HomeMy WebLinkAbout17, Water Rate Study
Workshop Item # 17 May 20, 2015 Adopting New Water RatesDiscussion of the Process for Water Rate Study Update and
Water Rate Study and Process for 2 District must comply with Proposition 218•Board adopted 3% annual increases for 2014 and 2015 only•2.5% from 2018 through 2023–3.0% from 2014 through
2017–assumptionsHDR recommended raising rates annually based on 2013 •Review water rates–Review cost of service–2013 District contracted HDR Engineering•Background / History Adopting
New Water Rates
Water Rate Study and Process for 3 the public hearing and adoption of an ordinanceIf not rejected, the rates can become effective 30 days after –protests are received from the majority
of the affected ownersProposed change in rates is considered rejected if written –mailing of the noticesDistrict must hold a public hearing at least 45 days after the –notice to property
owners of the proposed change in ratesmail a maymail a notice to all rate payers and mustDistrict –Rate adjustments may be adopted five years in advance–Rates must be based on actual
cost of service–Proposition 218 requirements•Background / History Adopting New Water Rates
New Information Adopting New Water RatesWater Rate Study and Process for 4 and propose ratesDistrict contracted with HDR to update the water rate study •Reduce District’s unaccounted
for water–Approximately $600,000 annually in addition to current levels–Accelerated pipeline replacement needed –This unfunded mandate requires District to absorb costs of compliance–Approximately
$400,000 reduced annual revenue–at least 28%State is mandating the District reduce its water production by –Upward pressure on rates caused by California’s drought•
Purpose of the PresentationReceive Board direction•year rate plan-Multi–Review proposed rates•rate plansDiscuss proposed •Review key assumption–update resultsthe water rate study Provide
a summary of •
Summary of the 2013 Financial Plan
Changes since the 2013 Study term debt-No new long•Program is funded through rates–Helps reduce overall production•Driven by need to reduce unaccounted for water–Increased pipeline replacement
capital funding needs–Accelerated pipeline replacement•Additional costs for staffing and customer outreach•3% of total revenues-•Results in reduced consumption based revenues•projections
for 2015 to meet conservation goalAdditional 18% reduction in consumption was built into –Achieved a reduction of 10% in 2014–levelsNeed to achieve 28% savings from 2013 consumption
–State mandated conservation•
Key Assumptions Developed two scenarios to reflect alternative rate plans•term debt was assumed-–current CIPCapital plan was developed based on the District’s •% annually2.9approximately
Operating and Maintenance costs increased •thereafterConsumption was reduced by 18% for 2015 and 0% (flat) –Customer growth estimated at 1% annually–escalated similarly to expensesRate
revenues were calculated at present rates and •test periodEscalation factors were used to project the budget over the –2024-Test period for the review was 2015 –Starting point for the
study was the 2015 budget•
Summary of the Financial Plan replacement programThree years with reduced accelerated pipeline •Level rate adjustments–Scenario 2 •replacement programOnly one year with reduced accelerated
pipeline •Initial year larger rate increases–Scenario 1 •:Differences•4.0%4.0%4.0%4.0%4.0%4.0%4.0%4.0%4.0%0.0%Scenario 23.0%3.0%3.0%3.0%3.0%3.0%3.0%5.0%6.0%0.0%Scenario 1 Annual Rate
Adjustments$4,397 $4,397 $4,100 $3,305 $3,213 $2,768 $2,525 $2,659 $3,022 $2,653 Scenario 2$4,397 $4,397 $4,100 $3,305 $3,213 $2,868 $3,037 $2,952 $3,022 $2,653 Scenario 1 Annual Capital
($000s)2024202320222021202020192018201720162015 Scenarios
Key Assumptions Cont. –
Projected Ending Reserve Balances
Financial Plan Review: 4.0%4.0%4.0%4.0%4.0%Scenario 2 3.0%3.0%3.0%5.0%6.0%Scenario 1 20202019201820172016 Rate Transition PlansProposed Focus for rates is on the next 5 years (Prop.
218)•meet Board target reserve levels in year 10With either proposed rate transition plan, reserve levels •($5 million)Reserve levels are projected to reach minimum fund levels •Need
to prudently fund capital improvement–Impact of State mandated conservation–Rate adjustments are necessary to fund the utility•Conclusions and Recommendations
Rate Design Key Assumptions 2Tier 1 and Tier between differential tier pricing and Analysis provides the rational of the •an allocation by tier for residential customersDeveloping •the
cost of providing water serviceReviewing •San Juan Capistrano decision–Legal requirements•pumping electric costsIncreased the pump zone charges to transition to recover the –Developed
rates for both rate transition plans–Adjusted rates “across the board”•Maintained current rate structure•18% reduction in 2015–Consumption levels reflect conservation requirements•year
period-Developed rates for a 5•
Present and Proposed Residential 0.97 0.94 0.90 0.87 0.83 0.80 8,000 + Gallons$0.78 $0.75 $0.72 $0.69 $0.67 $0.64 Gallons8,000-0 Consumption Charge83.12 79.92 76.85 73.89 71.05 68.32
1"69.69 67.01 64.43 61.95 59.57 57.28 3/4"$69.69 $67.01 $64.43 $61.95 $59.57 $57.28 5/8" x 3/4"ChargeMeter 20202019201820172016PresentScenario 2 0.97 0.94 0.92 0.89 0.85 0.80 8,000
+ Gallons$0.78 $0.76 $0.73 $0.71 $0.68 $0.64 Gallons8,000-0 Consumption Charge83.09 80.67 78.32 76.04 72.42 68.32 1"69.66 67.64 65.67 63.75 60.72 57.28 3/4"$69.66 $67.64 $65.67 $63.75
$60.72 $57.28 5/8" x 3/4"ChargeMeter 20202019201820172016PresentScenario 1 Rates
Residential Bill Comparison 10,000 gallons in summer*Bill Comparison assumes 3/4“ meter and 4,000 gallons in winter and $77.87 $74.87 $71.99 $69.22 $66.56 $64.00 Summer$72.80 $70.00
$67.31 $64.72 $62.23 $59.84 Winter Scenario 2$77.84 $75.57 $73.37 $71.23 $67.84 $64.00 Summer$72.78 $70.66 $68.60 $66.60 $63.43 $59.84 Winter Scenario 1 20202019201820172016Present
Monthly Residential Bill*Average
Present and Proposed Commercial $1.91 $1.84 $1.77 $1.70 $1.63 $1.57 Gal)All Consumption ($/1,000Consumption Charge83.12 79.92 76.85 73.89 71.05 68.32 1"$69.69 $67.01 $64.43 $61.95 $59.57
$57.28 3/4"ChargeMeter 20202019201820172016PresentScenario 2$1.91 $1.85 $1.80 $1.75 $1.66 $1.57 Gal)All Consumption ($/1,000Consumption Charge83.09 80.67 78.32 76.04 72.42 68.32 1"$69.66
$67.64 $65.67 $63.75 $60.72 $57.28 3/4"ChargeMeter 20202019201820172016PresentScenario 1 Rates
Present and Proposed Zone Charges 3.60 3.30 3.00 2.70 2.40 2.10 Zone 73.00 2.75 2.50 2.25 2.00 1.75 Zone 62.40 2.20 2.00 1.80 1.60 1.40 Zone 51.80 1.65 1.50 1.35 1.20 1.05 Zone 41.20
1.10 1.00 0.90 0.80 0.70 Zone 30.60 0.55 0.50 0.45 0.40 0.35 Zone 2$0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Zone 1 20202019201820172016Present
Summary of the Water Rate Study Maintain minimum reserve targets–conservation–replacementsFund operating and accelerated pipeline –year period-next 5Rate adjustments are necessary over
the •
New Information Adopting New Water RatesWater Rate Study and Process for 19 of each year st Rates would be effective the first bill printed after January 1–ordinance for the new water
ratesAugust 19, 2015 hold a public hearing and adopt an –proposed rates and public hearing July and August 2015 advertise in local newspaper the –public hearingJune 30, 2015 or before,
mail notices of proposed rates and –hearingJune 3, 2015 approve water rate increase subject to public –May 20, 2015 (tonight), workshop to discuss water rate study –Proposed schedule
if Board adopts new rates•
Fiscal Impact Adopting New Water RatesWater Rate Study and Process for 20$650,000 in Scenario 1 and about $440,000 in Scenario 2In 2016, the District’s revenue would increase about •increase
about $3.70 in Scenario 1 and $2.50 in Scenario 2In 2016, a typical monthly residential water bill would •may affect the District’s spending for the next five yearsThis workshop is
part of the overall Prop 218 process that •
Recommendation Adopting New Water RatesWater Rate Study and Process for 21 Receive this report and provide direction to staff•Prop 218establish rates for the next five years in compliance
with Staff recommends the implementation of Scenario 1 and •