HomeMy WebLinkAbout1991-10-22; Municipal Water District; 131; Inclining Block Water Rate Structure UpdateCARLSBAD M”“\IICIPAL WATER DlSTRlC’l- - -3ENDA BILL yp “j Av I 0 r\
AB # 131 TITLE: DEPT. HD. Df-(
MTG. l”hz h / Update on and Discussion of the Inclining CITY ATTY a?
DEPT. /i!&Ul- Block Water Rate Structure CITY MGR. +
RECOMMENDED ACTION:
Receive report and direct staff as Board deems appropriate on issues relating to the District’s
inclining block water rate structure.
ITEM EXPLANATION
Effective with the March-April 1991, billing cycle, the Board of Directors initiated an
inclining block water rate structure for the District. For the first four months, the system
consisted of two blocks. The first block was the base rate of $1.01 per unit (748 gallons).
This rate was charged for all consumption up to the allocation for each customer within the
District’s service area. For any consumption over the allocation, two-times the base rate, or
$2.02 was charged. The monthly allocations for customers were determined by taking actual
monthly consumption during fiscal year 198990 and reducing it by the conservation target
in effect (currently 20%).
The block rate system was altered for the July-August billing cycle with the creation of a four
tiered block system. Up to two and one-half times the current retail rate is charged for those
customers who exceed their monthly allocation by more than 20%. In addition, a change in
the methodology for setting single-family water allocations was performed. Under the revised
system, all single family allocations are based on a District-wide average. The semi-annual
single family average is reduced by 20% to determine the allocations. In the dry season the
allocation is 15 units, and in the wet season the allocation is 10 units.
One variable in the development of the block rate system was the impact on the District’s
revenue stream. A number of scenarios were developed. However, the only accurate way to
realize the effects of the block rate system is to experience it for a few months. Staff
informed the Board that the situation would be monitored closely. The District has been
meeting its allocation as a whole, but there are those individual customers that have exceeded
their targets and are subject to the higher rates. Now there are five months of data available
on this topic. A summary of the additional income received by the District due to the
inclining block rate structure is as specified below.
Billing Cvcle Amount
Overall
Conservation
Mar-Apr $ 46,033 -25%
Apr-May 158,652 -26
May-Jun 147,204 -29
Jun-Jul 115,740 -25
Jul-Aug 264,0 11 -32
Aun-Sep 263,532 -25
Total $995,172 -27%
‘.
The relatively large increase realized by the July-August and August-September billing cycle
can be attributed to the new four tiered rate structure. The total additional revenue received
by the District to date translates into approximately 33% of the District’s annual expenditures
for water purchases.
Staff would like to open this topic for discussion by the Board. Specifically, does the Board
desire to alter the existing inclining block rate structure in light of the facts presented in this
agenda bill? A detailed presentation will be given on this issue, and staff will respond to any
questions from the Board.
FISCAL IMPACT
There is no direct fiscal impact from this action. If the Board determines to make a revision
to the rate structure those changes will be analyzed.
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