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HomeMy WebLinkAboutHDR Water Rates 2020 Power Point © 2014 HDR, all rights reserved.Study UpdateSummary of the Water Rate October 7, 2020 2 Presentation SummaryStepsNext Review Proposed RatesrecommendationsReview and discuss the cost of service results and Provide feedback and direction on preferred capital scenario Review revised rate alternatives based on Board inputSummary of previous rate alternatives discussed 3 Overview of the Revenue Requirement necessary capital funding needs to meet target levelsterm borrowing ($11 Mil) to fund additional -Includes long on Board inputDeveloped two additional rate and capital scenarios based term borrowing-no new long–capital All capital improvements are funded through annual rate funded input and discussion (baseline, medium, full capital)Previously developed three capital funding scenarios for Board Assumed annual customer growth of 1.0%Developed a projection of rate revenues at current rate levels(~3.0% annually)Projected through FY 2030 based on historical inflationary increases Based on the FY 2020 and FY 2021 budgeted expenses Revenue Requirement funds an average of $7.2 million/year in capital Projects $72 million total5 Scenario •totalmillion $65 million/year in capital Projects $6.5 funds an average of 4 Scenario •Scenario 3 funds an average of $7.3 million/year in capital Projects $73 million total•Scenario 2 funds an average of $4.3 million/year in capital projects, $43 million total•Scenario 1 funds an average of $3.4 million/year in capital projects, $34 million total•4 Capital Improvement Plan– Revenue Requirement Summary Includes Cost of Service AdjustmentsAssumes a 3/4” meter and 5,000 gallons per month$109.75 $102.57 $94.97 $87.93 $80.67 $73.56 5Scenario $103.76 $98.82 $93.23 $87.13 $80.67 $73.56 4Scenario $112.69 $108.36 $104.19 $98.29 $85.47 $73.56 Cap$7m–3 Scenario $94.17 $89.69 $85.41 $81.35 $77.47 $73.56 $4m Cap-2 Scenario $83.75 $81.71 $79.72 $77.77 $75.87 $73.56 $3m Cap (Baseline)-Scenario 1 FY 2025FY 2024FY 2023FY 2022FY 2021FY 2020 5 Combined Reserve Balance by Scenario 6 Local Average Residential Bill Comparison 8 Board Discussion Transition PlanCapital Funding and Rate – Cost of Service Overview of the Water Utility Cost of Service 10 Develop average unit costs•Determine if subsidies exist•Objectives of Cost of Service Meet the intent of Proposition 218•Revenues reflect costs•Avoids subsidies•Generally accepted as “fair and equitable”•Why cost of service customer classes of serviceAnalysis to equitably allocate the water revenue requirement to the •What is cost of service? 11 Need for Cost of Service Consumption chargeFixed charge componentsProvides the basis for developing the rate structure customer classes of service (e.g., rate schedules)Equitably and proportionally allocates costs to the various Additional efforts and analysis to illustrate cost basis Recent legal decisionsserviceProvide the cost basis for revenues and rates by customer class of Required by Proposition 218 Summary of the Cost of Service Analysis$69.66 Current Fixed Charge (3/4")$75.74 $ / Month-Total --------------1.14 $ / Equiv. Mtrs / month-Fire Protection $74.59 $ / Equiv. Mtrs / month-Customer $1.91 $0.97 $0.78 Current Consumption Rates$1.37 $1.40 $0.99 $1.21 $/CCF-Total Allocated Costs --------------------------------------$0.75 $0.79 $0.37 $0.59 $/CCF-Capacity Costs $0.61 $0.61 $0.61 $0.61 $/CCF-Commodity Costs CommercialTier 2Tier 1System AverageResidentialFY 202125.9%5.1%-9.9%9.0%% Change Over Present Rates($141,707)$71,863 ($1,111,697)($1,181,540)FundsSubtotal Balance/(Deficiency) of $687,982 $1,333,441 $12,288,342 $14,309,765 Allocated Revenue Requirement$546,275 $1,405,305 $11,176,645 $13,128,225 Revenues at Present RatesPump ZonesCommercialResidentialT otal 13 13 Cost of Service Summary Proposed rates reflect cost of service results and unit costsEach study “resets” the cost of service analysis and rates prior studies completed for the DistrictSame methodology and customer classes are being used as in results and customer class impactsProposition 218 limits the ability to phase in cost of service Meter and consumption charges•ratesUnit costs are the basis for the proposed rates for each customer classCost of service analysis demonstrates the cost basis for the Rate Design Overview of the Rate Design 15 and equitablebased -Are costclass of serviceutility, and each revenues of the the target revenues to meet Produce sufficient Districtobjectives of the design goals and Meet the rate analysescost of service requirement and revenue findings of the Reflect the Current Rates as of 01/01/2020 3.60 Zone 73.00 Zone 62.40 Zone 51.80 Zone 41.20 Zone 30.60 Zone 2$0.00 Zone 1gal)1,000 Charge (per Zone $1.91 gal1,000 $/Commercial Consumption 721.16 8"576.93 6"384.62 4"268.81 3"160.58 2"116.80 1 1/2"83.09 1"69.66 3/4"$69.66 5/8" x 3/4"Charge/MonthMeter Commercial0.97 gal+ 8,000 $0.78 8,000 gal–0 Metered Consumption (1,000 gal)83.09 1"69.66 3/4"$69.66 5/8" x 3/4"Charge/MonthMeter Residential 16 Proposed Residential Rates 18(Scenario 5) Proposed Commercial Rates 19(Scenario 5) Proposed Pump Zone Rates 20(Scenario 5) 20 Rate Design Summary Proposed January 2021 implementationyear period-Proposed rates were provided for a up to a fiverequirement and cost of service resultsProposed rates were developed based on the revenue Consumption chargeeter chargeM customer classCost of service unit costs provide the cost basis for each 21 Next Steps…(January 2021)Implement adopted rates If no majority protest (<50%)•Adopt proposed rates Hold a public hearing (December)Send customer notification If directed by Board begin Proposition 218 processDevelop written report (part of the administrative record)Finalize the rate study Thank you for your input!