Los Angeles, City of

California

RFC provided litigation support to the City of Los Angeles (City) regarding its wastewater rate structure.  The City, which used a modified percentage of water usage approach to determine wastewater charges, requested that RFC determine the prevalence of different wastewater billing approaches that are in use across the country.  As a part of this survey, RFC identified the billing approach for over 900 wastewater utilities across the country, including over 200 wastewater utilities in California and the 50 largest public wastewater utilities.  To complement the survey, we prepared a report that examined the differences in each of the billing approaches.  The report described the following billing approaches: sewer meters; non-seasonal water usage; water usage with a cap; percentage of water usage; flat rate; and ad valorem taxes.

RFC also performed a detailed evaluation of the differences in the non-seasonal water usage and percentage of water usage approaches for determining wastewater charges. We developed nine scenarios to examine the rate impacts under the two approaches in order to determine whether or not one approach was significantly better.  We found that neither approach was superior.

Finally, RFC examined the costs associated with shifting to a wastewater measurement approach that could theoretically allow more accurate wastewater billing.  In the lawsuit, the plaintiffs mentioned that sub-metering would be a more appropriate approach for the City to use in determining wastewater charges.  We performed an in-depth analysis of the potential costs associated with implementing sub-metering.  We found that the costs associated with implementing such an approach would more than offset any potential benefit.  Council approved the rate increases.