Tiered Rates Tiered Rates Cathedral City Cathedral City City - PowerPoint PPT Presentation

Tiered Rates Tiered Rates Cathedral City Cathedral City City City Council Study Session Council Study Session Oct. 22, 2008 Oct. 22, 2008

Coachella Valley water demands Coachella Valley water demands 668,900 acre-feet 668,900 acre-feet Domestic 34% Ag 50% Golf 16% Agriculture Golf Domestic * Valleywide demands on all sources of water

Water Management Plan Water Management Plan goals goals Agriculture – 7% reduction by 2015 � 5% by 2010 � Golf – Domestic – 10% by 2010 (currently at 6%)

Why adopt tiered rates? Why adopt tiered rates?

#1 Reason: Water Conservation #1 Reason: Water Conservation • Proven water savings results 22% - 37% • Increased cost of imported water • Proposed legislation calls for 20% reduction by 2020 • Reduced water down streets • Lower maintenance costs • Keep economy viable • Ensure long-term viability of the aquifer • Prevent subsidence • Improve overall perception of the valley’s water use

Water consumption and efficiency Water consumption and efficiency 70.0 14.00 60.0 12.00 Wasted Water 50.0 10.00 Weather (Et in inches) Consumption (Ccf) 40.0 8.00 30.0 6.00 20.0 4.00 10.0 2.00 0.0 0.00 r y y h r r l e y t r e y i s e e e r r r n c a l b a a p u u b b b r u M m u u J m m a A g o J n r M u t e b e c e a A v e c t O J p o F e e N D S Month Consumption Eto

What are the different What are the different types of water rates? types of water rates?

Volumetric rates Volumetric rates (like CVWD uses now) are: (like CVWD uses now) are: • A rate structure where the unit price of water remains the same regardless of water consumption • Little economic incentive to conserve Base rate Units of water Units of water

Standard tiered rates are: Standard tiered rates are: • A rate structure where the price of water increases with each higher level, or tier, of consumption • A “one size fits all” solution • A simple, increasing block rate • Difficult to attain • Based on arbitrary tiers Higher rate Middle rate Low rate Units of water Units of water

Water budget-based Water budget-based tiered rates are: tiered rates are: • Individualized, defining the water budget using one or more customer characteristics, including: – Number in household – Lot size – Weather conditions • An incentive to be efficient • A means to target inefficient water users

Who else uses a tiered rate Who else uses a tiered rate structure? structure?

Southern California Agencies: Southern California Agencies: • Out of State Agencies: Out of State Agencies: • Hi-Desert Water Agency Hi-Desert Water Agency • Salt Lake City Salt Lake City • Mission Springs Mission Springs • Southern Nevada Southern Nevada • Cucamonga Water District Cucamonga Water District • Las Vegas Las Vegas • Irvine Ranch Water District Irvine Ranch Water District • Albuquerque Albuquerque • Rancho California Rancho California • Centennial, Colorado Centennial, Colorado • San Clemente San Clemente • Aurora, Colorado Aurora, Colorado • Capistrano Valley Capistrano Valley • Castle Rock, Colorado Castle Rock, Colorado • Santa Barbara Santa Barbara • Boulder, Colorado Boulder, Colorado • Crescenta Crescenta Valley Valley • Morrisville, NC Morrisville, NC • LA DWP LA DWP • Cary, NC Cary, NC • Lake Arrowhead Lake Arrowhead • Marco Island, FL Marco Island, FL Northern California Agencies: Northern California Agencies: • City of Rhonert City of Rhonert Park ark • Contra Costa Water Contra Costa Water • Santa Rosa Santa Rosa • Monterey Monterey • Redwood City Redwood City

Starting point Starting point • Start with residential (single family homes) and dedicated landscape customers (cities, school, HOAs, etc) only • Implement in 2009

Indoor allocation Indoor allocation • Provides generous “indoor needs” allotment based on more than 4 people (10 Ccf or 250 gpd) • Industry standard for indoor use is 60 gpd per person

Landscaped area Landscaped area • Assumes 45% of lot is landscaped

Promotes irrigation efficiency Promotes irrigation efficiency • Assume grass landscaping with spray irrigation • Irrigation efficiency important for meeting water budgets

Adjusts for weather Adjusts for weather • Adjusts for observed weather data • Five climate zones • Many people forget to reduce water usage as temperatures cool, which will affect their ability to meet their water budgets

Appeals process Appeals process • Adjusts for appeals, as needed • Can appeal number in household, lot size, irrigable area, weather zone and special circumstances

Sample tier structure Sample tier structure for residential customers for residential customers Tier Range Rate multiplier 1 Up to 10 Ccf (indoor 90% Base Rate (indoor only) needs) Up to 105% of 2 water budget Base Rate Up to 200% of 3 water budget 120% Up to 300% of 4 water budget 200% 300% or more of 5 water budget 400% * Ccf = 100 cubic feet of water

How residential customers How residential customers will be affected will be affected % of accounts % of accounts Tier in range (Jan.) in range (July) 1 (indoor 42.93% 33.10% needs) 2 17.77% 28.33% 3 26.03% 26.16% 4 8.03% 8.98% 13% of residential customers use 5 5.25% 3.43% 30% of water

A real example A real example • 8,354 square-foot corner lot • Desert landscaping in front and side yards, grass in back • Pool • Smart Controller • Two adults and a child living at home

Annual water 140 cost before: $336.86 After: $326.89 120 100 Water Consumption Ccf 80 60 40 20 0 January September November December February March May June July August October April Water Budget Actual Consumption Indoor Needs Tier 2 Tier 3 Tier 4

Real example #2 Real example #2 • 9,630 square-foot corner lot • Grass in front and back yards • Pool • No Smart Controller • Two adults and a teenager living at home

140 Annual water cost before: 120 $663.98 After: $704.83 100 Water Consumption Ccf 80 60 40 20 0 r y y e y h l r y t r r i e s r r r n l e e e c a u b a a p u b b r u b M J u u a A m g J m o m n M r u t e b e e a c A v e O c t J p o F e e N D S Water Budget Actual Consumption Indoor Needs Tier 2 Tier 3 Tier 4

How will CVWD help How will CVWD help residential customers meet residential customers meet their water budget? their water budget? • Smart Controller program • On-site technical assistance • Brochures, web-site info, bill stuffers • Lush & Efficient Landscape Gardening in the Coachella Valley • Landscape Workshop • Appeals process

What about non-residential What about non-residential customers? customers? • Dedicated landscape meters (HOAs, cities, schools, some businesses) – Based on landscaped area – No indoor allocation – Appeals process • Other customer types (hotels/motels, restaurants, etc.) will be phased in

Sample tier structure for dedicated Sample tier structure for dedicated landscape customers landscape customers % of accounts % of accounts Tier in range (Jan.) in range (July) 1 NA NA (indoor needs) 2 46.62% 51% Landscape 3 18.34% 22.23% customers account for 4% of domestic 4 11.49% 11.8% customers, but use 30% of domestic water 5 23.55% 14.97%

A real example A real example Large public school • 14 landscape meters • 46 acres • 52% irrigated • Meters/rate for indoor use stay the same

30,000 Annual water cost before: $71,025 After: 25,000 $76,275 20,000 15,000 10,000 5,000 If stayed within budget: $62,565 0 y y e h y y t r r r r l r i s e e e r n l e c r a a u a p u b b b b r M u u J g u a A m o m m J n r u M t b e a A e c e e J t O v c p o F e e N D S Water Budget Actual Consumption Tier 1 Tier 2 Tier 3

Real example #2 Real example #2 Public parkway • 1 landscape meter • 2 acres • 100% irrigated

Annual water cost before: 3,000 $20,251 After: 2,500 $44,052 2,000 1,500 1,000 500 If stayed within budget: $3,491 0 y e y h y y t r r l r r s r i e e r r n l e e c a a u a p u b b u b b r M u J g u a A o m J m m n u r M t b a e c e e A e O J t v c p F o e e N D S Water Budget Actual Consumption Tier 1 Tier 2 Tier 3

How will CVWD help How will CVWD help landscape customers meet their landscape customers meet their water budget? water budget? • Large Landscape Smart Controller program • Individual water audits and analyses • Encourage customers to be more actively involved in landscaping company/staff’s decisions regarding watering and plant choice • Educational opportunities • Bill Stuffer, brochure, web-site