Temescal Valley Water District

Size: px
Start display at page:

Download "Temescal Valley Water District"

Transcription

1 Temescal Valley Water District Comprehensive Water, Recycled Water, and Wastewater Cost of Service Study Draft Report / December 7, 2016

2

3 24640 Jefferson Avenue Suite 207 Murrieta, CA Phone November 23, 2016 Mr. Jeff Pape General Manager Temescal Valley Water District Temescal Canyon Road Temescal Valley, CA Subject: Water, Recycled Water, and Wastewater Rate Study Report Dear Mr. Pape, Raftelis Financial Consultants, Inc. (RFC) is pleased to provide this Water, Recycled Water, and Wastewater Cost of Service Rate Study Report (Report) for the Temescal Valley Water District (District). This Study includes a comprehensive review of the District s financial plan, usage trends, accounts, customer types, capital improvement plan and reserves to establish equitable rates that provide sufficient revenue over a five-year planning period. The proposed rate structures and resulting rates were derived based on the cost of service principles and are equitable and in compliance with Proposition 218. The major objectives of the study include the following:» Develop financial plans for the water, recycled water, and wastewater enterprises to ensure financial sufficiency, meet operation and maintenance (O&M) costs, and ensure sufficient funding for capital replacement and refurbishment (R&R) needs» Develop sound and sufficient reserve fund targets» Review current rate structures for the water, recycled water, and wastewater enterprises The Report summarizes the key findings and recommendations related to the development of the financial plans for Water, Recycled Water, and Wastewater utilities and the development of the updated water and recycled water rates. It has been a pleasure working with you, and we thank you, Allison Harnden, Mel McCullough, and other District Staff for the support provided during the course of this study. Sincerely, RAFTELIS FINANCIAL CONSULTANTS, INC. Habib Isaac Manager Andrea Boehling Lead Consultant

4 TABLE OF CONTENTS 1. EXECUTIVE SUMMARY BACKGROUND Objectives of the Study CURRENT RATES Water Rates Recycled Water Rates Wastewater Rates FINANCIAL HEALTH AND PROPOSED RECOMMENDATIONS Water Utility Financial Health Recycled Utility Financial Health Wastewater Utility Financial Health INTRODUCTION STUDY APPROACH LEGAL REQUIREMENTS California Constitution - Article XIII D, Section 6 (Proposition 218) California Constitution - Article X, Section Cost-Based Rate Setting Methodology KEY ASSUMPTIONS WATER RATE STUDY WATER UTILITY FINANCIAL PLAN Revenue from Current Rates O&M Expenses Capital Improvement Plan Reserve Requirements Financial Outlook at Current Rates Recommendations and Financial Plan WATER UTILITY COST OF SERVICE STUDY Proportionality Cost of Service Process Temescal Valley Water District Water, Recycled Water, and Wastewater Rate Study Report

5 4.2.3 Cost of Service Analysis Rate Design Water Rates RECYCLED WATER RATE STUDY RECYCLED WATER UTILITY FINANCIAL PLAN Revenue from Current Rates O&M Expenses Capital Improvement Plan Reserve Requirements Financial Outlook at Current Rates Recommendations and Financial Plan RECYCLED UTILITY COST OF SERVICE STUDY Cost of Service Analysis Rate Design Recycled Rates WASTEWATER RATE STUDY WASTEWATER UTILITY FINANCIAL PLAN Revenue from Current Rates O&M Expenses Capital Improvement Plan Reserve Requirements Financial Outlook at Current Rates Recommendations and Financial Plan Temescal Valley Water District Water, Recycled Water, and Wastewater Rate Study Report

6 LIST OF TABLES Table 1: Current Monthly Water Charges... 2 Table 2: Current Variable Usage Charge... 2 Table 3: Current Water Pumping Charges... 2 Table 4: Current Monthly Recycled Charge... 3 Table 5: Current Recycled Pumping Charges... 3 Table 6: Current and Rate Structure... 6 Table 7: FY Base Fixed Charges... 7 Table 8: FY RTS Charge (Water)... 7 Table 9: FY Commodity and Pumping Rates... 8 Table 10: FY Recycled Base Fixed Charges (Same as Water)... 9 Table 11: FY Commodity Rates... 9 Table 12: FY Recycled Pumping Rates (Same as Water) Table 13: Inflationary Factor Assumptions Table 14: Growth, Demand, and Revenue Assumptions Table 15: Projected Annual Service Charge Revenue Table 16: Projected Annual RTS Revenue Table 17: Projected Annual Variable Revenue Table 18: Projected Annual Pumping Revenue Table 19: Projected Annual Private Fire Protection Revenue Table 20: Projected Water Revenues Table 21: Projected O&M Expenses Table 22: Baseline Water Utility Capital Improvement Plan Table 23: Projected Water Utility CIP Table 24: Water Financial Plan Table 25: Revenue Requirements Table 26: Functionalized Expenses Table 27: System-Wide Peaking Factors Table 28: O&M Allocation Max Hour Table 29: O&M Allocation (%) Table 30: Revenues for Tier 1 Offset Table 31: Allocation of Costs to Cost Components Table 32: Residential Tier Adjustments Table 33: Usage by Customer Class and Tier Table 34: Customer Service Component - Unit Rate Table 35: Equivalent Meter Units Table 36: Meter Capacity Component Unit Rate Table 37: MWD Capacity Component Unit Rate Table 38: MWD RTS Component Unit Rate Table 39: Supply Component Unit Rate Table 40: Delivery Component Unit Rate Table 41: Class Peaking Factors Temescal Valley Water District Water, Recycled Water, and Wastewater Rate Study Report

7 Table 42: Peaking Costs Allocated to Classes Table 43: Residential Peaking Factors Table 44: Peaking Component Unit Rate Table 45: Revenue Offset Allocated to Class Table 46: Revenue Offset Component Unit Rate Table 47: Pumping Component Unit Rate Table 48: Pumping Requirement Allocated to Zones Table 49: FY 2017 Fixed Charge ($/Month) Table 50: 5-Yr Fixed Rates ($/Month) Table 51: FY 2017 Variable Rates ($/ccf) Table 52: 5-Yr Variable Rates ($/ccf) Table 53: 5-Yr Pumping Rates ($/ccf) Table 54: Projected Annual Service Charge Revenue Table 55: Projected Annual Variable Revenue Table 56: Projected Annual Pumping Revenue Table 57: Projected Recycled Water Revenues Table 58: Projected Recycled O&M Expenses Table 59: Baseline Recycled Utility Capital Improvement Plan Table 60: Projected Recycled Utility CIP Table 61: Recycled Financial Plan Table 62: Recycled Revenue Requirements Table 63: Recycled Fixed Revenue Requirements Table 64: Recycled Pumping Requirement Table 65: Recycled Functionalized Expenses Table 66: Recycled System-Wide Peaking Factors Table 67: Recycled O&M Allocation (%) Table 68: Allocation of Costs to Cost Components Table 69: Supply Component Unit Rate Table 70: Delivery Component Unit Rate Table 71: Peaking Component Unit Rate Table 72: FY 2017 Fixed Charge ($/Month) Table 73: 5-Yr Fixed Rates ($/Month) Table 74: 5-Yr Pumping Rates ($/ccf) Table 75: FY 2017 Variable Rates ($/ccf) Table 76: Recycled Study Period Revenue Requirements Table 77: Projected Fixed Revenue Table 78: Projected Pumping Revenue Table 79: Variable Revenue Requirement Table 80: 5-Yr Variable Rates ($/ccf) Table 81: Projected Annual Service Charge Revenue Table 82: Projected Wastewater Revenues Table 83: Projected Wastewater O&M Expenses Table 84: Baseline Wastewater Utility Capital Improvement Plan Table 85: Projected Wastewater Utility CIP Table 86: Wastewater Financial Plan Temescal Valley Water District Water, Recycled Water, and Wastewater Rate Study Report

8 LIST OF FIGURES Figure 1: Operating Financial Position at Current Rates Figure 2: Baseline Water Capital Improvement Plan and Funding Source Figure 3: Projected Ending Water Reserves at Current Rates Figure 4: Operating Financial Position at Rates Figure 5: Water Capital Improvement Plan and Funding Source Figure 6: Projected Ending Water Reserves at Projected Rates Figure 7: Cost of Service Process Figure 8: Calculation of Tier 1 Allocation Figure 9: Residential Tier Structure Figure 10: Residential Customer Bill Impact Figure 11: Recycled Operating Financial Position at Current Rates Figure 12: Baseline Recycled Capital Improvement Plan and Funding Source Figure 13: Projected Ending Recycled Reserves at Current Rates Figure 14: Operating Financial Position at Rates Figure 15: Recycled Capital Improvement Plan and Funding Source Figure 16: Projected Ending Recycled Reserves at Projected Rates Figure 17: Recycled Customer Bill Impact Figure 18: Wastewater Operating Financial Position at Current Rates Figure 19: Baseline Wastewater Capital Improvement Plan and Funding Source Figure 20: Projected Ending Wastewater Reserves at Current Rates Figure 21: Operating Financial Position at Rates Figure 22: Wastewater Capital Improvement Plan and Funding Source Figure 23: Projected Ending Wastewater Reserves at Projected Rates LIST OF APPENDICES APPENDIX A: Detailed Financial Plans Temescal Valley Water District Water, Recycled Water, and Wastewater Rate Study Report

9 This page intentionally left blank to facilitate two-sided printing. Temescal Valley Water District Water, Recycled Water, and Wastewater Rate Study Report

10

11 1. EXECUTIVE SUMMARY 1.1 BACKGROUND In 2016, the Temescal Valley Water District (District) engaged RFC to conduct a Water, Recycled Water, and Wastewater Cost of Service Rate Study (Study) to develop a financial plan, and design rates for the District s utilities over the next five years. The District s service area is approximately 6,730 acres and is governed by a Board of Directors. The District was formed in 1965 in order to provide water and wastewater services to the residents of Temescal Valley. Currently, the District provides water, recycled water, and wastewater services to residents and customers of Temescal Valley between the Cities of Lake Elsinore and Corona Objectives of the Study The major objectives of the study include the following:» Develop financial plans for the water, recycled water, and wastewater enterprises to ensure financial sufficiency, meet operation and maintenance (O&M) costs, ensure sufficient funding for capital replacement and refurbishment (R&R) needs, and maintain the financial health of the enterprises» Develop sound and sufficient reserve fund targets» Review current rate structures for the water, recycled water, and wastewater enterprises 1.2 CURRENT RATES Water Rates The current water rate structure consists of four main components: 1. Monthly water service charge that varies by meter size 2. Monthly readiness-to-serve (RTS) charge that is the same regardless of meter size or customer class 3. Variable usage charge that varies by customer class and water usage 4. A per unit pumping charge that varies by zones that differ by elevation In addition to the four main components, the District also charges a fire protection charge to those customers with private fire protection lines. Private fire protection customers are charged $0.002 per square foot (sqft) for the first 29,999 sqft and $0.001 per sqft for building sqft of 30,000 or above. The following tables summarize the current rate structure of the District. Table 1 provides a summary of the monthly charges by meter size. Table 2 summarizes the current variable charges by customer class and by tier as well as the tier widths. As shown, the District s current commodity rate structure is comprised of inclining tiers (5 tiers) for residential customers, a flat or uniform rate for non-residential customers, a two-tiered inclining rate structure for irrigation customers, and a uniform rate for construction customers. Table 3 shows the per unit 1 pumping charge by pumping zone. 1 One unit of water is equal to 748 gallons or 100 cubic feet (1 ccf) Water, Recycled Water, and Wastewater Rate Study Report 1

12 Meter size Table 1: Current Monthly Water Charges FYE 2016 Water Service Charge ($ / Month) FYE 2016 RTS Charge ($ / Month) SFR $20.87 $3.88 5/8" $20.87 $3.88 3/4" $30.87 $3.88 1" $45.48 $ /2" $65.27 $3.88 2" $ $3.88 3" $ $3.88 4" $ $3.88 8" $ $ " $ $3.88 Table 2: Current Variable Usage Charge Customer Class / Tiers Tier Width (ccf) FYE 2016 Usage Rate ($ / ccf) Residential Tier 1 (0-5) $2.07 Tier 2 (6-15) $2.26 Tier 3 (16-30) $2.65 Tier 4 (31-45) $3.52 Tier 5 (46+) $4.78 Non-Residential Uniform Uniform $2.65 Landscape / Industrial Tier 1 (0-40) $2.65 Tier 2 (41+) $3.60 Bulk / Construction Uniform Uniform $4.78 Table 3: Current Water Pumping Charges Pumping Zone FYE 2016 Rate ($ / ccf) Zone A $0.00 Zone B $0.12 Zone C $0.13 Zone D $ Temescal Valley Water District

13 1.2.2 Recycled Water Rates The current recycled 2 water structure consists of three main components: 1. Monthly recycled water service charge that varies by meter size and are equivalent to Potable Meter Charges 2. Uniform commodity charge per unit of recycled water 3. A per unit pumping charge that varies by pumping zone Table 4 provides a summary of the monthly charges by meter size. The current recycled commodity charge is a uniform rate of $1.69 per unit of recycled water. Similar to water customers, recycled customers currently pay pumping charges as shown in Table 5. Table 4: Current Monthly Recycled Charge Meter size FYE 2016 Recycled Water Service Charge ($ / Month) 5/8" $ /4" $ " $ /2" $ " $ " $ " $ " $ " $ " $ Table 5: Current Recycled Pumping Charges Pumping Zone FYE 2016 Rate ($ / ccf) Zone A $0.00 Zone B $0.12 Zone C $0.13 Zone D $ Wastewater Rates The current wastewater rate structure consists of a monthly residential rate of $35.30 and a non-residential rate of $35.30 per equivalent dwelling unit (EDU). EDU s are either assigned or determined on a monthly basis. For those customers with assigned EDU s, their EDU s remain constant from month-to-month whereas the EDU s for the remaining customers are determine each month and are based on the metered water usage in ccf, specifically the average daily usage times For the purposes of this report, Recycled is synonymous with Non-Potable. Water, Recycled Water, and Wastewater Rate Study Report 3

14 1.3 FINANCIAL HEALTH AND PROPOSED RECOMMENDATIONS As part of the financial plan development, RFC first reviewed the District s projected revenue requirements over a 10-year planning horizon to determine the financial health of the District s utilities over the shortterm and long-term and to determine if the current rates could support the utility s revenue needs Water Utility Financial Health For Fiscal Year (FY 2017) the District s total beginning reserve balance for the water utility is approximately $6.7 million. As part of Best Management Practices of utilities, it is recommended that a utility have at least days of operating reserves as well as sufficient funds available to ensure that the utility s capital plan can move forward as scheduled and is not delayed due to insufficient funds on hand. In relation to these two metrics, the District has more than 90 days of reserves and available funds on hand to fund a portion of the District s updated capital plan. Based on the financial plan review, the District is currently in a strong financial position, however, without revenue adjustments the capital related reserve (Repair and Replacement Reserve) will be fully depleted by FY Therefore, rate increases are needed to ensure that the District maintains a strong financial position moving forward and is able to continue to reinvest in the water utility system. After reviewing the District s revenue requirements, reserve policies, capital planning schedule, and current revenues, a financial plan was developed to meet the following criteria:» Positive net operating cash income each FY of the planning period» Fully fund capital projects through Pay-As-You-Go (PAYGO) or cash on hand» Establish and maintain the following reserves by the end of the Study Period (FY ): o Water Operating Fund minimum of 120 days of operating expenses o Repair & Replacement Fund target of 1 ½ years of replacement cost depreciation o Rate Stabilization Fund minimum of 10% of total revenues The District will utilize a portion of its reserves to mitigate the degree of required revenue adjustments in the first three fiscal years. By using available reserves to help fund the Dawson Canyon Reservoir project, the District would be able to mitigate significant increases during the years of construction. As a result, it is recommended that the District adjust revenue by a modest 4.5% each year of the Study Period. The first adjustment will take place on February 1, 2017 with the remaining adjustments occurring each year on January 1. The District relies on imported water from the Metropolitan Water District of Southern California (MWD) that is conveyed through Western Municipal Water District s (WMWD) Mills Pipeline. The financial plan developed as part of this project assumes increases in the cost of wholesale water that the District purchases; however, the proposed rates derived do not account for any incremental costs for purchased water and it is recommended that the District include authorization for automatic pass-through adjustments to the rates for the commodity charges and ready-to-serve (RTS) charge. As increases are approved by MWD for these charges, the District would pass-through these costs and adjust the proposed rates accordingly to recover the incremental cost incurred (Pass-Through). Authorizing automatic Pass-Through adjustments mitigates the risk of unknown rate increases by the MWD as the District s water wholesaler. Automatic Pass- Through adjustments in the rates are allowed through the provisions of Government Code Section and provide the following benefits to the District: 4 Temescal Valley Water District

15 » Clear transparency between costs that are controlled by the District versus uncontrolled costs from outside agencies» Provides increased revenue stability» Tracks increases in costs to the District from MWD and recovers the incremental increase through a direct rate adjustment as follows: o Imported Water: Starting in January 2018, any incremental increase in cost due to an increase in the current rate charged for purchased water would be spread over all units of water purchased o RTS Charges: Starting in January 2018, any incremental increase in cost due to an increase in the current rate charged for RTS would be spread over all accounts o The Pass-Through adjustments would continue to increase as MWD wholesale water rates increase Overall, the proposed financial plan for the water system aims to strike a balance between maintaining a strong financial position and minimizing rate increases to its customers through a multi-year measured approach. Under the proposed plan, the District will maintain a positive net income and will meet the 5-year financial reserve targets. To determine the appropriate rate structure for meeting the District s revenue requirements, RFC reviewed the current rate structure and consumption data, worked closely with District staff, the Finance Committee, and the Board of Directors, and where possible, incorporated feedback on policies and objectives. As such, RFC recommends the following proposed adjustments to the current structure:» Moving from a 5-tiered rate structure for Residential accounts to a 3-tiered rate structure with the following modifications to the Tier 1 and Tier 2 allotments (also referred to as tier widths). For Tier 1, the recommended allotment is based on providing 55 gallons per capita per day each month. Based on the District s service area density factor and the 30-day billing period, this translates to 7 ccf or units of water. For Tier 2, RFC analyzed the District s billing records to determine the average amount of water used, per account, during the summer quarter (July through September) and derived an average of 18 ccf. As such, RFC recommends adjusting the Tier 2 allotment from 15 ccf to 18 ccf to capture the average peak usage during the summer months when demand is highest. Tier 3 would be for any water usage above Tier 2.» Maintaining a uniform rate for Non-Residential accounts. Commercial uses and related water needs are not homogeneous and can vary drastically between accounts. Consequently, developing a tiered rate structure that appropriately captures the usage needs of each commercial use would not be practical, when considering the water usage of a Starbucks versus a restaurant versus a bookstore. Although maintaining uniform rates are recommended, it is important to note that the customer class as a whole is still paying its proportionate share of the costs of providing the service based on the total volume of water used, peak demand on the system, and burdens the class places on staff and customer service. A uniform rate provides the most appropriate and equitable rate structure between accounts within this customer class.» Modifying the Irrigation rate structure from a 2-tiered rate structure to a uniform rate structure. In order to maintain a tiered rate structure, the District would need to compile the landscape square footage served by each meter. With this data, an appropriate water allotment for Tier 1 could be calculated for each customer and anything over this Water Budget would fall into Tier 2 At this Water, Recycled Water, and Wastewater Rate Study Report 5

16 time, landscape area or irrigable area is not available for each customer account, therefore, RFC recommends moving to a uniform rate structure.» When implementing rate adjustments, it is a common practice for public utilities to include authorization for 5 years of proposed rate increases versus a shorter timeframe. Therefore, as part of the proposed rate increases, RFC recommends the District approve all 5 years of the proposed rate increases.» The District s current fixed meter charge recovered approximately 39% of the total District rate revenues in FY RFC recommends recovering approximately 33% of the revenue requirements via the fixed charge. Recovering a greater portion of the costs over the variable component will help send a pricing signal to the larger water use customers and will help encourage or promote conservation. Although there may be an inherent increase in revenue volatility, our analysis is using a baseline level of consumption that is lower than the District s 2013 Calendar Year usage that is used by the State Water Resource Control Board for monitoring appropriate levels of water usage during the recent drought conditions. The proposed rate structure is set forth in Table 6. The proposed monthly meter charge, RTS charge, and commodity rates are shown in Table 7, Table 8, Table 9, respectively. Table 6: Current and Rate Structure Customer Classes Current Tier Widths Tier Widths Residential Tier ccf 0 7 ccf Tier ccf 8 18 ccf Tier ccf 19 & Above Tier ccf Tier 5 46 & Above Non-Residential Uniform Uniform Irrigation Uniform Tier ccf Tier 2 41 & Above 6 Temescal Valley Water District

17 Meter Size Table 7: FY Base Fixed Charges FY 2017 Base Fixed Charge FY 2018 Base Fixed Charge FY 2019 Base Fixed Charge FY 2020 Base Fixed Charge FY 2021 Base Fixed Charge Residential $19.69 $20.58 $21.51 $22.48 $ /8" $19.69 $20.58 $21.51 $22.48 $ /4" $26.47 $27.67 $28.92 $30.23 $ " $40.03 $41.84 $43.73 $45.70 $ /2" $73.93 $77.26 $80.74 $84.38 $ " $ $ $ $ $ " $ $ $ $ $ " $ $ $ $ $ " $ $ $ $1, $1, " $1, $1, $2, $2, $2, " $2, $2, $3, $3, $3, Meter Size FY 2017 RTS Charge Table 8: FY RTS Charge 3 (Water) FY 2018 RTS Charge FY 2019 RTS Charge FY 2020 RTS Charge FY 2021 RTS Charge Residential $2.27 $2.27 $2.27 $2.27 $2.27 5/8" $2.27 $2.27 $2.27 $2.27 $2.27 3/4" $2.27 $2.27 $2.27 $2.27 $2.27 1" $2.27 $2.27 $2.27 $2.27 $ /2" $2.27 $2.27 $2.27 $2.27 $2.27 2" $2.27 $2.27 $2.27 $2.27 $2.27 3" $2.27 $2.27 $2.27 $2.27 $2.27 4" $2.27 $2.27 $2.27 $2.27 $2.27 6" $2.27 $2.27 $2.27 $2.27 $2.27 8" $2.27 $2.27 $2.27 $2.27 $ " $2.27 $2.27 $2.27 $2.27 $ Any increases in purchased water costs (unit rate) or RTS charges from MWD will be automatically passed-through to the District s customers and will be in addition to the rates shown. Water, Recycled Water, and Wastewater Rate Study Report 7

18 Customer Classes Commodity Rates 3 Residential Table 9: FY Commodity and Pumping Rates Tier Width 2017 Commodity Rates 2018 Commodity Rates 2019 Commodity Rates 2020 Commodity Rates 2021 Commodity Rates Tier 1 (0-7 ccf) $2.55 $2.67 $2.80 $2.93 $3.07 Tier 2 (8-18 ccf) $2.89 $3.03 $3.17 $3.32 $3.47 Tier 3 (19 ccf & Above) $3.19 $3.34 $3.50 $3.66 $3.83 Non-Residential Uniform $2.79 $2.92 $3.06 $3.20 $3.35 Irrigation Uniform $2.94 $3.08 $3.22 $3.37 $3.53 Pumping Rates Zone A Zone B $0.17 $0.18 $0.19 $0.20 $0.21 Zone C $0.18 $0.19 $0.20 $0.21 $0.22 Zone D $0.22 $0.23 $0.25 $0.27 $0.29 Zone E $0.26 $0.28 $0.30 $0.32 $ Recycled Utility Financial Health The District owns and operates a regional wastewater treatment facility capable of treating 1.57 million gallons per day of raw sewage and producing tertiary reclaimed water. The reclaimed or recycled water is usable for landscape irrigation and other non-consumptive purposes and accounts for approximately 45% of the District s total water usage. In FY 2017, the District s total beginning reserve balance for the recycled water utility is approximately $835,000. Based on the financial plan review, without revenue adjustments the capital related reserve (Repair and Replacement Reserve) will be fully depleted and operating at a deficit by FY Therefore, rate increases are needed to ensure that the District maintains a strong financial position moving forward and is able to continue to fund capital projects and invest in the system. Based on the District s revenue requirements, reserve policies, capital planning schedule, and current revenues, a financial plan was developed to meet the following criteria:» Positive net operating cash income each FY of the planning period» Fully fund capital projects through Pay-As-You-Go (PAYGO) or cash on hand» Establish and maintain the following reserves by the end of the Study Period (FY ): o Recycled Water Operating Fund minimum of 120 days of operating expenses o Repair & Replacement Fund target of 1 ½ years of replacement cost depreciation o Rate Stabilization Fund minimum of 10% of total revenues Approximately $3.9 million in recycled capital projects are scheduled during the Study Period. In order to fund these projects and establish the recommended reserves, RFC recommends revenue adjustments of 10% 8 Temescal Valley Water District

19 for FY 2017 and FY 2018 and 4% each year thereafter. Similar to the water utility, the first adjustment will take place on February 1 st, 2017 with the remaining adjustments occurring each year on January 1. The proposed financial plan for the recycled water system ensures recycled water customers are paying for the recycled expenditures (i.e. water and wastewater customers are not helping fund the recycled system). All recycled revenues and expenditures stay within the recycled enterprise. Under the proposed plan, the District will maintain a positive net income and will meet the 5-year financial reserve targets. RFC reviewed the current rate structure and consumption data, worked closely with District staff, the Finance Committee, and the Board of Directors, and where possible, incorporated feedback on policies and objectives in order to determine the appropriate rate structure for meeting the District s revenue requirements. As such, the following policy decisions were made by District staff and the Board:» Set the fixed meter charge equal to the water meter charge» Set pumping charges equal to potable customers» Maintain a uniform commodity rate structure, however, it is recommended that a pass-through provision be included in the rates. Under this approach, in instances where recycled demand is greater than available supply and the District purchases water from MWD, the incremental cost incurred by the District would be passed-through to the recycled customers. Currently, the base rate of purchased water to the recycled utility is set at $0.00 because the Recycled Water Utility did not incur any purchased water costs in FY The following tables summarize the proposed rates for the recycled utility. Table 10: FY Recycled Base Fixed Charges (Same as Water) Meter Size FY 2017 Base Fixed Charge FY 2018 Base Fixed Charge FY 2019 Base Fixed Charge FY 2020 Base Fixed Charge FY 2021 Base Fixed Charge 5/8" $19.69 $20.58 $21.51 $22.48 $ /4" $26.47 $27.67 $28.92 $30.23 $ " $40.03 $41.84 $43.73 $45.70 $ /2" $73.93 $77.26 $80.74 $84.38 $ " $ $ $ $ $ " $ $ $ $ $ " $ $ $ $ $ " $ $ $ $1, $1, " $1, $1, $2, $2, $2, " $2, $2, $3, $3, $3, Table 11: FY Commodity Rates 2017 Commodity Rates 2018 Commodity Rates 2019 Commodity Rates 2020 Commodity Rates 2021 Commodity Rates Recycled Uniform Rate $1.99 $2.21 $2.30 $2.39 $2.49 Water, Recycled Water, and Wastewater Rate Study Report 9

20 Table 12: FY Recycled Pumping Rates (Same as Water) Elevation Zone 2017 Pumping Rates 2018 Pumping Rates 2019 Pumping Rates 2020 Pumping Rates 2021 Pumping Rates Zone A - $0.00 $0.00 $0.00 $0.00 Zone B 0.17 $0.18 $0.19 $0.20 $0.21 Zone C 0.18 $0.19 $0.20 $0.21 $0.22 Zone D 0.22 $0.23 $0.25 $0.27 $0.29 Zone E 0.26 $0.28 $0.30 $0.32 $ Wastewater Utility Financial Health In FY 2017, the District s total beginning reserve balance for the wastewater utility is approximately $9.6 million. These reserves have been built up over time and will be used to help fund the Water Reclamation Facilities Upgrade and other scheduled capital projects totaling approximately $10 million during the Study Period. Based on the District s revenue requirements, reserve policies, capital planning schedule, and current revenues, the existing wastewater rates will:» Result in positive net operating cash income each FY of the planning period» Fully fund capital projects through Pay-As-You-Go (PAYGO) or cash on hand» Be sufficient to establish and maintain the following reserve funds: o Wastewater Operating Fund minimum of 120 days of operating expenses o Repair & Replacement Fund target of 1 ½ years of replacement cost depreciation o Rate Stabilization Fund minimum of 10% of total revenues The wastewater utility is in a strong financial position and revenue adjustments are not needed at this time, however, RFC recommends indexing the current rates each year by the Consumer Price Index to ensure rates keep pace with inflation. 10 Temescal Valley Water District

21 2. INTRODUCTION 2.1 STUDY APPROACH This report was prepared using principles established by the American Water Works Association (AWWA). The AWWA Principles of Water Rates, Fees, and Charges: Manual of Water Supply Practices M1 Manual (the M1 Manual ) establishes commonly accepted professional standards for cost of service studies. The M1 Manual principles of rate structure design and the objectives of the Study are described below. According to the M1 Manual, the first step in ratemaking analysis is to determine the adequate and appropriate level of funding for a given utility. This is referred to as determining the revenue requirement. This analysis typically considers the short-term and long-term service objectives of the utility over a given planning horizon, including capital facilities, system operations and maintenance, and financial reserve policies to determine the adequacy of a utility s existing rates to recover its costs. A number of factors may affect these projections, including the number of customers served, water-use trends, nonrecurring sales, weather, conservation, use restrictions, inflation, interest rates, wholesale contracts, capital finance needs, changes in tax laws, and other changes in operating and economic conditions. After determining the utility s revenue requirement, the next step was determining the cost of service. Utilizing the District s approved budget, financial reports, operating data, and capital improvement plans, a rate study generally study generally categorizes (functionalizes) system costs (e.g., treatment, storage, pumping, etc.), including operating and maintenance and asset costs, among major operating functions to determine the cost of service. After the asset values and operating costs are properly categorized by function, these functionalized costs are allocated first to cost causation components, and then distributed to the various customer classes (e.g., residential, non-residential, and landscape/irrigation) by determining the characteristics of those classes and the contribution of each to cost causation components such as supply costs, peaking costs, delivery costs, and fire protection. Rate design is the final element of the rate-making procedure and uses the revenue requirement and cost of service analysis to determine rates for each customer class that reflect the cost of providing service to those customers. Rates utilize rate components that build-up to the total commodity rates, and fixed charge rates, for the various customer classes. In the case of tiered rates, the rate components allocate the cost of service within each customer class, effectively treating each tier as a sub-class and determining the cost to serve each tier. Water, Recycled Water, and Wastewater Rate Study Report 11

22 2.2 LEGAL REQUIREMENTS California Constitution - Article XIII D, Section 6 (Proposition 218) Proposition 218, reflected in the California Constitution as Article XIII D, was enacted in 1996 to ensure that rates and fees are reasonable and proportional to the cost of providing service. The principal requirements for fairness of the fees, as they relate to public water, recycled water, or wastewater services are as follows: 1. A property-related charge (such as water, recycled water, and sewer rates) imposed by a public agency on a parcel shall not exceed the costs required to provide the property related service. 2. Revenues derived by the charge shall not be used for any purpose other than that for which the charge was imposed. 3. The amount of the charge imposed upon any parcel shall not exceed the proportional cost of service attributable to the parcel. 4. No charge may be imposed for a service unless that service is actually used or immediately available to the owner of property. 5. No charge may be imposed for general governmental services including, but not limited to, police, fire, ambulance or library services, where the service is available to the public at large in substantially the same manner as it is to property owners. 6. A written notice of the proposed charge shall be mailed to the record owner of each parcel at least 45 days prior to the public hearing, when the agency considers all written protests against the charge. As stated in AWWA s M1 Manual, water rates and charges should be recovered from classes of customers in proportion to the cost of serving those customers. Prop 218 requires that utility rates cannot be arbitrary and capricious, meaning that the rate-setting methodology must be sound and that there must be a nexus between the costs and the rates charged. RFC follows industry standard rate setting methodologies set forth by the AWWA M1 Manual to ensure this study meets Proposition 218 requirements and develops rates that do not exceed the proportionate cost of providing water, recycled water, or wastewater services California Constitution - Article X, Section 2 Article X, Section 2 of the California Constitution (established in 1976) states the following: It is hereby declared that because of the conditions prevailing in this State the general welfare requires that the water resources of the State be put to beneficial use to the fullest extent of which they are capable, and that the waste or unreasonable use or unreasonable method of use of water be prevented, and that the conservation of such waters is to be exercised with a view to the reasonable and beneficial use thereof in the interest of the people and for the public welfare. Article X, section 2 of the State Constitution institutes the need to preserve the State s water supplies and to discourage the wasteful or unreasonable use of water by encouraging conservation. As such, public agencies are constitutionally mandated to maximize the beneficial use of water, prevent waste, and encourage conservation. In connection with meeting the objectives of Article X, section 2, Water Code Sections 370 and 375 et seq. authorize a water purveyor to utilize its water rate design to incentivize the efficient use of water. Although 12 Temescal Valley Water District

23 incentives to conserve water may be provided by implementing a higher rate as consumption increases, a nexus between the rates and costs incurred to provide the water must be developed to achieve compliance with Proposition 218. Tiered Rates Inclining tier rate structures (synonymous with tiered rates) when properly designed and differentiated by customer class, allow a water utility to send consistent price signals to customers. Tiered rates meet the requirements of Proposition 218 as long as the tiered rates reasonably reflect the proportionate cost of providing service to users in each tier Cost-Based Rate Setting Methodology As stated in the AWWA M1 Manual, the costs of water rates and charges should be recovered from classes of customers in proportion to the cost of serving those customers. To develop utility rates that comply with Proposition 218 and industry standards while meeting other emerging goals and objectives of the District, there are four major steps discussed below and previously addressed in Section Study Approach Calculate Revenue Requirement The rate-making process starts by determining the test year (rate setting year) revenue requirement, which for this study is FY The revenue requirement should sufficiently fund the utility s O&M, debt service, capital expenses, and reserves. 2. Cost of Service Analysis (COS) The annual cost of providing service is distributed among customer classes commensurate with their service requirements. A COS analysis involves the following: a) Functionalize costs. Examples of functions are supply, treatment, transmission, distribution, storage, meter servicing, and customer billing and collection b) Allocate functionalized costs to cost causation components. Cost causation components include, but are not limited to, supply, base 4, maximum day, maximum hour 5, pumping, public fire protection, meter capacity, and customer service c) Distribute the cost causation components. Distribute cost components, using unit costs, to customer classes in proportion to their demands on the system. This is described in the M1 Manual A COS analysis considers both the average quantity of water consumed (base costs) and the peak rate at which it is consumed (peaking or capacity costs as identified by maximum day and maximum hour demands). 6 Peaking costs are costs that are incurred during peak times of consumption. There are additional costs associated with designing, constructing, and operating and maintaining facilities large enough to meet peak demands. These peak demand costs need to be allocated to those 4 Base costs are those associated with meeting average day demands and unrelated to meeting peaking demands. 5 Collectively maximum day and maximum hour costs are known as peaking costs or capacity costs. 6 System capacity is the system s ability to supply water to all delivery points at the time when demanded. Coincident peaking factors are calculated for each customer class at the time of greatest system demand. The time of greatest demand is known as peak demand. Both the operating costs and capital asset related costs incurred to accommodate the peak flows are generally allocated to each customer class based upon the class s relative demands during the peak month, day, and hour event. Water, Recycled Water, and Wastewater Rate Study Report 13

24 imposing such costs on the utility. In other words, not all customer classes share the same responsibility for peaking related costs. 3. Rate Design and Calculations Rates do more than simply recover costs. Within the legal framework and industry standards, properly designed rates should support and optimize a blend of various utility objectives, such as deterring water waste, supporting affordability for essential needs, and ensuring revenue stability among other objectives. Rates may also act as a public information tool in communicating these objectives to customers. 4. Rate Adoption Rate adoption is the last step of the rate-making process to comply with Proposition 218. RFC documents the rate study results in this Study Report to serve as the District s administrative record and a public education tool about the proposed changes, the rationale and justifications behind the changes, and their anticipated financial impacts. 14 Temescal Valley Water District

25 3. KEY ASSUMPTIONS The period for the Study uses the District s FY 2016 budget as the base year and the model projects the District s revenue requirements through FY 2026; however, the proposed rates herein are for FY 2017 through FY 2021 as the District will continue to periodically review rates and take a measured approach with any potential rate adjustments. Certain cost escalation assumptions and inputs were incorporated into the Study to adequately model expected future costs of the District. These assumptions were based on discussions with and/or direction from District management and are presented in Table 13 and Table 14. Table 13: Inflationary Factor Assumptions Inflationary Factors FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 General 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% Salary 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% Benefits 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% Utilities 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% Water Costs 1 N/A 3.7% 3.7% 3.7% 5% 5% 5% 5% 5% 5% MWD Fixed 2 N/A 2% 2% 2% 2% 2% 2% 2% 2% 2% Capital 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 1 Water purchase costs from MWD are known for 2017 and have been included as part of the base revenue requirements. In subsequent years, the actual increase will be automatically passed-through to customers. 2 MWD Capacity Charge and RTS Charge are known for 2017 and have been included as part of the base revenue requirements. In subsequent years, the actual increase for the RTS charge will be automatically passed-through to customers. Table 14: Growth, Demand, and Revenue Assumptions FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 Account Growth 1 All Customer Classes 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Demand Factor 2 All Customer Classes 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Revenues Factors Non-Operating Revenues 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% Reserve Interest Rate 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1 Account growth was conservatively set at 0% which means that the District is not relying on growth to help fund ongoing operating and maintenance costs. 2 Demand factors can be used to project changes in water usage and flow patterns. For the purposes of this Study, no changes were made to either the water or flow patterns. Through discussions with District staff, they are not expecting customers to reduce usage in the upcoming year. As drought conditions improve, the District anticipates there will be modest increases in water use as behaviors revert back to non-drought conditions, however, it is not known how soon or to what extent this will occur. Water, Recycled Water, and Wastewater Rate Study Report 15

26 4. WATER RATE STUDY 4.1 WATER UTILITY FINANCIAL PLAN This section describes the development of the water utilities financial plan, the results of which were used to determine the revenue adjustments needed to meet ongoing expenses and provide fiscal sustainability to the District. Establishing a utility s revenue requirement is a key step in the rate setting process. The review involves analysis of projected annual operating revenues under the current rates, O&M expenses, capital expenditures, transfers between funds, and reserve requirements. This section of the report provides a discussion of the projected revenues, O&M and capital expenditures, the capital improvement financing plan, and overall revenue requirements required to ensure the fiscal sustainability of the Water Utility Revenue from Current Rates The current water rate structure consists of four main components: 1. Monthly water service charge that varies by meter size (Table 15 summarizes the current meters by size, current monthly fixed charges, and projected revenue) 2. Monthly readiness-to-serve (RTS) charge that is the same regardless of meter size or customer class (Table 16 summarizes the projected RTS revenue) 3. Variable usage charge that varies by customer class and water usage (Table 17 summarizes the variable rate structure, usage by tier, current variable rates, and projected variable revenue) 4. A per unit pumping charge that varies by pumping zone (Table 18 summarizes the pumping zones, usage by zone, current rates, and projected pumping revenue) In addition to the four main components, the District also charges a fire protection charge to those customers with private fire protection lines. Private fire protection customers are charged $0.002 per square foot (sqft) for the first 29,999 sqft and $0.001 per sqft for building sqft of 30,000 or above (Table 19 summarizes the building sqft for those customers with private fire protection lines, the current rate, and the projected private fire protection revenue). Table 15: Projected Annual Service Charge Revenue Meter size # of Meters [A] Current Monthly Service Charges [B] Projected Annual Service Charge Revenue (A x B x 12) SFR 4,835 $20.87 $1,210,877 5/8" 49 $20.87 $12,272 3/4" 0 $30.87 $0 1" 8 $45.48 $4, /2" 8 $65.27 $6,266 2" 80 $ $97,584 3" 1 $ $1,733 4" 3 $ $7,511 6" 0 $ $0 8" 0 $ $0 10" 0 $ $0 Service Charge Revenue $1,340, Temescal Valley Water District

27 Customer Classes Residential Table 16: Projected Annual RTS Revenue # of Meters [A] Current RTS Charge ($ / Month) [B] Projected Annual RTS Charge Revenue (A x B x 12) RTS 4,984 $3.88 $232,055 Table 17: Projected Annual Variable Revenue Current Tiers Projected Annual Usage [A] Current Commodity Rate [B] Projected Variable Revenue (A x B) Tier ccf 273,976 $2.07 $567,130 Tier ccf 359,255 $2.26 $811,916 Tier ccf 164,077 $2.65 $434,804 Tier ccf 34,372 $3.52 $120,989 Tier 5 46 & Above 15,841 $4.78 $75,720 Non-Residential Uniform 30,415 $2.65 $80,600 Irrigation Tier ccf 21,793 $2.65 $57,751 Tier 2 41 & Above 69,547 $3.60 $250,369 Variable Revenue $2,399,280 Pumping Zone Table 18: Projected Annual Pumping Revenue Projected Annual Usage [A] Current Pumping Rate [B] Projected Pumping Revenue (A x B) Zone A 358,803 $0.00 $0 Zone B 176,440 $0.12 $21,173 Zone C 284,162 $0.13 $36,941 Zone D 149,871 $0.14 $20,982 Pumping Revenue $79,096 Table 19: Projected Annual Private Fire Protection Revenue Fire Protection Bldg Sqft [A] Current Fire Protection Charge ($ / Sqft / Month) [B] Projected Annual Fire Protection Charge Revenue (A x B x 12) 0-29,999 Sqft 957,882 $0.002 $22,989 30,000 + Sqft 513,521 $0.001 $6,162 Fire Protection Revenue $29,151 Water, Recycled Water, and Wastewater Rate Study Report 17

28 Using account growth, water demand factors, and other revenue assumptions from Table 14, RFC projected the revenues for the water utility 7. Table 20 summarizes the rate revenue (line 7) as well as miscellaneous and additional non-operating revenues. As shown in the table, since RFC assumed zero growth and no increase in water demand, the rates and rate revenue remained constant during the Study Period. The projected water sales by customer class and tier remained constant and was based on the actual FY 2016 usage. Table 20: Projected Water Revenues Line # 1 Water Utility Revenues FY 2017 FY 2018 FY 2019 FY 2020 FY Fixed Revenues $1,340,610 $1,340,610 $1,340,610 $1,340,610 $1,340,610 3 MWD - RTS Revenues $232,055 $232,055 $232,055 $232,055 $232,055 4 Usage Revenues $2,399,280 $2,399,280 $2,399,280 $2,399,280 $2,399,280 5 Zoning Pumping Revenues $79,096 $79,096 $79,096 $79,096 $79,096 6 Fire Protection Charge $29,151 $29,151 $29,151 $29,151 $29,151 7 Subtotal Rate Revenue $4,080,193 $4,080,193 $4,080,193 $4,080,193 $4,080,193 8 Misc. Revenues $110,000 $110,000 $110,000 $110,000 $110,000 9 Non-Operating Revenues $92,202 $74,757 $76,083 $77,369 $78, Total Revenues $4,282,394 $4,264,950 $4,266,277 $4,267,564 $4,268, O&M Expenses The District s FY 2017 budget values and the assumed inflation factors (Table 13) for the study period were used as the basis for projecting O&M costs. Table 21 shows the total projected O&M expenses for FY 2017 through FY As shown in the table, the water utility does not currently have any outstanding debt. Expenditures Table 21: Projected O&M Expenses FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Wholesale Water Purchases $2,364,501 $2,452,418 $2,542,805 $2,636,879 $2,751,634 MWD Capacity Charge $57,825 $58,982 $60,161 $61,364 $62,592 MWD RTS Charge $135,475 $138,184 $140,948 $143,767 $146,642 Energy Costs $125,000 $137,500 $151,250 $166,375 $183,013 Other Operating Costs $537,550 $552,933 $568,786 $585,127 $601,971 Administrative Expenses $417,350 $428,347 $439,669 $451,328 $463,334 Total Operating Expenses $3,637,701 $3,768,363 $3,903,620 $4,044,841 $4,209,186 Debt Service $0 $0 $0 $0 $0 Total Expenses $3,637,701 $3,768,363 $3,903,620 $4,044,841 $4,209,186 7 Although only the Study Period is shown here, RFC projected the revenues through FY Although only the Study Period is shown here, RFC projected the expenses through FY Temescal Valley Water District

29 4.1.3 Capital Improvement Plan The District provided the capital improvement plan (CIP) to address future water utility needs. Table 22 summarizes the Baseline CIP for the Study Period. Currently, the District operates on a Pay-As-You-Go basis (Paygo) meaning capital projects should be fund by cash on hand or reserves and not through the issuance of debt. RFC indexed the capital expenditures by a 3% inflationary compounding rate from Table 13 in order to account for increased construction costs in future years. Table 22: Baseline Water Utility Capital Improvement Plan FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 WATER SYSTEM, DISTRIBUTION Master Plan update $0 $25,000 $0 $0 $0 Five days of leak detection $3,000 $3,000 $3,000 $3,000 $0 Cross connection test $10,000 $10,000 $10,000 $10,000 $0 Urban Water Management Plan $100,000 $0 $0 $0 $0 New Dawson Canyon Reservoir - Design $100,000 $0 $0 $0 $0 New Dawson Canyon Reservoir - Const. $0 $1,000,000 $6,000,000 $0 $0 General Building - Water's Share $15,000 $50,000 $57,500 $62,500 $0 Total CIP $228,000 $1,088,000 $6,070,500 $75,500 $0 Inflated CIP $241,885 $1,188,887 $6,832,401 $87,525 $ Reserve Requirements For FY 2017, the District s total beginning reserve balance for the water utility is approximately $6.7 million. Currently, the District maintains an unrestricted reserve to cover operations and capital. As part of Best Management Practices of utilities, it is recommended that a utility have at least days of operating reserves as well as sufficient funds available to ensure that the utility s capital plan can move forward as scheduled and is not delayed due to insufficient funds on hand Financial Outlook at Current Rates Revenues generated from current rates and other revenues exceed the operational expenses for the Study Period. The District has more than 90 days of reserves and remaining funds available to fund a portion of the District s current capital improvement plan. Based on the financial plan review, the District is currently in a strong financial position, however, without revenue adjustments reserves will be depleted by FY 2019 and the District will be unable to fully fund the schedule capital projects. Therefore, rate increases are needed to ensure that the District maintains a strong financial position moving forward and is able to invest and reinvest in the system. Figure 1 illustrates the operating position of the water utility, where expenses, inclusive of reserve funding, are shown by stacked bars; and the total revenues at current rates are shown by the horizontal orange trend line. Figure 2 summarizes the baseline CIP and its funding sources by fiscal year (currently 100% PAYGO). Figure 3 displays the ending total reserve balance by FY for the water utility. Figure 1: Operating Financial Position at Current Rates Water, Recycled Water, and Wastewater Rate Study Report 19

30 Figure 2: Baseline Water Capital Improvement Plan and Funding Source 20 Temescal Valley Water District

31 Figure 3: Projected Ending Water Reserves at Current Rates Recommendations and Financial Plan After reviewing the District s revenue requirements, reserve policies, capital planning schedule, and current revenues, a financial plan was developed to meet the following criteria:» Positive net operating cash income each FY of the planning period» Fully fund capital projects through Pay-As-You-Go (PAYGO) or cash on hand» Establish and maintain the following reserves by the end of the Study Period (FY ): o Water Operating Fund minimum of 120 days of operating expenses o Repair & Replacement Fund target of 1 ½ years of replacement cost depreciation o Rate Stabilization Fund minimum of 10% of total revenues CIP Adjustments RFC worked closely with District staff to adjust the CIP to reflect a measured multi-year approach. The following adjustments were made:» The Dawson Canyon Reservoir project was reduced to $4 million to appropriately reflect the portion of the project related to existing customers» A sinking fund was established for the Dawson Canyon Reservoir project in order to accumulate the necessary funds over a three-year period as opposed to incurring the costs in one FY» The 5-year average CIP, excluding the Dawson Canyon Reservoir project, was used to project the future CIP needs of the water utility Table 23 summarizes the projected CIP. RFC inflated the total CIP using the inflationary factor from Table 13 in order to account for the decreased purchasing power of the dollar. Water, Recycled Water, and Wastewater Rate Study Report 21

32 Table 23: Projected Water Utility CIP FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 WATER SYSTEM, DISTRIBUTION Master Plan update $0 $25,000 $0 $0 $0 Five days of leak detection $3,000 $3,000 $3,000 $3,000 $0 Cross connection test $10,000 $10,000 $10,000 $10,000 $0 Urban Water Management Plan $100,000 $0 $0 $0 $0 New Dawson Canyon Reservoir - Design $100,000 $0 $0 $0 $0 Average CIP Future Years $0 $0 $1,082,800 $1,082,800 Sinking Fund - Dawson $1,333,333 $1,333,333 $1,333,333 Total CIP $1,546,333 $1,371,333 $1,346,333 $1,095,800 $1,082,800 Inflated CIP $1,640,505 $1,498,493 $1,515,310 $1,270,333 $1,292, Recommended Reserves RFC recommends establishing the following reserves: Operating Reserve The operating reserve is used primarily to meet ongoing cash flow requirements. RFC recommends establishing an operating reserve target of 180-days of O&M expenses and a minimum of 120- days of O&M. As the potential for revenue volatility increases, reserves should be set at an amount to offset this impact and provide revenue stability. A 180-day reserve ensures working capital to support the operation, maintenance and administration of the utility. Maintaining this level of reserves also provides liquid funds for the continued ongoing operations of the utility in the event of unforeseen costs or interruption with the utility or the billing system. Capital Repair and Replacement (R&R) The capital reserve is used primarily to meet the District s capital improvement requirements. The District s revised capital improvement plan over the five-year period is approximately $7.2M. The ideal target for the capital reserve should be to have a reserve sufficient to fund a year s worth of capital costs, which would ensure that the District can continue to reinvest in the water system and that necessary capital improvements are not delayed or deferred due to cash flow concerns. RFC recommends establishing a capital reserve based on a target of 1.5 times replacement cost depreciation. Rate Stabilization A Rate Stabilization fund is used in the event of any unforeseen circumstances or critical asset failures to help mitigate the impact to the District and ultimately the District s customers. RFC recommends setting a Rate Stabilization target of 10% of water revenues and holding off funding this reserve until after the Dawson Canyon Reservoir project is completed Pass-Through Provision The District relies on imported water from the Metropolitan Water District of Southern California (MWD) that is conveyed through Western Municipal Water District s (WMWD) Mills Pipeline. The proposed financial plan modeled projected increases in the cost of wholesale water that the District purchases, however, the proposed rates only include the current cost of purchased water and it is recommended that the District include authorization for automatic pass-through adjustments to the rates for the commodity charges and ready-to-serve (RTS) charge for any potential rate increases in wholesale rate increases implemented by MWD and charged to the District above the current rate (a Pass-Through). Authorizing automatic Pass- Through adjustments mitigates the risk of unknown rate increases by the MWD as the District s water wholesaler. Automatic Pass-Through adjustments in the rates are allowed through the provisions of Government Code Section and provide the following benefits to the District: 22 Temescal Valley Water District

33 » Clear transparency between costs that are controlled by the District versus uncontrolled costs from outside agencies» Provides increased revenue stability» Tracks increases in costs to the District from MWD and recovers the incremental increase through a direct rate adjustment as follows: o Imported Water Starting in January 2018, any incremental increase in cost due to an increase in the current rate charged for purchased water would be spread over all units of water purchased o RTS Charge: Starting in January 2018, any incremental increase in cost due to an increase in the current rate charged for RTS would be spread over all accounts o The Pass-Through adjustments would increase as MWD wholesale water rates increase Financial Plan The District will utilize a portion of its reserves to mitigate the degree of required revenue adjustments in the first three fiscal years. By using available reserves to help fund the Dawson Canyon Reservoir project, the District would be able to mitigate significant increases during the years of construction. As a result, it is recommended that the District adjust revenue by a modest 4.5% each year of the Study Period. The first adjustment will take place February 1, 2017 with the remaining adjustments occurring each year on January 1st. Overall, the proposed financial plan for the water system aims to strike a balance between maintaining a strong financial position and minimizing rate increases to its customers through a multi-year measured approach. Under the proposed plan, the District will maintain a positive net income and will meet the 5-year financial reserve targets. Table 24 summarizes the proposed financial plan (see Appendix A for a detailed financial Plan). Figure 4 illustrates the operating position of the District, where expenses, inclusive of reserve funding, are shown by stacked bars; and total revenues at both current rates and proposed rates are shown by the horizontal trend lines. Figure 5 summarizes the revised projected CIP and its funding sources (100% PAYGO). Figure 6 displays the ending total reserve balance for the water utility, inclusive of operating, capital, and rate stabilization funds. The horizontal trend lines indicate the minimum and target reserve balance and the bars indicate ending reserve balance. No new debt is proposed to be issued as part of the proposed five-year financial plan. Water, Recycled Water, and Wastewater Rate Study Report 23

34 Line # 1 Revenues Table 24: Water Financial Plan FY 2017 FY 2018 FY 2019 FY 2020 FY Rate Revenues $4,156,696 $4,450,363 $4,739,702 $5,041,612 $5,373,484 3 Other Revenues $202,202 $184,757 $186,085 $187,372 $188,701 4 Total Revenues $4,358,898 $4,635,120 $4,925,786 $5,228,984 $5,562, Less: Expenditures 7 Total Operating Expenditures $3,637,701 $3,768,363 $3,903,620 $4,044,841 $4,209,186 8 Total Debt Service $0 $0 $0 $0 $0 9 Total Expenditures $3,637,701 $3,768,363 $3,903,620 $4,044,841 $4,209, Net Cashflow (line 4 line 9) $721,197 $866,757 $1,022,167 $1,184,143 $1,352, Beginning Reserve Balance $6,702,386 $5,795,523 $5,186,175 $4,711,228 $4,640, Net Cashflow (line 11) $721,197 $866,757 $1,022,167 $1,184,143 $1,352, Interest $12,446 $22,388 $18,197 $15,154 $13, CIP Expenditures (Table 23) -$1,640,505 -$1,498,493 -$1,515,310 -$1,270,333 -$1,292, Ending Reserve Balance $5,795,523 $5,186,175 $4,711,228 $4,640,192 $4,713,714 Figure 4: Operating Financial Position at Rates 24 Temescal Valley Water District

35 Figure 5: Water Capital Improvement Plan and Funding Source Figure 6: Projected Ending Water Reserves at Projected Rates 4.2 WATER UTILITY COST OF SERVICE STUDY This Rate Study conforms to the principles set forth in the enabling statutes and the rates abide by the costof-service provisions of Proposition 218. Water, Recycled Water, and Wastewater Rate Study Report 25

36 4.2.1 Proportionality Demonstrating proportionality when calculating rates is a critical component of ensuring compliance with Proposition 218. For costs that are recovered through the District s proposed fixed meter charge, the Study spread the costs either over all accounts or by meter size, depending on the type of expense. As such, customer classes and usage are not considered nor necessary for calculating each customer s fixed charge. Conversely, costs that were determined as variable, are allocated among customer classes based on their demand on the system and water supplies. As stated in the Manual M1, the AWWA Rates and Charges Subcommittee agree with the Proposition 218 that the costs of water rates and charges should be recovered from classes of customers in proportion to the cost of serving those customers. The District s revenue requirements are, by definition, the cost of providing service. This cost is then used as the basis to develop unit costs for the water components and to allocate costs to the various customer classes in proportion to the water services rendered. Individual customer demands vary depending on the nature of the utility use at the location where service is provided. For example, water service demand for a family residing in a typical single-family home is different than the water service demand for an irrigation customer, primarily due to peak use behavior which drives the need for and costs of sizing infrastructure to meet this demand. The concept of proportionality requires that cost allocations consider both the average quantity of water consumed (base) and the peak rate at which it is consumed (peaking). Use of peaking is consistent with the cost of providing service because a water system is designed to meet peak demands, and the additional costs associated with designing, constructing and maintaining facilities required to meet these peak demands need to be allocated to those customers whose usage requires the need size facilities to meet peak demand. In allocating the costs of service, the industry standard, as promulgated by AWWA s M1 Manual, is to group customers with similar system needs and demands into customer classes. Rates are then developed for each customer class, with each individual customer paying the customer class proportionate, average allocated cost of service. Generally speaking, customers place the following demands on the District s water system and water supplies:» The system capacity 9 (for treatment, storage, and distribution) that must be maintained to provide reliable service to all customers at all times» The level of water efficiency as a collective group» The number of customers requiring customer services such as bill processing, customer service support, and other administrative services A customer class consists of a group of customers, with common characteristics, who share responsibility for certain costs incurred by the utility. Joint costs are proportionately shared among all customers in the system based on their service requirements; some specific costs, such as pumping charges, are borne by a subgroup of customers based on the characteristics of that group alone (i.e. elevation zone). 9 System capacity is the system s ability to supply water to all delivery points at the time when demanded. The time of greatest demand is known as peak demand. 26 Temescal Valley Water District

37 4.2.2 Cost of Service Process A cost of service analysis distributes a utility s revenue requirements (costs) to each customer class. Figure 7 provides a general overview of a cost-of-service analysis. Each step shown below will be described in greater detail in the next section. Figure 7: Cost of Service Process Cost of Service Analysis Step 1 Determine Revenue Requirement In this Study, water rates are calculated for FY 2017 (known as the Test Year), by calculating water purchase costs and by using the District s FY 2017 budget. Test Year revenue requirements are used in the cost allocation process. Subsequent years revenue adjustments are incremental and the rates for future years are based on 4.5% revenue adjustments and are applied across-the-board. The District should review the cost of service analysis at least once every five years to ensure that the rates are consistent with the costs of providing service. The revenue requirement determination is based upon the premise that the utility must generate annual revenues to meet O&M expenses, any debt service needs, reserve levels, and capital investment needs. Revenues from sources other than water rates and charges (e.g. revenues from miscellaneous services) are deducted from the rate revenue requirement. Additional deductions are made to account for the required net cashflows (found in Table 24 line 11) 10 and the mid-year adjustment 11. FY 2017 cost of service to be recovered from the District s water customers is shown in Table For the purposes of this Study, capital investments are funded through the Capital Repair and Replacement reserve. Meeting the minimum Capital R&R target ensures the capital projects can be funded each year of the Study Period. 11 The revenue requirement needs to be based on the revenue needs for a full fiscal year. Since the rates in FY 2017 will only be in effect for 5 months, the mid-year adjustment is used to include the revenue requirement for the remaining 7 months. Water, Recycled Water, and Wastewater Rate Study Report 27

38 Table 25: Revenue Requirements Line # FY Specific Allocations Operating Total 2 Revenue Requirements 3 Wholesale Water Purchases $2,364,501 $2,364,501 4 MWD Capacity Charge $57,825 $57,825 5 MWD RTS Charge $135,475 $135,475 6 O&M Expenses $954,900 $954,900 7 Energy Costs $125,000 $125,000 8 Total Revenue Requirements $2,682,801 $954,900 $3,637, Less: Revenue Offsets 11 Misc. Utility Charges $50,000 $50, Service Meter Income $20,000 $20, Cellular Site Lease $30,000 $30, Inspection Charges $10,000 $10, Interest Income $27,202 $27, Standby Charges $35,000 $35, Property Tax Income $30,000 $30, Total Revenue Offsets $0 $202,202 $202, Less: Adjustments 21 Adjustment for Cash Balance ($721,197) ($721,197) 22 Adjustment for Mid-Year Increase ($107,105) ($107,105) 23 Total Adjustments $0 ($828,302) ($828,302) Revenue Requirement from Rates $2,682,801 $1,581,000 $4,263, Step 2 Functionalize O&M Costs A cost of service analysis distributes a utility s revenue requirements (costs) to each customer class. After determining a utility s revenue requirement, the total cost of water service is analyzed by system functions to proportionately distribute costs in relation to how that cost is generally incurred. The water utility costs were categorized into the following functions:» Water Purchases Costs incurred to purchase MWD water from WMWD» MWD Capacity Costs from MWD incurred to account for the District s capacity in MWD s system» MWD RTS Ready-to-Serve costs from MWD» O&M Expenses o Operating Expense Daily operational costs of the utility including, but not limited to, field workers, water testing, capital outlay, contract staffing and meter servicing. o Administrative Expenses Includes, but not limited to, executive staff, District legal expenses, customer service, insurance, and audit expenses.» Energy Costs A component of the Operating Expenses associated with cost incurred to pump water to higher elevations Table 26 summarizes the functionalized O&M costs prior to any revenue offsets or adjustments (i.e. lines 2-7 from Table 25). 28 Temescal Valley Water District

39 Table 26: Functionalized Expenses Functionalized Expenses FY 2017 Functionalized Expenses Water Purchases $2,364,501 MWD Capacity Charge $57,825 RTS Charge $135,475 Energy Costs $125,000 O&M Expenses Operating Expenses $537,550 Administrative Expenses $417,350 Total O&M Expenses $3,637, Step 3 Allocate Functionalized Costs to Cost Components The functionalization of costs allows us to better allocate the costs based on how the costs are incurred. This is commonly referred to as cost causation. Essentially, cost causation means that the District incurs a cost of providing service as a result of the demands or burdens the customer places on the system and water resources. RFC used the Base-Extra Capacity method to allocate the functionalized costs to various rate components (cost causation components), as described in the M1 Manual. The District s costs were allocated to the following cost causation components: 1. Water Supply represents the variable cost of purchasing water. The District primarily serves its water demand through purchased water from MWD. It is anticipated that all water purchases will be at the Tier 1 rate, therefore, these costs increase or decrease in proportion to increases or decreases in water usage. Purchased water costs will be specifically allocated to the Water Supply component in order to promote transparency and clearly show the costs that are out of the District s control. Future increases in purchased water costs will automatically be passed-through to customers. 2. Base/Delivery are those operating and capital costs of the water system associated with serving customers at a constant, or average, rate of use. These costs tend to vary with the total quantity of water used. 3. Peaking Costs or Extra Capacity Costs represent those costs incurred to meet customer peak demands for water in excess of average day usage. Total extra capacity costs are subdivided into costs associated with maximum day and maximum hour demands. The maximum day demand is the maximum amount of water used in a single day in a year. The maximum hour (Max Hour) demand is the maximum usage in an hour on the maximum usage day (Max Day). Various facilities are designed to meet customer peaking needs. For example, transmission lines or reservoirs are designed to meet Max Day requirements. Both have to be designed larger than they would be if the same amount of water were being used at a constant rate throughout the year. The cost associated with constructing a larger line or reservoir is based on system wide peaking factors. For example, if the Max Day factor is 2.0, then certain system facilities have to be designed at least twice as large as required to meet average daily demand. In this case, half of the cost would be allocated to Base (or average day demand) and the other half allocated to Max Day. The calculation of the Max Hour and Max Day demands is explained below. 4. Pumping costs are the energy costs of pumping water to higher elevations. The water system is largely serviced by gravity-flow lines, therefore, these costs should only be recovered by those Water, Recycled Water, and Wastewater Rate Study Report 29

40 customers that require pumping stations. In order to continue charging a separate pumping rate to customers at higher elevations, energy costs will be specifically allocated to the Pumping rate component. 5. MWD Capacity represent the capacity costs incurred by buying water from MWD. These costs were specifically allocated to the MWD Capacity rate component to clearly show the costs outside of the District s control. 6. MWD RTS represent the RTS costs incurred by buying water from MWD. These costs were specifically allocated to the MWD RTS component to clearly show the costs outside of the District s control. In addition, future RTS increases will be automatically passed-through to customers. 7. Customer Service include customer related costs such as billing, collecting, customer accounting, and customer call center. These costs are incurred at the same level regardless of the type of land use or the total amount of water that the utility delivers. 8. Meter Capacity includes maintenance and capital costs associated with serving meters. These costs are assigned based on the meter size or equivalent meter capacity. 9. Fire Protection represent the costs incurred as a result of sizing the distribution infrastructure in order to be able to serve fire protection infrastructure. Allocating costs into these components allows us to distribute these cost components to the various customer classes on the basis of their respective base, extra capacity, and customer requirements for service. Except for the O&M Expenses, each of the functionalized costs will be allocated 100% to one of the cost components listed above. O&M Allocation The O&M expenses consist of two functionalized categories: Operating Expenses and Administrative Expenses. RFC reviewed the budget details related to the Operating Expenses and determined that approximately 48% of the expenses were related to employee wages or meter servicing, therefore, 48% of the Operating expenses were allocated to Meter Capacity. The remaining Operating Expenses (52%) were allocated to base/delivery, max day, max hour, and fire flow cost components. To allocate costs to delivery and peaking cost components, system peaking factors are used. The base demand is assigned a value of 1.0 signifying no peaking demands. The Max Day and Max Hour factors shown in Table 27 were based on historical data and discussions with District staff. A max day peaking factor of 1.42 means that the system delivers approximately 1.42 times the average daily demand during a peak day. Since certain facilities are designed to meet max hour requirements while also meeting fire flow requirements, an allocation is provided for fire flow. Based on RFC and District staff estimates, fire flow was assigned 10% of max day and max hour demands. Table 27: System-Wide Peaking Factors Factor Base Max Day Max Hour Fire Base % 0% 0% 0% Max Day % 24% 0% 10% Max Hour % 16% 30% 10% 12 Max Day = (Max Month Usage Average Monthly Usage) = (203, ,910) = Max Hour = (Max Day 1.5) = ( ) = Temescal Valley Water District

41 Using the relationship between Base, Max Day, Max Hour and fire protection, the remaining operational costs of 52% were allocated as variable costs and apportioned based on Max Hour. Table 28 identifies the final percent allocation of remaining operational costs to the cost components of Base, Max Day, Max Hour and Fire Protection when 52% of the total cost is apportioned based on Max Hour shown in Table 27. Table 28: O&M Allocation Max Hour % of Costs Base Max Day Max Hour Fire 100% 44% 16% 30% 10% 52% 23% 8% 16% 5% Review of the Administrative Expenses, indicated that approximately 50% of these costs were related to employee wages and benefits and the remaining 50% was related to other overhead costs, therefore, these costs were allocated 50% to Customer Service and 50% to Meter Capacity. Table 29 summarizes the percent allocations for the Operating and Administrative Expenses, the costs (prior to revenue offsets and adjustments) allocated to the cost components, and the resulting O&M Allocation (%). The O&M Allocation (%) will be used to allocate the Operating Requirement, including any revenue offsets or adjustments, from the revenue requirements (Table 25). Functionalized Expenses Customer Service Table 29: O&M Allocation (%) Meter Capacity Cost Components Fire Base Max Day Max Hour Total % Allocation Operating Expenses 0% 48% 5% 23% 8% 16% 100% Administrative Expenses 50% 50% 0% 0% 0% 0% 100% $ Allocation Operating Expenses $0 $258,024 $27,953 $122,249 $45,466 $83,858 $537,550 Administrative Expenses $208,675 $208,675 $0 $0 $0 $0 $417,350 Total O&M Expenses $208,675 $466,699 $27,953 $122,249 $45,466 $83,858 $954,900 O&M Allocation (%) 14 22% 49% 3% 13% 5% 9% Based on direction received from the District, RFC utilized the revenues from Table 30 to specifically offset the proposed tier 1 rate. Table 30: Revenues for Tier 1 Offset Other Revenues FY 2017 Stable Revenues Cellular Site Lease $30,000 Standby Charges $35,000 Property Taxes $30,000 Total Stable Revenue $95, There may be difference due to rounding. Water, Recycled Water, and Wastewater Rate Study Report 31

42 In order to use the stable revenues to offset Tier 1 rates, RFC increased the Operating Requirement by $95,000 and added a Revenue Offset rate component (-$95,000). This is considered a net neutral impact and doesn t affect the total revenue requirements of $4,263,801 (Table 25). The new Operating Requirement of $1,676,000 is then allocated based on the O&M Allocation (%) shown in Table 29. Table 31 shows the functionalized costs allocated to each of the cost causation components. 32 Temescal Valley Water District

43 Table 31: Allocation of Costs to Cost Components Fixed Variable 33% 67% FY 2017 Revenue Requirements Customer Service Meter Capacity MWD Capacity MWD RTS Fire Supply Base Max Day Max Hour Pumping Revenue Offset Water Purchases $2,364,501 $2,364,501 MWD Capacity Charge $57,825 $57,825 MWD RTS Charge $135, $135,475 O&M Expenses $1,676,000 $366,258 $819,130 $49,061 $214,567 $79,801 $147,184 Energy Expenses $125,000 $125,000 Revenue Offsets ($95,000) ($95,000) Cost of Service Requirement $4,263,801 $366,258 $819,130 $57,825 $135,475 $49,061 $2,364,501 $214,567 $79,801 $147,184 $125,000 ($95,000) Water, Recycled Water, and Wastewater Rate Study Report 33

44 Before we can allocate costs to customer class and tiers we first need to define the rate structure. Therefore, Step 4 will be discussed in Section Rate Design A key component of the Study includes evaluating the current rate structures and determining the most appropriate structures to model moving forward. The following subsections discuss the proposed rate structures, customer classes, and tier definitions for the water utility. Similar to the District s current rate structure, the proposed rates will include a monthly water service charge, RTS charge per account with an automatic pass-through provision, variable usage charge with an automatic pass-through provision for increases in rates of wholesale water imposed on the District by MWD, and a per unit pumping charge by elevation zone. Tiered Rates, when properly designed and differentiated by customer class as this Study does, allows a water utility to send consistent price incentives for conservation to customers. Due to the heightened interest in water conservation, tiered rates have seen widespread use, especially in relatively water-scare regions, such as Southern California. The proposed variable rate structures vary by customer class and have been discussed below Residential Water Rate Structure Residential customers are currently charged a volumetric use charge on an inclining 5-tier rate structure, where price per unit increases with each tier. RFC recommends moving to a 3-tiered rate structure that provides a more straight-forward connection between water needs and tiered allotments. The first tier is designed to recover the costs associated with providing water for basic indoor water needs; the second tier is designed to recover the costs associated with providing reasonable and efficient outdoor water usage; and the third tier is designed to recover costs associated with usage above the total water allotment provided through Tiers 1 and 2 combined. Senate Bill 7X7 ( th Ex. Sess.) ( SB 7 ), known as the Sustainable Water Use and Demand Management Reduction Law, mandates conservation by requiring the State to achieve a twenty percent reduction in urban per capita water use by December 31, 2020 (the so-called 20 by 2020 legislation). (Water Code section ) Urban retail water suppliers are required to determine in urban water management plans their own targets and methods for achieving this conservation and to assess the present and proposed means and methods for achieving the conservation targets. (Water Code sections , ) Thus, urban water suppliers must develop long-term strategies for developing water conservation and water resource management programs and practices that will be sufficient to reach their State mandated interim and overall water use targets. As part of an urban water supplier s urban water management plan, an urban water supplier must include a description of its water demand management measures to reach the State mandated interim and overall water use targets. Demand management is defined in California Water Code section as those water conservation measures, programs, and incentives that prevent the waste of water and promote reasonable and efficient use or reuse of available supplies. For purposes of achieving the 20 by Temescal Valley Water District

45 reduction target, SB 7x-7 established a per capita water usage target equal to 55 gallons per capita per day (gpcd). To align with the provisions of Water Code , the Tier 1 allotment is based on the Temescal Valley CDP density of approximately 3.09 persons per household at 55 gpcd over the 30-day billing period (rounded to the next whole unit of water). Figure 8 shows the calculation used to derive the residential Tier 1 allocation of 7 units of water. Figure 8: Calculation of Tier 1 Allocation TTTTTTTT 1 AAAAAAAAAAAAAAAAAA = HHHHHHHHHHhoooooo SSSSSSSS GGGGGGGG # oooo DDDDDDDD # oooo GGGGGGGGGGGGGG iiii aa UUUUUUUU = 3.09 pppph 55 gggggggg 30 DDDDDDDD 748 gggggggggggggg 7 uuuuuuuuuu For Tier 2, RFC analyzed the District s billing records to determine the average amount of water used, per account, during the summer quarter (July through September) and derived an average of 18 ccf. As such, RFC recommends setting the Tier 2 allotment at an additional 11 units 15 of water for each residential customer to capture the average peak usage during the summer months when demand is highest. Tier 3 would be for any water usage above Tiers 1 and 2. Figure 9 graphically shows the residential tier structure. Figure 9: Residential Tier Structure Table 32 summarizes the current and proposed structure and tier ranges. Table 32: Residential Tier Adjustments Current Tier Tier Range Break Rationale Tier ccf 0 7 ccf Indoor Allotment Tier ccf 8 18 ccf SFR Summer Average Tier ccf 19 ccf & Above Usage over T1 and T2 15 Tier 2 Allotment = Average Peak Usage Tier 1 Allotment = (18 7) = 11 units Water, Recycled Water, and Wastewater Rate Study Report 35

46 Tier ccf N/A Tier 5 46 ccf & Above N/A Non-Residential Water Rate Structure RFC recommends maintaining a uniform rate for Non-Residential accounts. Commercial uses and related water needs are not homogeneous and can vary drastically between accounts. Consequently, developing a tiered rate structure that appropriately captures the usage needs of each commercial use would not be possible without additional detailed data and analysis on the type of businesses and related water demand to determine appropriate allotments for efficient use. For example, a Starbucks, a restaurant, and a bookstore exhibit drastically different water needs. Although maintaining uniform rates are recommended, it is important to note that the customer class as a whole is still paying its proportionate share of the costs of providing the service based on the demand and burdens the class places on the system and is not being subsidized by another customer class. Due to the current data limitations, a uniform rate provides the most appropriate and equitable rate structure between accounts within this customer class Irrigation Water Rate Structure RFC recommends modifying the Irrigation rate structure from a 2-tiered rate structure to a uniform rate structure. In order to maintain a tiered rate structure, the District would need to define the efficient use for each account by providing a unique water allotment each month that is specific to each account s landscape area. The Tier 1 allotment would reflect the amount of water needed for each individual customer and Tier 2 would signal when an account has exceeded its water budget. At this time, landscape area or irrigable area is not available for each customer account, therefore, RFC recommends moving to a uniform rate structure Usage Under Tiers The proposed tier structure increases the width of Tier 1 and Tier 2 for Residential customers, leading to more usage in the lower tiers (assuming the same level of usage). For example, a customer using 20 units under the current Residential structure would be billed 5 units at the Tier 1 rate, 10 units at the Tier 2 rate, and 5 units at the Tier 3 rate. Under the proposed tier structure, the same customer using 20 units would be billed 7 units at the Tier 1 rate, 11 units at the Tier 2 rates, and 2 units at the Tier 3 rate. Performing this same analysis for all accounts yields the tier totals found in Table 33. Note that the total usage of 969,276 ccf is the same regardless of tier structure only the usage distribution in each tier is affected. Table 33: Usage by Customer Class and Tier Customer Class Current Tier Structure Tier Structure Residential Tier 1 273, ,579 Tier 2 359, ,826 Tier 3 164, ,116 Tier 4 34,372 N/A Tier 5 15,841 N/A Residential Usage 847, ,521 Non-Residential Usage 30,415 30,415 Irrigation Tier 1 21,793 91,340 Tier 2 69,547 N/A Irrigation Usage 91,340 91, Temescal Valley Water District

47 Total Water Usage 969, , Step 4 Distribute Cost Components to Customer Classes and Tiers In order to allocate costs to different customer classes, unit costs of service need to be developed for each cost causation component. The unit costs of service are developed by dividing the total annual costs allocated to each parameter by the total annual service units of the respective component. The annual units of service for each cost component from Table 31 is derived below. Customer Service Component These costs are incurred at the same level regardless of the type of land use or the total amount of water that the utility delivers, therefore, the Customer Service component is based on the number of bills and does not fluctuate with increases in meter size. The number of bills can be determined by multiplying the number of accounts, 4,984, times the number of billing periods, 12, in a year. The total Customer Service revenue requirement from Table 31 of $366,258 is divided by the number of bills to determine the unit cost of service shown in Table 34. Table 34: Customer Service Component - Unit Rate Customer Service Component Customer Service Revenue Requirements $366,258 # of Bills (4,984 x 12) 59,808 Monthly Unit Rate $6.13 Meter Capacity Component The Meter Capacity Component include costs related to maintenance, capital costs, and fire protection. RFC allocated these cost components based on meter size. In order to create parity across the various meter sizes, each meter size is assigned a factor relative to a 5/8 meter, which is given a value of 1. Larger meters have the potential to demand more capacity, or said differently, exert more peaking characteristics compared to smaller meters. The potential capacity demand (peaking) is proportional to the potential flow through each meter size. For the purposes of this study, the safe maximum operating capacity by meter type, as identified in the AWWA M1 Manual, 6th Edition, Table B-1, was used as a basis for calculating the equivalent meter ratio. As shown in Table 35, the safe maximum operating capacity for each meter was divided by the base meters safe operating capacity (20 gpm) to determine the equivalent meter ratio. The ratios represent the potential flow through each meter size compared to the flow through a 5/8 meter. Multiplying the number of meters by the AWWA Ratio results in the Equivalent Meter Units (EMUs). Water, Recycled Water, and Wastewater Rate Study Report 37

48 Table 35: Equivalent Meter Units Meter Size AWWA Capacity Capacity Ratio Number of Accounts Equivalent Meter Units Annual EMU [A] (gpm) [B] (A/20) [C] [D] (B x C) [E] (D x 12) Residential ,835 4,835 58,020 5/8" /4" " /2" " ,680 3" " ,134 6" 1, " 2, " 4, Totals 4,984 5,696 68,352 Based on these ratios and taking into consideration the number of billing periods, the total annual equivalent meters equals 68,352 (see Table 35). Table 36 shows the Meter Capacity costs and Fire Protection costs from Table 31 allocated over the total annual equivalent meters. Table 36: Meter Capacity Component Unit Rate Meter Capacity Component Meter Capacity Revenue Requirement $819,130 + Public Fire Protection Requirement $49,061 Total Meter Requirements $868,192 Annual Equivalent Units 68,352 Monthly Unit Rate $12.71 MWD Capacity Component The MWD Capacity costs were allocated over the equivalent meters. Table 37 summarizes the determination of the unit rate for the Meter Capacity Component. Table 37: MWD Capacity Component Unit Rate MWD Capacity Component MWD Capacity Revenue Requirement $57,825 Annual Equivalent Units 68,352 Monthly Unit Rate $ Temescal Valley Water District

49 MWD RTS Component Based on direction from the District, the MWD RTS costs will continue to be recovered equally over every account, therefore the number of bills was used to allocate these costs. Table 38 summarizes the determination of the unit rate for the MWD RTS Component. Table 38: MWD RTS Component Unit Rate MWD RTS Component MWD RTS Revenue Requirement $135,475 # of Bills 59,808 Monthly Unit Rate $2.27 Supply Component The District incurs purchased water costs at a uniform rate therefore, the Supply Component is based on the total units of water sold (see Table 33) irrespective of customer class or tiers. Table 39 summarizes the determination of the unit rate for the Supply Component. Table 39: Supply Component Unit Rate Supply Component Supply Revenue Requirements $2,364,501 Total Projected Water Sales (ccf) 969,276 Unit Rate (per ccf) $2.44 Base/Delivery Component Delivery costs are those operating and capital costs of the water system associated with delivering water to all customers at a constant average rate of use. Therefore, delivery costs are spread over all units of water, irrespective of customer class or tiers, to calculate a uniform rate. Table 40: Delivery Component Unit Rate Base/Delivery Component Base Revenue Requirements $214,567 Total Projected Water Sales (ccf) 969,276 Unit Rate (per ccf) $0.23 Peaking Component Extra capacity or peaking costs represent those costs incurred to meet customer peak demands for water in excess of a baseline usage. Total extra capacity costs are apportioned between maximum day and maximum hour demands based on the type of expense. The maximum day demand is the maximum amount of water used in a single day in a year. The maximum hour demand is the maximum usage in an hour on the maximum usage day. Different facilities are designed to meet different peaking characteristics. Therefore, extra capacity costs include capital improvements and power related costs, and have been apportioned between base, maximum day, and maximum hour. Costs allocated to base are part of the delivery costs as defined above. The Peaking Revenue Requirements, $226,984, were determined by adding the Max Day Requirements of $79,801 and the Max Hour Requirements of $147,184. Water, Recycled Water, and Wastewater Rate Study Report 39

50 Costs associated with peaking are first apportioned to each defined customer class based on its total demand (total water used, weighted by a peaking factor). Peaking was calculated for each customer class based on District consumption data, which ensures that accounts within each customer class will only recover the costs allocated to their respective customer class in proportion to the cost of providing service. Table 41 provides the peak factor for each customer class by taking the max month usage compared to the average month usage. Table 42 show the peaking costs allocated to each customer class. The peaking cost allocated to each customer class is derived by weighting the peaking factor based on the total amount of water usage that is generating the peaking factor (product of Usage and Peaking Factor). The result is the weighted peaking factor and peak costs are apportioned based on the percentage of peak (Table 42). Customer Class Table 41: Class Peaking Factors Max Month Usage [A] Average Month Usage [B] Peaking Factor [A B] Residential 91,221 70, Non-Residential 3,103 2, Irrigation 11,457 7, Table 42: Peaking Costs Allocated to Classes Customer Class Projected Usage (ccf) [A] Peaking Factor [B] Weighted Peaking Factor [A x B] % Allocation Revenue Requirements Residential 847, ,094,652 86% $195,742 Non-Residential 30, ,236 3% $6,658 Irrigation 91, ,484 11% $24,584 Totals 969,276 1,269,372 $226,984 Using the defined tiers and allotments, the peaking costs are then allocated to each tier. Similar to how costs may be apportioned to different groups of customers based on usage characteristics to show proportionality, maximum day and maximum hour costs were apportioned between tiers based on the unique usage characteristics of customers within each tier. As part of our consumption analysis, RFC analyzed the water usage of each and every account for a 12-month period and grouped customers based on which tier they fell within ( Tiered Customer Class ). Doing so allowed us to group like customers together based on water usage and to allocate costs to each tier. As such, the cost allocated to each tier is proportionately spread based on the demand of the corresponding accounts that fall within each tier. As part of allocating costs among each tier, the average usage of each Tiered Customer Class was analyzed, where Tier 1 is the baseline with a Tier Demand of The demand generated by Tiers 2 and 3 were then calculated by taking the average usage within these tiers compared to the full maximum allotment 16 of Tier 1 16 Average usage was determined each month by taking the usage stopped in the tier divided by the number of accounts that contributed to the tiered usage. 40 Temescal Valley Water District

51 customers. Table 43 shows the average usage per account for each Tiered Customer Class and the corresponding demand above Tier 1 customers. Residential Tier Peaking Table 43: Residential Peaking Factors Usage Stopped in Tier [A] # of Contributing Accounts [B] Max Average Usage [C] (A B) Peaking Factor [D] (C 7.00) Tier Tier 2 27,548 2, Tier 3 61,224 1, Table 44 shows the allocation of peaking revenue requirements to tiers as well as the derivation of the unit cost of service. Table 44: Peaking Component Unit Rate Customer Class Projected Usage (ccf) [A] Peaking Factor [B] Weighted Peaking Factor [C] (A x B) % Allocation [D] Revenue Requirements [E] Residential $195,742 Unit Rate [F] (E A) Tier 1 370, ,579 22% $43,767 $0.12 Tier 2 318, ,848 36% $69,900 $0.22 Tier 3 158, ,939 42% $82,075 $0.52 Subtotal 847,521 1,657,365 $195,742 Non-Residential 30,415 N/A $6,658 $0.22 Irrigation 91,340 N/A $24,584 $ ,276 $226,984 Revenue Offset Component In addition, the proposed rate structure will use the stable revenues discussed in Table 30 to offset Tier 1 rates thereby continuing to provide affordability for essential use and further encouraging conservation. Based on policy, the revenue offset will only apply to Residential and Non-Residential customers. Irrigation usage is considered non-essential and therefore they will not receive an offset. Similar to the Peaking Component, the first step is to allocate the revenue requirements to customer class. The revenue requirements were allocated to customer class based on their proportionate share of water use as shown in Table Tier 1 was set at the full maximum allotment of 7 units. Water, Recycled Water, and Wastewater Rate Study Report 41

52 Table 45: Revenue Offset Allocated to Class Customer Class Projected Usage (ccf) Allocation Factor Weighted Factor % Allocation Revenue Requirements Residential 847, ,521 97% ($91,709) Non-Residential 30, ,415 3% ($3,291) Irrigation 91, % $0 969, ,936 ($95,000) Table 46 shows the allocation of revenue offset requirements to tiers as well as the derivation of the unit cost of service. Table 46: Revenue Offset Component Unit Rate Customer Class Projected Usage (ccf) Allocation Factor Weighted Factor % Allocation Revenue Requirements Unit Rate Residential ($91,709) Tier 1 370, , % ($91,709) ($0.24) Tier 2 318, % $0 $0.00 Tier 3 158, % $0 $0.00 Subtotal 847, ,579 ($91,709) Non-Residential 30, , % ($3,291) ($0.10) Irrigation 91, % $0 $0.00 Pumping Component The pumping revenue requirements were allocated to pumping zones based on the actual cost of pumping one unit of water up one foot of elevation. Based on District staff analysis, it costs approximately $ to pump one unit of water up one foot of elevation. Table 47 shows the elevation of each pumping zone and the additional feet above the base zone that each unit of water must be pumped to reach customers in the respective zones. The unit rate was determined by multiplying the cost of approximately $ by the number of additional feet pumped shown in the table below 18. Table 47: Pumping Component Unit Rate Zone Elevation Additional Feet Pumped ZONE A (Base) 1,320 0 Unit Rate ZONE B 1, $0.17 ZONE C 1, $0.18 ZONE D 1, $0.21 ZONE E 1, $0.25 Table 48 shows the pumping revenue requirements of $125,000 from Table 31 allocated to each zone. 18 Difference due to rounding. 42 Temescal Valley Water District

53 Table 48: Pumping Requirement Allocated to Zones Zone Projected Usage by Zone Unit Rate Revenue Requirements Zone A 372,902 $ Zone B 176,440 $0.17 $29,995 Zone C 284,162 $0.18 $51,149 Zone D 149,871 $0.21 $32,972 Zone E 41,863 $0.25 $10,884 $125, Water Rates Fixed Charges Currently, the District s fixed monthly water charges generate approximately 39% of total rate revenues. The new rate structure will recover approximately 33% of rate revenues on the fixed monthly charges. Recovering a greater portion of the costs over the variable component will help send a pricing signal to the larger water use customers and will help encourage or promote conservation. Table 49 summarizes the monthly fixed charges by meter size based on the unit rates developed in the Rate Design section. Table 49: FY 2017 Fixed Charge ($/Month) Meter Size Capacity Ratio Customer Service [A] Meter Capacity [B] MWD Capacity [C] Base Fixed Charge [D] (A+B+C) MWD RTS [E] FY 2017 Service Charge [F] (D+E) Residential 1.00 $6.13 $12.71 $0.85 $19.69 $2.27 $ /8" 1.00 $6.13 $12.71 $0.85 $19.69 $2.27 $ /4" 1.50 $6.13 $19.07 $1.28 $26.47 $2.27 $ " 2.50 $6.13 $31.78 $2.13 $40.03 $2.27 $ /2" 5.00 $6.13 $63.55 $4.25 $73.93 $2.27 $ " 8.00 $6.13 $ $6.80 $ $2.27 $ " $6.13 $ $14.88 $ $2.27 $ " $6.13 $ $26.78 $ $2.27 $ " $6.13 $ $55.25 $ $2.27 $ " $6.13 $1, $ $1, $2.27 $1, " $6.13 $2, $ $2, $2.27 $2, As shown in the table above, the Customer Service and MWD RTS Components do not vary based on meter size whereas Meter Capacity and MWD Capacity increase as the size of the meter increases. The Meter Capacity and MWD Capacity rate is determined by multiplying the unit costs of $12.71 (Table 36) and $0.85 (Table 37) by the appropriate capacity ratios. The Base Fixed Charge shown in column D does not contain the MWD RTS charge. The MWD RTS costs are known for FY 2017 and have been included in the total FY 2017 Service Charge (column F), however, any future rate increases from MWD above those projected in this study will be passed-through to customers at the time of the increase. Water, Recycled Water, and Wastewater Rate Study Report 43

54 Applying the proposed revenue adjustments of 4.5% each year to the proposed monthly fixed charges (except the MWD RTS charge) yields the proposed monthly fixed charges for the Study Period in Table 50. Any increases in the MWD RTS charges will be in addition to the rates shown below. Table 50: 5-Yr Fixed Rates ($/Month) FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Meter Size Total Service Total Service Total Service Total Service Total Service Charge Charge Charge Charge Charge Residential $21.96 $22.85 $23.78 $24.75 $ /8" $21.96 $22.85 $23.78 $24.75 $ /4" $28.74 $29.94 $31.19 $32.50 $ " $42.30 $44.11 $46.00 $47.97 $ /2" $76.20 $79.53 $83.01 $86.65 $ " $ $ $ $ $ " $ $ $ $ $ " $ $ $ $ $ " $ $ $ $1, $1, " $1, $1, $2, $2, $2, " $2, $2, $3, $3, $3, Variable Rates The components of the variable rate are added together to produce rates for each customer class and tier. Table 51 shows each component rate and the final proposed FY 2017 variable rate. Table 52 shows the proposed variable rates for the Study Period. Any increases in the purchased water costs above what was projected in this study will be passed along to customers at the time of the increase and will be in addition to the rates shown below. Customer Classes Projected Usage Table 51: FY 2017 Variable Rates ($/ccf) Supply Component Delivery Component Peaking Component Revenue Offset Component FY 2017 Commodity Charge Residential Tier 1 370,579 $2.44 $0.23 $0.12 ($0.24) $2.55 Tier 2 318,826 $2.44 $0.23 $0.22 $0.00 $2.89 Tier 3 158,116 $2.44 $0.23 $0.52 $0.00 $3.19 Non-Residential 30,415 $2.44 $0.23 $0.22 ($0.10) $2.79 Irrigation 91,340 $2.44 $0.23 $0.27 $0.00 $ Temescal Valley Water District

55 Customer Classes Residential Table 52: 5-Yr Variable Rates ($/ccf) 2017 Commodity Rates 2018 Commodity Rates 2019 Commodity Rates 2020 Commodity Rates 2021 Commodity Rates Tier 1 $2.55 $2.67 $2.80 $2.93 $3.07 Tier 2 $2.89 $3.03 $3.17 $3.32 $3.47 Tier 3 $3.19 $3.34 $3.50 $3.66 $3.83 Non-Residential $2.79 $2.92 $3.06 $3.20 $3.35 Irrigation $2.94 $3.08 $3.22 $3.37 $3.53 Similarly, the proposed pumping rates are shown in Table 53 below. Elevation Zone Table 53: 5-Yr Pumping Rates ($/ccf) 2017 Pumping Rates 2018 Pumping Rates 2019 Pumping Rates 2020 Pumping Rates 2021 Pumping Rates Zone A $0.00 $0.00 $0.00 $0.00 $0.00 Zone B $0.17 $0.18 $0.19 $0.20 $0.21 Zone C $0.18 $0.19 $0.20 $0.21 $0.22 Zone D $0.22 $0.23 $0.25 $0.27 $0.29 Zone E $0.26 $0.28 $0.30 $0.32 $ Customer Impacts Figure 10 compares the bill totals for a Residential customer in Zone B at various levels of usage for the current rates and the proposed rates. Figure 10: Residential Customer Bill Impact Water, Recycled Water, and Wastewater Rate Study Report 45

56 5. RECYCLED WATER RATE STUDY 5.1 RECYCLED WATER UTILITY FINANCIAL PLAN This section describes the development of the recycled water utilities financial plan, the results of which were used to determine the revenue adjustments needed to meet ongoing expenses and provide fiscal sustainability to the District. The review involves analysis of projected annual operating revenues under the current rates, O&M expenses, capital expenditures, transfers between funds, and reserve requirements Revenue from Current Rates The current recycled water structure consists of three main components: 1. Monthly recycled water service charge that varies by meter size (Table 54 summarizes the current meters by size, current monthly fixed charges, and projected revenue) 2. Uniform commodity charge per unit of recycled water (Table 55 summarizes the projected usage inclusive of construction, current commodity rate, and projected revenue) 3. A per unit pumping charge that varies by pumping zone (Table 56 summarizes the projected usage by zone, current pumping rates, and the projected pumping revenue) Table 54: Projected Annual Service Charge Revenue Meter size # of Meters [A] Current Recycled Water Service Charge ($ / Month) [B] Projected Annual Service Charge Revenue (A x B x 12) 5/8" 6 $20.87 $1,503 3/4" 0 $30.87 $0 1" 6 $45.48 $3, /2" 7 $65.27 $5,483 2" 81 $ $98,804 3" 3 $ $5,200 4" 2 $ $5,008 6" 3 $ $15,215 8" 2 $ $16,204 10" 0 $ $0 Service Charge Revenue $150,691 Table 55: Projected Annual Variable Revenue Customer Classes Current Tiers Projected Annual Usage [A] Current Commodity Rate [B] Projected Variable Revenue (A x B) Recycled Uniform 814,834 $1.69 $1,377, Temescal Valley Water District

57 Pumping Zone Table 56: Projected Annual Pumping Revenue Projected Annual Usage [A] Current Pumping Rate [B] Projected Pumping Revenue (A x B) Zone A 693,137 $0.00 $0 Zone B - $0.12 $0 Zone C 105,258 $0.13 $13,684 Zone D 86,074 $0.14 $12,050 Pumping Revenue $25,734 Using account growth, water demand factors, and other revenue assumptions from Table 14, RFC projected the revenues for the recycled water utility 19. Table 57 summarizes the rate revenue (line 5) as well as miscellaneous and additional non-operating revenues. As shown in the table, since RFC assumed zero growth and no increase in recycled water demand, the rates and rate revenue remained constant during the Study Period. The projected recycled water sales by customer class remained constant and was based on the actual FY 2016 usage. Line # 1 Recycled Utility Revenues Table 57: Projected Recycled Water Revenues FY 2017 FY 2018 FY 2019 FY 2020 FY Service Charge $150,691 $150,691 $150,691 $150,691 $150,691 3 Usage Charge $1,377,069 $1,377,069 $1,377,069 $1,377,069 $1,377,069 4 Pumping Charge $25,734 $25,734 $25,734 $25,734 $25,734 5 Subtotal Rate Revenue $1,553,494 $1,553,494 $1,553,494 $1,553,494 $1,553,494 6 Misc. Revenues $10,000 $10,000 $10,000 $10,000 $10,000 7 Non-Operating Revenues $2,807 $2,033 $2,379 $2,497 $2,624 8 Total Revenues $1,566,301 $1,565,527 $1,565,874 $1,565,992 $1,566, O&M Expenses The District s FY 2017 budget values and the assumed inflation factors (Table 13) for the study period were used as the basis for projecting O&M costs. Table 58 shows the total projected O&M expenses for FY 2017 through FY As shown in the table, the recycled utility does not currently have any outstanding debt. 19 Although only the Study Period is shown here, RFC projected the revenues through FY Although only the Study Period is shown here, RFC projected the expenses through FY Water, Recycled Water, and Wastewater Rate Study Report 47

58 Table 58: Projected Recycled O&M Expenses FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Expenditures Water Purchases $0 $0 $0 $0 $0 Operating Costs $346,150 $356,014 $366,180 $376,660 $387,463 Energy Costs $275,000 $302,500 $332,750 $366,025 $402,628 Administrative Expenses $307,750 $315,958 $324,409 $333,113 $342,078 Total Operating Expenses $928,900 $974,471 $1,023,339 $1,075,798 $1,132,169 Debt Service $0 $0 $0 $0 $0 Total Expenses $928,900 $974,471 $1,023,339 $1,075,798 $1,132, Capital Improvement Plan The District provided the capital improvement plan (CIP) to address future recycled water utility needs. Table 59 summarizes the Baseline CIP for the Study Period. Currently, the District operates on a Pay-As-You- Go basis (Paygo) meaning capital projects should be fund by cash on hand or reserves and not through the issuance of debt. RFC indexed the capital expenditures by a 3% inflationary compounding rate from Table 13 in order to account for increased construction costs in future years. Table 59: Baseline Recycled Utility Capital Improvement Plan FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Recycled System Convert to Recycled $50,000 $50,000 $50,000 $50,000 $0 Recycled Delivery - Pipeline Extensions $600,000 $700,000 $700,000 $700,000 $0 Recycled Storage - Ground Water Dev. $100,000 $100,000 $100,000 $0 $0 Well Rehab $25,000 $25,000 $0 $0 $0 Total CIP $775,000 $875,000 $850,000 $750,000 $0 Inflated CIP $822,198 $956,136 $956,682 $869,456 $ Reserve Requirements For FY 2017, the District s total beginning reserve balance for the recycled water utility is approximately $835K. Currently, the District maintains an unrestricted reserve to cover operations and capital. As part of Best Management Practices of utilities, it is recommended that a utility have at least 90 days of operating reserves as well as sufficient funds available to ensure that the utility s capital plan can move forward as scheduled and is not delayed due to insufficient funds on hand Financial Outlook at Current Rates Revenues generated from current rates and other revenues exceed the operational expenses for the Study Period. The District has more than 90 days of reserves, however, without revenue adjustments the capital related reserve will be fully depleted and operating at a deficit by FY Therefore, rate increases are needed to ensure that the District maintains a strong financial position moving forward and is able to continue to fund capital projects and invest in the system. Figure 11 illustrates the operating position of the recycled utility, where expenses, inclusive of reserve funding, are shown by stacked bars; and the total 48 Temescal Valley Water District

59 revenues at current rates are shown by the horizontal orange trend line. Figure 12 summarizes the baseline CIP and its funding sources by fiscal year (currently 100% PAYGO). Figure 13 displays the ending total reserve balance by FY for the recycled utility. Figure 11: Recycled Operating Financial Position at Current Rates Figure 12: Baseline Recycled Capital Improvement Plan and Funding Source Water, Recycled Water, and Wastewater Rate Study Report 49

60 Figure 13: Projected Ending Recycled Reserves at Current Rates Recommendations and Financial Plan After reviewing the District s revenue requirements, reserve policies, capital planning schedule, and current revenues, a financial plan was developed to meet the following criteria:» Positive net operating cash income each FY of the planning period» Fully fund capital projects through Pay-As-You-Go (PAYGO) or cash on hand» Establish and maintain the following reserves by the end of the Study Period (FY ): o Recycled Operating Fund minimum of 120 days of operating expenses o Repair & Replacement Fund target of 1 ½ years of replacement cost depreciation o Rate Stabilization Fund minimum of 10% of total revenues CIP Adjustments RFC worked closely with District staff to adjust the recycled CIP to reflect a measured multi-year approach. The following adjustments were made:» To spread costs more evenly over the study period, the 6-year average CIP was used as the annual CIP for FY 2017 through FY 2020» The annual depreciation was used for all remaining years and is reflective of the minimum amount the District expects to reinvest in the system Table 60 summarizes the projected recycled CIP. RFC inflated the total CIP using the inflationary factor from Table 13 in order to account for the decreased purchasing power of the dollar. 50 Temescal Valley Water District

61 Table 60: Projected Recycled Utility CIP FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Recycled System 6-Yr Average CIP $790,833 $790,833 $790,833 $790,833 $0 Projected Reinvestment (Annual Depr.) Total CIP $790,833 $790,833 $790,833 $790,833 $384,251 Inflated CIP $838,995 $864,165 $890,090 $916,793 $458, Recommended Reserves RFC recommends establishing the same reserves recommended for the water utility: Operating Reserve The operating reserve is used primarily to meet ongoing cash flow requirements. RFC recommends establishing an operating reserve target of 180-days of O&M expenses and a minimum of 120- days of O&M. As the potential for revenue volatility increases, reserves should be set at an amount to offset this impact and provide revenue stability. A 180-day reserve ensures working capital to support the operation, maintenance and administration of the utility. Maintaining this level of reserves also provides liquid funds for the continued ongoing operations of the utility in the event of unforeseen costs or interruption with the utility or the billing system. Capital Repair and Replacement (R&R) The capital reserve is used primarily to meet the District s capital improvement requirements. The District s revised capital improvement plan over the five-year period is approximately $3.9M. The ideal target for the capital reserve should be to have a reserve sufficient to fund a year s worth of capital costs, which would ensure that the District can continue to reinvest in the recycled system and that necessary capital improvements are not delayed or deferred due to cash flow concerns. RFC recommends establishing a capital reserve based on a target of 1.5 times replacement cost depreciation. Rate Stabilization A Rate Stabilization fund is used in the event of any unforeseen circumstances or critical asset failures to help mitigate the impact to the District and ultimately the District s customers. RFC recommends setting a Rate Stabilization target of 10% of recycled revenues Financial Plan The District will utilize its reserves to the extent possible to mitigate the degree of required revenue adjustments during the Study Period. Approximately $3.9 million in recycled capital projects are scheduled during the Study Period. In order to fund these projects and establish the recommended reserves, The District would require revenue adjustments equal to 10% for FY 2017 and FY 2018 and 4% each year thereafter. Similar to the water utility, the first adjustment will take place on February 1 st, 2017 with the remaining adjustments occurring each year on January 1. The proposed financial plan for the recycled water system ensures recycled water customers are paying for the recycled expenditures (i.e. water and wastewater customers are not helping fund the recycled system). All recycled revenues and expenditures stay within the recycled enterprise. Under the proposed plan, the District will maintain a positive net income and will meet the 5-year financial reserve targets. Table 61 summarizes the proposed financial plan (see Appendix A for a detailed financial plan). Figure 14 illustrates the operating position of the recycled utility, where expenses, inclusive of reserve funding, are shown by stacked bars; and total revenues at both current rates and proposed rates are shown by the horizontal trend lines. Figure 15 summarizes the revised projected CIP and its funding sources (100% PAYGO). The District Water, Recycled Water, and Wastewater Rate Study Report 51

62 anticipates there will be additional recycled capital projects in FY 2021 and beyond, however, the extent and magnitude is not known at this time. Figure 16 displays the ending total reserve balance for the recycled utility, inclusive of operating, capital, and rate stabilization funds. The horizontal trend lines indicate the minimum and target reserve balance and the bars indicate ending reserve balance. No new debt is proposed to be issued as part of the proposed five-year financial plan. Table 61: Recycled Financial Plan Line # FY 2017 FY 2018 FY 2019 FY 2020 FY Revenues 2 Rate Revenues $1,618,223 $1,794,286 $1,917,323 $1,994,016 $2,073,776 3 Other Revenues $12,807 $12,033 $12,379 $12,497 $12,624 4 Total Revenues $1,631,030 $1,806,319 $1,929,702 $2,006,513 $2,086, Less: Expenditures 7 Total Operating Expenditures $928,900 $974,471 $1,023,339 $1,075,798 $1,132,169 8 Total Debt Service $0 $0 $0 $0 $0 9 Total Expenditures $928,900 $974,471 $1,023,339 $1,075,798 $1,132, Net Cashflow (line 4 line 9) $702,130 $831,848 $906,363 $930,715 $954, Beginning Reserve Balance $834,522 $698,872 $668,355 $685,667 $700, Net Cashflow (line 11) $702,130 $831,848 $906,363 $930,715 $954, Interest $1,215 $1,801 $1,039 $888 $ CIP Expenditures ( -$838,995 -$864,165 -$890,090 -$916,793 -$458,816 Table 60) 17 Ending Reserve Balance $698,872 $668,355 $685,667 $700,477 $1,196,734 Figure 14: Operating Financial Position at Rates 52 Temescal Valley Water District

63 Figure 15: Recycled Capital Improvement Plan and Funding Source Figure 16: Projected Ending Recycled Reserves at Projected Rates Water, Recycled Water, and Wastewater Rate Study Report 53

64 5.2 RECYCLED UTILITY COST OF SERVICE STUDY Cost of Service Analysis A cost of service analysis distributes a utility s revenue requirements (costs) to each customer class. As discussed in the Section and summarized below there are four main steps in the cost of service analysis. Each step shown below will be described in greater detail in the following subsections.» Step 1 Determine Revenue Requirements» Step 2 Functionalize O&M Costs» Step 3 Allocate Functionalized Costs to Cost Components» Step 4 Distribute Cost Components to customer Classes and Tiers Step 1 Determine Revenue Requirement In this Study, recycled rates are calculated for FY 2017 (known as the Test Year), by using the District s FY 2017 budget. Test Year revenue requirements are used in the cost allocation process. Subsequent years revenue adjustments are incremental and the rates for future years are based on the proposed revenue adjustments and the anticipated revenue requirements. The District should review the cost of service analysis at least every five years to ensure that the rates are consistent with the costs of providing service. The revenue requirement determination is based upon the premise that the utility must generate annual revenues to meet O&M expenses, any debt service needs, reserve levels, and capital investment needs. Revenues from sources other than recycled rates and charges (e.g. revenues from miscellaneous services) are deducted from the rate revenue requirement. Additional deductions are made to account for the required net cashflows (found in Table 61 line 11) 21 and the mid-year adjustment 22. FY 2017 cost of service to be recovered from the District s recycled customers is shown in Table For the purposes of this Study, capital investments are funded through the Capital Repair and Replacement reserve. Meeting the minimum Capital R&R target ensures the capital projects can be funded each year of the Study Period. 22 The revenue requirement needs to be based on the revenue needs for a full fiscal year. Since the rates in FY 2017 will only be in effect for 5 months, the mid-year adjustment is used to include the revenue requirement for the remaining 7 months. 54 Temescal Valley Water District

65 Table 62: Recycled Revenue Requirements Line # FY Specific Allocations Operating Total 2 Revenue Requirements 3 Fixed Rev Requirement $218,733 $218,733 4 Energy Costs (Pumping) $22,563 $41,326 5 Operating Costs $346,150 $346,150 6 Energy Costs $233,674 $233,674 7 Administrative Expenses $89,017 $89,017 8 Total Revenue Requirements $241,296 $668,842 $928, Less: Revenue Offsets 11 Misc. Utility Charges $10,000 $10, Interest Income $2,807 $2, Total Revenue Offsets $0 $12,807 $12, Less: Adjustments 16 Adjustment for Cash Balance ($702,130) ($702,130) 17 Adjustment for Mid-Year Increase ($90,621) ($90,621) 18 Total Adjustments $0 ($792,751) ($792,751) Revenue Requirement from Rates $241,296 $1,448,785 $1,708,844 Based on policy direction, the recycled fixed meter charge will be the same as the water base fixed charge and the pumping rates will be consistent between utilities. Therefore, the projected revenue from the fixed meter charge and pumping rates must be specifically allocated (as shown in Table 62 lines 3 & 4) to determine the remaining amount of revenue requirements that will be recovered from the uniform variable rate. Table 63 summarizes the determination of the revenue requirements for the recycled meter charge. Table 64 summarizes the determination of the pumping revenue requirements. Table 63: Recycled Fixed Revenue Requirements # of Recycled Fixed Meter Bills Water Meter Revenue Size (# of Meters x 12) Charge Requirement [A] [B] [C] (A x B) 5/8" 72 $19.69 $1,418 3/4" 0 $26.47 $0 1" 72 $40.03 $2, /2" 84 $73.93 $6,210 2" 972 $ $111,401 3" 36 $ $8,763 4" 24 $ $10,398 6" 36 $ $31,951 8" 24 $1, $45,709 10" 0 $2, $0 $218,733 Water, Recycled Water, and Wastewater Rate Study Report 55

66 Table 64: Recycled Pumping Requirement Pumping FY 2016 Recycled Usage Pumping Rate Pumping Revenue Requirement Zone A 621,843 - $0 Zone B $0 Zone C 105, $18,946 Zone D 16, $3,617 Zone E $0 $22, Step 2 Functionalize O&M Costs Similar to the water cost of service analysis, the recycled utility s revenue requirements (costs) need to be distributed to each customer class. After determining a utility s revenue requirement, the total cost of recycled service is analyzed by system functions to proportionately distribute costs in relation to how that cost is generally incurred. The recycled utility costs were categorized into the following functions:» Fixed Revenue Requirements The costs that will be recovered over the meter charge» Energy Costs (Pumping) A component of the Operating Expenses associated with cost incurred to pump water to higher elevations» O&M Expenses o Operating Expense Daily operational costs of the utility including field workers, water testing, capital outlay, contract staffing, etc. o Administrative Expenses Includes costs such as executive staff, District legal expenses, customer service, insurance, and audit expenses. The fixed revenue requirements were deducted from the Administrative Expenses o Energy Expenses A component of the Operating Expenses associated with cost incurred to produce recycled water. The pumping revenue requirements were deducted from the total energy costs. Table 65 summarizes the functionalized O&M costs prior to any revenue offsets or adjustments (i.e. lines 3-7 from Table 62). Table 65: Recycled Functionalized Expenses FY 2017 Functionalized Expenses Functionalized Expenses Fixed Revenue Requirement $218,733 Energy Costs (pumping) $22,563 O&M Expenses Operating Expenses $346,150 Energy Expenses $252,437 Administrative Expenses $89,017 Total O&M Expenses $928, Temescal Valley Water District

67 Step 3 Allocate Functionalized Costs to Cost Components The functionalization of costs allows us to better allocate the costs based on how the costs are incurred. This is commonly referred to as cost causation. Essentially, cost causation means that the District incurs a cost of providing service as a result of the demands or burdens the customer places on the system and recycled resources. RFC used the Base-Extra Capacity method to allocate the functionalized costs to various rate components (cost causation components), as described in the M1 Manual. The District s costs were allocated to the following cost causation components: 1. Meter Charges represents the costs that will be recovered over the fixed charge at the same rate as the water base meter charge. 2. Supply represents the variable energy cost of producing recycled water. 3. Base/Delivery are those operating and capital costs of the recycled system associated with serving customers at a constant, or average, rate of use. These costs tend to vary with the total quantity of recycled water used. 4. Peaking Costs or Extra Capacity Costs represent those costs incurred to meet customer peak demands for recycled water in excess of average day usage. Total extra capacity costs are subdivided into costs associated with maximum day and maximum hour demands. The maximum day demand is the maximum amount of recycled water used in a single day in a year. The maximum hour (Max Hour) demand is the maximum usage in an hour on the maximum usage day (Max Day). Various facilities are designed to meet customer peaking needs. For example, transmission lines or reservoirs are designed to meet Max Day requirements. Both have to be designed larger than they would be if the same amount of recycled water were being used at a constant rate throughout the year. The cost associated with constructing a larger line or reservoir is based on system wide peaking factors. For example, if the Max Day factor is 2.0, then certain system facilities have to be designed at least twice as large as required to meet average daily demand. In this case, half of the cost would be allocated to Base (or average day demand) and the other half allocated to Max Day. The calculation of the Max Hour and Max Day demands is explained below. 5. Pumping costs are the energy costs of pumping recycled water to higher elevations. Allocating costs into these components allows us to distribute these cost components to the various customer classes on the basis of their respective base, extra capacity, and customer requirements for service. The Fixed Revenue Requirement and Energy Costs (Pumping) will be allocated 100% to the Meter Charges and Pumping cost components, respectively. The allocation of the O&M Expenses is discussed below. O&M Allocation The O&M expenses consist of three functionalized categories: Operating Expenses, Energy Expenses, and Administrative Expenses. The Operating Expenses and Administrative Expenses were allocated to base/delivery, max day, and max hour cost components based on the Max Hour allocation (Table 66 line 3). Similar to water, in order to allocate costs to delivery and peaking cost components, system peaking factors are used. The base demand is assigned a value of 1.0 signifying no peaking demands. The Max Day and Max Hour factors shown in Table 66 were based on historical data and discussions with District staff. A max day peaking factor of 1.60 means that the system delivers approximately 1.60 times the average daily demand during a peak day. Since certain facilities are designed to meet max hour requirements. Water, Recycled Water, and Wastewater Rate Study Report 57

68 Table 66: Recycled System-Wide Peaking Factors Line # Factor Base Max Day Max Hour 1 Base % 0% 0% 2 Max Day % 37% 0% 3 Max Hour % 25% 33% Energy Expenses were allocated 100% to supply. Table 67 summarizes the percent allocations for the Operating Expenses, Energy Expense, and Administrative Expenses, the costs (prior to revenue offsets and adjustments) allocated to the cost components, and the resulting O&M Allocation (%). The O&M Allocation (%) will be used to allocate the Operating Requirement, including any revenue offsets or adjustments, from the revenue requirements (Table 62). Table 67: Recycled O&M Allocation (%) Cost Components Functionalized Expenses Supply Base Max Day Max Hour Total % Allocation Operating Expenses - 42% 25% 33% 100% Energy Expenses 100% % Administrative Expenses - 42% 25% 33% 100% $ Allocation Operating Expenses $0 $144,506 $86,261 $115,383 $346,150 Energy Costs $252,437 $0 $0 $0 $252,437 Administrative Expenses $0 $37,162 $22,183 $29,672 $89,017 Total O&M Expenses $252,437 $181,667 $108,444 $145,056 $687,604 O&M Allocation (%) 25 37% 26% 16% 21% Table 68 shows the functionalized costs allocated to each of the cost causation components. Table 68: Allocation of Costs to Cost Components Fixed Variable 13% 87% FY 2017 Revenue Requirements Meter Charges Supply Base Max Day Fixed Revenue Requirement $218,733 $218,733 Max Hour Pumping Pumping $22,563 $22,563 O&M Costs $1,467,548 $538,774 $387,731 $231,452 $309,591 Cost of Service Requirement $1,708,844 $218,733 $538,774 $387,731 $231,452 $309,591 $22, Max Day = (Max Month Usage Average Monthly Usage) = (98,949 61,962) = Max Hour = (Max Day 1.5) = ( ) = There may be difference due to rounding. 58 Temescal Valley Water District

69 Before we can allocate costs to customer class and tiers we first need to define the rate structure. Therefore, Step 4 will be discussed in Section Rate Design A key component of the Study includes evaluating the current rate structure and determining the most appropriate structure to model moving forward. RFC reviewed the current rate structure and consumption data, worked closely with District staff, the Finance Committee, and the Board of Directors, and where possible, incorporated feedback on policies and objectives in order to determine the appropriate rate structure for meeting the District s revenue requirements. As such, RFC recommends maintaining a uniform commodity rate structure, however, it is recommended that a pass-through provision be included in the rates. Under this approach, in instances where recycled demand is greater than available supply and the District purchases water from MWD, the incremental cost incurred by the District would be passed-through to the recycled customers Step 4 Distribute Cost Components to Customer Classes and Tiers Since the recycled rate structure will consist of a meter charge, uniform commodity rate, and pumping rate the distribution of cost components is greatly simplified. The unit costs of service are developed by dividing the total annual costs allocated to each parameter by the total annual service units of the respective component. The annual units of service for each cost component from Table 68 is derived below. Note, each rate component has been rounded up to the nearest whole penny. Meter Charge Component These costs represent the revenue that will be recovered over the monthly meter charge. Since, based on policy direction, these rates will be the same as the water base meter charge no further analysis is needed. Supply Component The District incurs energy costs in order to produce recycled water. Generally, energy costs are incurred in proportion to the recycled water produced. Therefore, the Supply Component is based on the total units of recycled water sold. An analysis of FY 2016 recycled billing data indicated that 743,540 units of recycled water were sold 26. Similar to water, no adjustments were made to recycled water demand. Table 69 summarizes the determination of the unit rate for the Supply Component. Table 69: Supply Component Unit Rate Supply Component Supply Revenue Requirements $538,774 Total Proj. Recycled Water Sales (ccf) 743,540 Unit Rate (per ccf) $ Excludes construction sales since these sales are considered unreliable. The conservative approach is to NOT rely on these sales to recover the District s revenue requirements. Water, Recycled Water, and Wastewater Rate Study Report 59

70 Base/Delivery Component Delivery costs are those operating and capital costs of the recycled system associated with delivering recycled water to all customers at a constant average rate of use. Therefore, delivery costs are spread over all units of recycled water to calculate a uniform rate. Table 70: Delivery Component Unit Rate Base/Delivery Component Base Revenue Requirements $387,731 Total Projected Water Sales (ccf) 743,540 Unit Rate (per ccf) $0.53 Peaking Component Costs associated with peaking are typically first apportioned to each defined customer class based on its total demand (total water used, weighted by a peaking factor). However, at this time there are no separate customer classes defined for the Recycled utility. Based on the analysis of the recycled systems consumption data, the recycled system peaks at a factor of 1.60 (Max month usage of 98,949 divided by the Average month usage of 61,962). As the district connects more users to the recycled system and those uses vary substantially in water usage characteristics the district should consider establishing customer classes for the utility. In the absence of distinguished customer classes, the peaking requirements are spread equally over every unit of recycled water as shown in Table 71. Table 71: Peaking Component Unit Rate Peaking Component Peaking Revenue Requirements $541,043 Total Projected Water Sales (ccf) 743,540 Unit Rate (per ccf) $0.73 Pumping Component The pumping revenue requirements were allocated to pumping zones based on the actual cost of pumping one unit of water up one foot of elevation. These costs represent the revenue that will be recovered over the pumping charge. Since the cost related to pumping one unit of water up one foot is the same regardless of the type of water, this will be the same as the water pumping charge no further analysis is needed. 60 Temescal Valley Water District

71 5.2.3 Recycled Rates Fixed Charges The recycled monthly fixed charge will be the same as the water base charge as shown in Table 72. Table 72: FY 2017 Fixed Charge ($/Month) Meter Size FY 2017 Base Fixed Charge Residential $ /8" $ /4" $ " $ /2" $ " $ " $ " $ " $ " $1, " $2, The proposed monthly fixed charges are shown in Table 73 and are set equal to the water base fixed charge for each year of the Study Period. Meter Size Table 73: 5-Yr Fixed Rates ($/Month) FY 2017 Fixed Meter Charge FY 2018 Fixed Meter Charge FY 2019 Fixed Meter Charge FY 2020 Fixed Meter Charge FY 2021 Fixed Meter Charge 5/8" $19.69 $20.58 $21.51 $22.48 $ /4" $26.47 $27.67 $28.92 $30.23 $ " $40.03 $41.84 $43.73 $45.70 $ /2" $73.93 $77.26 $80.74 $84.38 $ " $ $ $ $ $ " $ $ $ $ $ " $ $ $ $ $ " $ $ $ $1, $1, " $1, $1, $2, $2, $2, " $2, $2, $3, $3, $3, Variable Rates Similar to the proposed fixed charges, the proposed pumping rates are the same as water and are shown in Table 74 below. Water, Recycled Water, and Wastewater Rate Study Report 61

72 Elevation Zone Table 74: 5-Yr Pumping Rates ($/ccf) 2017 Pumping Rates 2018 Pumping Rates 2019 Pumping Rates 2020 Pumping Rates 2021 Pumping Rates Zone A $0.00 $0.00 $0.00 $0.00 $0.00 Zone B $0.17 $0.18 $0.19 $0.20 $0.21 Zone C $0.18 $0.19 $0.20 $0.21 $0.22 Zone D $0.22 $0.23 $0.25 $0.27 $0.29 Zone E $0.26 $0.28 $0.30 $0.32 $0.34 Next, the components of the variable rate are added together to produce the variable rate for recycled customers. Table 75 shows each component rate and the final proposed FY 2017 variable rate. Customer Classes Table 75: FY 2017 Variable Rates ($/ccf) Projected Usage Supply Component Delivery Component Peaking Component FY 2017 Commodity Charge Recycled 743,540 $0.73 $0.53 $0.73 $1.99 In order to determine the recycled variable rates for FY 2018 through FY 2021, RFC first determined the revenue requirements for each year of the study period. The Test Year revenue requirements are known and were shown in Table 68. Using the revenue adjustments that were determined during the financial plan analysis, RFC determined the revenue requirements for each year of the Study Period as shown in Table 76. Table 76: Recycled Study Period Revenue Requirements FY 2017 [A] FY 2018 [B] (A x (1+10%)) FY 2019 [C] (B x (1+4%)) FY 2020 [D] (C x (1+4%)) FY 2021 [E] (D x (1+4%)) Revenue Adjustment 10.0% 4.0% 4.0% 4.0% Total Revenue Requirement $1,708,844 $1,879,728 $1,954,917 $2,033,114 $2,114,439 Next, RFC determined the projected Fixed meter revenue and pumping revenue for each year of the Study Period. The projected fixed revenue, as shown in Table 77, was determined by multiplying the # of meters by the proposed monthly fixed charge to determine the monthly revenue. The monthly revenue was then multiplied by 12 to determine the projected annual fixed revenue. 62 Temescal Valley Water District

73 Meter Size # of Meters Table 77: Projected Fixed Revenue FY 2017 Base Fixed Charge FY 2018 Base Fixed Charge FY 2019 Base Fixed Charge FY 2020 Base Fixed Charge FY 2021 Base Fixed Charge 5/8" 6 $19.69 $20.58 $21.51 $22.48 $ /4" - $26.47 $27.67 $28.92 $30.23 $ " 6 $40.03 $41.84 $43.73 $45.70 $ /2" 7 $73.93 $77.26 $80.74 $84.38 $ " 81 $ $ $ $ $ " 3 $ $ $ $ $ " 2 $ $ $ $ $ " 3 $ $ $ $1, $1, " 2 $1, $1, $2, $2, $2, " - $2, $2, $3, $3, $3, Projected Fixed Revenue $218,733 $228,580 $238,868 $249,626 $260,865 Table 78 shows the projected pumping revenues. Table 78: Projected Pumping Revenue Elevation Zone Projected Usage Pumping Pumping Pumping Pumping Pumping Rates Rates Rates Rates Rates Zone A 621,843 $0.00 $0.00 $0.00 $0.00 $0.00 Zone B - $0.17 $0.18 $0.19 $0.20 $0.21 Zone C 105,258 $0.18 $0.19 $0.20 $0.21 $0.22 Zone D 16,439 $0.22 $0.23 $0.25 $0.27 $0.29 Zone E - $0.26 $0.28 $0.30 $0.32 $0.34 Projected Pumping Revenue $22,563 $23,780 $25,161 $26,543 $27,924 Since we know the total revenue requirement (Table 76) and both the projected fixed revenue (Table 77) and the projected pumping revenue (Table 78), we can determine the variable revenue requirement as shown in Table 79. Table 79: Variable Revenue Requirement FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Total Revenue Requirement $1,708,844 $1,879,728 $1,954,917 $2,033,114 $2,114,439 Projected Fixed Revenue $218,733 $228,580 $238,868 $249,626 $260,865 Projected Pumping Revenue $22,563 $23,780 $25,161 $26,543 $27,924 Variable Revenue Requirement $1,467,548 $1,627,368 $1,690,888 $1,756,945 $1,825,649 % Rate Adjustment 10.9% 3.9% 3.9% 3.9% The % Rate Adjustment will be used to determine the proposed variable rates for each year of the Study Period beyond FY 2017 and were calculated by comparing the variable revenue requirement from one year Water, Recycled Water, and Wastewater Rate Study Report 63

74 to the next. Table 80 shows the proposed variable rates for the Study Period. Rates were rounded up to the nearest whole penny. Table 80: 5-Yr Variable Rates ($/ccf) Customer Classes Commodity Commodity Commodity Commodity Commodity Rates Rates Rates Rates Rates Recycled $1.99 $2.21 $2.30 $2.39 $ Customer Impacts Figure 17 compares the bill totals for a recycled customer in Zone B at various levels of usage for the current rates and the proposed rates. Figure 17: Recycled Customer Bill Impact 64 Temescal Valley Water District

75 6. WASTEWATER RATE STUDY 6.1 WASTEWATER UTILITY FINANCIAL PLAN This section describes the development of the wastewater utilities financial plan, the results of which were used to determine the revenue adjustments needed to meet ongoing expenses and provide fiscal sustainability to the District. The review involves analysis of projected annual operating revenues under the current rates, O&M expenses, capital expenditures, transfers between funds, and reserve requirements Revenue from Current Rates The current wastewater rate structure consists of a monthly residential rate of $35.30 and a non-residential rate of $35.30 per equivalent dwelling unit (EDU). EDU s are either assigned or determined on a monthly basis. For those customers with assigned EDU s, their EDU s remain constant from month-to-month whereas the EDU s for the remaining customers are determine each month and are based on the metered water usage, specifically the average daily usage times Table 81 summarizes the annual EDU s, base service charge, and the projected annual wastewater revenues. Table 81: Projected Annual Service Charge Revenue Customer Class Annual EDU s [A] Current Wastewater Service Charge ($ / EDU) [B] Projected Annual Service Charge Revenue (A x B) Residential 57,732 $35.30 $2,037,940 Non-Residential 2,365 $35.30 $83,498 Service Charge Revenue $2,121,437 Using account growth, water demand/flow factors, and other revenue assumptions from Table 14, RFC projected the revenues for the wastewater utility 27. Table 82 summarizes the rate revenue (line 2) as well as miscellaneous and additional non-operating revenues. As shown in the table, since RFC assumed zero growth and no increase in wastewater demand, the rates and rate revenue remained constant during the Study Period. The projected wastewater sales by customer class remained constant and was based on the actual FY 2016 usage. Line # 1 Wastewater Utility Revenues Table 82: Projected Wastewater Revenues FY 2017 FY 2018 FY 2019 FY 2020 FY Service Charge $2,121,437 $2,121,437 $2,121,437 $2,121,437 $2,121,437 3 Misc. Revenues $337,350 $337,350 $337,350 $337,350 $337,350 4 Non-Operating Revenues $110,000 $110,000 $110,000 $110,000 $110,000 5 Total Revenues $2,568,787 $2,568,787 $2,568,787 $2,568,787 $2,568, Although only the Study Period is shown here, RFC projected the revenues through FY Water, Recycled Water, and Wastewater Rate Study Report 65

76 6.1.2 O&M Expenses The District s FY 2017 budget values and the assumed inflation factors (Table 13) for the study period were used as the basis for projecting O&M costs. Table 83 shows the total projected O&M expenses for FY 2017 through FY As shown in the table, the wastewater utility does not currently have any outstanding debt. Table 83: Projected Wastewater O&M Expenses FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Expenditures Operating Costs $796,100 $819,064 $842,726 $867,109 $892,237 Energy Costs $195,000 $214,500 $235,950 $259,545 $285,500 Administrative Expenses $456,700 $468,624 $480,900 $493,540 $506,556 Total Operating Expenses $1,447,800 $1,502,188 $1,559,576 $1,620,194 $1,684,292 Debt Service $0 $0 $0 $0 $0 Total Expenses $1,447,800 $1,502,188 $1,559,576 $1,620,194 $1,684, Capital Improvement Plan The District provided the capital improvement plan (CIP) to address future wastewater utility needs. Table 84 summarizes the Baseline CIP for the Study Period. Currently, the District operates on a Pay-As-You-Go basis (Paygo) meaning capital projects should be fund by cash on hand or reserves and not through the issuance of debt. RFC indexed the capital expenditures by a 3% inflationary compounding rate from Table 13 in order to account for increased construction costs in future years. Table 84: Baseline Wastewater Utility Capital Improvement Plan FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Wastewater System WRF Upgrade $250,000 $5,285,000 $2,000,000 $0 $0 Replace air actuator valves $40,000 $0 $0 $40,000 $0 Replace SBR Actuator valves $0 $42,000 $0 $0 $0 Carport style cover for FEB backup pump $0 $0 $10,000 $0 $0 Replace sand $0 $0 $10,000 $0 $0 Replace Airlift $0 $0 $10,000 $0 $0 Replace Residual Meter $0 $0 $15,000 $0 $0 Replace Residual Meter $0 $0 $15,000 $0 $0 Replace Bisulfate Meter $0 $0 $15,000 $0 $0 Modifications with storage improvements $0 $15,000 $0 $15,000 $0 Install Cover on Storage for Water Quality $0 $0 $0 $0 $0 Replace leaking, damaged pumps $0 $0 $0 $30,000 $0 Hard Drive storage/ backup $0 $10,000 $0 $10,000 $0 WRF SCADA $0 $0 $0 $100,000 $0 SS Management Plan Update $45,000 $0 $0 $0 $0 Demo WRF with Developer $0 $300,000 $0 $0 $0 Demo Plant $100,000 $0 $0 $0 $0 Total CIP $435,000 $5,652,000 $2,075,000 $195,000 $0 28 Although only the Study Period is shown here, RFC projected the expenses through FY Temescal Valley Water District

77 Inflated CIP $461,492 $6,176,093 $2,335,431 $226,058 $ Reserve Requirements For FY 2017, the District s total beginning reserve balance for the wastewater utility is approximately $9.6 million. Currently, the District maintains an unrestricted reserve to cover operations and capital. As part of Best Management Practices of utilities, it is recommended that a utility have at least 90 days of operating reserves as well as sufficient funds available to ensure that the utility s capital plan can move forward as scheduled and is not delayed due to insufficient funds on hand Financial Outlook at Current Rates Revenues generated from current rates and other revenues exceed the operational expenses for the Study Period. The District has more than 90 days of reserves, however, these reserves have been built up over time and will be used to help fund the Water Reclamation Facilities Upgrade and other scheduled capital projects totaling approximately $10 million during the Study Period. Figure 18 illustrates the operating position of the wastewater utility, where expenses, inclusive of reserve funding, are shown by stacked bars; and the total revenues at current rates are shown by the horizontal orange trend line. Figure 19 summarizes the baseline CIP and its funding sources by fiscal year (currently 100% PAYGO). Figure 20 displays the ending total reserve balance by FY for the wastewater utility. Figure 18: Wastewater Operating Financial Position at Current Rates Water, Recycled Water, and Wastewater Rate Study Report 67

78 Figure 19: Baseline Wastewater Capital Improvement Plan and Funding Source Figure 20: Projected Ending Wastewater Reserves at Current Rates 68 Temescal Valley Water District

79 6.1.6 Recommendations and Financial Plan After reviewing the District s revenue requirements, reserve policies, capital planning schedule, and current revenues, a financial plan was developed to meet the following criteria:» Positive net operating cash income each FY of the planning period» Fully fund capital projects through Pay-As-You-Go (PAYGO) or cash on hand» Establish and maintain the following reserves by the end of the Study Period (FY ): o Wastewater Operating Fund minimum of 120 days of operating expenses o Repair & Replacement Fund target of 1 ½ years of replacement cost depreciation o Rate Stabilization Fund minimum of 10% of total revenues CIP Adjustments RFC worked closely with District staff to adjust the wastewater CIP to reflect a measured multi-year approach. The following adjustments were made:» To spread costs more evenly over the study period, the 3-year average CIP was used as the annual CIP for FY 2017 through FY 2019» The 6-year average CIP was used to project the future CIP needs of the wastewater utility. Table 85 summarizes the projected wastewater CIP. RFC inflated the total CIP using the inflationary factor from Table 13 in order to account for the decreased purchasing power of the dollar. Table 85: Projected Wastewater Utility CIP FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Wastewater System 3-Year Average Major CIP Projects $2,720,667 $2,720,667 $2,720,667 6-Year Average CIP Future Years $480,000 $480,000 Total CIP $2,720,667 $2,720,667 $2,720,667 $480,000 $480,000 Inflated CIP $2,886,355 $2,972,946 $3,062,134 $556,452 $573, Recommended Reserves RFC recommends establishing the same reserves recommended for the water utility: Operating Reserve The operating reserve is used primarily to meet ongoing cash flow requirements. RFC recommends establishing an operating reserve target of 180-days of O&M expenses and a minimum of 120- days of O&M. As the potential for revenue volatility increases, reserves should be set at an amount to offset this impact and provide revenue stability. A 180-day reserve ensures working capital to support the operation, maintenance and administration of the utility. Maintaining this level of reserves also provides liquid funds for the continued ongoing operations of the utility in the event of unforeseen costs or interruption with the utility or the billing system. Capital Repair and Replacement (R&R) The capital reserve is used primarily to meet the District s capital improvement requirements. The District s revised capital improvement plan over the five-year period is approximately $10M. The ideal target for the capital reserve should be to have a reserve sufficient to fund a year s worth of capital costs, which would ensure that the District can continue to reinvest in the wastewater system and that necessary capital improvements are not delayed or deferred due to cash flow concerns. RFC recommends establishing a capital reserve based on a target of 1.5 times replacement cost depreciation. Water, Recycled Water, and Wastewater Rate Study Report 69

80 Rate Stabilization A Rate Stabilization fund is used in the event of any unforeseen circumstances or critical asset failures to help mitigate the impact to the District and ultimately the District s customers. RFC recommends setting a Rate Stabilization target of 10% of wastewater revenues Financial Plan Under the proposed plan, the District will maintain a positive net income and will meet the 5-year financial reserve targets. Table 86 summarizes the proposed financial plan (see Appendix A for a detailed financial plan). Figure 21 illustrates the operating position of the wastewater utility, where expenses, inclusive of reserve funding, are shown by stacked bars; and total revenues at both current rates and proposed rates are shown by the horizontal trend lines. Figure 22 summarizes the revised projected CIP and its funding sources (100% PAYGO). Figure 23 displays the ending total reserve balance for the wastewater utility, inclusive of operating, capital, and rate stabilization funds. The horizontal trend lines indicate the minimum and target reserve balance and the bars indicate ending reserve balance. No new debt is proposed to be issued as part of the proposed five-year financial plan. The wastewater utility is in a strong financial position and revenue adjustments are not needed at this time, however, RFC recommends indexing the rates each year by the Consumer Price Index to ensure rates keep pace with inflation. Table 86: Wastewater Financial Plan Line # FY 2017 FY 2018 FY 2019 FY 2020 FY Revenues 2 Rate Revenues $2,121,437 $2,121,437 $2,121,437 $2,121,437 $2,121,437 3 Other Revenues $447,350 $447,350 $447,350 $447,350 $447,350 4 Total Revenues $2,568,787 $2,568,787 $2,568,787 $2,568,787 $2,568, Less: Expenditures 7 Total Operating Expenditures $1,447,800 $1,502,188 $1,559,576 $1,620,194 $1,684,292 8 Total Debt Service $0 $0 $0 $0 $0 9 Total Expenditures $1,447,800 $1,502,188 $1,559,576 $1,620,194 $1,684, Net Cashflow (line 4 line 9) $1,120,987 $1,066,599 $1,009,211 $948,593 $884, Beginning Reserve Balance $9,690,314 $7,947,642 $6,081,409 $4,058,587 $4,470, Net Cashflow (line 11) $1,120,987 $1,066,599 $1,009,211 $948,593 $884, Interest $22,696 $40,114 $30,101 $20,238 $16, CIP Expenditures (Table 85) -$2,886,355 -$2,972,946 -$3,062,134 -$556,452 -$573, Ending Reserve Balance $7,947,642 $6,081,409 $4,058,587 $4,470,967 $4,798, Temescal Valley Water District

81 Figure 21: Operating Financial Position at Rates Figure 22: Wastewater Capital Improvement Plan and Funding Source Water, Recycled Water, and Wastewater Rate Study Report 71

82 Figure 23: Projected Ending Wastewater Reserves at Projected Rates 72 Temescal Valley Water District

The City of Sierra Madre

The City of Sierra Madre The City of Sierra Madre Comprehensive Water and Wastewater Cost of Service Study Report / December 24, 2018 24640 Jefferson Avenue Suite 207 Murrieta, CA 92562 Phone 951.698.0145 www.raftelis.com December

More information

Santa Clarita Water Division

Santa Clarita Water Division Santa Clarita Water Division Retail Water Rate Cost of Service Study Report September 2017 445 S Figueroa St Suite 2270 Los Angeles, CA 90039 Phone 213.262.9300 www.raftelis.com September 11, 2017 Mr.

More information

Rainbow Municipal Water District

Rainbow Municipal Water District Rainbow Municipal Water District Potable Water Cost of Service Study November 10, 2015 201 S Lake Ave. Suite 301 Pasadena CA 91101 Phone 626.583.1894 Fax 626.583.1411 www.raftelis.com November 10, 2015

More information

LONG BEACH WATER DEPARTMENT COST OF SERVICE AND RATE STUDY

LONG BEACH WATER DEPARTMENT COST OF SERVICE AND RATE STUDY LONG BEACH WATER DEPARTMENT COST OF SERVICE AND RATE STUDY Final Report / February 1, 2017 445 S. Figueroa Street Suite 2270 Los Angeles, CA 90071 Phone Fax 213. 262. 9300 213. 262. 9303 www.raftelis.com

More information

WATER AND WASTEWATER RATE STUDY

WATER AND WASTEWATER RATE STUDY WATER AND WASTEWATER RATE STUDY Draft July 3, 2013 Prepared by: Page 1 Page 2 201 S. Lake Avenue Suite 301 Pasadena, CA 91101 Phone 626. 583. 1894 Fax 626. 583. 1411 www.raftelis.com July 1, 2013 Mr. Don

More information

Final COST OF SERVICE STUDY SEPTEMBER City of San Clemente

Final COST OF SERVICE STUDY SEPTEMBER City of San Clemente Final COST OF SERVICE STUDY SEPTEMBER 2017 City of San Clemente Contents CONTENTS Executive Summary... 1 Study Goals and Drivers... 1 Water Rate Analysis & Adoption... 2 Recycled Water Rate Analysis &

More information

YORBA LINDA WATER DISTRICT

YORBA LINDA WATER DISTRICT YORBA LINDA WATER DISTRICT 2015 Water and Sewer Rate Study Report FINAL August 25, 2015 City of Thousand Oaks Water and Wastewater Financial Plan Study Report 445 S. Figueroa Street Suite #227 Los Angeles,

More information

La Cañada Irrigation District

La Cañada Irrigation District La Cañada Irrigation District Water Rate Study Report - 2009 March, 2009 201 S. Lake Blvd, Suite 803 Pasadena CA 91101 Phone Fax 626 583 1894 626 583 1411 www.raftelis.com March 30, 2009 Mr. Douglas M.

More information

SANTA FE IRRIGATION DISTRICT

SANTA FE IRRIGATION DISTRICT SANTA FE IRRIGATION DISTRICT Water Rate Study FINAL Report/March 2016 445 S Figueroa Street Suite 2270 Los Angeles, CA 90071 Phone 213 262 9300 Fax 213 262 9303 www.raftelis.com March 21, 2016 Ms. Jeanne

More information

YORK COUNTY, SOUTH CAROLINA

YORK COUNTY, SOUTH CAROLINA YORK COUNTY, SOUTH CAROLINA Water and Sewer Financial Planning and Rate Study Report October 25, 2017 1031 S. Caldwell Street Suite 100 Charlotte, NC 28203 Phone 704.373.1199 Fax 704.373.1113 www.raftelis.com

More information

MARINA COAST WATER DISTRICT FINANCIAL PLAN AND RATE AND FEE STUDY FINAL REPORT. September 2013

MARINA COAST WATER DISTRICT FINANCIAL PLAN AND RATE AND FEE STUDY FINAL REPORT. September 2013 MARINA COAST WATER DISTRICT FINANCIAL PLAN AND RATE AND FEE STUDY FINAL REPORT September 2013 10540 TALBERT AVENUE, SUITE 200 EAST FOUNTAIN VALLEY, CALIFORNIA 92708 P. 714.593.5100 F. 714.593.5101 MARINA

More information

RANCHO CALIFORNIA WATER DISTRICT

RANCHO CALIFORNIA WATER DISTRICT RANCHO CALIFORNIA WATER DISTRICT Two-Year Rate Study Final Report / June 4, 2018 June 4, 2018 Mr. Richard Aragon Assistant General Manager CFO/Treasurer Rancho California Water District 42135 Winchester

More information

Goleta Water District

Goleta Water District 201 S Lake Ave. Suite 301 Pasadena CA 91101 Phone 626 583 1894 www.raftelis.com Water Rates and Cost of Service Study Final Report / June 11, 2015 Water Cost of Service & Rate Study Report 2015 201 S Lake

More information

FORT COLLINS- LOVELAND WATER DISTRICT

FORT COLLINS- LOVELAND WATER DISTRICT FORT COLLINS- LOVELAND WATER DISTRICT Water Financial Planning and Rate Study Report March 16, 2018 District of Thousand Oaks Water and Wastewater Financial Plan Study Report March 16, 2018 Board of Directors

More information

WATER AND SEWER RATE STUDY

WATER AND SEWER RATE STUDY FINAL WATER AND SEWER RATE STUDY B&V PROJECT NO. 179322.0100 PREPARED FOR City of Lynwood, CA JANUARY 11, 2017 Black & Veatch Holding Company 2011. All rights reserved. City of Lynwood, CA WATER AND SEWER

More information

WATER AND SEWER UTILITIES RATE STUDY

WATER AND SEWER UTILITIES RATE STUDY WATER AND SEWER UTILITIES RATE STUDY RATE DESIGN WORKSHOP WITHCITYCOUNCIL / UTILITIES COMMISSION March 6, 2014 Agenda Overview of Rate Study Process Water / Sewer Developer Impact Fees Sewer Rates Water

More information

2017 WATER, RECYCLED WATER, AND WASTEWATER RATE STUDY REPORT

2017 WATER, RECYCLED WATER, AND WASTEWATER RATE STUDY REPORT 2017 WATER, RECYCLED WATER, AND WASTEWATER RATE STUDY REPORT Rancho California Water District [Type here] Table of Contents 1 Introduction... 5 1.1 About Rancho California Water District... 5 1.2 Background

More information

CITY OF THOUSAND OAKS

CITY OF THOUSAND OAKS CITY OF THOUSAND OAKS 2018 Wastewater Financial Plan Update Final Report / June 23, 2017 445 S. Figueroa Street Suite #2270 Los Angeles, CA 90071 Phone 213.262.9300 Fax 213.262.9303 www.raftelis.com June

More information

Town of Hillsborough. City Council Public Hearing. Water Rate Cost-of-Service Study. February 13, 2017

Town of Hillsborough. City Council Public Hearing. Water Rate Cost-of-Service Study. February 13, 2017 City Council Public Hearing February 13, 2017 Public Hearing on Proposed Water Rates PRESENTED BY Kelly J. Salt Partner 2016 Best Best & Krieger LLP Article X, section 2 (1928) The general welfare requires

More information

April 6, Katherine Godbey Director of Finance, Coachella Valley Water District Hovley Lane East Palm Desert, CA 92260

April 6, Katherine Godbey Director of Finance, Coachella Valley Water District Hovley Lane East Palm Desert, CA 92260 April 6, 2016 Katherine Godbey Director of Finance, Coachella Valley Water District 75515 Hovley Lane East Palm Desert, CA 92260 Dear Ms. Godbey: Hawksley Consulting (a subsidiary of MWH Global) is pleased

More information

WATER VALIDATION, COST OF SERVICE & RATE DESIGN ANALYSIS WASTEWATER VALIDATION & RATE ANALYSIS MISCELLANEOUS FEES & OVERHEAD RATE ANALYSIS

WATER VALIDATION, COST OF SERVICE & RATE DESIGN ANALYSIS WASTEWATER VALIDATION & RATE ANALYSIS MISCELLANEOUS FEES & OVERHEAD RATE ANALYSIS WATER VALIDATION, COST OF SERVICE & RATE DESIGN ANALYSIS WASTEWATER VALIDATION & RATE ANALYSIS MISCELLANEOUS FEES & OVERHEAD RATE ANALYSIS B&V PROJECT NO. 179801.0100 PREPARED FOR Vallecitos Water District,

More information

Comprehensive Rate Study & Cost Allocation Analysis. Public Workshop December 4, 2017

Comprehensive Rate Study & Cost Allocation Analysis. Public Workshop December 4, 2017 Comprehensive Rate Study & Cost Allocation Analysis Public Workshop December 4, 2017 Today s Workshop: Present findings and solicit Board input on rate design and fiscal policy considerations Financial

More information

2016 Water and Recycled Water Rate Study PUBLIC HEARING DECEMBER 12, 2016

2016 Water and Recycled Water Rate Study PUBLIC HEARING DECEMBER 12, 2016 2016 Water and Recycled Water Rate Study PUBLIC HEARING DECEMBER 12, 2016 Agenda Rate Study Overview Financial Plan Water Rate Design Recycled Water Rate Design Drought Rates Capacity Fees 12/12/2016 Public

More information

Water and Sewer Rates

Water and Sewer Rates Santa Margarita Water District - Water and Sewer Rates Home Live Chat Sitemap Phone: (949) 459-6420 Your Water Conservation Operations Doing Business News About Us Community Contact Us Your Water Water

More information

NALDRAFT SEPTEMBER2015 WASTEWATE

NALDRAFT SEPTEMBER2015 WASTEWATE FI NALDRAFT SEPTEMBER2015 Cos tof S e r v i c e s S T UDY WATE R WASTEWATE R RE CY CL E DWATE R ST ORMWATE R E NVI RONME NT ALRE SOURCE S CITY OF OXNARD PUBLIC WORKS INTEGRATED MASTER PLAN COST OF SERVICE

More information

Water Rate Study Final Report

Water Rate Study Final Report Phelan Pinon Hills Community Services District March 6, 2013 Water Rate Study Final Report Corporate Office: Anaheim, California Temecula Office: 27368 Via Industria, Suite 110 Temecula, California 92590

More information

Comprehensive Water Rate Study

Comprehensive Water Rate Study Final Report Dublin San Ramon Services District Comprehensive Water Rate Study January 213 Prepared by: HDR Engineering, Inc. January 1, 213 Ms. Lori Rose Financial Services Manager Dublin San Ramon Services

More information

STAFF REPORT. ITEM NO. 4 MEETING DATE: March 7, 2017 MEETING: Board of Directors SUBJECT:

STAFF REPORT. ITEM NO. 4 MEETING DATE: March 7, 2017 MEETING: Board of Directors SUBJECT: ITEM NO. 4 MEETING DATE: MEETING: Board of Directors STAFF REPORT SUBJECT: SUBMITTED BY: RECOMMENDED ACTION: Proposition 218 Customer Notification of Proposed Rate Increases Krishna Kumar, General Manager

More information

Final Report COMPREHENSIVE WATER AND WASTEWATER COST OF SERVICE AND RATE STUDY

Final Report COMPREHENSIVE WATER AND WASTEWATER COST OF SERVICE AND RATE STUDY Final Report COMPREHENSIVE WATER AND WASTEWATER COST OF SERVICE AND RATE STUDY Phase 2 Cost of Service and Rate Design BLACK & VEATCH PROJECT NO. 192366 Black & Veatch Holding Company 2017. All rights

More information

1. Accept staff report on the updated study of cost of service to provide potable water to San Jose Municipal Water System (SJMWS) customers; and

1. Accept staff report on the updated study of cost of service to provide potable water to San Jose Municipal Water System (SJMWS) customers; and CITY OF Cr SAN IPSE CAPITAL OF SILICON VALLEY TO: HONORABLE MAYOR AND CITY COUNCIL SUBJECT: MUNICIPAL WATER SYSTEM COST OF SERVICE STUDY COUNCIL AGENDA: 05/09/17 ITEM: 7.2 Memorandum FROM: Kerrie Romanow

More information

Valencia Water Company. Cost of Service Study

Valencia Water Company. Cost of Service Study Valencia Water Company Cost of Service Study 2018 2020 Prepared By: Kenneth J. Petersen, P.E. Beverly Johnson, CPA John Garon, Consultant September 2017 1 P age Contents EXECUTIVE SUMMARY... 1 INTRODUCTION...

More information

Study Workshops are designed to be both educational and to seek broad direction from the Board

Study Workshops are designed to be both educational and to seek broad direction from the Board Study Workshops are designed to be both educational and to seek broad direction from the Board Workshop #1 Financial Forecast & Cost of Service Water, recycled water, & sewer services Revenue requirement

More information

SUMMERLAND SANITARY DISTRICT

SUMMERLAND SANITARY DISTRICT SUMMERLAND SANITARY DISTRICT Financial Plan and Rate Study December 6, 2017 445 S. Figueroa Street Suite #2270 Los Angeles, CA 90071 Phone 213.262.9300 Fax 213.262.9303 www.raftelis.com December 6, 2017

More information

WATER USER RATES & FEE STUDY

WATER USER RATES & FEE STUDY WATER USER RATES & FEE STUDY FINAL REPORT February 2016 BARTLE WELLS ASSOCIATES Independent Public Finance Consultants 1889 Alcatraz Avenue Berkeley, California 94703 www.bartlewells.com Tel: 510/653-3399

More information

Table 2-2 Projected Water Production and Costs

Table 2-2 Projected Water Production and Costs Table 2-2 Projected Water Production and Costs Recorded Estimated Budget Forecast Description FY 2007-08 FY 2008-09 FY 2009-10 FY 2010-11 FY 2011-12 FY 2012-13 FY 2013-14 Well Production (OCWD, A-F, a)

More information

Sanitation Rate Study Final Report

Sanitation Rate Study Final Report Sanitation Rate Study Final Report City of Simi Valley April 24, 2015 Prepared by: Page 1 201 S. Lake Avenue Suite 301 Pasadena, CA 91101 Phone 626.583.1894 Fax 626.583.1411 www.raftelis.com April 24,

More information

City of Riverbank. Water Rate Study FINAL 6/18/2015

City of Riverbank. Water Rate Study FINAL 6/18/2015 Water Rate Study FINAL 6/18/2015 Bartle Wells Associates Independent Public Finance Consultants 1889 Alcatraz Avenue Berkeley, California 94703 www.bartlewells.com Tel: 510-653-3399 June 18, 2015 6707

More information

COMPREHENSIVE COST OF SERVICE AND RATE DESIGN ANALYSIS

COMPREHENSIVE COST OF SERVICE AND RATE DESIGN ANALYSIS Black & Veatch Holding Company 2011. All rights reserved. COMPREHENSIVE COST OF SERVICE AND RATE DESIGN ANALYSIS San Antonio Water System PREPARED FOR San Antonio Water System 26 MAY 2015 B&V PROJECT NO.

More information

Water Rate Study FINAL January 31, 2018

Water Rate Study FINAL January 31, 2018 Water Rate Study FINAL January 31, 2018 1889 Alcatraz Avenue Berkeley, CA 94703 Tel: 510 653 3399 www.bartlewells.com January 31, 2018 Joshua Basin Water District P.O. Box 675 / 61750 Chollita Road Joshua

More information

Water & Sewer Rate Study. Water & Sewer Cost of Service Rate Study. City of Norco, CA. Draft Report for

Water & Sewer Rate Study. Water & Sewer Cost of Service Rate Study. City of Norco, CA. Draft Report for Water & Sewer Cost of Service Rate Study for City of Norco, CA October 11, 2016 Table of Contents October 11, 2016 Chad Blais Director of Public Works City of Norco 2870 Clark Avenue Norco, CA 92860 Re:

More information

Notice of a public hearing

Notice of a public hearing Notice of a public hearing Dear Benicia Resident and/or Business Owner, You are receiving a revised Notice of a Public Hearing to increase the water and sewer rates and add water meter replacement fees.

More information

Water Rates Adjustments Phase 2

Water Rates Adjustments Phase 2 Water Rates Adjustments Phase 2 Presented by Shana E. Epstein Director of Public Works, City of Beverly Hills Background Phase 1-Effective January 18, 2018 5-year revenue requirement 3% annual increase

More information

Water and Sewer Utility Rate Studies

Water and Sewer Utility Rate Studies Final Report Water and Sewer Utility Rate Studies July 2012 Prepared by: HDR Engineering, Inc. July 27, 2012 Mr. Mark Brannigan Director of Utilities 591 Martin Street Lakeport, CA 95453 Subject: Comprehensive

More information

WASTEWATER FINANCIAL PLAN STUDY REPORT

WASTEWATER FINANCIAL PLAN STUDY REPORT WASTEWATER FINANCIAL PLAN STUDY REPORT FINAL October 7, 2013 Prepared by: Page 1 201 S. Lake Avenue Suite 301 Pasadena, CA 91101 Phone 626.583. 1894 Fax 626.583. 1411 www.raftelis.com October 7, 2013 Mr.

More information

2016 Water and Recycled Water Rate Study WEBINAR WITH DISTRICT STAFF JUNE 29, 2016

2016 Water and Recycled Water Rate Study WEBINAR WITH DISTRICT STAFF JUNE 29, 2016 2016 Water and Recycled Water Rate Study WEBINAR WITH DISTRICT STAFF JUNE 29, 2016 Agenda Financial Policy & Financial Plan Capacity Fees Preliminary Results Tier Definitions Next Steps 2016 Water & RW

More information

CITY OF REDLANDS WATER AND WASTEWATER RATE STUDY. Prepared by:

CITY OF REDLANDS WATER AND WASTEWATER RATE STUDY. Prepared by: CITY OF REDLANDS WATER AND WASTEWATER RATE STUDY Prepared by: August 30, 2010 201 S. Lake Blvd, Suite 301 Pasadena CA 91101 Phone Fax 626 583 1894 626 583 1411 www.raftelis.com August 30, 2010 Mr. Chris

More information

DRAFT COMPREHENSIVE COST OF SERVICE AND RATE DESIGN ANALYSIS. San Antonio Water System. San Antonio Water System 21 MAY 2015 PREPARED FOR

DRAFT COMPREHENSIVE COST OF SERVICE AND RATE DESIGN ANALYSIS. San Antonio Water System. San Antonio Water System 21 MAY 2015 PREPARED FOR Black & Veatch Holding Company 2011. All rights reserved. DRAFT COMPREHENSIVE COST OF SERVICE AND RATE DESIGN ANALYSIS San Antonio Water System PREPARED FOR San Antonio Water System 21 MAY 2015 B&V PROJECT

More information

July 1, Tier Percent of Allocation Cost per ccf $0.91 $1.27 $2.86 $4.80 $ % % % % 201+%

July 1, Tier Percent of Allocation Cost per ccf $0.91 $1.27 $2.86 $4.80 $ % % % % 201+% 1 CHART EXAMPLES OF WATER RATES AND CHARGES OF MWD MEMBER AGENCIES AND THEIR SUBAGENCIES MWD Member Agencies shown: MWDOC, SDCWA, Calleguas, Las Virgenes, West Basin, LADWP, Eastern and Foothill Member

More information

City of La Palma Agenda Item No. 5

City of La Palma Agenda Item No. 5 City of La Palma Agenda Item No. 5 MEETING DATE: January 19, 2016 TO: FROM: SUBMITTED BY: CITY COUNCIL CITY MANAGER Mike Belknap, Community Services Director AGENDA TITLE: Adopt a Resolution Approving

More information

Squaw Valley PSD. Water & Sewer Rate and Connection Fee Study. Presented by: Shawn Koorn Associate Vice President HDR Engineering, Inc.

Squaw Valley PSD. Water & Sewer Rate and Connection Fee Study. Presented by: Shawn Koorn Associate Vice President HDR Engineering, Inc. Squaw Valley PSD Water & Sewer Rate and Connection Fee Study February 15, 2017 Presented by: Shawn Koorn Associate Vice President HDR Engineering, Inc. Purpose of the District s Study Provide sufficient

More information

San Francisco Public Utilities Commission

San Francisco Public Utilities Commission San Francisco Public Utilities Commission Water & Wastewater Rate Study Report March 6, 2009 Prepared by: Table of Contents I. EXECUTIVE SUMMARY...1 A. Pricing Objectives...2 B. Review of Findings Water...2

More information

SAN ANTONIO WATER SYSTEM (SAWS) RATE ADVISORY COMMITTEE: MEETING 3

SAN ANTONIO WATER SYSTEM (SAWS) RATE ADVISORY COMMITTEE: MEETING 3 01 April, 2014 SAN ANTONIO WATER SYSTEM (SAWS) RATE ADVISORY COMMITTEE: MEETING 3 Bill Zieburtz Richard Campbell Robert Chambers RATE SETTING PROCESS STUDY APPROACH RATE SETTING OBJECTIVES FINANCIAL PLAN

More information

TOWN OF ORO VALLEY WATER UTILITY COMMISSION WATER RATES ANALYSIS REPORT OCTOBER 7, 2009

TOWN OF ORO VALLEY WATER UTILITY COMMISSION WATER RATES ANALYSIS REPORT OCTOBER 7, 2009 TOWN OF ORO VALLEY WATER UTILITY COMMISSION WATER RATES ANALYSIS REPORT OCTOBER 7, 2009 EXECUTIVE SUMMARY The functions and duties of the Oro Valley Water Utility Commission include reviewing and developing

More information

BODEGA BAY PUBLIC UTILITY DISTRICT Water and Wastewater Rate Study

BODEGA BAY PUBLIC UTILITY DISTRICT Water and Wastewater Rate Study BODEGA BAY PUBLIC UTILITY DISTRICT Water and Wastewater Rate Study FINAL REPORT March 22, 2018 BARTLE WELLS ASSOCIATES Independent Public Finance Advisors 1889 Alcatraz Avenue Berkeley, CA 94703-2714 Tel.

More information

CITY OF CALISTOGA WATER RATE STUDY FINAL REPORT

CITY OF CALISTOGA WATER RATE STUDY FINAL REPORT CITY OF CALISTOGA WATER RATE STUDY FINAL REPORT February 2, 218 This page was intentionally left blank. City of Calistoga Water Rate Study Report Page 2 February 2, 218 Dylan Feik City Manager City of

More information

COST OF SERVICE AND RATE STRUCTURE STUDY

COST OF SERVICE AND RATE STRUCTURE STUDY . COST OF SERVICE AND RATE STRUCTURE STUDY 2017 Draft in Progress Not for Public release TABLE OF CONTENTS Executive Summary and Recommendations 1 Objectives 3 Vallecitos Water District Water Rate Structure

More information

TEN YEAR FINANCIAL FORECAST

TEN YEAR FINANCIAL FORECAST TEN YEAR FINANCIAL FORECAST The ability to ensure a reliable supply of high quality water for Metropolitan s 26 member agencies depends on Metropolitan s ongoing ability to fund operations and maintenance,

More information

FINANCIAL PLAN REVIEW AND FORECAST

FINANCIAL PLAN REVIEW AND FORECAST Napa Sanitation District Cost of Service Rate and Capacity Charge Study Technical Memorandum #2 FINANCIAL PLAN REVIEW AND FORECAST DRAFT March 2018 Contents 1 Introduction 1 1.1 Project Background 1 1.1.1

More information

City of San Carlos Sewer Financial Plan & Rate Update

City of San Carlos Sewer Financial Plan & Rate Update City of San Carlos Sewer Financial Plan & Rate Update Revised 06/13/16 1889 Alcatraz Avenue Berkeley, CA 94703 Tel: 510 653 3399 www.bartlewells.com June 13, 2016 City of San Carlos Department of Public

More information

Focused Water Rate Study

Focused Water Rate Study FINAL Report for: Focused Water Rate Study (Includes Connection Fees & Sewer Rates) June 2017 OFFICE LOCATIONS: Temecula Corporate Headquarters 32605 Temecula Parkway, Suite 100 Temecula, CA 92592 San

More information

TAUSSIG DEVELOPMENT IMPACT FEE JUSTIFICATION STUDY CITY OF ESCALON. Public Finance Public Private Partnerships Urban Economics Clean Energy Bonds

TAUSSIG DEVELOPMENT IMPACT FEE JUSTIFICATION STUDY CITY OF ESCALON. Public Finance Public Private Partnerships Urban Economics Clean Energy Bonds DAVID TAUSSIG & ASSOCIATES, INC. DEVELOPMENT IMPACT FEE JUSTIFICATION STUDY CITY OF ESCALON B. C. SEPTEMBER 12, 2016 Public Finance Public Private Partnerships Urban Economics Clean Energy Bonds Prepared

More information

Frequently Asked Questions from Claremont Customers

Frequently Asked Questions from Claremont Customers Frequently Asked Questions from Claremont Customers Why are Golden State s rates higher in Claremont than the neighboring communities of Rancho Cucamonga, Upland or La Verne? Golden State's rates reflect

More information

2017 UTILITY RATE STUDY WORK SESSION #2: BACKGROUND, EDUCATIONAL/INFORMATIONAL

2017 UTILITY RATE STUDY WORK SESSION #2: BACKGROUND, EDUCATIONAL/INFORMATIONAL 2017 UTILITY RATE STUDY WORK SESSION #2: BACKGROUND, EDUCATIONAL/INFORMATIONAL Receive a presentation from Lewis Young Robertson & Burningham regarding the 2017 Utility Rate Study The purpose of the Council

More information

NOTICE OF PUBLIC HEARING ON PROPOSED NEW/INCREASED WATER RATES

NOTICE OF PUBLIC HEARING ON PROPOSED NEW/INCREASED WATER RATES NOTICE OF PUBLIC HEARING ON PROPOSED NEW/INCREASED WATER RATES WHERE: WHEN: PURPOSE: Rohnert Park City Hall Council Chamber 130 Avram Avenue Rohnert Park, California Tuesday, April 14, 2015 not before

More information

Maurice Kaufman, Director of Public Works / City Engineer Bartle Wells Associates DATE: September 7, 2016 MEMORANDUM

Maurice Kaufman, Director of Public Works / City Engineer Bartle Wells Associates DATE: September 7, 2016 MEMORANDUM TO: FROM: Maurice Kaufman, Director of Public Works / City Engineer Bartle Wells Associates DATE: September 7, 2016 SUBJECT: - MEMORANDUM Introduction The (City) provides sewer sanitary collection services

More information

Capital Region Water. Water and Wastewater Rate Study Report. November 22, Capital Region Water Water and Wastewater Rate Study

Capital Region Water. Water and Wastewater Rate Study Report. November 22, Capital Region Water Water and Wastewater Rate Study Capital Region Water Water and Wastewater Rate Study Report November 22, 2017 Capital Region Water Water and Wastewater Rate Study TABLE OF CONTENTS 1. INTRODUCTION...1 1.1 RATE STUDY SCOPE AND OBJECTIVES...1

More information

City of Cocoa FY 2010 Utility Rate Study. Final Report. Water, Sewer & Reclaimed Water Rates, Fees & Charges Study. Prepared by:

City of Cocoa FY 2010 Utility Rate Study. Final Report. Water, Sewer & Reclaimed Water Rates, Fees & Charges Study. Prepared by: p FY 2010 Utility Rate Study Water, Sewer & Reclaimed Water Rates, Fees & Charges Study June 29, 2010 Prepared by: June 29, 2010 W.E. Mack Finance Director 65 Stone Street Cocoa, FL 32922 Re: FY 2010

More information

Alameda County Water District. Financial Workshop Proposed Rates & Charges

Alameda County Water District. Financial Workshop Proposed Rates & Charges Alameda County Water District Financial Workshop Proposed Rates & Charges Month, October Day, Year 25, 2018 Presentation Overview Review Financial Workshops Timeline Proposed Development Charges Financial

More information

Water Consultancy. Montecito Sanitary District Wastewater Rate Study Report. Montecito Sanitary District

Water Consultancy. Montecito Sanitary District Wastewater Rate Study Report. Montecito Sanitary District 3585 Maple Street, Suite 250 Ventura, CA 93003 805-404-1467 Montecito Sanitary District Wastewater Rate Study Report March 2016 Montecito Sanitary District 1042 Monte Cristo Lane Santa Barbara CA 93108

More information

5. CONSIDER APPROVAL OF THE MINUTES OF THE NOVEMBER 14, 2018 REGULAR FINANCE COMMITTEE MEETING

5. CONSIDER APPROVAL OF THE MINUTES OF THE NOVEMBER 14, 2018 REGULAR FINANCE COMMITTEE MEETING NOTICE OF A SPECIAL MEETING OF THE OLIVENHAIN MUNICIPAL WATER DISTRICT S FINANCE COMMITTEE 1966 Olivenhain Road, Encinitas, CA 92024 Tel: (760) 753-6466 Fax: (760) 753-1578 Pursuant to AB 3035, effective

More information

Public Hearing on Water and Sewer Rates. September 20, 2017

Public Hearing on Water and Sewer Rates. September 20, 2017 Public Hearing on Water and Sewer Rates September 20, 2017 Agenda Discuss Proposed Rates Impacts to Reserves and Financial Performance Rate Protest Comments Cost of Service and Rate Structure Study Recommendation

More information

ORDINANCE NO AN ORDINANCE To Be Entitled:

ORDINANCE NO AN ORDINANCE To Be Entitled: AN ORDINANCE To Be Entitled: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF FORT MYERS, FLORIDA, AMENDING THE CITY CODE, CHAPTER 90, UTILITIES, ARTICLE II WATER, SECTION 90-35 RATES AND CHARGES ESTABLISHED;

More information

WORKSHOP BRIEFING DOCUMENT: Comprehensive Water and Wastewater Rate and Charge Study

WORKSHOP BRIEFING DOCUMENT: Comprehensive Water and Wastewater Rate and Charge Study WORKSHOP BRIEFING DOCUMENT: Comprehensive Water and Wastewater Rate and Charge Study July 31, 2007 HCD/GAI# A070574.01 Purpose of Rate Study Provide For Revenue Sufficiency Charge Customers Based On Costs

More information

CITY OF HEALDSBURG RESOLUTION NO

CITY OF HEALDSBURG RESOLUTION NO CITY OF HEALDSBURG RESOLUTION NO. 49-2012 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HEALDSBURG DETERMINING THAT THERE WAS NO MAJORITY PROTEST OF THE PROPOSED WATER AND WASTEWATER SERVICES RATE INCREASE

More information

CITY OF BEVERLY HILLS

CITY OF BEVERLY HILLS January 5, 2019 Final Report CITY OF BEVERLY HILLS Water Rate Study CITY OF BEVERLY HILLS 345 Foothill Road Beverly Hills, CA 90210 FINAL REPORT WATER RATE STUDY January 5, 2019 HF&H CONSULTANTS, LLC

More information

Water Rates Rate Restructure and Rate Adjustments

Water Rates Rate Restructure and Rate Adjustments Water Rates Rate Restructure and Rate Adjustments Community Outreach Meeting Questions We Will Address Why are water rates changing? Where does the water come from? Did the rain from last winter help?

More information

Notice of Public Hearing for Proposed Change to a Water Budget Rate Structure to be Held at Murrieta City Hall

Notice of Public Hearing for Proposed Change to a Water Budget Rate Structure to be Held at Murrieta City Hall May 20, 2011 Notice of Public Hearing for Proposed Change to a Water Budget Rate Structure to be Held at Murrieta City Hall Dear Western Municipal Water District customer, Every Western Municipal Water

More information

Richard Pearson, Community Development Director Tim Tucker, City Engineer

Richard Pearson, Community Development Director Tim Tucker, City Engineer CITY OF MARTINEZ CITY COUNCIL AGENDA February 21, 2007 TO: FROM: PREPARED BY: SUBJECT: Mayor and City Council Don Blubaugh, City Manager Richard Pearson, Community Development Director Tim Tucker, City

More information

City of Vista Wastewater Final Report Financial Plan. January 2013

City of Vista Wastewater Final Report Financial Plan. January 2013 Wastewater Final Report Financial Plan January 2013 201 S. Lake Avenue Suite 301 Pasadena, CA 91101 Phone 626. 583. 1894 Fax 626. 583. 1411 www.raftelis.com January 15, 2013 Robin Putnam Director of Community

More information

From: Lex Warmath and Elaine Conti, Raftelis Financial Consultants, Inc.

From: Lex Warmath and Elaine Conti, Raftelis Financial Consultants, Inc. 227 West Trade Street Phone 704 373 1199 www.raftelis.com Suite 1400 Fax 704 373 1113 Charlotte, NC 28202 Date: June 21, 2016 To: Mr. Bob Walker, Executive Director From: Lex Warmath and Elaine Conti,

More information

CITY OF OXNARD PUBLIC WORKS INTEGRATED MASTER PLAN DRAFT WATER COST OF SERVICE STUDY. FINAL July 2017

CITY OF OXNARD PUBLIC WORKS INTEGRATED MASTER PLAN DRAFT WATER COST OF SERVICE STUDY. FINAL July 2017 CITY OF OXNARD PUBLIC WORKS INTEGRATED MASTER PLAN DRAFT WATER COST OF SERVICE STUDY FINAL July 2017 2700 YGNACIO VALLEY ROAD, SUITE 300 WALNUT CREEK, CALIFORNIA 94598 P. 925.932.1710 F. 925.930.0208 CITY

More information

CITY OF CITY OF SONOMA FULLERTON. Pricing Objectives Discussion Water Rate Study 2018 Water Rate Study

CITY OF CITY OF SONOMA FULLERTON. Pricing Objectives Discussion Water Rate Study 2018 Water Rate Study CITY OF CITY OF FULLERTON SONOMA Pricing Objectives Discussion Water Rate Study 2018 Water Rate Study Interview / September 21, 2017 City Council Meeting / January 17, 2018 Agenda 1. Introduction 2. City

More information

Consideration of Adjustments to the San Dieguito Water District' s Water Rates and Meter

Consideration of Adjustments to the San Dieguito Water District' s Water Rates and Meter A AGENDA REPORT San Dieguito Water District MEETING DATE: May 21, 2014 GENERAL MANAGER: Glenn Pruim PREPARED BY: Jeff Umbrasas, Administrative DISTRICT SECRETARY: Gus Vina Services Manager SUBJECT: Consideration

More information

2018 Water Connection Fee Update August 17, 2018 Page 4 environmental effect. Further, the incremental fee increase will not to fund capital projects for the expansion of the existing infrastructure system.

More information

Long-Term Financial Stability Workshop #4. Capital Investment & Financing. Board of Directors September 23, 2014

Long-Term Financial Stability Workshop #4. Capital Investment & Financing. Board of Directors September 23, 2014 Long-Term Financial Stability Workshop #4 Capital Investment & Financing Board of Directors September 23, 2014 Agenda Introduction Capital Investment & Financing Seismic Surcharge 2 Workshop Topics Workshop

More information

CITY OF SANTA CRUZ WATER DEPARTMENT LONG RANGE FINANCIAL PLAN

CITY OF SANTA CRUZ WATER DEPARTMENT LONG RANGE FINANCIAL PLAN CITY OF SANTA CRUZ WATER DEPARTMENT LONG RANGE FINANCIAL PLAN JUNE 2016 1 LONG RANGE FINANCIAL PLAN TABLE OF CONTENTS Table of Contents... 2 Executive Summary... 4 1. Introduction... 6 2. Background...

More information

Sewer Rate Study CRESCENT CITY CALIFORNIA

Sewer Rate Study CRESCENT CITY CALIFORNIA CRESCENT CITY CALIFORNIA Sewer Rate Study 27368 Via Industria, Suite 110, Temecula, California 925904856 T 951.587.3500 800.755.6864 F 888.326.6864 www.willdan.com Mr. Eugene Palazzo City Manager City

More information

ES.1 Findings and Recommendations... ES Overview Current Rates Rate Making Objectives

ES.1 Findings and Recommendations... ES Overview Current Rates Rate Making Objectives Table of Contents Executive Summary ES.1 Findings and Recommendations... ES-1 Chapter 1. Introduction 1.1 Overview... 1-1 1.2 Current Rates... 1-1 1.3 Rate Making Objectives... 1-1 Chapter 2. Revenue Requirement

More information

SAN DIEGUITO WATER DISTRICT AGENDA REPORT

SAN DIEGUITO WATER DISTRICT AGENDA REPORT ~ SAN DIEGUITO WATER DISTRICT AGENDA REPORT Meeting Date: August 21, 2013 TO: VIA: FROM: SUBJECT: Board Members Gus Vina, Distrct Sectar ~7'.. Glenn Pruim, General Manager Tim Nash, Director of Finance

More information

VENTURA COUNTY WATERWORKS DISTRICTS Representing: Ventura County Waterworks Districts No. 1, 16, 17 & 19

VENTURA COUNTY WATERWORKS DISTRICTS Representing: Ventura County Waterworks Districts No. 1, 16, 17 & 19 VENTURA COUNTY WATERWORKS DISTRICTS Representing: Ventura County Waterworks Districts No. 1, 16, 17 & 19 Board of Ventura County Waterworks District No. 1 800 S. Victoria Avenue Ventura, CA 93009 Subject:

More information

Agenda Rio Linda / Elverta Community Water District Planning Committee

Agenda Rio Linda / Elverta Community Water District Planning Committee Agenda Rio Linda / Elverta Community Water District Planning Committee Sacramento Metro Fire Dept. Friday, February 5, 2015 6609 Rio Linda Blvd. 2:00 pm Rio Linda, CA 95673 Public documents relating to

More information

CITY OF ANAHEIM WATER UTILITY FUND. Financial Statements. June 30, 2014 and (With Independent Auditors Report Thereon)

CITY OF ANAHEIM WATER UTILITY FUND. Financial Statements. June 30, 2014 and (With Independent Auditors Report Thereon) Financial Statements (With Independent Auditors Report Thereon) Table of Contents Page Independent Auditors Report 1 Management s Discussion and Analysis (Unaudited) 3 Financial Statements: Statements

More information

WATER, WASTEWATER, STORMWATER, AND MUNICIPAL SOLID WASTE COST OF SERVICE AND RATE DESIGN STUDY

WATER, WASTEWATER, STORMWATER, AND MUNICIPAL SOLID WASTE COST OF SERVICE AND RATE DESIGN STUDY REPORT January 2017 WATER, WASTEWATER, STORMWATER, AND MUNICIPAL SOLID WASTE COST OF SERVICE AND RATE DESIGN STUDY PREPARED BY: ECONOMICS STRATEGY STAKEHOLDERS SUSTAINABILITY www.newgenstrategies.net 3420

More information

City of Ann Arbor, MI Water and Sewer Cost of Service Study Final Draft Report

City of Ann Arbor, MI Water and Sewer Cost of Service Study Final Draft Report City of Ann Arbor, MI Water and Sewer Cost of Service Study Final Draft Report June 15, 2018 June 15, 2018 Ms. Lynne Chaimowitz Budget and Finance Supervisor City of Ann Arbor 301 E. Huron Street Ann Arbor,

More information

Introduction to Water and Sewer Fund Needs August 11, 2017

Introduction to Water and Sewer Fund Needs August 11, 2017 Introduction to Water and Sewer Fund Needs August 11, 2017 A lot of good things are happening in Buffalo and we hope to make some exciting announcements in the months to come, especially about possible

More information

Through: Finance, Legal, and Administration Committee (3/11/15) Chief Financial Officer/Assistant General Manager

Through: Finance, Legal, and Administration Committee (3/11/15) Chief Financial Officer/Assistant General Manager Date: To: The Honorable Board of Directors Through: Finance, Legal, and Administration Committee (3/11/15) From: Submitted by: P. Joseph Grindstaff General Manager Christina Valencia Chief Financial Officer/Assistant

More information

City and Borough of Juneau, AK WATER UTILITY AND WASTEWATER UTILITY RATE STUDY

City and Borough of Juneau, AK WATER UTILITY AND WASTEWATER UTILITY RATE STUDY City and Borough of Juneau, AK WATER UTILITY AND WASTEWATER UTILITY RATE STUDY Summary of Findings October 2003 Financial Consulting Solutions Group, Inc. 8201 -- 164th Ave. NE, Suite 300, Redmond, WA

More information

Sewer Rate Study July 2016

Sewer Rate Study July 2016 July 2016 Prepared By The Finance Division TABLE OF CONTENTS SECTION 1: EXECUTIVE SUMMARY... 1 1.1 Background... 1 1.2 Purpose... 1 1.3 Current Sewer Rates... 1 1.4 Five Year Financial Projection... 1

More information

WATER UTILITY FINANCIAL PLAN AND RATE STUDY CITY OF WHITEFISH, MT MARCH 2016

WATER UTILITY FINANCIAL PLAN AND RATE STUDY CITY OF WHITEFISH, MT MARCH 2016 WATER UTILITY FINANCIAL PLAN AND RATE STUDY CITY OF WHITEFISH, MT MARCH 2016 The Financial Link Executive Summary - Water In May 2015, the City of Whitefish (City) retained AE2S to complete a Water and

More information

Managing Revenue in Water Systems

Managing Revenue in Water Systems Managing Revenue in Water Systems Monday, June 1, 2015 2:40 3:55 1.5 CPE Moderator: Speakers: Rodney Greek, San Diego County Water Authority Debby Cherney, Eastern Municipal Water District Jeffrey Hughes,

More information