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Home My WebLink About1992-02-26; Municipal Water District; Informational; Rate Stabilization & Reserve Funds Status ReportCARLSBAD MUNICIPAL WATER DISTRICT - AGENDA BILL 1B # ~ UlTG. IEPT. ADMIN. I RATE STABILIZATION AND RESERVE FUNDS STATUS REPORT DEPT. HD. CITY ATTY CITY MGR. 3ECOMMENDED ACTION: No recommendation at this time. This is an information item only. ITEM EXPLANATION: At Commission meetings in November and December of last year the Commission reviewed and recommended to the Board adoption of the Revised Inclining Block Water Rate Structure. The Board so adopted Resolution No. 766 revising the inclining rate structure. The rate structure was recommended for revision due to the issue of penalty charges and the penalty monies received by the District. The use of the penalty monies was determined as follows: Customer Service $ 100,000 Refund to S/F Customers 140,000 5 Units to All Customers 97,700 Rate Stabilization Fund 431,150 Reserves 431,150 Total $1,200,000 The two funds (Rate Stabilization Fund and Reserve Fund) have been established. However, no monies have been expended out of either fund. The rate stabilization fund was earmarked to possibly offset future water rate increases from the Metropolitan Water District and/or the County Water Authority. Since neither agency has taken any official action, the actual effect on CMWD's rates cannot be determined. When the increases are known, staff will be presenting that information to the Commission for review and recommendations. Also, no monies have been expended from the Reserve Fund. These monies were set aside and were to be utilized to supplement the rate stabilization fund, offset any penalty the District incurs from the SDCWA, or for other purposes. As for the remaining monies, the rebates will be occurring during the April or May billing cycle. The five unit credit has already taken place. No monies have been spent from the $100,000 set aside for customer service. This was intended for possible computer billing upgrades, and staff is still investigating the possible upgrades. FISCAL IMPACT: None EXHIBITS : None MWD METROPOLITAN WATER DISTRICT OF SOUTHERN CAIIFORNIA BOB GOMPERZ BOB MUlR LEE GOTTLIEB ROB HALLWACHS OFFICF (213) 250-6866 CE (213) 250-6930 OFFICE (213) 250-6603 0 I (lbl H15 137 54 '1, E 17141 196 8331 tlOhlt(d18 is6 1 3 Y Release: on receipt February 11, 1992 MWD REVENUE PLAN CONSIDERS STANDBY, SERVICE CHARGES Metropolitan Water District took a step today toward firming up its revenues for needed projects and programs aimed at assuring reliable supplies of water for Southern California. "With the Southland experiencing tremendous increases in population, improvements must be made to the region's water supply infrastructure if we are to meet burgeoning water demands," said Metropolitan General Manager Carl Boronkay. Under Metropolitan's revenue plan, the district would assess a service availability charge on its 27 member public agencies and collect a water standby charge on all real property in the districtls 5,200-square-mile service area. If approved by Metropolitan's board in May, the combined charges would raise an additional $50 million in firm revenues for the district, with approximately $25 million being collected from each source. Both charges will be subject to a series of public hearings to be held throughout the Southland in March and April. "These additional sources of revenue will begin funding necessary construction of needed storage and distribution more . . . . . -2- facilities and pay for conservation programs that will benefit water users throughout the district's six-county service area," said Boronkay. The proposed service charge to MWD member agencies would be based proportionately on each agency's water purchases from Metropolitan during the last four fiscal years, ending July 31, 1991. The standby charge would impose a $5 charge per year for each acre of land or $5 per year for each parcel of land less than an acre within the district's service area. Boronkay said that both proposed charges are needed to close the gap between the districtls rising fixed expenses and declining dependable revenues. "More than 75 percent of Metropolitanls revenues are currently derived from water sales. Consequently, when our water sales fall off, as they have during the drought, our revenues drop abruptly, leaving a considerable shortfall," Boronkay said. "Conversely, more than 80 percent of the district's expenditures are fixed costs which are associated with maintaining and paying for the facilities that deliver supplies to the Southland. These expenses, like mortgage payments, require a certain level of income regardless of the district's economic situation," he said. more . . . . . -3- "This imbalance between our fixed costs and firm revenues creates an unhealthy financial situation for Metropolitan,** Boronkay added. If approved, the standby charge would appear on bills to property owners, beginning next fall. However, MWD member agencies also would be permitted to make direct payments to the district on behalf of property owners instead of having Metropolitan impose the standby charge on real property. In a related action, the board noted its intention to discontinue the standby charge within two years and seek other means to raise firm revenue. Service charges would be collected from Metropolitants 27 member agencies in monthly installments. For example, projected annual service charges would range from $11,548 for the city of San Fernando to $6.7 million for the San Diego County Water Authority. Metropolitan*s board of directors will hold a series of six public hearings on the proposed charges. Five hearings, which will offer the public an opportunity to comment on the proposed standby charge, will be held at various Southland locations in late March and early April. Notification of the dates and sites for these hearings will be mailed to all real estate owners in the district. more . . . . . -E -4- A separate hearing on the service charge will be held April 21 at 10 a.m. at the district's Los Angeles headquarters, 1111 Sunset Boulevard. Metropolitan will accept written comments about the standby charge proposal, either at the scheduled hearings, or by mail. should be sent to Metropolitan Water District, P.O. Box 54153, Los Angeles, CA 90054, Attention: Executive Secretary. Correspondence must be received by April 7 and Metropolitan provides, through its member agencies, more than half the water used by 15 million Southern Californians in Ventura, Los Angeles, Orange, San Bernardino, Riverside and San Diego counties. ###