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

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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

September 10, 2012

meeting goals
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?
water study summary
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
refined fixed variable options
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
scenario 1 45 variable 55 fixed
Scenario 1 – 45% Variable / 55% Fixed
  • 25% of Debt is allocated to BASE (variable cost)
residential usage characteristics
Residential Usage Characteristics
  • 3 Tiered Rate Structure
  • Residential usage characteristics

Winter Avg Use = 11 HCF

Summer Avg Use = 25 HCF

scenario 1 preliminary rates
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
scenario 2 40 variable 60 fixed
Scenario 2 – 40% Variable / 60% Fixed
  • Entire Debt obligation is under Fixed
scenario 2 preliminary rates
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
proposed financial plan rate structure
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