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HomeMy WebLinkAbout2020-10-15; Water and Wastewater Rate Changes Set for January 1, 2021; Gomez, Paz{city of Carlsbad To the members of the: CITY COUNCIL D~te 10 /1 s/4o CA __:,,,[_ cc v CM ✓ ACM ✓ocM(3)✓ Ccarlsbad Municipal Water District · Memo ID #2020228 Council/CMWD Board Memorandum Oct. 15, 2020 To: From: Honorable Mayor Hall and Members of the City Council Carlsbad Municipal Water District Board of Directors Paz Gomez, Deputy City Manager, Public Works Geoff Patnoe, Assistant City Manager Q , Via: Re: Water and Wastewater Rate Changes ~for Jan. 1, 2021 This memorandum provides an update on the previously approved water and wastewater rate increases that will go into effect on Jan. 1, 2021. Background Based on a Cost Of Service Study, on Nov. 19, 2019, the City Council held a Public Hearing and adopted Resolution No. 2019-244, which established wastewater rates for the two calendar years 2020 and 2021. On the same date, the CMWD Board of Directors approved Resolution No. 1624 for two-year rates for potable and recycled water services. On Jan. 1, 2020, the first year of rate increases for the new wastewater, potable and recycled water rates went into effect. On Jan. 1, 2021; the second year of approved rates will be implemented (Attachments A and B). Discussion Before the Jan. 1, 2020 rate increase, potable water rates had not increased for two years and wastew~ter rates for four years. Even with these new increases, ratepayers still be provided with low rates when compared to other agencies in the region. These new increases allow for continued investment in maintaining, replacing and modernizing aging infrastructure. The table below shows the impact the rate changes have on a typical single-family residential customer. These amounts were included in the Nov. 19, 2019, Staff Report (Attachment C). The effect on multi-family homes and commercial accounts varies based on meter size and other factors. Example of Monthly Bill Jan. 1, 2019 Jan. 1, 2020 Jan. 1, 2021 Potable Water $68.81 $69.84 $71.33 Wastewater $27.81 $28.66 $29.52 Total Single Family Residential $96.62 $98.50 $100.85 City of Carlsbad -Carlsbad Municipal Water District 5950 El Camino Real I Carlsbad, CA 92008 I 760-438-2722 t Council/CMWD Board Memo -Water and Wastewater Rate Changes Set for Jan. 1, 2021 Oct. 15, 2020 Page 2 COVID-19 Relief During the COVID-19 pandemic state of local emergency, the following temporary relief measures for ratepayers were established by the CMWD Board of Directors with Resolution No. 1639: • Potable water service will not be discontinued due to non-payment • Late fees will not be assessed • Potable water business customers who closed their accounts due to the COVID-19 pandemic state of emergency may discontinue water service, which will stop the accrual of any monthly fees associated with having an active potable water service account; and when ready to reopen, may have water service reestablished without paying a reconnection fee The impact of these actions was a decrease in utility revenue of approximately $265,000. However, staff expects impacted ratepayers to begin paying this amount back through payment plans at the conclusion of the pandemic state of local emergency. In addition, not assessing late fees has resulted in estimated lost revenue of approximately $300,000 since March 2020. The approximate annual revenue that the city and CMWD receive in the three accounts totals $68 million. Next Steps On Jan. 1, 2021, the previously approved water and wastewater rates as shown in Attachments A and B will go into effect. Attachments: A. Water Rates in effect Jan. 1, 2021 B. Wastewater Rates in effect Jan. 1, 2021 C. Staff Report dated Nov. 19, 2019 (due to the size of this attachment, a hard copy is available for review in the City Council Office) cc: Scott Chadwick, City Manager/CMWD Executive Manager Celia Brewer, City Attorney/CMWD General Counsel Laura Rocha, Deputy City Manager, Administrative Services Vicki Quiram, Utilities Director/CMWD General Manager Kevin Branca, Finance Director Ryan Green, Assistant Finance Director Cheryl Gerhardt, Finance Manager ATTACHMENT A 2021 WATER RATES TABLES Ccarlsbad Municipal Water District Customers are assessed two fees monthly, a water delivery fee and a water usage fee. Customer Class and Rate Type ALL CUSTOMER CLASSES (except Fire Protection and Recycled) Monthly Delivery Fee per meter size 5/8inch 314inch 1 inch 1.5 inch 2inch 2.5 inch 3inch 4inch 6inch 8inch 10inch RECYCLED WATER Monthly Delivery Fee per meter size 518inch 314inch 1 inch 1.5 inch 2inch 2.5 inch 3inch 4inch 6inch 8inch 10inch FIRE PROTECTION Monthly Delivery Fee per meter size 518inch 3/4 inch 1 inch 1.5 inch 2inch 2.5 inch 3inch 4inch 6inch 8inch 10inch 12inch Monthly Base Rate $25.52 $34.44 $52.28 $96.88 $150.40 $212.84 $275.28 $453.68 $899.69 $1,434.89 $2,059.30 $23.69 $32.69 $50.70 $95.73 $149.75 $212.84 $275.90 $455.93 $906.18 $1,446.47 $2,076.82 $7.93 $8.05 $8.30 $8.92 $9.66 $10.53 $1 .1.40 $13.89 $20.10 $27.55 $36.25 $57.37 Customer Class and Rate Type SINGLE FAMILY RESIDENTIAL Monthly Water Rates Per Unit ( 1 unit= 748 Gallons) Tier 1 (0-10 Units) Tier 2 (11-18 Units) Tier 3 (19+ Units) MULTI-FAMILY RESIDENTIAL Monthly Water Rates Per Unit ( 1 unit= 748 Gallons) Tier 1 (0-5 Units) Tier 2 (6+ Units) COMMERCIAL AND NON-RESIDENTIAL AGRICULTURAL IRRIGATION RECYCLED WATER Carlsbad Municipal Water District Ccarlsbad Municipal Water District Monthly Base Rate $4.13 $4.51 $7.18 $3.95 $5.04 $4.36 $4.71 $5.41 $3.79 5950 El Camino Real I Carlsbad, CA 92008 I 760-438-2722 I 760-431-1601 fax I www.carlsbadca.gov 2021 WASTEWATER RATES TABLES ATTACHMENT B Customers are assessed one fee monthly, either a flat fee, a fee based on water usage, or a per student fee. {"city of Carlsbad Customer Class by Groups Monthly Base Rate SINGLE FAMILY RESIDENTIAL Flat Monthly Fee Single Family Residential Single Family w/Second Dwelling Unit Per Unit of Water Used RESIDENTIAL -OTHER Multi-Family Residential Mobile Ho'me COMMERCIAL Commercial -Group 2 Commercial -Group 3 Commercial -Group 4 Industrial Pretreatment Class Ill BREWERIES Brewery -Group 1 Brewery -Group 2 Brewery-Group 3 Brewery-Group 4 Per Student SCHOOLS Elementary Junior High High School Boarding School City of Carlsbad/Carlsbad Municipal Water District $29.52 $44.28 $3.48 $3.48 $2.88 $4.38 $8.10 $4.82 $2.88 $9.34 $8.10 $11.60 $0.59 $0.87 $1.17 $6.09 5950 El Camino Real I Carlsbad, CA 92008 I 760-438-2722 I 760-431-1601 fax I www.carlsbadca.gov Nov. 19, 2019 Item #16 Page 1 of 158 ATTACHMENT C Meeting Date: To: From: Staff Contact: Subject: Nov. 19, 2019 Mayor/ President and City Council / Board Scott Chadwick, City Manager/ Executive Manager Ligeia Heagy, Management Ana lyst Ligeia. Heagy@carlsbadca.gov, 760-603-7360 Vicki Quiram, Utilities Director/ General Manager Vicki.Quiram@carlsbadca.gov, 760-438-2722 CA Review~ Public Hearing for approval of a potable water rate structure modification and proposed two-year rates for potable water, recycled water and wastewater. Recommended Actions 1. Hold a Public Hearing and Adopt a City Council Resolution approving two-year rates for wastewater services; and 2. Adopt a Carlsbad Municipal Water District (CMWD) Resolution approving a potable water rate structure modification and two-year rates for potable water and recycled water services. Executive Summary On Dec. 18, 2018, the Board of Directors of the Carlsbad Municipal Water District (CMWD Board) approved Resolution No. 1611 authorizing an agreement with Carollo Engineers, Inc. (Carollo) for the 2019 Utilities Cost of Service Study (Study). The Study has been completed and recommends revenue increases for wastewater and potable water services to provide adequate funding for operations, maintenance and renewal of utilities infrastructure. Revenue increases are met by rate increases and/or the use of fund reserves. Staff recommends using both methods to mitigate rate impacts to customers. For potable water, the Study recommends a 1% revenue increase effective Jan. 1, 2020, and another 2% revenue increase effective Jan. 1, 2021. Potable water rates have been held flat for the last two years. Staff recommends a combination of potable water rate increases and the use of reserve funds to meet the revenue requirements in calendar years (CY) 2020 and 2021. For recycled water, no revenue increase is needed at this time. Recycled water rates have also been held flat for the last two years. Staff recommends that recycled water rates remain the same through CYs 2020 and 2021. Nov. 19, 2019 Item #16 Page 2 of 158 For wastewater, the Study recommends a 3% revenue increase effective Jan. 1, 2020, and another 3% revenue increase effective Jan. 1, 2021. Wastewater rates have been held flat for the last four years. Staff recommends a combination of wastewater rate increases and the use of reserve funds to meet the revenue requirements in CYs 2020 and 2021. The city and CMWD are required to notify customers at least 45 days in advance of a Majority- Protest Public Hearing for City Council and the CMWD Board consideration of changes to the rate structures and schedule of rates. On Sept. 17, 2019, the City Council and CMWD Board approved setting the date of this Public Hearing for Nov. 19, 2019, to hold the Majority-Protest Public Hearing and potentially approve the potable water rate structure modification and proposed two-year utilities rates for potable and recycled water and wastewater. Discussion CMWD provides reliable, safe drinking (potable) and recycled water to homes and businesses within a 32.3-square mile service area (Exhibit 6). There are approximately 30,170 potable and recycled water connections within the service area. CMWD is estimating a 1% increase in demand for fiscal year (FY) 2019-20 and a 1.8% increase by FY 2020-21. The demand increase is due largely to new development. The city provides wastewater services within a 30-square mile area (Exhibit 5). The wastewater system meets stringent regulations as it conveys wastewater from homes and businesses to the Encina Water Pollution Control Facility (EWPCF) for treatment. There are approximately 24,000 wastewater connections within the service area. A portion of the water from EWPCF is further treated at the Carlsbad Recycled Water Facility (CRWF) and is redelivered to customers through the CMWD recycled water system for landscape irrigation and other industrial-type uses that require process water. Cost of Service Study Process Carollo recently completed the Study on behalf of the city and CMWD. The principal objectives of the Study were as follows: 1) Water and Sewer Revenue Sufficiency Analysis -Develop multi-year forecasting Microsoft Excel models for potable water, recycled water and wastewater. These models contain the necessary data to determine the level of annual revenue required to meet each system's projected annual operating, debt service and capital cost requirements while maintaining adequate reserve levels. 2) Cost of Service Analysis -Complete a thorough cost allocation process to reflect the appropriate distribution of system costs to system functions and ultimately rate classes, based upon data such as average day, maximum day and peak-hour demands to ensure a fair and equitable distribution of costs by rate classification. 3) Rate Calculation -Review each utility's existing rate structure and develop appropriate modifications to ensure that rates reflect accepted industry practice and an equitable distribution of costs, enhance transparency and adhere to cost-based pricing principles. Nov. 19, 2019 Item #16 Page 3 of 158 Additionally, Carollo took a holistic look at each utility system and its relationship with each customer class to ensure continued compliance with all applicable laws, including Proposition 218. Potable and Recycled Water -Existing Rate Structures The existing rate structures consist of a base monthly delivery charge and a volumetric usage charge. The base monthly delivery charge is a fixed charge imposed regardless of water consumption and is proportionate to the size of the customer's water meter. This fixed delivery charge recovers operating costs such as staffing, customer service and utility billing, as well as a portion of the infrastructure service costs including operations, maintenance and capital replacement funding. The volumetric usage charge is based on actual water·consumption and recovers the cost of purchased water, variable operating costs such as electricity and chemicals, and approximately 50% of capital costs that are not funded using existing reserves. Potable and Recycled Water -Proposed CY 2020 Rate Structure The Study recommends one rate structure change for potable water -eliminating the Tier 3 category for the multi-family volumetric rate charge. Due to shifting customer demands, the Tier 3 usage demand is very low (5%). Removing Tier 3 and adjusting the rates for Tier 2 ensures the rate structure continues to reasonably reflect the proportional cost of providing service. The Study does not recommend changes to the existing recycled water rate structure. Potable Water Rates Potable water rates were held flat for the last two years due to sufficient reserve funding that met operating, maintenance and capital replacement costs. To meet the Study's potable water revenue requirement, staff recommends a combination of reserve funding and rate increases effective Jan. 1, 2020, and Jan. 1, 2021. Rates are allocated to customer classes based on each class's proportionate share of the system, which explains the va.riation in rate increases across customer classes. The proposed increase in potable water rates is primarily driven by increases in the cost of water purchased from the San Diego County Water Authority (SDCWA), increases in cost of desalination water and increases in operating costs due to inflation. CMWD is a member agency of SDCWA and purchases all its potable water from SDCWA. This purchase comprises approximately 55% of CMWD's total annual Operating Budget and includes 2,500 acre-feet annually of desalinated water, which is a local drought- resilient water supply. SDCWA projected high increases in the cost of treated water for FY 2019-20. However, SDCWA is mitigating rate impacts to member agencies through a planned draw on their rate stabilization fund of approximately $22 million for FY 2019- 20 and $38 million for FY 2020-21. Due to CMWD's specific allocated share of SDCWA fixed costs and projected water purchases for FY 2019-20 and FY 2020-21, the effective increase in SDCWA purchase costs for CMWD is approximately 3.5%. The SDCWA increase is primarily driven by: Nov. 19, 2019 Item #16 Page 4 of 158 1) Decreased water sales demand forecast after the outcomes from drought regulation and water conservation 2) An approximate 5% increase in Metropolitan Water District's (MWD) water rates and transportation charges, which are passed-through via the SDCWA 3) Increased Capital Improvement Program (CIP) expenditures due to increases in cost of steel and cement/concrete and shortage of skilled labor 4) Expenditures associated with shared reservoirs 5) Construction of new seawater intake-discharge facilities at the desalination plant in Carlsbad to comply with updated environmental standards The current and proposed potable water rates by customer class are shown in Exhibit 3. Potable water is a very affordable beverage. Fifty dollars can purchase 3 gallons of brand coffee, 8 gallons of brand soda, 15 gallons of milk, 45 gallons of bottled water or 7,256 gallons of CMWD water. A gallon of CMWD water costs less than a penny. Recycled Water Rates There will be no proposed rate increases for recycled water. Staff recommends maintaining the current recycled water rates for CYs 2020 and 2021. Wastewater Structure There are no proposed changes to the existing wastewater rate structure. The Study does recommend moving breweries into their own classes to establish rates that are commensurate w ith their impact on the wastewater system. Brewery waste is typically very high in biochemical oxygen demand {BOD) and total suspended solids {TSS) concentrations. The high concentrations can lead to increased degradation of wastewater infrastructure and drive higher treatment costs. Customers would be migrated into one of four new brewery classes once their business is identified as a brewery via the city's business license application process. Currently, there are approximately 10 breweries in Carlsbad. Breweries will be placed into rate classes depending on whether or not they also operate as a restaurant. The rates for each class are developed based on the assumption that half of a user's wastewater is generated by brewing and half is from the restaurant or general commercial operation (restrooms, breakrooms, etc.). The BOD and TSS loading assumptions are adjusted for each type of user accordingly. For breweries that haul their brewing waste offsite for treatment, those without restaurants w ill be charged a rate equal to the C2 commercial rate, and those with restaurants will be charged a higher rate. Breweries that fa ll into the B2 and B4 classes (those that do not haul their brewery waste for outside treatment) would have higher rates than those that do haul their waste for outside treatment. The use of classes for breweries also assists staff in identifying these businesses, providing outreach and ensuring that they are in compliance with waste discharge requirements. The proposed new brewery classes are as follows: Nov. 19, 2019 Item #16 Page 5 of 158 Bl -Brewery without a restaurant and hauls waste for outside treatment B2 -Brewery without a restaurant and does not haul waste for outside treatment B3 -Brewery with a restaurant and hauls waste for outside treatment B4 -Brewery with a restaurant and does not haul waste for outside treatment Staff reviewed brewery rates at neighboring agencies, and the proposed brewery rates are reasonable in comparison. Additionally, staff hand delivered the rate notices, which explain the new brewery classes and proposed rates, to each brewery. Also, staff has been working with these businesses regarding requirements for placement into the Bl and B3 classes. In recognition of the high concentration of waste produced, one brewery has already begun diverting this waste stream and would therefore fall into the Bl or B3 class now. Wastewater Rates Wastewater rates have been held flat for the past four years, as the utility experienced lower than anticipated expenditures for several years in a row that increased the reserves. The recommended revenue increase is 3% effective for one year beginning Jan. 1, 2020, and 3% for one year beginning Jan. 1, 2021. A portion of wastewater operating reserves will be used to offset the rate increases. The proposed rate increases are needed primarily for: 1. EWPCF's three-year 100% CalPERS retirement liability payoff 2. Increased energy and chemical costs 3. Capital budget for EWPCF infrastructure of $95 million over the next 10 years 4. Approximately $63 million over 15 years in the city's approved FY 2019-20 CIP for assessment, repair and rehabilitation of the wastewater system to extend the useful life of the system assets 5. Basic increases in the city's operating costs due to inflation The current and proposed wastewater rates by customer class for wastewater are shown in Exhibit 3. Proposition 218 Notice The City of Carlsbad and CMWD notified customers at least 45 days in advance of holding the Public Hearing by mailing written notices of the proposed changes to the wastewater, potable water and recycled water rate structures and schedule of rates to all property owners and utility customers via U.S. mail on Oct. 1, 2019. The Public Hearing must be held a minimum of 30 days before changes to the rate structure or existing rates can be enacted. Customers have the right to protest the changes by submitting their concerns in writing to the office of the city clerk any time before close of tonight's Public Hearing. If less than a majority of protests are received tonight, the City Council and CMWD Board may consider the proposed changes to the potable water rate structure and schedule of rates for wastewater, potable water and recycled water. Nov. 19, 2019 Item #16 Page 6 of 158 Fiscal Analysis If approved, the proposed potable water rate structure change and potable water and wastewater rate increases will be effective Jan. 1, 2020, and Jan. 1, 2021, as described above, and will provide adequate funding t o properly operate and maintain Carlsbad's water and _ wast ewater systems and maintain reserves. Exhibit 3 shows t~e current and proposed rate changes for each utility. Recommended Potable Water Rate Increase: After holding rat es flat for the past two years, the Study recommends increasing potable water revenue by 1% effective Jan. 1, 2020, and by 2% effective Jan. 1, 2021. For CY 2020, the 1% rate revenue increase will impact each class differently due to the cost of service adjustment and restructuring of the rates. For example, the Study's updated customer demand analysis found that irrigation customers are responsible for slightly more peak usage costs than under the current rate structure. Thus, the irrigation volumetric rate for CY 2020 has an increase above the overall 1% rate revenue increase. The Study also recommends adjusting the fixed delivery charges to account for shifting demand patterns between classes, and to more closely align revenue collection with expenditures. For example, the fixed delivery charge for a 5/8" meter is proposed to increase approximately 1.21% from $24.72 to $25.02, an increase of $0.30. The fixed delivery charge for a 3/4" meter is proposed to increase approximately 1.20% from $33.36 to $33.76, an increase of $0.40. The recommended increase in potable water rates is also influenced by the current desalination rate associated with purchasing 2,500 acre-feet of water under the Uniform Member Agency Purchase Contract (UMAPC). The current UMAPC desalination rate is approximat ely $2,788 per acre-foot, in comparison to the SDCWA blended rate of approximately $1,750 per acre-foot. Staff estimates the purchase of desalinated water would not have been necessary if customers used water consistently at the winter demand level and did not exhibit a seasonal peak in demand. Based on the supply cost allocation approach used in the Study, the cost of providing desalinated water was allocated to customers that place a high-peak demand on the water system, such as residential customers, above the average single-family residential winter water use, agricultural and irrigation customers. A target operating reserve of 40% of the Operations and Maintenance Budget, better than anticipated financial results and long-range financial planning have helped temper the recommended potable water rate increase by creating surplus operating reserves that CMWD can utilize to reduce rate increases in the near-term. Staff recommends using operating reserves to soften the potable water rate increases for the next two years. Approximately 1.6% of reserves would be used during FY 2019-20 and approximately 0.60% of reserves in FY 2020-21. If the rates were held flat for the next two years, ratepayers would experience higher rate increases in future years to maintain reserves. In addition to using operating reserves in FY 2019-20 for rate smoothing, approximately $2 million in capital reserves will be used to fund CIP projects. All proposed potable water rates are shown in Exhibit 3. Nov. 19, 2019 Item #16 Page 7 of 158 Recommended Recycled Water Rate: No increase in recycled water revenue for the next two years is needed. Staff recommends holding recycled water rates flat in CYs 2020 and 2021. The recycled water volumetric rate is less than the potable water agricultural and irrigation rates. The recycled water system provides a drought-resilient local supply, helps conserve -potable water and reduces reliance on imported water. The recycled water rates are shown in Exhibit 3 and reflect the utility's cost of providing services for CYs 2020 and 2021. Recommended Wastewater Rates: After holding the rates flat for the past four years, the Study recommends increasing wastewater revenue by 3% for CY 2020 and an additional 3% for CY 2021. Staff recommends using wastewater reserves over the next several years to partially offset rate increases. Approximately 42% of operating reserves in FY 2019-20 and 1.3% of operating reserves in FY 2020-21 will be used to smooth rate increases. Additionally, $4.5 million of existing capital reserves in FY 2019-20 and $13.8 million of existing capital reserves in FY 2020-21 will be used to fund capital improvements. To maintain sufficient reserves, wastewater increases are necessary in order to avoid a large increase later. The proposed wastewater rates are shown in Exhibit 3 and reflect the utility's cost of providing wastewater services for the next two years. The rates include new classes for breweries to ensure cost recovery commensurate with their impact to the wastewater system. Example Monthly Bill: The following table provides an estimated monthly bill if the proposed increases are approved: Current Bill Proposed Bill Proposed Bill (Jan. 1, 2020) (Jan. 1, 2021) Potable Water1a $68.81 $70.55 $72.42 Wastewater1b $27.81 $28.66 $29.52 Total Single Family Residential $96.62 $99.21 $101.94 1. Assumes an average single-family residence: a. Potable Water: 5/8" meter using 11 units per month, b. Wastewater: Pays a flat monthly charge Multi-Year Rates: Proposition 218 requires noticing customers of the Public Hearing and potential changes to the rate structures-and rate schedule. Using a multi-year rate approach and combining the noticing spreads the costs among all three utilities, thereby increasing economies of scale. While a 40% reserve funding level was established in the FY 2019-20 Operating Budget, the city and CMWD will propose a more detailed reserve policy for utilities that uses additional best practices and includes rate stabilization fund accounts. 7. Protest letters received as of Nov. 14, 2019 Nov. 19, 2019 Item #16 Page 8 of 158 Next Steps If approved, the city and CMWD will implement a potable water rate structure modification and two-year rates for wastewater, and potable and recycled water effective Jan. 1, 2020, for CY 2020, and Jan. 1, 2021, for CY 2021. Staff will work with the City of Carlsbad's Finance Department to expand the current utilities reserve policy for consideration during the FY 2020-21 budget process. Environmental Evaluation (CEQA) This project is exempt from the California Environmental Quality Act (CEQA) per State CEQA Guidelines Section 15273(a) -modification, structuring, restructuring, or approval of rates, tolls, fares, or other charges by public agencies. Public Notification and Outreach The California Constitution, Article XIIID, Section 6, states that local governments must hold a Majority-Protest Public Hearing and notify property owners and customers at least 45 days in advance of public hearings related to proposed water, recycled water and wastewater rates. At the Public Hearing, if it is determined that a majority of affected customers and property owners have submitted formal protests, the proposed fee changes must be rejected. This is a requirement of Proposition 218, passed by California voters in 1996, to limit methods by which local governments can create or increase taxes, fees and charges without taxpayer consent. Any affected customers and property owners interested in objecting to the increases may file a signed written protest with the office of the city clerk. The written protest must contain the address of service, the rate change being protested and be received prior to close of the Public Hearing. While protesters may appear at the hearing and be heard on the matter, only written protests are considered as part of the majority protest. Staff took the following actions at least 45 days prior to the Nov. 19, 2019, Public Hearing date: • Notified affected customers and property owners by mail of the Public Hearing • The Notice (Exhibit 3) provided information related to the Public Hearing proposed rates • In addition, information about the Majority-Protest Public Hearing and proposed rates was posted on the city's website at www.carlsbadca.gov/finance. Information regarding public notifications of this item such as mailings, Public Hearing notices posted in the newspaper and on the city website is available in the office of the city clerk. Exhibits 1. City Council Resolution 2. CMWD Board Resolution 3. Notice of Public Hearing and Proposed Multi-Year Rates 4. 2019 Utilities Cost of Service Studies 5. City of Carlsbad Wastewater Service Area Map 6. CMWD Water Service Area Map Nov. 19, 2019 Item #16 Page 9 of 158 RESOLUTION NO. 2019-244 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, APPROVING TWO-YEAR RATES FOR WASTEWATER SERVICES. WHEREAS, the California Constitution Article XIII D § 6(a)(2) requires local governments hold a Majority-Protest Public Hearing and notify customers not less than 45 days in advance of the Public Hearing before increasing in wastewater service rates; and WHEREAS, the city is proposing wastewater service rate increases effective Jan. 1, 2020 and Jan. 1,2021;and WHEREAS, On Oct. 1, 2019, Carlsbad residents and property owners were notified by mail of the proposed new wastewater rates, thereby complying with the advance notice requirement of 45 days; and WHEREAS, on Nov. 19, 2019, the City Council of the City of Carlsbad held a Majority- Protest Public Hearing regarding the increases in wastewater rates. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as follows: 1. That the above recitations are true and correct. 2. That the City Council of the City of Carlsbad hereby approves the wastewater rate increases of 3% effective Jan. 1, 2020, and Jan. 1, 2021. PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of Carlsbad on the 19th day of November 2019, by the following vote, to wit: AYES: Hall, Blackburn, Bhat-Patel, Schumacher. NAYS: None. ABSENT: None. MA HALL, Ma or IO~' Hec-w r.~z, Depv!j 1' BARBARA ENGLESON, City Clerk c;"tj Cieri(' (SEAL) Nov. 19, 2019 Item #16 Page 10 of 158 RESOLUTION NO. 1624 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE CARLSBAD MUNICIPAL WATER DISTRICT OF THE CITY OF CARLSBAD, CALIFORNIA, APPROVING A POTABLE WATER RATE STRUCTURE MODIFICATION AND TWO-YEAR RATES FOR POTABLE WATER AND RECYCLED WATER SERVICES. WHEREAS, the California Constitution Article XIII D § 6(a)(2) requires local governments hold a Majority-Protest Public Hearing and notify customers not less than 45 days in advance of the hearing before increasing water service rates; and WHEREAS, the Carlsbad Municipal Water District (CMWD) is proposing a potable water rate structure modification and two-year potable and recycled water service rates, effective Jan. 1, 2020, and Jan. 1, 2021; and WHEREAS, on Oct. 1, 2019, CMWD service area customers and property owners were notified by mail of the proposed potable water rate structure modification and proposed two-year rates for potable water and recycled water services; and WHEREAS, on Nov. 19, 2019, the CMWD Board of Directors held a Majority-Protest Public Hearing and approved the new potable water rate structure and two-year rates for potable water and recycled water services. NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of Carlsbad Municipal Water District of the City of Carlsbad, California, as follows: l. That the above recitations are true and correct. 2. That the Board of Directors of the Carlsbad Municipal Water District hereby approves the potable water rate structure modification and two-year rates for potable and recycled water, effective Jan. 1,2020,andJan. 1,2021. PASSED, APPROVED AND ADOPTED at a Joint Special Meeting of the Board of Directors of the Carlsbad Municipal Water District of the City of Carlsbad, California and the City Council of the City of Carlsbad, California on the 19th day of November 2019, by the following vote, to wit: AYES: Hall, Blackburn, Bhat-Patel, Schumacher. NAYS: ABSENT: (SEAL) Exhibit 3Nov. 19, 2019 Item #16 Page 11 of 158 Monthly Fire Protection Delivery Charge Two Year Maximum Rate Increase Current Meter Size: 5/8" $7.69 3/4" $7,82 1• $8.06 1.5" $8.67 2· $9.39 2.5" $10.24 3• $11.10 4" $13.53 6" $19.61 8" $26.91 10" $35.42 12" $56.09 Wastewater Rates 1/1/2020 Proposed $7.77 $7.89 $8.14 $8.67 $9.40 $10.33 $11.18 $13.62 $19.71 $27.01 $35.54 $56.25 1/1/2021 Proposed $7.93 $8.05 $8.30 $8.92 $9.66 $10.53 $11.40 $13.89 $20.10 $27.55 $36.25 $57.37 Residential customers pay a flat monthly charge for waste- water services, while most non-residential customers pay a rate per unit of water used. The proposed wastewater rate increase varies by wastewater customer class. The proposed rate increase will pay for costs associated with operations, maintenance, and replacement of aging or failing infrastructure, as well as establishing and main- taining an adequate operating reserve. Brewery Rates Previously Breweries were included in the Commercial classes. Breweries will be moved into their own classes and charged rates based on whether they also operate a restaurant, and whether they haul their brewery waste to a approved treatment facility for disposal. The rates for each class are developed based on the assumption that half of a user's wastewater is generated by brewing and half is from the restaurant or general operation (restrooms, breakrooms, ere.). The BOD and TSS loading assumptions are adjusted for each type of user accordingly. BODandTSS is hlghly corrosive to sewer manholes and pipelines. Breweries that do not haul their brewing waste off site for treatment will be charged the applicable brewery rate. Monthly Wastewater Rates 1/1/2020 1/1/2021 Current Proposed Proposed Residential Single Family $27.81 $28.66 I $29.52 Single Family $41.72 S42.99 I $44.28 w/2nd dwelling -Multi-Family $3.29 S3.38 $3.48 Mobile Home $3.29 $3.38 I $3.48 Commercial Commercial II $2.70 S2.80 S2.88 --------;----+-----+----Commercial Ill $4.10 54.25 $4.38 Commercial IV $7.65 S7.87 $8.10 Schools Elementary $0.55 S0.57 Junior High $0.82 S0.85 High School $1.10 S1.14 Boarding School SS.75 $5.91 Other Nocurrenrcustome~ I $2.61 S2.88 Breweries Brewery I• n/a $2.80 Brewery 2• n/a $9.07 Brewery3* n/a $7.87 Brewery4• n/a $11.26 ' Group VIII -large Volume , No current customers I n/a j n/a Group IX -Industrial Pretreatment Class Ill • NRG Plant I S4.53 I $4.68 *B1 and 83 Included in Commercial 2 or 3 previously B2 and 84 included in Commercial 4 previously $0.59 $0.87 $1.17 $6.09 $2.97 $2.88 $9.34 $8.1 S11.60 n/a $4.82 IMPORTANT ~QTICE Notice of Majority Pr~te~ Public Hearing on Proposed Maxim Potable Water / and Wastewater Rat;nncreases TUESDAY, NOV_' 19, 2019, AT 6 P.M. City of Carlsbad City Council Chambers 1200 Carlsbad Village Drive Carlsbad, CA 92008 This notice contains information on proposed changes to the water rate structure and proposed multi-year rates for water and wastewater services. For more information about the public hearing process or the proposed changes, please call 760-602-2420, or visit the city's website at www.carlsbadca.gov/finance. Ccarlsbad Municipal Wate r District Nov. 19, 2019 Item #16 Page 12 of 158 Proposed Changes to Water and Wastewater Rates The Carlsbad Municipal Water District, a subsidiary district of the City of Carlsbad, provides reliable safe drinking water and recycled water within its service area, and purchases 100 percent of its drinking water from the San Diego County Water Authority (SDCWA). The cost to purchase imported water continues to increase. The District proactively plans for Increases in costs associated with operations, maintenance, and replacement of aging or failing infrastructure. To accommodate these anticipated increases in cost, an increase in potable water rates over the next two years is being proposed. Potable water rates were held flat the last two years. No rate · increase is proposed for recycled water. The City of Carlsbad owns and maintains a sanitary sewer system that provides customers with wastewater collection and conveyance services to a jointly owned wastewater treatment plant (Encina). The City proactively plans for increases In costs associated with operations, maintenance, and replacement of aging or failing infrastructure. n,e City also pays a percentage share of the operation, maintenance, and capital replacement costs at the Encina plant. To accommodate these anticipated increases in cost, an increase in wastewater rates over the next two years is being proposed. This will be the first increase in four years, as the City has successfully held rates flat for that time frame. If the Carlsbad Municipal Water District Board of Directors and the City of Carlsbad City Council approve the rate increases at the public hearing on Nov. 19, 2019, tl1e new rates for the upcoming year will be effective Jan. 1, 2020 and the second year will be effective on Jan. 1, 2021. The proposed rates will enable the District and the City to continue to provide quality services in a fiscally responsible manner by funding ongoing operations, maintenance, and replacement of the water and wastewater system, as well as maintaining adequate operating reserves. How your Water Rate is Calculated To meet the revenue needs for purchasing imported water and maintaining the distribution system, the proposed rate changes in the following tables are being recommended. Proposed rates are allocated to each customer class based on their proportionate use of the water system. There are two components to the water rates: the usage charge and the mcinthly delivery charge. The usage charge is the charge for the volume of water used. The monthly delivery charge is a fixed charge based on the size of the meter. Residential meters are typically 5/8" to 1•. Larger meters are primarily for larger water demands, such as commercial buildings. Monthly Potable Water Delivery Charge Two Year Maximum Rate Increase Meter Size: 5/8" 3/4" 1" 1.5" 2· 2.5" 3" 4" 6" 8" 10" 1 unit= 748 gallons Current S24.72 S33.36 $S0.62 $93.79 $145.58 S206.07 $266.52 S439.10 $870.76 $1,388.75 $1,993.06 1/1/2020 Proposed $25.02 $33.76 $S1.25 $94.98 $147.4S S208.67 $269.B8 $444.79 $882.05 $1,406.76 $2,018.92 Residential Water Rates 1/1/2021 Proposed $25.52 $34.44 S52.28 S96.88 $150.40 S212.84 $275.28 $453.68 $899.69 $1,434.89 $2,059.30 Residential rates are grouped into tiers, with Tier l having the lowest per unit rate and the Tier 2 having an incrementally higher rate. The tier rate that is charged depends on a customer's actual water usage. Tier 1 Is designed to meet water use essential for internal residential use. Tier 2 is designed to meet exterior landscaping requirements for typical residential property. The water rate structure Is designed to be more consistent with actual demand, ensure adequate cost recovery for water services, and ensure adequate reserve funding. Non-Residential Water Rates Non-residential customers have different water usage needs than residential customers; therefore, the usage charge is a flat per unit rate rather than a tiered rate. Examples of non-residential customers include commercial, agricultural, and irrigation. Water Usage Charge Two Year Maximum Rate Increase 1 unit= 748 gallons 11/1/2020 1/1/2021 ($/unit) ($/unit) ($/unit) Current Tier Current Proposed Proposed Single Family Rates Tier 1 (0-70 units) $3.94 S4.04 $4.13 ner 2 (>10) $4.69 $4.42 ,$4.51 Tier 3 (19+ units) $7.00 $7.04 $7.18 Multi-Family Rates Tier 1 (0-5 units) $3.87 $3.87 $3.95 Tier2{>10) $4.67 $4.94 $5.04 Tier 3· (11 + units) $6.97 n/a n/a Non-Residential Rates Commercial S4.22 $4.27 $4.36 Agricultural Rates $4.53 $4.62 $4.71 Irrigation Rate $5.16 $5.31 $5.41 Recycled Water Rates The recycled water rate will remain unchanged. The recycled water cost is estimated based on the cost of treatment, and operation and maintenance costs of the distribution system, as well as adequate reserve funding. Monthly Recycled Water Usage Charge Two Year Rates 1 Unit= 748 gallons Current Recycled Water Rates I S3.7-9 Protesting the Rates 1/1/2020 Proposed $3.79 1/1/2021 Proposed $3.79 Monthly Recycled Water Delivery Charge Two Year Rates Current Meter Size: 5/8" S 23.69 3/4" $ 32.69 1" S 50.70 1.5" $ 95.73 2" S 149.75 2.5" S 212.84 3" $ 275.90 4• $455.93 6" S 906.18 8" $1,446.47 10· $2,076.82 Fire Protection 1/1/2020 Proposed $ 23.69 S 32.69 S 50.70 S 95.73 $ 149.75 S 212.84 S 275.90 S 455.93 S 906.18 $1,446.47 $2,076.82 1/1[2021 Proposed S 23.69 S 32.69 S 50.70 S 95.73 S 149.75 $ 212.84 S 275.90 $455.93 $906.18 $1,446.47 $2,076.82 Some customers have separate fire meters and lines for fire suppression sprinklers. The fire meters and lines require maintenance, service, and a portion of system capacity. The service connection size is the basis of the charge and can be measured either by the meter size or by the service line size. In cases where a meter is installed, which restricts the capacity of the connection and measures total water consumption, the charges will be based on the meter size. For fire lines that have a meter that is in place only to inform the District when water is drawn through the pipe and does not restrict water flows, the charge will be based on the service line size. Setting charges based on service connection size ensures legal compliance and ratepayer equity. As the property owner/ratepayer, you have the right to protest the proposed increases. Only one protest notice is allowed per parcel. If you choose to protest, you must submira signed written protest to the City Clerk on or before the dose of the hearing. The wr1tten protest must contain your full name and signature, parcel number, and the rate change being protested. Email protests do not satisfy the signed written protesting requirement. If it is determined that a majority of property owners have submitted a formal protest, the proposed fee change must be rejected. The protester may appear at the hearing and be heard on the matter; however a written protest Is also required. Please send all protests to: Office of the City Clerk, City of Carlsbad, 1200 Carlsbad VIiiage Drive, Carlsbad CA 92008. Nov. 19, 2019 Item #16 Page 13 of 158 ( City of Carlsbad Carlsbad Municipal Water District Wastewater Cost of Service Study FYE 2020 WASTEWATER RATE STUDY FINAL I October 2019 EXHIBIT 4 Nov. 19, 2019 Item #16 Page 14 of 158 Wastewater Cost of Service Study I FYE 2020 WASTEWATER RATE STUDY I CARLSBAD Contents Section 1 -Introduction 1.1 Study Purpose and Key Drivers 1.2 Background 1.2.1 Ongoing Water Conservatio_n Efforts 1.3 Project Approach 1.4 Project Findings and Recommendations Section 2 -Assumptions and Data 2.1 Growth and Wastewater Usage 2.2 User Rate Categories Section 3 -Revenue Requirement Analysis 3.1 Fiscal Policies 3.1.1 Fund Policies and Benchmarks 3.1.2 Operating Fund 3.1.3 Capital Fund 3.1.4 Bond Reserve 3.2 Debt 3.3 Capital Improvement Plan Funding 3.4 Operations and Maintenance Expenditures 3.5 Operating Revenues 3.6 Recommended Revenue Requirements Section 4 -Cost of Service Analysis 4.1 Revenue Needs 4.2 Functional Allocation Section 5 -Rate Design Analysis 5.1 Customer Allocation 5.1.1 Customer Class Loading and Allocation 5.2 Rate Design Section 6 -Rate Comparison i I OCTOBER 2019 I FINAL 1 1 1 2 2 3 5 5 5 7 8 8 8 9 9 9 9 11 12 12 14 14 15 17 17 18 21 23 Nov. 19, 2019 Item #16 Page 15 of 158 CARLSBAD I FYE 2020 WASTEWATER RATE STUDY I Wastewater Cost of Service Study Appendices Appendix A PROJECTED O&M COSTS Appendix B Capital Improvement Plan Appendix C REVENUE REQUIREMENT ANALYSIS Appendix D FUNCTIONAL ALLOCATION Appendix E WASTEWATER CUSTOMER ALLOCATION Appendix F RATE DESIGN Tables Proposed Wastewater Rates by Customer Class Capital Improvement Plan Expenditures($ millions) Capital Improvement Plan Funding($ millions) O&M Escalation Factors during Study Period Operating Expenditures($ millions) Current Rate Revenues($ millions) Offsetting Revenues($ millions) Revenue Requirement Summary($ millions) Expenditures and Offsetting Revenues Unit Cost Calculation Loading Assumption by Class Billed Usage by Customer Class for FY 2019/20 3 10 10 11 11 12 12 13 14 15 19 19 Table 1 Table 2 Table 3 Table 4 Table 5 Table 6 Table 7 Table 8 Table 9 Table 10 Table 11 Table 12 Table 13 Table 14 Allocation of Wastewater System by Customer Class (FY 2019/20) ($ millions) 20 Wastewater Rate by Customer Class 22 Figures Figure 1 Figure 2 Figure 3 Wastewater Functional Allocation Cost Allocation by Customer Class Regional Monthly Single-Family Residential Rate Comparison ii I OCTOBER 2019 I FINAL 16 21 23 Nov. 19, 2019 Item #16 Page 16 of 158 Wastewater Cost of Service Study I FYE 2020 WASTEWATER RATE STUDY j CARLSBAD Abbreviations BOD Carollo Ccf CDFA CEC cf CIP CPUC DWR EDU EWA EWPCF MFR mgd O&M sou SFR SWRCB TSS Biological Oxygen Demand Carollo Engineers, Inc. Hundred cubic feet California Department of Food and Agriculture California Energy Commission cubicfeet Capital Improvement Plan California Public Utilities Commission Department of Water Resources Equivalent Dwelling Unit Encina Wastewater Authority Encina Water Pollution Control Facility Multi-Family Residential million gallons per day Operation and maintenance Second dwelling unit Single Family Residential State Water Resources Control Board Total Suspended Solids FINAL I OCTOBER 2019 I iii Nov. 19, 2019 Item #16 Page 17 of 158 CARLSBAD I FYE 2020 WASTEWATER RATES I Wastewater Cost of Service Study -This Page Intentionally Left Blank- iv I OCTOBER 2019 I FINAL Nov. 19, 2019 Item #16 Page 18 of 158 Wastewater Cost of Service Study I FYE 2020 WASTEWATER RATES I CARLSBAD 1 Introduction The City of Carlsbad (Carlsbad or the City) has undertaken a comprehensive cost-of-service rate design study for its wastewater utility. This report summarizes the study approach, key findings, and recommendations for the wastewater utility and detailed review of the cost-of-service methodology and rate designs. In addition, a survey of wastewater rates has been conducted to compare the City's rates with other regional cities/agencies. This study includes an assessment of both the City's wastewater user rates and capacity fees. The wastewater user rates and capacity fees are designed to distribute the cost of the operation and improvement of the Encina Water Pollution Control Facility (EWPCF) equitably among all users in accordance with California legal requirements as defined by Proposition 218 and California Government Code §66013, respectively. 1.1 Study Purpose and l{ey Drivers Several factors influence the need to conduct a comprehensive cost-of-service rate design study. Identifying these issues upfront defines the strategic intent needed to complete this project successfully. These issues include the following: • The majority of the southwestern United States lies within a desert with scarce water resources. Rapid population growth, potential climate changes, below average rainfalls, court mandated delta flow restrictions, and the State's continuous water conservation effort have compounded this scarcity. • The State of California requires that all utility rates meet the cost-of-service requirements imposed under Proposition 218. These principles underlie the approach to rate setting such that all customers are charged rates that are fair and equitable based on the demands that each customer class places on the system. • The City has a set of clearly defined fiscal policies designed to promote the fiscal health of the utility, including reserve requirements and debt coverage requirements. These fiscal policies are not only designed to allow the utility to meet the level of service objectives, but also allow the utility to mitigate potential rate spikes or cash flow deficiencies despite unexpected revenue shortfalls. 1.2 Background The City of Carlsbad is located in northern San Diego County, in southern California with a population of over 100,000. The City maintains a separate wastewater enterprise fund with its own operating and capital reserves. The City provides wastewater service to roughly two thirds (2/3) of the City's population and is responsible for the collection and conveyance of sewer discharges to EWPCF. This facility is jointly owned by the cities of Carlsbad, Vista, Encinitas, the Buena Sanitation District, Vallecitos, and Leucadia. EWPCF provides full secondary treatment, sludge handling, and disposal through a deep ocean outfall that extends along the ocean floor to a point 1.5 miles off shore. Based on the City's customer data, FINAL I OCTOBER 2019 I 1 Nov. 19, 2019 Item #16 Page 19 of 158 CARLSBAD I FYE 2020 WASTEWATER RATES I Wastewater Cost of Service Study return to sewer factors given water usage, and certain reduction factors given current drought conditions, the City's average daily wastewater flow is roughly 7 million gallons per day (mgd). The City currently has approximately 24,000 active sewer accounts, consisting of single family residential, multi-family residential, commercial, other, brewery, industrial, and schools. 1.2.1 Ongoing Water Conservation Efforts After more than 5 years of drought in California, the Governor issued Executive Order B-40-17 in April 2017 ending the drought state of emergency in most of California. Precipitation and snowpack in water year 2017 have fi lled the majority of California's lakes, rivers, and major reservoirs. However, long-term conservation among Californians, improving water use efficiency, and strengthening local and regional drought planning are still critical to the State's resilience to drought and on-going climate change. From a wastewater perspective, flows would also decrease due to customers being water efficient, which in turn can increase wastewater strengths and odor control costs, among other issues. Directed by the Governor's Executive Order B-37-16 in May 2016, five State agencies-includ ing the Department of Water Resources (DWR), State Water Resources Control Board (SWRCB), California Public Ut ilities Commission (CPUC), California Department of Food and Agriculture (CDFA), and California Energy Commission (CEC)-have developed a longer-term water conservation framework to enhance the resilience against climate and drought. Although the drought state of emergency lifted earlier this year, this framework will continue to guide the utilities to prohibit wasteful water use, manage the water resources, and conserve a reliable water supply for the future. 1.3 Project Approach Rate analyses are typically performed periodically so that revenues from rates adequately fund utility operations and maintenance (O&M) and capital investments. Additionally, in California, water rates must adhere to the cost-of-service requirements imposed by the State Constitution. California Constitution article XIII D, Section 6 (Article XIII D) requires that property-related fees and charges, including water rates, do not exceed the reasonable and proportional cost of providing the service. Article X, Section 2, of the State Constitution establishes the need to preserve the State's water supplies and discourage the wasteful or unreasonable use or reasonable method of use. To achieve these requirements, a comprehensive rate study typically consists of the following progression of three interconnected processes. ,Revenue.Requirement Analysis ~~'1'"""'.~T7>': ~~'1a,~ . . . .·· . ,:--· -•C,:ompares·ex°isting r~venues of tne utility to its operating;capital, and'pol!cy_: . f" driven costs to establish the adequacy of.t~E; existin~ cost recovery levels; · · ·· -~-Co~!:of-sery ' •_Identifies and apportions annual revenue requirements to functional rate ' components based on its application of the utility system. ~•Cons1aers' lfotn tHe level ano structure of tlie rate es1gn to collect'tlie. ,,_,_,cl, ... u ,. , \~ .. I, ~ • .. ,_ .. ,tr distributed revenue requirements fr9m ea,ch cjass of ~ervi_ce> · .,_. ·:-,. ,, -, ... ~'-L'.· :·p . t - . i_i 2 I OCTOBER 2019 I FINAL Nov. 19, 2019 Item #16 Page 20 of 158 Wastewater Cost of Service Study I FYE 2020 WASTEWATER RATES I CARLSBAD 1.4 Project Findings and Recommendations Based on the analysis projections, the City will need to increase wastewater rate revenues to keep pace with inflationary cost increases and necessary capital improvements to the City's systems and at Encina. The use of reserves to fund a share of capital projects will help to minimize the necessary level of rate increases. It is recommended that the City reviews its revenues and expenditures on an annual basis to verify that the implemented rates are adequately recovering costs. The key findings and recommendations are as follows: • Proposed Rate Increases. Annual user rate revenue increases of 3.0 percent will be required in each year of the study period to fund the activities of the City's Wastewater Department. The proposed user rates largely retain the City's current rate structure and will include a cost of service adjustment in FY 2019/20 based on the updated cost of service allocations followed by an across the board increase in FY 2020/21. • Minimum Operating Reserve. It is recommended that the City continues to complete financial planning based on the current operating reserve policy that sets a minimum operating reserve of 40 percent of annual operating expenses. In the future, the City could consider this policy to increase the minimum reserve target with Council approval or implementing a best practices target above the 40 percent minimum for financial planning. • Implement Brewery Specific Rates Classes. The proposed rate structure includes several new rate classes for breweries that are designed to reflect the unique wastewater discharges that different types of brewing operations generate. The City plans to work with brewers through the implementation process to place each customer into the appropriate category based on their operation and offer guidance on how they can mitigate costs by hauling brewing waste offsite for treatment. • Recommended Update to Flow and Loading Assumptions. It is recommended that the City conduct a flow and sampling analysis starting prior to the next master plan, to update the flow assumptions, Biological Oxygen Demand (BOD) and Total Suspended Solids (TSS) loadings concentrations assumptions, return to sewer factors, and the Equivalent Dwelling Unit (EDU) definition for each customer category. These updates would subsequently be used in the next update of both user rates and capacity fees. Table 1 outlines the recommended wastewater charges for FY 2019/20 and FY 2020/21. Table 1 Proposed Wastewater Rates by Customer Class GROUP! SFR(l> $27.81 $28.66 $29.52 Single Family with 2nd dwelling<ll $41.72 $42.99 $44.28 MFR/MOBILE HOME (per ccf) $3.29 $3.38 $3.48 Multi-family residential (per ccf) $3.29 $3.38 $3.48 FINAL I OCTOBER 2019 I 3 Nov. 19, 2019 Item #16 Page 21 of 158 CARLSBAD I FYE 2020 WASTEWATER RATES I Wastewater Cost of Service Study II. I FY 2019/20 I FY 2020/21 nt Rates 3.0~with COS 3_0% , Adjustment GROUP II -Commercial 2 (per ccf) $2.70 $2.80 $2.88 GROUP Ill -Commercial 3 (per ccf) $4.10 $4.25 $4.38 GROUP IV -Commercial 4 (per ccf) $7.65 $7.87 $8.10 GROUPV Elementary School (per student) $0.55 $0.57 $0.59 Junior High School (per student) $0.82 $0.85 $0.87 High School (per student) $1.10 $1.14 $1.17 Boarding School (per student) $5.75 $5.91 $6.09 GROUP VI-Large Volume (no account) Breweries Bl -Brewery without a restaurant and n/a $2.80 $2.88 hauls waste for outside treatment B2 -Brewery without a restaurant that does not haul waste for outside n/a $9.07 $9.34 treatment B3 -Brewery with a restaurant and n/a $7.87 $8.10 hauls waste for outside treatment B4-Brewery with a restaurant that does not haul waste for outside n/a $11.26 $11.60 treatment Industrial Pretreatment Class Ill $4.53 $4.68 $4.82 Note: (1) Indicates a flat monthly charge. 4 I OCTOBER 2019 I FINAL Nov. 19, 2019 Item #16 Page 22 of 158 Wastewater Cost of Service Study I FYE 2020 WASTEWATER RATES I CARLSBAD 2 -Assumptions and Data This cost-of-service analysis accounted for fund balances, interest earnings, use of capacity fees, deposits and withdrawals to the capital fund, and tracked the operating fund as a method of assessing the impacts of adjustments to wastewater rates. Data were provided by the City as the basis for the analyses for the rate study. The data included fiscal policies and practices, historical and projected O&M expenditures, operating transfers, non-operating revenues, debt service requirements, replacement funding, capital improvement needs, and customer data. Based on the review of the data, a number of assumptions was developed and used as the basis for performing the cost-of-service and preparation ofthe rate design. This section outlines these assumptions as well as the limitations of the study. 2.1 Growth and Wastewater Usage Based on staff projections, Carlsbad's population is expected to grow to approximately 130,000 by FY 2034/25. This population is considered the bu ild-out population for the purposes of this analysis. This represents an increase of approximately 13 percent in total over the current rounded population of 116,000. It is expected that wastewater discharges will grow at a commensurate level over the same time period. 2.2 User Rate Categories Carlsbad classifies its wastewater customers as follows: • • • • • • • • C c::1,-"11· Group I -Single family residential (SFR) -Single family residential with second dwelling unit Mobile Home Multi-Family Residential Group II -Commercial 2 Group Ill -Commercial 3 Group IV -Commercial 4 Group V -Schools Elementary Schools -Junior High Schools High Schools Boarding Schools Group VI -Large volume (no account) Breweries Bl-Brewery without a restaurant and hauls waste for outside treatment 82 -Brewery without a restaurant that does not haul waste for outside treatment 83-Brewery with a restaurant and hauls waste for outside treatment 84-Brewery with a restaurant that does not haul waste for outside treatment Industrial pretreatment class Ill (desalination plant) FINAL I OCTOBER 2019 I 5 Nov. 19, 2019 Item #16 Page 23 of 158 CARLSBAD I FYE 2020 WASTEWATER RATES I Wastewater Cost of Service Study SFR customers are charged a fixed monthly fee. SFR with a second-dwelling unit (SDU) will have a higher fixed monthly fee discussed later in this report. All commercial groups and group VI customers are subject to a volumetric charge based on water usage. Schools are charged based on the number of students. The volumetric charges vary between customer classes based on each class's assumed flow and loadings. Wastewater customers' effluent discharges are not individually metered; instead, each user's discharges are estimated using wastewater billing records and/or metered water consumption records and assumed strength characteristics. The City's billing system has a detailed listing of historic water consumption by customer, property use classification, and month. The study recommends moving the breweries into their own class to establish a rate that is commensurate with their impact on the wastewater system. Brewery waste is typically very high in BOD and TSS concentrations. These high concentrations can lead to increased degradation of wastewater infrastructure and drive higher treatment costs. Customers would only be migrated into this class once they are confirmed as being a brewery, and only if they discharge brewing related waste into the wastewater system. Breweries that haul brewing waste for treatment at Encina Wastewater Authority (EWA) or another approved plant would be charged the otherwise applicable rate rather than the brewery rate. Customers in the Brewery category are split into separate rate classes based on whether or not they also operate as a restaurant. The rates for each class are developed based on the assumption that half of a user's wastewater is generated by brewing and half is from the restaurant or general commercial operation (restrooms, breakrooms, etc.). The BOD and TSS loading assumptions are adjusted for each type of user accordingly. Breweries who do not haul their brewing waste offsite for treatment will be charged the applicable brewery rate that reflects the estimated strength of the wastewater that they discharge to the system. For breweries who haul their brewing waste offsite for treatment, those without restaurants will be charged a brewery rate that is equal to the C2 commercial rate since it is assumed that all of their wastewater discharges come from general commercial activities. Breweries with restaurants who haul theoir brewing waste fo r offsite treatment will be charged a brewery rate that is equal to the C4 commercial rate, the standard rate for restaurants. The Group VI -Large Volume rate category is currently not in use as the only customer in this category is located outside the service area and no longer has a business presence within the City. Carollo Engineers, Inc. (Carollo) recommends removing this customer class from the cost-of-service study as it would result in a rate based solely on estimates and not data. A rate will be developed in the future if there are new customers that fall within this category. 6 I OCTOBER 2019 I FINAL Nov. 19, 2019 Item #16 Page 24 of 158 Wastewater Cost of Service Study I FYE 2020 WASTEWATER RATES I CARLSBAD 3 -Revenue Requirement Analysis The revenue requirement analysis sets the basis for short-and long-term rate planning. More importantly, the analysis serves as a means of evaluating each cost center's fiscal health and adequacy of current rate levels. If revenue projections under ex'isting rates do not meet forecasted requirements, rates need to be adjusted. At the foundation of any utility rate study is a revenue requirement, which uses projected cash flows and debt service requirements to project revenue shortfalls. Using historical records, future O&M expenditures were projected. Ongoing expenditures were escalated annually on a line-item basis using a range of escalation factors. For example, variable costs like power were increased not only by general cost inflation but also with increases in utility demands (see the section on operating and maintenance expenditures for more information). Non-operating revenues and expend itures were also evaluated. The City's CIP was incorporated as detailed in the capital improvement section. Using these projections, a financial model was developed incorporating the preceding tasks and assessing the forecasted revenues through a cash flow sufficiency test. A revenue requirement projection for total service operations was therefore established. The model consists of a functional set of methods and data that align with the utility's objectives. The adequacy of the existing rate structure can be measured by comparing revenue requirement projections against revenue projections under existing rates. If revenue projections under existing rates do not meet forecasted requirements, rates need to be adjusted. There are two sufficiency tests utilized to define the necessary annual revenues: the (1) cash flow and (2) debt coverage tests. These sufficiency tests are commonly used to determine the amount of annual revenue that must be generated from an agency's rates. • Cash Flow Sufficiency Test: A utility must generate annual utility revenues adequate to meet annual expenditure obligations of the utility. The cash flow test identifies projected cash requirements in each given year. Cash requirements inclu de O&M expenses, debt service payments, replacement funding, additions to fund balances, and rate funded capital expenditures. These expenses are compared to total annual projected revenues. Revenues that are available to meet this requirement include user ra~e revenue, interest earnings, non- operating revenues, and miscellaneous revenues. Shortfalls are then used to estimate needed rate increases. • Bond Coverage Test: Annual rate revenues must satisfy debt coverage obligations. It measures the ability of a utility to meet both legal and policy-driven revenue obligations. When a municipality issues a bond, the official statement dictates the financial obligations that must be met in order to remain in legal compliance. This official statement lists off bond covenants, including a coverage factor. Coverage factors are usually set at a level between 1.0x to 2.0x of annual debt service. The official statement also lists eligible revenues and expenditures to be included in the coverage test. The coverage test does not include policy expenditures (i.e., additions to meet minimum fund balances and depreciation fund ing), capital expenditures, or capacity fee revenues. FINAL I OCTOBER 2019 I 7 Nov. 19, 2019 Item #16 Page 25 of 158 CARLSBAD I FYE 2020 WASTEWATER RATES I Wastewater Cost of Service Study Revenues must be sufficient to satisfy both the cash flow and coverage tests. If revenues are found to be deficient through one or both of the tests, then the greater deficiency (shortfall) drives the rate increase. Currently, the City has no debt and has no plans to issue debt during the study period. Consequently, the cash flow test will drive the City's revenue requirements over the next five years. 3.1 Fiscal Policies As a part of the Revenue Requirement Analysis, the utility's fiscal policies were reviewed and evaluated in relation to capita l funding and appropriate levels for the operating, capital and bond reserves. Based on the results of this review, these policies were incorporated within the financia l model by tracking fund balances, interest earnings, use of capacity fees, deposits and withdrawals to funds, and tracking the operating fund as a way to assess the impacts of adjustments to wastewater rates. 3.1.1 Fund Policies and Benchmarks Utility fund policies are intended to be implemented as a measure of safety and security against future events that may negatively impact the utility's financia l health. Fund balances can address variability and timing of expenditures and receipts, as well as occasional disruptions in activities, costs, or revenues. The general objectives of these polic ies are to facilitate stable and predictable rates and funding sources, along with equitable recovery of costs from customers as they are being incurred (or accrued). Overall, a utility's fund policies are a collection of rules and gu idelines. The collective use of individual funds will allow the utility to minimize its exposure to revenue shortfalls and coverage defaults. The City currently has a minimum target balance for its operating reserve set at 10 percent of annual operating expenditures. The City's operating capital reserves remain well above the minimum target balance, and the City will be using both operating and capital reserves to pay for capital projects for the five-year study period. 3.1.2 Operating Fund Carlsbad practice states that the utility should maintain a minimum balance for this fund equivalent to 10 percent of annual operating expenditures. As of the beginning FY 2019/20 fund balance is over 40 percent of annual operating expendi~ures. The operating fund provides a minimum year-end unrestricted fund balance needed to accommodate the cyclical nature of revenues and expenses. It provides a "cushion," which can be used to cover cash balance fluctuations. This fund is intended to address both anticipated and unanticipated changes in revenues and expenses. Anticipated changes may include billing and receipt cycles, payroll cycles, and other payables. The operating fund can be used to meet cash deficiencies due to unanticipated changes in usage, unforeseen expenditures, or drops in revenues. The fund's target balance is characterized as a percentage of annual expenditures set at a level commensurate to t he potential shortfall in revenues, based on the relative volatility of revenues of the uti lity's volume based rate structure. In general, utilities that recover a significant portion of their costs through volume charges will experience greater fluctuations in revenues due to seasonal usage patterns and will face a greater degree of revenue risk than a utility with a flat rate structure. As noted, under Carlsbad's current rate structure, single family residential customers and schools are charged a flat monthly charge for sewer services and all other customers are charged on a volumetric basis. Carlsbad should prepare itself for potential revenue volatility by maintaining an operating fund balance that meets or exceeds the minimum target fund balance, as set by utility practices. 8 I OCTOBER 2019 I FINAL C c;:,r-••~· Nov. 19, 2019 Item #16 Page 26 of 158 Wastewater Cost of Service Study I FYE 2020 WASTEWATER RATES \ CARLSBAD The operating fund will be used to cover capital projects during the study years. 3.1.3 Capital Fund In addition to resources designed to protect against variations in operating costs and revenues, a capital fund can help meet the cost of capital projects, repairs, replacements, and unexpected emergency capital outlays. While it would be impractical to reserve against major system-wide failures such as a catastrophic earthquake (utilities often hold insurance policies for such catastrophic events), it is reasonable and prudent to identify and quantify possible failures of individual system components. The City uses system reinvestment as the mechanism to determine capital funding levels. This provides a relatively stable and predictable source of funding for capital projects. Depreciation is a commonly used benchmark for system reinvestment. The City funds depreciation by making annual contributions into the capital fund, which may then be used to fund repair and replacement projects within the City's CIP. Based on the wastewater asset data provided, annual depreciation amounts to $55.1 million in FY 2018/19. By using funds from the Capital f und, the City has been able to fully fund their CIP and maintain stable impacts on rates by collecting annual depreciation rather than setting rates to meet fluctuations in annual capital spending. There are four major sources of funding for this capital balance: contributions from other agencies (specif ically, the City of Vista), capacity fee revenues, interest , and depreciation funding. In addition to the Operating Fund, the capital fund will be used to meet capital needs and in cash funding a larger portion of its projected capital repair and replacement program during the study years. This will save the wastewater utility ratepayers money. 3.1.4 Bond Reserve The City has no current debt, thus no funds in the Bond Reserve. 3.2 Debt The City has no current debt and has no plans to issue debt during the study period. 3.3 Capital Improvement Plan Funding The City developed the current Capital Improvement Plan (CIP) to meet the ongoing major repair, replacement, and expansion requirements of the wastewater system. The City categorizes its expansion- related projects as 'connection projects' and replacement-related projects as 'replacement projects.' The City has budgeted $22.7 million for 26 replacement projects for the next five years. In addition, there are projects associated with the EWA's general improvement project s and planned asset replacements totaling approximately $29.1 million. The City also has budgeted $7.2 million for 11 connection projects for t he next five years. Table 2 shows the proj ected CIP project costs for FY 2019/20 through FY 2023/24. The funding analysis includes a 3.5 percent per year capital cost escalation factor to account for increases in construction and cont racting costs starting in FY 2020/21. FINAL I OCTOBER 2019 I 9 Nov. 19, 2019 Item #16 Page 27 of 158 CARLSBAD I FYE 2020 WASTEWATER RATES I Wastewater Cost of Service Study Table 2 Capital Improvement Plan Expenditures($ millions) FY2019/20 FY 2020/21 FY 2021/22 FY 2022/23 FY 2023/24 Connection Fee Fund Projects I $1.63 $2.80 $0.32 $2.11 $0.32 Replacement Fund Projects I 5.16 10.28 2.68 2.35 2.25 Encina Capital Projects I 5.29 6.23 5.13 5.92 I 6.56 I Total Wastewater Projects I $12.07 $19.31 $8.13 $10.39 $9.13 - I TOT AL ESCALATED COST $12.07 I $19.99 $8.71 $11.52 $10.48 * Lme or column totals may not tie due to rounding The City frequently adjusts this CIP based on engineering and planning needs for the wastewater system. For the purposes of this rate analysis, only annual depreciation funding will be recovered each year directly through rates. Funds are available within the operating reserve above the 40% policy target, additional transfers may be made from the operating fund to pay for CIP projects. When significant changes are made, Carlsbad will need to evaluate funding mechanisms (i.e., reserve balances, capacity fee revenues, etc.) and t he timing of projects within its CIP to develop an optimized funding strategy while mitigating any unnecessary rate impacts. Table 3 shows projected sources of funds for connection fee projects as well as the resulting capital funds balance. The t(ansfers and replacement funding line item represents the transfer of operating revenues to the capital reserve for depreciation funding as well as additional transfers for cash funding of capital. As shown in the tables, the City plans to draw on t he reserves to fund CIP projects over the next several years. Table 3 Capital Improvement Plan Funding($ millions) I FY2019/20 FY 2020/21 FY2021/22 FY 2022/23 FY 2023/24 Beginning Capital Funds Balance I $33.17 $28.71 $14.95 $12.33 $9.36 (Connection Fee and Replacement) Transfers and Replacement Funding 6.78 4.76 4.87 6.80 6.54 ·-- Interest 0.42 0.36 0.22 0.20 0.17 Connection Fees 0.43 0.43 0.43 0.43 0.43 Use of Funds for Projects I $(12.07) $(19.31) $(8.13) $(10.39) $(9.13) Year-End Balance $28.71 $14.95 $12.33 $9.36 $7.36 Change in Reserves $4.45 $13.76 $2.62 $2.97 $2.00 * Lme or column totals may not t,e due to rounding An important aspect of the capital funding plan is that the City intends to draw on both existing replacement reserves and existing connection fee reserves to fund capital projects. Since the implementation of the City's existing connection fees, reduced volumetric discharges due to conservation and changes in planned developments have reshaped the CIP projects that are necessary to serve new users. While some of the projects init ially conceived and included in the connection fees have changed, other projects have been modified or expanded to take their place. Further, replacements and upgrades to the City's existing infrastructure are required to maintain the assets that serve new users and to maintain the excess system capacity that will be needed to serve users that have not yet connected to the system. To these ends, the City plans to allocate existing connection fee reserves, as well as a share of future connection fees, to pay for replacement projects that have an excess capacity component. The City will be updating their connection fees in a future study later this year. 10 I OCTOBER 2019 I FINAL Nov. 19, 2019 Item #16 Page 28 of 158 Wastewater Cost of Service Study I FYE 2020 WASTEWATER RATES I CARLSBAD 3.4 Operations and Maintenance Expenditures The cost-of-service analysis utilizes City's FY 2017/18 budgets as the basis for forecasting future revenue needs. O&M expenditures are assumed to increase commensurate with cost inflation and projected cost increases associated with increases in wastewater flows due to growth and higher treatment standards. Revenues and expenses are projected for future fiscal years using the annual escalation factors shown in Table 4. Table 4 O&M Escalation Factors during Study Period • FY 2019/20 FY 2020/21 FY 2021/22 FY 2022/23 FY2023/24 General Inflation 2.5% 2.5% 2.5% 2.5% 2.5% Labor Inflation 3.0% 3.0% 3.0% 3.0% 3.0% Labor -PERS (Normal Cost) 12.4% 13.2% 13.2% 13.2% 13.2% Labor -Health Insurance 7.5% 7.4% 7.1% 6.9% 6.6% Chemicals Inflation 2.5% 2.5% 2.5% 2.5% 2.5% Utilities Inflation 2.5% 2.5% 2.5% 2.5% 2.5% ~ Construction Inflation 2.5% 2.5% 2.5% 2.5% 2.5% Property Tax Increase 4.3% 3.8% 3.1% 3.7% 2.9% Depreciation Funding I 2.8% 2.1% 1.2% 1.2% 1.2% -I- I Interest Earnings 2.1% 2.2% 2.3% 2.4% 2.5% Customer Demand Growth 1.0% 0.9% 0.6% 0.2% 0.2% Gnrl lnfltn + Cstmr Dmnd Grwth 3.5% 3.4% 3.1% 2.7% 2.7% No Annual Increase I 0.0% 0.0% 0.0% 0.0% 0.0% One Time Expense -100.0% I -100.0% -100.0% -100.0o/o -100.0o/o * Line or column totals may not tie due to rounding The City transports its wastewater flows to EWA for treatment and has budgeted $4.1 million for EWA services for FY 2019/20. The California Public Employees Retirement System (PERS) defines the Unfunded Accrued Liability (UAL) as is the amortized dollar amount needed to fund past service credit earned (or accrued) for members who are currently receiving benefits, active members, and for members entitled to deferred benefits, as of the valuation date. The UAL is not included in the $4.1 million and instead is an additional $953,000. These cost s are expected to increase with general inflation and customer demand growth. Table 5 presents a summary of the projected operating expenditures for FY 2019/20 through FY 2023/24. Table 5 Operating Expenditures($ millions) FY 2019/20 FY 2020/21 FY 2021/22 FY 2022/23 FY2023/24 Personne I $ 2.44 I $ 2.56 $ 2.67 $ 2.78 $2.88 Maintenance and Equipment 3.31 2.32 2.37 2.42 2.47 Encina Services (inc, Encina I Pension Payoff) 5.06 5.19 5.33 4.23 4.34 ---Depreciation Funding 3.80 3.90 3.99 4.09 4.19 Transfer to Capital Fund 2.98 -----Total Operating Expenses $17.58 $13.97 $14.36 $13.52 $13.89 * Lme or column totals may not tie due to roundmg I I I FINAL I OCTOBER 2019 I 11 Nov. 19, 2019 Item #16 Page 29 of 158 CARLSBAD J FYE 2020 WASTEWATER RATES I Wastewater Cost of Service Study If the actual escalation factors are greater than projected, the City could potentially pass through some additional costs to its customers in accordance with California Government Code §53756, which will help offset unforeseen costs and promote the fiscal stability of the wastewater utility. 3.5 Operating Revenues Operating revenues are projected from budgeted revenues based on the escalation factors shown in Table 5. Table 6 shows the projected user rate revenues based on the current rates and prior to the inclusion of any rate increases for FY 2019/20 through FY 2023/24. This base level of rate revenue is expected increases modestly over the study period based on the expected level of growth in customer accounts. Table 6 Current Rate Revenues($ millions) Sewer Pre-Treat TOTAL WASTEWATER RATE REVENUES $13.76 $13.88 $13.97 $14.00 0.03 s14.02 1 ,. Line or column totals may not tie due to rounding In addition to above rate revenues, the City also receives other offsetting revenues that can be used to decrease the amount of revenues needed from user rates. Table 7 summarizes the projected offsetting revenues for the wastewater fund. Table 7 Offsetting Revenues($ millions) FY FY FY FY FY 2019/20 2020/21 2021/22 2022/23 2023/24 Fines & Forfeitures $0.09 $0.09 $0.09 $0.09 $0.09 Income from Prop & Investments I 0.16 0.10 0.10 0.11 0.11 1 Interdepartmental 0.08 0.09 0.09 0.09 0.09 I Other Revenues 0.07 0.08 0.08 0.08 0.08 I TOT AL OFFSETTING REVENUES $0.41 $0.35 $0.36 $0.37 $0.37 I - ----* Line or column totals may not r,e due to roundmg 3.6 Recommended Revenue Requirements Rate revenue increases will be necessary in order to meet the City's projected operating and capital funding needs. Annual rate revenue increases of 3-percent will enable the City to continue to fully fund its capital program and meet its debt service requirements. Furthermore, by initiating annual increases now, the City can mitigate larger increases in the fut ure and avoid the need for substantial debt issuances. Though the financial analysis included projection for a five-year period, the City only intends to adopt rates updated for FY 2019/20 and FY 2020/21. Table 8 below summarizes the revenue requirement projection. 12 I OCTOBER 2019 I FINAL Nov. 19, 2019 Item #16 Page 30 of 158 Wastewater Cost of Service Study I FYE 2020 WASTEWATER RATES I CARLSBA0 Table 8 Revenue Requirement Summary($ millions) I FY FY FY FY FY 2019/20 2020/21 2021/22 2022/23 2023/24 Pre-Rate Increase ~~nues_w_i-th_o_u_t-ln-c-re_a_s-es-----+-$-1-3-.7-6_...__$_13_.8_8_+--$13.97 $14.00 $14.02 I Revenue from Previous Years' Increases --0-.4-2---+---0-.8-5--+--1-.3-0--+---1.-7-6- ~setting Revenues 0.41 0.35 0.36 0.37 0.37 Operating Revenues I $14.16 $14.64 $15.18 $15.67 $16.15 Less Operating Expenditures J (13.9~ -- (17.58) (14.36) (13.52) (13.89) - Cash Flow Surplus/(Deficit) $(3.41) $0.68 $0.82 $2.15 $2.27 Rate Revenue Increase I 3.00% 3.00% I 3.00% 3.00% 3.00% - Post-Rate Increase Revenue from Increase I $0.41 $0.43 I $0.44 $0.46 $0.47 - (Less): Rate Increase Delay (0.24) (0.25) (0.26) (0.27) (0.28) -l I I I I -- Cash Flow Surplus/(Deficit) $(3.24) $0.86 $1.00 I $2.34 $2.46 Operating Fund Reserve I Beginning Operating Fund Balance $7.71 I $4.47 $4.45 $4.58 $4.21 ---' Cash Flow $(3.24) $0.86 $1.00 I $2.34 $2.46 Transfer to Capital I . I (0.87) I (0.87) (2.71) (2.35) --ENDING OPERATING FUND BALANCE 1 $4.47 $4.45 $4.58 $4.21 $4.33 Percent of Operations I 41% I 40% I 40% 40% 40% • Line or column totals may not tie due to rounding Total operating expenses included in the cash flow sufficiency test include depreciation. The City currently transfers an amount equal to annual depreciation as well as an additional capital funding transfer from the operating reserves to the capital reserves each year. Over time, the City has b~en very proactive in annually contributing to the replacement of its system. Based on the current fund balances, the City can mitigate the necessary rate adjustments by reducing its annual capital funding transfers to the capital fund over the next five years. This will allow the City to meet the operating reserve policy target of 40 percent of operations costs. The proposed rate revenue increases for FY 2019/20 will be implemented by a full cost of service adjustment, and rate adjustments will vary by customer class. For 2020/21, the percentage rate revenue increase is recommended to be applied to the FY 2019/20 cost of service-based rates. FINAL I OCTOBER 2019 I 13 Nov. 19, 2019 Item #16 Page 31 of 158 CARLSBAD I FYE 2020 WASTEWATER RATES I Wastewater Cost of Service Study 4 -Cost of Service Analysis The purpose of a cost-of-service (COS) analysis is to provide a rational basis for distributing the full costs of wastewater service to each customer in proportion to the demands they place on the system. The COS analysis yields an appropriate method for allocating costs, which could be continued until substantial changes in cost drivers or customer flow or loading patterns occur. Using a COS analysis, user rates are developed to allocate O&M, debt service, and rehabilitation and replacement costs to system users. Allocating costs begins by developing unit costs for each billable constituent: customer, flow, BOD, and TSS. Unit costs are then applied to the flow and loading of each customer category in order to allocate the costs to each customer. The City's current rate structure was developed using a COS analysis. The overall procedure used to develop the user rates is as follows: • Revenue Needs. Define t he annual revenue that must be recovered from user rates and permit users. • Functional Allocation. Determine the percentage allocation of O&M and capital costs to the billable constituents: pumping, flow, BOD, and TSS. • Unit Costs. Develop unit costs for each billable constituent by dividing the total cost allocated to that constituent by the total wastewater flow or loadings of that constituent. • Customer Category Rates. Assign costs to customer categories based on usage, then develop rates for each customer category. 4.1 Revenue Needs The revenue needs are defined as the amount of revenues that must be recovered through user rates and industrial user rates in order to cover annual expenditures less any offsetting revenues. Expenditures and offsetting reve nues for FY 2019/20 are shown in Table 9 below. Table 9 · Expenditures and Offsetting Revenues Ongoing Operating Expenses $10,803,213 Other Operating Expenses Re lacement Fundin (De reciation Fundin 3,800,000 Transfers to Capital Fund 2,975,000 Adjustment for Mid-Year Increase 240,749 LESS: Offsetting Revenues Additions to (Use of) Reserves (3,241,279) Fines and Forfeitures (87,800) & Investments (161,870) (83,400) Other Revenues (74,800) Connection Fees RATE REVENUES REQUIRED $14,169,813 * Line or column totals may not tie due to rounding 14 I OCTOBER 2019 I FINAL Nov. 19, 2019 Item #16 Page 32 of 158 Wastewater Cost of Service Study I FYE 2020 WASTEWATER RATES I CARLSBAD In FY 2019/20, $14.2 million must be recovered through wastewater service charges to cover the City's annual expenditures. 4.2 Functional Allocation The American Water Works Association (AWWA) defines a two-step process for recovering costs. First, capital and O&M costs should be allocated to applicable functional categories. A functional category is a primary function of the utility that costs can be allocated to, then recovered based on how customers utilize the system. For this study, fourfunctional categories were assumed as follows: • Flow costs are associated with the collection, pumping and treatment of sewage effluent, based on volume regardless of strength. The City does not meter sewage discharges. Instead, flows by each customer class are estimated using water consumption. The flow component is measured in assumer flow in hundred cubic feet (ccf). • BOD costs are associated with providing the transportation and treatment of dissolved organisms within sewage effluent. BOD costs are allocated based on assumed BOD strength in a user class' discharges. BOD is measured in pound. • TSS costs relate to providing the transportation and treatment of solid objects within sewage effluent. TSS costs are allocated based on assumed TSS strength in a user class' discharges. TBB is measured in pound. Once the functional categories have been defined, each operating and capital cost is allocated on a line item basis to one or more of these functional categories. The functional costs are then allocated to customer classes based on the unique demands each customer class places on the system. The allocation metrics shown above are consistent with industry standards. Items that cannot be reasonably allocated between these functional categories are allocated "As-All-Others" and costs are split proportionally based on the allocation split of all other items. · Annual expenditures and off-setting non-rate revenues are allocated on a line-by-line item basis between the functional components outlined above. As noted, a total of $14.2 million must be collected through rates in FY 2019/20. Functional costs are allocated as one of t he following: customer only, flow only, flow/BOD/TSS, as-all-others, or any other metric deemed pragmatic. Costs allocated to each category can then be divided by the total of number of units served by that category based on the metrics outlined in Table 10. Table 10 Unit Cost Calculation $ Allocable (in 1,000's) $7,057,775 $4,542,406 $2,569,632 % allocable 58.63% 25.85% 15.52% TOTAL UNITS 3,736,824 ccf 5,454,181 lbs 5,138,340 lbs UNIT COST $1.89/ccf $0.83/lbs $0.50/lbs * Line or column totals may not tie due to rounding FINAL I OCTOBER 2019 I 15 Nov. 19, 2019 Item #16 Page 33 of 158 CARLSBAD I FYE 2020 WASTEWATER RATES I Wastewater Cost of Service Study Figure 1 Wastewater Functional Allocation 16 I OCTOBER 2019 I FINAL Nov. 19, 2019 Item #16 Page 34 of 158 Wastewater Cost of Service Study I FYE 2020 WASTEWATER RATES I CARLSBAD 5 -Rate Design .Analysis 5.1 Customer Allocation The City does not individually meter wastewater usage by its customers. Metering wastewater is an expensive and generally inefficient process. Single family residential customers, including duplex and 'Ml' customers, incur a flat monthly charge for service. Schools are charged on a per student basis, and all other customer classes are charged based on a percentage of water consumption, which is outlined in this report. For the purposes of this study, City staff provided wastewater billing records, including FY 2015/16 to FY 2017/18. FY 2017/18 data were utilized to develop usage information by !=UStomer class and by month. Wastewater billing records list monthly charges by customer as well as the amount of water used by each customer. Water consumption was not provided for those customers who receive a flat monthly bill (i.e., single family residences and schools). For these customers, data from the water utility billing system was used to estimate discharges to the sewer system. In order to test the validity of the customer data, two tests were performed: an accuracy test and a reliability test. The accuracy test verifies that the correct data is being used by performing a price out on the provided data set in order to calculate revenues and compare the result to the actual revenues listed in financial statements. An acceptable margin of error for this test is +/-3 percent (actual revenues compared to revenues calculated from the billing records). Based on the Comprehensive Annual Financial Report, the actual wastewater rate revenues collected by the City in FY 2017/18 amounted to $13.9 M. Using the customer data set provided, the calculated amount came to $13.8M, a difference of $0.lM. This minimal level of discrepancy validates that the data provided is sufficiently accurate to be used in the model and calculations. Performing a reliability test is also necessary in order to confirm that the correct data is being used. From a statistical standpoint, the definition of reliability is the consistency of a set of measurements. In other words, "Can the provided data be considered a 'normal' year?" It is important to verify that a normalized year of data is being used as the foundation for developing rates; otherwise, revenues may be over or under collected. For example, during a wet year, consumption may be reduced. If a test for reliability is not performed under these circumstances, then the customer base may be understated. Rates would then be set at a level higher than needed and revenues would be over collected. While there is no guarantee that a 'normal' year will occur in the years addressed by this study, for the sake of projections, it is prudent to assume that this will be the case. In performing the reliability test, historical data was reviewed and compared. When comparing historical data, it is important to account for any growth within the customer data and also to take into consideration any external forces (such as weather, conservation, etc.). Based on the data provided the average winter water consumption has gradually increased since FY 2015/16. Starting in 2017, the state finally started recovering from the extreme drought, which started in 2011. The state is now drought free for the first time since 2011. Consequently, the water consumption has been presumably increased. FINAL I OCTOBER 2019 I 17 Nov. 19, 2019 Item #16 Page 35 of 158 CARLSBAD I FYE 2020 WASTEWATER RATES I Wastewater Cost of Service Study After the provided customer data sets were validated, the number of accounts, the amount of flow, BOD, and TSS for each customer class were determined. This allowed for the allocation of costs from the various functional categories (as described in the previous section) to each customer class. The customer classes are defined as follows: • Single Family Residential includes single fam ily residences, duplexes and Ml (multiple PD Us) accounts. These users are charged a flat monthly wastewater bill. • Multi-Family Residential includes multi-family residences and mobile homes. These users are charged based on 90 percent of their water usage (per ccf). • Group II Commercial includes soft water services, car washes, office buildings, professional buildings, laundromats, department and retail stores, warehouses, hospital convalescent homes and indoor theaters. These users are charged based on 95 percent of their water usage (per ccf). • Group Ill Commercial includes hotels and motels without restaurants, repair and service stations, shopping centers, amusement parks, nightclubs, nurseries and greenhouses, commercial laundries, manufacturing and lumber yards. These users are charged based on 95% of their water usage (per ccf). • Group IV Commercial includes hotels and motels with restaurants, wholesale bakeries, supermarkets, mortuaries, and restaurants. These users are charged based on 95% of their water usage (per ccf). • Group V includes schools: Elementary Schools are billed on a per student basis. Middle Schools are billed on a per student basis. High Schools are billed on a per student basis. Boarding Schools are billed on a per student basis. • Group VI Large Volume includes organizations and social services. These users are charged based on 95 percent of their water usage (per ccf). Currently, there is no accounts under this class. • Breweries include all businesses where beer or beverage brewing takes place. As a component of the Study, the City will be adding several new brewery specific rate classes to account for the unique wastewater discharges that breweries generate. The brewery proposed classes are: Bl-Brewery without a restaurant and hauls waste for outside treatment. These users are charged based on 82.5 percent of their water usage (per ccf). B2 -Brewery without a restaurant that does not haul waste for outside treatment. These users are charged based on 82.5 percent of their water usage (per ccf). B3 -Brewery with a restaurant and hauls waste for outside treatment. These users are charged based on 82.5 percent of their water usage (per ccf). B4-Brewery with a restaurant and hauls waste for outside treatment. These users are charged based on 82.5 percent their water usage (per ccf). • Industrial Pretreatment Class Ill includes any user discharging waste other than domestic waste, having a reasonable potential to adversely affect the Encina Water Pollution Control Facility and requires annyal inspection and permits every three years. These users are charged based on 95 percent of their water usage. S.1.1 Customer Class Loading and Jlllocation Carlsbad provided a table that outlines the assumed loading concentrations by user class. It is assumed that these concentrations are accurate. No changes have been made to the assumed loading concentrations that are shown in Table 11. 18 I OCTOBER 2019 I FINAL Nov. 19, 2019 Item #16 Page 36 of 158 Wastewater Cost of Service Study I FYE 2020 WASTEWATER RATES I CARLSBAD Table 11 Loading Assumption by Class GROUP 1-SFR 200 200 GROUP I -MRF/MOBILE HOME 200 200 GROUP II -Commercial 2 130 121 GROUP Ill -Commercial 3 328 279 GROUP IV -Commercial 4 820 680 GROUP V SCHOOLS Elementary School 130 100 10 gpd per student Middle School 130 100 15 gpd per student High School 130 100 20 gpd per student Boarding School 130 100 75 gpd per student GROUP VI -Large Volume (no accounts) 130 93 Breweries Bl-Brewery without a restaurant and hauls waste 130 121 for outside treatment B2 -Brewery without a restaurant that does not 1,265 810 haul waste for outside treatment B3-Brewery with a restaurant and hauls waste for 820 680 outside treatment 84-Brewery with a restaurant that does not haul 1,610 1,090 waste for outside treatment Industrial Pretreatment Class Ill Hughes 41 52 Beckman Micro Oper 1 2,082 601 Culligan 5 51 -Using these assumptions, water consumption data, and the wastewater billing records, assumed usage by each customer class was calculated and is summarized in Table 12. Table 12 Billed Usage by Customer Class for FY 2019/20 ,. -·~-;"~ Flo~v' - -BOD -TSS , , -Mo_nthly Account (1,000 ccf) (1,000 lb) (1,000 lb)· -~~--., .. ..,.,~'..'.t' ..... ...-)-.· ~~ GROUP I-SFR 21,644 2,095 2,616 2,616 GROUP I -MRF/MOBILE HOME 1,035 537 670 670 GROUP II -Commercial 2 1,120 427.85 348.06 320.10 GROUP Ill -Commercial 3 292 460.39 943.60 801.50 GROUP IV -Commercial 4 119 161.63 827.35 686.09 GROUP V -Elementary Schools 19 16.21 13.16 10.12 FINAL I OCTOBER 2019 I 19 Nov. 19, 2019 Item #16 Page 37 of 158 CARLSBAD I FYE 2020 WASTEWATER RATES I Wastewater Cost of Service Study :,· ' -- -Flo~ Boo· .. ·tss ~- .;_:'.fto!Jthly Account (1,000 ccf) (l1Q._q9.J.b) (1,QOQ)~f _ GROUP V • Junior High Schools 4 9.57 7.77 5.97 GROUP V • High Schools 4 17.80 14.45 11.11 GROUP V · Boarding Schools 1 7.10 5.76 4.43 GROUP VI• Large Volume (no accounts) 0.00 0.00 0.00 Breweries n/a n/a n/a Industrial Pretreatment Class Ill 1 4.47 8.30 13.27 TOTAL: 24,238 3,737 5,454 5,138 * Line or column totals may not tie due to rounding Using these assumptions and the unit costs developed in the functional allocation section of this wastewater report, costs were allocated to each customer class as outlined in Table 13. Because the City was still in the process of assigning brewery users into the brewery classes at the time of the analysis, the total billed usage was not calculated for the breweries. The proposed brewery rates are calculated based on the assumed loading concentrations and return to sewer factor for each brewery subclass. Table 13 Allocation of Wastewater System by Customer Class (FY 2019/20) ($ millions) --Custoi:n~r Class Flow BOD· TSS GROUP 1-SFR $3,957 $2,178 $1,308 GROUP I -MRF/MOBILEHOME $1,014 $558 $335 GROUP II · Commercial 2 $808 $290 $160 GROUP Ill -Commercial 3 $870 $786 $401 GROUP IV· Commercial 4 $305 $689 $343 GROUP V · Elementary Schools $30.6 $11.0 $5.1 GROUP V • Junior High Schools $18.1 $6.5 $3.0 GROUP V · High Schools $33.6 $12.0 $5.6 GROUP V • Boarding Schools $13.4 $4.8 $2.2 GROUP VI • Large Volume (no accounts) $0.0 $0.0 $0.0 Breweries n/a n/a n/a Industrial Pretreatment Class Ill $8.4 $6.9 $6.6 TOTAL: 7,058 4,542 2,570 * Line or column totals may not t,e due to rounding The amount of revenues recovered by each customer class is summarized in Figure 2. 20 I OCTOBER 2019 I FINAL Nov. 19, 2019 Item #16 Page 38 of 158 Industrial Pretreatment Class Ill $21,983 GROUP V -Boarding Schools $20,413 GROUP V -High Schools $51,217 $27,531 Wastewater Cost of Service Study I FYE 2020 WASTEWATER RATES I CARLSBAD Commercial 4 $1,337,425 Figure 2 Cost Allocation by Customer Class 5.2 Rate Design This task involved three separate activities -1) allocating costs by function (see the functional allocation section), 2) allocating costs by customer class (see the customer allocation section), and 3) calculating wastewater rates. Based on the rate evaluation performed under the previous tasks, it was determined that in general, the City's current rate structure is capable of meeting the City's goals. The recommended rates are based on "cost-of-service" principles that incorporate the work performed in previous tasks and adhere to Proposition 218 requirements. Once costs have been allocated to customer classes, rates can be developed. As noted, the single family residential customer class is charged a flat monthly rate, schools are billed based on number of students, and all other customers are charged based on a percentage of water consumed. To calculate the single family residential (SFR) flat monthly charge, total cost allocable to the SRF customer class is divided by the total number of bills that go out to this customer class per year. In order to calculate the charge per student for each school type, the total costs allocable to each school type are divided by the product of the number of months the school type is assumed to be in session and the number students served by that school type. Charges are developed for all other customer classes by dividing total costs allocable to that customer class by the total assumed flow of that customer class. These customers are subject to a monthly minimum charge for wastewater service. This minimum monthly charge is set at half of the monthly rate that is incurred by SFR users. This minimum charge was accounted for when developing rates. Table 14 below outlines the resulting wastewater rates by customer class for the next five years. FINAL I OCTOBER 2019 I 21 Nov. 19, 2019 Item #16 Page 39 of 158 CARLSBAD I FYE 2020 WASTEWATER RATES I Wastewater Cost of Service Study Table 14 Wastewater Rate by Customer Class GROUP I Single Family Residential (flat) SFR w/ Second dwelling unit (flat) Multi-Family Residential (per ccf) MRF/Mobile Home (perccf) GROUP II -Commercial 2 (per ccf) GROUP Ill• Commercial 3 (per ccf) GROUP IV• Commercial 4 (per ccf) GROUPV Elementary School (per student) Junior High School (per student) High School (per student) Boarding School (per student) GROUP VI • Large Volume (no accounts) Breweries Bl -Brewery without a restaurant and hauls waste for outside treatment B2-Brewery without a restaurant that does not haul waste for outside treatment B3 -Brewery with a restaurant and hauls waste for outside treat_ment B4 -Brewery with a restaurant that does not haul waste for outside treatment Industrial Pretreatment Class Ill 22 I OCTOBER 2019 I FINAL $28.66 $29.52 $42.99 $44.28 $3.38 $3.48 $3.38 $3.48 $2.80 $2.88 $4.25 $4.38 $7.87 $8.10 $0.57 $0.59 $0.85 $0.87 $1.14 $1.17 $5.91 $6.09 $2.80 $2.88 $9.07 $9.34 $7.87 $8.10 $11.26 $11.60 $4.68 $4.82 Nov. 19, 2019 Item #16 Page 40 of 158 Wastewater Cost of Service Study I FYE 2020 WASTEWATER RATES I CARLSBAD 6 -Rate Comparison Carollo conducted a survey of wastewater rates to compare the City,'s existing and proposed rates to those of surrounding agencies. All wastewater systems face unique challenges, and they develop their rates accordingly. Taking this into consideration, Figure 3 below summarizes regional monthly wastewater bills for single family residential customers, including the City's current and proposed monthly flat rates. As shown in the figure, the City's rate is the lowest amongst surveyed agencies. With the proposed increases, the rate remains one of the lowest in surrounding area. Additionally, this survey might not reflect rate increases currently under review, but not yet implemented. $140 $120 =$100 m ~ $80 .s:: +" C ~ $60 Figure 3 -Fixed Charge Commodity Charge Regional Monthly Single-Family Residential Rate Comparison FINAL I OCTOBER 2019 I 23 Nov. 19, 2019 Item #16 Page 41 of 158 CARLSBAD I FYE 2020 WASTEWATER RATES I Wastewater Cost of Service Study Appendix A PROJECTED O&M COSTS E:SCAU.10R I"/ JOHH2O FY 2020121 FY 2021122 FY 2022,121 FY 2013/24 REVENUES Chars es for s.r"kes code line ltl!,m 5100 Commodity Usagl!! 511.2 5ewcrPre--Tre.at 5121 Sewer literals other Char4ts for Scrrvic6 Finu •nd ForfeiturM Late Charses Othl!r Fines ;and forf•ltures ln¢:om• frQm Propcrt:Y & lovfftment, 5300 lntc:rcit lt'tCQmo • Pooled Clsh S>OS 5310 S,60 5361 lntcrest-UnrulldGaln5/Loucs Interest lncornefrmOthr Inv Sale of Clpjtill As.sets (c.1csh adJ) DoNtc:d Anc:ts Othc-r Income from Ptoperty &ln~tments Tot.II Income from Ptoparty & tnwtstments Interdepartmental 5430 t"t'c Labor Other rnte,de-partrnen~I Total lntetdepartmental other Revenues SSSO Prior Year fee Refur,ds. 5639 .... 5674 Misc R~mbtJr,ement El(fl, MISC AR Write Offs Other Other Re\l'f!n~ Total Other Revenuu TOTAL REVENUES EXPENDITURES ,.,rsonnl'I tcdo linett.m 6100 R~Salaries 6101 lncentivf!P.ay- 6150 100 Worlcer's Ca.mp 62()0 Overtln»Salarles 6210 Standby Pay 6300 Parttlmes Salaries 6400 Temporary~p 6501 HHlth lnsur~nce 6510 Ufe lnwranc:e 6520 Vlsionlnsurilnce 6530 Medicire 6629 Cell Phone Refmbuf'sement 6630 Auto AHa.wance 6640 hrn~ Leave Accrual 66'1 Health'f£mpAwarcfs 66'3 ,1nal Vacatfon Pay ..,. fll'lillSlclc.Le.ave P.11y 66SS Ob.ability .... Unemplo~nt 6657 Worker's CompenUillon 6720 PERS 6723 PERS Unfunded LI.ab Up 6721 PERS (GAS8 53 CONTRA ACCOUNT} 6m Oper11tion Expense 6730 Soehl Security 6740 Oeferred Comp Other PffsoMel Total Pu ,onn.a Costs OCTOBER 2019 I FINAL ProjKtfon Custor,'11'!:t De,ITW\d Growth 13,72a,.DOO CUstomer Of.JMnd Growth ,.~"' CUstorne:r ~.and Growth Geiv~I lnfl•tlon 13,7S7,100 f--"'=ncc•""'='°""'=cc""=--=G<owt=cch_--11 S Cuitome:r~mandQowth . 87,800 lnterut Eamlnp: 161.870 Gffle~l lnfl1tJon Ge.nerallnflltion ~llnfh1tlon ~llnft1tlon ~r11llntlltlon 1Gl,870 GffitBI lnflltJon a,,400 GmutJ lnffltfon 83,400 General lnftaUon 74,800 Gtn«rtlln~Oon 74,800 14.164,970 ProjeGtion L.aborlnfladon l~S36,S13 labor Inflation LAbor1nfl1don Labor lnflatlon oo,na Labor lnfl1tlon 25,552 Labor Inflation LAbor 1nf11tk>n 20,000 L.abor 4 Health lmunnc.e 314,544 ~llnflatfon 1,581 Gene-r.11nflatlon Genefill Inflation l3,!H9 Ge:neAol Inflation ""' Ge:nen.l 1nn1t1on 2,100 Lilbcrlnfladon Ge.netal lnftatlon Lllbcrlnflltion Labor Inflation 8.l.53 Genl!r:lllnftation 14,837 GM.tnl lnflltlon 4,107 Gener.al !nff.atlo.n 39,690 Labor· P£RS (Norm1I Cost) lJI0,681 litbor • PE.RS (NonMI Cost) 1.99,S27 Labor· KRS (Normal Cost) Genenil lnfl.adon GenetiillnflilllOn Generill lnfl.aHon Gener11I 1nf11;don 2,442,:385 ProjMbOn ProJeeilon Project-on Pro)t(tiOn 14,264,890 l4,7a7,950 15,265,790 15,751;310 ,0,240 31,350 32:,360 33,390 14,2:95,130 14,8151,300 15,198,150 15,784,700 88,580 89,150 S s~.aso s 89,510 ...... 89,150 89,3SO 89,510 98,270 102~30 109,920 1(15,320 98,270 102.430 109,920 105,11:20 8S,4'SIO 87,630 89,820 "2,070 85,490 37,630 89,820 92,070 s 761'70 78,590 80,SSO 82,560 76,670 78,590 80,550 B2,560 14,644,140 lS,1.77,100 15,667,790 s 16,154,160 Projedion Proj!ction Pr.ojectlon Pro)ectioft 1,582,610 1,630,090 1,678,990 1,729,360 OZ600 64,480 66.410 68,400 26,320 27,110 27.920 28,760 20,600 :21,220 21,860 22,520 337,760 361,840 386,730 412,370 1,620 ,...., 1,700 1,740 24,540 25,150 25,780 26,420 390 400 410 420 2,150 2,200 2,260 2,320 3,400 8.6SO 8,910 9,18!:I lS,210 lS,590 15,980 16,3&'.) 4,210 4,320 4,4:,0 4,>40 40,6BC 4!,700 42,740 43,810 108,905 215,172 221,627 221.276 227,.263 255,109 277,705 288,111 2,563,257 2.674,6511 2,783,452 2,882,&07 Nov. 19, 2019 Item #16 Page 42 of 158 MP)t•n•n~ & Equlpir,cnt 7111 Other Mieh & Eqtlip 711S Velide R.nt~lf 71~ W.iSt:R~tals 7120 flAiKLHS41S nio omee Eq.iip Maint n11 Comml#'l!Qtlanfqulp MalnU•N~ 7215 Sohwue M.tititenUiee n .16 Ccm~r MfT~fflllM:41 mo V~le M11ntenancc 7221 W11ihindWut m2 Othtr Equip MilN m, PlpelN ~ntffllrKit mo Rout!M 8Ulldln& MaintenatKe n41 As))MII bpaks n" Miit\tenarc., Rep1ir• rd Reh1b 7400 ..... 7410 legil 7435 Admlnlrtr;)tJw 7490 ~ f',ofHSioMI SMlfc<M 7500 EncfMServbs 7500 El'ltiria ~ tPe~('>ft,ayet1) 7550 Mis,cebn.ous Ovtslc» Sarvfie»s 7551 Bal'lk.Sl!'.tvit',$ 7553 Convn Am Support 7554 R ... tory/Pfflflittl"I Feel 7556 MlscS.Nie.@S 7558 L1undtyand Uniform MalntHl"ICe 7SS9 El1KttlnJ/SCA0AServbs 75'2 FOG lnsptttion Sff,,ice.s: 7563 Smutco-m WI R/Al•rm Serv6c.e-s 7564 Landsc1pi'figSffvic.H 7710 Msandl>\lbl!shinc 7711 Ol.11$ 11nd Sl.,b5aipJons 77ll 8oak:s and P\lbrie.uions 7713 Audio Vl,1111 Mltffllb 7715 Printitlg mo Postage 7725 OfficeS(Jp~iH m• Office Ft.lrnlture &Elf,lipment mo Cotnputet Softwue m, Mb,;, Compi.Aff Ke~6mire 7135 Ptcrno Mater1a1, 7745 FoodEX4)erM 7750 Keatan:tUgM. 7751 T•lephont-& Commt.nlcatlons 7752 Waste Dlspo,lil Se.Mots 7753 Water 7801 Buildil"l&Mail'ltenanc:e 7810 ElectrfulSuppUe:s 7&11 Janito~I Supplies 7820 Paru-VeHdn 7821 P■rts•Equip 7830 Rod<andMlne:ral Producls 7831 A~lt 7850 SrniillTook 7SS1 ~f¢1YEQ1,iprr,cn1 7852 Uniforms and.AttlUSOl'ie:s 7853 Moters/HttJrcs, 7857 Pe:rso~J Protective Eql,f.ptne:nt: 7880 GasolrrMtaild~I 7883 Chemicals 78 .. Tralnln&SwPlies 78 .. Medk:Ji1 ~IH-Dlspos1ble 7899 MIK~fes 8110 Employee Trairling 8120 T'ult!Offltmibl.n«ne:nt mo Ttainirc/Tniili,c.itel5tt<ITtnel 8500 D@?fecl1tlon 8520 Confete«e Tralld 8522 MIK. Me:11b/Mlles 85,0 Bad Oebtf.xp-Other Inv/Bits 8534 RqOve:r/Short ""' NED Rctntal Aulst:.nce P.'lyment; ..... bterill Aul,tance i'roa,am '610 S11tdcmenls 8700 Co- 8809 Vclicle Direct Chartt;s 8810 Velicle:Main1Manot(2} 8811 vci.;lc Rtpl..:emcnt WO Ge:nerallilb """' lnformatfon Tedvloqit:s .. ,., Misc IMe:tde:pHtmental Oiirge:1 .... t&ChJ8ad: 8892 Utnity&atrg Chilr~tt 8510 f"UQl/lce,,C fffi 8511 Arbltr.lge CO$ts 8520 Printjp,11 8"21 lnterest~e 8922 Int E'xp-Capltatfzed hw.erest Othff•HNt&Ught Other-Puts & Equipment Othct-YINrtCcwers Addt'I Milnre,w,ce: & Equipment Other M,inlenano & Er;iuipl1'eflt Tot.I Mtinh:n•nce & Equipment Costs Wastewater Cost of Service Study I FYE 2020 WASTEWATER RATES I CARLSBAD JiiiiA #E·RW·~all+M&Nlii!·HlifMNiii·P:if'NFiF.PiiHM Genera! tt\rlatiOn G.nenill.nfli,t1on l)>lO -',030 Gat'Nt.11111nf\ation 1,000 1.030 Ge~tnflatlon ~"IH't11nfl•tion 500 510 G.n«al tnflatfon 1,000 -',030 Gent-1Wlnflatfon 74,250 7i,l10 G~lnfi.tlon ~.nen11rrnat10n 500 510 Gen.RI Inflation 2,500 2,$0 ~llrtt'latiofl ~lnfl&tlcin 141,000 144,S30 Gt!'l'Wt'lllnflttfon ~allnflatie>n 10,000 10,250 ~!hrl\ttlon 3,000 '·°"' ~lnflatkln ~lnflatlol\ Gentnl Inflation Gene1'allnftatlCln 130,000 133,250 Gmlnfltn•Cstmr OmfdG,wth 4,101,.976 4,240,SCO No AMual l1'CIW.S. 9Sl,50S 9SS,Sl0 Gffltnl ln:flatlon 170,000 1?'4.2SO GtfJWallnflttion Genenll~tlon General Inflation 32.000 mm GMlralirtnulon ~llnflltlon 5,000 S,130 ~llnfiltlon 20.000 20,500 GtMJ-11 Jnfletlon '6,000 47,150 Ge:Mnl lnR1tJon &S,000 87,.130 ~flnRatlon. 65,000 ..... o Genenllnflltlon 2,000 2J)60 ~tlrtflatk:in 11,000 11,280 ~llntbt'lon 500 '10 G.Nr»l lnfllt.lan ~lnRIIISon 7,500 1,"30 Gmenl lnftlt.lon ,,soo 3,590 Gtnetal lnfbtion 5,000 S,130 ~llnflldon 2,000 2J)60 Gtne~t lnflltion 1'),00:, 10,250 GeMr»l lnfaadon ,,ooo 3,l)80 Gen.tat lnRadon 2.000 2.0SO ~llnf'liUon Utlll\itslntlation 285,(0;) 292,.130 Ut.llltiH lnfladcin n,ow 23,580 U~ftittlnllltion IS.OW 15.380 Utlldulnffatlon ,..000 3Ei,900 General lnfadon Genenil lnlratbn 2,000 2,050 ~11n'4tion ,00 '10 General tnflatSon 5,000 •~,o G4-nc"'11"'1.ttion 106,000 108,650 Gel'leral tn'1ittJOn 1,000 1,D3() ~lfnl~tfon 277 280 Gener.I rnRil~n 2,500 2,5<0 Gfflffalfnfr..Gon 18,000 18,450 ~rl'rflltbn 3,000 3,000 G•~lnflatSon GeMral lnf~tion UtlltJe:slnflation 2.000 '·°"' ~e11, l~1tion 60,000 61,500 ~ lnft.tJon G•ner1111'1flati04\ G~lntlltlon 20,000 20,500 Gil'Mttllnflatbn 500 SlO Ge-l"ll'falltTf1a~n Gentnltnflltion 3,000 3,000 Constna:.don lnflatbn 3,80),al) 3,895,000 ~nenl1nftttlon 2S.000 25-,630 Gene:nlllrlladon S,000 S,130 Gentt-allnfJatlon Genffallnflltlon 16.000 1•,400 No Annual lncrusc ,No.AMul.llnicruse S0.000 S0,000 GtNf'allnJiltlon NoAMUA.llncrHse 440,000 4'0,000 GffleRllnflatlon 71,300 7',l)80 Gener at Inflation 80,400 82,410 G&iDenlllnfbtkm 217,766 223,llO GMtritl lnllldon ...... 56,210 ~llnflatlon 187,104 191,780 General Inflation 7•1,lJ0 759,640 ~llnflation GMeniil lnHadon GeMl'ill lnllatic>n GerW!1111llrdlltk>n Gfflil1"11l ll'lft.tlon Geneltlllnflltion 0ne rl!M·fxpe,tse HCI AnnlAI lnct'HSe No Aln.ll1 lnctHse HoA.rn.JillrKTHR Genima lrdlatbn (C..k::lA,tedBelow) (1,.050,726) 12,160,!21 $ 11.,404,404 1,<)60 1,060 520 1,<)60 78,010 520 2,620 143,.lAO 10,5,10 .3,160 1,..,.., 4.374,270 9S3,Sl0 173,610 3.3,620 5,260 21,010 43,3,0 89,310 '8,300 2,100 11.560 520 7..,., 3,680 5,260 2,100 10,SlO 3,160 2,100 299,430 24,170 15,760 37,820 2,100 320 5,260 111.370 1,060 290 2,620 18,910 3,160 2,100 63,040 21.010 520 3,160 3,992,380 26,270 ..,.,, 16,810 50,000 440,000 74,910 84,470 228,790 ~,620 196,S70 778pl0 (1,08~'41) U.636,199 $ •. s 1,090 1~20 1,090 1,120 530 540 1,090 1.,120 79,'l<O .81,960 530 540 2,6,0 2,760 151,840 lSS,640 io,no 11,0,0 5,240 '·""' 1-39,990 143,490 4,.C.93,450 4,613,660 (M<,7211 (m,m) 183,080 187,680 .... 60 !5.320 S,!90 5,520 21,540 22P80 49,540 50,71!() 91,540 93,830 70.010 71,760 2,150 2,200 U,850 12,150 '30 540 ll.coo 8,280 !,no '·"'° 5.390 S,520 2,150 2,200 10,770 11!)40 3,240 3,3,!0 2,150 2,200 300,920 ll4,5SO 24,770 25,3'90 16.].S0 16,550 '8,770 39,740 2,1SO 2,200 330 340 5,390 S,S20 ll,USO 117,000 -',090 1,120 300 310 2,600 2,760 19,380 19,860 .J,240 3,320 2,150 2,200 64,620 66,240 21,540 22,l)80 S>O 540 3,240 3,320 4,092.190 4,1.94,490 26,930 27/,00 5,3'0 5.520 17,230 17µo S0,000 S0.000 440,000 440,000 76,7tJIJ 7S,700 8&,580 88,7.0 234,SlO 240,370 59,050 60~4() 201,480 206,520 198,100 818.0SO (1)03,580) (1,125,651) 10,731,20 $ U.006,au FINAL I OCTOBER 2019 Nov. 19, 2019 Item #16 Page 43 of 158 CARLSBAD I FYE 2020 WASTEWATER RATES I Wastewater Cost of Service Study C•pftalOUtt&V 900S Cai;ilt.tl Out!ay < S 10k -New 9006 Capft.,I Outlay< $10k-Repl 9010 Cap Outlay-Vehk:l~s 9020 Computer Equip> $10k • Repl 9021 Office Equfpnent 9022 Other Eqtdpme;nt 9030 Offke fumiMe 9050 Capitaezed Assets Other t.apltal Outlay TotalCapbl OtJUay Co:rts Other Flnandnr Uws .... TransfenOut Tt11NfcrOvt-Debt Service Toh I Other Fina ncfnc Usff Costs TOTA.L ExPENDITUR:ES · I ESCAI.ATOI? FY 2019/20 FY 2020/21 FY 20:21/21 FY 2022123 n 2023/'24 Gffle.nllnflatlon General l~tlon Gc~ral lnfl.tlon Ge:ntnl Inflation ~allnflAdon ~t1lltifl•don Gencnl Inflation Gen!nl lnfl.aUon ~Mtallnfladon Constl'\letlon lnflatiOn 2,9"75,000 3,049,37.S 3,125,609 3,203,750 3,283,843 Gmir~ lnfladon 2,975,000 3,049,375 3,12.S,609 3,203,750 3,283,843 17,578,2l.3 17,017,036 17,486,499 16,724,470 17,172,763 .AOOrTIONAl. O!M £:C.F'&l!MUP:ES FY l019t20 ;y 2020/21 FY 2021/22 FY 2022/23 FY 202.3/24 m,woi,•<10,s,1,.., ... ,. ""' Addt'IO&M 2 One-tim@ (EWA ~pi■ costs I Ont-lim~ (OptJmi'lation, etc, I less; Added RCVC!nuc l6S: Bud&et Analysis Amounl AddedO&M OCTOBER 2019 I FINAL bbor lnfl1Uon Gene~I lnflitlon One lime Expe~ One lime E.llPCnse Gene~llnflatlon One. llml! Exp,:nse Gene-rtl ln"•tiOn -s {l,039,9i8)' (1,060,726) r-(l,081,941)' u.103,sso)' jl,12S,651) 11.oa•.•201 s 11,0<0,nGJ s 11,oat,9411 $ (1,10,,saoJ s 11,us,6S1J Nov. 19, 2019 Item #16 Page 44 of 158 Wastewater Cost of Service Study I FYE 2020 WASTEWATER RATES I CARLSBAD Appendix B CAPITAL IMPROVEMENT PLAN SEWER ?.EPU.C£1.1&ST l'!IDJ[-CTS FY1019/l0 fV 2020/21 fY 2021/ll FY '1D.2Z/2J FY 2023/24 Include Pttiojttt:Tltllt FundEns:Sour«: Total Budget Agua Htclonda Llft.SUtion Biologiul Moniloring And Mainteruince 225,000 l>,000 2S,000 25,000 2S,000 Bw:na lnter«pto, Sew,er Access Ro::.d Improvement$ 1,150,000 Buc:N lntCl'«ptOf Sewer Improvements 3,7S8,499 226.SOO 2,170,000 ButlM lnterc,eptor ~Wtt Reafienmcnt • h st Segment 1,987,000 ~480,000 Chs,qwpin Lift S~tion For« Main Outfal RNtlj1lm«mt 320,000 Entin• CaJ;>iul Projec;ti: 128,754,044 5,290,7U 6,234)41 s.m,rm S,924,.$10 6,563,932 Foxes Landing lift St.ation WetW\l!I And P1n1p Rl!fll.acement 5,492,000 Loan• SewttReplTo SeWll!rCom 4,700,000 North Batlquitos lntBC:eptor Sewer Au:ess Road lrnpmv~nts 250,CXIO 250,000 Nonh 8allqultos Uh Suitlon fortemaln Rehabltltatlon SS0,000 Odor And Corrosion Prevention Assessment 3201000 Odon Center 3,9'5,000 Poinsettia Lane Lift Station Overflow 1,299,249 100,000 SCAOA 111'fFOYements 1,207,500 1.000.cm Sewer lift Station Re:paln And Upgrades. 5,035,380 525,000 150,000 150,000 150.000 150,000 Sewer Line C.paiclty ln,pOYcmcnts 970,000 100.000 870,000 Sewer Linc COnditiQn ASffU~t 4~9'68,000 22S,000 225,000 225,000 225,000 225,000 Sewe.r Line Refurtilshments And Replacement 41,856,475 1,5.30,CXX> 1,530,(XXI l,&S0,000 l,SS0,000 1.S>0,000 Simsbury S~wer Extension 671,000 Terra mar 14TH Coastil Improvements S00,000 150,000 Tem,rnar ~r Replacement• El Athol And Los Robles 1,,250,000 Vallecltos lnten:eptorSl!wetCleanlngAndCCTV 250,000 250.000 VIiiage And 8arrlo Tr.iffk Clrdes 160,000 Villas Sewer Lift Station Replacement &So,000 130,000 no,ooo Vist:11 Carbbid lntercept@r • Rehabli1,1tion (VCl & VC21 141,000 20,0CX> 121,cm Wat@r, Recycled,. And Se'Wft' Muter Plan 447,680 2s,ooo 25,000 4,216,632 599,29; 2.960.301 4J2,390 99,747 23,664 TOTALSEW£R RE.PLACEMENT PROJECTS US,3'24,459 10,446,506 16,510,642 7,809,462 3,274,317 3,812,596 SE\VEP. CONtJECllOH rec P~OJECTS FY 2019/20 fY 2020/Zl FY ZOll/ZZ FY ZOll/13 FY '1;.0D/24 Include Project Titk FunctincSouree TotiilBudcet Buena IMerteptot Sewer lmp,o...ements 550,000 S0,000 Faraday & £1 CamQ> Ru 1 Sewer Replacemi:.nt • Orion To PAR 11!16,000 46,DDD Las Palmu Trunk Se'Nef 3,18£,.000 556,000 2.630.(XX) lo.an Rep11y -Sewer CoMTO SewerR~~ 4,700,000 Sewer Model~ 2,400,000 300,000 300,000 300.000 Sewer Monitorq Pro&ram (capacity) 928,000 12S,Ol0 12S,DDD 22,000 22.DDD 22,000 ~ C•rlsbad lntcn::cptOr • 6uem Vht~ lift St•tion lmpro·vements 1,125,000 Vi"sta Ci_rl$bad lntm:cptOr• Agua Ht?dionda ls&ForcetNln (VC12-VC13 30,367,000 Vista Carlsbad lnten:@ptor • lagoon Bllcfge R@plac@ment {VC1181 9,518,000 Vista CarlsbMI lnte,uptor • R@ach VC14 To VCl.S 20,745,000 Vista Carisb~ lnt@R:l!ptor • R@ach VO 2,689,000 591.000 2P92,000 TOTAL SEWER CONNECTION FEE PROJECTS 76,394,000 1,621,000 Z,801,000 322,000 2,114,000 322,000 S-'WtAAOP{J=Y lOJ9/2tl· FY2tla/24) UNESCA.\.ATEO ... 51,85J..S22 s SS,187,250 ... s 10,446,506 s 16.510,'42 S 7,809,462 S 9.114,.111 s 8,.e,12.$96 ........ 7,187/.:IXJ 1.S,85,301 .. ...... t,<>&OlO ?.&01.ooc:i ID.IX'> 2,114,000 322,l)OO TOTAi.: 59,040,-SU 5 t:2,772,551 fot1l $ 12,074,506 s 19,111,642 s s.n:1.~2 s tO,!SS,!:111 $ 9,l.34,$$6 10-YEAR OP [FY '2019/'lD· FY 202:1/29) ESCALATED .,.,. 10-2,$39,9S'9 s 119,7<12,.180 ... ' ,.......,,. $ t7/J8,S,St.4 $ 8,365,681 $ 9,173,883 s 10,112,656 ........ 10,397,0::0 11,674,.153 Eli:l)lnSion ,..,.,IXJO ,,.,...,, 34-4,934 2.,343.830 369,502 TOTAL. 112,936,959 s 131,416,U) , .... s 12,014,SOC ' 19,9S7,S49 ' li,TI0,6l6 $ l1,Sl7,7l2 $ 10,482,158 JOTAl OP (fYlOH/20 • JY 2039/40) ... 153.US,l60 S 1'}6,270,383 (xp.1nslon 1.3,607,0CIJ 16,S30,42S TOTAL: 1H,n2:",u;o $ n .2.,800,l!Oll FINAL I OCTOBER 2019 Nov. 19, 2019 Item #16 Page 45 of 158 CARLSBAD I FYE 2020 WASTEWATER RATES I Wastewater Cost of Service Study Appendix C REVENUE REQUIREMENT ANALYSIS FY 2019/20 FY 2020/21 FY 2021/22 FY 2022/23 FY 2023/24 CASH FLOW TESTS REVENUES Charges tor Services $ 13,757,100 $ 14,295,130 s 14,819,300 $ 15,298,150 $ 15,784,700 Fine.sand Forfeitures 87,800 88,580 89,150 89,350 89,510 Income from Property &Investments 161,870 98,270 102,430 109,920 105,320 Interdepartmental 83,400 85,490 87,630 89,820 92,070 Other Revenues 74,800 76,670 78,590 80,550 82,560 Connection Fees Total Revenues 14,164,970 $ 14,644,140 s 15,177,100 $ 15,667,790 s 16,154,160 EXPENDITURES Ongoing Operating Expenses Personnel 2.44~,385 $ 2,563,257 2,674,691 $ 2,783,452 $ 2,882,607 Enclna Operations 4,101,976 4,240,800 4,374,270 4,493,450 4,613,660 Maintenance & Equipment 4,258,852 4,329,330 4,401,490 3,255,209 3,323,814 Capital Outlay Other Financing Uses Other Operating Expenses One•tlme Funding (1,060,726) (1,081,941) (1,103,580) (1,125,651) Rate Funded Capital Debt Serv1ce Total Operating Expenditures $ 10,803,213 $ 10,072,661 $ 10,368,510 $ 9,428,531 $ 9,694,429 Policy Expenditures Replacement Funding 3,800,000 3,895,000 $ 3,992,380 s 4,092,190 4,194,490 Transfers to C.pltal Fund 2,975,000 Additions to Meet Minimum Fund Balances Total Policy Expenditures $ 6,775,000 $ 3,895,000 3,992,380 $ 4,092,190 $ 4,194,490 POLICY OVERRIDES Repla~ement Fund.Ing Transfers to Capltal Fund Additions to Meet Minimum Fund Balances(') Total Expenditures $ 17,578,213 $ 13,967,661 $ 14,360,890 $ 13,520,721 $ 13,888,919 Includes transfer. 0of!S not indude depreciation Cash Flow Surplus (Deficit) $ (3,413,243) $ 676,479 $ 816,210 $ 2,147,069 $ 2,26S,241 DEBT COVERAGE TEST REVENUES Operatil'€ Revenues $ 14,164,970 $ 14,644,140 $ 15,177,100 $ 15,667,790 $ 16,154,160 Connection Fee Revenues AJlowed Total REVENUES $ 14,164,970 $ 14,644,140 $ 15,177,100 $ 15,667,790 s 16,154,160 EXPENDITURES Personnel 2,442,385 $ 2,563,257 2,674,691 $ 2,783,452 $ 2,882,607 Maintenance & Equipment 4,258,852 4,329,330 4,401,490 3,255,209 3,323,814 Debt Service On@•time Funding (1,060,726) (1,081,941) (1,103,580) (1,125,651) Coverage Total EXPENDITURES $ 6,701,237 $ 5,831,861 $ 5,994,240 $ 4,935,081 S,080,769 Bond Coverage Surplus (Deficit) $ 7,463,733 $ 8,812,279 9,182,860 $ 10,732,709 $ 11,073,391 OCTOBER 2019 I FINAL C ~,-11,.. Nov. 19, 2019 Item #16 Page 46 of 158 Wastewater Cost of Service Study I FYE 2020 WASTEWATER RATES I CARLSBAD REVENUE REQUIREMENT FY 2019/20 FY 2020/21 FY 2021/22 FY 2022/23 FY 2023/24 Revenue Requirement $ (3,413,243) $ 676,479 $ 816,210 $ 2,147,069 $ 2,265,241 Cash Flow Driven Surplus Surplus Surplus Surplus Month of implementation February February February Februa~ February Calculated Increase (%) 59.55% 0.00% 0.00% 0.00% 0.00% Calculated Single Family Rate($) $44.37 $28.66 $29.52 $30.41 $31.32 Override 3% 3% 3% 3% 3% Resulting Single Family Rate($) $28.65 $29.52 $30.41 $31.33 $32.26 41% 40% 40% 40% 40% Rate Increases Rate Increase(%) 3.00% 3.00% 3.00% 3.00% 3.00% Cumulative Rate Increase(%) 3.1% 6.1% 9.3% 12.7% 16.0% SFRRate $28.66 $29.52 $30.41 $31.33 $32.26 CASHflOW Revenues Before Rate Increase $ 14,164,970 $ 14,644,140 $ 15,177,100 $ 15,667,790 $ 16,154,160 Revenues From Rate Increase 412,713 428,854 444,579 458,945 473,541 less: Rate Increase Delay (240,749) (250,165) (259,338) (267,718) (276,232) Less: Expenditures (17,578,213) (13,967,661) (14,360,890) (13,520,721) (13,888,919) Annual Revenue Increase $ 171,964 $ 178,689 $ 185,241 $ 191,227 $ 197,309 Cash flow $ (3,241,279) $ 855,168 $ 1,001,451 $ 2,338,296 $ 2,462,549 Total Ending Balance s 33,180,290 $ 19,403,137 $ 16,908,968 $ 13,573,816 $ 11,691,330 1121 Days 703Doys 595Days 525Days 440Days Operating Fund Beginning Balance $ 7,708,047 $ 4,466,767 $ 4,453,355 $ 4,580,180 $ 4,212,844 Cash Flow (3,241,279) 855,168 1,001,451 2,338,296 2,462,549 Transfers from Operating to Capital fund (868,581) (874,626) (2,705,632) (2,347,361) Ending Fund Balance $ 4,466,757 s 4,453,355 $ 4,580,180 $ 4,212,844 $ 4,328,032 Days of Operation 151 Days 146 Days 146Days 146Days 146 Days 41% 40% 40% 40% 40% Coverage Cove rage Factor No Debt No Debt No Debt No Debt No Debt FINAL I OCTOBER 2019 Nov. 19, 2019 Item #16 Page 47 of 158 CARLSBAD I FYE 2020 WASTEWATER RATES I Wastewater Cost of Service Study Appendix D FUNCTIONAL ALLOCATION CURRENT YEAR, -- AUOO.TION l'~'OfX flOW BOD TSS A~ ,._11 O~hMo flow/800/TSS 35" 42" "" "" so Ptttent customer "" "" "" 100" Flow Only 100% °" "" °" As All Others "" "" "" 100!1 Plant In Sl!fVke 66% 21!1 13!1 °" Pl.ANT IN SEP.VICf RCNLO now BOD TSS As Atl Otll!-rs IM· IMPROVEMENTS N -JOINTVl[NTUR[ lO-IAHD ME· MACHINERY & EQUIPMENT PP· PIPES & PUMPING Plant•ln,.Senrke Sub Total ReaUocation of •As AU Others"' Total Allocatlon Percentage AllocaUon EXPENDITURES Pe~nnel Reg~l,aries Incentive Pay IODWork!!!r'sComp Overtlme sala~ Standby Pay Parttlmes S.iluie$ Temporary Help Heatth Insurance Life Insurance V,:don lnsur.1 nee Medicare Cell Phone Reimbursement Al.Ito Allowance Earned Luve Accrual HealthvEmpAwards Fim11I Vati-tion Pav Final Sick Leave Pay DisabUity Unemployment Worker's Compensation PERS PERS Unfon~d LI.ab Exp PER5 IGASB 68 CONTRA ACCOUNT) Opelilt.ion Expense 5odal Security Deferred Comp Other Per50nnet OCTOBER 2019 I FINAL 7,134,824 JOO% °" s 52,584,214 35% 42% 23% °" $ 2,629,102 100!1 165,978 loo,I 56,566,723 90!I 5% s" °" 119,080,841 76,218,724 24,991,168 15,0?S,868 2,795,080 1,832,017 600,69S 362:,368 (2,795,080) 119,080,841 78,050,741 2S,S91,864 lS,438,236 100% 66% 21" 13" "" fYe 2020 ALLOCATION Fl.OW BOO TSS Ai; .A.II Othet1 l,S36,S13 60,778 25,552 20,000 314,544 1,584 23,939 380 2,100 8,153 14,837 4,107 39,690 190,681 199,527 AsAIIOthtts AsAltOtheB NAIJOtlwn. AsAIIOtl,e,s AsAIIOtl,.,. AsAlf Othe~ /4S All Othl'rs. As All Otho<> A5All0theB AsAltOtllen AsAIIOthtrs AsAIIOt.hor> /!u All OtheB As All Other> As All Other> As Alf Others As All Othors As All Other> As AIIOthe" M All Other, AsAIIOthus AsAIIOthoB As All Othor> As All Othor> /!u AIIOthiers AsAII Other, As All Othe-n "" "" "" '°"" "" "" "" 100% "" "" "" 100" °" °" "" 100% "" "" o" 100% "" "" "" 100% °" °" °" 100% °" °" °" 100% "" "" °" 100% "" "" "" 100% "" °" "" 100% °" "" "" 100% "" "" "" 100% °" "" "" 100% "" "" "" 100% "" "" "" 100% "" "" "" 100% "" "" °" 100% "" "" "" 100% "" "" "" 100% "" "" °" '°"" "" °" °" 100% °" "" "" 100% "" "" "" 100% °" °" °" 100% "" "" "" 100% "" "" "" 100% Nov. 19, 2019 Item #16 Page 48 of 158 Maint.nan(:• Ii [quipm•nt OtMJ Mach & £quip Vehtde Rentals Mhcl\t'ntab Mkc:lt>ases Offlt:e EqWp Malnt Communk:.11tlon EqYip M1lnten1nc;e So~r• Millnten~nc;e Com11',1Cr Milll'l!Cl\ll'tt \l'dtide Marn.1eNn« Other Equip M.11int Plpeline Ma&unanc:e Routlrve &uHdtnc Malnte11ance Maintcnanc;e, Re:p,,tr arld R~b Audi< ,,.., Admlflis1r1ttve M~ ProfcuioNI SeMees EndM~«$ Enclna St~ {Pt:nslcn Pay0tf) MiU;tlJa~Ll$0tll1'dt.5eM'ees Comm Arts S:uppon RquNtory/P«mit~ Fus Misc.SttvicH Laundiy and Untlom, Mllnteance Elt'ct:rlcat/SJ:>DA.s.tvicH FOG lMl)tctkln Strkts Sman:cov-e, wtfl/Al•rm 5erViUI Landselping sei"'Ates Ack and P!Jblishll'II Dues end SUMCl'fptlo ns BookS and Putitkatlons Audio Vista I M&tt>rlak Prlntq Post•~ Office. SUppHiu Offlca Fumltun & Equipnwnt CompYter SOftw.ue Misc. Comput« Hardware Promo M.1tt'ffals Food Expense Hntar.dUght T~epho~ & Convnunlcatlons Waste Dtspoal Sefvk@s Watl!I Bul\diricM11lt'lttN1net: ileet ... l!Upplle> J1nltorial Suppl:IH P.an.s-Vehldes f'af'U-Eq,iSp Rock ,1nd Mine-ral Products Smal Tools Safety Equipment Um"ormsandAotusortu Metet$/Flttlng1 ~ONI Protective IEQU[pmcnl Guollnc 11nd Oil ChCmic:.411$ TqininQ~ M\SCSIJl)flltt:I, Employ,tt Tralnfnc TiUlllon Aelmbutsefflent Tralninc/fralnfnl Relattd Travel O!predatlon Confer~-e Travel Mlsc. Mnls/MRt:s Bad Otht Exp• OUwr lrw/ailb R~Owr/Sbort NED Rcnt•I AssfsUt'ICe. Payn,~nu btcnlA»bt1nc~ Pror,:1m Conti~ies Vehrelt Direct Charses Vet.Ide Maintenance (2) Vehkle Repla,cemMt G!!l\t/111IUab lnformat[on tec:hnolodes Mkc lnlttdt'partmf:nnil Ch.af)tS Misd:l&BKk Ut!Mty8i11IntChar&e~ct flsc1I Agt-nt Fff$ Arbi':~f;eCc»U lnte,estEicpense Int Exp..Caplt•R:zed lnwest Other. HHt & Ucht Other· Parts & E~prr.ent Other• SINn Cown. Adcft, Malnlffllnat & Equlpmt"nt Othl!lr M1lntm1~ & Equipment Wastewater Cost of Service Study I FYE 2020 WASTEWATER RATES I CARLSBAD . . . " . -AIAHOthffl "" "" "" "''" 1,000 flow,_.., "'"" "" "" "" ~000 Flow,_ "'"" "" "" "" flow an,v 1009' "" "" "" 500 FlowOdv 1009' "" "" "" 1,000 Flowonlv 1009' "" "" "" 74,lSO flow~ 1009' "" "" "" FIOWontv 1009' "" "" "" 500 flown..a.. 1009' "" "" "" 2,500 1-lowr-. "'"" "" "" "" FfOWntiN '""" "" "" "" 141,0CO Flew......._· '""" "" "" "" Flow-'""" "" "" "" 10,000 FIClwnr.tv '""" "" "" "" 3,000 flow<:Mv "'"" "" "" "" As/,l)OO>tff "" "" "" 1009' JiUAltOthtn "" "" "" 1009' As AltOllMn "" "" "" 1009' U0,000 AsAIIOthm "" "" "" 1009' 4,101,976 llow/llODlr>.S 35" .,,. ,.,. "" 953,!j()S Flow/90DITSS "" .,,. ,.,. "" 170.000 IUAltOllMn "" "" "" '""" JuAIIOthH's "" "" "" '""" -JuAAOlher1 "" "" "" '""" 32,000 ,,_,_ 1009' "" "" "" AsAlt°""" "" "" "" "'"" 5,000 /UAIIOCbtn "" "" "" '""" 20,000 flow°"'" "'"" "" "" "" 46,000 JuAIIOthm "" "" "" '""" 85,000 AJAlfOlMn "" "" "" 1009' 65,000 MA!IOlhm "" "" "" '""" zooo JUAIIOlhtn "" "" "" 1009' 11,000 kAllOlhen "" "" "" '""" 500 .. .,,°""" "" "" "" 1009' IU/,l)Olhon "" "" "" 1009' 1,500 AIAIIOlhon "" "" "" 1009' ,,,oo A.sAJ1'0thns "" "" "" 1009' 5,000 MAlf:Qhffl "" "" "" 1009' 2,000 AsAIIOthm "" "" "" 1009' 10,000 MAll'otMn "" "" "" 1009' 3,000 As AllOthtrJ "" "" "" 1009' ~000 A.sAIJOthffl "" "" "" 1009' /U A/IOlhon "" "" "" '""" 28',000 .... °""" "" "" "" '""" 23,000 .... """" "" "" "" '""" 15,000 "'"'"""" "" "" "" 1009' 36,000 .... """" "" "" "" '""" .AsAIIOthm "" "" "" 1009' zooo "'Alt°""" "" "" "" 1009' 300 MAltOtbtn "" "" "" 1009' 5,000 As AIIOtt,Ks "" "" "" 1009' 106,000 ,....-1009' "" "" "" 1,000 .. AJIOUNN "" "" '"' """ m .,AIIOthm "" '"' "" 1009' t500 .. A/10thm "" "" "" 1009' 18.000 .,,i,_ "" "" "" 1009' 3,000 /U All0«W$ "" "" "" '""" "'AIIOthtn "" "" "" 1009' .,All"""" "" "" "" 1009' zooo AsAIJothet1 "" "" "" 1009' 60,000 Flow= 1009' "" "" "" MAltOlhtn "" "" "" 1009' ,.AIIOllMn "" "" "" '""" 20,000 kAIICXhars "" "" "" 1009' 500 ,., .. OllMn "" "" "" '""" .. AltOdl,,, "" "" "" 1009' 3,000 .... """" "" "" "" 1009' "'"'°""" "" "" "" 1009' 2S,000 "'AJIOthon "" "" "" '""" 5,000 ,-A11011,en "" "" "" 1009' MAIJOthffl "" "" "" 1009' Hi,000 HAJl<>l,m "" "" "" 1009' AJAltOlhffl: "" "" "" 1009' 50,000 AsAltOlhltt. "" "" "" 1009' As/JJOthers "" "" "" '""" 440,000 MAIIOthon "" "" "" 1009' 71,300 As AIIOthers "" "" "" 1009' ""·""' MAIIOthffl "" "" "" 1009' 217,766 A1-AIIOth«s "" "" "" '""" 54,840 As AIIOtNn "" "" "" 1009' 187.104 As AJIOtheD "" "" "" '""" 741,110 .MAllOUwn "" "" "" '""" MAll0thon "" "" "" l-,.Al100-"" "" "" l-.. AJIC!dvn "" "" "" '""" AI...Uothers "" "" "" '""" .. AIIOlhtn "" "" "" 1009' AsN!Ot~ "" "" "" '""" JuAIIOthen "" "" "" '""" MAIIOllMn "" "" "" '""" JdAIIOther1 "" "" "" 1009' .... """" "" "" "" '""" "'All0thon "" "" "" """' MN.I~ "" "" "" l"°" FINAL I OCTOBER 2019 Nov. 19, 2019 Item #16 Page 49 of 158 CARLSBAD I FYE 2020 WASTEWATER RATES I Wastewater Cost of Service Study Caphal Outlay C.ipital Outlay< $10k • New Ca pita I Outlay< $10k -Rep I Cap Outlav -Vehicles Comput~r Equip~ S 10k • Repl Office Equipment Other Equipment Office Furniture Capital12:ed ASUlS Other Capft~I 01.Jtlar; Othe.r Financing UsH Transfers Out Transfer Out• ~ht Service Operat1ng £xpenditure5Sub Total Reallocation of "As AO Others• Total Allocation Perc.entage Allocation ' ' . . $ Plant In Service Plant In Senrice Plant In Seivice Plant In Se-Nice Plant In Servfce Pl~ nt In Service Pl.im In Seniice Plant In seMce Plant In Sef\l'ice lndude<lbelow As All Others AsAII 0th!!~ 10,807,2S3 10,803,213 100% HOW BOD T.SS As All Ofhe,n: 66% m, 13% 0% 66% 21% 13% 0% 66% 21" 13" 0% 66% m, 13% 0% 66% 21" 13% 0% 66% 21" 13" 0% 66l' 21" 13% 0% 66% 21" 13% 0% 66% 21" 13% 0% "" 0% 0% 100% "" 0% 0% 100% 2,199,996 2,130,749 1,ln,486 5,294,982 2,114,824 2,D48,2$3 1,131,900 (5,294,982) 4,314,820 4,179,007 2,309,386 40% 39" >1% RATE REVENUE f.!EQUUU:MENT FYE 2.()20 At.LOCATION FLOW 800 TSS A,: ,6,11 0Jhufl. Operating E,xpense-5 10,803,213 ASO&M One-Time Funding Plant ln Seivke Rate Funded Capital Plant In SeNk:e Replacement FwidJ,-g {Depreciation Funding} 3,800,000 Plam lnServfce Transfers to Capital Fund 2,975,000 Plant In Service Coverage Driven Increase Plant In Service Adjustment for Mid Ye;ar Increase 240,749 As All Other> Ley Offsetting RevenuM Over/Under Collection of Revenues s (3,241,279) As All Other> Fines and Forftit1A·e1 (87,800) As AllOthen Income from Property & lnvestment'5 (161,870) AsAIIOthen Interdepartmental (83,400) As All Other> Other Revenues (74,800) As Al other> Connect.On Fees Plant In service Total ~te Revenues to be Collect@d 14,169,813 Realloation of '"As All Others"' Total Aftoc.ation 14,169,813 OCTOBER 2019 I FINAL 40% 39% 66" 21" 66l' 21% 66% 21% 66% 21" 66" 21% 0% 0% "" 0% 0% 0% 0% 0% 0% 0% 0% 0% 66% 21% 8,755,.448 S,635,034 (1,697,674) (1,092,628) 1,os1,ns 4,542,406 21% 13% 13% 13" 13% 13% 0% 0% 0% 0% 0% 0% 13% 3,187,731 (618,098) 2,569,632 0% 0~ 0% 0% 0% 0% 100% 100% 100% 100% 100% 100% 0% (3,408,400) 3,408,400 Nov. 19, 2019 Item #16 Page 50 of 158 Wastewater Cost of Service Study I FYE 2020 WASTEWATER RATES I CARLSBAD Appendix E WASTEWATER CUSTOMER ALLOCATION GROUP I -CROUP II_ GROUP Ill -GROUP IV.. GROUP V • GROUP V • G~OUP V-GROUP V. GROu, VI -lndudrial CUSTOMER S"TATISTICS GROUP I• SFR MRF/MO&llE I I El•mcntory Junior High H h Soord1ng Orew■mu. la,ge Volume P,e1reotment TOTAL ! HOME Comme,cio 'l ComMlr(•O 3 Comn1t rclol 4 Sthooh, Stl-,ooh 19h St ooh. Sthoola {no otcounl•) Clou Ill Assumed Row (ccf) SOD(lb<) TSS[lb<) EOUs [Monthly) 2,095,027 ccf 2,615,584 lbs 2,615,584 lbs 21,64S EOUs S36,781 cd 670,1S61bs 670,1561bs S,S46EDUs 427,847 ccf 348,060lbs 320,097 lbs 3,605 EDUs 460,388ccf 943,60011>$ 801,.S01 lbs 6,075 EOUs 161,631 ccf 827,349 lbs 686,094 lbs 4,056EOUs 16,214 ccf 13,lSSlbs 10,12111>$ 134 EDUs 9,570ccf 7,766 lbs 5,974 lbs 79 EOUs 17,804 cd 14,4481b5 11,114 lbs 147!DUs 7,096 ccf 5,758 lbs 4,430 lbs S8EOUs Occf Dibs Olt>s OEDUs Occf Dibs Olbs OEOUs 4,465ccf 3,736,824 ctf 8,301 lb> S,454,18"1 lbs 13,269 lbs S, 138,340 lbs 65 EDUs 41,409 EOUs GROUP I-GROUP II• GROUP HI_ GROUP IV. GROUP V -GROUP V-GROUP V-GROUP V -GROUP VI• lndu1tuol FLOW CROUP 1-SFR MRF/M061lE Elemonto,y Junior 1-i1gh I h Roardfng 8rcw•tl•~ large Volumt Prn·hearmtnl Totol HOMf Con1me1tlal 'l Commer(lol 3 Comnierclal 4 Schooh S,hool'i H 9 Sc;hooh School, (no otccun!G) Clou 111 Allocation Basis: I AUl#llfd Flow c«n I· Assumed flow (ccf) 2,095,027 536,781 427,847 460,388 161,631 16,214 9,570 17,804 7,096 0 0 4,465 3,736,824 Allocation Adjustment Fac1or 1.0 1,0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 LO Adjusted Assumed Flow (ccf} 2,095,027 536,781 427,847 460,388 161,631 16,214 9,S70 17,804 7,096 0 0 4,465 3,736,824 Allocated Cu$tomer Costs 3,956,8~8 1,03.3,823 $ 808,078 869,539 $ 30S,27S 30,624 18,076 33,627 13,402 8,434 7,057,1'75 GROUP I• OROUP II• GROUP Ill_ GROUP IV. GROUP V • GROUP V • CROUP V. GROUP V • OROUP VI· lndu1triol 800 GROUP I• SFR MRF/MO61LE Eleman1a,y Juruor ~19h h 8001d1ng Brewe11H large Volume P1etreatment Totol HOME Cammerclul 2 Comm~rciol 3 Comm•rcial 4 Sthooh Sthooh High Sc ooh Schools ,no account•) Clau Ill Allociltion Basis: 1,00..,.1 I:::_ 80D(lt,,) 2,615,584 670,156 348,060 943,600 827,349 13,158 7,766 14,448 5,758 0 0 8,301 S,4S4,181 Allocation Adjustment Factor LOO 1.00 1.00 LO 1.0 1.0 1.0 1,0 1.0 1.0 1.0 1,0 Ad]usto<I BOD (lb>) 2,615,584 670,156 348,060 943,600 827,349 13,158 7,766 14,44! 5,758 0 0 8,301 S,454,181 Allocated Customer Costs: 2,178,337 5S8,126 s 289,875 785,859 689,041 10,958 6,468 12,033 4,796 6,913 4,542,406 GROUP 1.. GROUP 11.. GROUP Ill -GROUP IV-GROUP V.. GROUP V -GROUP V-GROU~ V -. GROUP VI.. lndu1tdal TSS GR:OUP I• SFJI MRF(MOBILE , I I I Elomonlary Junior 1-l,uh , h S I Boarding B,ciwor1e1 Lorge Volu,ue Pret,eatment Tolal MOME Comme,c.u, '2 Comm-,(/a 3 Comm•rc10 4 School• Schooh H19 choo • Schooh (no occounh,} Clan Ill Allocatlon Basis: jm;sq l· TSS [lbs) 2,61S,58.I.I 670,156 320,(197 801,501 686,094 10,121 5,974 11,114 4,430 0 D 13,269 5,138,340 Allocation Adjustment Factor 1.0 1.0 1.0 1.0 1.0 1-0 1.0 LO 1.0 1.0 1.0 1.0 Adjusted TS5 (11>$) 2,615,584 670,156 320,097 801.S01 686,094 10,121 5,974 11,114 4,430 0 D 13,269 5,138,340 Allocated Customer Cos.ts 1,308,027 335,138 160,on 400,823 343,109 5,062 2,988 S,S58 Z21S 6,636 2,569,632 GROUP I -GROUP U. GROUP Ill• GROUP IV. GROUP V • Elem•nll:111 GROUP\/. CROUP\/. GROUP 't/. GIOUP VI• lndu,ltrnl COST ALLOCATION SUMMA.RY GROUP f. SFl't MRf/MOBllE . S I V Junior High I 0oordlng Biuw•rlH La,u• Velum• P,eheohr,enl To!al ., MOME Commorc,ol 2 Comme,clal 3 Comri,crclol 4 choo, School, High Schoo, Schoolt (no accounh} Ctou Ill FLOW 3,956,898 1,013,823 803,078 869,539 305,275 30,624 18,076 33,627" 13,402 8,434 7,.0'S7,77S BOO 2,178,337 553,126 289,875 785,859 689;04-1 10,9.58 6,468 12,033 4,796 6,913 4,542,406 TSS 1,308,027 335,138 100,on 400,823 343,109 S,062 z••s S,SS8 2,iis 6,636 2,Sfig,632 TOTAL 7,443,262 1,907,087 1,258,031 2,056,221 1,337,425 46,644 27,531 51,217 20,413 21.983 14,169,813 FINAL I OCTOBER 2019 Nov. 19, 2019 Item #16 Page 51 of 158 CARLSBAD I FYE 2020 WASTEWATER RATES I Wastewater Cost of Service Study Appendix F RATE DESIGN GROUP I -SFR # OF ACCOUNTS FLOW [cd) BOD [lbs) TSS [lbs) Actual annual(# of bills) Actual monthly Monthly units Monthly Amount Allocable Charge per month Total to be Collected Calculated Above Difference GROUP I -MRF/MOBILE HOME # of Accounts below minimum (Annually) Minimum Charge s $ $ Revenues to be Collected $ 259,723 21,644 $0.00 120 $14.33 1,719.51 2.095,027 174,586 . $8.07 $1S.24 $ 3,956,898 s 3,956,898 $ Assumed Flow 482 2,615,584 217,965 $10.07 $8.39 $ 2,178,337 $ 2,178,337 $ Monthly Rate Assumed BOD 601.47 2,615,584 217,965 $10.07 $5.04 $ 1,308,027 s 1,308,027 $ $ 28.661 Assumed TSS 601.47 # OF ACCOUNTS FLOW {eel) BOD (lbs) TSS [lbs) Actual annual(# of bills) 12,421 S36,781 670,156 670,156 Revenues s s 1,013,823 s 558,126 $ 335,138 Removal of Min Charge Revenues (914.10) (503.23) (302.17) Revenues to be Collected $ -$ 1,012,908 $ 557,623 $ 334,836 Effective Unit Charge $0.00 $1.89 $0.83 $0.50 Actual annual w/o Minimum Charge Accounts 12,301 536,299 669,554 669,S54 Actual monthly w/o Minimum Charge Accounts 1,025 44,692 55,796 55,796 Monthly units w/o Minimum Charge Accounts 43.60 54.43 54.43 Monthly Amount Allocable Charge per month $0.00 $82 .. 35 $45.33 $27.22 Total to be Collected s s 1,012,908 $ 557,623 $ 334,836 Calculated Above 1,013,823 558,126 335,138 Difference $ $ (914.10) $ (503.23) $ (302.17) See "Bills at or below minimum" tob for colculotion on II of accounts below minimum. Per ccf Rate $ 3.381 OCTOBER 2019 I FINAL C c;a,,,-••~· Nov. 19, 2019 Item #16 Page 52 of 158 GROUP II -Commercial 2 # of Accounts below minimum (Annually) Minimum Charge Revenues to be Collected $ Total Accts & Usage Revenues $ Removal of Min Charge Revenues Revenues to be Co fleeted $ Effective Unit Charge Actual annual w/o Minimum Charge Accounts Actual monthly w/o Minimum Charge Accounts Monthly units w/o Minimum Charge Accounts Monthly Amount Allocable Charge per month Total to be Collected $ Calculated Above Difference $ Wastewater Cost of Service Study I FYE 2020 WASTEWATER RATES I CARLSBAD 2,S68 $i4.33 36,797.46 Assumed Flow 7,701 Assumed BOD 6,264.84 Assumed TSS 5,761.52 # OF ACCOUNTS FlOW (ccf) BOD (lbs) TSS (lbs) 13,444 427,847 348,060 320,097 $ 808,078 $ 289,87S $ 160,077 (23,636) (8,479) (4,682) $ 784,442 $ 281,396 $ 155,395 $0.00 $1.87 $0.82 $0.49 10,876 420,146 341,796 314,335 906 35,012 28,483 26,19S 38.63 31.43 28.90 $0.00 $72.12 $25.87 $14.29 s 784,442 $ 281,396 $ lSS,395 808,078 289,875 160,077 $ (23,636.33) $ (8,478.86) $ (4,682.27) See "Bilis at or below minimum" tab for calculation on II of accounts below minimum. GROUP Ill -Commercial 3 # of Accounts below minimum (Annually) Minimum Charge Revenues to be Collected $ 113 $14.33 1,619.20 Assumed Flow 275 Per ccf Rate $ 2.so I Assumed BOD 563.90 Assumed TSS 478.98 # OF ACCOUNTS FLOW (cd) BOD (lbs) TSS (lbs) Total Accts & Usage 3,498 460,388 943,600 801,501 Revenues $ $ 869,539 $ 785,859 $ 400,823 Removal of Min Charge Revenues (685) (619) (316) Revenues to be Collected $ $ 868,855 $ 785,240 $ 400,507 Effective Unit Charge $0.00 $1.89 $0.83 $0.50 Actual annual w/o Minimum Charge Accounts 3,385 460,113 943,036 801,022 Actual monthly w/o Minimum Charge Accounts 282 38,343 78,586 66,752 Monthly units w/o Minimum Charge Accounts 135.92 278.57 236.62 Monthly Amount Allocable Charge per month $0.00 $256.66 $231.96 $118.31 Total to be Collected $ -$ 868,855 $ 785,240 $ 400,507 Calculated Above 869,539 785,859 400,823 Difference $ $ (684.73) $ (618.84) $ (31S.63) See "Bills at or below minimum" tab far calculation on II of accounts below minimum. Per ccf Rate $ 4.25 1 FINAL I .OCTOBER 2019 Nov. 19, 2019 Item #16 Page 53 of 158 CARLSBAD I FYE 2020 WASTEWATER RATES I Wastewater Cost of Service Study GROUP IV -Commercial 4 # of Accounts below minimum (Annually) Minimum Charge Revenues to be collected $ Total Accts & Usage Revenues $ Removal of Min Charge Revenues Revenues to be Collected $ Effective Unit Charge Actual annual w/o Minimum Charge Accounts Actual monthly w/o Minimum Charge Accounts Monthly units w/o Minimum Charge Accounts Monthly Amount Allocable Charge per month Total to be Collected s Calculated Above Difference $ 13 $14.33 186.28 Assumed Flow 15 Assumed BOD 74.75 Assumed TSS 61.99 # OF ACCOUNTS FLOW (ccf) BOD (lbs) TSS (lbs) 1,426 161,631 827,349 686,094 -$ 305,275 $ 689,041 $ 343,109 (43) (96) (48) $ 305,232 $ 688,94S $ 343,061 $0.00 $1.89 $0.83 $0.50 1,413 161,617 827,274 686,032 118 13,468 68,940 57,169 114.37 585.43 485.48 $0.00 $216.00 $487.54 $242.77 $ 305,232 $ 688,945 $ 343,061 305,275 689,041 343,109 $ (42.52) $ (95.97) $ (47.79) See "Bills at or below minimum• tab for calcu/otion an #-of accounts below minimum. Per eel Rate $ 7.871 GROUP V -Elemenrary Schaal, # OF ACCOUNTS FLOW (ccf) BOD (lbs) TSS (lbs} Actual annual 228 16,214 13,158 10,121 Actual monthly 19.00 1,351.18 1,096.49 843.46 Monthly units 71.11 57.71 44.39 Monthly Amount Allocable Charge per month $0.00 $134.32 $48.06 $22.20 Total to be Collected $ $ 30,624 $ 10,958 $ 5,062 Calculated Above 30,624 10,958 5,062 Difference $ $ $ $ Calculated Revenues $ 46,644 Number of Students 6,874 $/Student Rate $ 0.57 LINE# GROUP V • Junior High Schools # OF ACCOUNTS FLOW {tcf) BOD (lbs) TSS (lbs) 139 Actual annual 48 9,570 7,766 5,974 • 140 Actual monthly 4.00 797.53 647.20 497.85 141 Monthly units 199.38 161.80 124.46 142 Monthly Amount Allocable Cha!]e ~• month $0.00 ~376.58 $134.75 ~62.24 143 Total to be Collected s $ 18,076 $ 6,468 s 2,988 145 Difference $ ~ 18,075.67 $ 6,468.12 $ 2,987.63 Calculated Revenues $ 27,531 Number of Students 2,719 $/Student Rate $ 0.85 OCTOBER 2019 I FINAL Nov. 19, 2019 Item #16 Page 54 of 158 Wastewater Cost of Service Study I FYE 2020 WA'STEWATER RATES I CARLSBAD LINE# GROUP V. High Schools # OF ACCOUNTS FLOW (eel) SOD (lbs) TSS (lbs) 146 Actual annual 48 17,804 14,448 11,114 147 Actual monthly 4.00 1,483.66 1,204.00 926.16 148 Monthly units 370.92 301.00 231.54 149 Monthly Amount Allocable Cha!le eer month $0.00 $700.55 $250.68 $115.79 150 Total to be Collected $ $ 33,627 $ 12,033 $ 5,558 152 Difference $ $ 33,626.51 $ 12,032.76 $ 5,557.94 Calculated Revenues $ 51,217 Number of Students 3,774 $/Student Rate $ 1.14 GROUP V • 8oording Schools # OF ACCOUNTS FLOW [ccf) BOD (lbs) TSS (lbs) Actual annual 12 7,096 5,758 4,430 Actual monthly 1.00 591.33 479.87 369.13 Monthly units 591.33 479.87 369.13 Monthly Amount Allocable Charge per month $0.00 $1,116.85 $399.65 $184.60 Total to be Collected $ . $ 13,402 $ 4,796 $ 2,215 Difference $ $ 13,402.19 $ 4,795.78 $ 2,215.17 Calculated Revenues $ 20,413 $/Student Rate 288 $/Student Rate $ 5.91 lnduslriol Pretreotmenr Clos, Ill # OF ACCOUl~TS FLOW (eel) BOD libs) TSS (lbs) Actual annual 12 4,465 8,301 13,269 Actua I monthly 1 372 692 1,106 Monthly units $366.34 $681.03 $1,088.61 Monthly Amount Allocable Charge per month $0.00 $691.91 $567.18 $544.40 Total to be Collected $ $ 8,434 $ 6,913 $ 6,636 Calculated Above 8,434 6,913 6,636 Difference $ $ $ $ Per ccf Rate $ 4.681 FINAL I OCTOBER 2019 Nov. 19, 2019 Item #16 Page 55 of 158 CARLSBAD I FYE 2020 WASTEWATER RATES I Wastewater Cost of Service Study Brewery Rate . Assumed Brewery Waste Concentration w/ Restaurant w/o Restaurant BOD mg/I 2,400 2,400 TSS mg/I 1,500 1,500 Secondary Use Concentration w/ Restaurant (C4) w/o Restaurant (C2) BOD mg/I 820 130 TSS mg/I 680 121 Wastewater from Brewing 50% 50% Wastewater from Secondary Use 50% 50% Effective Concentration w/ Restaurant w/o Restaurant BOD mg/I 1,610 1,265 TSS mg/I 1,090 810 System Unit Costs Flow $1.89 per HCF BOD $0.83 per lb TSS $0.50 per lb Unit Costs per HCF Sewer Discharge Flow $1.89 $1.89 BOD $8.36 $6.57 TSS $3.40 $2.53 Total Rate per HCF of Dischage $13.64 $10.98 Return to Sewer 82.500% 82.500% B4Rate 82 Rate Rate per HCF of Water Used $11.26 $9.07 Group II -Commercial $2.80 Bl Rate Group IV-Commercial $7.87 83 Rate OCTOBER 2019 I FINAL Nov. 19, 2019 Item #16 Page 56 of 158 ( City of Carlsbad EXHIBIT 4 Carlsbad Municipal Water District Water Cost of Service Study FYE 2020 POTABLE AND RECYCLED WATER RATE STUDY FINAL I October 2019 Nov. 19, 2019 Item #16 Page 57 of 158 Water Cost of Service Study I POTABLE AND RECYCLED WATER RATE STUDY I CARLSBAD Contents Section 1-Introduction 1.1 Study Purpose 1.2 Overview of the Rate Setting Process 1.2.1 Revenue Requirement Analysis 1.2.1 Water Demand Analysis 1.2.2 Cost of Service Analysis 1.2.3 Rate Design Analysis & Calculation 1.2.4 Rate Adoption 1.3 Project Objectives 1.3.1 Rate Study Best Practices and Legal Considerations 1.4 Current Rate Structure 1.5 Project Findings and Recommendations Section 2 -Inputs and Assumptions 2.1 Potable and Recycled Water System Profile 2.2 Forecast Assumptions 2.3 Water Demand 2.4 Water Supply Section 3 -. Revenue Requ irement Analysis 3.1 Capital Improvement Plan Funding 3.2 Operating Revenues & Expenses 3.3 Recommended Revenue Requirements 3.3.1 Cash Flow Sufficiency Test 3.3.2 Debt Coverage Test Section 4 -Cost of Service Analysis 4.1 Functional Allocation Analysis 4.1.1 Functional Cost Categories -Potable Water 4.1.2 Functional Allocation Factors 4.1.3 Functional Allocation Peak Factor Analysis 4.1.4 Functional Allocation Results 4.2 Customer Class Allocation 1 1 1 2 2 2 3 3 3 4 4 4 7 7 7 8 8 10 10 12 14 14 16 17 17 18 19 20 21 21 FINAL I OCTOBER 2019 I i Nov. 19, 2019 Item #16 Page 58 of 158 CARLSBAD I POTABLE AND RECYCLED WATER RATE STUDY I Water Cost of Service Study 4.2.1 Potable Volumetric Cost Allocation 4.2.2 Supply Allocation 4.2.3 Fixed Cost Allocation 4.2.4 Potable Water Customer Allocation Results Section 5 -Rat e Design Analysis 5.1 Rate Structure Objectives and Goals 5.2 Proposed Water Delivery Fees 5.3 Proposed Water Usage Fees 5.3.1 Residential Rates 5.3.2 Commercial, Agricultural, and Irrigation Rate Design 5.4 Proposed Potable Water Rates 5.5 Proposed Recycled Water Rates 5.6 Proposed Fire Service Rates 5.7 Regional Water Rate Comparison Appendices Appendix A Append ix B Appendix( Appendix D Appendix E Appendix F Appendix G Appendix H Appendix I Appendix J Tables Table 1 Table 2 Table 3 Table 4 Table 5 CUSTOMER AND DEMAND FORECASTS WATER SUPPLY PURCHASES AND COSTS CAPITAL IMPROVEMENT PLAN PROJECTED O&M COSTS REVENUE REQUIREMENT ANALYSIS POTABLE WATER FUNCTIONAL ALLOCATION RECYCLED WATER FUNCTIONAL ALLOCATION POTABLE WATER CUSTOMER ALLOCATION RATE DESIGN ANALYSIS SUPPLY ALLOCATION Proposed Water Usage Fees Current Water Delivery Fees Water System Customer Profile Escalation Factors Forecasted Water Demand by Customer Class (CCF) ii I OCTOBE~ 2019 I FINAL 22 22 24 24 25 25 25 27 27 30 30 31 32 32 5 6 7 7 8 Nov. 19, 2019 Item #16 Page 59 of 158 Table 6 Table 7 Table 8 Table 9 Table 10 Table 11 Table 12 Table 13 Table 14 Table 15 Table 16 Table 17 Table 18 Table 19 Table 20 Table 21 Table 22 Table 23 Table 24 Table 25 Table 26 Table 27 Table 28 Table 29 Table 30 Table 31 Table 32 Table 33 Table 34 Table 35 Table 36 Table 37 Water Cost of Service Study I POTABLE AND RECYCLED WATER RATE STUDY I CARLSBAD Water Supply Purchases (AF,$ millions) Capital Improvement Plan Expenditures -Potable Water($ millions) Capital Improvement Plan Expenditures -Recycled Water($ millions) Capital Improvement Plan Expenditures and Funding - Potable Water($ millions) Capital Improvement Plan Expenditures and Funding -Recycled Water Current Rate Revenue($ millions) Offsetting Revenues -Potable Water($ millions) Offsetting Revenues -Recycled Water($ millions) Expenditures-Potable Water($ millions) Expenditures-Recycled Water($ millions) Cash Flow Sufficiency Test -Potable Water($ millions) Cash Flow Sufficiency Test-Recycled Water($ millions) Debt Service Coverage Test-Recycled Water Functional Allocation -Potable Water System Demand Factors Extra Capacity Allocations Functional Allocation Results Summary-Potable Water Customer Class Service Units Supply Allocation -Step 1 Supply Allocation -Step 2 Supply Allocation Summary Fixed Cost Customer Allocation Factors Potable Water Customer Allocation Summary, FYE 2020 ($ millions) Proposed Monthly Water Delivery Fees -Potable Water Proposed Monthly Water Delivery Fees -Recycled Water Proposed Monthly Water Delivery Fees-Fire SFR Rate Design -Base, Max Day, Max Hour SFR Rate Design -Supply Costs SFR Rate Design Summary, FYE 2020 Proposed Multi-Family Residential Tier Allotments MFR Rate Design -Base, Max Day, Max Hour MFR Rate Design -Supply Costs 9 10 11 11 12 12 13 13 14 14 15 16 16 19 20 20 21 22 23 23 24 24 24 26 26 27 28 28 28 29 29 29 FINAL I OCTOBER 2019 I iii Nov. 19, 2019 Item #16 Page 60 of 158 CARLSBAD I POTABLE AND RECYCLED WATER RATE STUDY I Water Cost of Service Study Table 38 MFR Rate Design Summary, FYE 2020 Table 39 Commercial, Agricultural, and Irrigation Rate Design Summary, FYE 2020 Table 40 Proposed Potable Water Delivery Fees Table 41 Proposed Potable Water Usage Fees Table 42 Proposed Recycled Water Delivery Fees Table 43 Proposed Recycled Water Usage Fees Table 44 Proposed Fire Service Delivery Fees Figures & Equations Figure 1 Equation 1 Figure 2 Conceptual Overview of the Rate-Setting Process Tier Peak Factor Formula Regional Monthly SFR Water Bill Comparison iv I OCTOBER 2019 I FINAL 30 30 30 31 31 31 32 2 28 33 C c::a,-1'"'· Nov. 19, 2019 Item #16 Page 61 of 158 Water Cost of Service Study I POTABLE ANO RECYCLED WATER RATE STUDY I CARLSBAD Abbreviations ADD AF AWWA Carollo ccf CIP CMWDor District Desai DSCR DU FYE LWD Ml Manual MOD MEU MFR MGD MHD MWD O&M PERS SCADA SDCWA SFR Study UAL UMAPC VWD c · c::ar-"11· Average Day Demand Acre Feet American Water Works Association Carollo Engineers, Inc. Hundred cubic feet Capital Improvement Plan Carlsbad Municipal Water District Carlsbad Desalination Plant Debt Service Coverage Ratio Dwelling Unit Fiscal year ending Leucadia Wastewater District Principles of Water Rates, Fees, and Charges: Manual of Wi;zter Supply Practices Ml Maximum Day Demand Meter Equivalent Unit Multi-Family Residential million gallons per day Max Hour Demand Metropolitan Water Dist rict of Southern California Operations and maintenance Public Employees' Retirement System supervisory control and data acquisition San Diego County Water Authority Single-Family Residential Cost of Service Study Unfunded Accrued Liability Uniform Member Agency Purchase Contract Vallecitos Water District FINAL I OCTOBER 2019 I v Nov. 19, 2019 Item #16 Page 62 of 158 CARLSBAD I POTABLE AND RECYCLED WATER RATE STUDY I Water Cost of Service Study -This Page Intentionally Left Blank- vi I OCTOBER 2019 I FINAL Nov. 19, 2019 Item #16 Page 63 of 158 Water Cost of Service Study I POTABLE AND RECYCLED WATER RATE STUDY I CARLSBAD Section 1 -Introduction The Carlsbad Municipal Water District (CMWD or the District) supplies potable and recycled water to approximately 28,900 connections within a 32.3 square mile service area in Southern California. In fiscal year ending (FYE) 2020, the District is projected to deliver approximately 14,200 acre-feet (AF) of potable water and 4,000 AF of recycled water to customers. The District currently purchases all of its potable water supplies from the San Diego County Water Authority (SDCWA) and entered into an agreement with SDCWA to purchase supplemental water supplies from the Carlsbad Desalination Plant (Desai). Recycled water is produced at the Carlsbad Water Recycling Facility, as well as purchased from the Vallecitos Water District. 1.1 Study Purpose Carlsbad retained Carollo Engineers, Inc. (Carollo) to perform a comprehensive Cost of Service Study (Study) of the District's potable water, recycled water, and wastewater systems and to develop a rate plan for the upcoming five-year period, FYE 2020 through FYE 2024. Although this Study presents a five- year rate projection, at this time the District is adopting rates for the next two years. Caroll o's analysis was guided by the policies and practices of the District, industry best practices for cost of service analyses as outlined by the American Water Works Association (AWWA), and requirements for establishing water rates within the State of California. The findings and recommendations of this cost of service analysis for potable and recycled water are detailed within this report. The findings of the cost of service analysis for wastewater are provided by Carollo in a separate report. 1.2 Overview of the Rate Setting Process Rate analyses are performed periodically so that revenues continue to adequately fund utility operations, maintenance, and necessary capital investments. In California, water rates must adhere to the cost of service requirements imposed by Proposition 218 and the State Constitution. Proposition 218 requires that property related fees and charges, including water rates, not exceed the reasonable and proportional cost of providing the.service. The District's last rate study was completed by Carollo in 2016 and provided rates for FYE 2017 through FYE 2019. The District has obligations to safeguard and preserve the State's limited water resources. Article X (2) of the State Constitution establishes t he need to preserve the State's water supplies and discourage the wasteful or unreasonable use of water by encouraging conservation. To achieve these multi-faceted requirements-rates that must simultaneously be equitable and reasonable, while providing a conservation message-Carollo's cost of service approach tests the adequacy of existing revenues, recommends additional revenues where needed, and develops rates built on comprehensive cost allocation and customer data analyses. Carollo reviewed the District's current cost of service rate setting process. The processes presented below are advocated by the AWWA. While the process is described in a linear step by step approach, it is an iterative process, where the ultimate objective is to balance revenues with costs in an equitable manner for customers. FINAL I OCTOBER 2019 I 1 Nov. 19, 2019 Item #16 Page 64 of 158 CARLSBAD I POTABLE AND RECYCLED WATER RATE STUDY I Water Cost of Service Study 1.2.1 Revenue Requirement Analysis The methodology that Carlsbad applies to establish annual rate revenue needs is consistent with industry standards established by the Principles of Water Rates, Fees, and Charges: Manual of Water Supply Practices Ml (Ml Manual), which is published by AWWA, a national industry trade group that makes recommendations on generally accepted practices in the water and sewer industry. The revenue requirements analysis compares the forecasted revenues of the utility to its forecasted operating and capital reserve costs to determine the adequacy of the existing rates to recover the utility's costs. If any shortfalls exist, rates may need to increase. Revenue Requirement Analysis Compares existing revenues of the district to its operating, capital reserves, and policy driven costs to establish the adequacy of the existing cost recovery levels. Water Demand Analysis Forecasts water sales based on historical bill ings, modifications to the rate structure, and any regulatory restrictions. - Cost of Service Analysis Identifies and apportions annual revenue requirements to functional components based on its application to the District's system, and then allocates to customer classes and tiers based on system usage. Rate Design & Calculation Considers both the level and structure of the rate design to collect the distributed revenue requirements from each class of service Rate Adoption The Study presents the basis for the rates proposed to be adopted in compliance with Proposition 218 1.2.1 Water Demand Analysis Forecasting water sales and purchases is a critical component in the rate setting process. As part of t he budget process, the District forecasts the expected water usage based on historical demand, proposed changes to rates, regulatory impacts, weather, and other variables. These forecasted water demands are then compared against forecasted revenue requirements, and rates are developed in order to recover costs. Future demands are based on historic sales and escalated for projected growth and per capita demand changes. Figure 1 Conceptual Overview of the Rate-Setting Process 1.2.2 Cost of Service ~alysis This step builds a link between the District's revenue requirements and the proposed rates for each customer. After determining the revenue requirement, this step outline the cost to deliver each unit of water and to serve each customer. Th is process takes each item in the water system's budget and allocates the items based on what function is served. For example, some cost items support the ability to deliver additional, more expensive water, while other costs are incurred to provide customer service or to fund capital replacement. Organizing the budget in terms of end function allows the creation of a nexus · between the budget item and the rate. This organization bridges the costs incurred by t he District and the unique and varied benefits delivered to each customer. 2 I OCTOBER 2019 I FINAL Nov. 19, 2019 Item #16 Page 65 of 158 Water Cost of Service Study I POTABLE AND RECYCLED WATER RATE STUDY I CARLSBAD 1.2.3 Rate Design Analysis & Calculation The rate design involves developing a rate structure that proportionately recovers costs from customers. The rate structure must be tailored to the customer demand and account profile; built upon a nexus between costs and the rates that customers are charged; resilient enough to handle changing cost and demand scenarios; and flexible enough to meet multiple other unique criteria. The rate design allows the District to develop unit costs that can then be layered based on requirements to meet customer needs. This is a critical process for establishing tiered rates, as increasing usage incurs additional costs making excess water more expensive to provide. The final part of the rate design analysis is the rate calculation. This provides the nexus between the revenue requirements, the functional cost allocation, and the final rates that customers are charged. This process connects planned expenditures to the designed rates by establishing rates to match the estimated revenue generation with expenditures. 1.2.4 Rate Adoption To comply with the requirements of Proposition 218, the results of the Study are documented in th is Report to support the District's public outreach regarding the proposed changes and provide the rationale and justifications behind the changes and the anticipated financial impacts. While the document should be easily understood, it must provide sufficie nt detail to fully support and document the rate setting process. In order to adjust rates, the District must prqvide a written notice 45 days prior to adoption of the rates. During this 45 day notice period, any property owner or tenant directly responsible for the payment of water or sewer service fees may submit a written protest to the proposed rate increases. If written protests against the proposed rate increases are not presented by a majority of affected District property owners or customers, the Board of Directors will be authorized to adopt the rate increases. As the fol lowing sections of this Report will demonstrate, this process creates a fair and equitable foundation for each charge and rate that the District levies. 1.3 Project Objectives The Study aims to achieve several objectives related to the District's rate setting, cost recovery, and financial planning methodologies. Specific objectives for the project include the following. 1. Review of the current financial plans for the District's potable and recycled water systems to identify opportunities to improve long-term financial standing. 2. Evaluation and development of policy recommendations for the existing potable water and recycled water rate structures to achieve the objectives of the District. Namely, the rate structure should: • Be easy to understand. • Promote water use efficiency/conservation. • Maintain continued compliance with cost of service requirements. 3. Thorough documentation of the cost of service analysis, including the functional allocation and classification of costs, and the allocation of costs among customer classes. 4. Preparation of a rate design framework that proportionately recovers costs from the District's customers and meets the goals outlined above. C c:::a,-11~-FINAL I OCTOBER 2019 I 3 Nov. 19, 2019 Item #16 Page 66 of 158 CARLSBAD I POTABLE AND RECYQED WATER RATE STUDY I Water Cost of Service Study The Study identifies what actions the District should implement to maintain the financial viability of the system in light of changing consumer demands, increasing purchased water costs, regulatory requirements, and future infrastructure investments. 1.3.1 Rate Study Best Practices and Legal Considerations Rates are typically designed to achieve multiple objectives. While industry standards provide a basis for testing reasonableness, this basis does not on its own meet legal requirements-particularly the unique legal requirements for agencies in California. Within the cost of service approach and legal requirements, an agency's practices form the basis ofthe detailed rate structure design elements, making it distinct to the agency and the community it serves. Within the District's rate structure, these policies and practices encompass the entire structure including the selection of rate design, methodology for allotting the amount of water use within customer tier allocations, and how costs are allocated to target water usage in upper tiers. With its rate structure, the District is able to satisfy its policy and practices objectives and proportionally recover costs from its customers. 1.4 Current Rate Structure The CMWD maintains separate rate structures for potable and recycled water customers. The following section identifies how the District is currently charging their potable and recycled water customers. Currently, potable and recycled water customers have two components to their bill: 1. Water Delivery Fee. 2. Water Usage Fee. The Water Delivery Fee is a fixed monthly charge. It is assessed based on meter size. It is intended to capture the costs of the water utility associated with providing customer service for each account, as we ll as the costs of providing the system capacity to serve each account. The customer service component of the charge is equal to all customers while the capacity component is varied based on meter equivalent ratios as identified in the A WWA M6 Manual Water Meters -Selection, Installation, Testing, and Maintenance. The Water Usage Fee is a volumetric charge based on the amount of water consumed each month, as measured by each customer's water meter. It is intended to capture the costs of the water utility that vary with the amount of water provided. 1.5 Project Findings and Recommendations Based on the an~!ysis proj~cti~n~1·the Qi~1j-ic½ will need to increase water rate revenues to keep pace with increases in wholesale water supply .costs,_inflationary increases in operating expenses, and necessary capital improvements to the D'istrict's systems. The use of reserves to fund a share of capital projects will help to minimize the necessary level of rate increases. It is recommended that the District reviews its revenues and expenditures on an annual basis to verify that the implemented rates are adequately recovering costs. 4 I OCTOBER 2019 I FINAL Nov. 19, 2019 Item #16 Page 67 of 158 Water Cost of Service Study I POTABLE AND RECYCLED WATER RATE STUDY I CARLSBAD The key findings and recommendations are as follows: • Proposed Potable Water Rate Increases. Annual user rate revenue increases of 1.0 percent in FY 2019/20 and 2.0 percent in FY 2020/21 will be required to fund potable water activities. The proposed user rates largely retain the District's current rate structure and will include a cost of service adjustment in FY 2019/20 based on the updated cost of service allocations followed by an across the board increase in FY 2020/21. • Multi-Family Tiered Rates. The proposed rate structure reduces the number of tiers for multi- family users from the current 3 tiers to 2 tiers. The customer data analysis showed customer usage patterns have shifted and that that very little consumption now occurs within the third tier. This, coupled with the relatively low level of variation in water usage per dwelling unit among multi-family customers, led to the determination that the simpler 2-tier structure is most appropriate at this time. • Recycled Water Rate Increases. No recycled water rate increases will be necessary during the study period. • Minimum Operating Reserve. It is recommended that the District continues to complete financial planning based on the current operating reserve policy that sets a m inimum o·perating reserve of 40 percent of annual operating expenses. In the future, the District could consider this policy to increase the minimum reserve target with Council approval or implementing a best practices target above the 40 percent minimum for financial planning. Table 1 and Table 2 outline the current and proposed water usage and water delivery fees. Table 1 Proposed Water Usage Fees ! Current Rates I Proposed Rates Customer Class ~ ; I = 1 ~-~ I Usage I FYE 2020 -r FYE 2021 Tier Rate T L. ·t 1.0% and 1m1 COS 2.0% 1 10 ccf $3.94 1 10 ccf $4.04 $4.13 Single Family Residential 2 18 ccf $4.69 2 18 ccf 4.42 4.51 3 >18 ccf $7.00 3 >18 ccf 7.04 7.18 1 5 ccf $3.87 1 5ccf $3.87 $3.95 Multi-Family Residential 2 10 ccf $4.67 2 >5 ccf 4.94 5.04 per dwelling unit (DU) basis 3 >10 ccf $6.97 N/A Commercial N/A All Usage $4.22 N/A All Usage $4.27 $4.36 Agricultural N/A All Usage $4.53 N/A All Usage $4.62 $4.71 Irrigation N/A All Usage $5.16 N/A All Usage $5.31 $5.41 Recycled N/A All Usage $3.79 N/A All Usage $3.79 $3.79 FINAL I OCTOBER 2019 I 5 Nov. 19, 2019 Item #16 Page 68 of 158 CARLSBAD I POTABLE ANO RECYCLED WATER RATE STUDY I Water Cost of Service Study Table 2 Current Water Delivery Fees Meter Size I Current Rates I FYE 2020 Proposed I FYE 2021 Proposed Potable Mont hly Charge 1.0% with COS 2.0% 5/8" $24.72 $25.02 $25.52 3/4" 33.36 33.76 34.44 1" 50.62 51.25 52.28 1.5" 93.79 94.98 96.88 2" 145.58 147.45 150.40 21/2" 206.52 208.67 212.84 3" 266.52 269.88 275.28 4" 439.10 444.79 453.68 6" 870.76 882.05 899.69 8" 1,388.75 1,406.76 1,434.89 10" 1,993.06 2,018.92 2,059.30 Recycled Monthly Charge 1.0% with COS 2.0% 5/8" $23.69 $23.69 $23.69 3/4" 32.69 32.69 32.69 l" 50.70 50.70 50.70 1.5" 95.73 95.73 95.73 2" 149.75 149.75 149.75 21/2" 212.84 212.84 212.84 3" 275.90 275.90 275.90 4" 455.93 455.93 455.93 6" 906.18 906.18 906.18 8" 1,446.47 1,446.47 1,446.47 10" 2,076.82 2,076.82 2,076.82 Fire Monthly Charge 1.0% with COS 2.0% 5/8" $7.69 $7.77 $7.93 3/4" 7.82 7.89 8.05 l" 8.06 8.14 8.30 1.5" 8.67 8.74 8.92 2" 9.39 9.48 9.66 21/2" 10.24 10.33 10.53 3" 11.10 11.18 11.40 4" 13.53 13.62 13.89 6" 19.61 19.71 20.10 8" 26.91 27.01 27.55 10" 35.42 35.54 36.25 6 I OCTOBER 2019 I FINAL C c;:,r-"#T,· Nov. 19, 2019 Item #16 Page 69 of 158 Water Cost of Service Study [ POTABLE AND RECYCLED WATER RATE STUDY I CARLSBAD Section 2 -Inputs and .Assumptions 2.1 Potable and Recycled Water System Profile FYE 2018 customer consumption data was used as the basis for forecasted demand and rate calculations. Table 3 summarizes the FYE 2018 number of accounts and demand by customer class, including the percentage of the totals. Table 3 Water System Customer Profile I Number of I Account I FYE 2018 I Demand Customer Class A t Percentage of D d ( f) Percentage of ccoun s Total eman cc Total Single Family Residential 24,333 84.3% 3,443,366 41.6% Multi-Family Residential 1,125 3.9% 729,706 8.8% Commercial 1,679 5.8% 1,278,130 15.5% Agricultural 21 0.1% 89,904 1.1% Irrigation 825 2.9% 860,450 10.4% Subtotal: Potable Water 27,948 6,401,556 Recycled Water 877 3.0% 1,869,935 22.6% TOTAL, ALL CUSTOMERS 28,861 100.0% 8,271,491 100.0% * Line or column totals may not tie due to rounding 2.2 Forecast Assumptions The escalation factors used in this analysis are based on a review of both long-term and recent cost escalation fact ors from the Engineering News-Record Index, an industry benchmarking resource, and based on input from Carlsbad staff based on realized cost escalations. Other costs were escalated based· on recent and specific cost trends. The escalators used for the Metropolitan Water District (MWD) and SDCWA pass-through costs are presented in Appendix B of this Study. Other escalation factors include account growth and changes in per account demands from each customer class. These factors for both potable and recycled water are presented in Table 4. Table 4 Escalation Factors Escalation Factor I FYE 2020 I FYE 2021 I FYE 2022 FYE 2023 I FYE 2024 General Inflation 2.5% 2.5% 2.5% 2.5% 2.5% Labor Inflation 3.0% 3.0% 3.0% 3.0% 3.0% Labor-PERS (Normal Cost) 12.4% 13.2% 13.2% 13.2% 13.2% Labor-PERS (UAL) 15.0% 14.4% 15.7% 16.5% 16.7% Labor-Health Insurance 7.5% 7.4% 7.1% 6.9% 6.6% Chemicals Inflation 5.0% 5.0% 5.0% 5.0% 5.0% Utilities Inflation 5.0% 5.0% 5.0% 5.0% 5.0% C c::,,,,.,,,.. FINAL I OCTOBER 2019 I 7 Nov. 19, 2019 Item #16 Page 70 of 158 CARLSBAD I POTABLE AND RECYCLED WATER RATE STUDY J Water Cost of Service Study Escalation Factor I FYE 2020 I FYE 2021 [ FYE 2022 I FYE 2023 FYE 2024 Construction Inflation 2.5% 2.5% 2.5% 2.5% 2.5% Property Tax Increase 4.3% 3.8% 3.1% 3.7% 2.9% Depreciation Funding 2.8% 2.1% 1.2% 1.2% 1.2% Interest Income 2.1% 2.2% 2.3% 2.4% 2.5% Customer Demand Growth 1.0% 0.9% 0.6% 0.2% 0.2% 2.3 Water Demand Water demand drives several key components of the revenue requirement analysis, as a large portion of the District's water revenues and O&M costs are tied to the amount of water usage. Forecasted water demand was calculated using the customer demand growth escalation factor presented in Table 4. Detailed projections of customer accounts and demands are included for reference in Appendix A. Table 5 Fore casted Water Demand by Customer Class (CCF) Customer Class I FYE 2020 I FYE 2021 [ FYE 2022 I FYE 2023 I FYE 2024 Single Family Residential 3,311,487 3,344,148 3,368,974 3,377,018 3,381,525 Multi-Family Residential 701,759 708,680 713,941 715,646 716,601 Commercial 1,245,801 1,248,662 1,249,785 1,252,666 1,259,515 Agricultural 86,461 87,313 87,962 88,172 88,289 Irrigation 827,495 835,657 841,860 843,870 844,997 Recycled 1,741,529 1,758,705 1,771,761 1,775,992 1,778,362 TOTAL ALL CUSTOMER 7,914,531 7,983,166 8,034,283 8,053,363 8,069,289 CLASSES * Line or column totals may not tie due to rounding 2.4 Water Supply The District obtains its water from SDCWA, which in turn has two main sources: imported water (largely from the Colorado River) and locally produced water from the Carlsbad Desalination Plant. Water purchased from SDCWA has historically been the source of potable water sold by the District. From FYE 2014 to FYE 2018 the District purchased an average of 14,270 acre-feet annually of water from SDCWA. Desalinated water deliveries began in July 2016 per the Uniform Member Agency Purchase Contract (UMAPC). The District is required to purchase a minimum 2,500 acre-feet per year. Additional Desai purchases of 416 AF are projected from FYE 2021 and beyond. Desalinated water deliveries are estimated to represent approximately 23 percent of the overall water delivery costs for FYE 2018. The District produces recycled water at the Carlsbad Water Recycling Facility and purchases recycled water from Leucadia Wastewater District (LWD) and Vallecitos Water District (VWD). In FYE 2018, the amount of recycled water purchased from LWD was 278 AF and 2,116 AF from VWD. The purchase 8 I OCTOBER 2019 I FINAL C c:::ar-"#1· Nov. 19, 2019 Item #16 Page 71 of 158 Water Cost of Service Study I POTABLE AND RECYCLED WATER RATE STUDY I CARLSBAD contract with LWD expired in FYE 2019 and no future purchases are expected. Purchases from VWD are projected at 2,200 AF in FYE 2020 and 3,000 AF thereafter. The District has previously received a $100/AF rebate from MWD and a $200/AF rebate from SDCWA, with a maximum annual allowable yield eligible for rebate of 5,000 AF. These rebates expired in FYE 2019. Table 6 presents a summary of the District's forecasted water purchases in FYE 2020 through FYE 2024. Detailed projections of water purchases and costs are included for reference in Appendix B. Table 6 Water Supply Purchases (AF, $ millions) Source of Supply I FYE 2020 I FYE 2021 I FYE 2022 I FYE 2023 I FYE 2024 SDCWA Water Purchases (AF) 12,883 12,595 12,690 12,727 12,760 Fixed Charges $6.5 $6.5 $6.8 $7.0 $7.3 Variable Charges $16.8 $16.6 $17.3 $18.3 $19.3 TOTALSDCWA $23.3 $23.1 $24.2 $25.4 $26.6 Desalination Water Purchases (AF) 2,500 2,916 2,916 2,916 2,916 Fixed Charges $4.1 $5.0 $5.2 $5.5 $5.7 Variable Charges $1.9 $2.3 $2,.3 $2,.4 $2.5 Other Charges $0.9 $1.0 $1.1 $1.1 $1.2 TOTALDESAL $6.9 $8.4 $8.7 $9.1 $9.5 Recycled Water Water Purchases (AF) 4,198 4,239 4,271 4,281 4,287 VWD Charges $2.20 $1.72 $1.77 $1.83 $1.88 TOT AL RECYCLED $1.67 $1.72 $1.77 $1.83 $1.88 TOTAL WATER PURCHASES $32.76 $34.52 ($ MILLIONS) $36.29 $37.91 $39.62 * Line or column totals may not tie due to rounding FINAL I OCTOBER 2019 I 9 Nov. 19, 2019 Item #16 Page 72 of 158 CARLSBAD I POTABLE AND RECYCLED WATER RATE STUDY I Water Cost of Service Study Section 3 -Revenue Requirement .Analysis The revenue requirement analysis is a comprehensive test of a utility's fiscal health, scrutinizing the adequacy of current revenues, and setting the basis for rate planning. It reviews the utility's revenues, expenses, debts, and reserve policies, assessing the viability of each metric going forward. Where cash flows and balances are insufficient, the revenue requirement analysis determines the needed additional cash flows to meet all funding goals. The District's FYE 2020 budget expenses serve as the base year for O&M costs. Furthermore, Carollo collected information related to current cash and restricted fund balances and policies, the budgeted capital improvement plan expenditures, and all other operating and non-operating future revenues and expenditures. Once the revenue requirement is established by compiling all of the District's cost drivers, two tests are utilized to define the annual revenues necessary. 1. The cas/J Dow su.iit:ieocytest looks for a net positive cash flow at the end of each fiscal year. This test looks at whether revenues exceed expenses; when they do not, this test recommends additional revenue. 2. The second test is the delJI .service coverage le.st. Utility bond issuances regularly include a stipulation that the agency maintain sufficient cash flows to cover the planned debt service, plus an additional percent of that debt service, typically between 25 and 40 percent. 3. Operating and Capital Budgets. 3.1 Capital Improvement Plan Funding Though the District's CIP spending has been limited in recent years, significant improvements will likely be required over time as the system ages. An analysis of the District's current assets found that the system's total replacement value is approximately $1.3 billion for potable water assets, and $300 million for recycled water assets. The prudent financial planning which led to reserve balance the District has accumulated can be used to offset rate requirements at the time that improvements need to be undertaken. The District is in the process of finalizing a master plan for the potable and recycled water systems and recently completed an asset management plan and a SCAD A assessment. Based on the results of those studies, the District plans to increase capital investment over the coming years. Table 7 and Table 8 summarize the projected capital improvement plan (CIP) expenditures for the potable and recycled water systems. A detailed summary showing the District's projects can be found in Appendix C. Table 7 Capital Improvement Plan Expenditures -Potable Water($ millions) CIP j FYE 2020 j FYE 2021 j FYE 2022 I FYE 2023 j FYE 2024 Connection Fee Fund Projects $1.5 $0.0 $6.3 $1.8 $0.3 Replacement Fund Projects 8.8 7.3 12.1 16.2 18.2 TOTAL POTABLE WATER PROJECTS $10.3 $7.3 $18.4 $18.0 $18.5 TOTAL ESCALATED COST $10.6 $7.6 $19.7 $20.0 $21.2 * Line or column totals may not tie due to rounding 10 I OCTOBER 2019 I FINAL Nov. 19, 2019 Item #16 Page 73 of 158 Water Cost of Service Study I POTABLE ANO RECYCLED WATER RATE STUDY I CARLSBAD Table 8 Capital Improvement Plan Expenditures -Recycled Water($ millions) I FYE 2020 I FYE 2021 I FYE 2022 I FYE 2023 I FYE 2024 Connection Fee Fund Projects $0.0 $0.0 $0.0 $0.0 $0.0 Replacement Fee Fund Projects 0.9 1.0 1.1 0.9 1.1 TOTAL RECYCLED WATER PROJECTS $0.9 $1.0 $1.1 $0.9 $1.1 TOTAL ESCALATED COST $0.9 $1.0 $1.2 $1.0 $1.2 * Line or column totals may not tie due to rounding The District's potable CIP expense and funding is shown in Table 9 and Table 10. The transfers and replacement funding line item represents the transfer of operating revenues to the capital reserve for depreciation funding as well as additional transfers for cash funding of capital. As shown in the tables, the District plans to draw on the reserves to fund CIP projects over the next several years. An important aspect of the capital funding plan is that the District intends to draw on both existing replacement reserves and existing connection fee reserves to fund capital projects. Since the implementation of the District's existing connection fees, reduced water consumption due to conservation and changes in planned developments have reshaped the CIP projects that are necessary to serve new users. While some of the projects initially conceived and included in the connection fees have changed, other projects have been modified or expanded to take their place. Further, replacements and upgrades to the District's existing infrastructure are required to maintain the assets that serve new users and to maintain the excess system capacity that w ill be needed to serve users that have not yet connected to the system. To these ends, the District plans to allocate existing connection fee reserves, as well as a share of future connection fees, to pay for replacement projects that have an excess capacity component. The District will be updating their connection fees in a future study later this year. Table 9 Capital Improvement Plan Expenditures and Funding -Potable Water ($ millions) I FYE 2020 I FYE 2021 I FYE 2022 I FYE 2023 I FYE 2024 Beginning Capital Funds Balance $88.9 $87.6 $89.1 $78.5 $66.6 (Connection Fee and Replacement) Transfers and Replacement Funding $6.1 $6.2 $6.3 $6.4 $5.8 Interest $1.0 $1.0 $1.3 $1.2 $1.0 Connection Fees $2.0 $1.9 $1.4 $0.5 $0.4 Use of Funds for Projects ($10.3) ($7.6) ($19.7) ($20.0) ($21.2) Year-End Balance $87.6 $89.1 $78.5 $66.6 $52.7 Change in Reserves ($1.2) $1.5 ($10.6) ($11.9) ($14.0) * Line or column totals may not tie due to rounding FINAL I OCTOBER 2019 I 11 Nov. 19, 2019 Item #16 Page 74 of 158 CARLSBAD J POTABLE AND RECYCLED WATER RATE STUDY J Water Cost of Service Study Table 10 Capital Improvement Plan Expenditures and Funding -Recycled Water I FYE 2020 I FYE 2021 I FYE 2022 I FYE 2023 I FYE 2024 Beginning Capital Funds Balance $12.4 $11.7 $10.9 $9.8 $9.0 (Connection Fee and Replacement) Transfers and Replacement Funding $0.0 $0.0 $0.0 $0.0 $0.0 Interest $0.2 $0.2 $0.2 $0.1 $0.1 Connection Fees $0.0 $0.0 $0.0 $0.0 $0.0 Use of Funds for Projects ($0.9) ($1.0) ($1.2) ($1.0) ($1.2) Year-End Balance $11.7 $10.9 $9.8 $9.0 $7.9 Change in Reserves ($0.7) ($0.9) ($1.0) ($0.8) ($1.1) * Line or column totals may not tie due to rounding 3.2 Operating Revenues & Expenses Operating revenues and expenses were projected for the next five years by applying the escalation factors outlined in Table 4 to the District's FYE 2019 budgeted revenues and expenditures. Table 11 shows the District's projected potable and recycled water rate revenues for FYE 2020 through FYE 2024, before applying any proposed rate increases. Increases in commodity charge revenue is projected on a combination of customer demand growth and usage growth, while delivery charge revenue is escalating due to customer demand growth. Recycled water revenues escalate in the same manner. Detailed projections of O&M costs are included for reference in Appendix D. Table 11 Current Rate Revenue($ millions) Revenue Item I FYE 2020 I FYE 2021 I FYE 2022 I FYE 2023 I FYE 2024 Potable Water Commodity Charges $28.31 $28.56 $28.74 $28.81 $28.86 Delivery Charges 11.90 12.01 12.08 12.11 12.13 TOT AL POT ABLE WATER $40.21 $40.56 $40.83 $40.92 $40.99 Recycled Wat er Commodity Charges $6.68 $6.74 $6.78 $6.80 $6.81 Delivery Charges 1.11 1.12 1.13 1.13 1.13 TOTAL RECYCLED WATER $7.79 $7.86 $7.91 $7.93 $7.94 * Line or column totals may not tie due to rounding In addition to above rate revenues, the District also receives other offsetting revenues. Table 12 summarizes the projected offsetting revenues for the potable water funds, and Table 13 summarizes the projected offsetting revenues for the recycled water funds. 12 I OCTOBER 2019 I FINAL Nov. 19, 2019 Item #16 Page 75 of 158 Water Cost of Seivice Study I POTABLE AND RECYCLED WATER RATE STUDY I CARLSBAD · Table 12 Offsetting Revenues-Potable Water($ millions) Revenue Item I FYE 2020 I FYE 2021 I FYE 2022 I FYE 2023 I FYE 2024 Other Charges for Services $0.28 $0.29 $0.30 $0.30 $0.31 Developer Fees Tax Revenues 2 3.52 3.65 3.76 3.90 4.01 Licenses and Permits Intergovernmental 0.02 0.02 0.02 0.02 0.03 Fines & Forfeitures 0.28 0.29 0.30 0.31 0.31 Income from Prop & Investments 0.86 0.88 0.90 0.92 0.94 Interdepartmental 0.11 0.11 0.11 0.12 0.12 Other Revenues 0.28 0.29 0.30 0.30 0.31 TOTAL OFFSETTING REVENUES $5.35 $5.53 $5.69 $5.88 $6.04 * Line or column totals may not tie due to rounding Table13 Offsetting Revenues -Recycled Water($ millions) Revenue Item I FYE 2020 I FYE 2021 I FYE 2022 I FYE 2023 I FYE 2024 Other Charges for Services $0.004 $0.35 $0.36 $0.38 $0.39 Developer Fees 0.25 Intergovernmental 0.15 4.54 4.68 4.82 4.97 Fines & Forfeitures 0.01 Income from Prop & Investments 0.03 0.03 0.03 0.03 Interdepartmental 0.09 0.35 0.35 0.36 0.37 Other Revenues 0.00 1.04 1.07 1.09 1.12 TOTAL OFFSETTING REVENUES $0.51 $6.31 $6.49 $6.68 $6.88 * Line or column totals may not tie due to rounding Table 14 and Table 15 illustrate operating expenditures over the five year projection period for potable ·and recycled water, respectively. Potable operating expenses are projected to increase approximately $6.3 million by FYE 2024. The increases are largely due to the rise purchased water costs. The Transfers to Capital Reserve line ("Replacement Funding"), and the annual depreciation amount are transferred to the capital reserve. Recycled expenses are going up approximately $0.2 million over the projection period. FINAL I OCTOBER 2019 113 Nov. 19, 2019 Item #16 Page 76 of 158 CARLSBAD I POTABLE AND RECYCLED WATER RATE STUDY I Water Cost of Service Study Table 14 Expenditures -Potable Water($ millions) I FYE 2020 I FYE 2021 I FYE 2022 I FYE 2023 I FYE 2024 Personnel $3.73 $3.91 $4.08 $4.24 $4.39 Maintenance & Equipment 11.94 10.75 11.22 11.56 11.90 Water Purchases (SDCWA and Desai) 24.04 25.77 27.12 28.47 29.89 Capital Outlay 0.37 0.38 0.39 0.40 0.41 Debt Service 0.00 0.00 0.00 0.00 0.00 Depreciation Funding 4.10 4.19 4.24 4.29 4.34 Transfer to Capital Fund 2.00 2.05 2.10 2.15 1.50 TOTAL OPERATING EXPENDITURES $46.18 $47.05 $49.16 $51.12 $52.44 * Line or column totols may not tie due to rounding Table 15 Expenditures -Recycled Water($ millions) I FYE 2020 I FYE 2021 I FYE 2022 I FYE 2023 I FYE 2024 Personnel $1.56 $1.64 $1.71 $1.78 $1.84 Maintenance & Equipment 2.62 2.68 2.76 2.76 2.84 Water Purchases 2.20 1.72 1.78 1.83 1.88 Capital Outlay 0.05 0.05 0.05 0.05 0.06 Debt Service 2.74 2.74 2.77 2.77 2.77 Depreciation Funding 0.00 0.00 0.00 0.00 0.00 Transfer to Capital Fund 0.00 0.00 0.00 0.00 0.00 TOTAL OPERATING EXPENDITURES $9.16 $8.83 $9.06 $9.19 $9.39 "Line or column totals may not tie due to rounding 3.3 Recommended Revenue Requirements Rate revenue increases will be necessary in order to meet the District's projected operating needs. The increases for potable water are primarily driven by increasing purchased water cost from SDCWA and the delivery of desalinated water pursuant to the UMAPC. The recommended increases will enable the District to continue to fully fund its capital program and meet its debt service requirements. Furthermore, by initiating annual increases, the District can mitigate larger increases in the future and avoid the need for substantial debt issuances. 3.3.1 Cash Flow Sufficiency Test The cash flow sufficiency test evaluates revenues received by the District to see that they are adequately covering both operating and non-operating expenses. Table 16 and Table 17 provide the cash flow sufficiency tests for potable and recycled water, respectively. The cost of service analysis includes proposed potable water rate increases of 1 percent in FYE 2020 and 2 percent per year thereafter. Based on t he projections, no recycled water rate increases for the five year forecast are necessary. Though the financial analysis included projection for a five-year period, the District only intends to adopt rate updated for FY 2019/20 and FY 2020/21. 14 I OCTOBER 2019 I FINAL Nov. 19, 2019 Item #16 Page 77 of 158 Water Cost of Service Study [ POTABLE ANO RECYCLED WATER RATE STUDY [ CARLSBAD The proposed potable water rate revenue increases for FYE 2020 will be implemented by a full cost of service adjustment, and rate adjustments will vary by customer class and rate component. For FYE 2021, the percentage rate revenue increase is recommended to be applied to the FYE 2020 cost of service- based rates. Total operating expenses included in the cash flow sufficiency test include depreciation. The District currently transfers an amount equal to annual depreciation as well as an additional capital funding transfer from the operating reserves to the capital reserves each year. Overtime, the District has been very proactive in annually contributing to the replacement of its system. Based on the current fund balances, the District can mitigate the necessary rate adjustments by reducing its annual capital funding transfers to the capital fund over the next five years. This will allow the District to meet the operating reserve policy target of 40 percent of operations costs. Table 16 Cash Flow Sufficiency Test-Potable Water($ millions) I FYE 2020 I FYE 2021 I FYE 2022 I FYE 2023 I FYE 2024 Pre-Rate Increase Rate Revenues without Increases $40.21 $40.56 $40.83 $40.92 $40.99 Revenue from Previous Years' Increases 0.00 0.41 1.23 2.08 2.94 Offsetting Revenues 5.35 5.53 5.69 5.88 6.04 Operating Revenues $45.56 $46.50 $47.75 $48.87 $49.97 Less Operating Expenditures ($46.18) ($47.05) ($49.16) ($51.12) ($52.44) Cash Flow Surplus/(Deficit) ($0.62) ($0.55) ($1.41) ($2.24) ($2.47) Rate Revenue Increase 1.0% 2.0% 2.0% 2.0% 2.0% Post-Rat e Increase Revenue from Increase $0.40 $0.82 $0.84 $0.86 $0.88 (Less): Rate Increase Delay1 (0.20) (0.41) (0.42) (0.43) (0.44) Cash Flow Surplus/(Deficit) ($0.42) ($0.14) ($0.99) ($1.81) ($2.03) Operating Fund Reserve Beginning Operating Fund Balance $26.40 $25.98 $25.84 $24.85 $23.03 Cash Flow (0.42) (0.14) (0.99) (1.81) (2.03) Other Transfers 0.00 0.00 0.00 0.00 0.00 ENDING OPERATING FUND BALANCE $25.98 $25.84 $24.85 $23.03 $21.00 Percent of Operations 56% 55% 51% 45% 40% * Line or column totals may not tie due to rounding Based on the study projections, no rate revenue increases will be needed for recycled water. Costs are expected to increase only slightly over the study period and capital reserves are sufficient to fund the planned CIP investments. Additional detail of the revenue requirement analysis is included for reference in Appendix E. FINAL I OCTOBER 2019 I 15 Nov. 19, 2019 Item #16 Page 78 of 158 CARLSBAD I POTABLE AND RECYCLED WATER RATE STUDY I Water Cost of Service Study Table 17 Cash Flow Sufficiency Test-Recycled Water($ millions) I FYE 2020 I FYE 2021 I FYE 2022 I FYE 2023 I FYE 2024 Pre-Rate Increase Rate Revenues without Increases $7.79 $7.86 $7.91 $7.93 $7.94 Revenue from Previous Years' Increases 0.00 0.00 0.00 0.00 0.00 Offsetting Revenues 0.51 0.37 0.38 0.39 0.40 Operating Revenues $8.30 $8.23 $8.29 $8.32 $8.34 Less Operating Expenditures ($9.16) ($8.83) ($9.06) ($9.19). ($9.39) Cash Flow Surplus/(Deficit) ($0.86) ($0.60) ($0.77) ($0.88) ($1.05) Rate Increase 0.0% 0.0% 0.0% 0.0% 0.0% Post-Rate Increase Revenue from Increase $0.00 $0.00 $0.00 $0.00 $0.00 (Less): Rate Increase Delayl 0.00 0.00 0.00 0.00 0.00 Cash Flow Surplus/(Deficit) ($0.86) ($0.60) ($0.77) ($0.88) ($1.05) Beginning Operating Fund Balance $9.52 $8.66 $8.06 $7.29 $6.41 Cash Flow (0.86) (0.60) (0.77) (0.88) (1.05) Other Transfers 0.00 0.00 0.00 0.00 0.00 ENDING OPERATING FUND BALANCE $8.66 $8.06 $7.29 $6.41 $5.36 Percent of Operations 95% 91% 80% 70% 57% * Line or column totals may not tie due to rounding 3.3.2 Debt Coverage Test The District's annual debt obligat ion for FYE 2020 through FYE 2024 is approximately $2.7 million. The District's current and projected debt obligations are State Revolving Fund loans for the recycled water system. This is stated as a debt service coverage ratio (DSCR) of l.lOx. However, the District has a best practices target of maintaining a bond coverage ratio of 125 percent, or 1.25x, of the annual debt service obligation. The potable water system has no outstanding debt service obligations. Based on the proposed rate revenue increases, the District will meet its debt coverage obligation for the entire five year projections. Table 18 presents the calculation of the DSCR. Table 18 Debt Service Coverage Test-Recycled Water Budget Item I FYE 2020 I FYE 2021 FYE 2022 FYE 2023 FYE 2024 Recycled Revenues for Coverage $16.35 $16.20 $16.32 $16.37 $16.41 Test Recycled Expenses for Coverage (6.43) (6.09) (6.29) (6.42) (6.62) Test Net Revenue Available for $9.93 $10.11 $10.02 $9.94 $9.79 Coverage Test Recycled Water Debt Service $2.74 $2.74 $2.77 $2.77 $2.77 Coverage (1.25x) 0.68 0.68 0.69 0.69 0.69 DSCR 2.90x 2.96x 2.89x 2.87x 2.82 x * Line or column totals may not tie due to rounding 16 I OCTOBER 2019 I FINAL C c;:a,_.,,.. Nov. 19, 2019 Item #16 Page 79 of 158 Water Cost of Service Study I POTABLE AND RECYCLED WATER RATE STUDY I CARLSBAD Section 4 -Cost of Service Analysis With the District's revenue requirements outlined, including necessary revenue increases, the next step is to link each cost item with a specific service to the system that it supports. This is commonly referred to as the cost of service analysis, or the functional cost allocation, because it connects each cost with a functional category or purpose that it funds. The purpose of a cost of service analysis is to provide a rational basis for distributing the full costs of the District's service to each customer class in proportion to the demands they place on the system. For instance, expenses related to the billing system are allocated under the umbrella of the customer service function, while baseline water purchases go to support the base demand ful')ction. The purpose of this cost of service study is to develop water rates that proportionally recover the full cost for providing potable and recycled water services for the District's customers. The approach and analysis presented withi n t his report reasonably achieve this objective and are projected to recover the District's annual revenue needs absent substantial and unforeseen changes in the costs or customer water demands. The cost of service process is comprised of four steps. 1. Revenue Requirement. 2. Functional Allocation. 3. Customer Class Allocation. 4. Rate Design. The Functional Allocation builds on the Revenue Requirement analysis that was described in the previous chapter by allocating each budget item to a specific functional category. The general functiona l categories include customer, service, supply, base, peak, and fire. Allocating the budget to t hese functional categories is a process of grouping expenditures into common cost areas so that those costs can then be distributed to each customer based on the services provided. For example, customer costs include utility billing expenditures, which are then charged to each customer based on the number of bills received each year. The purpose of this process is to allocate costs to the distinct customer classes based on each class's unique number of accounts, size of the meters, and demand characteristics and translate each cost into a specific rate component. 4.1 Functional Allocation Analysis In order to proportionally recover costs from the District's customers, the budget was evaluated by line item, allocating each expenditure to a functional cost category. While a similar methodology was used for the potable and recycled water analyses, there are some differences between the two funds and, consequently, how costs are allocated. A detailed analysis of the functional allocation is presented in Appendix F. The AWWA Ml Manual outlines the two most widely used methods for allocation costs, wh ich are the base-extra capacity method and the commodity demand methodology. Both methods recognize that the cost of service customer depends not only on the total volume of water used, but also on the rate of use or peak-demand requirements. The cost of service allocation completed in this study is established on the base-extra capacity method. Carollo developed a detailed cost allocation that serves as the basis FINAL I OCTOBER 2019 I 17 Nov. 19, 2019 Item #16 Page 80 of 158 CARLSBAD I POTABLE AND RECYCLED WATER RATE STUDY I Water Cost of Service Study for the proposed rate adjustments. This analysis yields an appropriate method for allocating costs, which could be sustained unless substantial changes in cost drivers or customer consumption patterns occur. 4.1.l Functional Cost Categories -Potable Water In using the base-extra capacity method, costs are typically separated into five broad cost components. 1. Customer. 2. Base. 3. Extra capacity. 4. Recycled Water. 5. Fire. The cost of service analysis has been completed using the five-year average of forecasted costs for FYE 2016 through 2020. As noted in the AWWA Ml Manual, in detailed rate studies, some of these elements may be broken down further into two or more subcomponents. Based on the District's expenditures and system characteristics, the Customer component was separated into two subcomponents to better identify and allocate costs that may vary based on the size of the meter rather than per account. 1. Customer (based on accounts). 2. Service (based on MEUs). Similarly, the extra capacity functional allocation was split into two subcomponents based on calculated peaking factors to better distinguish that all demand (and peaking) is not equal. 1. Max Day (based on maximum day demand). 2. Max Hour (based on maximum hour demand). In addit ion, two categories were added to the functional allocation in order to recover costs from imported water supplies; SDCWA and Desai. Given the breakdown of the broad cost components as detailed above, the District's costs were allocated among the following eight categories. Customer. Customer costs are fixed expenditures that relate to the District's support activities, which include utility billing, customer service, and administrative support. These expenditures are common to all customers and uniformly recovered from each customer through the monthly delivery charge. Service. Service costs are annual expenditures that the District will incur each year regardless of the quantity of water sold. These costs include salaries, benefits, and system operational costs, excluding water supply costs and conservation programs. The service costs also include fixed pass-through costs from the SDCWA. Service costs are reasonably un iform across the different customer classes and are collected based on each customer's meter size, which determines the instantaneous quantity of water that can be drawn from the District's system and approximates that customer's potential demand on the system. lase-: Costs allocated to base are operating and capital costs incurred by the water system to provide a basic level of service to each customer. These costs are tied to the amount of base (annualized minimum month) demand. 18 I OCTOBER 2019 I FINAL Nov. 19, 2019 Item #16 Page 81 of 158 Water Cost of Service Study I POTABLE AND RECYCLED WATER RATE STUDY I CARLSBAD Max Day: Costs allocated to max day are operating and capital costs incurred by the water system to provide a maximum day level of service to each customer. These costs are tied to the amount of maximum day demand, as calculated in Section 4.1.3 . Mu Hour. Costs allocated to max hour are operating and capital costs incurred by the water system to provide a maximum day level of service to each customer. These costs are tied to the amount of maximum day demand, as calculated in Section 4.1.3 . SIJCW/l-. Costs associated with the lowest cost source of water supply, which is the non-desalinated water purchased from SDCWA. These costs vary by the amount consumed. DesaJ. Costs associated with the purchase of desalinated water, which is the higher cost source of supply. Fite: Costs allocated to fire are operating and capital costs incurred to provide public and private fire service. Fire costs are allocated to private fire lines as a percent of total capacity of public fire hydrants and private fire service lines or meters, which restrict the flow of that fire line. 4.1.2 Functional Allocation Factors In order to perform the functional allocation, the cost of service analysis combines information from the revenue requirement analysis, the District's detailed operating budget, historical billing data, and additional operational and system information provided by Carlsbad. The allocation to each functional category was calculated based on the detailed budget and cost information, and then applied to the calculated rate revenue requirements. The allocation factors used in the functional allocation are outlined in Table 19 for potable water. In the functional allocation, each line item in the District's budget is assigned an allocation factor according to the functional categories it serves. The budgeted value for that line item is then allocated to the functional categories based on the percentages associated with the allocation classification. Table 19 Functional Allocation -Potable Water Allocation Factor I Customer I Service I Base I ~:; I ~oa:r I Fire I SDCWA I Desai Customer Only 100% Service Only 100% Customer/Service 50% 50% Base Only 100% Max Day 100% • Max Hour 100% Base/Max Day 63% 38% Base/Max Day/Max 34% 21% 45% Hour Max Day/Max Hour 50% 50% Capacity/Demand 49% 17% 10% 22% 1.2% SDCWAOnly 100% Desai Only 100% * Line or column totals may not tie due to rounding FINAL I OCTOBER 2019 I 19 Nov. 19, 2019 Item #16 Page 82 of 158 CARLSBAD I POTABLE AND RECYCLED WATER RATE STUDY I Water Cost of Service Study 4.1.3 Functional Jlllocation Peak Factor Analysis Water agencies must maintain a fair and equitable methodology for recovering costs both across and within customer classes. To accomplish this, peak factors are a standard industry practice for identifying relative demands on the utility system. The following peak factor calculations exhibit how MVWD's customers place demands on the system, and provide a basis for recovering costs. With the District's costs outlined from its budget, water production and distribution costs, as well as other costs to be recovered through commodity rates, must be assigned to either the Base, Max Day, Max Hour, or Recycled categories. The first step allocating variable costs among these categories is the development of system demand factors. Table 20 illustrates total system demand factors for the District in million gallons per day (MGD) based on FYE 2018 usage data. Average day demand is calculated based on total usage divided by 365 days. The max day demand/max month factor and the max hour demand/average day demand factors were provided by the most recent update of the CMWD Water Master Plan. Table20 System Demand Factors System Demand Factor I Million Gallons per Day (MGD) Average Day Demand (ADD) 13.12 Max Day Demand (MDD) 20.99 Max Hour Demand (MHD) 38.04 MDD / Max Month 1.60 MDD / ADD ("Max Day Coincidental Factor") 1.60 MHD / ADD ("Max Hour Coincidental Factor") 2.90 The resulting Max Day and Max Hour Coincidental Factors that are calculated from the system demand factors are used to determine the extra capacity allocations, which allocate base, max day, and max hour costs within the functional allocation analysis, as presented in Section 4.1.2. To develop the "Base/ Max Day" functional allocation factor, the Max Day Coincidental Factor is divided between base and max day, where base represents 1.00 of the ratio, and max day represents the remainder. The resulting "Base/ Max Day" allocation factor is 63 percent to base and 38 percent to max day. The same methodology is applied to the "Base/ Max Day/ Max Hour" functional allocation factor using the Max Hour Coincidental Factor, which results in 34 percent to base, 21 percent to max day, and 45 percent to max hour. The extra capacity allocations are presented in Table 21 below. Table 21 Extra Capacity Allocations Factor I Ratio I Extra Capacity Allocation(%) MDD / ADD ("Max Day Coincidental Factor") 1.60 100% Base 1.00 62.5% Max Day 0.60 37.5% . MHD / ADD ("Max Hour Coincidental Factor") 2.90 100% Base 1.00 34.5% Max Day 0.60 20.7% Max Hour 1.30 44.8% 20 I OCTOBER 2019 I FINAL Nov. 19, 2019 Item #16 Page 83 of 158 Water Cost of Service Study I POTABLE ANO RECYCLED WATER RATE STUDY I CARLSBAD 4.1.4 Functional Allocation Results Once each cost is allocated, a combined allocation of the District's expenses is used as the basis for allocating rate revenue requirements to each functional category and subsequently to each customer class. The functional allocation also defines the spl it between costs recovered through fixed rate components and those recovered through variable rate components. 4.1.4.1 POTABLE WATER FUNCTIONAL ALLOCATION RESULTS The results of the potable waterfunctional allocation analysis are shown in Table 22. The majority of the system's costs are related to variable supply costs for imported water from SDCWA. Combined with Desalination costs, these source costs make up over 53 percent of the District's potable rate revenue requirements. The Service, Customer, and Fire cost components are collected through fixed rate components and total approximately 31 percent of the District's potable costs. These costs are recovered through Carlsbad's monthly delivery fee. The District's water usage fees recover the remaining 69 percent of costs, which are allocated to the Base, Max Day, Max Hour, SDCWA, and Desai components. Table 22 Functional Allocation Results Summary-Potable Water All . 8 . I Revenue Requirement I Percent of Total Functional ocat1on as1s ($ .11. ) All t· m1 ions oca 10n Customer $2.57 6.3% Service 9.66 23.8% Base 3.77 9.3% Max Day 2.07 5.1% Max Hour 1.21 3.0% Fire 0.19 0.5% SDCWA 15.01 37.0% Desai 6.13 15.1% TOTAL $40.61 100.0% * Line or column totals may not tie due to rounding 4.2 Customer Class Allocation The final step in the cost of service analysis is the allocation of costs to each customer class. This step utilizes the results of the functional allocation and service units to proportionally allocate costs based on the level of service provided to each customer (rate) class. Service units are metrics for each customer class such as the number of accounts, number of meters by size, and usage characteristics that define the level of service provided to each class. Each functional cost component is divided amongst the customer classes in proportion to each classes' share of the service units used to allocate the respective functional component. Table 23 presents the total service units, otherwise known as the customer class characteristics, of each customer class. These totals are used to proportionally allocate the functional cost components between each customer class. The values presented in Table 23 are the projected values for FYE 2020. FINAL I OCTOBER 2019 I 21 Nov. 19, 2019 Item #16 Page 84 of 158 CARLSBAD I POTABLE AND RECYCLED WATER RATE STUDY I Water Cost of Service Study Table 23 Customer Class Service Units S . U . I Single I Multi-I C . I I A . I I I 1 . • I F' I T I erv1ce nit Family Family ommema gncu tura mgat1on ire ota Number of Accounts 24,716 1,142 1,706 22 838 782 29,207 (Customer) Number of ME Us 27,845 5,019 8,390 272 4,520 40,365 86,412 (Service) Annual Water 3,320,201 703,605 1,249,080 86,688 829,673 6,189,248 Usage (ccf) Max Month (ccf) 347,708 68,691 128,900 12,187 104,210 661,696 Max Day (ccf) 32,547 4,136 9,314 629 10,757 57,384 Max Hour (ccf) 58,992 7,497 16,882 1,140 19,497 104,008 SDCWA (ccf) 2,755,027 647,705 1,114,040 65,689 517,786 5,100,248 Desai (ccf) 565,174 55,900 135,039 20,999 311,887 1,089,000 * Line or column totals may not tie due to rounding 4.2.1 Potable Volumetric Cost Allocation Costs allocated to the variable functional categories (Base, Max Day, Max Hour, SDCWA, and Desai) are allocated based on the amount of demand in each of those categories for each class. This directly ties the incremental cost of water to each class's consumption and to volumetric rate tiers (where applicable). Every unit of water has both an element of base, max day, max hour, SDCWA, and Desai costs. The elements are allocated across the total projected FYE 2020 demand and are summed to determine the total cost allocated to each class. 4.2.2 Supply Allocation The available water supplies are allocated based on unit costs. Non-desalinated water from SDCWA, the lower'cost source, is used to fulfi ll all base demand requirements. Desalinated water, the more expensive source, is used to fulfill peak demand requirements. The available supply from each priority is the basis to allocate costs to each customer class and then usage to each tier (where applicable). This approach recovers costs associated with the higher cost source of supply through the upper tiers. In practice, this means that the costs of desalinated water are recovered from each class based on each cla ss's incremental summer demands. Allocation proportions are based on the projected consumption from each customer class for FYE 2020. The allocation of available supply to each customer class was performed using the two step process described below. Step l: Allocate SDCWA water to all classes based on annualized three-month minimum usage. The annualized minimum demand is assumed to represent the basic minimum level of usage for each customer class. The remaining SDCWA water is available to be allocated to all customers in step two of the supply allocation. Table 24 shows the calculations for Step 1 of the supply allocation. 22 I OCTOBER 2019 I FINAL Nov. 19, 2019 Item #16 Page 85 of 158 Water Cost of Service Study J POT ABLE AND RECYCLED WATER RATE STU DY J CARLSBAD Step 2: Allocate remaining SDCWA and Desai demand to all classes based on annualized average usage. The remaining supply is allocated across classes based on proportional, annualized, average monthly use. This represents each class's incremental use above their basic minimum needs. Table 25 shows the calculations for Step 2 of the supply allocation. Table 24 Supply Allocation -Step 1 I SDCWA I Desai I Total Total amount to be allocated 5,100,248 1,089,000 6,189,248 ccf I Annualized Three-I I I I Customer Class Month Min. (ccf) % of Usage SDCWA Desai Total Single Family 2,611,096 54.1% 2,611,096 2,611,096 Multi-Family 633,469 13.1% 633,469 633,469 Commercial 1,079,650 22.4% 1,079,650 1,079,650 Agricultural 60,342 1.3% 60,342 60,342 Irrigation 438,359 9.1% 438,359 438,359 TOTAL 4,822,916 100% 4,822,916 4,822,916 * Line or column totals may not tie due to rounding Table 25 Supply Allocation -Step 2 I SDCWA I Desai I Total Amount remaining to be allocated 277,332 1,089,000 1,366,332 ccf C I Annualized I Less I I o/c f I I I u~~::er Avg. Month previously Remaining u:ao e SDCWA Desai Total (ccf) allocated g Single Family 3,320,201 (2,611,096) 709,105 51.9% 143,931 565,174 709,105 Multi-Family 703,605 (633,469) 70,136 5.1% 14,236 55,900 70,136 Commercial 1,249,080 (1,079,650) 169,430 12.4% 34,390 135,039 169,430 Agricultural 86,688 (60,342) 26,347 1.9% 5,348 20,999 26,347 Irrigation 829,673 (438,359) 391,314 28.6% 79,427 311,887 391,314 TOTAL 6,189,248 (4,822,916) 1,366,332 100% 277,332 1,089,000 1,366,332 * Line or column totals may not tie due to rounding The allocations to SDCWA and Desai from steps 1 and 2 are summed to determine the total supplies allocated to each customer class. The costs allocated to SDCWA and Desai are t hen split between each customer class proportionally based on their allocation of water from each supply. Table 26 shows the total demand (ccf) allocated to each supply as a result of the calculations in Table 24 and Table 25. FINAL I OCTOBER 2019 I 23 Nov. 19, 2019 Item #16 Page 86 of 158 CARLSBAD I POTABLE AND RECYCLED WATER RATE STUDY I Water Cost of Service Study Table 26 Supply Allocation Summary Customer Class [ SDCWA [ Desai [ Total Single Family 2,755,027 565,174 3,320,201 Multi-Family 647,705 55,900 703,605 Commercial 1,114,040 135,039 1,249,080 Agricultural 65,689 20,999 86,688 Irrigation 517,786 311,887 829,673 TOTAL 5,100,248 1,089,000 6,189,248 * Line or column totals may not tie due to rounding 4.2.3 Fixed Cost Allocation Fixed costs are allocated based on each class's share of accounts and MEUs. Customer costs are allocated based on the number of accounts and Service costs are allocated based on the number of ME Us. All costs allocated to the Fire functional category are allocated directly to fire customers. Table 27 summarizes the service units and the percentage allocations used to allocate fixed costs to each customer class. Table 27 Fixed Cost Customer Allocation Factors C Cl I # A I Percent I # MEU I Percent I Private Fire I Fire Percent ustomer ass ccounts . s . . Allocation Allocation Accounts Allocation Single Family 24,716 87% 27,845 60% Multi-Family 1,142 4% 5,019 11% Commercial 1,706 6% 8,390 18% Agricultural 22 0.1% 272· 1% Irrigation 838 3% 4,520 10% Fire 782 100% TOTAL 29,207 100% 86,412 100% 782 100% * Line or column totals may not tie due to rounding 4.2.4 Potable Water Customer Allocation Results Table 28 summarizes the total revenue requirements allocated to each potable water customer class for FYE 2020. These allocated costs are subsequently used to determine the fixed delivery charges and volumetric rates for each customer class. Additional detail of the customer allocation analysis is included for reference in Appendix G. Table 28 Potable Water Customer Allocation Summary, FYE 2020 ($ millions) (Functional I Service Unit I SFR I MFR I Commercial I Agricultural I Irrigation I Fire omponent .. , . Customer Accounts $2.23 $0.10 $0.15 $0.00 $0.08 $- Service MEUs 2.02 0.43 0.76 0.05 0.50 Base Annual 1.17 0.15 0.34 0.02 0.39 Usage (ccf) Max Day Max Day 0.69 0.09 0.20 0.01 0.23 Usage (ccf) 24 I OCTOBER 2019 I FINAL C c;:,,-11,.. Nov. 19, 2019 Item #16 Page 87 of 158 Water Cost of Service Study I POTABLE AND RECYCLED WATER RATE STUDY I CARLSBAD ;~:~~~~~t I Service Unit I SFR I MFR I Commercial I Agricultural I Irrigation I Fire Max Hour Max Hour 8.11 1.91 3.28 0.19 1.52 Usage (ccf) SDCWA SDCWA 5.84 1.05 1.76 0.06 0.95 Allocation Desai Desai 3.18 0.31 0.76 0.12 1.76 Allocation Fire MEUs 0.19 TOTAL $23.25 $4.04 $7.25 $0.46 $5.42 $0.19 * Line or column totals may not tie due to rounding Section 5 -Rate Design Analysis The rate design analysis links the cost allocated to each customer class with the projected demand for each class. The resulting rates from this analysis must fully recover costs. Additionally, the analysis should demonstrate that each customer class is paying their fair and proportionate share of system costs. 5.1 Rate Structure Objectives and Goals With costs equitably allocated to each customer class, as outlined in Section 0, the District has some flexibility in designing a rate structure that meets its policy and fiscal objectives. In determining the appropriate rates and rate structures, the District considered various rate design alternatives and the resulting impacts to both the District and its customers. Carollo utilized multiple criteria in judging each rate structure. 1. Clear and understandable. 2. Easily administered. 3. Follows cost of service principles. 4. Provides revenue stability. 5. Provides affordability. 6. Complies with legal and regulatory requirements. Given the numerous and competing elements of rate design, selection of an appropriate rate structure is complex. There is no single structure that meets all objectives equally. The rate recommendations presented within this report proportionally recover costs from system users, helps to stabilize annual rate revenues, and are easy to both administer and understand by the District's customers as they provide consistency with the existing rate structure. The following section summarize the calculations and methodologies used to developed the proposed rates, additional detail of the rate design analysis is included for reference in Appendix H. 5.2 Proposed Water Delivery Fees Delivery charges are intended to recover the District's fixed operating costs. The proposed delivery charges are a combination of the Customer and Service functional components. Separate delivery charges were developed for recycled customers to reflect the specific costs of the recycled water system. C c;,,,,.,,,,.. FINAL I OCTOBER 2019 I 25 Nov. 19, 2019 Item #16 Page 88 of 158 CARLSBAD I POTABLE AND RECYCLED WATER RATE STUDY I Water Cost of Service Study To determine the delivery charge, the meter unit cost is multiplied by the meter capacity ratios previously developed by the District to calculate the meter Service cost. These ratios are based on ratios identified in the A WWA M6 Manual 'Water Meters -Selection, Installation, Testing, and Maintenance' and represent the types of meters used by the District. The ratios are calculated using the average of maximum flow for meters of each size. The service cost is then added to the customer cost to calculate the cost based fixed charges. Table 29 (potable) and Table 30 (recycled) present the results of this calculation for FYE 2020. The proposed revenue adjustments, as a percentage, do not equal or necessarily correlate to an equivalent percentage increase to rates or monthly bills. The results of the cost of service analysis and rate redesign will affect users differently based on their meter size and water consumptions habits. Table 29 Proposed Monthly Water Delivery Fees-Potable Water M 5. I Meter Equivalent I Customer I Service I T I F. d Ch eter 1ze . ota 1xe arge Ratio Component Component 5/8" 1.00 $7.52 $17.49 $25.02 3/4" 1.50 7.52 26.23 33.76 1" 2.50 7.52 43.72 51.25 1.5" 5.00 7.52 87.45 94.98 2" 8.00 7.52 139.92 147.45 21/2" 11.50 7.52 201.13 208.67 3" 15.00 7.52 262.35 269.88 4" 25.00 7.52 437.25 444.79 6" 50.00 7.52 874.51 882.05 8" 80.00 7.52 1,399.23 1,406.76 10" 115.00 7.52 2,011.39 2,018.92 * Line or column totals may not tie due to rounding Table 30 Proposed Monthly Water Delivery Fees-Recycled Water Meter Size I Meter Equivalent Ratio I Total Fixed Charge 5/8" 1.00 $23.69 3/4" 1.50 $32.69 1" 2.50 $50.70 1.5" 5.00 $95.73 2" 8.00 $149.75 21/2" 11.50 $212.84 3" 15.00 $275.90 4" 25.00 $455.93 6" so.co $906.18 8" 80.00 $1,446.47 10" 115.00 $2,076.82 * Line or column totals may not tie due to rounding 26 I OCTOBER 2019 I FINAL Nov. 19, 2019 Item #16 Page 89 of 158 Water Cost of Service Study I POTABLE AND RECYCLED WATER RATE STUDY I CARLSBAD Table 31 summarizes the proposed fixed charges for customers with fire line service. Currently the District does not have a separate charge for private fire line customers. The service connection size is the basis of the charge for customers that have fire line service. The size of the connection determines the flow capacity, or quantity of water that can be drawn from the District's system in the event of a fire. Service connection size can be measured either by consumption meter size or by service line size. In cases where an installed meter restricts the capacity of the connection and measures total water consumption, the charges will be based on the meter size. For fire lines that have a meter that is in place only to inform the District when water is drawn through the pipe and does not restrict water flows, the charge will be based on the service line size. Setting charges based on service connection size ensures legal compliance and ratepayer equity. Table 31 Proposed Monthly Water Delivery Fees -Fire Meter Size I Meter Equivalent Ratio I Total Fixed Charge 5/8" 1.00 $7.77 3/4" 1.50 7.89 1" 2.50 8.14 1.5" 5.00 8.74 2" 8.00 9.48 21/2" 11.50 10.33 3" 15.00 11.18 4" 25.00 13.62 6" 50.00 19.71 8" 80.00 27.01 10" 115.00 35.54 12" 200.00 56.25 5.3 Proposed Water Usage Fees The District's tiered customers include single-family and multi-family residential classes, referred to collectively as residential customers. All other customer classes are billed a uniform rate, regardless 9f usage. The volumetric rate for recycled customers is calculated based on the recycled water system's unique costs. 5.3.l Residential Rates The current rates for all residential customers utilize a three-tiered inclining block structure. The usage allotments for each tier are constant throughout the course of the year. Tier allotments are based on the water needs for each customer and on the actual usage patterns observed in the customer billing data. 5.3.1.1 SFR RATE DESIGN The single-family residential tiered rates provide a strong relationship between the District's cost of providing the water service and the customer's payment for that service. The tiered rates build from the functional allocation presented in O and are structured to recover Base, Max Day, and Max Hour costs, which are costs related to internal expenditures, as well as SDCWA and Desai water purchase costs. Carollo does not propose any changes to the current SFR rate t ier break structure during the five-year rate setting period. FINAL I OCTOBER 2019 I 27 Nov. 19, 2019 Item #16 Page 90 of 158 CARLSBAD I POTABLE AND RECYCLED WATER RATE STUDY I Water Cost of Service Study The development of the residential tiers is a two-step process. First, Base costs are allocated to ~ach tier equally. Max Day and Max Hour costs are allocated to each tier based on the tier peak factor calculated using Equation 1. For each tier the peak factor is multiplied by the projected FYE 2020 demand and divided by the sum product of demand and both factors to calculate the percent of max day and max hour to be allocated to each tier, as shown in Table 32. Equation 1 Tier Peak Factor Formula Table 32 Max Month Tier Usage (cc!) Tier Peak Factor=-------------Average Month Tier Usage (eel) SFR Rate Design -Base, Max Day, Max Hour Tier I Peak Factor I FYE 2020 Demand (ccf) I Base j Max Day I Max Hour Tierl 1.06 2,106,380 63.5% 55.2% 55.2% Tier2 1.32 715,224 21.5% 23.5% 23.5% Tier3 1.73 498,597 15.0% 21.3% 21.3% TOTAL 3,320,201 100% 100% 100% * Line or column totals may not tie due to rounding Next, SDCWA and Desai cost components are allocated between the t hree tiers. Using t he result of the supply allocation (see Table 26), the forecasted FYE 2020 demand is allocated between the two supplies as summarized in Table 33. The resulting percent allocation split between the tiers is used to allocate the SDCWA and Desai costs between Tiers 1, 2, and 3. Table 33 SFR Rate Design -Supply Costs Tier I FYE 2020 Demand (ccf) I SDCWA (ccf) I Desai (ccf) I SDCWA I Desai Tierl 2,106,380 2,106,380 76.5% Tier2 715,224 648,647 66,577 23.5% 11.8% Tier3 498,597 498,597 88.2% TOTAL 3,320,201 2,755,027 565,174 100% 100% * Line or column totals may not tie due to rounding Using the percent allocations calculated in Table 32 and Table 33, the total revenue requirement for each functional component is divided between Tier 1 and 2. The resulting proposed FYE 2020 SFR water usage fees are presented in Table 34. Table 34 SFR Rate Design Summary, FYE 2020 Functional R . Tier 1 Tier 2 Tier 3 I FYE 2020 Revenue I . I I . equirement Component ($ millions) ($/ccf) ($/ccf) ($/ccf) Base $2.02 $0.61 $0.61 $0.61 Max Day 1.17 0.31 0.18 a.so Max Hour 0.69 0.18 0.23 0.29 SDCWA 8.11 2.94 2.67 Desai 3.18 0.52 5.63 TOTAL $15.17 million $4.04/ ccf $4.42 / ccf $7.04 / ccf * Line or column totals may not tie due to rounding 28 I OCTOBER 2019 I FINAL Nov. 19, 2019 Item #16 Page 91 of 158 Water Cost of Service Study I POTABLE AND RECYCLED WATER RATE STUDY I CARLSBAD 5.3.1.2 MFR RATE DESIGN Carollo proposes that the current tiers for multi-family residential customers be reduced from three to two tiers. This is based on the observed historical demand profile of multi-family residential customers and the goal of the District to encourage conservation. Based on FYE 2018 usage data, 78 percent of MFR usage was Tier 1, 17 percent was Tier 2, and only 5 percent was Tier 3. Given the low amount of usage in Tier 3, Carollo proposes that the District eliminate Tier 3 in order to better match their MFR customer usage profile. A summary of the proposed changes to the multi-family residential tiers is presented in Table 35. The proposed monthly MFR Tier 1 allotment per dwelling unit remains at 5 ccf. This allotment is in alignment with the monthly SDCWA allotment per account. Additionally, 5 ccf t ies closely to average minimum month use per account, and to the indoor use of a four person household using of-55 gallons per capita, per day. Any usage above 5 ccf will be charged the MFR Tier 2 rate. Table 35 Proposed Multi-Family Residential Tier Allotments Customer Class I Tier I Current Allotment I Proposed Allotment Multi-Family Residential {per DU) * Line or column totals may not tie due to rounding Tierl Tier2 Tier3 5 ccf 5 ccf 5 ccf > Sccf > 10 ccf NIA Similar to single family residential, multi-family residential tiered rates provide a strong relationship between the District's cost of providing the water service and the customer's payment for that service. The tiered rates build from the functional allocation presented in Section 4 and are structured to recover Base, Max Day, Max Hour, SDCWA, and Desai water purchase costs. The process by which these costs are allocated between MFR Tier 1 and 2 are similar to those presented in Section 5.3.1.1 Table 36 presents the allocation of base, max day, and max hour costs to each MFR tier. Table 37 presents the process of allocating each supply cost component to the tiers. And finally, Table 38 provides a summary of the FYE 2020 MFR rate design. Table 36 MFR Rate Design -Base, Max Day, Max Hour Tier I Peak Factor J FYE 2020 Demand (ccf) J Base I Max Day J Max Hour Tierl 1.04 547,586 77.8% 72.2% 72.2% Tier2 1.41 156,019 22.2% 27.8% 27.8% TOTAL 703,605 100% 100% 100% * Line or column totals may not tie due to rounding Table37 MFR Rate Design -Supply Costs Tier I FYE 2020 Demand (ccf) I SDCWA (ccf) I Desai (ccf) I SDCWA I Desai Tierl 547,586 547,586 84.5% Tier2 156,019 100,119 55,900 15.5% 100% TOTAL 703,605 647,705 55,900 100% 100% * Line or column totals may not tie due ta rounding FINAL I OCTOBER 2019 I 29 Nov. 19, 2019 Item #16 Page 92 of 158 CARLSBAD J POTABLE AND RECYCLED WATER RATE STUDY I Water Cost of Service Study Table 38 MFR Rate Design Summary, FYE 2020 Functional I FYE 2020 Revenue I Tier 1 I Tier 2 Component Requirement($ millions) ($/ccf) ($/ccf) Base $0.43 $0.61 $0.61 Max Day 0.15 0.20 0.27 Max Hour 0.09 0.12 0.16 SDCWA 1.91 2.94 1.89 Desai 0.31 2.02 TOTAL $2.89 $3.87 $4.94 * Line or column totals may not tie due to rounding 5.3.2 Commercial, Agricultural, and Irrigation Rate Design The water usage fee for the remaining customer classes are uniform rates charged regardless of usage. Similar to the SFR and MFR rate design, the total cost of each functional category is divided by the total usage for that customer class to produce a rate per ccf. The sum of all functional cat egory unit rate results in the customer class water usage fee as shown in Table 39. Table 39 Commercial, Agricultural, and Irrigation Rate Design Summary, FYE 2020 Customer Base Max Max SDCWA D I R Projected Rate I I I I I I Total Costs I I . esa to ecover Class ($ millions) Day Hour ($ millions) Demand (ccf) ($/ccf) Commercial $0.76 $0.34 $0.20 $3.28 0.76 $5.33 1,249,080 $4.27 Agricultural 0.05 0.02 0.01 0.19 0.12 0.40 86,688 $4.62 Irrigation 0.50 0.39 0.23 1.52 1.76 4.40 829,673 $5.31 * Line or column totals may not tie due to rounding 5.4 Proposed Potable Water Rates Table 40 and Table 41 present the current and adopted potable water rates for the next two years. The FYE 2020 overall annual rate adjustment of one percent will be implemented as a full cost of service adjustment and will therefore impact each rate uniquely. FYE 2021 will have a two percent rate revenue increase applied equally to all rates. Table 40 Proposed Potable Water Delivery Fees Meter Size I Current I FYE 2020 I FYE 2021 Increase cos 2% 5/8" $24.72 $25.02 $25.52 3/4" 33.36 33.76 34.44 1" 50.62 51.25 52.28 1.5" 93.79 94.98 96.88 2" 145.58 147.45 150.40 21/2" 206.52 208.67 212.84 3" 266.52 269.88 275.28 4" 439.10 444.79 453.68 6" 870.76 882.05 899.69 8" 1,388.75 1,406.76 1,434.89 10" 1,993.06 2,018.92 2,059.30 30 I OCTOBER 2019 I FINAL C c;:,,-••~· Nov. 19, 2019 Item #16 Page 93 of 158 Water Cost of Service Study I POTABLE AND RECYCLED WATER RATE STUDY I CARLSBAD Table 41 Proposed Potable Water Usage Fees Customer Class I Tier I Current ($/ccf) FYE 2020 I FYE 2021 Increase cos 2% Tier l $3.94 $4.04 $4.13 Single Family Residential Tier2 4.69 4.42 4.51 Tier3 7.00 7.04 7.18 Tierl $3.87 $3.87 $3.95 Multi-Family Residential Tier2 4.67 4.94 5.04 Tier3 6.97 N/A N/A Commercial N/A $4.22 $4.27 $4.36 Agricultural N/A $4.53 $4.62 $4.71 Irrigation N/A $5.16 $5.31 $5.41 5.5 Proposed Recycled Water Rates Table 42 and Table 43 present the current and adopted recycled water rates over the next two years. From FYE 2020 and FYE 2021, Carollo recommends no annual rate adjustment. Table 42 Proposed Recycled Water Delivery Fees Meter Size I Current I FYE 2020 I FYE 2021 Increase 5/8" $23.69 $23.69 $23.69 3/4" 32.69 32.69 32.69 l" 50.70 50.70 50.70 1.5" 95.73 95.73 95.73 2" 149.75 149.75 149.75 21/2" 212.84 212.84 212.84 3" 275.90 275.90 275.90 4" 455.93 455.93 455.93 6" 906.18 906.18 906.18 8" 1,446.47 1,446.47 1,446.47 10" 2,076.82 2,076.82 2,076.82 Table 43 Proposed Recycled Water Usage Fees Customer Class I Tier I Current ($/ccf) I FYE 2020 I FYE 2021 Increase Recycled N/A $3.79 $3.79 $3.79 FINAL I OCTOBER 2019 I 31 Nov. 19, 2019 Item #16 Page 94 of 158 CARLSBAD I POTABLE AND RECYCLED WATER RATE STUDY I Water Cost of Service Study 5.6 Proposed Fire Service Rates Table 44 presents the current and adopted fire service delivery fee rates over the next two years. The FYE 2020 overall annual rate adjustment of orie percent will be implemented as a full cost of service adjustment and will t herefore impact each rate uniquely. FYE 2021 will have a two percent rate revenue increase applied equally to all rates. Table 44 Proposed Fire Service Delivery Fees Meter Size I Current I FYE 2020 I FYE 2021 Increase cos 2% 5/8" $7.69 $7.77 $7.93 3/4" 7.82 7.89 8.05 1" 8.06 8.14 8.30 1.5" 8.67 8.74 8.92 2" 9.39 9.48 9.66 21/2" 10.24 10.33 10.53 3" 11.10 11.18 11.40 4" 13.53 13.62 13.89 6" 19.61 19.71 20.10 8" 26.91 27.01 27.55 10" 35.42 35.54 36.25 5.7 Regional Water Rate Comparison A regional survey of SFR water rates was conducted to compare the District's existing and proposed rates to those of surrounding agencies. Although not all water systems are alike, such comparisons are common. Care should be taken in drawing conclusions from such comparisons as all systems face unique challenges and have developed their rates accordingly. Figure 2 compares the District's existing and proposed rates for s ingle family residences, assuming an 11 unit water use and a 5/8" residential meter. The monthly bill includes usage fee, service charges (including the SDCWA infrastructure access charge when applicable), and miscellaneous charges such as pumping fees and Readiness-to-Serve charge. As shown in the figure, t he District's average single-family residential monthly bill is currently $68.81. With the proposed increases, the average bill would increase approximately $2.84 to $71.65. When compared to the surrounding agencies, the District's proposed rate continues to falls below the average regional monthly bill. Additionally, this survey does not reflect rate increases currently under review, but not yet implemented. 32 I OCTOBER 2019 I FINAL Nov. 19, 2019 Item #16 Page 95 of 158 Water Cost of Service Study J POTABLE ANO RECYCLED WATER RATE STUDY I CARLSBAD $140 $120 -----$100 -s68.81 $71.65 _r ----------------$80 :-. al$60 : : >-: t :i: ~ ., ; §$40 ~ .c. ' . •• ,., $20 I I $- -Fixed Charge -Commodity Charge --Regional Average Figure 2 Regional Monthly SFR Water Bill Comparison FINAL I OCTOBER 2019 I 33 Nov. 19, 2019 Item #16 Page 96 of 158 CARLSBAD I POTABLE AND RECYCLED WATER RATE STUDY I Water Cost of Service Study Appendix A CU STOMER AND DEMAND FORECASTS Forecasted customer demands for potable and recycled water are based on actual demand data provided by the District for FYE 2018. Growth projections for all customer classes follow population data projections developed by the City of Carlsbad. Residential dwelling unit growth was used for all customer classes except for commercial customers, which is projected based on the average growth of commercial and industrial square feet. Growth Input o.s" o.7" 1.0" 0.1" o.2" 0.1" o.•" o.•" o.4" 0.3% o.3" o.s" o.5" o.5" 0.4" o.5" o.6" SMigk! Family S/8" 2,792;376 2,811,925 2,839,659 2,360,740 2,867,570 2,871,397 2.689,003 2,906,786 2,917,385 2,926,748 2.934,756 2,949,771 2,963,845 2.978,683 2,99],75S 3,00S,829 3,024,612 3/4" 268,758 270,640 273,309 275,338 275.996 276,364 278,(164 279,770 280,790 281,691 282,462 2&3,907 285,262 286,690 287,948 289,303 291,111 I" 227,417 2i9,009 231.,268 232,985 233,541 233,853 235,291 236,735 237,598 238,360 239,013 240,236 241..382 242,590 243,655 244,801 206,331 1.s· 5,728 5,768 5,825 5,868 5,882 5,890 5,926 5,962 5,984 6,003 6,020 6,050 6,079 6,110 6,137 6,165 6,204 2" 2,840 2,860 2,88B 2,909 2,916 2,no 2,938 2,956 2,967 2,976 2.985 l,000 3,014 3,029 3,042 3,DS7 3,076 2.s· .. 4• 6" 8" 10· Total 3,297,118 3,320,201 3,352.949 3,377,839 3,l8S,90S 3,390,424 3,41~182 3,432,210 3,444,725 3,4SS,n9 3,465,235 3t482,965 3r499c582 3,517,102 3,532,.537 3,5491154 3,571,.334 Growth Input o.s" 0.1% 1.0% 0.1" 0.2K 0.1" o.6% o.6" o.4" o.3" o.3% o.s% o.s" o.s" o.4" o.s% o.6" MultiF;_,mnv 5/8 49,417 49,763 50,253 50,627 50,747 50,815 51,128 51,441 51.629 51,795 51,936 52,202 S2,451 52,714 52,945 53,194 53,527 3/4 21.930 22,083 22,301 22,467 22,520 22,550 22,689 22,828 22,911 22,98S 23,048 23,166 23,276 23,393 23,496 23,606 23,754 l" 57,9SO 58,355 58.931 59,368 59,510 59,589 59,956 60,324 60,544 60,738 60,904 61,216 61,508 61,816 62,D87 62,379 62,769 1.5• 178,463 179,713 181,485 '182,832 183,269 183,513 1841642 1ss,ns 186,453 187,051 187,563 188,522 189.422 190,370 191,206 192,105 193,300 2· 297,680 299,764 302,721 304.968 305.696 306,104 307,987 309,877 3U,007 312,005 3U,859 314,459 315,960 317,541 318,935, 320,435 322,438 2.5" 3" 44,6B6 44,998 45,442 45,780 45,889 45,950 46,233 46,516 46,686 46,836 46,964 47,204 47,430 47,6fil 47,876 48,101 48,401 4• 41,627 41,918 42,332 42,646 42,74& 42,805 43,068 43,332 43,490 43,630 43,749 43,973 <14,W 44,404 44,599 44,809 45,089 6" 6.962 7,011 7,080 7,133 7,150 7,159 7,203 7,247 7,274 7,297 7,317 7,355 7,390 7,427 7,459 7,494 7,541 8" 10· Total 698,714 703,605 710,545 71$,820 717,529 718,487 7U,907 727,342 729,994 732,337 734,340 738,098 741,619 745,332 748,603 752,124 756,824 OCTOBER 2019 I FINAL Nov. 19, 2019 Item #16 Page 97 of 158 Growth Input Comm~rdaV lnstltutionaVOther S/8 Total Total Total 3/4 1" i.s· 2" 2.5' 3' 4' 6' 8' 10" Growth Input Agricultural 5/8 3/4 1· 1,5'" 2· 2.s• 3" ... 6' 8" 10• GroW\h Input Irrigation 5/8 3/4 1· 1.s· 2' 2.5" 3• 4' 6" 8" 10· Water Cost of Service Study I POTABLE AND RECYCLED WATER RATE STUDY I CARLSBAD 0.9% 1.lK 0.1" 0.2% 0.8" 1.6" 1.3" 1.3" 1.6% 1.7'< 1.7'< 1.1,. 0.9% F.YE :Z019 FY£ 2020 FYE 2021 FYE 202.l FYE 2023, Pt'E ioz4 FYE 2.025 FYE 202.G fY( 201.7 FYE io.u FYE ZOl.9 FYE 2030 FYE 2031 (YE 2032 FYE 2033 FVE 2034 FVE 2035 36,264 37,011 37,096 37,130 37,215 37,419 37,722 38,319 38,820 39,319 39,942 40,634 41,316 41.817 42,196 42,619 43,056 17,852 18,220 18,262 18,278 18,320 18,420 18,570 18,863 19,110 19,356 19,662 20,003 20,339 20,586 20,n2 20,980 21,1.95 87,503 89,307 89,512 89,593 89,799 90,290 91,0ll 92,462 93,672 94,876 96,378 98,049 99,694 100,904 101.817 102,839 103,893 267,368 272,881 273,508 273,754 274,385 275,885 278,121 282,521 286,218 289,89& 294,488 299,593 304,620 308,316 311,107 314,230 317,449 691,200 705,452 707,071 707,708 709,339 713,217 718,999 730,373 739,930 749,444 761,309 n•,501 787,503 797,058 804,273 812,347 820,668 34,371 35,079 35,160 35,192 35,273 35.,466 35,753 36,319 l6,7~ 37,267 37,&57 38,513 39,159 39,635 39,993 40,395 40,809 43,169 44,059 44,161 44,200 44,302 44,544 44,906 45,616 46,213 46,807 47,548 48,372 49,184 49,'181 50,231 50,736 51,255 867 885 887 888 890 895 902 917 929 940 955 972 988 1,000 1,009 1,019 1,030 45,252 46,185 46,291 46,333 46,439 46,693 41,012 47,817 48,442 49,0(;5 49,842 50.706 51,557 52.'182 S2,6S5 53,183 53,728 1,223,845 1,249,080 1,251,948 1,253,074 1,255,962 1,262,829 1,273,067 1,293,205 1,310,128 1,316,972 1,347,91:n 1,171,350 1,394,361 1,411,279 l,424,0S4 t,438,349 1,453,032 0.5" 0,7'1 '·°" 0.7'1 0.2" o.,,. 0.6,. 0.6" 0.4" 0.3" 0.3" 0.5" 0,.5" 0.4" o.s" 0,6" f'f't 2019 FVE 2010 FYC 2021 FYE. ~022 J.'YE 2023 FY£ 2024 FYE 1025 FYE 1026 NE 1027 f't't 2018 t--YE 2029 FYE 2010 FYE 2031 F'YE 2032 FYE 2033 F'YE 20~ FYE 20.lS 736 741 748 754 756 757 761 766 769 n1 n, 777 781 785 788 792 797 1,171 1,179 1,191 1,200 1,202 1,204 1,211 1,219 1,223 1,227 1,231 1,137 1,243 1,249 1,254 1,260 1,268 577 581 586 S91 592 593 597 600 602 604 606 609 612 615 618 621 625 4,49• 4,526 4,571 4,604 •,615 4,622 4,650 4,679 4,696 4,711 4,724 4,748 4,770 4,794 4,815 4,838 4,868 26,797 26,984 27,251 27,453 27,518 27,555 27,725 27,895 27,996 28,086 28,163 l8.307 28,442 28,585 28,710 28,845 29,025 52,311 52,6n 53,197 53,592 53,720 53,791 54,122 54,454 54,653 54,828 54,978 55,260 55,523 55,801 56,046 56,310 56,662 86,086 86,688 87,543 88,193 88,404 88,522 89,066 89,613 89,939 90,228 90,47S 90,938 91,372 91.,829 92.,2.U !12,666 93.245 0.5" 0,7'1 1.0" 0,7" 0.2" 0.1" 0.6" 0.6" 0.4" 0.3" 0.3% 0.5" 0.5" 0.5" 0.4" o.s" 0.6" FYE. 2019 FVE 2010 FY£ 2021 fVE 2022 fYE 2023 FYE 2024 FYE 2025 FYE 2026 FYE 2027 FYE 2018 FYE 2029 FYE 2030 FYE .2031 t'V£ 2032 FY£ 2033 fYE 2014 F\'E Z03S 10,202 10,274 10,375 10,452 10,477 10,491 10,556 10,620 10,659 10,693 10,723 10,778 10.829 10,883 10,931 10,982 11,051 10,196 10,267 10,368 10,445 10,470 10,484 10,549 10,613 10,652 10,686 10,716 10,770 10,822 10,876 10,924 10,975 11,044 83,744 84,:330 85,162 85,794 85,999 86,114 86,64.ci 87,175 87,493 frT,774 88,014 8M64 88,886 89,331 89,723 90,145 90,709 248,348 250,087 252,553 254,428 255,036 255,376 256,947 '.258,524 259,466 260,299 261,011 262,347 263,598 264,918 266,081 267,332 269,003 413,471 416,367 420,474 423,595 424,606 425,173 427,789 430,413 431.983 433,369 434,SSS 436,nl 438,862 441,059 442,995 445,079 447,860 47,052 47,381 47,849 48,204 48,319 48,383 48,681 48,980 49,158 49,316 49,451 49,704 49,941 50,191 50,411 50,649 50,965 10,890 10,966 11,075 11,157 11,184 11,198 11.,267 11,336 11,378 11,414 11,446 11,504 11,559 11,617 11,668 11,723 ll,796 823,905 829,673 837,856 844,076 846,091 847,220 852,433 857,662 860,789 863,SSl 865,91S 870!345 874,497 878,876 882,733 886,S!S 892,427 FINAL I OCTOBER 2019 Nov. 19, 2019 Item #16 Page 98 of 158 CARLSBAD I POTABLE AND RECYCLED WATER RATE STUDY I Water Cost of Service Study Total Growth Input 5/8 3/4 1• 1.5'" 2" 2-S" 3" .. 6" 8" 10" 0.S" 541 4,888 152,422 S28,828 650,176 31,722 39,594 199,325 121,924 1 729,42.1 OCTOBER 2019 I FINAL 0.7" 54S S50 4,922 4,971 lSl,489 155,003 532,531 -S37,783 654,728 661,186 31,9~4 32,259 39,871 40,265 200,720 202,700 122.n1 123,988 1,741,529 1,758,705 0.7" 0.2" 0.1,. 0.6,. 554 556 556 S60 5,008 5,()20 5,026 5,057 156,154 1S6.526 156,735 157,700 541,nS 543,069 543,194 547,139 666,094 667,685 668,576 672,689 32,499 32,577 32,620 32,821 40,564 40,660 40,71S 40,965 204,205 204,692 204,966 206,227 124,909 125,207 125,374 126,145 1,771,761 1,775,992 1,ns,362 t,789,303 0.6,. 563 5,088 158,667 SS0,496 676,816 33,022 41,216 207.492 126,919 1,800,260 0.4,. 0.3% 0.3% 0,5" 0.S" O.S" 0.4,. 0.5,. 0,6" S6S S67 569 S71 574 sn 580 S82 586 S,107 S,123 S,137 5,164 S,188 5,214 S.237 5,262 S,295 159,246 159,757 160,194 161.013 161,782 162.592 163,305 164,073 165.099 552,503 SS4):76 SSS.793 558,636 561,302 564,112 566,588 569,253 sn.s10 679,284 681,464 683,328 686,824 690,101 693,556 696,600 699.Sn 704.2SO 33,142 33,.249 33,340 33.SlO 33,670 33,839 33,9&7 34,147 34,361 41,367 ·~·99 41.613 41,826 42,025 42,236 42,421 42,621 42,887 208,248 208.917 209,488 210,560 211,565 212,624 213,557 214,561 215,902 127,382 127,791 128,141 128,796 129,411 130,059 130,629 131,244 132,064 1,806,844 1,812,643 1,817,602 1,826,902 1.835,618 1,844,808 1,852,904 1,861,620 1,873,254 Nov. 19, 2019 Item #16 Page 99 of 158 Water Cost of Service Study I POTABLE AND RECYCLED WATER RATE STUDY I CARLSBAD Appendix B WATER SUPPLY PURCHASES AND COSTS Water Purchases Escalators Customer Service Charge Increase Emergency Storage Ch•rge lncre•se Infrastructure Access Charge Increase Supply Reliability Charge Increase MWD Capacity Reservation Charge Increase MWD Readiness to Service Charge Increase Transportation Rate Increase SDCWA M&I Melded Supply Rate Increase SDCWA Melded Treatment Rate Increase Desai• Fixed Capital Increase Desai• Fixed Financing Increase Desai -Fixed O&M Increase Desai• Fixed Electricity Increase Desai• Variable O&M Increase Desai -Variable Electricity Increase Desai• Conveyance Cost Increase Desai -Indirect Costs Increase Desai· T.O. Inefficiency Increase Desa I· Wheeling Increase FYE 2020 FYE 2021 FYE 2022 FYE 2023 FYE 2024 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 2.00% 2.00% 2.00% 2.00% 10.00% 20.00% 1.00% 1.00% 1.00% 30.00% 5.00% 5.00% 5.00% 5.00% 3.00% 3.00% 3.00% 3.00% 3.00% 6.00% 6.00% 6.00% 6.00% 6.00% 10.00% 5.00% 5.00% 5.00% 5.00% 2.00% 6.00% 6.00% 6.00% 6.00% 2.00% 2.00% 2.00% 2.00% 2.00% 0.00% 2.50% 2.50% 2.50% 2.50% 9.70% 9.70% 9.70% 9.70% 9.70% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 3.00% 3.00% 3.00% 3.00% 3.00% 0.00% 2.50% 2.50% 2.50% 2.50% 1.50% 1.50% 1.50% 1.50% 1.50% 6.00% 6.00% 6.00% 6.00% 6.00% 6.00% 5.00% 5.00% 5.00% 5.00% DRAFT I OCTOBER 2019 Nov. 19, 2019 Item #16 Page 100 of 158 CARLSBAD j POTABLE, RECYCLED, AND WASTEWATER RATE STUDY I Water Cost of Service Study SDCWA/MWD Purchases Water Consumption Override Water Purchases !Af1 12,923 12,636 I 12,131 I 12,768 I 12,802 I Water Purchases jgfl 5,629,295 s,S04,o89 I s,54s,s13 I s,s61,613 I s,s16,426 I Water Purchasee (MGD) ll.54 11.28 I 11.31 I 11.40 I 11.43 I Customer Data (eel) 6,189,248 6,240,841 6,279,003 6,293.891 6,307,482 System Loss Qnput) 8.5% 8.5% 8.5% 8.5% 8.5% System Loss (colculated} 5,100,248 4,970,631 5,008,793 5,023,681 5,037,272 Axed Charges (CY) [,£,,.1,w,1 ~ 9':~ (!I .,.m ~ Customer Service Charge s 812,784 $ 853,423 $ 896,094 $ 940,899 $ 987,944 Emergency Storage Charge 2,243,167 2,288,030 2,333,791 2,380,467 2,428,076 Infrastructure Access Charge 1,594,656 1,913,587 1,932,723 1,952,050 1,971,571 Supply Reliability Charge 1.329,m 1,396,262 1,466,075 1,539,378 1,616,347 MWD Capacity Reservation Charge 267,570 275,597 283,865 292,381 301,152 MWD Readiness to Service Charge 'YBas1 508,524 539,035 571,378 605,660 642,000 Fixed Charges (FY) Customer Service Charge $ 816,858 $ 833,104 $ 874,759 $ 918,497 $ 964,422 Emergency Storage Charge 2,255,110 2,265,599 2,310,911 2,357,129 2,404,271 Infrastructure Access Charge 1,448,754 1,754,122 1,923,155 1,942,387 1,961,811 Supply Reliability Charge 1,214,769 1,363,017 1,431,168 1,502,727 1,577,863 MWD Capacity Reservation Charge 272,085 271,584 279,731 288,123 296,767 MWD Readiness to Service Charge 508,524 539,035 571,378 605,660 642,000 Total Axed Charges (FY) $ 6,516,099 $ 7,026,460 $ 7,391,101 $ 7,614,522 $ 7,847,133 Axed per AF $504 $556 $581 $596 $613 ·1% 10% 4% 3% 3% Variable Charges (CY) ~ ~"m ~ ~l r.i.-~ I Transportation Rate s 132 $139 $146 $152.81 $160.45 SDCWA M&I Melded Supply Rate $ 925 $981 $1,039 $1,102 $1,168 SDCWA Melded Treatment Rate s 280 $286 $291 $297 $303 CWA Drought fee Variable Price per AF $ 1,337 $1,404.70 $1,476.17 $1,551.63 $1,631.32 TotalVartable Costs (FY) s 17,071,393 s 17,321,580 s 18,337,823 s 19,329,282 $ 20,373,629 Total SDCWA & MWD Charges (FY} $23,587,492 $24,348,040 $25,728,925 $26,943,804 $28,220,762 OCTOBER 2019 I FINAL Nov. 19, 2019 Item #16 Page 101 of 158 Water Cost of Service Study I POTABLE AND RECYCLED WATER RATE STUDY I CARLSBAD Desai Purchases Contract Desai Water, Min. 2500 AF (1,5) 2,500 2,500 2,500 2,500 2,500 Additional desal water, AF (1) 416 416 416 416 Total Desai (AF) 2,500 2,916 2,916 2,916 2,916 In cq 1,089,000 1,270,210 1,270,210 1,270,210 1,270,210 Fixed Charges ($/ AF), Calendar Year (4,5) r~Icm r~ ' ' ,. ' Capital, Debt Service Charge $552.44 $566.25 $580.41 $59~ $609.79 Capital, Equity Return Charge $469.49 $515.03 $564.99 $619.80 $679.92 FlxedO&M $474.30 $486.16 $498.31 $510.77 $523.54 Flxed Electrictiy $152.15 $155.95 $159.85 $163.85 $167.95 Variable Charges ($/AF) (4,5) Variable O&M $122.77 $125.84 $128.99 $132.21 $135.52 Variable Electricity $653.60 $673.20 $693.40 $714.20 $735.63 Other Costs ($/ AF) (4,5) Conveyance (Pipeline Debt Payment) $218.26 $223.72 $229.31 $235.04 $240.92 Indirect Costs (2) $32.80 $33.29 $33.79 $34.30 $34.82 Administration Charge $10.30 $10.92 $11.58 $12.27 $13.01 Wheeling (Transportation Charge Including credit $101.83 $106.93 $112.27 $117.89 $123.78 Axed Costs($) Capital $1,381,100 $1,651,188 $1,692,468 $1,734,779 $1,778,149 Financing $1,173,735 $1,501,842 $1,647,521 $1,807,330 $1,982,641 Fixed O&M $1,185,746 $1,417,630 $1,453,071 $1,489,398 $1,526,632 Fixed Electrictiy $380,378 $454,764 $466,133 $477,787 $489,731 Variable Costs($) Variable O&M $306,936 $366,961 $376,135 $385,538 $395,177 Variable Electricity $1,633,992 $1,963,065 $2,021,957 $2,082,616 $2,145,094 Other Costs($) Conveyance $545,650 $652,357 $668,666 $685,383 $702,517 Indirect Costs $82,007 $97,088 $98,544 $100,023 $101,523 T.O. Inefficiency $25,758 $31,847 $33,758 $35,783 $37,930 Wheeling (Transportation Charge lncludingcredrt $254,586 $311,796 $327,386 $343,755 $360,943 Total Desai Costs, CY (3) $ 6,969,887 $ 8,448,538 s 8,785,638 s 9,142,391 s 9,520,338 Desai Costs (FY Basis) s 6,969,887 s 8,448,538 s 8,785,638 s 9,142,391 s 9,520,338 Recycled Water Purchases Assumptio ns Potable Water Cost $ 1,321 $ 1,371 $ 1,440 $ 1,514 $ 1,591 Vallecitos Annual Escalation 3% 3% 3% 3% 3% Reclaimed Water Increases Expected AF to be Sold (Historical Sales &Custom 3,998 4,037 4,067 4,077 4,083 System Losses 5% 5% 5% 5% 5% Recycled Water to be Purchased 4,198 4,239 4,271 4,281 4,287 Source of Supply (in AF) Vallecitos Water District (VWD) 3,135 2,386 2,386 2,386 2,386 Carlsbad Water Recycling Facility (CWRF) 1,063 1,853 1,885 1,895 1,901 Total Recycled Water (AF) 4,198 4,239 4,271 4,281 4,287 5-J,eormoving overage 4,172 4,230 4,277 4,232 4,255 Unit Costs Valledtos Water District (VWO) $ 702 $ 723 $ 745 $ 767 $ 790 Purchase Amount Valledtos Water District (VWD) $ 2,200,000 $ 1,724,985 $ 1,776,735 $ 1,830,037 $ 1,884,938 Outside RW Purchases $ 2,200,000 $ 1,724,985 $ 1,776,735 $ 1,830,037 $ 1,884,938 DRAFT I OCTOBER 2019 Nov. 19, 2019 Item #16 Page 102 of 158 CARLSBAD I POTABLE, RECYCLED, AND WASTEWATER RATE STUDY I Water Cost of Service Study Appendix C CAPITAL IMPROVEMENT PLAN Wat er Connection Projects FY 2019/20 FY 2020/21 FY 2021/22 FY 2022/23 FY 2023/24 Include ✓ ✓ ✓ ✓ ✓ ✓ ✓ Project Title College Boulevard -Cannon Road to Badger lane (375 Zone) College Boulevard -Cannon Road to Badger lane (490 Zone) Desalinated Water Flow Control Facility Poinsettia Lane -Cassia Road to Skimmer Court Rancho Carlsbad Groundwater Supply San Luis Rey Mission Basin Groundwater Supply Water Modeling Total Water Connection Projects OCTOBER 2019 I FINAL 35,000 370,000 800,000 6,000,000 300,000 1,432,000 S0,000 300,000 300,000 300,000 $1,450,000 $0 $6,300,000 $1,837,000 $300,000 Nov. 19, 2019 Item #16 Page 103 of 158 Water Cost of Service Study I POTABLE AND RECYCLED WATER RATE STUDY I CARLSBAD Water Replacement Projects FY 2019/20 FY 2020/21 FY 2021/22 FY 2022/23 FY 2023/24 Include ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Project Title ABANDON POTABLE SERVICES (NEW RECYCLED SERVICES) AVIARA PARKWAY AND PLUM TREE WATERLINE CARLSBAD BOULEVARD WATERLINE REPLACEMENT AT TERRAMAR CAR.LSBAD WATER RECYCLING FACILITY (ENCINA CAPITAL PROJECTS) CATHODIC PROTECTION PROGRAM CRESTVIEW DRIVE TRANSMISSION MAIN EL FUERTE AND CORINTIA STREET PRESSURE REDUCING STATION FIRE FLOW SYSTEM IMPROVEMENTS HYDROELECTRIC GENERATOR AT OESAL FLOW CONTROL FACILITY NO. 5 LIMITED ACCESS PIPELINE RELOCATION PROGRAM MAERKLE FACILITY IMPROVEMENTS MAERKLE RESERVOIR FLOATING COVER REPLACEMENT MAERKLE RESERVOIR TRANSMISSION MAIN MISCELLANEOUS PIPELINE REPLACEMENTS NORMALLY CLOSED VALVE (INSTALL MOTORIZED VALVE) ORION CENTER PALOMAR AIRPORT WATERLINE REALIGNMENT PRESSURE REDUCING STATION PROGRAM RANCHO CARLSBAD GROUNDWATER SUPPLY RECYCLED WATER LINE· CWRF TO AGUA HEDIONDA LAGOON RECYCLED WATER PHASE 3 • CWRF EXPANSION RECYCLED WATER PHASE 3 • PIPELINES RECYCLED WATER PHASE 3 • RESERVOIR RESERVOIR REPAIR AND MAINTENANCE PROGRAM SAN DIEGUITO WATER INTERTIE AND PIPELINE EXTENSION SAN LUIS REY MISSION BASIN GROUNDWATER SUPPLY SANTA FE II INLET PIPELINE SANTA FE II RESERVOIR SITE ELECTRICAL IMPROVEMENTS SCADA IMPROVEMENTS SIDEWALK/STREET CONSTRUCTION· VALLEY STREET MAGNOLIA AVENUE TRI-AGENCY WATER TRANSMISSION PIPELINE REPLACEMENT WATER CONDITION ASSESSMENT PROGRAM WATER LOSS MONITORING WATER VALVE REPAIR/REPLACEMENT PROGRAM WATER, RECYCLED, AND SEWER MASTER PLAN SCADA IMPLEMENTATION Total Water Replacement Projects C c;:,r.-••"· s 850,000 $ $ $ $ 100,000 1,000,500 500,000 2,500,000 150,000 180,000 180,000 190,000 190,000 190,000 800,000 90,000 390,000 390,000 390,000 390,000 200,000 2,075,000 2,000,000 1,000,000 100,000 1,000,000 8,301,000 3,320,000 1,530,000 1,730,000 2,690,000 2,800,000 225,000 600,000 600,000 600,000 600,000 600,000 200,000 1,000,000 1,960,000 50,000 25,000 2,370,000 350,000 390,000 400,000 410,000 410,000 420,000 100,000 100,000 100,000 100,000 100,000 890,000 910,000 930,000 940,000 960,000 50,000 25,000 174,750 897,046 3,144,481 3,486,084 2,479,194 $8,120,000 $6,135,000 $8,950,000 $12,715,500 $15,721,000 FINAL I OCTOBER 2019 Nov. 19, 2019 Item #16 Page 104 of 158 CARLSBAD I POTABLE, RECYCLED, AND WASTEWATER RATE STUDY I Water Cost of Service Study Recycled Water Connection Projects FY 2019/20 FY 2020/21 FY 2021122 FY 2022/23 FY 2023/24 Include Total Projects Project Tltle RECYCLED WATER LINE· CWRF TO AGUA HEDIONDA LAGOON RECYCLED WATER PHASE 3 • PIPELINES RECYCLED WATER PHASE 3 • CWRF EXPANSION RECYCLED WATER PHASE 3 • RESERVOIR $0 $0 $0 $0 $0 Recycled Water Replacement Projects FV 2019/20 FV 2020/21 FY 2021/22 FV 2022/23 FY 2023/24 Include Project Title ✓ CARLSBAD WATER RECYCLING FACILITY (ENCi NA CAPITAL PROJECTS) $ 202,800 $ 207,000 $ 211,000 s 215,000 s 219,000 ✓ CATHODIC PROTECTION PROGRAM $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000 ✓ CWRF IRRIGATION AND LANDSCAPE . . . . ✓ MISCELLANEOUS PIPELINE REPLACEMENTS . . . 250,000 350,000 ✓ ORION CENTER . . . . . ✓ RECYCLED WATER CONDITION ASSESSMENT PROGRAM 50,000 50,000 50,000 50,000 50,000 ✓ RECYCLED WATER VALVE & APPURTENANCE REPLACEMENT PROGRAM 110,000 110,000 110,000 120,000 120,000 ✓ SCADA IMPROVEMENTS 150,000 . . . . ✓ WATER, RECYCLED, AND SEWER MASTER PLAN 25,000 25,000 . . . ✓ SCADA IMPLEMENTATION 309,677 589,141 710,795 233,285 303,709 Total Projects $867,477 $1,001,141 $1,101,795 $888,285 $1,062,709 Total CIP Project Summary FY 2019/20 FY 2020/21 FY 2021/22 FY 2022/23 FY 2023/24 Total CIP (FY 2019-2040} R&R 85% $ 6,412,227 $ 6,658,187 $ 13,196,276 $ 17,089,869 $ 19,262,903 Expansion 15% 4,750,000 1,650,000 6,300,000 1,837,000 300,000 Total CIP $ 11,162,227 $ 8,308,187 $ 19,496,276 $ 18,926,869 $ 19,562,903 Total 5--Year CIP (FY 2019-2023) R&R 75% s 6,412,227 $ 6,891,223 $ 14,136,181 $ 18,947,843 $ 22,104,624 Expansion 25% 4,750,000 1,707,750 6,748,718 2,036,715 344,257 Total 5-Year CIP $ 11,162,227 $ 8,598,973 $ 20,884,898 s 20,984,558 $ 22,448,881 OCTOBER 2019 I FINAL Nov. 19, 2019 Item #16 Page 105 of 158 Water Cost of Service Study I POTABLE AND RECYCLED WATER RATE STUDY I CARLSBAD Appendix D PROJECTED O&M COSTS Revenues Charges for Suvkes Code Line Item 4885 PlanChecfc 4976 Special Benefit District Serve 4995 Adminftts 5100 Commodity Usage 5101 Water Delivery Charses 5110 New Account Charges Slll Badcflow Oevk:e 5113 Qulck Turnon Fees 5115 Scheduled Disconnect Fee 5124 Service lns1atl.1tion Fees 5125 Misc Conn Chg 5127 NonJurlsdlctional F-eu Other Charges for Servf«s Total Chal'l[e.s for Sen,ic,a: Oeveklper fe.t$ Developer Connection Fees Other Developer Fee.5 Total Oeveloperfeu Tax Revenues 4010 Adjustments • Current Taxes 4011 Property Taxes• current 4012 Refund$ • Current Taxes 4015 Supplemental PropertyTaxe-s 4016 Refunds p Supplemental Taxes 4018 Unitary Tax (combine w/4011) 4020 Prior Years Propen.y Taxes 4021 Refund$· PriorYe.;uT.ixe5 4027 Surplus Property Tax Increment 4111 Sales and Use tax OtherT.ax Reveinues: Total Tax Revenuet Licenses and pepnjts 4452 Fire -Protect Sys Other Ucl!nns and Pf:tmlts Tot81 lkenses and Permib lntergovemmental 452S Homeowners Exemption 4753 SOCWA/MWO Credits OU,e;r lntergovl!mrMntal Total lnte!JOYem mental Ge-ner1t tmll\lon General Inflation General lnfl.ation Cust. Demand Grwlh + Usage Grwth Cuuomer Oern.nd Growth Gntl lnfltn -t-C~mr Omnd Grwth GM lnfltn + Cstmr Omncf Grwth Gnrl lnOtR+ cumr omnd Grwtil Gnrl lnfltn + Cstmr Omnd Grwt.h Grni lnfltn + Cstmr Dmnd Grwth Gnt1 lnfltn-+ Cstrnr Omnd Grwth GM 1nr1tn + Carn, Omnd Grwth Gnrl lnfltn + CS'lrnr Omnd Grwt.h (C.ilcuJ.ite.d Gene..ral tnflatlon Get,e.ral tnffation Prooenv Tu: lncreut General 1nfl.Iuon Property Tu lncreue <if-MDI lnflit1on Gene-ral lnflaoon Pro~Taxlnc:rease General lnf11tJon PropenyTu 1ncre.He General lnflltlon General Inflation General lnf'btion GtM.ral Inflation Gene-r1:I Inflation One Time ex nse General Inflation fY£ 2020 FYE .2021 FVE 2022 FYE 2023 FYE 202.4 Projectlon (Pre-Projection (Pre--Pro.}ectk)n {Pr•• Project,on (Pre• Pro)Kdon (Pre-- Rtte lncrea:se) Rat• lnueue) R11e lncn!'ast:) Rate Increase) Ral'f: Increase) so so so so so 0 0 0 0 0 0 0 0 0 0 28,307,000 28,84l,9J3 29,610,224 30,270,239 30,9l9,737 11,900,000 12,125,293 lM47,863 12,725,328 13,002,574 135,200 139,776 144,l?S 148,103 1S2,06S 15,410 15,932 16,433 16,881 17,332 15,800 16~335 16,849 17,308 11,n1 8,200 8;478 8,744 8,983 9,223 103,100 106,589 109,944 112,939 US,961 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 s 40,484,7l0 $ 41,25S 314 s 42,354,233 s 43,299,780 s 44 244,664 s 211,110 I s 287,109 IS 296,145 IS 304,214 I s 312,352 I so so so so so 3,220,000 3,342,03S 3,445,641 3,572,785 3,676,7S3 0 0 0 0 0 65,000 67,464 69,555 72,121 74,220 800 820 841 S62 883 58,200 59,655 6:1,146 62,675 64,242 39,200 40,686 41,947 43,495 44,760 12~0001 (22,550) 123,114) 123,692) 124,284) 155,725 161,627 166,637 172,786 1n.s14 0 0 0 0 0 0 0 0 0 0 3,516,925 $ 3,649,739 S 3,762,653 S 3,901,033 $ 4,014,389 so so so so so 0 0 0 $ S2l,!ll0 S22,34S S22,904 S23,476 $24,063 0 0 0 1,100 1,128 1,156 1,185 1,214 22,900 23,473 24,0S9 24,661 2s~2n FINAL I OCTOBER 2019 Nov. 19, 2019 Item #16 Page 106 of 158 CARLSBAD I POTABLE, RECYCLED, AND WASTEWATER RATE STUDY I Water Cost of Service Study flnff & Forf~lture$ SID Reconne-et Fees 5212 Code! Vaolations 5222 Return Check Fee 522S Late Charges 5226 Door Har,cer Fee 5229 MISC RMS Other Finu & Forfcitort:s Total Anes & ForfeJtures fnsome from Proo & Investments 5300 5305 5315 5320 5341 5342 5360 5361 5362 Interest Income -Pooled cash tn1crest -Unre~liled Gains/Lo5$-es lnttrest Income -Propeny Ta,c FacUJtles A.entars Other Rentals and Leasts Cell Site Leases Sale of Capital Ass.ets Donated AS$ets Scrap & Recyde Other lncome from Prop & lnveslments Total Income from Prop & lnviHlm•nU lnterdee1rtmrn1at S430 Eng labor 5442 Reimbursed Work for Other Dept. Other lnterdepartmenta l Total lnt~rdepartmental Qther Reyenues 5542 Major FaciUtles 5550 Prior Year fee Refunds 5632 Stri.lglllS/Sigo, S634 Misc Damages S636 Lo.u RecOYCry 5638 Misc: Reimbursement Losses 5639 Misc Re)mbursement Expenses 5664 Mlsc AR Write Offs 5674 Mise Rt-Yenues Other Other Revenues TotaJ Other Revenu@s 0th££ fmaocjng sources 5900 T~nsfers tn Other Other fi~ricing Sources Total Other f",nanciog Sources Total Revenues OCTOBER 2019 I FINAL General Inflation General Inflation General lnfla1ion General Inflation Gener,1 Inflation Gener,! Inflation General Inflation lntaest Income General Inflation. Interest loc:ome. General Inflation General 1nf11tion General Inflation Cimt'rallnflation One Time Ex:pe.~- Genenl lnflitlon General lnnation Gerwral Inflation Gene~I Inflation Gent!-ral Inflation Gener.ti loflatlon General Inflation General lnflatlon Genenl lnflatk>n Ge.ner1l lnfl1tlon General Inflation Generi1l lnfla1lon General Inflation Gener111 lnflatlon General Inflation No Annual Increase Gene~I Inflation FYE2020 M2021 M2022 M2023 f'YE2024 $3,100 S3,178 $3,257 $3,338 $3,422 $100 $103 $105 $108 $110 4,300 4,408 4,518 4,631 4,746 27l,700 279,518 286,505 293,668 301,010 3,900 3,998 4,097 4,200 4,305 0 0 0 0 0 0 0 0 0 0 284,100 $ 291,203 $ 298,483 $ 305,945 $ 313,593 $598,617 $611,787 $625,858 $ .. 0,878 $656,900 0 0 0 0 0 5,300 5,417 5,541 S,674 5,816 0 0 0 0 0 40,900 41,923 42,971 44,04S 45,146 213,SOO 21S,838 224,308 229,916 23S,664 0 0 0 0 0 0 0 0 0 0 400 410 420 431 442 0 0 0 0 0 8S8,717 $ 878,373 $ 899,098 $ 920,944 $ 943,968 $108,200 0 0 108,ZOO $10,100 0 0 0 52,900 2,733 187,200 0 28,000 0 2ao,933 $0 0 $ll0,905 110,905 s $10,353 0 0 0 54,223 2:,802 191,880 0 28,700 0 2s11gs1 so $113,678 0 0 113,678 $10,611 0 0 0 SS,.578 2,872 196,677 0 29,418 0 29S,1S6 $_0 0 $116,520 116,SZO S10,877 0 0 0 56,968 2,944 201,594 0 30,153 0 $0 46,496,963 s 47,747,360 $ 48,871.417 $119.,433 0 0 119,413 $11,149 0 0 0 58,392 J.017 206.,634 0 30,907 0 310.098 $0 0 4!>,971,422 Nov. 19, 2019 Item #16 Page 107 of 158 I Expenditures Per5onnel Code line Item 6100 Reg Salarles 6101 lnctntl~t-Pay 6140 Other Personnel 6150 IOO Worker's Comp 6200 Overt1me Salaries 6210 Star.db)' Pay 6300 Pamimc Salaries 6310 EIKted Offidals' sa\.arits 6400 Temporary Help 6501 H@althlnsur.mc:e 6S10 Ufe lnsu~nce 6520 Vfslon lmuf'i~ 6S30 Medicare 6620 MTG Physlc.ils 6629 Cell Phone AUowa nee 6630 Allio Allowance 6640 Earned leave Accn.,al 6651 Healthy Emp Aw1rd5, 6653 Final Vacatlon Pay 6654 Final Sick Leaive Pay 665S Dis.ability 6656 Ullemployment 6657 Worker's Compensation 6720 PERS sno PERS UAL Exp 6721 PERS (GASB 68 Contra Account) PERS. Repayment 6722 OPE8 E.x.pens~ 6730 5oeial Security 6140 Deferred Comp 6741 Def Comp Match Other PeriOmel Total Pe,sonnel Costs Maintenance & Equipment 7ll0 Off,ce Equip Rental 7111 Other Mach & Equip 7115 Vehicle Rentals 7119 Misc Rentals 7120 Misc Leases 7210 Offite Equip Maintenance 72U Communication Equip Maintl!f'lanc:e 7:n.s Software Maintenance n20 Vehlde Maim 7221 Wash ,nd W-ax 7222 Other Equip Malntel'\itnee. 7225 Car Wash Repairs 7226 Pipeline Mainten.ince 7227 Fire Hydr,nt Maintenance 7230 Routine Building Malnten,ance 7241 Asphalt Repairs 7244 Street Swl!@plng 7249 Malntet1anu , Rtpalr and Rehab 7400 Audll 7410 Legal 743S Admlnlstntfve 7480 ClaimsAdmin 7490 M;sc Professio~I Services 7500 Encin.a Servkes 7510 City Generated 7511 CitJten Gt-nera.ted 7SSO Mkctllaneous Outside Services 7S51 Bank Se-MC@s 7552 Book Binding 7553 Comm Arts Support 7554 i:tegulatory/Permtttl,. Fees ?556 Misc Services: Customer servke charge Emergency Storage Ch1rge 7557 lnfrastructurn Access Charge Supply Reliability Chargo MWO Capadty Reservation Charge MWO ReadJness to SeMec Charge C c:a,-•,,.. Water Cost of Service Study I POTABLE AND RECYCLED WATE~ RATE STUDY I CARLSBAD labor Inflation Labor Inflation Labor lnf~tion bbotlnflation bborlnflilion labor Inflation Labor lnftldon Labor Inflation Labor Inflation bbor• He;iilth lns~nce bborlnf11lion Ubor lnffaUon Labor Inflation Labor Inflation labor lnffatiOn L.ibor lnfli1tion bbor lnfl1tion labor lnfl•Oon labor Inflation tabor Inflation labor Inflation Ubor Inflation Ubor lnf11tlon labor· PERS (Norm.al Cost I Labor• PER.5 [Normal Con) labor• PERS (Normal Cost) ubof • PERS (UAl) One Tlme Exo,mse: labor INUltion Ubor Inflation Labor lnfl1Uon Ubor lnfliilllion General lnflitlon General lnfl11ion General 1nnat1on G~Dllnflatfon Generil Inflation Gener,a.l lnflateon Gffle.ral Inflation General Inflation General tnfl1tion Gfflenl lnfbtJon Gtnenl lnflatJon General Inflation General Inflation General Inflation Gener,1 lnflitlon GeMr1cl ln01tlon General Inflation GeMral Inflation General lnflatlon Gener,I lnflitlon Gener,I lrdlitlon General fnfladon General lnflatiOn ~neral Inflation General lnfl,tion Genen1l lnfliltlon General Inflation GeM:ral rnflatM>n General lnflatlon General ln.ftiltion Ge~ri11 lnftilt5on General lnflitlon {Calcut.1cd] (Calrulattd] (Calculated] (Calculated] {Calculated) {Cakul.ated) Projection {Pre• Projt«lon (Pre--ProjC!a:ion (Pre-Projtedon (Pre-ProjeaJon (Pre• Rate Increase) Rate Increase) Rate Increase) Rate: lnut•lt!) Rate lflC(ea~) $2,340,216 $2,410,422 $2.482,73S $2,557,217 $2,633,934 so $0 $0 $0 so 0 0 0 0 0 0 0 0 0 0 Ul,063 114,395 117.627 121,362 125.002 22.S44 23,220 23,917 24,634 lS,373 9,888 10,185 10,490 10,805 ll,U9 7,000 7,210 1,426 7,649 ?,879 40,000 41.200 42.436 43,709 4S,020 447,441 480,462 514,719 550,132 586,606 2.360 2.431 2,S04 2.579 2,656 0 0 0 0 0 36,886 37,993 39,132 40,306 41,516 410 422 435 ... 461 2,550 2,627 2.7C15 2~786 2,870 0 0 0 0 0 0 0 0 0 0 17,750 18,283 18,831 19,396 19,978 0 0 0 0 0 22.575 23,252 23,950 24,668 25,408 6,315 6,504 6,700 6,901 7,108 60,120 6).924 63,781 65,695 67,666 289,851 318,176 327,721 337,553 347,679 303,753 346,137 388,548 422,964 438,813 0 0 0 0 0 5,133 5,287 S,446 5,609 5,m 0 0 0 0 0 0 0 0 0 0 3,725 855 s 3,910,129 s 4,079,303 s 4 244 413 s 4,394,875 $500 $513 $52S S538 $552 2.000 2.050 2.101 2.154 2.208 2.1s0 2,104 2,2S9 2,.315 2,373 S,000 5,125 5,253 5,384 5,519 ].500 ].538 1.576 1,615 1,656 lll,000 134,275 137,632 14].073 144,599 450 46} 473 485 497 SOD 513 525 538 552 125,000 128,125 131,328 134,611 137/j77 50,000 51,250 52,531 53,845 55,191 5,000 S,125 5,253 5,384 S,519 40,000 41.000 42,025 43,076 44,153 5,000 5,12S 5,253 5,3&4 5,519 70,000 71.750 73,544 75,382 n ,.267 2.000 2,050 2.101 2,154 2,208 421.SOO 432,038 442.838 453,909 465,257 483,600 495,690 508,082 520,784 533,804 120,000 123,000 126,075 129,227 132.4S8 816,858 833,104 874,?S9 918;497 964,422 ?,255,UO 2,265,599 2,310,911 2.357,129 2,404,271 1,448,754 1,754,122 1,923,155 1~42,387 1,961,8U 1,214,769 1.363,017 1,431.168 1,502,727 1.sn,863 272,085 271,584 279,731 288,123 296,767 508,524 S39.1)3S 571.378 6[15,660 642.000 FINAL I OCTOBER 2019 Nov. 19, 2019 Item #16 Page 108 of 158 CARLSBAD I POTABLE, RECYCLED, AND WASTEWATER RATE STUDY I Water Cost of Service Study 7S58 Laundry and Uniform Malntenanc;e 7559 ElectricaVScada Servic;es 7560 W.t;ter Sa mpli"8 Services 7561 Water Conservation Setvlces 7564 Landscaping Services 7710 Ads and Publishing 7711 Dues and Subscriptions 7712 Books and Publiutions 7713 Audio-Visual Materlills 771S Printing 1no Postage 7725 Office Supplies 7726 Offke Furniture & Equipment 7730 Computer Softw~re 7731 Misc. Computer Hardware 7735 Promo Materlals 7741 Preschool 7745 Food E"xpense 7750 Heat alld Light 7751 Telephone &CommunlcatiOns 7752 Waste Disposal Scrvfct-s 77S3 WatN 7801 Building Maintena !\Ce 7810 Electrical Supplies 7811 J:anilori.al Supplies 7820 Parts•Vehtcle5 7821 Parts-Eciuip 7830 Rock and Mine:ra I Products 7831 Asphalt 7850 Small Tools 78Sl safety Equipment 7852 uniforms and Accessories 7853 Mel[!f"S/f'rttings • New Development 7863 Melef"S/Frttings • Replacement 7855 Flre Hose and Appliances 7856 Rescue Equipmem 7857 Personal Protective Equipment 7858 Breathing Apparatus Equipment 7865 Automated Meter Program 7880 Ga~line and Oil 7881 Propane 7882 Other Petrol Products 788.3 Ch~mitals 7890 CMWD Pure Watet•Outside A&ency 7892 Desai Costs 7899 Misc Supplies 8110 Employee Training 8120 Tuition Relmburnment 8130 Training/Training Related Travel 8500 Oepreclation 8510 Prop Taxes PO 8S20 Conference Travel 8522 Misc. Mta ls/Milts 85'30 Bad Oebt Exp• Other Inv/Bills 8534 RegOver/Short 8610 Settlements 8615 Interest on Deposit 8621 lnterfund servlces 8699 Misc Expenditures 8700 Contingencies 8809 Vehicle Direct Char&e.s 8810 Vehicle Maintenance 8811 Vehicle Replacement 8820 Strut Lighting 8822 Med~n Maintenance 8830 Genera I Lab 8840 Copy Services 885S Records MaRage:ment lnterdept 8860 lnformatk>n Technologies 8890 Misc Interdepartmental Charges 8891 Mi> Chg Sad< 8892 UtUity 8Ullng Charge-bad: 8910 FTscal Agent Fees 8911 Arbitrage Costs 8912 Misc Debt Expense" 8920 Principal 6921 Interest Expense 8922 Int Exp-Capital/zed Interest 6930 AmortJzation Expe-nse 8931 Issuance Costs Other Addrtionat Ma intenan,;e & EauiD1T1ent Total Maintenance & Equipment Costs OCTOBER 2019 I FINAL Gefleral lnf~tlon Gmtnl lnfladon Gtneral Inflation Gtntttal lnFlaHon Generil lnflatlon ~er.11 Inflation General lnfbtton Gener'II lnflatk>n Genenl Inflation General Inflation General lnfla1ion Generil Jnflition Genenl lnflaHon Genenl lnflalk>n GeM:nl Inflation GeMral Inflation General Inflation General Inflation Utllit~s lnfbuon UtlUtiH Inflation Utl!ities Inflation Utiijtles Inflation Geoeral lnfl.aitlon Gene1'3l lnflatlon Ge11eral lnfl1tion General Inflation Geoeral 1nfl.atlol'I General lnflatiOl'I General lnflnlon General lnfladon Gme.r.al lnfl.itlon General Inflation General lnflatton General Inflation General lnfJat~n Gf:ntral lnfbtion Genenl Inflation General Inflation Generi1l lnfb1tkm UtlUOes Inflation Gene,,I lnflatk>n General Inflation Chemicals tnfb,Uon (C•lculat!!d] (Calculated) Ge.nenl Inflation Ge.neral lnf~tlon General Inflation Ge-nera11nflation Oepredatlon Fundina General lnflnlon Gffleral tnfliitlon General lnfl.atlol'I General Inflation General lnfl:.ation General Inflation Gerienl Inflation General Inflation Gene,-1 lnf-lation General Inflation Genenl lnflat1on Genenl lnfbtion Gieneral Inflation General lnflahon Gener1l lrtfladon GeMral Inflation General lnflatlon General Inflation General lnfb.tion Gene~I Inflation Genc.~l lnfbtlon General Inflation Gentral Inflation General Inflation Genenl lnfl.aUon [Ciilkulated) [Caleulatod) Gentnt Inflation General Inflation Genenil lnfl,tion No Annual lncreue No Anrw~l lncreue FYE 2020 FYf :Z.021 FYE 20ll FYE 2023 FYE 2024 8,000 8,200 8,405 8,615 8,831 105,000 107,625 110,316 113,074 115,900 158,000 161,950 16S,999 170,149 174,402 22,SOO 23,063 23,639 24,230 24,836 60,000 82,000 B4,0SO 86,151 88,305 soo 513 525 538 5S2 40,000 41,000 42,025 43,076 44,153 1.200 l,'230 1,261 1,292 1,325 lS,000 lS,375 lS,759 16,153 16,557 7,000 7,175 7,354 7,538 7,TD 10,000 10,250 10,506 10,769 11,038 15,000 15,375 15,759 16,153 16,SS7 15,000 15,375 15,759 16,153 16,557 5,000 5,125 S,2S3 5,384 S,519 8,000 8,200 8,405 6,615 8,831 115,000 120,750 126,788 133,127 139,783 ,38,000 39,!IOO 41,895 43,990 46,189 10,000 10,500 11,02S ll,S76 12,155 10,000 10,500 11,025 11,576 12,155 1,000 1,025 1,051 1,on 1,104 223,000 228,575 234,289 240,147 246,150 15,000 15,375 15,759 16,153 16,557 5,000 5,125 5,253 S,384 S,S19 lS,000 25,625 26,266 26,922 27,595 3,500 3,588 3,677 3,769 3,863 110,000 112,7'50 llS,.569 118,458 121,419 126,000 129,150 132,379 135,688 139,080 2,000 2,100 2,205 2,315 2,431 500 513 525 538 552 25,000 26,250 27,563 28/l41 30,36" 17,071,393 17,321,580 18,337,823 19,329,282 20,373,629 6,969,6"7 8,448,536 6,785,638 9,142,391 9.520,338 45,000 46,125 47,278 48,460 49,672 1,000 1,025 1,051 1,on 1,104 10,000 10,250 10,506 10,769 11,038 4,100,000 4,187,740 4,237,993 4,26",425 4,336,600 5,000 5,125 5,253 5,384 S,S!9 26,000 28,700 29,418 30,153 30,907 3,533 3,621 3,7U 3,805 3,900 10,000 10,250 10,506 10,769 11,038 72,800 74,620 76,486 78,398 80,358 164,900 169,023 173,243 1n.579 182,019 143,3•3 146,932 l50,60S 154,370 158.,.229 85,560 87,699 89,891 92,139 94,442 371,757 381,051 390,S77 400.,342 410,350 1,817,408 1,862,843 1,909,414 1,957,150 2,006,078 . . ' [1,837,087) (1,874,094) (1,911,878) {1,950,382) $ 40,080,085 $ 40,710,504 $ 42,586/067 $ 44,318,550 $ 46,137,309 Nov. 19, 2019 Item #16 Page 109 of 158 <;apttal Outlav 9003 Non-Bud&eted Cap Equip <S10K 900S Capit3I Outlay <$10K New 9006 Capital Outlay< $10K • Re.pl 9010 Cap Outlay• Vehk/es 9020 Computer Eq.,ip > $10K -Repl 9021 Offlee Equipment 9022 Other Equipment 9030 Office Furniture 9040 Redass Capital Outtay 90SO t:apit31iz~ Assets othef Capital Outlay Total Capital Outlay costs Other Financing Uses 9999 Transfers Out Other Other Fini~fng Uses Total Other Financlns Uses Costs Total Expenditures Water Cost of Service Study I POTABLE AND RECYCLED WATER RATE STUDY I CARLSBAD General lnfl~lon General lnflallon Ge-neral lnflallon GeOl!tal Jnf\.atton Gfflen1I Inflation Gcner1I lrdl.-tlon c;.....,.11ari.t1on General lr-llatk>n Gen1tral lnffatiOn OM Time Elcpen$t! GeneniJ lnfl.ltion Construction lnfbtion FYE 1.020 fYE. 2021 FYH022 FYE 2023 FYE 2024 so $0 so so $0 S,43S S,574 S,714 S,857 6,003 0 365,000 374,125 383,478 393,06S 402,892 0 0 0 0 0 0 0 370,43a $ 379,699 $ 389,192 $ 398,922 $ 408,895 $2,000,000 0 $2,000,000 $2,0S0,000 $2,0S0,000 $2,101,250 $2,101,250 $2,153,781 $2,1S3,781 $2,207,626 $2,207,626 $ 46,176,379 $ 47,050,333 $ 49,155,812 $ 51,115,665 $ Sl,148,705 FINAL I OCTOBER 2019 Nov. 19, 2019 Item #16 Page 110 of 158 CARLSBAD I POTABLE, RECYCLED, AND WASTEWATER RATE STUDY I Water Cost of Service Study Appendix E REVENUE REQUIREMENT ANALYSIS FYE 2020 FYE 2021 FYE 2022 FYE 2023 FYE 2024 Revenues Water Operations $ 6 Commodity Cha 'lies s 28,307,000 s 28,842,910 $ 29,610,220 30,270,240 $ 30,929,740 Delivery Charges 11,900,000 12,125,290 12,447,860 12,725,330 13,002,570 Non-Rate Charges for Services 277,710 287,110 296,150 304,210 312,350 Developer Fees Tax Revenues 3,516,920 3,649,740 3,762,650 3,901,030 4,014,390 Licenses and Permits Intergovernmental 22,900 23,470 24,060 24,660 25,280 Fines & Forfeitures 284,100 291,200 298,480 305,940 313,590 Income from Prop & Investments 858,720 878,370 899,100 920,940 943,970 Interdepartmental 108,200 110,910 113,680 116,520 119,430 Other Revenues 280,930 287,960 295,160 302,530 310,100 Other financing sources Total Water Revenues $45,556,480 $46,496,960 $47,747,360 $48,871,400 $49,971,420 Recycled Water Operations Commodity Cha 'lies s 6,677,200 s 6,736,250 s 6,779,860 $ 6,795,080 s 6,806,990 Delivery Charges 1,113,300 1,123,150 1,130,420 1,132,950 1,134,940 Non-Rate Charges for Services 4,000 4,130 4,260 4,380 4,500 Developer Fees 250,000 256,250 262,660 269,220 275,950 Intergovernmental (CWA) 150,000 Fines and Fmfeltures 13,200 13,530 13,870 14,210 14,570 Income from Property & Investments Interdepartmental 92,100 94,400 96,760 99,180 101,660 Other Revenues 2,000 2,050 2,100 2,150 2,210 Other Financing sources Total Recycled Water Revenues $8,301,800 $8,229,760 $8,289,930 $8,317,170 $8,340,820 Total Revenues $ 53,858,280 54,n6,no $ 56,037,290 $ 57,188,570 $ 58,312,240 Expenditures Water Operating Expenses Personnel $ 3,725,855 $ 3,910,129 s 4,079,303 $ 4,244,413 $ 4,394,875 Maintenance & Equipment (w/o depreciation) 35,980,085 36,522,764 38,348,074 40,030,125 41,798,709 Capital Outlay 370,438 379,699 389,192 398,922 408,895 Other Financing Uses Total Water Exeenditures $40,076,379 $40,812,593 $42,816,569 $44,673,459 $46,602,479 Recycled Water Operating Expenses Personnel $ 1,558,540 s 1,635,472 s 1,707,021 s 1,776,773 $ 1,840,158 Maintenance & Equipment 4,817,493 4,406,955 4,533,298 4,591,601 4,723,608 Capital Outlay 50,000 51,250 52,531 53,845 55,191 Other Financing Uses Total Recycled Water EJ<penditures $9,161,397 $8,829,041 $9,064,908 $9,194,276 $9,391,015 Other Operating EJ<penses Oebt Service -Potable Water • $ $ s $ $ Debt Service -Recycled Water 2,735,365 2,735,365 2,772,058 2,772,058 2,772,058 Rate-Funded Capital~ Potable Water $ $ $ s Rate-Funded Capital -Recycled Water Total Water Exeendltures $ 40,076,379 $ 40,812,593 $ 42,816,569 $ 44,673,459 $ 46,602,479 Total Recycled Water Expenditures $ 9,161,397 $ 8,829,041 $ 9,064,908 $ 9,194,276 $ 9,391,015 Total Operating Expenditures $ 49,237,776 $ 49,641,634 $ 51,881,477 $ 53,867,734 $ 55,993,494 OCTOBER 2019 I FINAL Nov. 19, 2019 Item #16 Page 111 of 158 Water Cost of Service Study I POTABLE AND RECYCLED WATER RATE STUDY I CARLSBAD Policy Expendit ures Replacement Funding Potable Water Repl Funding $ 4,100,000 $ 4,187,740 $ 4,237,993 $ 4,288,425 $ 4,338,600 Recycled Water Repl Funding Transfets to Capital Reserve Potable Water $ 2,000,000 $ 2,050,000 $ 2,101,250 $ 2,153,781 $ 1,500,000 Recycled Water Additions to Meet Minimum Fund Balances Potable Water $ $ $ $ $ Recycled Water Total Poli~ Exeend~ures $6,100,000 $6,237,740 $6,339,243 $6,442,206 $5,838,600 Potable Water 6,100,000 6,237,740 6,339,243 6,442,205 5,838,600 Recycled Water Total Expenditures for Cash Flow Test $55,337,776 $55,879,374 $58,220,720 $60,309,941 $61,832,094 Poroble warer 46,176,379 47,050,333 49,155,812 51,115,565 52,441,079 Recycled Water 9,161,397 8,829,041 9,064,908 9,194,276 9,391,015 Check TRUE TRUE TRUE TRUE TRUf Cash Flow Surelus !Deficit! $ 11,479,496) ($1,152,654! ($2,183,430} !$3,121,371! !$3,519,854! Potable Water (619,899) {553,373) {1,408,452) {2,244,265) {2,469,659) Recycled Worer {859,597) {599,281) (774,978) {877,106) {1.~50,195) Check TRUE TRUE TRUE TRUE TRUE 8ond Coverage I 1.2.Sx Debt Coverage Test Revenues Water Revenues $ 91,112,960 $ 92,993,920 $ 95,494,726 $ 97,742,800 99,942,840 Water Connection Fee Revenues Allowed Recycled Water Revenues 16,353,600 16,203,270 16,317,200 16,365,120 16,405,690 Recyded Water Ccnnectlon Fee Revenues Allowed Total Revenues $ 107,466,560 $109,197,190 $ 111,811,926 $ 114,107,920 $ 116,348,530 Potable Wottt 91,112,960 92,993,920 95,494,726 97,742,800 99,942,840 Recyded Water 16,353,600 16,203,270 16,317,200 16,365,UO 16,405,690 ExpendlWres Water Expenditures $ 40,076,379 40,812,593 $ 42,816,569 $ 44,673,459 $ 46,602,479 Recycled Water Expenditures 6,426,033 6,093,677 6,292,850 6,422,218 6,618,958 Debt Service -Potable Water Debt Service • Recyded Water 2,735,365 2,735,365 2,n2,oss 2,n2,oss 2,772,058 Coveraie 683,841 683,841 693,014 693,014 693,014 Total Expenditures $ 49,921,617 $ 50,325,475 $ 52,574,492 $ 54,560,749 $ 56,686,509 Potable Water 40,076,379 40,812,593 42,816,569 44,673,459 46,602,479 Recycled Water 9,161,397 8,829,041 9,064,908 9,194,276 9,391,015 Bond Coverage Surplus (Deficit) $ 57,544,943 $58,871,715 $59,237,434 $59,547,171 $59,662,021 Potoble Water 51,036,581 52,181,327 52,678,157 53,069,341 53,340,361 Recycled Water 7,192,203 7,374,229 7,252,292 7,170,844 7,014,675 FINAL I OCTOBER 2019 Nov. 19, 2019 Item #16 Page 112 of 158 CARLSBAD J POTABLE, RECYCLED, AND WASTEWATER RATE STUDY J Water Cost of Service Study FYE 2020 FYE 2021 FYE 2022 FYE 2023 FYE 2024 Revenue Requirement -Pot able Water Revenue Shortfalls $ (619,899) (553,373) (1,408,452) $ (2,244,265) $ (2,469,659) cash Flow Dnven cash Flow Cash Flov.1 Driven Cosh Flow Driven cash Flow Driven Driven Revenue Increase January Janua!1 Januarv January January Calculated Revenue Increase(%) 3.1% 2.7% 6.7% 10.4% 11.2% Rate Override(%) 1.00% 2.00% 2.00'/4 2.00% 2.00'Ai Operating Ba/once In Doys of ExpendMures 183doys ll9days 162days 140 doys 119 doys Coverage% of yeor, {30% ~ 110 Days) 50% 49% 44% 38% 33% Implemented Rate Increase 1.0% 2.0% 2.0% 2.0% 2.0% Cumulative Rate Increase 5.4% 7.5% 9.7% 11.9% 14.1% Cash Flow • Water Revenues Before Rate Increase $ 4S,S56,480 $ 46,496,960 $ 47,747,360 $ 48,871,400 $ 49,971,420 Revenues From Rate Increase 402,070 819,364 841,162 859,911 878,646 Less: Rate Increase Delay (201,035) (409,682) (420,581) (429,956) (439,323) Less: Expenditures (46,176,379) (47,050,333) (49,155,SU) (51,11S,66S) (52,441,079) Cash Flow $ (418,864) $ (143,691) $ (987,871) $ {1,814,309) $ !2,030,336) Total Available Fund -Potable Water Beginning Balance s U0,265,845 $ 105,534,246 s 106,877,770 $ 95,621,780 $ 82,734,005 Ending Fund Balance 105,534,246 106,877,770 95,621,780 82,734,005 67,420,365 Fund change $ (14,731,599) $ 1,343,524 (11,255,990} $ (U,887,775! $ (15,313,639) 961 Days 956Days 815 Days 676Days 528Doys Operating Fund -Potable Water Beginning Balance s 26,398,268 $ 25,979,404 s 25,835,713 $ 24,847,842 s 23,033,533 cash Flow (418,864) {143,691) (987,871) (1,814,309) (2,030,336) Transfers to Cap·ta1 Fund Endin2 Fund Balance 25,979,404 $ 25,835,713 24,847,842 $ 23,033,533 $ 21,003,197 OCTOBER 2019 I FINAL Nov. 19, 2019 Item #16 Page 113 of 158 Water Cost of Service Study j POTABLE AND RECYCLEU WATER RATE STUDY j CARLSBAD FYE 2020 FYE 2021 FYE 2022 FYE 2023 FYE 2024 Revenue Requirement -Recycled Water Revenue Shortfalls $ (859,597) $ (599,281) $ (TT4,978) s (Bn,106) $ {l,OSQ,195) Cash Flow Driven Cash Flow Cosh Flow Driven Cash Flew Driven Cosh Flow Driven Driven Revenue Increase January Januarv January January January calculated Rate Increase (%) 22.1% 15.3% 19.6% 22.1% 26.4% Rate Override (%) 0.00% 0.00% 0.00% 0.1)0% 0.00"/4 Operating Balance in Days of Expendftures 49Zdays 483 days 4Z3days 364 days 295 days Covero~e % of year, /30'/4 -llO Days/ 135% l3Z% 115% 100% 81% Rate Increase(%) 0.0% 0.0% O.O"Ai 0.0% 0.0% OJmulative Rate Increase(%} 6.4% 5.4% 5.4% 6.4% 5.4% Cash Flows Revenues Before Rate Increase s 8,301,800 $ 8,229,760 $ 8,289,930 $ 8,317,170 s 8,340,820 Revenues From Rate Increase less: Rate Increase Delay less: Expenditures (9,151,397) (8,829,041) (9,064,908) (9,194,276) (9,391,015) Cash Flow $ (859,597! $ (599,281) $ (TT4,978) $ (BTT,106) (1,050,195) Debt Coverage per Covenant Debt Service $ 2,735,365 $ 2,735,365 $ 2,772,058 $ 2,772,058 $ 2,772,058 Net revenue (bond covenant definition of •net") 4,821,539 5,494,768 4,576,393 6,522,849 5,530,126 Debt service coverage 2 2 2 Total Available Fund • Recycled Water Beginning Balance $ 35,660,258 s 14,520,410 s 14,096,800 s 13,484,585 $ 12,754,980 Ending Fund Balance (Includes Capital Fund) 14,520,410 14,096,800 13,484,585 12,754,980 11,839,726 Fund change (21,139,848) $ (423,610) $ (612,215) $ (729,605) $ (915,255) 825 Days 844 Days 782 Days 725DOYf 653 Days Operating Fund Beginning Balance $ 9,519,244 s 8,659,647 s 8,060,365 s 7,285,387 $ 6,408,281 Cash Flow (859,597) (599,281) (n4,978) (877,106) 11,050,195) Transfers to Capital Fund Ending Fund Balance $ 8,659,647 $ 8,060,365 $ 7,285,387 $ 6,408,281 $ 5,358,086 FINAL I OCTOBER 2019 Nov. 19, 2019 Item #16 Page 114 of 158 CARLSBAD I POTABLE, RECYCLED, AND WASTEWATER RATE STUDY I Water Cost of Service Study Appendix F POTABLE WATER FUNCTIONAL ALLOCATION &1/if .. hf. $.A C1¥1;-0:i-'V (1'11110'MCll'0~ No,~ luioic•OJIIY '-•Odt•f'ton...e Cu;~flla~e ltf»tf/~M('f S~c}IU£ »cWA03..,. Ore:UtOt1N Mloa~r M.uMor,,, ~MM.Cbr •=Ja.1-u:,,irJ~"'i.r M:n ~V/W.+& Ho_. ~e'ly'&Ou11Md ~ul ~.\IOtKn wa& amwww:muo:.: \.:_:-,j 9.1~~: \\T.:«1..=Jro-N.c:C'"..S ~;,.,"IC:'\ 5 ta,o:;,,;:,; :k~~il.~ k;;e;,,o.,-:, l"OCC'lfl•,..,..,(C'lll-:.loe,;rt !k'~ .. ot'""'-'MOIMn"" G!DliftttdM we:•ueeruM, lB:ra(sur:a l'fffOnnill !0.o.Kj.:.t 1.0IO~ m.4♦.1 l.&~ ltJ.lUJJ :15-&~A14 ... .,,. .... .... ~-~"~·=-~-~'~------~--------~ la@;; ,,,~~~ .. "t.: c.~M~iiiu;mi ;.; , 4P ■::.: - ... ... - A "''' .... -"''' , ... I ... I .., """ ... ~ ,._,. I u-. I .. ,.~ ,,. ,.. "" , ... -JU"i , ... ..... ... ,.. "" ,,. ,,. ... S ,9-Mil ,,. ... "" - LJLi. "" , .. , .. - .. ;. • I ,£WlitHM .,. .. ... .. .. .. .. ., ,,.. .,. °' .. .. .. .. °' .. ... = .. .wwa;..a "" .. °' •• .,. "" .. -· O'S I ._ .. i 1H -\ 1"' I 111"' l u.~I °"I • I 0" N.Juil 111 · ·I\ M+IM&i·I a, M,t ·@WN\i+M ~S..laria """" 2.M0,11, ~uu.nss -s -s sn.s10.,os -s -s lncelll:M!P.ay ~,ho'~ IOOY.fofl.er',CGrlrCP OWnlrrlt s-,11-~ k~,.-r P..rttlmes..br'-'s Otou,.s~•s.twiti T~p01~Help ---Ult!nwt-ll'M ¼lc,nh'Y'anc• .....,,. MPflo(llfollo..,..,ri«- .Auoo~• ~l-Acmitl liNl!hy&npA.w•1ds FIMIV'lc.aticwlPMr 1'tni11$ic.l. lit~ P•~ _.., Untl!lpopH'II Wnrkff'l ComptNAlion PF.RS PlR$UAI.E!ql PWt4J,SIGltonts•k~i£. -·-0P{8lllptns. Socl•l$eanlty Oc4crrfll(Ol9fl OttComp,.._.M OlhffPl!r.Mllffl OCTOBER 2019 I FINAL ..... "' l.S!iO n;r.,o '·"' ...... -· '"''" """' 10i,709 ..... -,,,,., "' ..... v•1 l2l '""" 6,'JIS .. ...... .H.SU .., ..... ~-5.ASl -,.m " ...... ...... .., .. ,so ""'" .. ' ..... l.S19 ., ...... ...... ..... 11,sa. "' """' ..... ,..., "' """' '·"' " ..... 5',H1 "' ..... uun ,.,,, ...... ,., ... , "'" Sel'tbOnlv ....... ...., St~Ori,iv StfWb(lny Stf'IUOnly ,~., .. 5el'rict-Onlv Sti'tMQny Nov. 19, 2019 Item #16 Page 115 of 158 l,hln~n:wt<• I, f.q•lp-l Offket~lpftent.11 ()lherMKh&[qLtp vtl'odl 11,tlQIJ ti.Cl._ Of!U CqulPM•inW,W,C:e Communlutlofl£ii,lpM,o,ille sottw,reM;iotllU-e Vl!lwda-P.tiint w~lu,ndwu Ofltflquip~t~lll:4' c-,w,tt:i~piirn. ~M.._nte R'1!H,<d,11111.Mlln~t llllllltir.McR11C~lnlffllnce Jupi'Yltfl.ep•~ ..... , ...... Mlinc!fi.n:it,~tr11'1d~h. ... , ttpl AdmlnktrWW! , __ Mi►ePfofa.tiontlSt~ kcffas.rku CJtyGellen.ted CillnnGel'lltr•lt'<I """""'°"'°"""""""' .......... lcotlinfWC Coran ,t,,ts SUppOlt ~,,..no,,,rt~fflllft'i'C ~ MIKSel'WC.H Qlltoffllf s.n,;c. Qil,p .. CIJlltf1t~~o,,:.,ctC~it: 1ri(UIRIClll11tAttH1Cblrte Sl.oP'Pl't'fltlilblSrlyClwrp " MWO(.t,pkkyllritfW>~~Q MWO~floHS~$coMcebi twncky1ndurw;fo,m ~hler (l,c.tlbt/$c.tda~ wa1,rS.r-,Qr,cSc!rvil:-K wa1erC_,,,.ttN!SenCt-n ~~" AckMdl'\.t,.1W"inii: Oue'$1fldWM .. d- k-o~tnd~1tio,- Mdb.Vlw;i,1 Mltl!Ws ...... Poii.p OfficeSllp;ill!S Off~~-(~ tOMP,.,llerSoftw•1 MK. Co,.,.iltf IW·O,nrte ~,orno~•tl'iil" Ptuctool FoodlllptnM ~ttflllli&ht; Telfs,hani,&t'omonricationt W~l:ll 1)4P)nl Seft(ca w, .. Bulldkll:Mallfflll"ICf: DtcukelSUpplit-1 l41dtioJ1tlS41119I~ P.MtJ•~ ~•U•£M Aod.-.dMine~l'rodllC:ts Juphall ~Took S.fttytcppme~ Unilomu: and Ac:ceuoritf. Mott.~•HrwC.wlo1 ~~B/Al~•~p~ i:;,.fktMaflllAppllittH Wtutiq...-,it f'enoral ~ecl:M E~ ••1~Apfl,l~tln(..- ""klmatitdMltWIProp-1 .. 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""":::-::::37;-zz~""~ -_ -_ ...... :: J-----a..,.c''---t ll.SOO MP Dir,· M:t;,i Holll' 80,000 (U$t0fflf( ·liro'" SCIO CIMDfflef •lklf'n 40,000 (IJSIOfflt,I •ltOAff 1..200 (1,1~ ·IIOAfe Custotr. •Noflr& lj,000 (11$tofl'll!r • NO Rr. l,»:J C~o,rw, •HoRra 10,,000 Cus__, •No Ar. 1S,OCO (1,1.'fflfnff -NoRrt 1$,.000 S.Met-ON S,000 s-tteOnl l.000 Cm:..,_ • No fi!W CUJIIOfl'IS •Norw CUJ~ -NoRre US,000 cu~~ -NO Rrt )$,000 C:IKIGINI • No fire lO..OOO C.asto-•Nolht 10,000 Cwl!Omn -NORN- S.000 ,,,.,. u= ~=~~~~~j~~;::~ U6,DOO i.ooo CetofflC'fOn ~floArw C.I.Olt>ctOl'i -Hoftn J:!t,000 C.tomer l.i • No All! s,ooa C111no1111, On • ttofillf 11,000 C•1om1r •floliff uu Om.tomer •lloffR J(l,000 Cu.~ •Mo'- (latomlf -NoflJe c....,'°""' •MoAlt Cl,J\o,tntr •Mofiile ~r •floffw C14ton\tf -Hoi:.,., eur.i-, l;w! • Ho fn 74,IOO Sttvt, _,, 16',,00 St,vke Inll tO.>41 ~Odw Cwtom1:rorw ,--111,~7 CuslDlllefOW. ,Noflnrc l.,1;17,4011 Cus~arw -- Water Cost of Service Study I POTABLE ANO RECYCLED WATER RATE STUDY I CARLSBAD 7,7H ...., ... ..... .,,. ,S,000 ,_ , .... ..... .. ,. 11SIICO ..... l0,000 11),000 .... 2.t.,.331 ·- ••n 4lM6l 4n,10& UlSll l&J..Jn e5t.ol2 ,.,.,,,,,. 14VJ~ ....... u,au .... ... '"'"" 14.817 U0,000 ,,.,,., _.,. ... 71.!Ul ,.,,,. 241.&01 ffi-HWRR-1-11 • $ $ • $ l,000 ., .. ·- m,ooo ... , .. 24~7 L121,SSS ""5» .. , .... ,..,,. m..., ,..,,., lSl,.$$1 105,000 1'8,000 ...,,. u."" >!,000 45,000 4,;, I • $ • $ W1 , .... ... u 2,.1U "" ... .. ,.,., FINAL I OCTOBER 2019 Nov. 19, 2019 Item #16 Page 116 of 158 CARLSBAD I POTABLE, RECYCLED, AND WASTEWATER RATE STUDY I Water Cost of Service Study C.plblOiitlay HDn"lkl"'1cledCtpfqap'-S1l $ Capi~Olld•y<$10t:"- CiopCM.lly•Vthl~ Coq,ul:N (""' •$101t• ~ Offke(~l ~(~ C..pl~llaclAsseb OtbN c,piUI OUtiay Opar.1ol$tl( Opet,~ Slllt Tt S R<!~ado,.of~AsADOIMrs" M·€i5MHIII M , ... ·m 'rlibl_ S,O& I • ,.._ . . . • I • I I AsAIOthtn I ' 40,.0,s,.,,, ' 2.tl7,5Ali t0.07'.ffl ' Z,tl?,3A6 '·"' CM $ ' $ ,;; . ' ffi·liWHi· . ' ' ' ' a,t,SJ,7" ' S.t,Q.704 $ 1,721,91) $ .. ., .. ' 140,0Q t,.ClltM $ J.ZJ0,704 ' 1,7U,tU ' u.,s, ' 140,oP ....,. .... ~,,. ... ..,,. tii·ffM M H, 2 . ' ' ' ' ' 17,1171,ffi ' ~--$ $ 17,011,,U $ 5,.•9,&11 $ I 42.'1l, I 11.•" .... .. .,, ·@MN iii· lffi OloMAltallall S 2'17,JIC S IJ)l.\ffl S .1)341011 S 1)21,913 $ l,l,150 $ l40,Cl!l1 $ 17,P7J,Jtl $ 6,.9M,.&a7 $ ~u,f:vr,de,dC.pl.fl l'oOl!ot-Watallel!lhi~(OieflHdldan c, ...... tn,Offi.r:MF!ftm:oun AdJ.forMld'feulfKIHY ~•~U'CN.rJt,SfoirkMCN --Tu:"'""""'" ~•l!d'-illtt, -"~•ft\.111 Alles&.fotW!urH lloc:ome~fl'"¥t,""""1,1nehb ln!o,kp,"""nl.ll --OIM,01n,no;i,c:S¢auoc;e Tol:illit.ta~•tokc..a.«..i lk.11(,<11:ioNlol"AIAIIOtllltf'I" OCTOBER 2019 I FINAL ...... .,,., --4,100,DOO C. &~ lJ)OOJXIO e. &Derund f,t.llJJ~lt MAIOl!Mn I $ j Pla.nUnS.MCA! j $ ..,.,.. tte,4,loo) l&U.1~ (lOU(q ( ...... «l.60',071) ..,...,, .... ..._ .... _, ""°""' "'-""""" ......... ......... A!.AI011htu .... _ .......... AsMOlt11u .... -. ' ' lDOO,OJ? 1C'K,,fi7 -04,U8 tU,'6l 4'368 91$,6,U l4C.tU 206)9' ~•,m 24,.)75 • s • $ • s • $ • s • 5 • S • S • S • S • S . s . ' . ' 1.,11,)"6 $ 1Q.N-.•~ ' o1,2R.tn ' p,»,m1 11,324,'511 (U6,316) l,SQ!i,6U ' ,.~oo i l;l5',.tU ' I I . ' . ' us:z.,.., ' """"' ......... ' .. I . ' • $ l,J,s,tH ' (156,l") ..,,,_,., ' ,,. . ' . ' ,,...,. ' .....,,, ,..,.,, ' .. I • 5 f'I .• A-6') . ' . ' . ' • $ lOl.,,GJ) s an.no, 17,COJ,,Hl ' 6,1189,.a&l ' (5,$61,10,) (2.GS«i,Z,Z) 1--.n,1 $.J4),JCl9 U.OlJ,161 s ,,_,, $ "" I u• .. Nov. 19, 2019 Item #16 Page 117 of 158 Water Cost of Service Study I POTABLE AND RECYCLED WATER RATE STUDY I CARLSBAD Appendix G RECYCLED WATER FUNCTIONAL ALLOCATION CUstomff/S•!'Yke; Custom ff/Source ServlceOnty (U$tOmetOtlly V~ableOnly Ju.AJ!Othff$ Pl.Int In S.MCe Recyded Mlins Ritc:y<:lcd Wat et Stationi Recycled Watu hcillty Const.ruction In PrOJfl!'SS Ph11nt-ln•$•rvke Sub Toto,J R.111Jocation of•~ All ~hen.• Tota,Alloutkln R~lng Al!ocations R•c,cl,HI Wat•r Opuatinf Exp•nd/tutt$ Personnel Reg sat.IMS lnc:•nti'M P~y Othcf'Penon,i,cl 100 Wof'ker's Comp Ovfflime S..tlrles Sundbyhy ,,.~!Sala,i~, Elected Ofr11eia1s' Sa!ariu TemprolfY ~ HHlth lnswance LJfe lns1.m1nce Vision Jnsunnce Cell Phone Allowance l\utoAl1omnce Ea med Leave ActrUII '1Hlthy EmpAw,uds Fll'lll Vacation P.iy F'mel sack leave P¥'/ OlabRity UJ'MmpfQyrTHJnt WoJter's CompeM1tlon PERS PERS-Repayl'l\e.flt one Exii«~e Soct•I Security Deff.redComp Def C.Omp M;atc;h Other Personnel Co.n A»clototlon Bas/J LI __ ..,:fYE..:.:.:20::;20::...._----1 Fbc•d Chor~ J£mmod.:ty Chorg~ I ""' ""' "" ""' """ "" """' "" ,_ "" App#u :c vo,.lll'l,,,ie /urittfons, f:':;:~::::/::a:~_!::::.gM, lt«m~~-----1 r----~-----~----~-_.:; """' "" "'"' "" .,,. "" "" 42,11$,946 8,220.212 14/~Sl,103" 6S,290,260 65,290,260 1,009,950 ,,.,.. ·- S,,00 l9S,343 .. , lS,24-0 J80 l.3SO 5,338 10.277 2,615 23,710 125,33$ 131,517 500 Sctviceorw S.f\lfieeOtw S.,,,,ic.'tfflN' Senoke-Onlv Senol~Or'lhl SetvluOnl\t Scf'\llc:9'0nlv S.Nlc.Ontv S.Mc.Onlv ~lce-Onhr S.niiceOnlv S.NiteOnll/ Scni!ceOnt,, Custom.rOnlv CustomerOnlY S.rvkeOnlu S.rvluOl'lv Service Orly Scrvlc•Orfv S.rvi~Orh Servl~eOriv SeMceO,._, ScMciti Oriv V1nlbleOnly Vui1W..Onl\t S.MCeOriv s.-n~, s.-- Servict:O.riv s $ I "' I 380 \,350 100!1 "" "'"" "" ,..,. "" ""'" 42,113,946 s 23,171,314 42.lUl,9415 s 23,171,314 s "" I "" I "" 1,0)9,950 $ 1:7,344 ·- S/100 195,343 "' 15,244 5,338 10,277 2,us 23,710 12S,33.S 131,517 500 FINAL I OCTOBER 2019 Nov. 19, 2019 Item #16 Page 118 of 158 CARLSBAD I POTABLE, RECYCLED, AND WASTEWATER RATE STUDY I Water Cost of Service Study Mainteaanee & Equipment Off!e4 [qup Rent.al Other Mach & E~ MlscRentab Mlschues Office Equ!p Mairv:«141ra Software Maintenance VehlcltMIW,t WHh.JndWu: Other Equip ~!ntemnc-e' Rol.AA)e &ulldlnc Malnte.mc:e Asphlh: Repairs Mltinte.rpnee, Repair ilndRehlb Audit letal Administntive Cliilrm:Admin Mhc Profession,) Services Endnos..vlo,s EncW SHvices {Pension Pa-yoff} CityGener.Jted M~IMOUS Ou.tslda Stfvices Book 8Wldif11 Regu'lttory/Pe<mlttingfff1. Mlsc:Servi'~ MWO/CWA F"u:ed 0.rge:s Laundry u,d Uniform Malme.ara £.lectrkaVSCADA ~le:~ Landscapincser-AO!s Ads and P\t,1$hirc Oun tine! Subscriptions Books o11nd Publlc:.1tions Audlo-Vlwal M•lffllls Prlntlnr Post•&e Office 5tlppltes Office Ft,niture & fqu'pment Computer Softw.are- Misc, Comput•r Klrdw.a,e Promo Materllls P,esc:hoot Heat 11nd Light Telephone & Communicalions W.asto Ol~po;i,I Si::1"111~ Water Ndlrw,M.ilnteNince Electric.al Supplies Julitorial Supplies Parts.-fqulp Roctand1Mlntn1 Product$ ........ Smalt Tools Saft?V E(l(Jprnent Uniforms and Acte1$0rit! Mctcrl/Fttil"I&'$ • New Mete(V'Flttlnp • Rephttt!m.nt Ffrt! HoH and Appliances Rescue Equipment PC1"sonal Protktive Equipment Brcalhinc Apparal\1$ Equipnw:nt ShootingRanaeS1JPPIIH Gasolfn• arid 01 CMWD Pure Water-Outsfck! Al,enc:y CMWO Purch Water•FIOffl City MlscS1..if'Pies EmployH Tr.ilnlng TuitlonA.flmbuNement , Tr.ainlrc/Tulnifll. Rel.lted T~v~ Prop Toes PD Confem-a/Mn tinf:T~-..1 MJsc..Me.ats/WM &.Id Otbt &p• Other Inv/Bills Reg Over/Short PrtorPeriod~tmtnt Repayments lnte:re:ston~poslt M[Sc: Expe:,idtur~s Vehicle Direct Ch;,tge-s Vehl'clt> MalntHnc. Vt!liCit> Repl.ac:etrlt!'nt SueetUghtlnc MNfl;an M1Jntenace ~MnlUab Record,: Man.:igemeJ1t lntetdept tnlorm.:itlonTCCMOloglcs Misc lnt@rd@partrnt-ntal Chuees Mis a.Back Utility &IIK"l Chirieback Other AdditfoNI Maintenance & Equipment OCTOBER 2019 I FINAL S00 22,400 S00 S00 1,000 1,000 3,243 86,000 lfo27,0B7 188,0CX) 3,000 3S,OOJ 22,000 8,500 500 4,000 1,000 1,000 2,500 S.000 2.000 2,500 180,000 12,000 4,500 S00 66,500 1,000 1,000 600 1,900 3,000 15,0IXI 20,000 2;1.00p;xJ 18,000 7,000 "" u.sco 2,SCO 2,500 1,000 8,000 23,300 12,0715 29,150 102,912 421,128 (375,303 ) Variable Only VarllbleOnly Variltia.Onl Varilble:Onl Varilbk-Only Variable On! Vairllb5eOnly VarilW.On!y VariltNOnly VarllbleOnl VarllW.Only VuJlbleOnl Variable Only V,11riabte-Only Val'RIW.Onl Varilbtt:Only Vart.br.eOnl Varilble Onl ValilbleOnly v~nableOnlv VarfableOnl VaN!bfeOnlv ~rfableOnl VarfableOnl VariableOnlv VarfableOn}v V;,rfabl41Onfy Vari;11bl4Onlv Custome,~ V.arllbleOnl V.ariaWeOnlv VaNlblcOnl CUSlome{ unru Customer<- Varf11bleOnl =-~· CU::510me<°"""' CllstofMfn...... Cu;tomel'"unN V1rfableOnly V.1rfableOnfv V.u1ableOnly Vulable n..,., V.at11ble()n1y Va~bJ•r- V,ui,1ble Orly Vart.1bleOntv Viltlablef\M, Vilfiab1e.--.. Vari.able. UNV Variable Only V1riable0Ny Variable[..,., Vuiabl.'"'""" Cunomer Only Customer Only ServlotOnly ServiceOnlv V;ariabee n.w VarlitHOnfrw VeritbleO~ varwblcn...i... V.1riabl. UfllV Varilt.Onfv Varbblftn..i.. V•fllbkOnlt, cunornerOnlv Customer Ont Variable Only Custom1trOntv V,1riaWeOnly Custom.-Ontv CU5.tomerOnlv AJAIIOthers VarfabteOnlv Varf•bleOnlv V-1riaibl0-Only Varf.lbleOnlv Van"1bleOnlY VarfableOnlv V1riabl4Onlv Variable Only Vulable :1n.1v VutableOnty Variable VarlablennN Ci.mr>merOnl'v V,11rJabl0-LinN Va,~b!en..1u VarilbleOnty Variableurw Cust0«1er Onl Varilble,,.,,., VarifbleOnho s ,,000 8,SCO 500 4.000 1.000 1.000 2:,00 1,900 •.ooo 7µ:,J "" ·~"" 2,S00 2,500 29.lSO 15.000 20,000 500 '22,400 500 S00 1,000 1,000 S,241 86,000 1Rl.7P87 188,000 30,000 ;s,000 22,000 5,000 2µ:,J 2:,00 180,000 12,000 4,500 S00 '6,500 1,000 lµxJ 600 8,000 23,;oo 12,.076 102,912 421,118 (37S)03) Im:1111 ™ 1.000 Nov. 19, 2019 Item #16 Page 119 of 158 Caplbl Outi.y Noll>-&uds..ted Cap fqulp<SlOk C.1pita1 CM.11y <SIOK Ne.w C•pOutlay • Vehkle-1 Cornp,ttt Eqiatp > $1<>: -Repl Offiee EqufptMn1. Othe.r equiprntr'lt Cap(~liaclAiH"ts OpiU1 Projec.u Othet Clpfhl Ouday Other Fin1ndn1 Us.u Othtt Other Anancq: Lfsas Ope~un, (xpudit\;Ns Sub Total ftullocadon of "As Alt Othws• TotalAlocaOon Optr.ittJll[~s O.bt Rate f\Clded C,pltal Aepl11cement Functnc jDepHclatton F'wld!na) T~Mfers to C.pl::al Reserve C.shFlows btu PIDtttier RtfflMI 0¥MNndtr Co1Kt'°'1 0Ut1Wru.1u -odJu•"""" 0/fstttiillg R.Ky<hd Wotu R~WIW~S AdJ.forMJdYnrlraeue Non-R•~• ChtlJff Jor Stnrn;ti ~loperfees lme,gowmmenul (CWA) FinM and Fo.rfett~~ lncorM from Property & l~stl'l'lents lnt~i:partmcMII OlMr FTNndflC5o11<H Totilll ltlle hv-et11.1es to be-Collected RHllonllon of "'As All Oth•n• Totaa~atlon """' "''" Water Cost of Service Study I POTABLE AND RECYCLED WATER RATE STUDY I CARLSBAD V•rilbleOnlv v,r1ai.on1y 50,000 V,1NbleOnlv Varilbk-Onlw V1t11b&I-Only Vartabl•Ol'llv Ylrili~Ol'llv VarilbleOnlv 'V1rJl~OnlY V11'11bltOnly 6,426,033 6,&26,033 I---'== l:,73S,36S 1--...:..:;== A,OlM V•rilbleOnlv VaNbltOnN {•,l)OO) {2SO,OCO (150,000 (1'.2001 I I (92,1001 (2,000 I 1,no,soo 7,791)500 V1rilbh0nlv Custom•rLINV AsAllOtNrs Varilblt:Only NAJI Others NAIi Others MAl100ffl AsAIIOthu1 NAllOthcn AsAllOtt.rs AsAIIOthars: As All Others /uAl!Othf!n AsAllOthtrs I I I I $ s s $ 80,240 $ 12.49 80,292 $ 1.25% I "' 80.292 ~$ ,..,., IU,015) 61,171 's 's ;s $ $ 1,460,293 $ 227.21 1,460,520 $ 22.71" I 1,460,520 1,450,.slO 1211,SSO) i,.~.,. s ,.,. I S0,000 4,184,460 760.22 .c,aas.220 76.02" 4,885,220 2,13S,36S 7,620,515 I (1,140,333} 6,480,ZS-Z '"' $ $ $ $ 1,000 (1,000.00) ··- (859,597) 14.0CO) (250,000) (150,l)OO) (13,200) (1,370,197} 1,370,1'7 .,. FINAL I OCTOBER 2019 Nov. 19, 2019 Item #16 Page 120 of 158 CARLSBAD I POTABLE, RECYCLED, AND WASTEWATER RATE STUDY I Water Cost of Service Study Appendix H POTABLE WATER CUSTOMER ALLOCATION Alloc.ction Yf'or I fYE 2020 .,. MFR NR AR IR Cu~tomcr Stohstlcs Singh:-F-omi1y ,.,~111-Fom!ly Comm.rc1ol A9nc;uhurol lrttgohon ~uv Number of Attt>unts Number of MEUs A,t,nualWate-rUsa1e- Mu.Month MnDay Mu Hou, SOCWA De,al Atloc:•tion 8.&SI$.: Albc,1ted Customer Com Allocation Bul-s: AlloCilted Customer Costs AllocatJon Basis: Alouted Customer Costs ,\location Bask: Alooated Customu Costs Allocation aasts:: Albeated Customer Costs Allocation 8asis: Allocetod o.tstomer costs Atlon tion Bu is: Aloeauon Ba Sis: Aloeated CustomarCom Custcml!I' 8asc MaxOay Max How SOCWA -· 0 ... 1 Fire Teti! OCTOBER 2019 I FINAL 24,716 27,845 3,320.201 347,70,, 32,547 S.S,99-2 2,755,.027 565,174 87" I Numbcrof.Atcount$'. I '24,716 $ 2,230,900 Number of ME Us j ""' 27,845 S,844,260 I Ann~I Water Usage-I 54" 3,320,201 2,020,318 S7" Max Dav I ,,,541 $ !::173,659 57% Mn.Hour I .. ,.., $ 667,597 54" SOCWA I ,.m}J21 $ 8,109,736 s,,. Desai I S6s.114 $ 3,181,145 rtl.llYlberofM.EUs 2,230,900 2,020,318 1,.l73,6S9 687,597 8,109,736 >,844,260 3,181,14S 231247,616 1,.142 5,019 7O3,60S 68,691 4,136 7,497 647,705 55,900 .,. 1,142 103,W "" 5,019 1,053417 U% 703,605 428,U9 7" 4-,136 149,152 7" 7,497 87,382 "" 647,70S 1,906,594 SS.900 3'14,641 103,111 428,139 249,152 87,382 1,906,594 1,0$3,417 314,641 4,042,436 1.706 8,390 1,249,080 128,900 9,314 J6,U2 1,114,040 135,039 '" 1.706 153,971 '"" 8,390 1,760,Sn ""' J..249,080 760,0S6 16" 9,314 llS,SGS "" 16,882 196,769 "" 1..11410lO 3,279,304 "" 135.039 760,084 153,971 760,056 llS,86S 196,769 3,279,304 1,760,877 760,084 7,246,926 22 272 86,688 12,181 629 l.140 6S,689 20,999 "" 22 1,964 '" ,n S7,193 1.40% U ,688 SZ,749 LlO!I .,. 22,&al 1.101' 1,140 13,281 l.29" 65,689 193,364 1.93% 20.999 118,19S 1,964 52,749 22,682 u.isa 193,364 57,193 U8,19S 4S9,43S 838 4,520 &29,673 104,210 10,757 19,497 517,7S6 311..,887 '" 838 '"" 948,753 "" 829,673 504,SSO "" 1O,7S7 387,903 227,256 '°" S17,78li 1,524,162 ""' 311,887 1,7SS,489 75,667 504,850 387,903 227,256 1,524,16'2 948,753 vssµ, S,424,080 782 40,365 40,365 188,m 18&,S77 lH,S77 2',207 8-6,4U 6,189,248 cc:f 66l,696ccf 57,384cd 104,00S ccf 5,100.249 cd 1,089,000cer '°"" 28,425 2,565,613 46,047 9,66',SOO 11)0% 6,189,248 l,766,112 100!< S7,3MI 2.069,262 "'"" 104,008 1,112,292 5,100,248 15,013,161 1,089,000 6-,129,SSS 40365 188,Sn 2,565.613 3,766,112 2,069,262 1.212.292 1S,OJ3,l61 9,664,SOO 6,129,SSS 1ss.sn 401609,070 Nov. 19, 2019 Item #16 Page 121 of 158 Water Cost of Service Study I POTABLE ANO RECYCLED WATER RATE STUDY I CARLSBAD Appendix I RATE DES IGN ANALYSIS First yeorofroteoi ustme~ IMSii,,iiNi!MriM• ii;i-Customer Service Fire Base Max Day M•• Hour SDCWA Desai -Allocated 2020 Revenue Requirement S 2,230,900 S 5,844,260 $ $ 2,020,318 $ 1,173,659 $ 687,597 $ 8,109,736 $ 3,181,145 $ 23,247,616 Recovered through Account Charges Number of Accounts Monthly Fixed Charge Per Account Recovered through Unit Charges Effective Number of MEUs (FY 2021) Monthly Fixed Charge Per MEU Recovered through Volume Charges lier Limits (eel} Tierl lier 2 Tier 3 Tier Usage Tier 1 Tier 2 Tier3 I I I Volume Charge ($/ccf) 0 11 19 % 63% 22% 15% 100'¼ Tier Volume Charge perccf: Tlerl Tier2 Tler3 C c::a,,,...,,,.. I I I I I I UnnerUmit 10 18 999999 ccf 2,106,380 715,224 498,597 3,320,201 24,716 I 21,845 1 lier Peak Factor 1.06 1.32 1.73 I 100% $ 7.52 $ $ $ s s $ 100% 100'¼ 17.49 $ s $ $ 1 100% 100% PeakingAllocations~l __ 34_% __ ~----~-21% All Tiers Tier l Tier 2 Tler3 Tier 1 Tier2 lier3 $ $ $ $ 1,144,897 1,144,897 63.44% 21.54% 15.02% 0.61 TRUE 0.61 0.61 0.61 686,938 686,938 55.2% 23.5% 21.3% $ 0.35 $ TRUE $ 0.31 $ $ 0.39 $ $ 0.50 $ $ s 7.52 $ s 17.49 100% 100% 100% 45% 1,488,366 2,755,027 565,174 TRUE 274,545 2,106,380 715,224 648,647 66,577 498,597 498,597 55.2% 76.5% 0% 23.5% 23.5% 11.8% 21.3% 0.0% 88.2% 0.21 $ 2.44 $ 0.96 TRUE TRUE TRUE Rounded Rates 0.18 $ 2.94 $ $ 4.04 0.23 s 2.67 s 0.52 $ 4.42 0.29 $ $ 5.63 $ 7.04 FINAL I OCTOBER 2019 Nov. 19, 2019 Item #16 Page 122 of 158 CARLSBAD I POTABLE, RECYCLED, AND WASTEWATER RATE STUDY I Water Cost of Service Study Multi-Family Residential (MFR) Customer Servlce Fire Base Max Day MaJ< Hour SOCWA Desai -Allocated 2020 Revenue Requirement $ 103,111 $ 1,053,417 $ 428,139 $ 149,152 $ 87,382 $ 1,906,594 $ 314,641 _s ___ 4,_04_z..,,4_36_ Recovered through Account Charges 100% _N_um_b_er_o_f_A_cco_u_n_ts~(_FY_2_0_2~1)~------~----~1,_14_2~1 -------------------------------------------_____ _ Monthly Fixed Charge Per Account $ 7.52 $ $ $ $ 7.52 Recovered through Unit Charges .-----~ !._ ____ _.__-'1"'00%=--'----'1"'00%""'---'------'-------'---------'------'-------' _Ef_fe_ct_i_ve_N_u_m_b_e_ro_f_M_E_U_s~(F_V_2~0_21~)-----~----~S,_01_9~1 _$ ______ $,-------,-----,-$----------------------,-----_____ _ Monthly Fixed Charge Per MEU 17.49 $ $ $ $ $ s 17.49 Recovered through Volume Charges I I I 100% I 100% I 100% I 100% I 100% Tier Limits (ccf/DU) ller 1 Tier2 Tler3 Tier Usage Tlerl I ller2 I ner3 I 0 6 11 % 78% 22% Total MFR Usage 100% Volume Charge ($/ccf) nerVolume Charge perccf: nerl ller2 T1er3 Upper limit I s I 10 I 999999 ccf I 547,586 I 156,019 I 703,605 Commercial Allocated 2020 Revenue Re9uirement Recovered through Account Charges Number of Accounts (FY 2021) Monthly Fixed Charge Per Account Recovered through Unit Charges Effective Number of MEUs ( FY 2021) Monthly Fixed Charge Per MEU Recovered through Volume Charges Projected BIiied Water Usage (eel) Volume Charge (Sleet) OCTOBER 2019 I FINAL Tler Peak Factor 1.04 1.41 1.55 703,605 1,7061 s,390 I 1,249,oso 1 PeaklngAllocatlons~I ----~~----~----~ 87% I 13% I 13% I All llers ccf Tier 1 Tier 2 ller 3 Tierl Tler2 Tier3 s $ $ 615,126 547,586 67,540 n.8% 22.2% 0.0% TRUE 0.61 s 0.61 s 0.61 $ 88,480 88,480 88,480 72.2% 72.2% 27.8% 27.8% 0.0% 0.0% TRUE TRUE 0.21 $ 0.12 0.20 $ 0.12 0.27 $ 0.16 647,705 55,900 547,586 100,119 55,900 84.5% 0.0% 15.5% 100.0% 0.0% 0.0% TRUE TRUE $ 2.71 $ 0.45 $ 2.94 $ $ 1.89 $ 2.02 Customer Service Fire Base MaK Day Max Hour SOCWA Desai -------------------------------------------$ 153,971 $ 1,760,Sn $ $ 760,056 $ 335,865 $ 196,769 $ 3,279,304 $ 760,084 100% $ 7.52 $ $ $ $ $ $ $ I 100% 100% $ $ 17.49 $ $ $ $ $ $ I 100% 100% 100% 100% 100% $ s $ $ 0.61 $ 0.27 $ 0.16 $ 2.63 $ 0.61 TRUE Rounded Rates $ 3.87 $ 4.94 $ -$ 7,246,926 $ 7.52 $ 17.49 Rounded Rates $ 4.27 Nov. 19, 2019 Item #16 Page 123 of 158 Water Cost of Service Study I POTABLE AND RECYCLED WATER RATE STUDY I CARLSBAD Agricultural Customer Service Fire Ba,e Max Day Max Hour SDCWA Desai --------------------------------------------Allocated 2020 Revenue Requirement $ 1,964 $ 57,193 $ $ 52,749 $ 22,682 $ 13,288 $ 193,364 $ 118,195 $ 459,435 Percent Recovered Through Acccunt Charges 100% Number of Accounts 22 1 Monthly Fixed Charge Per Account $ 7.52 $ $ $ $ $ $ $ $ 7.52 Recovered through Unit Charges I 100% 100% Effective Number of MEUs (FY 2021) m l MonthlX Fixed Charge Per MEU $ $ 17.49 $ $ $ $ $ $ $ 17.49 Reccvered through Volume Charges I I I 100% I 100% I 100% I 100% 100% Projected Billed Water Usage (ccf) 86,6881 Rounded Rates Volume Charg!,JS/cd) s $ $ $ 0.61 $ 0.26 s 0.15 $ 2.23 $ 1.36 $ 4.62 Irrigation Customer Service fire Base Max Day Max Hour SDCWA Desai -Allocated 2020Revenue Requirement $ 75,667 $ 948,753 $ $ 504,850 $ 387,903 $ 227,256 $ 1,524,162 $ 1,755,489 $ 5,424,080 Percent Recovered Through Account Charges 100% Number of Accounts 8381 Monthly Fixed Charge Per Account $ 7.52 $ $ $ $ s $ $ 7.52 Recovered through Unit Charges I 100% 100% Effective Number of MEUs (FY 2021) 4,s20 I Monthly Fixed Charge Per MEU $ $ 17.49 $ s $ s $ $ $ 17.49 Recovered through Volume Charges I I 100% I 100% I 100% I 100% 100% Projected Billed Water Usage (ccf} 829,673 1 Rounded Rates Volume Charge ($/ccf! $ $ $ $ 0.61 $ 0.47 $ 0.27 $ 1.84 $ 2.12 $ 5.31 Fire Cuslomer Servite-Fire Base Max Day MaK Hour SDCWA Desai -Allocated 2020 Revenue Re9uirement $ 188,Sn 188,Sn Percent Recovered Through Account Charges 38% Number of Accounts 182.00 I Monthll Fixed Charge Per Account $ 7.52 $ 7.52 Recovered through Unit Charges 63% Effective Number of MEUs !FY 2021! 40,3651 Rounded Rates Monthll Fixed Char,e Per MEU $ 0,24 $ 0.25 FINAL I OCTOBER 2019 Nov. 19, 2019 Item #16 Page 124 of 158 CARLSBAD I POTABLE, RECYCLED, AND WASTEWATER RATE STUDY I Water Cost of Service Study Appendix J SUPPLY ALLOCATION Supply Allocation SDCWA Desai Total Total Available for Retail (ccf) 5,100,248 1,089,000 6,189,248 Annualized Month Minimum Use Remaining Available Before Allocation 5,100,248 1,089,000 6,189,248 Amount to be Allocated 4,822,916 4,822,916 Allocated Min. 3 Month Remaining Single Family 2,611,096 2,611,096 2,611,096 2,611,096 Multi-Family 633,469 633,469 633,469 633,469 Commercial/Non-Residential 1,079,650 1,079,650 1,079,650 1,079,650 Agricultural 60,342 60,342 60,342 60,342 Irrigation 438,359 438,359 438,359 438,359 Total (ccf) 4,822,916 4,822,916 4,822,916 4,822,916 Remaining to Allocate 277,332 1,089,000 1,366,332 Annualized Average Use Remaining Available Before Allocation 277,332 1,089,000 1,366,332 Amount to be Allocated 277,332 1,089,000 1,366,332 Less Previously Allocated Average Month Allocated Remaining Single Family 3,320,201 (2,611,096) 709,105 143,931 565,174 709,105 Multi-Family 703,605 (633,469) 70,136 14,236 55,900 70,136 Commercial/Non-Residential 1,249,080 (1,079,650) 169,430 34,390 135,039 169,430 Agricultural 86,688 (60,342) 26,347 5,348 20,999 26,347 Irrigation 829,673 (438,359) 391,314 79,427 311,887 391,314 Total (ccf) 6,189,248 (4,822,916) 1,366,332 277,332 1,089,000 1,366,332 Remaining to Allocate OCTOBER 2019 I FINAL Nov. 19, 2019 Item #16 Page 125 of 158 Water Cost of Service Study I POTABLE AND RECYCLED WATER RATE STUDY I CARLSBAD Total Supply Allocation SDCWA Desai Total Single Family Single Family 2,755,027 565,174 3,320,201 Multi-Family Multi-Family 647,705 55,900 703,605 Commercial/Non-Residential Commercial/Non-Residential 1,114,040 135,039 1,249,080 Agricultural Agricultural 65,689 20,999 86,688 Irrigation Irrigation 517,786 311,887 829,673 Total (ccf) 5,100,248 1,089,000 6,189,248 d1eck: 5,100,248 1,089,000 6,189,248 Single Family 54% 52% 106% Multi-Family 13% 5% 18% Commercial/Non-Residential 22% 12% 34% Agricultural 1.3% 1.9% 3% Irrigation 10.2% 28.6% 39% 100% 100% 200% FINAL I OCTOBER 2019 Nov. 19, 2019 Item #16 Page 126 of 158 CITY OF CARLSBAD WASTEWATER BOUNDARY PACIFIC OCl:AN ----CITY OF CARLSBAD WASTEWATER BOUNDARY EXHIBIT 5 Nov. 19, 2019 Item #16 Page 127 of 158 PACIFIC OCEAN ----CMWD BOUNDARY NOT TO SCALE EXHIBIT6 Exhibit 7 Nov. 19, 2019 Item #16 Page 128 of 158 To City Clerk: RECEIVED OCT 3 O 2019 CITY OF CARLSBAD CITY CLERK'S OFFICE I am a property owner of Carlsbad, 90029. I am protesting the proposed rate increases. The increases will put a real strain on cost of living for my family. We are pleading with you to not increase the rates. My husband and I are both hard-working individuals and find it difficult to pay mortgage and bills to live in this area. Please, please do not increase the rates. Thank you for understanding. Best, 0:--~ Erin Esko Coha Nov. 19, 2019 Item #16 Page 129 of 158 To City Clerk: I am a property owner of Carlsbad, 90029. I am protesting the proposed rate increases. The increases will put a real strain on cost of living for my family. We are pleading with you to not increase the rates. My wife and I are both hard-working individuals and find it difficult to pay mortgage and bills to live in this area. Please, please do not increase the rates. Thank you for understanding. Bes~~~ Aluphen Coha Nov. 19, 2019 Item #16 Page 130 of 158 Nov. 19, 2019 Item #16 Page 131 of 158 -· ----------- ~ w\r-vY\f'.. ~ + lWLL{ Lb\l\ c..-e.t2-,v,"J l}Je., c~ ·p R-v~~t-{ ~ ~ 'P rDf05eJ-6--eeir---WO-~ K~ ~~ ~~ ~f>oSQdL rv,,..5---yi ,M LA.M po{-"ttio\e ev-rl~'2-tJ...,v0l. Wcz.. S-fc<0a,.f,£_£_ ~ ~Cd2-'2~':I,,,, ~jOV--( u~-0--'A.e--s~s ~~s UU"ll s\Qcv,Q_ J CA-1-ZO ( I Q, QA.\0-i 51-wi.11 .s ~~ RECEIVED OCT 3 0 2019 ,-CITY OF CARLSBAD CITY CLERK'S OFF/CE : I Nov. 19, 2019 Item #16 Page 132 of 158 ----· - - ---~ Oc"Tube~ 2r;, 2o1 j lt\-e~-\iok\_Q~ k,, . P)eo..se_ . ~Ccer+ 4,s vtote Q.S 1M. / -s tp--i e.o\.....W. \--d--hc"' -r v-ot ~.s +--h ::IL. e. r"' p OS eo\ \--0--Te t"'-c ve.q.s es. -"-"\l"!le ! Re kcc0c i;?~ 1r \t- 'SlC\V\a_,'i-uve.. ·. ~ Aaav~.~ of s._ei,-.Vtc.e ·. ' ~\sl:,°'-J, C!+C,2.t>jO , -. I 'RECEIVED ' - -OCT 2 8 2019 CITYOFc 1 CITY CLEBK~~~~E .. "j I Nov. 19, 2019 Item #16 Page 133 of 158 Sonia De La Fuente Carlsbad CA 92029 October 24, 2019 City Clerk's Office 1200 Carlsbad Village Drive Carlsbad, CA 92008 City Clerk of Carlsbad, Subject: Protesting the Proposed Rate Increase. RECEIVED OCT 2 B 2019 CITY OF CARLSBAD CITY CLERK'S OFFICE I attest I'm the owner of this parcel and as the property owner of 2808 Atadero Ct. Carlsbad, CA 92009 I protest this rate increase. Sonia De La Fuente Nov. 19, 2019 Item #16 Page 134 of 158 Office of the City Clerk City of Carlsbad RECEIVED OCT 2 S 2019 CITY OF CARLSBAD CITY CLERK'S OFFICE Craig Arterburn Carlsbad, CA 92008-4319 October 24, 2019 1200 Carlsbad Village Drive Carlsbad, CA 92008 Re: Protest of Proposed Water Rate Increases Carlsbad City Clerk and City Council: I write in protest of the residential 5/8 inch meter size rate increases for January 1, 2020 and 2021. Pertinent information regarding my parcel and account: 1. Parcel Number 2. Account Number 3. Meter Number 4. Meter Size 5/8 inch I'm protesting the proposed water rate increase for the following reasons: 1. I am on a fixed retirement income where annual COLA increases don't come close to mitigating increases in any of my utilities. 2. Other than possible replacement of aging and/or failing infrastructure within the water system, I don't see any benefit to the increase. 3. Operations and maintenance costs shouldn't change significantly to require an increase- especially twice in two years. 4. The city already requested a 1.1 % trash collection rate increase in 2017 ( effective 2018?), and now another increase is being requested for 2020 through FY 2021-22. 5. Past Governor Moonbeam's outrageous fuel and vehicle registration tax, rammed through the corrupt state legislature without a vote of the people, is still costing us hundreds of dollars each year. With the exception of #2, the rate increases reek of a clandestine way for employee pay raises. On my fixed income, I 'm not keen on helping to pay for other peoples' mortgages, car payments, and kids' college tuition. When does it end? When will COLA ever match actual real inflation? C•z;~ CRAIG ARTERBURN Nov. 19, 2019 Item #16 Page 135 of 158 lo/d--r/.:2tJ1? ;/2 e<f/v c/·t7 C 1-e ;e /; 1 p, ,r I 5 0--p-;Lcie S t-~fo f°/-Of'>S ,,J) o , I f f ✓,/ ( _L _1~ ocr e__ I ('./ v'-12 ~ / L e ~ .i-(' a~ ·1 I ('v {/Lf~ j,. I/> : 7 ~ tf 1/ (,' v '7--o~ so c:,,.~e S'e Cuf!'.) 0 N Lr tt LL(_ n, /Vo ~ 1i . ',,-, ~ ~ F, ,/L 1 T tJ (-2, > ( J d O v( ,,-v c:J e 12---~ I~ /vCe.__ o..y cit' S c 12-r'I""' "t1:V _ ,:,:J' i),V h , V')-" ,S..<_ .;;,_ I r .e-,y,---Iu ... :.v r'7"' J-/f._( c.. I~ .r > cg ;)--_ c) o $V h~ A~~.) r I p( (/~ /, v ~ U;:J ~ '-J:, Y-TY2 A ~ ,,-Ir,/ d,L~ -f--o b € ✓-i.b( z iv -_;-f,._;--;:: /fr>} V7o_,d/ ~ A-CL-u: . /. '':;? ( () _(' T ~ (,.,/1 ·; ( A ~ />?Le "'1.. /v ~ //'),\ ,,</ / c:? r~ I/ v'--). (A_y w .4-ft ! r I .e~, -4' )v_,(b /Z, r~ · · · SA_,, vv h ~ 7 o~ Ccthj, 5 :rv ~ ,1,,,,.c) lJ,_r1,,, f::' y di1 So {/ t!,R) /JINc;4) ?~~~wCVL~ ~ Ms. Patricia Haueen .. l,clrJSOaa, CA 92011 Nov. 19, 2019 Item #16 Page 136 of 158 \o : 6 k\, ~ t G--v \-s\-, Fv~: M<lA-'1l~ ~c RECEIVED OCT 2 8 2019 CITY OF CARLSBAD CITY CLERK'S OFFICE Nov. 19, 2019 Item #16 Page 137 of 158 I -)-.:> \ o \ ·-z_ o ) l ~ I RECEIVED nrr 9. d. ?OtQ r.1TY OF CARLSBAD CITY CLERK'S OFFICE Nov. 19, 2019 Item #16 Page 138 of 158 I I I -,~ . > ''! ' . ClTY OF C . . CITY CLERK'S OFFICE Nov. 19, 2019 Item #16 Page 139 of 158 Maria Bucci Carlsbad, CA 92010 10/11/2019 Dear Office of the City Clerk, RECEIVED OCT 1 7 2019 CITY OF CARLSBAD CITY CLERK'S OFFICE I am a resident and property owner in Carlsbad, California and am submitting a formal, written protest to the rate increase of the Proposed Maximum Potable Water and Wastewater Rate. Sincerely, Maria Bucci J_ ___ ,,_----------------------------- Nov. 19, 2019 Item #16 Page 140 of 158 October 9. 201"' Office of the City Clerk Citv of Carlsbad 1200 Carlsbad Village Drive Carlsbad, CA 92008 Dear City Clerk, RECEIVED · OC1 1 5 20l9 CITY OF CARLSBAD CITY CLERK'f' OFFICE Patrice Danaher Carlsbad, CA 92010 I am protesting the residential rates the City Council plans to approve at the public hearing on Nov. 19, 2019. My parcel number is The specific rate changes I am protesting are the Monthly Potable Water Delivery Charge proposed for 1 / l /2020 and 1 / l /202 l; and Water Usage Charge proposed for 1 / l /2020 and 1/1/2021. Sincerely yours, ~~ Patrice Danaher Nov. 19, 2019 Item #16 Page 141 of 158 TO: Office of the City Clerk, City of Carlsbad 1200 Carlsbad Village Drive Carlsbad, CA 92008 RECEIVED . OC1 15 20,9 CITY OF CARLSBAD CITY CLERK'S OFFICE I am writing to protest the Proposed Maximum Potable Watercruu vvastewater Rate increases. The rate change I am protesting is Monthly Potable Water Delivery Charge for Parcel number My account number is Account It is going from $24.72 to $25.02 on 01/01/2020 and $25.52 on 01/01/2021. I am also protesting the Water Usage Charge going from $3.94 to $4.04 on 01/01/2020 and $4.13 on 01/01/2021 Si d Carlsbad, Ca 92010 Nov. 19, 2019 Item #16 Page 142 of 158 ~ ~~ ~~ ~ ~, .J 3 ,C\<..l T" ~ ~I \ /b -q·-19 RECEIVED OCT 1 5 2019 CITY OF CARLSBAD CITY CLERK'S OFFICE Nov. 19, 2019 Item #16 Page 143 of 158 ~o ~ ~ I 'f .:l._ t' 0 ~ RECEIVEu OCT 1 5 2019 CITY OF CARLSBAD CITY CLERK'S OFFICE ~ ~_,(0,-,. ~ L__F;-y-...J..../0 " .. ~ ~ ( ~-c:,._) *~~ '{)~ ±:t ~ ~ i 3 , q '--I --fo .f; '-1..o '+ ""-'hf, I 3 ~ Nov. 19, 2019 Item #16 Page 144 of 158 October 10, 2019 Carlsbad Municipal Water District Office of the City Clerk, City of Carlsbad 1200 Carlsbad Village Dr. Carlsbad, CA 92008 To Whom it May Concern, This is a letter to submit a formal protest to the proposed fee change. Protester: Parcel Number: Current Owner: Lisa A Jenkins Carlsbad, CA 92008 RECEIVED OCT 15 2019 CITY OF CARLSBAD CITY CLERK'S OFF ICE 1 Nov. 19, 2019 Item #16 Page 145 of 158 October 13, 2019 RE: WATER RATES INCREASE PROTEST RECEIVED OCT 1 5 2019 CITY OF CARLSBAD CITY CLERK'S OFFICE I protest the rate increase to water A~D wastewater residential rates which will be heard at the Public Hearing on 11/19/19. Thank you, James Brown Carlsbad, CA 92008 Nov. 19, 2019 Item #16 Page 146 of 158 \ide,;t fUo1)<e . f.< a.t< c~"'~ ~ ~ proh 14 : oil rqtt l~cVLC\& ~t d~ ~ JV\~ fc..r(J ff\.,J sc.1~1 1av l L , L 1 o LP ~ 1 IL J iut 1 OCT O 7 2019 crrv OF CARLSBAD - CITY CLERK'S OFF!C£__ M Nov. 19, 2019 Item #16 Page 147 of 158 ; Watec Bat" lncre To Gcity of Carlsbad) CC/BCC Bl ■ m Water Rate Increases 3 De..+ :;N)f 9 We are protesting the proposed increase for Carlsbad water and wastewater rates. We are retired and on a fixed income and feel that should be considered when proposing such an increase. ~~ Cherie Mclarty Michael R. Mclarty c:-:, B I M •.. RECEIVED OCT O 7 2019 CITY OF CARLSBAD CITY CLERK'S OFFICE ii Nov. 19, 2019Item #16 Page 148 of 158I /v c.i'< e.A>lf I <, i, /( l(S e. _17',y-WI/ fc ~ j ~ ct~ ":f IL r + , ,,__, ( µ , v< ,d ,_ /!-, 7-r ~ ;/ ,,cJ ,~-cl) . . /-j r--t1 _.L cl O ,,,v" T l( S" (? ,/'?"'?1 lt r✓\ (_t.;~e t<. ~ ft:~ ~-Tari, c,'9ee/4l_ C /V t:t ( ( -rx t t'V_Ji-5 R. e ; J7v ~ c:. c Ct 4;-s a.r(.. t-#" . _ A_ f/•~f'~s-ecf 0 c~ ~;3: A'<ST f.~ f<Q,:t~c-f-c~(,, ::r ~ o L~ a~J. c.N l rr-,hA ve S-oc:1cJ. S't!cu,e,~ P0tz-/7Y\ ()--;rJ c~ ... ,r Jl L ( ';::. t L> CL ' II E"ff. y ±/ ,=-F-J-M u /\-.1e j-e,'--, s e --' _4-, --. -~ -.---~~ ---. ----·-----.., • • • -. • - • . 4 _;l°r.'" 1 ___ , ************·········••\ Ms. Patricia Haugen Carlsbad, CA 92011 --.........•............ Nov. 19, 2019 Item #16 Page 149 of 158 City Clerk City of Carlsbad 1200 Carlsbad Village Dr Carlsbad, CA 92008 RE: parcel To whom it may concern: Water rate increases RECEIVED NOV -6 2019 CITY OF CARLSBAD CITY CLERK'S OFFICE November 2, 2019 This is a formal protest to the rate increase to the water usage and delivery charges. I am opposed to these rate increases because I think the charge is already too high. We are already trying to save water, not using any excess and still paying too much. I hope this proposed increase does not go through because it will affect us too much financially. Sincerely, Carlsbad, CA 92009 Nov. 19, 2019 Item #16 Page 150 of 158 RECEIVED -, NOV -6 2019 cT{y~ OF CARLSBAD I LERK'S OFFICE I 1 l-I -~019 J~a.r S ~ ' / Jf\o.6°'-lfh J -=r: wo'-"-\d. \ ·,\(e_ -\--0 ~k +k\----=r-pro+e~\.-+~~ 1 p , Df o s.ed r-o. ~ -, 1' c. i' e.°' se.. , Y°Y'd no. v'A-<2... ; 'i:i . fY'-0-" pv-e.,,_ \-~ ¼ !""'Ao..>" 'f\ , , N\~ ~e. r V i U/... a_J J I"~ S ~ &, \ s b c..c:\ , C Pi C? ::i co1 \ ~ a. Y\ \c ~"'-v-..., . Nov. 19, 2019 Item #16 Page 151 of 158 City of Carlsbad 1200 Carlsbad Village Dr Carlsbad, CA 92008 October 30, 2019 Re: Water rate increases , To whom it may concern: RECEIVED NOV -6 20'9 CITY OF CARLSBAD CIT'< CLERK'S OFFICE I am writing to formally protest the rate increases you are proposing to the water usage and delivery charges. I do not think you should be charging more than you are charging already. The rates are already too high. Please rethink these rate increases because they will affect a lot of us in a very negative way. Thank you for your attention, Susana M. Cuellar Carlsbad, Ca 92009 Parcel Nov. 19, 2019 Item #16 Page 152 of 158 RECEIVED NOV 1 2 2019 CITY OF CARLSBAD CITY CLERK'S OFFICE 08 Ocrnbrn 20 l 9 PROTESTING THE INCREASE IN WATER RATES MuNicipAl WATER DEPARTMENT I AM THE OWNER of PARCEL NUMbER I AM pROTESTiNq THE iNCREASE iN WATER RATES foR OUR l ANd ½ iNCH METER SERViNq A COMMERCiAl pROpERiyy. SiqNiNq foR THE HFM TRUST ANd THE MKM TRuST. Nov. 19, 2019 Item #16 Page 153 of 158 RECEIVED NOV 1 2 2019 CITY OF CARLSBAD CITY CLERK'S OFFICE 08 Ocmbm 20 l 9 PROTESTING THE INCREA5E IN WATER RATES MuNicipAL WATER DEPARTMENT I AM THE OWNER of PARCEL NUMbER I AM pROTESTiNCj THE iNCREASE iN WATER RATES foR OUR 5 /8 iNCH METER SERViNCj A COMMERCiAL pROpERT)I. SiqNiNq foR THE HFM TRUST ANd THE MKM TRusT. Nov. 19, 2019 Item #16 Page 154 of 158 RECE\VED NO\J 1 2 20\9 CARLSBAD C\i'< O~RK'S OFFICE. C\i'< CLt:e 08 Ooobrn 201 9 PROTESTING THE INCREASE IN WATER RATES MuNicipAl WATER D EPARTMENT I AM T~IE OWNER of pARcEl NUMbER I AM pROTESTiNCj THE iNCREASE iN WATER RATES fOR OUR 1 iNCH METER SERViNCj A NON-RESidENTiAl iRRiCjATiON pROpERl)f. SiCjNiNCj foR THE HFM TR usT ANd THE MKM TRUST. Nov. 19, 2019 Item #16 Page 155 of 158 RECEIVED NOV 1 2 2019 CITY OF CARLSBAD CITY CLERK'S OFFICE 08 OcrnbER 2019 PROTESTING THE INCRfA<iE IN WATER RATES MuNicipAl WATER DEPARTMENT I AM Tl-IE OWNER of pARcEl NUMbER I AM pROTESTiNCj Tl-IE iNCREASE iN WATER RATES fOR OUR 2 iNCH METER SERViNCj A SiNCjlE fAMily 1-iOME. SiCjNiNCi foR THE HFM TRUST ANd THE MKM TRusT. Nov. 19, 2019 Item #16 Page 156 of 158 RECEIVED NOV 12 2019 CITY OF CARLSBAD CITY CLERK'S OFFICE 08 Oaobm 201 9 PROTESTING THE INCREA5E IN WATER RATES MuNicipAl WATER DEPARTMENT I AM THE OWNER of pARcEl NUMbER I AM pROTESTiNCj THE iNCREASE iN WATER RATES foR OUR 2 iNCH METER SERViNCj A SiNCjlE fAMily HOME. SiqNiNq foR THE HFM TRUST ANd THE MKM TRUST. Nov. 19, 2019 Item #16 Page 157 of 158 /\II Receive -Agenrl.;; Item # ~ For the Inform; : , ;11 of the: CITY COL: .• It. Date \\ \ \~ CA )0 CC .::f2_ CM ..1,COO 'P DCM (3) ;._.-----, Office of the Ci~y Clerk RECEIVED City of Carlsbad!: NOV l &. 2019 1"200 Carfsbad 'Village Dr. C I b d CA 912008 CITY OF CARLSBAD ar s a ' CITY CLERK'S OFFICE Dear City Clerk,, r protest ttie pro,posed Tier 1 sfngre famffy rate that fs currentry at $3.94/unit prclposed TO $4.04/unit effective 1/1/2020 as well Yne proposed "T() $4.21/unit effective 1n12021. ,tiry· rrame 1s J'ac:que~ne Srmon and i rrve at , Carlsbad, C~A 92011. Parcel # Parcer # Nov. 19, 2019 Item #16 Page 158 of 158 P-ecei ved \ \-\9-\ ~ ~ ~ RR,C<Jrci. Reclaimed water inequality in city of Carlsbad My concern is the lack of progress being made to bring reclaimed water to all the citizens of Carlsbad. I have lived in the Alicante Hills HOA for five years now, and our biggest expense is our water bill. By not having the reclaimed water and the benefits of the cheaper rates we lose roughly $10,000 dollars per year, $50,000 in the five years I have lived here. Why have my tax dollars gone to benefit some areas that enjoy the cheaper rates while others are paying the high costs of non reclaimed water rates. You don't treat other city services such as fire, police,gas,and electric that way,providing for some and not for others. I propose that all citizens should be given the benefits of the reclaimed water rates or none do, why should some benefit with the savings provided by our tax dollars and others do not. If the city had made constant progress to provide for all you could justify the wait,but this is not the case I propose that by charging those who have the reclaimed water benefits the same amount that those who do not, the excess profits could be used to bring the reclaimed water to all, and then allow everyone to reap the benefits of the reclaimed water rates, or start giving those who have helped fund the advantages of the reclaimed water the same low rate. Respectfuly, Dave Allen Carlsbad, CA Nov. 19, 2019 All Receive -Agenda Item # _UR _ For the Information of the: CllY COUNCIL Oate iW-cA ~cc':f_ CM ¥1-COO ~ DCM (3) ~ Council Memorandum To: City Council and Carlsbad Municipal Water District Board From: Vicki Quiram,.Utilities Di_rector/General Manager Via: Paz Gomez, Deputy City Manager, Public Works {city of Carlsbad Re: Additional Materials for the Nov. 19, 2019 Council Meeting Regarding Staff Report Item No. 16 -Public Hearing for approval of a potable water rate structure modification and proposed two-year rates for potable water, recycled water and wastewater. This memorandum provides additional materials for the Nov. 19, 2019 Joint City Council and Carlsbad Municipal Water District Board Meeting related to Agenda Item No. 16, Exhibit 3, regarding holding a public hearing for water rates. The information in the published materials overstate the current and proposed monthly recycled water delivery charge rates. In Exhibit 3, the published materials state the current and proposed monthly recycled water delivery charge rates are: Monthly Recycled Water Delivery Charge Two Year Rates 1/1/2020 Current Proposed Meter Size: 5/8" $ 23.69 $ 23.69 3/4" $ 32.69 $ 32.69 1" $ 50.70 $ 50.70 1.5" $ 95.73 $ 95.73 2" $ 149.75 $ 149.75 2.5" $ 212.84 $ 212 .84 3" $ 275.90 $ 275.90 4" $ 455.93 $ 455 .93 6" $ 906.18 $ 906.18 8" $1,446.47 $1,446.47 10" $2,076.82 $2,076.82 Joint Carlsbad Municipal Water District/ Utilities Department 5950 El Camino Real I Carlsbad, CA 92008 I 760-438-2722 t 1/1/2021 Proposed $ 23.69 $ 32.69 $ 50.70 $ 95.73 $ 149.75 $ 212.84 $ 275.90 $ 455.93 $ 906.18 $1,446.47 $2,076.82 Carlsbad Municipal Water District Board Nov. 19,2019 Page 2 Exhibit 3 should state the current and proposed monthly recycled water delivery charge rates are: Monthly Recycled Water Delivery Charge Two Vear Rates 1/1/2020 1/1/2021 Current Proposed Proposed Meter Size: 5/8" $ 23.34 $ 23.34 $ 23.34 3/4" $ 32.22 $ 32.22 $ 32.22 1" $ 49.97 $ 49.97 $ 49.,97 1.5" $ 94.35 $ 94.35 $ 94.35 2" $ 147.59 $147.59 $ 147.59 2.5" $ 209.77 $ 209.77 $ 209.77 3" $ 271.92 $ 271.92 $ 271.92 4" $ 449.35 $ 449.35 $ 449.35 6" $ 893.11 $ 893.11 $ 893.11 8" $1,425.61 $1,425.61 $1,425.61 10" $2,046.87 $2,046.87 $2,046.87 As the cost of service study did not rely on the overstated rates, the error did not affect the cost of service study results. Therefore, staff continues to recommend there be no increase in recycled water rates for calendar years 2020 and 2021. cc: Scott Chadwick, City Manager Elaine Lu key, Chief Operations Officer Celia Brewer, City Attorney Public Hearing for CY2020 & 2021 Utilities Rates Vicki Quiram, Utilities Director Ligeia Heagy, Utilities Department November 19, 2019 Requested Action •Adopt the proposed calendar year 2020 and 2021 utilities rates. 2 California Proposition 218 •Overview –Majority Protest Public Hearing •Schedule –Sep. 17, 2019: Set the majority-protest public hearing date for Nov. 19, 2019 –Oct. 1, 2019: Mailed the Notice of Hearing (minimum 45 days ahead of public hearing) –Nov. 19, 2019: Hold majority-protest public hearing, set rates –Jan. 1, 2020: Implement new rates •Protest process 3 Utilities Cost of Service Study •Carollo Engineers, Inc. •Objectives: –Ensures charges are aligned with the cost of providing services –Comply with Prop 218, state constitution, and legal requirements 4 Potable Water Revenue 5 •No rate increase for last two years •Revenue increase of –1% for CY2020, and –2% for CY2021 •Increase primarily driven by: –SDCWA and MWD increases –cost of water (55%) –SDCWA capital improvement program –Demand changes Potable Water –Rates 6 Potable Water -Single Family 5/8ths Meter -Delivery Charge History $30.00 $24.72 $24.72 $25.02 $25.52 $25.00 $24.11 $21.08 $22.19 $20.07 ov $20.00 ~ n;! ..c u ~ $15.00 ,v .::! Q) o $10.00 $5.00 $0.00 2014 2015 2016 2017 2018 2019 2020 2021 Calendar Year 2019 Water Rate Comparison –Single Family Residential 7 Regional Monthly SFR Water Bill $140 $120 $100 iii $80 r: r· .. .. ,1""1 r , .. > :c .... $60 c:: 0 ~ $40 I $20 ' $-.. . . . . ... . . . . . . . .. . . . . .. . .. .. . • • .. .. • -Fixed Charge -Commodity Charge --Regional Average Recycled Water Revenue and Rates 8 •No revenue increase recommended •No rate increases proposed Recycled Water –Rate History and Value 9 $6.00 $5.00 41 $4.00 ... ro ci: u ·;: ; S3.00 E ::, g $2.00 $1.00 $- Volumetric Charge -Recycled Water Rate vs. Potable Irrigation Rate $4.15 $4.22 $3.85 si.so ......... . .......... S3.53 $3.27 2011 2012 2013 2014 Recycled Water Rate -Potable Irrigation Rate $4.44 2015 $4.67 2016 Calendar Year $5.03 2017 S5.16 ······ ..... $3.79 2018 S5.16 ··········· ················ $5.31 ....... ?.?·41 ········· $3.79 $3.79 $3.79 2019 2020 2021 ......... Linear (Recycled Water Rate) ......... Linear (Potable Irrigation Rate) Wastewater Revenue 10 •No increases for the last 4 years •Revenue increase –3% for CY2020 –3% for CY2021 •Increased costs associated with Encina Wastewater Authority –CalPers pension obligation -100% pay-off over 3 years ($4.1M) –Capital Improvement Program ($95M –over the next 10 yrs) •Inflation (chemicals and energy) •Wastewater CIP (asset management plan & SCADA) Wastewater –Historical Rates 11 Wastewater -Single Family Fixed Monthly Charge $30.00 $29.52 $29.00 $28.66 QJ $27.81 $27.81 $27.81 $27.81 ~ $28.00 ~ u 2!:-$27.00 ~ $26.03 .... C: ~ $26.00 $25.52 ,:, QJ $25.00 .2:S u.. $24.00 $23.00 2014 2015 2016 2017 2018 2019 2020 2021 Calendar Year 2019 Wastewater Rate Comparison –Single Family Residential 12 $160 $140 $120 $100 $80 $60 $4o I s211s~ $20 $- Regional Monthly SFR Wastewater Bill .~111 11 1111 -Commodity Charge Example of Monthly Bill Changes 13 Current Bill Proposed Bill (Jan. 1, 2020) Proposed Bill (Jan. 1, 2021) Potable Water $68.81 $69.84 $71.33 Wastewater $27.81 $28.66 $29.52 Total SF Residential $96.62 $98.50 $100.85 What does one gal of water cost for the average residential customer? Less than one Penny! What Can Buy You? 14 9,257 gallons 39 gallons 15 gallons 7 gallons 3 gallons Requested Action 15 •Adopt the proposed CY2020 & CY2021 utilities rates. The Following is the previous presentation –in case we need to refer to one of the slides during the question period 16 Public Hearing for CY2020 & 2021 Utilities Rates Vicki Quiram, Utilities Director Ligeia Heagy, Utilities Department September 17, 2019 Requested Action •Set the date for a public hearing on the proposed CY2020 & CY2021 utilities rates. 18 California Proposition 218 •Overview –Majority Protest Public Hearing •Schedule –Sep. 17, 2019: Set the majority-protest public hearing date for Nov. 19, 2019 –Oct. 1, 2019: Mailed the Notice of Hearing (minimum 45 days ahead of public hearing) –Nov. 19, 2019: Hold majority-protest public hearing, set rates –Jan. 1, 2020: Implement new rates •Protest process 19 Utilities Cost of Service Study •Carollo Engineers, Inc. •Objectives: –Comply with Prop 218, state constitution, and legal requirements –Update data on current customer usage demands –Ensure sufficient funding for operations 20 Utilities Cost of Service Study •Process –Revenue Requirement –Functional Allocation –Customer Class Allocation –Rate Design 21 Customer Classes Potable Water Wastewater Single Family Single Family Multi-family Multi-family Non-Residential Commercial Commercial Schools Agriculture Irrigation Customer Classes - Examples 22 Utilities Cost of Service Study 23 Results •Rebalances rates to account for shifting demand between classes •Potable rate structure revision to mirror usage patterns -Proposed Tier 3 deletion for multi-family residential (<5%) •Reserve Policy for each utility: target of 40% of operating budget Potable Water Revenue 24 •Revenue increase of 1% for CY2020, and 2% for CY2021 •Increase primarily driven by: –Demand pattern shifts between customer classes –SDCWA and MWD increases –cost of water –SDCWA capital improvement program SDCWA Demand Forecast 25 Historical & Forecasted Water Sales 700 600 _, 500 a: u.. ~ 400 ~ "O ~ 300 V, ::, 0 = I-200 100 0 Revenue Impact: • In 2008 $1 /AF= $620,000 • In 2015, $1 /AF= $500,000 • In 2019, $1/AF=$395,000 56% increase ($1.56/AF) to generate 2008 levels ($620,000) 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Fiscal Year • Forecasted Deliveries 4 SDCWA Cost Breakdown 26 Recommended CY 2020 Cost of Water Breakdown $1,800 $1,600 $1,400 $1,200 LL. $1,000 :::: = $800 $600 $400 $200 $- ■ Transportation * ■ Supply Reliability* Storage• ■ Customer Service • ■ Melded M&I Treatment Rate ■ Melded M&I Supply Rate Untreated Water Cost Approved CY 2019 $120.00 $80.00 $171.00 $61.00 $276.00 $909.00 $1,341.00 $1,617.00 Preliminary St. %L'. CY 2020 $132.00 $12.00 10.0% $104.00 $24.00 30.0% $181.00 $10.00 5.8% $64.00 $3.00 4.9% $280.00 $4.00 1.4% $925.00 $16.00 1.8% $1,406.00 $65.00 4.8% $1,686.00 $69.00 4.3% 10 Potable Water –where does the money go? 27 Other Financing Uses 4% Personnel 7% M & 0 & Capital Outlay 12% FY 2020 Expenses Depreciation 7% MWD/CWA Fixed charges 11% Water Purcha, 44% • Water Purchases • MWD/CWA Fixed charges • M & 0 & Capital Outlay • Personnel • Other Financing Uses • CIP • Depreciation Potable Water –Rates 28 Potable Water -Single Family 5/8ths Meter -Delivery Charge History $30.00 $24.72 $24.72 $25.02 $25.52 $25.00 $24.11 $21.08 $22.19 $20.07 ov $20.00 ~ n;! ..c u ~ $15.00 ,v .::! di o $10.00 $5.00 $0.00 2014 2015 2016 2017 2018 2019 2020 2021 Calendar Year 2019 Water Rate Comparison –Single Family Residential 29 Regional Monthly SFR Water Bill $140 $120 $100 iii $80 r: r· .. .. ,1""1 r , .. > :c .... $60 c:: 0 ~ $40 I $20 ' $-.. . . . . ... . . . . . . . .. .. . . .. . .. .. . • • .. .. • -Fixed Charge -Commodity Charge - -Regional Average Recycled Water Revenue and Rates 30 Good news! •No revenue increase recommended •No rate increases proposed Recycled Water –where does the money go? 31 FY 2020 Expenses • Water Purchases • M & 0 & Capital Outlay • Personnel • Debt Service • Encina Services • CIP • Depreciation Recycled Water –Rate History and Value 32 $6.00 $5.00 41 $4.00 ... ro ci: u ·;: ; S3.00 E ::, g $2.00 $1.00 $- Volumetric Charge -Recycled Water Rate vs. Potable Irrigation Rate $4.15 $4.22 $3.85 si.so ......... . .......... S3.53 $3.27 2011 2012 2013 2014 Recycled Water Rate -Potable Irrigation Rate $4.44 2015 $4.67 2016 Calendar Year $5.03 2017 S5.16 ······ ..... $3.79 2018 S5.16 ··········· ················ $5.31 ....... ?.?·41 ········· $3.79 $3.79 $3.79 2019 2020 2021 ......... Linear (Recycled Water Rate) ......... Linear (Potable Irrigation Rate) Wastewater Revenue 33 •Revenue increase of 3% for CY2020, and 3% for CY2021 •Increased costs associated with Encina Wastewater Authority –CalPers pension obligation -100% pay-off over 3 years ($4.1M) –Capital Improvement Program ($95M –over the next 10 yrs) •Inflation (chemicals and energy) •Wastewater CIP (asset management plan & SCADA) Wastewater –where does the money go? 34 M & 0 & Capital Outlay 19% • M & O & Capital outlay • Personnel • Other Financing Uses • Encona Ser111ces • Encina CIP • CIP Depreciation Wastewater –Historical Rates 35 Wastewater -Single Family Fixed Monthly Charge $30.00 $29.52 $29.00 $28.66 Q.J $27.81 $27.81 $27.81 $27.81 ~ $28.00 .c u 2--$27.00 .c -$26.03 C ~ $26.00 $25.52 -c:, -~ $25.00 I.I.. $24.00 $23.00 2014 2015 2016 2017 2018 2019 2020 2021 Calendar Year Wastewater - Breweries 36 Breweries FY 2020 FY 2021 B1 – Brewery without a restaurant and hauls waste for outside treatment $2.80 $2.88 B2 – Brewery without a restaurant that does not haul waste for outside treatment $9.07 $9.34 B3 – Brewery with a restaurant and hauls waste for outside treatment $7.87 $8.10 B4 – Brewery with a restaurant that does not haul waste for outside treatment $11.26 $11.60 PROPOSED 2019 Wastewater Rate Comparison –Single Family Residential 37 $160 $140 $120 $100 $80 $60 $4o I s211s~ $20 $- Regional Monthly SFR Wastewater Bill .~111 11 1111 -Commodity Charge Example of Monthly Bill Changes 38 Current Bill Proposed Bill (Jan. 1, 2020) Proposed Bill (Jan. 1, 2021) Potable Water1a $68.81 $70.55 $72.42 Wastewater1b $27.81 $28.66 $29.52 Total SF Residential $96.62 $99.21 $101.94 Requested Action 39 •Approve the proposed CY2020 & CY2021 utilities rates.