HomeMy WebLinkAbout2013-11-05; City Council; 21413; Public Hearing Water Rate Structure and IncreasesA CITY OF CARLSBAD AND
CARLSBAD MUNICIPAL WATER DISTRICT - AGENDA BILL
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AB#
MTG.
DEPT.
21.413
11/05/2013
PW-UTIL
PUBLIC HEARING FOR POTABLE WATER,
RECYCLED WATER, AND WASTEWATER RATES:
NEW RATE STRUCTURE AND RATE INCREASES
DEPT. DIRECTOR
CITY ATTY.
CITY MGR.
1482 of the Board of Directors of the Carlsbad Municipal Water District,
RECOMMENDED ACTION:
Adopt Resolution No.
California, conducting a Majority-Protest Public Hearing to Approve a new Potable 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. 2013-257 of the City Council of the City of Carlsbad, California, conducting a
Majority-Protest Public Hearing to Approve 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) Service Area
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). 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 the current rate structure and rate increases for its potable water and
recycled water service. The adopted rate 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 increases 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 that CMWD paid to the San Diego County Water Authority (SDCWA).
Proposed Potable Water and Recycled Water Rate Structure
Raftelis 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 ofthe potable water system.
DEPARTMENT CONTACT: William Plummer, (760) 602-2768, bill.plummer^carlsbadca.gov
FOR CLERK USE.
COUNCIL ACTION: APPROVED CONTINUED TO DATE SPECIFIC •
DENIED CONTINUED TO DATE UNKNOWN •
CONTINUED • RETURNED TO STAFF •
WITHDRAWN • OTHER - SEE MINUTES •
AMENDED • REPORT RECEIVED •
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 for 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; therefore, the cost per unit is less than the rates in the higher tiers. The cost of service analysis also
resulted in a lower amount of peaking-related costs compared to the allocations that served as the basis for
the current rate structure. Non-residential 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.
Potable Water and Recycled Water Rates
For potable water, RFC recommends 5 percent annual revenue increases in calendar year 2014 and calendar
year 2015, both effective on January 1'^ of the 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. Refer to the Rate Study
(Exhibit 8) for a detailed explanation of all recommended changes.
City of Carlsbad Wastewater Rates
The City of Carlsbad's wastewater service area is shown on Exhibit 4. The wastewater rate structure itself has
not changed. The proposed wastewater rates will increase by a maximum of 2 percent because of inflationary
costs associated with operation and maintenance of the collection system and treatment and to maintain
adequate reserves. The proposed single family monthly flat rate beginning January 1, 2014 is $25.52, an
increase of $0.50, or approximately 2 percent over the current rate. A summary of the recommended changes
per customer class is shown on Exhibit 6, and is calculated as follows:
• Single-family residential - Flat monthly charge
• Multi-family - Based on 100% of water usage
• Commercial - Based on 100% of water usage
• Schools - Based on number of students
• Large Volume - Based on 100% of water usage
Public Notice Requirement
The California Constitution, Article XIIID, Section 6, states that local governments must hold a Majority-Protest
public hearing, and notify property owners and customers forty-five (45) days in advance of public hearings
related to proposed water, recycled water, and wastewater rates. The public hearing is to be held forty-five
(45) days after noticing the ratepayers.
At the public hearing, if it is determined that a majority of property owners has submitted a formal protest, the
proposed fee change must be rejected. This is a requirement of Proposition 218, which was passed by
California voters in 1996 to limit methods by which local governments can create or increase taxes, fees and
charges without taxpayer consent. 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 and be received prior to the close ofthe public hearing. While protestors may appear at the hearing
and be heard on the matter, only written protests are considered as part ofthe majority protest.
Staff took the following actions at least forty-five (45) days prior to this public hearing:
• Affected utility customers and property owners were notified by mail of the public hearing.
• The notice (see Exhibit 7) outlined the proposed rate changes.
• The notice provided information relating to the public hearing.
• In addition, information about the Majority-Protest public hearing and proposed rates was posted on
the City's website at www.carlsbadca.gov.
Protest Letters Received
As of October 18, 2013 there were 19 protest letters were received. The protest letters are attached as Exhibit
9. Any protest letters received prior to the close ofthe Majority-Protest public hearing will be forwarded to the
Board of Directors and City Council. If there is no majority protest, staff is recommending that the Board of
Directors and City Council, after hearing public comment, adopt the proposed rate increases.
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) ofthe 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 CEQA 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 rate increases, if approved, will be effective January 1, 2014 and January 1, 2015, and will
provide adequate funding to properly operate and maintain Carlsbad's water, recycled water, and wastewater
systems and provide adequate operational reserves.
EXHIBITS;
1. Resolution No. 1482 of the Board of Directors of the Carlsbad Municipal Water District,
California, conducting a Majority-Protest public hearing to approve a new potable 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.
2. Resolution No. 2013-257 of the City Council of the City of Carlsbad, California, conducting a
Majority-Protest public hearing to approve an increase to the 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. Potable Water and Recycled Water Rate increases.
6. Wastewater (Sewer) Rate Increases.
7. Notice of Public Hearing.
8. 2013 Carlsbad Municipal Water District Potable Water and Recycled Water Rate Study.
9. Protest Letters Received.
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RESOLUTION NO. 1482
A RESOLUTION OF THE BOARD OF THE CARLSBAD MUNICIPAL WATER
DISTRICT, CALIFORNIA, CONDUCTING A MAJORITY-PROTEST PUBLIC
HEARING TO APPROVE A NEW POTABLE 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.
WHEREAS, it is in the best interest of CMWD and its customers to implement a new rate
structure beginning January 1, 2014; and
WHEREAS, the Carlsbad Municipal Water District is proposing water and recycled water rate
increases in January 2014 and January 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 California Constitution Article XIII D § 6(A)(2) states that local governments must
hold a majority-protest public hearing, and notify customers not less than forty-five (45) days in advance of
increases in water rates; and
WHEREAS, in September 2013, Carlsbad residents and property owners were notified by mail of
the proposed rate increases (Exhibit 7), thereby complying with the advance notice requirement of forty-
five (45) days; and
WHEREAS, the Board of Directors of the Carlsbad Municipal Water District approves the new
water and recycled water rate structure presented in the 2013 Rate Study (Exhibit 8) and also the rate
increases as set forth in Exhibit 5; 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) of the California Environmental Quality Act (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;
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(2) purchasing or leasing supplies, equipment, or materials; and (3) meeting financial reserve
needs and requirements; and
WHEREAS, a copy of this CEQA exemption shall be retained in the CMWD file and files with the
county clerk to serve as verification of this evaluation and as the CEQA environmental determination
record.
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 imposes the new rate
structure described in Exhibit 8 and the rates as set forth in Exhibit 5, as well as future rate
adjustments for the pass-through of wholesale water and inflationary costs. These rates shall be
effective as of January 1, 2014 and January 1, 2015.
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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 on the 5*^ day of November,
2013, by the following vote to wit:
AYES: Board Members Hall, Packard, Wood, Blackburn and Douglas.
NOES: None.
ABSENT: None.
-nAj{r./J-A/„A^A^
MATT HALL, President
ATTEST:
BARBARA ENGLESON, Secs^tary
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RESOLUTION NO. 2013-257
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIFORNIA, CONDUCTING A MAJORITY-PROTEST PUBLIC HEARING TO
APPROVE AN INCREASE TO THE WASTEWATER 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 City of Carlsbad (city) is proposing wastewater (sewer) rate increases in January
2014 and January 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 wastewater (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 California Constitution Article XIII D § 6(A)(2) states that local governments must
hold a majority-protest public hearing, and notify customers not less than forty-five (45) days in advance of
increases in wastewater rates; and
WHEREAS, in September 2013, Carlsbad residents and property owners were notified by mail of
the proposed rate increase (Exhibit 7), thereby complying with the advance notice requirement of forty-five
(45) days; and
WHEREAS, the City Council of the City of Carlsbad approves the wastewater rate increases as set
forth in Exhibit 6; and
WHEREAS, the city determines increases to the wastewater (sewer) rates are in accordance with
the findings required by Section 15273(c) of the 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 CEQA exemption shall be retained in the city file and files with the
county clerk to serve as verification of this evaluation and as the CEQA environmental determination
record.
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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.
2. That the City Council of the City of Carlsbad approves the increases in wastewater (sewer) rates
as well as future rate adjustments for inflationary costs, effective January 1, 2014, and January
1, 2015 as set forth in Exhibit 6.
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PASSED, APPROVED AND ADOPTED at a Joint Special Meeting of the Carlsbad City
Council and the Carlsbad Municipal Water District Board of Directors on the 5*^ day of
November, 2013, by the following vote to wit:
AYES: Council Members Hall, Packard, Wood, Blackburn and Douglas.
NOES: None.
ABSENT: None.
4^ MATT HALL, Mayor
ATTEST:
BARBARA ENGLESON, Wf Clerk
CARLSBAD MUmClPAL miER DISTRICT BOUNDARY
WOT TO SCALE
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C/WtVD BOUNDARY f?D
EXHIBIT 3
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CITY OF CARLSBAD WASTEWATER BOUNDARY
P/iOFIC
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C/rr OF CARLSBAD WASTEWATER BOUNDARY
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EXHIBIT 4
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EXHIBIT 5
Water Rates
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 $1,685.86
Customer
Class
Volumetric "Usage Charge"
Existing Tier Existing
Proposed
Tier
Proposed
1/1/2014
Proposed
1/1/2015
($ per HCF)
Single Familv
Residential
Oto 12 $3.20 Oto 10 $3.19 $3.35
13 to 20 $4.13 11 to 18 $4.24 $4.45
21+ $5.62 19+ $6.11 $6.42
Multi-Familv
Residential
Oto 5 $2.71 Oto 5 $3.19 $3.35
6 to 10 $3.05 6 to 10 $4.24 $4.45
11+ $3.64 11+ $6.11 $6.42
Non-Residential (2)
Commercial NA $3.70 NA $3.85 $4.05
Agricultural NA $3.70 NA $3.95 $4.15
Irrigation NA $4.15 NA $4.22 $4.44
Recycled NA $3.53 NA $3.53 $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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EXHIBITS
Wastewater (SEWER) Rates
Discharger Current
Rate
Proposed
1/1/2014
Proposed
1/1/2015
Residential
Group 1 - Single Family (Flat Monthly Charge) $ 25.02 $ 25.52 $ 26.03
Group 1 - Multi-Family (100% of monthly water usage per ccf) $ 2.88 $ 2.94 $ 3.00
Group 1 - Mobile Home (100% of monthly water usage per ccf) $ 2.88 $ 2.94 $ 3.00
Commercial
Group II (100% of monthly metered water usage per ccf) $ 2.35 $ 2.40 $ 2.44
Group III (100% of monthly metered water usage per ccf) $ 3.56 $ 3.63 $ 3.70
Group IV (100% of monthly metered water usage per ccf) $ 6.60 $ 6.73 $ 6.87
Institutional
Group V - Elementary School (per student) $ 0.51 $ 0.52 $ 0.53
Group V - Junior High School (per student) $ 0.75 $ 0.77 $ 0.78
Group V - High School (per student) $ 1.02 $ 1.04 $ 1.06
Group V - Boarding School (per student) $ 5.32 $ 5.43 $ 5.53
Group V - Other Institutional (per ccf of water usage) $ 2.23 $ 2.27 $ 2.32
Large Volume
$ $ Group VI - (100% of monthly metered water usage per ccf) $ 2.03 $ 2.07 $ 2.11
1) ccf = one hundred cubic feet
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NOTICE OF PUBUC HEARING EXHIBIT?
Sample rate changes
Ths table bsiow dtsmonstratesthe effects ofthe
proposed rat«sfor a singis-family rssidsncs with a
5/S" mster The first row shows ths changes based
on average demand, whicii is IS units per month.
The second example is for 26 units per month.
Current Water Rates
No. of Delivery Usage Monthly
Units Charge Charge Bill
13 $21.38 $42. S3 $63,91
26 $21.38 $105.16 $126,54
Proposed Water Rates
Delivery Usage Monthly Percent
Charge Charge Bill Changed
$20.07 $44 62 $64.69 1%
$20.07 $114.70 $134,77
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 resen/e.
Wastewater rates
Residential customers pay a flat monthly charge
for wastevyater services, while most non-
residential customers pay a rate per unit of water
used. The proposed wastewater rate imxease
is 2 psercent for all vvastewater customers.
The proposed rate inaease wiil payfor costs
associated with operations, maintenance,, and
replacement of aging or failing infrastrudure^ as
wei! as establishing and maintaining an adequate
operating reserve.
Monthly Wastewater Rates
1/1/2014 1/1/2015
Current Proposed Proposed
Residential
Single Family $2S.02 $25,52 $26.03
Multi-Farnily $2.88 $2,94 $3.00
Mobile Home $2.88 $2,94 $3.00
Commercial
Croup II $2,3S $2.40 $2,44
Croup III $3,56 $3,63 $3,70
Group IV $6.60 $6,73 $6.87
Croup V - Schools
Elementary $0.51 $0.,52 $0.53
junior Hkih $0,75 $0.77 $0,78
High School $1.02 $1.04 $1,06
Boarding $5.32 $5.43 $5,53
Sch ool
Croup V - Other
Other I $2,35 | $2.40 | $2,44
Croup VI -Uige Volume
Bio Hyd ration I $2,03 I $2,07 $2.11
Protesting the rates
As the property ovwer/rate payeo you hs'^e the
right to protest the proposed increases. Only
one proterrt notice is allowed per parcel, if you
choose to protest, you must submit a signed
written protest to the City Cieri< on or before
the close ofthe hearing. The witten protest
must contain your full name and signature,
the address ofthe ser\nce and the rate change
being protested. If it is determined that a
majorit"/ of property ovmers have submitted a
formal protest, the proposed fee <±iange must
be rejected. The protester may appear at the
hearing and be heard on the matter however
a v^ritten protest is also required. Please
send aii protests to; Office of the Cit>' Clerk,
City of Carisbad, 1200 Carlsbad Village Dnve,
Carlsbad CA92008,
More information
For more information about the public hearing
process or the proposed changes, please call
760-^2-2420, or visit the city's website at
www.carlsbadca.gov/ finance.
CITV OF
CARLSBAD
wwvv .ca rl sbad ca, g ov
Notice of Majority Protest Public Hearing on
Proposed Water Rate Structwe and Maximum
Water & Wastewater Rate Increases
Tuesday, Nov. 5, 2D13
6 p.m.
City 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 ser/ices,
for more information about the public
hearing process or the proposed
changes, please call 760-602-2420,
or vi si t th e ci t/s websi te a t
^vww.carl sbadca.gov/flnance
CITY OF
CARLSBAD
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NOTICE OF PUBLIC HEARING EXHIBIT 7
Proposed changes to water
and wastewater rates
The Carlsbad Municipal Water District, a
subsidiary district of the City of Carisbad,
purchases TOO percent of its drinking
water from the San Diego County
Water Authority. 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.
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 )an. 1,
2014, and the second year will be effective on
Jan. 1, 2015.
The proposed rates wiil enable the city to
continue to provide quality services in a fiscally
responsible manner by funding ongoing
operations, maintenance, and replacement
of the water system, as well as maintaining
adequate operating reserves.
How your water rate is calculated
To accommodate the anticipated increases
in cost for purchasing imported water, the
proposed rate changes will increase Carlsbad
Municipal Water District revenues by 5 percent
overall. Rates are allocated to each customer
class based on its proportionate use of the
water system.
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 of the
meter. Residential meters are typically 5/8" to
1". Larger meters are primarily for larger water
demands, such as commercial buildings.
Monthly Water Delivery 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
314' $26.97 $27.02 $28.38
$38.52 $40,93 $42.98
1.5" $67.60 $75.70 $79.49
2" $102,27 $117.43 $123.31
2.5" Jl 47.80 $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
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 propetty.
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 miore
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 wil! continue
to see a lower average bill per dwelling 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 on the purchase cost of water
from the San Diego County Water Authority.
Recycled water cost is estimated baasd on cost
of treatment, and operation and maintenance
costs of the distribution system.
Water Usage Charge « Two Year Maximum Rate Increase • 1 unit = 748 gallons
Current Tier Current Proposed Proposed Proposed
(S/unit) Tier 1/1/2014 1/1/2015 (S/unit)
($/unit) (S/unit)
Single-Family Rates
Tier 1 (0-12 units) $3.20 Tierl (0-10unit-s) $3.19 $3.35
Tier 2 (1 3-20 units) $4.13 Tier 2 (11-18 units) $4.24 $4,45
Tier 3 (21-1- units) $5.62 Tier 3 (19+ units) $6.11 $6.42
Multi-Family 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 Rales $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
16
EXHIBITS
2013
CARLSBAD MUNICIPAL WATER DISTRICT
POTABLE WATER AND RECYCLED WATER
RATE STUDY
RAFTELIS
FINANCIAL CONSULTANTS, INC,
Cityof Carlsbad
\1
201S. Lake Avenue Phone 626 . 583 .1894 www.raftelis.com
Suite 301 Fax 626.583.1411
Pasadena, CA 91101
RAFTELIS
FINANCIAL CONSULTANTS, INC.
August 12,2013
Ms. Wendy Chambers
Assistant Utilities Director
Carlsbad Municipal Water District
5950 El Camino Real
Carlsbad, CA 92008
Subject: Potable Water and Recycled Water Rate Study Report
Dear Ms. Chambers,
Raftelis Financial Consultants (RFC), Inc. is pleased to provide this Potable Water and Recycled Water Rate Study
Report (Report) to the Carlsbad Municipal Water District (District). This Report summarizes the process through
which we conducted a long-term financial planning and cost of service rate study. The implementation of the
recommendations of this report will enhance equity to the District's customers and meet the District's pricing
objectives.
It has been a pleasure working with you, and we wish to express our thanks to you and the rest of District staff for
the support provided throughout the course of this study.
Sincerely,
Raftelis Financial Consultants, Inc.
^ ^A^y^--:Ai^
Sudhir Pardiwala
Vice-President
Contents
1 Executive Summarv
1.1 Revenue Requirements 21
1.2 Cost of Service Allocations
1.3 Rate Design
1.4 Customer Impacts
1.5 Comparison of Bills with Surrounding ARencies 26
2 Introduction ^°
2.1 Proiect Overview 28
2.2 Current Environment 28
2.3 Pricing Obiectives 28
2.4 Study Scope
3 Svstem and Rate Structures ^2
3.1 Water Sources ^2
3.2 Water Customer and Consumption Characteristics 32
3.3 Existing Water Rate Structure
3.4 Potable Water Rate Revenue Composition 35
3^ Growth
4 Revenue Requirements
4.1 Potable Water Proiected Requirements 37
4.2 Potable Water Operating and Capital Expenses 37
A3 Potable Water Debt 38
4.4 Proiected Revenue Increases 38
4.5 Potable Water Operating Cash Flow 38
4.6 Potable Water Reserves 39
4.6.1 Potable Water Operating Reserve 39
4.7 Recycled Water Proiected Revenue Reouirements 40
4.8 Recycled Water Operating and Capital Expenses 41
4.9 Recycled Water Debt Loans 43
4.10 Recycled Water Reserves 43
4.10.1 Recycled Water Operating Reserve 43
5 Rate Design and Cost of Service (COS) Analysis 45
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5.1 Overview of Rate Setting 45
5.2 Cost of Service Analysis 45
5.3 Unit Costs of Service 49
5.4 Existing Rate Structure Analysis 56
6 Proposed Water Rate Structure and Rates 57
6.1 Fixed Monthly Charges 57
6.2 Single Family Residential (SFR) Potable Water Commodity Rates 57
63 Multi Family Residential (MFR) Potable Water Commodity Rates 57
6.4 Non-Residential Potable Water Commodity Rates 58
6.5 Agricultural Potable Water Commodity Rates 58
6.6 Irrigation Potable Water Commodity Rates 58
6.7 Recycled Water Rates 58
6.8 Customer Rate Impacts 59
7 Comparison of Bills with Surrounding Agencies ^3
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Executive Summary
Carlsbad Municipal Water District (District) engaged Raftelis Financial Consultants, Inc. (RFC) to conduct a
comprehensive potable water and recycled water rate study that included a review of revenue requirements, user
classifications, and costs of services. RFC developed a rate and financial planning model that would be used to
evaluate alternative rate structures and to provide more detailed forecasts to assist in planning and updating rates
in future years. This report documents the results ofthe study and suggests changes to cost allocations and the
potable and recycled water rate structures that will
The specific objectives of this study include the development of a financial plan and rate structure that:
• Promotes Financial Sufficiency;
• Promotes Revenue Stability;
• Promotes Rate Stability;
• Is Based on Cost of Service Based Allocations; and
• Is Legally Defensible.
The following sections briefly describe our findings and recommendations resulting from this study.
Revenue Requirements
Forecasts show that the District's total revenue requirement from rates for FY 2014 is approximately $35.6 million
for the potable water system and approximately $6.9 million for the recycled water system. The Capital
Improvement Program (CIP) will be financed through cash for the water system and a Clean Water State Revolving
Fund (CWSRF) loan for the proposed Phase III on the recycled water system. In order to meet all potable water
operating and capital revenue requirements, including the funding of reserves, RFC recommends 5% annual
revenue increases in FY 2014 and FY 2015, both effective on January ofthe respective years. The primary reason
for the potable water rate increase is the increase in purchased water costs from the San Diego County Water
Authority (SDCWA). It should be noted that 5% is the overall level of revenue increase recommended. Under the
proposed rate structures, customers are affected differently. For example, some customers may see bill decreases
while others may experience bill increases higher than 5%.
At this time, RFC does not anticipate the need for revenue increases for the recycled water system. However, this
assessment is based on forecasted growth in customers that will help the utility meet future revenue requirements.
If this expansion in customers does not occur, rate increases may be needed.
Cost of Service Allocations
The cost of service allocations, for the potable water system, conducted in this study are based on the Base-Extra
Capacity method endorsed by the American Water Works Association (AWWA), a nationally recognized industry
group. Under the Base-Extra Capacity method, revenue requirements are allocated to the different user classes
proportionate to their use of the potable water system. Allocations are based on average day (base), maximum day
peak (Max Day) usage, maximum hour peak (Max Hour) usage, meters and services, and billing and customer
service. Our analysis revealed that revisions to the Single Family Residential (SFR) and Multifamily Residential (MFR)
rate structures will enhance equity and meet the District objectives. Non-residential customer classes would retain
the uniform volumetric rate structure, but there are adjustments to the rates recommended based on our analysis
of customer peaking activity.
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Rate Design
The monthly fixed meter charges are comprised of two components: a meter charge that varies by meter size and a
customer service portion that does not vary by meter size. Our analysis of the costs to be recovered from the
existing monthly fixed charge resulted in changes to these rates. RFC also recommends changes to the tiers in the
SFR customer class rate structure. The proposed rate structure enhances equity by more accurately reflecting a
first-tier breakpoint that is related to internal water consumption. There are lower peaks associated with this
demand and therefore are typically charged less than the rates in the higher tiers. Our cost of service analysis also
resulted in a lower amount of peaking-related costs compared to the allocations that served as the basis for the
current rate structure. This had the effect of increases to the rates the MFR customer class pays. Changes to the
non-residential customer classes results from our analysis of demand peaking associated with each customer class.
Table 1-1 outlines the existing rates and the proposed rates.
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TABLE 1-1
CURRENT AND PROPOSED RATES
Monthly Fixed Charge
Existing Proposed
Meter Service Service Charge
Size Charge 1/1/2014
Proposed
Service Charge
1/1/2015
5/8"
3/4"
1"
1- 1/2"
2"
2- 1/2"
3"
4"
6"
8"
10"
$
$
$
$
$
$
$
$
$
$
21.38
26.97
38.52
67.60
102.27
147.80
194.72
298.75
588.03
934.75
$1,339.61
$
$
$
$
$
$
$
$
$
$
$
20.07
27.02
40.93
75.70
117.43
166.10
214.78
353.86
701.56
1,118.80
1,605.58
21.08
28.38
42.98
79.49
123.31
174.41
225.52
371.56
736.64
1,174.74
1,685.86
Volumetric Charge (per HCF)
Single Family
Tier (HCF)
12
20
21+
Existing
3.20
4.13
5.62
Proposed
Tier (HCF)
10
18
19+
Proposed Proposed
1/1/2014 1/1/2015
3.19
4.24
6.11
3.35
4.45
6.42
Multifamily
5 $ 2.71
10 $ 3.05
11+ $ 3.64
Non-Residential $ 3.70
Agricultural $ 3.70
Irrigation $ 4.15
Recycled $ 3.53
5
10
11+
3.19
4.24
6.11
3.85
3.95
4.22
3.53
3.35
4.45
6.42
4.05
4.15
4.44
3.53
Customer Impacts
The following tables display the customer billing impacts under the proposed rate structure as compared to the
existing rate structure. As the proposed rate structure makes changes to the cost of service allocations, some
Raftelis Financial Consultants, Inc. Page 23
customers will see increases in bills while others will see decreases. Recycled water customers will not see an
increase in their volumetric charges, but will see an increase in their fixed monthly charges.
TABLE 1-2
FY 2014 MONTHLY SFR RATE IMPACT 5/8" METER
Total Bill Existing Existing Existing Proposed Proposed Proposed
Usage Monthly Fixed Variable Monthly Monthly Fixed Variable Monthly $ %
(HCF) Charge ($) Charge ($) Bill ($) Charge ($) Charge ($) Bill($) Change Change
2 21.38 6.40 27.78 20.07 6.37 26.44 -1.34 -5%
4 21.38 12.80 34.18 20.07 12.75 32.82 -1.36 -4%
6 21.38 19.20 40.58 20.07 19.12 39.19 -1.39 -3%
10 21.38 32.00 53.38 20.07 31.87 51.94 -1.44 -3%
12 21.38 38.40 59.78 20.07 40.34 60.41 0.63 1%
1 13 21.38 42.53 63.91 20.07 44.57 64.64 0.73 1%
18 21.38 63.18 84.56 20.07 65.76 85.83 1.27 1%
20 21.38 71.44 92.82 20.07 77.98 98.05 5.23 6%
26 21.38 105.16 126.54 20.07 114.66 134.73 8.19 6%
34 21.38 150.12 171.50 20.07 163.56 183.63 12.13 7%
40 21.38 183.84 205.22 20.07 200.24 220.31 15.09 7%
13 units = SFR Average
TABLE 1-3
FY 2014 MONTHLY MFR RATE IMPACT - 3/4" METER (4 UNIT BUILDING)
Total DU Existing Existing Existing Proposed Proposed Proposed
Usage Monthly Fixed Variable Monthly Monthly Fixed Variable Monthly $ %
(HCF) Charge ($) Charge ($) Bill ($) Charge ($) Charge ($) Bill($) Change Change
2 26.97 21.68 48.65 27.02 25.49 52.51 3.86 8%
5 26.97 54.20 81.17 27.02 63.73 90.75 9.58 12%
1 6 26.97 66.40 93.37 27.02 80.68 107.70 14.33 15%
8 26.97 90.80 117.77 27.02 114.57 141.59 23.82 20%
10 26.97 115.20 142.17 27.02 148.46 175.48 33.31 23%
14 26.97 173.44 200.41 27.02 246.27 273.29 72.88 36%
20 26.97 260.80 287.77 27.02 392.98 420.00 132.23 46%
26 26.97 348.16 375.13 27.02 539.69 566.71 191.58 51%
34 26.97 464.64 491.61 27.02 735.30 762.32 270.71 55%
40 26.97 552.00 578.97 27.02 882.01 909.03 330.06 57%
6 units = MFR per dwelling unit average
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TABLE 1-4
FY 2014 MONTHLY NON-RESIDENTIAL RATE IMPACT - 2" METER
Total Bill Existing Existing Existing Proposed Proposed Proposed
Usage Monthly Fixed Variable Monthly Monthly Fixed Variable Monthly $ %
(HCF) Charge ($) Charge ($) Bill ($) Charge ($) Charge ($) Bill($) Change Change
60 102.27 222.00 324.27 117.43 231.00 348.43 24.16 7%
80 102.27 296.00 398.27 117.43 308.00 425.43 27.16 7%
100 102.27 370.00 472.27 117.43 385.00 502.43 30.16 6%
120 102.27 444.00 546.27 117.43 462.00 579.43 33.16 6%
140 102.27 518.00 620.27 117.43 539.00 656.43 36.16 6%
160 102.27 592.00 694.27 117.43 616.00 733.43 39.16 6%
180 102.27 666.00 768.27 117.43 693.00 810.43 42.16 5%
200 102.27 740.00 842.27 117.43 770.00 887.43 45.16 5%
220 102.27 814.00 916.27 117.43 847.00 964.43 48.16 5%
TABLE 1-5
FY 2014 MONTHLY AGRICULTURAL RATE IMPACT 2" METER
Total Bill Existing Existing Existing Proposed Proposed Proposed
Usage Monthly Fixed Variable Monthly Monthly Fixed Variable Monthly $ %
(HCF) Charge ($) Charge ($) Bill($) Charge ($) Charge ($) Bill($) Change Change
60 102.27 222.00 324.27 117.43 237.00 354.43 30.16 9%
80 102.27 296.00 398.27 117.43 316.00 433.43 35.16 9%
100 102.27 370.00 472.27 117.43 395.00 512.43 40.16 9%
120 102.27 444.00 546.27 117.43 474.00 591.43 45.16 8%
140 102.27 518.00 620.27 117.43 553.00 670.43 50.16 8%
160 102.27 592.00 694.27 117.43 632.00 749.43 55.16 8%
180 102.27 666.00 768.27 117.43 711.00 828.43 60.16 8%
200 102.27 740.00 842.27 117.43 790.00 907.43 65.16 8%
220 102.27 814.00 916.27 117.43 869.00 986.43 70.16 8%
240 102.27 888.00 990.27 117.43 948.00 1,065.43 75.16 8%
TABLE 1-6
FY 2014 MONTHLY IRRIGATION RATE IMPACT - 2" METER
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Total Bill Existing Existing Existing Proposed Proposed Proposed
Usage Monthly Fixed Variable Monthly Monthly Fixed Variable Monthly $ %
(HCF) Charge ($) Charge ($) Bill($) Charge ($) Charge ($) Bill ($) Change Change
60 102.27 249.00 351.27 117.43 253.20 370.63 19.36 6%
80 102.27 332.00 434.27 117.43 337.60 455.03 20.76 5%
100 102.27 415.00 517.27 117.43 422.00 539.43 22.16 4%
120 102.27 498.00 600.27 117.43 506.40 623.83 23.56 4%
140 102.27 581.00 683.27 117.43 590.80 708.23 24.96 4%
160 102.27 664.00 766.27 117.43 675.20 792.63 26.36 3%
180 102.27 747.00 849.27 117.43 759.60 877.03 27.76 3%
200 102.27 830.00 932.27 117.43 844.00 961.43 29.16 3%
220 102.27 913.00 1,015.27 117.43 928.40 1,045.83 30.56 3%
240 102.27 996.00 1,098.27 117.43 1,012.80 1,130.23 31.96 3%
Comparison of Bills with Surrounding Agencies
Figures 1-1 displays a bill comparison of the District and nearby agencies that was provided by the District. The
chart compares the bills for a customer with a %" meter that uses 14 hef per month. As displayed, even with the
forecasts revenue increases, the District's bills are toward the low end ofthe regional sample.
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$120
$100
$80
$60
$40
$20
$-
FIGURE 1-1
BILL COMPARISON %" METER AND 14 HCF PER BILL
SURVEYOR MEMBERAGENCYWATERRATES
14 Unit Water Use and 3/4" Residential Meter
Water bill effective February 2014
Data provided by the District.
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Introduction
Project Overview
The Carlsbad Municipal Water District (District) engaged Raftelis Financial Consulting, Inc. (RFC) to perform a
potable and recycled water rate study. The key deliverables ofthe study were a financial plan and rate structures
that would ensure the financial stability of the District and allow for recovery of revenue requirements based on
cost of service principles. The District last completed a cost of service rate study in 2009 and most recently
increased rates effective on January 1, 2013. The proposed rates will be effective January 1st of 2014 and 2015.
Current Environment
The District serves approximately 28,000 potable and recycled water customers in its service area in northern San
Diego County. The District purchases 100% of its treated potable water from SDCWA. Beginning in January 2016,
the District will begin purchasing desalinated seawater to supplement its purchases from SDCWA. Recycled water is
purchased from three sources, including Leucadia Wastewater District (Leucadia), Vallecitos Water District
(Vallecitos), and produced internally at the District's Carlsbad Water Recycling Facility (CWRF). As with most utilities
in the region, the District is facing supply constraints and reduced water sales. The District service area is
experiencing slow growth in potable accounts and usage of approximately 0.5% per year.
Pricing Objectives
At the beginning of the study, RFC conducted a pricing objectives workshop. The goal of the workshop was to
prioritize the District's rate-making objectives. Often, pricing objectives can conflict with each other. Therefore, it is
beneficial to have a formal ranking of objectives that can guide the rate-setting process and resolve conflicts should
they occur.
Participants ofthe workshop were asked to prioritize the District's pricing objectives based on a weighted score as
either "Most Important = 4," "Very Important = 3," "Important = 2," or "Least Important = 1." These data were
compiled to serve as the basis for evaluating the alternative potable water rate structures that will represent the
framework for the proposed rates resulting from this study. Table 2-1 presents the rate criteria matrix based on
the results ofthe rankings provided by representatives ofthe District.
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TABLE 2-1
PRICING OBJECTIVES RANKINGS
Financial Sufficiency 20 Primary Pricing Objectives
Revenue Stability 19
Primary Pricing Objectives
Rate Stability 16
Secondary Pricing Objectives
Cost of Service Based Allocations 15
Secondary Pricing Objectives Defensibility 15 Secondary Pricing Objectives
Simple to Understand and Update 14
Secondary Pricing Objectives
Minimization of Customer Impacts 13
Secondary Pricing Objectives
Ease of Implementation 11 Tertiary Pricing Objectives
Conservation 9
Tertiary Pricing Objectives
Affordability to Disadvantaged Customers 6
Least Important Equitable Contributions from New Customers 5 Least Important
Economic Development 5
Least Important
RFC then graded the District's current rate structure and three other potential rate structures for SFR and MFR
customers on how they meet the meet the pricing objectives.
1. Current Rates - This option would keep the current rate structure unchanged at three tiers and at the
current tier cutoffs.
2. Modified Tiers - This option would keep the three-tier rate structure for residential customers, but
potentially make changes to the tier cutoffs.
3. Added Tier - This option would add a fourth tier to the residential customer class rate structures.
4. Hybrid - This option would make changes to the tiers and also add a fourth tier to the residential customers.
Table 2-2 outlines the results of our grading.
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TABLE 2-2
RATE STRUCTURE GRADING RESULTS
Current Modified
Structure Tiers Added Tier Hybrid
Financial Sufficiency 10 10 10 10
Revenue Stability 10 9 9 9
Rate Stability 10 9 8 9
Cost of Service Based Allocations 8 10 9 9
Defensibility 8 10 8 9
Simple to Understand and Update 10 9 8 8
Minimization of Customer Impacts 10 8 7 7
Ease of Implementation 10 9 9 9
Conservation 8 9 10 10
Affordability to Disadvantaged Customers 8 9 9 10
Equitable Contributions from New Customers N/A N/A N/A N/A
Economic Development N/A N/A N/A N/A Economic Development
Score: 262.00 259.00 1 243.00 1 250.00
As shown, the first two options scored the highest. These scores guide the rate-setting process by identifying the
current rate structure and the one with modified tiers as the preferred options for the District.
Study Scope
The scope ofthis study results in the development of cost-based water rates through a comprehensive cost of
service and rate design study process. Figure 2-1 provides a graphical representation ofthe various steps involved
in the comprehensive cost of service and rate design process.
• Financial Planning: Revenue requirements are projected for fiscal year (FY) 2014. Financial planning
involves estimation of annual Operating and Maintenance (O&M) and capital expenditures, reserve targets,
operating and capital revenue sources and the determination of required annual user revenues from rates
and charges.
• Cost of Service Analysis: Cost of service analysis involves identifying and apportioning annual revenue
requirements to the different potable water user classes proportionate to their demand on the water
system.
• Potable Water Rate Design: Rate design involves the development of a fixed and variable schedule of rates
for different user classes to proportionately recover the costs attributable to them. Policy objectives, such
as encouraging conservation, are considered at this stage.
FIGURE 2-1
COST OF SERVICE/RATE DESIGN PROCESS
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FINANCIAL
PLANNING
Step 1
Review Revenue
Requirements and
Determine Revenues
Required from Rates
Define User Classes
and Estimate User
Class Accounts and
Usage by Class
Bill Tabulation/
Usage Analysis
Step
COST OF «,p^
SERVICE
Step
RATE
DESIGN
Step^jl Design Rate Structure
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System and Rate Structures
This section ofthe report presents a brief overview ofthe potable and recycled water sources, existing rates, and
user/usage characteristics.
Water Sources
The District's customers include residential, commercial, industrial, agricultural, irrigation, and recycled customers.
The District is expected to purchase approximately 16,300 acre-feet (AF) of potable water from SDCWA in FY 2014
to serve its potable customers. As the District relies on SDCWA for 100% of its potable water purchases, it is
especially sensitive to regional supply conditions that impact SDCWA. During periods of drought or other supply-
related cutbacks, the District's supply could potentially be negatively impacted. In an effort to diversify its supply,
the District will begin purchasing desalinated seawater in FY 2016 from the SDCWA to supplement water purchased
from SDCWA.
Recycled water is supplied from three sources. In FY 2014, 200 AF is forecasted to be purchased from Leucadia,
3,000 AF from Vallecitos, and 1,070 AF from CWRF. Future growth in demand is expected to be met by supplies
from CWRF.
Water Customer and Consumption Characteristics
The vast majority of District customer accounts are residential customers. Table 3-1 displays the number of
accounts by customer class and meter size as of FY 2012.
TABLE 3-1
FY 2012 WATER CUSTOMER ACCOUNTS
Meter Size Single Family Multifamily Non-Residential Agricultural Irrigation Recycled
5/8" 21,248 251 311 1 59 1
3/4" 1,423 102 153 2 46 12
1" 756 159 282 2 184 160
1-1/2" 26 187 314 3 222 247
2" 8 313 571 13 357 258
2-1/2" --1 ---
3" -7 60 6 1 8
4" -2 3 8 4 6
6" -2 1 -4 2
8" --2 -1 1
10" --
Total 23,461 1,023 1,698 35 878 695
Figure 3-2 displays water consumption in hundred cubic feet (HCF) by customer class. As shown, the majority
(approximately 52%) of potable water is for residential purposes. Although Non-Residential customers make up a
relatively small amount of total customers, they use a large amount of water on a per-account basis.
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Vi/ATEFI, COfiSUMPTION BY CLAS-S FY 2,0:
Recycled
20%
Single Family
43%
Irrigation
10%
Agricultural
2%
Non-Residential
16% Multifamily
9%
The District currently utilizes a three-tiered water rate structure for residential customers and a uniform water rate
structure for non-residential customers and recycled water customers. One billing unit is equal to one HCF or 748
gallons. This rate structure also includes a monthly meter service charge that varies with meter size. The District last
increased its rates effective January 1, 2013. Table 3-2 outlines the existing rates.
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TABLE 3-2
EXISTING WATER RATE STRUCTURE
Monthly Fixed Charge Volumetric Charge
Single Family
Existing Tier (HCF)
Meter Service 12 $ 3.20
Size Charge 20 $ 4.13
5/8" $ 21.38 21+ $ 5.62
3/4" $ 26.97
1" $ 38.52 Multifamily
1-1/2" $ 67.60 5 $ 2.71
2" $ 102.27 10 $ 3.05
2-1/2" $ 147.80 11+ $ 3.64
3" $ 194.72
4" $ 298.75 Non-Reside $ 3.70
6" $ 588.03 Agricultural $ 3.70
8" $ 934.75 Irrigation $ 4.15
10" $ 1,339.61 Recycled $ 3.53
As tiered rate structures exist for the residential customers, it is often helpful to consider how many customers are
impacted at each tier and how much consumption is charged at each level. Table 3-3 displays the bills and
consumption levels at various intervals. Percentages marked in yellow reflect the tier cutoff points for the
respective residential classes. The data shows that 60% ofthe annual single family residential (SFR) bills fall within
the first tier and 83% of the bills fall within the first two tiers. This means that the remaining 17% of the annual bills
exceed the 20 hef per month usage. The total usage in the first tier is 68% ofthe total SFR usage and 85% ofthe
SFR usage falls within the first two tiers. Similarly 60% ofthe multi-family residential (MFR) bills fall within the first
tier and 94% in the first two tiers. The corresponding usage in the first tier is 75% and in the first two tiers 93% of
the total MFR usage. These percentages are reasonable.
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TABLE 3-3
FY 2012 SINGLE FAMILY AND MULTIFAMILY - PERCENT OF Bl LLS AND CONSUMPTION THROUGH EACH BLOCK
Single Family Multifamily
% Bills in % Total % Bills in % Total
Usage Block Consump Block Consump
1 2% 8% 1% 17%
2 6% 15% 5% 34%
3 11% 22% 19% 51%
4 17% 29% 39% 65%
5 23% 35% 60% 75%
6 29% 41% 75% 82%
7 35% 47% 83% 86%
8 41% 52% 88% 89%
9 46% 56% 92% 92%
10 51% 60% 94% 93%
11 56% 64% 96% 94%
12 60% 68% 97% 95%
13 64% 71% 98% 95%
14 67% 73% 98% 96%
15 70% 76% 99% 96%
16 73% 78% 99% 96%
17 76% 80% 99% 96%
18 78% 82% 99% 97%
19 81% 84% 99% 97%
20 83% 85% 99% 97%
Potable Water Rate Revenue Composition
Rate revenue makeup is an important concept to consider when designing a financial plan and rate structure. A
high amount of fixed revenue (derived from monthly charges that are not dependent on water consumption)
promotes revenue stability for the District. However, a high level of fixed revenue/charges reduces the incentive to
conserve water among its customers. Figure 3-3 displays the current amount of fixed and variable revenue derived
from the potable water rates.
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PERCENTAGE OF FIXED AND VARiABLE RATE REVENUI
72.4%
27.6%
• Fixed Revenue Variable Revenue
The District's current level of fixed revenue of 27.6% and variable revenue of 72.4% 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 District meets this
guideline. Any future rate structures should not deviate significantly from this level of fixed and variable revenue.
District potable water customer accounts and usage is expected to increase at a rate of less than 0.5% per year over
the life of this study. The recycled water system, however, is expected to have significant growth over the study
period. Demand in FY 2012 was 3,837 AF and in FY 2013 was 4,211 AF. By FY 2019, the recycled utility is expected to
increase demand to approximately 5,900 AF. Table 3-4 outlines the expected growth in demand per year.
NEW RECYCLED WATER DEMAND f AF)
Customers FY 2014 FY 2015 FY 2016 FY 2017 FY 2018
Vista
Oceanside
Phase III 161
300
106 327
254
157
Raftelis Financial Consultants, Inc. Page 36
Revenue Requirements
A review of revenue requirements is a key first step in the rate design process. The review involves an analysis of
annual operating revenues under existing rates, O&M expenses, capital expenditures, reserves, and transfers
between funds. This section ofthe report provides a discussion ofthe projected revenues, operating and capital
expenditures, debt coverage requirements, reserve funding policies, and the revenue adjustments required to
ensure the financial stability ofthe water enterprise. While all rate options are two-year plans, long-term financial
impacts are analyzed. Therefore, the graphs and tables show five years' worth of data.
Potable Water Projected Requirements
Figure 4-1 displays the District's revenue requirements via the stacked bar charts. The red line graph represents the
revenue under the existing rate structure, which shows that the revenue under the existing rates is insufficient to
meet revenue requirements and revenue adjustments are needed. The red stacked bar component in red indicates
when reserves are being added to or being drawn upon to meet annual revenue requirements.
FIGURE 4-1
POTABLE WATER REVENUE REQUIREMENTS
FY 2014
Water Purchases
I Depreciation
I Annual Suprlus/Deficit
•Proposed Revenue
FY 2016 FY 2018
••1 O&M (Less Water)
•Mi Debt Service
Existing Revenue
Potable Water Operating and Capital Expenses
The District's FY 2014 budget was used to develop a long-term forecast in the rate model. Various escalation rates
were used to project future O&M expenses. Nearly all O&M expenses are subject to an minimum annual 3 %
inflation increase (based on historical CPI), while others have an additional escalation factor related to growth. The
main drivers in the increases in operating costs, and also the need for revenue increases, are the cost increases in
imported water purchases and desalinated seawater purchases beginning in FY 2017. Table 4-1 displays the potable
operating expenses from FY 2014 through FY 2018.
TABLE 4-1
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POTABLE WATER OPERATING EXPENSES
Line
No. FY 2014 FY 2015 FY 2016 FY 2017 FY 2018
1 Personnel $ 3,222,962 $ 3,395,103 $ 3,513,932 $ 3,633,406 $ 3,664,147
2 O&M (less water & Depr.) $ 4,891,322 $ 5,103,931 $ 5,272,441 $ 5,441,242 $ 5,620,845
3 Depreciation $ 3,475,000 $ 3,579,250 $ 3,686,628 $ 3,797,226 $ 3,911,143
4 Transfers Out to Capital $ 893,000 $ 893,000 $ 893,000 $ 893,000 $ 893,000
5 Imported Water Purchases (Fixed) $ 5,850,000 $ 6,131,983 $ 6,418,659 $ 6,693,452 $ 6,981,423
6 Imported Water Purchases (Variable) $17,650,000 $18,574,419 $19,752,315 $23,744,506 $25,100,724
7 Total $35,982,284 $37,677,686 $39,536,974 $44,202,831 $46,171,282
Potable Water Debt
The potable water fund does not currently have any outstanding debt. Based upon our analysis, we do not see the
need to issue debt at this time. The District's reserves and revenue stream are sufficient to meet all revenue
requirements. This will allow the District to maintain its debt capacity for potential future needs.
Projected Revenue Increases
In order to meet all District revenue requirements, including the desired funding of reserves, RFC recommends 5%
revenue increases in FY 2014 and FY 2015. For planning purposes, additional 5% revenue increases are assumed in
the years beyond FY 2015 as well. For the recycled water system, we do not see the need for additional revenue
increases at this time. With new recycled water customers joining the system in the coming years, the expected
growth in customers and sales is expected to be sufficient to fund any additional growth related expenditures.
However, should the expected customer growth not materialize, we would recommend reviewing the level of rates
in the coming years.
Potable Water Operating Cash Flow
The operating cash flow statement shown in Table 4-2 displays the rate revenue from the current rate structure
(Line 1), the rate revenue generated from the proposed revenue increases of 5% per year from FY 2014 to FY 2018
(Line 2), and the sum of the existing and proposed revenue (Line 3). The table demonstrates how the revenue
requirements (beginning on Line 6) are met and the resulting surplus/deficit (Line 10).
TABLE 4-2
OPERATING CASH FLOW
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Line FY 2014 FY 2015 FY 2016 FY 2017 FY 2018
No. $ $ $ $ $
1 Revenue from Existing Retail Rates 33,876,180 34,045,442 34,199,183 34,351,446 34,485,969
2 Additional Rate Revenue Required 635,200 2,372,600 4,212,500 6,160,300 8,217,900
3 Total Rate Revenue 34,511,380 36,418,042 38,411,683 40,511,746 42,703,869
4 Non-Rate Revenue 3,767,000 3,907,484 4,037,619 4,168,580 4,308,492
5 Total Revenue 38,278,380 40,325,526 42,449,302 44,680,326 47,012,361
Revenue Requirements
6 O&M (less Depreciation) 31,614,284 33,245,436 34,998,746 39,555,413 41,318,607
7 Depreciation 3,475,000 3,579,250 3,686,628 3,797,226 3,911,143
8 Transfers Out to Capital 893,000 893,000 893,000 893,000 893,000
9 Total Revenue Requirements 35,982,284 37,717,686 39,578,374 44,245,639 46,122,750
10 Net Annual Cash Balance 2,296,096 2,607,840 2,870,929 434,687 889,611
Potable Water Reserves
The District reserves consist of an operating reserve and a capital replacement reserve. The District's operating
reserve currently has an informal target of 40% of annual operating expenditures. Over the forecast period, the
District is making significant progress toward reaching this target. Reserve fund cash flows are shown in Figures 4-2
and 4-3.
Potable Water Operating Reserve
Operating reserves are used for working capital requirements to meet the ongoing expenses of the District.
Because the District's fixed rate revenue is approximately 27% of total rate revenue, the District's cash flows are
relatively stable. The District's current trajectory of approaching 40% of annual operating expenses is therefore
appropriate.
FIGURE 4-2
POTABLE WATER OPERATING RESERVE
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$18
I $16
^ $14
$12
$10
$8
$6
$4
$2
$-
FY 2014 FY 2016 FY 2018
Ending Balance Target-40% of O&M
Figure 4-4 displays the District's recycled revenue requirements via the stacked bar charts. The line graph
represents the revenue under the existing rate structure. As mentioned previously, the existing rate structure and
revenue stream are sufficient to meet revenue requirements in the near-term.
$12
(/I
I $10
$8
$6
$4
$2
$-
FIGURE 4-3
RECYCLED WATER REVENUE REQUIREr^lENTS
FY 2014 FY 2015
Water Purchases
• DebtServlce
— Existing Revenue
FY 2016 FY 2017 FY 2018
O&M (Less Water)
••i Annual Suprlus/Deficit
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Recycled Water Operating and Capital Expenses
The District's FY 2014 recycled budget was used to develop a long-term forecast in the rate model. Various
escalation rates were used to project future O&M expenses. Nearly all O&M expenses are subject to an minimum
annual 3 % inflation increase (based on historical CPI), while others are subject to an additional escalation factor
related to growth. Table 4-3 displays the recycled water operating expenses from FY 2014 through FY 2018. The
District's recycled water CIP through FY 2018 is shown in Table 4-4.
TABLE 4-3
RECYCLED WATER OPERATING EXPENSES
Line FY 2014 FY 2015 FY 2016 FY 2017 FY 2018
No. $ $ $ $ S
1 Personnel $ 862,909 $ 898,288 $ 929,728 $ 961,339 $ 994,025
2 O&M (less water) $2,674,914 $2,755,357 $2,836,249 $3,213,016 $ 3,596,321
3 Water Purchases $2,000,000 $1,934,611 $1,992,649 $2,052,429 $ 2,114,002
4 Debt Service $2,002,387 $1,876,482 $1,876,482 $1,876,482 $ 3,639,373
5 Totai $7,540,210 $7,464,739 $7,635,108 $8,103,266 $10,343,721
Currently, the Recycled Water capital expenditures consist ofthe Phase III Recycled Water Project expansion, which
is expected to begin in FY 2015 and be completed in FY 2017. There are no projects scheduled for FY 2014 or FY
2018 at present.
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TABLE 4-4
RECYCLED WATER CAPITAL EXPENSES
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018
$ $ $ $ $
Phase III PiDeline Costs
Expansion Alignment lA 608,000 608,000 608,000
Expansion Alignment 2 2,020,333 2,020,333 2,020,333
Expansion Alignment 4A 147,000 147,000 147,000
Expansion Alignment 5 2,493,000 2,493,000 2,493,000
Expansion Alignment 7 431,667 431,667 431,667
Expansion Alignment 9 356,667 356,667 356,667
Expansion Alignment 18 129,667 129,667 129,667
Retrofit Customers Near Existing System 58,667 58,667 58,667
Subtotal 6,245,000 6,245,000 6,245,000
CWRF 4.0 MGD Treatment Expansion
GMF Feed Pump Station 100,000 100,000 100,000
GMF (4.0 MGD expansion) 566,667 566,667 566,667
Chlorine Feed and Storage System 66,667 66,667 66,667
Chlorine Contact Basin 666,667 666,667 666,667
Misc. Items, Controls, Electrical, etc. 166,667 166,667 166,667
Construction Costs 1,566,667 1,566,667 1,566,667
Construction Cost Contingency (20% of Direct) 313,333 313,333 313,333
Engineering and Design (10% ofthe Subtotal) 188,000 188,000 188,000
Project Administration (2.5% of the Subtotal) 47,000 47,000 47,000
Construction Mgmt. and Inspection (10% of
Subtotal) 188,000 188,000 188,000
Subtotal 2,303,000 2,303,000 2,303,000
Reservoir Storage Cost
1.5 MG Steel Tank Reservoir 612,667 612,667 612,667
Total CIP - 9,160,667 9,160,667 9,160,667
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Recycled Water Debt Loans
The recycled water utility has received loans from the State Water Resources Control Board (SWRCB) to develop its
recycled water system. Additional loans are expected to be received to fund further expansion. Table 4-5 displays
existing loan repayment schedules.
TABLE 4-5
EXISTING DEBT SERVICE
Line FY 2014 FY 2015 FY 2016 FY 2017 FY 2018
1 Interest 165,883 153,859 141,534 128,901 115,952
2 Principal 480,976 493,001 505,326 517,959 530,908
3 Total 646,859 646,859 646,859 646,859 646,859
SWRCB - Recvclinq Loan
4 Interest 335,261 314,691 293,648 272,120 250,098
5 Principal 894,361 914,932 935,975 957,502 979,525
6 Total 1,229,623 1,229,623 1,229,623 1,229,623 1,229,623
SWRCB - Phase 1 - Loan No. 3-870-550-0
7 Interest 2,683 ----
8 Principal 123,222
9 Total 125,905 ---
• 10 Total Existing Debt Service 2,002,387 1,876,482 1,876,482 1,876,482 1,876,482
Our financial forecast also assumes an additional Clean Water State Revolving Fund (CWSRF) loan in the amount of
$27.4 million dollars. The term of the loan is expected to be 20 years and at a 2.5% interest rate. Loan repayment is
projected to commence the year after the projects are completed, FY 2018 (possibly FY 2019). This will add an
additional $1.76 million in annual debt service forthe recycled water utility, which is reflected in Table 4-3.
Recycled Water Reserves
The District's recycled reserves consist of an operating reserve. The District's operating reserve currently has an
informal target of 40% of annual operating expenditures. The recycled water utility is expected to meet this target
over the forecast period. The Operating Reserve fund cash flows are shown in Figure 4-4.
Recycled Water Operating Reserve
Operating reserves are used for working capital requirements to meet the ongoing expenses ofthe District. Due to
the recycled water utility's operating reserve beginning balance and expected growth in customers and usage, the
utility is forecasted to meet and exceed its 40% operating expenditure target by FY 2015.
Raftelis Financial Consultants, Inc. Page 43
$9
I $8
1 $7
$6
$5
$4
$3
$2
$1
$-
FY 2014 FY 2016 FY 2018
Ending Balance ———Target
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Rate Design and Cost of Service (COS) Analysis
Once the financial planning process is complete, the next step is to determine how the overall revenue
requirements will be recovered from the water system's customers. This section describes that process.
Overview of Rate Setting
As an enterprise fund, water operations are financed and operated as a distinct business. Appropriate fees and
charges should be established to ensure that the water operations can operate on a self-sustaining basis. For a
water utility, the majority of revenue is normally derived through user charges. These service fees, rates, and
billings are charged to the beneficiaries of the water services. Development of a user charge system is defined as
the total process of identifying costs, allocating costs to the water beneficiaries, and designing a rate structure to
recover allocated costs.
Cost of Service Analysis
The cost of service analysis is based upon the premise of generating revenues sufficient to meet the estimated
annual revenue requirements and allocating the revenue requirements to the customer classes in proportion to the
service that they receive. Revenue requirements include operating costs and rate-funded capital costs, annual debt
service, and reserve requirements. Deductions from revenue requirements include miscellaneous operating and
non-operating revenues, interest revenues, and reserves funding. Adjustments are also made to account for cash
balances (transfers to reserves) to ensure collection of adequate revenues. The FY 2014 total costs of service to be
recovered from the retail users, shown in Table 5-1 on line 12, are estimated at approximately $35.6 million.
Approximately $31.2 million is considered operating expenses and the remaining $4.4 million is capital expenses.
The total cost of water service is analyzed by system function in order to equitably distribute costs of service to the
various classes of customers. For this analysis, using the AWWA Base-Extra Capacity Methodology of allocating
costs, water utility costs of service are assigned to three basic functional cost components: base costs, extra
capacity costs, customer costs.
Base costs are those operating and capital costs ofthe water system associated with serving customers at a
constant average rate of use or average daily demand (ADD). Water systems are designed to handle peak demands
and extra capacity costs represent those operating and capital costs incurred to meet customer peak demands for
water in excess of ADD. Total extra capacity costs are subdivided into costs associated with maximum day and
maximum hour demands. Maximum day demand is the maximum usage recorded on any day in a year. The
maximum hour usage is the maximum usage recorded in any hour ofthe maximum usage day. Customer costs are
subdivided into customer service and billing costs, and meter costs. Customer costs are uniform for all customers
and include expenses, such as customer service, meter reading, billing, accounts receivables, and accounting.
Meter service costs include maintenance and capital costs associated with meters, and a portion of extra capacity-
related costs. The separation of costs of service into these principal components provides the foundation for
further allocation of such costs to the customer classes on the basis of their demands.
TABLE 5-1
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FY 2014 POTABLE WATER COST OF SERVICE TO BE RECOVERED FROM RATES
Line Operating Capital
No. Expense Expense Total
Revenue Requirements
1 O&M 31,614,284 $31,614,284
2 Depreciation 3,475,000 $ 3,475,000
3 Transfer to Capital 893,000 $ 893,000
$
Subtotal $31,614,284 $4,368,000 $35,982,284
Less Rev. Requirements Met from Other Sources
Non-Rate Revenue 3,767,000 $ 3,767,000
Subtotal $ 3,767,000 $ $ 3,767,000
Less Adjustments
Adjustment for Annual Cash Balance
Adjustment to Annualize Rate Increase
$ (2,296,096)
$(1,058,667)
$ (2,296,096)
$ (1,058,667)
Subtotal $ (3,354,763) $ $ (3,354,763)
Net Revenue to be Recovered from Rates $31,202,047 $4,368,000 $35,570,047
RFC performed the following steps to allocate District O&M and capital costs. To allocate costs, the first step is to
identify the system peaking factors. Base is assigned a value of 1.00, as it represents ADD. The District's maximum
day (Max Day or Peak Day) demand is estimated to be 1.65 times the ADD. Max Day is therefore assigned a value
of 1.65. The maximum instantaneous usage is approximated by the maximum hourly (Max Hour or Peak Hour)
usage and is estimated to be 2.90 times the ADD. Max Hour is therefore assigned a value of 2.90. These factors are
derived from the District's master plan and confirmed by District staff. The system peaking factors are summarized
in Table 5-2.
TABLE 5-2
SYSTEM PEAKING FACTORS'
Factors
Base 1.00
Max Day 1.65
Max Hour 2.90
The District is comprised of various facilities, each designed and operated to fulfill a given function. In order to
provide adequate service to its customers at all times, the utility must be capable not only of providing the total
Carlsbad Municipal Water District, 2012 Water Master Plan
Raftelis Financial Consultants, Inc. Page 46
amount of water used, but also of supplying water at peak or maximum rates of demand. The separation of costs
into functional components provides a means for distributing such costs to the various classes of customers on the
basis of respective responsibilities for each particular type of service.
The functional cost allocations are calculated from the peaking factors as follows:
Cost categories that are solely Base or ADD-related, such as source of supply, are allocated 100 % to the Base cost
component.
Cost categories that are designed to meet Max Day peaks are allocated to Base and Max Day factors. Therefore, the
allocations are as follows:
Base:
Max Day:
60.6%
39.4%
1.00/1.65
0.65/1.65
Cost categories such as distribution, which are designed for Max Hour peaks, are allocated similarly. The Base
allocation percentage is calculated by dividing the Base units of 1.00 by the Max Hour peaking factor of 2.9. The
Max Day allocation percentage is calculated by dividing the incremental Max Day units (0.65) by the Max Hour
factor of 2.9. The Max Hour allocation percentage is calculated by dividing the incremental Max Hour units by the
total peak of 2.9.
Base: 34.5% 1.00/2.9
Max Day: 22.4% 0.65/2.9
Max Hour 43.1% 1.25/2.9
A summary ofthe allocation is displayed in Table 5-3.
TABLE 5-3
SUMMARY OF ALLOCATION PERCENTAGES
Demand
Factors Base Max Day Max Hour
Base 1.00 100%
Max Day 1.65 60.6%
Max Hour 2.90 34.5% 22.4% 43.1%
These percentages are used to allocate the operating and capital costs amongst Base, Max Day, and Max Hour
parameters for cost of service calculations. The budgeted operating costs are categorized by function and then
allocated to the parameters as summarized in Table 5-4.
TABLE 5-4
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ALLOCATION TO BASE EXTRA CAPACITY PARAMETERS
Line
Base Peak Day Peak Hour Meter
Charges
Billing &
Customer
Service
General Conservation Total
No. Function
1 Source of Supply $23,500,000 $ -$ $ $ -$ -$ -$23,500,000
2 Treatnnent $ 27,273 $ 17,727 $ $ $ -$ -$ -$ 45,000
3 Meters $ $ -$ $1,245,682 $ -$ -$ -$ 1,245,682
4 Customer Billing $ $ -$ $ $584,712 $ -$ -$ 584,712
5 General Plant $ $ -$ $ $ -$2,505,576 $ -$ 2,505,576
6 Assets $ 2,156,934 $ 952,113 $ 358,929 $ 7,023 $ -$ -$ -$ 3,475,000
7 Labor $ 1,472,085 $ 839,327 $1,082,555 $ 797,906 $226,430 $ -$ 208,012 $ 4,626,314
8 Total $27,156,292 $1,809,168 $1,441,484 $2,050,611 $811,142 $2,505,576 $ 208,012 $35,982,284
9 Operating % 81.12% 5.40% 4.31% 6.13% 2.42% 0.00% 0.62%
10 Capital % Allocation 62.07% 27.40% 10.33% 0.20% 0.00% 0.00% 0.00%
Line 9 on Table 5-4 displays how the net operating expense to be recovered from user rates will be allocated. The
capital cost allocation percentages are shown on Line 10. The capital percentages were derived from an analysis
completed by RFC and are based on the total assets of the water utility. Costs shown in the "General" column are
items that cannot be allocated to one specific parameter and are reallocated to the direct parameters based on the
percentage of the total for each parameter. The allocation percentages on lines 9 and 10 reflect this.
The next step is to apply the operating and capital allocation percentages outlined in Table 5-4 to the net operating
and capital expenses to be recovered from rates (from Table 5-1). Table 5-5 outlines that process.
TABLE 5-5
ALLOCATION OF NET REVENUE REQUIREMENTS
Line
Base Peak Day Peak Hour Meter
Charges
Billing &
Customer
Service
General Conservation Total
No.
1 Net Operating Costs $25,311,088 $1,686,239 $1,343,539 $1,911,277 $756,027 $ -$ 193,878 $31,202,047
2 Capital Costs $ 2,711,220 $1,196,786 $ 451,166 $ 8,828 $ $ -$ $ 4,368,000
3 Total Cost of Service $28,022,307 $2,883,025 $1,794,705 $1,920,105 $756,027 $ -$ 193,878 $35,570,047
Note that the values in the "Total" column correspond to the net revenue requirements including operating and
capital costs outlined in Table 5-1. The next step in the COS process is to determine the unit costs of service.
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Unit Costs of Service
In order to allocate costs of service to the different user classes, units of service and unit costs of service need to be
developed for each functional cost component. The units of service for the parameters are outlined in Table 5-6.
TABLE 5-6
UNITS OF SERVICE
Category Base Peak Day Peak Hour Meter Charges Billing & Customer Service
Unit of Service HCF HCF/Day HCF/Hour Equiv. Meters Annual Bills
Base units of service are based on annual water consumption in HCF. Peak Day units are based on the extra capacity
needed to serve beyond ADD to meet Max Day demand in HCF/day. Peak Hour or Max Hour units are based on the
extra capacity needed to serve Max Hour demands in excess of Max Day demands in HCF/day. Units of service for
meter charges are the total annual equivalent meters. Billing & Customer Service units of service are the number of
bills delivered, which is derived from the number of accounts.
Equivalent meters are used instead of accounts when allocating meter charges in order to recognize the fact that
larger meters provide more capacity and are more expensive to install, maintain, and replace than smaller meters
are. Meters are assigned a hydraulic capacity according to size that is based on the sustained maximum flow rate of
the meter. For example a 5/8" meter has a sustained hydraulic capacity of 20 gallons per minute (gpm) whereas a
6" meter has a sustained hydraulic capacity of 1,000 gpm. Therefore, a 6" meter is equivalent to 1,000/20, or 50,
5/8" meters. In this manner, capacity ratios are used to calculate the total number of equivalent meters in the
system.
The total number of potable equivalent meters included in our cost of service analysis, which takes into account
hydraulic flow using the 5/8" meter as a base, is estimated to be 44,246 in FY 2014. Given that billing occurs
monthly, a total of 530,952 potable equivalent meters are billed per year. The total projected equivalent water
meters included in our cost of service analysis for our test year, FY 2014, are presented in Table 5-7. Equivalent
meters are used in the unit cost calculation of meters and services charges in the cost of service section.
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TABLE 5-7
PROJECTED EQUIVALENT POTABLE METERS FY 2014
Meter Size Meters Capacity Ratio Equiv. Meters
5/8" 22,038 1.0 22,038
3/4" 1,739 1.5 2,609
1" 1,394 2.5 3,484
1-1/2" 758 5.0 3,789
2" 1,272 8.0 10,173
2-1/2" 1 11.5 12
3" 75 15.0 1,119
4" 17 25.0 428
6" 7 50.0 353
8" 3 80.0 242
10" -115.0 -
Total 44,246
Per Year 530,951
The total units of service for all parameters are shown in Table 5-8.
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TABLE 5-8
UNITS OF SERVICE BY POTABLE CUSTOMER CLASS
Maximum Day Requirements Maximum Hour Requirements
Line
Annual Average Capacity Total Extra Capacity
Use Daily Use Factor Capacity Capacity Factor
(HCF) (HCF/dav) % (HCF/day) (HCF/day) %
Total Extra
Capacity Capacity
(HCF/day) (HCF/day)
No. of No. of
Meters Customers
(Equiv.) (No.)
Annual
No. of
Meters
( Equiv.)
Annual
No. of
Bills
(No.)
1 Single Family 3,556,940 9,745 200% 19,490 9,745 300% 29,235 9,745 25,662 23,641 307,943 283,692
2 Multifamily 781,901 2,142 177% 3,786 1,644 265% 5,679 1,893 4,530 1,031 54,360 12,370
3 Non-Residential 1,346,908 3,690 192% 7,094 3,404 288% 10,641 3,547 8,646 1,711 103,750 20,532
4 Agricultural 151,135 414 211% 873 459 316% 1,310 437 421 35 5,054 423
5 Irrigation 846,708 2,320 260% 6,042 3,722 391% 9,063 3,021 4,987 885 59,844 10,617
6 Total 6,683,593 18,311 37,286 18,975 55,929 18,643 44,246 27,303 530,951 327,635
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The first column in Table 5-8 identifies the District's potable water customer classes. The "Annual Use" column
identifies the annual consumption for each customer class. The "Average Daily Use" column is the previous column
divided by 365 (days per year) to determine the base capacity. The next three columns consist of Maximum Day
data. The Maximum Capacity Factor column contains estimates on the class peaking characteristics. For example,
the Single Family Maximum Day Capacity Factor means that the maximum day requirements are 200% of
base/average demand. The next column. Total Capacity, lists the capacity needed to serve average demand and
Max Day demands. The next column. Extra Capacity, lists only the capacity needed to service the Max Day demand
in excess of the base/average demand. The next three columns are similar to the Max Day group of columns except
that they relate to the Max Hour capacity needs. The Capacity Factor column means that the Max Hour
requirements are 300% of base/average demand. The Total Capacity lists the total capacity needed to meet ADD,
Max Day, and Max Hour demands. The third column. Extra Capacity, lists the capacity needed to meet demand in
excess of average/base and maximum day. The final four columns are based on the equivalent meters and
customers both multiplied by 12 (months per year). This will allow us to calculate the meter cost and customer
service components of a fixed charge component ofthe rate structure on a monthly basis.
Unit costs of service are developed by dividing the total annual costs allocated to each cost parameter by the total
annual service units ofthe respective category. The unit cost calculations are shown in Table 5-9.
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TABLE 5-9
POTABLE WATER UNIT COSTS OF SERVICE
Meter
Charges
Billing &
Line
Base Peak Day Peak Hour
Meter
Charges Customer
Service
General Conservation
No.
1 Net Operating Costs $ 25,311,088 $ 1,686,239 $ 1,343,539 $ 1,911,277 $ 756,027 $ -$ 193,878
2 Capital Costs $ 2,711,220 $ 1,196,786 $ 451,166 $ 8,828 $ $ -$
3 Total Cost of Service $ 28,022,307 $ 2,883,025 $ 1,794,705 $ 1,920,105 $ 756,027 $ -$ 193,878
4 Modified Total Cost $ 21,296,954 $ 2,883,025 $ 1,794,705 $ 7,384,455 $ 2,017,030 $ -$ 193,878
5 Total Units of Service 6,683,593 18,975 18,643 530,951
Equiv.
327,635 929,595
6 Unit of Measure HCF HCF/Day HCF/hour Meters/Mo. Bills/Mo. HCF
7 Total Unit Cost of Service $ 3.19 $ 151.94 $ 96.27 $ 13.91 $ 6.16 0.21
Raftelis Financial Consultants, Inc. Page 53
In order to more accurately reflect cost of service and ensure that the District collects a similar amount of fixed
revenue, certain costs from the Base component are recovered from the Meter Charges portion and the Billing
and Customer Service items. SDCWA has certain supply-related components that are fixed costs and are more
accurately recovered from these components. These costs include the Customer Service Charge, Emergency
Storage Charge, Infrastructure Access Charge, and MWD Capacity Charge.
With the units of service of each customer class and the unit costs of service, we can now allocate costs to the
respective customer classes, as shown in Table 5-10.
Raftelis Financial Consultants, Inc. Page 54
TABLE 5-10
COSTS OF SERVICE ALLOCATED TO POTABLE WATER CUSTOMER CLASSES
Line
Base Peak Day Peak Hour Meter
Charges
Billing&
Customer
Service
Conservation
No.
Single Family
1 Units 3,556,940 9,745 9,745 307,943 283,692 639,890
2 Costs - $ $11,334,022 $1,480,678 $938,131 $4,282,863 $1,746,505 $ 133,456
Multifamily
3 Units 781,901 1,644 1,893 54,360 12,370 55,230
4 Costs - $ $ 2,491,491 $ 249,794 $182,244 $ 756,037 $ 76,155 $ 11,519
Non-Residential
5 Units 1,346,908 3,404 3,547 103,750 20,532 134,691
6 Costs - $ $ 4,291,860 $ 517,225 $341,474 $1,442,953 $ 126,404 $ 28,091
Agricultural
7 Units 151,135 459 437 5,054 423 15,113
8 Costs - $ $ 481,584 $ 69,742 $ 42,024 $ 70,298 $ 2,606 $ 3,152
Irrigation
9 Units 846,708 3,722 3,021 59,844 10,617 84,671
10 Costs - $ $ 2,697,997 $ 565,586 $290,831 $ 832,305 $ 65,361 $ 17,659
The Base, Peak Day, and Peak Hour columns will comprise the commodity/volumetric rates for each customer
class. The Meter Charges and Billing & Customer Service columns will comprise the fixed monthly charge.
The fixed portion of our proposed rate structure will vary by meter size, not by customer class. The commodity or
volume rate, however, will vary by customer class. The average volumetric rates by customer class are outlined in
Table 5-11 and include rates with and without conservation costs. Typically conservation costs are assigned to
higher volume customers who may benefit from the conservation program by using water more efficiently. For
residential tiered rates, conservation costs are included in the higher tiers. For other classes that do not have
tiered rates conservation costs are included in the uniform rates.
Raftelis Financial Consultants, Inc. Page 55
TABLE 5-11
AVERAGE VOLUMETRIC RATES BY POTABLE WATER CUSTOMER CLASS
Total Units Average Volume Average Volume
Volume-based of Rate without Rate with
Line Charges Service Conservation Cost Conservation Cost
No. Customer Class $ HCF $/HCF $/HCF
1 Single Family $ 13,886,289 3,556,940 $ 3.87 $ 3.91
2 Multifamily $ 2,935,047 781,901 $ 3.74 $ 3.76
3 Non-Residential $ 5,178,650 1,346,908 $ 3.83 $ 3.85
4 Agricultural $ 596,503 151,135 $ 3.93 $ 3.95
5 Irrigation $ 3,572,073 846,708 $ 4.20 $ 4.22
Existing Rate Structure Analysis
RFC conducted an analysis of the District's existing rate structure and its underlying cost of service allocations.
Two specific allocations were of note. Underthe previous allocation, a large portion ofthe water supply costs
were allocated to peaking. Under industry standards, supply costs are typically allocated to "Base" in the Base-
Extra Capacity methodology. Allocating a large portion of supply costs to peaking caused a disproportionate
difference in the average rates charge to multifamily customers. These residential customers typically have lower
peaking characteristics than single-family customers. Thus, multifamily customers should typically have lower
average commodity rates than single-family customers; however, the difference between the two rates is more
pronounced when there are excessive peaking costs.
The second item of note was the allocation of 20% of annual debt service to customer service costs. As debt is
generally incurred to fund capital projects, it is appropriate to allocate it in proportion to how the existing asset
base is allocated amongst the Base-Extra Capacity categories. Allocating 20% of annual debt service to customer
service costs causes excessive monthly meter charges for lower-sized meters, as the customer service portion is
much larger as a percentage of the total monthly fixed meter charge.
Our cost of service analysis changes these two allocations and results in the changes one would expect. The
difference between single-family and multifamily rates is much smaller and the customer service portion of the
fixed monthly service charge is reduced.
Raftelis Financial Consultants, Inc. Page 56
Proposed Water Rate Structure and Rates
As part ofthe exercise of prioritizing pricing objectives, RFC evaluated alternative rate structures and, based on
the pricing objective exercise results, the current rate structure: a fixed charge and three volumetric tiers best
meets the needs ofthe District.
A monthly meter charge will continue to be assessed to each customer and will vary depending on the customer's
meter size. The monthly meter charge includes a customer service component and a meter cost component.
The meter cost component varies based on meter size by reflecting the difference in potential demand that can
be placed on the system by different sized meters. The remaining revenue requirements will be recovered from a
volumetric or consumption charge. The volume rate per hef varies by customer class. The volume rates are
designed to ensure that each customer class pays its share ofthe costs of service shown in Table 5-11. Details and
proposed modifications to the commodity rate structure are outlined in the following sections.
Fixed Monthly Charges
As shown in Table 5-9, the monthly charge per equivalent meter is $13.91. Thus, a 5/8" meter, or one equivalent
meter, is charged $13.91 per month. A %" meter, which is 1.5 equivalent meters, is charged $20.86 per month
($13.91 * 1.5). The other component of the fixed monthly charge is the billing and customer service component.
As shown in Table 5-9, this amount is $6.16 per month. This charge ofoes not vary by meter size; customer service
and billing costs incurred are not any greater for larger meters compared to smaller meters. Therefore, in our
previous examples the 5/8" and the YA meter would be charged $6.16 per month for this component, totaling
$20.07 and $27.02 per month respectively when combined with the meter charge component. The proposed
rates are shown in Table 6-1.
Single Family Residential (SFR) Potable Water Commodity Rates
RFC recommends that the District retain its three-tier inclining rate structure for SFR customers. However, RFC
does recommend adjustments to the 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 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
consumption, and recovers the remaining costs of service associated with the single family class of customers.
The proposed rates are shown in Table 6-1.
Multi Family Residential (MFR) Potable Water Commodity Rates
RFC recommends that the District retain its three-tier inclining rate structure and tier cutoffs for MFR customers.
However, RFC does recommend adjustments to volumetric rates. Underthe current rate structure, MFR
customers are receiving a much lower volumetric rate compared to SFR customers. To some extent, this is
Raftelis Financial Consultants, Inc. Page 57
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. RFC
recommends increasing the rates to be identical to the SFR customers. However, due to the consumption patterns
and existing tier cutoffs, MFR customers will continue to pay a lower average rate per hef than SFR customers,
which is appropriate and expected. The proposed rates are shown in Table 6-1.
Non-Residential Potable Water Commodity Rates
RFC recommends that the District 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. The proposed rates are shown in Table 6-1.
Agricultural Potable Water Commodity Rates
RFC recommends that the District retain the uniform commodity rate for this customer class. The rates have been
revised to more accurately reflect the peaking characteristics of these customers. The proposed rates are shown
in Table 6-1.
Irrigation Potable Water Commodity Rates
RFC recommends that the District retain the uniform commodity rate for this customer class. The rates have been
revised to more accurately reflect the peaking characteristics of these customers. The proposed rates are shown
in Table 6-1.
Recycled Water Rates
RFC recommends that the District retain the uniform commodity rate for this customer class. As there are no
revenue increases included as part ofthe recycled water revenue plan, the commodity rates are forecasted to
remain the same over the study period. The proposed rates are shown in Table 6-1.
Raftelis Financial Consultants, Inc. Page 58
TABLE 6-1
CURRENT AND PROPOSED RATES
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
Volumetric Charge (per HCF)
Single Family
Tier (HCF)
12
20
21+
Existing
3.20
4.13
5.62
Proposed
Tier (HCF)
10
18
19+
Proposed Proposed
1/1/2014 1/1/2015
3.19
4.24
6.11
3.35
4.45
6.42
Multifamily
5 $ 2.71
10 $ 3.05
11+ $ 3.64
Non-Residential $ 3.70
Agricultural $ 3.70
Irrigation $ 4.15
Recycled $ 3.53
5
10
11+
3.19
4.24
6.11
3.85
3.95
4.22
3.53
3.35
4.45
6.42
4.05
4.15
4.44
3.53
Customer Rate Impacts
An important component of the rate study was an analysis of how the proposed rate structure would impact the
monthly bills of water customers. RFC worked closely with District staff to ensure that appropriate revenue
requirements would be recovered, while still paying close attention to the related impacts on customers.
Raftelis Financial Consultants, Inc. Page 59
The proposed water rate structure results in meter charges and different volume charges for all customer classes.
Tables 6-2 through 6-6 demonstrate the impacts of the proposed rates on the District's potable water customers
across varying usage levels.
TABLE 6-2
FY 2014 MONTHLY SFR RATE IMPACT - 5/8" METER
Total Bill Existing Existing Existing Proposed Proposed Proposed
Usage Monthly Fixed Variable Monthly Monthly Fixed Variable Monthly $ %
(HCF) Charge ($) Charge ($) Bill ($) Charge ($) Charge ($) Bill($) Change Change
2 21.38 6.40 27.78 20.07 6.37 26.44 -1.34 -5%
4 21.38 12.80 34.18 20.07 12.75 32.82 -1.36 -4%
6 21.38 19.20 40.58 20.07 19.12 39.19 -1.39 -3%
10 21.38 32.00 53.38 20.07 31.87 51.94 -1.44 -3%
12 21.38 38.40 59.78 20.07 40.34 60.41 0.63 1%
1 13 21.38 42.53 63.91 20.07 44.57 64.64 0.73 1%
18 21.38 63.18 84.56 20.07 65.76 85.83 1.27 1%
20 21.38 71.44 92.82 20.07 77.98 98.05 5.23 6%
26 21.38 105.16 126.54 20.07 114.66 134.73 8.19 6%
34 21.38 150.12 171.50 20.07 163.56 183.63 12.13 7%
40 21.38 183.84 205.22 20.07 200.24 220.31 15.09 7%
13 units = SFR Average
TABLE 6-3
FY 2014 MONTHLY MFR RATE IMPACT - 3/4" METER (4 UNIT BUILDING)
Total DU Existing Existing Existing Proposed Proposed Proposed
Usage Monthly Fixed Variable Monthly Monthly Fixed Variable Monthly $ %
(HCF) Charge ($) Charge ($) Bill ($) Charge ($) Charge ($) Bill($) Change Change
2 26.97 21.68 48.65 27.02 25.49 52.51 3.86 8%
5 26.97 54.20 81.17 27.02 63.73 90.75 9.58 12%
6 26.97 66.40 93.37 27.02 80.68 107.70 14.33 15%
8 26.97 90.80 117.77 27.02 114.57 141.59 23.82 20%
10 26.97 115.20 142.17 27.02 148.46 175.48 33.31 23%
14 26.97 173.44 200.41 27.02 246.27 273.29 72.88 36%
20 26.97 260.80 287.77 27.02 392.98 420.00 132.23 46%
26 26.97 348.16 375.13 27.02 539.69 566.71 191.58 51%
34 26.97 464.64 491.61 27.02 735.30 762.32 270.71 55%
40 26.97 552.00 578.97 27.02 882.01 909.03 330.06 57%
6 units = MFR per dwelling unit average
TABLE 6-4
FY 2014 MONTHLY NON-RESIDENTIAL RATE IMPACT-2" METER
Raftelis Financial Consultants, Inc. Page 60
Total Bill Existing Existing Existing Proposed Proposed Proposed
Usage Monthly Fixed Variable Monthly Monthly Fixed Variable Monthly $ %
(HCF) Charge ($) Charge ($) Bill ($) Charge ($) Charge ($) Bill($) Change Change
60 102.27 222.00 324.27 117.43 231.00 348.43 24.16 7%
80 102.27 296.00 398.27 117.43 308.00 425.43 27.16" 7%
100 102.27 370.00 472.27 117.43 385.00 502.43 30.16 6%
120 102.27 444.00 546.27 117.43 462.00 579.43 33.16 6%
140 102.27 518.00 620.27 117.43 539.00 656.43 36.16 6%
160 102.27 592.00 694.27 117.43 616.00 733.43 39.16 6%
180 102.27 666.00 768.27 117.43 693.00 810.43 42.16 5%
200 102.27 740.00 842.27 117.43 770.00 887.43 45.16 5%
220 102.27 814.00 916.27 117.43 847.00 964.43 48.16 5%
TABLE 6-5
FY 2014 MONTHLY AGRICULTURAL RATE IMPACT - 2" METER
Total Bill Existing Existing Existing Proposed Proposed Proposed
Usage Monthly Fixed Variable Monthly Monthly Fixed Variable Monthly $ %
(HCF) Charge ($) Charge ($) Bill ($) Charge ($) Charge ($) Bill ($) Change Change
60 102.27 222.00 324.27 117.43 237.00 354.43 30.16 9%
80 102.27 296.00 398.27 117.43 316.00 433.43 35.16 9%
100 102.27 370.00 472.27 117.43 395.00 512.43 40.16 9%
120 102.27 444.00 546.27 117.43 474.00 591.43 45.16 8%
140 102.27 518.00 620.27 117.43 553.00 670.43 50.16 8%
160 102.27 592.00 694.27 117.43 632.00 749.43 55.16 8%
180 102.27 666.00 768.27 117.43 711.00 828.43 60.16 8%
200 102.27 740.00 842.27 117.43 790.00 907.43 65.16 8%
220 102.27 81400 916.27 117.43 869.00 986.43 70.16 8%
240 102.27 888.00 990.27 117.43 948.00 1,065.43 75.16 8%
TABLE 6-6
FY 2014 MONTHLY IRRIGATION RATE IMPACT-2" METER
Raftelis Financial Consultants, Inc. Page 61
Total Bill Existing Existing Existing Proposed Proposed Proposed
Usage Monthly Fixed Variable Monthly Monthly Fixed Variable Monthly $ %
(HCF) Charge ($) Charge ($) Bill ($) Charge ($) Charge ($) Bill ($) Change Change
60 102.27 249.00 351.27 117.43 253.20 370.63 19.36 6%
80 102.27 332.00 434.27 117.43 337.60 455.03 20.76 5%
100 102.27 415.00 517.27 117.43 422.00 539.43 22.16 4%
120 102.27 498.00 600.27 117.43 506.40 623.83 23.56 4%
140 102.27 581.00 683.27 117.43 590.80 708.23 2496 4%
160 102.27 664.00 766.27 117.43 675.20 792.63 26.36 3%
180 102.27 747.00 849.27 117.43 759.60 877.03 27.76 3%
200 102.27 830.00 932.27 117.43 844.00 961.43 29.16 3%
220 102.27 913.00 1,015.27 117.43 928.40 1,045.83 30.56 3%
240 102.27 996.00 1,098.27 117.43 1,012.80 1,130.23 31.96 3%
Raftelis Financial Consultants, Inc. Page 62
Comparison of Bills with Surrounding Agencies
Figures 7-1 displays a bill comparison ofthe District and nearby agencies that was provided by the District. The
chart compares the bills for a customer with a %" meter that uses 14 hef per month. As displayed, even with the
forecasted revenue increases, the District's bills are toward the low end ofthe regional sample.
FIGURE 7-1
BILL COMPARISON YA METER AND 14 HCF PER BILL
$120
$100
$80
$60
$40
$20
SURVEY OF MEMBERAGENCYWATERRATES
14 Unit Water Use and 3/4" Residential Meter
Water bill effective February 2014
Data provided by the District.
Raftelis Financial Consultants, Inc. Page 63
EXHIBITS
PROTEST LETTERS RECEIVED
P.O. Box 489
Carlsbad, CA 92018
Nov 4, 2013
Office of the City Clerk
City of Carlsbad
1200 Carlsbad Village Drive
Carlsbad, CA 92008
Dear Clerk of the City:
I am writing in protest of the proposed water rate increase for single family residential
customers. The address of my service is 2722 Chestnut Avenue, Carlsbad, 92010. Your
brochure explains that "multi-family residential customers will continue to see a lower
average bill per dwelling unit." Using the single family homeowners' increased rates to
subsidize the multifamily water usage needs is not equitable. The multifamily dweller
should be just as responsible for conserving water as every other human being. Unless
the multifamily dweller is responsible for increased costs, just like the single family
owner, it is likely that conservation is not going to be a priority in those households. It is
your responsibility to make everyone equally accountable for conservation efforts and
increased costs. This is not reflected in your "Proposed Water Rate Structure".
Sincerely,
Diane \. Lech
Single family homeowner
Andrea Dykes For the Information of tlhi(Si
Omir OJUPCQtl
From:
Sent:
To:
Subject:
kasey <kcinciarelli@roadrunner.com>
Tuesday, November 05, 2013 10:05 AM
Council Internet Email
NOv. 4 city council meeting comments
ACM
Date
CA .CC
City Manager
•_/A
On the proposed water rate increases for the next two years: A system needs to be deviced to compensate homeowners
when the water meters are not read within 32 days. When my reading stretches to 35 days - as it did in July /August (the
hottest months of the year) I end up unfairly showing more units and have to pay the higher above baseline rates.
In addition conservation continues to be somewhat of a joke here in CArlsbad. The folks sent out to perform audits have
on both my audit and a neighbors just said "everythings looks good" you are using a reasonable amount of water. When I
had a major underground leak and the neighbors newly landscaped yard has hundreds of gallons of run-off everytime the
front yard sprinklers run. You need better trained personel, so they are not merely wasting everyones time. They can take
the irrigation class at Mira Costa, it's just one class.
kasey cinciarelli
Carlsbad. CA
u LJ ^'J U^t.t f^..d I AH^^/^^^' A^<^-'i-A'
ET /^^-'"^' . ,
c
A I I
ci^n vfr--
AH
October 3, 2013
Office of City Clerk
City of Carlsbad
1200 Carlsbad Village Dr
Carlsbad Ca 92008
Re Proposed Water Rate Structure
This letter serves as a formal written protest to the proposed changes to water and wastewater
rates that was received via mailed notice at the end of September. The proposed changes
indicate that water charges would increase by approximately 14% through the 2015 year. That
amount of increase is unacceptable given the stagnation of the economy, wage earnings and
general lack of economic Inflation.
Sincerely,
Dennis D Capps
760-525-2798
thecapps@cox.net
Ownership Parcel # 215-430-07-00
7111 El Fuerte St
Carlsbad 92009
(Ao
9/25/13
Erin Goforth
2077 Caleta Court
Carlsbad, CA 92009
To Whom It May Concem:
Vm writing to protest the proposed changes to the water rate structure and
rate increases for water and wastewater services.
Sincerely,
Oct. 7,2013
To the City of Carlsbad, Ca. City Council,
I would like to protest all ofthe proposed water rate structure and maximum water and wastewater rate
increases proposed for a vote on Nov. 5,2013. Which mclude the monthly delivery charge, water usage
charge, and monthly wastewater rates.
Proposition 26, a law passed by voters in 2010 that requires a two-thirds supermajority of voters to
approve a tax or fee increase not directly tied to the cost of providing a govemment service.
Read more: http://www.sandiegoreader.com/weblogs/news-ticker/2013/sep/24/los-angeles-based-
metropolitan-water-district-must/#ixzz2fp8kyJDe
Thank you for giving me the time to deliver my protest.
Ettore Graziano ' /
1107 Buena Vista way [
Carisbad, Ca. 92008 |
Ah
Jack Debes
4055 Park Drive
Carisbad, CA 92008
September 22,2013
Office of the City Clerk
Cityof Carlsbad
1200 Cartsbad Village Drive
Carlsbad, CA 92008
Dear City Cierk:
This letter is a formal protest to the proposed rate changes for single family residents as It pertains to
the parcel located on this letter head. Please count my protest vote when considering the proposed
rate change.
A4ack C. Debes
James Vitalie September 20, 2013
(F.A. Vitalie Tmst)
3037 Jefferson St.
Carlsbad, CA 92008
Utility Bill Account Number: 00815400-00
City of Carlsbad
City Council Chambers
1200 Carlsbad Village Dr.
Carlsbad. CA 92008
Subject: Protest of Proposed Changes to the Water Rate Increases
I am the homeowner at 3037 Jefferson Street in Carlsbad. I recently received your pamphlet
outlining proposed rate increases to the "Monthly Water Delivery Charge" and the "Water Usage
Charge". I protest both water rate increases. While I realize we live in a desert and all the
water must be obtained from external sources, the cunent rates are still the highest I have ever
experienced, especially in comparison to other kx^tions I have resided including the East
Coast, Mid-West and Northem Caiifomia areas. The quality of the water delivered by Carisbad
is poor in comparison to these other locations. Since it is too brackish to drink, I pay another
$35.00 a month to a private vendor for purified drinking water.
Periiaps you can look internally for efficiencies that will allow Carisbad to deliver water to their
residents at a fair cost to its homeowners. Thanks for your consideration in this matter.
70
Office ofthe City Clerk
City of Carlsbad
1200 Carisbad Village Drive
Carlsbad, CA 92008
Protesting the rates:
I formally protest the proposed increase, all of them, the one for 1/1/2014 and 1/1/2015.
Since the new water meter was installed, my bill doubled to $300. I cannot afford this and have cut in the last two
years cut down my water usage by not showering every day, and cutting the water for my grass to the point where the
homeowners association wrote me a letter and told me to water more.
Sincerely,
Janice Hooks
3563 Pebble Street
Carisbad, Ca 92010
Sept. 16, 2013
Office of the City Clerk
City of Carlsbad
1200 Carlsbad Village Drive
Carlsbad, CA 92008
I formally protest the proposed Water and Wastewater Rates Increases..
Contrary to your assertion to encourage water conservation, a financial incentive already
exists to conserve water - namely, curtailed use savings on my water bill. I do not need a
rate increase to establish an incentive, as there is already one by savings. Indeed, when
you intend increase the rate, you have actually punished my heretofore conservation
efforts and charge me the difference, and possible more, for what I have already
conserved - the opposite effect of your assertion.
^U^il/c
John A. D'Andrea
Service address: 6615 Sitio Cedrela
Carlsbad. CA 92011
-1^
City of Carlsbad, Office of the City Clerk
1200 Carisbad Village Drive
Carisbad, CA 92008
Sept 28,2013
Dear Sir:
I am writing to officially protest the proposed water rate hike being considered by our city,
^erelyd
D. Gluiiano
1732 Havens Pt Pl
Carisbad, CA 92008
7^
09-21-13
I, Roland Maus, residing at 3825 Nautical Drive, Carlsbad protest any and all rate
increases currently being considered for Water and Wastewater services.
EGEOWIE
{ SFP 2 5 2013
CITY OF CARLSBAD CITY CLERK'S OFFICE
September 19,2013
Office ofthe City Clerk, City of Carlsbad,
Protest Single-Family Water Rate Increases.
Being a retired senior on fixed income, every penny counts as you might imagine. The
proposed water rate increases just add another fmancial burden to our meager lives.
Furthermore, m my opmion; the methodology utilized by the City Carlsbad that requires
*a majority of property owners to provide protest letters' insures that the rate increases
will be initiated. Final thought: How about those residents that support a water rate
increase submit letters to the city clerk and if a majority is not received the water rate
increase is rejected.
Kind Regards,
Michael Tage Klmt
2759 Spokane Way
Carlsbad, Ca. 92010
September 21,2013
To Whom It May Concern:
I would definitely like to protest both the trash and water rate hike scheduled for January of 2014 and
15.1 am already paying over $200.00 a month and I am the only water user for a single femily home.
Accordingly, I still only water my lawn 3 times a week, but have been experiencing Increases over the
last 5 years.
I believe this rate Increase is unjust and uncalled for. As a govemment vtorker, I have received no raises
fbr the last four years, and have had to do without, while expenses keep climbing, I believe the
businesses can take a hit for the next four years and do without like the rest of us.
*atJeffr(
Carisbad resident
77
October 1.2013
City Of Carlsbad
Carlsbad Municipal Water District
Carisbad, CA 92008
Dear Sir or Madame,
We oppose any Increase to the water delivery charge and water usage
Charge as Is currently being proposed.
Sincerely,
Mike and Annetta Wilson
3611 Seavlew Way
Carisbad CA 92008
OCT-7 2013
Philip & Sondra Boone
2042 Cordoba Place
Carlsbad CA 92008
Office ofthe aty Clerk
City of Carlsbad
1200 Carlsbad Village Drive
Carlsbad CA 92008
To Whom It May Concern:
This is a formal protest to the proposed fee change to the City of Carlsbad water
rates. ^
My full name is: J,
Philip Boone ^
Sondra Boone ^^r^s^^^^^>^ .^^CHN^
Our resident address is:
2042 Cordoba Place
Carlsbad CA 92008
The rate change I am protesting is for Monthly Wastewater Rates
Single Family Residential current is $24.02; proposed 1/1/2014 is $25.52
Proposed 1/1/2015 is $26.03
The rate change I am protesting is for Monthly Water Delivery Charge
3/4" current $26.97, proposed 1/1/2014 $27.02,1/1/2015 $28.38
1" current $38.52, proposed 1/1/2014 $40-93,1/1/2015 $42.98
The rate change I am protesting is for Water Usage Charge
Single-Family Rates
Tier 1 (0-12 units) current $3.20
proposed 1/1/2014 Tier (0-10 units) $3.19
proposed 1/1/2015 Tier (0-10 units) $3.35
Tier 2 (13-20) current $4.13
Proposed 1/1/2014
proposed 1/1/2014 Tier (11-18 units) $4.24
proposed 1/1/2015 Tier (0-10 units) $445
11
September 25,2013
Gary and Rana Coleman
1552 Regatta Road
Carlsbad, CA 92011
Dear City Clerk,
I am writing in protest ofthe following rate increases: Monthly Water Delivery Charge, Water Usage
Charge, and Monthly Wastewater Rates.
Sincerely,
Rana Coleman
Carisbad Resident
1552 Regatta Road
Carlsbad, CA 92011
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Alex Szabo
5338 Forecastle Ct
Carlsbad, CA 92008-3824
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Office of the City Cleric
1200 Carlsbad Village Drive
Carisbad, CA 92008
Saturday, October 05, 2013
6643 Halite Place
Carisbad. CA 92009
Re: Water Rate Increase
City Cleric,
Please take this letter as our written protest to the Proposed Water Rate
Structure and Maximum Water & Wastewater Rate increase. There should be no
increases to the existing high rates that exist today.
Sincerely,
Wilbur E. Mower, Jf.
cc File
September 21,2013
Office ofthe City Clerk
City of Carlsbad
1200 Carlsbad Village Drive
Carlsbad, CA 92008
Dear Sir/Madam
We reside at 2917 Rancho Rio Chico, Carlsbad, CA The purpose ofthis letter is
to protest the increase m Monthly Water Delivery charge 5/8" delivery charge for 2015.
We also protest the Water Usage Charge for Smgle Family Residents for 2014 and 2015.
Also, we are protesting the Monthly Wastewater Single Family increases in 2014 and
2015.
William R. Blank
Patricia A. Blank
^3
Office of City Clerk
City of Carlsbad
120 Carlsbad Village Drive
Carlsbad, ca 92008
Re: Proposed water rate Increases
Gentlemen:
Please accept this letter as a formal protest to the proposed new
water rates - Wastewater rates: $25.02 to $26.03 by 2015 and Water
Rates: up to 6% increase by 2015.
When we approved on the ballot the desalination plant, we were
promised to never pay more that the current water rates. The city
has already advised that this will not occur due to unforeseen costs
and now with current water rates Increasing it appears we are facing
another government boondoggle like the Calif. Bullet Train.
The Carlsbad Golf Course (Crossings) has proved to be a disaster. We
need to protect our citizens from excessive spending, over-taxation
and fees.
Sincerely,
Theodore Van de Kamp
homeo\Nner
1708 Evergreen Circle
Carlsbad, CA 92008
c>
rage z ot z
From: joe abreu [mailto:jrabreu(aroadrunner.com]
Sent: Tuesday, October 01, 2013 10:10 AM
To: City Clerk
Subject: Protesting the water rate increases.
Pursuant to the Notice of Majority Protest Public Hearing and the ability to protest by e-mail, we the
inhabitants of 7304 Melodia Terrace protest the increase in Water Usage Charge for Tier 2 and Tier 3.
for Jan 12014 and Jan 1 2015. Also the Increase in Monthly Wastewater Rates for Jan 1,2014 and Jan 1,
2015.
We were charged with similar increases in Jan 1, 2012 and again in Jan 1, 2013. When will it stop, if we
do not keep our grass green then the HOA sends us a letter to water. The City Council must pay
attention to what is happening at the Carisbad Municipal Water District and the San Diego Water
Authority.
Thank you,
Joseph R. Abreu
Ingrid M. Abreu
to
10/1/2013
1 NOV - 5 2013
CITY OF CARLSBAD
CiTY CLERK'S OFFICE
November 5, 2013
Office ofthe City Clerk
City of Carlsbad
1200 Carlsbad Village Drive
Carlsbad, CA 92008
RE: Protest ofthe proposed increase to the water rates for single-family residential
I am a homeowner at 6511 Onda Place, Carisbad, CA 92009, and I am protesting the proposed
single-family residential water usage rate increases for 2014 and 2015.
We already pay some ofthe highest rates in the country for water. The tiered system is unfair
and skewed towards penaUzing those who have larger yards or pools and yet still conserve water
as much as they can. The proposed structure for the new tiers moves more families into the
second and third tiers, and I believe this is unfair also. I particularly object to the increase in
rates for the tier 3 in 2015, when the cost v^ll increase by almost $.80 per unit! That is
outrageous!
The City of Carlsbad usually gets things right. The price stmcture for water is not one of them.
We can barely afford the water utility rate as it is and, when we retire, we will probably be
forced to sell our home because there seems to be no end in sight for the increases. Had we been
able to foretell the future 20 years ago when we put in our pool, we would never have
constructed it.
THE TIERED WATER SYSTEM AND THE PROPOSED RATE INCREASES ARE FLAWED
AND SHOULD BE REJECTED.
Sincerely,
Carolyn B. Reinmiller
6511 Onda Place, Carlsbad, CA 92009
ALTERNATE PROPOSAL ON WATER
RATE STRUCTURE
DAN DOWNING
First of all, I do not disagree with a rate increase
That is a natural result of supply and demand
THE CITY HAS SAID IT SHOULD BE RUN MORE LIKE A
BUSINESS
•In any business a vendor offers a product or service at a price.
•The buyer always negotiates for a better deal.
•The Water District has offered to sell water for a price.
•It is incumbent on the citizens and businesses in Carlsbad to ask for a better
deal.
CITY PROPOSAL ON DELIVERY CHARGE
Meter Size Current 1/1/2015 Change % Change
5/8 21.38 21.08 -0.3 -1.4%
3/4 26.97 28.38 1.41 5.2%
1 38.52 42.98 4.46 11.6%
1 1/2 67.6 79.49 11.89 17.6%
2 102.27 123.31 21.04 20.6%
2 1/2 147.8 174.41 26.61 18.0%
3 194.72 225.52 30.8 15.8%
4 298.75 371.56 72.81 24.4%
6 588.03 736.64 148.61 25.3%
8 934.75 1174.74 239.99 25.7%
10 1339.61 1685.86 346.25 25.8%
Average Increase 8.9%
PROPOSED WATER AND SEWER RATES
•Water Tier 1 (0-10 units) $3.19/unit
•Water Tier 2 (11-18 units) $4.24/unit
•Sewer (single family) $26.03 monthly fixed rate
CONSIDER THE WATER DISTRICT’S EXAMPLE OF A
RESIDENCE USING THE AVERAGE OF 13 UNITS PER
MONTH.
•Delivery Charge is $20.07
•Usage charge is $4.24 x 13 = $55.12
•Sewer Charge is $25.52
•Total is $100.71
•(The example in the notice has an error, their usage charge is calculated as
$44.62)
THE RESULT OF A 50% WATER USE REDUCTION
•Delivery Charge is $20.07
•Usage charge is $4.24 x 6.5 = $27.56
•Sewer Charge is $25.52
•Total is $73.15
•Therefore a 50% use reduction yields a 27% cost reduction
ANALYSIS
•When water usage goes down, the Water District’s costs should go down.
•The proposed structure with high fixed charges create no incentive for the district to
cut costs when usage is down.
•This is essentially a no-layoff, cradle to grave welfare system
for the Public Employees, this cannot be allowed to happen.
MY PROPOSAL
•Cut the water fixed charges in half
•Raise the usage rates to balance the revenue
•Cut the fixed sewer charge in half, the balance made up with a charge
proportional to water use.
THE RESULT
•If the consumer continues to use the same amount of water, their cost will be
unchanged.
•If the consumer uses less water, they pay less.
•If the consumer uses more water, they pay more.
•If overall city water usage goes down, revenue to the Water District goes
down, and they must find a way to cut costs, like any other business.
EXPECTED RESPONSE FROM THE WATER DITRICT
•“The fixed charges are necessary to cover the costs of water infrastructure.”
•If that is true, show us the calculations that say you can never cut costs.
Majority Protest Public Hearing:
Water and Wastewater Rate Increases
City of Carlsbad/Carlsbad Municipal Water District
November 5, 2013
Cost of Service Study:
Potable Water and Recycled Water
•Consultant: Raftelis 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 $64.69 $67.93
Wastewater (a) $25.02 $25.52 $26.03
Total $88.93 $90.21 $93.96
Recycled Water (b) $1,337.77 $1,352.93 $1,358.81
Action Items
•Protest letters
•Open public hearing
•CMWD Board action
•Carlsbad City Council action
8
Water and Wastewater Rates
Questions?
9
Calendar
•September 10, 2013: Set majority-protest public hearing for November 5, 2013
•September 17, 2013: Mailed written public notice to comply with Proposition 218 (45 day) noticing requirement
•November 5, 2013: Hold majority-protest public hearing, set rates for 2 years, and approve new rate design
•January 1, 2014: Implement new rates
10
Potable Water
Where does the money go?
11
Recycled Water
Where does the money go?
12
Wastewater
Where does the money go?
13
Monthly Fixed “Delivery Charges”
14
Monthly Fixed Charge
Existing Proposed Proposed
Meter Service Service Charge Service Charge
Size Charge 1/1/2014 1/1/2015
5/8"21.38$ 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”
15
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
16
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
Water Agency Contact Information
San Diego County Water Authority
http://www.sdcwa.org
4677 Overland Avenue
San Diego, CA 92123
858-522-6600
Metropolitan Water District
http://www.mwdh2o.com
Mailing address:
P.O. Box 54153
Los Angeles, CA 90054-0153
Street address:
700 North Alameda Street
Los Angeles, CA 90012-2944
213-217-6000
17