 years,we plan to build a surface water plant. We'll then buy water from farmers if the farmers want to sell it to us, or some other method to transfer the water to municipal and industrial (M&I) use. The structure of New Mexico water law has not allowed that up to this point. An unidentified audience member questioned whether we were planning restrictions against home pools in this area. James Ericson, City Manager, stated of a water scarce area like Phoenix has not implemented any restrictions, it is not likely that we would see any restrictions in Las Cruces. Monday stated the City works closely with EBID There are"flat-raters" that may have a parcel of land with irrigation rights. At some point, situations change and these flat-raters quit using or paying. When that happens,the City approaches EBID and asks to take it over Chris Egerstrom, female audience member, stated the reservoir does get dangerously low Monday agreed and stated that is why the City relies on groundwater here in the valley We'll never be 100%surface water because we need a"drought contingency" and that is groundwater Monday stated the hydrologist has indicated there is approximately 8,000,000 acre feet of "potable",which means "drinking" water on the East Mesa. Here in the valley,the water replenishes itself underground,practically as fast as it's being used. Egerstrom stated El Paso and Juarez are also pulling water from this area. Monday concurred that El Paso is getting to be a big town and there is a risk. However, El Paso is moving more toward surface water There is always a risk, but as a Utility we would not encourage big water use intensive industries because of the amount of water they would use. However, these decisions are left to the City Council. Page 2 of 4 0 Egerstrom stated this is a bit of a two-edged sword. We want industry to come in to support the economy,yet we don't want industry because of the possibility of them using too much water Janine Lowell, audience,how serious is El Paso's interest in drawing water from Las Cruces Monday stated they are very serious. The Texas-New Mexico Water Commission has been established,which includes representatives from El Paso, Las Cruces,New Mexico State University,to work on plans for surface water treatment plants from Hatch to El Paso. El Paso will built a surface water treatment plant that will pump water across the Franklin Mountain Range,Anthony Gap and over the other side of the mountain where El Paso is really growing. Bob Snyder, F&A Dairy, explained they have always planned on expanding the plant. When he asked the City Water Resources Director about doubling his water usage, he was told there would not be a problem. Snyder said he is doing a plant expansion and by doing some re-engineering, he can accumulate 35,000 gallons a day of his own water and apply it against what he's using with the City Snyder said we need to clear up the public's perception on the meaning of "a lot of water" A heavy user isn't somebody using 100,000 a day A heavy user is someone like a blue jeanfactory F&A Dairy is not a big dairy,it's just an average size cheese plant. The City has made it pretty clear that they support industry and the water is available. Ellen Smyth, South Central Solid Waste Authority, stated the Authority is ranked number 8 on the list of industrial users We are required by City Ordinance to deal with dust pollution, specifically out at the landfill. Our water tank is being filled 8-10 times a day to control the dust out at the landfill. During cell construction, our water usage actually increased tenfold. Smyth stated that as a non-profit, quasi-governmental entity,we are willing to pay at whatever the rates are set; however, it's irritating when a for-profit industry is able to strike a contract for a better price that we're having to pay I appreciate what the City provides We have great service and water pressure. What concerns me is that for-profit commercial industries, i.e. Sonoma Ranch, are able to make a separate contract outside of the public rates. Monday stated the golf course is a much bigger user and their COS is less than the average. Vicky Saenz, League of Women Voters, stated they are very concerned about water quantity and would support the inclining block rates for everybody Anticipate the Hueco Basin being out of water in 25 years; Juarez pumping out of the southern end of the Mesilla Bolson and the city moving out to the northeast and using the Jornada Basin. Saenz stated that the 1998 Water Works Association Research Foundation published the results of a study, "Effectiveness of Residential Conservation Price and Non-Price Programs" Las Cruces participated in this study and the study concluded conservation pricing of water does cut down water use. Saenz said inclining block rates is fair and they would support it for all users. Monday responded that the flat rate is also a conservation rate. Industnal/commercial users have less control over conserving water than residential users Page 3 of 4 Chuck Sagerstrom, audience member, stated if everyone with an evaporative swamp cooler was legislated to re-route the water from the overflow tube,billions of gallons of water could be saved a year Sagerstrom stated he does this and gets twenty to forty-five gallons of fresh water a day to water his property Secondly, if builders were legislatively required to put wastewater from the showers and the sinks in every home they built back into the soil to irrigate property, people wouldn't have to water their trees and all that water would be saved. This would cost the builder an extra$175 in plumbing costs. Sagerstrom stated his opinion that they won't do this because it will penalize the builders and the developers who are the power in this City An unidentified male audience member commented if there is any concern over shortage of water we should start looking at conservation. One way to conserve is for new home builders to use xeriscaping. Customers would save money and water You see many businesses that run the water too long and end up with water running down the street. Refrigerated air supposedly costs more than swamp coolers. If you use refrigerated air wisely, it can actually cost less than swamp coolers. Monday stated the inclining block rate addresses that issue. A customer can have grass,but it will cost that customer much more to maintain it. There being no further discussion, Monday stated this item will be taken back before City Council in a Work Session at a later date. People are encouraged to attend,but public comment is normally not taken at Work Sessions. Meeting adjourned at approximately 6 55 p.m. Page 4 of 4