HomeMy WebLinkAboutAgenda Packet - EVWD Board of Directors - 04/20/2010East Valley
Water District
SPECIAL MEETING
APRIL 20, 2010 - 8:00 AM
EAST VALLEY WATER DISTRICT
3654 HIGHLAND AVE #12, HIGHLAND, CA.
AGENDA
CALL TO ORDER
PLEDGE OF ALLEGIANCE
1. PUBLIC COMMENTS
2. Discussion and possible action regarding draft rate study & proposed rate adjustments
prepared by HDR Engineering
3. CLOSED SESSION
CONERENCE WITH LEGAL COUNSEL — ANTICIPATED LITIGATION
Significant exposure to litigation pursuant to Government Code Section 54956.9(b)
One potential Case
4. ANNOUNCMENT OF CLOSED SESSION ACTIONS
5. ADJOURN
Pursuant to Government Code Section 54954.2(a), any request for a disability - related modification or
accommodation, including auxiliary aids or services, that is sought in order to participate in the above
agendized public meeting should be directed to the District's Administrative Manager at (909) 885-
4900.
fal
Iechnica! h?ernorandum
DRAFT PRELIMINARY RATE ANALYSIS
East Valley Water District - Comprehensive
Water and Sewer Rate Study March 25, 2010
Prepared by: Stacy Costello, Financial Analyst
Reviewed by: Greg Clumpner, Project Manager
Introduction
HDR was retained by East Valley Water District (District) to prepare rate studies for the
District's water and sewer systems. As a part of this study, HDR evaluated current customer
classes and rate structures to improve the efficiency and equity of the rates, while focusing on
options that are most feasible and best meet the District's overall objectives. This includes
forecasting revenues and expenditures, developing net revenue requirements, performing a
cost -of- service rate analyses and recommending new rates. This technical memorandum (TM)
presents an overview of the preliminary results from the rate studies.
Sewer Rate Study
Cost of Service Sewer Rate Analysis
As background to this study, we note that any comprehensive sewer /water rate study typically
addresses three purposes: (l ) evaluating the overall financial requirements of the utility, (2)
analyzing the cost to serve each customer class and, finally (3) evaluating the appropriateness
of the rate structure. These three inter- related analyses are summarized in Figure 1.
Compares the sources offunds (revenues) to the expenses of
Revenue Requirement Analysis the utility to determine the overall sufficiency of current
rates and determine the future rate ad%usiments needed.
Allocates the revenue requirements to the various customer
Cost-of- Service Analysis classes of service in a 'fair and equitable" manner and
ensures rates meet Proposition 218 requirements.
Rate R Considers how fixed charges and volume -based rates are
Design Analysis designed to collect the target level of revenues.
Figure 1 - Overview of Rate Study Components
East valley Water Distnct t
Camrehennve Water and Sewer Rate Study March 25, 2010
falTcer"inical Mei7iorandum
This sewer rate analysis provides these three components. The most distinctive aspect of the
District's sewer rates is that they consist of separate rates for: (1) treatment- related services
provided by the City of San Bernardino (City). and (2) collection - related services provided by
the District. The City's rates are not set by the District, but instead are essentially a "pass_
through" to District sewer customers. Because of this, HDR's cost -of- service sewer rate
analysis only addresses collection - related costs provided by the District.' The proposed rates
were developed by evaluating specific cost -of- service components, including:
• Unit costs — The revenue requirements were "functional into customer service
costs and flow- related costs. Unit costs for these functions were determined based on
water consumption and the estimated effluent received at the City's treatment facility.
• Revenue requirements by customer class — The total collection- related revenue that
should be collected from each customer class was determined using the unit costs and
the total units, such as water use, number of accounts, or dwelling units, used by each
class.
® Fixed vs. variable costs and rates — The revenue requirements for each customer class
are collected through a combination of fixed monthly charges and variable rates,
although the revenue from single - family residential customers are rolled into a single
monthly flat rate. In contrast, commercial revenue requirements are collected through a
combination of fixed monthly charges and volume -based rate tied to their water
consumption.
The following sections summarize the results from the cost of service sewer rate analysis.
More detailed tables showing the step -by -step development of the analysis are provided in a
separate appendix and documented in a separate MS Excel -based rate model.
Revenue Requirements
In order to identify the District's long -term financial needs, 14DR has developed a ten -year
financial plan which forecasts sewer revenues and expenditures, including reserves. This plan
is based on current District budgets, discussions with District staff, and related information
such as debt service schedules.
In the District's case, revenue requirements are limited to the costs for the collection system,
including customer billing and administrative costs. This is because the City provides
wastewater treatment services and sets the rates for all treatment - related services. The City's
rates are a pass- through to their customers; the District just adds their collection - related rates to
the City's rates. The District's financial plan addresses three primary components:
' District collection costs in this case also include customer costs related to billing and administrative functions.
Therefore, the District allocates its "collection" costs to customers based on flow and customer costs.
' Sewer cost -of- service studies normally allocate costs based on flow, BOD, TSS and customer costs. The City's
rates cover all BOD and TSS - related costs, and are therefore, excluded from District collection - related rates.
2
East Vattey Water District March 25, 2010
Comprehensive Water and Sewer Rate Study
fal1Fchr,icaI Ihenior and urn
• Meeting Operations Costs — The sewer utility must generate enough revenue to cover
the expenses of sewer operations, including administration and accounting, collection
operations, and the wastewater treatment plant costs (the City's costs). For Fiscal Year
2010/2011, the net revenue requirement (total annual expenses, including debt service,
less non -rate revenues) is approximately $9.5 million for both treatment and collection,
and $3.6 million for collection only.
• Maintaining adequate bond coverage — The District's bond covenants require the
District to maintain a minimum debt service coverage ratio of 1.2, although the
District's policy is to have a coverage ratio in the range of 1.5 to 1.75.
• Sustaining Reserve Funds — The sewer utility should maintain separate Operating and
Repair and Replacement (R &R) Reserve Funds. The Operating Reserve functions as an
emergency reserve, a rate stabilization fund, and the source of working capital for
operations. Year -end surplus rate revenues are transferred into the operating fund;
operating funds in excess of the target fund reserve are transferred into the R &R
reserve. Although good management practice is to keep a minimum balance of 25% of
the operating budget, the District has been advised to strive for a minimum of 6- months
(50 %) operating costs.
The District is currently updating its sewer master plan, but is aware that the sewer system will
need significant repairs and replacement over the next 10 years. Current District estimates are
about $15 million. Because of this, the District would like to start funding approximately $1.5
million per year for these costs. Therefore, HDR has include this amount is the financial plan.
Sewer Exhibit 1 presents a summary of this ten -year financial plan, showing revenue
requirements, revenue sources (including rate revenue), and necessary rate increases.
Based on the forecasts shown in Exhibit 1, the District would need a rate increase of
approximately 35p3 in order to fund $1.5 million in repair and replacement costs in FY' 10 -11
and not run a deficit in the Sewer Fund reserves. Unfortunately, this 35% would not fully meet
the District's financial criteria for the sewer fund. That is, it would take a larger rate increase of
approximately 45% to fully fund the operating reserve plus $1.5 million in repair and
replacement costs in FY' 10 -1 1. If a 45% initial rate increase is not feasible, the District could
adopt sewer rate increases of 35 %, 15 %, and 5% for FY' 10 -11 through FY' 12 -13, followed by
and then 2% each year for the remainder of the 10 -year planning period.
' These rate increases only refer to District collection- system related costs, not the City of San Bernardino rates.
East Valley Water District 3
Comprehensive Water and Sewer Rate Study March 15, 2010
Fal TechricE! io,emoiandum
4
East valley Water 0rstdct March 25, 2010
Comprehensive Water and Sewer Rate Study
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East valley Water 0rstdct March 25, 2010
Comprehensive Water and Sewer Rate Study
fl
)'ec nic, l Memorandum
Comparison of Current and Proposed Sewer Rate Structures
The District currently combines the City's rates for treatment with the District's rates for
collection services. It also adds a surcharge for customers east of Boulder Avenue to reimburse
the City for costs related to a sewer interceptor serving this area. The "east of Boulder"
customers are primarily single - family customers, who will continue to pay this surcharge.
The figures in this section show a comparison of the current and proposed rate structures for
each customer class (single- family, multi- family, and commercial customers). Projected rates
after FY'l0 -I1 assume across - the -board rate increases based on the recommended increases
each year, as presented in Exhibit 1. A summary of the preliminary recommended sewer rates
resulting from the cost of service rate analysis is provided in Figure 2.
Single Family Residential
The District currently charges a monthly flat rate of $10.84 per Single Family Residential
(SFR) account, plus the treatment charge from the City of $15.25 for a total charge of $26.09
for customers on the West side of Boulder Avenue. HDR recommends a fixed monthly sewer
charge of $31.36, of which $15.36 is for the collection system, for all SFR customers. The
basis of the proposed charge is an assumed average monthly consumption of approximately 14
hcf of water per SFR customer.' Figure 3 shows the projected single- family monthly bills.
This is the consumption indicated by sewer utility records. Water utility records indicate a consumption of about
23 hcf /month for single- family and 10 for multi - family.
Cast vauey water District 5
Canprehensive water and Sewer Rate StWy March 25. 2010
�-
_..,.
Flat -Rate Customers
(S/accfAna.)
(SAlefi
(saeccbYno)
("cf/
(SACCIRno.)
("c0
($/accthno)
($Mcq
Single Family Residential
$26.09
-
$15.36
--
$16.00
--
$31.36
--
Volume -Based Customers
Multiple Family Residential
$2.10
$1.42
$5.40
$0.72
$2.00
$0.95
$7.40
$1.67
Commercial
School, Church
$2.10
$1.20
$5.40
$0.72
$2.00
$0.70
$7.40
$1.42
Hospital
$2.10
$1.43
$5.40
$0.72
$2.00
$0.95
$7.40
$1.67
Goemment
$2.10
$1.94
$5.40
$0.72
$200
$1.50
$7.40
$2.22
Auto Repair
$2.10
$1.78
$5.40
$072
$2.00
$1.30
$7.40
$2.02
Car Wash
$2.10
$1.78
$5.40
$0.72
$2.00
$1.30
$7.40
$2.02
Laundromat
$2.10
$1.76
$5.40
$072
$2.00
$1.30
$7.40
$2.02
Dry Cleaners
$2.10
$2.34
$5.40
$0.72
$2.00
$1.90
$7.40
$2.62
Offices . Motels
$2.10
$1.94
$5.40
$0.72
$2.00
$1.50
$7.40
$2.22
Retail
$2.10
$2.34
$5.40
$072
$2.00
$1.90
$7.40
$2.62
Hotel with Restaurant
$2.10
$2.0
$5.40
$032
$2.00
$2.00
$7.40
$2.72
Restaurant
1 $2.10
$2.48
1 $5.40
$0.72
1 $2.00
$2.00
1 $7.40
$2.72
' Rates shown are for Westo /Boulder Ave " Rates for
"East o /Boulder Ave "are $2 00hno higher for single -family and
$009100forcommemial
Figure 2 - Summary of Current
and Proposed
Sewer Rates
Single Family Residential
The District currently charges a monthly flat rate of $10.84 per Single Family Residential
(SFR) account, plus the treatment charge from the City of $15.25 for a total charge of $26.09
for customers on the West side of Boulder Avenue. HDR recommends a fixed monthly sewer
charge of $31.36, of which $15.36 is for the collection system, for all SFR customers. The
basis of the proposed charge is an assumed average monthly consumption of approximately 14
hcf of water per SFR customer.' Figure 3 shows the projected single- family monthly bills.
This is the consumption indicated by sewer utility records. Water utility records indicate a consumption of about
23 hcf /month for single- family and 10 for multi - family.
Cast vauey water District 5
Canprehensive water and Sewer Rate StWy March 25. 2010
lq
7�e,a,rica! H�errarersdflm
— Monthly Sewer Bill Comparison - Single - Family Customers
$40 $37.87
$36.07
$35
$31.36
$30
= $26.09
$25
a
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$15
$10
$5 !I
I
■Current(Westof Boulder Ave.) o Proposed 2010111 o Proposed 2011112 ❑Proposed 2012113
Figure 3 - Monthly Sewer Bill Comparison for SFR customers
Multi - Family Sewer Customers
The District bills multi - family residential customers fixed monthly charge of $2.10 per account
plus $1.42 per hcf of water use. which includes the City's charges for treatment services of
$0.87/hcf. These are the rates for customers west of Boulder Avenue.' HDR proposes to charge
fixed customer cost of $7.40 per month per account plus a variable charge of $1.67/hcf based
on water consumption.
Figure 4 shows the projected multi - family monthly bills. This figure is based an average
apartment complex of 21 units and the average water consumption of 10 hcf /month per
apartment unit.
S Multi - family customers east of Boulder Avenue are charged an additional $0.09/hcf.
6
East Valley Water DisMIt March 25, 2010
Comprehensive Water and Sewer Rate Sway
lq
Iechnicfl memorandum
Figure 4 - Monthly Sewer Sill Comparison for MFR Users
Commercial Sewer Customers
The District currently bills commercial customers a fixed monthly charge of $2.10 per account
plus a volume -based charge ranging from $1.20 to $2.48/hcf for customers west of Boulder
Avenue, which include the City's treatment - related rates ranging from $0.65 to $1.93 /hcf.
Commercial customers east of Boulder have a surcharge of $0.09 /hcf. HDR proposes to charge
fixed customer cost of $7.40 per month plus a variable charge ranging from $1.42 to $2.72 /hcf.
Current and proposed commercial sewer rates were previously summarized in Figure 2. Current
and projected monthly sewer bills for restaurants are shown in Figure 5.
East Valley Water District 7
Cornprehensive Water and Sewer Rate Study March 25, 2010
Monthly Sewer Bill Comparison - Multi - Family Accounts
$1.000
- - - -
-- --
-- ,
N
$900
m
<�I
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..-
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$200
O 1\ <
t
$100
$0
50 100 150 200
250 300
350
400
Water Consumption (cd)
Current'West of Boulder Ave.)
i Proposed 2010/11
❑ Proposed 2011/12
❑ Proposed 2012/13
Figure 4 - Monthly Sewer Sill Comparison for MFR Users
Commercial Sewer Customers
The District currently bills commercial customers a fixed monthly charge of $2.10 per account
plus a volume -based charge ranging from $1.20 to $2.48/hcf for customers west of Boulder
Avenue, which include the City's treatment - related rates ranging from $0.65 to $1.93 /hcf.
Commercial customers east of Boulder have a surcharge of $0.09 /hcf. HDR proposes to charge
fixed customer cost of $7.40 per month plus a variable charge ranging from $1.42 to $2.72 /hcf.
Current and proposed commercial sewer rates were previously summarized in Figure 2. Current
and projected monthly sewer bills for restaurants are shown in Figure 5.
East Valley Water District 7
Cornprehensive Water and Sewer Rate Study March 25, 2010
I Ll
$6501 -
$600 1I
1 $550 i
$Soo 1
= $450 1
m
y $400 JI
Or
r $350 i
m $300 1
t°. $250
u
W $200
i $150 .
$100 1
$50 al
$0 4i
Tech -oics" Ftb�nleranaum
Monthly Sewer Bill Comparison- Restuarants
20 40 60 SO 100 120 140 160
Water Consumption (Off)
I ■Currem(West of OOUltler Ave( ■Proposed 2030/11
i ❑ Proposed 2011/12 ❑ Proposed 2012/13
Figure 5 - Monthly Sewer Bill Comparison for Restaurant Accounts
Water Rate Study
Cost of Service Water Rate Analysis
As previously discussed in the Sewer Rate Analysis, a comprehensive rate study is typically
used for three purposes: (1) to evaluate the overall financial requirements of the utility, (2) to
analyze the cost to serve each customer class and, finally, (3) to evaluate the appropriateness of
the rate structure.
Although this water rate analysis provides these three components, unlike sewer rates the actual
design of the water rates incorporated a number of additional factors, such as an overall rate
philosophy that emphasizes revenue stability, equity among different types of customers, and a
greater level of water conservation.
We have develop this cost -of- service rate using the District's current rate structure as well as an
alternative rate structure for single- family customers consisting of three consumption tiers.
Both the adjusted current rate structure and the three - tiered structure were determined based on
industry standards and cost -of- service principles. The following are some of the basic
components included in this analysis:
8
East valley Water District
Comprehensive Water and Sewer Rate Study Mann 25, ]010
1Lq i'echrricel idierriorandum
® Unit costs — The water revenue requirements were "functionalized" into three
categories including (1) customer service costs, (2) fixed capacity costs, and (3) variable
(or volume- based) costs. Unit costs for each of these functions were determined based
on allocations to functional areas, water consumption, and number of accounts by meter
size and customer class.
® Revenue requirements by customer class — The total revenue that should be collected
from each customer class was determined using the unit costs and the total units that
each class uses. For example, customer costs are allocated based on number of
accounts, while volume - related costs are allocated based on the water consumption for
each class by meter size.
® Fixed vs. variable costs and rates — The revenue requirements for each customer class
are collected through a combination of fixed monthly charges and variable rates. Fixed
costs, such as customer service, billing, and general administrative costs are typically
collected through a fixed monthly charge, while pumping costs and water supply are
typically collected through volume charges. However, the overall percentage allocation
to fixed and variable is also reflect overall conservation objectives: more aggressive
water conservation goals would dictate a higher percentage of costs allocated to variable
(volume- based) charges.
The overall methodologies used in this analysis follow generally accepted industry standards
and methodologies (i.e., Water Environment Federation [WEE]) and equitably allocate the
District's costs to the various functional categories related to the water utility (e.g., customer
costs, fixed costs, and variable costs). The fixed and volume -based charges were calculated
based on the net revenue requirements, the number of customer accounts, water consumption,
and other information provided by the District.
A summary of the preliminary recommended water rates resulting from the cost of service rate
analysis is provided in Figure 6.
The California Urban Water Conservation Council recommends setting single-family volume -based rates so as to
recover about 70 percent of rate revenue through these charges. This is a guideline, and water utilities generally
develop their own policy and set this percentage based on their conservation objectives.
East Valley Water District 9
Comprehensive Water and Sewer Rate Study March 25, 2010
llTechrlical 44eo1)arandurt
Monthly Meter Charges (Fixed)
5 /8" Meter
$10.45
$1090
4%
3/4" Meter
$10.45
$1090
4%
1" Meter
$14.63
$1191
-5%
1 112" Meter
$18.81
$21 36
14%
2" Meter
$3030
$4234
40%
3" Meter
$11494
$73.78
-36%
4" Meter
$146.29
$118.70
-19%
6" Meter
$219.44
$231.00
5%
8" Meter
$303.04
$365.75
21%
Volume Charge
1.35 $1.54 14%
Per hcf
Alternative Single - Family Residential Volume Charges
Tier 1 breakpoint 15 $ 1.35 $ 1 34 -1%
Tier 2 breakpoint 34 NA $ 1.68 24%
Tier 3 breakpoint NA NA $ 2 10 56%
Figure 6 - Summary of Current and Proposed Water Rates
Revenue Requirements
The District has a number of regulatory- driven capital improvement projects that will need to
be funded over the next 10 years. This has increased the District's projected revenue
requirements. Additionally, the District's financial advisors have recommended the District
maintain an operating reserve of about 50 percent (six months) of annual operating expenses.
Water Exhibit 1 presents a summary of the proposed water utility 10 -year financial plan and
shows revenue requirements, the introduction of a rate stabilization fund, revenue sources, and
proposed rate increases.
10
East Valley Water Distract Merch 25, 2010
Comprehensive Water and Sewer Rate Study
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East valley Water 0®tnct
Comprehensive Water and Sewer Rate Shay
SchnicaI ;V emorandum
>>
March 25, 2010
fl7ecr;n 1c.Fr f✓en,arandurit
As described in the Sewer Revenue Requirements (page 1), rate increases are governed by
meeting operations costs, maintaining adequate debt coverage, and building reserve funds. The
current state of the District's water utility, with regards to these objectives, is as follows:
• Meeting Operations Costs — For Fiscal Year 2010/2011, the net revenue requirement
(total annual expenses, including debt service, less non -rate revenues) is estimated to be
approximately $17.3 million. This includes rate - funded increase of $2 million for capital
improvement projects.
• Maintaining adequate bond coverage - The District is legally required to maintain a
debt service coverage ratio of at least 1.20. To be conservative, it is normally
recommended to have a coverage ratio of at least 1.40, and the District's financial
advisors have recommended a target coverage ratio of at least 1.50. Neglecting to
implement a rate increase in FY' 10 -11 will result in a ratio of only 0.53.
O Sustaining Reserve Funds — Because of the increasing volatility of consumption -based
rate revenue, the District should establish a Rate Stabilization in addition to Operating
and Capital Improvement Reserve Funds. Good management practice is to keep
approximately 15% of anticipated rate revenue in the Rate Stabilization Fund. Surplus
revenue from operations will be transferred to /from the Operating Reserve, which the
District's policy is to try to maintain a balance of at least 50% of operating expenses.
In light of these requirements and recommended practices, HDR proposes the District adopt an
overall increase in the water rate revenue of 15% for FY' 10 -11 followed by increases of 10 %,
4 %, 2% and 2 %. Although the plan currently shows no rate increases would be needed in the
remaining years in the 10 -year plan, HDR would advise the District to reassess these
projections over the next few years.
Comparison of Current and Proposed Water Rate Structures
All metered accounts, regardless of customer class, are charged a fixed rate based on meter
size, plus a variable rate based on water consumption, as previously shown in Figure 6.
The process of designing cost -of- service water rate provides the opportunity to incorporate a
number of bigger - picture objectives and policies. These might include revenue stability, equity
among customer classes, and water conservation. However, this rate structure design process
should consider and reflect the District's water consumption patterns. Figure 7 summarizes the
most recent consumption data for the District by customer class, while Figure 8 compares the
total annual consumption by customer class.
East Valley Water D,tnct 12
Comprehensive Water and Sewer Rate Study March 25, 2010
MR
Rcm(1ential
A 1.JI ")r Icidi
L;lulb -f aRiilp
Irrigation
Figure 7- Water Consumption by Customer Class
P echrickl hitemorandum
Figure 8 - Percent of Water Consumption by Customer Class
These two figures illustrate importance of the District's single- family customers in terms of
total number of customers, total revenue, and indicate that most water system facilities are used
in serving single - family customers. They also illustrate that single - family customers have
significant summer -time peaking requirements compared to the other customer classes. We
have reflected these factors in this cost -of- service analysis, particularly in the alternative three -
tiered rate structure for single - family customers.
East Valley Water District
Canprehensive Water and Sewer Rate Study
13
March 15, 2010
L'1� lec';n;ar rt'rerrrara io�rrr
The following figures show a comparison of the current and proposed rate structures for each
customer class. Projected rates after FY' 10 -11 assume an across - the -board rate increase based
on the recommended percent increases each year, as shown in Water Exhibit 1 .
Single Family Residential Customers
The District currently charges single - family customers a monthly fixed charge ranging from
$10.45 to $14.63, depending on meter size' Current volume charges are $1.35 /hcf for all
customers, including single- family.
Current and proposed single - family water rates were summarized above in Figure 6. We have
developed two rate structure alternatives for the District to consider. These alternatives are (1)
updating the District's current uniform (single -tier) rate structure, or (2) adopting three -tier rate
structure. The pros and cons of these two alternatives are:
LCurrent Uniform Rate Structure — Provides more rate stability, is easier to administer
and understand, but puts a lower priority on water conservation.
2.Three -Tier Rate Structure — Provides greater water conservation and can result in
lower operating costs in the long -run, but requires a change in billing procedures, will
need to be explained to customers and, since revenue is tied more closely with water
consumption, can increase revenue instability in the short -ruts.
Overall, reducing both peak water consumption and total annual water use can reduce District
operating costs by decreasing pumping costs, replacement costs, and delaying or avoiding
capacity- related improvements. In general, 14DR would recommend the more conservation -
oriented approach imbedded in the three -tier rate structure, particularly in light of increasing
emphasis on reducing per capita consumption." Figure 9 compares the current, proposed and
projected single- family monthly bills for the current single -tier rate structure, while Figure 10
compares current bills with new single -tier and three -tier rate structures.
' $10.45 is for a 5/8 or 3/4 -inch meter, while $14.63 is for a 1 -inch meter. There are also a small number of larger
single - family meters with higher charges.
' State Law (_ _) requires urban water utilities to reduce average per capita consumption by 20 percent by 2020.
14
East Valley Water Dr,mtt
Comprehensive Water and Sewer Rate Study March T5. 2010
lq
1echnicai hliemoiantium
Figure 9 - Monthly Water Bill Comparison for SFR Customers (Single -Tier)
Comparison of SFR Alternative Monthly Water BiIIs (314" meter) N
$120 . , ._ ' – –' -- -- -- —' ' - -- ------ - - - - -' - -o _
o_
$110 ■ Present 2009/10 Bill A w
$100 ■ Proposed Single Tier 2010/11 Bill o o w
m
$90 ❑Proposed 3 -Tier 2010/11 Bill O m w w
N w
$80 m m n
o w
Me $70 n
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o e! o
$40 r
$30
°m °m $20 0 w w
$30
$0
0 15 25 35
Water Consumption hcf
Figure 10 - Monthly Water Bill Comparison for SFR Customers (3- Tiers)
East Valley Water District
Comprehensive Water and Sewer Rate StWy
15
March 25, 2010
Monthly Water Bill Comparison for SFR Users (314" meter)
g
m m
$120
v °
$ll0
■ Present 2009/10 Bill
o y
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■Proposed Single -Tier 2010/116111
T �
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C Proposed 2011/12 Bill v
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13 Proposed 2012/13 Bill
^
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Water Consumption hcf
Figure 9 - Monthly Water Bill Comparison for SFR Customers (Single -Tier)
Comparison of SFR Alternative Monthly Water BiIIs (314" meter) N
$120 . , ._ ' – –' -- -- -- —' ' - -- ------ - - - - -' - -o _
o_
$110 ■ Present 2009/10 Bill A w
$100 ■ Proposed Single Tier 2010/11 Bill o o w
m
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N w
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$40 r
$30
°m °m $20 0 w w
$30
$0
0 15 25 35
Water Consumption hcf
Figure 10 - Monthly Water Bill Comparison for SFR Customers (3- Tiers)
East Valley Water District
Comprehensive Water and Sewer Rate StWy
15
March 25, 2010
f-
Tcchr.icat flicmcra'ndulri
Multi - Family Residential Customers
The District currently charges multi- family customers the same as commercial customers. That
is, there is a fixed monthly charge based on meter size plus a volume -based rate of $1.35/hcf.
Figure 11 compares current and proposed monthly bills for multi - family customers, assuming
the average number of apartments (21 units) in the account. Average multi - family water use is
about 10 hcf /month, so typical water consumption for a 21 -unit apartment complex would be
about 210 hcf /month.
Figure 11 - Monthly Water Bill Comparison for MFR Accounts
Commercial
Commercial customers currently use the fixed monthly charges and volume -based rate of
$1.35/hef previously shown in Figure 6. Although commercial customers vary significantly by
type and level of consumption, Figure 12 compares current and proposed monthly bills for a
"typical commercial" customer having a 1 -inch meter and using an average of 35 hcf /month of
water.
16
East Valley Water DnInct March 15, 7010
Comprehensive Water and Sewer Rate Study
$600
Monthly Water Bill Comparison for MFR Users (1 "Meter)
N
■ Present 2009110 Bill
$500
q r°
•Proposed 2010111 Bill
°Proposed 2011/12 Bill
r
w:
❑Proposed 2012/13 Bill
m
N to
r
C
$300 -j
$
Or N r W
-
;
&<
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I
$200
a
$100
t
_
$0
v
{
100 150
200
250
300
Water Consumption hd
I—
Figure 11 - Monthly Water Bill Comparison for MFR Accounts
Commercial
Commercial customers currently use the fixed monthly charges and volume -based rate of
$1.35/hef previously shown in Figure 6. Although commercial customers vary significantly by
type and level of consumption, Figure 12 compares current and proposed monthly bills for a
"typical commercial" customer having a 1 -inch meter and using an average of 35 hcf /month of
water.
16
East Valley Water DnInct March 15, 7010
Comprehensive Water and Sewer Rate Study
fl
? hr,icai Merrrora no. um
Monthly Water Bill Comparison for Commercial Users (3/4 ''Meter),
$120 to _m..
o i
■ Present 2009/10 Bill w
e� w
$100 ❑ Proposed 2010/11 Bill on ° m
r� m r w
❑ Proposed 2011/12 Bill ed do
on
❑ Proposed 2012/13 Bill on N w
$80
iD
w w
w
r $60 N m w w w I
0 ,., r•'s ew �'
$QO
$20 r
$a
15 25 35 45 55
Water consumption hcf
Figure 12 - Monthly Water Bill Comparison for a Typical Commercial User
Next Steps
These results are, at this stage, preliminary and subject to change based on refinements of data and
review by District staff. We propose the next steps as a pathway to complete this analysis and
develop final recommendations:
® Review by District Staff — Once District staff has reviewed this technical memo, we
would like to discuss the analysis, recommendations, and reflect the District's input.
® Clarify Data Questions — As with any analysis relying not only on significant data of
various types (water consumption, customer accounts, budget data, etc.), but a number
of assumptions, there are likely adjustments needed, including clarifications to some
issues.
® Update the Analysis — Once we have received comments form District staff and
resolved any outstanding issues, we will update the analysis and provide a draft report.
O Provide Final Report — Based on the updated rate analysis and comments from District
staff on the draft report, HDR will finalize the analysis and provide the District with a
final written study that is intended to be presented the District Board and public.
East Valle/ Water pntnct 17
Comprehensive Water and Sewer Rate Study
March 25, 2010
The following pages were passed out at the March 13`h Board meeting.
WATER RATE STUDY— SUMMARY OF REVENUE REQUIREMENTS
Revenues
Proposed 3 years of rate Increases:
• 2010/11 — 15%
• 2011/12 — 10%
• 2012/13 —5%
Expenditures
Assumes inflationary rate of approximately 2%
Annual contribution from operations to Capital Projects - $2,000,000
Debt service includes Plant 134 loan, Plant 150 loan, and 2010 COP issue (schedule attached).
Reserves
Establishes a Rate Stabilization Reserve equal to 15% of revenue; funded very quickly:
• 2010/11 - $1,500,000
• 2011/12 - $1,000,000
• 2012/13 — $500,000
Operating Reserve substantially reaches target (50% of Oper. Expenses) in FY 2014/15
Replacement Reserve (CIP Reserve on schedule) quickly begins building in 2015 -16
Debt Service Coverage
Jumps to 1.93 in FY 2010/11. Lowest coverage is 1.72 in 2014/15 when debt service is highest.
Fildmann Rolapp suggested rating agencies will look for debt service coverage of between 1.5 and 1.75;
1.75 having a better chance of maintaining District's AA- rating.
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Water Rate
rr• Rates
Propose. d Rates
r
Total Fixed Monthly Charges'
5/8" Meter
$10.45
$10.90
4%
$11.99
10%
$12.58
5%
3/4" Meter
$10.45
$10.90
4%
$11.99
10%
$12.58
5%
1" Meter
$14.63
$13.91
-5%
$15.30
10%
$16.06
5%
1 1/2" Meter
$18.81
$21.36
14%
$23.50
10%
$24.67
5%
2" Meter
$30.30
$42.34
40%
$46.57
10%
$48.90
5%
3" Meter
$114.94
$73.78
-36%
$81.16
10%
$85.22
5%
4" Meter
$146.29
$118.70
-19%
$130.57
10•%
$137.10
5%
6" Meter
$219.44
$231.00
5%
$254.10
10%
$266.80
5%
8" Meter
$303.04
$365.75
21%
$402.33
10%
$422.45
5%
Volume Charge
Per hcf
$1.35
$1.57
16%
$1.73
10%
$1.81
5%
Alternative Single-Family Residential
Tier 1 0 to 15 hcf /mo.
Volume Charges
$1.35
$1.38
2%
$1.52
10•�
$1.59
5%
Tier 2 15+ to 34 hcf/mo.
NA
$1.72
27%
$1.89
10%
$1.99
5%
Tier 3 over 34 hcf/mo.
NA
$2.24
66%
$2.46
10%
$2.59
5%
1, FY'10 -11 Fixed Monthly Charges include customer charges of $6.40 plus capacity charge based on meter size
2. Adjusted from previous year by on across -the -board percent adjustment.
EAST VALLEY WATER DISTRICT
WATER RATE STUDY
EXHIBIT 1A
SUMMARY OF SOURCES & USES OF FUNDS
Sources of Funds
Water Revenues (Service Charges)
Miscellaneous Revenues
Total Revenues
Application of Funds (Operations)
Operations and Maintenance
Customer Accounts /Service
General and Administrative
Total Application of Funds
Net Debt Service
CIP from Rates
Capital Projects
Total CIP from Rates
$15,814,600 $15,814,600 $15,814,600 $15,893,673
663,500 767,740 767,982 769,077
$16,478,100 $16,582,340 $16,582,582 $16,662,750
$ 7,270,800 $ 7,563,400 $ 7,883,800 $ 8,485,900
461,250 466,500 475,200 487,400
4,991,950 4,920,400 4,998,100 5,092,5
$12,724,000 $12,950,300 $13,357,100 $14,065,800
$ 2,907,749 $ 3,105, 744 $ 3,306,069 $ 3,452,526
14( 8,900) 2,000,000 2,000,000 2,000,0
$ (148,900) $ 2,000,000 $ 2,000,000 $ 2,000,000
Total Revenue Requirements $15,482,849 $18,056,044 $18,663,169 $19,518,326
Surplus /(Deficiency) $ 995,251 $ (1,473,704) $ (2,080,587) $ (2,855,576)
As % of Rates (District /Collection System) 6.3% -9.3% -13.2% - 18.0.0
Source: Exhibit 1 -SUMMARY OF THE REVENUE REQUIREMENTS
SEWER RATE STUDY — SUMMARY OF REVENUE REQUIREMENTS
Revenues
Proposed 3 years of rate increases.
2010/11 —15%
• 2011/12 —10%
• 2012/13-5%
Expenditures
Assumes inflationary rate of approximately 2%
Annual contribution from operations to Capital Projects:
• 2010111 - $550,000
• 2011/12 - $1,050,000
• 2012/13 — $1,300,000 Thereafter
Debt service includes 2010 COP issue (schedule attached).
Reserves
Operating Reserve substantially reaches target (50% of Oper. Expenses) in FY 2016/17
Replacement Reserve (CIP Reserve on schedule) quickly begins building in 2016/17
Debt Service Coverage
Jumps to 3.91 in FY 2010/11. Continues to build throughout 10 year plan presented, reaching 7.00 in
2019/2020.
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' Rates shown are Poi "West of Boulder Ave - Rates for -East cf Boulder Ave 'am 12.00,m o. higher for single - family and $0.094?c/Por commercial
Proposed
1 11 through
Proposed Sewer
Rates
1
District Rates
(Colloct,0,1)
City Rates (Trcae,orit)
Fixed Mo.
F T.talmonth4y
Rate
wirrt■w
Flat -Rate Customers
($ /acct /mo.)
( &hcf)
($1acct.hno)
($Alct)
($1acct.1mo)
Flat -Rate Customers
(S/acctAno)
(Smcf)
(SracctAno)
($mco
($1accl1mo)
(S.hct)
($ /acctnno)
(Smcp
Single Family Residential
$26.09
-•
$14.53
--
$16.00
--
$30.53
•-
volume -Based Customers
$1.59
$6.52
$1.67
Commercial
Multiple Family Residential
$2.10
$1.42
$3.64
$0.50
$2.00
$0.95
$5.64
$1.45
Commercial
$5.64
$1.45
$6.21
$1.59
$6.52
$1.67
Gowmment
$5.64
School, Church
$2.10
$1.20
$3.64
$0.50
$2.00
$0.70
$5.64
$1.20
Hospital
$2.10
$1.43
$164
$0.50
$200
$095
$5.64
$1.45
Gaemment
$2.10
$1.94
$3.64
$0.50
$2.00
$1.50
$5.64
$2.00
Auto Repair
$2.10
$1.78
$164
$0.50
$2.00
$1.30
$5.64
$1.80
Car Wash
$2.10
$1.78
$3.64
$0.50
$2.00
$1.30
$5.64
$1.80
Laundromat
$2.10
$1.76
$3.64
$0.50
$2.00
$1.30
$5.64
$1.80
Dry Cleaners
$2.10
$2.34
$3.64
$0.50
$2.00
$1.90
$5.64
$2.40
Offices, Motels
$210
$1.94
$3.64
$0.50
$2.00
$1.50
$5.64
$2.00
Retail
$2.10
$2.34
$3.64
$0.50
$2.00
$1.90
$5.64
$2.40
Hotel with Restaurant
$2.10
$2.48
$364
$0.50
$2.00
$2.00
$5.64
$2.50
Restaurant
1 $2.10
$2.48
$3.64
$0.50
$2.00
$2.00
$5.64
$2.50
' Rates shown are Poi "West of Boulder Ave - Rates for -East cf Boulder Ave 'am 12.00,m o. higher for single - family and $0.094?c/Por commercial
I r_- .,.e...r,.ro,.. d.re. A "_ "Fncl n( Rnulrlor d,m "ra to am..1 200 /mo. hioher for single - family and$0.09hlcf forcommercial
Proposed
1 11 through
FY12-13
1
customer
Fixed Mo.
Volme-Based
Fixed Mo.
Flat -Rate Customers
($ /acct /mo.)
( &hcf)
($1acct.hno)
($Alct)
($1acct.1mo)
(Shia)
Single Family Residential
$30.53
$33.58
$35.26
Volume -Based Customers
Multiple Family Residential
$5.64
$1.45
$6.21
$1.59
$6.52
$1.67
Commercial
School, Church
$5.64
$1.20
$6.21
$1.32
$6.52
$1.39
Hospital
$5.64
$1.45
$6.21
$1.59
$6.52
$1.67
Gowmment
$5.64
$2.00
$6.21
$2.20
$6.52
$2.31
Auto Repair
$5.64
$1.80
$6.21
$1.98
$6.52
$2.08
Car Wash
$5.64
$1.80
$6.21
$1.98
$6.52
$2.08
Laundromat
$5.64
$1.80
$6.21
$1.98
$6.52
$2.08
Dry Cleaners
$5.64
$2.40
$6.21
$2.64
$6.52
$2.77
Offices, Motels
$5.64
$2.00
$6.21
$2.20
$6.52
$2.31
Retail
$5.64
$2.40
$6.21
$2.64
$6.52
$2.77
Hotel with Restaurant
$5.64
$2.50
$6.21
$2.75
$6.52
$2.89
Restaurant
$5.64
$2.50
$6.21
$2.75
1 $6.52
$2.89
I r_- .,.e...r,.ro,.. d.re. A "_ "Fncl n( Rnulrlor d,m "ra to am..1 200 /mo. hioher for single - family and$0.09hlcf forcommercial
EAST VALLEY WATER DISTRICT
SEWER RATE STUDY
EXHIBIT to
SUMMARY OF SOURCES 8 USES OF FUNDS
Sources of Funds
Collection Revenues (Semce Charges) $ 3,665,000 $ 3,665,000 $ 3,665,000 $ 3,683,325
Miscellaneous Revenues 217,000 211,120 211,241 212,035
Total Revenues $ 3,882,000 $ 3,876,120 $ 3,876,241 $ 3,895,360
Application of Funds (Operations)
Wastewater Collection System
Customer Accounts /Service
General and Administrative
Total Application of Funds
Net Debt Service
CIP from Rates
R &R Costs
Capital Projects
Total CIP from Rates
$ 523,100 $ 686,800 $ 696,600 $ 709,500
461,250
466,500
475,200
487,400
1,911,150
2,081,200
2,115,700
2,157,900
$ 2.895,500
$ 3,234,500
$ 3,287,500
$ 3,354,800
$ 469,593
$ 304,798
$ 331,218
$ 335,649
$ 300,000 $ 300,000 $ 550,000 $ 550,000
33y 250,000 500,000 750,000
$ 331,900 $ 550,000 $ 1,050,000 $ 1,300,000
Total Revenue Requirements $ 3,696,993 $ 4,089,298 $ 4,668,718 $ 4,990,449
Surplus /(Deficiency) $ 185,007 $ (213,178) $ (792,477) $(1,095,089)
As % of Rates (District/Co llection System) 5.0.01 -5.el. -21.6% -29.7%
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The following pages are the most recent updates from HDR received after
the Board meeting.
1. FY'10 -11 Fixed Monthly Charges include customer charges of $6.40 plus capacity charge based on meter size.
2. Adjusted from previous year by an across - the -board percent adjustment.
Wator Rate
11
Tile We rl N!0l
Proposed Sewer
Rates
1
_
1 t Rdt,?S
collclfirint
Total Fixed Monthly Charges'
... n)
Total Monthly
Rate
Flat -Rate Customers
($MCCtAno.)
(h?Ct
I
(E/accthno)
5/8" Meter
$10.45
$10.90
4%
$11.99
10%
$12.58
5%
3/4" Meter
$10.45
$10.90
4%
$11.99
10%
$12.58
5%
1" Meter
$14.63
$13.91
-5%
$15.30
10%
$16.06
5%
1 1/2" Meter
$18.81
$21.36
14%
$23.50
10%
$24.67
5%
2" Meter
$30.30
$42.34
40%
$46.57
10%
$48.90
5%
3" Meter
$114.94
$73.78
-36%
$81.16
10%
$85.22
5%
4" Meter
$146.29
$118.70
-19%
$130.57
10%
$137.10
5%
6" Meter
$219.44
$231.00
5%
$25410
10%
$266.80
5%
8" Meter
$303.04
$365.75
21%
$402.33
10%
$422.45
5%
Volume Charge
$2.00
$1.30
$5.64
$1.80
Car Wash
$2.10
$1.78
Per hcf
Single-Family
Residential Alternative
$1.35
$1.35
$1.57
$1.38
16%
2%
$1.73
$1.52
10%
10%
$1.81
$1.59
5%
5%
Tier 1 0 to 15 hcf1mo.
Tier 2 15+ to 34 hcf /mo.
NA
$1.72
27%
$1.89
10%
$1.99
5%
Tier 3 over 34 hcf/mo.
NA
$2.24
66%
$2.46
10%
$2.59
5%
1. FY'10 -11 Fixed Monthly Charges include customer charges of $6.40 plus capacity charge based on meter size.
2. Adjusted from previous year by an across - the -board percent adjustment.
Tile We rl N!0l
Proposed Sewer
Rates
_
1 t Rdt,?S
collclfirint
City RateslTleaj
... n)
Total Monthly
Rate
Flat -Rate Customers
($MCCtAno.)
(h?Ct
I
(E/accthno)
($ncco
(Mad 0)
($Amt)
(E/acct /ma)
Based
(Erpop
Single Family Residential
$26.09
$14.53
$1600
$30.53
Volume -Based Customers
Multiple Family Residential
$2.10
$1.42
$3.64
$0.50
$2.00
$0.95
$5.64
$1.45
Commercial
School. Church
$2.10
$1.20
$3.64
$0.50
$2.00
$0.70
$5.64
$1.20
Hospital
$2.10
$1.43
$3.64
$0.50
$2.00
$0.95
$5.64
$1.45
Goy mment
$2.10
$1.94
$3.64
$0.50
$2.00
$150
$5.64
$2.00
Auto Repair
$2.10
$1.78
$3.64
$050
$2.00
$1.30
$5.64
$1.80
Car Wash
$2.10
$1.78
$3.64
$0.50
$2.00
$130
$5.64
$1.80
Laundromat
$2.10
$1.76
$3.64
$0.50
$2.00
$1.30
$5.64
$1.80
Dry Cleaners
$2.10
$2.34
$3.64
$0.50
$2.00
$1.90
$5.64
$2.40
Offices, Motels
$2.10
$1.94
$3.64
$050
$2.00
$1.50
$5.64
$2.00
Retail
$2.10
$2.34
$364
$0.50
$2.00
$1.90
$5.64
$2.40
Hotel with Restaurant
$2.10
$2.48
$3.64
$0.50
$2.00
$2.00
$5.64
$2.50
Restaurant
$2.10
$2.48
$3.64
$0.50
$2.00
$2.00
$5.64
$2.50
' Rates shown are for Nest of Boulder Ave " Rates for "East or Boulder Ave "are $2 001mo. higher for single - Family and $O.Ogncc/torcommermal
a. Rates for 'West of Boulder Ave. " -- 'East of Boulder Ave." rate are $2.00 1mo. higher for single - family and $0.09Aicf for commercial
b. Proposed rates consist of current "City" rates plus previous year's "District" rates adjusted by the % rate increase (from Exhibit 1).
• ...
r
Customer Classes
Fixed Mo.
Volume-Based
Flat -Rate Customers
($/acctlmo.)
($nccf)
xed Mo.
($ /acct/mo.)
Volume-Base
($nccf)
($1accf.1mo.)
($nccl)
Single Family Residential
$30.53
$31.98
$32.78
Volume -Based Customers
Multiple Family Residential
$5.64
$1.45
$6.01
$1.50
$6.21
$1.53
Commercial
School, Church
$5.64
$1.20
$6.01
$1.25
$6.21
$1.28
Hospital
$5.64
$1.45
$6.01
$1.50
$6.21
$1.53
Government
$5.64
$2.00
$6.01
$2.05
$6.21
$2.08
Auto Repair
$5.64
$1.80
$6.01
$1.85
$6.21
$1.88
Car Wash
$5.64
$1.80
$6.01
$1.85
$6.21
$1.88
Laundromat
$5.64
$1.80
$6.01
$1.85
$6.21
$1.88
Dry Cleaners
$5.64
$2.40
$6.01
$2.45
$6.21
$2.48
Offices, Motels
$5.64
$2.00
$6.01
$2.05
$621
$2.08
Retail
$5.64
$2.40
$6.01
$2.45
$6.21
$2.48
Hotel with Restaurant
$5.64
$2.50
$6.01
$2.55
$6.21
$2.58
Restaurant
1 $5.64
$2.50
1 $6.01
$2.55
1 $6.21
$2.58
a. Rates for 'West of Boulder Ave. " -- 'East of Boulder Ave." rate are $2.00 1mo. higher for single - family and $0.09Aicf for commercial
b. Proposed rates consist of current "City" rates plus previous year's "District" rates adjusted by the % rate increase (from Exhibit 1).
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