HomeMy WebLinkAbout8 Attachment 1 TDPUD - 2020 Water Rate Study Draft Report_11.09.20
Draft Report
Truckee Donner Public Utility District
2020 Water Rate Study
November 2020
hdrinc.com 2365 Iron Point RoadSuite 300Folsom, CA 95630-8709
(916) 817-4700
November 9, 2020
Mr. Brian Wright
Water Utility Director
Truckee Donner Public Utility District
11570 Donner Pass Road
Truckee, CA 96161
Subject: Comprehensive Water Rate Study Draft Report
Dear Mr. Wright:
HDR Engineering, Inc. (HDR) is pleased to present to the Truckee Donner Public Utility District
(District) the draft report for the 2020 comprehensive water rate study. The District’s
comprehensive water rate study was developed to provide cost-based and equitable rates. This
was accomplished by developing a revenue requirement, cost of service, and proposed rates that
generate sufficient revenue to prudently fund the operating and capital needs of the District.
This report outlines the overall approach used to achieve these objectives, along with our
findings, conclusions, and recommendations. This report was developed utilizing the District’s
accounting, operating, and customer billing records. HDR has relied upon this information to
develop our analyses that form our findings, conclusions, and recommendations. The study is a
continuation of the use of generally accepted methodologies (i.e., AWWA) established in the
District’s 2015 comprehensive water rate study completed by HDR. This report was developed
and documented to provide cost-based, equitable, and defensible rates, compliant with the
requirements of Proposition 218, as it is currently understood.
We appreciate the assistance provided by the District’s management and staff in the
development of this study. More importantly, HDR appreciates the opportunity to provide these
technical and professional services to the District.
Sincerely yours,
HDR Engineering, Inc.
Shawn Koorn
Associate Vice President
Table of Contents i
Truckee Donner PUD – Comprehensive Water Rate Study
Executive Summary ....................................................................................................................1
Introduction ............................................................................................................................1
Overview of the Rate Study Process ........................................................................................1
Key Water Rate Study Results..................................................................................................2
Summary of the Water Revenue Requirement Analysis ...........................................................2
Summary of the Water Cost of Service Analysis .......................................................................5
Summary of the Present and Proposed Water Rate Designs ....................................................6
Water Rate Study Recommendations ....................................................................................10
Summary of the Water Rate Study ........................................................................................10
1 Introduction and Overview ...............................................................................................11
1.1 Introduction ...............................................................................................................11
1.2 Goals and Objectives ..................................................................................................11
1.3 Overview of the Rate Study Process............................................................................12
1.4 Organization of the Study ...........................................................................................12
1.5 Summary ....................................................................................................................12
2 Overview of Water Rate Setting Principles .......................................................................13
2.1 Introduction ...............................................................................................................13
2.2 Generally Accepted Rate Setting Principles .................................................................13
2.3 Determining the Revenue Requirement ......................................................................13
2.4 Analyzing Cost of Service ............................................................................................14
2.6 Designing Water Rates ................................................................................................15
2.7 Economic Theory and Rate Setting .............................................................................15
2.8 Summary ....................................................................................................................16
3 Development of the Revenue Requirement .....................................................................17
3.1 Introduction ...............................................................................................................17
3.2 Determining the Revenue Requirement ......................................................................17
3.3 Establishing a Time Frame and Approach ....................................................................17
3.4 Projecting Rate and Other Miscellaneous Revenues ...................................................18
3.5 Projecting Operation and Maintenance Expenses .......................................................19
3.6 Projecting Capital Funding Needs and Transfer Payments...........................................19
3.7 Projection of Debt Service ..........................................................................................21
3.8 Reserve Funding .........................................................................................................22
3.9 Summary of the Revenue Requirement ......................................................................22
3.10 Reserve Levels ............................................................................................................23
3.11 Debt Service Coverage Ratios .....................................................................................24
3.12 Consultant’s Conclusions ............................................................................................24
Table of Contents
Table of Contents ii
Truckee Donner PUD – Comprehensive Water Rate Study
4 Development of the Cost of Service Analysis................................................................ 4-26
4.1 Introduction ........................................................................................................... 4-26
4.2 Objectives of a Cost of Service Study ...................................................................... 4-26
4.3 Determining the Customer Classes of Service ......................................................... 4-27
4.4 General Cost of Service Procedures ........................................................................ 4-27
4.5 Functionalization and Allocation of Plant in Service ................................................ 4-30
4.6 Functionalization and Allocation of Operating Expenses ......................................... 4-32
4.7 Major Assumptions of the Cost of Service Study ..................................................... 4-32
4.8 Development of Cost-Based Water Rates ............................................................... 4-33
4.9 Development of the Unit Costs for Rate Designs ..................................................... 4-35
4.10 Summary Results of the Cost of Service Analysis ..................................................... 4-39
4.11 Consultant’s Conclusions and Recommendations ................................................... 4-40
4.12 Summary of the Cost of Service Analysis ................................................................. 4-40
5 Development of the Rate Designs ................................................................................ 5-42
5.1 Introduction ........................................................................................................... 5-42
5.2 Rate Design Criteria and Considerations ................................................................. 5-42
5.3 Overview of the Proposed Rate Structures ............................................................. 5-43
5.4 Summary of the Present and Proposed Water Rates............................................... 5-43
5.7 Summary of the Proposed Rate Revenues .............................................................. 5-45
5.9 Water Rate Study Recommendations ..................................................................... 5-46
5.10 Summary of the Water Rate Study .......................................................................... 5-46
Technical Appendix A – Water Technical Analysis .......................................................................
Executive Summary 1
Truckee Donner PUD – Comprehensive Water Rate Study
Executive Summary
Introduction
HDR Engineering, Inc. (HDR) was retained by the Truckee Donner Public Utility District (District)
to conduct a comprehensive water rate study. The objective of the rate study was to review the
District’s operating and capital costs in order to develop a financial plan and cost-based and
equitable rates for the District’s water customers. This study determined the adequacy of the
existing water rates and provided the framework and cost basis for any needed future
adjustments. The District has historically used comprehensive water rate studies to establish
their rates and this study is a continuation of that past practice.
The District owns and operates a water supply, treatment, transmission, and distribution system.
The determination of the total costs associated with providing water supply, treatment,
transmission and distribution of water to the District’s customers has been developed based
upon the District’s accounting, operating, and customer billing records and other relevant
information.
Overview of the Rate Study Process
A comprehensive water rate study uses three interrelated analyses to address the adequacy and
equity of a utility’s rates. These three analyses are a revenue requirement analysis, a cost of
service analysis, and a rate design analysis. These three analyses are illustrated below in Figure
ES - 1.
Figure ES – 1
Overview of the Comprehensive Water Rate Analyses
Revenue Requirement Analysis
Cost of Service Analysis
Rate Design Analysis
Compares the revenues to the expenses of
the utility to determine the overall rate
adjustment required
Allocates the revenue requirement to the
various customer classes of service in a
“fair and equitable" manner
Considers both the level and structure
of the rate design to collect the target
level of revenues
Executive Summary 2
Truckee Donner PUD – Comprehensive Water Rate Study
The above framework for reviewing and evaluating the District’s water rates was utilized in the
development of this study.
Key Water Rate Study Results
The water rate study was developed to establish equitable and proportional rates sufficient to
meet the District’s operating and capital costs. The water rate analysis resulted in the following
findings, conclusions, and recommendations.
A revenue requirement analysis was developed for the projected time period of FY 2021
through FY 2030
The District’s FY 2021 budget was used as the starting point of the analysis
Operation and maintenance expenses are projected to increase at inflationary levels
based on District current and future projections
The capital funding analysis assumes that the water utility will need to issue long‐term
debt in order to funded necessary capital improvements; this estimate of additional
annual debt service maintains the current levels of annual debt service payments as
existing debt is being retired
The revenue requirement analysis resulted in proposed water rate revenue adjustments
to increase rate revenues sufficient to support water operating and capital needs over
the projected time period
A cost of service analysis was developed to review the equity of the existing rates and
proportionally allocate the revenue requirement between the various customer classes
(e.g., rate schedules)
The results of the cost of service analysis provide equitable and proportional unit costs
(i.e., cost basis) which were used to establish the proposed rates
The study has developed proposed rates for the FY 2021 – FY 2025 time period, by
customer class of service (e.g., rate schedule)
Summary of the Water Revenue Requirement Analysis
The revenue requirement analysis is the first analytical step in the development of the water rate
study. This analysis determines the adequacy of the existing water rates. From this analysis, a
determination can be made as to the overall level of rate revenue adjustments needed to provide
adequate and prudent funding for both operating and capital needs.
For this study, the revenue requirement was developed for a projected time period (FY 2021 –
FY 2030) with a rate setting period identified as FY 2021 through FY 2025. Reviewing a multi‐year
time frame is recommended in that it allows the utility to better anticipate future financial
requirements and allow the District to begin planning for these impacts sooner, thereby
minimizing short‐term rate impacts and overall long‐term rates.
The revenue requirement analysis was developed using a “cash basis” methodology. The cash
basis methodology is the most commonly used methodology by public/municipal utilities to set
their revenue requirement. Under a cash basis methodology annual O&M expenses, transfer
payments or taxes, annual debt service, and capital projects funded through rate revenues are
Executive Summary 3
Truckee Donner PUD – Comprehensive Water Rate Study
summed to equal the total revenue requirement. The primary financial inputs in the
development of the District’s revenue requirement analysis were the District’s FY 2021 budget,
FY 2020 billed customer and consumption data, and the District’s water system capital plan
developed as part of the Water Infrastructure Capital Improvement Plan Development
conducted by Farr West Engineering in May 2020.
After the operating and maintenance (O&M) expenses have been projected over the time period
based on annual inflationary indices, the next step is to develop the funding plan for capital
improvement projects (CIP). The proper and adequate funding of capital projects is important to
help minimize rates over time. A general financial guideline states that, at a minimum, a utility
should fund an amount equal to or greater than annual depreciation expense through rates for
capital projects. The most recently available depreciation figure for the District’s water utility
was FY 2019 of approximately $4.5 million. Currently, the District is projected in the capital
finding analysis to fund an amount greater than annual depreciation expense over the projected
time period. The level of rate funded capital developed in the capital funding analysis ranges
from $3.0 million to $6.8 million, increasing in future years to reflect renewal and replacement
funding needs. It is assumed that – in addition to the rate funded capital improvements – the
District will need to utilize other funding sources in order to fully fund the CIP, namely long-term
borrowing to fund the identified capital improvements. Provided below in Table ES - 1 is a
summary of the CIP, including the assumed funding sources, over the five-year rate setting
period.
Table ES – 1
Summary of the Annual Rate Funded Capital ($000)
FY 2021 FY 2022 FY 2023 FY 2024 FY 2025
Total Capital Projects $3,270 $5,300 $6,500 $7,600 $8,100
Plus: Funds Held in Reserve
for Future Projects 0 1,100 0 1,100 0
Less: Debt Issues 0 2,200 0 2,200 0
Less: Other Funding 270 200 1,300 200 1,300
Total Capital Projects $3,000 $4,000 $5,200 $6,300 $6,800
As can be seen, the difference between annual capital improvement needs and rate funded
capital is being funded through other funding sources which includes existing reserves and long-
term debt. The District’s capital plan reflects the capital projects needed to maintain the existing
system and repair or replace deteriorating infrastructure as well as projects related to growth or
redundancy. The full capital improvement plan is found in the Technical Appendix in Exhibit 3.
The revenue requirement analysis for District’s customers was developed to determine the rate
projections based on the specific costs of the District’s water utility. Provided below, in Table ES
– 2, is a summary of the revenue requirement analysis developed for the District’s water utility
as part of the 2020 comprehensive water rate study. A more detailed discussion and analysis of
Executive Summary 4
Truckee Donner PUD – Comprehensive Water Rate Study
the revenue requirement can be found in Section 3 of this report as well as in the Technical
Appendix in Exhibit 3.
Table ES - 2
Summary of the Revenue Requirement Analysis ($000)
FY 2021 FY 2022 FY 2023 FY 2024 FY 2025
Revenues
Rate Revenues $13,128 $13,242 $13,357 $13,473 $13,590
Misc. Revenues 655 609 613 616 617
Total Revenues $13,784 $13,852 $13,970 $14,088 $14,207
Expenses
O & M 10,386 11,189 11,508 11,837 12,176
Rate Funded Capital 3,000 4,000 5,200 6,300 6,800
Annual Debt Service 2,659 1,983 1,982 2,129 2,132
Transfers/Reserve Funding (1,080) (829) (939) (980) (340)
Total Expenses $14,965 $16,343 $17,752 $19,286 $20,768
Bal./(Def.) of Funds ($1,182) ($2,491) ($3,782) ($5,198) ($6,561)
Bal. as a % of Rate Rev. -9.0% -18.8% -28.3% -38.6% -48.3%
Proposed Rate Rev Adjust. 9.0% 9.0% 8.0% 8.0% 7.0%
Add’l Rev. from Rate Adj. $1,182 $2,491 $3,782 $5,198 $6,561
Total Bal./(Def.) of Funds $0 $0 $0 $0 $0
As can be seen, the revenue requirement analysis has summed O&M, rate funded capital, net
debt service and transfers/reserve funding. The total revenue requirement (i.e., expenses) are
then compared to the total revenue sources of the water utility. From this comparison, a balance
(+) or deficiency (-) of funds in each year can be determined. This balance or deficiency of funds
in each year is then compared to the present rate revenues to determine the level of rate
adjustment necessary to meet the revenue requirement in a particular year. It is important to
note, the “Bal. / (Def.) of Funds” row is cumulative. That is to say, any adjustments in the initial
years will reduce the deficiency in the later years. Over this projected time period, the total
deficiency of rate revenue is approximately 48%. To meet the overall revenue needs of the five
year rate period, annual rate adjustments of 9.0% in FY 2021 and FY 2022, followed by 8.0%
annually in FY 2023 and FY 2024, and 7.0% in FY 2025 are proposed.
The above rate revenue adjustments, on a cumulative basis, meet the overall deficiency of 48%
over the five year period reviewed. Based on the revenue requirement analysis developed, HDR
has concluded that the District will need to adjust the level of water rate revenues as noted above
to maintain cost-based rates. HDR has reached this conclusion for the following reasons:
Rate adjustments are necessary to fully fund the Districts capital improvement plan
• The CIP was based on the Farr West Water Infrastructure Capital Improvement Plan
Development
Executive Summary 5
Truckee Donner PUD – Comprehensive Water Rate Study
The proposed rate adjustments maintain the District’s financial health and provide long-
term, sustainable funding levels
Prior to the implementation of the fifth, and final, proposed rate adjustment in FY 2025,
the District should complete a review/update of the water rates
In reaching this conclusion, HDR would recommend that the District adopt the proposed rate
revenue adjustments through FY 2025 in order to provide sufficient funding for the annual
operating expenses and capital improvement program. A more detailed discussion of the
development of the revenue requirement analysis is provided in Section 3 of this report.
Summary of the Water Cost of Service Analysis
A cost of service analysis determines the equitable and proportional allocation of the revenue
requirement to the various customer classes of service (e.g., residential, commercial, and pump
zone charges). The objective of the cost of service analysis is different from determining the
revenue requirement analysis. Whereas a revenue requirement analysis determines the utility’s
overall financial needs, the cost of service analysis determines the equitable and proportional
manner to collect the revenue requirement from each customer class of service (e.g., rate
schedule).
In summary form, the cost of service analysis began by functionalizing the revenue requirement
for the D istrict’s water utility. The functionalized revenue requirement was then allocated into
the various cost components. The individual allocation totals were then distributed to the various
customer classes of service proportionally based on the appropriate distribution factors. The
distributed expenses for each customer class were then aggregated to determine each customer
class’s overall revenue responsibility. Table ES - 3 provides the summary of the cost of service
analysis for the test year.
Table ES - 3
Summary of the Cost of Service Analysis ($000)
Class of Service
Present
Revenues
(FY 2021)
Allocated
Costs
$
Difference
%
Difference
Residential $11,177 $12,288 ($1,112) 9.9%
Commercial 1,405 1,333 72 -5.1%
Pump Zones 546 688 (142) 25.9%
Total $13,128 $14,310 ($1,182) 9.0%
The cost of service study allocates the proportional share of the revenue requirement to each
customer class based on their respective demands on the system and the facilities required to
provide service. The results of the analysis indicate that slight cost differences exist between the
various customer classes of service. It is important to understand that a cost of service analysis
Executive Summary 6
Truckee Donner PUD – Comprehensive Water Rate Study
is based on a projection of customer consumption data based on recent year’s consumption
history.
As noted above, some cost differences exist between the customer classes of service. Given the
requirements of Proposition 218, the cost of service results must be implemented in order to
achieve equitable and proportional rates. A key element of this study is the continuation of cost
of service adjustments to reflect the study results as noted in the 2016 water rate study.
Additionally, it is important to understand that customer characteristics and system operations
vary from year to year. These variations can be further impacted by pandemics, droughts, and
changing weather. As a result, it is important to review the cost of service results continuously
to maintain equitable and cost based rates.
Another key outcome of the cost of service analysis is the development of unit costs (e.g., $ /
customer or $/1,000 gallons). The unit costs provide the cost-basis for the development of the
District’s proposed rates. Provided below in Table ES - 4 is a summary of the unit costs derived
in the cost of service analysis that will be used to develop the proposed rate designs by customer
class.
Table ES – 4
Summary of the Unit Costs
Average Residential Commercial
Fixed Meter Costs $75.74 System Average System Average
Tier 1 Commodity Use $0.99 N/A
Tier 2 Commodity Use $1.40 N/A
All Consumption N/A $1.37
Section 4 of this report provides a detailed discussion of the cost of service analysis conducted
for the District’s water utility and the development of the unit costs.
Summary of the Present and Proposed Water Rate Designs
The final step of a comprehensive rate study process is the design of the proposed water rates
to collect the required level of revenue, based on the results of the revenue requirement and
cost of service analyses. The revenue requirement analysis provided a set of recommendations
related to the level of annual rate adjustments, or the level of total revenues necessary to provide
sufficient funding. The cost of service analysis resulted in recommendations as to how the
revenue is equitably and proportionally collected from each customer classes of service. The unit
costs developed as a part of the cost of service are used as the proposed rates in the first year.
The District’s proposed water rates have been developed with the intent of meeting the legal
requirements of California constitution article XIII D, section 6 (Article XIII D), also known as
Proposition 218. A key component of Article XIII D is the development of rates which reflect the
Executive Summary 7
Truckee Donner PUD – Comprehensive Water Rate Study
cost of providing service and are proportionally allocated among the various customer classes of
service. HDR would point out that there is no single methodology for equitably assigning costs to
the various customer groups. The American Water Works Association (AWWA) M1 Manual
clearly delineates various methodologies which may be used to establish cost-based rates. Article
XIII D does not prescribe a particular methodology for establishing rates, consequently, HDR
developed the District’s proposed water rates based on the AWWA M1 manual methodology to
meet the requirements of Article XIII D and recent legal decisions to provide an administrative
record of the steps taken to establish the District’s water rates.
HDR is of the opinion that the proposed rates comply with legal requirements of Article XIII D.
HDR reaches this conclusion based upon the following:
• The revenue derived from water rates does not exceed the funds required to provide the
property related service (i.e., water service). The proposed rates are designed to collect the
overall revenue requirements of the D istrict’s water utility.
• The revenues derived from water rates shall not be used for any purpose other than that
for which the fee or charge is imposed. The revenues derived from the District’s water rates
are used exclusively to operate and maintain the District’s water system.
• The amount of a fee or charge imposed upon a parcel or person as an incident of property
ownership shall not exceed the proportional costs of the service attributable to the parcel.
This study has focused exclusively on the issue of proportional assignment of costs to
customer classes of service. The proposed rates have appropriately grouped customers into
customer classes of service (residential, commercial, and pump zones) that reflect the varying
consumption patterns and system requirements of each customer class of service. The
grouping of customers and rates into these classes of service creates the equity and fairness
expected under Article XIII D by having differing rates by customer classes of service which
reflect both the level of revenue to be collected by the utility, but also the manner in which
these costs are incurred and equitably assigned to customer classes of service based upon
their proportional impacts and burdens on District’s the water system and water resources.
Given the requirements to develop rates based on cost of service principles, the unit costs in
Table ES - 4 were used to design the proposed water rates for the District’s customer classes of
service. The District currently has established customer classes of service that were reviewed and
discussed with District staff in the development of this study. The customer classes of service
and corresponding rate schedules reflect the various customer types served by the District. All
customers are charged a fixed monthly meter charge, which varies by meter size to reflect the
demands (costs) that larger meters place on the system. As a point of reference, the monthly
meter charge is the same, by meter size, for all customers regardless of customer type. The
residential consumption charge is an increasing two block tiered rate structure. The block sizes
are based on the typical customer consumption patterns and provides 8,000 gallons per month
(billing period) in the first tier. This level of usage, based on the District’s customer specific data,
provides ample consumption in the winter period, or when outside watering needs are minimal.
All consumption over the first tier is charged at a higher rate (increasing block structure) to reflect
the cost of providing service at higher levels of consumption and capacity use. For commercial
customers, the rate structure has a monthly fixed meter charge and a consumption charge which
Executive Summary 8
Truckee Donner PUD – Comprehensive Water Rate Study
is a uniform rate structure. The use of uniform rate structure for commercial customers is a
common industry approach given the wide variations of types of commercial customers and their
total monthly usage patterns. Even with these variation, the overall customer characteristics are
similar within the commercial customer class. Finally, the District assesses pump zone charges
to reflect the costs associated with pumping water into higher (elevation) pressure zones. The
analysis is based on the average cost of pumping and maintenance in total, and then applied to
each pump zone, or the number of zones water must be pumped through to reach the pressure
zone providing service. The pump zone charges are applied to all customers in the applicable
pump zones. Provided in Table ES - 5 is a summary of the current and proposed water rates over the five year
rate setting period.
Executive Summary 9
Truckee Donner PUD – Comprehensive Water Rate Study
Table ES - 5
Summary of the Current and Proposed Water Rates
Current
Rate FY 2021 FY 2022 FY 2023 FY 2024 FY 2025
Residential
Fixed Charge $/Month
5/8" x 3/4" $69.66 $75.74 $82.55 $89.16 $96.29 $103.03
3/4" 69.66 75.74 82.55 89.16 96.29 103.03
1" 83.09 90.34 98.47 106.35 114.85 122.89
Commodity Charge $/1,000 gal.
0 - 8,000 gal (block 1) $0.78 $0.99 $1.08 $1.16 $1.26 $1.34
8,000 + gal (block 2) 0.97 1.40 1.53 1.65 1.78 1.91 Commercial
Fixed Charge $/Month
5/8" x 3/4" $69.66 $75.74 $82.55 $89.16 $96.29 $103.03
3/4" 69.66 75.74 82.55 89.16 96.29 103.03
1" 83.09 90.34 98.47 106.35 114.85 122.89
1-1/2" 116.80 126.99 138.42 149.49 161.45 172.75
2" 160.58 174.59 190.30 205.52 221.97 237.50
3" 268.81 292.26 318.56 344.05 371.57 397.58
4" 384.62 418.17 455.80 492.27 531.65 568.87
6" 576.93 627.25 683.71 738.40 797.48 853.30
8" 721.16 784.07 854.63 923.00 996.84 1,066.62
Commodity Charge -
$/1,000 gallons $1.91 $1.37 $1.49 $1.61 $1.74 $1.86 Pump Zone Charges
Zone 1 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Zone 2 0.60 0.75 0.82 0.89 0.96 1.03
Zone 3 1.20 1.50 1.64 1.77 1.91 2.04
Zone 4 1.80 2.25 2.45 2.65 2.86 3.06
Zone 5 2.40 3.00 3.27 3.53 3.81 4.08
Zone 6 3.00 3.75 4.09 4.42 4.77 5.10
Zone 7 3.60 4.50 4.91 5.30 5.72 6.12
As can be seen, the proposed rates have been adjusted to reflect the overall revenue needs of
the water utility based on the revenue requirement and cost of service analysis and have been
adjusted by customer class based on the unit costs from the cost of service analysis.
Section 5 of this report provides a detailed discussion of the current and proposed water rates
along with a component by component summary of the proposed water rates for FY 2021 – FY
2025.
Executive Summary 10
Truckee Donner PUD – Comprehensive Water Rate Study
Water Rate Study Recommendations
Based on the results of the water rate study, HDR recommends the following:
Rate revenue adjustments are necessary to prudently fund operating expenses as well as
necessary capital investment in renewal and replacement of the existing system
Water rates should be adjusted 9% in FY 2021 and FY 2022, 8% in FY 2023 and FY 2024,
and 7% in FY 2025.
The proposed rates reflect the results of the cost of service analysis and the proportional
allocation of costs to the various customer classes of service
Prior to the implementation of the fifth, and final, proposed rate adjustment the District
should complete a review of the water rates
Summary of the Water Rate Study
This completes the summary of the development of the comprehensive rate study for the
District’s water utility. The focus of this study has been the prudent and adequate funding of
water utility operating and capital needs as well as the development of proportional and
equitable proposed rates for a five-year period. A full and complete discussion of the
development of the District’s comprehensive water rate study can be found in following sections
of this report.
Introduction & Overview 11
Truckee Donner PUD – Comprehensive Water Rate Study
1 Introduction and Overview
1.1 Introduction
HDR Engineering, Inc. (HDR) was retained by the Truckee Donner Public Utility District (District)
to conduct a comprehensive water rate study. The objective of a comprehensive water rate study
is to develop equitable and proportional water rates which are in compliance with the legal
requirements of Proposition 218. This is acco mplished by first reviewing and analyzing the
District’s water operating and capital costs, and developing a projection of the overall revenue
requirements of the utility. Then, the District’s revenue requirements are equitably and
proportionally to the District’s customer classes of service (e.g., residential, commercial). The
findings and conclusions from the cost allocation process is then used to develop the District’s
proposed water rates which are reflective of how the District’s costs are incurred. The end result
of the comprehensive rate study process is cost-based and equitable water rates reflective of the
District’s specific costs.
The District owns and operates a water system which is comprised of water supply, treatment,
transmission, and distribution facilities. The determination of the total costs associated with
providing water supply , treatment, transmission and distribut ion of water to the District’s
customers has been developed based on the District’s accounting, operating, and customer
billing records and other relevant information.
1.2 Goals and Objectives
The District had a number of key objectives in developing the water rate study. These key
objectives provided a framework for policy decisions contained within the rate study. These key
objectives were as follows:
Develop the study in a manner that is consistent with the principles and methodologies
established by the American Water Works Association (AWWA), M1 Manual, Principles of
Water Rates, Fees, and Charges
Review the District’s rates utilizing “generally accepted” rate making methodologies to
determine adequacy and equity of the utility rates, while recognizing and acknowledging the
specific and unique characteristics of the District’s system
Meet the District’s financial planning criteria as it relates to legally required debt service
coverage ratios, adequate funding of capital infrastructure, and maintenance of adequate
and prudent reserve levels
Develop a final proposed rate transition plan which adequately supports the utility’s funding
requirements, while attempting to minimize overall impacts to rates.
Provide proposed rates designed to meet the legal requirements of Article XIII D and recent
legal decisions related to Article XIII D.
Introduction & Overview 12
Truckee Donner PUD – Comprehensive Water Rate Study
1.3 Overview of the Rate Study Process
The rates a utility charges must be set at a level where a utility’s operating and capital expenses
are met with the revenues received from customers. This is an important point, as failure to
achieve this objective may lead to insufficient funds to maintain system integrity. To evaluate
the adequacy of the existing rates, a comprehensive rate study is often performed. A
comprehensive water rate study consists of three interrelated analyses. Figure 1 - 1 below
provides an overview of these analyses.
Figure 1 – 1
Overview of the Comprehensive Water Rate Analyses
The above framework was utilized for reviewing and evaluating rates the District’s water utility.
1.4 Organization of the Study
This report is organized in a sequential manner that first provides an overview of utility rate
setting principles, followed by sections that detail the specific steps used to review the District’s
water rates. The following sections comprise the District’s water rate study report:
• Section 2 – Overview of Water Rate Setting Principles
• Section 3 – Development of the Revenue Requirement Analysis
• Section 4 – Development of Cost of Service Analysis
• Section 5 – Development of the Proposed Rate Designs
A Technical Appendix is attached at the end of this report, which details the various technical
analyses that were undertaken in the preparation of the District’s comprehensive water study.
1.5 Summary
This report will review the comprehensive water rate analyses prepared for the District. This
report has been prepared utilizing generally accepted water rate setting techniques.
Revenue Requirement Analysis
Cost of Service Analysis
Rate Design Analysis
Compares the revenues to the expenses of
the utility to determine the overall level of
rate adjustment required
Allocates the revenue requirement to the
various customer classes of service in a
“fair and equitable" manner
Considers both the level and structure
of the rate design to collect the target
level of revenues
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2 Overview of Water Rate Setting Principles
2.1 Introduction
This section of the report provides background information about the water rate setting process,
including descriptions of generally accepted principles as outlined in the American Water Works
Association M1 Manual (AWWA M1), types of utilities, methods of determining the revenue
requirement, cost of service analysis, and rate design. This information is useful for gaining a
better understanding of the details presented in Sections 3 through 5 of this report.
2.2 Generally Accepted Rate Setting Principles
As a practical matter, all utilities should consider setting their rates around some generally
accepted or global principles and guidelines. Utility rates should be:
Cost-based, equitable, and set at a level that meets the utility’s full revenue requirement
Easy to understand and administer
Designed to conform to generally accepted rate setting techniques
Stable in their ability to provide adequate revenues for meeting the utility’s financial,
operating, and regulatory requirements
Established at a level that is stable from year-to-year from a customer’s perspective
2.3 Determining the Revenue Requirement
Most public utilities use the “cash basis”1 methodology or approach for establishing their
revenue requirement and, ultimately, their rates. The cash basis methodology is well
documented in rate setting literature. The methodology conforms to most public utility
budgetary requirements and, additionally, the calculation is easy to understand. A public utility
totals its cash expenditures for a period of time to determine required revenues. The revenue
requirement for a public utility is usually comprised of the following costs or expenses:
• Total Operating Expenses: This includes a utility’s operation and maintenance (O&M)
expenses, plus any applicable taxes or transfer payments. Operation and maintenance
expenses include the labor, benefits, materials, electricity, chemicals, supplies, etc.,
needed to keep the utility functioning.
• Total Capital Expenses: Capital expenses are calculated by adding debt service payments
(principal and interest) to capital improvement projects financed with rate revenues. In
lieu of inc luding capital improvement projects financed with rate revenues, a utility
sometimes includes depreciation expense or annual renewal and replacement costs to
stabilize the annual revenue requirement.
1 “Cash basis” as used in the context of rate setting is not the same as the terminology used for accounting
purposes and recognition of revenues and expenses. As used for rate setting, “cash basis” simply refers to the
specific cost components to be included within the revenue requirement analysis.
Overview of Water Rate Setting Principles 14
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Under the cash basis approach, the sum of the total O&M expenses plus the total capital
expenses equals the utility’s revenue requirement during any selected period of time (historical
or projected).
Note that the two portions of the capital expense component (debt service and capital
improvement projects financed from rates) are necessary under the cash basis methodology
because utilities generally cannot finance all their capital facilities with long-term debt. At the
same time, it is often difficult to pay for all capital projects (capital expenditures) on a “pay-as-
you-go” basis given that some major capital projects may have significant rate impacts upon a
utility, even when financed with long-term debt. Many utilities have found that some
combination of pay-as-you-go funding and long-term financing will often lead to minimization of
rate increases (impacts) over time.
As noted, public utilities typically use the cash basis methodology or approach to establish their
revenue requirements. An exception occurs if a public utility provides service to a wholesale or
large contract customer. In this situation, a public utility could use the “utility basis” approach
(see Table 2 - 1) to earn a fair return on the investment needed to serve the wholesale or large
contract customer.
Table 2 – 1
Cash Versus Utility Basis Comparison
Cash Basis Utility Basis (Accrual)
+ O&M Expenses + O&M Expenses
+ Taxes/Transfer Payments + Taxes/Transfer Payments
+ Capital Improv. Funded From Rates
(≥ Depreciation Expense) + Depreciation Expense
+ Debt Service (Principal + Interest) + Return on Investment
= Total Revenue Requirement = Total Revenue Requirement
The District’s study developed herein has used the “cash basis” methodology to establish the
District’s total revenue requirements. This aspect of the study is discussed in more detail in
Section 3.
2.4 Analyzing Cost of Service
After the total revenue requirement is determined, it is equitably allocated and proportionally
distributed to the users of the service. This process, developed through a cost of service analysis,
reflects the cost relationships for producing and delivering water services to the utility’s
customers. A cost of service analysis is composed of three analytical steps:
1. Costs are functionalized or grouped into the various cost categories related to providing
service (e.g., supply, treatment, transmission, distribution, pumping, etc.). This step is
largely accomplished by the utility’s accounting system.
Overview of Water Rate Setting Principles 15
Truckee Donner PUD – Comprehensive Water Rate Study
2. The functionalized costs are then allocated to specific cost components. Allocation refers
to the arrangement of the functionalized data into cost components. For example, a
water utility’s costs – such as for the District ’s in this study - are typically allocated as
commodity (average day), customer (peak day), customer, or fire protection-related.
3. Once the costs are allocated into components, they are proportionally distributed to the
customer classes of service (residential, commercial, industrial, etc.). The distribution is
based on each customer class’ relative contribution to the cost component (i.e., benefits
received from and burdens placed on the system and its resources). For example,
customer-related costs are proportionally distributed to each class of service based on
the total number of customers in that class of service, relative to all other customer
classes of service. Once the total costs (i.e., revenue requirement) are equitably
distributed , the revenues from each customer class of service required to achieve cost-
based rates can be determined.
The District developed a cost of service analysis as a part of this study. This aspect of the study
is discussed in more detail in Section 4.
2.6 Designing Water Rates
Rates that meet the utility’s cost-based and equitable objectives are designed based upon the
results and findings from the revenue requirement and cost of service analyses. Using the cost
information from these two analyses results in rates that are strictly cost-based, equitable and
proportional. The average unit costs (i.e., cost-based rates) from the cost of service does not
consider or take into account any other non-cost based goals and objectives (e.g., conservation,
economic development, ability to pay, revenue stability). In designing the final proposed rates,
factors such as ability to pay, continuity of past rate philosophy, economic development, ease of
administration, and customer understanding may typically be taken into consideration.
However, the proposed rates must take into consideration each customer class’s proportional
share of costs allocated through the cost of service analysis to meet the legal requirements of
establishing the proposed rates. The development of the District’s proposed water rate designs
are discussed in more detail in Section 5. 2.7 Economic Theory and Rate Setting
One of the major justifications for a comprehensive rate study is founded in economic theory.
Economic theory suggests that the price of a commodity must roughly equal its cost if equity
among customers is to be maintained. This statement’s
implications on utility rate designs are significant. For example, a
water utility usually incurs capacity-related costs to meet summer
outdoor or non-domestic watering needs. It is presumed, then,
that the customers who create excessive peak demands on the
system - and create the need for upsized water system
infrastructure - should pay their proportional share of the costs
related to the over-sizing of facilities to meet peak use
requirements. When costing and pricing techniques are refined, customers have a more accurate
“Economic theory
suggests that the price of
a commodity must
roughly equal its cost if
equity among customers
is to be maintained.”
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Truckee Donner PUD – Comprehensive Water Rate Study
understanding of what the commodity costs to produce and deliver. This basis pricing technique
has been incorporated and used within this study. 2.8 Summary
This section of the report has provided a brief introduction to the general principles, techniques,
and economic theory used to set water rates. These principles and techniques provide the
theoretical and technical basis for the analyses used within the District’s water rate study.
Development of the Revenue Requirement 17
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3 Development of the Revenue Requirement
3.1 Introduction
The development of a revenue requirement analysis is the first analytical step in the three-step
comprehensive rate study process. This section of the report discusses the development of the
District’s water revenue requirement. The District’s revenue requirement analysis was
developed using the District’s revenue, expense and customer data for their water system.
The revenue requirement analysis developed herein determines the adequacy of the District’s
overall water rates at current rate levels. From this analysis, a determination can be made as to
the overall level of rate revenue adjustment needed to provide adequate and prudent funding
for both operating and capital expenses. HDR developed an independent analysis based on
information provided by the District as part of the review.
3.2 Determining the Revenue Requirement
In developing the District’s water revenue requirement, the water
utility must financially “stand on its own” and be properly funded.
That is, no transfers from other District funds occur to subsidize
the District’s water utility. As a result, the revenue requirement
analysis, as developed herein, assumes the full and proper funding
needed to operate and maintain the District’s water system on a
financially sound and prudent basis.
3.3 Establishing a Time Frame and Approach
The first step in calculating the revenue requirement for the District’s water utility was to
establish a time period or time frame for the revenue requirement analysis. For this study, the
revenue requirement was developed for a 10-year time period (FY 2021 – FY 2030). This time
frame was composed of the FY 2020 and FY 2021 budgets which were projected through FY 2030.
While revenues and expenses were projected for a ten-year period, the focus for rate setting
purposes was the immediate five-year period of FY 2021 – FY 2025. Reviewing a multi-year time
period is recommended in order to attempt to identify any major financial impacts that may be
on the horizon. By anticipating future financial requirements sooner, the District can begin
planning for these changes, thereby minimizing short-term rate impacts and likely overall long-
term rate levels.
The second step in determining the revenue requirement was to decide on the basis of
accumulating costs. In this particular case, for the revenue requirement analysis a cash basis
methodology or approach was utilized. As noted in Section 2, the cash basis methodology is the
most common methodology used by public/municipal utilities to establish their revenue
requirement. This is also the methodology that the District has used in prior rate studies to
determine its water revenue requirement. Table 3 - 1 provides a summary of the cash basis
“In developing the
District’s water revenue
requirement, the water
utility must financially
“stand on its own” and be
properly funded.”
Development of the Revenue Requirement 18
Truckee Donner PUD – Comprehensive Water Rate Study
approach and details the cost components used to develop the District’s water revenue
requirement.
Table 3 – 1
Overview of the District’s “Cash Basis” Revenue Requirements
+ Water Operation and Maintenance Expenses
+ Rate Funded Capital
+ Debt Service (Principal + Interest) – Existing and Future
± Change in Working Capital
= Total Water Revenue Requirement
− Miscellaneous Revenues
= Net Revenue Requirement (Balance Required from Water Rate Revenues)
Given a time period around which to develop the revenue requirement and a method to
accumulate the costs, the focus shifts to the development and projection of the District’s
revenues and expenses.
The primary financial inputs in the development of the revenue requirement were the District’s
FY 2020 and FY 2021 budget documents, recent billed customer and consumption data, and the
current Water Infrastructure Capital Improvement Plan Development conducted by Farr West
Engineering. Presented below is a detailed discussion of the steps and key assumptions
contained in the development of the of the District’s water revenue requirement analysis.
3.4 Projecting Rate and Other Miscellaneous Revenues
Once the method and time period for developing the revenue requirement was established, the
next step is to develop a projection of the water rate revenues, at present rate levels. In general,
this process involved developing projected billing units (i.e., meter size, billed consumption) for
each customer group or rate schedule (i.e., residential and commercial). The billing units for each
customer group were then multiplied by the current adopted water rates. This method of
independently calculating revenues links the projected revenues used within the analysis to the
projected billing units. It also helps to confirm that the billing units used within the study are
reasonable for purposes of projecting future revenues, equitably and proportionally distributing
costs and, ultimately, establishing proposed rates.
Development of the Revenue Requirement 19
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The District currently has separate rate schedules for its residential and commercial customers.
All customers have a fixed charge by service meter size and a variable consumption charge. The
consumption charge for residential customers is
a two-block increasing rate structure. The
commercial consumption charge is a uniform
rate. In addition, customers may be charged a
pump zone charge which reflects the cost of
pumping water to higher pressure zones. The
majority of the District’s water rate revenues are
derived from the residential customer class. In
total, the District is projected to receive
approximately $13.1 million in rate revenue in FY
2021. The rate study has assumed a conservative level of customer growth that at 1.0% / year
for the review period. By FY 2025 the rate revenues, given assumed growth and assuming no rate
adjustments, are projected to be approximately $13.6 million.
In addition to the rate revenues described above, the District also receives miscellaneous water
revenues. These are revenues related to interest earnings, other miscellaneous revenues,
standby revenues, and rents. In total, the District is projected to receive approximately $650,000
in miscellaneous revenues in FY 2021. This amount of miscellaneous revenues is anticipated to
remain relatively stable over the projected five-year time period.
On a combined basis, taking into account the water rate revenues and the miscellaneous
revenues, the District’s water utility has total projected revenues of approximately $13.8 million
in FY 2021 which is projected to increase to approximately $14.2 million by FY 2025. 3.5 Projecting Operation and Maintenance Expenses
Operation and maintenance (O&M) expenses are incurred by the District to provide water service
(supply, treatment, transmission and distribution services). This includes the daily operation and
maintenance of the existing infrastructure. The District provided detailed budgeted O&M
expenses and projections of known changes to budgeted O&M expenses as a part of this study.
Using the FY 2020 and FY 2021 O&M budget, O&M expenses were projected over the review
period using projected escalation factors. T he escalation factors were developed based on
assumed annual inflation and the recent experience of the District and the general economy. The
total O&M expenses for the District are approximately $10.4 million based on the FY 2021
budget. Over the planning horizon, the total O&M expenses for the D istrict are projected to
increase to approximately $12.2 million by FY 2025 based on assumed inflationary impacts.
3.6 Projecting Capital Funding Needs and Transfer Payments
A key component in the development of the water revenue requirement was properly and
adequately funding capital improvement needs for the infrastructure of the system. One of the
major issues facing utilities across the U.S. is the amount of renewal and replacement (R&R)
capital improvement needs. In addition, utilities often face funding pressure from
growth/expansion-related improvements and meeting unfunded regulatory requirements and
Development of the Revenue Requirement 20
Truckee Donner PUD – Comprehensive Water Rate Study
mandates. The proper and adequate funding of capital projects is an important issue for all water
utilities and is not just a local issue or concern of the District.
In general, there are three general types of capital projects that a utility may need to fund. These
include the following types:
Renewal and Replacement - Renewal and replacement projects are essentially projects
required for maintain the existing facilities and system that is in place today. As the existing
plant or pipelines become worn out, obsolete, etc., the utility should be making continuous
(annual) investments to maintain the integrity of the facilities.
Growth / Capacity Expansion - A utility may need to make capital investments to add or
expand the capacity of facilities needed to accommodate future capacity needs (customers).
Regulatory-Related - The last type of capital project may be a function of a regulatory
requirement in which the Federal or State government mandates the need for an
improvement to the system to meet a regulatory standard. These regulatory-related projects
are often unfunded mandates.
Understanding these different types of capital projects is important because it aids in explaining
and helps to understand why capital improvement costs are increasing and driving necessary
revenue adjustments. In addition, and more importantly, the way in which projects are funded
may vary by the type of capital project. For example, renewal and replacement projects may be
paid for via rates and funded on a “pay-as-you-go” basis. In contrast to this, growth or capacity
expansion projects may be funded via the collection of development or water connection fees
(i.e., growth-related charges) in which new development pays a proportional and equitable share
of the cost of facilities necessary to serve their respective development (impact). Finally,
regulatory projects may be funded by a variety of different means, which may include rates, long-
term debt, grants, etc.
While the above discussion appears to precisely divide capital projects into three clearly defined
categories, the reality of working with specific capital projects may be more complex. For
example, a pump may be replaced, but while being replaced, it is up-sized to accommodate
greater capacity to serve increasing demands or new development. There are many projects that
share these “joint” characteristics.
For purposes of developing the capital projects funding plan, the District provided its long-term
capital improvement plan (CIP). In addition, the District recently completed the Water
Infrastructure Capital Improvement Plan Development which provided a listing of long-term
capital projects that address deficiencies and improvements to the water system. A review and
discussion of the capital funding needs was held with the District’s Board to review and develop
a rate transition plan to adequately fund annual capital improvement needs.
Provided below in Table 3 - 2 is a summary of the capital funding plan based on discussion with
the District Board and identified in the Water Capital Improvement Plan. As noted, the focus of
the District’s water rate study was on the five-year period of FY 2021 – FY 2025 for rate setting
purposes. The capital plan detail shown in Table 3-2 has been simplified for summary purposes.
Exhibit 4 in the Technical Appendix details the individual capital projects and identified funding
sources through FY 2030.
Development of the Revenue Requirement 21
Truckee Donner PUD – Comprehensive Water Rate Study
Table 3 – 2
Summary of the Annual Rate Funded Capital ($000)
FY 2021 FY 2022 FY 2023 FY 2024 FY 2025
Total Capital Projects $3,270 $5,300 $6,500 $7,600 $8,100
Plus: Funds Held in Reserve
for Future Projects 0 1,100 0 1,100 0
Less: Debt Issues 0 2,200 0 2,200 0
Less: Other Funding 270 200 1,300 200 1,300
Total Capital Projects $3,000 $4,000 $5,200 $6,300 $6,800
As can be seen in Table 3 - 2, the overall level of capital improvements varies from year-to-year,
increasing to meet the overall capital replacement needs as outlined in the capital improvement
plan (Farr West). The capital improvements are primarily related to renewal and replacement
needs. While the total amount required to fund projects may vary from year-to-year, the rate
study has attempted to provide a consistent annual funding source for capital improvements (i.e.,
rate revenues). In this case, rates will annually fund $3.0 - $6.8 million annually (as highlighted
in Table 3 - 2). To fund the remaining capital needs, vehicle reserves, along with intermittent
long-term borrowing will fund the remaining amount.
A desirable and recommended minimum funding target for rate funded capital is an amount
equal to or greater than annual depreciation expense. The
District’s annual depreciation expense in 2019 was approximately
$4.5 million. This financial plan will move the District to funding
which is approximately 1.5 times depreciation expense. It is
important to note and understand that annual depreciation
expense is not the same as replacement cost. Thus, funding an
amount which exceeds annual depreciation expense is both
prudent and appropriate. In developing this financial plan, HDR
and the District have attempted to minimize rate impacts while
providing adequate funding for the planned capital improvement projects of the water utility.
3.7 Projection of Debt Service
The District currently has several outstanding long-term debt issues. These include the pipeline
COP, DWR-SRF, and DWR Prop 55. The debt service payments associated with the pipeline COP
is incurred throughout the projected time period and is funded, in part, through annual rate
revenues, facility fees, and assessment revenues. The DWR-SRF is funded through assessment
revenues and is fully paid in FY 2025. The DWR Prop 55 loan is fully paid in FY 2021. In total,
these issues have an annual debt service payment of approximately $2.6 million in FY 2021,
reducing to $2.1 million in FY 2025 as the DWR Prop 55 is fully paid. As noted, facility fees and
assessment revenues are used to fund portions of the existing debt which reduces the impact to
rates. Net debt service in FY 2021 is $1.4 million reducing to $575,000 in FY 2025 when only
“A desirable and
recommended minimum
funding target for rate
funded capital is an
amount equal to or
greater than annual
depreciation expense.”
Development of the Revenue Requirement 22
Truckee Donner PUD – Comprehensive Water Rate Study
reviewing water rate revenue funded debt service (debt less facility fee and assessment
revenues).
As shown in Table 3 - 2, The District is planning to issue additional (new) long-term debt over the
FY 2021 – FY 2025 period. This is estimated to occur every other year starting in FY 2022 with a
total of $2.2 million per issuance. As noted, this level of debt issuance is being planned to meet
the overall capital funding needs. This additional debt adds approximately $150,000 per issuance
or about $450,000 of additional annual debt service costs by FY 2025.
As a point of reference, HDR is not providing municipal advice as it relates to bonds, terms, or
structures of debt issuances. Rather, this rate study has identified projections of future funding
needs and utilized conservative long-term debt terms for financial modeling/planning purposes,
based on discussions with District staff.
3.8 Transfers
The final component of the revenue requirement are transfers into the water fund, or out of the
water fund. Transfers in reflect the facility fees and assessment revenues to offset annual debt
service payments. The transfers out are the annual transfer to the vehicle reserve and transfer
of funds to the capital fund for future years capital funding needs.
3.9 Summary of the Revenue Requirement
Given the above projections of revenue and expense components, a summary of the District’s
water revenue requirement analysis can be developed. In developing the revenue requirement
analysis, consideration was given to the financial planning considerations of the D istrict. In
particular, emphasis was placed on minimizing rates while adequately funding the operational
activities and capital improvement needs throughout the review period. Presented below in
Table 3 - 3 is a summary of the District’s water revenue requirement based on projected expenses
and current rates. Detailed exhibits of this analysis can be found in the Technical Appendices in
Exhibits 1 - 7.
Development of the Revenue Requirement 23
Truckee Donner PUD – Comprehensive Water Rate Study
Table 3 - 3
Summary of the Revenue Requirement Analysis ($000)
FY
2021
FY
2022
FY
2023
FY
2024
FY
2025
Revenues
Rate Revenues $13,128 $13,242 $13,357 $13,473 $13,590
Misc. Revenues 655 609 613 616 617
Total Revenues $13,784 $13,852 $13,970 $14,088 $14,207
Expenses
O & M $10,386 $11,189 $11,508 $11,837 $12,176
Rate Funded Capital 3,000 4,000 5,200 6,300 6,800
Annual Debt Service 2,659 1,983 1,982 2,129 2,132
Transfers/Reserve Funding (1,080) (829) (939) (980) (340)
Total Expenses $14,965 $16,343 $17,752 $19,286 $20,768
Bal./(Def.) of Funds ($1,182) ($2,491) ($3,782) ($5,198) ($6,561)
Bal. as a % of Rate Rev. -9.0% -18.8% -28.3% -38.6% -48.3%
Proposed Rate Adjustment 9.0% 9.0% 8.0% 8.0% 7.0%
Add’l Rev. from Rate Adj. $1,182 $2,491 $3,782 $5,198 $6,561
Total Bal./(Def.) of Funds $0 $0 $0 $0 $0
As can be seen, the revenue requirement has summed the O&M, rate funded capital, net debt
service, and transfer/reserve funding. The total revenue requirements (i.e., expenses) are then
compared to the total revenues which include the rate revenues - at present rate levels - and
other miscellaneous revenues. From this comparison, a balance or deficiency of funds in each
year can be determined. This balance or deficiency of funds is then compared to the rate
revenues to determine the level of rate adjustment needed to meet the revenue requirement. It
is important to note the “Bal. / (Def.) of Funds” row is cumulative. That is, any adjustments in the
initial years will reduce the deficiency in the later years.
Based on the revenue requirement analysis developed for the District’s water utility, HDR has
concluded that the overall level of rate revenues will need to be adjusted over the next five years
(FY 2021 – FY 2025) to maintain prudent funding of capital replacement needs and fund annual
operating and maintenance expenses. As a part of the analysis, a rate transition plan has been
developed. As can be seen above in Table 3 – 3, the proposed annual rate adjustments (blue
shaded line) have been developed to adjust rates over the five-year period and meet the
operating and capital needs of the District’s water utility. These adjustments will also maintain
strong financial indicators/metrics as additional long-term borrowing is issued to fund a portion
of the District’s capital improvement needs.
3.10 Reserve Levels
Another key element of determining the financial health and sustainability of the District’s water
utility is a review of the level of available reserve levels after the proposed rate adjustments.
Utilities generally have different reserves, each with a different and specific purpose. Typically,
Development of the Revenue Requirement 24
Truckee Donner PUD – Comprehensive Water Rate Study
a utility will maintain an operating reserve, capital reserve, connection fee reserve and, in some
cases, an emergency or rate stabilization reserve. Each of these funds can have a minimum
ending balance that, if reached or falls below, is a signal that the District should review the
revenue sources associated with each fund. The minimum ending balances will vary depending
on the purpose or objective of the fund and the expected revenue sources.
For the District, there are five separate funds. These are the operating cash fund, operating
reserve fund, vehicle reserve fund, deferred liability reserve, and facility fee reserve. Each of
these funds was reviewed during the development of the rate study process with the focus being
on the operating cash fund given that this reserve is the primary funding source for operating
and capital needs. The target minimum balance for this fund is based on 180 days of O&M. Over
the course of the time period, the operating cash fund is increasing to meet target levels. Based
on the proposed revenue adjustments, the operating cash fund will reach the target minimum in
FY 2028.
3.11 Debt Service Coverage Ratios
When long-term debt is issued, and specifically for municipal revenue bonds, the District enters
into legal agreements that require a specific level of revenue be generated each year in excess of
O&M expenses and annual debt service payments. As noted previously, the District has several
outstanding debt issuances. Generally, the financial markets require a minimum coverage ratio
of 1.25 times. In other words, the revenue available for debt service, after O&M is at least 1.25
times the amount of the annual debt service payment.
Given this legal minimum, utilities often target for financial planning purposes a coverage ratio
greater than the required minimum. Typically, this maybe 1.30 times to 1.50 times to account
for potential fluctuations in revenues and expenses. Provided in below Table 3 - 4 is a summary
of the debt service coverage calculations for the District’s water utility before and after the
proposed rate adjustments shown in Table 3-3.
Table 3 - 4
Summary of the Debt Service Coverage Ratios
FY 2021 FY 2022 FY 2023 FY 2024 FY 2025
Before Rate Revenues Adjustment 1.28xx 1.34xx 1.24xx 1.06xx 0.95xx
After Rate Revenue Adjustment 1.72xx 2.60xx 3.15xx 3.50xx 4.03xx
As can be seen in Table 3 - 4, with the proposed rate adjustments, the District is meeting
minimum target debt service coverage ratios with the proposed revenue adjustments.
3.12 Consultant’s Conclusions
The revenue requirement developed above for the District’s water utility has indicated the need
for annual rate revenue increases to adequately fund the District’s water utility operating and
Development of the Revenue Requirement 25
Truckee Donner PUD – Comprehensive Water Rate Study
capital needs. To meet the overall revenue needs of the five year rate period, annual rate
adjustments of 9.0% in FY 2021 and FY 2022, followed by 8.0% annually in FY 2023 and FY 2024,
and 7.0% in FY 2025 are proposed.
The above rate adjustments, on a cumulative basis, meet the overall need for a 48% rate
adjustment over the five-year time period reviewed. Based on the revenue requirement analysis
developed, HDR has concluded that the District will need to adjust the level of water rate
revenues as noted above to maintain cost-based rates. HDR has reached this conclusion for the
following reasons:
Rate adjustments are necessary to fully fund the District’s capital improvement plan
• The CIP was based on the Farr West Water Infrastructure Capital Improvement Plan
Development
The proposed rate adjustments maintain the District’s financial health and provide long-
term, sustainable funding levels
Prior to the implementation of the fifth, and final, proposed rate adjustment in FY 2025,
the District should complete a review/update of the water rates
In reaching these conclusions, HDR would recommend that the District adopt the proposed
annual rate adjustments through FY 2025 in order to provide sufficient funding for the annual
operating expenses and capital improvement program.
Development of the Cost of Service Analysis 4-26
Truckee Donner PUD – Comprehensive Water Rate Study
4 Development of the Cost of Service Analysis
4.1 Introduction
In the previous section, the revenue requirement analysis focused on the total revenues and
expenses required to adequately fund the District’s water utility. This section of the report will
provide an overview of the development of the District’s water utility cost of service analysis,
which is the second analytical step in the comprehensive water rate study.
A cost of service analysis determines the equitable and proportional allocation of the total
revenue requirement between the various customer classes of service (e.g., residential,
commercial). The previously developed revenue requirement for FY 2021 was utilized in the
development of the District’s cost of service analysis.
4.2 Objectives of a Cost of Service Study
There are two primary objectives in conducting a cost of service analysis:
Equitably and proportionally allocate the District’s water revenue requirement between
the customer classes of service, and
Derive average unit costs (i.e., cost-based rates) for subsequent rate designs
The objectives of the cost of service analysis are different from determining a revenue
requirement. As noted in the previous section, a revenue requirement analysis determines the
utility’s overall financial needs, while the cost of service analysis determines the equitable and
proportional manner to collect the calculated revenue requirement.
The results of the cost of service analysis determine the average unit costs which are used in the
development of the final step of the rate study process, the design of proposed rates. The cost
of service analysis provides a per unit cost of water consumption based on each customer class’s
equitable and proportional share of costs. Additionally, the cost of service also proportionally
assigns customer-related costs and converts them to a per equivalent meter cost.
As noted above, the cost of service is designed to equitably and proportionally allocate costs. For
example, a water utility incurs costs related to meeting average day, peak day, fire protection,
and customer-related cost components. A water utility must build sufficient capacity 2 to meet
peak capacity needs. Therefore, those customers contributing to those peak demands on the
system should pay their proportional share of the costs to provide the capacity in the system.
The unit costs provide the relationship between these components which are then used to set
cost-based rates.
2 System capacity is the system’s ability to supply water to all delivery points at the time when demanded.
Coincident peaking factors are calculated for each customer class at the time of greatest system demand. The time
of greatest demand is known as peak demand. Both the operating costs and capital assets related costs incurred to
accommodate the peak demands are generally allocated to each customer class based upon the class’s
contribution to the particular peak use event (e.g., peak-day, peak-hour, etc.).
Development of the Cost of Service Analysis 4-27
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4.3 Determining the Customer Classes of Service
The first step in a cost of service analysis is to determine the customer classes of service. Based
on discussions with District staff, the classes of service used within the District’s cost of service
analysis were:
Residential
Commercial
Pump Zones
In determining classes of service for cost of service purposes, the objective is to group customers
together into similar or homogeneous groups based upon similar facility requirements and/or
demand characteristics. Pump zones are separated out to provide a method to allocate the
specific costs associated with providing water at different (i.e., higher) pressure zones to
residential and commercial customers in those zones.
4.4 General Cost of Service Procedures
In order to determine the cost to serve each customer class of service on the District’s water
system, a cost of service analysis is conducted. A cost of service analysis utilizes a three-step
approach to review costs. These steps take the form of functionalization, allocation, and
distribution. Provided below is a detailed discussion of the water cost of service study conducted
for the District, and the specific steps taken within the analysis. The approach used for the
District’s study conforms to generally accepted and industry standard cost of service
methodologies which are outlined in the AWWA M1 Manual.
4.4.1 Functionalization of Costs
The first analytical step in the cost of service analysis is called functionalization. Functionalization
is the arrangement of expense and plant asset (e.g., wells, pipes, pumps) data by major operating
functions (e.g., supply, treatment, transmission, storage, distribution). Within this study, there
was a limited amount of functionalization of the cost data required since this was largely
accomplished within the D istrict’s system of accounts.
4.4.2 Allocation of Costs
The second analytical task performed in a water cost of service study is the allocation of the costs.
The allocation of the costs included within the revenue requirement examines why/how each
cost was incurred or what type of need is being met by incurring those expenses. The following
cost allocators were used to develop the cost of service analysis:
• Commodity-Related Costs: Commodity costs are those costs which tend to vary with the
total quantity of water consumed by a customer. Commodity costs are those incurred
under average load (demand) conditions and are generally specified for a period of time
such as a month or year. Chemicals or utilities (electricity) are examples of commodity-
related cost as these costs tend to vary based upon the total volume (amount) of water
consumed.
• Capacity-Related Costs: Capacity costs are those which vary with peak demand, or the
maximum rates of flow to customers. System capacity is required when there are large
Development of the Cost of Service Analysis 4-28
Truckee Donner PUD – Comprehensive Water Rate Study
demands for water placed upon the system (e.g.,
summer lawn watering). For water utilities, capacity-
related costs are generally related to the sizing of
facilities needed to meet a customer’s maximum
water demand at any point in time. For example,
portions of distribution storage reservoirs and
distribution mains (pipes) must be adequately sized
to meet peak demand requirements (capacity).
• Customer Related Costs: Customer costs are those
costs which vary with the number of customers on
the water system. They do not vary with system
output or consumption levels. These costs are also
sometimes referred to as “readiness to serve” or
“availability” costs. Customer costs may also
sometimes be further allocated as either actual or
weighted. Actual customer costs vary
proportionally, from customer to customer, with the
addition or deletion of a customer regardless of the
size of the customer. An example of an actual
customer cost is postage for mailing bills. This cost
does not vary from customer to customer,
regardless of the size or consumption characteristics
of the customer. In contrast, a weighted customer
cost reflects a disproportionate cost, from customer
to customer, with the addition or deletion of a
customer. Examples of weighted customer costs are
items such as meter maintenance expenses, where
a large commercial customer requires a significantly
more expensive meter than a typical residential
customer.
• Fire Protection Related Costs: F ire protection costs
are those costs related to the public fire protection
functions. Usually, such costs are those related to
public fire hydrants and the over-sizing of mains and
distribut ion storage reservoirs for fire protection
purposes
• Revenue Related Costs: Some costs associated with
the utility may vary with the amount of revenue
received by the utility. An example of a revenue
related cost would be a utility tax which is based on
the gross utility revenue.
Water Cost of Service Analysis
Terminology
Functionalization – The
arrangement of the cost data by
functional category (e.g., source of
supply, treatment, etc.).
Allocation – The assignment of
functionalized costs to cost
components (e.g., commodity,
capacity, customer, and fire
protection related).
Distribution – Distributing the
allocated costs to each class of
service based upon each class’s
proportional contribution to that
specific cost component.
Commodity Costs – Costs that are
classified as commodity-related
vary with the total consumptive use
of water (e.g., chemical use at a
treatment plant).
Capacity Costs – Costs allocated as
capacity-related vary with peak day
or peak hour usage. Facilities are
often designed and sized around
meeting peak demands.
Fire Protection Costs – Costs that
are related to fire protection
services (e.g., hydrants, oversizing
of storage and distribution mains).
Customer Costs – Costs allocated as
customer-related vary with the
number of customers on the system
(e.g., metering and customer billing
costs).
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4.4.3 Development of Distribution Factors
Once the allocation process is complete, the various allocated costs are proportionally distributed
to each customer class of service. The District’s allocated revenue requirement are distributed to
the previously identified customer groups using the following distribution factors.
• Commodity Distribution Factor: As noted previously, commodity-related costs vary with
total water consumption. Therefore, the commodity distribution factor was based on the
projected total metered water consumption, plus water losses, for each class of service for
the projected test period.
• Capacity Distribution Factor: The capacity distribution factor was developed based on the
estimated contribution to the water system peak day use of each customer class. Peak day
use by customer class of service was estimated by developing peaking factors for each tier
for residential customers and total consumption for commercial customers. In this
particular case, the peaking factor was defined as the relationship between peak day
contribution and average day use and estimated based on a review of the average month
to peak month usage. Given an estimated peaking factor, the peak day contribution for
each tier of residential customers and the commercial class of service was developed.
• Customer Distribution Factor: Customer costs vary with the num ber of customers on the
system. Two basic types of customer distribution factors were identified; actual and
weighted. The distribut ion factors for actual customers was based on the projection of the
number of customers for each customer class as developed within the revenue
requirement. The weighted customer distribution factors is also broken down further into
two factors which attempt to reflect the disproportionate costs associated with serving
different types of customers. The first weighted customer distribution factor is for customer
service and accounting. This weighted customer distribution factor takes into account any
differences in providing customer service and billings to different customer classes. In the
District’s study, the customer service and accounting distribution factor was held constant
based on the total number of actual customer accounts. The second weighted customer
distribution factor is for meters and services. This factor reflects the different costs
associated with providing larger sized meters based on the number of equivalent meters
for each customer class of service.
• Public Fire Protection Distribution Factor: The development of the distribution factor for
public fire protection expenses involved an analysis of each class of service and their
corresponding fire flow requirements. This distribution factor took into account each
classes gallon per minute (gpm) fire flow requirements in the event of a fire, along with the
duration of the required flow (e.g., 1,000 gpm for 120 minutes). The fire flow rates used
within the public fire protection distribution factor were based on industry standards and
the fire flow estimates for the District. The minimum fire flow requirements are then
multiplied by the number of customers in each class of service, and the assumed duration
of the fire, to determine the class’ prorated fire flow requirements.
Development of the Cost of Service Analysis 4-30
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• Revenue Related Distribution Factor: The revenue related distribution factor was
developed from the projected rate revenues for FY 2021 for each customer class of service.
These same revenues were used within the revenue requirement analysis discussed
previously.
As mentioned before, in a cost of service analysis, the distribution factors represent a group of
similar or homogenous customers such as residential or commercial customers. For this analysis,
however, additional cost detail was needed when distributing costs. This meant that the
commodity and capacity allocation factors had the classes further broken down given that the
residential customer class has two tiers and commercial has a single tier for the development of
the cost basis for the rates (i.e., cost basis under Proposition 218). Further discussion related to
the distribution of costs is discussed in more detail in the rate design analysis provided in Section
5 of this report.
4.5 Functionalization and Allocation of Plant in Service
As noted, one of the first steps of the cost of service is the functionalization and allocation of
plant in service. In performing the functionalization of plant in service, HDR utilized the District’s
historical plant (asset) records. Once the plant assets were functionalized, the analysis shifted to
the allocation of the asset. The allocation process included reviewing each group of assets and
determining which cost allocators the assets were related to. For example, the District’s assets
were allocated as: commodity-related, capacity-related, customer-related, revenue-related,
public fire protection-related, or a direct assignment. Provided below is a summary of the
allocation process. The following approach is based on generally accepted cost of service
methodologies, as described in the American Water Works Association (AWWA) M1 Manual,
Principles of Water Rates, Fees and Charges.
Source of Supply
Source of supply was allocated on the basis of the relationship between average day (commodity)
and peak day (capacity). Based on the operation of the system, the source of supply assets were
38% to commodity-related and 62% capacity-related. This allocation reflects the District’s system
specific peak demand (capacity needs) in relation to the system’s average day use (commodity
needs).
Water Treatment
Water treatment was allocated in the same manner as source of supply; 38% to commodity and
62% capacity. Treatment is generally considered an extension or component of supply. This
allocation reflects the operation of the treatment facilities either as meeting average day and
peak day needs on the system.
Land and Buildings
Land and buildings were allocated the same as supply and water treatment which is 38% to
commodity and 62% capacity. This reflects the operation of the treatment facilities either as
meeting average day and peak day needs on the system.
Storage
Storage reservoirs are typically designed to meet at least two types of needs –peak use demands
and fire protection. The total storage capacity of the District’s reservoirs was examined and
Development of the Cost of Service Analysis 4-31
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consideration given to the capacity required for fire protection under a fire event scenario. This
amount of capacity, in relation to the total storage capacity, is considered fire protection related.
The balance of storage capacity is considered to be in place to meet peak use demands. This
resulted in 92% of the storage reservoir costs being assigned to peak day capacity and the
remaining 8% to be assigned to the public fire protection component.
Transmission & Distribution
Transmission and distribution lines (mains) are typically assumed to serve three functions. First,
a distribution system must be in place to meet a customer’s minimum use requirements for
water. This portion of the distribution main plant investment is considered to be a function of
the number of customers served. This can be allocated as a customer related cost or as the
number of equivalent meters on the system. Next, a portion of the distribution system mains is
considered a function of meeting peak flow capacity requirements on the system. Distribution
mains must be sized to adequately meet the maximum (peak) flows demanded by customers.
This portion of the distribution main plant investment is considered capacity-related and is based
on the proportion of mains sized to meet this peak use. Finally, even with sizing of mains to meet
peak use demands, distribution mains must also be sized for public fire flow demands. In other
words, on the day with the peak use demand on the system, there must still be sufficient over-
sizing of mains to meet this additional fire flow requirement. This final portion of over-sizing for
distribution plant investment is classified as public fire protection-related. Based on an analysis
of the District’s mains, the assignment of the distribution mains was determined to be 33%
capacity-related, 62% weighted customer meter and services-related, and 5% fire protection
related.
Pumping equipment was allocated 100% to pumping zones. These assets provide the ability of
the District to pump water to the various pressure zones within the District’s system.
Meters and Valves
This category includes services, meters, GIS equipment, etc. These assets have been allocated as
100% as weighted customer meters and services. Also included in this category are fire hydrants.
These assets have been allocated as 100% public fire protection related.
General Plant
General plant is proportionally allocated as all other assets as outlined in the above categories.
The exception to this category is laboratory equipment. Laboratory equipment is allocated as
100% commodity related.
Table 4 - 1 provides a summary of the basic functionalization and allocation of the major water
asset infrastructure. A more detailed exhibit of the District’s functionalization and allocation of
plant investment can be found in the Technical Appendix Exhibit 11.
Development of the Cost of Service Analysis 4-32
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Table 4-1
Summary of the Classification of Water Utility Plant in Service
Commodity Capacity Customer Revenue Related Fire Protection Direct Assignment Pump Zones Plant Component CAP-1 CAP-2 Actual Customer Weighted Customer Weighted Meters & Svc Source of Supply 38% 62% 0% 0% 0% 0% 0% 0% 0% 0%
Water Treatment 38% 62% 0% 0% 0% 0% 0% 0% 0% 0%
Land and Buildings 38% 62% 0% 0% 0% 0% 0% 0% 0% 0%
Storage 0% 92% 0% 0% 0% 0% 0% 8% 0% 0%
Transmission/Distribution 0% 31% 0% 0% 0% 59% 0% 5% 0% 5%
Meters and Valves 0% 0% 0% 0% 0% 87% 0% 13% 0% 0%
General Plant 4% 29% 0% 0% 0% 60% 0% 7% 0% 0%
4.6 Functionalization and Allocation of Operating Expenses
As noted in the AWWA M1 Manual, operating expenses (revenue requirement) are generally
functionalized and allocated in a manner similar to the corresponding plant account. For
example, maintenance of distribution mains is allocated in the same manner (allocation
percentages) as the plant account for distribution mains. This approach to allocation of the
District’s water utility revenue requirement was used for this analysis.
For the District’s water rate study, the revenue requirement for FY 2021 was functionalized,
allocated , and distributed. As noted in Section 3, the District utilized a cash basis revenue
requirement, which was comprised of operation and maintenance expenses, rate funded capital,
net debt service, and reserve funding. A more detailed review of the functionalization and
allocation of the revenue requirement can be found in the Technical Appendix in Exhibits 13 - 15.
4.7 Major Assumptions of the Cost of Service Study
A number of key assumptions were used within the District’s water rate study. Below is a brief
discussion of the major assumptions used.
The test period used for the water cost of service analysis was FY 2021. The revenue and
expense data was previously developed within the revenue requirement analysis.
A cash basis methodology was utilized which conforms to generally accepted water cost
of service approaches and methodologies.
The allocation of plant in service was developed based upon generally accepted cost
allocation techniques. Furthermore, they were developed using the District’s water utility
specific data.
Development of the Cost of Service Analysis 4-33
Truckee Donner PUD – Comprehensive Water Rate Study
Consumption by class of service and pricing tier were developed for each class of service
from historical usage information provided by the District.
Peak day capacity allocation factors were estimated based upon each customer group’s
average to peak month relationship.
4.8 Development of Cost-Based Water Rates
Cost-based and equitable rates are of paramount importance in developing proposed water
rates. While always a key consideration in developing water rates, meeting the legal
requirements, and documenting the steps taken to meet the requirements, has been in the
forefront with the recent legal challenges in the State of California on water rates. Given this,
the District’s proposed water rates have been developed to meet the legal requirements of
California constitution article XIII D, section 6 (Article XIII D). A key component of Article XIII D is
the development of rates which reflect the cost of providing service and are proportionally
distributed among the various customer classes of service. HDR would point out that there is no
single prescribed methodology for equitably assigning costs to the various customer groups. The
American Water Works Association (AWWA) M1 Manual clearly delineates various
methodologies which may be used to establish cost-based rates. In addition, Article XIII D does
not prescribe a particular methodology for establishing cost-based rates. Consequently, HDR
developed the District’s proposed water rates based on the methodologies provided in the
AWWA M1 Manual to meet the requirements of Article XIII D and recent legal decisions to
provide an administrative record of the steps taken to establish the District’s water rates.
HDR is of the opinion that the proposed rates comply with legal requirements of Article XIII D.
HDR reaches this conclusion based upon the following:
• The revenue derived from water rates does not exceed the funds required to provide
the property related service (i.e., water service). The proposed rates are designed to
collect the overall revenue requirement of the District’s water utility.
• The revenues derived from water rates shall not be used for any purpose other than
that for which the fee or charge is imposed. The revenues derived from the District’s
water rates are used exclusively to operate and maintain the District’s water system.
• The amount of a fee or charge imposed upon a parcel or person as an incident of
property ownership shall not exceed the proportional costs of the service attributable
to the parcel. This study has focused almost exclusively on the issue of proportional
assignment of costs to customer classes of service. The proposed rates have appropriately
grouped customers into customer classes of service (residential, commercial) that reflect
the varying consumption patterns and system requirements of each customer class of
service. The grouping of customers and rates into these classes of service creates the
equity and proportionality expected under Article XIII D by having differing rates by
customer classes of service which reflect both the level of revenue to be collected by the
utility, but also the manner in which these costs are incurred and equitably assigned to
customer classes of service based upon their proportional impacts and burdens on
District’s the water system.
Development of the Cost of Service Analysis 4-34
Truckee Donner PUD – Comprehensive Water Rate Study
The current rate structure includes a fixed charge that is the same for all customers as well as a
consumption (usage) charge. The consumption charge structure for residential customers is a
two tiered increasing tier structure and commercial is a uniform consumption charge. Given the
prior discussion on the California legal requirements of setting rates, the development of the
District’s cost of service analysis and subsequent average unit costs (i.e., cost-based rate
components), provides the basis for the development of the proposed water rates for the
District.
As a part of this study, HDR developed the cost of service and water rate design discussion to
clearly demonstrate and support the proposed water rates and tiered pricing. The following
discussion provides a more detailed analysis of the costing techniques and methodologies used
to support the District’s proposed rate design.
4.8.1 Determination of Sizing and Number of Tiers
For the District’s study, the single family residential rate structure is a two-tiered consumption
charge. As part of this study, recent consumption data was reviewed to evaluate if any
adjustments to the size or number of tiers should be recommended. After reviewing the
consumption data, it was determined that the current tire sizes were appropriate given the
District’s residential consumption data. The goal in establishing tier sizes for residential
customers is to establish the first block at
a typical or average level of usage. All
consumption above the first tier is the
second block. In reviewing the individual
customer consumption data, it was
determined that the current tiers
reasonably reflected those targeted
consumption levels. Shown in the chart is
the average consumption by month for
single family residential customers. As can
be seen in the chart, the current block sizes
correspond to customers’ average monthly
use up to the summer average use (tier one) and the additional use in the summer period (tier
two).
The current rate structure fo r the commercial customers is a uniform rate structure. A tiered
rate structure is typically not used for commercial customers as total consumption levels for
commercial customers can vary significantly and greater use is not indicative of inefficient use.
For that reason, establishing a tiered rate structure for commercial customers is difficult, unless
the rate structure tier sizes are individually established for each individual commercial customer.
An individually tailored rate structure is a complex and administratively difficult rate structure
and is not suggested or recommended for the District. While the consumption levels for
commercial customers can vary significantly, the overall customer characteristics (peak use
characteristics, timing of co nsumption, etc.) are similar. For the above reasons, HDR has
recommended that the District maintain their uniform rate structure for their commercial
customers.
0
2
4
6
8
10
12
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec1,000 GallonsAverage Single Family Monthly
Consumption
Avg Consumption Tier 2
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Truckee Donner PUD – Comprehensive Water Rate Study
After the number and size of tiers and the seasonal periods have been identified, the pricing of
the tiers and seasons is the next analytical step.
4.8.2 Establishing the Cost-Basis for Pricing Tiers
While there remains much discussion in the legal and rate community as to the impacts and
stricter technical (legal) requirements as a result of the San Juan Capistrano decision, HDR has
concluded that utilities have available to them at least three technical approaches to be able to
demonstrate (i.e., cost-justify) the individual pricing of the tiers. These technical approaches
encompass the following areas:
1. Cost differences in water supply (i.e., stacking of water supply resources to tiers).
2. Cost differences from high peak use consumers (relationship of average use to peak use).
3. Direct assignment of costs to specific tiers (e.g., conservation program costs, etc.).
In certain cases, the cost differences within tiered pricing may be related to the cost of water
supply when a utility has more than one source of water supply. Additionally, this water supply
approach may also include the cost of alternative water supplies (i.e., recycled or reuse water).
For example, reuse water may be assigned to higher tiers to reflect outdoor use or the need for
additional/alternative water supply to meet the demands of the high use customers.
The second possible justification for cost differences in tiered pricing is related to high-peak use
(peak demand) customers. Customers that use more water may create greater demands (i.e.,
capacity requirements) and costs on the system. A water supply and distribution system must
be sized to meet these peak use requirements. In other words, on the hottest day of the year
when everyone is watering their lawn, the supply and distribution system must be sized to meet
those peak use demands. Economic theory clearly states that equity is achieved when those that
create the demand event, pay for the demand event. In this particular case, this has implications
upon the equitable allocation of capacity-related costs to the different usage tiers (low use/low
peak use vs. high use/high peak use).
Finally, certain costs may be directly assigned to specific tiers. For example, a conservation
program which focuses on outdoor water use may be directly assigned to the water tiers, or
seasons, which are most directly related to outdoor use. The direct assignment to a specific price
tier will create a price differential for that tier.
For the District’s water study, the focus of the analysis was on the second method of determining
the cost impacts and cost differences associated with high peak use customers. The pricing of
the tiers was developed to provide the cost-basis (cost-justification) and meet the requirements
of Proposition 218.
4.9 Development of the Unit Costs for Rate Designs
To begin the assignment of costs related to specific tiers, the results of the cost of service analysis
is utilized. The cost of service analysis allocates the revenue requirement between the various
cost components of average use (commodity), peak use (capacity), and customer (actual and
Development of the Cost of Service Analysis 4-36
Truckee Donner PUD – Comprehensive Water Rate Study
weighted). Provided in Table 4 – 2 is a summary of the allocation of the FY 2021 revenue
requirement from the cost of service analysis.
Table 4 - 2
Summary of the Allocation of the FY 2021 Revenue Requirement ($000) Total Commodity Capacity Customer Equivalent Meters Revenue Related Fire Protection Direct Assignment Pump Zones Net Revenue
Requirement $14,310 $605 $585 $12,244 $0 $0 $188 $0 $688
There are approximately $14.3 million in total costs which are allocated between the various cost
components. The $14.3 million is the total revenue requirement for FY 2021. The total allocated
to each cost component (e.g., commodity, capacity) is proportionally distributed to the various
customer classes of service to calculate the monthly meter charge and consumption charge
levels. To provide the cost-basis for tiered pricing, the allocated costs are further distributed
between the various rate structure components based on the appropriate distribution factors.
Provided below is a discussion of the approach used to distribute the revenue requirement
between the various customer classes of service and to the various rate components.
4.9.1 Commodity Distribution Factor
The commodity distribution factor is based on the average annual use for each of the customer
classes of service, and more importantly by tier or seasons. For the development of the pricing
of the proposed rates the following customer class components were used:
• Residential – Tier 1
• Residential – Tier 2
• Commercial
• Pump Zones
To develop the commodity distribution factor for each customer class, the usage for each class
was divided by the total usage of the system. This produces the percent of the system that each
class is responsible for and, therefore, each class’ contribution to commodity related costs. After
the responsibility of commodity related costs has been identified, the total commodity related
costs can be distributed to each customer class and tier based on the distribution factor. The final
step in developing the unit costs is to divide the costs for each customer class and tier by the total
amount of consumption used in determining each class’ proportional share of commodity related
costs. This calculation provides a value on a $ per 1,000 gallon basis. Which becomes a
component of proposed consumption rate.
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Truckee Donner PUD – Comprehensive Water Rate Study
Provided in Table 4 – 3 is a summary of the commodity distribution factor and unit cost
development.
Table 4 - 3
Summary of the Commodity Distribution Factor
Reference A B C D
Calculation D = C / A
FY 2021
Consumption
(1,000 gal)
% of
Total
Distributed
Commodity Costs
Unit Cost
($ /1,000 gal)
Residential
Tier 1 434,892 44.14% $266,932 $0.61
Tier 2 258,250 26.21% 158,511 0.61
Single Family Total 693,142 70.35% $425,442 $0.61
Commercial 292,118 29.65% $179,299 $0.61
Total 985,260 100.00% $604,741 $0.61
As can be seen, the development of the commodity distribution factor is fairly straightforward.
As an example, Tier 1 consumption of the single family class of service represents 44.14% of the
total consumption on the system. As a result, 44.14% of the commodity related costs ($604,741
in total) are allocated to Tier 1 of the single family customers which is approximately $267,000.
The total costs in Column C are taken from Table 4 – 2. This approach is then used for each of
the customer classes of service for each rate component, for the residential tiers and the
commercial customer class. Next, to develop the unit costs, the dollars in column C are divided
by the consumption in column A. This results in the cost-based commodity component of the
proposed rate.
4.9.2 Capacity Distribution Factor
The capacity distribution factor utilizes the same customer classes as in the development of the
commodity distribution factor. Whereas commodity costs are related to the total volume of
water used by each class of service and tier, capacity is related to how each tier or class consumes
water. Customers use water in different ways and at different times, thus creating different
usage patterns and resulting in different peaking factors. These usage patterns drive how the
District must size the system to meet the demands of customers regardless of when they occur.
To determine the distribution by tier or class, peaking factors need to be developed for each
customer class of service and tier. The peaking factors for a class of service must be estimated
due to a lack of specific metered data related to peak day usage for each customer class and tier.
The method used to estimate customer class and tier peaking factors is to review the average
monthly volume of water consumed and compare it to the maximum monthly usage of water
(i.e., relationship of average month to peak month). By dividing the maximum month by the
Development of the Cost of Service Analysis 4-38
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average month, a reasonable surrogate for the peak-day factor is determined. This factor
provides the difference between the average use and peak day use in each tier or class. For
example, if a customer used 10.0 CCF per month on average and in the peak month 15.0 CCF was
used, the peaking factor would be 1.50 (15.0 / 10.0 = 1.50). In this example, the peaking factor
is stating that the maximum usage in a month is 1.50 time higher than the average usage per
month. Using this same calculation for each customer class tier or season, the allocation factors
for capacity can be developed. Shown below in Table 4 – 4 is a summary of the capacity allocation
factor for each customer class.
Table 4 - 4
Summary of the Capacity Distribution Factor
Reference A B C D E F G
Calculation C = A * B G = E / F
Average
Use
(MGD)
Peaking
Factors
Peak Day
Use
(MGD)
% of
Total
Distributed
Capacity
Costs
FY 2021
Consumption
(1,000 gal)
Unit Cost
($/1,000
gallons)
Residential
Tier 1 1.49 1.66 2.47 27.8% $162,442 434,892 $0.37
Tier 2 0.88 3.50 3.10 34.7% 203,384 258,250 0.79
Residential Total 2.37 2.35 5.57 62.5% $365,826 693,142 $0.53
Commercial 1.00 3.34 3.34 37.5% $219,540 292,118 0.75
Total 3.37 2.64 8.91 100.0% $585,367 985,260 $0.59
Table 4 – 4 above shows the development of the capacity distribution factor. Similar to that of
the commodity cost distribution to the residential tiers and commercial class of service, the
capacity-related costs are distributed in the same proportional manner. For example, 27.8% of
the capacity costs are distributed to Tier 1 of the single family customers based on the
relationship of the Tier 1 peak use to the total system peak use. That proportional distribution
to Residential Tier 1 results in a distribution of $162,422. The distributed costs are then divided
through by the FY 2021 consumption to develop the unit cost for each tier or class (e.g., $162,422
÷ 434,892 1,000 gallons = $0.37/1,000 gallons). Again, this becomes the capacity component of
the proposed rates for FY 2021.
Combining the unit costs from the commodity and capacity unit costs result in the basis of the
tiered or uniform rate. The summary of this calculation is provided in Table 4 – 5 This sums the
costs from Table 4 – 3 column D and Table 4 – 4 column G to calculate the equitable and
proportional consumption charge for the residential tiers and the commercial uniform rate.
Development of the Cost of Service Analysis 4-39
Truckee Donner PUD – Comprehensive Water Rate Study
Table 4 - 5
Summary of the Tier / Season Cost Basis
Reference A B C D E
Commodity
Costs
($/1,000 gal)
Capacity
Costs
($/1,000 gal)
Other Costs
($/1,000 gal)
Total Unit
Cost
($/1,000 gal)
Differential
($/1,000 gal)
Residential
Tier 1 $0.61 $0.37 $0.00 $0.99
Tier 2 $0.61 $0.79 $0.00 $1.40 $0.41
Total Residential $0.61 $0.53 $0.00 $1.14
Commercial $0.61 $0.75 $0.00 $1.37 NA
Total $0.61 $0.59 $0.00 $1.21 NA
The results shown in Table 4 – 5 above are the basis for the District’s consumption pricing for the
proposed residential tiers and the commercial uniform rate structures as described previously.
The analysis and costs shown above have been developed to comply the recent legal decisions
related to developing cost-based water rates.
The final unit cost development is the customer related costs which are used to establish the
monthly fixed meter charge which varies by meter size. A similar exercise as the consumption
components was completed and as a result, the total customer related costs plus fire protection
related costs were divided by the number of equivalent meters on the system. An equivalent
meter uses the capacity ratio of a 1-inch meter to the larger meter sizes to determine the pricing
for each meter size. In this way the meter charge reflects the equitable proportion of fixed costs
on the system based on the capacity demands the customer can place on the system based on
the size of the meter. Provided in Table 4 – 6 is a summary of the fixed meter charge unit cost
development
Table 4 - 6
Summary of the Fixed Meter Charge Cost Basis
Components Units
Total Customer Costs $12,431,676
# of Equiv. Meters 13,679
Unit Cost ($ / equivalent meter) $75.74 (3/4” Meter)
4.10 Summary Results of the Cost of Service Analysis
In summary form, the cost of service analysis began by functionalizing the District’s revenue
requirement. The functionalized revenue requirement was then allocated into the various cost
Development of the Cost of Service Analysis 4-40
Truckee Donner PUD – Comprehensive Water Rate Study
components. The individual allocated totals were then distributed proportionally to the various
customer classes of service based on the appropriate distribution factors. The distributed
expenses for each customer class were then aggregated to determine each customer class’s
overall revenue responsibility (i.e., cost to provide service). Provided below in Table 4 - 7 is the
summarized results of the District’s water cost of service analysis.
Table 4 - 7
Summary of the Water Cost of Service Analysis ($000)
Class of Service
Present Rate
Revenues
Allocated
Costs
$
Difference
%
Difference
Residential $11,177 $12,288 ($1,112) 9.9%
Commercial 1,405 1,333 72 -5.1%
Pump Zones 546 688 (142) 25.9%
Total $13,128 $14,310 ($1,182) 9.0%
The results of the analysis indicate that some cost differences exist between the various customer
classes of service. It is important to understand that a cost of service analysis is based on one
year’s O&M expense data and projected customer usage information. The cost to serve
customers is a dynamic function and a cost of service analysis can be impacted by a number of
variables such as budget structure change or a change in consumption characteristics due to
weather or the current pandemic. Given this, the results of the cost of service analysis may
change from year to year. As the District continues to monitor water rates and cost of service
results through future studies, future cost of service adjustments will likely be necessary to reflect
system and customer characteristics at that time.
4.11 Consultant’s Conclusions and Recommendations
The cost of service study equitably and proportionally distributed the revenue requirement to
each customer class with their respective benefit received from and burdens placed on the water
system (proportional distribution) based on the service requirements. While some cost
differences exist, the overall allocation of costs between customers appears to be reasonable
and reflect the impacts each customer class of service places on the system. Given the legal
requirements and limitations imposed by Article XIII D, section 6, the results of the cost of service
will be used to establish the proposed rate designs for each of the District’s water customer
classes of service. More specifically, the unit costs derived from the cost of service results are
utilized as the basis for the rate design for each water customer class in Section 5.
4.12 Summary of the Cost of Service Analysis
This section of the report has provided the recommendations resulting from the cost of service
analysis developed for the District’s water utility. This analysis was prepared using generally
accepted cost of service techniques as discussed and shown in the AWWA M1 Manual. The
following section of the report will provide a summary of the present and proposed rates for the
Development of the Cost of Service Analysis 4-41
Truckee Donner PUD – Comprehensive Water Rate Study
District’s water utility. The Technical Appendix provides the detail of the cost of service analysis
in Exhibits 7 – 15.
Development of the Rate Design 5-42
Truckee Donner PUD – Comprehensive Water Rate Study
5 Development of the Rate Designs
5.1 Introduction
The final step of the District’s water rate study is the design of rates to collect the target levels of
revenues, based on the results of both the revenue requirement and the cost of service analyses.
In reviewing District’s water rates, consideration is given to the level of the rates as well as the
structure of the rates. The level of rates reflects the amount of revenues that should be collected
while the structure of the rates is how it is collected (charged) from the customers.
The overall revenue level for the District has been established in the revenue requirement
analysis (Section 3) while the proportional distribution of costs between the various customer
classes has been developed in the cost of service analysis (Section 4). These two analyses provide
the basis for the overall revenue needs of the District’s water utility and also provides the revenue
levels to be collected from each class of service based on cost causation and the unit costs for
each rate component.
5.2 Rate Design Criteria and Considerations
Prudent rate administration dictates that several criteria must be considered when setting utility
rates. Some of these rate design criteria are listed below:
• Rates which are easy to understand from the customer’s perspective
• Rates which are easy for the District to administer
• Consideration of the customer’s ability to pay
• Continuity, over time, of the rate making philosophy
• Policy c onsiderations (encourage efficient use, economic development, etc.)
• Provide revenue stability from month to month and year to year
• Promote efficient allocation of the resource
• Equitable and non-discriminatory (cost-based)
• Legally Defensible
It is important that the District provide its water customers with a proper and accurate price
signal as to what their consumption and peaking (demand) requirements are costing. This goal
may be approached through rate level and structure. When developing the proposed rate
designs, all the above listed criteria may be taken into consideration. However, it should be noted
that it is difficult - if not impossible - to design a rate that meets all the goals and objectives listed
above. A good example of this is that it may be difficult to design a rate that takes into
consideration the customer’s ability to pay while at the same time being completely cost-based
in nature. In designing rates, there are always trade-offs between these various goals and
objectives. A key element in the development of the District’s study is meeting the requirements
imposed by Proposition 218 while reflecting the District’s goals and objectives. This is
accomplished through the review of customer and system characteristics, District rate design
Development of the Rate Design 5-43
Truckee Donner PUD – Comprehensive Water Rate Study
goals and objectives, and proposed rates based on the average unit costs as developed in the
cost of service analysis.
5.3 Overview of the Proposed Rate Structures
In discussion with District staff, it was determined that the current residential and commercial
rate structures would be maintained. At this time, these rate structures reflect the District’s rate
design goals and objectives. Key to this is the revenue stability of the current rate structure.
Given the demographics and seasonality of the District’s customers and service area, the fixed
and variable revenue was maintained as described and developed in the cost of service analysis
(Section 4).
5.4 Summary of the Present and Proposed Water Rates
The proposed rates for the District’s water utility were designed to meet the total system revenue
needs discussed in Section 3 and reflect the cost of service results – including unit cost
development - provided in Section 4. The proposed water rates have been developed for each
customer class of service based on the development of the pricing through the cost of service
analysis.
5.4.1 Review of the Present and Proposed Single Family Residential Water Rates
The District’s proposed single family residential rate structure maintains the current rate
structure. This structure consists of a monthly fixed charge by meter size and a two-tier increasing
consumption charge. Provided below in Table 5 - 1 is a summary of the present and proposed
rates for the District’s single family residential water customers.
Table 5 - 1
Summary of the Monthly Residential Water Rates
Rate Component
Present
Rate FY 2021 FY 2022 FY 2023 FY 2024 FY 2025
Fixed Charge $/Month
5/8" x 3/4" $69.66 $75.74 $82.55 $89.16 $96.29 $103.03
3/4" 69.66 75.74 82.55 89.16 96.29 103.03
1" 83.09 90.34 98.47 106.35 114.85 122.89
Commodity Charge - $/1,000 gal.
0 - 8,000 gal (block 1) $0.78 $0.99 $1.08 $1.16 $1.26 $1.34
8,000 + gal (block 2) 0.97 1.40 1.53 1.65 1.78 1.91
The proposed rates in Table 5 – 1 show the fixed meter charge are based on the results of the
unit costs developed in the cost of service and summarized in Table 4 - 6. The subsequent meter
sizes are adjusted by the AWWA 1” meter equivalencies. The AWWA meter equivalencies reflect
the relationships of capacity to the larger meter sizes, and the fixed costs associated with
Development of the Rate Design 5-44
Truckee Donner PUD – Comprehensive Water Rate Study
providing that level of capacity. Also
shown in the table are the proposed
tiered commodity charges (i.e.,
consumption rates) for FY 2021, which is
taken directly from column D in Table 4–
5. The proposed rates for FY 2022
through FY 2025 are adjusted “across
the board” or by the overall revenue
requirement results to collect the target
level of revenues. This approach to
establishing the fixed meter charges and
tiered commodity charges meet the
equitable and proportional
requirements of Proposition 218. If implemented, rate adjustments after FY 2025 would again
need to be supported by a comprehensive water rate study that would provide the cost-basis for
any proposed rates.
5.6.2 Review of the Present and Proposed Commercial Water Rates
For commercial customers, the same monthly fixed charge by meter size as with residential
customers that varies by meter size. However, the commercial consumption charge is a uniform
rate. As mentioned previously, a uniform rate is a generally accepted rate structure for
commercial customers given the various end uses of the consumption. Based on the results of
the cost of service unit costs, the proposed rates for the commercial customer class were
developed. Table 5 – 2 provides a summary of the present and proposed multi-family rates.
Table 5 - 2
Summary of the Monthly Commercial Water Rates
Rate Components
Present
Rate FY 2021 FY 2022 FY 2023 FY 2024 FY 2025
Fixed Charge $/Month
5/8" x 3/4" $69.66 $75.74 $82.55 $89.16 $96.29 $103.03
3/4" 69.66 75.74 82.55 89.16 96.29 103.03
1" 83.09 90.34 98.47 106.35 114.85 122.89
1 1/2" 116.80 126.99 138.42 149.49 161.45 172.75
2" 160.58 174.59 190.30 205.52 221.97 237.50
3" 268.81 292.26 318.56 344.05 371.57 397.58
4" 384.62 418.17 455.80 492.27 531.65 568.87
6" 576.93 627.25 683.71 738.40 797.48 853.30
8" 721.16 784.07 854.63 923.00 996.84 1,066.62
Commodity Charge $/1,000 gal $1.91 $1.37 $1.49 $1.61 $1.74 $1.86
Current FY 2021 FY 2022 FY 2023 FY 2024 FY 2025
0 Cons $69.66 $75.74 $82.55 $89.16 $96.29 $103.03
8,000 gal Cons $75.90 $83.63 $91.16 $98.45 $106.33 $113.77
16,000 gal Cons $83.66 $94.85 $103.38 $111.65 $120.58 $129.03
$0
$20
$40
$60
$80
$100
$120
$140
Residential Bill Comparison 3/4" Meter
Development of the Rate Design 5-45
Truckee Donner PUD – Comprehensive Water Rate Study
As noted, the commercial fixed meter charge and commodity charges (i.e., consumption rates)
are based on the unit costs developed in the cost of service analysis. These unit costs are shown
on Table 4 – 5 and Table 4 – 6. A primary change to this rate is a reduction in the commodity
charge. This change is reflective of the commercial customer’s usage characteristics as outlined
in the cost of service analysis. While the proposed rates for commercial customers in FY 2021
brought the rate to cost-based levels, based solely on the results of the cost of service, it is
important to note that the adjustments for FY 2022 through FY 2025 continues the District’s
overall rate adjustments.
5.6.3 Review of the Present and Proposed Pump Zone Rates
The pump zone rates are based on the costs associated with pumping water to higher pressure
zones to provide service. The pump zone rates are in addition to the proposed residential and
commercial rates for those customers in each zone. The pump zone rates are based on the costs
allocated in the cost of service analysis, total pumped consumption, to calculate the average
pumping cost. Provided in Table 5 - 3 is a summary of the present and proposed pump zone
water rates.
Table 5 - 3
Summary of the Pump Zone Rates
Rate Component
Present
Rate FY 2021 FY 2022 FY 2023 FY 2024 FY 2025
$/ 1,000 gal
Zone 1 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Zone 2 0.60 0.75 0.82 0.89 0.96 1.03
Zone 3 1.20 1.50 1.64 1.77 1.91 2.04
Zone 4 1.80 2.25 2.45 2.65 2.86 3.06
Zone 5 2.40 3.00 3.27 3.53 3.81 4.08
Zone 6 3.00 3.75 4.09 4.42 4.77 5.10
Zone 7 3.60 4.50 4.91 5.30 5.72 6.12
5.7 Summary of the Proposed Rate Revenues
The rates for each customer class of service meet the results of the revenue requirement and
cost of service results. Provided in Table 5 - 5 is a summary of the revenue targets based on the
revenue requirement and cost of service analyses for the FY 2021 proposed rate adjustments.
Development of the Rate Design 5-46
Truckee Donner PUD – Comprehensive Water Rate Study
Table 5 - 5
Comparison of the FY 2021 Proposed Revenues and Allocated Costs ($000’s)
Class of Service
Present
Revenues
Cost of
Service
Adjustment
Target
Revenues
Proposed
Revenues
$
Difference
Residential $11,177 $12,288 $12,288 $12,303 $15
Commercial 1,405 1,333 1,333 1,320 (13)
Pump Zone 546 688 688 683 (5)
Water System Total $13,128 $14,310 $14,310 $14,306 ($4)
The above table is provided to further demonstrate the District’s rates are cost-based and equity
and meet the requirements of Proposition 218. As can be seen, the proposed revenues closely
reflect the proportional allocation of costs to the various customer classes of service. A more
detailed analysis of the projection of the proposed revenues is included within the Technical
Appendix of this report.
This concludes the discussion of the proposed water rates. Detailed exhibits for the various rate
designs are included within the Technical Appendices. 5.9 Water Rate Study Recommendations
Based on the results of the District’s water rate study, HDR recommends the following:
Rate revenues for the District’s water utility should be adjusted annually in FY 2021
through FY 2025
The proposed rates should be implemented to reflect each customer class’ proportional
allocation of costs as outlined in the cost of service analysis.
The rates are proposed to be implemented and effective each year on January 1 of each
year.
When funds are available, increase the level of annual replacement funding to transition
towards meeting annual renewal and replacement funding needs.
Prior to the implementation of the fifth, and final, proposed rate adjustment the District
should complete a review of the water rates.
5.10 Summary of the Water Rate Study
This completes the analysis for the Truckee Donner Public Utility District’s water utility. This
study has provided a comprehensive review and development of proposed water rates for the
District. Adoption of the proposed water rates will allow the District to meet their current and
projected water system financial obligations for the time period reviewed based on the
assumed customer growth, capital improvement plan, and projected increases in operating
costs. Should these assumptions change, the proposed rate adjustments may also need to be
revised to reflect current conditions.
Technical Appendix A – Water Technical Analysis
Truckee Donner PUD
Water Utility
Revenue Requirment Summary
Scenario 5 - Updated Mid Hi Cap Funding
(Values in $1,000s)
FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Revenue
Rate Revenue at Current Rates $13,020 $13,128 $13,242 $13,357 $13,473 $13,590 $13,709 $13,829 $13,950 $14,071 $14,195
Miscellaneous Revenue 644 655 609 613 616 617 632 647 671 702 744
Total Revenue $13,664 $13,784 $13,852 $13,970 $14,088 $14,207 $14,341 $14,476 $14,621 $14,773 $14,939
Expenditures
Board of Directors $276 $166 $171 $176 $182 $187 $193 $198 $204 $210 $217
General Manger 688 812 836 862 888 915 943 971 1,001 1,031 1,062
Adminsitrative Services 1,463 1,446 1,499 1,554 1,611 1,670 1,732 1,796 1,862 1,931 2,003
Conservation 103 107 110 113 117 120 124 128 131 135 139
Water Operations 5,809 6,543 6,713 6,888 7,067 7,252 7,442 7,637 7,838 8,044 8,257
IT/GIS 757 775 799 823 848 873 899 926 954 983 1,012
Interdepartmental Rent 507 537 568 585 603 621 639 658 678 699 719
Additional Expenditures 0 0 493 507 522 538 554 571 588 606 624
Total Expenditures $9,602 $10,386 $11,189 $11,508 $11,837 $12,176 $12,525 $12,885 $13,256 $13,639 $14,034
Rate Funded Capital $2,093 $3,000 $4,000 $5,200 $6,300 $6,800 $7,100 $7,100 $7,100 $7,100 $7,100
Debt Service $2,829 $2,659 $1,983 $1,982 $2,129 $2,132 $1,476 $1,476 $1,623 $1,623 $1,772
Transfers ($1,105)($1,092)($978)($1,057)($1,010)($1,060)($256)($248)($243)($239)($229)
Total Revenue Requirement $13,419 $14,954 $16,194 $17,633 $19,256 $20,048 $20,844 $21,213 $21,737 $22,122 $22,677
Balance/(Deficiency) of Funds $246 ($1,170)($2,342)($3,663)($5,167)($5,841)($6,504)($6,737)($7,116)($7,349)($7,737)
Rate Adj. as a % of Rate Rev -1.9%8.9%17.7%27.4%38.4%43.0%47.4%48.7%51.0%52.2%54.5%
Proposed Rate Adjustment 0.0%9.0%9.0%8.0%8.0%7.0%3.0%3.0%3.0%3.0%3.0%
Rate Revenue After Adjustment $13,020 $14,310 $15,733 $17,139 $18,670 $20,151 $20,938 $21,754 $22,603 $23,483 $24,401
Debt Service Coverage Ratio
Before Rate Asjustment 1.44 1.28 1.34 1.24 1.06 0.95 1.23 1.08 0.84 0.70 0.51
After Rate Adjustment 1.44 1.72 2.60 3.15 3.50 4.03 6.13 6.45 6.17 6.50 6.27
Average Monthly Residential Bill $73.56 $80.18 $87.40 $94.39 $101.94 $109.08 $112.35 $115.72 $119.19 $122.77 $126.45
$ Change Per Month 0.00 6.62 7.22 6.99 7.55 7.14 3.27 3.37 3.47 3.58 3.68
Cumulative $ Change per Month 0.00 6.62 13.84 20.83 28.38 35.52 38.79 42.16 45.63 49.21 52.89
Ending Reserve Balance $6,375 $6,413 $7,683 $6,712 $7,903 $7,532 $9,388 $9,531 $12,249 $13,316 $17,015
Low Interest Loan $0 $0 $2,200 $0 $2,200 $0 $2,200 $0 $2,200 $0 $2,200
Funding Available for Capital $2,253 $3,270 $5,300 $6,500 $7,600 $8,100 $8,400 $8,400 $8,400 $8,400 $8,400
ProjectedBudget
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Water Utility Page 1 of 1
Revenue Requirement
Exhibit 1 - Escalation Factors
Budget Budget
FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Revenues
As Customer GrowthCustomer Growth Calculated 1.0%1.0%1.0%1.0%1.0%1.0%1.0%1.0%1.0%1.0%
As Consumer Price IndexConsumer Price Index Calculated 2.6%2.6%2.6%2.6%2.6%2.6%2.6%2.6%2.6%2.6%
As Standby FeesStandby Fees Calculated -1.0%-1.0%-1.0%-1.0%-1.0%-1.0%-1.0%-1.0%-1.0%-1.0%
As Misc. RevenueMisc. Revenue Calculated 2.0%2.0%2.0%2.0%2.0%2.0%2.0%2.0%2.0%2.0%
As Consumption GrowthConsumption Growth Calculated 0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%
As FlatFlat Calculated 0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%
Expenses
As SalariesSalaries Budget Budget 3.0%3.0%3.0%3.0%3.0%3.0%3.0%3.0%3.0%
As RetirementRetirement Budget Budget 3.0%3.0%3.0%3.0%3.0%3.0%3.0%3.0%3.0%
As BenefitsBenefits Budget Budget 3.0%3.0%3.0%3.0%3.0%3.0%3.0%3.0%3.0%
As Dental & Vision BenefitsDental & Vision Benefits Budget Budget 6.0%6.0%6.0%6.0%6.0%6.0%6.0%6.0%6.0%
As Repairs & MaintenanceRepairs & Maintenance Budget Budget 3.3%3.3%3.3%3.3%3.3%3.3%3.3%3.3%3.3%
As Worker's CompensationWorker's Compensation Budget Budget 3.3%3.3%3.3%3.3%3.3%3.3%3.3%3.3%3.3%
As OPEBOPEB Budget Budget 5.0%5.0%5.0%5.0%5.0%5.0%5.0%5.0%5.0%
As Materials & SuppliesMaterials & Supplies Budget Budget 3.0%3.0%3.0%3.0%3.0%3.0%3.0%3.0%3.0%
As EquipmentEquipment Budget Budget 3.0%3.0%3.0%3.0%3.0%3.0%3.0%3.0%3.0%
As MiscellaneousMiscellaneous Budget Budget 3.0%3.0%3.0%3.0%3.0%3.0%3.0%3.0%3.0%
As Operations & MaintenanceOperations & Maintenance Budget Budget 5.1%3.0%3.0%3.0%3.0%3.0%3.0%3.0%3.0%
As Professional ServicesProfessional Services Budget Budget 3.5%3.5%3.5%3.5%3.5%3.5%3.5%3.5%3.5%
As RentRent Budget Budget 5.9%3.0%3.0%3.0%3.0%3.0%3.0%3.0%3.0%
As Purchased PowerPurchased Power Budget Budget 1.0%1.0%1.0%1.0%1.0%1.0%1.0%1.0%1.0%
As FlatFlat Budget Budget 0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%
As One-timeOne-time -100.0%-100.0%-100.0%-100.0%-100.0%-100.0%-100.0%-100.0%-100.0%-100.0%-100.0%
As FlatFlat 0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%
As Capital O&MCapital O&M Budget Budget -39.5%2.0%2.0%2.0%2.0%2.0%2.0%2.0%2.0%
Investment Interest 2.0%2.0%2.0%2.0%2.0%2.0%2.0%2.0%2.0%2.0%2.0%
New Long-Term Debt Assumptions
Revenue Bond
Rate 4.8%5.0%5.0%5.0%5.0%5.0%5.0%5.0%5.0%5.0%5.0%
Term 20 20 20 20 20 20 20 20 20 20 20
Low Interest Loan
Rate 2.8%3.0%3.0%3.0%3.0%3.0%3.0%3.0%3.0%3.0%3.0%
Term 20 20 20 20 20 20 20 20 20 20 20
Projected
Notes
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Water Utility Page 1 of 5
Revenue Requirement
Exhibit 2 - Revenues & Expenses
FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Revenues
Rate Revenues
Residential Residential $11,075,144 $11,176,645 $11,282,807 $11,389,805 $11,497,638 $11,606,308 $11,716,649 $11,827,827 $11,939,840 $12,052,689 $12,168,046 Calc'd in Cust Data Tab
CommercialCommercial 1,399,030 1,405,305 1,413,135 1,420,965 1,428,796 1,437,462 1,446,129 1,454,795 1,463,462 1,472,128 1,480,794 Calc'd in Cust Data Tab
Zone Charges 546,274 546,275 546,275 546,275 546,275 546,275 546,275 546,275 546,275 546,275 546,275 Calc'd in Cust Data Tab
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Total Rate RevenuesTotal Rate Revenues $13,020,448 $13,128,225 $13,242,217 $13,357,046 $13,472,710 $13,590,046 $13,709,054 $13,828,897 $13,949,577 $14,071,093 $14,195,116
Other Revenues
Misc Operating RevenueMisc Operating Revenue $241,738 $252,578 $252,578 $252,578 $252,578 $252,578 $252,578 $252,578 $252,578 $252,578 $252,578 As Flat
Non-Potable 103,485 103,485 103,485 103,485 103,485 103,485 103,485 103,485 103,485 103,485 103,485 Calc'd in Cust Data Tab
Misc Rents Misc Rents 75,518 76,651 78,184 79,748 81,343 82,970 84,629 86,321 88,048 89,809 91,605 As Misc. Revenue
Standby Revenue 123,280 119,582 118,386 117,202 116,030 114,870 113,721 112,584 111,458 110,344 109,240 As Standby Fees
Interest Income 100,000 103,000 56,802 59,775 62,149 62,759 77,160 91,659 115,420 146,149 187,416
----------------------------------------------------------------------------------------------------------------------------------------------------------Total Other RevenuesTotal Other Revenues $644,021 $655,296 $609,435 $612,788 $615,585 $616,661 $631,573 $646,627 $670,989 $702,365 $744,324
Total Revenues $13,664,469 $13,783,521 $13,851,652 $13,969,834 $14,088,295 $14,206,707 $14,340,627 $14,475,524 $14,620,566 $14,773,457 $14,939,440
Budget
Notes
Projected
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Revenue Requirement
Exhibit 2 - Revenues & Expenses
FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Budget
Notes
Projected
Expenses
Board of Directors $275,812 $166,111 $171,094 $176,227 $181,514 $186,959 $192,568 $198,345 $204,296 $210,424 $216,737 As Miscellaneous
General Manger
Admin & Ops General Exp $283,146 $421,314 $433,953 $446,972 $460,381 $474,193 $488,418 $503,071 $518,163 $533,708 $549,719 As Salaries
Public Information 104,849 92,889 95,675 98,546 101,502 104,547 107,683 110,914 114,241 117,669 121,199 As Salaries
Legislature & Regulations 45,809 47,380 48,801 50,265 51,773 53,327 54,926 56,574 58,271 60,020 61,820 As Salaries
Office Supplies & Expenses 50,505 77,020 79,331 81,711 84,162 86,687 89,287 91,966 94,725 97,567 100,494 As Materials & Supplies
Outside Service Employed 115,050 60,049 62,151 64,326 66,577 68,908 71,319 73,816 76,399 79,073 81,841 As Professional Services
Injuries & Damages 1,564 2,305 2,374 2,445 2,519 2,594 2,672 2,752 2,835 2,920 3,008 As Miscellaneous
General Advertising 42,774 64,772 66,715 68,717 70,778 72,901 75,089 77,341 79,661 82,051 84,513 As Miscellaneous
Misc General Expense 44,301 45,817 47,192 48,607 50,065 51,567 53,114 54,708 56,349 58,040 59,781 As Miscellaneous
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Total General Manager $687,998 $811,546 $836,192 $861,589 $887,758 $914,724 $942,510 $971,142 $1,000,645 $1,031,047 $1,062,373
Adminsitrative Services
Customer Accounts Supervision $151,206 $159,569 $164,356 $169,286 $174,365 $179,596 $184,984 $190,533 $196,249 $202,137 $208,201 As Salaries
Meter Reading Expenses 962 990 1,020 1,051 1,082 1,115 1,148 1,183 1,218 1,255 1,292 As Salaries
Customer Records & Collections 589,591 565,273 582,231 599,698 617,689 636,220 655,307 674,966 695,215 716,071 737,553 As Salaries
Cust Rec&Coll Meter Reader 0 0 0 0 0 0 0 0 0 0 0 As Salaries
Provision for Bad Debts 5,249 5,249 5,406 5,569 5,736 5,908 6,085 6,268 6,456 6,649 6,849 As Miscellaneous
Admin and General Expenses 470,287 462,481 485,605 509,885 535,380 562,149 590,256 619,769 650,757 683,295 717,460 As OPEB
Office Supplies & Expenses 69,043 71,114 73,247 75,445 77,708 80,039 82,441 84,914 87,461 90,085 92,788 As Materials & Supplies
Outside Services Employed 26,398 27,189 28,141 29,126 30,145 31,200 32,292 33,422 34,592 35,803 37,056 As Professional Services
Insurance Expense 136,191 140,277 144,485 148,820 153,284 157,883 162,619 167,498 172,523 177,699 183,030 As Miscellaneous
Injuries & Damages 13,613 14,211 14,637 15,076 15,529 15,995 16,474 16,969 17,478 18,002 18,542 As Miscellaneous
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Total Adminstrative Services $1,462,540 $1,446,353 $1,499,129 $1,553,956 $1,610,918 $1,670,104 $1,731,606 $1,795,521 $1,861,949 $1,930,996 $2,002,770
Conservation
Water Conservation $76,057 $79,160 $81,535 $83,981 $86,500 $89,095 $91,768 $94,521 $97,357 $100,277 $103,286 As Salaries
Admin & Ops General 9,073 9,623 9,912 10,209 10,516 10,831 11,156 11,491 11,835 12,191 12,556 As Salaries
Office Supplies & Expenses 6,764 6,967 7,176 7,391 7,613 7,841 8,077 8,319 8,569 8,826 9,090 As Materials & Supplies
IT/GIS 0 0 0 0 0 0 0 0 0 0 0 As Salaries
Injuries & Damages 0 0 0 0 0 0 0 0 0 0 0 As Miscellaneous
General Advertising 7,784 8,018 8,259 8,506 8,761 9,024 9,295 9,574 9,861 10,157 10,462 As Miscellaneous
Misc General Expense 3,000 3,090 3,183 3,278 3,377 3,478 3,582 3,690 3,800 3,914 4,032 As Miscellaneous
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Water Utility Page 3 of 5
Revenue Requirement
Exhibit 2 - Revenues & Expenses
FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Budget
Notes
Projected
Water Operations
Ops Supervision & Engineering $290,389 $309,267 $318,545 $328,102 $337,945 $348,083 $358,525 $369,281 $380,360 $391,770 $403,523 As Salaries
Construction Engineering 69,679 74,209 76,435 78,728 81,090 83,523 86,028 88,609 91,268 94,006 96,826 As Salaries
Facilites Operations 839,605 911,382 938,724 966,885 995,892 1,025,769 1,056,542 1,088,238 1,120,885 1,154,512 1,189,147 As Salaries
Power Supply 1,319,957 1,333,468 1,347,118 1,360,589 1,374,195 1,387,937 1,401,816 1,415,834 1,429,993 1,444,292 1,458,735 As Purchased Power
Pumping Operations 573,252 577,594 594,921 612,769 631,152 650,087 669,589 689,677 710,367 731,678 753,629 As Salaries
Meters/Services Operations 497,992 453,563 467,170 481,185 495,621 510,489 525,804 541,578 557,825 574,560 591,797 As Salaries
Misc. General Expense 419,486 508,956 524,225 539,951 556,150 572,834 590,019 607,720 625,952 644,730 664,072 As Miscellaneous
Maint Supervision & Engineering 205,383 226,734 233,536 240,542 247,758 255,191 262,847 270,732 278,854 287,220 295,836 As Salaries
Maint of Sources 821,218 844,156 869,481 895,565 922,432 950,105 978,608 1,007,966 1,038,205 1,069,352 1,101,432 As Miscellaneous
Maint of Distribution 689,858 718,575 740,132 762,336 785,206 808,762 833,025 858,016 883,757 910,269 937,577 As Miscellaneous
Meter Reader Expense 0 0 0 0 0 0 0 0 0 0 0 As Miscellaneous
Injuries & Damages 82,397 85,537 88,103 90,746 93,469 96,273 99,161 102,136 105,200 108,356 111,606 As Miscellaneous
Annual Paving Maintenance 0 250,000 257,500 265,225 273,182 281,377 289,819 298,513 307,468 316,693 326,193 As Miscellaneous
Water Meter Maintenance & MTU Replacement 0 175,000 180,250 185,658 191,227 196,964 202,873 208,959 215,228 221,685 228,335 As Miscellaneous
Fire Hydrant Maintenance 0 75,000 77,250 79,568 81,955 84,413 86,946 89,554 92,241 95,008 97,858 As Miscellaneous
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Total Water Operations $5,809,217 $6,543,441 $6,713,390 $6,887,849 $7,067,273 $7,251,807 $7,441,602 $7,636,814 $7,837,602 $8,044,130 $8,256,568
IT/GIS
Engineering/SCADA Ops $115,063 $120,685 $124,306 $128,035 $131,876 $135,832 $139,907 $144,104 $148,427 $152,880 $157,467 As Salaries
GIS/Engineering Ops 91,414 95,185 98,041 100,982 104,011 107,132 110,346 113,656 117,066 120,578 124,195 As Salaries
Meter Reading 38,385 39,819 41,014 42,244 43,511 44,817 46,161 47,546 48,972 50,442 51,955 As Miscellaneous
Customer Records 112,155 103,324 106,424 109,617 112,905 116,292 119,781 123,375 127,076 130,888 134,815 As Salaries
Administrative & General IT Ops 364,690 380,188 391,594 403,341 415,442 427,905 440,742 453,964 467,583 481,611 496,059 As Miscellaneous
Office Supplies & Expenses 8,908 9,175 9,450 9,734 10,026 10,327 10,636 10,955 11,284 11,623 11,971 As Materials & Supplies
Outside Services Employed 10,000 10,300 10,661 11,034 11,420 11,819 12,233 12,661 13,104 13,563 14,038 As Professional Services
Safety 15,991 16,796 17,300 17,819 18,353 18,904 19,471 20,055 20,657 21,277 21,915 As Miscellaneous
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Total IT/GIS $756,605 $775,472 $798,788 $822,805 $847,544 $873,028 $899,278 $926,317 $954,170 $982,861 $1,012,414
Interdepartmental Rent $506,843 $536,537 $567,969 $585,008 $602,558 $620,635 $639,254 $658,432 $678,185 $698,530 $719,486 As Rent
Total Expenses $9,601,694 $10,386,318 $10,696,627 $11,000,800 $11,314,333 $11,637,527 $11,970,697 $12,314,166 $12,668,269 $13,033,353 $13,409,775
Additional Expenditures $0 $0 $492,500 $507,275 $522,493 $538,168 $554,313 $570,942 $588,071 $605,713 $623,884
Total Operations & Maintenance Expense $9,601,694 $10,386,318 $11,189,127 $11,508,075 $11,836,826 $12,175,695 $12,525,010 $12,885,108 $13,256,340 $13,639,066 $14,033,659
8.2%7.7%2.9%2.9%2.9%2.9%2.9%2.9%2.9%2.9%
Rate Funded Capital $2,092,867 $3,000,000 $4,000,000 $5,200,000 $6,300,000 $6,800,000 $7,100,000 $7,100,000 $7,100,000 $7,100,000 $7,100,000 FY 2019 Dep. Exp. =$4,533,109
43.3%33.3%30.0%21.2%7.9%4.4%0.0%0.0%0.0%0.0%
Debt Service
Pipeline COP RatesPipeline COP Rates $1,265,881 $1,252,412 $576,869 $577,228 $573,008 $576,529 $573,196 $575,581 $574,322 $570,555 $575,893 Financial Plan
Pipeline COP FFPipeline COP FF 357,617 356,179 358,008 358,672 359,233 360,884 359,005 359,806 358,474 360,101 359,147 Financial Plan
Pipeline COP AssmtPipeline COP Assmt 97,973 96,216 99,060 97,837 100,297 97,925 99,736 97,150 99,142 100,444 97,360 Financial Plan
DWR-SRF Donner Lake AssmtDWR-SRF Donner Lake Assmt 800,852 800,852 800,852 800,852 800,852 800,852 0 0 0 0 0 Financial Plan
DWR PROP 55 RatesDWR PROP 55 Rates 306,481 153,241 0 0 0 0 0 0 0 0 0
2020 Balance (diff between Opt budget and debt schedules)0 0 0 0 0 0 0 0 0 0 0
New Low Interest LoanNew Low Interest Loan 0 0 147,875 147,875 295,749 295,749 443,624 443,624 591,498 591,498 739,373 Calculated @ 2.98% for 20 yrs
New Revenue BondNew Revenue Bond 0 0 0 0 0 0 0 0 0 0 0 Calculated @ 4.98% for 20 yrs
----------------------------------------------------------------------------------------------------------------------------------------------------------Total Debt Service $2,828,804 $2,658,900 $1,982,664 $1,982,464 $2,129,139 $2,131,939 $1,475,561 $1,476,161 $1,623,436 $1,622,598 $1,771,773
-6.0%-25.4%0.0%7.4%0.1%-30.8%0.0%10.0%-0.1%9.2%
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Water Utility Page 4 of 5
Revenue Requirement
Exhibit 2 - Revenues & Expenses
FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Budget
Notes
Projected
Transfers
In
Transfer from DLAD for SRF debt pmtTransfer from DLAD for SRF debt pmt ($800,852)($800,852)($800,852)($800,852)($800,852)($800,852)$0 $0 $0 $0 $0
Transfer in from DLAD Surcharge for 2006 COP debt pmt (97,973) (96,216) (99,060) (97,837) (100,297) (97,925) (99,736) (97,150) (99,142) (100,444) (97,360)
Transfer in from employee and overhead for sidefund debt (22,838) (13,022) 0 0 0 0 0 0 0 0 0
Transfer in from Vehicle Reserve (on CIP Calculation)0 0 0 0 0 0 0 0 0 0 0
Xfr in from FF Reserve (357,617) (356,179) (358,008)(358,672)(359,233)(360,884)(359,005)(359,806)(358,474)(360,101)(359,147)
Transfer from Operating Reserve Fund 0 0 0 0 0 0 0 0 0 0 0
Out
Debt Service PaymentsDebt Service Payments $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Transfer to Vehicle ReserveTransfer to Vehicle Reserve 174,709 174,709 279,950 200,000 250,000 200,000 202,536 208,612 214,870 221,316 227,956
Transfer to Operating Reserve Fund 0 0 0 0 0 0 0 0 0 0 0
----------------------------------------------------------------------------------------------------------------------------------------------------------Total TransfersTotal Transfers ($1,104,571)($1,091,560)($977,970)($1,057,361)($1,010,382)($1,059,661)($256,205)($248,344)($242,746)($239,229)($228,551)
Total Revenue Requirements $13,418,793 $14,953,658 $16,193,820 $17,633,178 $19,255,583 $20,047,973 $20,844,365 $21,212,924 $21,737,030 $22,122,435 $22,676,881
20.7% 8.9% 9.2% 4.1% 4.0% 1.8% 2.5% 1.8% 2.5%
Balance / (Deficiency) of Funds $245,676 ($1,170,137)($2,342,168)($3,663,344)($5,167,288)($5,841,266)($6,503,738)($6,737,400)($7,116,465)($7,348,978)($7,737,441)
Cumulative Rate Adjust. as a % of Rate Rev -1.9%8.9%17.7%27.4%38.4%43.0%47.4%48.7%51.0%52.2%54.5%
Proposed Rate Adjustment 0.0%9.0%9.0%8.0%8.0%7.0%3.0%3.0%3.0%3.0%3.0%
Addt'l Rev from Proposed Adj.$0 $1,181,540 $2,490,861 $3,782,021 $5,197,769 $6,561,353 $7,228,647 $7,925,461 $8,652,950 $9,412,309 $10,205,981
Net Bal/(Def) of Funds After Rate Adj.$245,676 $11,403 $148,693 $118,677 $30,481 $720,087 $724,909 $1,188,061 $1,536,485 $2,063,331 $2,468,540
Additional Rate Increase Needed -1.9%-0.1%-1.1%-0.9%-0.2%-5.3%-5.3%-8.6%-11.0%-14.7%-17.4%
Debt Service Coverage Ratio
Before Rate Adjustment 1.44 1.28 1.34 1.24 1.06 0.95 1.23 1.08 0.84 0.70 0.51
After Rate Adjustment 1.44 1.72 2.60 3.15 3.50 4.03 6.13 6.45 6.17 6.50 6.27
Average Monthly Residential Bill (3/4" meter + 5,000 gal)$73.56 $80.18 $87.40 $94.39 $101.94 $109.08 $112.35 $115.72 $119.19 $122.77 $126.45
$ Change Per Month 6.62 7.22 6.99 7.55 7.14 3.27 3.37 3.47 3.58 3.68
Cumulative $ Change per Month 6.62 13.84 20.83 28.38 35.52 38.79 42.16 45.63 49.21 52.89
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Water Utility Page 5 of 5
Revenue Requirement
Exhibit 2 - Revenues & Expenses
FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Budget
Notes
Projected
Cash Reserves
Operating Cash Fund
Beginning Balance $2,583,000 $2,828,676 $2,840,079 $2,988,772 $3,107,449 $3,137,930 $3,858,017 $4,582,925 $5,770,987 $7,307,472 $9,370,803
Plus: Additions 245,676 11,403 148,693 118,677 30,481 720,087 724,909 1,188,061 1,536,485 2,063,331 2,468,540
Less: Uses of Funds 0 0 0 0 0 0 0 0 0 0 0
Ending Balance $2,828,676 $2,840,079 $2,988,772 $3,107,449 $3,137,930 $3,858,017 $4,582,925 $5,770,987 $7,307,472 $9,370,803 $11,839,343
Target Balance (60 Days O&M + DS Payments)$4,407,165 $4,366,240 $3,821,972 $3,874,202 $4,074,919 $4,133,423 $3,534,466 $3,594,261 $3,802,561 $3,864,636 $4,078,676 "equal to twice the highest month budgeted expenditure (this will probably be the month in which principal and interest on debt are due)
Or 180 Days of O&M $4,800,847 $5,193,159 $5,594,563 $5,754,038 $5,918,413 $6,087,847 $6,262,505 $6,442,554 $6,628,170 $6,819,533 $7,016,830
Operating Reserve Fund
Beginning Balance $1,632,000 $1,632,000 $1,632,000 $1,632,000 $1,632,000 $1,632,000 $1,632,000 $1,632,000 $1,632,000 $1,632,000 $1,632,000
Plus: Additions 0 0 0 0 0 0 0 0 0 0 0
Less: Uses of Funds 0 0 0 0 0 0 0 0 0 0 0
Ending Balance $1,632,000 $1,632,000 $1,632,000 $1,632,000 $1,632,000 $1,632,000 $1,632,000 $1,632,000 $1,632,000 $1,632,000 $1,632,000
Capital Improvement Reserve
Beginning Balance $0 $0 $0 $1,100,000 $0 $1,100,000 $0 $1,100,000 $0 $1,100,000 $0
Plus: Additions 0 0 1,100,000 0 1,100,000 0 1,100,000 0 1,100,000 0 1,100,000
Plus: Loan Proceeds 0 0 0 0 0 0 0 0 0 0 0
Plus: Bond Proceeds 0 0 0 0 0 0 0 0 0 0 0
Less: Uses of Funds 0 0 0 (1,100,000)0 (1,100,000)0 (1,100,000)0 (1,100,000)0
Ending Balance $0 $0 $1,100,000 $0 $1,100,000 $0 $1,100,000 $0 $1,100,000 $0 $1,100,000
Target Balance: Average Annual Capital Improv.$6,662,287 $6,842,000 $7,027,000 $7,217,000 $7,412,000 $7,612,000 $7,818,000 $8,029,000 $8,246,000 $8,469,000 $8,698,000 2.7% / Yr. Growth
Vehicle Reserve Fund
Beginning Balance $15,000 $30,303 $45,912 $56,980 $58,119 $110,282 $112,487 $117,324 $128,454 $146,191 $170,858
Plus: Additions 174,709 174,709 279,950 200,000 250,000 200,000 202,536 208,612 214,870 221,316 227,956
Plus: Interest 594 900 1,117 1,140 2,162 2,206 2,300 2,519 2,866 3,350 3,976
Less: Uses of Funds (160,000)(160,000)(270,000)(200,000)(200,000)(200,000)(200,000)(200,000)(200,000)(200,000)(200,000)
Ending Balance $30,303 $45,912 $56,980 $58,119 $110,282 $112,487 $117,324 $128,454 $146,191 $170,858 $202,790
Target Balance: (?)
Deferred Liability Reserve
Beginning Balance $107,000 $109,140 $111,323 $113,549 $115,820 $118,137 $120,499 $122,909 $125,368 $127,875 $130,432
Plus: Additions 0 0 0 0 0 0 0 0 0 0 0
Plus: Interest 2,140 2,183 2,226 2,271 2,316 2,363 2,410 2,458 2,507 2,557 2,609
Less: Uses of Funds 0 0 0 0 0 0 0 0 0 0 0
Ending Balance $109,140 $111,323 $113,549 $115,820 $118,137 $120,499 $122,909 $125,368 $127,875 $130,432 $133,041
$824,000 $848,720 $874,182 $900,407 $927,419 $955,242 $983,899 $1,013,416 $1,043,819 $1,075,133 $1,107,387
Facility Fee Reserve
Beginning Balance $1,598,000 $1,775,191 $1,784,143 $1,791,410 $1,798,145 $1,804,444 $1,809,184 $1,832,773 $1,873,696 $1,935,361 $2,012,192
Plus: Additions 500,000 330,148 330,149 330,150 330,150 330,150 346,658 363,990 382,190 397,477 413,377
Plus: Interest 34,808 34,983 35,126 35,258 35,381 35,474 35,937 36,739 37,948 39,455 41,328
Less: Uses of Funds (357,617)(356,179)(358,008)(358,672)(359,233)(360,884)(359,005)(359,806)(358,474)(360,101)(359,147)
Ending Balance $1,775,191 $1,784,143 $1,791,410 $1,798,145 $1,804,444 $1,809,184 $1,832,773 $1,873,696 $1,935,361 $2,012,192 $2,107,750
Total Reserve Funds
Beginning $4,303,000 $4,743,310 $4,781,457 $6,050,710 $5,079,533 $6,270,791 $5,900,187 $7,755,931 $7,898,505 $10,616,899 $11,684,285
Ending $4,743,310 $4,781,457 $6,050,710 $5,079,533 $6,270,791 $5,900,187 $7,755,931 $7,898,505 $10,616,899 $11,684,285 $15,382,924
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Water Utility Page 1 of 1
Revenue Requirement
Exhibit 3 - Capital Improvement Plan
FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Notes
Annual CIP
Emergency Generator $153,615 $0 $0 $0 $0 $0 $0 $0 $0 $0
Generator 1,786,785 0 0 0 0 0 0 0 0 0
New Pipeline 0 1,884,911 1,465,526 1,817,022 1,734,361 1,707,086 618,449 1,195,103 0 1,242,508
New PRV Station 0 63,357 181,803 0 0 0 0 0 0 0
Pipe Modification 0 0 0 32,013 0 0 76,112 0 0 0
Pipeline Replacement 2,315,505 2,408,125 2,504,450 2,604,628 2,708,813 2,817,166 2,929,853 3,047,047 3,168,928 3,295,686
PRV Rehabilitation 90,000 93,600 97,344 101,238 78,965 82,124 85,409 88,825 92,378 96,074
Pump Station Rehabilitation 1,293,600 1,345,344 1,259,242 1,309,612 1,361,996 1,416,476 1,473,135 1,149,045 0 1,242,807
Pump Station Replacement 1,237,005 0 0 0 383,015 0 0 0 2,182,880 0
Service Modification 0 0 0 92,737 0 0 167,671 0 0 0
Tank Rehabilitation 813,600 846,144 879,990 915,189 951,797 989,869 1,029,464 1,070,642 876,979 912,058
Well Rehabilitation 0 327,473 169,671 117,638 122,344 127,238 579,357 80,278 83,490 86,829
Well Replacement 0 0 433,301 0 0 0 0 0 0 0
Vehicles 160,000 270,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000
Additional Capital Project 0 (4,690,110) (1,868,954) (691,326) 409,923 558,708 1,060,042 1,240,551 1,569,059 1,795,345 1,324,038
----------------------------------------------------------------------------------------------------------------------------------------------------------Total Annual CIP $2,252,867 $3,270,000 $5,300,000 $6,500,000 $7,600,000 $8,100,000 $8,400,000 $8,400,000 $8,400,000 $8,400,000 $8,400,000
Transfer to Capital Reserve 0 0 1,100,000 0 1,100,000 0 1,100,000 0 1,100,000 0 1,100,000
Total Capital Improvement Projects $2,252,867 $3,270,000 $6,400,000 $6,500,000 $8,700,000 $8,100,000 $9,500,000 $8,400,000 $9,500,000 $8,400,000 $9,500,000
Less: Outside Funding Sources
Operating Cash Fund 0 0 0 0 0 0 0 0 0 0 0
Operating Reserve Fund 0 0 0 0 0 0 0 0 0 0 0
Capital Improvement Reserve 0 0 0 1,100,000 0 1,100,000 0 1,100,000 0 1,100,000 0
Connection Fees 0 0 0 0 0 0 0 0 0 0 0
Vehicle Fund 160,000 270,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000
Assumed Debt Issuance / Proceeds 0 0 0 0 0 0 0 0 0 0 0
Low Interest Loans 0 0 2,200,000 0 2,200,000 0 2,200,000 0 2,200,000 0 2,200,000
Revenue Bonds 0 0 0 0 0 0 0 0 0 0 0---------------------------------------------------------------------------------------------------------------------------------------------------------------------Total Funding Sources $160,000 $270,000 $2,400,000 $1,300,000 $2,400,000 $1,300,000 $2,400,000 $1,300,000 $2,400,000 $1,300,000 $2,400,000
Rate Funded Capital $2,092,867 $3,000,000 $4,000,000 $5,200,000 $6,300,000 $6,800,000 $7,100,000 $7,100,000 $7,100,000 $7,100,000 $7,100,000 $0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
$8,000,000
$9,000,000
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Truckee Donner PUD
Water Utility
Revenue Requirement
Exhibit 4 - Debt Service
Pipeline COP
Rates
Pipeline COP
FF
Pipeline COP
Assmt
DWR-SRF
Donner Lake
Assmt
DWR PROP
55 Rates Total
Payment Fiscal Total
Date Year P&I P&I P&I P&I P&I P&I
2020 $1,265,881 $357,617 $97,973 $800,852 $306,481 $2,828,804
2021 1,252,412 356,179 96,216 800,852 153,241 2,658,900
2022 576,869 358,008 99,060 800,852 1,834,789
2023 577,228 358,672 97,837 800,852 1,834,589
2024 573,008 359,233 100,297 800,852 1,833,390
2025 576,529 360,884 97,925 800,852 1,836,190
2026 573,196 359,005 99,736 1,031,937
2027 575,581 359,806 97,150 1,032,537
2028 574,322 358,474 99,142 1,031,938
2029 570,555 360,101 100,444 1,031,100
2030 575,893 359,147 97,360 1,032,400
2031 574,705 359,524 98,421 1,032,650
2032 573,333 357,313 100,104 1,030,750
2033 575,711 359,424 101,490 1,036,625
2034 574,484 359,309 97,207 1,031,000
2035 306,800 306,800
Total $9,989,707 $5,689,496 $1,480,362 $4,805,112 $459,722 $22,424,399
Notes
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Water Utility
Revenue Requirement
Exhibit 5 - Revenue at Present Rates
Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Total
Residential
Growth Factor 1.00%
Meter Charge As of 1/1/2020
5/8" x 3/4"$69.66 11,548 11,549 11,550 11,554 11,556 11,562 11,582 11,586 11,587 11,593 11,598 11,599 11,572
3/4"69.66 847 846 846 845 849 855 861 873 881 886 887 891 864
1"83.09 0 0 0 0 0 0 0 0 0 0 0 0 0---------------------------------------------------------------------------------------------------------------------------
Total Metered Customers 12,395 12,395 12,396 12,399 12,405 12,417 12,443 12,459 12,468 12,479 12,485 12,490 12,436
Total Metered Monthly Charges $863,416 $863,416 $863,487 $863,698 $864,120 $864,964 $866,793 $867,919 $868,552 $869,256 $869,678 $870,030 $10,395,328
Metered Consumption ($/1,000 gal)As of 1/1/2020
0 - 8,000 gal (block 1)$0.78 30,990 30,587 27,646 28,567 23,439 33,494 49,300 53,279 47,382 41,255 33,568 27,514 427,022
8,000 + gal (block 2)0.97 4,226 5,398 5,266 0 4,136 12,388 43,719 70,626 57,911 36,585 10,600 2,721 253,576---------------------------------------------------------------------------------------------------------------------------
Total Consumption 35,216 35,985 32,911 28,567 27,575 45,883 93,019 123,905 105,292 77,840 44,169 30,236 680,598
Total Consumption Charges $28,271 $29,094 $26,671 $22,283 $22,294 $38,142 $80,861 $110,065 $93,131 $67,666 $36,466 $24,101 $579,046
Additional Zone Charge ($/1,000 gal)As of 1/1/2020
Zone 1 $0.00 11,725 15,089 12,784 11,748 11,703 20,774 41,379 59,214 51,429 39,940 22,835 12,617 311,235
Zone 2 0.60 7,529 7,636 6,575 5,833 5,889 11,042 22,502 29,048 24,482 17,880 11,323 6,571 156,311
Zone 3 1.20 4,958 4,167 4,031 3,238 2,816 4,388 9,175 11,633 9,811 6,766 2,968 3,354 67,304
Zone 4 1.80 6,240 5,264 5,249 4,135 4,451 5,973 12,077 14,624 12,030 8,088 4,684 4,533 87,349
Zone 5 2.40 3,615 2,927 3,392 2,828 2,049 2,808 6,073 6,740 5,463 3,829 1,733 2,595 44,052
Zone 6 3.00 630 506 554 386 326 438 822 1,183 898 617 337 311 7,009
Zone 7 3.60 518 395 327 399 341 460 991 1,463 1,180 722 288 254 7,338---------------------------------------------------------------------------------------------------------------------------
Total Zone Charge Volume 35,216 35,985 32,911 28,567 27,575 45,883 93,019 123,905 105,292 77,840 44,169 30,236 680,598
Total Zone Charges $34,132 $29,025 $29,210 $24,210 $22,048 $32,351 $66,858 $82,704 $68,170 $47,043 $24,994 $24,203 $484,947
Un-metered Residential As of 1/1/2020
Zone 1 $79.05 75 75 75 74 74 74 74 74 74 74 74 74 74
Zone 2 82.09 16 16 16 16 16 16 16 16 16 16 16 16 16
Zone 3 86.35 0 0 0 0 13 12 0 12 0 0 0 0 3
Zone 4 90.61 0 0 0 0 0 0 0 0 0 0 0 0 0
Zone 5 94.84 12 12 12 12 0 12 12 0 12 12 12 12 10
Zone 6 98.88 0 0 0 0 0 0 0 0 0 0 0 0 0
Zone 7 103.38 0 0 0 0 0 0 0 0 0 0 0 0 0---------------------------------------------------------------------------------------------------------------------------
Total Un-metered Residential Customers 103 103 103 102 103 114 102 102 102 102 102 102 103
Total Un-metered Charges $8,380 $8,380 $8,380 $8,301 $8,286 $9,337 $8,301 $8,199 $8,301 $8,301 $8,301 $8,301 $100,770
Total Residential Revenue 934,200 929,915 927,748 918,491 916,748 944,794 1,022,814 1,068,887 1,038,154 992,266 939,439 926,634 11,560,092
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Water Utility
Revenue Requirement
Exhibit 5 - Revenue at Present Rates
Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Total
Commercial
Meter Charge
5/8" x 3/4"$69.66 0 0 0 0 0 0 0 0 0 0 0 0 0
3/4"69.66 343 343 343 343 343 345 348 348 350 355 356 257 340
1"83.09 183 183 183 183 183 183 183 183 183 184 184 185 183
1 1/2"116.80 88 88 88 88 88 88 88 88 88 88 88 88 88
2"160.58 76 76 76 76 78 78 80 80 81 81 81 81 78
3"268.81 5 5 5 5 5 5 5 5 5 5 5 5 5
4"384.62 12 12 12 12 12 12 12 12 12 12 12 12 12
6"576.93 4 4 4 4 4 4 4 4 4 4 4 4 4
8"721.16 0 0 0 0 0 0 0 0 0 0 0 0 0---------------------------------------------------------------------------------------------------------------------------
Total Number of Customers 711 711 711 711 713 715 720 720 723 728 729 631 710
Total Monthly Charges $69,888 $69,888 $69,888 $69,888 $70,212 $70,353 $70,888 $70,888 $71,191 $71,557 $71,627 $64,816 $841,085
Commercial Consumption
$/1,000 gal $1.91 15,356 14,814 13,932 13,418 15,169 21,828 39,939 53,564 42,657 27,406 19,844 14,190 292,118---------------------------------------------------------------------------------------------------------------------------
Total Consumption 15,356 14,814 13,932 13,418 15,169 21,828 39,939 53,564 42,657 27,406 19,844 14,190 292,116
Total Consumption Charges $29,331 $28,295 $26,610 $25,628 $28,972 $41,692 $76,284 $102,307 $81,475 $52,345 $37,901 $27,103 $557,941
Additional Zone Charge ($/1,000 gal)
Zone 1 $0.00 11,693 12,502 11,997 11,560 13,408 19,281 32,198 42,310 35,847 24,775 17,711 11,502 244,785
Zone 2 0.60 1,373 1,419 1,317 1,272 1,228 1,753 2,770 3,559 2,678 1,181 1,579 1,142 21,271
Zone 3 1.20 122 111 116 103 155 268 319 471 477 327 70 43 2,582
Zone 4 1.80 704 604 337 340 289 443 4,388 6,673 3,164 762 384 276 18,364
Zone 5 2.40 1,456 175 161 139 85 80 246 525 477 353 94 1,223 5,015
Zone 6 3.00 7 3 3 3 0 1 6 12 4 1 0 2 47
Zone 7 3.60 1 1 1 1 3 3 12 14 11 5 5 3 65---------------------------------------------------------------------------------------------------------------------------
Additional Zone Charge Volume 15,356 14,814 13,932 13,418 15,169 21,828 39,939 53,564 42,657 27,406 19,844 14,190 292,116
Total Zone Charge Revenue 5,758 2,504 1,934 1,846 1,661 2,376 10,594 16,057 9,070 3,344 1,966 4,184 61,294
Total Commercial Revenue $104,976 $100,687 $98,431 $97,362 $100,846 $114,421 $157,767 $189,253 $161,736 $127,245 $111,495 $96,102 $1,460,320
Total Revenue $1,039,176 $1,030,602 $1,026,180 $1,015,853 $1,017,594 $1,059,215 $1,180,580 $1,258,140 $1,199,890 $1,119,511 $1,050,933 $1,022,737 $13,020,412
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Customer Data Projection
Revenue Requirement
Exhibit 6 - Customer Data
Input
As of 1/1/2020 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Residential
Meter Charge
Meter Charge5/8" x 3/4"5/8" x 3/4"$69.66 11,572 11,688 11,805 11,923 12,042 12,162 12,284 12,407 12,531 12,656 12,783 As Customer Growth
3/4"$69.66 864 977 987 997 1,007 1,017 1,027 1,037 1,047 1,057 1,068 As Customer Growth
Meter Charge1"1"$83.09 0 0 0 0 0 0 0 0 0 0 0 As Customer Growth
-------------------------------------------------------------------------------------------------------------------------Total Residential Cust.Total Residential Cust.12,436 12,665 12,792 12,920 13,049 13,179 13,311 13,444 13,578 13,713 13,851
Monthly Charge Revenue $10,395,328 $10,586,927 $10,693,089 $10,800,086 $10,907,920 $11,016,590 $11,126,931 $11,238,108 $11,350,122 $11,462,971 $11,578,328
Metered Consumption ($/1,000 gal)
Metered Consumption ($/1,000 gal)0 - 8,000 gal (block 1)0 - 8,000 gal (block 1)$0.78 427,022 434,892 434,892 434,892 434,892 434,892 434,892 434,892 434,892 434,892 434,892 As Consumption Growth
Metered Consumption ($/1,000 gal)8,000 + gal (block 2)8,000 + gal (block 2)$0.97 253,576 258,250 258,250 258,250 258,250 258,250 258,250 258,250 258,250 258,250 258,250 As Consumption Growth
----------------------------------------------------------------------------------------------------------------------------------------------------------Total Consumption 680,598 693,142 693,142 693,142 693,142 693,142 693,142 693,142 693,142 693,142 693,142
Consumption Charge Revenue $579,046 $589,718 $589,718 $589,718 $589,718 $589,718 $589,718 $589,718 $589,718 $589,718 $589,718
Additional Zone Charge ($/1,000 gal)
Zone 1 $0.00 311,235 311,235 311,235 311,235 311,235 311,235 311,235 311,235 311,235 311,235 311,235 As Consumption Growth
Zone 2 $0.60 156,311 156,311 156,311 156,311 156,311 156,311 156,311 156,311 156,311 156,311 156,311 As Consumption Growth
Zone 3 $1.20 67,304 67,304 67,304 67,304 67,304 67,304 67,304 67,304 67,304 67,304 67,304 As Consumption Growth
Zone 4 $1.80 87,349 87,349 87,349 87,349 87,349 87,349 87,349 87,349 87,349 87,349 87,349 As Consumption Growth
Zone 5 $2.40 44,052 44,052 44,052 44,052 44,052 44,052 44,052 44,052 44,052 44,052 44,052 As Consumption Growth
Zone 6 $3.00 7,009 7,009 7,009 7,009 7,009 7,009 7,009 7,009 7,009 7,009 7,009 As Consumption Growth
Zone 7 $3.60 7,338 7,338 7,338 7,338 7,338 7,338 7,338 7,338 7,338 7,338 7,338 As Consumption Growth
----------------------------------------------------------------------------------------------------------------------------------------------------------Total Zone Charge Volume 680,598 680,598 680,598 680,598 680,598 680,598 680,598 680,598 680,598 680,598 680,598
Zone Charge Revenue 484,947 484,948 484,948 484,948 484,948 484,948 484,948 484,948 484,948 484,948 484,948
Un-metered Residential
Zone 1 $79.05 74 0 0 0 0 0 0 0 0 0 0
Zone 2 $82.09 16 0 0 0 0 0 0 0 0 0 0
Zone 3 $86.35 3 0 0 0 0 0 0 0 0 0 0
Zone 4 $90.61 0 0 0 0 0 0 0 0 0 0 0
Zone 5 $94.84 10 0 0 0 0 0 0 0 0 0 0
Zone 6 $98.88 0 0 0 0 0 0 0 0 0 0 0
Zone 7 $103.38 0 0 0 0 0 0 0 0 0 0 0
----------------------------------------------------------------------------------------------------------------------------------------------------------Un-metered Residential Customers 103 0 0 0 0 0 0 0 0 0 0
Un-metered Revenue $100,770 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Consumption Revenue $11,560,092 $11,661,593 $11,767,755 $11,874,753 $11,982,587 $12,091,256 $12,201,598 $12,312,775 $12,424,788 $12,537,637 $12,652,994
Notes
Projected
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Truckee Donner PUD Page 2 of 3
Customer Data Projection
Revenue Requirement
Exhibit 6 - Customer Data
Input
As of 1/1/2020 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Notes
Projected
Commercial
Meter Charge
###5/8" x 3/4"$69.66 0 0 0 0 0 0 0 0 0 0 0 As Customer Growth
###3/4"$69.66 340 343 346 349 352 356 360 364 368 372 376 As Customer Growth
###1"$83.09 183 185 187 189 191 193 195 197 199 201 203 As Customer Growth
###1 1/2"$116.80 88 89 90 91 92 93 94 95 96 97 98 As Customer Growth
###2"$160.58 78 79 80 81 82 83 84 85 86 87 88 As Customer Growth
###3"$268.81 5 5 5 5 5 5 5 5 5 5 5 As Customer Growth
###4"$384.62 12 12 12 12 12 12 12 12 12 12 12 As Customer Growth
###6"$576.93 4 4 4 4 4 4 4 4 4 4 4 As Customer Growth
###8"$721.16 0 0 0 0 0 0 0 0 0 0 0 As Customer Growth
-------------------------------------------------------------------------------------------------------------------------Total Commercial Cust.Total Commercial Cust.710 717 724 731 738 746 754 762 770 778 786
Meter Charge Revenue $841,085 $847,359 $855,190 $863,020 $870,851 $879,517 $888,183 $896,850 $905,516 $914,183 $922,849
Commercial Consumption
Commercial$/1,000 gal$/1,000 gal 1.91 292,118 292,118 292,118 292,118 292,118 292,118 292,118 292,118 292,118 292,118 292,118 As Consumption Growth
-----------------------------------------------------------------------------------------------------------------------------------------------Total Consumption 292,118 292,118 292,118 292,118 292,118 292,118 292,118 292,118 292,118 292,118 292,118
Commodity Charge Revenue $557,945 $557,945 $557,945 $557,945 $557,945 $557,945 $557,945 $557,945 $557,945 $557,945 $557,945
Additional Zone Charge ($/1,000 gal)
Zone 1 $0.00 244,785 244,785 244,785 244,785 244,785 244,785 244,785 244,785 244,785 244,785 244,785 As Consumption Growth
Zone 2 $0.60 21,271 21,271 21,271 21,271 21,271 21,271 21,271 21,271 21,271 21,271 21,271 As Consumption Growth
Zone 3 $1.20 2,582 2,582 2,582 2,582 2,582 2,582 2,582 2,582 2,582 2,582 2,582 As Consumption Growth
Zone 4 $1.80 18,364 18,364 18,364 18,364 18,364 18,364 18,364 18,364 18,364 18,364 18,364 As Consumption Growth
Zone 5 $2.40 5,015 5,015 5,015 5,015 5,015 5,015 5,015 5,015 5,015 5,015 5,015 As Consumption Growth
Zone 6 $3.00 47 47 47 47 47 47 47 47 47 47 47 As Consumption Growth
Zone 7 $3.60 65 65 65 65 65 65 65 65 65 65 65 As Consumption Growth
-----------------------------------------------------------------------------------------------------------------------------------------------Additional Zone Charge Volume 292,128 292,129 292,129 292,129 292,129 292,129 292,129 292,129 292,129 292,129 292,129
Additional Zone Charge Revenue 61,326 61,327 61,327 61,327 61,327 61,327 61,327 61,327 61,327 61,327 61,327
Total Commercial Revenue $1,460,357 $1,466,632 $1,474,462 $1,482,293 $1,490,123 $1,498,790 $1,507,456 $1,516,122 $1,524,789 $1,533,455 $1,542,122
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Truckee Donner PUD Page 2 of 3
Customer Data Projection
Revenue Requirement
Exhibit 6 - Customer Data
Input
As of 1/1/2020 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Notes
Projected
Calculated Water Rate Revenue
Fixed
Residential $10,496,098 $10,586,927 $10,693,089 $10,800,086 $10,907,920 $11,016,590 $11,126,931 $11,238,108 $11,350,122 $11,462,971 $11,578,328
Commercial 841,085 847,359 855,190 863,020 870,851 879,517 888,183 896,850 905,516 914,183 922,849
---------------------------------------------------------------------------------------------------------------------------------------------------------------------$11,337,184 $11,434,286 $11,548,278 $11,663,106 $11,778,771 $11,896,107 $12,015,114 $12,134,958 $12,255,638 $12,377,154 $12,501,177
Consumption Charge
Residential $579,046 $589,718 $589,718 $589,718 $589,718 $589,718 $589,718 $589,718 $589,718 $589,718 $589,718
Commercial 557,945 557,945 557,945 557,945 557,945 557,945 557,945 557,945 557,945 557,945 557,945
---------------------------------------------------------------------------------------------------------------------------------------------------------------------$1,136,991 $1,147,664 $1,147,664 $1,147,664 $1,147,664 $1,147,664 $1,147,664 $1,147,664 $1,147,664 $1,147,664 $1,147,664
0.9%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%
Total Revenue Less Zone Charges
Residential $11,075,144 $11,176,645 $11,282,807 $11,389,805 $11,497,638 $11,606,308 $11,716,649 $11,827,827 $11,939,840 $12,052,689 $12,168,046
Commercial 1,399,030 1,405,305 1,413,135 1,420,965 1,428,796 1,437,462 1,446,129 1,454,795 1,463,462 1,472,128 1,480,794
---------------------------------------------------------------------------------------------------------------------------------------------------------------------$12,474,174 $12,581,949 $12,695,942 $12,810,770 $12,926,434 $13,043,770 $13,162,778 $13,282,622 $13,403,302 $13,524,817 $13,648,841
Total Zone Charge Revenue $546,274 $546,275 $546,275 $546,275 $546,275 $546,275 $546,275 $546,275 $546,275 $546,275 $546,275
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Truckee Donner PUD
Water Utility Page 1 of 3
Development of Allocation Factors
Exhibit 7 - Commodity & Capacity
Water 25.0%Water % of Peaking Peak Day [2]Average Daily % of Equiv.% of
(kgal)Losses [1]Flow (MGD)Total Factor Use (MGD) Use (MGD)Total Meters Total
Residential
ResidentialTier 1Tier 1 434,892 108,723 1.49 44.1%1.66 2.47 1.49 27.8%12,665 92.6%
ResidentialTier 2Tier 2 258,250 64,562 0.88 26.2%3.50 3.10 0.88 34.7%0.00 0.0%
Commercial 292,118 73,030 1.00 29.6%3.34 3.34 1.00 37.5%1,014 7.4%
-----------------------------------------------------------------------------------------------------Total 985,260 246,315 3.37 100.0%2.64 8.91 3.37 100.0%13,679 100.0%
Actual Production [3]3.57 Actual Peak [4]9.30
Allocation Factor (COM)(CAP-1)(CAP-2)
Notes
[1]
[2]
[3]2019 TDPUD potable Production (W18 Water Production 2019.xlsx)
[4]
CapacityCommodity Capacity - Equiv. Meters
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Water Utility Page 2 of 3
Development of Allocation Factors
Exhibit 8 - Customer
Customer Service & Accounting
Number of % of Weighting Weighted % of Equiv.% of
Billing Units Total Factor Customer Total Meters Total
Residential 12,665 94.6%1.00 12,665 94.6%12,665 92.6%
Commercial 717 5.4%1.00 717 5.4%1,014 7.4%
------------------------------------------------------------Total 13,382 100.0%13,382 100.0%13,679 100.0%
Allocation Factor (AC)(WCA)(WCMS)
Meters & ServicesActual Customer
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Water Utility Page 3 of 3
Development of Allocation Factors
Exhibit 9 - Fire Protection and Revenue Alloc
Fire Prot.Total PFP FY 2021
Number of Requirmt's Duration Requirements % of Revenue at % of
Accounts (gals/min) [1](minutes) [1](1,000 g/min)Total Present Rates Total
Residential 12,665 1,000 120 1,519,800 85.5%$11,176,645 88.8%
Commercial 717 2,000 180 258,120 14.5%$1,405,305 11.2%
-------------------------------------------------------------13,382 1,777,920 100.0%$12,581,949 100.0%
Allocation Factor (FP)(RR)
Fire Protection Revenue Related
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Water Utility Page 1 of 1
Development of Allocation Factors
Exhibit 10 - Distribution Main Analysis
Distribution Main AnalysisDistribution Storage
Installed
hrs gpm Total Main Size Length (ft)[2]Replcmt $ [3]Total
Fire Flow Requirements 3 2,000 720,000 ( a )0.75"-2"12,251 $529.17 $6,483,104
2.5"-3"2,355 551.63 1,298,956
Storage Capacity [1]9,545,000 ( b )4"40,712 564.87 22,997,038
6"368,855 632.79 233,407,996
Public Fire Protection 7.5%(FP)8"476,009 648.75 308,810,990
( a ) / ( b ) = FP%10"67,114 734.66 49,305,937
12"115,209 738.51 85,082,829
Capacity 92.5%(CAP)14"32,189 798.66 25,707,776
1 - FP% = CAP 16"49,553 843.58 41,802,094
18"3,026 888.49 2,688,504
20"4,456 933.41 4,159,218
24"30,330 1,023.24 31,034,912
30"0 0.00 0
36"0 0.00 0
42"0 0.00 0
-----------------------------2" - 12" Total 1,082,506 $707,386,850 ( e )
Capacity / Commodity Customer%
Average Day 3.37 ( c )38.0%(COM)( f ) Total @ 2" Equivalent Cost 572,830,586
( c ) / ( d ) = COM%( f ) / ( e ) = Cust.%81.0%(AC)
Peak Day 8.91 ( d )62.0%(CAP)Capacity
1-(( c ) / ( d )) = CAP%( g ) Cost for 2" - 6"$264,187,094
( h ) 8" - 12" @ Equivalent 6" Cost 416,585,879
( g + h - f ) / ( e ) = CAP%15.3%(CAP)
Fire Protection
1 - CUST.% - CAP% = FP%3.7%(FP)
Notes
[1] - W11 Water Tank Inventory.xlsx
[2] - W12 Pipe Inventory GIS Total - MC Edits 06-09-2020.xlsx
[3] - Table 13 - 14 Page 20 of TDPUD Water Infrastructure CIP Development Final from Farr West Engineering
Source of Supply
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Water Utility
Functionalization and Classification
Exhibit 11 - Plant In Service
Total Capacity -Actual Customer Meters &Revenue Fire Direct Pump
Plant Commodity Capacity Equiv. Meters Customer Acct/Svcs Svcs Related Protection Assign.Zones
2017 Rplmt (COM)(CAP-1) (CAP-2)(AC) (WCA)(WCMS)(RR)(FP)(DA)(PZ)Basis of Classification
Customer Related
Weighted for:
Plant In Service
Land and Buildings
Land & Land Rights $609,266 $231,521 $377,745 $0 $0 $0 $0 $0 $0 $0 $0 38% (COM)/ 62% (CAP-1)
Intangible Assets Easment Land 600,592 228,225 372,367 0 0 0 0 0 0 0 0 38% (COM)/ 62% (CAP-1)
Land & Land Rights 7,631 2,900 4,731 0 0 0 0 0 0 0 0 38% (COM)/ 62% (CAP-1)
Structures & Improvements 4,573,322 1,737,862 2,835,459 0 0 0 0 0 0 0 0 38% (COM)/ 62% (CAP-1)----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Total Land and Buildings 5,790,811 2,200,508 3,590,303 0 0 0 0 0 0 0 0
Source of Supply
Wells & Springs $5,625,416 $2,137,658 $3,487,758 $0 $0 $0 $0 $0 $0 $0 $0 38% (COM)/ 62% (CAP-1)------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Total Source of Supply $5,625,416 $2,137,658 $3,487,758 $0 $0 $0 $0 $0 $0 $0 $0
Water Treatment
Water Treatment Equipment $611,120 $232,226 $378,894 $0 $0 $0 $0 $0 $0 $0 $0 38% (COM)/ 62% (CAP-1)------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Total Water Treatment $611,120 $232,226 $378,894 $0 $0 $0 $0 $0 $0 $0 $0
Transmission & Distribution
Pumping Equipment $3,670,847 $0 $0 $0 $0 $0 $0 $0 $0 $0 $3,670,847 100% (PZ)
Water Transmission & Distribution Lines 67,179,350 0 21,967,647 0 0 0 41,651,197 0 3,560,506 0 0 33% (CAP-1)/ 62% (WCMS)/ 5% (FP)------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Total Transmission & Distribution $70,850,197 $0 $21,967,647 $0 $0 $0 $41,651,197 $0 $3,560,506 $0 $3,670,847
Storage
Resevoirs & Tanks $4,107,405 $0 $3,797,575 $0 $0 $0 $0 $0 $309,830 $0 $0 92% (CAP-1)/ 8% (FP)------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Total Storage $4,107,405 $0 $3,797,575 $0 $0 $0 $0 $0 $309,830 $0 $0
Meters, Valves and Misc.
Water Services $13,459,995 $0 $0 $0 $0 $0 $13,459,995 $0 $0 $0 $0 100% (WCMS)
Water Meters 6,563,720 0 0 0 0 0 6,563,720 0 0 0 0 100% (WCMS)
Backflow Devices 1,476 0 0 0 0 0 1,476 0 0 0 0 100% (WCMS)
Tfr WO at YE 0 0 0 0 0 0 0 0 0 0 0 100% (WCMS)
Fire Hydrants 3,700,020 0 0 0 0 0 0 0 3,700,020 0 0 100% (FP)
Telemetry System 0 0 0 0 0 0 0 0 0 0 0 100% (WCMS)
Scada System Water 5,138,951 0 0 0 0 0 5,138,951 0 0 0 0 100% (WCMS)
GIS Mapping Hardware 32,967 0 0 0 0 0 32,967 0 0 0 0 100% (WCMS)
GIS Mapping Software 113,930 0 0 0 0 0 113,930 0 0 0 0 100% (WCMS)
GIS Mapping Data 324,711 0 0 0 0 0 324,711 0 0 0 0 100% (WCMS)
Hirshdale Deferred Plant Payments 57,876 0 0 0 0 0 57,876 0 0 0 0 100% (WCMS)------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Total Meters, Valves and Misc.$29,393,644 $0 $0 $0 $0 $0 $25,693,624 $0 $3,700,020 $0 $0
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Water Utility
Functionalization and Classification
Exhibit 11 - Plant In Service
Total Capacity -Actual Customer Meters &Revenue Fire Direct Pump
Plant Commodity Capacity Equiv. Meters Customer Acct/Svcs Svcs Related Protection Assign.Zones
2017 Rplmt (COM)(CAP-1) (CAP-2)(AC) (WCA)(WCMS)(RR)(FP)(DA)(PZ)Basis of Classification
Customer Related
Weighted for:
Plant Before General $116,378,593 $4,570,392 $33,222,177 $0 $0 $0 $67,344,821 $0 $7,570,356 $0 $3,670,847
Percent Plant Before General 100.0% 3.9% 28.5%0.0% 0.0% 0.0% 57.9% 0.0% 6.5% 0.0% 3.2%
Percent Plant Before General w/o PZ DA 100.0% 4.1% 29.5%0.0% 0.0% 0.0% 59.8% 0.0% 6.7% 0.0% 0.0%
G&A Equipment
Structures & Improvements Hq bld $868,050 $35,200 $255,870 $0 $0 $0 $518,675 $0 $58,305 $0 $0 as Plant Before General Plant - PZ
Office Furniture & Equipment 10,648 432 3,139 0 0 0 6,362 0 715 0 0 as Plant Before General Plant - PZ
Transportation Equipment 2,103,648 85,305 620,079 0 0 0 1,256,966 0 141,298 0 0 as Plant Before General Plant - PZ
Tools, Shop & Garage Equipment 112,284 4,553 33,097 0 0 0 67,092 0 7,542 0 0 as Plant Before General Plant - PZ
Laboratory Equipment 9,862 9,862 0 0 0 0 0 0 0 0 0 100% (COM)
Water Power Operated Equipment 5,862 238 1,728 0 0 0 3,503 0 394 0 0 as Plant Before General Plant - PZ
Communication Equipment 898,379 36,430 264,810 0 0 0 536,797 0 60,342 0 0 as Plant Before General Plant - PZ
Misc Equipment 386,859 15,687 114,032 0 0 0 231,155 0 25,985 0 0 as Plant Before General Plant - PZ
Water Computer Equipment 100,199 4,063 29,535 0 0 0 59,871 0 6,730 0 0 as Plant Before General Plant - PZ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------$4,495,791 $191,770 $1,322,290 $0 $0 $0 $2,680,420 $0 $301,311 $0 $0
Total Plant 120,874,384 4,762,162 34,544,467 0 0 0 70,025,241 0 7,871,666 0 3,670,847
Plus: Capital Works in Progresss
CWIP - Water $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 as Plant in Service
CWIP Year End Accrued Inventory 0 0 0 0 0 0 0 0 0 0 0 as Plant in Service
RWIP - Water 0 0 0 0 0 0 0 0 0 0 0 as Plant in Service
WO Tfr at YE 0 0 0 0 0 0 0 0 0 0 0 as Plant in Service------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Total Capital Works in Progress 0 0 0 0 0 0 0 0 0 0 0
Depreciation $50,689,490 $1,997,045 $14,486,456 $0 $0 $0 $29,365,558 $0 $3,301,037 $0 $1,539,395 as Plant in Service
Net Plant in Service $70,184,894 2,765,117 20,058,011 0 0 0 40,659,683 0 4,570,630 0 2,131,453
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Water Utility
Functionalization and Classification
Exhibit 12 - Revenue Requirement
Total Capacity -Actual Customer Meters &Revenue Fire Direct Pump
Expenses Commodity Capacity Equiv. Meters Customer Acct/Svcs Svcs Related Protection Assign.Zones
FY 2021 (COM)(CAP-1)(CAP-2)(AC)(WCA)(WCMS)(RR)(FP)(DA)(PZ)Basis of Classification
Customer Related
Weighted for:
Expenses
Board of Directors $166,111 $0 $0 $0 $0 $0 $166,111 $0 $0 $0 $0 100% (WCMS)
General Manger
Admin & Ops General Exp $421,314 $0 $0 $0 $0 $0 $421,314 $0 $0 $0 $0 100% (WCMS)
Public Information 92,889 0 0 0 0 0 92,889 0 0 0 0 100% (WCMS)
Legislature & Regulations 47,380 0 0 0 0 0 47,380 0 0 0 0 100% (WCMS)
Office Supplies & Expenses 77,020 0 0 0 0 0 77,020 0 0 0 0 100% (WCMS)
Outside Service Employed 60,049 0 0 0 0 0 60,049 0 0 0 0 100% (WCMS)
Injuries & Damages 2,305 0 0 0 0 0 2,305 0 0 0 0 100% (WCMS)
General Advertising 64,772 0 0 0 0 0 64,772 0 0 0 0 100% (WCMS)
Misc General Expense 45,817 0 0 0 0 0 45,817 0 0 0 0 100% (WCMS)--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Total General Manager $811,546 $0 $0 $0 $0 $0 $811,546 $0 $0 $0 $0
Adminsitrative Services
Customer Accounts Supervision $159,569 $0 $0 $0 $0 $0 $159,569 $0 $0 $0 $0 100% (WCMS)
Meter Reading Expenses 990 0 0 0 0 0 990 0 0 0 0 100% (WCMS)
Customer Records & Collections 565,273 0 0 0 0 0 565,273 0 0 0 0 100% (WCMS)
Cust Rec&Coll Meter Reader 0 0 0 0 0 0 0 0 0 0 0 100% (WCMS)
Provision for Bad Debts 5,249 0 0 0 0 0 5,249 0 0 0 0 100% (WCMS)
Admin and General Expenses 462,481 0 0 0 0 0 462,481 0 0 0 0 100% (WCMS)
Office Supplies & Expenses 71,114 0 0 0 0 0 71,114 0 0 0 0 100% (WCMS)
Outside Services Employed 27,189 0 0 0 0 0 27,189 0 0 0 0 100% (WCMS)
Insurance Expense 140,277 0 0 0 0 0 140,277 0 0 0 0 100% (WCMS)
Injuries & Damages 14,211 0 0 0 0 0 14,211 0 0 0 0 100% (WCMS)--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Total Adminstrative Services $1,446,353 $0 $0 $0 $0 $0 $1,446,353 $0 $0 $0 $0
Conservation
Water Conservation 79,160 0 0 0 0 0 79,160 0 0 0 0 100% (WCMS)
Admin & Ops General 9,623 0 0 0 0 0 9,623 0 0 0 0 100% (WCMS)
Office Supplies & Expenses 6,967 0 0 0 0 0 6,967 0 0 0 0 100% (WCMS)
IT/GIS 0 0 0 0 0 0 0 0 0 0 0 100% (WCMS)
Injuries & Damages 0 0 0 0 0 0 0 0 0 0 0 100% (WCMS)
General Advertising 8,018 0 0 0 0 0 8,018 0 0 0 0 100% (WCMS)
Misc General Expense 3,090 0 0 0 0 0 3,090 0 0 0 0 100% (WCMS)
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Water Utility
Functionalization and Classification
Exhibit 12 - Revenue Requirement
Total Capacity -Actual Customer Meters &Revenue Fire Direct Pump
Expenses Commodity Capacity Equiv. Meters Customer Acct/Svcs Svcs Related Protection Assign.Zones
FY 2021 (COM)(CAP-1)(CAP-2)(AC)(WCA)(WCMS)(RR)(FP)(DA)(PZ)Basis of Classification
Customer Related
Weighted for:
Water Operations
Ops Supervision & Engineering $309,267 $0 $0 $0 $0 $0 $309,267 $0 $0 $0 $0 100% (WCMS)
Construction Engineering 74,209 0 0 0 0 0 74,209 0 0 0 0 100% (WCMS)
Facilites Operations 911,382 36,957 268,643 0 0 0 544,567 0 61,216 0 0 as Plant Before General Plant - PZ
Power Supply 1,333,468 853,420 0 0 0 0 0 0 0 0 480,048 64% (COM)/ 36% (PZ)
Pumping Operations 577,594 369,660 0 0 0 0 0 0 0 0 207,934 64% (COM)/ 36% (PZ)
Meters/Services Operations 453,563 0 0 0 0 0 453,563 0 0 0 0 as Meters
Misc. General Expense 508,956 0 0 0 0 0 508,956 0 0 0 0 100% (WCMS)
Maint Supervision & Engineering 226,734 0 0 0 0 0 226,734 0 0 0 0 100% (WCMS)
Maint of Sources 844,156 0 0 0 0 0 844,156 0 0 0 0 100% (WCMS)
Maint of Distribution 718,575 0 234,974 0 0 0 445,517 0 38,084 0 0 33% (CAP-1)/ 62% (WCMS)/ 5% (FP)
Meter Reader Expense 0 0 0 0 0 0 0 0 0 0 0 as Meters
Injuries & Damages 85,537 0 0 0 0 0 85,537 0 0 0 0 100% (WCMS)
Annual Paving Maintenance 250,000 0 81,750 0 0 0 155,000 0 13,250 0 0 33% (CAP-1)/ 62% (WCMS)/ 5% (FP)
Water Meter Maintenance & MTU Replacement 175,000 0 0 0 0 0 175,000 0 0 0 0 100% (WCMS)
Fire Hydrant Maintenance 75,000 0 0 0 0 0 0 0 75,000 0 0 100% (FP)--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Total Water Operations $6,543,441 $1,260,037 $585,367 $0 $0 $0 $3,822,505 $0 $187,550 $0 $687,982
IT/GIS
Engineering/SCADA Ops $120,685 $0 $0 $0 $0 $0 $120,685 $0 $0 $0 $0 100% (WCMS)
GIS/Engineering Ops 95,185 0 0 0 0 0 95,185 0 0 0 0 100% (WCMS)
Meter Reading 39,819 0 0 0 0 0 39,819 0 0 0 0 100% (WCMS)
Customer Records 103,324 0 0 0 0 0 103,324 0 0 0 0 100% (WCMS)
Administrative & General IT Ops 380,188 0 0 0 0 0 380,188 0 0 0 0 100% (WCMS)
Office Supplies & Expenses 9,175 0 0 0 0 0 9,175 0 0 0 0 100% (WCMS)
Outside Services Employed 10,300 0 0 0 0 0 10,300 0 0 0 0 100% (WCMS)
Safety 16,796 0 0 0 0 0 16,796 0 0 0 0 100% (WCMS)--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Total IT/GIS $775,472 $0 $0 $0 $0 $0 $775,472 $0 $0 $0 $0
Interdepartmental Rent 536,537 0 0 0 0 0 536,537 0 0 0 0 100% (WCMS)
Total Expenses $10,386,318 $1,260,037 $585,367 $0 $0 $0 $7,665,382 $0 $187,550 $0 $687,982
Additional Expenditures 0 0 0 0 0 0 0 0 0 0 0 100% (WCMS)
Total Operations & Maintenance Expense $10,386,318 $1,260,037 $585,367 $0 $0 $0 $7,665,382 $0 $187,550 $0 $687,982
$0
Rate Funded Capital 3,000,000 0 0 0 0 0 3,000,000 0 0 0 0 100% (WCMS)
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Truckee Donner PUD Page 3 of 3
Water Utility
Functionalization and Classification
Exhibit 12 - Revenue Requirement
Total Capacity -Actual Customer Meters &Revenue Fire Direct Pump
Expenses Commodity Capacity Equiv. Meters Customer Acct/Svcs Svcs Related Protection Assign.Zones
FY 2021 (COM)(CAP-1)(CAP-2)(AC)(WCA)(WCMS)(RR)(FP)(DA)(PZ)Basis of Classification
Customer Related
Weighted for:
Debt Service
Pipeline COP Rates $1,252,412 $0 $0 $0 $0 $0 $1,252,412 $0 $0 $0 $0 100% (WCMS)
Pipeline COP FF 356,179 0 0 0 0 0 356,179 0 0 0 0 100% (WCMS)
Pipeline COP Assmt 96,216 0 0 0 0 0 96,216 0 0 0 0 100% (WCMS)
DWR-SRF Donner Lake Assmt 800,852 0 0 0 0 0 800,852 0 0 0 0 100% (WCMS)
DWR PROP 55 Rates 153,241 0 0 0 0 0 153,241 0 0 0 0 100% (WCMS)
2020 Balance (diff between Opt budget and debt schedules)0 0 0 0 0 0 0 0 0 0 0 100% (WCMS)
New Low Interest Loan 0 0 0 0 0 0 0 0 0 0 0 100% (WCMS)
New Revenue Bond 0 0 0 0 0 0 0 0 0 0 0 100% (WCMS)---------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total Debt Service $2,658,900 $0 $0 $0 $0 $0 $2,658,900 $0 $0 $0 $0
Transfers
In
Transfer from DLAD for SRF debt pmt ($800,852)$0 $0 $0 $0 $0 ($800,852)$0 $0 $0 $0 100% (WCMS)
Transfer in from DLAD Surcharge for 2006 COP debt pmt (96,216)0 0 0 0 0 (96,216)0 0 0 0 100% (WCMS)
Transfer in from employee and overhead for sidefund debt (13,022)0 0 0 0 0 (13,022)0 0 0 0 100% (WCMS)
Transfer in from Vehicle Reserve (on CIP Calculation)0 0 0 0 0 0 0 0 0 0 0 100% (WCMS)
Xfr in from FF Reserve (356,179)0 0 0 0 0 (356,179)0 0 0 0 100% (WCMS)
Transfer from Operating Reserve Fund 0 0 0 0 0 0 0 0 0 0 0 100% (WCMS)
Out
Debt Service Payments 0 0 0 0 0 0 0 0 0 0 0 100% (WCMS)
Transfer to Vehicle Reserve 174,709 0 0 0 0 0 174,709 0 0 0 0 100% (WCMS)
Transfer to Operating Reserve Fund 0 0 0 0 0 0 0 0 0 0 0 100% (WCMS)
Transfer to Cash Reserves 11,403 0 0 0 0 0 11,403 0 0 0 0 100% (WCMS)---------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total Transfers ($1,080,157)$0 $0 $0 $0 $0 ($1,080,157)$0 $0 $0 $0
Total Revenue Requirements $14,965,061 $1,260,037 $585,367 $0 $0 $0 $12,244,125 $0 $187,550 $0 $687,982
Less: Other Income
Misc Operating Revenue $252,578 $252,578 $0 $0 $0 $0 $0 $0 $0 $0 $0 100% (COM)
Non-Potable 103,485 103,485 0 0 0 0 0 0 0 0 0 100% (COM)
Misc Rents 76,651 76,651 0 0 0 0 0 0 0 0 0 100% (COM)
Standby Revenue 119,582 119,582 0 0 0 0 0 0 0 0 0 100% (COM)
Interest Income 103,000 103,000 0 0 0 0 0 0 0 0 0 100% (COM)---------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total Other Income $655,296 $655,296 $0 $0 $0 $0 $0 $0 $0 $0 $0
Net Revenue Requirements $14,309,765 $604,741 $585,367 $0 $0 $0 $12,244,125 $0 $187,550 $0 $687,982
Truckee Donner PUD11/9/2020
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Truckee Donner PUD Page 1 of 4
Water Utility
Cost of Service Summary
Exhibit 13 - Allocation by Component - COM, CAP & DA
Classification Components FY 2021 Tier 1 Tier 2 Commercial Pump Zones
Commodity $604,741 $266,932 $158,511 $179,299 $0 (COM)
Capacity $585,367 $162,442 $203,384 $219,540 $0 (CAP-1)
Direct Assignment $0 $0 $0 $0 $0 (DA)
Total $1,190,107 $429,374 $361,895 $398,839 $0
Residential
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Water Utility
Cost of Service Summary
Exhibit 14 - Allocation by Component - Cust. Fire, Rev.
Classification Components FY 2021 Residential Commercial Pump Zones Allocation Factor
Customer Related
Actual Customer $0 $0 $0 $0 (AC)
Customer Acct/Svcs 0 0 0 0 (WCA)
Meters & Svcs 12,244,125 11,336,752 907,374 0 (WCMS)------------------------------------------------------------ Total Customer Related $12,244,125 $11,336,752 $907,374 $0
Equiv. Meters $0 $0 $0 $0 (CAP-2)
Revenue Related $0 $0.00 $0.00 $0 (RR)
Fire Protection $187,550 $160,322 $27,229 $0 (FP)
Pump Zones $687,982 $0 $0 $687,982
Net Revenue Requirment $13,119,658 $11,497,073 $934,602 $687,982
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Water Utility
Cost of Service Summary
Exhibit 15 - Summary of Cost Allocation
FY 2021
Total Residential Commercial Pump Zones Source
Revenues at Present Rates $13,128,225 $11,176,645 $1,405,305 $546,275
Allocated Revenue Requirement $14,309,765 $12,288,342 $1,333,441 $687,982
--------------------------------------------------------
Subtotal Balance/(Deficiency) of Funds ($1,181,540)($1,111,697)$71,863 ($141,707)
% Change Over Present Rates 9.0%9.9%-5.1%25.9%
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Water Utility
Cost of Service Summary
Exhibit 15 - Average Unit Cost
FY 2021
Total Tier 1 Tier 2 Commercial
Commodity Costs - $/CCF $0.61 $0.61 $0.61 $0.61
Capacity Costs - $/CCF $0.59 $0.37 $0.79 $0.75
Direct Assign. Costs - $/CCF $0.00 $0.00 $0.00 $0.00
--------------------------------------------------------
Total Allocated Costs - $/CCF $1.21 $0.99 $1.40 $1.37
Current Consumption Rates $0.78 $0.97 $1.91
Customer - $ / Equiv. Mtrs / month $74.59 $74.59 $74.59
Fire Protection - $ / Equiv. Mtrs / month 1.14 1.05 2.24
------------------------------------------
Total - $ / Month $75.74 $75.65 $76.83
Current Fixed Charge (3/4")$69.66 $69.66
Rate Rev $/CCF $13.32 $25.70 $4.81
Allocated Rev Req $/CCF $14.52 $28.26 $4.56
Basic Data
Annualized Water Flows - CCF 985,260 434,892 258,250 292,118
No. of Customers 13,382 12,665 717
No. of Units NA NA NA NA
Equivalent Meters 13,679 12,665 1,014
Residential
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Truckee Donner PUD
Water Utility
Rate Design
Exhibit 16 - Summary of Rate Design
Current FY 2021 FY 2022 FY 2023 FY 2024 FY 2025
Residential
5/8" x 3/4"$69.66 $75.74 $82.55 $89.16 $96.29 $103.03
3/4"69.66 75.74 82.55 89.16 96.29 103.03
1"83.09 90.34 98.47 106.35 114.85 122.89
Commodity Charge
0 - 8,000 gal (block 1)0.78 0.99 1.08 1.16 1.26 1.34
8,000 + gal (block 2)0.97 1.40 1.53 1.65 1.78 1.91
Commercial
5/8" x 3/4"$69.66 $75.74 $82.55 $89.16 $96.29 $103.03
3/4"69.66 75.74 82.55 89.16 96.29 103.03
1"83.09 90.34 98.47 106.35 114.85 122.89
1 1/2"116.80 126.99 138.42 149.49 161.45 172.75
2"160.58 174.59 190.30 205.52 221.97 237.50
3"268.81 292.26 318.56 344.05 371.57 397.58
4"384.62 418.17 455.80 492.27 531.65 568.87
6"576.93 627.25 683.71 738.40 797.48 853.30
8"721.16 784.07 854.63 923.00 996.84 1,066.62
Commodity Charge/ 1,000 gal $1.91 $1.37 $1.49 $1.61 $1.74 $1.86
Pump Zone Charges
Zone 1 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Zone 2 0.60 0.75 0.82 0.89 0.96 1.03
Zone 3 1.20 1.50 1.64 1.77 1.91 2.04
Zone 4 1.80 2.25 2.45 2.65 2.86 3.06
Zone 5 2.40 3.00 3.27 3.53 3.81 4.08
Zone 6 3.00 3.75 4.09 4.42 4.77 5.10
Zone 7 3.60 4.50 4.91 5.30 5.72 6.12
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Truckee Donner PUD
Water Utility
Rate Design
Exhibit 17 - Residential Bill Comparison
Current Proposed $%
Rate Rate Change Change
0 $69.66 $75.74 $6.08 8.7%
5,000 73.56 80.67 7.11 9.7%
8,000 75.90 83.63 7.73 10.2%
10,000 77.84 86.44 8.60 11.0%
15,000 82.69 93.44 10.75 13.0%
20,000 87.54 100.45 12.91 14.7%
25,000 92.39 107.46 15.07 16.3%
30,000 97.24 114.46 17.22 17.7%
35,000 102.09 121.47 19.38 19.0%
40,000 106.94 128.48 21.54 20.1%
45,000 111.79 135.48 23.69 21.2%
50,000 116.64 142.49 25.85 22.2%
Meter Size Current Proposed
1" $69.66 $75.74
Commodity Charge ($/1,000 gal)
0 - 8,000 gal $0.78 $0.99
>8,000 gal $0.97 $1.40
Consumption
(Gallons)
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Water Utility
Rate Design
Exhibit 18 - Non-Residential Bill Comparison
Current Proposed $%
Rate Rate Change Change
1" Meter
0 $69.66 $75.74 $6.08 9%
20,000 107.86 103.04 (4.82) -4%
40,000 146.06 130.35 (15.71) -11%
60,000 184.26 157.66 (26.60) -14%
80,000 222.46 184.96 (37.50) -17%
100,000 260.66 212.27 (48.39) -19%
120,000 298.86 239.58 (59.28) -20%
140,000 337.06 266.88 (70.18) -21%
160,000 375.26 294.19 (81.07) -22%
2" Meter
40,000 $159.49 $144.95 ($14.54) -9%
60,000 197.69 172.26 (25.43) -13%
80,000 235.89 199.56 (36.33) -15%
120,000 312.29 254.18 (58.11) -19%
140,000 350.49 281.48 (69.01) -20%
160,000 388.69 308.79 (79.90) -21%
180,000 426.89 336.10 (90.79) -21%
Meter Size Current Proposed
1"$69.66 $75.74
1 1/2"69.66 75.74
2"83.09 90.34
3"116.80 126.99
4"160.58 174.59
6"268.81 292.26
8"384.62 418.17
10"721.16 784.07
Commodity Charge
All Consumption $/1,000 gal $1.91 $1.37
Consumption
(Gallons)
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Truckee Donner PUD
Water Utility
Rate Design
Exhibit 19 - Pump Zone Charge
Current Proposed $%
Rate Rate Change Change
1 $0.00 $0.00 $0.00 0.0%
2 0.60 0.75 0.15 25.0%
3 1.20 1.50 0.30 25.0%
4 1.80 2.25 0.45 25.0%
5 2.40 3.00 0.60 25.0%
6 3.00 3.75 0.75 25.0%
7 3.60 4.50 0.90 25.0%
Zone
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Water Utility
Rate Design
Exhibit 20 - Rate Revenue Projection
Current FY 2021 FY 2022 FY 2023 FY 2024 FY 2025
Residential
Fixed $10,586,927 $11,510,965 $12,672,149 $13,822,866 $15,077,751 $16,293,920
Consumption $589,718 $792,093 $862,483 $931,482 $1,006,000 $1,076,420
Total $11,176,645 $12,303,058 $13,534,632 $14,754,348 $16,083,752 $17,370,340
2021 COSA $12,288,342
Commercial
Fixed $847,359 $921,273 $1,013,467 $1,104,566 $1,203,755 $1,300,836
Consumption $557,945 $398,839 $434,734 $469,513 $507,074 $542,569
Total $1,405,305 $1,320,111 $1,448,201 $1,574,079 $1,710,829 $1,843,405
2021 COSA $1,333,441
Pump Zone
Consumption $546,274 $682,844 $744,884 $805,516 $869,248 $930,444
2021 COSA $687,982
System Total $13,128,223 $14,306,014 $15,727,717 $17,133,943 $18,663,829 $20,144,190
System Target $14,298,362 $15,733,078 $17,139,066 $18,670,479 $20,151,399
$ Difference ($7,652) $5,361 $5,124 $6,650 $7,209
Fixed Rev 87.1% 86.9% 87.0% 87.1% 87.2% 87.3%
Variable Rev 12.9% 13.1% 13.0% 12.9% 12.8% 12.7%
Truckee Donner PUD11/9/2020
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