Water Rates Rate Restructure and Rate Adjustments

Transcription

1 Water Rates Rate Restructure and Rate Adjustments Community Outreach Meeting

2 Questions We Will Address Why are water rates changing? Where does the water come from? Did the rain from last winter help? Is water conservation still needed? When were the rates last adjusted? How can I help control my water bill? Short video to answer some of these questions 2

3 Video 3

4 2016 Water Demand: Lowest Since 1952 Water Consumption in Acre feet Water Consumption (Sales) Service Territory Population 3

5 Making Sense of the Bill (Bi-monthly) 5

6 Making Sense of the Bill (Bi-monthly) Customer Type Meter Size Billing Units Used 6

7 Water Rate Components $6.00 $5.00 $4.00 CURRENT SYSTEM AVERAGE RATE Commodity (47%) $2.45 > Commodity Charge > Volumetric charge that covers costs of water delivered, includes the Purchased Water Adjustment Charge for changes in commodity cost $3.00 $2.00 $1.00 $0.00 $5.24 per Billing Unit Billing Unit = 748 gallons Distribution & Customer (34%) $1.78 Capital Improvement (19%) $1.005 > Distribution and Customer (D&C) > Fixed charge that covers operations and maintenance costs > Capital Improvement (CIC) > Volumetric charge that covers capital improvements and investments 7

8 The Value of a Billing Unit of Water > 1 billing unit of water from PWP = 748 gallons and costs $5.25 > 1 gallon of water at the grocery store dispenser costs $ gallons would cost $ > A 16 ounce bottle of water costs about $ gallons of bottled water would cost $5,984. 8

9 So what is going to change? Rate Structure How revenues are collected > Conservation impacts > Groundwater availability What is changing? > Water allocation > Water block prices > How customers are identified Rate Adjustments Amount of revenues collected > Costs have been cut but are still going up What is changing? > Distribution & Customer Charge > Commodity (water costs) > Capital Improvement Charge 9

10 How revenues are collected WATER RATE RESTRUCTURE 10

11 Why Cost of Service Study and Rate Redesign was Completed Cost of Service Analysis > Ensure revenue requirements are met > Ensure rates are equitable and fair > Ensure rates are responsive to changing resources and supply conditions Proposed Rate Design > Rate stability > Affordability & bill impact > Ease of understanding > Conservation and efficient use of water > Compliance with Proposition

12 Introduction to New Rate Components Rate Element Current Rate Structure Proposed Rate Structure Updates COMMODITY Water Allocation Monthly allocation based on meter size Monthly allocation based on customer groups and factors such as property size, count of dwelling units, historic usage Water Pricing 4 rate blocks priced based on source of supply (groundwater, MWD Tier 1 / Tier 2) 4 rate blocks priced based on blended supply sources including water efficiency Blended Supply Capital Improvement Charge Formula based, per billing unit Formula based per billing unit plus future fixed charge Current Variable CIC Charge Future Fixed CIC Charge

13 Proposed Customer Groups & Subgroups Single Family Residential Existing Customer Groups by Meter Connections 5/8 3/4 1 1 ½ Small Medium Large Multi Family Residential 2 Units 9 Units 36 Units Commercial Medium Restaurant Small Office Large Schools XLarge Golf Course

14 Water Allocation Methodology Change > In the current rate design, water blocks are sized and priced based on where water comes from and the size of your meter connection. > In the proposed rate design, water blocks are sized and priced based on where water comes from and how you use water. Water Blocks Current Rate Design Proposed Rate Design Block 1 Block 2 Block 3 Block 4 Groundwater Purchased water Purchased water + Conservation Costs Purchased water + Conservation Costs Minimal health and sanitation indoor use Continued indoor use + outdoor use Primarily Outdoor use + Conservation Costs Primarily Outdoor use + Conservation Costs 14

15 Water Pricing: 4 Block Structure > A 4-block water structure provides price signals and considers the cost differential between groundwater and MWD purchased water. Ground water Purchased water BLOCK1 Estimated % of Total Sales 40-45% Ground water Purchased water BLOCK % Purchased water Conservation BLOCK3 7-12% Purchased water Conservation BLOCK4 4-8% 15

16 Water Pricing: Current vs. Proposed Single Family Residential Commodity Block Rates > Note: Final rates adopted by City Council may differ $5.00 $4.00 $3.00 $2.00 $1.40 $1.25 $1.26 $2.99 $2.15 $2.48 $3.49 $3.26 $3.18 $4.24 $3.54 $4.00 $1.00 $0.00 Block 1 Block 2 Block 3 Block 4 Current Proposed FY 2018 Proposed FY 2019 Current Allocation in Billing Units Meter Size Block 1 Block 2 Block 3 Block 4 5/8 3/4" ½ Proposed Allocation in Billing Units Subclass Block 1 Block 2 Block 3 Block 4 Small Medium Large

17 Bill Impact SFR Small; 18 BU Bimonthly Current Distribution & Customer Charge with 3/4 meter: $ Commodity Charge: Block 1: $ Block 2: $ 5.98 Total Commodity $ CIC: $ Total Water Service: $ Proposed (FY18) Distribution & Customer Charge with 3/4 meter: $ Commodity Charge: Block 1: $ Block 2: $ 4.30 Total Commodity $ CIC: $ Total Water Service: $ $1.70 Increase (2.1%) 17

18 Bill Impact SFR Medium; 50 BU Bimonthly Current Distribution & Customer Charge with 1 meter: $ Commodity Charge: Block 1: $ Block 2: $ Total Commodity $ CIC: $ Total Water Service: $ Proposed (FY18) Distribution & Customer Charge with 1 meter: $ Commodity Charge: Block 1: $ Block 2: $ Block 3: $ Total Commodity $ CIC: $ Total Water Service: $ $2.99 Increase (1.3%) 18

19 Bill Impact SFR Large; 110 BU Bimonthly Current Distribution & Customer Charge with 1 1/2 meter: $ Commodity Charge: Block 1: $ Block 2: $ Total Commodity $ CIC: $ Total Water Service: $ Proposed (FY18) Distribution & Customer Charge with 1 1/2 meter: $ Commodity Charge: Block 1: $ Block 2: $ Block 3: $ Total Commodity $ CIC: $ Total Water Service: $ $42.12 Increase (8.4%) 19

20 Proposed Capital Improvement Charge Proposed Fixed Rate Component > Current CIC charge (100% volumetric) generates revenues to fund capital improvement projects and debt service payments. > Proposed fixed component would recover new bond financing costs PROPOSED CURRENT CIC RATE - VARIABLE long term infrastructure improvements and debt service payments CIC RATE VARIABLE long term infrastructure improvements and existing debt service payments + CIC RATE FIXED New debt service payments > Over time, all revenues to recover debt service financing would be fixed. 20

21 Amount of revenues collected WATER RATE ADJUSTMENTS 21

22 Proposed Water Rate Adjustments Rate Structure Rate Adjustments Rate adjustments are independent of water rate restructuring MWD $$$$ Commodity rate increases to pass through MWD increases Operating costs are higher > Cost reductions made to minimize rate impacts > Eliminated 8 full-time positions > Last D&C increase was July 2011 Sept 25th Capital Improvement Charge reduction Prop 218 notice and Public Hearing 22

23 $140 Sample Bill Impacts Single Family Residential Medium (34% of all Accounts) > Average Monthly Use = 15 BU > FY 2018 Average Monthly Change = 6.6% > FY 2019 Average Monthly Change = 7.5% Monthly SFR Medium Bill Impacts (1") $120 $100 $80 $60 $61.82 $69.35 $74.27 $73.74 $78.59 $84.52 $85.66 $87.83 $94.76 $97.58 $98.18 $ $ $ $ $40 $20 $0 12 BU 15 BU 18 BU 21 BU 24 BU Current Monthly Bill Proposed FY2018 Proposed FY

24 Monthly Bill Comparison - Residential $140 Residential $120 Estimated Monthly Bill $100 $80 $60 $40 $20 $0 3/4 Inch 8 BU 3/4 Inch 12 BU 1 Inch 20 BU Long Beach $35.38 $50.09 $99.28 Burbank $35.86 $47.64 $72.67 Pasadena $36.04 $48.57 $95.80 LADWP $45.37 $68.05 $ Glendale $50.95 $63.71 $ Crescenta Valley $51.37 $65.07 $

25 Schedule for Proposed Water Rate Restructure and Rate Adjustments Date Action Item Aug-Sep Community Outreach Meetings 9/25/17 Water Rates Public Hearing and 1 st Reading of Rate Ordinance 10/02/17 2 nd Reading of Rate Ordinance 11/01/17 New Water Rate Structure and Rate Adjustments effective 10/01/18 Year 2 Rate Adjustments effective PWPweb.com/WaterRates 25