Water and Sewer Rate Study October 1, 2019 ‐ Final Rate Options City of Santa Ana 2019 Water and Recycled Water Rate Study Re c o mme nda tio ns to City Co unc il – I te m 65A Oc to b e r 1, 2019 Co ntinue d fro m Se pte mb e r 17, 2019, Co unc il Me e ting 2019 Wa te r Ra te Study Drive rs • Schedule: The previous rate study was completed in 2014 The last adopted rate adjustments were for FY 2019 (last year) • Legal: Recent court decisions have “raised the bar” for transparency and cost-to- service requirements for water rates (Prop 218). • Rate Structure: Revenue was significantly lower than forecasted during drought years • System Investment Needs: 20% of the water distribution infrastructure is past its useful life 70% of the existing infrastructure will reach its useful life by 2040 A Water Master Plan was developed to identify system deficiencies and develop a capital program 2 Stantec Consulting & Hildebrand Consulting 1
Water and Sewer Rate Study October 1, 2019 ‐ Final Rate Options Surve y – Re side ntia l Wa te r Use rs (typic a l mo nthly wa te r use with 5/ 8” x 3/ 4” me te r) Proposed (Year 1) Current 3 Wa te r E nte rprise Re ve nue F Y2018 Ac tuals Ra te Re ve nue F ixe d Rate Re v e nue $ 8,392,030 Variable Rate Re v e nue $ 45,154,453 T o ta l Re ve nue $ 53,546,483 O the r Re ve nue : Othe r Ope rating Inc o me $ 826,226 Inte re st Inc o me $ 553,964 No n-Ope rating Inc o me $ 1,187,776 T o ta l O the r Re ve nue $ 2,567,966 T O T AL REVENUE $ 56,114,449 4 Stantec Consulting & Hildebrand Consulting 2
Water and Sewer Rate Study October 1, 2019 ‐ Final Rate Options Wa te r E nte rprise E xpe nse s F Y2018 Ac tuals $23,694,899 Purc ha se d Wa te r a nd E le c tric ity $6,165,137 Sa la rie s a nd Be ne fits $421,375 Othe r Va ria b le O&M $9,616,819 F ixe d Ope ra tio ns & Ma inte na nc e Co sts $1,347,355 Cle a n Wa te r Co mplia nc e $8,567,409 F ixe d Ove rhe a d $1,361,525 De b t Se rvic e Ca pita l E xpe nditure s $6,274,059 T otals $57,448,577 5 Ag ing I nfra struc ture 6 Stantec Consulting & Hildebrand Consulting 3
Water and Sewer Rate Study October 1, 2019 ‐ Final Rate Options Wa te r E nte rprise Ma ste r Pla n Ca pita l Spe nding F o re c a st 10-year total: $143.6 million Projects include: • Drilling new wells • Rehabilitating existing wells • Rehabilitating pump stations • Rehabilitating tanks • AMI project funded with debt Historical spending • Will create 8 full time jobs (@ $185K / FTE) 7 Non-Rate Revenue Existing Rate Revenues Wate r E nte r pr ise Rate Revenue from Increases O&M Expenses & Transfers F inanc ial F or e c ast Debt Service Cash-Funded CIP $120 Total Revenue / Expenses ($M) and Re c omme nde d Rate $100 Inc r e ase s $80 $60 Revenues Expenses $40 $20 $0 $50 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Minimum Reserves Ending Fund Balance Target Reserves MILLIONS $0 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Implementation Schedule Jan.1 Jul.1 Jul.1 Jul.1 Jul.1 Jul.1 Jul.1 Jul.1 Jul.1 Jul.1 Jul.1 Rate Increases 7.00% 7.00% 6.50% 2.00% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Propose d E stimate d - - $8.7M - $11.7M - - - - - - - De bt Issuances 8 Stantec Consulting & Hildebrand Consulting 4
Water and Sewer Rate Study October 1, 2019 ‐ Final Rate Options Pro po se d Wa te r Ra te De sig n Appro a c h 1. Enhance connection between water rates and the cost to provide water service • Water usage rates are directly tied to the cost of purchased and pumped water… • … this will result in increased fixed revenue and decreased variable revenue 2. Update Pass-Through Provision • Automatic updates to rates to reflect changes in wholesale water costs 3. Minor modifications to meter equivalency schedule • Bringing the meter equivalency schedule in line with industry standards • Reflects the hydraulic capacity of the respective meter sizes. 9 Ra te Struc ture Co st Ca te g o rie s Utility Costs Commodity Costs Drive n b y the size o f the utility infra struc ture Drive n b y the vo lume o f wa te r so ld • Sa la rie s & b e ne fits • Wa te r purc ha se s • Ope ra tio ns & ma inte na nc e • Pumping e le c tric ity • Ca pita l • Asso c ia te d g e ne ra l & • Asso c ia te d g e ne ra l & a dministra tive a dministra tive Cur r e nt fixe d r e ve nue : Wate r Usage Charge Wate r Utility Char ge 16.2% (variable ) (fixe d) 10 66% Re ve nue 34% re ve nue Stantec Consulting & Hildebrand Consulting 5
Water and Sewer Rate Study October 1, 2019 ‐ Final Rate Options Pro po se d T ie re d Wa te r Usa g e Ra te s Volume (AF) MWD Costs Green Acre Unit Cost OCWD & Pumped Water Costs Costs of Water (75% of Water Supply – w/In-Lieu) ($/AF) Tier 1 Tier 2 Recycled Water 11 T ie r 1 Allo c a tio ns* Increase Tier 1 allocation with meter size Current Recommended Account Size: Tier 1 Allocation: 12 * Allocation sizes are designed to result in all Tier 1 sales to equal OCWD purchases Stantec Consulting & Hildebrand Consulting 6
Water and Sewer Rate Study October 1, 2019 ‐ Final Rate Options Re c omme nde d Wate r Rate Sc he dule Ye ar 1 Monthly Water Utility Charge (fixed) Water Usage Charges Monthly Rate Current Rate Proposed Rate Meter Size Current Proposed (per CCF) (per CCF) 5/8" X 3/4" $6.95 $20.51 Tier 1 $3.02 $2.03 3/4" $15.10 $30.76 Tier 2 $3.59 $4.79 1" $28.65 $51.27 Recycled Water $2.42 $2.15 1 1/2" $44.93 $102.53 2" $82.90 $164.04 Tier 1 Water Usage Allocation (CCF per Month) 3" $137.15 $358.84 Current Proposed 4" $272.78 $645.91 Single Family* 22 10.5 Multi-Family** 22 8.5 6" $435.53 $1,332.83 Non-Residential* 22 31.0 Multi-Family Residential is currently charged $4.75 * Proposed Tier 1 allocation allocated per equivalent meter per dwelling unit. ** Proposed Tier 1 allocation per dwelling unit 13 E xa mple Mo nthly Wa te r Bills Sing le F a mily Ho me s with 5/ 8” X 3/ 4” me te r Low Water User Typical Water User High Water User (5 HCF) (10.5 HCF) (25 HCF) Current Proposed Current Proposed Current Proposed $22.05 $30.66 $38.66 $41.82 $84.16 $111.28. Increase of $8.61 Increase of $3.16 Increase of $27.12 . . 14 Stantec Consulting & Hildebrand Consulting 7
Water and Sewer Rate Study October 1, 2019 ‐ Final Rate Options Mo nthly Wa te r Bill I mpa c ts Sing le F a mily Custo me rs (a ll me te r size s, 35,991 a c c o unts) 15 Mo nthly Wa te r Bill I mpa c ts Multi-F a mily (All me te r size s, 3,713 a c c o unts) 16 Stantec Consulting & Hildebrand Consulting 8
Water and Sewer Rate Study October 1, 2019 ‐ Final Rate Options Surve y – Re side ntia l Wa te r Use rs (typic a l mo nthly wa te r use with 5/ 8” x 3/ 4” me te r) Proposed (7% Increase) Current 17 Ra te Study Ac hie ve me nts Enhanced connection between water rates and the cost to provide water service • Improves fairness and legal defensibility Increased revenue stability through higher fixed rates • Stabilizes revenue and makes rates “drought tolerant” Rate revenue increases will meet the needs of system deficiencies • Addresses deferred maintenance and allows the utility to implement efficient asset management practices 18 Stantec Consulting & Hildebrand Consulting 9
Water and Sewer Rate Study October 1, 2019 ‐ Final Rate Options Ne xt Ste ps • Re q ue st City Co unc il to dire c t Sta ff to se nd Pro po sitio n 218 No tific a tio n • 45-da y wa iting pe rio d • Pub lic He a ring o n o r a fte r No ve mb e r 19, 2019 to a do pt ra te s • Ra te s a re a c tive o n Ja nua ry 1, 2020 19 E xtra Wa te r Bill I mpa c t Slide s Stantec Consulting & Hildebrand Consulting 10
Water and Sewer Rate Study October 1, 2019 ‐ Final Rate Options City of Santa Ana 2019 Sewer Rate Study Re c o mme ndatio ns to City Co unc il – I te m 65A Oc to be r 1, 2019 Co ntinue d fro m Se pte mbe r 17, 2019, Co unc il Me e ting 2019 Se we r Rate Study Drive rs • Schedule: • The last rate study was completed in 2014 • The last adopted rate adjustments were for FY 2019 (last year) • Legal: • Recent court decisions have “raised the bar” for transparency and cost-to- service requirements for water rates (Prop 218). • Rate Structure: • Revenue is being un-necessarily affected by drought events • System Needs: Sewer system has significant capital investment needs. • Currently averaging less than 1 mile of sewer line replacement per year • Proposed plan jumps sewer line replacement to an average of 4 miles a year 2 Stantec Consulting & Hildebrand Consulting 1
Recommend
More recommend
