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Home My WebLink About1995-09-12; Municipal Water District; 290; Results of Water Rates Working CommitteeCARLSBAD -JN&3PAL WATER DISTRICT ““AGENDA BILL AB # uwd TITLE: MTG. 9/l 2195 Report on Results of Water Rates Working Committee DEPT. CMWD RECOMMENDED ACTION: There is no action required. This is an informational item only. ITEM EXPLANATION: In February 1995, the Board approved hiring the firm of Montgomery Watson to perform a rate study. An integral component of this study has been the participation of a citizens’ committee. The committee was composed of 14 members, each representing an important constituency or type of Carlsbad water user that could be affected by a revised rate structure. The committee met a total of six times, including a tour of the District facilities. The purpose of the committee was to provide input to District staff and consultants about the various aspects of rates, both water and sewer, and what impacts each would have on the representative water user. The District thought that a citizens’ group would provide valuable insight and perspective to a process that is generally conducted without much public commentary, other than during the public hearings adopting the rates. The committee proved to be a valuable experience both for the citizens and the staff who participated. A public relations firm conducted the meetings and acted as facilitator. During the fifth meeting, the committee was asked to weight potential rate structure options, using their own values and learned knowledge of the factors affecting the District when making rate decisions. The results of their weighting is detailed in the Water Rates Working Committee Final Report and will be incorporated into Montgomery Watson’s Rate Study Report, which will be completed in the Fall. At that time, the final rate structure recommendations will be presented to the Board. During the staff presentation, additional details of the process will be presented, and some members of the committee may wish to address the Board to present their perspective of the experience. FISCAL IMPACT: 1 Because this is an informational item, there is no fiscal impact. EXHIBITS: 1. Water Rates Working Committee Final Report, August 1995. EXHIBIT 1 Water Rates Working Committee final Report Augurt, 1995 WATER RATES WORKING COMMITTEE (WRWC) Carlsbad Municipal Water District Table of Contents for The Final Committee Report Adopted july 26, 1995 I. Executive Summary (Revised and adopted on h/y 26, 19951 . . . . . . . . . . . . . . . . . . . . Pages 1-2 II. List of Organizations and Individuals Adopting the WRWC Report (Signatory Page) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . Page 3 Ill. WRWC Statement of Purpose (Adopted April 26, 1995) . . . . . . . . . . . . . . . . . . Page 4 IV. WRWC Groundrules of Participation (Adopted April 26, 1995) . . . . . . . . . . . Pages 5-7 V. Results of Final Weighting of Rate Structure Components (Completed )uly 13, 1995) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pages 8-9 VI. WRWC Subcommittee Commentary and Recommendations (As drafted by subcommittee on /me 28, 1995 and revised and adopted by full WRWC on july 26, 1995) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pages 1 O-l 1 VII. Appendices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pages 12-37 WATER RATES WORKING COMMITTEE FINAL REPORT Section I - Executive Summary I. Introduction This Final Report by the Water Rates Working Committee (WRWC) represents the culmination of the committee’s efforts to provide community input to the process of designing a new water rate structure for the Carlsbad Municipal Water District. The committee was formed to ensure that District staff and consultants consider all relevant community viewpoints before making a final recommendation to the District’s Board of Directors. The WRWC was comprised of 14 members, each representing an important constituency or type of Carlsbad water user that could be affected by a revised water rate structure. Representatives brought a variety of perspectives to the committee discussions including business, agriculture, residential, industrial, government and environmental viewpoints. The committee’s first three meetings were devoted to a general education on water supply and delivery, rates terminology, the District’s finances and an in-depth analysis of the current water rate structure. The committee also participated in a site tour that included the District offices and other important facilities used to supply water to the District’s service area. During the last two meetings, the committee members worked to reach consensus on a set of preferred options for a revised water rate structure. These options will be utilized by the District’s rate study consultant, and incorporated into his final recommendation to District staff. Members of the WRWC adopting this report have indicated their participation in the committee process through their completion of the weighting exercise and the selection of a set of preferred options for the new water rate structure. The committee also provided additional input regarding rate structure issues to the District staff and its consultants during committee discussions. The committee meetings were facilitated by an outside facilitator whose role was to maintain neutrality and establish an open, balanced committee process. II. WRWC Results: Weights for Rate Structure Components The WRWC voted on various options for rate structure components and placed weights on the following: fixed versus variable charges; the delivery charge for different customer classes; alternative rate structures; the implementation, availability and revenue structure of a conservation rate; the implementation of a lifeline user rate; financing of capital projects; financing of the reclaimed water system; connection fees for the potable water system; discounts for reclaimed water users; and revisions to the residential sewer rate structure. The committee was given two opportunities to weight the rate structure options. The first allowed them to weight according to what they found important based on the prior education process. Before they completed the second weighting, the committee was given an opportunity to discuss the options, provide commentary, and ask questions to share their individual perspective with the whole committee. Since some committee members changed their weightings, the results of the second exercise were deemed the official weighting to be used in the rate structure study. The results of the weighting exercise are included in the Final Report. They are to serve as input on community values to the District’s consultant and are not intended to endorse a particular water rate structure. Decisions regarding the selection of a final rate structure will be made by the City of Carlsbad Councilmembers who also serve as the Carlsbad Municipal Water District Board of Directors. III. Committee Commentary and Recommendations While outside the purview of the committee’s purpose, the committee also submitted additional commentary on the subject of water conservation. A report was drafted by subcommittee members and approved by the entire committee to provide thoughts and recommendations for future consideration by District staff. This commentary is included in the Final Report. IV. Structure of the Report The balance of this report includes six sections and Appendices. Section II lists the organizations and individuals adopting the report in the form of a signatory page. Section III presents the WRWC’s Statement of Purpose and Section IV outlines the Groundrules of Participation. Section V presents the results of the final weighting exercise. Section VI is the commentary on water conservation. This report also includes three appendices. Appendix I is a roster of participants and observers. Appendix II is a roster of the District staff and consultants. Appendix Ill is a compilation of all the meeting agendas and summaries. V. Conclusion Those who participated in the process have provided valuable input that will assist in designing a revised water rate structure that adequately reflects the values and needs of the Carlsbad community. 7- ‘ r - _- WATER RATES WORKING COMMITTEE FINAL REPORT Section II - list of Organizations and Individuals Adopting the Report (Signatory Page) dary Akin Engineering Supervisor Encina Engineering, SDC&E Bret Berry Project Manager, Carltas - Resident, L*hore Gardens dobile Home Park -Oakley P&r Apartment Owner Lee Bohlmann Nancybowdn Executive Vice President Purchasing Manager, Carlsbad Chamber of Commerce Carlsbad Unified School District Hal De Weese Board Member Alicante Hills Homeowners fissociation Chuck Pridham Operations Manager, ParI%p&tendent City of Carlsbad Parks & Recreation Dept. OfYE scobedo President Barrio Carlsbad Association Karen Messer Conservation Chair Buena Vista Audubon Society Managing Director, La Costa Resort & Spa San Diego County Hotel/Motel Association David Thompson President, Thompson Rose Co. m County Farm Bureau , Chair Carlsbad Village Business Association WATER RATES WORKING COMMITTEE FINAL REPORT Section Ill - Statement of Purpose Adopted April 26, 1995 The Water Rates Working Committee (WRWC) consists of water users who represent residential, business, agricultural and industrial interests in the Carlsbad Municipal Water District (District). The WRWC will help District staff and consultants to weight potential options for a revised water rate structure, considering the impacts that various options could have on specific groups as well as on the community as a whole. In doing so, the committee will be asked to discuss issues such as equity, revenue sufficiency, flexibility, accountability for growth, conservation, etc. The new rate structure must incorporate increased costs for county-wide capital improvement projects that will be passed on to member agencies, including the District, by the San Diego County Water Authority (Authority) and the Metropolitan Water District of Southern California (MWD). The structure will also take into account the District’s projections for future growth, as well as master plans for potable and reclaimed water, and the need to develop alternative, local water resources within the District. Specifically, the committee will provide the following input: 0 voice community and business concerns about restructuring water rates; l consider the importance of various criteria for a revised rate structure; 0 discuss the impacts of various rate options on specific groups as well as on the community as a whole; 0 weight potential options for a revised water rate structure; 0 consider goals of the District’s master water plan; 0 bring forth other important issues that should be considered by District staff. #### WATER RATES WORKING COMMITTEE FINAL REPORT Section IV - Groundrules of Participation Adopted April 26, 1995 Representation Members of the Water Rates Working Committee (WRWC) were recruited based on several qualities: 0 willingness to work cooperatively with other committee members; 0 demonstrated ability to present the perspective of an important group who will be affected by a water rate restructuring; l commitment to attend the series of meetings. The WRWC is designed to act as a small, working group of individuals representing a broad range of interests. WRWC members are expected to coordinate with their respective organization or constituency to keep them aware of this committee’s discussions and ideas. As needed, the Carlsbad Municipal Water District (District) will support members in these efforts. WRWC members are not expected to distribute mailings to the community at large. Role of Committee Members An engineering firm is proceeding with preliminary studies on various rate structure alternatives so that a preferred rate structure can be determined. The WRWC has been formed to ensure that District staff and consultants consider all relevant community points of view before making a final recommendation to the District’s Board of Directors. Consequently, the role of the WRWC members is to: 0 become familiar with rate structure considerations and options; 0 bring forth issues or interests that will directly affect them based on water rate increases; l present community and business values and concerns to the District; 0 learn how water rate structure revisions will affect various groups and the community as a whole; 0 work to reach a consensus on preferred options for a new water rate structure. Commitment to Attend Meetings In order to establish trust and maintain the integrity of the process, consistent participation of all committee members is essential. WRWC members will commit to attend meetings consistently. Substitutes are not encouraged. However, if a committee member must send a substitute, the member will inform project staff and brief the substitute in advance of the meeting. Work Product A summary report will be prepared on behalf of the WRWC. It is suggested that the report document the following: 0 the scope and content of the committee’s discussions; 0 a weighting of potential options; 0 individual opinions and observations that may not be reflected in the main body of the report. The WRWC’s report will provide public input to the District’s rate study consultant. This input will be incorporated into the consultant’s final recommendation to District staff. As a public document, copies of this report will be provided to the District to aid members, agency staff, and as requested, the media and general public. However, neither the committee’s discussions nor summary report are intended as an endorsement of a particular rate structure option. Media Contact and Observers While the WRWC is studying, negotiating or weighing issues, the participants will not make public statements to the media prejudging the outcomes. Such statements can hamper creative discussion. Upon the completion of the committee meetings, the WRWC will appoint a subcommittee to work with project staff and consultants to collectively determine an appropriate medium and approach to summarize the committee’s work and recommendations. If observers attend WRWC meetings, they are required to identify themselves to the project staff or facilitators prior to the start of each meeting. Staff will provide a copy of these groundrules to observers. Indemnification and Hold Harmless The District agrees to defend, indemnify, protect and hold the WRWC members harmless from and against any and all claims asserted or liability established for damages or injuries associated with the final water rate structure recommendation. ’ 3 ‘I Furthermore, it is the understanding of the members of the WRWC and the District that all decisions concerning the final rate structure adopted by the District will solely be made by the City of Carlsbad and/or their consultants, agents or officers. support A facilitator, as well as District staff and consultants, will provide assistance to the WRWC during its discussions. The facilitator will be neutral with respect to the issues and any preferred rate structure alternatives. District staff and consultants will be available to make presentations to community organizations at the request of WRWC members, and to make additional information pertaining to rates available to the committee. The District will be responsible for educating the committee on basic water and rate structure issues. Specifically, the committee will be informed about the following: 0 the existing water system; 0 the District’s current rate structure; 0 the cost and purpose of District, San Diego County Water Authority and Metropolitan Water District capital improvements that will be passed on to water users; 0 potable water rate charges including unit vs. delivery charges, drought penalties and lifeline user rates; 0 reclaimed water rates and the impact of increased reclaimed water use on potable water demands; 0 connection fees; 0 the District’s master water plan, including capital improvement projects and the ability to develop local, alternative water resources. #### WATER RATES WORKING COMMITTEE FINAL REPORT Section V - Results of Final Weighting of Rate Structure Components (N = 14) Completed July 13, 1995 The committee was given two opportunities to weight the rate structure options. The first allowed them to weight according to what they found important based on the prior education process. Before they completed the second weighting, the committee was given an opportunity to discuss the options, provide commentary, and ask questions to share their individual perspective with the whole committee. Since some committee members changed their weightings, the results of the second exercise were deemed the official weighting to be used in the rate structure study. 1. Analysis of Fixed versus Variable Charge How much of our revenue should be collected from variable (per unit rate) and fixed (delivery charge) sources? #1 e / Keep It as rt IS 19% Oo . . . . 18% 14% Use a technical expert’s standard (American Water Works Association) to establish the ratio. 16% 17% Recover all costs from a fixed revenue source. 18% 23% Recover all costs from a variable revenue source. 28% 31% Use AWWA method modified to meet the District’s needs. 2. Delivery Charge for Different Customer Classes How should the delivery charge for District customers be structured? #1#2 5 1 % 58% Keep it the same as it is (based only on meter size). 49% 42% Base it on meter size and customer classification. 3. Alternate Rate Structures What rate structure should be used by the District? a. E / Decltmng block rate 19% OO * . 34% 46% Uniform rate (remain as is) 2 1 % 15% Inclining block rate 26% 21% Seasonal rate 4. Conservation Rate What should the District do with the current conservation rate offered to single-family residential customers? #1 #2 35% 28% Keep it as it is. 26% 24% Eliminate it. 39% 49% Use a more technical method to establish what the rate should be. 5. Availability of Conservation Rate What customer classifications should be eligible for the conservation rate? #l 52% #2 82% All customer classifications. 28% 12% Residential only (including single-family and multi-family). 20% 5% Single-family residential only. 8 6. Structure of Conservation Rate If the District were to keep the conservation rate or institute an inclining block rate, how should it be structured? &! 5 / Keep It revenue neutral. 56% Oo . 2 1 % 12% Generate extra revenue to fund conservation programs only. 23% 20% Generate additional money to fund water resource management programs (groundwater recovery, desalination, conservation programs). 7. lifeline User Rate What should the lifeline rate or discount be for Carlsbad residents? #1 #2 69% 68% There shouldn’t be one. 14% 15% A 10% discount off the total water and sewer charges. 16% 17% A 15% discount off the total water and sewer charges. 8. Financing of Capital Projects How should the District finance capital projects? &I 22 24% 16% Raise funds from rates and connection fees only (pay-as-you-go). 28% 19% Use borrowed funds at market rates (pay-as-you-use). 48% 65% Use a combination of pay-as-you-go and pay-as-you-use. 9. 10. 11. 12. Financing the Reclaimed Water System How should the reclaimed water system be financed? #J #2 1 1 % 7% Not at all; eliminate the program. 34% 29% Raise money to expand the system by using potable water rates. 43% 53% Have reclaimed and potable water users split the cost of expanding the system. 1 3 % 11% Have current and new reclaimed water users pay the total cost of expanding the system. Connection Fee for Potable Water System What method should be used to calculate potable connection fees? El #2 22% 27% Keep it as it is (based on EDUs). 78% 73% Base it on meter size. Reclaimed Water Rates Analysis What should the District charge for reclaimed water? #1 #2 3 1 70 30% The same rate as potable water. 31 % 36% A 5% discount from potable water rates. 38% 34% A 10% discount from potable water rates. Residential Sewer Rates Review and Update How should residential users be charged for sewer services? #I #2 26% 31% Keep it as a uniform fixed fee per dwelling unit for all residential users. 1 1 70 10% Establish different fixed fees for single-family and multi-family customers. 16% 18% Keep it as a fixed fee for single-family residential users, but switch to flow-based for multi- family customers. 46% 41% Switch to a flow-based system for all residential customers. 9 !-- ‘G _- WATER RATES WORKING COMMITTEE FINAL REPORT Section VI - Subcommittee Commentary & Recommendations As drafted by subcommittee on June 28, 1995 and revised and adopted by full WRWC on July 26, 1995 The following report provides commentary and recommendations made by the Water Rates Working Committee’s subcommittee on water conservation. Representatives from the subcommittee have met with District staff to discuss current programs and management practices that encourage water conservation. The overall recommendation of the subcommittee is that the City consider water conservation as an important source of water, and review possibilities for incentives to all users to conserve as much as might be realistic and cost-effective. The City may find that conservation could be a very cost-effective alternative to excess water demand fees and the capital outlay involved in construction of new reservoirs or expansion of the reclaimed water system to the full extent envisioned. The subcommittee recommends that water conservation be evaluated as an integral part of the new water resources management plan. There may still be large groups of users who are not currently using water efficiently, and for whom conservation would not be burdensome. For example, it is not known whether homeowners’ associations are more or less efficient in their use of water than single-family residences. There may be new incentives that would have a substantial effect on water use, for example, landscape retrofit incentives paid for by peak use fees. Based on the information provided by the District, the subcommittee has made the following recommendations to help increase the success of water conservation. Recommendations for Future Research/Analysis The subcommittee would like to encourage closer coordination between the District and the City’s planning and fire departments to ensure that City ordinances are written and enforced in a manner that promotes conservation. It is also recommended that the City review and, if necessary, revise the goals of the new water resources management plan to evaluate conservation as a possible new source of water on the same footing as other sources, so that a cost-benefit analysis can be done. As the studies for the new plan have not yet begun, this may be an appropriate time to do so. Finally, the subcommittee recommends that the new rate structure be reviewed for its possible disincentive effect on future conservation programs. The recent drought has shown how, under the current rate structure, water conservation can lead to reduced operating revenues and thus necessitate higher water rates. Such a rate structure might be an impediment to viewing conservation as a source of new water. 10 Specific Benefits of Increased Conservation According to the subcommittee, increased water conservation may provide a number of benefits to the community and the environment by delaying the need to build costly infrastructure to accommodate new demands on the current water supply. Some specific benefits and objectives of increased conservation are as follows: 1) 2) 3) 4) The District may avoid or delay paying the New Demand Charge from MWD. With increased conservation, the District could delay reaching the level of water use that triggers the New Demand Charge, even as Carlsbad continues to grow. The District may find, after water usage has been decreased through conservation, that it may be able to delay the need to build additional infrastructure such as reservoirs and sewer upgrades to meet increased water demand and emergency storage requirements. As increased conservation will help to expand the existing potable water supply, the District should consider finding the optimal and most cost-efficient balance of potable and reclaimed water supplies to meet future water demand. The District may delay other more expensive water supply alternatives such as wells or desalination. #### 11 ‘4 Table of Contents for Appendices Appendix I Roster of WRWC Members and Observers Appendix II Roster of CMWD Staff and Consultants Appendix Ill Agendas and Summaries of WRWC Meetings APPENDIX I WATER RATES WORKING COMMITTEE (WRWC) Roster of WRWC Members and Observers NAME AFFILIATION COMMITTEE MEMBERS Akin, Gary Berry, Bret Bohlmann, Lee De Weese, Hal Duncanson, Doug Escobedo, Ofie Messer, Karen Moritz, Andy Parker, Oakley Powers, Nancy Sheaffer, Darrel I Thompson, David Prid ham, Chuck Wanamaker, Allan OBSERVERS Benedetto, Craig Kubota, Jack Stroman, Bill Engineering Supervisor, Encina Engineering, SDG&E Project Manager, Carltas Executive Vice President, Carlsbad Chamber of Commerce Board Member, Alicante Hills Homeowners Association Park Superintendent, City of Carlsbad Parks & Recreation Dept. President, Barrio Carlsbad Association Conservation Chair, Buena Vista Audubon Society Resident, Lakeshore Gardens Mobile Home Park Apartment Owner Purchasing Manager, Carlsbad Unified School District Managing Director, La Costa Resort & Spa San Diego County Hotel/Motel Association President, Thompson Rose Co., San Diego County Farm Bureau Operations Manager, Hughes Aircraft Co. Co-Chair, Carlsbad Village Business Association Legislative Advocate, Building Industry Association of San Diego County Water Commissioner, CMWD Lab Analyst, SDG&E 14 APPENDIX II NAME Anger, Julie Flack, Jeanne Greaney, Bob G uevara, Pat Hi Idabrand, Lisa Honig, Barbara Musser, Kurt Pardiwala, Sudhir Plummer, William Sargent, Laurie Wiltgen, Joni WATER RATES WORKING COMMITTEE Roster of CMWD Staff and Consultants AFFILIATION Committee Liaison, Katz & Associates Administrative Manager, Carlsbad Municipal Water District General Manager, Carlsbad Municipal Water District Construction/Maintenance Superintendent, Carlsbad Municipal Water District Finance Director, City of Carlsbad Accountant, City of Carlsbad Operations Superintendent, Carlsbad Municipal Water District Principal Engineer, Montgomery Watson District Engineer, Carlsbad Municipal Water District Faci I itator, Katz & Associates Management Analyst, Carlsbad Municipal Water District 16 APPENDIX Ill - AGENDA FIRST WATER RATES WORKING COMMITTEE MEETING Wednesday, April 26, 1995 6-&30 p.m. Carlsbad Senior Center 799 Pine Avenue Carlsbad I. Greeting & Opening Remarks II. Administration & Role of Committee III. Committee and Staff Introductions IV. Statement of PurposeKommittee Groundrules BREAK (10 min.) V. Overview of Water Process and Water District A. Authority / MWD B. CMWD C. Committee Q&A VI. Closing Remarks #### Mayor Bud Lewis, City of Carlsbad (5 min.) Laurie Sargent, Facilitator (10 min.) Laurie Sargent (10 min.) Laurie Sargent (20 min.) Bob Greaney, Gen. Mgr., Carlsbad Municipal Water District (45 min.) Laurie Sargent (5 min.) 18 - KATZ & ASSOCIATES WATER RATES WORKING COMMITTEE MEETING #l SUMMARY Date: Wednesday, April 26, 1995 Time: 6 to 8:30 p.m. Location: Carlsbad Senior Center Distribution: All meeting attendees I. INTRODUCTION Bud Lewis, the mayor of Carlsbad, began the meeting by thanking the committee members for participating in a process that will provide valuable input on the issue of water rates to the Carlsbad Municipal Water District staff and its consultants. Laurie Sargent, facilitator, briefly explained her role on the committee and asked committee members to provide her with any comments or feedback that will make the meetings more productive or efficient. II. COMMITTEE, STAFF, OBSERVER INTRODUCTIONS Laurie asked the WRWC committee members, District staff and observers to introduce themselves. An announcement was made that Hughes Aircraft Co. will have a representative on the committee, but they were not able to attend the first meeting. In addition to those listed on the committee, staff and observer roster, Jack Kubota, a City of Carlsbad Water Commissioner, also was present at the meeting. Ill. ADMINISTRATION & ROLE OF COMMITTEE Laurie explained the procedure for each meeting and stated that committee members would receive summaries of each meeting as well as any additional background materials requested by the committee for an early review prior to the next meeting. A change to the meeting schedule was recommended and unanimously approved by the committee. The fifth committee meeting, originally scheduled for Wednesday, June 21 has been changed to Wednesday, June 28. The meeting will be held at the same time and location. Laurie reviewed the information and materials contained in the committee binders. 19 IV. STATEMENT OF PURPOSE/COMMITTEE GROUNDRULES Laurie covered the main points outlined in the committee groundrules including: committee selection and representation, commitment to attend the series of meetings, the committee members’ role in the process, contact with the media and the committee’s work product that will be compiled into a final summary report. Laurie also stated that the most important meetings will be the fourth (May 31) and fifth (June 28). At these meetings, the committee will be asked to discuss and weight potential options for a new water rate structure. The committee groundrules and statement of purpose were discussed and unanimously approved by the committee with no changes. V. OVERVIEW OF WATER PROCESS AND WATER DISTRICT Bob Greaney, General Manager of the Carlsbad Municipal Water District, gave a general overview of how water is received by the Southern California region and how it is delivered and managed by various agencies, including the Metropolitan Water District of Southern California, the San Diego County Water Authority and the Carlsbad Municipal Water District. VI. CLOSING REMARKS For the next meeting, Laurie asked the committee members to bring in a recent copy of their water bill for a review of rates terminology. The next meeting will be held from 6 to 8:30 p.m. on Wednesday, May 10 at the Carlsbad Senior Center (799 Pine Avenue). #### 20 I. II. Ill. AGENDA SECOND WATER RATES WORKING COMMITTEE MEETING Wednesday, May 10, 1995 6-8:30 p.m. Carlsbad Senior Center 799 Pine Avenue Carlsbad Introduction & Administration Metropolitan Water District General Rates Overview San Diego County Water Authority General Rates Overview BREAK (10 min.) IV. Carlsbad Municipal Water District Projects Overview V. Understanding Water Reclamation VI. Financial Overview of CMWD BREAK (10 min.) VII. Review of Rate Structure Terminology VIII. Overview of Rate Structure Analysis of Individual/Company Water Bills IX. Closing Remarks Laurie Sargent, Facilitator (5 min.) June Skillman, MWD (25 min.) Martin Bridges, SDCWA (25 min.) Mark Stadler, SDCWA William Plummer, CMWD (20 min.) William Plummer (20 min.) Jeanne Flack, CMWD (20 min.) Sudhir Pardiwala, Montgomery Watson (5 min.) Sudhir Pardiwala (5 min.) Laurie Sargent (5 min.) #### 21 SECOND WATER RATES WORKING COMMITTEE MEETING BIOS ON GUEST SPEAKERS June Skillman Metropolitan Water District of Southern California June Skillman is a resource specialist at the Metropolitan Water District of Southern California. She joined the district in 1995 and is currently responsible for preparing cost and rate studies and various financial analyses in the Planning and Resources division. June earned her bachelor of arts degree in Art History from the University of California, Riverside in 1981 and her masters degree in Business Administration from the California State University, Fullerton in 1985. Prior to joining the district, June worked as a senior financial analyst for the Public Utilities Department for the City of Anaheim. Martin Bridges San Diego County Water Authority Martin Bridges is a cash manager for the San Diego County Water Authority and is primarily responsible for handling the agency’s financial investments. He is also involved in rates analyses and specifically reviews the impact of rates on the Authority’s member agencies, of which the Carlsbad Municipal Water District is one. Martin joined the Authority in 1987, and has worked in the Finance Department in his current capacity for the last four years. He earned a finance degree from San Diego State University in 1987. Mark Stadler San Diego County Water Authority Mark Stadler is an administrative analyst in the San Diego County Water Authority’s Public Affairs Department. He joined the Authority in 1989 after spending 11 years in the newspaper industry. Mark is involved with several of the Authority’s departments and projects and is responsible for writing, and handling media relations and legislative analysis. Additionally, he serves as the public affairs department liaison for the Authority’s Emergency Water Storage Project. Mark received his bachelor of arts degree in Political Science from the University of California, San Diego in 1978, and is currently working on a masters of public administration at San Diego State University. #### 22 KATZ & ASSOCIATES WATER RATES WORKING COMMITTEE MEETING #2 SUMMARY Date: Wednesday, May 10, 1995 Time: 6 to 8:30 p.m. Location: Carlsbad Senior Center Distribution: All meeting attendees I. INTRODUCTION & ADMINISTRATION Laurie Sargent started the meeting and introduced Darrell Sheaffer, Managing Director of La Costa Resort & Spa, and Chuck Pridham, Operations Manager for Hughes Aircraft Co., who were both in attendance for the first time. The minutes from the first WRWC meeting were unanimously approved by the committee. II. METROPOLITAN WATER DISTRICT GENERAL RATES OVERVIEW June Skillman from the Metropolitan Water District of Southern California (MWD) gave the committee an overview of MWD’s rates and planning process. MWD has committed to providing its member agencies with 100 percent water reliability 90 percent of the time. In order to achieve this goal, an extensive capital improvement plan has been designed to meet Southern California’s projected water demand into the year 2020. June also explained how MWD proposes to pay for these projects through a revised rate structure. MWD’s new rate structure was designed to meet the following objectives: increase revenue stability; provide more equity; ensure that growth pays its fair share; and minimize any rate shock. The Board of Directors’ for MWD approved the new rate structure in March of 1994, and the following new charges will be passed on to MWD’s member agencies: a readiness-to-serve charge, a new demand charge, and a connection maintenance charge. Other sources of revenue for MWD include taxes and commodity .charges. Ill. SAN DIECO COUNTY WATER AUTHORITY GENERAL RATES OVERVIEW Mark Stadler and Martin Bridges from the San Diego County Water Authority provided the committee with an overview of the Authority’s current projects and rate structure. 23 Martin discussed the economics of providing a reliable water supply and the current threats to water reliability in the San Diego region. Mark provided an overview of the Authority’s capital improvement projects (CIP). The four main purposes for the CIP are to: upgrade and expand the capacity of existing pipelines; replace smaller pipelines; bring more water into the County (44 percent); and increase overall water reliability. One of the Authority’s largest projects is the Emergency Water Storage Project intended to provide a supplemental water supply to San Diego in the event of an earthquake or other natural disaster causing severe damage to water pipelines. The Authority is currently investigating the possibility of developing alternative, local water supplies. The two primary alternatives being considered are water reclamation (treating wastewater for irrigation and other non-potable uses) and water repurification (taking reclaimed water and treating it to a high degree of purification through reverse osmosis). The Authority is also considering the enhancement of groundwater supply and desalination. Martin explained how the agency proposes to pay for its CIP program through a revised rate structure and discussed the specific impact that the new charges would have on the Carlsbad Municipal Water District. IV. CARLSBAD MUNICIPAL WATER DISTRICT PROJECTS OVERVIEW Bill Plummer, District Engineer with the Carlsbad Municipal Water District, gave an overview of the District’s facilities and how they receive water. Bill also reviewed the basic costs of capital improvement projects anticipated for the District. The District currently finances these projects through various revenue resources: local projects are funded through connection fees; replacement projects are funded through water rates; and MWD and the Authority are paid through water rates and connection fees. V. THE WATER RECLAMATION PROCESS IN CAR&BAD Bill Plummer also gave an overview of the District’s reclaimed water system. In 1989 the District embarked on a reclaimed water system to develop an independent water supply, primarily for irrigation users within the District. This effort was accelerated by conditions imposed on water agencies by the drought. As a result, the District is in the process of implementing a five-phase reclaimed water master plan. To develop the reclaimed water master plan the District looked at: five distinct geographic areas in the District, the types of water uses that were possible for reclaimed water consumption, what sources of reclaimed water were available, the distribution systems needed, and a capital improvement and financing plan. 24 The District decided that the water should be of a high quality. This would allow for greater flexibility as to the uses for reclaimed water within the District. Consequently, the District approved a reclamation process that included primary, secondary and tertiary treatment. Bill gave an overview of the five-phase reclaimed water master plan that is scheduled for completion by the year 2010. VI. FINANCIAL OVERVIEW OF CMWD Jeanne Flack, Administrative Manager with the Carlsbad Municipal Water District, gave a financial overview presentation on the District’s potable, sanitation, and reclaimed water funds. Each service is managed as an independent enterprise fund, and generates its own revenue by charging for the services provided. These funds are separate and distinct from the city’s other funds. Jeanne also discussed the District’s expenses and revenues generated for each fund. Finally, Jeanne stressed the degree of influence that other agencies including the Encina Wastewater Authority, MWD, and the San Diego County Water Authority have on the rates charged by the District. The City of Carlsbad has to look at how they are going to accommodate the increases and objectives of these different agencies when they restructure their own water rates. VII. REVIEW OF RATE STRUCTURE TERMINOLOGY Sudhir Pardiwala, the District’s independent rate study consultant from Montgomery Watson, reviewed a list of common terms associated with water rate structures. These terms are also listed in a glossary of terms in the notebook provided to each committee member. VIII. CLOSING REMARKS The review of individual and company water bills was postponed so that the meeting could adjourn on time. The tour of local water facilities is scheduled for Saturday, May 20 from 9 a.m. to 12:30 p.m. Committee members are to arrive at the Carlsbad Municipal Water District (5950 El Camino Real) at 8:45 a.m. The next committee meeting will be held on Wednesday, May 31 from 6 to 8:30 p.m. at the Carlsbad Senior Center (799 Pine Avenue). #### 25 I. II. II. IV. V. VI. VII. AGENDA WATER RATES WORKING COMMITTEE TOUR OF LOCAL WATER FACILITIES Saturday, May 20, 1995 9 a.m. - 12:30 p.m. Carlsbad Municipal Water District 5950 El Camino Real Carlsbad Welcome/Introduction Laurie Sargent, Facilitator (9:00-9:05) CMWD Telemetry System Bryan Troup, CMWD (9:05-9:20) Meadowlark Reclamation Facility Kurt Musser, CMWD (9:45-l 0:30) Vallecitos Water District TBA, VWD Maerkel Reservoir and Dam Kurt Musser (10:45-l 1:05) Twin D Reservoirs Kurt Musser (11:25-l 1:45) Home Plant Lift Station Kurt Musser (12:00-l 2:20) Closing Remarks Laurie Sargent (12:20-l 2:30) #### 26 I. II. Ill. IV. AGENDA THIRD WATER RATES WORKING COMMITTEE MEETING Wednesday, May 31, 1995 6-8:30 p.m. Carlsbad Senior Center 799 Pine Avenue Carlsbad Introduction & Administration Review Individual/Company Water Bills Laurie Sargent, Facilitator (5 min.) Jeanne Flack, CMWD (10 min.) CMWD’s Current Rate Structure Comparisons of Olivenhain MWD and Vallecitos WD Rates Jeanne Flack (10 min.) Jeanne Flack (15 min.) BREAK (10 min.) V. Overview and Discussion of Sudhir Pardiwala, Montgomery Watson CMWD’s Rate Study (1 hour, 15 min.) BREAK (10 min.) VI. Discuss Objectives for New Rate Structure Laurie Sargent (20 min.) Sudhir Pardiwala VII. Closing Remarks Laurie Sargent (5 min.) #### 27 KATZ & ASSOCIATES WATER RATES WORKING COMMITTEE MEETING #3 SUMMARY Date: Wednesday, May 3 1, 1995 Time: 6 to 8:30 p.m. Location: Carlsbad Senior Center Distribution: All meeting attendees I. INTRODUCTION & ADMINISTRATION Laurie Sargent started the meeting by stating that the evening would be discussion-oriented, and she encouraged the committee to ask questions and participate throughout the presentations. The committee approved the minutes from the second WRWC meeting with no changes. II. REVIEW INDIVIDUAL/COMPANY WATER BILLS Jeanne Flack reviewed the specific charges that appear on the Carlsbad Muncipal Water District’s bills. The average usage for a single-family residential home in the District is 14 units. She also stated that multi-family units typically use less water, but this measurement is highly dependent on the amount of outside irrigation. Ill. CMWD’S CURRENT RATE STRUCTURE Jeanne also gave a presentation on the components of the District’s current rate structure including: the commodity charge (charge per unit of water); the delivery charge (fixed charge based on meter size); and the sewer charges for residential, commercial, industrial, institutional and large volume users. The sewer charges for other than residential users are based on the user’s specific facilities such as kitchens, restaurants, showers, outside irrigation, etc. These rates attempt to reflect the actual cost of the service. Irrigation and agricultural users are not charged for sewer because they do not put any wastewater into the sewer system. IV. COMPARISON OF OLIVENHAIN MWD AND VALLECITOS WD RATES Jeanne presented several figures and charts that offered a comparison of various water bill charges in the Carlsbad, Vallecitos and Olivenhain water districts. When comparing each district, Jeanne encouraged the committee to consider the agency’s revenue sources, the different services they provide, and what the real bottom line is. 28 The Carlsbad Municipal Water District has a uniform structure with a conservation rate and offers a discount to agricultural customers. Olivenhain Municipal Water District operates a three-tiered block rate that is adjusted seasonally and also has a discount rate for agriculture. The Vallecitos Water District has a flat rate, a different pumping charge for each pumping zone, and gives an automatic discount to agricultural users. The Carlsbad and Olivenhain agriculture discounts are voluntary. The agricultural rates are a temporary program provided by the Metropolitan Water District. All three agencies purchase 100 percent of their water from the San Diego County Water Authority. Jeanne also showed comparisons of the three districts’ commodity charges, delivery charges, charges per meter size, and examples of monthly bills for a variety of customers. V. OVERVIEW AND DISCUSSION OF CMWD’S RATE STUDY Sudhir Pardiwala gave an overview of the purview of the water rate study. He mentioned that the study will also include a review and update of the District’s sewer rates. Sudhir’s portion of the study will involve collecting data, making data projections, considering policy decisions, meeting revenue requirements, and conducting rate calculations. The scope of the study will include an analysis of the following elements of the District’s current rate structure: availability/delivery charge (including a review of the fixed charge for multi-family units); various options for financing of capital projects; connection fees for potable and reclaimed water systems; and reclaimed water rates. The study will determine the actual cost to deliver reclaimed water to current and potential users. Sudhir will also evaluate the feasibility of alternative rate structures including declining block, uniform, inverted or inclining block, and seasonal. His analysis of the District’s current sewer rates will simply be a review and update including a look at the current sewer charge for multi-family units. VI. DISCUSS OBJECTIVES FOR NEW RATE STRUCTURE In order to end the meeting early, Sudhir continued his presentation on the rate structure objectives through the second break. The committee was encouraged to review the objectives prior to the next meeting and consider if any important objectives were not included on the list. Sudhir discussed the objectives set by the District for the new rate structure. They include: revenue sufficiency, equity, conservation encouragement, growth paying its fair share, simplicity, flexibility, and a reclaimed water subsidy. Karen Messer expressed a concern that the issue of conservation was not being reviewed carefully enough and, therefore, the magnitude of its importance for the committee and the rate study was unclear. Laurie suggested that willing members of the committee form a subcommittee on the issue of conservation and meet separately with District staff to discuss the issue prior to the next meeting. 29 2-- ,iT- The subcommittee, which includes Gary Akin and Karen Messer, will share their findings with the rest of the committee at the WRWC meeting on June 28. VII. CLOSING REMARKS Laurie adjourned the meeting a half-hour early and stated that the overheads for the presentations would be distributed to the committee members in the next mailing. She asked the committee to carefully review their materials prior to the next meeting as they will be participating in a weighting exercise that will require a clear understanding of the issues and objectives for a new rate structure. The next WRWC meeting will be held on Wednesday, June 28 from 6 to 8:30 p.m. at the Carlsbad Senior Center (799 Pine Avenue). #### 30 L-/e- i d .d .I AGENDA FOURTH WATER RATES WORKING COMMITTEE MEETING Wednesday, June 28, 1995 6-8:30 p.m. Carlsbad Senior Center 799 Pine Avenue Carlsbad I. Introduction & Administration II. Review/Discuss Rate Structure Objectives III. Clarification of Exercise and First Weighting of Rate Structure Options BREAK (10 min.) IV. Discussion and Second Weighting of Rate Structure Options VI. Closing Remarks Laurie Sargent, Facilitator (5 min.) Laurie Sargent (10 min.) Sudhir Pardiwala, Montgomery Watson Laurie Sargent (45 min.) Sudhir Pardiwala Laurie Sargent (1 hour, 15 min.) Laurie Sargent (5 min.) #### 31 KATZ & ASSOCIATES WATER RATES WORKING COMMITTEE MEETING #4 SUMMARY Date: Wednesday, June 28, 1995 Time: 6 to 8:30 p.m. Location: Carlsbad Senior Center Distribution: All meeting attendees I. INTRODUCTION AND ADMINISTRATION Laurie Sargent started the meeting and gave a general explanation of the weighting exercise. The committee will submit a vote on each of the twelve rate structure components. After completing the exercise once, the committee will discuss the results and have an opportunity to vote again based on any new information learned from the discussion. Two committee members, Darrell Sheaffer and Allan Wanamaker, were not present at the meeting. Because the weighting exercise is intended to reflect input from the entire committee, the results will not be final until both Darrell and Allan have an opportunity to provide their votes. The minutes from the third WRWC meeting passed with no changes. II. REVIEW/DISCUSS RATE STRUCTURE OBJECTIVES The committee was given a revised set of rate structure objectives and was asked to keep them in mind during the weighting exercise. Ill. CLARIFICATION OF EXERCISE AND FIRST WEIGHTING OF RATE STRUCTURE OPTIONS Laurie briefly reviewed the purpose of the weighting exercise and how the results would be incorporated into the rate study. The committee completed their first weighting of rate structure options. IV, DISCUSSION AND SECOND WEIGHTING OF RATE STRUCTURE OPTIONS Laurie and Sudhir Pardiwala reviewed the results of the first weighting. Going through each of the twelve components, they discussed the number of points and the percentage given to each option by the committee. Sudhir then explained in greater detail the impacts that various options would have on current water users. Some of these impacts had not previously been considered by the committee. 32 35 The committee completed the second weighting of rate structure options. In most instances, the amount of weight given to the most preferred options increased in the second weighting. V. CLOSING REMARKS Laurie stated that the results of the first and second weighting exercise will be distributed to the committee once the votes of Darrell and Allan have been incorporated. Members of the water conservation subcommittee, including Gary Akin and Karen Messer, met prior to the meeting on June 28 to draft a commentary for inclusion in the committee’s Final Report. The committee will receive and is asked to review the draft commentary prior to the next meeting. If there are any comments or revisions, these should be submitted to Julie Anger before July 26. At the next meeting, Sudhir will explain how he is going to incorporate the weighting results into his rate study and final recommendation to the District. The next WRWC meeting will be held at 6 p.m. on Wednesday, July 26 at the Carlsbad Senior Center (799 Pine Avenue). Your attendance is important as you will be asked to sign the committee’s Final Report. #### 33 AGENDA FIFTH WATER RATES WORKING COMMITTEE MEETING Wednesday, July 26, 1995 6-8:30 p.m. Carlsbad Senior Center 799 Pine Avenue Carlsbad I. Introduction & Administration Laurie Sargent, Facilitator (5 min.) II. Final Results of Committee Weighting Exercise Laurie Sargent (10 min.) III. Explanation of How Results Will Be Incorporated Into Rate Study and Final Sudhir Pardiwala (45 min.) Recommendation to the District IV. Signing of Final Report V. Review of Approval Process and Next Steps VI. Closing Remarks A. Committee Evaluation B. City Council Meetings Laurie Sargent (5 min.) Bob Greaney and Jeanne Flack, CMWD (5 min.) Laurie Sargent (5 min.) #### 34 KATZ & ASSOCIATES WATER RATES WORKING COMMITTEE MEETING #5 SUMMARY Date: Wednesday, July 26, 1995 Time: 6 to 8:30 p.m. Location: Carlsbad Senior Center Distribution: All meeting attendees I. INTRODUCTION & ADMINISTRATION Laurie Sargent thanked the committee members for attending the final meeting of the Water Rates Working Committee. The minutes from the fourth WRWC meeting were unanimously approved by the committee. II. FINAL RESULTS OF COMMITTEE WEIGHTING EXERCISE Laurie reviewed the final results of the committee weighting exercise which incorporated scores from both Darrell Sheaffer and Allan Wanamaker who were not present at the last meeting. Ill. EXPLANATION OF HOW RESULTS WILL BE INCORPORATED Sudhir Pardiwala provided an overview and encouraged committee discussion about the impacts of the results. He was able to do some preliminary analysis based on the committee recommendations, but will not have final numbers until he finishes analyzing all of the relevant data from the District. Consequently, Sudhir focused his report on explaining different methods to achieve the results selected by the committee. During Sudhir’s presentation, there was lengthy discussion regarding implementation and availability of the conservation rate to all customer classifications. The overriding advantage of implementing the conservation rate for all customer classes is that increased conservation may help the District to delay having to pay the New Demand Charge from MWD as well as some costs for new infrastructure. These offsets can be factored into the equation when determining the new conservation rate. Sudhir discussed various options for implementing a conservation rate. The easiest option to implement is a uniform block for all customers, but this would not be fair to larger meter users. A second option is to use a base block for each meter size, and a third option would be to base the rate on individual customers’ water usage characteristics. The last option would involve extensive auditing and exemption applications, and would be extremely burdensome on the administrative staff. 35 7” J’ c - . Some members of the committee expressed concern that a conservation rate based on meter size would prevent some water users from being able to take advantage of it. The District reminded the committee that those users who do not qualify for the conservation rate are not being penalized; they simply pay the normal rate and are still able to reduce their total bill by conserving water. If every water user qualified for the rate, then the conservation rate would have to be increased to a level at which all water users would be paying the same rate in order to provide sufficient revenue. The committee also discussed the subsidy that potable water users would provide to the reclaimed water system by offering reclaimed water users a 5 percent discount from potable water rates. The benefit to the potable water users is that, similar to increased conservation, reclaimed water use reduces the overall demand on the potable water system. Finally, the committee discussed the options for switching residential sewer rates to a flow-based system. The options Sudhir presented include basing the rate on average monthly flow, average winter flow or the lowest winter month flow. Sudhir indicated the average winter flow method is most effective, because it is more reliable and can be implemented without extremely time- intensive administrative procedures. IV. SIGNING OF FINAL REPORT Laurie asked the committee members to review a draft of the executive summary to be included in the committee’s Final Report. The summary provides an overview of the committee’s purpose and activities, as well as the support materials to be included in the Final Report. The committee approved the executive summary with no changes. The committee was also encouraged to discuss comments submitted regarding the subcommittee report on water conservation. A few committee members were interested to know if it is realistic to assume that the District could actually delay building additional infrastructure as a result of increased conservation. Karen Messer reiterated that the purpose of thesubcommittee commentary was to encourage the city to consider evaluating conservation by conducting a real cost-benefit analysis as they would when looking at other water resource options. The recommended revisions to the commentary were approved by the committee. The committee members who were present signed the signatory page of the Final Report. Doug Duncanson, from the City of Carlsbad Parks and Recreation Department, was the only member not present or represented by an alternate. He will be asked to sign the Final Report at a later date. V. REVIEW OF APPROVAL PROCESS AND NEXT STEPS Bob Greaney, General Manager of the Carlsbad Municipal Water District, expressed his appreciation to the committee members for their continued participation. He also encouraged the committee members to remain involved in the next steps by attending future City Council meetings discussing the new water rate structure. In particular, the District will give a report on the involvement of the WRWC and an explanation of the committee process at a Council meeting 36 2. w . sometime in September. Their final recommendation to the Council, who also serves as their Board of Directors, will also be made later this year. WRWC members are encouraged to attend both meetings and will receive a letter from the District notifying them of the dates once they are finalized. VI. CLOSING REMARKS Laurie also thanked the committee members for their participation and asked each committee member to stay for a moment after the meeting while the District presented a small gift to remind committee members of their important role in the process. The committee members will also receive a copy of the Final Report in the mail. On a final note, Laurie encouraged the committee to complete an evaluation form that was distributed to each member. Information from these surveys will be used to help design and coordinate future committees and/or public involvement activities for the District. #### 37