Short answer: It depends, but average rates are often higher for West Hollywood customers served by Beverly Hills than for those served by Los Angeles

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Water customers in West Hollywood are split into two groups: the majority served by the City of Los Angeles and those on the westside served by the City of Beverly Hills. Beverly Hills recently approved a series of infrastructure-related rate increases. Now they’re studying changes to the way the rate burden is distributed among customers. That made us wonder how the rates paid by the two groups in West Hollywood compare to each other and to customers in nearby cities.


Background: Structure of water rates

Water rates are limited to the cost of service. When water providers set their rates, they add up their costs and split them among customer classes, services, and levels of water use. Water use is typically measured in hundreds of cubic feet (HCF). One HCF is 748 gallons.

For example, Beverly Hills has rates for single-family residential, multi-family residential, and non-residential (commercial) customers. The bi-monthly bill includes fixed and variable charges. The fixed charge is based on the size of the water meter. Customers expecting to use a lot of water — such as a large apartment building — install bigger meters. The variable charge is based on actual water consumption. For single-family customers, the water comes in four increasingly-expensive tiers. Once they’ve used up a tier, they start buying water from the next, higher-priced tier.

EXAMPLE OF A WATER RATE STRUCTURE

Note: These are not the rates in June 2018. Source: City of Beverly Hills, “Water Rate Study: Rate Policy Decisions,” presentation to the Public Works Commission, prepared by HF&H, May 10, 2018.

The number, size, and pricing of tiers varies among cities and customer classes. So does the fixed bi-monthly charge. Some cities, such as Los Angeles and Santa Monica, don’t have a fixed charge. Instead, they recover those costs through the variable charges for water use.

The rates themselves may change gradually or quickly. For example, Los Angeles’ current single-family rates are 5% to 20% higher than they were a year ago.

Beverly Hills adds a 25% premium to its rates for West Hollywood customers (see our earlier report). Los Angeles added a small out-of-city premium in the past, but not in 2017 or 2018.


Single-family rates

For a given level of water use, we estimated the average rate — including fixed charges — paid by single-family customers in West Hollywood and nearby cities. We had to make some simplifying assumptions. We focused on a range of water consumption we suspect is common in West Hollywood, centered around 15 HCF bi-monthly.

Notes: (1) The average starts high for Culver City and the areas served by Beverly Hills due to fixed charges. We assumed a 3/4-inch meter. (2) Culver City is served by a state-regulated water company. We used their base rates plus the surcharge that covers discounts for low-income customers. We excluded temporary rate adjustments, one of which is large — $0.52 per HCF — but about to expire. (3) The Los Angeles number is a “max” because it assumes the lowest allocation of cheaper water. It isn’t that different from the “min” at this level of water use. Sources: Water provider websites, accessed in May 2018; our analysis.

This illustration suggests that:

  • Most West Hollywood single-family customers served by Beverly Hills pay more for a given amount of water than those served by Los Angeles. The difference is close to 50% at 15 HCF. The difference is even bigger for customers who use less than 15 HCF.
  • West Hollywood customers served by Beverly Hills also pay more than customers in nearby cities. For 15 HCF, they pay 18% more than Culver City, 25% more than Beverly Hills, 45% more than Los Angeles, and close to three times as much as Santa Monica.
  • Many West Hollywood customers served by Los Angeles pay less than they would in Beverly Hills or Culver City. It depends on how much water they use. However, Santa Monica rates are about half of Los Angeles’ at these levels of consumption.

The overall pattern looks different at higher consumption levels. From roughly 35 to 125 HCF, the rates in areas served by Los Angeles exceed those in areas of West Hollywood served by Beverly Hills. We suspect those levels of consumption are uncommon in West Hollywood, given the smaller lot sizes with less landscaping.

Note: This chart shows a range of rates for areas served by Los Angeles, because the amount of water a customer can buy at a given rate varies widely based on the size of the property, the time of year, and how hot the area is. Sources: Same as above.


Multi-family rates

For multi-family rates, we prepared two illustrations. The first is for a four-unit property. It’s based on the amount of water used by the each household: the total for the property divided by four. Our estimates for areas served by Los Angeles are just examples, because the real numbers depend on each customer’s usage history.

(*) The amount of water a Los Angeles multi-family customer can purchase at the lowest rate depends on historical usage, with a floor. We assumed that at least 80% of the water was purchased at the lowest rate. Sources: Same as above.

The second illustration is for a 100-unit apartment or condominium building. For buildings like this, we’d guess the typical water consumption is somewhere around 10 HCF per household.

Notes: Assumes a four-inch water meter. Assumes Los Angeles customers get at least 80% of their water at the lowest rate. Sources: Same as above.

Together, the illustrations suggest that:

  • The size of the building makes a difference, mainly because fixed charges are spread over more households.
  • For small buildings in West Hollywood, customers served by Beverly Hills generally pay more than those served by Los Angeles. In this illustration, it’s 20% extra at 10 HCF. They also pay 20% to 75% more than customers in nearby cities who use 10 HCF.
  • For large buildings in West Hollywood, the Los Angeles and Beverly Hills rates are fairly close. The differences depend on the amount of water used and other assumptions. At something less than 10 or 12 HCF per household, Los Angeles-served rates may be a bit higher than Beverly Hills-served rates.


Non-residential rates

Businesses, nonprofits, and government agencies pay non-residential rates. Their water consumption varies widely. We estimated numbers for a smaller business using 30 HCF or less bi-monthly. The averages start high in areas that have fixed charges.

Notes: Assumes a 3/4-inch water meter. (*) Assumes Los Angeles customers get at least 90% of their water at the lowest rate. Sources: Same as above.

In this illustration, at 15 HCF, a Beverly Hills-served business in West Hollywood would pay double what a Los Angeles-served business would.

Among nearby cities, Beverly Hills-served West Hollywood has the highest non-commercial rates, followed by Beverly Hills itself, the areas served by Los Angeles, and finally Santa Monica. There are exceptions at the lowest and highest levels of water consumption. Culver City moves around. It starts high due to a high fixed charge, but it has the lowest variable rate, so the average drops with higher levels of water consumption.


Multi-family versus single-family rates

After looking at the rate structures, we wondered how the price of water differs between multi-family and single-family households. We compared households using the same amount of water. We focused on the variable rate for the water itself.

Note: Compares the volume-based rates for the water itself. Excludes fixed charges because they should reflect real differences in customer-level costs such as billing. Sources: Same as above.

The illustration shows that many multi-family households in Santa Monica, Beverly Hills, and the part of West Hollywood served by Beverly Hills are charged significantly more for a given quantity of water, excluding fixed charges. For example, in Beverly Hills-served West Hollywood, the variable charge for 15 HCF of water is 40% higher for a multi-family household than for a single-family household.

There may be a small differential in areas of West Hollywood served by Los Angeles, but it depends on each customer’s actual usage history. In Culver City, the rates are the same in the relevant range.


Appendix: Rate comparisons from another study

A few years ago, consultants working for the City of Santa Monica analyzed the single-family rates of nearby cities. Culver City and Beverly Hills charged the most for a customer using 30 HCF bi-monthly. Pasadena charged the least. Of course, some or all of the rates may have changed since then.

Source: City of Santa Monica, “Water Rate and Revenue Plan, prepared by Kennedy/Jenks Consultants, February, 2015.

The study also compared non-residential rates. Beverly Hills came out highest and Burbank lowest for a customer using 192 HCF bi-monthly. We don’t know why they picked that level.

Source: Same as above.


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Short answer: It depends, but average rates are often higher for West Hollywood customers served by Beverly Hills than for those served by Los Angeles| Water customers in West Hollywood are split into two groups: the majority served by the City of Los Angeles and those on the westside...