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Home My WebLink About17-1 AttachmentP res ent ed by : Shaw n Koorn Associate Vice President M ay 20, 2015 Water Rate Up date 2 P urpose of the P res ent ation •P rovid e a su mma ry o f t he water rate st u dy upd ate resu lt s –Revi ew key assu mpt ion •Discu ss p ropo sed rate t ran sit io n plans •Review proposed rates –M ul ti-year rate p lan •Rece ive Board p ol icy direction 3 Sum mary o f t he 2 013 F inan cial Pla n •P rior st udy assumed annua l adjustments of 3% th rou gh out th e time per iod Goal $- $1,00 0 $2,00 0 $3,00 0 $4,00 0 $5,00 0 $6,00 0 $7,00 0 $8,00 0 FY14 FY15 FY1 6 F Y1 7 F Y18 FY19 FY2 0 F Y21 FY22 FY2 3 Wate r Projecte d Cash & R e se rve Balance (i n thousands) Cas h & R e serve B alance s 4 Changes sin ce t he 2 013 S tu dy •State m andated conser vation –Need to achieve 28% savings from 201 3 consum ptio n levels –Achieved a reduction of 1 0% in 2014 –Additio nal 18% reduction in consum ption was built into projections fo r 2015 to meet conservation goal •Results in reduc ed consump tion based revenues •Reduc tion of approximately 2% -3% of total revenues •Accelerated p ipelin e replacements –Inc reased pipeline replacement capital funding needs –Driven by need to reduce u nacco unted fo r water •H elps reduce overall production –Program is funded through existing rates •No new long-term debt 5 D eve lo pm e nt of th e F ina n cial P lan 6 Key Assu mp tion s •Starting point for t he stu dy was the 2015 bud get –Test period for the review was 2015 -20 24 –Escalatio n fac to rs were used to projec t the budget over the test period •Rate revenues were calculated at present rates an d escalated similarly to expenses –Custom er growth estimated at 1% annually –Co nsumption was redu ced by 18 % fo r 2015 and 0% (flat) thereafter •O&M projected at ap proximately 2.9% annu ally •Capital plan was developed based on th e District ’s current CIP –No additional lo ng-term debt was assumed •Developed two (2) scenarios to reflect alternative rate tran sition plans 7 Key Assu mptio ns Cont. – Capital Im prove ment Plan $0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 $4,500,000 $5,000,000 2015 2016 2017 2018 20 19 2020 2021 2022 2023 2024 CIP Summary: Total Projects by Year 2014 Plan Scenario 1 Scenario 2 2013 Study 8 S um mary of the Financial Plan S cenarios 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Annual Capital ($000s) Scenario 1 $2,653 $3,022 $2,952 $3,037 $2,868 $3,213 $3,305 $4,100 $4,397 $4,397 Scenario 2 $2,653 $3,022 $2,659 $2,525 $2,768 $3,213 $3,305 $4,100 $4,397 $4,397 Annual Rate Adjustments Scenario 1 0.0%6.0%5.0%3.0%3.0%3.0%3.0%3.0%3.0%3.0% Scenario 2 0.0%4.0%4.0%4.0%4.0%4.0%4.0%4.0%4.0%4.0% •Differences: •Scenario 1 –Initial year larger rate increases •O nly o ne year with reduced accelerated waterline replacement program •Scenario 2 –Levelized rate adjustments •Three years with reduced accelerated waterline replacement pro gram 9 Pro ject ed E nd ing Res erve Balan ces $0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,00 0,000 2015 2 016 2017 2018 2019 2020 2021 2022 2023 2024 Water Reser ve Fund -Scenario 1 Total Ending Reserve Balances Minimum Fun d Balance $0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,00 0,000 2015 2 016 2017 2018 2019 2020 2021 2022 2023 2024 Water Re serve Fund s -Scen ario 2 Total Ending Reserve B alances Minimum Fund Balance 10 Financial Plan Review : Conclus ions and Recom menda tions •R ate a dju stments a re necessar y to fund the utility –Impact of State mandated conser vation –Need to p rud ently fund cap ital improvem ent needs •Reser ve levels a re projected to reach m inimum fund levels ($5 mill ion) •With either p roposed rate t ran siti on p lan, reser ve levels meet B oard target reser ve levels in year 10 •Foc us for rates is on th e n ext 5 years (P rop . 218) Propo sed Rate Tra nsition Plans 2016 2017 2018 2019 2020 Scenario 1 6.0%5.0%3.0%3.0%3.0% Scenario 2 4.0%4.0%4.0%4.0%4.0% 11 Ra te D e sign 12 Rat e Desig n Ke y Ass um ptio ns •Developed rates for a 5-year period •Consu mption levels reflect conser vatio n requirements –18% red uct ion in 2015 •Maintained cu rrent rate st ruc tu re •Ad ju sted rates “ac ross the board ” –D evelop ed rates for both rate transition plans •Legal req uirements –San Ju an Cap istrano decision •Reviewing the cost o f providing water ser vice •Develo ping an allo cation by tier for residential custom ers •Analysis prov id es the rational of the tier pricing and differential between tier 1 and tier 2 13 P resent a nd P ropos ed Reside ntial Ra tes Scenario 1 Present 2016 2017 2018 2019 2020 Meter Charge 5/8" x 3/4"$57.28 $60.72 $63.75 $65.67 $67.64 $69.66 3/4"57.28 60.72 63.75 65.67 67.64 69.66 1"68.32 72.42 76.04 78.32 80.67 83.09 Consumption Charge 0 -8,000 G allons $0.64 $0.68 $0.71 $0.73 $0.76 $0.78 8,000 + Gallons 0.80 0.85 0.89 0.92 0.94 0.97 Scenario 2 Present 2016 2017 2018 2019 2020 Meter Charge 5/8" x 3/4"$57.28 $59.57 $61.95 $64.43 $67.01 $69.69 3/4"57.28 59.57 61.95 64.43 67.01 69.69 1"68.32 71.05 73.89 76.85 79.92 83.12 Consumption Charge 0 -8,000 G allons $0.64 $0.67 $0.69 $0.72 $0.75 $0.78 8,000 + Gallons 0.80 0.83 0.87 0.90 0.94 0.97 14 Residen tial Bill Com pariso n Average Monthly Residential Bill* Present 2016 2017 2018 2019 2020 Scenario 1 Winter $59.84 $63.43 $66.60 $68.60 $70.66 $72.78 Summer $64.00 $67.84 $71.23 $73.37 $75.57 $77.84 Scenario 2 Winter $59.84 $62.23 $64.72 $67.31 $70.00 $72.80 Summer $64.00 $66.56 $69.22 $71.99 $74.87 $77.87 *Ass umes 3/4“ meter an d 4,000 gallons in winter and 10,000 gallons in summer 15 Pre se nt and Propose d Comm erc ia l Ra tes Scenario 1 Present 2016 2017 2018 2019 2020 Meter Charge 3/4"$57.28 $60.72 $63.75 $65.67 $67.64 $69.66 1"68.32 72.42 76.04 78.32 80.67 83.09 Consumption Charge All Consumption ($/1,000 Gal)$1.57 $1.66 $1.75 $1.80 $1.85 $1.91 Scenario 2 Present 2016 2017 2018 2019 2020 Meter Charge 3/4"$57.28 $59.57 $61.95 $64.43 $67.01 $69.69 1"68.32 71.05 73.89 76.85 79.92 83.12 Consumption Charge All Consumption ($/1,000 Gal)$1.57 $1.63 $1.70 $1.77 $1.84 $1.91 16 Pre se nt and Propose d Zone Charge s Present 2016 2017 2018 2019 2020 Zone 1 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Zone 2 0.35 0.40 0.40 0.45 0.45 0.50 Zone 3 0.70 0.80 0.80 0.90 0.90 1.00 Zone 4 1.05 1.20 1.25 1.35 1.35 1.50 Zone 5 1.40 1.60 1.66 1.80 1.80 2.00 Zone 6 1.75 2.00 2.08 2.25 2.25 2.50 Zone 7 2.10 2.40 2.50 2.70 2.70 3.00 17 Sum mary o f t he Wat er Ra te S tu dy •R ate a dju stments a re necessar y over the next 5-year period –Prud ently fund operating an d capital needs –Impacts of State mandated con ser vation –M aintain m inimum reser ve targets •R ate transiti on w ill var y d epend ing on ca pi tal fu nding levels •P rop osed rates have been develop ed for a 5-year period 18 B oard Disc ussio n