Loading...
HomeMy WebLinkAbout1977-06-21; City Council; 5109; Water Rate IncreaseCITY OF CARLSBAD s~i AS> Initial: AGENDA BILL NO. 3 / 0 J _ ' Dept. Hd., DATE: June 21, 1977 DEPARTMENT: Public Works Subject: WATER RATE INCREASE Statement of the Matter Wholesale water costs from CMWD from June 1976 and commencing 1 July 1977,/will have increased from $75.63 to $108.35 per acre foot or an amount of $32.72 a 43% increase. This is equivalent to a 7.5<£ per unit cost increase. An analysis of the financial condition of the water enterprise indicates that an increase in rates is necessary to maintain fiscal integrity during Fiscal Year 77-78. This analysis is attached as Exhibit A, and recommends a 5<£ per unit increase effective with the August 1, 1977 billing. The proposed increase is less than a direct pass through of the wholesale price increase due to improved efficiency of operations and economics of scale due to our increased customer base. This rate increase is the first rate adjustment that has been requested since the last increase in October 1972. The proposed rate increase has been declared as having a non-significant effect on environmental quality in compliance with CEQA on January 18, 1977 (Exhibit B). The proposed resolution includes the recommended rate increase and also includes some minor editorial revisions to clarify the previous resolution and are consistent with the present manner in which the previous resolution was administered, as follows: 1. Add paragraph II (a) (2) - relating to standby charges which are billed to vacant residents where no water is used. This is required since the property benefits through the continued maintenance of the system including fire flows even though no water is used, it continues to be available to meet the properties needs. 2. Paragraph-II (b) - concerning industrial customers, add "other than agricultural", between "customers" and "using" to more clearly indicate that agricultural customers are a separate category of customer. Additionally after the rate, add "over 20,000 cu. ft." to clarify the fact that all water consumed through 20,000 cu. ft. (200 units) is billed at the normal residential rate of 43<£ per 100 cu. ft. EXHIBITS A. Memorandum from Director of Utilities & Maintenance to Public Works Administrator, June 10, 1977; same subject. B. Declaration of Non-Significant Environmental Impact. C. Resolution No. RECOMMENDATION If Council concurs with staff to: 1. Raise Water Rates by 5£ per unit. 2. Rate increase effective with the August 1, 1977 billing. Adopt Resolution No. j /*L 7 COUNCIL ACTION: 6-21-77 Resolution No. 5127 was adopted. June 10, 1977 MEMORANDUM TO: Public Works Administrator FROM: Director of Utilities & Maintenance SUBJECT: Water Rate Increase The San Diego County Water Authority (SDCWA) commenced delivering filtered Colorado River Water to the Carlsbad Municipal Water District in October 1, 1976. Filtered water and other operating costs have resulted in wholesale rate increases charged to us by CMWD over the last year with the latest increase effective July 1, 1977 to $108.35 per acre foot. Our total increases from a cost of $75.63 in June 1976 to $108.35 is $32.72 per acre foot (7.54 per unit) or 43%. I have attached a copy of our latest modification of this change as Enclosure (1). It should be noted that our last retail rate in- crease was in October 1972 when our water was costing $64.42 per acre foot delivered from CMWD. Increases in the wholesale cost of water since that time have been accommodated by improved operating efficiencies and by efficiencies that are attributable to an increasing customer base. However, this increased cost of water can no longer be accommodated by our present rate structure and an increase in our retail rate structure is indicated. Rates established for the sale of water must provide the revenues to meet the costs of operation of the enterprise, plus an amount 1.35 times the annual debt service ($184,565.75) or about $249,163.76 ($184,565.75 X 1.35 = $249,163.76). Simplistically, total revenues are derived from the sale of water plus the ready-to-serve charges, plus other revenues (fees, overhead charges, etc.). The receipts from ready-to-serve charges are relatively constant as are other revenues; the revenues received from the sale of water are, however, dependent upon total consumption and will vary as more or less water is consumed. I have used three different levels of consumption; 4666 acre feet as 10% below this year's estimated use; 5184 acre feet as an estimate of this year's usage (10 month actual - 2 months estimate); and 5764 acre feet based on "normal" consumption plus our anticipated growth. A more detailed discussion and tabulation of the methods used to arrive at revenue figures are contained in Enclosure 2. As stated above, total operating income required by the conditions of our bond sales is $249,163.76. Operating income that could be expected from water sales at the current rate (38<£) and with increases of 2<£, 3<£, 4<£ and 5<£ are shown in the table below. The operating income is defined as operating revenues less operating expenses (this does not include debt service costs). The estimated operating income is computed based on FY77-78 Budget submissions which have yet to be approved. Water Rate Increases -2-June 10, 1977 4666 A.F. 5184 A.F. 5764 A.F. 38* 118,789 140,027 163,807 OPERATING INCOME 40* 41* 158,356 176,741 183,987 204,412 212,686 235,396 42* 195,078 224,785 [258,0481 43* 213,462 1245.2101 280,759 It can be seen from this table that a rate increase of 5* per unit, from 38* to 43* should meet our operating income requirements based on best estimates that our consumption in FY77-78 will approximate the consumption of this year. It should be pointed out that this estimate does consider that increased consump- tion due to projected growth offsets the projected 10% reduction due to water conservation efforts. The 5* increase is less by just under 2J5* per unit than the direct pass through price increase due to increased water costs. However, as our customer base increases and because of the City's efforts to increase reliability and efficiency of operations, the enterprise can absorb the differ- ential. The operational savings are, in this case, passed on to the consumer by moderating the rate increase. I have reviewed the current operating budget and I am of the opinion that the proposed 5* rate increase will not be necessary until the next fiscal year - specifically the water sold in July (billed on 1 August) should be subject to this increase. In summary, my recommendations are: 1. Increase the basic water rates by 5* per unit, i.e., Domestic rates to go from 38* to 43*; Industrial rates from 23* to 28*. 2. The proposed increase be effective on the August 1 billing. Director of Utilities & Maintenance Attachments RWG:pag C^RLSBKD MUNICIP/1L r'ATER DISTRICT 5950 El Camino Real. Carlsbad, California 92008 Telephone: (714) 438-2722 June 8, 1977 Mr. Roger Greer Director of Utilities and Maintenance City of Carlsbad 1200 Elm Avenue Carlsbad, California 92008 Subject: Water Rates Dear Roger, You asked me for a letter confirming the water rates commencing July 1, 1977, and the breakdown is as follows: Domestic Water Rate - Basic price Override Chiorination $ 93.35 14.00 1.00 TOTAL per acre foot $108.35 Agricultural Rate - Basic price Override Chiorination $ 60.35 14.00 1.00 TOTAL per acre foot $ 75.35 If you have any questions please feel free to contact me. Sincerely, CARLSBAD MUNICIPAL WATER DISTRICT Johuf P. He'nley', "Assistant Manager JPH:fw cc: Mr. P. Bussey ENCLOSURE (1) ESTIMATE OF REVENUES & EXPENSES FY 77-78 Revenues to the enterprise are of the following categories: 1. READY-TO-SERVE fees - estimated at present monthly receipts of $35,000/month or $420,000/year. 2. WATER SALES: See next paragraph 3. OTHER REVENUES which include receipts from fees and overhead charges - estimated as $40,500. Sales of water are based on unit charges of 38* per unit for domestic and 23* for all over 200 units for industrial users.* Revenues are "normalized", i.e., due to the differing rates and based on historical data, the following was used to arrive at water sales revenue: UNIT CHARGE REVENUE PER ACRE FOOT 38* $ 149.00 40* 157.48 41* 161.42 42* 165.35 43* 169.29 Water sales revenues also were derived for three differing circumstances; the first as 10% below this fiscal year (FY76-77) or 4666 acre feet; this fiscal year's anticipated use based on the first 10 months actual plus an estimate of May and June salessor 5T84 acre feet; and the sales that could be anticipated from normal use plus growth,or 5764 acre feet. TOTAL OPERATING REVENUE 4666 A.F. 5184 A.F. 5764 A.F. 38* 1,155,734 1,232,916 1,319,336 40* 1,195,301 1,276,876 1,368,215 41* 1,213,686 1,297,301 1,390,925 42* 1,232,023 1,317,674 1,413,577 43* 1,250,407 1,338,099 1,436,288 * Industrial users include the following: Culligan Softwater, Sargent Industries, SDG&E, Burrough's, Dixon Ford, Unified School District, Army & Navy Academy and several large restaurants and markets. ENCLOSURE (2) -2- Operating Income is equal to Operating Revenues minus Operating Costs. It is this figure that is used as a basis to meet our bond obligations. OPERATING INCOME 384/Unit 404/Unit Alt/Unit 424/Unit 434/Unit 4666 A.F. $ 118,789 $ 158,356 $ 176,741 $ 195,078 $ 213,462 5184 A.F. 140,027 183,987 204,412 224,785 |245.210| 5764 A.F. 163,807 212,686 235,396 |258,048| 280,759 The net income is the "bottom line" which indicates whether or not the enterprise made or lost money during the year. Net income = Operating income + Non-operating Revenue - Debt Service + Depreciation. Non-operating Revenue (interest on investments) is estimated at $45,000 Debt Service (interest + principal) = $186,000 Depreciation = $118,000 The net income position is projected as follows: 38* 404 414 424 434 4666 A.F. 95,789 130,360 148,745 167,082 185,466 5184 A.F. 112,031 155,991 176,416 196,789 1217,2141 5764 A.F. 135,811 184,690 207,400 |230,052| 252,763 The net income will also provide funds for the capital expenditures planned for the year. The FY77-78 Budget estimate (yet to be approved) is $206,725. Accordingly, the net income will be sufficient to cover these expenditures with a rate increase from 384 to 434 per unit assuming that our water sales next year will be equal to this year's sales. RWGrpag 6/10/77 1 """ ,' RESOLUTION NO. 5127 2 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD REVISING WATER RATES, 3 CHARGES, BILLING, AND RELATED REGULATIONS. 4 WHEREAS, Section 14.04.030 of the Carlsbad Municipal Code (Ordinance 4001 Section (3) ) empowers the City Council to, from time to time, by resolution, adopt rules and regulations for the operation and maintenance of the Water Department of the City, and 8 for furnishing water to users, and empowers the Council to, by resolution, modify rates, charges and penalties respecting water service. 10 NOW, THEREFORE, BE IT RESOLVED that the hereinafter stated 11 regulations respecting water rates, charges billing, and related 12 regulations shall become immediately effective upon passage of this 13 resolution. 14 I. Generally. The schedules of rates, compensations, charges 15 and minimum charges as set out in this resolution are fixed and 16 established as the rates, compensations, charges and minimum charges 17 to be charged and collected by the City for domestic water and water 18 service, except as otherwise specifically provided. 19 II. Water Charges. 20 (a) There shall be a separate monthly water standby charge for each consumer; provided that there shall be only one 21 monthly standby charge for each equivalent dwelling unit, each agricultural and industrial consumer, and each insti-22 tutional consumer as follows: 23 For a 5/8" meter $ 3.85 „. For a 3/4" meter $ 4.7024 For a 1 " meter $ 6.35 0_ For a 1 1/2" meter $ 8.0025 For a 2 " meter $ 13.00 For a 3. " meter $ 19.2526 For a 4 " meter $ 38.10 For a 6 " meter $ 56.65 28 XXX 1 (I) When one meter serves muK.ple dwelling units or multiple equivalent dwelling 2 units, the first unit shall pay the unit rate based on the above schedule and all 3 other units shall pay the 5/8" meter rate. 4 (2) In the event no water is used through the meter, or the property becomes vacant, the 5 monthly stand-by charge will be charged to and paid by the owner thereof or the 6 applicant for service. 7 (b) The rates to be charged for water supplied in any one .month through meters are as follows:8 All consumers, other than agricultural,9 using over 20,000 cu. ft./month 28<t/100 cu. ft. over 20,000 cu. ft,10 All other consumers 43<t/100 cu. ft. (c) All agricultural consumers who meet the Metropolitan '2 Water District Southern California requirements for agricultural consumers receive a pro-rata share of the " agricultural rebate the City receives monthly from the Carlsbad Municipal Water District.14 (d) There shall be a monthly charge of five dollars per15 month for all water connections supplying non-metered water for fire sprinkler purposes. All maintenance or repairs to16 fire service systems from the water main to the shutoff valve shall be paid for by the consumer and shall be charged on the17 regular water billing. All fire service systems shall be equipped with a meter by-pass which shall be paid for and18 installed at the consumer's expense. In the event water is served through the fire service system, the City Water Depart-19 ment and the Fire Department shall estimate the amount of water used and the regular charge therefore shall be put on customer's0 bill and shall be paid by consumer. 21 III. Payment of Bills. All water bills are due and payable at the 22 City Hall of the City of Carlsbad upon presentation and are delinquent 23 if not paid by the 15th of the month following the monthly billing. 24 IV. Units Within Multiple Dwellings, Allowing Cooking. In addition to other charges established by this resolution, a monthly op fee shall be paid to the City for each individual living unit contained 27 in any motor court, motel, hotel, or rooming house, or other transient 28 type habitat in the amount of 70£. -2- 8 10 11 12 14 15 16 17 18 19 20 21 22 23 24 25 27 28 V. Meter Keadjng - Water Districts. For convenience in the reading of meters and preparation of water bills, the department is expressly authorized to divide the City into districts. These districts may, from time to time, be revised or changed as necessary or desirable, in order to equalize the work of reading meters and billing. The meters in each district so established shall be read and water bills based on such meter readings, shall be prepared and mailed to the consumers in each district on approximately the same day of each and every month, except when Saturdays, Sundays and legal holidays intervene. VI. Bills - Mailing. Unless the applicant for water service directs otherwise, all bills will be mailed to the premises where water service is furnished. VII. Change of Ownership or Occupancy - Notification. It shall be the duty of every person signing an application for water delivery and of every owner of property to which water is delivered to notify the Water Department of any change in the ownership or occupancy of the premises to which the water is to be furnished at least two days prior to such change. Every applicant shall be liable for the water furnished and metered in accordance with the application until the Water Department receives written notice to cancel same and shut off the water, when the applicant's liability shall cease except as to water previous to such notice. Every owner of property is liable for water furnished to any premises he has rented in the event the tenant does not pay the water bill. Water service shall not be given any consumer upon change of address until all delinquent charges owed by the consumer at a former place of residence or business shall be paid. XXX XXX -3- 1 6 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 26 27 VIII. New Accounts - Turning on Water Charge. Regulation of water service; turning on and off of water supply. A three dollar and thirty cents charge will be made by the department for turning on the water supply when requested by the consumer incident to the opening of a new account. IX. Units Within Multiple Dwelling, Not Allowing Cooking. In addition to any other charges and fees as contained in this resolution, a monthly fee of one dollar shall be paid to the City for each five rooms in any hotel, rooming house, or motel, in which no cooking is allowed. X. Nonpayment - Service Discontinuance. In the event that any consumer shall be delinquent in the payment of his water bill, and such delinquency shall continue for a period of ten days after the final date for payment of such bill, the department shall have the right forthwith and without notice to discontinue water service to the premises of such delinquent consumer, and water shall not again be supplied to him or to the premises until all delinquent water bills, plus the penalties thereon, and reconnection charges, have been paid. XI. Restoring Service After Discontinuance. Procedures for restoring service after delinquency period. If water service is cut off or discontinued for failure to pay delinquent bills, such service may again be established only in the event the consumer or the applicant for service at such place pays all delinquent bills, charges and penalties, and makes such cash deposit as may be required by the Water 25 Department. When an owner or consumer has been delinquent in his water bills in succession or three times in any one calendar year, he shall be required to deposit a sum equal to an average two months' water bill -4- 1 2 3 4 5 6 7 8 9 10 11 12 13 1.4 15 16 17 18 19 20 21 22 23 24 25 26 27 ;28 upon such premises and pays, in addition theretx.. the sum of eight dollars and twenty-five cents for turning on the water supply. Thereupon and not otherwise will water service again be made or established to the premises where the water bill has been delinquent. XII. The Rates and Charges established by this resolution shall on their effective day supersede the rates established by Resolution No. 2098. PASSED, APPROVED AND ADOPTED, by the City Council of the City of Carlsbad at a regular meeting of the City Council held on the 21st day of June, 1977, by the following vote, to wit: AYES: Councilmen Frazee, Lewis, Packard and Councilwoman Casler. NOES: None. ABSENT: Councilman Skotnicki. •M^OL* ATTEST: / .^^E-.Q-i. T- /1 ' •»«-L.-^W»^i.L. MARGARET E7ADAMS, City Clerk NORA K. GARDINER, Deputy City Clerk (SEAL) ROBERT C. FRAZEE, MayoKof the City of Carlsbad Carlsbad, California -5-