HomeMy WebLinkAbout1992-07-28; Municipal Water District; 176; Fixing Rates for Water Supplied by CMWDLB # j ? 6 TITLE:
ilTG. ? -a%-? % FIXING RATES FOR WATER SUPPLIED BY CARLSBAD MUNICIPAL WATER DISTRICT
IEPT. mwD
CARLSBAD FNICIPAL WATER DISTRI(=T . -\GENDA
IECOMMENDED ACTION:
SOY Hold a public hearing and adopt Resolution No.- fixing rates for water supplied by the Carlsbad Municipal Water District,.
ITEM EXPLANATION:
The base price of water supplied by the Carlsbad Municipal Water District is currently $1.15 per unit (748 gallons). If converted to a cost per gallon, the price would be $.0015 (fifteen hundredths of a cent). There are a number of factors that go into the development of the retail water rates.
The most significant portion of CMWD's retail water rate is the wholesale price of water charged to the District by the San Diego County Water Authority. Presently, the Authority's charges, which include the costs incurred by the Metropolitan Water District, comprise 64% of the current retail rate. The second most significant portion of the water rate funds District operations. These expenses include personnel and other operating costs associated with the distribution of the water supply. These costs attribute to approximately 23 % of the water rate. The remaining 13% of the rate funds the District's depreciation of the water system.
Current Retail Rate Comoonents Cost per Acre Foot Cost per Unit
Metropolitan Costs SDCWA Costs District Operations Depreciation
$261.00 $0.60 62.00 0.14 113.00 0.26 65.00 0.15
TOTAL $501.00 $1.15
An increase in one of the three components of the retail rate is being recommended. The rates charged are scheduled to increase on July 15, 1992. The reason for this increase from the County Water Authority is the increase from $261.00 per acre foot charged by the Metropolitan Water District to $322.00 per acre foot. This represents a $47.00 per acre foot increase in untreated water plus an increase of $14.00 per acre foot for the treated water surcharge. CMWD receives treated water from the CWA.
Page 2 of Agenda Bill No. r-lb
The Methodology used in the development of the proposed $1.29 base rate is as follows:
Proposed Retail Cost per Rate Components Acre Foot
Metropolitan Costs $322.00 SDCWA Costs 62.00 District Operations 113.00
Depreciation 65.00
Cost Per % Unit Increase
0.74 18.9 0.14 0 0.26 0
0.15 0
TOTAL $562.00 $1.29 12.2
CMWD presently charges its customers for water through an inclining block rate. The inclining block rate was established during the 1991 calendar year to encourage water conservation during the drought. This present inclining block rate structure is as follows:
1 thru 7 units ........ ..$O.gO/uni t (single family residential only) Up to allocation*.....................$l.l5/uni t 1% to 20% over allocation*............$l.43/uni t More than 20% over allocation*........$l.73/uni t
*Allocation is based on a percentage of conservation required from the base year usage (for example, during Stage 4, when 20% conservation was required, the allocation was 20% less than the base year usage, for each customer).
Presently CMWD is back to Stage I which asks for a 10% voluntary conservation effort. The Metropolitan Water District is not charging the penalty rate through its IICP program and as a result, the County Water Authority will not be charging any penalties for exceeding the base year allocations.
As a result, CMWD has three options in charging for water; the present inclining block rate, the previously used flat rate, and a combination of the flat rate with a life-line rate.
1. INCLINING BLOCK RATE -
Continuation of the inclining block rate utilizing the rate increase previously discussed would be as follows:
1 thru 7 units .................. ..$l.O4/uni t Up to allocation..................$l.29/uni t 1% to 20% over allocation.........$l.57/uni t More than 20% over allocation.....$1.87/uni t
The base year of 1989-90 for determining the allocation would still be used. However, the base year will eventually change when additional conservation efforts are required possibly during the next drought or shortage. A completely different method of calculating the cut-back will be required. Additionally, it would be difficult to charge the penalty rates for those who exceed the allocation since the conservation effort is voluntary and CMWD does not get charged any penalties.
Page 3 of Agenda Bill No. 136
2. FLAT RATE
If CMWD re-instituted the flat rate, the rate including the latest rate increase would be $1.29/unit. By going to the flat rate the allotments would no longer be needed and no penalties would be incurred. However, there would also be the loss of the lifeline rate.
3. FLAT RATE WITH LIFELINE RATE
The third option would involve a flat rate charge with a lifeline rate or basically, a two tier system. In order to utilize a lifeline rate, the base rate would have to be increased to offset the loss of revenue incurred by the lifeline rate. For example, if the lifeline rate becomes $1.04 per unit for the first seven units, the base rate for everyone using more than seven units would have to be $1.48 per unit or an increase over the old base rate of 33 cents (29% increase). This figure is based on a District-wide average single-family residential use of 16 units per month. Continued utilization of a lifeline rate is difficult to justify. There is no reason the District should be delivering water for less than the cost to deliver it.
Additionally, lifeline rates, if used, should be offered to customers who meet some type of income eligibility requirements. Applying lifeline rates to all customers assumes that low-income customers used less water than other customers, which is not necessarily true. As a result, all customers received the benefit of the reduced rate. This subsidy must be recovered through higher usage rates in all other blocks. Lifeline rates probably should be considered only when the cost of water is high compared to other similar utilities and/or when a significant percentage of residential customers are perceived to be unable to afford water service.
Therefore, staff recommendation is that the District re-institute the flat rate water charge $1.29 per unit for all customer classifications.
The Water Commission reviewed this issue on May 27th and recommends that the Board adopt a flat rate of $1.29 per unit for all customer classifications.
FISCAL IMPACT:
Retail water rates must be increased to cover the wholesale increases from the Authority or an annual shortfall would exist that amounts to $1,037,000 for 1992-'93. These additional costs are being assessed by the Authority for their budgetary needs.
EXHIBITS:
Resolution No. &Pi-
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RESOLUTION NO. ‘04
RESOLUTION OF THE BOARD OF DIRECTORS OF THE
CARLSBAD MUNICIPAL WATER DISTRICT FIXING
’ RATES OF WATER SUPPLIED BY THE CARLSBAD
MUNICIPAL WATER DISTRICT
e San Diego County Water Authority is increasing the wholesale
cost of water by ov % for the 1992-93 fiscal year to cover its expenses; and
ct will also require an increase in its component of the
retail water rate to cover th st of the increase from the San Diego County Water
Authority for the 1992-93 fiscal
WHEREAS, the Board of
DISTRICT has determined that a revis
OF DIRECTORS OF THE CARLSBAD
ABSENT:
ATTEST:
ALETHA L. RAUTENKRANZ, Secretary
(SEAL)
Carlsbad Journal
Decreed A Legal Newspaper by the Superior Court of San Diego County
Mail all correspondence regarding public notice advertising to
W.C.C.N. Inc. P.O. Box 230878, Encinitas, CA 92023-0878 (619) 7534543
Proof of Publication
STATE OF CALIFORNIA, ss.
COUNN OF SAN DIEGO,
I am a citizen of the United States and a resident of the county aforesaid;
I am over the age of eighteen years, and not a party to or interested in the above entitled matter.
I am principal clerk of the printer of the Carlsbad Journal, a newspaper of general circulation,
published weekly in the City of Carlsbad, County of San Diego, State of California, and which newspaper
is published for the dissemination of loca1 news and intelhgence of a genera1 character, and which
newspaper at all times herein mentioned had and still has a bona fide subscription list of paying
subscribers, and which newspaper has been established, printed and published at regular intervals in the
said City of Oceanside, County of San Diego, State of California, for a period exceeding one year next
preceding the date of publication of the
.i/--.-.r.. ~~ ~--x-. MOT&E 6ifl”‘ -: notice hereinafter referred to; and that the
PUBirLEP.m&.8jNG notice of which the annexed is a printed afimqmww- 1 *@vtw*. Jmiisr
s “‘iJichL copy, has been published in each regular
T#@Qf, ,T!gGT and entire issue of said newspaper and not “ in any supplement thereof on the follow-
ing dates, to-wit:
July 16 19 92
19
19
19-
19
I certify under penalty of perjury that the
foregoing is true and correct. Executed at
Carlsbad, County of San Diego, State of
California on the 16th
day of July 1992
/ .- c
v
'i\loff IA 4-l
Clerk of the Printer 2 .
NOTICE OF PUBLIC HEARING
SETTING RATES FOR WATER SUPPLIED BY
CARLSBAD MUNICIPAL WATER DISTRICT
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, Carlsbad, California, at 6:00 p.m., on Tuesday, July 28, 1992, to consider an increase in the rates for water supplied by the Carlsbad Municipal Water District to cover the cost of the increase in the cost of water
from the San Diego County Water Authority. The increase will raise the cost of
water from $1.15 per unit to $1.29 per unit, effective July 15, 1992. The Board will also consider the elimination of the inclining block rate and implementation of a flat rate water rate structure.
If you have any questions regarding this matter, please call Bob Greaney,
District Manager, at the Carlsbad Municipal Water District, 438-3367, ext. 106.
If you challenge the establishment of the water rates 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: Carlsbad Municipal Water District
PUBLISH: July 16, 1992 CARLSBAD MUNICIPAL WATER DISTRICT BOARD OF DIRECTORS