HomeMy WebLinkAbout11 Ordinance water meter surcharge Agenda Item # I I
Public Utility District
ACTION
To: Board of Directors
From: Bob Mescher
Date: December 03, 2008
Subject: Adoption of an Ordinance for the Water Meter Surcharge
1. WHY THIS MATTER IS BEFORE THE BOARD
California's AB 2572 requires the District to begin reading all water meters and billing on a
volumetric basis. Implementation of new meters will require a number of Board actions and
will have a financial impact on the District.
2. HISTORY
In 1991, California's Water Measurement Law (SB 229) was enacted. This law required that
water meters be installed on all new commercial and residential water connections as of
January 1, 1992. SB 229 did not require the retrofit of meters for previously existing
customers. SB 229 did not require that the water meters be read and does not require billing
of customers on a volumetric basis. The District has been installing water meters on all new
connections since 1992 and is in compliance with this law.
On September 29, 2004, California's AB 2572 was signed into law. AB 2572 requires that the
District begin reading the water meters installed since 1992 and commence billing on a
volumetric basis by January 1, 2010. AB 2572 also requires that all other water services be
equipped with water meters and billed on a volumetric basis by January 1, 2025.
On April 16, June 18, July 2, and July 16, 2008, workshops were held to discuss the metering
of water services and proposed funding. A three phase approach was identified to cover the
implementation of metering and volumetric billing:
• Phase 1 is a pilot program to be completed by early 2009
• Phase 2 will achieve compliance with the 2010 deadline of AB 2572
• Phase 3 will achieve compliance with the 2025 deadline of AB 2572
There is no flexibility in the scheduling of Phase 1 and Phase 2 since the deadline to begin
meter reading is January 1, 2010.
On July 23, after reviewing several options, the Board authorized the District to proceed with
an expedited implementation plan, but directed staff to continue to look for other ways to
finance it. The Board indicated financing the plan with little or no external debt would be
desired.
The expedited implementation plan would begin installing approximately 2,000 meters per
year in 2010 and completing the implementation by 2012.
As directed by the Board, staff identified alternative methods to fund the water meter project,
and on October 1, 2008, staff presented a revised funding proposal.
Proposed Funding
The water meter reserve fund has a current balance of$1.3 million.
The District owns a surplus vacant parcel (Steele property) valued at over$3.0 million.
It is estimated that $1.5 million will be saved through energy conservation between 2011 and
2017, once volumetric billing begins and leak detection improves.
Operational expenses will be reduced by $1.5 million over the next 9 years through labor
savings.
Utilizing the above resources and savings, the District would need to borrow only $2.5 million
for a 5 year term, (1/3 of the loan beginning in 2011 and ending in 2016 and the remaining 2/3
beginning 2012 and ending 2017). The $5.00 monthly surcharge would continue for 5 years,
beginning January 2009 and ending December 2013. See the attached cash flow projection.
3. NEW INFORMATION
The proposed $5.00 monthly surcharge falls under Proposition 218.
The District has mailed meter surcharge information to property owners on or before October
17, 2008 and a public hearing will be held on December 3, 2008.
If the surcharge is adopted, it would become effective January 2, 2009. The surcharge would
apply to all treated water accounts within the District.
4. FISCAL IMPACT
The fiscal impact of fully implementing the new water meters is estimated (in FY 08 dollars) to
be $10,000,000 over the next four years.
The interest expense of a 5-year$2.5 million loan would be approximately$300,000.
The meter implementation and debt service would be paid:
35% from a surcharge paid by customers
27% from reduced expenses and conservation paid by rates
27% from the land sale
11% from the existing meter reserve
100% Total
5. RECOMMENDATION
Staff recommends that the board adopt the monthly water surcharge of$5.00 per customer
effective January 2, 2009.
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Mary Chapman Michael D. Holley
Administrative Services Manager General Manager
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Truckee Donner Public Utility District
Projected Cash Flow of Meter Compliance Project& Financing-$5 Surcharge
September 26,2008
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E Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Total
Beginning - - - 663,000 - - 647,000 541,000 443,000 129,000 -
Monthly Surcharge - 752,000 760,000 767,000 775,000 783,000 3,837,000
Reduced Expenses 200,000 206,000 212,000 218,000 224,000 225,060 225,000 1,510,000
Conservation - - - 146,000 176,000 208,000 218,000 229,000 241,000 253,000 1,471,000
External Loan 816,000 1,729,000 2,545,000
Meter Reserve 266,000 1,006,000 1,272,000
Land Sale 3,000,000 3,000,000
Interest Earned - - 20,000 - - 19,000 16,000 13,000 4,000 72,000
Meter Expenditures (266,000) (2,300,000) (2,961,000) (2,624,000) (2,716,000) (10,867,000)
Internal Loan 342,000 (342,000) - -
Loan Repayments (182,000) (568,000) (568,000) (568,000) (568,000) (386,000) (2,840,000)
Ending - - 663,000 - - 647,000 541,000 443,000 129,000 - -
Assumptions
Customers 2008 12,535
Monthly surcharge $ 5.00 5 years
Debt interest rate 4.29%
Customer growth 1.00%
Conservation 10.00%
Purch power inflation 4.00%
Other inflation 3.50%
Debt Requirements
External Loan#1 $ 816,000 5 years starting 2011
External Loan#2 $1,729,000 5 years starting 2012
Internal Loan#1 $ 342,000 1 year starting 2009
Internal Loan#2 $ - starting 2015
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Public Utility District
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Ordinance No. 2008 - XX
ESTABLISHING A MONTHLY BILLING SURCHARGE
APPLICABLE TO THE WATER METER PROJECT
WHEREAS, California's AB 2572 requires the District to begin reading all water meters
and billing on a volumetric basis; and
WHEREAS, implementation of the Water Meter Project will require a number of Board
actions and will have a financial impact on the District; and
WHEREAS, workshops were held on April 16, June 18, July 2, July 16, and October 1,
2008 to discuss the metering of water services and proposed funding; and
WHEREAS, a three phase approach was identified to cover the implementation of
metering and volumetric billing; and
WHEREAS, the District intends to establish a monthly billing surcharge in the amount
of $5.00 for a period of five years applicable to all treated water customers to provide
revenues to pay a portion of the Water Meter Project; and
WHEREAS, notices were placed in local newspapers and notification was sent to all
parcels liable for payment of water fees as required by Proposition 218; and
WHEREAS, on December 3, 2008, a public hearing was held to receive comments
from the public concerning the proposal to adopt a water meter surcharge.
NOW, THEREFORE, BE IT ENACTED by the Board of Directors of the Truckee
Donner Public Utility District as follows:
Section 1. Effective January 2, 2009, a surcharge of $5.00 will be added to monthly
bills of treated water accounts printed from January 2, 2009 through December 31,
2013.
Section 2. If no protest is made pursuant to Public Utilities Code Section 16078, then
the terms of this ordinance shall be effective thirty days after adoption by the board of
directors of the District.
Section 3. The Clerk of the District shall immediately cause a copy of this ordinance to
be published in a newspaper of general circulation and posted in three places within the
District.
Ord. 2008-XX Water Meter Surcharge
Section 4. The provisions of other Ordinances shall remain in effect to the extent that
they do not conflict with this ordinance.
PASSED AND ADOPTED by the Board of Directors of the Truckee Donner Public Utility
District at a meeting duly called and held within the District on the 3rd day of December
2008 by the following roll call vote:
AYES:
NOES:
ABSTAIN:
ABSENT:
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
By
Tim F. Taylor, President of the Board
ATTEST:
Michael D. Holley, Clerk of the Board
Ord. 2008-XX Water Meter Surcharge