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Home My WebLink AboutCity Council Study Session 10/5/2015 - Supplemental Communic 10/5/2015 Water an d Sewer Rate Adjustment CouncilCity • Session October Background • Last Rate Adjustment eon • Water Rates set by City Council Resolution • Sewer Service Rates set by Ordinance • Proposition 218 Protest Hearing Requirements in effect SUPPLEMENTAL COMMUNICATION Meeting Cate: Agenda Item No.T `SAS 1 10/5/2015 air and Sewer�ervice aRT�, Adjustment Past Practices • Water Rates • Set by Council Resolution 99-50 • Water commodity rate can be adjusted each year with formulas based on the cost to purchase imported water and produce ground water • Water Meter Rate adjusted based on the percentage change in the CPI-U Index • Sewer Service Rates • Methodology set by HBMC 14.55.030 • Adjusted based on the percentage change in the CPI-U Index aterSupply • Groundwater Basin • Orange County Water District(OCWD)Manages the Orange County Ground Water Basin • Basin Pumping Percentage(BPP),established yearly, currently set at 75 percent of agency's total water demand • Replenishment Assessment(RA) for pumping,currently set at $322 per acre foot • Imported Water • Purchased from the Municipal Water District of Orange County (MWDOC)who is a Member Agency of the Metropolitan Water District. • Currently used to supply remaining City demand • Current rate is$942 per acre foot 2 Zo/s/zois P7�j" ater Commodity Rate Formula • Cost of Water at last rate adjustment • BPP=65%;RA=$253 per acre foot • MWDOC rates: $797.50 per acre foot • Cost of water=$443.58 per acre foot • Current Cost of Water • BPP=75%;RA=$322 per acre foot • MWDOC rates: $942 per acre foot • Cost of water$477.00 per acre foot • Difference = $33.42 per acre foot • Divided into billing units = $0.0767/BU Water Meter Rate • Adjusted by the Percentage Increase of the Consumer Price Index-Urban Los Angeles-Orange-Riverside counties established by the U.S. Bureau of Labor Statistics and available after July 1 of each year • Increase of m percent this year 3 10/5/2015 "Water Meter Charges %11 $11.2370 •• $, 11.3606 V. $22.4740 $ 22.7212 1-1/2" $33.7110 $ 34.0818 2" $56.1850 $ 56.8030 3" $123.6070 $ 124.9667 4"Compound $191.0290 $ 193.1303 4"FM $370.8210 $ 374,9000 6"Compound $370.8210 $ 374.9000 6"FM $752.8790 $ 761,1607 8"FM $1,314,7290 $1.329,1910 10"FM $2,056,3710 $2,078.9911 Proposed Water Rates • Water Commodity Rate— One Billing Unit (BU) = One hundred cubic feet (CCF) = 748 gallons • Current Rate: $1.7535 per BU • Proposed Rate: $i.83oz per BU • 4.37%increase • Water Meter Rate (for three-quarter inch meter) • Current Rate: $11.2370 per month • Proposed Rate: $11.36o6 per month • Increase of$0.1236 per month • 1.1%increase 4 10/5/2015 I"mpacts of Proposed Adjustment On a Single Family Residence At 12 Billing Units Per Month Commodity $21.0420 $21.9624 $0.9204 4.4% Meter $11.2370 $11.3606 $0.1236 1.1% Total $32.2790 $33.3230 $1.0440 3.2% Comparison of Water l a sto Other Agencies Huntington Beach-Current $1.7535 $11.2370 $32.28 Huntington Beach-Proposed $1.8302 $11.36o6 $33.32 Fountain Valley $2.940 $6.510 $41.79 Garden Grove $2.830* $6.120 $40.o8 Irvine Ranch WD $1.no* $10.30 $27.29 Mesa WD $3.400 $10.75 $51-55 Newport Beach $3.080 $17.27 $54.23 Seal Beach $2.230* s18.93 $45.69 Westminster $2.280* $354 $30.90 "Tiered rates. 5 10/5/zoi5 Water Master Plan • Water Master Plan and fee implemented in 1995 through 2007 for system improvements. • Improvements included water reservoir, booster and pump station upgrades, pipeline and cathodic protection improvements. • Current water system needs are under evaluation. • Includes water well replacements, pipeline improvements and replacements and facility security projects. • Updated Water Master Plan and system needs will be presented to City Council in 2oi6. -Sewer Service Charges This is an example of the fee adjustment where the CPI methodology is used. The adjustment was suspended by the City Council for fiscal year zo15-16 due to current revenues meeting budget need and fund reserves exceeding the reserve policy level. Category Current ++ 11% Single Family(per month) $to.69 $ro.8i Multi-Family(per unit/month) $8.87 $8.97 Commercial/Industrial (per month) $12.41 $12.55 Rate modification based on CPIU available as of July i is+aa% 6 io/5/zoi5 Sewer Service Charges (cont'd) Category Current + 1.1% High Consumption Commercial/Industrial (Per too Cubic Feet of Water) $2.32 $2.35 Schools (perADA/year) High School $3.42 $3.45 K-8 $2.20 $2.22 ---C-OMparison of Current-Sewer Rates to Other Agencies Huntington Beach $io.692 Fountain Valley $6.ot Irvine Ranch WD $24.05 Newport Beach $4.50* Sea]Beach $27.40 *Additional charge of s6.25 if customer is not a Newport Beach water customer 7 10/5/2015 Proposition 218 Procedures • All residents and property owners are mailed a protest hearing notice 45 days before the public hearing • City Council holds public hearing on the proposed adjustment (s) • If 50% + 1 of property owners/residents mail in protests, adjustment cannot be adopted • Staff recommends City Council vote to reaffirm the formulas for rate adjustments • Under Proposition 218, the rate(s) cannot exceed the cost of service Recommended Actions Public hearing set for October 191h City Council meeting to consider the following actions: • Approve Resolution to affirm Water Rate Adjustment Formula • Approve Ordinance to affirm Sewer Service Rate Adjustment formula 8 10/5/2015 Water Budget Tiered Water Rates Background • Current Water Rate Structure • Uniform commodity rate- the same rate is charged to all customers for all water used • Fixed Monthly Meter Fee- based on the size of the meter or number of dwelling units served by the meter • 2oo8 Orange County Grand Jury report recommended water budget rate structure • Regulatory conservation goals (SB x7-7) Water Budget Tiered Water Rates Background (Cont.) • Huntington Beach was awarded a Department of Water Resources grant to perform a rate study to develop a water budget rate structure • Grant eligibility tied to conservation rate compliance • Heightened concerns for future water supply restrictions • City Council Study Sessions in November 2olr and April 2013 • April 2015 State Appeals Court's ruling on the City of San Juan Capistrano Tiered Water Rates 9 1o/s/2o1s Conservation & Efficiency Water Water Conservation Efficiency • Reducing water usage • Reducing water waste • Rules and regulations • Target driven • Restricting water use • Appropriate water use ` ernative Water Rate Structures • Uniform (Status Quo) • Simplified Water Budget(WB) • Water allocation varies by season(2-4 seasons)and lot size by bins • g Tiers:Efficient indoor,outdoor uses and inefficient uses • Default of 4 people per household for single-family • Variances granted for household size and lot size • Full Water Budget (WB) • Water allocation varies according to actual/historical weather data and estimated landscape data • Allowed variances for household size,lot size and other needs • 4 Tiers:Efficient indoor and outdoor uses,inefficient and excessive uses 10 10/5/2015 Water Budget Allocation • Two components: 1. Indoor Budget, which is determined by household size and gallons per capita per day (gpcd) • 4 persons per household * 55 gpcd *days of service • Waiver allows for approved additional needs and /or additional occupancy 2. Outdoor Budget, which is determined by landscape area estimate and weather Proposition 218 Requirements • Nexus between tier prices and cost of service • Examples • Cost of water supplies • Conservation program costs • Potential new sources of supply • Urban run-off program costs 11 10/5/2015 —Ompanson Between- Rate Structures Uniform rates Simplified WB Full WB • Uses existing staff • Promotes efficiency • Promotes maximum • Simple to explain • Equitable efficiency • Could fund urban • Equitable run off programs • Could fund urban • Minimal additional runoff programs staff • Drought management • Drought tool management tool • Requires additional staff Questions 12