HomeMy WebLinkAbout2013-09-10; City Council; 21366; Set Public Hearing Water Rate Structure IncreasesCITY OF CARLSBAD AND CARLSBAD MUNICIPAL WATER
DISTRICT - AGENDA BILL
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AB# 21.366 SET PUBLIC HEARING FOR POTABLE WATER,
RECYCLED WATER, AND WASTEWATER RATES:
NEW RATE STRUCTURE AND RATE INCREASES
DEPT. DIRECTOR f './/^
MTG. 09/10/2013
SET PUBLIC HEARING FOR POTABLE WATER,
RECYCLED WATER, AND WASTEWATER RATES:
NEW RATE STRUCTURE AND RATE INCREASES
CITYATTY.
DEPT. PW-UTIL
SET PUBLIC HEARING FOR POTABLE WATER,
RECYCLED WATER, AND WASTEWATER RATES:
NEW RATE STRUCTURE AND RATE INCREASES CITY MGR. tt^
RECOMMENDED ACTION:
Receive a Report on Carlsbad Municipal Water District's 2013 Potable Water and Recycled Water Rate Study.
Adopt Resolution No. 1478 of the Board of Directors of the Carlsbad Municipal Water District,
California, setting a public hearing to Approve proposed new Potable Water and Recycled Water Rate
Structure and Increases to the Potable Water and Recycled Water Rates as well as future rate adjustments
allowing for the pass through of wholesale water costs and inflationary adjustments for operations and
maintenance.
Adopt Resolution No. 2013-229 of the City Council of the City of Carlsbad, California, setting a public
hearing to Approve proposed increases In wastewater rates as well as allowing for the pass through of
inflationary adjustments for operations and maintenance.
ITEM EXPLANATION;
Carlsbad Municipal Water District (CMWD) currently supplies potable water and recycled water to a 32.3
square mile service area within the City of Carlsbad (refer to Exhibit 3). Currently, for Fiscal Year 2013-2014,
there are approximately 28,000 potable and recycled water customers within the service area with an annual
demand projected at 16,300 acre-feet (AF) for potable water, and 4,300 AF for recycled water.
Existing Potable Water and Recycled Water Rate Structure
On June 23, 2009 the CMWD adopted a new rate structure and rate increases for its potable water and
recycled water service. The adopted structure incorporated an increasing block three-tiered potable water rate
for residential customers and a uniform rate for non-residential potable water customers and recycled water
customers. This rate structure also Included a monthly Delivery Charge that varies with meter size. The CMWD
last increased its rates by 8 percent, effective January 1, 2013, primarily as a pass through for the Imported
water rate paid to the SDCWA.
DEPARTMENT CONTACT: William Plummer, (760) 602-2768, bill.plummer(5)carlsbadca.gov
FOR CLERK USE.
COUNCIL ACTION: APPROVED CONTINUED TO DATE SPECIFIC •
DENIED • CONTINUEDTO DATE UNKNOWN •
CONTINUED • RETURNED TO STAFF •
WITHDRAWN • OTHER - SEE MINUTES •
AMENDED • REPORT RECEIVED •
Proposed Potable Water and Recycled Water Rate Structure
Raftells Financial Consultants, Inc. (RFC) was retained to perform a "Cost of Service" study and to evaluate the
existing and alternative rate structures. For the potable water system, the cost of service allocations
conducted In the study Is based on the Base-Extra Capacity method endorsed by the American Water Works
Association. Under the Base-Extra Capacity method, revenue requirements are allocated to the different user
classes proportionate to their use of the potable water system. The analysis performed by RFC revealed that
the existing three-tiered rate structure for Single Family Residential (SFR) and Multi-Family Residential (MFR)
should be maintained; however, RFC recommended changes to the tier cutoff points in the SFR customer class
rate structure to more accurately reflect a first-tier breakpoint that is related to internal water consumption.
There are lower peaks associated with Tier 1 demand; and therefore, the cost per unit Is typically less than the
rates In the higher tiers. The cost of service analysis also resulted In a lower amount of peaklng-related costs
compared to the allocations that served as the basis for the current rate structure. Non-residentlal customer
classes would retain the uniform volumetric rate structure, but there are adjustments to the rates
recommended based on the analysis of customer peaking demand activity.
For potable water, RFC recommends 5 percent annual revenue increases in calendar year 2014 and calendar
year 2015, both effective on January l'^ ofthe respective years. The primary reason for the potable water rate
Increase is the Increase In purchased water costs from the SDCWA. For recycled water, no Increase Is proposed
for the Usage Charge. A summary of the recommended changes per customer class is shown on Exhibit 5
Wastewater Rates
The City of Carlsbad's wastewater service area Is shown on Exhibit 4. The proposed wastewater rates will
increase by a maximum of 2 percent The proposed single family monthly rate Is $25.52, an increase of $0.50,
or approximately 2 percent over the current rate. 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
Schedule for Adoption of Rate Structure and Implementation of New Rates
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 from SDCWA.
September 10, 2013 Set the Public Hearing for November 5, 2013
November 5, 2013 Hold the Public Hearing and set rates
January 1, 2014 Implement new rates
Prior to holding a public hearing, a written notice must be mailed to the address to which the CMWD
customarily malls the billing statement, and the property owner, 45 days prior to the public hearing date. The
Notice of Rate Increase to customers will be mailed on or before September 19, 2013 to meet the 45 day
notice requirement. Any person interested In objecting to the increases may file a signed written protest with
the City Clerk. The written protest must contain the address of service, the rate change being protested, the
grounds of protest, and be received prior to the close of the public hearing. The protestor may appear at the
hearing and be heard on the matter. The Notice will contain rates for calendar year 2014 and also calendar
year 2015. A sample ofthe Notice is shown on Exhibit 6.
ENVIRONMENTAL IMPACT:
The California Environmental Quality Act (CEQA) and the State CEQA Guidelines provide a statutory exemption
for the review and modification of fee and rate schedules. Specifically, Section 21080(b)(8) of CEQA and
Section 15273(a) of the CEQA Guidelines provide for such statutory exemptions if such rates or charges are for
the purpose of: (1) meeting operating expenses, including employee wage rates and fringe benefits; (2)
purchasing or leasing supplies, equipment, or materials; and (3) meeting financial reserve needs and
requirements, etc.
Section 15273(c) of the CEQA Guidelines requires that the Board make findings regarding such an exemption
Indicating specifically the basis for the claim of exemption. Staff recommends that the Board make the findings
required by Section 15273(c) ofthe CEQA Guidelines as follows:
The rates and charges Identified in the Schedule of Fees, Deposits, and Charges are for the purpose of:
(1) meeting operating expenses. Including employee wage rates and fringe benefits; (2) purchasing or
leasing supplies, equipment, or materials; and (3) meeting financial reserve needs and requirements.
A copy of this exemption shall be retained in the CMWD file and filed with the county clerk to serve as
verification ofthis evaluation and as the CEQA environmental determination record.
FISCAL IMPACT:
The proposed water rate structure consists of a base monthly Delivery Charge and a volumetric Usage Charge.
The base monthly Delivery 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 Usage Charge Is Imposed based
on actual water consumption.
Changes to all potable water rates are being proposed at this time. However, for recycled water only the
"Delivery Charge" rates are proposed to Increase. The "Usage Charge" rates are proposed to remain
unchanged.
The proposed Sinele-Familv Residential Usage Charge rate structure includes three pricing tiers, expressed In
units (1 unit is one hundred cubic feet or 748 gallons). The cost per unit Increases by tier. The 10 unit upper
limit for Tier 1 captures roughly 60 percent of current water consumption for this category and Is considered
essential for internal residential use. The 18 unit upper limit for Tier 2 captures roughly 82 percent of current
water consumption and is designed to meet exterior landscaping requirements for typical residential property.
Tier 3 represents the remaining 18 percent for consumption. Tier 3 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 Multl-Familv Residential structure also Includes three pricing tiers. The MFR Tiers remain
unchanged with the 5 unit upper limit for Tier 1 capturing roughly 75% of current water consumption, and Tier
2 capturing 93 percent of total consumption.
Non-residentlal rates are not subject to a tier structure. The rate Is flat, and increases when additional
conservation Is required.
The Notice of Public Hearing (Exhibit 6) lists the current rates and proposed maximum rates. These rates
represent the maximum rate increase of 5 percent for potable water purchases and operational charges. Of
the maximum 5 percent Increase in the potable water rates, the primary component Is a pass through directly
attributed to the increase in the cost of purchased water from SDCWA. Approximately 75 percent of the
increase in the estimated costs from 2014 Is directly attributed to water purchase costs. The remaining
increase would pay for additional requests and ensure adequate operating reserves. If the Board does 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. The objective of the rate increase and the tiered rate structure for single
family and multifamily residential customers is to ensure that sufficient revenue will be generated for
operating and maintaining the utility.
Section 53756 to the Government Code 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 5 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 ofthe water utility, provided the property-
related fee or charge, as adjusted for Inflation, does not exceed the cost of providing the service. At the time
that actual rate Increases are being presented to the Board for approval, the fiscal impact will be provided. The
notice mailed to customers will disclose that the Board may consider pass-through Increases In wholesale
charges for water and adjustments for inflation for water utilities. The Board would still be required to
authorize the pass through amounts; however, the majority protest public hearing Is not required.
EXHIBITS;
1. Resolution No. 1478 of the Board of Directors of the Carlsbad Municipal Water District,
California, setting a public hearing to approve a new rate structure and proposed Increases In potable
water and recycled water rates as well as future rate adjustments allowing for the pass through of
wholesale water costs and inflationary adjustments for operations and maintenance.
2. Resolution No. 2013-229 of the City Council of the City of Carlsbad, California, setting a public
hearing to approve proposed increases in wastewater rates, as well as allowing for the pass through of
inflationary adjustments for operations and maintenance.
3. Carlsbad Municipal Water District Boundary Map.
4. City of Carlsbad Wastewater Boundary Map.
5. Summary of Potable Water and Recycled Water Changes per Customer Class
6. Notice of Public Hearing.
RESOLUTION NO. 1478
A RESOLUTION OF THE BOARD OF THE CARLSBAD MUNICIPAL WATER
DISTRICT, CAUFORNIA, SETTING A PUBUC HEARING TO APPROVE A
NEW RATE STRUCTURE AND PROPOSED INCREASES IN POTABLE
WATER AND RECYCLED WATER RATES AS WELL AS FUTURE RATE
ADJUSTMENTS ALLOWING FOR THE PASS THROUGH OF WHOLESALE
WATER COSTS AND INFLATIONARY ADJUSTMENTS FOR OPERATIONS
AND MAINTENANCE. .
WHEREAS, the California Constitution Article XIII D § 6(A)(2) states that local governments must
hold a public majority-protest hearing, and notify customers not less than forty-five (45) days In advance of
Increases In water rates; and
WHEREAS, It is in the best interest of CMWD and Its customers to Implement a new rate
structure; and
WHEREAS, the Carlsbad Municipal Water District is proposing water and recycled water rate
increases in January 2014 and 2015; and
WHEREAS, the California Legislature passed Assembly Bill 3030 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 of the water
utility in a public ratemaking case proceeding using the procedures authorized by current law; and
WHEREAS, the Board determines that actions regarding the new potable water and recycled
water rate structure and increases to the rates are in accordance with the findings required by Section
15273(c) ofthe CEQA Guidelines as follows:
The rates and charges identified in the Schedule of Fees, Deposits, and Charges are for the
purpose of: (1) meeting operating expenses, including employee wage rates and fringe benefits;
(2) purchasing or leasing supplies, equipment, or materials; and (3) meeting financial reserve
needs and requirements; and
WHEREAS, A copy ofthis exemption shall be retained in the CMWD file and files with the county
clerk to serve as verification ofthis evaluation and as the CEQA environmental determination record; and
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WHEREAS, a majority protest public hearing is required to be held regarding the increase In
water and recycled water rates as well as future rate adjustments allowing for the pass-through of
wholesale water costs and Inflationary adjustments.
NOW, THEREFORE, BE IT RESOLVED by the Carlsbad Municipal Water District Board ofthe City of
Carlsbad, California, as follows:
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, November 5, 2013, in accordance with applicable law, on these
proposed rate increases, as well as future rate adjustments for the pass-through of wholesale
water and Inflationary costs.
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PASSED, APPROVED AND ADOPTED at a Joint Special Meeting ofthe Carlsbad Municipal
Water District Board of Directors and the Carlsbad City Council, held on the 10*^ day of
September, 2013, by the following vote:
AYES:
NOES:
ABSENT:
Board Members Hall, Packard, Wood, Blackburn and Douglas.
None.
None.
MATT HALU President
ATTEST:
BARBARA ENGLESONfSecretary
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RESOLUTION NO. 2013-229
A RESOLUTION OF THE BOARD OF THE CITY COUNCIL OF THE CITY OF
CARLSBAD, CAUFORNIA, SETTING A PUBUC HEARING TO APPROVE AN
INCREASE IN SEWER RATES AS WELL AS FUTURE RATE ADJUSTMENTS
ALLOWING FOR THE PASS THROUGH OF WHOLESALE WATER COSTS
AND INFLATIONARY ADJUSTMENTS FOR OPERATIONS AND
MAINTENANCE.
WHEREAS, the California Constitution Article XIII D § 6(A)(2) states that local governments must
hold a public majority-protest hearing, and notify customers not less than forty-five (45) days in advance of
increases in water rates; and
WHEREAS, the City of Carlsbad (city) is proposing sewer rate increases in January 2014 and
2015; and
WHEREAS, the California Legislature passed Assembly Bill 3030 that allows a locally owned
water utility to adopt a multi-year rate schedule establishing sewer fees, for a period not to exceed 5 years,
provided that the rate schedule be adopted by the governing board of the agency In a public ratemaking
case proceeding using the procedures authorized by current law; and
WHEREAS, the city determines Increases to the sewer rates are in accordance with the findings
required by Section 15273(c) ofthe CEQA Guidelines as follows:
The rates and charges Identified In the Schedule of Fees, Deposits, and Charges are for the
purpose of: (1) meeting operating expenses, including employee wage rates and fringe benefits;
(2) purchasing or leasing supplies, equipment, or materials; and (3) meeting financial reserve
needs and requirements; and
WHEREAS, A copy of this exemption shall be retained in the city file and files with the county
clerk to serve as verification ofthis evaluation and as the CEQA environmental determination record; and
WHEREAS, a majority protest public hearing is required to be held regarding the increase in
sewer rates as well as future rate adjustments allowing for Inflationary adjustments.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as
follows:
1. That the above recitations are true and correct.
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That the City Council of the City of Carlsbad sets a majority protest public hearing for Tuesday,
November 5, 2013, in accordance with applicable law, on these proposed rate increases, as well
as future rate adjustments for inflationary costs.
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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 10*^ day of
September, 2013, by the following vote:
AYES:
NOES:
ABSENT:
Council Members Hall, Packard, Wood, Blackburn and Douglas.
None.
None.
MATT HALL, Mayor
ATTEST:
BARBARA ENGLESON
CARLSBAD MUNICIPAL WATER DISTRICT BOUNDARY
PACIFIC
OCEAN
CMWD BOUNDARY
ll
EXHIBITS
CITY OF CARLSBAD WASTEWATER BOUNDARY
PACIFIC
OCEAN
CITY OF CARLSBAD WASTEWATER BOUNDARY
EXHIBIT 4
EXHIBIT 5
Summary of Potable Water and Recycled Water Changes per Customer Class
Fixed Monthly "Delivery Charge''
The Delivery Charge will continue to be assessed to each customer and will vary depending on the
customer's meter size. The "Delivery Charge" for each meter size is comprised of two components. The
first component is the equivalent meter charge which reflects the difference in potential demand that
can be placed on the distribution system by different sized meters. It is calculated at $13.91. Thus, a
5/8" meter, or one equivalent meter. Is charged $13.91 per month. A 3/4" meter, which Is 1.5
equivalent meters based on Its greater flow rate capacity, is charged $20.86 per month ($13.91 x 1.5).
The second component Is the billing and customer service charge which Is calculated at $6.16 per
month. This charge does not vary by meter size because billing and customer service costs Incurred are
not any greater for larger meters compared to smaller meters. Therefore, the 5/8" and the 3/4" meter
would be charged $6.16 per month for this component, totaling $20.07 and $27.02 per month,
respectively, when combined with the equivalent meter charge component. The "Delivery Charge" for
other meter sizes is determined correspondingly by determining the equivalent meter charge based on
the ratio of the meter's flow rate capacity compared to the 5/8" meter and then adding the billing and
customer service charge.
Single Family Residential (SFR) Potable Water Usage Charge
RFC recommends that the CMWD retain its three-tier inclining rate structure for single family
residential (SFR) customers. However, RFC does recommend adjustments to the consumption tier cutoff
points. RFC recommends reducing the first tier from 12 HCF per month to 10 HCF per month. This level
of consumption is more consistent with CMWD's internal demand for the average single-family
household. The lower rate for this essential quantity of water Is available for all customers. RFC
recommends reducing the second tier from 20 HCF to 18 HCF. This level of usage still provides an
adequate amount of water for external landscaping needs, while continuing to send a signal for
conservation to high-usage customers. The first tier Is designed to provide essential usage with low
peaking; the rate excludes peaking costs and is available to all residential customers. This design allows
the peaking costs to be assigned to the higher tiers and effectively Increases those rates consistent with
cost of service and provides an incentive for conservation. The second tier, which is designed to cover
mostly irrigation usage, which has high peaking, includes the peaking costs and is closer to the average
rate. The third tier Is designed to recover costs associated with external Irrigation consumption, and
recovers the remaining costs of service associated with the single family class of customers.
Multi-Family Residential (MFR) Potable Water Usage Charge
RFC recommends that the CMWD retain Its three-tier Inclining rate structure and consumption tier
cutoffs for MFR customers. However, RFC does recommend adjustments to volumetric rates. Under the
current rate structure, MFR customers are receiving a much lower volumetric rate compared to SFR
customers. To some extent, this is appropriate as peaking characteristics of MFR customers are lower
than SFR customers. However, the current spread between the two classes is not appropriate given the
peaking characteristics found In these classes, based on an analysis of the most recent usage
information. RFC recommends Increasing the volumetric rates to be Identical to the SFR customers. Due
to the consumption patterns and existing consumption tier cutoffs, MFR customers will continue to pay
a lower average rate per HCF than SFR customers.
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Commercial Potable Water Usage Charge
RFC recommends that the CMWD retain the uniform commodity rate for this customer class since these
customers are very non-homogenous and It Is difficult to apply a standard tiered rate structure to these
customers without being overly punitive to large customers. In addition, they are motivated to control costs
and therefore generally limit unnecessary water use. Also, their lower peaking characteristics result In lower
average rates than for the residential customers.
Agricultural Potable Water Usage Charge
RFC recommends that the CMWD retain the uniform commodity rate for this customer class. The rates have
been revised to more accurately reflect the peaking characteristics of these customers.
Irrigation Potable Water Usage Charge
RFC recommends that the CMWD retain the uniform commodity rate for this customer class. The rates have
been revised to more accurately reflect the peaking characteristics of these customers.
Recycled Water Usage Charge
RFC recommends that the CMWD retain the uniform commodity rate for this customer class. Rates are
forecasted to remain the same over the study period, therefore no Increase to the "Usage Charge" Is
proposed for the next 2 years. The "Delivery Charge" will be the same as Potable Water.
The proposed rates for all customer classes described above are shown in Table 1. As the proposed rate
structure makes changes to the cost of service allocations, some customers will see Increases in monthly
billing while others will see decreases.
Fixed Revenue vs. Variable Revenue
With reference to Table 1, the fixed portion of CMWD's proposed rate structure will vary by meter size, not
by customer class, (see Delivery Charge). The volumetric or Usage Charge rate, however, will vary by
customer class. The average volumetric rates by customer class include rates with and without conservation
costs. The CMWD's current level of fixed revenue is 27.6% and variable revenue is 72.4% which Is consistent
with Industry practices. The California Urban Water Conservation Council's Best Management Practice (BMP)
1.4 states that variable rate revenue should be greater than or equal to 70% of total rate revenue. The
CMWD meets this guideline.
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TABLE 1
Fixed Monthly "Delivery Charge"
Proposed Proposed
Existing Service Charge Service Charge
Meter Size Service Charge 1/1/2014 1/1/2015
5/8" $21.38 $20.07 $21.08
3/4" $26.97 $27.02 $28.38
1" $38.52 $40.93 $42.98
1-1/2" $67.60 $75.70 $79.49
2" $102.27 $117.43 $123.31
2-1/2" $147.80 $166.10 $174.41
3" $194.72 $214.78 $225.52
4" $298.75 $353.86 $371.56
6" $588.03 $701.56 $736.64
8" $934.75 $1,118.80 $1,174.74
10" $1,339.61 $1,605.58 $1,685.86
Volumetric "Usage Charge"
Customer
Class Existing Tier
(HFC)
Existing
($ per HCF)
Proposed
Tier
(HFC)
Proposed
1/1/2014
($ per HCF)
Proposed
1/1/2015
($ per HCF)
Oto 12
13 to 20
21+
Single Familv
Residential
$3.20 0 to 10
$4.13 11 to 18
$5.62 19+
$3.19
$4.24
$6.11
$3.35
$4.45
$6.42
Oto 5
6 to 10
11+
Multi-Familv
Residential
$2.71 0 to 5
$3.05 6 to 10
$3.64 11+
$3.19
$4.24
$6.11
$3.35
$4.45
$6.42
Commercial
Agricultural
Irrigation
Recycled
NA
NA
NA
NA
Non-Residential (2)
$3.70 NA
$3.70 NA
$4.15 NA
$3.53 NA
$3.85
$3.95
$4.22
$3.53
$4.05
$4.15
$4.44
$3.53
1. HCF = One Hundred Cubic Feet or 748 gallons
2. Non-residential rates are not subject to a tier structure, the rate Is flat.
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EXHIBIT 6
COVER
Notice of Majority Protest Public Hearing on Proposed Water Rate Structure and Maximum Water 8i
Wastewater Rate Increases
Tuesday, Nov. 5, 2013, at 6 p.m.
City of Carlsbad
City Council Chambers
1200 Carlsbad Village Drive
Carlsbad, CA 92008
This notice contains information on proposed changes to the water rate structure and rate increases for
water and wastewater services.
For more information about the public hearing process or the proposed changes, please call 760-602-
2420, or visit the city's website at www.carlsbadca.gov/finance.
INSIDE
Proposed changes to water and wastewater rates
The City ofCarlsbad and the Carlsbad Municipal Water District, a subsidiary district ofthe City of
Carlsbad, purchase 100 percent of its drinking water from the San Diego County Water Authority
(SDCWA). The cost to purchase imported water continues to increase. To accommodate the anticipated
increases in cost, a new water rate structure and an increase in water and wastewater rates over the
next two years is being proposed. No rate increase is proposed for recycled water.
The proposed rate increase is based on a maximum five percent increase in the cost allocated to each
customer category based on a new proposed rate structure.
If the Carlsbad Municipal Water District Board of Directors approves the rate increases at the public
hearing on Nov. 5, 2013, the new rates for the first year will be effective Jan. 1, 2014 and the second
year will be effective on Jan. 1, 2015.
The proposed rates will enable the city to continue to provide quality services in a fiscally responsible
manner by funding ongoing operations, maintenance, and replacement ofthe water system, as well as
maintaining adequate operating reserves.
How your water rate is calculated
There are two components to the water rates: the usage charge and the monthly delivery charge. The
usage charge is the charge for the volume of water used. The monthly delivery charge is a fixed charge
based on the size ofthe meter. Residential meters are typically 5/8" to 1". Larger meters are primarily
for larger water demands, such as commercial buildings.
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Monthly Water Deliveiy Charge
Two Year Maximum Rate Increase
1/1/2014 1/1/2015
Current Proposed Proposed
Meter Size:
5/8" $ 21.38 $ 20.07 $ 21.08
3/4" $ 26.97 $ 27.02 $ 28.38
1" $ 38.52 $ 40.93 $ 42.98
1.5" $ 67.60 $ 75.70 S 79.49
2" S 102.27 S 117.43 $ 123.31
2.5" $ 147.80 $ 166.10 $ 174.41
3" $ 194.72 $ 214.78 $ 225.52
4" $ 298.75 $ 353.86 $ 371.56
6" $ 588.03 $ 701.56 $ 736.64
8" S 934.75 $ 1,118.80 $ 1,174.74
10" $ 1,339.61 $ 1,605.58 $ 1,685.86
Residential Water Rates
Residential rates are grouped into tiers, with the first tier having the lowest per unit rate and the second
and third tiers having incrementally higher rates. The tier rate that is charged depends on a customer's
actual water usage. Tier 1 is designed to meet water use essential for internal residential use. Tier 2 is
designed to meet exterior landscaping requirements for typical residential property. Tier 3 is designed to
recover costs associated with external irrigation consumption, as well as the increased cost to provide
the excess system capacity needed to meet peak demands.
Single-family residential
The proposed rate structure change adjusts the number of water consumption units associated with
each tier. These adjustments are more consistent with actual demand, ensure adequate cost recovery
for water services, and encourage water conservation.
Multi-family residential
No changes are being proposed to the tier cutoff points for multi-family residential customers; however
the volumetric rate will be adjusted to be more consistent with single-family residential customers. Due
to the consumption patterns and existing consumption tier cutoffs, multi-family residential customers
will continue to pay a lower average rate per unit.
Non-Residential Water Rates
Non-residential customers have different water usage needs than residential customers; therefore, the
usage charge is a flat per unit rate rather than a tiered rate. Examples of non-residential customers
include commercial, agricultural and irrigation. The recycled water rate will remain unchanged because
it is not dependent upon the purchase cost of water from the SDCWA. Recycled water cost is estimated
based on cost of treatment, and operation and maintenance costs ofthe distribution system.
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Water Usage Charge
Two Year Maximum Rate Increase
1 unit = 748 gallons
Current Tier Current
(S/unit)
Proposed
Tier
Proposed
1/1/2014
($/unit)
Proposed
1/1/2015
($/unit)
Single-Family Rates
Tier 1 (0-12 units) $ 3.20 Tier 1 (0-10 units) $ 3.19 $ 3.35
Tier 2 (13-20 units) $ 4.13 Tier 2 (11-18 units) $ 4.24 $ 4.45
Tier 3 (21+ units) $ 5.62 Tier 3 (19+ units) $ 6.11 $ 6.42
Multi-Familv Rates
Tier 1 (0-5 units) $ 2.71 Tier 1 (0-5 units) $ 3.19 $ 3.35
Tier 2 (6-10 units) $ 3.05 Tier 2 (6-10 units) $ 4.24 $ 4.45
Tier 3 (11+ units) $ 3.64 Tier 3 (11+ units) $ 6.11 $ 6.42
Non-Residential Rates
Commercial $ 3.70 N/A $ 3.85 $ 4.05
Agricultural Rates $ 3.70 N/A $ 3.95 $ 4.15
Irrigation Rate $ 4.15 N/A $ 4.22 $ 4.44
Recycled Water $ 3.53 N/A $ 3.53 $ 3.53
Sample rate changes
The table below demonstrates the impacts ofthe proposed rates for a single-family residence with a
5/8" meter. The first row shows the changes based on average demand, which is 13 units. The second
example is for 26 units, which reflects Tier 3 usage.
Current Water Rates Proposed Water Rates
No. of Delivery Usage Monthly Delivery
Units Charge Charge Bill Charge Charge Monthly Bill Changed
13 S 21.38 $ 42.53 $ 63.91 $ 20.07 $ 44.57 $ 64.64 1%
26 $ 21.38 S 105.16 $ 126.54 $ 20.07 $ 114.66 $ 134.73 6%
Wastewater rates
Residential customers pay a flat monthly charge for wastewater services, while most non-residential
customers pay a rate per unit of water used. The proposed wastewater rate increase is 2 percent for all
wastewater customers. The proposed rate increase will pay for costs associated with operations,
maintenance, and replacement of aging or failing infrastructure, as well as establishing and maintaining
an adequate operating reserve.
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Monthly Wastewater Rates
1/1/2014 1/1/2015
Current Proposed Proposed
Residential
Single Family $ 25.02 $ 25.52 $ 26.03
Multi-Family $ 2.88 $ 2.94 $ 3.00
Mobile Home $ 2.88 $ 2.94 $ 3.00
Commercial
Group II $ 2.35 $ 2.40 $ 2.44
Group III $ 3.56 $ 3.63 $ 3.70
Group IV $ 6.60 $ 6.73 $ 6.87
Group V -
Schools
Elementary $ 0.51 $ 0.52 $ 0.53
Junior High $ 0.75 $ 0.77 $ 0.78
High School $ 1.02 $ 1.04 $ 1.06
Boarding School $ 5.32 $ 5.43 $ 5.53
Group V - Other
Other $ 2.23 $ 2.27 $ 2.32
Group VI - Large Volume
Bio Hydration $ 2.03 $ 2.07 $ 2.11
Protesting the rates
As the property owner/rate payer, you have the right to protest the proposed increases. Only one
protest notice is allowed per parcel. If you choose to protest, you must submit a signed written protest
to the City Clerk on or before the close of the hearing. The written protest must contain your full name
and signature, the address ofthe service and the rate change being protested. If it is determined that a
majority of property owners have submitted a formal protest, the proposed fee change must be
rejected. The protester may appear at the hearing and be heard on the matter; however a written
protest is also required. Please send all protests to: Office of the City Clerk, City of Carlsbad, 1200
Carlsbad Village Drive, Carlsbad CA 92008.
More information
For more information about the public hearing process or the proposed changes, please call 760-602-
2420, or visit the city's website at www.carlsbadca.gov/finance
19
Set Public Hearing
For November 5, 2013
Water and Wastewater Rate Increases
City of Carlsbad/Carlsbad Municipal Water District
September 10, 2013
Cost of Service Study:
Potable Water and Recycled Water
•Consultant: Rafetelis Financial Consultants, Inc.
•Objectives:
–Respond to increase in water purchase costs from
SDCWA
–Update data on current customer water demands
–Maintain pricing signal to high water users
–Ensure sufficient funding for operations
–Comply with Proposition 218
Cost of Service Study:
Potable Water Findings
•Annual revenue increase of 5% for calendar years 2014 and 2015
•Rate structure revisions to mirror usage patterns
–Tier 1: 12 HCF/month to 10 HCF/month
–Tier 2: 20 HCF/month to 18 HCF/month
–Tier 3: 21+ HCF/month to 19+ HCF/month
•Multi-family rates altered to mirror single-family rates
•Reserve policy: maximum of 40% of operating budget
3
Cost of Service Study:
Potable Water Bill Comparison
4
Cost of Service Study:
Recycled Water Findings
•Annual volumetric rate increase of 0% for
calendar years 2014 and 2015
•Reserve policy: maximum of 40% of operating
budget
5
Wastewater Rates
•Annual rate increase of 2% for calendar years
2014 and 2015
6
Example of Monthly Bill Changes
(a) Average single-family house:
Potable Water: 5/8” meter using 13 units
Wastewater: Pay a flat monthly charge
(b) Industrial Park site with 2” meter using 350 units in July
7
Current Proposed
(1/1/2014)
Proposed
(1/1/2015)
Potable Water (a) $63.91 $64.64 $67.93
Wastewater (a) $25.02 $25.52 $26.03
Total $88.93 $90.16 $93.96
Recycled Water (b) $1,337.77 $1,352.93 $1,358.81
Calendar
•September 10, 2013: Set majority-protest public hearing for November 5, 2013
•September 19, 2013: Mail written public notice on or before this date to comply with Proposition 218 (45 day) noticing requirement
•November 5, 2013: Hold majority-protest public hearing, set rates, and approve new rate design
•January 1, 2014: Implement new rates
8
Water and Wastewater Rates
Questions?
9
Monthly Fixed “Delivery Charges”
10
Monthly Fixed Charge
Existing Proposed Proposed
Meter Service Service Charge Service Charge
Size Charge 1/1/2014 1/1/2015
5/8"21.38$ 20.07$ 21.08$
3/4"26.97$ 27.02$ 28.38$
1"38.52$ 40.93$ 42.98$
1-1/2"67.60$ 75.70$ 79.49$
2"102.27$ 117.43$ 123.31$
2-1/2"147.80$ 166.10$ 174.41$
3"194.72$ 214.78$ 225.52$
4"298.75$ 353.86$ 371.56$
6"588.03$ 701.56$ 736.64$
8"934.75$ 1,118.80$ 1,174.74$
10"1,339.61$ 1,605.58$ 1,685.86$
“Usage Charges”
11
Volumetric Charge (per HCF)
Proposed Proposed Proposed
Existing 1/1/2014 1/1/2015
Single Family
Tier (HCF)Tier (HCF)
12 3.20$ 10 3.19$ 3.35$
20 4.13$ 18 4.24$ 4.45$
21+5.62$ 19+6.11$ 6.42$
Multifamily
5 2.71$ 5 3.19$ 3.35$
10 3.05$ 10 4.24$ 4.45$
11+3.64$ 11+6.11$ 6.42$
Non-Residential 3.70$ 3.85$ 4.05$
Agricultural 3.70$ 3.95$ 4.15$
Irrigation 4.15$ 4.22$ 4.44$
Recycled 3.53$ 3.53$ 3.53$
Wastewater Charges
12
Monthly Wastewater Rates
1/1/2014 1/1/2015
Current Proposed Proposed
Residential
Single Family $25.02 $25.52 $26.03
Multi-Family $2.88 $2.94 $3.00
Mobile Home $2.88 $2.94 $3.00
Commercial
Group II $2.35 $2.40 $2.44
Group III $3.56 $3.63 $3.70
Group IV $6.60 $6.73 $6.87
Group V – Schools
Elementary $0.51 $0.52 $0.53
Junior High $0.75 $0.77 $0.78
High School $1.02 $1.04 $1.06
Boarding School $5.32 $5.43 $5.53
Group V – Other
Other $2.23 $2.27 $2.32
Group VI – Large Volume
Bio Hydration $2.03 $2.07 $2.11