HomeMy WebLinkAbout14 Commercial Water Rate Agenda Item # +r
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Staff Report
To: Board of Directors
From: Peter Holzmeister
Date: May 4, 2004
Subject: Commercial metered water rate
Why this matter is before the board: I am asking the board to reconsider an action
taken to increase commercial water rates.
History: When the board adopted the budget for 2004 1 recommended a 5% water rate
increase. However, with regard to the commercial metered rate, I recommended that we
abandon the declining block rate in favor of a flat charge per thousand gallons of water
used. Attached is a table showing the declining block rate that had been in effect and
the flat rate per thousand gallons adopted in the new ordinance.
New information: The approach I recommended was too simple. It resulted in a huge
cost increase for customers who use greater than the base allowance plus 96,000
gallons of water in a month. An example will demonstrate the point. A customer with a
four-inch service who uses 1,000,000 gallons in a month, which is not uncommon, would
see a bill of$936.83 in 2003 compared to a bill of$1,612.20 in 2004. The problem, I
think, is in the base allowance and the base fee, where we should be capturing our fixed
costs. The problem is not in the concept of a flat rate per gallon used.
We have not reviewed our metered water rate in many years. We have simply adopted
percent increases in the cost of the various blocks, without evaluating the base fee and
the use allowances. I think it is time to review the entire commercial meter rate
structure. Meanwhile, until we complete a more disciplined water rate study, I suggest
we back off the current flat block rate and temporarily adopt a simple 5% rate increase
within the current declining block structure.
Recommendation:
1. 1 recommend that the board amend Ordinance 2003-06 by deleting the portion that
reads as follows:
Gallons Charge
0 to 16,000 gallons 1.70/ 1,000
16,000 to 56,000 gallons 1.70/ 1,000
56,000 to 96,000 gallons 1.70/ 1,000
96,000 and above 1.70 / 1,000
and adopting in its place to following language:
Gallons Charge
0 to 16,000 gallons 1.70 / 1,000
16,000 to 56,000 gallons 1.34 / 1,000
56,000 to 96,000 gallons 1.07/ 1,000
96,000 and above .87 / 1,000
2. 1 recommend that the board direct the general manager to present to the board at a
future date a proposal to conduct a commercial water meter rate study. The study
should be completed before the 2005 budget is presented to the board.
An Ordinance Amending Ordinance 2003-06
Concerning Metered Commercial Water Rates
WHEREAS the District adopted Ordinance 2003-06 Amending the Water Monthly
Retail Rates and Amending the Water Connection Charges; and
WHEREAS Ordinance 2003-06 adopted a flat block rate in place of a declining block
rate for metered commercial water accounts; and
WHEREAS the board wishes to have a water rate study conducted prior to changing
the structure of the metered rate;
NOW THEREFORE BE IT ENACTED BY THE BOARD OF DIRECTORS OF THE
TRUCKEE DONNER PUBLIC UTILITY DISTRICT THAT
1. Ordinance 2003-06 is hereby amended by deleting the portion that reads as follows:
Gallons Charge
0 to 16,000 gallons 1.70 / 1,000
16,000 to 56,000 gallons 1.70/ 1,000
56,000 to 96,000 gallons 1.70/ 1,000
96,000 and above 1.70 / 1,000
and adopting in its place to following language:
Gallons Charge
0 to 16,000 gallons 1.70 / 1,000
16,000 to 56,000 gallons 1.34/ 1,000
56,000 to 96,000 gallons 1.07 / 1,000
96,000 and above .87 / 1,000
2. All other portions of Ordinance 2003-06, or any other ordinance, shall remain in full
force and effect except as the same may conflict with the provisions of this ordinance.
PASSED AND ADOPTED by the Board of Directors of the Truckee Donner Public Utility
District at a meeting duly called and held within the District on the fifth day of May 2004
by the following roll call vote:
AYES:
NOES:
ABSENT:
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
By
James A. Maass, President of the Board
ATTEST:
Peter L. Holzmeister, Clerk of the Board
Comparison of District Water Rates: 2003 and 2004
Gallons 2003 charge 2004 charge
0 to 16,000 $1 .62 $1 .70
16,000 to 56,000 1 .27 1.70
56,000 to 96,000 1 .02 1.70
96,000 and above .83 1 .70
Gallons Allowance
Size of Service Per Month 2003 Rate 2004 Rate
3/4 inch 6,000 34.91 36.66
1 inch 11,000 41.55 43.63
1 '/4 inch 17,000 49.78 52.27
1 '/2 inch 24,000 58.36 61.28
2 inch 43,000 80.35 84.37
3 inch 96,000 134.73 141 A7
4 inch 171,000 193.24 202.90
Calculation of the bill for 2003 and 2004
1,00,000 Gallons used, 4 inch service
Water Usage 2003 Cost 2004 Cost
First 171 ,000 gallons $193.24 $ 202.90
Next 16,000 gallons 25.92 27.20
Next 56,000 gallons 71 .12 95.20
Next 96,000 gallons 97.92 163.20
Next 661 ,000 gallons 548.63 1 ,123.70
Total = 1,000,000 gallons $936.83 $1,612.20