Item 4 - First Reading of Ord Amending Section 13.11.010 Schedule of Water Service Charges and Establishing Water Rates
AGENDA REPORT SUMMARY
TO: Honorable Mayor and Members of the City Council
FROM: James L. Bowersox, City Man~
INITIATED BY: Warren H. Shafer, Director of Administrative service@
DATE: June 21, 2005
SUBJECT: Consideration of an Ordinance of the City of Poway, California Amending Section
13.11.010 of the Poway Municipal Code, Schedule of Water Service Charges, and
Establishing Water Rates
ABSTRACT
The City adopts water charges on a calendar year basis. This report recommends an increase of
4.2% for water commodity charges, an increase in bimonthly water service charges ranging from
$1.50 to $ 254.71, a service fee of $15 for posting shut-off notices at the service address, and no
adjustment to water pumping charges for calendar year 2006.
ENVIRONMENTAL REVIEW
This item is not subject to CEQA review.
FISCAL IMPACT
As stated throughout this report.
ADDITIONAL PUBLIC NOTIFICATION AND CORRESPONDENCE
Published in the Poway News Chieftain on June 2 and 9, 2005.
RECOMMENDATION
It is recommended that the City Council introduce and hold the first reading of the proposed
Ordinance, Attachment 1, establishing water rates. It is further recommended that the Public Hearing
be continued for the second reading and adoption of the Ordinance on July 5, 2005.
ACTION
rn :\customer services\rates\FY _ 05-06\agenda-summary _ water, doc
1 of 10 June 21, 2005 Item # ~
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CITY OF POWAY
AGENDA REPORT
TO: Honorable Mayor and Members of the City Council
FROM: James L. Bowersox, City Mana~
INITIATED BY: Warren H. Shafer, Director of Administrative service(~~
Peter Moote, Deputy Director of Administrative Services~
Tina White, Revenue & Business Activity Manager p
DATE: June 21,2005
SUBJECT: Consideration of an Ordinance of the City of Poway, California Amending
Section 13.11.010 of the Poway Municipal Code, Schedule of Water Service
Charges, and Establishing Water Rates
BACKGROUND
The City establishes its water rates each year effective the first full billing cycle after January 1, to
correspond with the normal annual rate adjustments made by the Metropolitan Water District
(MWD) and the San Diego County Water Authority (CWA). The City's rate consultant has
analyzed water utilization data and budget information and applied it to the City's rate model. The
results of this analysis are contained in the report.
Water Use Charae
The largest component of the City's water rate is the purchase of raw water from the MWD and
the CWA. There are several components to the water charges from these agencies which are
described below, all of which impact the rates the City must charge its customers for water.
1. Cost of raw water - MWD has a two-tier system for pricing raw water purchases. The Tier 1
supply rate recovers the cost of maintaining a reliable amount of water supply, while the Tier 2
supply rate is set to recover MWD's cost of developing additional water supply and to
encourage the efficient use of local resources. Approximately 82% of the City's raw water
purchases will be at Tier 1, with the remaining 18% purchased at the Tier 2 rate. The
proposed rate for City water customers assumes no increase for Tier 1 purchases and a 25%
increase in the cost of raw water purchased at the Tier 2 rate, effective January 1, 2006.
2. A readiness to serve (RTS) charge, which is passed through to the City from MWD and CWA,
is intended to recover the debt service of expenditures for projects to meet reliability and
quality needs. This charge is partially paid by the water standby charge imposed by MWD on
property owners' tax bills. The remaining charges are billed directly to the City. Poway's RTS
charges for 2006 will remain unchanged from 2005, at $342,813.
2 of 10 June 21, 2005 Item # -..!:i-.-
Consideration of an Ordinance Amending Section 13.11.010 of the Poway Municipal
Code, Schedule of Water Service Charges, and Establishing Water Rates
June 21, 2005
Page 2
3. The CWA Board adopted an Infrastructure Access Charge effective January 1, 1999, as an
additional source of fixed revenue to improve coverage of the CWA's projected fixed
expenditures. The CWA's intent in imposing this charge is to provide CWA with the fixed
revenues required to generate a minimum 25% ratio of fixed revenues to fixed expenditures,
after taking into account revenue generated from CWA's otherfixed revenues (Standby Water
Availability Charge and property taxes). The fee is based on the number and size of water
meter connections within the City as of December 31 of the prior year. Poway's infrastructure
access charges will remain unchanged from 2005, at $249,752.
4. In 2001, the CWA added a surcharge for funding emergency storage projects. The cost for
this surcharge will remain at $383,548 in 2006.
5. The CWA added a Customer Service Charge in 2003 for recovery of costs that support the
functioning of the Authority, including policy development and program implementation. The
Customer Service Charge is allocated among the member agencies on the basis of each
agency's three-year rolling average water use. The cost of this charge remains unchanged in
2006 at $314,445.
6. In 2003, the MWD added a Capacity Reservation charge, levied on an agency's minimum daily
flows over the three previous years, for recovery of costs for providing peak capacity within the
distribution system. The cost of this charge will remain at $211,507 for 2006.
The total of all fixed MWD and CWA charges to the City is $1 ,502,065 for 2006, or approximately
57% of the City's projected water revenue requirements for 2006. The combined cost of raw
water, CWA fixed fees, and the City's water utility operations, system amortization and
administrative costs determine the revenue requirement to be recovered by water customer fees,
which are comprised of the following:
Water Commodity Rate
The current charge for water is $2.019 per unit (approximately 748 gallons). This rate is proposed
to be adjusted to $2.104, or 4.2%, effective January 1, 2006. The commodity rate increase is
needed to support the fixed-fee pass-through costs paid by the City and increased costs of the
City's water utility operations. The proposed rate also incorporates the set aside of water system
replacement funds and provides for full amortization of the system.
The table below provides a schedule of the City's water commodity rate for a 6-year period. With
the proposed rate for 2006, adjustments to the City's water commodity rate over this period
equate to an average increase of approximately 3% per year.
3 of 10 June 21, 2005 Item # -3--
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Consideration of an Ordinance Amending Section 13.11.010 of the Poway Municipal
Code, Schedule of Water Service Charges, and Establishing Water Rates
June 21, 2005
Page 3
Aaricultural Rebate
Effective May 1, 1994, MWD implemented an interim agriculture water program that provides an
agricultural discount to approved customers. The total per acre-foot discount is a straight pass-
through and appears on the customer's bill as a credit. In order to participate in the program, a
customer must submit an application, be a qualified agricultural user, and agree that in the event
of a water shortage, the agricultural deliveries would first be reduced up to 30% before mandatory
reduction targets are imposed on any other water customers. The current agricultural discount
passed through to agricultural customers is $.2066 per unit, which will be adjusted as necessary
to reflect the actual MWD discount.
Reclaimed Water
Reclaimed water sales for use in landscape meters began in July of 1998. Under agreement with
the City of San Diego, the City of Poway will purchase up to 670 acre-feet annually of reclaimed,
non-potable water from the San Diego Reclaimed Water Distribution System. The City currently
has 191 reclaimed water accounts which used approximately 263,000 units (or 604 acre-feet) of
reclaimed water in 2004. This use represents an increase of approximately 1% from 2003 to
2004. The rate for reclaimed water through the Poway distribution system is based on 90% of the
rate for potable water, or $1.894 per unit effective January 1, 2006.
Water Service Charae
The bimonthly water service charge is a flat rate amount that recovers a portion of the annual
indirect operating costs attributable to maintenance of the system's capacity, as well as total costs
for customer services. The water service charge is based on water meter size and uses the
hydraulic capacity of the customer's water meter. It is recommended that the water service
charges be adjusted for 2006 as follows:
Meter Size . 2000 thru 2005 Jepuary. 2006 % Change Average
(current Rate) p:~Rllte 2005-2006 % Change
< ." .., per year
" , "A:...> 2000-2006
5/8-inch $ 16.80 $ 18.30 8.9% 1.5%
3/4-inch 16.80 18.30 8.9% 1.5%
1-inch 31.50 37.80 20.0% 3.3%
1-1/2 inch 55.95 70.32 25.7% 4.3%
2-inch 85.35 109.33 28.1% 4.7%
3-inch 163.65 213.38 30.4% 5.0%
4-inch 251.80 330.42 31.2% 5.2%
6-inch 594.50 785.61 32.1% 5.3%
8-inch 791.00 1,045.71 32.2% 5.4%
4 of 10 June 21, 2005 Item # ~
-
Consideration of an Ordinance Amending Section 13.11.010 of the Poway Municipal
Code, Schedule of Water Service Charges, and Establishing Water Rates
June 21, 2005
Page 4
Delinauent Notification (Shut-off notice) fee
The City bills for water and sewer utility services bi-monthly. Payment is due within 15 days, with
the bill past due and a late fee assessed after 30 days. If the bill remains unpaid approximately
50 days after the original billing date, a shut-off notice ("door hanger") is personally posted at the
service address warning of a possible shut-off of service for non-payment. We do not currently
charge a fee for posting the door hanger.
On average, we mail approximately 3,000-3,500 bills each billing cycle. Of that amount, about
1,200 become past due. Approximately 90-120 customers are tagged for shut off each cycle, with
about 9-12, or 10%, of those customers actually turned off for non-payment.
A review of each billing cycle indicates that many of the customers tagged with a door hanger are
chronically late in paying. For those customers tagged each cycle, they are late, on average,
about 21.5 times over the life of their water account and the majority of them have had water
service terminated for non-payment at least once. It is estimated that approximately 10% of the
customers tagged each cycle appear on the tag list nearly every time.
A significant amount of resources are expended each cycle in tagging this small percentage of
customers. At this time, the cost of this process is borne by all customers. It is recommended
that a fee be implemented to provide for cost recovery from those customers requiring a door
hanger. An evaluation of our costs to produce and place a door hanger indicates that a fee of$15
would allow for cost recovery.
Additionally, we surveyed 14 other water districts and cities in San Diego County as to their
policies and fees associated with the practice of tagging with a door hanger. Of those 14 entities,
two give no notice prior to turn-off. Another three provide a door hanger but do not charge a fee.
The majority of the agencies (nine) charge a fee for door hangers, ranging from $10 to $40 per
door hanger.
If approved, Customer Services staff will notify customers of this new fee prior to its
implementation. Additionally, once in effect, we would have the ability to waive the fee as a
courtesy one time per customer. A one-time waiver policy means that customers who
inadvertently overlook a bill and past due notice would have the fee waived once at their request.
Water Pumpina Rates
In addition to the regular water rates charged to all customers, pumping charges are added to the
water bills of customers who are served from a water reservoir other than the water treatment
plant clear well. Electricity costs for water pumping are passed through to the customer. Based
on electricity costs and projected consumption by zone, it is proposed that pumping rates at 5 of 9
pumping stations be increased 4%. New per unit pumping charges for the City's nine stations will
range from $.0732 to $.4439.
Due to the potential fluctuation of electricity costs to the City, the ordinance establishing wat~r
rates includes a provision for periodic (no more than bimonthly) adjustments to the water pumping
charges to offset actual energy costs.
5 of 10 June 21, 2005 Item # ~
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Consideration of an Ordinance Amending Section 13.11.010 of the Poway Municipal
Code, Schedule of Water Service Charges, and Establishing Water Rates
June 21, 2005
Page 5
FINDINGS
The table below depicts a combined water and sewer utility bill for the average residential
customer (Tier 111- average consumption of 58 units) from 2001 to 2005. This table also shows
the combined effect of the proposed water rate and sewer rate adjustments for 2005-2006.
Average R~id",tial,M " "',',i' ~ ','!,p'" "i' -----.-.-.. . - "'.- ..---....-.-...-'.... -~~-_.._-
Wate't,iBill' ,,' ", '.. ,.,.. ,,' i ""f' ''1'
Tier ~'~avg. consuniptiOn
58' units water) I
I
% Increase
" from' 04,-05 AVlilra9!J %
l~c~~~lti";~~~~;i:+~O~:<J~ ,:::;'"j.
FY ()4-$ Pi'05-06 to QS,.Q6 increase1year
....._--'-_.._._~_._--_._.-.._....._......_._.
Water $ 119.23 $125.14 $128.91 $133.90 $140.34
Sewer $ 55.18 $ 57.77 $ 61.74 $66.14 $ 72.57
Total $174.41 $182.91 $190.65 $ 200.04 $212.91 6.4% 5.1%
The following changes to water charges should be in effect, as set forth in this report, the first full
billing cycle after January 1, 2006:
. The water commodity rate of $2.104 per unit
. The door hanger fee of $15
. The water service charges based on water meter size
. The charges for water pumping
ENVIRONMENTAL REVIEW
This item is not subject to CEQA review.
FISCAL IMPACT
As noted throughout the report.
ADDITIONAL PUBLIC NOTIFICATION AND CORRESPONDENCE
Published in the Poway News Chieftain on June 2 and 9, 2005.
RECOMMENDATION
It is recommended that the City Council introduce and hold the first reading of the proposed
Ordinance, Attachment 1, establishing water rates. It is further recommended that the Public
Hearing be continued for the second reading and adoption of the Ordinance on July 5, 2005.
Attachment: (1) Ordinance establishing water rates
m ',I:Uo.,tCoII:er serVli:es\l:Jles\FY 05-06\wtr rate 05-06rpt clor
6 of 10 June 21, 2005 Item # ~
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ORDINANCE NO.
AN ORDINANCE OF THE CITY OF POWAY, CALIFORNIA
AMENDING SECTION 13.11.010 OF THE POWA Y MUNICIPAL CODE, SCHEDULE
OF WATER SERVICE CHARGES, AND ESTABLISHING WATER RATES
WHEREAS, the City of Poway provides water service to citizens of Poway; and
WHEREAS, the City of Poway wishes to establish per-unit water consumption rates
effective January 1,2006 through December 31,2006; and
WHEREAS, the City has a fixed bimonthly service charge (capacity charge) based upon
the hydraulic capacity of the meter size; and
WHEREAS, the fixed bimonthly service charge (capacity charge) adopted herein shall
be imposed as a condition of service by the City to the customer. Any customer may avoid
payment of the fee or charge by disconnecting from the facilities of the City. This fee or
charge is not imposed upon real property or upon a person as an incident of property
ownership; and
WHEREAS, the City has a basic water use charge, which shall be imposed on the basis
of the amount of water used or consumed by the customer. The fee or charge is not imposed
upon real property or upon a person as an incident of property ownership. A customer may
reduce or avoid the fee by reducing or discontinuing use; and
WHEREAS, the City has pumping charges for established Service Areas; and
WHEREAS, the City has a Raw Water Rate and other charges; and
WHEREAS, all fees or charges adopted herein were not calculated or developed on the
basis of any parcel map, including an assessor's parcel map.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF POWA Y DOES ORDAIN
AS FOLLOWS:
Section 1. That the water rate schedule is hereby established as follows for all water
billed on the first full billing cycle after January 1,2006, through December 31,2006:
7 of 10 Attachment 1 June21,2005 Item#~
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Ordinance No.
Page 2
Water Use Rate
The basic water rate for all classes of
service including agriculture and
agriculture/domestic shall equal (per
unit): $2.019 $2.104
Pumping Charges
Water customers within the areas
specified below shall pay a bimonthly
pumping charge for service from a water
reservoir. The City may adjust this
charge no more than once bimonthly to
offset actual energy costs:
Improvement District NO.1 $.4268 $.4439
Improvement District NO.4 .0732 .0732
Orchard A-73, Silver Saddle .1750 .1750
Camelback .2028 .2109
Wood cliff .2449 .2449
Community Pump Station .1165 .1212
Welton .1818 .2036
Reclaimed .3952 .3952
Old Coach Way .2808 .2920
Basic Water Service Charges
All water customers shall pay a
bimonthly basic water service charge for
water service based upon meter size as
follows:
Meter Size
5/8-inch, 3/4-inch $ 16.80 $ 18.30
1-inch 31.50 37.80
1-1/2-inch 55.95 70.32
2-inch 85.35 109.32
3-inch 163.65 213.38
4-inch 251.80 330.42
6-inch 594.50 785.61
8-inch 791.00 1,045.71
8 of 10 June 21, 2005 Item # ~
Ordinance No.
Page 3
Raw Water Rate
The basic raw water rate for raw water Actual cost of raw Actual cost of raw
usage water from SDCWA water from SDCWA
plus a surcharge plus a surcharge
calculated based on calculated based on
related costs per related costs per
contracts. contracts.
Reclaimed Water Rate
Water rate for use of reclaimed water. 90% of the water use 90% of the water use
rate. rate.
Other Charges
Shut-off notice ("door hanger") N/A $15
Restoration of Service $30 during normal $30 during normal
working hours; $80 working hours; $80
for weekends or for outside normal
outside normal working hours and
working hours; $104 Saturdays; $104 for
for holidays. Sundays and holidays.
Delinquency 10% of unpaid balance 10% of unpaid balance
or $50, whichever is or $50, whichever is
less. less.
Returned Check $25 $25
Agricultural Rebate for qualified $0.2824 or as set by $0.2066 or as set by
Agricultural Users MWDICWA MWDICWA
Section 2. That the setting of such charges and rates is categorically exempt from the
requirements of CEQA, pursuant to Sections 1080(b)(4) and (b)(8)(1) & (2) and Section
21060.3 of the Public Resources Code, and Title 14 of the California Code of Regulations,
Section 15269(c) and 15273(a)(1) & (2) and 15307.
9 of 10 June 21, 2005 Item # Ji--
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Ordinance No.
Page 4
EFFECTIVE DATE: This ordinance shall take effect and be in force thirty (30) days after
the date of its passage; and before the expiration of fifteen (15) days after its passage, it shall
be published once with the names of members voting for and against the same in the Poway
News Chieftain, a newspaper of general circulation published in the City of Poway.
Introduced and first read at a Regular Meeting of the City Council held on the 21st day
of June 2005, and thereafter PASSED AND ADOPTED at a regular meeting of said City
Council held on the 5th day of July 2005, by the following roll call vote.
AYES:
NOES:
ABSENT:
DISQUALIFIED:
Michael P. Cafagna, Mayor
ATTEST:
L. Diane Shea, City Clerk
In ',I;listomer services IFY _05-06\wtr rate 05-06 onJ doc
10 of 10 June 21, 2005 Item # ~
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