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Elk Grove WD Board Meeting Water Rates Habib Isaac – Principal Gregg Tobler – Task Manager

Elk Grove WD Board Meeting Water Rates Habib Isaac – Principal Gregg Tobler – Task Manager September 10, 2012. Meeting Goals. Review timeline to date Review Rate Design Fixed / Variable Cost components Variable cost allocation Residential usage characteristics

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Elk Grove WD Board Meeting Water Rates Habib Isaac – Principal Gregg Tobler – Task Manager

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  1. Elk Grove WD Board Meeting Water Rates Habib Isaac – Principal Gregg Tobler – Task Manager September 10, 2012

  2. Meeting Goals • Review timeline to date • Review Rate Design • Fixed / Variable • Cost components • Variable cost allocation • Residential usage characteristics • Customer impact based on usage levels • Accounts affected by percentage change in bill • What is the preferred rate structure?

  3. Water Study Summary • Willdan and staff held first meeting with CAC on August 7th • Reviewed existing rate structure and fixed / variable options • Implementation options – (January versus July) • Identified next steps and timeline • Finance Committee Meeting – (August 13th) • Supported CAC recommendation of January adjustments • Modest adjustments instead of significant adjustments in future years • Directed staff to assemble finance team for debt restructuring • 40% Fixed / 60% Variable: too significant of a change when compared to current split of existing rate structure • Willdan and staff held second meeting with CAC on September 4th • Refined Fixed / Variable options • Fire protection allocation • Preliminary rates • Board Meeting September 10th • Refined Fixed / Variable options • Fire protection allocation • Preliminary rates

  4. Refined Fixed / Variable Options • Fixed / Variable options: 60% / 40%55% / 45% • 60% fixed / 40% variable: 2 tiered residential structure • 55% fixed / 45% variable: 3 tiered residential structure • Fixed revenue • Costs either apportioned over accounts or based on meter size • Variable revenue • Costs are allocated between customer classes based on usage • Total water units used • Peak demand placed on utility system • Horizontal equity achieved • Residential • Further allocated between tiers based on usage characteristics

  5. Scenario 1 – 45% Variable / 55% Fixed • 25% of Debt is allocated to BASE (variable cost)

  6. Variable Cost Allocation

  7. Residential Usage Characteristics • 3 Tiered Rate Structure • Residential usage characteristics Winter Avg Use = 11 HCF Summer Avg Use = 25 HCF

  8. Scenario 1 – Preliminary Rates Residential Accounts • Tier 1 = $1.51 • Tier 2 = $2.50 • Tier 3 = $4.53 • Non-Residential Accounts • $1.99 • Irrigation Accounts • $2.43 • Existing Structure • Tier 1 = $1.46 • Tier 2 = $1.80

  9. Scenario 1 – Fixed Charges

  10. Customer Impact – Scenario 1 28.34 3.01 (3.81)

  11. Scenario 2 – 40% Variable / 60% Fixed • Entire Debt obligation is under Fixed

  12. Scenario 2 – Preliminary Rates Residential Accounts • Tier 1 = $1.55 • Tier 2 = $3.79 • Non-Residential Accounts • $1.75 • Irrigation Accounts • $2.19 • Existing Structure • Tier 1 = $1.46 • Tier 2 = $1.80

  13. Scenario 2 – Fixed Charges

  14. Customer Impact – Scenario 2 15.34 0.12 1.78

  15. Proposed Financial Plan / Rate Structure • January implementation date • Debt restructured to achieve future level payments • Annual revenue adjustments limited to 3% • Selection of fixed / variable percentage split • 55% / 45% • 60% / 40% • Fixed cost spread over accounts and meter size • Variable cost allocated to customer classes based on usage and peaking factors • Residential tiered rate structure tied to fixed / variable split

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