Item 7 - Water Customer Bill CreditFebruary 4, 2020, Item #7
DATE:
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CONTACT:
SUBJECT:
Summary:
AGENDA RE PO RT City of Poway
February 4, 2020
Honorable Mayor and Members of the City Council
Aaron Beanan, Director of Finance -fa::,
Aaron Beanan, Director of Finance
(858) 668-4411 or abeanan@poway.org
Water Customer Bill Credit
CITY COUNCIL
On Friday Nov. 29, 2019, rainwater runoff entered the clearwell and discolored the water. As a result,
the State issued a precautionary boil water advisory on Saturday Nov. 30, 2019. Even though all State
certified lab tests showed there was no bacteria in the water and it met all health standards, residents
were advised to boil water and businesses had to close per the San Diego County Department of
Environmental Health. The precautionary boil water advisory was lifted on Friday Dec. 6, 2019. This
advisory event had a significant impact on the City of Poway community. As such, City Council directed
staff to calculate a one-time water fixed charge bill credit equal to 1 /8 of a customer's normal fixed
charge and explore the feasibility of calculating a one-time water commodity charge credit during the
period in which the precautionary boil water advisory was in effect. This report discusses the
magnitude and process for issuing one-time bill credits.
Recommended Action:
It is recommended that the City Council issue one-time fixed charge credits and one-time variable
charge credits , equal to 1 /8 of a water customer's applicable charges, to those customers who
experienced the precautionary boil water advisory event ("Event") in a total amount not to exceed
$420,000 using the General Fund's Extreme Events/Public Safety reserve per City Council direction at
the Dec. 17, 2019 council meeting,
Discussion:
On Friday Nov. 29, 2019, rainwater runoff entered the clearwell and discolored the water. As a result,
the State issued a precautionary boil water advisory on Saturday Nov. 30, 2019. Even though all State
certified lab tests showed there was no bacteria in the water and it met all health standards, residents
were advised to boil water and businesses had to close per the San Diego County Department of
Environmental Health. The precautionary boil water advisory was lifted on Friday Dec. 6, 2019.
This advisory had a significant impact on the City of Poway community. As such, City Council directed
staff to calculate a one-time water fixed charge bill credit equal to 1 /8 of a customer's normal fixed
charge and explore the feasibility of calculating a one-time water commodity charge credit during the
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February 4, 2020, Item #7
period in wh ich the precautionary boil water adv isory was in effect. The credit is equal to 1 /8 of the
app li cab le w ater charges because it represents the w ee k per iod customers were inconven ienced out
of their normal bi-monthly, or 8-week, bill cycle during the Event.
Bill Credit Analysi s
Staff analyzed the estimated costs associated with providing the bill credits. The cost associated with
providing a 1 /8 fixed charge bill credit based on each customer's meter size is estimated at just over
$86,000. The average fixed charge bill credit is $6.26 with the most common fixed charge bill credit
being $5.29, or 1 /8 of a ¾" meter's fixed charge of $42.28. This makes sense given residential
customers with a ¾" meter are the most common water customer type.
The estimated cost associated with providing a 1/8 commodity charge bill credit based on each
customer's bi -monthly bill covering the Event is approximately $323,000. The average commodity
charge bill credit is $23.43. There is a large range in the commodity charge bill credits because
customer usage varies a lot from customer to customer. The minimum commodity charge bill credit
is less than a dollar while the maximum is over $4,000. Customers receiving bill credits in excess of
$100 are typically large residential or non-residential customers.
The chart below shows the estimated distribution affixed plus commodity charge bill credits to water
customers .
Total Pr ecautionary Boil Water Adv i so r y Bi ll Cred it
7,000
6,189
6 ,000
~ 5,000
(lJ 4 ,386 E
0
~ 4,000 :::,
u -0 .... 3,000 (lJ
.0
E
:::, 1,821 z 2,000
I 899
1,000 I 448 -27 8 1
0-10 10 -20 20-50 50 -100 100 -500 500 -1,000 - 2,000 -3,000 -4 ,000 -
1,000 2,000 3,000 4,000 5,000
Bill Cred it ($)
As the chart shows, more than 10,500 water customers, or approximately 77%, will receive a bill credit
between $10 and $50 . Slightly more than 13% of customers will receive a bill credit which is $10 or
less . Approximately 7% of customers will receive a bill credit between $50 and $100.
While the total estimated costs associated with a 1 /8 fixed charge and commodity charge credit are
approximately $409,000, staff recommends giving authority for up to $420,000 in bill credits for the
reasons described in the following sections of this report.
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February 4, 2020, Item #7
Bill Credit Eligibility
Staff proposes that only single-family residential customers, multi-family residential customers and
non -residential customers are eligible to receive a bill credit. Further, staff proposes only customers
within those categories that were affected by the Event would be eligible for the bill credit. People
who established water service after the precautionary boil water advisory was lifted on Friday Dec. 6,
2019, or people who experienced the Event but have since relocated would not be eligible for the bill
credit. Lastly, staff proposes that landscape irrigation customers, recycled •water customers, and city
accounts would not be eligible for the credits. These eligibility recommendations provide the credits
to those impacted by the Event while trying to eliminate the credits provided to those that were not.
Timeline
The timeline becomes an important factor in determining eligibility if staff's recommendation that
only customers affected by the Event, as described above, receive a bill credit. There are four
bimonthly billing cycles for customers given the time it takes to read the meters and process the
information for billing. In order to capture each customer's bill impacted by the Event, staff must have
time to read the meters and pull the billing data from the billing cycles covering the Event. The
approximate timeline below shows the four bimonthly billing cycles in relationship to the Event,
tonight's Council meeting, and when customers could expect to receive the bill credits.
Bill Cycle 4
Bill Cycle 1
Bill Cycle 3
Bill Cycle 2
OCTOBER
Event
NOVEMBER
I
~ ~ /1 Bill Credits
JANUARY FEBRUARY MARCH APRIL ~MBER □ I
I □ I
As the graphic shows, staff will not have all the information necessary to process credits for customers
impacted by the Event until the first part of February. If the bill credits are approved by Council,
customers will start seeing the credits on the March bills, with the last customers seeing the credits
on those bills mailed at the end of April.
Environmental Review:
This action is not subject to review under the California Environmental Quality Act (CEQA).
Fiscal Impact:
Pursuant to the General Fund Reserve Policy (Policy), the General Fund Extreme Events/Public Safety
reserve was established as a hedge against natural disasters, other public safety emergencies, and
unexpected infrastructure repair and replacement. Pursuant to the Policy, in the event City Council
authorizes use of the General Fund reserve, the City Manager shall propose a plan for the
replenishment of the reserves to the City Council within 60 days or as soon as practicable. Further,
the Policy states the City will strive to replenish the General Fund reserve within one year of use, but
will fully replenish the reserve within five years of use.
The total estimated fiscal impact associated with issuing 1 /8 fixed charge credit and a 1 /8 commodity
charge credit is no more than $420,000. This amount is slightly higher than staff's current estimates
because not all the billing cycle information for those customers impacted by the Event is available
yet as described in the timeline section of this report. Even though staff is requesting authority for
slightly more than current estimates to be conservative, staff anticipates the amount will be less than
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this total once the last bill cycle is included in the analysis. Staff believes the actual amounts will be
less because the time period covered by the final bill cycle covers cooler and wetter months, which
typically leads to lower consumption.
Based on the City Council direction at the Dec. 17, 2019 council meeting, staff recommends
appropriating up to $420,000 from the General Fund Extreme Events/Public Safety reserve (Acct No.
1120-53300) and transferring the funds to the water fund (Acct No. 5100-52300) to cover the costs of
the bill credits. The actual amounts appropriated and transferred will be based on the actual credits
applied to water customers bills during the March and April timeframes pursuant to the
recommended eligibility requirements.
There are sufficient funds in the General Fund Extreme Events/Public Safety reserve for this
appropriation. Staff will return to Council during the mid-year budget with a plan to replenish the
General Fund reserve. Any plans proposed will not include the use of water funds and therefore not
impact ratepayers.
Public Notification:
None.
Attachments:
None.
Reviewed/ Approved By:
Wendy aserman
Assistant City Manager
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Reviewed By:
Alan Fenstermacher
City Attorney
Approved By:
Chr�
City Manager
February 4, 2020, Item #71~ f \