Sonoma County Service Area #41(CSA #41) Water Rate Study

Transcription

1 Sonoma County Service Area #41(CSA #41) Water Rate Study September 13, 2016 Prepared by Greg Clumpner, Director, NBS Carmen Narayanan, Consultant, NBS 1

2 CSA #41 Zones of Benefit 2

3 Overview of Presentation Overview of Rate Study Methodology & Tasks Key Findings of the Water Rate Study For Each CSA #41 Zone of Benefit: Overview of Financial Plan Proposed Rates Rate Study Recommendations 3

4 Overview of Key Rate Study Tasks Key Components in the Water Rate Study: 1 2 COST-OF-SERVICE 3 ANALYSIS FINANCIAL PLAN / REVENUE REQUIREMENTS Determines total revenue needed from rates. Determines annual % adjustments to rates needed. Allocates revenue requirements to customer classes in a fair and equitable" manner. Complies with Prop 218. RATE DESIGN Determines the rate structure used to collect revenue from each customer class. Reflects County and Zone of Benefit s Policies & Rate Objectives. 4

5 Overview of Key Rate Study Tasks (cont.) Rate Study Methodology (must comply with Prop 218): State Law (Prop. 218) requires rates be fair & equitable. This means costs must be allocated to customer in proportion to their cost-of-service. Additional criteria based on recent court cases: Tiered rates must demonstrate a cost basis for each tier. Based on the Cost-of-Service Analysis, proposed rates: Rate increases differ by customer class in Year 1. After Year 1 they increase in an across-the-board manner. 5

6 Overview of Key Rate Study Tasks (cont.) Water Rate Study Addresses Multiple Issues: 1. Financial Issues: Collecting Adequate Revenues Funding Capital Improvement Costs Maintaining Acceptable Levels of Reserves 2. Rate Design: Tiered rates vs. Uniform (Single-Tier) Variable rates Fixed (Base) Rates Incorporate Peaking Factors & Hydraulic Capacity Factors Meeting Fairness & Equity Criteria Creating a Defensible Administrative Record 6

7 Overview of Key Rate Study Tasks (cont.) Determining Annual Revenue Requirements: Identify: Annual Operating Costs Debt Service Obligations Rate-Funded Capital Expenditures Deduct: Non-Rate Revenues (including tax-roll revenue used for a specific purpose, such as debt service payments) Consider: Long-term Reserve Funding Requirements Bond and/or Debt Coverage Levels 7

8 Key Water Rate Study Findings Current Water Rates are Inadequate to Meet Projected Revenue Requirements Due to the Need to: 1. Fund Capital Replacement and Improvements. 2. Correct Annual Deficits. 3. Build and Maintain Reserves. 4. Include Projected Cost of Inflation. Recommended Annual Increases to Total Zone Revenue Zones of Benefit to Meet Net Revenue Requirements FY 2016/17 FY 2017/18 FY 2018/19 FY 2019/20 FY 2020/21 Fitch Mountain 4.00% 4.00% 4.00% 4.00% 4.00% Freestone 37.00% 4.00% 4.00% 4.00% 4.00% Jenner 15.00% 9.00% 9.00% 9.00% 9.00% Salmon Creek 7.00% 7.00% 7.00% 7.00% 7.00% 8

9 Fitch Mountain 334 Connections 9

10 Fitch Mountain Financial Plan Overview Tax Roll Revenue Ends 10

11 Fitch Mountain Current & Proposed Water Rates Use Uniform Volumetric Rates NBS recommends the Zone adopt a uniform volumetric rate structure. Rate Design 50% Fixed and 50% Volumetric Residential Customers Only FY 2016/17 FY 2017/18 FY 2018/19 FY 2019/20 FY 2020/21 Projected Increase in Rate Revenue per Financial Plan: 4.00% 4.00% 4.00% 4.00% 4.00% Fixed Service Charge Water Rate Schedule Monthly Fixed Service Charges: 5/8 inch (330 connections) $48.00 $43.35 $45.08 $46.89 $48.76 $ inch (4 connections) $50.41 $ $ $ $ $ inch $52.75 $ $ $ $ $ inch $55.12 $ $ $ $ $ Commodity Charges for All Water Consumed Current Rates Proposed Rates Per 1,000 gal for the 1st 15K gal/esd $ Per 1,000 gal for 15,001 to 20K gal/esd $ Per 1,000 gal for over 20K gal/esd $ Rate Per 1,000 gallons of Water Consumed -- $11.29 $11.74 $12.21 $12.70 $

12 Freestone 28 Connections 12

13 Freestone Financial Plan Overview End of Transfers In from Water Fund End of Tank Lid Replacement Charge 13

14 Freestone Current & Proposed Water Rates Keep Tiered Volumetric Rates the Zone will keep existing volumetric rate structure to maintain conservation-oriented rate design Water Rate Schedule (for typical meter sizes) Current Rates Proposed Rates FY 2016/17 FY 2017/18 FY 2018/19 FY 2019/20 FY 2020/21 Fixed Service Charge 5/8 inch meter (26 connections) $42.17 $59.00 $61.36 $63.81 $66.37 $ inch meter (1 connection) $43.56 $61.00 $63.44 $65.98 $68.62 $ /2 inch meter $45.04 $63.00 $65.52 $68.14 $70.87 $ inch meter (1 connection) $47.21 $65.00 $67.60 $70.30 $73.12 $76.04 Commodity Charge (per 1,000 gal) Per 1,000 gal for the 1st 15K gal/esd $ Per 1,000 gal for 15,001 to 20K gal/esd $ Per 1,000 gal for over 20K gal/esd $ Per 1,000 gal for the 1st 6K gal/esd -- $21.35 $22.20 $23.09 $24.02 $24.98 Per 1,000 gal for 6,001 to 12K gal/esd -- $23.42 $24.36 $25.33 $26.34 $27.40 Per 1,000 gal for over 12K gal/esd -- $32.63 $33.94 $35.29 $36.70 $

15 Jenner 123 Connections 15

16 Jenner Financial Plan Overview 16

17 Jenner Current & Proposed Water Rates Use Uniform Volumetric Rates NBS recommends the Zone adopt a uniform volumetric rate structure. Rate Design 80% Fixed and 20% Volumetric Residential & Commercial Customers Water Rate Schedule Current Rates Proposed Rates - Rate Alternative #1 FY 2016/17 FY 2017/18 FY 2018/19 FY 2019/20 FY 2020/21 Projected Increase in Rate Revenue per Financial Plan: 15.00% 9.00% 9.00% 9.00% 9.00% Fixed Service Charge Monthly Fixed Service Charges: Residential 5/8 inch (109 connections) $37.32 $40.36 $43.99 $47.95 $52.26 $ inch $38.76 $97.88 $ $ $ $ inch n/a $ $ $ $ $ inch n/a $ $ $ $ $ Commercial 5/8 inch (15 connections) $37.32 $ $ $ $ $ inch $38.76 $ $ $ $ $ inch n/a $ $ $ $1, $1, inch n/a $1, $1, $1, $1, $1, Commodity Charges for All Water Consumed (All Customers) Per 1,000 gal for the 1st 15K gal/esd $ Per 1,000 gal for 15,001 to 20K gal/esd $ Per 1,000 gal for over 20K gal/esd $ Rate Per 1,000 gallon of Water Consumed -- $6.50 $7.48 $8.15 $8.89 $

18 Salmon Creek 97 Connections 18

19 Salmon Creek Financial Plan Overview One-Time Revenues not expected to continue. 19

20 Salmon Creek Current & Proposed Water Rates Use Uniform Volumetric Rates NBS recommends the Zone adopt a uniform volumetric rate structure. Rate Design 75% Fixed and 25% Volumetric Commodity Charge Conversion 100 cubic feet equals gallons, or 1,000 gallons equals cubic feet Residential Customers Only FY 2016/17 FY 2017/18 FY 2018/19 FY 2019/20 FY 2020/21 Projected Increase in Rate Revenue per Financial Plan: 7.00% 7.00% 7.00% 7.00% 7.00% Fixed Service Charge Water Rate Schedule Monthly Fixed Service Charges: 5/8 inch (95 connection) $64.37 $74.18 $79.38 $84.93 $90.88 $ inch (2 connections) $66.86 $ $ $ $ $ inch $70.20 $ $ $ $ $ inch $73.51 $ $ $ $ $ Commodity Charges for All Water Consumed Current Rates* Proposed Rates Per 100 cubic feet for the 1st 2,000 cubic feet/esd $ Per 100 cubic feet for the 2,001-2,700 cubic feet/esd $ Per 100 cubic feet for the 2,700+ cubic feet/esd $ Rate Per 100 cubic feet of Water Consumed -- $10.77 $11.53 $12.33 $13.20 $

21 Recommendation 1. If there are not 50% plus one Proposition 218 protests, Approve the Recommended Rates for each Zone of Benefit: 1. Fitch Mountain 2. Freestone 3. Jenner 4. Salmon Creek 2. Adopt Individual Zone Resolutions 3. Implement new rates effective October 13,

22 Questions and Discussion Questions Carmen Narayanan