HomeMy WebLinkAbout2009-08-11; Municipal Water District; 693; Agriculture and recycled rate classesCARLSBAD MUNICIPAL WATER DISTRICT - AGENDA B
AB# 693
MTG. 8/11/09
DEPT. FIN
APPROVING WATER RATES FOR
AGRICULTURE AND RECYCLED
f*t f OTV^JiJiem /"*! A ooeroCUSTOMER CLASSES
DEPT. HEAD Js|U—
CITY ATTY. @&-'
CITY MGR. U^
RECOMMENDED ACTION:
Adopt Resolution No.1369 approving water rates for agriculture and recycled
customers located in the Carlsbad Municipal Water District.
ITEM EXPLANATION:
The California Constitution, Article XIIID, Section 6, states that local governments must hold a
public majority-protest hearing, and notify customers forty-five (45) days in advance of
increases in water rates. At its meeting on May 5, 2009, the Board of Directors of the Carlsbad
Municipal Water District adopted Resolution No. 1352 setting a public hearing for June 23,
2009.
The public hearing was held on June 23, 2009, and as of that date, there was no majority
protest. The Board of Directors chose not to approve the proposed rates for two customer
classes at that time, agriculture and recycled, and asked staff to return at a later date to allow
for additional time to review the proposed rates for those customer classes.
AGRICULTURE RATE:
At the Board's direction, staff met with representatives from the agricultural industry to discuss
the proposed water rates. The agricultural representatives expressed their concerns with
regard to the proposed volumetric charge increase, but noted their willingness to adjust their
usage and demand patterns in order to achieve a cost based adjustment to the proposed rate.
The group discussed the cost-of-service methodology and data used to develop the proposed
rates, focusing on the usage patterns and potential demands that the agricultural customer
class places on the system. The proposed $3.41 per unit charge accounts for the peak
demand placed on the system. This customer class could alter their demand pattern to reduce
the peak need and the timing of that need, and therefore, be more similar to the non-residential
user category. If the Board agrees to implement a lower rate, staff will continue to work with the
agriculture customers to assist them with implementing these changes.
DEPARTMENT CONTACT: Helga Stover, 760-602-2429, Helga.Stover@carlsbadca.qov
FOR CITY CLERKS USE ONL Y. /
COUNCIL ACTION:APPROVED
DENIED
CONTINUED
WITHDRAWN
AMENDED
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CONTINUED TO DATE SPECIFIC
CONTINUED TO DATE UNKNOWN
RETURNED TO STAFF
OTHER -SEE MINUTES
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Page 2
These changes would include:
• Reduction of summer time water demands - The District's peak water demands occur
between June and September. Reducing the agricultural water demands during these
peak months would result in significant reductions in storage requirements, consequently
reducing the cost burden this class places on the system.
• Watering during off-peak day times - Based on 20 of the agricultural users currently
monitored through the automated meter reading program, which provides water
consumption reads in two hour increments, roughly 40% of the agricultural water
demands occur between 5 p.m. and 9 p.m. This is also the time period with the greatest
demand on the system during the daily cycle, when families are cooking and bathing.
Delaying watering until after 9 p.m. could significantly reduce the strain on the District's
storage system. Through periodic monitoring of the usage patterns, the District could
make sure the overall demand objectives were met, thereby supporting combined non-
residential and agriculture rate in future years.
Staff also looked at how other agencies classified some of their agriculture customers, and
found that in many districts, this group is combined with the non-residential class because of
their similarities. Agriculture is a relatively small customer class, and, unlike irrigation
customers, this group produces product for sale; their water use is considered essential for their
business to operate. This change to the previous proposed rate, will still meet the objectives of
the overall rate design. By approving this change in the rate structure, the agriculture rate
would be $2.64 instead of $3.41, which was the amount discussed at the June 23 majority-
protest hearing. Revenues in the first year would be reduced by about $200,000, and future
planned increases in the non-residential and agriculture water rate could make up for this loss
gradually over time.
RECYCLED RATE:
Staff and the consultants from PCS Group reviewed the analysis for determining the recycled
rate of $2.52 per unit. This is the rate needed to generate sufficient revenue to pay for the cost
of recycled water, and no changes are recommended at this time.
FISCAL IMPACT:
The proposed rate increases, if approved, will be effective September 1, 2009. These rates are
within the amounts discussed at the majority-protest public hearing on June 23; there was no
majority protest. Based on the original rates proposed, the District would have generated an
excess of about $600,000 in FY2009-10 to add to its operating reserve. With the reduced
agriculture rate, that excess will be reduced to about $400,000, or a reduction in revenue of
$200,000 for the year attributed to the rate change.
Page 3
Table of current rates, rates approved on June 23, and proposed rates:
Delivery Charge
Meter Size
5/8"
3/4" •
1"
1.5"
2"
2.5"
3"
4"
6"
8"
Single Family
Tierl
Tier 2
Tier3
Multi-Family
Tierl
Tier 2
Tier3
Non-Residentia
Irrigation
Agricultural (*)
Recycled (*)
Water Rates
Current Rate
flat rate
flat rate
flat rate
flat rate
flat rate
flat rate
flat rate
flat rate
flat rate
flat rate
per unit
per unit
per unit
per unit
per unit
per unit
$ 14.54
$ 17.87
$ 24.50
$ 42.26
$ 60.88
$ 73.13
$ 108.89
$ 176.49
$ 341.99
$ 541.28
$ 2.12
$ 2.12
varied
$ 2.12
$ 2.12
$ 2.01
Approved/Proposed (*)
flat rate
flat rate
flat rate
flat rate
flat rate
flat rate
flat rate
flat rate
flat rate
flat rate
Units
0-12
13-20
21 +
Units
0-5
6-10
11 +
per unit
per unit
per unit
per unit
$ 16.78
$ 21.18
$ 30.25
$ 53.08
$ 80.30
$ 116.05
$ 152.90
$ 234.58
$ 461.73
$ 733.98
$ 2.29
$ 2.95
$ 4.02
$ 1.93
$ 2.18
$ 2.59
$ 2.64
$ 2.97
$ 2.64
$ 2.52
ENVIRONMENTAL IMPACT:
The California Environmental Quality Act (CEQA) does not apply to the establishment or
modification of rate for the purpose of meeting operating expenses (CEQA Guidelines
Regulation 15273).
EXHIBITS:
1. Resolution No.1369 of the Board of Directors of the Carlsbad Municipal Water
District approving water rates.
3
Exhibit 1
1 RESOLUTION NO. 1369
2 A RESOLUTION OF THE BOARD OF DIRECTORS OF
CARLSBAD MUNICIPAL WATER DISTRICT (CMWD), TO
3 APPROVE WATER RATES
4
5 WHEREAS, on June 23, 2009, the Board held a majority-protest public hearing
6 approving water rate increases; and
7 WHEREAS, there was no majority protest; and
8 WHEREAS, the Board did not approve the Agriculture and Recycled proposed
9 rates of $3.41 per unit for agriculture water use and $2.52 per unit for recycled water
10 use at that meeting; and
11
WHEREAS, the Board requested additional analysis of the proposed rates; and
12
WHEREAS, the Board desires to set the Recycled water rate at $2.52 per unit
and the Agriculture water rate at $2.64 per unit based on the twin assumptions that
15 there will be a reduction in peak demands for agricultural water between June and
16 September, and that agricultural water users will adjust their watering demands to be
17 during off-peak hours which occur during the time periods from 9pm to 5am; and
18 WHEREAS if these assumptions turn out to be incorrect, then the Board will re-
in
consider whether or not to impose a new rate up to the maximum stated and considered
20 at the majority-protest hearing of $3.41 per unit; and
21
WHEREAS, these rates are within the amounts discussed at the majority-protest
22
public hearing.
24 NOW, THEREFORE, BE IT RESOLVED by the Carlsbad Municipal Water
25 District Board of the City of Carlsbad, California, as follows:
26 1. That the above recitations are true and correct.
27
28
Exhibit 1
1 2. That Carlsbad Municipal Water District Board of the City of Carlsbad,
2 California approves the Recycled water rate of $2.52 per unit and the
3 Agriculture water rate of $2.64 per unit, effective September 1, 2009.
4
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PASSED, APPROVED AND ADOPTED at a Special Meeting of the Board of
Directors of the Carlsbad Municipal Water District of the City of Carlsbad on the 11th
day of August, 2009, by the following vote to wit:
AYES: Board Members Lewis, Kulchin, Hall, Packard and Blackburn
NOES: None.
ABSENT: None.
_
AUDE A 'LEWIS, President
ATTEST:
LORRAINE M. WOOD, Secretary
(SEAL)
^0
AGENDA ITEM # 2.
Mayorc:
City Council
City Manager
City Attorney
City Clerk
Mayor Lewis and Members of the City Council
City of Carlsbad
1200 Carlsbad Village Drive
Carlsbad California 92008 ' ZZZZZZZZIII
Flower Fields Water Rates
Dear Mayor and Members of the City Council:
We understand that staff has recommended consolidation of the commercial and agricultural water rates
which will reduce the preliminary estimated burden on agricultural operations below that previously
forecast.
We support this change and understand that this is the best reconciliation possible under the legal
guidelines and assumptions built into the recently completed consultants report. We urge you to approve
the new rates.
This adjustment, however, does not mitigate the extraordinary burden on agriculture that the imposition
of the new rates and new cost allocation methodology first made visible a few months ago in the
consultants study. Even with the new consolidated rates, the change in agriculture from the 2008 rate of
$1.81 to $2.64 per unit is 46%, compared with average residential rate change of about 30%.
For those in agriculture outside of the areas affected by Proposition D, the decision to stay in agriculture
represents an individual choice. In the case of the Flower Fields, we have an obligation to plant and farm
immediately. As a result our opportunity to take further steps to reduce our costs in the current year is
dramatically limited, hi order to allow for time to take further steps we request that City provide a direct
subsidy to reduce the increase in the fiscal year 2010 to $2.35 per unit which would reduce the
immediate impact to the same 30% affecting residential owners in the City. The estimated cost to the
subsidy to the City would be $14,000 while the Flower Fields would bear an increase of over $50,000
from fiscal year 2009.
The change in cost allocations and the underlying increase in water rates raises issues of long term
sustainability. We believe there are fundamental and inappropriate assumptions in the study which
should be addressed in the future as the costs are reviewed and rates again considered. To this end we
ask the City Council to create an agriculture sustainability committee which would include those in
agriculture to work with the City agencies and those in fanning to develop recommendations for long
term operational sustainability, in keeping with the mandate of Proposition D.
Very Truly Yo
ler Calkins
President. CB Ranch Enterprises.
3600 AVENI DA L'NCI-NAS SUITE 100 CA RLSDAD. C.'A 92008
FELEPHONE 760 930-9123 FAX 760 431 9020 w w \v. chef iovvv rf ieids com
AUG -72009
CITY OF CARLSBADCITY CLERK'S OFFICE
AGENDA ITEM #_
c: Mayor
City Council
City Manager
City Attorney
City Clerk
August 6, 2009
The Honorable Claude A. "Bud" Lewis
Carlsbad City Council
1600 Carlsbad Village Drive
Carlsbad, CA 92008
Dear Mayor Lewis:
As the price of water escalates throughout our region farmers will be challenged to maintain their
profitability. We seem to have entered a period of serial rate increases driven by supply and
system shortfalls. Because policy development and public opinion indicate a desire to maintain
farming in the City of Carlsbad, I would like to suggest that an effort be undertaken to examine
agricultural water with the intent of developing a strategy that will help sustain farms into the
future.
My suggestion is for the appointment of a farm water study group that would report back to you
and the members of the council in your capacities that include oversight of the Carlsbad
Municipal Water District. In addition to other topics the study group could examine all aspects
of reclaimed water, agriculture's share of system capacity as a pricing strategy, access to raw
water, and ratepayers' appetite for a water pricing structure that supports farm water use.
Without a proactive effort the risk is real that Carlsbad's farmers could be priced out of
existence.
Sincerely,
Eric Larson
Executive Director
cc. Mayor Pro Tem Ann J. Kulchin
Council Members Matt Hall
Council Member Mark Packard
Council Member Keith Blackburn
Approve Agriculture and
Recycled Water Rates
1
Calendar
June 23: Public Hearing
Approved water and sewer rate increases
except for recycled and agriculture rates
July 28:Set Agriculture and
Recycled water rates
Sept. 1:Effective Date
Meeting with Agricultural
Industry Representatives
1.Concern about increase
2.Discussed cost allocation methodology
3.Altered demand could reduce peak need
4.Willing to adjust usage and demand pattern
5.Similar to business/non-residential class
6.Could allow for lower rate
3
Reduction of Summer Time
Water Demands
4
•Reduce peak demands between June
and September
•Reduced storage requirements
•Lower cost burden on specific class
Watering during
off-peak day times
5
•40% demand currently between 5pm
and 9pm
•Also highest demand time overall –
families are cooking and bathing
•Delaying watering until after 9pm:
–reduce storage needs
–smooth out the usage peaks
Agriculture Rate Alternative:
Charging the same rate as
the non-residential and
business class
•Other agencies combine agriculture
with non-residential/business
•Similar purpose -product for sale
•Charge rate of $2.64 per unit
•No additional noticing
6
Agriculture Rate Alternative
(continued)
•Requires peak reduction
•Staff to monitor usage
•Board could consider future increase
if peak demand not reduced
7
Agricultural Rate -$2.64 per unit
Effect on revenues and reserve
Reduce revenue by $200,000 per year
8
Agriculture rate alternative:
Implement rate of $3.41 per unit
•Within amount previously noticed and
discussed at the majority protest public
hearing
•Would generate more revenue
Recycled Water Rate
•Original notice recommended $2.97 per unit
•Staff reduced recommended rate to $2.52 per
unit at July 23rd Public Hearing
10
Proposed Rates
11
(per unit
of water)
Current
Rate
Noticed
Rate
Proposed
Rate
Agriculture 2.12$ 3.41$ 2.64$
Recycled 2.01$ 2.97$ 2.52$
Questions/Comments
Carlsbad Municipal Water Board:
Resolution 1369 approving the
Agriculture and Recycled water
rates effective September 1, 2009.
Action Items
DIVIDER SLIDE
DO NOT GO BEYOND
THIS POINT
14
Diurnal Tiered Structure
15
Three tiers based on off-peak, midday, and peak-hour.
Seasonal Water Consumption
16Based on average monthly water usage from FY 2005/06 to FY 2007/08
Time-of-Use Based Rates
17
Seasonal Agricultural Rates
Rates
Winter (November-April)$2.64
Summer (May-October)$3.96
Diurnal Agricultural Rates
Rates
9pm-5am $2.98
9am-5pm $4.47
5am-9am & 5pm-9pm $7.45
Seasonal & Diurnal Agricultural Rates
Winter (November-April)Rates Summer (May-October)Rates
9pm-5am $2.54 9pm-5am $3.31
9am-5pm $3.81 9am-5pm $4.96
5am-9am & 5pm-9pm $6.35 5am-9am & 5pm-9pm $8.26
Agricultural Water Usage by
Customer Type
18Based on average monthly water usage from FY 2005/06 to FY 2007/08
AB 3030
19
•September 30, 2008
•Authorized pass-through of
increases in wholesale water costs
•Authorized inflationary
adjustment
•Public Hearing not Required
•Board/Council action is required
with 30 day written notice
•For 5 years
Agriculture Mitigation Fund
•The fund was established to promote the
long-term sustainability of the coastal
landscape and floriculture in Carlsbad
•Revenues can be used for any project or
activity benefiting or enhancing the use of
natural resources, including open field
cultivated floriculture, in the coastal zone in
the City of Carlsbad
•Growers could apply for a grant to assist
with paying for their water with the next grant
application cycle.
Objectives of rate design
•Fair and equitable
•Ensures compliance
•Flexible
•Meets Board and Council policy objectives
•Equity for customers already conserving
•Pricing signal to water wasters
•Minimizes enforcement resources
•Ensures sufficient funding for operations
Agriculture Rate Alternative:
Create separate class
•Create special class for Flower Fields and
Strawberry Fields
•Additional resources and time
•Public hearing and notice requirement
•Others may request special class
22???+
IAWP Rate
(Interruptible Agriculture Water
Program)
Agriculture rate $2.64
Less:-.32
= IAWP Rate $2.32
23