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Home My WebLink AboutItem 4d - Water Supply and Rate Update PresentationWater and Sewer Rate UpdatesWater Supply Updates City Council Presentation -May 16, 2023 Water and Sewer Rate UpdatesWater Supply Updates The City is at or near full capacity at all surface water reservoirs. Reservoir Levels Spillway Videos Storm Damage Water Demands Water and Sewer Rate UpdatesWater Supply Updates Reservoir Levels Spillway Videos Storm Damage Water Demands Water and Sewer Rate UpdatesWater Supply Updates Reservoir Levels Spillway Videos Storm Damage Water Demands Nacimiento Pipeline Fiscal ImpactNacimiento Pipeline Photos $275,000 -$385,000 Cost to the City $5.9M -$8.3M Total Project Cost December 2024 Estimated Completion Date for Permanent Repairs 93% Estimated Percent Covered by FEMA 4-5% Estimated Percent Covered by City Permanent Repairs Water and Sewer Rate UpdatesWater Supply Updates Reservoir Levels Spillway Videos Water Demands Storm Damage September 2023 Target Date for Temporary Repairs Because of storm damage to the Nacimiento Pipeline, the City will not have access to this reservoir until September 2023 at the earliest. Temporary Repairs $350,000 -$550,000 Total Project Cost Nacimiento Pipeline Fiscal ImpactNacimiento Pipeline Photos The City’s water supply modeling shows that the City has over 10 years of water available based on current reservoir storage levels and current water demand. Reservoir Total Volume (acre-feet)City’s Allocation (acre-feet)% Capacity Nacimiento 353,665 5,482 NA Whale Rock 38,967 20,350 100% Salinas 24,661 22,661 103% Total Annual Water Demand: 5,000 Water and Sewer Rate UpdatesWater Supply Updates Reservoir Levels Spillway Videos Storm Damage Water Demands Water and Sewer Rate UpdatesWater Supply Updates Reservoir Levels Spillway Videos Storm Damage Water Demands Water and Sewer Rate UpdatesWater Supply Updates Rate Study Updates Cost Reductions Important Dates Rate Revenue Requirement Study Cost of Services Study Fiscal Year Water Revenue Requirement Sewer Revenue Requirement 2023-24 Proposed +8.5%+4.0% 2024-25 Proposed +7.5%+4.0% 2025-26 Forecasted +7.5%+4.0% 2026-27 Forecasted +4.5%+4.0% 2027-28 Forecasted +4.5%+3.5% The Rate Revenue Requirement Study determines how much additional rate revenues are needed to support operating and capital expenses. Increased Costs Rate Revenue Requirement Study Cost of Services Study +14.13% +13.41% +4.62% -15.62% $(2,000) $- $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 Residential Multi-Family Non-Residential Irrigation Water Cost of Service (in thousands) Revenues vs Distributed Costs (FY23-24 forecast) Revenues Distributed Costs +3.66% +4.61% +4.22% $- $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 Residential Multi-Family Non-Residential Sewer Cost of Service (in thousands) Revenues vs Distributed Costs (FY23-24 forecast) Revenues Distributed Costs Water and Sewer Rate UpdatesWater Supply Updates Increased Costs Cost Reductions Important Dates Rate Study Updates Chemicals Electricity Construction Why are rates increasing? The Utilities Department estimates that it will spend $300,000 more on chemicals in FY23-24 than FY21-22. Inflation Chemical FY21-22 Contract FY22-23 Contract FY23-24 Contract % increase from FY21-22 to FY23-24 Alum $336/ton $450/ton $491/ton 46% Fluoride $1,760/ton $3,211/ton $3,016/ton 71% Sodium Hydroxide $0.76/gallon $1.28/gallon $1.34/gallon 76% Polymer $0.60/lb $0.95/lb $1.06/lb 77% Chlorine $1.19/gallon $1.43/gallon $2.46/gallon 107% Water and Sewer Rate UpdatesWater Supply Updates Rate Study Updates Increased Costs Cost Reductions Important Dates Why are rates increasing? It is anticipated that electricity will cost Utilities $1.5 million more in FY23-24 than FY21-22. 53%54%56%57%18%16% 19%20% 27%28% 23%22% $2,922,000 $3,353,000 $4,462,000 $4,816,000 FY21-22 FY22-23 FY23-24 FY24-25 Electricity Costs Raw Water Delivery Water Treatment Wastewater Treatment Other Water and Sewer Rate UpdatesWater Supply Updates Rate Study Updates Cost Reductions Important Dates Increased Costs Chemicals Electricity Construction Inflation Why are rates increasing? California Construction Cost Index 7102 CCCI February 2021 9166 CCCI February 2023 29% CCCI % increase from Feb-2021 to Feb-2023 0 50 100 150 200 250 300 2018 2019 2020 2021 2022 December YoY PPI Index Commodity:Plastics sewer, stormdrain, and water main pipe Source:U.S. Bureau of Labor Statistics PPI Detailed report 5-year increase: 149% Water and Sewer Rate UpdatesWater Supply Updates Rate Study Updates Cost Reductions Important Dates Increased Costs Chemicals Electricity Construction Inflation Why are rates increasing? Municipal Cost Index 261.08 MCI January 2021 308.41 MCI January 2023 18% % increase from Jan-2021 to Jan-2023 While it is hard to quantify the effect of general inflation, the MCI is a reasonably good placeholder to estimate the impact of inflation on municipal operations. MCI has increased 18% over two years. Water and Sewer Rate UpdatesWater Supply Updates Rate Study Updates Cost Reductions Important Dates Increased Costs Chemicals Electricity Construction Inflation Cost Savings Cost Control Financial Assistance Fund Grant Purpose Project Awarded Amounts Sewer SRF Loan Forgiveness WRRF Upgrade $4,000,000 Sewer Flood Protection WRRF Upgrade $2,077,103 Sewer Wastewater Discharge Compliance WRRF Upgrade $1,314,530 Water Energy Resiliency WTP Generator $1,395,000 Water Groundwater Sustainability Plan Sustainable Groundwater Management Act $256,395 Water Groundwater Expansion Groundwater Plume Characterization Study $1,996,575 Water Groundwater Expansion Groundwater Plume Cleanup $5,877,765 Water Self-Generation Incentive Program Tesla Battery Pack $3,202,536 Total $20,119,904 Water and Sewer Rate UpdatesWater Supply Updates Rate Study Updates Cost Reductions Important Dates Increased Costs Cost Savings Cost Control Financial Assistance Cost Control for Rate Payers Energy efficiency efforts to reduce electricity costs. Pursuit of additional grant opportunities. Reduction in the sewer cap default from 8 CCF to 5. Water and Sewer Rate UpdatesWater Supply Updates Rate Study Updates Important Dates Cost Reductions Increased Costs Cost Savings Cost Control Financial Assistance Eligible customers can receive a 15% discount on monthly water and sewer bills. Please visit www.slocity.org/cap Water and Sewer Rate UpdatesWater Supply Updates Rate Study Updates Important Dates Cost Reductions Increased Costs Water and Sewer Rates Community Forum Where:Library Community Room, 995 Palm St San Luis Obispo CA 93403 When: May 18, 2023 6 p.m. to 8 p.m. Purpose:To provide an opportunity for the community to ask questions about rates. Public Hearing for Proposed Water and Sewer Rates Where:Council Chambers 990 Palm St San Luis Obispo CA 93401 When: June 6, 2023 5:30pm Purpose:To consider proposed increases to water and sewer rates. Water and Sewer Rate UpdatesWater Supply Updates Rate Study Updates Cost Reductions Important Dates Increased Costs Water and Sewer Rate UpdatesWater Supply Updates Questions