HomeMy WebLinkAbout2009-05-05; City Council; 19796; Water & wastewater rate hearing and rate structureCARLSBAD CITY COUNCIL AND
MUNICIPAL WATER DISTRICT - AGENDA BILL
13
AB#
MTG.
DEPT.
19.796
05-05-09
FIN
SET PUBLIC HEARING FOR BOTH
WATER AND WASTEWATER RATE
INCREASES AND APPROVING NEW
RATE STRUCTURE
DEPT. HEAD
CITY ATTY.
CITYMGR.
RECOMMENDED ACTION:
Receive an update on drought management, water shortage allocation and status of water rates
and charges.
Adopt Resolution No.1352 of the Board of Directors of the Carlsbad Municipal Water
District, California, setting a public hearing regarding proposed increases in water rates as well
as future rate adjustments allowing for the pass-through of wholesale water costs and inflationary
adjustments, and approving a new rate structure.
Adopt Resolution No. 2009-095 of the City Council of the City of Carlsbad, California,
setting a public hearing regarding proposed increases in wastewater rates as well as allowing for
the pass through of inflationary adjustments for operations and maintenance.
ITEM EXPLANATION:
The presentation provides an update on drought management and water shortage allocation
affecting the Carlsbad Municipal Water District, and discusses the status of water rates and
charges from the Metropolitan Water District (MWD) and the San Diego County Water Authority.
The Carlsbad Municipal Water District (CMWD) service area is located in a semi-arid climate with
an average annual rainfall of 10 inches. As a result, the CMWD purchases 100% of its drinking
water from the San Diego County Water Authority (CWA), which imports water from the
Metropolitan Water District of Southern California (MWD). Water provided via this supply chain
originates from both the Colorado River and the San Francisco Bay-Delta region of Northern
California. A 242 mile-long aqueduct brings Colorado River water from Lake Havasu to the
Southland while the 444 mile-long California Aqueduct carries water south as part of the State
Water Project.
DEPARTMENT CONTACT: contact 760-602-2429 Helga.Stover@carlsbadca.gov
FOR CITY CLERKS USE ONLY. v /
COUNCIL ACTION:APPROVED
DENIED
CONTINUED
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CONTINUED TO DATE SPECIFIC
CONTINUED TO DATE UNKNOWN
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The region's water supplies remain impacted by extremely dry conditions around California. In
addition, there is a court-ordered pumping restriction on the State Water Project which went into
effect in December 2007. The pumping restriction is designed to protect threatened fish species,
and as a result, reduces water supplies from the Bay-Delta to 25 million Californians.
The CMWD has supported CWA's enhanced public education campaign to increase public
awareness regarding the recent supply situation. Additionally, CMWD has called for all
customers to cut back water usage by 20 gallons per day (a 10% reduction) as part of the
County-wide "20 Gallon Challenge."
Through September 2008, consumption data indicates that CMWD customers saved 5.5% over
the prior year's consumption, short of the 10% regional goal. Without additional significant
conservation, the region's water supply will be increasingly strained.
In December of 2008, the Board adopted a Drought Response Plan and Water Conservation
Ordinance, which was based on the SDCWA Model Conservation Ordinance. The ordinance
included four different and specific demand reduction targets at the 10%, 20%, 40%, and greater
than 40% levels which provide a basis for action by CWA, and provide a framework for county
retail water agencies to respond in kind.
Staff has been working with a financial consulting firm, PCS Group, to provide financial services
including the design of utility rates which could help to address the need for additional
conservation. Staff held a series of public workshops followed by a Board/Council workshop to
get input on a new rate structure. Based on the results of the public workshops and Board
direction, as well as the PCS Group study, staff is recommending a tiered rate structure (for
residential water customers) which would address funding requirements during normal periods
and also during periods of cutbacks. Assembly Bill 2882 (approved September 30, 2008),
added Chapter 3.4 (commencing with Section 370) to Division 1 of the California Water Code
(the Code), authorizes public entities to adopt allocation-based conservation water pricing which
meets certain requirements. There must be a fair and reasonable relationship to costs, and the
revenues cannot exceed the reasonable cost of water service, including basic (fixed) costs and
incremental costs. The Bill further states that allocation-based conservation water pricing by
public entities that sell and distribute water is an effective means by which waste or
unreasonable use of water can be prevented and water can be saved. The primary component
of this kind of rate structure is that the volumetric prices for the lowest through the highest priced
increments are established in an ascending relationship that is economically structured to
encourage conservation and reduce the inefficient use of water. The consulting firm, PCS Group
performed the cost of service study and established the proposed rate design to ensure
compliance with the Code.
Additional objectives of the rate design were to create a rate structure that considered the
following:
• Is fair and equitable to all customers
• Can be easily explained to the end customer
• Ensures compliance with cutbacks from wholesale suppliers
• Is flexible
PageS
• Meets the Board policy objectives
• Provides equity for customers already conserving
• Sends pricing signals to water wasters
• Minimizes enforcement resource needs
• Is compatible with the agency's billing system
• Promotes administrative ease and cost efficiencies
• Ensures sufficient funding for operations
• Ensures sufficient operating and replacement reserves
On April 23rd, the SDCWA approved mandatory supply cutbacks of 8% beginning July 1, 2009,
In addition, the cost of wholesale water is currently projected to increase by 27% (from $667 to
$847 per acre foot) and the fixed charges for water purchases are expected to increase 14.5%
(from $3.1 million to $3.6 million). Current information indicates that increases will continue for
several years.
The following schedule will allow CMWD to implement a new rate structure in a timely manner in
order to respond to the increased cost of wholesale water, as well as the mandatory reduction in
water usage.
May 5 Set the Public Hearing for June 23rd
May 8 Mail the Notice of Rate Increase to customers
June 16 Adopt 2009-10 Operating and Capital Budgets
June 23 Hold the Public Hearing and set rates
August 1 Implement new rates
Prior to holding a public hearing, a written notice must be mailed to the address to which the City
customarily mails the billing statement 45 days prior to the public hearing date.
The operating budget is scheduled for adoption on June 16, 2009. At that meeting, the Board
and Council may choose to include funding for a meter replacement program and provide
additional maintenance resources for the water, recycled water, and wastewater utilities. The
budgetary decisions at that meeting and the drought information available at that time, will
determine the recommended rate increase for the June 23rd Public Hearing.
The Notice will contain rates which represent the maximum rate increase of 18% for water
purchases and operational charges, and 9% for wastewater services. Of the maximum 18%
increase in the water rates, the primary component is a pass through directly attributed to the
increase in the cost of purchased water. Approximately 75% of the increase in the estimated
costs from 2009 to 2010 is directly attributed to water purchase costs. The remaining increase
would pay for additional requests and ensure adequate operating reserves. If the Board and
Council do not choose to fund the additional requests, the proposed rate increase would be less
than the maximum amount. As long as the rate adopted is equal to or less than the maximum
rate noticed, there is no requirement for another public hearing and notice.
Page 4
The proposed residential tiered water structure consists of a base monthly service charge and a
usage commodity charge. The base monthly charge is similar to the current charge - this
charge is paid regardless of water consumed and is imposed proportionate to water meter size.
The fixed charge recovers the fixed utility costs such as utility billing, maintenance, operations,
and replacement funding.
The commodity charge is imposed based on actual water consumption. The proposed single-
family residential structure includes three pricing tiers, expressed in units. The 12 unit upper
limit for Tier 1 captures roughly 50% of current water consumption. The Notice (Exhibit 3) lists
the current rates and proposed maximum rates with a progressive pricing scale for responding to
water supply limitations. If the SDCWA were to impose larger (or lesser) cutbacks, the
Board/Council could take an action to increase (or decrease) the rates in the future without
additional noticing. This would allow the Board/Council to respond to supply changes in a
timelier manner. AB3030 permits the Board/Council to pass through rate increases for
wholesale water charges. This is discussed later in this report.
It is important to note that the proposed maximum increase percentage of 18% is an average of
all user categories. The proposed rate increases are lower for residential water purchases
which fall within the first tier. This water is considered essential. The cost per unit increases by
tier. This increase not only incentivizes customers to use less water, it also reflects the
increased cost to provide excess system capacity to meet peak demands, which is otherwise
idle during non-peak winter months.
The proposed multi-family residential structure also includes three pricing tiers. The 5 unit upper
limit for tier one captures roughly 75% of current water consumption.
Non-residential rates are not subject to a tier structure. The rate is flat, and increases when
additional conservation is required. Changes to all water rates are being proposed at this time.
Wastewater Rates
The proposed wastewater rates will increase by a maximum of 9%. As with the proposed water
rate increases, the allocation of cost by user category has changed based on the most recent
cost of service study; the 9% is an average of all user categories. The proposed single family
monthly rate is $20.93, an increase of $3.28, or approximately 18% over the current rate. The
cost of service study considered all the cost components of the expenditures and allocated those
costs to the existing customer classes. It is not uncommon that in a community with a lot of
development, the allocation ratios change over time, sometimes resulting in large rate
fluctuations in certain customer classes.
The rate structure itself has not changed, and is calculated as follows:
• Single-family residential - Flat monthly charge
• Multi-family - Based on 90% of water usage
• Commercial - Based on 100% of water usage
• Schools - Based on number of students
Exhibit 3 displays the current rates and proposed maximum rates for all the user categories.
Page 5
The proposed rates adhere to Proposition 218 requirements, equitably allocating costs to each
customer class based on demands placed on the system, and the cost of providing wastewater
conveyance and treatment. With the proposed cost allocation, single-family residential monthly
rates and school rates will increase, while most other customer classes will experience a
decrease in wastewater rates. This cost shift is not uncommon when realigning rates after an
extended period.
ASSEMBLY BILL 3030:
On September 30, 2008, the Governor of California signed into legislation California Assembly
Bill 3030, an act which added Section 53756 to the Government Code. This section allows
agencies that provide water, wastewater or refuse collection service to adopt a schedule of fees
or charges authorizing automatic adjustments that pass through increases in wholesale charges
for water and adjustments for inflation for both water and wastewater operations for up to five
years.
The schedule of fees or charges may include a schedule of adjustments, including a clearly
defined formula for adjusting for inflation for operations and maintenance of the water and
wastewater utility, provided the property-related fee or charge, as adjusted for inflation, does not
exceed the cost of providing the service.
If an agency purchases wholesale water from another public agency, the schedule of fees or
charges may provide for automatic adjustments for up to 5 years which pass through the
adopted increases or decreases in the wholesale water charges established by the other
agency. The Board and Council would still be required to authorize the pass through amounts;
only the majority protest public hearing is not required.
An agency is not required to follow the notice provisions of California Constitution article XIII D,
section 6 when implementing any adjustment made pursuant to a schedule of fees or charges as
authorized pursuant to California Government Code section 53756. However, it must provide
written notice of the adjustment not less than 30 days prior to the effective date of the
adjustment. Such notice may be given as provided in California Government Code section
53755(a), by including it in the agency's regular billing statement for the fee or charge or by any
other mailing by the agency to the address to which the agency customarily mails the billing
statement for the fee or charge.
The notice mailed to customers will disclose that the Council and Board may consider pass-
through increases in wholesale charges for water and adjustments for inflation for both water
and wastewater utilities.
FISCAL IMPACT:
There is no fiscal impact to setting a public hearing date. The objective of the rate increase and
the tiered rates structure for normal as well as drought periods is to ensure that sufficient
revenue will be generated for operating the two utilities, while encouraging conservation and
complying with the mandatory cutbacks imposed by the Metropolitan Water District. At the time
that actual rate increases are being presented to the City Council and Board for approval, the
Page 6
fiscal impact will be provided. There are no rate increases proposed at this time for the Solid
Waste (refuse) enterprise.
ENVIRONMENTAL IMPACT:
The California Environmental Quality Act (CEQA) does not apply to the establishment or
modification of rates for the purpose of meeting operating expenses (CEQA Guidelines
Regulation 15273).
EXHIBITS:
1. Resolution No. 1352 of the Board of Directors of the Carlsbad Municipal Water
District, California, setting a public hearing regarding proposed increases in water rates as
well as future rate adjustments allowing for the pass through of wholesale water costs and
inflationary adjustments for operations and maintenance, and approving a new rate structure.
2. Resolution No. 2009-095 of the City Council of the City of Carlsbad, California, setting a
public hearing regarding proposed increases in wastewater rates, as well as allowing for the
pass through of inflationary adjustments for operations and maintenance.
3. Notice of Public Hearing.
Exhibit 1
1 RESOLUTION NO. 1352
2 A RESOLUTION OF THE BOARD OF DIRECTORS OF
CARLSBAD MUNICIPAL WATER DISTRICT (CMWD), TO
3 SET A PUBLIC HEARING REGARDING PROPOSED
4 INCREASES IN WATER RATES AS WELL AS FUTURE
RATE ADJUSTMENTS ALLOWING FOR THE PASS-
5 THROUGH OF WHOLESALE WATER AND
INFLATIONARY COSTS, AND APPROVING A NEW RATE
6 STRUCTURE.
7
8 WHEREAS, the California Constitution Article XIII D § 6(A)(2) states that local
9 governments must hold a public majority-protest hearing, and notify customers not less
10 than forty-five (45) days in advance of increases in water rates; and
11 WHEREAS, the Carlsbad Municipal Water District is proposing water rate
12 increases in August 2009; and
WHEREAS, it is in the best interest of CMWD and its customers to implement a
new rate structure; and
WHEREAS, the California Legislature recently passed Assembly Bill 3030
(approved September 30, 2008) that allows a locally owned water utility to adopt a
multi-year rate schedule establishing water service charges and fees, for a period not to
exceed 5 years, provided that the rate schedule be adopted by the governing board of18
the water utility in a public ratemaking case proceeding using the procedures authorized
by current law; and20
WHEREAS, a public hearing is required to be held regarding the increase in
21
water rates as well as future rate adjustments allowing for the pass-through of
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wholesale water costs and inflationary adjustments; and
23
WHEREAS, Assembly Bill 2882 (approved September 30, 2008), added Chapter
24 3.4 (commencing with Section 370) to Division 1 of the Water Code, allows a public
25 entity to adopt allocation-based conservation water pricing meeting certain
f\f
requirements. That allocation-based conservation water pricing by public entities that
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Exhibit 1
1 sell and distribute water is an effective means by which waste or unreasonable use of
2 water can be prevented and water can be saved.
3 NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the
4 Carlsbad Municipal Water District, as follows:
5 1. That the above recitations are true and correct.
2. That the Board of Directors of the Carlsbad Municipal Water District sets a
majority protest public hearing for Tuesday, June 23, 2009, in accordance with
applicable law, on these proposed rate increases, including allocation-based water8
pricing, as well as future rate adjustments for the pass-through of wholesale water and
inflationary costs.10
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PASSED, APPROVED AND ADOPTED at a Joint Special Meeting of the
Carlsbad Municipal Water District Board of Directors and the Carlsbad City Council,
held on the 5th day of May, 2009, by the following vote:
AYES:
NOES:
ABSENT:
Board Members Lewis, Kulchin, Hall, Packard and Blackburn.
None.
None.
X LEWIS, President
ATTEST:
O^A^tjLjL-
ORR/JNE M. WtoOD, Secretary
Exhibit 2
1 RESOLUTION NO. 2009-095
2 A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF CARLSBAD, CALIFORNIA, TO SET A PUBLIC
3 HEARING REGARDING PROPOSED INCREASES IN
4 WASTEWATER RATES, AS WELL AS FUTURE RATE
ADJUSTMENTS ALLOWING FOR THE PASS-THROUGH
5 OF INFLATIONARY COSTS
6
WHEREAS, the California Constitution Article XIII D § 6(A)(2) states that local
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governments must hold a public majority-protest hearing, and notify customers not less
o
g than forty-five (45) days in advance of increases in wastewater rates; and
10 WHEREAS, the City of Carlsbad is proposing increased wastewater rates in
11 August 2009; and
12 WHEREAS, the California Legislature recently passed Assembly Bill 3030 that
13 allows a locally owned utility to adopt a multiyear rate schedule for a period not to
14 exceed 5 years, provided that the rate schedule be adopted by the governing board of
the utility in a public ratemaking case proceeding using the procedures authorized by
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current law; and
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WHEREAS, a public hearing is required to be held regarding the increase in18
wastewater rates as well as future rate adjustments allowing for the pass-through
20 inflationary adjustments.
21 WHEREAS, a public hearing is required to be held regarding the increase in
22 wastewater rates before the rates are implemented.
23 NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of
Carlsbad, California, as follows:
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1. That the above recitations are true and correct.
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Exhibit 2
2. That the City Council of the City of Carlsbad sets a majority protest public
hearing for June 23, 2009, in accordance with applicable law, on these proposed rate
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PASSED, APPROVED AND ADOPTED at a Joint Special Meeting of the
Carlsbad City Council and Carlsbad Municipal Water District Board of Directors, held
on the 5th day of May, 2009, by the following vote:
AYES: Council Members Lewis, Kulchin, Hall, Packard and Blackburn.
NOES: None.
ABSENT: None.
A LEWIS, Mayor
ATTEST:
/ORRAJlSlE M. $JDOD, City Clerk
Notice of Public Hearing
on proposed Rate Increases and Drought
Rates
Tuesday - June 23, 2009 at 6pm
City of Carlsbad - Council Chambers
1200 Carlsbad Village Drive
Carlsbad, California 92008
For questions about the public hearing
process or the proposed water and
wastewater rate increases and drought rates,
please call (760) 602-2403.
Any person interested in objecting to the amount
of the proposed increases may file a signed
written protest with the City Clerk, at or before
the hour fixed for the hearing. The written
protest must contain the address of service, the
rate change being protested, and the ground or
grounds of protest. The protestor may appear at
the hearing and be heard on the matter.
EXPLANATION OF RATE INCREASES
WATER RATES
City of Carlsbad/CMWD rate increases shown in
the following tables may change depending on
the level of drought conservation needed. The
rates in each category are the maximum rates
that the Council/Board may set to achieve the
financial and conservation objectives desired at
that time. The various levels of drought
conservation include non-drought ratesfbase =
0% cutbacks) and drought rates assuming
increasing levels of mandatory cutbacks. The
reason for the increase in the base rate is to fund
the increasing cost of water purchased from the
San Diego County Water Authority (SDCWA), as
well as rising operating and maintenance costs.
The reason for the drought rates is to respond to
water supply limitations using a progressive
pricing scale. The drought levels would be
implemented and generally triggered by SDCWA
and MWD's prior declaration of a drought level.
In addition to rising costs, the SDCWA will
require mandatory water cutbacks beginning
July, 2009.
SEWER/WASTEWATER RATES
The proposed rates shown in the following
tables are set to generate revenues for
recovering costs associated with operations,
maintenance, and replacement funding of the
City's wastewater system, as well as establishing
adequate operating reserves.
The proposed rate changes vary by customer
category, based on a recent cost of service
study to accurately and fairly allocate costs to
the different customer categories.
RATE TABLES ARE SHOWN ON
THE BACK SIDE OF THIS NOTICE
ASSEMBLY BILL 3030
On September 30, 2008 the Governor of
California signed into legislation California
Assembly Bill 3030, an act which added Section
53756 to the Government Code. This section
allows agencies that provide water, wastewater
or refuse collection service to adopt a schedule
of fees or charges authorizing automatic
adjustments that pass through increases in
wholesale charges for water and adjustments for
inflation for both water and wastewater
operations.
The schedule of fees or charges may include a
schedule of adjustments, including a clearly
defined formula for adjusting for inflation for
operations and maintenance of the water and
wastewater utility, provided the property-related
fee or charge, as adjusted for inflation, does not
exceed the cost of providing the service.
If an agency purchases wholesale water from
another public agency, the schedule of fees or
charges may provide for automatic adjustments
for up to 5 years that pass through adopted
increases or decreases in the wholesale water
charges established by the other agency. The
Council and Board would still be required to
authorize the pass through amounts; only the
majority protest public hearing is not required.
Current Rate I
WATER RATES CURRENT RATE MAXIMUM RATE MAXIMUM RATE MAXIMUM RATE MAXIMUM RATE MAXIMUM RATE
Delivery Charge
Meter Size
5/8"
3/4"
1"
1.5"
2"
2.5"
3"
4"
6"
8"
Single Family
Tierl
Tier 2
TierS
Multi-Family
Tierl
Tier 2
TierS
Non-Residential
Agricultural
Recycled / Irrigation
flat rate $ 14.54
flat rate $ 17.87
flat rate $ 24.50
flat rate $ 42.26
flat rate $ 60.88
flat rate $ 73.13
flat rate $ 108.89
flat rate $ 176.49
flat rate $ 341.99
flat rate $ 541.28
per unit $ 2.12
per unit $ 2.12
per unit varied
per unit $ 1 .81
per unit $ 2.01
0% CUTBACK
flat rate $ 15.25
flat rate $ 19.50
flat rate $ 27.50
flat rate $ . 48.25
flat rate $ 73.00
flat rate $ 105.50
flat rate $ 139.00
flat rate $ 213.25
flat rate $ 419.75
flat rate $ 667.25
Units
0-12 $ 2.29
13-20 $ 2.95
21 +$ 4.02
Units
0-5 $ 1.93
6-10 $ 2.18
11 +$ 2.59
per unit $ 2.64
per unit $ 3.41
per unit $ 2.97
10% CUTBACK
flat rate $ 16.78
flat rate $ 21.18
flat rate $ 30.25
flat rate $ 53.08
flat rate $ 80.30
flat rate $ 116.05
flat rate $ 152.90
flat rate $ 234.58
flat rate $ 461.73
flat rate $ 733.98
Units
0-12 $ 2.29
13-20 $ 3.69
21 +$ 5.23
Units
0-5 $ 1.93
6-10 $ 2.73
11 + $ 3.37
per unit $ 3.17
per unit $ 4.44
per unit $ 3.57
20% CUTBACK
flat rate $ 16.78
flat rate $ 21.18
flat rate $ 30.25
flat rate $ 53.08
flat rate $ 80.30
flat rate $ 116.05
flat rate $ 152.90
flat rate $ 234.58
flat rate $ 461.73
flat rate $ 733.98
Units
0-12 $ 2.29
13-20 $ 4.87
21 + $ 6.84
Units
0-5 $ 1.93
6-10 $ 3.49
11 +$ 4.28
per unit $ 3.70
per unit $ 4.27
per unit $ 4.91
30% CUTBACK
flat rate $ 17.54
flat rate $ 22.14
flat rate $ 31.63
flat rate $ 55.49
flat rate $ 83.95
flat rate $ 121.33
flat rate $ 159.85
flat rate $ 245.24
flat rate $ 482.72
flat rate $ 767.34
Units
0-8 $ 2.29
9-16 $ 5.46
17+ $ 7.44
Units
0-4 $ 1.93
5-8 $ 3.93
9+ $ 4.67
per unit $ 3.83
per unit $ 4.61
per unit $ 5.20
40% CUTBACK
flat rate $ 19.83
flat rate $ 25.03
flat rate $ 35.75
flat rate $ 62.73
flat rate $ 94.90
flat rate $ 137.15
flat rate $ 180.70
flat rate $ 277.23
flat rate $ 545.68
flat rate $ 867.43
Units
0-8 $ 2.29
9-14 $ 6.20
15+ $ 8.45
Units
0-4 $ 1.93
5-8 $ 4.47
9+ $ 5.31
per unit $ 4.23
per unit $ 5.12
per unit $ 5.94
Current Rate [ Proposed Rate
SEWER RATES % CHANGE
^^^^l^^^^^^^^^BH^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^HHV^~^^^^^^^^^^^^^^^^^^^^^^^^^B^H^^^^^^^^^^^^^^^^^^^^^^^^^^^-^>-^>^-^^^— ^—
Group I - Residential (Flat Monthly Charge)
Group I - Multi-Family (per ccf, based on 90% water usage)
Group II - Commercial (per ccf of water usage)
Group III - Commercial (per ccf of water usage)
Group IV - Commercial (per ccf of water usage)
Group V - Other Institutional (per ccf of water usage)
Group V - Elementary School (per student)
Group V - Junior High School (per student)
Group V - High School (per student)
Group V - Boarding School (per student)
Group VI - Bio-Hydration Research Lab Inc. (per ccf of water usage)
per month
$ 17.65
$ 2.51
$ 2.08
$ 2.73
$ 4.31
$ 2.06
$ 0.27
$ 0.53
$ 0.80
$ 3.97
$ 1.62
2009-10
$ 20.93
$ 2.41
$ 1.96
$ 2.98
$ 5.53
$ 1.87
$ 0.43
$ 0.64
$ 0.85
$ 4.45
$ 1.70
per month
18.6%
-4.0%
-5.8%
9.2%
28.3%
-9.2%
59.3%
20.8%
6.2%
12.1%
4.9%
:itt€i above i^
addition; CMWD may pass through increases In
Drought Management, Water Shortage Allocation and Status of Water Rates and ChargesCarlsbadMunicipalWaterDistrictBoardofDirectorsCarlsbad Municipal Water District Board of DirectorsMay 5, 20091
DiscussionDiscussionyyBackgroundBackgroundyyDrought ManagementDrought ManagementyyWaterShortageAllocationWaterShortageAllocationWater Shortage AllocationWater Shortage AllocationyyMWD/CWA Rates and ChargesMWD/CWA Rates and ChargesyyProposedNewRatesandRateStructureProposedNewRatesandRateStructureyyProposed New Rates and Rate StructureProposed New Rates and Rate StructureyySet Public HearingSet Public HearingyyAB3030AB3030yyAB 3030AB 30302
BackgroundBackgroundyyJanuary 2008 January 2008 –– 30% Agriculture Cutbacks30% Agriculture CutbacksyyMarch 2008 March 2008 ––CWA Declares Level I Drought CWA Declares Level I Drought ggWatchWatchyyJune 2008 June 2008 ––MWD Declares Level II Water Supply MWD Declares Level II Water Supply pp ypp yAlertAlertyyDecember2008December2008––CMWDAdoptsModelCMWDAdoptsModelDecember 2008 December 2008 CMWD Adopts Model CMWD Adopts Model OrdinanceOrdinanceyyJanuary2009January2009––CMWDExecutiveManagerCMWDExecutiveManagerJanuary 2009 January 2009 CMWD Executive Manager CMWD Executive Manager Declares Level I Drought WatchDeclares Level I Drought Watch3
Drought ManagementDrought Managementyy10% Voluntary Water Reduction10% Voluntary Water ReductionyyCWARollsout20CWARollsout20‐‐gallonChallengeandgallonChallengeandCWA Rolls out 20CWA Rolls out 20gallon Challenge and gallon Challenge and Increases Outreach EffortIncreases Outreach EffortyyCWAbuysSpotWaterTransfersCWAbuysSpotWaterTransfersyyCWA buys Spot Water TransfersCWA buys Spot Water TransfersyyCWA buys DryCWA buys Dry‐‐Year Supplies from DWR Year Supplies from DWR 4
Water ShortageWater Shortage••FY 2010 available MWD supplies:FY 2010 available MWD supplies:1.83 MAF1.83 MAF••FY 2010 Adjusted Base Period Demand: FY 2010 Adjusted Base Period Demand: 211MAF211MAF2.11 MAF2.11 MAF••Shortage Amount: Shortage Amount: 280TAF(13%)280TAF(13%)280 TAF (13%)280 TAF (13%)••MWD Declares Allocation (10% to 15%)MWD Declares Allocation (10% to 15%)IAWP remains at 30% cutbacksIAWP remains at 30% cutbacks5
Water Authority Estimated SupplyWater Authority Estimated SupplyFY 2010FY 2010SupplySourceVolume(AF)Supply SourceVolume (AF)MWD M&I Allocation* 380,000QSA155 000QSA155,000Local Potable 30,000TotalSupply565 000Total Supply565,000*Excludes agricultural supplies (IAWP and SAWR)Excludes agricultural supplies (IAWP and SAWR) Excludes agricultural supplies (IAWP and SAWR)Excludes agricultural supplies (IAWP and SAWR)6
Supply Outlook Supply Outlook (MWDWSAP/B fD(MWDWSAP/B fDYSli)YSli)(MWD WSAP/Before Dry(MWD WSAP/Before Dry‐‐Year Supplies)Year Supplies)800SWP=25% SWP=40% SWP=40%M&I Demand(base on FY 2007,with growth @ 1/2%/yr)SWP=30%600et-64 TAF-72 TAF10%-93 TAF-39 TAF11%14%6%M&I Demand (base on FY 2007, with growth @ 1/2%/yr)400and Acre‐Fee200Thousa02010 2011 2012 20137MWD QSALocal Seawater DesalDry-Year Transfer
Reducing ImpactsReducing Impactsyy2009 dry year transfers 2009 dry year transfers yy16,000 acre16,000 acre‐‐feet net (projected)feet net (projected)yyAvailable for use or storageAvailable for use or storageyyCarryover StorageCarryover Storageyy42,000 acre42,000 acre‐‐feet available in local reservoirsfeet available in local reservoirsyyStored in Lower Stored in Lower OtayOtay, Sweetwater, El Cap and , Sweetwater, El Cap and yy,,p,,pS.V.S.V.yy16,000 acre16,000 acre‐‐feet in semifeet in semi‐‐tropic storage accounttropic storage accountpgpg8
Water Supply Shortage ConditionsWater Supply Shortage ConditionsGoal of avoiding cutbacks through voluntary Goal of avoiding cutbacks through voluntary conservation and supply enhancementconservation and supply enhancementyyVoluntary conservation in CY 08 did not achieve Voluntary conservation in CY 08 did not achieve 10% target10% targetyyLimited spot transfer market so farLimited spot transfer market so faryyPumping restrictionsPumping restrictionsyyMultiMulti‐‐year eventyear event9
Supply Outlook Supply Outlook (MWDWSAP/ ithD(MWDWSAP/ ithDtfiFY2010)tfiFY2010)(MWD WSAP/with Dry(MWD WSAP/with Dry‐‐year transfers in FY2010)year transfers in FY2010)800SWP=25% SWP=40% SWP=40%M&I Demand(base on FY 2007,with growth @ 1/2%/yr)SWP=30%600et-48 TAF-72 TAF8%-93 TAF-39 TAF11%14%6%M&I Demand (base on FY 2007, with growth @ 1/2%/yr)400and Acre‐Fee200Thousa02010 2011 2012 201310MWD QSALocal Seawater DesalDry-Year Transfer
Water Allocation ProcessWater Allocation ProcessyyCWA Board approved use of CWA Board approved use of drydry‐‐year supplies in FY year supplies in FY 20102010yyCWA Board declares Level II Drought AlertCWA Board declares Level II Drought AlertyyCWA Board approves Member Agencies Allocation CWA Board approves Member Agencies Allocation percentagespercentages11
Water Authority Municipal and Industrial Water Authority Municipal and Industrial Allocation Percentages for FY 2010Allocation Percentages for FY 201012
Water Allocation Process (cont.)Water Allocation Process (cont.)yyMWD provide Final Allocations (midMWD provide Final Allocations (mid‐‐May)May)yyCWA Volumetric Allocations (end of May)CWA Volumetric Allocations (end of May)yyCMWD Declare Level II Drought Alert (midCMWD Declare Level II Drought Alert (mid‐‐g(g(latelate‐‐May)May)13
Supplies are Driving MWD RatesSupplies are Driving MWD Rates$$$$$$$$$$$$$$$$$$$$Colorado River WaterState Water ProjectState Water TransfersLoss of Sales (Shortage)<2003200320072008>200910?<20032003-20072008>2009-10?TransitionfromleastTransitionfromleast‐‐costsuppliestomorecostsuppliestomore‐‐expensivesuppliesisexpensivesuppliesisTransition from leastTransition from leastcost supplies to morecost supplies to moreexpensive supplies is expensive supplies is key driver of MWD’s escalating rates.key driver of MWD’s escalating rates.14
MWD/CWA Rates and ChargesMWD/CWA Rates and ChargesyyApril 14April 14ththMWD Board adopted a Rate Increase for 2010MWD Board adopted a Rate Increase for 2010••19.7% increase effective September 200919.7% increase effective September 2009••No increase January 2010No increase January 2010••Projected increase of 21.5% for January 2011Projected increase of 21.5% for January 2011BothincreasesincludeaDeltaSurchargeBothincreasesincludeaDeltaSurchargeWaterSupplyWaterSupply••Both increases include a Delta Surcharge Both increases include a Delta Surcharge ––Water Supply Water Supply Charge EliminatedCharge Eliminated••Surcharge will remain in effect until Delta issues are Surcharge will remain in effect until Delta issues are ggsolvedsolved15
Future ActionsFuture ActionsyCWA proposed rate increase due out late May16
CRACA“CRACA“LiteLite”High/LowRateForecast”High/LowRateForecastCRACA CRACA LiteLite High/Low Rate Forecast High/Low Rate Forecast$1,700$1 300$1,400$1,500$1,600ot$1,000$1,100$1,200$1,300$/Acre-FooCompounded Annual $700$800$900$,2009201020112012201320142015201620172018pGrowth RateCRACA “Lite” High 9.2%CRACA “Lite” Low 7.6%LRFP High 5.2%CRACA "Lite" High Rate$766 $990 $1,133 $1,254 $1,324 $1,389 $1,458 $1,522 $1,587 $1,686High Annual % Change11.9% 29.3% 14.4% 10.7% 5.6% 4.9% 5.0% 4.3% 4.3% 6.2%CRACA "Lite" Low Rate$766 $932 $1,039 $1,144 $1,210 $1,255 $1,311 $1,355 $1,398 $1,480Low Annual % Change11 9%21 6%11 6%10 0%58%37%45%34%32%59%2009201020112012201320142015201620172018Calendar YearLow Annual % Change11.9%21.6%11.6%10.0%5.8%3.7%4.5%3.4%3.2%5.9%LRFP High Rate$768 $829 $884 $946 $982 $1,013 $1,058 $1,086 $1,147 $1,213LRFP Annual % Change12.3% 7.9% 6.6% 7.0% 3.8% 3.2% 4.4% 2.6% 5.6% 5.8%17
Future Actions (cont.)Future Actions (cont.)yyCWA Proposed Rate Increase CWA Proposed Rate Increase ‐‐Due out Late Due out Late ppMayMayyyCWABoardconsiderationCWABoardconsideration‐‐JulyJulyCWA Board consideration CWA Board consideration JulyJuly18
Questions?Questions?19
Robb GranthamRobb GranthamCaliforniaBranchManagerCaliforniaBranchManagerCalifornia Branch ManagerCalifornia Branch ManagerFCS GroupFCS GroupPerformed cost of service studyPerformed cost of service studyDesignedratemodeltorespondDesignedratemodeltorespondDesigned rate model to respond Designed rate model to respond to water cutbacks and to water cutbacks and hihipurchase cost increasespurchase cost increases
CalendarCalendar••Today Today ‐‐Set public hearing for June 23rdSet public hearing for June 23rdCalendarCalendar••May 8May 8thth––mail written public hearing notice mail written public hearing notice ••At least 45 days prior to public hearingAt least 45 days prior to public hearing••Requirement of Prop. 218Requirement of Prop. 218J16J16ththOiBdAd iOiBdAd i••June 16June 16thth‐‐Operating Budget AdoptionOperating Budget Adoption••On June 23On June 23rdrd‐‐hold majority protest public hold majority protest public hearingsetratesapprovenewratedesignhearingsetratesapprovenewratedesignhearing , set rates, approve new rate designhearing , set rates, approve new rate design••August1August1implementnewratesimplementnewrates••August 1August 1––implement new rates implement new rates
Previously Held WorkshopsPreviously Held Workshops••ResidentsResidents••LocalBusinessesLocalBusinesses••Local BusinessesLocal Businesses••CMWD BoardCMWD Board••Water AllocationsWater Allocations••Increased EnforcementIncreased Enforcement••Charging PenaltiesCharging Penalties••TieredRatesTieredRates––ResidentialResidentialTiered Rates Tiered Rates ResidentialResidential••Flat Rates Flat Rates ––NonNon‐‐residentialresidential
Obj ifdiObj ifdiObjectives of rate designObjectives of rate designFair and equitableEnsures complianceFlexibleMeetsBoardandCouncilpolicyobjectivesMeets Board and Council policy objectivesEquity for customers already conservingPricing signal to water wastersMinimizes enforcement resourcesEnsures sufficient funding for operations
Tiered versus Flat RatesTiered versus Flat Rates••Residential Water CustomersResidential Water Customers••HavesimilarbasicwaterneedsHavesimilarbasicwaterneeds••Have similar basic water needsHave similar basic water needs••Excess amounts are considered nonExcess amounts are considered non‐‐essential essential andcostmoreandcostmoreand cost moreand cost more••NonNon‐‐Residential Water CustomersResidential Water Customers••Businesses are dependant upon varying Businesses are dependant upon varying quantities of water quantities of water
Proposed Water Rate IncreaseProposed Water Rate IncreaseAAtiti18%18%AverageAveragerate increase rate increase ––18%18%All water usersAll water usersyyDelivery Charge Delivery Charge ‐‐ResidentialResidential••CurrentRate$14.54permonthCurrentRate$14.54permonthCurrent Rate $14.54 per monthCurrent Rate $14.54 per month••Proposed Rate $16.78 per monthProposed Rate $16.78 per monthyyCditChCditChRidtilRidtilyyCommodity Charge Commodity Charge ‐‐ResidentialResidential••Current Rate $2.12 per unit Current Rate $2.12 per unit ••Proposed Rate $2.29 per unit (Tier 1)Proposed Rate $2.29 per unit (Tier 1)yyAverage use of 12 units per monthAverage use of 12 units per monthyyIncrease is less than $4/month Increase is less than $4/month ––8.2%8.2%
RatesRatescontinuedcontinuedRates Rates ‐‐continuedcontinuedyyNonNon‐‐residential residential ‐‐$3.17 per unit$3.17 per unityyAgriculturalAgricultural‐‐$3 90perunit$3 90perunityyAgricultural Agricultural ‐‐$3.90 per unit$3.90 per unityyRecycled/Irrigation Recycled/Irrigation ‐‐$3.57 per unit$3.57 per unit
PdWt tRtIPdWt tRtIProposed Wastewater Rate IncreaseProposed Wastewater Rate IncreaseAverageAveragerate increase rate increase ––9%9%gg••Cover fixed costsCover fixed costsMaintainadequatereservesMaintainadequatereserves••Maintain adequate reservesMaintain adequate reserves••Funding for additional requestsFunding for additional requestsgqgq••No change to current rate structureNo change to current rate structure
Residential Wastewater RatesResidential Wastewater Rates(18.6% increase)(18.6% increase)yyFlat rateFlat rateyyCurrent Rate Current Rate ‐‐$17.65 per month$17.65 per monthyydd$h$hyyProposed Rate Proposed Rate ‐‐$20.93 per month$20.93 per monthNonNon‐‐ResidentialWastewaterRatesResidentialWastewaterRatesNonNonResidential Wastewater RatesResidential Wastewater RatesyyBase monthly fix chargeBase monthly fix chargeygygyyCommodity rates for commercial, nonCommodity rates for commercial, non‐‐residential and institutional residential and institutional categories based on wastewater strength characteristicscategories based on wastewater strength characteristics
MailedMajorityProtestPublicMailedMajorityProtestPublicMailed Majority Protest Public Mailed Majority Protest Public Hearing Notice Hearing Notice ••Describes explanation of increasesDescribes explanation of increases••RatetablesshowingMAXIMUMratesfor:RatetablesshowingMAXIMUMratesfor:••Rate tables showing MAXIMUM rates for:Rate tables showing MAXIMUM rates for:••No water cutbacksNo water cutbacks••10% cutbacks 10% cutbacks < < We will be here on 7/1< < We will be here on 7/1••20% cutbacks 20% cutbacks ••30% cutbacks30% cutbacks••40%cutbacks40%cutbacks••40% cutbacks40% cutbacks
AB3030AB3030AB 3030AB 3030••September 30, 2008September 30, 2008••Authorized passAuthorized pass‐‐through of increases in through of increases in wholesalewatercostswholesalewatercostswholesale water costswholesale water costs••Authorized inflationary adjustmentAuthorized inflationary adjustmentPbliHitRidPbliHitRid••Public Hearing not RequiredPublic Hearing not Required••Board/Council action is required with Board/Council action is required with 30 day written notice30 day written notice••For 5 yearsFor 5 years33
Proposed IncreaseProposed IncreaseTtlM thlUtilitBillTtlM thlUtilitBillTotal Monthly Utility BillTotal Monthly Utility Bill12 Units per month 12 Units per month Current ProposedSewerSolid WasteWt$ 17.65$ 18.87$4089$ 20.93$ 18.87$4426Water$ 40.89$ 77.41$ 44.26$ 84.06Monthly Increase%I$ 6.6586%% Increase8.6%
Questions/CommentsQuestions/Comments
Action ItemsAction ItemsCarlsbad Municipal Water Board:Carlsbad Municipal Water Board:Resolution 1352:Resolution 1352:Set Public HearingSet Public HearingResolution 1352: Resolution 1352: Set Public Hearing Set Public Hearing for June 23for June 23rdrd..City Council:City Council:R l ti 2009R l ti 2009095095StPbliStPbliResolution 2009Resolution 2009--095: 095: Set Public Set Public Hearing for June 23Hearing for June 23rdrd..
EdfiEnd of presentation…….
ProposedPenaltyRateCY2009Proposed Penalty Rate ‐CY 2009UsageUsage Penalty Rate Penalty Rate (MWD (MWD Total Penalty Total Penalty Treated M&I supply)Treated M&I supply)RateRate100%<Use100%<Use<<115%115% 2 x MWD Tier 2 2 x MWD Tier 2 (2 x $695)(2 x $695)$1,390$1,390(2 x $695) (2 x $695) Use>115%Use>115% 4 x MWD Tier 2 4 x MWD Tier 2 $2,780$2,780(4 x $695) (4 x $695)
Agriculture annual water usage Agriculture annual water usage 30,000 35,000 20,000 25,000 Low winter usage10,000 15,000 g 5,000 ,390 July 2007 Aug 2007 Sep 2007 Oct 2007 Nov 2007 Dec 2007 Jan 2008 Feb 2008 Mar 2008 Apr 2008 May 2008 Jun 2008