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HomeMy WebLinkAbout1994-04-27; Municipal Water District; 0427.01; Setting Potable & Reclaimed Water Rates FY 1994-954B m27.1 TITLE: RECOMMENDATION TO BOARD OF DIRECTORS ,,, TG P4/27/94 DEPT.cMwD--- SE’ITING POTABLE AND RECLAIMED WATER RATES FOR FISCAL YEAR 1994 - 95 ~ RECOMMENDED ACTION: Make a recommendation to the Carlsbad Municipal Water District to set potable and reclaimed water rates for fiscal year 1994 - 95. DEPT. HD. w@ CITY ATTY CITY MGR. - lTEM EXPLANATION: There are three enterprise funds managed by the Carlsbad Municipal Water District. Of the three, a rate increase will be proposed for the water fund and reclaimed water fund. The following presents information regarding each of the funds: WATER RATES: For fiscal year 1994 - 95, the District is faced with the need to raise water rates. This increase is due to the $27 per acre foot increase in treated water imported from the Metropolitan Water District of Southern California. This $27 per acre foot increase equates to $0.062 per unit. (1 Unit = 748 gallons). The San Diego County Water Authority is not proposing any increase for the coming year. As a result, the County Water Authority will be passing through the Metropolitan Water District increase. Therefore, the total cost per acre foot that CMWD pays will go from $455 to $482 for treated water. The Carlsbad Municipal Water District will not be proposing any increase due to its operations. Therefore, the only increase proposed will be the $27 per acre foot (0.062 per Unit) increase from Metropolitan. Preliminary drafts of our water budget shows that we can hold the line on increases in utilities and other operating costs by reductions in other budget areas. However, at present our budget cannot absorb the increase from Metropolitan. The line item for water purchases for FY 1994 - 95 is projected at 14,500 acre feet. Accounting for the Metropolitan increase results in a $418,500 shortfall, if rates stay the same. Pending legislation (SB 1666 and SB 1448) still threatens our property tax revenue, which currently supplements the .156 on the water rates for depreciation. The legislation authorizes counties to shift property taxes from Enterprise Districts to any Special Districts approved by the Supervisors, (the “superpot“ concept). SEWERRATE9 The sewer fund budget for FY 1994 - 95 does not propose any rate increase. The increase last FY is presently funding depreciation adequately. REcLAlMED WATER RATES: Our reclaimed water rates continue to be tied to the potable water rates. The FY 1994 - 95 budget continues to show a loss, and therefore demonstrates the continued need for rebates from both Metropolitan and the County Water Authority. Additional scrutiny will be required if the potable water rate does not increase as proposed or the “stand-by charge increases in lieu of a rate increase. Page 2 of Agenda Bill No. 0427.01 There are several options the Commission should review with regard to the water rate increase. The District, by way of the increase, must generate an additional $418,500. 1. Rake water rates only to absorb the increase from MetroDolitan. This increase would bring the per unit rate from the current $1.67 to $1.73. The rate includes the subsidization of the conservation rate, which would go from $1.48 per unit to $1.54 for 7 or less units of water. 2. Increase stand-by charne from $7.40 Der month for a 5/8" meter to $9.50 Der month. This option would generate the needed revenue from a fixed source, as was discussed during the water rate discussions for fiscal year 1993 - 94. 3. Combine increases in the water rate and stand-bv charne to generate needed revenue. To divide the increase between the stand-by charge and the water rate, the Commission could recommend a $1.00 increase in the stand-by charge and a .03g increase in the water rate. This would put the monthly 5/8" fee at $8.50 and the water rate at $1.70. The rate increase from Metropolitan will be effective July 1,1994. The District cannot absorb the increase and must pass it trough to customers beginning with the July 15 - August 15 water bill. Increasing water rates will generate the needed revenue to account for the hike in rates from Metropolitan. This action will result in a balanced budget for fiscal year 1994 - 95. If an increase is not recommended in either the stand-by charge or the water rate, the Water Enterprise Fund will have shortfall of $418,500.