HomeMy WebLinkAbout02/16/1993, 1 - NEW WATER RATE STRUCTURE MEM
7city o� san ���s oB�spo -
COUNCIL AGENDA REPORT NSM
FROM: William C. Statler, Director of Finance
Prepared by: Linda Asprion, Revenuew3ager j#
SUBJECT: NEW WATER RATE STRUCTURE
CAO RECONMENDATION
■ Adopt a resolution eliminatingminimum charges and implementing a three-tiered
commodity rate structure for all customers which will charge the following rates on
a monthly basis:
1 - 5 units @ $2.00 per hundred cubic feet (ccf)
6 - 12 units @ $3.00 per ccf consumed
13+ units @ $335 per ccf consumed
■ Provide direction on modifying utility bills to show a cost break-out of three-tiered
rate structure.
DISCUSSION
Overview
On January 12, 1993, the Council conceptually approved restructuring the City's water rates
by eliminating minimum charges, which are currently based upon meter size, and
implementing a monthly three tiered rate structure for all customers with the first tier for
1 to 5 ccf, a middle tier for 6 to 12 ccL and the third tier for 13 ccf and up. Based on
Council's conceptual approval, staff has modeled a three-tiered rate structure that ensures
adequate revenues to fully recover the total cost of providing water services. Based upon
this modeling and Council direction, staff is recommending that on a monthly basis 1 - 5 ccf
be charged at $2.00 per ccf, 6 - 12 ccf be charged at $3.00 per ccf, and 13+ ccf be charged
at $335 per ccf.
Background
At their January 12, 1993 meeting, the Council reviewed the "water rate structure goals"
adopted in May 1988, and analyzed five basic "types" of water rate structures using a
"continuum" approach to determine how each type conformed with the adopted goals. We
determined that some of these goals are potentially in conflict For example, a rate
structure that provides rate stability will probably not encourage conservation efforts; and
a rate structure that is easy to understand will not necessarily be equitable between classes
of customers. In the five typologies presented, primary rate structure goals are achieved
based on the reliance of the structure on either fixed (minimum charges) or variable
(commodity charges) components.
city of San L 3 OBispo
NO COUNCIL AGENDA REPORT
Based upon the information presented at the January 12, 1993 meeting (Exhibit B), the
Council conceptually approved eliminating minimum charges, which are currently based on
meter size, and implementing a rate structure based upon three-tiers of consumption for
both residential and commercial customers. The proposed rate structure reflects Council's
direction from this meeting.
Proposed Water Rate Compared to Current Water Rate
As discussed at the January 12, 1993 meeting, the rate structure tells us how costs will be
distributed among various types of customers. Under almost any rate structure, the average
customer will pay about the same. What the various rate structures tell us is not how the
"average customer" will be affected, but how the "non-average customer" will be affected.
The recommended rate structure meets the criteria conceptually approved by the Council
and is summarized below on a monthly basis in comparison with our current rate structure:
Current Proposed
Structure Structure
Minimum Charges
5/8" Meter $ 5.90 None
3/4" Meter $ 8.85 None
1" Meter $ 14.75 None
1/2" Meter. $ 3550 None
2" Meter $ 59.00 None
3" Meter $106.00 None
4" Meter $187.95 None
6" Meter $284.15 None
8" Meter $448.10 None
10" Meter $56830 None
Commodity Charges
1 to 5 ccf $ 1.20 per ccf $2.00 per ccf
6 to 12 ccf $ 2.40 per ccf $3.00 per ccf
13+ ccf $ 2.40 per ccf $3.35 per ccf
The following is a summary of average writ casts based on the current and proposed three-
tiered rate structure for both residential and non-residential customers depending on their
meter size and water use characteristics:
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Nii% COUNCIL AGENDA REPORT
AVERAGE UNIT COST
Current Proposed % Increase
Structure Structure (Decrease)
Residential
5/8" Meter, 5 ccf $238 $2.00 (19%)
1" Meter, 5 ccf $4.15 $2.00 (51%)
5/8" Meter 8 ccf' $239 $238 0%
5/8" Meter, 10 ccf $239 $2.50 5%
1" Meter, 10 ccf $3.28 $2.50 (23%)
5/8" Meter, 20 ccf $2.40 $2.89 21%
1" Meter, 20 ccf $2.84 $2.89 2%
"Average" residential customer at 70% of 1987 consumption levels
Non-Residential
1" Meter, 50 Units $258 $3.17 23%
2" Meter, 200 Units $2.67 $331 24%
3" Meter, 450 Units $2.62 $333 27%
6" Meter, 1650 Units $257 $335 31%
The following chart shows how the proposed rate will affect the monthly billing of both
residential and non-residential customers:
MONTHLY BILLING
Current Proposed Increase
Structure Structure (Decrease)
Residential
5/8" Meter, 5 ccf $ 11.90 $ 10.00 ($ 1.90)
1" Meter, 5 ccf $ 20.75 $ 10.00 ($ 10.75)
5/8" Meter, 8 ccf" $ 19.10 $ 19.00 ($ .10)
5/8" Meter, 10 ccf $ 23.90 $ 25.00 $ 1.10
1" Meter, 10 ccf $ 32.75 $ 25.00 ($ 7.75)
Non-Residential
1" Meter, 50 ccf $ 128.75 $ 15830 $ 2955
2" Meter, 200 ccf $ 533.00 $ 660.80 $ 127.80
3" Meter, 450 ccf $1,180.00 $1,498.30 $ 318.30
6" Meter, 1650 ccf $4,238.15 $59518.30 $19280.15
s "Average" residential customer at 70% of 1987 consumption levels
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Alternatives for Modifying Utility Bills
At the January 12, 1993 meeting, there was direction to modify the current utility bill to
include a breakdown of the number of units charged at each tier. There is a one time cost
of $5,000 to implement this change summarized as follows:
■ Computer program changes to reformat
utility bills and printing program $4,500
■ New utility billing stock $ 500
Implementing this change will take approximately three months.
An alternative to modifying the utility bills, yet providing the customer with additional
billing information, is to print the three-tiered rate schedule on the back of each bill. By
using the rate schedule, the customer could validate the calculation and determine the
amount of savings by any further conservation efforts. The cost for this alternative is
estimated at $500 and would take one month to implement. There would be no cost to this
approach if we wait to make this change until our current billing stock is exhausted, which
is estimated to happen within five months.
Staff is requesting Council direction on the alternative they deem most appropriate.
Notification of Rate Change
In order to ensure that the City's water customers are properly notified of the proposed rate
structure change, a display ad has been published in the Telegram Tribune by the City
Clerk's Office, and an informational letter has been mailed to each of the City's top eighty
water users, explaining how the rate structure is changing. Additionally, the Chamber of
Commerce is coordinating a meeting with the high water users to discuss their concerns and
questions. For all water customers, a notice will be enclosed in the first utility bill
explaining the rate structure change.
FISCAL IMPACT
As previously discussed, any rate structure can ensure adequate revenues to meet the City's
operational and capital requirements. The issue before the Council is solely how this
revenue is generated by different kinds of customers.
ALTERNATIVES
Water Rate Soucture
As presented in the January 12, 1993 report, there are many other rate alternatives that the
Council could consider. However, the proposed rate structure reflects Council's direction.
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COUNCIL AGENDA REPORT
UnMy W FoinW
As discussed above, there are several alternatives available to us in better presenting the
cost of water to our customers on the utility bill.
ATTACHMENTS
Resolution amending water service rates
EIfHMM
A. Rates for water services per bi-monthly billing cycle
B. Council Agenda Report from January 12, 1993 describing water rate structure goals
and options
RESOLUTION NO. (1993 SERIES)
A RESOLUTION OF.THE COUNCIL OF THE CITY OF SAN LUIS OBISPO
AMENDING WATER SERVICE RATES
WHEREAS, a comprehensive review of water rate structures has been performed
and reviewed by the Council; and
WHEREAS,based on this review the Council has determined that a three-tiered rate
structure that does not include any minimum charges is an appropriate method of charging
customers for the water consumed; and
WHEREAS, it is the City's policy that water rates and charges fully recover the
operating, debt service, and capital costs of the water system; and
WHEREAS, it has been determined that the new water rates are "revenue neutral'
compared with the previous rate structure;
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis
Obispo as follows:
SECTION 1. Chapter 420.060 of the Municipal Code (Rates for service per bi-
monthly billing cycle) is hereby amended as set forth in Exln'bit A attached hereto.
SECTION 2. The rates set forth in Exhibit A shall be effective March 1, 1993.
SECTION 3. All other provisions of Chapter 420 of the Municipal Code remain in
full force and effect..
On motion of : seconded by
. and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing Resolution was adopted on this day of . 1993.
Mayor Peg Pinard
ATTEST:
City Clerk Diane Gladwell
APPR D:
City ' trative Officer
o ey
Director of Finance
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Exhibit A
RATES FOR WATER SERVICES PER MONTH
Rates for water service per month consist of commodity charges as follows:
Commodity Charges Per CCF
Inside City Outside City
Construction Site Meters Only
0 to 1 ccf $2.00 $4.00
In excess of 1 ccf thereafter $150.00 $300.00
All Others
1 to 5 ccf $2.00 $4.00
more than 5 ccf and less than 13 ccf $3.00 $6.00
13 ccf or more $335 $6.70
ccf = one hundred cubic feet
EETING DATE:
�� �� ►�I�I���I ���� city of san oB1spo
COUNCIPAGENDA REART NUMBER:
FROM: William C. Statler, Director of Finance
Prepared by: Linda Asprion, Revenue Manager
SUBJECT: WATER RATE STRUCTURE REVIEW
CAO RECOMMENDATION
Conceptually approve a new water rate structure (Type E, Exhibit 2) that eliminates
minimum charges and retains the current two tier commodity charge structure. Based on
Council direction, staff will schedule a public hearing and return with an appropriate
resolution for Council adoption.
DISCUSSION
Overview
The purpose of this report is to provide Council with an overview of the different types of
water rate structures available in meeting adopted rate goals; to compare these various rate
structures to the City's current rate structure; and to propose a change in the City's water
rate structure. The recommended rate structure encourages conservation, recognizes that
the marginal cost of adding new water resources is high, is easier for our customers to
understand, and is equitable among classes of customers.
Background
In June, 1992, staff brought to Council the annual review of the financial needs of the Water
Fund. Although no rate increase was recommended, there was a rate change proposed that
would modify the existing basis for single meter residential minimum charges to address
concerns relating to meter oversizfng for fire protection purposes (excerpt from June 1, 1992
Council Agenda Report provided in Exhibit 1). The proposed rate change was not accepted
by Council. Instead, Council requested a water rate structure review with the intent of
analyzing the entire water rate structure and not just single meter residential. This report
is in response to Council's request.
Revenue Requirements Versus Rate Structure
The Financial Plan policies require the City to perform an annual review of the revenue
requirements of the Water Fund and adjust the rate structure as necessary to ensure that
an adequate amount of revenue is generated and that it is generated in an equitable manner
from customers. Although we consider both revenue requirements and rate structure
together in the annual review of the Water Fund, we need to recognize that the revenue
required to operate the water facilities and the rate structure by which the revenue is
generated are really two separate issues.
Revenue requirements tell us bow much revenue is needed to fully recover the total cost
of providing water services, including operations, capital outlay, and debt service. Rate
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COUNCIE AGENDA RESORT
structure tells us how these costs will be distributed among different types of customers. It
is important to recognize that any rate structure can be designed to ensure revenue
adequacy. The type of rate structure used will depend on the "rate structure goals". In May
1988, the Council adopted the following water rate structure goals:
■ Comply with legal requirements
■ Ensure revenue adequacy to fully meet system operating and capital needs
■ Encourage conservation
■ Provide equity and fairness between classes of customers
■ Be easy to understand by our customers and easy to administer
■ Provide for ongoing review in order to facilitate rate stability
As we review the various types of rate structures, it will become apparent that some of these
goals are potentially in conflict. For example, a rate structure that provides rate stability
will probably 'not encourage conservation efforts; and a rate structure that is easy to
understand by our customers will not necessarily be equitable between classes of customers.
As stated above, the rate structure tells us how costs will be distributed among the various
types of customers. Under almost any rate structure, the average customer will pay about
the same. What the various rate structures tell us is not how the "average customer" will
be affected, but how the "non-average customer"will be affected. For example, for a lower
than "average" water user, how will the bill be affected by various types of rate structures?
And conversely, how will the various rate structures affect the higher than "normal" user?
Water Rate Structure Typologies
In considering water rate structures, we thought it would be useful to categorize potential
rate structures based on the primary "goal' that they are intended to accomplish, viewing
them as a continuum ranging from a strong bias towards rate stability to a strong bias
towards water conservation. Exhibit 2 provides five basic "types" of water rate structures
using .this "continuum" approach. Under each type is listed the characteristics of that
particular rate structure along with their advantages, disadvantages, and neutral qualities.
Some of these qualities are purposeful and others are more of an by-product based upon
customer reaction to the rate structure. But regardless of the type, each rate structure is
comprised of two basic components: minimum charges and commodity charges. In the five
typologies presented, primary rate structure goals are achieved based on the reliance of the
structure on either fixed (minimum charges) or variable (commodity charges) components.
.Wvdnuvn Chmgm. The minimum charge component is basically a flat rate that is unrelated
to consumption. Although a minimum charge can include a consumption allowance,
consumption is not the basis for the rate. The flat rate (minimum charge) is typically based
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COUNCIfAGENDA REPORT
upon either.
■ Type of account (i.e. residential or commercial)
■ Meter size
■ Flat rate per account
Commodity Charges On the other hand commodity charges are based upon consumption.
Commodity charges consist of the following possible components:
■ Same rate for each unit of water consumed
■ Inclining rates for each unit of water or tier of units (i.e. 1 - 10 units one rate, 11 -
20 units a higher rate)
■ Declining rates for each unit of water or tier of units (i.e. 1 - 10 units one rate, 11 -
20 units a lower rate)
■ Combination of the above components (i.e. 1 - 20 units one rate, 21 - 40 units a
higher rate, 41+ units a lower rate)
In the "typologies" presented in Exhibit 2, Type A represents the primary rate.goal of
stability, and recognizes that the costs of delivering water at any one point in time are
primarily fixed. For example, 90% of the City's costs of delivering water to our customers
do not directly vary with consumption. At the other end of the continuum, Type E
represents the primary rate goal of encouraging water conservation, and recognizes that the
marginal cost of acquiring new water supplies is very high. Types B, C, and D simply
represent other points in this continuum. As reflected in this chart, it is the varying
combinations and reliance of each type on minimum versus commodity charges that
primarily establish its position on the continuum
It is important to note that all types have the neutral qualities of providing revenue
adequacy and meeting legal requirements. Therefore, the question really becomes:
What is the rate structure trying to achieve and how does that compare to the City's objectives?
The City's current water rate structure is most closely aligned with Type D. The City
charges a minimum flat rate based upon meter size, which does not include any water
consumption. The minimum rate comprises approximately 2595' of our rate revenue
requirements. The remaining 75% of the revenue requirement is comprised of two tiers of
commodity charges (1 - 5 units @ $1.20 per unit and 6+ units @ $2.40 per unit on a
monthly basis). This type of rate structure encourages conservation goals and provides
customer equity as the rates increase with higher consumption. However, this rate structure
is difficult for some customers to understand, since there is a minimum charge even if there
is no water consumed. Additionally, this rate structure is relatively unstable, since revenue
generated under it is highly dependent upon consumption. Lastly, as discussed last June,
there are circumstances where meter size,which determines minimum charges,is not related
city osans oBispo _
COUNCIf AGENDA REPORT
to projected water needs,but rather, fire sprinkler requirements. This results in many single
meter residential having larger water bills solely due to this factor.
Accordingly, we are proposing that the City's water rate structure be changed to a 'Type E"
with two tiers of rates, which is the same as our current rate structure, but eliminates
minimum charges. This type of rate structure encourages conservation, recognizes that the
marginal cost of adding new water resources is high, and is easier than our current rate
structure for customers to understand. It is equitable among classes of customers, as no one
group is being required to carry a disproportionate share of system costs. The primary
disadvantage is that the rate may be very unstable if the customers have inconsistent
consumption patterns. However, as noted above, our current rate structure is already highly
unstable. Although the proposed rate structure will make it slightly more unstable, we
believe that this is a reasonable trade-off given the other benefits of the proposed structure.
I
In summary, we believe that this proposed water rate structure is more closely aligned with
the City's objectives.
Water Rate Comparisons
Exhibit 3 provides water rate comparisons for monthly charges for each type. The examples
are all based upon raising the same amount of revenue, $5,638,200, which is the projected
revenue requirement for fiscal year 1992-93 (see Exhibit 4 for five year projection presented
last June) and based upon a 70% consumption level from the water consumed in 1987, the
last year prior to drought conditions. Monthly billing comparisons for each type are
provided for 5/8' and 1' meter sizes, and for varying levels of consumption (5, 10, and 20
units monthly - one unit equals 100 cubic feet, or 748 gallons). The mid-range monthly
consumption (10 Units) reflects an average single family customer. Each type has two
examples: one with meter size rate variances as under the City's current rate structure; and
the other without meter size rate variances. The exception to this is Type E, which is
unaffected by meter size as the rate is based totally on consumption. For Type E, one
example is based upon two tiers of increasing rates; and the other example is based on each
unit of water costing the same.
It is important .to recognize that Exhibit 3 needs to be analyzed both vertically and
horizontally. Horizontal analysis demonstrates the difference in monthly rates among the
types between 5 units, 10 units, and 20 units of consumption - each example is for twice the
number of units consumed. Additionally the average cost per unit can be compared for
each type and each level of consumption.
Vertically, the analysis is between the two meter sizes (5/8" and 1"), with the difference
being dependent on whether the example is with meter size rate variances or without meter
size rate variances.
In the water fund rate review presented to Council in June, 1992, we presented the option
of revising the rate structure to charge all single meter residential accounts the same
minimum charge regardless of meter size. The proposal was to charge the current minimum
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Ommiq COUNCIL AGENDA REPOURT
charge for 5/8" meters and have that minimum charge become the base minimum rate for
all residential customers. Because the rate structure for single meter residential remains an
issue,we have included examples for rate structures incorporating meter size variances and
rate structures without meter size variances.
With the exception of types A-2, B-2, and C-2, which are calculated without meter size
variances, there is very little difference in monthly cost between categories for our"average"
customer (5/8" meter using 10 units of water): monthly bills range from $21.24 to $28.50,
compared with out current rate structure billing of $23.90.
This confirms our basic rate structure premise: "average" customers are not significantly
affected by different rate structures. However, "non-average" customers - greater than 5/8'
meter or higher or lower than average users - are affected. For comparison purposes, the
following is a summary of average unit costs based on the current and proposed structure
for different types of customers depending on their meter size and water use characteristics:
Average Unit Cost
Current Proposed Percent
Structure Structure Change
5/8" Meter, 5 Units $2.38 $1.66 (30%)
1" Meter, 5 Units $5.19 $1.66 (68%)
5/8" Meter, 10 Units $2.39 $2.49 4%
1" Meter, 10 Units $3.28 $2.49 (24%)
5/8" Meter, 20 Units $2.40 $2.91 21%
1" Meter, 20 Units $2.84 $2.91 2%
The examples provided above primarily reflect residential customers,who account for about
65% of the City's water use. The following is a comparison of our current versus proposed
rates for larger water users:
Average Unit Cost
Current Proposed Percent
Structure Structure Change
1" Meter, 50 Units $2.58 $3.15 18%
2" Meter, 200 Units $2.67 $326 18%
3" Meter, 450 Units $2.62 $330 21%
6" Meter, 1650 Units $2.57 $3.31 22%
The current and proposed rate structures are summarized below on a monthly basis:
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i COUNCM AGENDA REPORT
Current Proposed
Structure Structure
,Wwirnum Chmges
5/8" Meter $ 5.90 None
3/4" Meter $ 8.85 None
1" Meter $14.75 None
1 1/2" Meter $35.50 None
Commodity Cliwges
0 to 5 Units $1.20 per unit $1.66 per unit
More than 5 Units $2.40 per unit $3.32 per unit
FISCAL IMPACT
As indicated previously, any rate structure will provide revenue adequate to meet the City's
requirements. The.issue is solely how this revenue is generated by different kinds of
customers.
ALTERNATIVES
There are numerous rate alternatives that the Council could consider. However, as has
been discussed, all the various alternatives are comprised of either minimum charges or
commodity charges, or some combination of the two. Staff has presented ten possible rate
alternatives considered to be the basis for the full spectrum of rate alternatives. The ten
examples presented provide the basis for Council's direction to make appropriate changes
to the City's water rate structure.
SUMMARY
The purpose of this report is to provide Council with an overview of the various types of
water rate structures that meet the City's adopted rate goals; to compare these rate
structures to the City's current rate structure; and to propose a change in the City's water
rate structure. Staff is recommending the City change from a rate structure with minimum
charges and two increasing block rate commodity charges, to a structure with no minimum
charges and that retains the increasing block rate commodity charges. The proposed rate
structure .meets all of the adopted rate goals, except that it is highly sensitive to
consumption, and as such, is relatively unstable. However, this is also true of the City's
current rate structure. Once staff receives Council direction, we will ,schedule a public
hearing and return with an appropriate resolution for Council adoption.
EXHIBITS
1. Excerpt from June 1, 1992 Council Agenda Report
2. Water rate structure typologies
3. Water rate comparisons for monthly billings
4. Revenues, expenditures and changes in financial position for the water fund
Exhibit 1
EXCERPT FROM JUNE 11 1992 COUNCIL AGENDA REPORT
Single Meter Residential Rates
On July 6, 1990, Ordinance No. 1170 became effective requiring all
new residential units to have fire sprinklers. With this new
requirement came the need to have a larger water meter (usually 1
inch) which would provide for the additional pressure needed if the
fire sprinklers were activated. Without a sprinkler system, a 5/8
inch or 3/4 inch meter would normally be adequate.
The City's current readiness to serve charge is a flat. rate based
upon the size of the meter, with the rate increasing as the size of
the meter increases. As such, some customers may be paying a
higher readiness to serve charge based primarily on fire protection
rather than water service needs. Below is a 'chart showing the
three levels of readiness to serve charges currently in effect for
all customers:
Meter Size Readiness to Serve Charge
5/8 Inch $ 5. 90 Monthly
3/4 Inch $ 8.85 Monthly
1 Inch $14.75 Monthly
Concerns with the impact of this rate structure on some of our
customers have been recognized by staff and voiced by affected
customers, as well as by the Council. Provided in Exhibit 4 is a
memorandum from the Fire Chief to the Director of Finance
summarizing this issue.
After reviewing several options, staff believes that the best way
of addressing this concern is to charge all single meter
residential (SMR) accounts the same readiness to serve charge
regardless of the meter size (up to the 1" level) . Since- 70% of
our residential customers have 5/8" meters, it is recommended that
this become the base rate for this new service classification.
However, decreasing the readiness to serve charge on our current
SMR accounts with 3/4" and 1" meters will reduce Water Fund
revenues by approximately $155, 000 per year.
To compensate for this reduced revenue., a $ . 15 increase per unit
of consumption (one hundred cubic feet) over 10 units (bimonthly)
would be required. Accordingly, the per unit price of $1.20 for
the first ten units of consumption will remain the same, with the
per unit price of $2.40 increasing to $2.55 for consumption over
ten units. This modest increase will affect all water customers
with consumption over 10 units in a billing period.
The following is a summary of - the monthly change in costs for
residential customers based upon using 22 units of water during a
standard billing cycle (which is 90% of the household average in
1987) at different meter size rates if this revised rate structure
is adopted:
Meter Current Revised Increase
Size Rate Rate (Decrease)
5/8 inch $26.30 $27.20 $ .90
3/4 inch $29.25 $27.20 ($ 2. 05)
1 inch $35. 15 $27.20 ($ 7.95)
'This adjustment to the over 10 unit consumption rate-tier would
have a modest impact on the average customer yet will provide the
necessary revenue to compensate for the reduction in readiness to
serve charges.
Impact of this rate change
As discussed in the rate analysis above, no rate increases for
revenue purposes are required for 1992-93. However, with this rate
structure change, some customers will see increases (or decreases)
in their billing, although total revenues will remain the same.
Effectively communicating this rate structure change in the general.
context of "no rate increases" for 1992-93 will be difficult.
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1 1
RECEIVED
FEB 16 M3 FFg 1 61993
CITY COUNCIL CITY CLERK
MEMORANDUM
SM LUIS OSISPO.CA >QR LUIS OBI�PO. CA
TO: Mayor Pinard " '
Council members Rappa, Roalman, Romero, and Settle
FROM: Lynn Bloclt�, Administrator
DATE: February 16, 1993
RE: Water Rate Fee Structure
The Business Improvement Association Board of Directors
would like to support the proposed two tiered water rate
structure presented at the January 12, 1993 City Council
meeting.
The BIA informally surveyed several downtown businesses and
found that all those businesses surveyed would experience a
rate increase under the three tiered proposal. The
increases varied from 10 - 25%.
Business customers make every effort to conserve water
through implementation of conservation methods,
retrofitting, and minimizing consumption.
While businesses may be higher users, this does not mean
that they are wasters. A restaurant or hotel is naturally
going to consume more than a single family home by the
nature of the, business.
The two tiered structure proposed by the City staff which
sets fees at $2.25 1-5 units and $2.80 over 6 units would
raise the same revenue and fairly distribute the cost of
water to all users.
The BIA would ask that the City Council consider that
businesses have no more ability to pay for increased fees
than residents and the cost of resources should be equally
distributed to all users.
ODPI STO:
❑•Denotes Amon ❑ FYI
iCamdl ❑,MDDHL
CAO Cd'FIN.DIR.
0 ❑ FiRECHIEFF
❑ FW DIR.
CLERK/ORIC. ❑ POLICECI-L
❑�,MMCMT.T&U4 CJ REC.DIR.
�)FME D UTILDIR.
P.O.Bar 1402•San Lk Ohipo•CA•93406.80SI541-0186