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Emergency Financial Response: Drought Rates

Emergency Financial Response: Drought Rates. May 15, 2014. As water managers, how should we plan for financial uncertainty?. How do I measure the potential impacts? What issues should I reasonably plan for? What is an acceptable level of risk?

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Emergency Financial Response: Drought Rates

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  1. Emergency Financial Response: Drought Rates May 15, 2014

  2. As water managers, how should we plan for financial uncertainty? • How do I measure the potential impacts? • What issues should I reasonably plan for? • What is an acceptable level of risk? • How and what should I communicate to my constituents and elected officials? • How do I measure whether my financial position is sound prior to a disruptive event?

  3. Understanding your key hurdles will help guide your approach Usage System Needs

  4. Absent an adaptive program, disruptive events can have severe financial impacts 52.2 mgd Annual Growth Rate of 50 49.4 mgd 1.50% for Riverside 47.3 mgd Annual Growth Rate of 40 1.09% for Riverside Annual Growth Rate of Total average flow (MGD) 0.75% for Riverside 30 20 2000 2005 2010 2015 2020 2025

  5. System planning…

  6. Rate Considerations

  7. Detailed analysis of customer data provides basis for recommended rate structure design Data management of the agency’s historical consumption records Consumption profile analysis and changes in demands Inter and intra-class behavior

  8. Consumption analysis creates the basis for setting rate tiers and assessing ratepayer impacts and revenue stability * San Francisco Public Utilities Commission

  9. Rate setting can account for changes in supplies and address revenue stability Upper Tier Upper Tier $4.13 $4.13 13 ccf Upper Tier $2.20 11 ccf Middle Tier $2.20 Middle Tier $2.20 8 ccf 8 ccf 6 ccf $1.92 $1.92 Base Base Base $1.92 Base Rates Drought Level 2 Drought Level 3

  10. Effective communication is central to influencing customer behaviors and opinions • Align process, policies, and recommendations with communities values • Engage stakeholders and community advocates • Translate complex technical and financial concepts into simple language and clear illustrations • Pay close attention to equity and affordability… • Recognize the natural tendency to resist change • Make rates and resulting bills simple and controllable

  11. Case Study San Diego County

  12. San Diego County Water Authority

  13. History of supply planning decisions and capital improvements • 2003 Quantification Settlement Agreement • IID water transfer, 35-yr take or pay, 4.88 maf • $1.45 billion • Canal linings, 110 yrs, 4.32 maf • $175 million • 1997 Water Resource Plan • Add IID water transfer • 2005 Urban Water Management Plan • Add 56kaf desalination 1995 Urban WaterManagement Plan • 2006 Comprehensive Reliability and Cost Assessment “CRACA” • Analyze cost/reliability of CIP • Validate storage decisions • Carlsbad desal is local project 2000 Urban Water Management Plan 1993 Water Resource Plan 01 02 03 04 06 08 09 10 11 12 13 89 90 91 92 93 94 95 96 97 98 99 00 • 2009 CRACA “lite” • Validate CIP scope/cost • Drought mgmt impacts • 1989 Water Distribution Plan • Increase system capacity and reliability • 10 projects • $530 million CIP budget • Emergency Storage Project • Add 92 kaf of emergency storage • Add $730 million to CIP • $1.594 billion CIP budget • Carlsbad Desal Project • 30 year Water Purchase agreement • 56 kaf local supply • Add $80 million • To CIP for existing system improvements • 2004 Water Facilities Master Plan Update • Preferred alternative “supply from the west” • Add 89 kaf of regional desalination • Add 100 kaf of carryover storage • Add 50-100 MGD of treatment capacity • $3.229 billion CIP budget * Ken Weinberg SDCWA

  14. Relationship between building permits, sales & rates 01 02 03 04 05 06 07 08 09 10 11 89 90 91 92 93 94 95 96 97 98 99 00 * Ken Weinberg SDCWA

  15. Rate setting was an evolutionary process design to achieve fiscal sustainability Sales (TAF) Rainfall (inches) • Unbundle rate and create new fixed charges • Customer Service Charge • Storage Charge • Transportation Rate • Implement melded rates • Supply Rate • Treatment Rate • Implement new charges to support ESP/CIP • Infrastructure Access Charge • Special Ag Water Rate • Enhance financial policies • Rate Stab Fund • Debt Service Coverage • Implement new charges to support CIP • Standby Charge • Capacity Charge Transitional Ag Rates * Ken Weinberg SDCWA

  16. Questions Robb Grantham Carollo Engineers rgrantham@carollo.com (415) 990-9924

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