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Home My WebLink About10/17/1989, 5 - APPLICATION OF SURCHARGE LEVELS ABOVE THE 40 UNIT CEILING Meeting Date: 10/17/89 City Of San IDIS OBISPO Item No: �- i COUNCIL AGENDA REPORT FROM: William T. Hetland PREPARED BY Allen Short Utilities Director �"' Water Division Manager Subject: Application of Surcharge levels above the 40 unit Ceiling CAO Recommendation: Adopt Resolution implementing alternative one which imposes a 100 percent surcharge when usage exceeds the ceiling of 40 units and a 200 percent surcharge when usage exceeds the 1987 base year. BACKGROUND: The City Council requested that staff investigate modifying the current mandatory water conservation program, to include establishing an "allocation ceiling" for all single family residential accounts. Additionally, as part of the modification increase in the lifeline allowance for all single family residential accounts. The City Council on September 26, 1989 approved the establishment of a maximum target allocation of 40 units per billing cycle for single family residential accounts. Additionally the lifeline allocation was increased from 15 units to 21 units per billing cycle for all single family residential accounts. The implementation of the program modifications were to be effective with billing cycles beginning on or after October 1, 1989. To encourage compliance with the mandatory water conservation program and modifications, there is a surcharge added to the water bill if a customer exceeds the required reductions amounts. The City establishes by resolution the surcharge method and amount. Staff presented to Council at the September 26, 1989 meeting one option and example identifying surcharge levels. The City Council requested that staff develop other alternatives and present those options at the 10/17/89 Council meeting. SURCHARGE ALTERNATIVES Three surcharge options have been identified and are listed below in the order of staff's preference. Under all three options the customer will receive a minimum surcharge of 100 percent for exceeding the ceiling of 40 units. The difference among the options occurs when the 200 percent surcharge is imposed. 1. The surcharge will be 100 percent of the total water bill on which the usage is greater than the ceiling but less that the base S- / �►��i�HI�nIIIpp��nuI��U city of san Luis osispo i COUNCIL AGENDA REPORT Page 2 . year usage. If the usage is greater that the base year, a 200 percent surcharge is added to the total water bill. This approach was the original staff recommendation and is currently in effect. 2 . The surcharge will be 100 percent of the total water bill on which the ceiling is exceeded but less than the preestablished target allocation. In the event that the customer consumption exceeds the preestablished target allocation, the surcharge will be 200 percent of the total water bill. 3 . The surcharge will be 100 percent of the total water bill on which the ceiling is exceeded up to 57 billing units. If the usage is greater than this amount, a 200 percent surcharge is added to the total water bill. The value of 57 units is the base year usage that would provide a target allocation of 40 units (30% reduction) during the summer period. Example of Surcharge Methodology If for example, if a customer had the following: A 1987 usage of 90 units: and a preestablished target allocation of 63 units; Identified in the table below are examples of each of the proposed methodologies and their financial impacts on the total water bill, based upon the above example. . Alternative Consumption Units 40 41 58 64 r' 91 1. $ 59.90 $122.80 $173.80 $191.80 $409.20 2. $ 59.90 $122 .80 $173 .80 $287.70 $409 .20 3 . $ 59.90 $122.80 $260.70 $287.70 $409.20 Implications The original intent of the surcharge portion of the mandatory water conservation program was to encourage compliance. Those individuals who did not conserve enough were assessed a 100 percent surcharge. Those individuals who did not conserve at all were assessed a 200 percent surcharge. city of San lues OBISpo dia; COUNCIL AGENDA REPORT Page 3. Alternative one most closely resembles the original concept regarding when the 100 percent and 200 percent surcharge are imposed. Under option two, the sample customer will receive a 200 percent surcharge ($191.33) even through the customer will have conserved 30 percent from their 1987 usage. Under alternative three, the sample customer will receive a 200 percent surcharge ($173 .80) even though the customer conserved 64 percent from their 1987 usage. Recommendation Attached are three resolutions which will implement the surcharged options identified. It is recommended that alternative one which imposes a 100 percent surcharge when usage exceeds the ceiling of 40 units and a 200 percent surcharge when usage exceeds the 1987 base year be implemented. ATTACHMENTS: Draft Resolutions (3) Approved: (01 City Admi -strative Officer Finance Director Z-�---j j City Atto Utilities Director Water Division Manager •3 Alternative No. 1 RESOLUTION NO. (1989 SERIES) A RESOLUTION OF THE COUNCIL OF SAN LUIS OBISPO AMENDING THE MANDATORY WATER CONSERVATION IMPLEMENTATION POLICY STATEMENT WHEREAS, on September 26, 1989 the City Council passed Resolution No. 6696 establishing a maximum water allocation of 40 units per billing period for any single family residential meter within the City service area. WHEREAS, the City has determined that Section 1 of Resolution No. 6603 requires a program modification. NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as follows: Delete second sentence, Paragraph 5, Section 1 of Resolution No. 6603 and add in its place that the surcharge will be 100 percent of the total water bill on which the usage is greater than the ceiling but less that the base year usage. If the usage is greater that the base year, a 200 percent surcharge is added to the total water bill. On motion of seconded by and on the following roll call vote: AYES: NOES: ABSENT: the following resolution was passed this . day of , 1989 . Page 2. Resol No. Mayor RON DUNIN CITY CLERK PAMELA VOGES APPROVED: 45�CITY ADMINISTRATIVE OFFICER CITY ATTORNEY FIN TOR W� l UTILITIES DIRECTOR a QL,ti WATER DIVISION MANAGER Alternative No. 2 RESOLUTION NO. (1989 SERIES) A RESOLUTION OF THE COUNCIL OF SAN LUIS OBISPO AMENDING THE MANDATORY WATER CONSERVATION IMPLEMENTATION POLICY STATEMENT WHEREAS, on September 26, 1989 the .City Council passed Resolution No. 6696 establishing a maximum water allocation of 40 units per billing period for any single family residential meter within the City service area. WHEREAS, the City has determined that Section 1 of Resolution No. 6603 requires a program modification. NOW, THEREFORE, BE IT RESOLVED by the Council of the City San Luis Obispo as follows: Delete second sentence, Paragraph 5, Section 1 of Resolution No. 6603 and add in its place that the surcharge will be 100 percent of the total water bill on which the ceiling is exceeded but less than the preestablished target allocation. In the event that the customer consumption exceeds the preestablished target allocation, the surcharge will be 200 percent of the total water bill. On motion of seconded by and on the following roll call vote: AYES: NOES: ABSENT: the following resolution was passed this day of 1989. Page 2 . Resol No. Mayor RON DUNIN CITY CLERK PAMELA VOGES APPROVED: '1 AqL_,,CITY ADMINISTRATIVE OFFICER CITY ATTORNEY FIN CE DIRECTOR UTILITIES DIRECTOR 16, WATER DIVISION MANAGER S7 -- -Alternative No. 3 RESOLUTION NO. (1989 SERIES) A RESOLUTION OF THE COUNCIL OF SAN LUIS OBISPO AMENDING THE MANDATORY WATER CONSERVATION IMPLEMENTATION POLICY STATEMENT WHEREAS, on September 26, 1989 the City Council passed Resolution No. 6696 establishing a maximum water allocation of 40 units per billing period for any single family residential meter within the City service area. WHEREAS, the City has determined that Section 1 of Resolution No. 6603 requires a program modification. NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as follows: Delete second sentence, Paragraph 5, Section 1 of Resolution No. 6603 and add in its place that the surcharge will be 100 percent of the total water bill on which the ceiling is exceeded up to 57 billing units. If the usage is greater than this amount, a 200 percent surcharge is added to the total water bill. The value of 57 units is the base year usage that would provide a target allocation of 40 units during the summer period. On motion of seconded by and on the following roll call vote: AYES: NOES: ABSENT: the following resolution was passed this day of , 1989. r Page 2. Resol No. Mayor RON DUNIN CITY CLERK PAMELA VOGES APPROVED: ,�&�CITY ADMINISTRATIVE OFFICER CITY ATTORNEY FIN CE DIRECTOR W� l UTILITIES DIRECTOR a Y lk WATER DIVISION MANAGER �� 1