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Home My WebLink AboutStaff Report 1.B 11/14/2016MM 20"'616 WATER AND SEWER RATE STUDY �` Presented to: Petaluma City Council Presented by: Dan St. John, F.ASCE, Director Alex Handlers, Principal, Bartle Wells Associates Presented on: November 14,2016 �iVL.. � „,... . ,, } li4 Syn ';... Rate Study Under Way, Last One Adopted Dec ''I I t5enchmarking Current Rates ,P Water: Low; Sewer: Upper-mid range; Combined: Middle Current 49 There is NO one right way to set rates * Rates Are Required f fi of Service IdentifiedAreas of Improvements u1scussion of Policy Issues Water over 2 Years e, Input necessary to complete rate making process o Review Steps to Completion Single Family Residential Monthly Water Rate Survey Based on 8 hcf monthly water use (approx. 200 gpd) it jq A ,j Usage Charges m Fixed Monthly Charge Average Fixed Charge: $15.73,33% of total bill $60 Petaluma Fixed Charge: $7,39,21% of total bill 5w.*p 64.76 61.78 58.61 C11- 01 0 "N 0 0 & 011A 0 ti Ip Rates Effective October 2016 3 72.29 Single Family Residential Monthly Sewer Rate Survey Based on flat rate or 6 hcf of monthly winter water use 4130 0� q 10 qA, ,\q,A 0& q0 xA0 ok CO zR &-A Rates Effective October 2096 P 1 Historical Monthly Water Charges With 25% conservation over past 2 years bills are roughly the same as they were 6 years customersWater ago for !' $70 MOD -HIGH: 16 > 12 hof 62.75 630.67 57.86 . .. 5.5i 57.73 ...,..,. $50 54.08 51.51 w 47.83 A 9.5 > 7 hcf 43.82 3.31�3&0! $30- .. . -.. 95. ..... 34.36 35.1 32.... 33,. 32,03'__ 31m 2A 26.3° �jr.1 2.21 2.13 22. 22.19.. 21.x? 17.40 18.64 19.58 16.03 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1 r ti, Historical With 20% conservation over past 2 years 120 Sewer bills are roughly the same as they were 5 years ago for customers with averages MOD -HIGH: 10 > 8 lid winter use $1+00 .5. 9.99 98.36 02.89 X4.95 93.25 85.75 82.77 77.55 79.39 5.44 ,9 7..17 66.73 $60 62,98 59.09 52.12 49,33 46«87 48.27 .50.33 50,07 47.55 40 3:0 38,06 : 4 > 3 hcf winter Esse 33.67 29.81 $20 $0 007 2008 200901 011 2012 2013 2014 201501 J v OEM Summary of Projecti e Working to 1 i r future rate increases Without s, sewer and water rates will go up Robust I O -Year CIP Including NBWRA Recy l r Projects Project if l to Blogasr llis Creek Projected fr and Sewer Capacity Fees Funding f Groundwater Sustainability Pavement lCharge * Does not include fi i saving from Refinancing r Debt f FISCAL PROJECTIONS - WATER City of Petaluma $36 Water Enterprise Projected Revenues & Expenses ME 9E. 2015116 2016/17 2017/18 2018/19 2019120 2020121 2021/22 2022123 2023124 2024/25 2025126 2026127 Excludes grant and debt -funded capital improvements, but includes projeced new debt service on debt-financed projects, VJ Pay --Go Capital TM Debt Service $30 Water Source of Supply Water Operating Costs Projected Revenues $26 0 $20 7.4 CL R9 X $15 �10 LU t;4' < $10 ME 9E. 2015116 2016/17 2017/18 2018/19 2019120 2020121 2021/22 2022123 2023124 2024/25 2025126 2026127 Excludes grant and debt -funded capital improvements, but includes projeced new debt service on debt-financed projects, VJ FA M. FISCAL PROJECTIONS - SEWER City of Petaluma Sewer Enterprise Projected Revenues & Expenses Pay --Go Capital Debt Service: Outstandinig i Wastewater Treatment �40 Sewer Operating Costs Projected Revenues M 11.4 11.7— 9.9 — 11.2 9.7 UE M, 2015/16 2016/17 2017118 2018/19 2019120 2020/21 2021122 2022/23 2023/24 2024/25 Note: 2015/16 Revenues include almost $3 million of one-time capacity charge revenues from new development, Fixed Rates Low Distribution f Fixed Costs. - * Introduction of a standard Account and Metering Charge Applied to All Customers Meter Capacity Ratios Do Not Match Current Industry Practices for Water Rate Makin Introduction of Equivalent Dwelling unit For Multi -Family Water Rates Like Used for Sewer at s =} Tiered r Rates Pavement Maintenance Fee for Utilities Fund Balance r is {Continuation of Automatict just for: I WA Wholesale Water Rates a Annual Adjustments on July 1, not twice pryear as current practice IF 11M�g I Wn 1,03111,11v� 'Fixed Revenue Below Regional and National Averages Fixed Water : $7.39 (21 % of TypicalBill); 1 All Revenues Average Region: $15.73 (33% of Typical ill) Industry Norm: 25 - in Water Sewer Fixed Rates: Typical Bill �bVulnerable to Disproportionate Revenue Declines Due to Water Conservation and Emergency Curtailments ,9 Fixed Expenses: 65% in Water; 90% in Sewer M FA Single Family Residential Fixed Monthly Water Charges Average Fixed Monthly Charge: $15.73 $25 Petaluma Fixed Charge: $7.39 (47% of Average) M. $10 02 . . . . . . . . . . . . . . . . . . . 0 kfi Rates Effective October 2016 13 Fixed Charge % of Typical Single Family Residential Water Bill Based on 8 hcf monthly water use (approx. 200 gpd) 60% Average Fixed Charge = 33% of Typical Bill % UM 30% 20% 100%TIM I 0% 0 kq Ok ,§,p&,CZ\v k"i 0 Ok 0'- X & Z 0 ,sA .,,4A 8� Ok Ok 0 6� 'k Rates Effective October 2016 0 Mj 12 M. M. M# EEC 0 Single Family Residential Fixed Monthly Sewer Charges Excludes Volumetric Sewer Charges Average Fixed Monthly Charge: $45.25 & 6 erd C� .\Czp K &5 co eA 0 eA 0 o", 011, 0 4b \100e;y r6 of ok e , Rates Effective October 2016 11.1.11, 1 - - 1 1.11 / 15 MW 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Fixed Charge % of Typical Single Family Residential Sewer Charge Based on 6 hcf average monthly winter sewer use 0 A IbP. ri Gad o' 1o'4il 4�� P .\e& A �ss <zo o G Cf 9 z 0111 0 X!PII P �A 1§ I 01 0 0 /\0 0 &&nA 01- '.10 jc *-A 01 Rates Effective October 2016 16 ............ .............. wou .............. iii n 0 A IbP. ri Gad o' 1o'4il 4�� P .\e& A �ss <zo o G Cf 9 z 0111 0 X!PII P �A 1§ I 01 0 0 /\0 0 &&nA 01- '.10 jc *-A 01 Rates Effective October 2016 16 Impact of Past Two Years of Conservation on Water Revenues Revenue Loss (at current rates) $3,047,000 Net Revenue Loss $11618,000 Need to Improve Ii Recommend 5 - Year Transition to Increase Fixed WaterRevenues rTargetSewer - 50% Target M VE KIIE102211, IGM , I " 1,11111 "1 "I" �1 N (0.311 o", (11-1-0.110 Fixed Cost Spli "Account and Metering" Costs Proposed riDivided ll r All Customers Equivalent '""4 Method Used Allocate "Readiness to Serve" Fixed Costs Single it it Multifamily i Other, e.g. Commercial Based, on AWWA Meterit Ratio r Current Capacity Ratio does not match known industry standard IV i .rw .�.. r z ...; rz ... < , Purposed Promote Water conservation current Tiers Are very Wide es Tier 1 is up to Zoo gallons per day (gpd)average Tier 2 up to 400 g d and se on Most customers Are Billed In Tier 1 Conserving "Effect" not felt by most customers Propose ii of 0 100 gpd (4 Hundred Cubic Feet (HCF) per Month) Tiers o Legal Standard Set By San Capistrano Casl Rate ust Have Nexus to Cost of Service Water Conservation Costs and Urban Recycled Water Costs Are osts Incurred y Higher Tier Water Customers 1k, H'All ., 00 Monthly Single Family Residential Water Bill Distribution 2015/16 13% Tier -I rier 2 T I e r-3 TI-er-4 I et 70 - Hw. %-i 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 16 16 17 18 19 20 21 22 23 24 26 26 27 28 29 30 Monthly Water Use (hcf) In My: %-W- I SFR Tier I m SFR Tier 2 SFR Tier 3 SFR Tier 4 is Multi -Family Comm/Ind Irrigation 41000,000 CzM g 3,500,000 Trli 3,000,004 21500,001, 2,000,000 1#1 2013/14 2015/16 21 EXII III ISTING TIERS I I 30% 20% 10% 0% % Bills % Use % Revs E]Tier 4:25+ 0 Tier 3: 17 - 24 hcf El Tier 2: 9 -16 hcf M Tier 1: 0 - 8 hcf "I 40% 30% 20% 10% 0% % Bills % Use % Revs 0 Tier 4, 16+ D Tier 3: 9 -16 hcf 13 Tier 2: 5 - 8 hcf M Tier 1: 0 - 4 hcf W, 2 ,r �.�WIN 011,41 8-1111l'll k UtilitiesUtilities In the Right Of Way Increases the Cost of Street Maintenance * Similar To Garbage Franchise Operations & Gas and Electrio Which Commonly Pay a Franchise Fee * Recognized by Other Cities, e.g. Santa Rosa & Roseville Costs and Water & Sewer Utilities Operations e StreetSaver TM Pavement Management Program Used to Estimate Maintenance # and "` •,., ..►4 58% to Water & 42% to Sewer Prorated Based on Trench Lengths 2% Impact on Typical Utility Bill, about $2.58 per month 9111 appurtenances.* Cutting, removal, and patching of pavement, base and sub -base to install, repair, or replace pipe and surrounding,* Reflective cracking through the pavement section caused by differential settlement of engineered backfill within the pipe trench section as compared to the undisturbedsoil. * "Potholing" or other positive pipe location techniques that cause penetration of the pavement section for the purpose of obtaining the precise locations. Structural weakening of the subsoil supporting the pavement section due to saturation caused by a leak in i pipe. Emergency repairs due to pipe failure or leaks. Operation of utility maintenance vehicles'on City streets. Typical Factors In ! !, ..,;o Operational Reserve, typically 3 to 6 months * Rate Stabilization Reserve, currently existing in Sewer Fund * Funding of Following Year's CIP, typically satisfies Bond Coverage Requirements Targets Used 'in Fiscal Projections WaterEnterprise: Ius $4 Million for Following Year's CIP Ranges , ! !1DX V Water Fund Balance belowy dip Target r to Large CIP expenditures Sewer Enterprise: 3 -months O&M Plus $8 Million for Following Year's CIP Plus Rate Stabilization Reserve. Ranges i $12.2 Million not including ab o W AUTOMATIC ADJUSTMENTS RATE o Have worked well in the past Required to be ReviewedEvery 5 -Years * Sewer: CPI plus 1.5% (2% minimum) Water: CPI plus - hru of SCWA Wholesaler Rates Adjustments Happen Twice per Year ► �„ ,,. NOTE Maintain CPI Adjustment ro int in SCWA Pass-Thru Adjustment, Simplify Formula Establish Additional "above I" increase it necessary Adjust Once per Year At Beginning of Fiscal Year m Rates:Sonoma County Water Agency Wholesale Water Petaluma Aquaduct J • A r R 62 1 s o 68 A $150 39 1 A m 30 49f 6V W 1.17 z 0.970-99 o 99 C $1.00 - _OM 10.76 10 years (2006-2016). EffectiveRates &I I " , , 0 1 � � �Jf'M' r Finalize Rate Analysis Based on Policy Input Second Workshop: Findings & Recommendations ,n Evaluate "Drivers" to Potential :., CIP, Water Recycling, NBWRA, GSA, 13213, etc. Evaluate cit nti l Impacts on Customer Classes December- January Timeframe Present i i =aProp 218 Processincluding lic Notificati Council Rate Resolutionr Adoption New Rates In PlaceI 1, 2017 Auto Adjustment Each Year Thereafter f r 5 Years New Rate to y Required beforeJuly 2023 Adjustment M M nt c"ll"m �i