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Item 3.1 - PowerPoint presented by staff at meetingWater and Sewer Rates Public Hearing March 5, 2019 Proposition 218 Notice 2 2 3 - 1 2 3 4 5 6 7 07-08 08-09 09-10 10-11 11-12 12-13 13-14 14-15 15-16 16-17 17-18MillionsWater Consumption Trend Residential Irrigation/Landscape/Agri/Other Commercial/Non-Residential FY 2017-18 4.5 million units/ 10,381 AF 1 unit = 748 gallons 1 acre foot = 325,851 gallons SDCWA Rates & Charges 2018 SDCWA Final 2019 SDCWA Final Change over Current Readiness-to-Serve Charge 37,202 32,668 -12.19% Capacity Charge Allocation (5 YRA)19,276 15,577 -19.19% Supply Reliability Charge (5 YRA)61,584 62,290 1.15% Customer Service Charge (3 YRA)50,290 44,464 -11.58% Storage Charge Allocation (3 YRA)134,932 122,345 -9.33% Infrastructure Access Charge ( per meter)50,056 50,150 0.19% Total Monthly 353,340 327,494 -7.31% Total Annual 4,240,081 3,929,932 Final Commodity/AF (including trans. charge)$1,009 $1,029 1.98% San Diego County Water Authority Rates and Charges 4 Water Utility Operating Costs $25,223,880 City Costs Water Treatment Water Transmission and Distribution Reclaimed Water Distribution General Administration Met/SDCWA/SDG&E Costs Water Supply/Pumping Energy Supply Reliability Charge (50%) Storage Allocation Readiness-to-serve Capacity Charge Allocation (50%) Poway Water Utilities City Costs 32% Water Supply/Energy 68% Water Utility System Rehabilitation/Loan Repayment/Other $1,529,170 Grand Total Water Utilities Revenue Requirement $26,753,050 5 Poway Water Utilities Base Costs Recovered by Fixed Service/Meter Charges -$5,455,350 City Costs Meter Reading Billing Water Department Administration Accounting, Payroll, Insurance General Administration Met/SDCWA Costs Readiness-to-serve Capacity Charge Allocation (50%) Supply Reliability Charge (50%) Infrastructure Access (Meter) Charge Customer Service Charge System Rehabilitation (50% allocated to Base/Capacity) 6 City Costs 54%Met/SDCWA Costs 28% System Rehab. 18% Consumption Costs Recovered by Commodity (volumetric) Charges -$21,297,700 City Costs Water Treatment Water Transmission and Distribution Reclaimed Water Distribution Met/SDCWA/SDG&E Costs Water Supply/Pumping Energy Supply Reliability Charge (50%) Storage Allocation Readiness-to-serve Capacity Charge Allocation (50%) System Rehabilitation (50% allocated to Supply) Poway Water Utilities 7 City Costs 22% System Rehab. 4% Water Supply/Energy 61% Met/SDCWA Costs 13% Poway Water Utilities Revenues 8 Meter/Fixed Charges 16% Commodity 79% Drought Recovery Surcharge 5% Poway Water Utilities 9 Proposed Increase Water Service (Fixed Meter Charge)7.5% Water Commodity 4.5% Drought Surcharge (Discontinued December 2018) $.00 Water Fund Balance (Reserve) FY 2017-18 Estimated Beginning Balance 7/1/2017 $1,775,080 General Fund Loan Repayment ($401,250) Preliminary Closing (sources less uses)+$4,002,836 FY 2018-19 Proposed Beginning Balance 7/1/2018 $5,240,296 General Fund Loan Repayment ($537,620) Projected Uses $26,753,050 Projected Sources $27,643,900 Projected Fund Balance (Reserve) (21%)$5,593,526 Target Reserve Level -20% of Annual Operating $5,064,076 Poway Water Utilities 10 Poway Sewer Utilities Sewer Utilities Operating Costs $8,709,400 City Costs Sewer Pumping and Transportation Billing Accounting, Payroll, Insurance General Administration Treatment and Disposal San Diego Metro Bernardo System Penasquitos System Sewer Utility System Rehabilitation/Other $608,000 Grand Total Sewer Utilities Revenue Requirement $9,317,400 City Costs 48%Metro/Penasquitos/ Bernardo Systems 52% 11 Poway Sewer Utilities Grand Total Revenue for Cost Recovery $8,481,400 Sources of Revenue to Recover System Use Bi-Monthly Meter Service Charges Single Family Residential -Universal Capacity Non-Residential -Meter Size Based Capacity $1,754,900 Interest, Other Service Fees $285,400 Revenue from Sewer Flow (Residential based on portion of winter water use) Tier No. of Accounts Tier 1 1,775 Tier 2 4,848 Tier 3*2,652 Tier 4 989 Tier 5 597 Tier 6 278 Tier 7 (max.)281 Non-Residential 2,354 Total Bi-Monthly Sewer Flow Charges *Includes 771 Default R3 Customers $6,441,100 12 Fixed Capacity/Service Charges 24% System Use/Volumetric Charges 76% Poway Sewer Utilities 13 Proposed Increase Fixed Sewer Service Charge 3.25% Sewer Commodity 3.25% Sewer Fund Balance (Reserve) FY 2017-18 Estimated Beginning Balance 7/1/2017 $15,048,035 Preliminary Closing (sources less uses*)+$431,853 FY 2018-19 Proposed Beginning Balance 7/1/2018 $15,479,888 Projected Uses $9,317,350 Projected Sources $8,481,400 Use Fund Balance (Reserve)($835,950) Reserve –Metro Pure-Water Program Funds $14,643,938 Poway Sewer Utilities 14 Capital Improvement Program (CIP) •Current & Future CIP projects are a component of the proposed water and sewer rates •November 2014 –Water Treatment Plant Condition Assessment •Evaluation of overall condition of the plant & its individual components •December 2014 –Water Distribution System Maintenance & Rehabilitation Assessment Project •Inventory and assess existing water distribution system and prioritize rehabilitation and replacement needs 15 Capital Improvement Program (CIP) •Projects were identified for maintenance and rehabilitation of water system assets •Prioritized 10-year CIP was developed •Estimated cost of $18.4 million (2014 dollars) •Estimates did not include identified operations & maintenance projects or other CIP projects that were currently planned by the City to address regulatory, capacity, or other master planned efforts 16 Capital Improvement Program (CIP) •September 2013 –Sewer System Infrastructure Evaluation •Evaluated the capacity and condition of the City’s sewer conveyance system •Develop and prioritize future sewer CIP project •Recommended CIP program based upon the report -$9.2 million •Estimates did not include operations & maintenance projects such as manhole rehabilitation 17 Capital Improvement Program (CIP) •FY 18-19 CIP Includes: •10 Water projects totaling nearly $5.0 million •5 Sewer Projects totaling $4.5 million •Seven-year Water CIP work plan contains •31 projects –Current total estimated cost of $14.8 million •Five-year Sewer CIP work plan contains •17 projects –Current total estimated cost of $4.2 million 18 Water System Infrastructure •Operate & Maintain •24 Million-Gallon (MG) per Day Water Treatment Plant •10 MG Clearwell Tank •289 Miles of Water Distribution Pipes •14 Pump Stations •6,794 Water Distribution Main Valves •2,821 Fire Hydrants •18 Treated Water Storage Reservoirs •1 Billion-Gallon Lake Poway Reservoir and Dam •Approx. 3.25 Billion-Gallons of water treated annually 19 Sewer System Infrastructure •Operate & Maintain •186 Miles of Collection Pipelines •12,193 Sewer Laterals •4,066 Manholes •5 Sewage Lift Stations •Collects and Transport approx. 1.465 Billion-Gallons of sewage annually 20 Current Proposed Increase/Decrease (reflected beginning May 2019 billing) Water Service (Fixed Meter Charge)$39.33 $42.28 $2.95 Water Commodity $128.25 $134.00 $5.75 Temporary Drought Recovery Surcharge $18.75 $0.00 -$18.75 Sewer $71.15 $73.46 $2.31 Total Combined Bill $257.48 $249.74 Bimonthly -$7.74 Monthly -$3.87 Single-Family Residential Customer Combined Bimonthly Water and Sewer Bill (25 Units, Most Common 3/4-inch Water Meter, Sewer Tier 2) 21 22 * Effective 2018 ** Effective 2019 $- $20 $40 $60 $80 $100 $120 $131.32 $119.56 $117.00 $115.24 $113.06 $111.85 $111.16 $108.08 $98.60 $97.87 $96.79 $92.92 $92.30 $89.88 $89.88 $90.82 $86.83 $85.54 $84.25 $78.83 $76.30 $67.41 Based on 13 Unit Water Use and 3/4" Residential Meter Size Water bill effective January 2019 23 $- $20 $40 $60 $80 $100 $120 $140 120.35 91.09 90.55 82.84 81.75 79.17 78.55 68.53 66.56 65.81 65.47 64.53 63.54 62.91 62.82 61.95 56.45 56.17 54.12 53.90 50.15 48.75 43.51 38.99 35.23 34.21 28.84 28.64 Sewer Rate Comparison in San Diego County Based on 12.6 units of water and 3/4" Residential meter size for sewer bill January 2019 Water & Sewer Rate Study •January 8, 2019 Workshop –Council directed staff to proceed with a Water & Sewer Rate Study to prepare for next rate-setting cycle •Request for Proposals issued on February 4, 2019 •Staff expects to present contract award for study at the March 19, 2019 City Council meeting. •Expect to hold multiple workshops for public comment 24 Open the public hearing, hear testimony and accept all written protests against the water and sewer rate increases from affected ratepayers Close the Public Hearing Adopt the Resolutions to establish the Schedule of Water and Sewer Service Rates and Charges effective March 1, 2019 New rates appearing on bills beginning in May 2019 Recommendation 25 Water and Sewer Rates Public Hearing March 5, 2019