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ELK GROVE WATER DISTRICT Community Workshop May 30, 2013

ELK GROVE WATER DISTRICT Community Workshop May 30, 2013. 2013 Water Rate Study and Proposed Multi-Year Water Rate Adjustments. Meeting Purpose. Review the 2013 Water Rate Study and the proposed multi-year adjustments, and Answer questions. Background.

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ELK GROVE WATER DISTRICT Community Workshop May 30, 2013

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  1. ELK GROVE WATER DISTRICT Community Workshop May 30, 2013 2013 Water Rate Study and Proposed Multi-Year Water Rate Adjustments

  2. Meeting Purpose • Review the 2013 Water Rate Study and the proposed multi-year adjustments, and • Answer questions.

  3. Background • The Elk Grove Water District (District) periodically reviews its water rates to ensure coverage of its operational, debt service and capital expenses. • The last water rate study was adopted in April, 2007. • On November 14, 2011, Staff issued a Request for Proposals for a water rate services study to determine the District’s revenue and expenditure needs for the next five fiscal years.

  4. Background • FY 2007-08 32% (implemented) • FY 2008-09 20% (implemented) • FY 2009-10 15% (12% implemented) • FY 2010-11 3% (not implemented) • FY 2011-12 3% (not implemented) • FY 2012-13 0%

  5. Background Staff accepted proposals from the following four firms on November 28, 2011: • FCS Group • HDR Engineering, Inc. • Raftelis Financial Consultants, Inc. • Willdan Financial Services

  6. Background On January 25, 2012, the Board authorized the General Manager to execute a contract with Willdan to conduct a water rate study to determine the future water rates needed to meet the District’s needs over the next five fiscal years. The study incorporates three main elements: • Revenue requirement analysis, • Rate designand its impact to customers, and • An Assembly Bill 1600 nexus study for establishing the new connection fees.

  7. Water Rate Study • This rate study has six phases: • Phase 1: Data Collection • Phase 2: Revenue Requirement Analysis • Phase 3: Cost of Service Analysis • Phase 4: Rate Design • Phase 5: Connection Fees • Phase 6: Study Recommendations and Presentation • Phase 7: Proposition 218 Procedural Requirements

  8. Water Rate Study Willdan met with Staff in April 2012 to review the District’s current Budget (Fiscal Year 2011-12) and review components of the Draft FY 2012-13 Budget. In May 2012, Willdan presented the first look at the revenue requirements to the Finance Committee of the Board of Directors.

  9. Public Meetings In June 2012, Willdan presented multiple scenarios that reflected a calendar year fiscal year implementation datesand various options for refunding the District’s existing debt obligations.

  10. Public Meetings In August 2012, the first meeting was held of the Community Advisory Committee (CAC). The CAC is a committee of citizens, who reside within the Elk Grove Water District service area, formed to review the development of the water rate study and provide input to the Board of Directors. Willdan presented the various revenue requirements and fixed/variable percentagesto the CAC.

  11. Public Meetings In September 2012, Willdan presented to both the CAC and the Finance Committee the following: • Refined fixed/variable options • Public and Private Fire Line allocations • Preliminary Rates • 2-tiered and 3-tiered residential rates

  12. Public Meetings The water rate study was thorough and included many fundamentalcomponents. After discussions with the Board and the CAC, Staff recommended that the process be slowed down to give the parties involved time to understand the various elements. It was also decided to have additional public meetings to ensure that the District was providing transparency in this process.

  13. Public Meetings Meetings resumed in November 2012 Adjustments were made to the rate design • Refinement to fixed/variable (i.e. revenue collected from monthly meter charge versus water consumption) • Customer Classes • Residential • Non-Residential • Irrigation • Private Fire Protection

  14. Public Meetings In addition, the presentations in November discussed possible multi-family accounts as a separate customer class. (Currently not possible due to lack of unit data for each complex.) A revised timeline was set to reflect a possible July, 2013 implementation.

  15. Public Meetings In December, 2012 Staff recommended a contract revision to expand the scope of work for Willdan in the following areas: • Revenue requirements • Cost of service analysis • Rate design analysis • Public meetings and presentations Willdan was requested to collect additional data reflecting the summer water usage of 2012 to update the model with more current data.

  16. Public Meetings Willdan presented an updated water rate structure that reflected the following additional information: • Updated consumption numbers (CY 2012) • Revenue check • Adjustments for all accounts being metered by April 2014 • Updated reserve balances per audited financial statements • Revised rates • Impacts to customers based on new rates • Revised implementation date of January 2014

  17. Revenue Requirements • Revenue adjustments to begin January 2014 with increases as follows: • January 2014 – 3% • January 2015 – 3% • January 2016 – 3% • January 2017 – 4% • January 2018 – 5%

  18. Cost Cutting Measures The District has done the following to contain expenditures during the last two fiscal years: • Frozen three positions • Operations Manager • Utility Billing Specialist • Water Distribution Operator • Employee Cost Control Program • Employee’s contribution of 6% towards retirement by FY 2013-14 • Capping of health benefits costs for current employees and future retirees

  19. Significant Costs (Current Budget) • Debt Service $3,680,913 • Salaries and Benefits $3,553,485 • Purchased Water $2,895,481 • Capital Improvements Five Year Program $9,214,000 Adjustments are to keep up with inflation, and to help fund the capital projects

  20. Rate Structure Components • Fixed revenue • Costs either apportioned over accounts or based on meter size. • Billing costs are shared equally per account • Capital improvement costs are allocated according to meter size • Variable revenue • Costs equitablyallocated between customer classes based on demand • Total water usage • Peak demand placed on utility system • Customer Classes • Residential • Non – Residential • Irrigation

  21. Meter Charge January 1, 2014 Existing Difference 59.23 56.53 $ 2.70 1" 83.37 73.48 $ 9.89 1.5" 112.34 118.71 $ (6.37) 2" 179.93 446.56 $ (266.63) 3" 276.49 565.29 $ (288.80) 4" 517.89 847.93 $ (330.04) 6" 807.57 1,170.14 $ (362.57) 8" 1,145.53 - 10" Proposed Meter Chargesfor January 2014

  22. Proposed Variable Rates for January 2014 • Existing Structure • Tier 1=$1.46 • Tier 2=$1.80 • Proposed Residential • Tier 1=$1.39 • Tier 2=$2.76 • Proposed Non-Residential • $1.57 • Proposed Irrigation • $1.70

  23. Proposed Flat Rate for January 2014 • Existing Structure • $78.30 per month • Proposed Residential • $70.22 per month

  24. Five Year Schedule – Monthly Meter Charges

  25. Five Year Schedule – Variable Rates

  26. Five Year Private Fire Line Charges

  27. Bill Calculator

  28. EGWD Website • 2013 Water Rate Study Report • Meeting Agenda, Minutes and Presentations • Bill Calculator • Public Hearing and Protest Notice

  29. Proposition 218 Process Public Notices mailed on May 10, 2013 Public Hearing to adopt future water rates to be held on June 26, 2013 at 6:30 PM at the Cosumnes Community Service District Administration Building 8820 Elk Grove Boulevard Written Protests can be submitted to the Board prior to the closing of the public hearing

  30. Questions/Comments

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