HomeMy WebLinkAbout1993-07-27; Municipal Water District; 218; Rates for Potable & Reclaimed Water. h
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CAP-XAD MUNICIPAL WATER DISTR -T - AGENDA BI
SETTING RATES FOR POTABLE AND
RECLAIMED WATER SUPPLIED BY THE
CARLSBAD MUNICIPAL WATER DISTRICT CITY MGR.
RECOMMENDED ACTION:
Hold a public hearing and adopt Resolution No. 8 ?! setting rates for potable
and reclaimed water supplied by the Carlsbad Municipal Water District and Resolution
No. &Y fj appropriating funds from the Rate Stabilization Fund and the Penalty
Reserve Fund to defer water rate increases for two months.
ITEM EXPLANATION:
The Carlsbad Municipal Water District is hereby holding a public hearing to set water
rates. District staff has prepared a staff report outlining the issues related to water rates
for fiscal year 1993-94, and is asking the Board to consider increasing the rates as
recommended in the report.
There are two main factors affecting the retail price of water supplied by the Carlsbad
Municipal Water District (District) for fiscal year 1993-94.
1. Increases in rates to the District from its suppliers, the San Diego County Water
Authority (CWA) and the Metropolitan Water District (MWD). Both CWA and
MWD have embarked on multi-million dollar capital improvement programs
designed to increase water storage capacity and improve the reliability of the
water supply to Southern California. Increases from these two entities amount to
20% over last year’s prices.
2. Decreased sales revenue due to customer water conservation and a cool, rainy
winter. Approximately 70% of the District’s fixed costs are covered by the per
unit charge to customers. As a result, the amount of revenue that can be
applied to fixed costs varies as water sales vary. This presents some difficult
rate-setting decisions with regard to increases in the per unit water rate and the
meter stand-by charge. The District will suffer losses of approximately $1 million
for fiscal year 1992-93. Anticipating a similar level of water consumption for
fiscal year 1993-94, staff estimates a potential loss of $1.6 million.
The District is unaffected by the State property tax shift this year. However, chances
are that we will be facing a potential loss again next fiscal year.
A more complete analysis of the above issues and the following rate options is
available in the attached staff report.
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Page 2 of Agenda Bill No. 2 1 g
Rate Options
1. Pass through
increase from CWA
and MWD only.
2. Increase rates to
accommodate CWA
and MWD increases,
and to cover potential
CMWD losses.
3. Combination of
rate increase and
meter stand-by
charge increase for
CWA, MWD and
CMWD needs.
Meter Stand-by
Charge
$5.50
for 518
meter
$0.46
$2.75
$1.67
$8.25
~
~~~~~
$1.8
million
None
None
~~~~~~~~~
~
;:g;:s.,:.
Severe service
level reductions,
various program
cuts, staffing level
considerations
None
None
Rate Stabilization Fund and Penalty Reserve Fund
The Board may choose to use the two funds that were established with revenue from the
inclining block rate structure in 1991. A portion of this money was utilized last year to offset
the loss of revenue the District experienced as a result of delaying the rate increase. The Rate
Stabilization Fund currently has $304,000, and the Penalty Reserve Fund is at $574,000. The
proposed rate increase could be deferred for up to two months, leaving approximately
$130,000 in the Penalty Reserve Fund. That would make the rate increase effective
September 15, 1993.
Water Commission Recommendations
The Water Commission met on May 12 and 26,1993, to discuss the above options and arrived
at the following recommendations.
1. Increase water rate from current $1.30 to $1.67 per unit.
2. Increase all water meter stand-by charges by 50%. For example, a 5/8” meter would go
from the current $5.50 per month $8.25 per month. Other meter size charges are included
in the Staff Report.
3. Increase Conservation Rate from current $1.15 to $1.48 per unit.
4. Continue to set reclaimed water rate equal to potable water rate.
Page 3 of Agenda Bill No. 2 1%
The following examples show how the Commission’s recommendations will affect water
customers in various classifications, in low, average and high water usage categories.
Single-Family Residential Customer with 5/8” meter
Multi-Family Complex
Commercial/Industrial Customer with 4” meter
Agricultural Customer with 2” meter
ENVIRONMENTAL REVIEW
The District is exempt from the environmental review process in this instance, because no
environmental review is required when setting rates, tolls or fares.
FISCAL IMPACT
The District currently balances its estimated revenues with anticipated expenses. With the
increase from MWD and CWA, the District must increase the retail water rates by a like amount
or an annual shortfall would exist of approximately $1 .l million for FY 1993-94. These
additional costs are being assessed by CWA and MWD for their capital improvement
expenditures.
If the other increase of 22~ per unit is not implemented to fund District operations and
maintenance, an annual shortfall of approximately $1.8 million could exist for FY 1993-94.
Reductions in the operations budget to meet this $1.8 million loss are possible, but would lead
to drastic reductions in service levels.
Page 4 of Agenda Bill No. 8 18
The Board has the option of utilizing the Rate Stabilization Fund to offset or defer the rate
increase. Should the Board decide to use these funds, the current amounts of $304,035 in the
Rate Stabilization Fund and $574,000 in the Penalty Reserve Fund would be depleted.
EXHIBITS
1. Resolution No. 84 Y Setting Rates for Water Supplied by CMWD
2. Resolution No. BY S Appropriating Funds to Defer Water Rate Increase
3. Staff Report - Fiscal Year 1993-94 Water Rate Increase
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RESOLUTION NO. 844
RESOLUTION OF THE BOARD OF DIRECTORS
OF THE CARLSBAD MUNICIPAL WATER DISTRICT
SETTING RATES FOR WATER SUPPLIED BY THE
CARLSBAD MUNICIPAL WATER DISTRICT
WHEREAS, the Metropolitan Water District and the San Diego County Water
Authority have increased the wholesale cost of water by an overall 20% for the 1993-
94 fiscal year to cover their expenses; and
WHEREAS, the Carlsbad Municipal Water District will also require an increase
in its component of the retail water rate to cover the cost of the increase from the
Metropolitan Water District and the San Diego County Water Authority for the 1993-94
fiscal year; and
WHEREAS, the Carlsbad Municipal Water District has experienced revenue
losses due to reduced water sales; and
WHEREAS, the Carlsbad Municipal Water District will require an increase in its
operations and depreciation costs in order to cover the loss in revenue; and
WHEREAS, the Board of Directors of the Carlsbad Municipal Water District has
determined that a revision of the charges for water delivery is necessary; and ’
WHEREAS, the Board recognizes the need to generate a larger portion of fixed
costs from a constant source of monthly revenue to fund District operations and
maintenance; and
WHEREAS, the customers of the District benefit by the stabilization of District
revenue that, in turn, decreases the volatility of the District financial situation due to
variations in water sales and more accurately represents the actual purchase price,of
water; and
WHEREAS, the term “Delivery Charge” more accurately reflects the costs
incurred by the District than the term “Meter Stand-by Charge”; and
WHEREAS, Southern California is an arid region whose residents should
continually observe wise water use; and
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WHEREAS, an inclining block rate is included as one of the Best Management
Practices developed by the State Water Conservation Coalition.
NOW, THEREFORE, THE BOARD OF DIRECTORS OF THE CARLSBAD
MUNICIPAL WATER DISTRICT HEREBY RESOLVES THAT:
1. The existing rate structure as described in Resolution No. 815 is
amended to read as follows.
2. Effective August 15, 1993, the base rate charged for all water supplied
by the District shall be set at $1.67 per unit.
3. A conservation rate of $1.48 per unit will be charged to all single-family
residential customers whose monthly consumption is seven units or less.
4. The term monthly meter stand-by charge is changed to “delivery
charge.”
5. The monthly delivery charge shall be set at $6.50 for a 5/8” meter, with
the multi-unit dwelling charge set at $3.80 per month, and all other charges set as
follows:
Meter Size Monthly Stand-by Fee
518” $6.50
3/4” 6.65
1” 6.70
1 l/2” 7.10
2” 15.90
I 2 l/2” 19.65
3” 23.40
4” 28.80
6” 31 .oo
8” 35.30
Fire 15.90
Multi-Unit Dwellings 3.80
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6. The monthly delivery charges as stated in number 4 above will become
effective August 15,1993.
7. Effective January 15, 1994, the monthy delivery charges will be revised
as follows:
Mete.r Size Monthly Stand-by Fee
5/8” $7.50
3/4” 7.65
1 II 7.75
1 l/2” 8.20
2” 18.35
2 l/2” 22.65
3” 27.00
4” 33.20
6” 35.80
8” 40.75
Fire 18.35
Multi-Unit Dwellings 4.35
8. In the event the District implements the inclining block rate, the rates will
be established with multipliers of the base rate as follows:
Conservation Rate SRF Usage <8 units .88 X Base Rate
Block 1 Up to Allocation Base Rate
Block 2 l-20% Over Allocation 1.15 X Base Rate
Block 3 >20% Over Allocation 1.35 X Base Rate
9. The effective date of this resolution shall be the beginning of the meter
reading cycle in August (August 15, 1993).
PASSED, APPROVED AND ADOPTED at a regular meeting of the Carkbad
Municipal Water District held on the 27th day of July, 1993, by the following vote, to
wit:
j AYES: Board Members Stanton, Kulchin, Nygaard
NOES: Board Members Lewis, Finnil
ABSENT: None
ATTEST:
I
I f
&&TH&~!. ‘R~uT@~KRANZ, Secretary I KAREN R. KlJNDTZ,-Assistant Secretary
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RESOLUTION NO. 845
RESOLUTION OF THE BOARD OF DIRECTORS
OF THE CARLSBAD MUNICIPAL WATER DlSTRlCi
APPROPRIATING FUNDS FROM THE RATE STABILIZATION FUND
AND THE PENALTY RESERVE FUND TO DEFER THE RATE
INCREASE FOR ONE MONTH AND ABSORB LOSSES
FROM THE DELIVERY CHARGE INCREMENTAL INCREASE
WHEREAS, the San Diego County Water Authority (CWA) and the Metropolitan
Water District (MWD) have increased their rates to the Carlsbad Municipal Water
District by 20% effective July 1, 1993; and
WHEREAS, the Carlsbad Municipal Water District will experience a loss in
revenue due to decreased water sales without an increase in its component of the
water rate; and
WHEREAS, a rate stabilization fund and a penalty reserve fund were
established on December 10, 1991, by the Board with penalty monies obtained from
the previous inclining block rate to be used to offset rate increases; and
WHEREAS, as of June 15, 1993, the rate stabilization fund had a balance of
$304,000 and the penalty reserve fund had a balance of $574,000; and
WHEREAS, the Board has chosen to use these two funds to defer the water
rate increase for a period of one month and allow an incremental increase in the
delivery charge; and
WHEREAS, as a result of these deferrals, the District would lose approximately
$604,000; and
WHEREAS, there is enough money in the two funds to cover the estimated
shortfall.
NOW, THEREFORE, THE BOARD OF DIRECTORS OF THE CARLSBAD
MUNICIPAL WATER DISTRICT HEREBY RESOLVES THAT:
1. The above recitations are true and correct.
*
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1 2. Funds in the amount of $304,000 from the rate stabilization fund and
2 $300,000 from the Penalty Reserve Fund are hereby appropriated to the Purchased
3 Water Account No. 501-820-631 O-2661.
4 PASSED, APPROVED AND ADOPTED at a regular meeting of the Carlsbad
5 Municipal Water District held on the 27th day of July, 1993, by the following vote, to
6 wit:
7 AYES: Board Members Stanton, Kulchin, Nygaard
8 NOES: Board Members Lewis, Finnila
9 ABSENT: None
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13 ATTEST:
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16 NZ, Secretary
17 tant Secretary
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FISCAL YEAR 1993-94 WATER RATE INCREASE
STAFF REPORT
The base price of water supplied by the Carlsbad Municipal Water District (District) is currently
$1.30 per unit (748 gallons). There are a number of factors that are effecting retail water rates
set by the District for fiscal year 1993-94, among them cost increases from both the
Metropolitan Water District (MWD) and the San Diego County Water Authority (CWA). The
District is facing its own difficulties, with water sales significantly decreased from prior years.
Carlsbad Munlclpal Water District
When developing the 1992-93 budget, water sales revenue was estimated to be $9.9 million
on sales of approximately 17,500 acre feet. Due to an unusually rainy.winter and customer
water savings of more than 15% from the base year during the summer months, projected
revenue has been adjusted downward to approximately $7.9 million, or 14,000 acre feet of
water sales. The District currently has $4 million in reserves, a portion of which will be used to
offset the potential reduction in revenue of $1 .l million this fiscal year.
This phenomenon of reduced operating revenue tied to reduced water sales is due to the fact
that a majority of District operating and maintenance costs are derived from the per unit charge
for water. A portion of depreciation is also funded via the per unit water rate. This presents a
problem when water sales decrease dramatically, as they have over the past few years. A
20% drop in sales results in a corresponding decrease in revenue, and this dynamic will
continue to occur as water sales go down. As a consequence, the per unit cost of water must
increase to make up for the subsequent losses.
For fiscal year 1993-94, staff has estimated that water sales would be similar to fiscal year
1992-93, and therefore is projecting a sales figure of 13,485 acre feet (includes a 7% loss due
to evaporation). As a result, revenue that is collected via the water rate to fund District
operations and depreciation will be reduced. In order to prevent a loss comparable to what will
be experienced this fiscal year, it is necessary to increase the rates by $122 per acre foot, or
28$ per unit (22~ for operations and 6c for depreciation).
While developing the 1993-94 budget, staff worked to reduce expenditures by approximately
7.5% on all line items, with the exception of purchased water. The reductions came in the form
of fewer capital expenditures, cutbacks on public information and conservation programs, as
well as large decreases in both contract and professional services. Even with these
reductions, an increase in the Districts component of the water rate is needed.
Metropolitan Water District and the San Diego County Water Authority
MWD continues to increase its rates in accordance with its aggressive $6 billion capital
improvement plan. MWD’s projection is that the wholesale rate of water will increase by an
average of 8.5 percent each year for the next ten years. On Tuesday, March 9, 1993, the
MWD Board of Directors approved an increase of $63 per acre foot, which equates to 15c per
unit of water.
Similarly, CWA launched its own capital improvement program totaling $720 million through the
year 2010. On Thursday, March 11, the CWA Board of Directors approved a rate increase of
$15 per acre foot, which equals 3.5c per unit of water. However, the CWA Board voted on
June 10, 1993, to discontinue the treated water surcharge of $7 per acre foot. This reduces
the District’s per unit charge by 1.5c. Therefore, the total increase from CWA will be equivalent
to 2c per unit.
. The total increase from MWD and CWA is 20% over the previous rate and, based on estimated
fiscal year 1993-94 water purchases of 14,500 acre feet, amounts to $1 .l million in additional
costs to CMWD.
Summary of Rate Increase
As the following chart illustrates, the most significant portion of the Districts retail water rate is
the wholesale price of water charged to the District by the San Diego County Water Authority
(CWA) and the Metropolitan Water District (MWD). Presently, CWA’s and MWD’s charges
comprise 68% of the current retail rate. The second most significant portion of the water rate is
that which funds District operations. These expenses include personnel and other operating
costs associated with the distribution of the water supply. These costs account for
approximately 23% of the water rate. The remaining 13% of the rate funds the Districts
depreciation of the water system.
Below is a summary of the increases in each of the components of the water rates which are
proposed in this report.
MWD Costs $0.74 $0.15 $0.89
CWA Costs 0.15 0.02 0.17
District Operations 0.26 0.22 0.48
Depreciation 0.15 0.06 0.21
Potential State Budget Impact
Last year, the District was spared from losing $750,000 in the property tax shift to the State of
California. The State has declared that all agencies who received AB 8 bailout funds (Special
District Augmentation Funds) after Proposition 13 will lose that portion of their property tax
revenue. Staff has determined that the District did not receive any SDAF monies and will not,
therefore, be affected this year. However, staff does anticipate that this issue will surface
again next fiscal year.
Rate Increase Options
With regard to the water rate, the Board has several decisions to make.
1. the per mwater The current rate is $1.30 per unit. Staff is
recommending an increase to $1.67 per unit.
2. Jncrew the Meter Stand-by Chw The current monthly charge for a 518” meter is
$5.50. This and the other stand-by fees have not been revised since 1990, before the
City’s water-related functions were combined with the Districts. As a result, they do not
accurately reflect prevailing operations and maintenance costs.
Rate consultants generally recommend that 60% of a water agency’s fixed costs of
operations and maintenance be covered by the monthly stand-by fee. The current
revenue collected by the stand-by charge only covers 30% of the District’s total
operations and maintenance. These charges, at the time they were established,
represented 60% of the City’s water functions, which incorporated water billing in the
Finance Department and the meter shop at Utilities/Maintenance. As a result, most of
the District’s operations and maintenance are now funded by the water rate.
3. Other Options
a. win or discontinue the conservatron ra& that allows single-family residential
customers to pay a lower per unit rate (currently $1 .15 per unit) if their monthly
consumption is seven units of water or less. This rate is subsidized by the other
rate payers by lq! per unit. If the conservation rate is discontinued, this group of
customers would experience an increase of 52c per unit, from $1.15 to $1.67. This
results in an overall increase of $3.64 on the monthly water rate, if the customer
uses seven units of water. There are approximately 5,000 single-family residential
customers who fall into this classification.
b. . . . Utilize R&&&&&on and Penalty Reserve Funds to offset or defer incrw .
The Board could choose to use the Rate Stabilization Fund and Penalty Reserve
Fund that were established in 1991 with revenue from the previous inclining block
rate to either offset or defer the water rate increase to customers. The current
balances in both funds amounts to $878,000. This dollar amount would allow the
Board to defer rate increases for two months, based on historic water sales during
the months of July and August. The rate increase would then become effective on
September 15, 1993.
The next two pages present an analysis of the three options that the Board has with regard to
the water rate increases that incorporate the issues discussed above. The first option is to
only pass-through to customers the increases from MWD and CWA. The second option
includes the Districts funding needs in the increase, as well as the pass-through from MWD
and CWA. The final option looks at including the increases for CMWD, MWD and CWA, as
well as changes in the meter stand-by charges.
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Option 1: MWD and CWA Pass-Through Only
‘ii~~~ig~~.;iij;:;:5;5;:iilil~ .~::::::::iiiii::ii’iiiiiiii At a minimum, the rate increases from both the San Diego County Water
i.‘~~~.~.~~~~~~ Authority and the Metropolitan Water District should be passed through to
~..:llxiixiiiiliiiiiliiidi::i:j~
. ......... . ..... . .... . ...... . ............................ .................................... ............ ................... .
................................................. iij:i:-iiiiiii::~:~il::~~~~~~:~~:~~~~~~~~~:~:~~~~~:~~~~~.~~~~~~~~~~~~~~~~~~~:~~:~ District customers. The total increase from these two entities amounts to
iii,‘::~:i:::ii:‘iiii~~~~:~.~:~~~~~~~~~~~~~~~~~~~~,~~~~~~~~:~~~~~~~~~~~~~~~~:~ ... -::-:-:-:-:.c ............ ..~:.~:.):(.:.:.:.:.~.~.~.~.~.~.~.~.~.~.~.:.~.~...: .: :. .... an annual $1.2 million, which the District cannot absorb. ?:.:.:.:.:.:.: ):(.~:.:.:.):(.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.: .:.:.:.:.; / .................. ... . ......... .................................... ......................... .:.:.:.:.:: ............... .......................... ..................
............... . ................. :.:.:: ............. increase of 17 cents per unit, to $1.47 per unit of water. Conservation ......... . ............................................................. .A., ........... . :.: ... . ......................................... . ..................................... ......................................... .:.: : :.>:. ............. . .......... . ................ . .............................................. :::.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.::.:.:.::.:.:.:.:...:.:.: ... .: >:.: ... .:.:.:: .................................................... .............................. . ... ._\ rate of $1.30 per unit. ..................... ...... ................... ...................................... ,/ ...... ........................ . ............. . .................. .................................... .................................... ............ :.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.: :.:...:.:.:.:.):.:.:...:.~: ... .>::
~ $1,769,0()(). Staff worked to reduce expenditures by 7% for fiscal year
~:~~~~~~~~~~~~ 1993-94. Further reductions in the budget could be accomplished, but ... . . . j:.:.:.~.::.:.:.::.:..:.;..:.::..:.:.:.:.:.:.:.:.):.:.:.:.~.::.:...):.:.::.: ..
,: j::,:::::::::.:~:~-: ::::::.: :.:.::::::: .. :l:~il: would result in significant impacts in service levels and maintenance .:.:.:: :.:.:.:..::: ..: ‘:1:::1 :.::::
:tl;‘ii::‘.:Eiii’ii.:iiilii%:‘;i:I standards. Although expenditure reductions are helpful, the real problem :,::;::::::::::: :.:‘::,.:::::: j:::::..::.::::::..:::::.:.::::::::::::: .:.:p:::::y ::::: ................... .................. ., .... . . ., ......... ., ...... ......... 1.1:;:j:1::::~:::::‘.1:::#:xi:l:I:I:i.. is the 20% decrease in water sales, wh ich is res ................. ............ ............ ., ......... . . ., .... . ... . . ., . . . ,.,.,.,., ., ... onsible for this loss.
Total increase in water rate of 17%.
To reach a balanced budget, service levels would suffer considerably. ........................................................................... :::: i:::::.::.:::.::::::.: ..: i.:‘:...:. .:( : ::.+::.::.: ., : ............... ::. ..... ::.::..:.::.::::::.:.: ... . .......................... .... :j:~:~:~: Entire programs would have to be cut, including all pubic information, ...... ........................................ : .................................. .............. ................................................................... .,., . ......... . : .:.:.:. ........ .......... ......... ::iii,ii conservation and meter exchange programs, and longer response times .......................... :. :,:jj:j j ::i:i:i:i.i.::.:::;i::i:-:-l : ::.::..:. .. ::.:.: .. :-irii: to emergency callouts. Maintenance standards of the water system itself .:.:.:.:.:..:.: .> liiijiiiiiil~~~:~~~~~~:~:~~~:ii::i~~.’i would have to be lowered dramatically, with only minimum maintenance in ;.::::::::::,:::::::::::::‘:~:::i:i:i:::i.~:~:~.:: :.::. :.::: : :::-: ................ iiiiiii’iii:i::iii;ii:iii’i”i.i .effect. This outcome would not be felt immediately, but would surface ..:.:...:.....::...::...:.:.:....::::..:::::: ............. ::.::. ....... .: ..: :.:..:. ..:.:.:.: .G :...:.:...: .: :. :.:.:.:.:.:.‘.:.: .. “.’ ““‘Y :.j : .. .. . .:.:. .,.: .:.:,: ,: :: :, : :.:.: .:.::.:::.:.:: :‘.:::::::::;:j :.::::::::‘,: :::::,:.:::j.,.:::::.: ,, .. ., . . .... .,., ......................................... ~.~,~<,~,~,,,~,,‘~ :: ..... :.: ...... . ..:. .... over time, as the water system deteriorated. Staffing levels would have to ... . .... ., . ...... ....... .... .j:.: ... . ) .: :::::::::: :&::.:.:.::.:. ....... . “.‘.‘:-‘:‘:.ii:ii:,:~-i’:i:i:::“li:-’jii~.Ili:i ............ ..... ........... . ... :.:.:.: :y.:.:.: .:.: ............ .................................. ................ . :.:.:.:.:.:.: ::: :. :.: : .;, : ..: be evaluated carefully, with education and training completely slashed. i:iii’i;aiiliis’ii’:i’:iiiiiii-)iili:iiiii:’:i~~~~ii.ilii:i Cuts into OtheMlise mandatory expenditures would have to be considered. iii::~iii.i.F:j~,~~~.~.~ iiii: i:;.;c::ii’i j !$g;:; ; [-‘ii-:! ~.:.)..:.:.: ... . :.:.:.: ... . . :.:.: .. : ./ ::.:..::.:.:. ..::.:. .. :x:. : ::.:.:.:. .. ........ . ....................................... . . . . . . ................ .......... ... .......... ., .:. .:.:.:.: ... . ...... ..... . : . . ....... ., ...... :.:. . .. ~::‘i.-iii;i”ciii:iiBpiiiiii.i.‘.iii:~iiji:j::i:: Even with all these drastic measures, it is doubtful that $1.7 million could be trimmed from the budget.
Option 2: increase In Water Rate Only
rate all elements of increases into the water rate, including the
pass-through from MWD and CWA and the Districts recommended
. . . . . . ..i.. . . :. :;:..::. ;:. ..:. :;:, :, ‘I:i:i-;:i:l’i:i:i:‘:‘I:::I:;.i’l’::::I:::”I:I:‘I:::: increase of 45 cents per unit to $1 -75 per unit of water. Conservation rate ” :::.::j-::y:::‘: ,: :.,.A:.::.:~,:~: ,j::.:. ,.,: .:.. :.‘~.~--:-‘-:.:-::-‘: .“‘. .‘::I ;:;I;; ~:~:;I;I;,;.~;I;I;~~:~~~:~.~~~:~.~::~:~:~~ :i.k; ;:;:;.&;:::. 0 f $1 .48 per u nit.
,.,., ., . . . . . . . . . . . . .:,:.:.:., :,,.:.:::-, : .:.: ,.: ,./, ., ,. ../. . . . ,. . . . . .
. . . . ..:i :...:.:.:... :.:::.:. . . . . . . : : ~ ~~~~.~li:i;it:i.::~~~~,~:i::: If increases were not implemented this year, at some point in the future . . . . . . . . . . . V...i .,.,.,.,.,.i .,.i,..,.,.,., ,.,.,.,..:. . . . . . . . . ::... .:.:.:. . . . : .:.:: the customer would have to bear a heavier burden to bring services and
..~.::~:~:::;~:~.-:~:~~~~.::::~:~:~::~::~j::~:i:iii:j:~~~.~~~ system maintenance back to District standards. Implementing an increase .A:.:.:: :. .A:.:.:.:. .:.:: 3 . . . . : >:.: .,_ ,,.., ..,.
.>......i . . . . . :.~::.j:::::.:.::.:.:.:.:.:.:.: . . . . . . . . . . . . . . .,...: . . . . ;... ./ . . . . . .../..... .: . . . . :li:iiii::-i:_;:::~l:j:-ii:-i now would avoid that imposing burden at a later date. .: ..:.:.:...: :.:(.:.:
Option 3: Increase In Per Unit Rate and Meter Stand-by Charge
Combine increases in the per unit charge of water and the meter stand-by
.:.:.:.:.:.:.:.:.::.::. ........................................ ;.;:,:,:;:-;:;:::;j:;:;l;j;j:j;;i;i;;j;j~ .., ............................... . ..... . ... :.:.:.:.:.:.:.:.:.: charge. This action would allow the District to collect more of the fixed ........... .................... . ................. ..............................................
l:~:‘i:::I:‘I:~.‘I’:l:I:li:::i:::l:l:iiifj:~ costs of operations from a set monthly fee, thereby reducing the needed .~-:i:i:~l:~i:::i:ii:i#:l:l:li:i:i:i:l~: :.:.:.:.::.:.:.:.:.~:.:.:.:; ......... . .... . ,.,.j,.,.,.i,.,., :i::::::.::i:i:j:::,~::~::::::::::::~:::::::,::::.::::::: increase of the per unit rate . .................................................................. ::::::::::::::::::::::::::::::::;:::/:1: :.:.:.:. :.:.: : ................... ./ :.:.:.: ....... .... ~~~~~~~~ increase of 37 cents per unit to $1.67 per unit of water. Conservation rate
................. ., ........ i’~~;i~~~~~~~~~~~~~~~~~~ ....................................... ........... . . ........ .:.::...:...~.:.:.~:.:.:.:.:.:.~:.:.:.::.;~:.~..~:.)~ ... of $1.48 per unit of water. Increase in monthly meter stand-by charges as
:...:.:.:.:.:.:..:.:.:.~:.~ ................. ........ . . . ... . . . ...... . . .,.,.,., lii,iii:iiii’jiiiil:ili:;l’lii~:i~~:~~~~:~:~.~~
:.:.:.:.:.:.:I I:.:.:.:.:: :.: ............ .:...::.
outlined below. This increase in the stand-by charges would bring the
.. . ... . ... .............. ~:il~~~~~~:~~~~ II.5:~~~~~~~~~ percentage of fixed costs covered from the current 30% to 45%. Other
::::::::::::::j:::::::::::,::::::::::::::::::::::,::::::::::::.::: meter prices are listed below.
Stabilization of District revenue. Including a larger portion of fixed costs
into a constant source of income reduces wide fluctuations in District
losses and gains. Customers ultimately suffer by having to experience
large increases in rates after years in which water sales are down.
Conversely, during periods of high water consumption, rates are artificially
high in anticipation of lower usage. Both increases and decreases in
water sales would not have any appreciable effect on the water operations
and maintenance of the District. Therefore, the actual per unit rate would
more accurately reflect the actual cost of water as it is purchased by the
District. ‘Increases in this component would then be primarily driven by
1 MWD and CWA.
The following chart represents the corresponding increases in the water meter stand-by charge
proposed in the above Option 3.
3” 20.00 29.70
4” 24.60 36.50
6” 26.50 39.40
8” 29.70 44.80
Fire 13.60 20.20
Multi-Unit Dwellings 3.20 4.80 ,
The multi-unit dwelling charge is for those dwellings that are receiving water through a master
meter. The master meter is charged a stand-by fee based on the meter size. Each dwelling is
then charged a reduced stand-by fee, with the exception of one dwelling. For example, an
apartment complex houses 30 dwelling units. Water is delivered via a 2” meter. The current
charge would be $13.60 for the 2” meter and $3.20 X 29 units for the secondary stand-by
charges. The initial stand-by charge covers one dwelling unit.
Other Issues
Use of Rate Stabilization Fund and Penalty Reserve Fund
The Rate Stabilization Fund and the Penalty Reserve Fund could be used to either defer or
reduce the rate increase to customers. The current balance in the Rate Stabilization Fund, as
of June 15, 1993, is $304,035; the balance in the Penalty Reserve Fund is $574,000. These
funds could be utilized to defer the rate increase by two months, if the Board chooses to
implement Option 2 or 3 of the Rate Increases. If implementation of the increase is delayed,
the District would lose approximately $316,700 in the first month and $398,000 the second
month, based on historical water consumption during the months of July and August. If the
Board chooses Option 1, then the increase could be deferred for up to seven months. Another
option is to reduce the per unit rate by 15 cents per unit overall for one year.
If the funds are used to reduce the rate by 15 cents, the rates would be as follows:
l Option 1: $1.32 per unit, with $1.30 conservation rate
l Option 2: $1.61 per unit, with $1.48 conservation rate
l Option 3: $1.52 per unit, with $1.48 conservation rate
If the funds are used to defer the increase for one to seven months, the rates would remain as
they are presented in each of the options.
There are some other considerations regarding use of the two funds. Both the Rate
Stabilization Fund and the Penalty Reserve Fund would be depleted. The District is not
currently receiving any excess revenue that can be applied toward re-establishment of these
funds. In the two-month deferral scenario, there is no long-term adverse effect on either the
District or the customer. However, if the Board chooses to reduce the per unit rate of water by
15 cents and do away with the fund, next year’s water rate would have to be increased by 15
cents per unit over and above any increases from MWD and CWA in order to reach the
appropriate level for support of this year’s increase that was deferred for one year.
Effect on Inclining Block Rate
On September 15, 1992, the Board, with a recommendation from the Water Commission,
approved keeping the inclining block rate to be implemented in the event the District returns to
mandatory water conservation. Activation of the block rate hinged on the specific stage that
would be established by MWD. The stages adopted by MWD are as follows:
1 -- Water Watch -- Voluntary Conservation
2 -- Water Alert -- 10% Mandatory Conservation
3 -- Water Warning -- 15% Mandatory Conservation
4 -- Water Warning -- 20% Mandatory Conservation
5 -- Water Warning -- 30% Mandatory Conservation
6 -- Water Warning -- 40% Mandatory Conservation
The percentage reductions are based on the fiscal year July 1989 through June 1990. This
base year could change, subject to MWD’s requirements.
The inclining block rate was preserved and is to be implemented in the following manner.
Stages 1 and 2 Flat Rate with Conservation Rate
Stages 3 - 6 Inclining Block Rate
The approved inclining block rate includes the following blocks and multipliers.
. Conswtlon Proposed R@
1 - 7 units (SFD only) .88 X Base Rate $1.48*
Up to Allocation Base Rate 1.67
1 - 20% over Allocation 1 .I 5 X Base Rate 1.92
More than 20% over Allocation 1.35 X Base Rate 2.25
*Rates based on $1.67 per unit base rate. Multipliers would be used to establish inclining
block rate in the same manner if the rate chosen is anything other than $1.67 per unit.
The District is currently under a Stage 1 Water Watch with voluntary conservation and is,
therefore, not in an inclining block rate.
Summary of Water Commission Recommendations
The Water Commission met on May 12 and 26 to discuss the water and sewer rates and the
issue of increases. After extensive discussion of all the alternatives presented herein, the
Commission recommended the following with reference to water rates.
1.
2.
Increase water rate from $1.30 to $1.67 per unit.
Increase Meter Stand-by Charge from $5.50 per month for a 5/8” meter to $8.25 per
month.
3. Conservation Rate of $1.48 per unit.
4. Continue to set the reclaimed water rate to correspond with the potable water rate.
FISCAL IMPACT
The District currently balances its estimated revenues with anticipated expenses. With the
increase from MWD and CWA, the District must increase the retail water rates by a like amount
or an annual shortfall would exist of approximately $1 .I million for FY 1993-94. These
additional costs are being assessed by CWA and MWD for their capital improvement
expenditures.
If the other increase of 22$ per unit is not implemented to fund District operations and
maintenance, an annual shortfall of approximately $1.8 million could exist for FY 1993-94.
Reductions in the operations budget to meet this $1.8’million loss are possible, but would lead
to drastic reductions in service levels.
The Board has the option of utilizing the Rate Stabilization Fund to offset or defer the rate
increase. Should the Board decide to use these funds, the current amounts of $304,035 in the
Rate Stabilization Fund and $574,000 in the Penalty Reserve Fund would be depleted.
Carlsbad SUN
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. 2841 Loker Ave. East, Carlsbad, CA 92008 (619) 431-4850
Proof of Publication
STATE OF CALIFORNIA, ss.
COUNTY 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 Sun, 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 local news and intelligence of a general character, and which newspa-
per 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
Carlsbad, County of San Diego, State of California, for a period exceeding one year next
preceding the date of publication of the
notice hereinafter referred to; and that the
notice of which the annexed is a printed
copy, has been published in each regular
NOTICE OF and entire issue of said newspaper and not
PUBLIC HEARING REVISION OF WATER RATE in any supplement thereof on the follow-
STRUCTURE ing dates, to-wit:
NOTICE IS HEREBY-GIVEN‘that the Board of Directors of lhti Carl: sbad Municipal Water District will hold a public hearing at the City Council Chambers. 1200 Carlsbad Village Drive,Carlsbad.Califoornia. at 690 P.M., on Tuesday. July 27. 1993. lo consider an increasein the District’s potable and recIa%med water rates. effective September 15. 189% The proposed rate in- crease is required to fund in- creases in the District’s operating. cost3 for fiscal year 1993-34. Ifyou have any questions regard- ing this matter. please call the Dls- triet Oftlce at 4382722. If you challenge the revision Of the water rate structure in court. you may be limited to raising only those issues raised by you or some- one else at the public hearing de- scribed in this notice. or in Written correspondence delivered to the City of Carlsbad City Clerk’s Oftke at, or prior to, the public hearing. Aoolicant: Carlsbad Municipalwa- ter’District CARLSBAD MUNICIPAL WATER DISTRICT BOARD OF DIRECTORS CJ 6110: July 15. 1993
July 15 192
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 15th
day of July, 1993
Clerk of the Printer
NOTICE OF PUBLIC HEARING
REVISION OF 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, Carlsbad', California, at 6:00 p.m., on Tuesday, July 27,
1993, to consideran increase in the District's potable and reclaimed water
rates, effective September 15, 1993. The proposed rate increase is required to
fund increases in the District's operating costs for fiscal year 1993-94.
If you have any questions regarding this matter, please call the District Office
at 438-2722.
If you challenge the revision of the water 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: Carlsbad Municipal
Water District
PUBLISH: July 14, 1993 CARLSBAD MUNICIPAL WATER DISTRICT BOARD OF DIRECTORS
r .
.
July 9, 1993
TO: CITY CLERK’S OFFICE
FROM: Administrative Manager, CMWD
RE: PUBLIC HEARING REQUEST
Attached are the materials necessary for you to notice the Water Rate Increases for
a public hearing before the Board of Directors of the Carlsbad Municipal Water
District. Please notice the item for the Board meeting of July 27, 1993.
Thank you.
. Assistant City &lanager Date
’ (I
c (FOR WATER RATE INCREASE)
NOTICE OF PUBLIC HEARING REVISING WATER RATE STRUCTURE
NOTICE IS HEREBY GIVEN that the Board of Directors of the Carlsbad Municipal
Water District (District) will be holding a public hearing at the Carlsbad City Council
Chambers, 1200 Carlsbad Village Drive, Carlsbad, California, at 6:00 p.m. on Tuesday,
July 27, 1993, to consider an increase in the District’s potable and reclaimed water
rates. The proposed rate increase is required to fund increases in the District’s
operating costs for fiscal year I#%92 -734+
If you have questions regarding this matter, please call the District office at 438-2722.
If you challenge the proposed action mentioned above 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 delivered to the City of Carlsbad’s City Clerk office at or prior to the
public hearing.
APPLICANT: Carlsbad Municipal Water District
BOARD OF DIRECTORS, CARLSBAD MUNICIPAL WATER DISTRICT
(FOR SEWER RATE INCREASE)
NOTICE 06 PUBLIC HEARING REVISING SEWER RATES
NOTICE IS HEREBY GIVEN that the City Council of the City of Carfsbad will be holding
a public hearing at the Carlsbad City Council Chambers, 1200 Carisbad Village Drive,
Carlsbad, California, at 6:00 p.m. on Tuesday, July 27, 1993, to consider an increase in
the city’s sewer rates. The proposed rate increase is required to fund increases in the
city’s sanitation operating costs for fiscal year wT&+
’ If you have questions regarding this matter, please call the Carisbad Municipal Water
District office at 438-2722. If you challenge the proposed action mentioned above 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 delivered to the City of Cartsbad’s City
Clerk office at or prior to the public hearing.
APPLICANT: City of Carisbad
CITY COUNCIL OF THE CITY OF CARLSBAD