Loading...
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 # ~ --_..--------- .---.--..-, --_.~ -~-----~-----..- 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-- -------------- 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 $.4439. Due to the potential fluctuation of electricity costs to the City, the ordinance establishing wat~r rates includes a provision for periodic (no more than bimonthly) adjustments to the water pumping charges to offset actual energy costs. 5 of 10 June 21, 2005 Item # ~ -- _..__._-_.----------_._-_.__.__._--~_._- --~_._._...~---_._...- -- --. Consideration of an Ordinance Amending Section 13.11.010 of the Poway Municipal Code, Schedule of Water Service Charges, and Establishing Water Rates June 21, 2005 Page 5 FINDINGS The table below depicts a combined water and sewer utility bill for the average residential customer (Tier 111- average consumption of 58 units) from 2001 to 2005. This table also shows the combined effect of the proposed water rate and sewer rate adjustments for 2005-2006. Average R~id",tial,M " "',',i' ~ ','!,p'" "i' -----.-.-.. . - "'.- ..---....-.-...-'.... -~~-_.._- Wate't,iBill' ,,' ", '.. ,.,.. ,,' i ""f' ''1' Tier ~'~avg. consuniptiOn 58' units water) I I % Increase " from' 04,-05 AVlilra9!J % l~c~~~lti";~~~~;i:+~O~:<J~ ,:::;'"j. FY ()4-$ 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 # ~ ---_.._---_._---~ -- -- 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#~ -------...----- --. 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-- -- 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 # ~ -----------..--