Sacramento Utility Rates - A Recent History

Left: The XKCD cartoon from (roughly) early 2008, first brought to my attention by MikeMac, named "Someone Is Wrong On The Internet"


Once again, it's time for that never-ending task, keeping errors off the Internet.

Today's error concerns the rate at which Sacramento residential utility rates are increasing.

Especially over the last four or five years, I've been increasingly-worried about the rate at which Sacramento utility rates have been jumping. It was easy-to-tell that the increase was greater than the cost-of-living: you could feel it in your bones. It was only a matter-of-time before a Rebellion would take root.

And now the Rebellion is at hand:

Reining in Rates - Rolling back the city’s exploding utilities rates
By Craig Powell

If it seems like your city utilities bills have been escalating out of control in recent years, it’s because they have. In the past nine years, Sacramento’s city council has approved rate hikes that have exceeded the inflation rate by a whopping 321 percent.

And it’s getting worse. In the past four years, rates hikes have outpaced inflation by an eye-popping 1,321 percent - this while Sacramento has sunk into the worst recession of modern times, local unemployment has hit 12.4 percent (and is staying
there), and home foreclosure and business bankruptcy rates have hit record highs.

But relief is finally on the way in the form of the Utilities Rate Hike Rollback Initiative of 2010, which is expected to appear on the November ballot. The initiative is courtesy of the efforts of the Sacramento County Taxpayers Association and a team of dedicated campaign volunteers who will be working hard in the coming
months to qualify the measure for the ballot. They will be doing it the old-fashioned way, by forgoing paid signature gatherers and relying entirely on volunteers to gather the 5,420 signatures necessary to qualify the measure for the ballot.

If voters approve the measure, rate relief will begin almost immediately. A 9.2 percent rate hike that is set to go into effect this July will be canceled within two months of the election (January 1, 2011); utilities rates will be frozen in place for a year after that; and, perhaps most important of all, future rate hikes approved by the council will be limited to increases in the cost of living unless the city is able to persuade city voters in the future to approve rate hikes greater
than the rate of inflation. Under the rollback initiative, the city’s practice of using ratepayers’ money as a secret slush fund for other city expenses should finally come to an end.

Now, as far as I can tell, this secret slush fund stuff regards the city's use of ratepayer money to pay for the disposal of garbage dumped randomly in the city:

As for the violations, the city used the utility funds primarily to pay for such services as cleaning up illegally dumped debris, subsidizing water in the parks and other services to benefit residents.

Some people object to having ratepayers pay for this work, but I find nothing wrong with this practice. Indeed, everything about the operation of city utilities might be scandalous, except for this one thing that everyone else seems to consider scandalous, but which I think is just fine. I mean, where else are they supposed to get the money for disposing of random garbage?

But what really bothered me is Mr. Powell's absurd numbers: 321%, 1,321%. THAT's the real rubbish! Clearly, Mr. Powell is more interested than fanning the flames of rebellion than in arithmetic.

But what are the real numbers?

Since I've been at one location since 1995, and my utility services haven't altered a whit over that period, I have the records to do a more-reasonable calculation, and compare it to the Consumer Price Index (CPI).

Left: Marc's monthly Sacramento residential utility bill, with fitted curves (lower two lines; amounts in dollars), vs. the Consumer Price Index (July 1983 = 100), with fitted curves (upper two lines).
Annual rate of increase of Marc's monthly Sacramento residential utility bill, and the Consumer Price Index (July 1983 = 100).







Results fall naturally into four periods:

• December 1997 through December 2004: The monthly utility bill is increasing faster than the CPI by about 1.3%;
• December 2004 through September 2008: The monthly utility bill increase accelerates, so that it is increasing faster than the CPI by about 2.3%;
• September 2008 through December 2008: That brief period when it all hit the fan - the monthly utility bill didn't change, but the CPI collapsed, so that the difference in rates is about 12%;
• December 2008 through December 2009: The monthly bill is increasing faster than the CPI by about 4.4%.

These numbers are unsustainable and provocative and suggest a utility customer rebellion is imminent in Sacramento. Nevertheless, they are nowhere nearly as extreme as Mr. Powell suggests in his article.

I'm sympathetic to a rebellion - I'll go get my pitchfork - but I'd be happier with better numbers to start the battle.