2019 Wa te r Ra te Study Drive rs Schedule: The previous rate - - PDF document

▶
2019 wa te r ra te study drive rs
SMART_READER_LITE
LIVE PREVIEW

2019 Wa te r Ra te Study Drive rs Schedule: The previous rate - - PDF document

Oct 18, 2023 250 likes •448 views

Water and Sewer Rate Study October 1, 2019 Final Rate Options City of Santa Ana 2019 Water and Recycled Water Rate Study Re c o mme nda tio ns to City Co unc il I te m 65A Oc to b e r 1, 2019 Co ntinue d fro m Se pte mb e r 17,

slide-1
SLIDE 1

Water and Sewer Rate Study October 1, 2019 ‐ Final Rate Options Stantec Consulting & Hildebrand Consulting 1

City of Santa Ana 2019 Water and Recycled Water Rate Study

Re c o mme nda tio ns to City Co unc il – I te m 65A

Oc to b e r 1, 2019

Co ntinue d fro m Se pte mb e r 17, 2019, Co unc il Me e ting

2019 Wa te r Ra te Study Drive rs

  • Schedule:

 The previous rate study was completed in 2014  The last adopted rate adjustments were for FY 2019 (last year)

  • Legal:

 Recent court decisions have “raised the bar” for transparency and cost-to- service requirements for water rates (Prop 218).

  • Rate Structure:

 Revenue was significantly lower than forecasted during drought years

  • System Investment Needs:

 20% of the water distribution infrastructure is past its useful life  70% of the existing infrastructure will reach its useful life by 2040  A Water Master Plan was developed to identify system deficiencies and develop a capital program 2

slide-2
SLIDE 2

Water and Sewer Rate Study October 1, 2019 ‐ Final Rate Options Stantec Consulting & Hildebrand Consulting 2

Surve y – Re side ntia l Wa te r Use rs

(typic a l mo nthly wa te r use with 5/ 8” x 3/ 4” me te r)

3

Current Proposed (Year 1)

Wa te r E nte rprise Re ve nue

F Y2018 Ac tuals

Ra te Re ve nue

F ixe d Rate Re v e nue 8,392,030 $ Variable Rate Re v e nue 45,154,453 $

T

  • ta l Re ve nue

53,546,483 $ O the r Re ve nue :

Othe r Ope rating Inc o me 826,226 $ Inte re st Inc o me 553,964 $ No n-Ope rating Inc o me 1,187,776 $

T

  • ta l O the r Re ve nue

2,567,966 $ T O T AL REVENUE 56,114,449 $

4

slide-3
SLIDE 3

Water and Sewer Rate Study October 1, 2019 ‐ Final Rate Options Stantec Consulting & Hildebrand Consulting 3

Wa te r E nte rprise E xpe nse s

F Y2018 Ac tuals

5

Purc ha se d Wa te r a nd E le c tric ity

$23,694,899

Sa la rie s a nd Be ne fits

$6,165,137

Othe r Va ria b le O&M

$421,375

F ixe d Ope ra tio ns & Ma inte na nc e Co sts

$9,616,819

Cle a n Wa te r Co mplia nc e

$1,347,355

F ixe d Ove rhe a d

$8,567,409

De b t Se rvic e

$1,361,525

Ca pita l E xpe nditure s

$6,274,059

T

  • tals

$57,448,577

6

Ag ing I nfra struc ture

slide-4
SLIDE 4

Water and Sewer Rate Study October 1, 2019 ‐ Final Rate Options Stantec Consulting & Hildebrand Consulting 4

Wa te r E nte rprise Ma ste r Pla n Ca pita l Spe nding F

  • re c a st

Projects include:

  • Drilling new wells
  • Rehabilitating existing wells
  • Rehabilitating pump stations
  • Rehabilitating tanks
  • AMI project funded with debt
  • Will create 8 full time jobs (@ $185K / FTE)

Historical spending

10-year total: $143.6 million

7 Wate r E nte r pr ise F inanc ial F

  • r

e c ast and Re c omme nde d Rate Inc r e ase s 8

Implementation Schedule Jan.1 Jul.1 Jul.1 Jul.1 Jul.1 Jul.1 Jul.1 Jul.1 Jul.1 Jul.1 Jul.1 Rate Increases

7.00% 7.00% 6.50% 2.00% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%

De bt Issuances

  • $8.7M
  • $11.7M
  • Propose d

E stimate d

$0 $20 $40 $60 $80 $100 $120

FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Total Revenue / Expenses ($M)

Non-Rate Revenue Existing Rate Revenues Rate Revenue from Increases O&M Expenses & Transfers Debt Service Cash-Funded CIP

Expenses Revenues

$0 $50 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 MILLIONS

Minimum Reserves Ending Fund Balance Target Reserves

slide-5
SLIDE 5

Water and Sewer Rate Study October 1, 2019 ‐ Final Rate Options Stantec Consulting & Hildebrand Consulting 5

Pro po se d Wa te r Ra te De sig n Appro a c h

1. Enhance connection between water rates and the cost to provide water service

  • Water usage rates are directly tied to the cost of purchased and pumped water…
  • … this will result in increased fixed revenue and decreased variable revenue

2. Update Pass-Through Provision

  • Automatic updates to rates to reflect changes in wholesale water costs

3. Minor modifications to meter equivalency schedule

  • Bringing the meter equivalency schedule in line with industry standards
  • Reflects the hydraulic capacity of the respective meter sizes.

9

Ra te Struc ture Co st Ca te g o rie s

10

Utility Costs

Drive n b y the size o f the utility infra struc ture

  • Sa la rie s & b e ne fits
  • Ope ra tio ns & ma inte na nc e
  • Ca pita l
  • Asso c ia te d g e ne ra l &

a dministra tive

Commodity Costs

Drive n b y the vo lume o f wa te r so ld

  • Wa te r purc ha se s
  • Pumping e le c tric ity
  • Asso c ia te d g e ne ra l &

a dministra tive Wate r Utility Char ge (fixe d)

34% re ve nue

Wate r Usage Charge (variable )

66% Re ve nue

Cur r e nt fixe d r e ve nue : 16.2%

slide-6
SLIDE 6

Water and Sewer Rate Study October 1, 2019 ‐ Final Rate Options Stantec Consulting & Hildebrand Consulting 6

11

Pro po se d T ie re d Wa te r Usa g e Ra te s

OCWD & Pumped Water Costs (75% of Water Supply – w/In-Lieu) MWD Costs

Tier 1 Tier 2

Unit Cost

  • f Water

($/AF) Volume (AF)

Green Acre Costs

Recycled Water

T ie r 1 Allo c a tio ns*

Current

12

Recommended Account Size: Tier 1 Allocation: Increase Tier 1 allocation with meter size

* Allocation sizes are designed to result in all Tier 1 sales to equal OCWD purchases

slide-7
SLIDE 7

Water and Sewer Rate Study October 1, 2019 ‐ Final Rate Options Stantec Consulting & Hildebrand Consulting 7

Water Usage Charges Current Rate (per CCF) Proposed Rate (per CCF) Tier 1 $3.02 $2.03 Tier 2 $3.59 $4.79 Recycled Water $2.42 $2.15 Tier 1 Water Usage Allocation (CCF per Month) Current Proposed Single Family* 22 10.5 Multi-Family** 22 8.5 Non-Residential* 22 31.0

* Proposed Tier 1 allocation allocated per equivalent meter ** Proposed Tier 1 allocation per dwelling unit

Monthly Water Utility Charge (fixed) Meter Size Current Proposed 5/8" X 3/4" $6.95 $20.51 3/4" $15.10 $30.76 1" $28.65 $51.27 1 1/2" $44.93 $102.53 2" $82.90 $164.04 3" $137.15 $358.84 4" $272.78 $645.91 6" $435.53 $1,332.83 Monthly Rate Multi-Family Residential is currently charged $4.75 per dwelling unit.

Re c omme nde d Wate r Rate Sc he dule

Ye ar 1 13

E xa mple Mo nthly Wa te r Bills Sing le F a mily Ho me s with 5/ 8” X 3/ 4” me te r

Low Water User (5 HCF) Current Proposed $22.05 $30.66 Increase of $8.61 . Typical Water User (10.5 HCF) Current Proposed $38.66 $41.82 Increase of $3.16 . High Water User (25 HCF) Current Proposed $84.16 $111.28. Increase of $27.12

14

slide-8
SLIDE 8

Water and Sewer Rate Study October 1, 2019 ‐ Final Rate Options Stantec Consulting & Hildebrand Consulting 8

Mo nthly Wa te r Bill I mpa c ts Sing le F a mily Custo me rs (a ll me te r size s, 35,991 a c c o unts)

15

Mo nthly Wa te r Bill I mpa c ts Multi-F a mily (All me te r size s, 3,713 a c c o unts)

16

slide-9
SLIDE 9

Water and Sewer Rate Study October 1, 2019 ‐ Final Rate Options Stantec Consulting & Hildebrand Consulting 9

Surve y – Re side ntia l Wa te r Use rs

(typic a l mo nthly wa te r use with 5/ 8” x 3/ 4” me te r)

17

Current Proposed (7% Increase)

18

Ra te Study Ac hie ve me nts

 Enhanced connection between water rates and the cost to provide water service

  • Improves fairness and legal defensibility

 Increased revenue stability through higher fixed rates

  • Stabilizes revenue and makes rates “drought tolerant”

 Rate revenue increases will meet the needs of system deficiencies

  • Addresses deferred maintenance and allows the utility to implement efficient asset

management practices

slide-10
SLIDE 10

Water and Sewer Rate Study October 1, 2019 ‐ Final Rate Options Stantec Consulting & Hildebrand Consulting 10

Ne xt Ste ps

  • Re q ue st City Co unc il to dire c t Sta ff to se nd Pro po sitio n 218

No tific a tio n

  • 45-da y wa iting pe rio d
  • Pub lic He a ring o n o r a fte r No ve mb e r 19, 2019 to a do pt ra te s
  • Ra te s a re a c tive o n Ja nua ry 1, 2020

19

E xtra Wa te r Bill I mpa c t Slide s

slide-11
SLIDE 11

Water and Sewer Rate Study October 1, 2019 ‐ Final Rate Options Stantec Consulting & Hildebrand Consulting 1

City of Santa Ana 2019 Sewer Rate Study

Re c o mme ndatio ns to City Co unc il – I te m 65A

Oc to be r 1, 2019

Co ntinue d fro m Se pte mbe r 17, 2019, Co unc il Me e ting

2019 Se we r Rate Study Drive rs

  • Schedule:
  • The last rate study was completed in 2014
  • The last adopted rate adjustments were for FY 2019 (last year)
  • Legal:
  • Recent court decisions have “raised the bar” for transparency and cost-to-

service requirements for water rates (Prop 218).

  • Rate Structure:
  • Revenue is being un-necessarily affected by drought events
  • System Needs: Sewer system has significant capital investment needs.
  • Currently averaging less than 1 mile of sewer line replacement per year
  • Proposed plan jumps sewer line replacement to an average of 4 miles a year

2

slide-12
SLIDE 12

Water and Sewer Rate Study October 1, 2019 ‐ Final Rate Options Stantec Consulting & Hildebrand Consulting 2

Surve y – Re side ntial Se we r Use rs

(typic al mo nthly wate r use with 5/ 8” X 3/ 4” me te r)

3 Current Proposed (Year 1)

Se we r E nte rprise Re ve nue

F Y2018 Ac tuals

Ra te Re ve nue

F ixe d Rate Re v e nue 1,053,874 $ Variable Rate Re ve nue 5,290,773 $

T

  • ta l Re ve nue

6,344,647 $ O the r Re ve nue :

Othe r Ope rating Inc o me 2,605 $ Inte re st Inc o me 223,019 $ No n-Ope rating Inc o me 33,882 $

O the r Re ve nue 259,506 $ Re stric te d Re ve nue

Co nne c tio n F e e s 1,480,855 $

T

  • ta l Re stric te d Re ve nue

1,480,855 $ T O T AL REVENUE 8,085,008 $

slide-13
SLIDE 13

Water and Sewer Rate Study October 1, 2019 ‐ Final Rate Options Stantec Consulting & Hildebrand Consulting 3

Se we r E nte rprise O&M E xpe nse s

F Y 2018 E stimate

Salarie s and Be ne fits $1,821,741 F ixe d Ope ratio ns & Mainte nanc e Co sts $2,392,588 Mino r Capital Outlay $183,568 F ixe d Ove rhe ad $519,266 Capital E xpe nditure s $194,350

T

  • tals

$5,111,514

Se we r E nte rprise Capital Spe nding F

  • re c ast

6 10-year total: $83.0 million Historical spending Projects include:

  • Immediately ramp up to 7

miles of pipe replacement to draw down on the $23M from OCSD

  • Leveling off at 3.5 miles of

pipe replacement thereafter

  • San Lorenzo Pump Station in

FY 2020 ($7M)

  • Will create 3 full time jobs

(@ $185K / FTE) *Assumes a cost of $1.5 million per mile of pipe)

slide-14
SLIDE 14

Water and Sewer Rate Study October 1, 2019 ‐ Final Rate Options Stantec Consulting & Hildebrand Consulting 4

Se we r E nte rprise F ina nc ia l F

  • re c a st

a nd Re c omme nde d Ra te Inc re a se s

7

Implementation Schedule Jan.1 Jul.1 Jul.1 Jul.1 Jul.1 Jul.1 Jul.1 Jul.1 Jul.1 Jul.1 Jul.1 Rate Increases

3.0% 5.0% 9.0% 9.0% 9.0% 9.0% 9.0% 9.0% 9.0% 3.0% 3.0%

Average Single Family per Month $7.03 $5.60 $5.88 $6.41 $6.99 $7.62 $8.31 $9.06 $9.88 $10.77 $11.09 $11.42 Pr

  • pose d

E stimate d

$0 $5 $10 $15 $20 $25 $30 $35

FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030

Total Revenue / Expenses ($M)

Non-Rate Revenue Existing Rate Revenues Rate Revenue from Increases O&M Expenses & Transfers Cash-Funded CIP

Expenses

Revenues

$0 $10 $20 $30 $40

FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030

MILLIONS

Target Reserves Ending Fund Balance Minimum Reserves

Pro po se d Se we r Rate De sig n Mo dific atio ns

1. Create 3 customer classes to account for a Return-to-sewer factor

  • 50% Single Family Residential
  • 80% Multi-Family Residential
  • 90% Non-Residential

2. Minor Modifications to meter equivalence factors

  • Bringing the meter equivalency schedule in line with industry standards

3. Fixed utility charges only

  • Use of fixed charges only is recommended, as all utility expenses are fixed costs
  • Utility charges are scaled largely based on meter size

8

slide-15
SLIDE 15

Water and Sewer Rate Study October 1, 2019 ‐ Final Rate Options Stantec Consulting & Hildebrand Consulting 5

F ixe d Re ve nue Co st Cate g o rie s

9

Ac c ount Costs (7% )

Drive n by the c o st o f manag ing ac c o unts

  • Billing
  • Custo me r Se rvic e

Me te r Costs

Drive n by the size o f the c o lle c tio n syste m infrastruc ture

  • Ope ratio ns
  • Mainte nanc e
  • Capital

Se we r Utility Cha rg e

T

  • ta l fixe d re ve nue : 100% (vs. 17% c urre ntly)

10

Pro po se d Rate Struc ture

Me te r Size Sing le Fa m ily Multi- F a m ily R eside ntia l Non- R e sidentia l

5/8" X 3/4" $5.60 $8.40 $9.33 Fixed (Monthly): 3/4" $7.93 $12.12 $13.52 $1.68 1" $12.59 $19.57 $21.90 1 1/2" $24.23 $38.20 $42.85 Volumetric: 2" $38.20 $60.55 $68.00 $0.43 / CCF 3" $82.43 $131.32 $147.62 4" $147.62 $235.63 $264.96 6" $303.61 $485.21 $545.74 8" $559.71 $894.97 $1,006.73 10" $885.66 $1,416.49 $1,593.43

Pr

  • posed Monthly R

a te s (100% fixed) Cur r ent R a tes

slide-16
SLIDE 16

Water and Sewer Rate Study October 1, 2019 ‐ Final Rate Options Stantec Consulting & Hildebrand Consulting 6

Mo nthly Se we r Bill I mpac ts Sing le F amily Re side ntial (5/ 8” X 3/ 4”me te r, 35,915 ac c o unts)

11

E xample Mo nthly Se we r Bills Sing le F amily Ho me s (with typic al wate r usag e o f 10.5 HCF

) 5/8 x 3/4" Meter Current Proposed $6.20 $5.60 Decrease of $0.60 . 3/4“ Meter Current Proposed $ 6.20 $7.93 Increase of $1.73 . . 1” Meter Current Proposed $6.20 $12.59 . Increase of $6.39

12

slide-17
SLIDE 17

Water and Sewer Rate Study October 1, 2019 ‐ Final Rate Options Stantec Consulting & Hildebrand Consulting 7

Surve y – Re side ntial Se we r Use rs

(ave rag e mo nthly wate r use , 5/ 8” X 3/ 4” me te r)

13 Current Proposed (with 3% increase)

F OG Charg e

Charge is designed to pay for the extra cost of monitoring accounts with fats, oils & grease abatement measures (primarily food establishments).

  • Annual cost of program: $673,000
  • 1,372 Accounts
  • FOG Charge: $40.92 per month, (currently $24.38)

14

slide-18
SLIDE 18

Water and Sewer Rate Study October 1, 2019 ‐ Final Rate Options Stantec Consulting & Hildebrand Consulting 8

15

Rate Study Ac hie ve me nts

 Enhanced connection between sewer rates and the cost to provide water service

  • Improves fairness and legal defensibility

 Increased revenue stability through fixed rates

  • Stabilizes revenue and makes rates “drought tolerant”

 Rate revenue increases will meet the needs of system deficiencies

  • Addresses deferred maintenance and allows the utility to implement efficient asset

management practices

Ne xt Ste ps

  • Re que st City Co unc il to dire c t Staff to se nd Pro po sitio n 218

No tific atio n

  • 45-day waiting pe rio d
  • Public He aring o n o r afte r No ve mbe r 19, 2019 to ado pt rate s
  • Rate s are ac tive o n January 1, 2020

16