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Home My WebLink About1992-05-27; Municipal Water District; 0592-02; Utilization of Rate Stabilization FundsCARLSBAD MUNICIPAL WATER DISTRICT - AGENDA BILL \B# 0592-2 05/27/92 JITG. z 0 F 0 a =! 0 z 3 0 0 DEPT. HD. gr& CITY ATTY UTILIZATION OF RATE STABILIZATION FUNDS FOR METROPOLITAN'S SERVICE TITLE: ___ 3EPT. CMWD 1 CHARGE I CITY MGR. 3ECOMMENDED ACTION: Recommend that the Board adopt Resolution No. utilizing rate stabilization funds to offset the service charge passed through by the County Water Authority from the Metropolitan Water District. ITEM EXPLANATION: Metropolitan Water District recently adopted a plan to generate $50 million in annual firm revenue. This revenue will provide an increased degree of financial stability as it pursues projects and programs aimed at increasing reliable water supplies for Southern California. This $50 million dollar program is split into two revenue packages. One package is a stand-by charge and results in a $5.00 charge per year per acre for each acre of land or $5.00 per year for each parcel of land less than an acre, within Metropolitan's service area. This charge is expected to generate half of the needed $50 million firm revenue needed. The remaining $25 million is a service charge to all MWD's member agencies. The service charge will be based on each agency's water purchases from Metropolitan during the last four fiscal years, ending July 31, 1991. The amount to be collected is $2.86 for every acre- foot of water purchased by agencies during the four-year period. The service charge to the County Water Authority is approximately $6.7 million and this charge will be passed through to its member agencies using the same criteria. As a result, CMWD's charge amounts to $189,000 for the coming budget year. There are three options on this service charge. The first is to pass the charge on to the customers as a flat charge. There are approximately 17,000 customers served by CMWD and the $189,000 service charge would result in approximately an $11.00 per year charge to each customer. This converts to slightly less than $1.00 per month. The service charge from Metropolitan and passed through by CWA is based on a total water usage and a flat rate is not the best or most equitable method of passing on the cost. The second method would be to pass the cost on through the water rate. This is the most equitable method because, as previously stated, the service charge from Metropolitan is based on total usage for a 4 year period. The $2.86 per acre foot charge multiplied by the 4 year total water usage results in a $.03 per unit additional charge for water to the CMWD customer. This method is staff's preferred method of passing on the service charge. Page 2 of Agenda Bill No. The third option is to utilize the monies set aside in the Rate Stabilization Fund the District recently established. There is approximately $326,000 in the fund and this money could be used to cover the service charge for at least this first year. Staff recommends that the rate stabilization fund be utilized to pay for the $189,000 service charge for fiscal year 1992-'93. FISCAL IMPACT: The $189,000 service charge is included in next year's budget. At this time, however, it is shown as an expenditure only. As a result, there will be a $189,000 shortfall unless a method of securing the revenue is established. If the Commission recommends use of the rate stabilization fund to offset the service charge, additional revenue sources will not be needed at this time. EXHIBITS : None. MWD METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA no'? GQMPFRZ BOB MUlR LE€ GOTTLIEB ROB HALLWACHS 0FFIf.E ,?I?\ 250 t866 OFFICE (2131 250-6930 OFFICE !213) 250-6603 OFFICE (2131 250-6450 i 1 I ti il Release: on receipt May 12, 1992 METROPOLITAN ADOPTS REVENUE STABILITY PLAN Metropolitan Water District's board of directors authorized measures today that will provide the agency with an increased degree of financial stability as it pursues projects and programs aimed at assuring reliable water supplies for Southern California. The fiscal package adopted today calls for the district to assess a service availability charge on its 27 member public agencies and to collect a water standby charge on all real property in the district's 5,200-square-mile service area. The combined charges will raise an additional $50 million in annual firm revenues for the district, with approximately $25 million being collected from each source. "Improvements must be made to the region's water supply infrastructure if we are to meet current and future water demands," said Metropolitan General Manager Carl Boronkay . "These additional sources of revenue will begin funding necessary construction of needed storage and distribution facilities, and pay for conservation and more . . . . . -2- maintenance programs that will benefit water users throughout the districtls service area," he said. The service charge to MWD member agencies will be based on each agencyls water purchases from Metropolitan during the last four fiscal years, ending July 31, 1991. The amount to be collected is $2.86 for every acre-foot of water purchased by agencies during the four-year period. An acre-foot of water is 326,000 gallons, about the amount used by two average families in and around the home in one year. The standby charge will be limited to 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. Exemptions will be considered for: -- lands owned by public agencies, -- areas committed to open space that will not need water s.ervice from Metropolitan, and -- properties which are not now and cannot reasonably be expected to receive any benefit from the projects to which the proceeds of the water standby charge will be offered. Metropolitan provides, through its 27 member public agencies, more than half the water used by 15 million Southern Californians in Ventura, Los Angeles, Orange, San Bernardino, Riverside and San Diego counties. ###