Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Home
My WebLink
About
01-09-2018 Item 11 Water and Wastewater Rate Structure Review
Meeting Date: 1/9/2018 FROM: Carrie Mattingly, Utilities Director Prepared By:Jennifer Metz, Utilities Projects Manager SUBJECT:WATER AND WASTEWATER RATE STRUCTURE REVIEW RECOMMENDATION Direct staff to incorporate the updated water and wastewater rate structures into the Water and Wastewater Rate Study and fund analyses. DISCUSSION Background The City’s Rate Structure Review began in July 2017 and critically examines Council goals in support of the provision of water and wastewater services now and into the future. Guided by HDR Engineering, Inc. (HDR), two study sessions in July and August 2017 provided the Council and community an introduction to rate concepts and terminology and reviewing rate structure goals (Attachments A and B). Based on the guidance received during the first two sessions, this report now presents the recommended water and wastewater rate structures for use in the upcoming water and wastewater rate study and fund analysis for the 2018-19 Budget Supplement. Actual rates are included in the recommended rate structures to review customer impacts; however, staff is not proposing actual water and wastewater rates at this time. A recommendation on water and wastewater rates will be included in the April 2018 Proposition 218 notice, and presented to the Council as part of the 2018-19 Financial Plan supplement process in June 2018. Current Rate Structure The City’s current water rate structure does not differentiate between customer classes, meaning there is no difference in the fixed and consumption charges to a residential customer, a commercial business or office, or a multi-family apartment complex. The City’s current residential wastewater rate structure includes a monthly fixed charge per account and a volumetric charge based on average winter water consumption. The non- residential rate structure also includes the monthly fixed charge, plus a consumption charge on all water consumption. During the August 15, 2017, study session, the City Council prioritized its rate structure goals, as shown in Table 1. To identify the rate structure that best reflect these goals, various Table 1: City Council Rate Structure Goal Prioritization Rate Structure Goal Prioritization 1 Revenue Stability and Predictability 2 Discourage Wasteful Use 3 Stability and Predictability of the Rates 4 Fair Allocation of Total Cost of Service Among Customer Classes 5 Reflect all Present and Future Costs Source: August 15, 2017 City Council Water and Wastewater Rate Structure Study Session. Packet Pg 253 11 conceptual water and wastewater rate structures were reviewed and tested. Recommended Rate Structures To achieve revenue and rate stability and predictability, the Council’s #1 and #3 goals, the recommended rate structure proposes to increase the percentage of monthly fixed charges from existing levels. According to HDR, this movement towards a greater percentage of fixed charges is seen throughout the water and wastewater industry and across the United States. This is due to the impacts that climate conditions and regulatory factors have on utility revenues. The City’s commitment to discourage wasteful use (goal #2) is maintained in the recommended tiered residential rate structure and for all other customers by setting the variable charges at greater than 70 percent. To identify the appropriate level of fixed charges and ensure fair allocation of the cost of service among customer classes (goal #4), HDR analyzed the City’s customer classes (shown in Table 2), water meter sizes, and consumption data. The average water customer uses six units of water per month, with the average residential water bill at approximately $56. The average residential wastewater bill, based on an average winter water use of four units, is $46. Table 2: Water and Wastewater Accounts by Customer Class Customer Class Number of Accounts % of Total Accounts Residential Includes: individually metered residences, including condominiums, and secondary dwelling units 11,203 73 Multi-Family Residential Includes: apartments, duplexes, and mobile home parks 1,877 12 Non-Residential Includes: all commercial, churches, city and government facilities, schools, hotels/motels, manufacturing, etc. 1,675 11 Irrigation Only Includes: parks, schools, and other separately metered landscape irrigation (both potable and recycled water) 575* 4 TOTAL: 15,330 100% *NOTE: Irrigation only accounts do not generate wastewater, reducing the total wastewater Packet Pg 254 11 accounts to approximately 14,800. SOURCE: City of San Luis Obispo, Utility Billing System, 2017. To establish greater equity for cost of service between the customer classes, the recommended rate structure uses the customer meter size to establish the monthly account charge for the multi-family, non-residential, and irrigation classes. The proposed structures, shown in Table 3 (water) and Table 4 (wastewater), reflect the recommended structure. Important to note here is that the data shown is revenue “neutral” meaning they represent current revenue levels. Bill comparisons are provided at right and in Attachment C as to how the proposed structure would affect the average residential customer’s bill and other customer classes. Residential Rate Structure.The recommended residential water rate structure, applicable to individually metered residences, proposes an increased monthly fixed charge from $12.33 to $16.40 and a new three-block increasing consumption charge to replace the existing two blocks. The three-block structure is based on average winter use (up to five units/month), average peak summer use (six to 12 units/month), and greater than peak summer use (greater than 12 units/month). Consumption over the five units is charged at a higher rate to account for the increased costs associated with providing the additional capacity needed for higher water consumption. Although this higher rate tier is specifically based off the cost of providing the additional service as required by Prop. 218, the rate will have the effect of incentivizing conservation (goal #2). The recommended residential wastewater rate structure also proposes an increased monthly fixed charge per account from $8.57 to $13.80. The volumetric charge will maintain the City’s current average winter water use approach. Multi-Family, Non-Residential, and Irrigation Rate Structures.The recommended rate structure for multi-family and non-residential customers includes an increased monthly fixed charge varying by meter size, and a uniform consumption charge for all units of water consumed. The recommended rate structure for irrigation customers also includes a monthly fixed charge by meter size and a uniform consumption charge. The average use of most irrigation customers is in the upper block of the current rate structure. The recommended multi-family residential wastewater rate structure maintains the current winter water structure for those Recommended Rate Structure Customer Impacts Average Residential water bill (monthly base charge + 6 units) Current Rate Structure: $55.95 monthly Recommended Rate Structure: $56.35 Monthly Average Residential wastewater bill (monthly base charge + 4 units) Current Rate Structure: $45.25 monthly Recommended Rate Structure: $45.60 monthly II Multi-Family Residential customer bill Example: # unit Apartment building 1” meter using 20 units/month Current Water Rate Structure: $170.38 / month Recommended Rate Structure: $186.40 monthly Current Wastewater Rate Structure: $121.85 monthly Recommended Rate Structure: $181.05 monthly I Non-Residential Customer Bill Example: Motel with 2” water meter using 200 units/month Current Water Rate Structure: $1,813.85 monthly Recommended Rate Structure: $1,637.40 monthly Current Wastewater Rate Structure: $1,842.57 monthly Recommended Rate Structure: $1,703.55 monthly I Irrigation-Only Customer Bill Example: Park with a 2” meter using 200 units/month Current Water Rate Structure: $1,813.85 monthly Recommended Rate Structure: $1,787.40 monthly Packet Pg 255 11 customers with a separate irrigation meter. However, similar to the recommended water rate structure, the monthly fixed charge is proposed to vary by meter size. The non-residential rate alternative maintains the current rate structure based on all water consumption and adds a monthly fixed charge that would vary by meter size. Table 3: Current and Proposed Water Rate Structure Comparison Existing Rate Structure (All Customers) Recommended Rate Structure, by “Customer Class” Residential Multi-Family Non- Residential Irrigation Monthly Account Charge (or Base Fee) $12.33 $16.40 N/A N/A N/A Monthly Account Charge (by Meter Size): 3/4” & Less N/A N/A $16.40 $16.40 $16.40 1” N/A N/A $27.40 $27.40 $27.40 1-1/2” N/A N/A $54.60 $54.60 $54.60 2” N/A N/A $87.40 $87.40 $87.40 3” N/A N/A $164.00 $164.00 $164.00 4” N/A N/A $273.40 $273.40 $273.40 6” N/A N/A $546.60 $546.60 $546.60 8” N/A N/A $874.60 $874.60 $874.60 Consumption Charge: Block 1 (First 8 units) $7.27 N/A N/A N/A N/A Block 2 (> 8 units) $9.08 N/A N/A N/A N/A Block 1 (First 5 units) N/A $6.50 N/A N/A N/A Block 2 (6 – 12 units) N/A $7.45 N/A N/A N/A Block 3 (>12 units) N/A $8.60 N/A N/A N/A All Consumption N/A N/A $7.75 $7.90 $8.50 NOTE: 1 unit of water equals 748 gallons Table 4: Current and Proposed Wastewater Rate Structure Comparison Existing Rate Structure (All Customers) Recommended Rate Structure by “Customer Class” Residential Multi-Family Non-Residential Monthly Account Charge (or Base Fee) $8.57 $13.80 N/A N/A Monthly Meter Charge 3/4” & Less N/A N/A $13.80 $13.80 1” N/A N/A $23.05 $23.05 1-1/2” N/A N/A $45.95 $45.95 2” N/A N/A $73.55 $73.55 3” N/A N/A $138.00 $138.00 4” N/A N/A $230.05 $230.05 6” N/A N/A $459.95 $459.95 Packet Pg 256 11 8” N/A N/A $735.95 $735.95 Volumetric Charge All Consumption* $9.17 $7.90 $7.90 $8.15 * Residential customers, and multi-family customers without a separate irrigation meter, are billed the volumetric charge on average winter water use. Water and Wastewater Drought Rate Structure As experienced during the recent drought conditions, climatic changes have an immediate effect on water consumption and influence wastewater production in turn. The recommended rate structures were selected to add revenue stability; however, 77 to 78 percent of the City’s water and wastewater revenue would still come from volumetric charges. Establishing a drought rate structure outside of a declared drought emergency would add another component to provide revenue stability during future drought. Once the final rate structure is determined, the City will develop a drought rate to align with the recommended rate structures and the five water shortage response stages beyond the Monitor stage (identified as the Watch, Warning, Severe, Extreme, and Critical stages) in the City’s 2015 Urban Water Management Plan, Water Shortage Contingency Plan. The drought rate structure would vary by stage to reflect the severity of the event and would be enacted by the Council. The drought rates would be eliminated, or reduced, as the event changes to reflect the impacts to revenues. Public Outreach The City is committed to helping the public understand the recommended water and wastewater rate structures. The Utilities Department included a feature article on the water and wastewater rate structure changes in the most recent Resource publication and information on the Utilities web page. Targeted Facebook messaging directed people to the web page for information on the recommended rate structure changes. Outreach efforts will continue until final consideration of the rate structure and rate study in June. FISCAL IMPACT The recommended changes to the water and wastewater rate structures were designed to be revenue neutral. If nothing but the rate structures were to change in the future, customers would see changes in their bill depending on their water consumption, sewer cap, and water meter size as shown in the examples provided. Utility billing staff has confirmed that the recommended water and wastewater rate structures presented in this report can be accommodated by the City’s utility billing software and incorporated into the billing system. The City has begun a comprehensive Rate Study where actual rates will be developed around each customer class, water consumption patterns, and cost of service. The Rate Study is anticipated to be discussed at a study session with the City Council on February 6, 2018. Packet Pg 257 11 CONCURRENCES Concurrence was provided by other affect reviewing City departments. ENVIRONMENTAL REVIEW Modification of rates and charges by public agencies is statutorily exempt from the California Environmental Quality Act (CEQA) under Section 15273 of the Public Resources Code because the change in fees is not intended to fund expansion of capital projects not otherwise evaluated under CEQA. Therefore, no environmental review is required for this item. Attachments: a - Rate Structure CAR 7-18-2017 b - Rate Structure CAR 8-15-2017 c - Rate Structure Customer Impacts Packet Pg 258 11 Packet Pg 259 11 1BDLFU1H Packet Pg 260 11 1BDLFU1H Packet Pg 261 11 1BDLFU1H Packet Pg 262 11 1BDLFU1H Packet Pg 263 11 1BDLFU1H Packet Pg 264 11 1BDLFU1H Packet Pg 265 11 Packet Pg 266 11 Packet Pg 267 11 Packet Pg 268 11 Packet Pg 269 11 Packet Pg 27011 Packet Pg 27111 Packet Pg 27211 Packet Pg 27311 Packet Pg 27411 Packet Pg 27511 Packet Pg 27611 Packet Pg 27711 Packet Pg 27811 Packet Pg 27911 Packet Pg 28011 Packet Pg 28111 Packet Pg 28211 Packet Pg 28311 Packet Pg 28411 Packet Pg 28511 Packet Pg 28611 Packet Pg 28711 Packet Pg 28811 Packet Pg 28911 Packet Pg 29011 Packet Pg 29111 Packet Pg 29211 Packet Pg 29311 Packet Pg 29411 Packet Pg 29511 Packet Pg 29611 Packet Pg 29711 AƩĂchment 3: RĂte Structure Customer ImpĂcts WĂƚĞƌRĂte Structure - ResidenƟĂl Bill CompĂƌŝƐon Present ZĂƚĞ Structure: Fixed ChĂrge $ / Acct. Per Account $12.33 sĂriĂble ChĂrge $ / Unit 0 – 8 Units $7.27 8 + Units 9.08 ConsumpƟon Present Proposed (CCF) RĂtes RĂtes $ % 0 $12.33 $16.40 $4.07 33.0% 1 19.60 22.95 3.35 17.1% 2 26.87 29.50 2.63 9.8% 3 34.14 36.05 1.91 5.6% 4 41.41 42.60 1.19 2.9% 5 48.68 49.15 0.47 1.0% 6 55.95 55.70 (0.25) -0.4% 7 63.22 62.25 (0.97) -1.5% 8 70.49 68.80 (1.69) -2.4% 9 79.57 76.98 (2.59) -3.3% 10 88.65 85.16 (3.49) -3.9% Di īerence Proposed RĂte Structure: Fixed ChĂrge $ / Acct. Per Account $16.40 sĂriĂble ChĂrge $ / Unit 0 – 5 Units $6.50 5 – 25 Units 7.45 25 + Units 8.60 In Units Packet Pg 298 11 AƩachment 3: Rate Structure Customer Impacts Water Rate Structure - MuůƟ-Family Bill Comparison Present Rates: Base Fee $ / Acct. Per Account $12.33 Volume Charge $ / Unit 0 – 8 Units $7.27 8 + Units 9.08 ConsumpƟon Present Proposed (CCF) Rates Rates $ % 3/4" & Less Customer 5 $48.68 $54.65 $5.97 12.3% 10 88.65 98.64 9.99 11.3% 15 134.05 142.63 8.57 6.4% 20 179.45 186.61 7.16 4.0% 25 224.85 230.60 5.75 2.6% 30 270.25 274.59 4.34 1.6% 35 315.65 318.58 2.92 0.9% 1" Customer 25 $224.85 $230.60 $5.75 2.6% 50 451.85 450.54 (1.31) -0.3% 75 678.85 670.48 (8.38) -1.2% 100 905.85 890.41 (15.44) -1.7% 125 1,132.85 1,110.35 (22.50) -2.0% 150 1,359.85 1,330.29 (29.56) -2.2% Di īerence Proposed Rates: Base Fee $ / Acct. ¾” & Less $16.40 1-Inch 27.40 Volume Charge $ / Unit All ConsumpƟon $7.75 In Units Packet Pg 299 11 AƩachment 3: Rate Structure Customer Impacts Water Rate Structure - Non-ResidenƟal Bill Comparison Present Rates: Base Fee $ / Acct. Per Account $12.33 Volume Charge $ / Unit 0 – 8 Units $7.27 8 + Units 9.08 ConsumpƟon Present Proposed (CCF) Rates Rates $ % 3/4" & Less Customer 5 $48.68 $55.90 $7.22 14.8% 10 88.65 95.40 6.75 7.6% 15 134.05 134.90 0.85 0.6% 20 179.45 174.40 (5.05) -2.8% 25 224.85 213.90 (10.95) -4.9% 30 270.25 253.40 (16.85) -6.2% 35 315.65 292.90 (22.75) -7.2% 1" Customer 25 $224.85 $213.90 ($10.95) -4.9% 50 451.85 411.40 (40.45) -9.0% 75 678.85 608.90 (69.95) -10.3% 100 905.85 806.40 (99.45) -11.0% 125 1,132.85 1,003.90 (128.95) -11.4% 150 1,359.85 1,201.40 (158.45) -11.7% 175 1,586.85 1,398.90 (187.95) -11.8% 2" Customer 50 $451.85 $411.40 ($40.45) -9.0% 100 905.85 806.40 (99.45) -11.0% 150 1,359.85 1,201.40 (158.45) -11.7% 200 1,813.85 1,596.40 (217.45) -12.0% 250 2,267.85 1,991.40 (276.45) -12.2% 300 2,721.85 2,386.40 (335.45) -12.3% 350 3,175.85 2,781.40 (394.45) -12.4% Di īerence Proposed Rates: Base Fee $ / Acct. ¾” & Less $16.40 1-Inch 27.40 2-Inch 87.40 Volume Charge $ / Unit All ConsumpƟon $8.20 In Units Packet Pg 300 11 AƩachment 3: Rate Structure Customer Impacts Water Rate Structure - IrrigaƟŽn Bill CŽmparisŽn Present Rates: Base Fee $ / Acct. Per Account $12.33 sŽlume Charge $ / Unit 0 – 8 Units $7.27 8 + Units 9.08 CŽnsumpƟŽnPresentPrŽpŽsed (CCF) Rates Rates $ % 0 $12.33 $16.40 $4.07 33.0% 2 26.87 33.40 6.53 24.3% 4 41.41 50.40 8.99 21.7% 6 55.95 67.40 11.45 20.5% 8 70.49 84.40 13.91 19.7% 10 88.65 101.40 12.75 14.4% 12 106.81 118.40 11.59 10.9% 14 124.97 135.40 10.43 8.3% 16 143.13 152.40 9.27 6.5% 18 161.29 169.40 8.11 5.0% 20 179.45 186.40 6.95 3.9% 25 224.85 228.90 4.05 1.8% 30 270.25 271.40 1.15 0.4% 40 361.05 356.40 (4.65) -1.3% 50 451.85 441.40 (10.45) -2.3% Di īerence PrŽpŽsed Rates: Base Fee $ / Acct. ¾” & Less $16.40 sŽlume Charge $ / Unit All ConsumpƟon $8.50 In Units Packet Pg 301 11 AƩachment 3: Rate Structure Customer Impacts Wastewater Rate Structure - ResidenƟal Bill Comparison Present Rates: Base Fee $ / Acct. Per Account $8.57 Volume Charge $ / Unit All Use $9.44 ConsumpƟon Present Proposed (CCF) Rates Rates $% All Customers - AWWU 3 0 $8.57 $13.80 $5.23 61.0% 1 17.74 21.75 4.01 22.6% 2 26.91 29.70 2.79 10.4% 3 36.08 37.65 1.57 4.4% 4 36.08 37.65 1.57 4.4% 5 36.08 37.65 1.57 4.4% 6 36.08 37.65 1.57 4.4% All Customers - AWWU 4 0 $8.57 $13.80 $5.23 61.0% 1 17.74 21.75 4.01 22.6% 2 26.91 29.70 2.79 10.4% 3 36.08 37.65 1.57 4.4% 4 45.25 45.60 0.35 0.8% 5 45.25 45.60 0.35 0.8% 6 45.25 45.60 0.35 0.8% All Customers - AWWU 5 0 $8.57 $13.80 $5.23 61.0% 1 17.74 21.75 4.01 22.6% 2 26.91 29.70 2.79 10.4% 3 36.08 37.65 1.57 4.4% 4 45.25 45.60 0.35 0.8% 5 54.42 53.55 (0.87) -1.6% 6 54.42 53.55 (0.87) -1.6% Di īerence Proposed Rates: Base Fee $ / Acct. Per Account $13.80 Volume Charge $ / Unit All Use $7.95 In Units NOTE: AWWU = Average Winter Water Use Packet Pg 302 11 AƩachment 3: Rate Structure Customer Impacts Wastewater Rate Structure - MuůƟ-Family Bill Comparison Present Rate Structure: Base Fee $ / Acct. Per Account $8.47 Volume Charge $ / CCF All Use $9.17 ConsumpƟon Present Proposed (CCF) Rates Rates $% 3/4" & Less Customer - AWWU 5 0 $8.57 $13.80 $5.23 61.0% 1 17.74 21.75 4.01 22.6% 2 26.91 29.70 2.79 10.4% 3 36.08 37.65 1.57 4.4% 4 45.25 45.60 0.35 0.8% 5 54.42 53.55 (0.87) -1.6% 6 54.42 53.55 (0.87) -1.6% 1" Customer - AWWU 7 0 $8.57 $23.05 $14.48 169.0% 2 26.91 38.95 12.04 44.7% 4 45.25 54.85 9.60 21.2% 6 63.59 70.75 7.16 11.3% 8 72.76 78.70 ` 5.94 8.2% 10 72.76 78.70 5.94 8.2% 12 72.76 78.70 5.94 8.2% 1 1/2" Customer - AWWU 9 0 $8.57 $45.95 $37.38 436.2% 3 36.08 69.80 33.72 93.5% 6 63.59 93.65 30.06 47.3% 9 91.10 117.50 26.40 29.0% 12 91.10 117.50 26.40 29.0% 15 91.10 117.50 26.40 29.0% 18 91.10 117.50 26.40 29.0% Di īerence Proposed Rate Structure: Base Fee $ / Acct. ¾” & Less $13.80 1-Inch 23.05 1-1/2-Inch 45.95 Volume Charge $ / Unit All Use $7.95 In Units NOTE: AWWU = Average Winter Water Use Packet Pg 303 11 AƩachment 3: Rate Structure Customer Impacts Wastewater Rate Structure - Non-ResidenƟal Bill Comparison Present Rate Structure: Base Fee $ / Acct. Per Account $8.57 Volume Charge $ / Unit All Use $9.17 ConsumpƟon Present Proposed (CCF) Rates Rates $% 3/4" & Less Customer 0 $8.57 $13.80 $5.23 61.0% 2 26.91 30.10 3.19 11.9% 4 45.25 46.40 1.15 2.5% 6 63.59 62.70 (0.89) -1.4% 8 81.93 79.00 (2.93) -3.6% 10 100.27 95.30 (4.97) -5.0% 12 118.61 111.60 (7.01) -5.9% 1" Customer 5 $54.42 $63.80 $9.38 17.2% 10 100.27 104.55 4.28 4.3% 15 146.12 145.30 (0.82) -0.6% 20 191.97 186.05 (5.92) -3.1% 25 237.82 226.80 (11.02) -4.6% 30 283.67 267.55 (16.12) -5.7% 35 329.52 308.30 (21.22) -6.4% 2" Customer 10 $100.27 $155.05 $54.78 54.6% 20 191.97 236.55 44.58 23.2% 30 283.67 318.05 34.38 12.1% 40 375.37 399.55 24.18 6.4% 50 467.07 481.05 13.98 3.0% 60 558.77 562.55 3.78 0.7% 70 650.47 644.05 (6.42) -1.0% Di īerence Proposed Rate Structure: Base Fee $ / Acct. ¾” & Less $13.80 1-Inch 23.05 2-Inch 73.55 Volume Charge $ / Unit All Use $8.15 In Units Packet Pg 304 11 © 2014 HDR, all rights reserved.Setting Cost-Based Utility Rates01-09-2018 Item 11, Presentation Overview of the PresentationOverview of the Rate Structure Review ProcessReview the City Council and Staff’s Prioritization of GoalsReview Rate Structure ComponentsDiscuss Recommended Alternative Rate Designs•Customer class rate structuresNext Steps201-09-2018 Item 11, Presentation Rate Structure Evaluation Process3ReviewReview of the Current Water Rate Structure Review Current Industry Thinking and TrendsConceptualPrioritize Goals and ObjectivesDevelop Conceptual Rate StructuresSelect “Conceptual” Rate Structure for Further Review TechnicalTechnical Analysis of Selected “Conceptual” Rate Structure01-09-2018 Item 11, Presentation Prioritization of Attributes by City Council and City Staff4Council Prioritization Rank City Staff PrioritizationRevenue Stability & Predictability1 Revenue Stability & PredictabilityDiscourage Wasteful Use, While Promoting All Justified Types and Amounts2 Simple and Easy to Understand and AdministerStability and Predictability of the rates themselves 3Discourage Wasteful Use, While Promoting All Justified Types and AmountsFair Allocation of Total Cost of Service Among Customer Classes4Fair Allocation of Total Cost of Service Among Customer ClassesReflect All Present and Future Costs & Benefits of Providing Utility Services5Stability and Predictability of the rates themselves01-09-2018 Item 11, Presentation Overview of the Current Water Rate Structure51 Unit = 100 Cubic Feet (1 CCF)1 CCF = 748 gallonsWater Base Fee Per Account $12.33/MonthConsumption ChargeTier 1 – 1 to 8 units $7.27/UnitTier 2 – 9+ units $9.08/Unit01-09-2018 Item 11, Presentation Current Water Rate Structure vs. Prioritized Goals6Supporting•Discourage wasteful useOpposing•Revenue stability and predictability•Stability and predictability of the rates•Fair allocation of costs•Reflect all present and future costs01-09-2018 Item 11, Presentation Overview of the Current Wastewater Rate Structure7Base Fee Per Account $8.57/MonthVolumetric ChargeAll Consumption* $9.44/Unit1 Unit = 100 Cubic Feet (1 CCF)1 CCF = 748 gallons01-09-2018 Item 11, Presentation Current Wastewater Rate Structure vs. Prioritized Goals8Supporting• Stability and predictability of the rates•Discourage wasteful useOpposing• Revenue stability and predictability•Fair allocation of costs•Reflect all present and future costs01-09-2018 Item 11, Presentation Meeting Rate Design Goals and Objectives9Revenue and Rate StabilityRevise (increase) fixed chargesRevise tier sizing and pricingIncrease target ending reserve balancesDiscourage Wasteful UseTiered structureReview tier sizingFair Allocation of CostsRate structure by customer class of serviceFixed charge by meter sizeReflect Present and Future CostsAbility to respond to changing conditions (i.e., drought)Value of water and wastewater services01-09-2018 Item 11, Presentation Provides the requirements for setting and implementing property related rates and feesRequires a cost basis for establishing the level of the ratesRequires a customer notification process and protest hearingIf no majority protest:oCouncil may implement the proposed ratesoThe proposed rates are the maximum rates that can be charged for the time period specified•Rate levels will be reviewed during budgeting process•Council action necessary to reduce rates lower than noticed levelsProposition 218 and Rate Setting1001-09-2018 Item 11, Presentation Rate Structure Components11Fixed Charges• Various names; meter charge, customer charge, minimum charge, readiness to serve, etc.•Promotes revenue stability• Recovers customer related costs, plus other “fixed” costs of the system01-09-2018 Item 11, Presentation Rate Structure Components(Cont’d)Variable ChargesTypically based on metered water consumptionTypically preferred by customersFour basic types of variable rate structures1201-09-2018 Item 11, Presentation What is the Appropriate Level?13Fixed Charges ―Revenue Stability―Collection of Fixed Costs―Lower Customer AcceptanceVolumetric Charges ―Conservation―Efficient Use―Higher Customer AcceptanceFixed― Does not vary with sales― Salaries, debt service, etc.― 80 – 95% for utilitiesVariable― Varies with sales― Power, chemicals, etc.― 5 – 20% for utilitiesThe majority of a utility’s costs are fixed in nature01-09-2018 Item 11, Presentation Developing a rational basis for the block / tier sizesDefining Block / Tier Size Assumptions14Indoor Use•Avg winter water use (system or individual)• Number of occupants and gallons/capitaOutdoor Use• Irrigation watering needs (average summer use or calculated average per customer)Excessive/Wasteful•Based on conservation goals and objectivesOther Considerations• Applicability to customer class of service•Seasonal availability and cost of water01-09-2018 Item 11, Presentation Customer Usage CharacteristicsClassAnnual Monthly AvgWinter Monthly AvgSummer Monthly AvgMulti‐Family 20.12 18.97 20.50Commercial 17.31 16.06 17.73Schools 65.73 32.19 76.91Irrigation 42.94 17.15 51.53Averages for All Other customer class broken out further1501-09-2018 Item 11, Presentation Customer Usage Characteristics (cont’d)16Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov DecResidential5.87 6.12 5.88 6.60 7.06 8.40 8.44 7.99 8.40 8.42 7.78 6.86Irrigation26.65 14.46 11.67 10.77 25.26 33.85 70.00 77.86 64.98 65.58 59.64 43.07Non‐Residential29.31 26.92 27.36 28.91 30.45 33.52 37.02 35.67 37.65 36.06 32.91 30.200102030405060708090CCFAverage Consumption by Class01-09-2018 Item 11, Presentation Focused on how each structure reflects the prioritized goals and objectivesGoals can be achieved through reviewing the:oLevel and application of the fixed chargesoApplicability and sizing of tiersoCustomer class rate structures Multiple alternatives were reviewed and analyzed with staffProposed rate alternatives are for illustrativepurposes only and reflect current revenue levels (revenue neutral)Rate Structure Overview1701-09-2018 Item 11, Presentation 18Residential Water RatesComponent Basis PricingFixed ChargePer Acct. $16.40Variable ChargeBlock 10 – 5 CCF $6.50Block 25–12 CCF 7.45Block 312 + CCF 8.60ComponentAchieves Goal1Revenue Stability/Predictability2Discourage Wasteful Use3Stability/ Predictability of the Rates4Fair Allocation the Cost of Service5Reflect Present and FutureCosts01-09-2018 Item 11, Presentation Residential WaterBill Comparison19Present Rate StructureFixed Charge$/ Acct.Per Account $12.33Variable Charge$ / CCF0 –8 CCF $7.278 + CCF 9.08Proposed Rate StructureFixed Charge$/ Acct.Per Account $16.40Variable Charge$ / CCF0 –5 CCF $6.505 –25 CCF 7.4525 + CCF 8.60Consumption Present Proposed(CCF)Rates Rates$ %0$12.33 $16.40 $4.07 33.0%119.60 22.953.35 17.1%226.87 29.502.63 9.8%334.14 36.051.91 5.6%441.41 42.601.19 2.9%548.68 49.150.47 1.0%655.95 55.70(0.25)‐0.4%763.22 62.25(0.97)‐1.5%870.49 68.80(1.69)‐2.4%979.57 76.98(2.59)‐3.3%1088.65 85.16(3.49)‐3.9%Difference.Also shown on Council Agenda Report Packet Pg 29801-09-2018 Item 11, Presentation 20Multi‐Family Water RatesComponent Basis PricingFixed Charge¾” & Less $16.401” 27.401 ½” 54.602” 87.403” 164.004” 273.406” 546.608” 874.60Variable ChargeAll UseUniform $7.75ComponentAchieves Goal1Revenue Stability/Predictability2Discourage Wasteful Use3Stability/ Predictability of the Rates4Fair Allocation the Cost of Service5Reflect Present and FutureCosts01-09-2018 Item 11, Presentation Multi‐Family WaterBill Comparison21Present Rate StructureBase Fee$/ Acct.Per Account $12.33Volume Charge$ / CCF0 –8 CCF $7.278 + CCF 9.08Proposed Rate StructureBase Fee$/ Acct.¾” & Less $16.401‐Inch 27.40Volume Charge$ / CCFAll Consumption $7.75Consumption Present Proposed(CCF) Rates Rates$ %3/4" & Less Customer5$48.68 $54.65 $5.97 12.3%1088.65 98.64 9.99 11.3%15134.05 142.63 8.57 6.4%20179.45 186.61 7.16 4.0%25224.85 230.60 5.75 2.6%30270.25 274.59 4.34 1.6%35315.65 318.58 2.92 0.9%1" Customer25$224.85 $230.60 $5.75 2.6%50451.85 450.54 (1.31)‐0.3%75678.85 670.48 (8.38)‐1.2%100905.85 890.41 (15.44)‐1.7%125 1,132.85 1,110.35 (22.50)‐2.0%150 1,359.85 1,330.29 (29.56)‐2.2%Difference. .Also shown on Council Agenda Report Packet Pg 29901-09-2018 Item 11, Presentation 22Non‐Residential Water RatesComponent Basis PricingFixed Charge¾” & Less $16.401” 27.401 ½” 54.602” 87.403” 164.004” 273.406” 546.608” 874.60Variable ChargeAll UseUniform $7.90ComponentAchieves Goal1Revenue Stability/Predictability2Discourage Wasteful Use3Stability/ Predictability of the Rates4Fair Allocation the Cost of Service5Reflect Present and FutureCosts01-09-2018 Item 11, Presentation Non‐Residential WaterBill Comparison23Present Rate StructureBase Fee$/ Acct.Per Account $12.33Volume Charge$ / CCF0 –8 CCF $7.278 + CCF 9.08Proposed Rate StructureBase Fee$/ Acct.¾” & Less $16.401‐Inch 27.402‐Inch 87.40Volume Charge$ / CCFAll Consumption $8.20Consumption Present Proposed(CCF) Rates Rates $ %3/4" & Less Customer5 $48.68 $55.90 $7.22 14.8%10 88.65 95.40 6.75 7.6%15 134.05 134.90 0.85 0.6%20 179.45 174.40 (5.05)‐2.8%25 224.85 213.90 (10.95)‐4.9%30 270.25 253.40 (16.85)‐6.2%35 315.65 292.90 (22.75)‐7.2%1" Customer25 $224.85 $213.90 ($10.95)‐4.9%50 451.85 411.40 (40.45)‐9.0%75 678.85 608.90 (69.95)‐10.3%100 905.85 806.40 (99.45)‐11.0%125 1,132.85 1,003.90 (128.95)‐11.4%150 1,359.85 1,201.40 (158.45)‐11.7%175 1,586.85 1,398.90 (187.95)‐11.8%2" Customer50 $451.85 $411.40 ($40.45)‐9.0%100 905.85 806.40 (99.45)‐11.0%150 1,359.85 1,201.40 (158.45)‐11.7%200 1,813.85 1,596.40 (217.45)‐12.0%250 2,267.85 1,991.40 (276.45)‐12.2%300 2,721.85 2,386.40 (335.45)‐12.3%350 3,175.85 2,781.40 (394.45)‐12.4%DifferenceAlso shown on Council Agenda Report Packet Pg 30001-09-2018 Item 11, Presentation 24Irrigation Water RatesComponent Basis PricingFixed Charge¾” & Less $16.401” 27.401 ½” 54.602” 87.403” 164.004” 273.406” 546.608” 874.60Variable ChargeAll UseUniform $8.50ComponentAchieves Goal1Revenue Stability/Predictability2Discourage Wasteful Use3Stability/ Predictability of the Rates4Fair Allocation the Cost of Service5Reflect Present and FutureCosts01-09-2018 Item 11, Presentation Irrigation WaterBill Comparison25Present Rate StructureBase Fee$/ Acct.Per Account $12.33Volume Charge$ / CCF0 –8 CCF $7.278 + CCF 9.08Proposed Rate StructureBase Fee$/ Acct.¾” & Less $16.40Volume Charge$ / CCFAll Consumption $8.50Consumption Present Proposed(CCF) Rates Rates $ %0 $12.33 $16.40 $4.07 33.0%2 26.87 33.40 6.53 24.3%4 41.41 50.40 8.99 21.7%6 55.95 67.40 11.45 20.5%8 70.49 84.40 13.91 19.7%10 88.65 101.40 12.75 14.4%12 106.81 118.40 11.59 10.9%14 124.97 135.40 10.43 8.3%16 143.13 152.40 9.27 6.5%18 161.29 169.40 8.11 5.0%20 179.45 186.40 6.95 3.9%25 224.85 228.90 4.05 1.8%30 270.25 271.40 1.15 0.4%40 361.05 356.40 (4.65)‐1.3%50 451.85 441.40 (10.45)‐2.3%DifferenceAlso shown on Council Agenda Report Packet Pg 30101-09-2018 Item 11, Presentation 26Residential Wastewater RatesComponent Basis PricingFixed Charge$ / Acct. $13.80Variable ChargeUniformAll Use * $7.95* Billed up to the sewer capComponentAchieves Goal1Revenue Stability/Predictability2Discourage Wasteful Use3Stability/ Predictability of the Rates4Fair Allocation the Cost of Service5Reflect Present and FutureCosts01-09-2018 Item 11, Presentation Residential WastewaterBill Comparison27Present Rate StructureBase Fee$/ Acct.Per Account $8.57Volume Charge$ / CCFAll Use $9.44Proposed Rate StructureBase Fee$/ Acct.Per Account $13.80Volume Charge$ / CCFAll Use $7.95Consumption Present Proposed(CCF) Rates Rates$% All Customers ‐ AWWU 30$8.57 $13.80 $5.23 61.0%117.74 21.75 4.01 22.6%226.91 29.70 2.79 10.4%336.08 37.65 1.57 4.4%436.08 37.65 1.57 4.4%536.08 37.65 1.57 4.4%636.08 37.65 1.57 4.4% All Customers ‐ AWWU 40$8.57 $13.80 $5.23 61.0%117.74 21.75 4.01 22.6%226.91 29.70 2.79 10.4%336.08 37.65 1.57 4.4%445.25 45.60 0.35 0.8%545.25 45.60 0.35 0.8%645.25 45.60 0.35 0.8% All Customers ‐ AWWU 50$8.57 $13.80 $5.23 61.0%117.74 21.75 4.01 22.6%226.91 29.70 2.79 10.4%336.08 37.65 1.57 4.4%445.25 45.60 0.35 0.8%554.42 53.55 (0.87)‐1.6%654.42 53.55 (0.87)‐1.6%Difference.Also shown on Council Agenda Report Packet Pg 30201-09-2018 Item 11, Presentation 28ComponentAchieves Goal1Revenue Stability/Predictability2Discourage Wasteful Use3Stability/ Predictability of the Rates4Fair Allocation the Cost of Service5Reflect Present and FutureCostsMulti‐Family Wastewater RatesComponent Basis PricingFixed Charge¾” & Less $13.801” 23.051 ½” 45.952” 73.553” 138.004” 230.056” 459.958” 735.95Variable ChargeAll UseUniform $7.95* Without separate irrigation meter, usageis billed up to the sewer cap01-09-2018 Item 11, Presentation Multi‐Family WastewaterBill Comparison29Present Rate StructureBase Fee$/ Acct.Per Account $8.47Volume Charge$ / CCFAll Use $9.17Proposed Rate StructureBase Fee$/ Acct.¾” & Less $13.801‐Inch 23.051‐1/2‐Inch45.95Volume Charge$ / CCFAll Use$7.95Consumption Present Proposed(CCF)Rates Rates$%3/4" & Less Customer ‐ AWWU 50$8.57 $13.80$5.23 61.0%117.74 21.754.01 22.6%226.91 29.702.79 10.4%336.08 37.651.57 4.4%445.25 45.600.35 0.8%554.42 53.55(0.87)‐1.6%654.42 53.55(0.87)‐1.6%1" Customer ‐ AWWU 70$8.57 $23.05$14.48 169.0%226.91 38.9512.04 44.7%445.25 54.859.60 21.2%663.59 70.757.16 11.3%872.76 78.70 `5.94 8.2%1072.76 78.705.94 8.2%1272.76 78.705.94 8.2%1 1/2" Customer ‐ AWWU 90$8.57 $45.95$37.38 436.2%336.08 69.8033.72 93.5%663.59 93.6530.06 47.3%991.10 117.5026.40 29.0%1291.10 117.5026.40 29.0%1591.10 117.5026.40 29.0%1891.10 117.5026.40 29.0%DifferenceAlso shown on Council Agenda Report Packet Pg 30301-09-2018 Item 11, Presentation 30ComponentAchieves Goal1Revenue Stability/Predictability2Discourage Wasteful Use3Stability/ Predictability of the Rates4Fair Allocation the Cost of Service5Reflect Present and FutureCostsNon‐Residential Wastewater RatesComponent Basis PricingFixed Charge¾” & Less $13.801” 23.051 ½” 45.952” 73.553” 138.004” 230.056” 459.958” 735.95Variable ChargeAll UseUniform $8.1501-09-2018 Item 11, Presentation Non‐Residential WastewaterBill Comparison31Present Rate StructureBase Fee$/ Acct.Per Account $8.57Volume Charge$ / CCFAll Use $9.17Proposed Rate StructureBase Fee$/ Acct.¾” & Less $13.801‐Inch 23.052‐Inch 73.55Volume Charge$ / CCFAll Use $8.15Consumption Present Proposed(CCF) Rates Rates$%3/4" & Less Customer0$8.57 $13.80 $5.23 61.0%226.91 30.10 3.19 11.9%445.25 46.40 1.15 2.5%663.59 62.70 (0.89)‐1.4%881.93 79.00 (2.93)‐3.6%10100.27 95.30 (4.97)‐5.0%12118.61 111.60 (7.01)‐5.9%1" Customer5$54.42 $63.80 $9.38 17.2%10100.27 104.55 4.28 4.3%15146.12 145.30 (0.82)‐0.6%20191.97 186.05 (5.92)‐3.1%25237.82 226.80 (11.02)‐4.6%30283.67 267.55 (16.12)‐5.7%35329.52 308.30 (21.22)‐6.4%2" Customer10$100.27 $155.05 $54.78 54.6%20191.97 236.55 44.58 23.2%30283.67 318.05 34.38 12.1%40375.37 399.55 24.18 6.4%50467.07 481.05 13.98 3.0%60558.77 562.55 3.78 0.7%70650.47 644.05 (6.42)‐1.0%DifferenceAlso shown on Council Agenda Report Packet Pg 30401-09-2018 Item 11, Presentation Purpose: Maintain sufficient water and wastewater revenue during mandatory reductions in consumptionStages are related to conservation savings (tied to Water Shortage Contingency Plan from Urban Water Management Plan)Drought rates are in addition to the proposed ratesCustomers that conserve in accordance with the targets should have minimal bill impactsWhat are Drought Rates?3201-09-2018 Item 11, Presentation Multiple rate structures were developed and analyzed with staffRate structure alternatives presented were developed to meet the Council’s goals and objectivesGoal is to provide discussion on the rate structures for further rate development in the cost of service studySummary of the Rate Structures3301-09-2018 Item 11, Presentation Gain feedback and preliminary direction on rate structures and drought ratesDevelop comprehensive water and wastewater rate studyPresent study methodology (February 2018)Developed full proposed rates for Proposition 218 process (April 2018)Public hearing on proposed rates (June 2018)Next Steps3401-09-2018 Item 11, Presentation Direct staff to incorporate the updated water and wastewater rate structures into the Water and Wastewater Rate Study and fund analyses.Recommendation01-09-2018 Item 11, Presentation