ELK GROVE WATER DISTRICT

Community Workshop May 30, 2013

2013 Water Rate Study and Proposed Multi-Year Water Rate Adjustments

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Review the 2013 Water Rate Study and the proposed multi-year adjustments, and

Answer questions.

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Meeting Purpose

The Elk Grove Water District (District) periodically reviews its water rates to ensure coverage of its operational, debt service and capital expenses.

The last water rate study was adopted in April, 2007.

On November 14, 2011, Staff issued a Request for Proposals for a water rate services study to determine the District’s revenue and expenditure needs for the next five fiscal years.

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Background

FY 2007-08 32% (implemented) FY 2008-09 20% (implemented) FY 2009-10 15% (12% implemented) FY 2010-11 3% (not implemented) FY 2011-12 3% (not implemented) FY 2012-13 0%

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Background

Staff accepted proposals from the following four firms on November 28, 2011:

◦ FCS Group◦ HDR Engineering, Inc.◦ Raftelis Financial Consultants, Inc.◦ Willdan Financial Services

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Background

On January 25, 2012, the Board authorized the General Manager to execute a contract with Willdan to conduct a water rate study to determine the future water rates needed to meet the District’s needs over the next five fiscal years. The study incorporates three main elements:

◦ Revenue requirement analysis, ◦ Rate design and its impact to customers, and ◦ An Assembly Bill 1600 nexus study for establishing the

new connection fees.

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Background

This rate study has six phases:

◦ Phase 1: Data Collection◦ Phase 2: Revenue Requirement Analysis◦ Phase 3: Cost of Service Analysis◦ Phase 4: Rate Design◦ Phase 5: Connection Fees◦ Phase 6: Study Recommendations and

Presentation◦ Phase 7: Proposition 218 Procedural Requirements

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Water Rate Study

Willdan met with Staff in April 2012 to review the District’s current Budget (Fiscal Year 2011-12) and review components of the Draft FY 2012-13 Budget.

In May 2012, Willdan presented the first look at the revenue requirements to the Finance Committee of the Board of Directors.

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Water Rate Study

In June 2012, Willdan presented multiple scenarios that reflected a calendar year fiscal year implementation dates and various options for refunding the District’s existing debt obligations.

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Public Meetings

In August 2012, the first meeting was held of the Community Advisory Committee (CAC). The CAC is a committee of citizens, who reside within the Elk Grove Water District service area, formed to review the development of the water rate study and provide input to the Board of Directors.

Willdan presented the various revenue requirements and fixed/variable percentages to the CAC.

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Public Meetings

In September 2012, Willdan presented to both the CAC and the Finance Committee the following:

◦ Refined fixed/variable options◦ Public and Private Fire Line allocations◦ Preliminary Rates◦ 2-tiered and 3-tiered residential rates

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Public Meetings

The water rate study was thorough and included many fundamental components.

After discussions with the Board and the CAC, Staff recommended that the process be slowed down to give the parties involved time to understand the various elements.

It was also decided to have additional public meetings to ensure that the District was providing transparency in this process.

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Public Meetings

Meetings resumed in November 2012

Adjustments were made to the rate design

◦ Refinement to fixed/variable (i.e. revenue collected from monthly meter charge versus water consumption)

◦ Customer Classes Residential Non-Residential Irrigation

◦ Private Fire Protection

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Public Meetings

In addition, the presentations in November discussed possible multi-family accounts as a separate customer class. (Currently not possible due to lack of unit data for each complex.)

A revised timeline was set to reflect a possible July, 2013 implementation.

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Public Meetings

In December, 2012 Staff recommended a contract revision to expand the scope of work for Willdan in the following areas:

◦ Revenue requirements◦ Cost of service analysis◦ Rate design analysis◦ Public meetings and presentations

Willdan was requested to collect additional data reflecting the summer water usage of 2012 to update the model with more current data.

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Public Meetings

Willdan presented an updated water rate structure that reflected the following additional information:

◦ Updated consumption numbers (CY 2012)◦ Revenue check◦ Adjustments for all accounts being metered by April

2014◦ Updated reserve balances per audited financial

statements◦ Revised rates◦ Impacts to customers based on new rates◦ Revised implementation date of January 2014

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Public Meetings

Revenue adjustments to begin January 2014 with increases as follows:

◦ January 2014 – 3%◦ January 2015 – 3%◦ January 2016 – 3%◦ January 2017 – 4%◦ January 2018 – 5%

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Revenue Requirements

The District has done the following to contain expenditures during the last two fiscal years: 

◦ Frozen three positions Operations Manager Utility Billing Specialist Water Distribution Operator

◦ Employee Cost Control Program Employee’s contribution of 6% towards retirement by FY

2013-14 Capping of health benefits costs for current employees and

future retirees

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Cost Cutting Measures

Debt Service $3,680,913 Salaries and Benefits$3,553,485 Purchased Water $2,895,481 Capital Improvements Five Year Program $9,214,000

Adjustments are to keep up with inflation, andto help fund the capital projects

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Significant Costs (Current Budget)

Fixed revenue◦ Costs either apportioned over accounts or based on meter size.

Billing costs are shared equally per account Capital improvement costs are allocated according to meter size

Variable revenue◦ Costs equitably allocated between customer classes based on

demand Total water usage Peak demand placed on utility system

Customer Classes◦ Residential◦ Non – Residential◦ Irrigation

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Rate Structure Components

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Proposed Meter Chargesfor January 2014

January 1, 2014 Existing Difference

59.23 56.53 2.70$

83.37 73.48 9.89$

112.34 118.71 (6.37)$

179.93 446.56 (266.63)$

276.49 565.29 (288.80)$

517.89 847.93 (330.04)$

807.57 1,170.14 (362.57)$

1,145.53 -

Meter Charge

6"

8"

4"

10"

1.5"

2"

3"

1"

Existing Structure◦ Tier 1=$1.46◦ Tier 2=$1.80

Proposed Residential◦ Tier 1=$1.39◦ Tier 2=$2.76

Proposed Non-Residential◦ $1.57

Proposed Irrigation◦ $1.70

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Proposed Variable Rates for January 2014

Existing Structure◦ $78.30 per month

Proposed Residential◦ $70.22 per month

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Proposed Flat Rate for January 2014

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Five Year Schedule – Monthly Meter Charges

January 1, 2014 January 1, 2015 January 1, 2016 January 1, 2017 January 1, 201859.23 61.01 62.84 65.04 67.98 83.37 85.87 88.45 91.55 95.68

112.34 115.71 119.18 123.36 128.93 179.93 185.33 190.89 197.59 206.50 276.49 284.79 293.33 303.62 317.31 517.89 533.43 549.43 568.70 594.35 807.57 831.80 856.75 886.80 926.80

1,145.53 1,179.90 1,215.29 1,257.92 1,314.65

6"8"

10"

4"

Meter Charge1"

1.5"2"3"

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Five Year Schedule – Variable Rates Commodity Charge January 1, 2014 January 1, 2015 January 1, 2016 January 1, 2017 January 1, 2018

Residential MeteredTiered

Tier 1 0 - 30 1.39$ 1.44$ 1.48$ 1.53$ 1.60$ Tier 2 30.01 + 2.76 2.85 2.93 3.04 3.17

Non-ResidentialUniform 1.57 1.62 1.67 1.73 1.80

IrrigationUniform 1.70 1.75 1.80 1.87 1.95

Residential FlatMonthly Charge 70.22 72.00 73.83 76.03 78.96

Tier (HCF)

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Five Year Private Fire Line Charges

FYE 2014 FYE 2015 FYE 2016 FYE 2017 FYE 2018

(Connection Size, inches)Demand

Factor2" 6.19 2.71 2.79 2.88 2.98 3.11 3" 17.98 7.87 8.11 8.35 8.64 9.03 4" 38.32 16.78 17.28 17.80 18.42 19.25 6" 111.31 48.73 50.19 51.70 53.51 55.92 8" 237.21 103.85 106.96 110.17 114.03 119.18 9" 323.34

10" 426.58 186.75 192.35 198.12 205.07 214.32 11" 548.1012" 689.04 301.65 310.70 320.02 331.25 346.19

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Bill Calculator

2013 Water Rate Study Report Meeting Agenda, Minutes and Presentations Bill Calculator Public Hearing and Protest Notice

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EGWD Website

Public Notices mailed on May 10, 2013

Public Hearing to adopt future water rates to be held on June 26, 2013 at 6:30 PM at the Cosumnes Community Service District Administration Building

8820 Elk Grove Boulevard

Written Protests can be submitted to the Board prior to the closing of the public hearing

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Proposition 218 Process

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Questions/Comments