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HomeMy WebLinkAbout1991-02-19; Municipal Water District; 086; Adopt Inclining Block Water Rate Structure3MWD - AGENDA BILL ~B#~&&L TITLE: AT& +h+/ Hold Public Hearing and Adopt Inclining 1EPT.a Block Water Rate Structure for Service Area RECOMMENDED ACTION: Hold a Public Hearing and adopt Resolution No. 716 creating an inclining block water rate structure for the Carlsbad Municipal Water District service area. ITEM EXPLANATION California is in the midst of a five year drought that has reduced available water supplies to levels that are lower than 1976-77, the worst water year on record. In response, the Metropolitan Water District has declared a Phase III of its Incremental Interruption and Conservation Plan (I.I.C.P.) effective February 1, 1990. This Phase requires all water purveyors to reduce their demands by 15% over fiscal year 1989-90 figures. In addition, at their February 12th Board meeting, M.W.D. is expected to declare a Phase V in March which could result in a conservation target of 29%. During 1989-90 the District purchased 17,918 acre feet. This translates into a target amount of 15,230 acre feet at 15% reduction and 12,721 acre feet under 30% reduction for the current year. The base year will be adjusted by two factors. First, the District's targets will be adjusted by the increase in service connections since 1989-90. The second factor takes into account any mandatory conservation programs implemented by the District. This would apply to June and.July 1990, which was the only time the District imposed mandatory water conservation restrictions as part of its Stage II water declaration. On a month-by-month basis, water consumption targets will be developed by taking the adjusted base year of 1989-90 and reducing it by the current I.I.C.P. conservation target percentage. If at the end of each month the District has purchased a guantity of water that falls below our target allocation, a $99.00/acre foot rebate will be paid by M.W.D. Conversely,. for every acre foot purchased that exceeds the District's target allocation, a $394.00/acre foot penalty will be assessed by M.W.D. Rebates and penalties are based on M.W.D.'s untreated water rates. As previously mentioned, the rebates will be $99.00/acre foot and the penalties will be $394.00/acre foot. M.W.D.'s rates are expected to increase by at least $32.00/acre foot in July of 1991. Therefore, the potential rebates and penalties after July could become $115.00/acre foot and $458,00/acre foot respectively. It should be noted that the rebates and penalties will be in addition to the current treated water cost of $277.00/acre foot ($309.00/acre foot after July 1st). In response to these facts, staff has developed a retail rate structure that applies the same methodology used by M.W.D. and applies it to our retail customers. Under this plan-.a target will be developed for each service connection in the District by taking actual demands on a month-by-month basis for fiscal year 1989-90 and reducing it by the M.W.D. conservation target. On a service-by- service basis, every unit of water consumed up to the individual target will be charged at the current retail rate (block 1). Every unit of water that exceeds that customer's target, will be charged at double the current retail rate (block 2). This is displayed graphically as follows: IICP Rate Program Retail Rates :. .: $l,Ol/Unit ’ .. -I :. -15% Target b $2,02/Unit $l,Ol/Uni t 1989-90 Demands Current Target (16 Units) (13 Units) The Water Commission has spent a number of their meetings, including a three-hour workshop, on this issue. They recommend approval by the Board of Directors. FISCAL IMPACT The impacts on the District of this rate alteration by M.W.D. could be dramatic. Under the worst case scenario, the District could be penalized over $1 million during 1991-92 if there is not any reduction in demands over base year 1898-90. The block 2 rate, of double the current retail rate, will recover any potential penalties assessed by M.W.D. On the contrary, if there are any increased revenues due to the inclining block system, those funds will be earmarked for public education, water conservation programs, or a fund to use in-lieu of future rate increases. The block 2 rate was calculated by taking the current water rate of $1.01 and adding the effects of the $394.00/acre foot penalty assessed by MWD. The penalty equates to a cost of $0.90 per unit (748 gallons). An $0.11 per unit charge was added to cover any decrease in operating expenses that may be caused by a reduction in the amount of water purchased from the County Water Authority. This is displayed in the following form: Category Cost per Unit Current Cost of Water $0.63 District Operations .25 Depreciation . 13 Current Rate Penalty Reduced O&M $1.01 .90 . 11 Penalty Rate $2.02 Exhibits: Resolution No.716 Adopting the Inclining Block Rate Structure P - (~ 1 2 3 4 5 6 7 a 9 10 11 12 13 14 15 16 17 ia 19 I 20 21 22 23 24 25 26 27 28 RESOLUTION NO. 716 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE CARLSBAD MUNICIPAL WATER DISTRICT ADOPTING AN INCLINING BLOCK RATE STRUCTURE WHEREAS, California is entering its fifth year of drought: and WHEREAS, San Diego County and the Carlsbad Municipal Water District are heavily reliant upon imported water supplies; and WHEREAS, the Metropolitan Water District (M.W.D.) has declared a Phase III of their Incremental Interruption and Conservation Plan (IICP) as of February 1, 1991. NOW, THEREFORE, BE IT RESOLVED that the Carlsbad Municipal Water District Board of Directors has created an inclining block water rate system under the following conditions: 1. Monthly conservation targets will be established using the base year of 1989-90 and reducing that amount by fifteen percent. Water consumption within this first block (Block 1) will be charged at the current retail rate (presently $1.01 per unit). Any water used over the target amount will be charged at the Block 2 rate or twice the retail rate (presently $2.02 per unit). 2. Conservation targets for new residential customers will be based on an average monthly usage in the Carlsbad Municipal Water District's service area, less the fifteen percent conservation amount. 3. New commercial and industrial conservation targets will be determined on a case-by-case basis. 4. All water used from a fire hydrant through a temporary meter Will be charged at the Block 2 water rate. 5. As the District changes its retail water rates, the Block 1 2 31 4 5 6 7 a 9 10 31 12 13 14 15 16 17 ia 19 I/ 20 21 22 23' 24 25 26 27 28 1 rate will continue to be the current retail rate, and the Block 2 rate will be double the current retail rate. 7. As M.W.D. sees the need to move to another phase of its IICP, the Carlsbad Municipal Water District will respond by requiring that its customers save the corresponding percentage of water of that phase, which will then be the basis for the block rate system. The reductions by phase are as follows: Phase I (voluntary) 5% Phase II 10% Phase III 15% Phase IV 22% Phase V 29% Phase VI 40% 6. Exemptions - Upon receipt of a completed application form, exemptions will be considered by staff under, but not limited to the following circumstances: .a. Change in ownership or occupancy of a residence that results in an increase of more than three persons. b. Increased water demands due to the existence of medical equipment in the home. C. Events of an unusual nature. d. Apparent, specific changes in water consumption habits that create a situation where further conservation to the targeted amount is not possible. In order to be considered for this exemption, the customers water demands must be at or below the average residential demand minus the current conservation target. .- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 e. The use of reclaimed water. 7. Installation of ornamental fountains, swimming pools, or new landscaping does not qualify for exemptions. 8. If a customer does not reduce his/her demands by at least 50% of the current conservation target for three consecutive months, a written notification shall be sent. Fifty precent of the current conservation target equals 5% in a Phase II, 7.5% in a Phase III, 11% in a Phase IV, 15% in a Phase V, and 20% in Phase VI. If in the fourth month targets are still not met, a flow restrictor shall be inserted in the customers water meter. The restrictor shall remain until a Phase I declaration is performed by M.W.D., satisfactory completion of a water audit, or approval by the General Manager. 9. Following a decision by Staff, an appeal may be filed at the District office within seven days of the initial decision. The General Manager or his/her designee shall make a final determination based on the facts presented. Any final staff decision may be appealed to the Water Commission. 10. If additional revenues are generated by the inclining block rate structure, including the corresponding rebates or penalty charges imposed by M.W.D., the District will earmark those funds to be used for future water conservation programs, or as the Board deems appropriate. 11. The effective date of this Resolution shall be the beginning of the meter reading cycle in March (March 15, 1991). , . 1 2 3 4 5 6 7 8 9 1c 11 12 l:! 14 1: I( 1' 11 II 21 '21 2, 2 2 2 2 2 2 PASSED, APPROVED AND ADOPTED at a regular meeting of the Carlsbad Municipal Water District held on the 19th day of February I 1991, by the following vote, to wit: AYES: Board Members Lewis, Kulchin, Larson, Nygaard and Stanton NOES: None ABSENT: None NOTICE OF PUBLIC HEARING ESTABLISHMENT OF A INCLINING BLOCK WATER RATE STRUCTURE NOTICE IS HEREBY GIVEN that the Board of Directors of the Carlsbad Municipal Water District, will hold a public hearing at the City Council Chambers, 1200 Carlsbad Village Drive (formerly Elm Avenue), Carlsbad, California, at 6:00 P.M. on Tuesday, February 19, 1991, to consider the adoption of an ordinance to create an inclining block rate structure that will be used to determine the charges for water use on every individual meter within the boundaries of the Carlsbad Municipal Water District. If adopted the program will effect the charges on all connections that use what the Carlsbad Municipal Water District considers as excessive water use when compared to the base year of 1989-90. If the plan is effective then the district will be able to comply with the requirements of the San Diego County Water Authority. If you have any questions regarding the this matter, please call the Carlsbad Municipal Water District at 438-2722. If you challenge the inclining block rate structure in court, you may be limited to raising only those issues raised by you or someone else at the public hearing described in this notice, or in written correspondence delivered to the City of Carlsbad, City Clerk's Office at or prior to the public hearing. APPLICANT: City of Carlsbad PUBLISH: January 23, 1991 BOARD OF CARLSBAD MUNICIPAL WATER DISTRICT DIRECTORS. E-in 4& b4 ‘bo vi a~~ k C-J u - -64 w&l *l-l 19) kN -Jpa‘ H a)c + .:: 3 Ls *?I aJ c n ub4alo urn al ta 2 2Lz u . . a v) cm c urn c 3$x!