HomeMy WebLinkAboutAgenda Report - January 6, 2010 J-02AGENDA ITEM %1`#L
&% CITY OF LODI
COUNCIL COMMUNICATION
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AGENDA TITLE: Receive Advisory Water and Wastewater Usage -Based Rates for the Purpose of
Research and Customer Comparison
MEETING DATE: January 6,2010
PREPARED BY: Public Works Director
RECOMMENDEDACTION: Receive advisory water and wastewater usage -based rates for the
purpose of research and customer comparison.
BACKGROUND INFORMATION: Asa result of a series of actions by the City Council, a program is in
placeto install residential water meters throughout the community
by the end of 2013. Assembly Bill 2572, adopted in 2004, requires
that metered services installed since 1992 begin receiving
usage -based water utility bills by January 2011. The City currently provides water and wastewater
service to approximately 16,600 single-family residences.
As the City begins the transition from flat rates to usage -based rates, we want to provide comparative
utility bill information in advance of January 2011. The water and wastewater rates presented in
ExhibitsA and B, respectively, are presented as the probable rate structure of the future. However, no
billing at this time will occur from the proposed rates. These rates will be subject to the annual indexing
increase and other rate increases previously approved by the City Council. Final water and wastewater
rates will be recommended for approval in summer 2010 and will be subject to Proposition 218
requirements.
The recommended advisory water and wastewater rates are intended to be revenue neutral. That is, the
annual revenue generated from the new rates, in aggregate, should generate the same overall level of
income as the current rates. The rates have been developed using data collected from the approximately
2,950 installed water meters, which is about 15 percent of the total meters to be installed. Individual
descriptions of the water and wastewater rate structures are provided below.
Water Utility Rate Structure. Based upon the water -usage data collected from single-family homes with
meters, single-family customers use an average of 22 hundred cubic feet (CCF) per month, or around
16,500 gallons per month. Monthly water usage varies throughout the year, commensurate with irrigation
demands. Water use varies significantly from one customer to the next for a variety of reasons, including
but not limited to lot size, household size, type of landscaping, types of water -using appliances, and
personal habits and practices. For rate analyses purposes, it is assumed that the average monthly
single-family water usage will decrease by about 10 percent (to 20 CCF per month) once metered billing
begins. The rate analysis focused upon generating an equivalent to current revenue, and the
recommended water rate structure is presented in ExhibitA. The water rate consists of a base charge
and a progressive three -tiered commodity charge structure. The weighted average commodity rate is
$1.11 per CCF. All existing rate components are to be consolidated into the fixed service charge and
water usage rates.
APPROVED:
Blair Kir gr..Qdy Manager
MW12WTILITY RATESIW_WMCC Advisory Rates.doc 12117/2009
Receive Advisory Water and Wastewater Usage -Based Rates for the Purpose of Research and
Customer Comparison
January 6,2010
Page 2
The City has an existing usage -based rate structure for non-residential customers, and it is
recommended that rate structure be maintained for those non-residential accounts for the time being.
This structure includes a monthly base charge referenced to the meter size and a commodity charge of
$0.537 per CCF as presented in Exhibit C. It needs to be noted that the non-residential commodity
charge is approximately one-half of the weighted average residential commodity charge ($.537 versus
$1.11 per CCF) and that future work will need to be done to amend the non-residential rate structure to
make it more comparable to the residential commodity charge rate. Both the base charge and
commodity charge are likely to be increased.
Exhibit A presents the recommended monthly charge composed of a fixed monthly service charge and a
three-tierwater rate structurefor single-family customers. The fixed service charge will vary by meter
size, but to date only 3/ -inch meters have been installed at single-family residences. A tiered structure
will encourage water conservation while still reflecting cost -of -service requirements. The first tier would
includethe first 10 CCF of monthlywater use, the second tier would include the next 40 CCF of monthly
water use, and third tier would include all water use in excess of 50 CCF. The rates have been
structured to capture 50 percent of the revenue through the fixed -service charge component and
50 percent through the usage component.
A single-family residential unit that is vacant (zero water usage) would be charged the minimum monthly
fixed service charge of $22.25. With the new meters in place, it will be possible to lock a water service
off, and the Council may wish to have staff research options for a "no service" minimum monthly charge.
The advisory water rate structure, like the current wastewater rate structure, is not broken into
components (i.e., infrastructure replacement, PCE/TCE cleanup), but those programs are funded to the
levels previously established by City Council.
Exhibit D presents examples of how customers may be impacted by the change from a flat rate based on
the number of bedrooms compared to the usage -based rate. Monthly water bills underthe flat rates are
compared with a range of usage (low, medium and high) associated with each home size. In Lodi,
96 percent of single-family homes have either two, three or four bedrooms. The statistical database from
the meters in place today include very few one-, five- and six -bedroom homes and, for those types of
homes, we have estimated the low, medium and high water usage (italicized in the table) to calculate the
comparisons.
Wastewater Utility Rate Structure. The rate structure for the wastewater system will establish a linkage
between winter water usage and the fixed monthly charge (July through June) for each single-family
wastewater account. Winter water usage is representative of indoor water usage (irrigation systems are
normally turned off in winter), and it is reasonable to assume that water usage in winter months is
reflective of wastewater flow contributions.
The wastewater rate structure establishes a fixed monthly charge each year based upon the prior
winter's water usage and the current rate schedule. The fixed monthly charge includes a fixed service
charge component and usage -based charge that varies for each customer based upon winter water
usage. The fixed service charge does not vary with meter size because variation in single-family meter
sizes is generally due to irrigation demands or fire suppression requirements, not upon wastewater
demands.
K:\WP\UTILITY RATES\W_WMcC Advisory Rates.doc 12/17/2009
Receive Advisory Water and Wastewater Usage -Based Rates for the Purpose of Research and
Customer Comparison
January 6,2010
Page 3
The recommended wastewater rate schedule is presented in Exhibit B. The rates have been structured
to capture 50 percent of the revenue through the fixed service charge component and 50 percent through
the usage component. The recommended rates set a monthly fixed service charge of $18.95 and a
usage charge of $2.15 per CCF for each unit of usage. In July of each year, the wastewater rate for each
account for the coming year will be reset based upon usage the prior December through February and
the annual indexed rate adjustment will applied, as approved by City Council.
A single-family residential unit that is vacant (zero water usage) would be charged the minimum monthly
fixed service charge of $18.95.
Exhibit E presents examples of how customers may be impacted by the change from a flat rate based on
the number of bedrooms to the usage -based approach, which considers winter water usage as the
measure of sewer flow. Monthly wastewater bills under the flat rates are compared with a range of usage
associated with each home size. In Lodi, 96 percent of single-family homes have either two, three or four
bedrooms. The statistical data base from the meters in place today include very few one-, five- and six -
bedroom homes and, for those types of homes, we have estimated the low, medium, and high winter
usage (italicized in the table) to calculate the comparisons.
Some customers will pay more and others less, but the equity between accounts is improved because
the amount of the wastewater bill will be tied to usage and not bedroom count. Also, customers will be
able to influencetheir wastewater bill by limiting water usage Decemberthrough February.
Acting to approve the advisory water and wastewater rates will facilitate an important element of the
public outreach for the water meter program to inform customers of the pending changes to the utility rate
structures.
FISCAL IMPACT: None at this time. The rates are advisory only.
FUNDING AVAILABLE: There are no costs associated with adoption of advisory rates.
F. Wally Sa elin
PublicWorks Director
FWS/pmf
Attachments
K:\WP\UTILITY RATES\W WIMCC Advisory Rates,doc 1211712009
Exhibit A
PROPOSED ADVISORY RESIDENTIAL WATER RATES
FOR COMPARATIVE BILLING PURPOSES (1) (2)
Monthly Fixed Service Charge
Up to %" meter
$22.25
1 " meter
$36.15
1 '/2" meter
$70.60
2" meter
$112.10
Water Usage Rates
Tier 1 0-10 CCF per month
$0.86 / CCF
Tier 2 11-50 CCF per month
$1.29 / CCF
Tier 3 > 50 CCF per month
$1.71 / CCF
Notes:
Estimated to be revenue neutral relative to current water rates implemented in
July 2008.
(2) All existing rate components are to be consolidated into the fixed service charge and
water usage rates.
Exhibit B
PROPOSED ADVISORY RESIDENTIAL WASTEWATER RATES
FOR COMPARATIVE BILLING PURPOSES(')
Monthly Fixed Service Charge
$18.95
Wastewater Flow Charge
Based on Winter Water Usage (2)
$2.15 / CCF
Monthly Wastewater Bills
Winter Water Use (CCF)
0
$18.95
1
$21.10
2
$23.25
3
$25.40
4
$27.55
5
$29.70
6
$31.85
7
$34.00
8
$36.15
9
$38.30
10
$40.45
11
$42.60
12
$44.75
13
$46.90
14
$49.05
15
$51.20
16
$53.35
17
$55.50
18
$57.65
19
$59.80
20
$61.95
Notes:
Estimated to be revenue neutral relative to the wastewater rates implemented in
July 2009.
(2) Winter water usage determined as average monthly usage from December through
February.
Exhibit C
EXISTING COMMERCIAL/INDUSTRIAL WATER RATES
Commercial/Industrial Flat Rate
Monthly Base Charge:
Meter
$11.43
1" Meter
$17.14
1 '/2" Meter
$22.85
2" Meter
$28.58
3" Meter
$40.00
4" Meter
$51.43
6" Meter
$74.29
8" Meter
$97.16
10" Meter
n/a
Water Usage Rates
Metered Rate
$0.537 / CCF
Approx. $0.70 per 1,000 gallons
Exhibit D
COMPARISON OF TYPICAL WATER BILLS
UNDER EXISTING AND PROPOSED WATER RATE STRUCTURES
Notes:
(1) Low volume use defined as 10th percentile for specified home size.
(z) Median volume use defined as 50th percentile for specified home size.
(3) High volume use defined as 90th percentile for specified home size.
(4) Amounts shown in italics are estimates. Insufficient data are available for statistical analysis.
1 Bdrm 12
Bdrm
13 Bdrm 14
Bdrm 15
Bdrm
16 Bdrm
Number of Single
Family Dwellings
540 1
4,4271
9,4481
1,9261
260
1 16
Percent of Single
Family Dwellings
3.2%1
27.0%1
57.0%1
12.0%1
1.6%1
0.1%
MONTHLY WATER BILL WITH CURRENT RATES
$27.98 1 $33.61 1 $40.28 $48.40 1 $58.06
1 $69.67
MONTHLY WATER BILL WITH PROPOSED RATES
Low Volume User
Water Use CCF
4
5
6
7
9
12
Monthly Bill
$25.68
$26.54
$27.39
$28.25
$29.96
$33.39
Median Volume User
Water Use CCF
14
16
18
20
24
30
Monthly Bill
$35.96
$38.53
$41.11
$43.68
$48.82
$56.53
High Volume User
Water Use CCF
30
35
38
40
45
50
Monthly Bill
$56.53
$62.96
$66.82
$69.39
$75.82
$82.24
Notes:
(1) Low volume use defined as 10th percentile for specified home size.
(z) Median volume use defined as 50th percentile for specified home size.
(3) High volume use defined as 90th percentile for specified home size.
(4) Amounts shown in italics are estimates. Insufficient data are available for statistical analysis.
Exhibit E
COMPARISON OF TYPICAL WASTEWATER BILLS
UNDER EXISTING AND PROPOSED WASTEWATER RATE STRUCTURES FOR 2010
Notes:
(1) Low volume use defined as 10th percentile for specified home size.
(z) Median volume use defined as 501h percentile for specified home size.
(3) High volume use defined as 901h percentile for specified home size.
(4) Amounts shown in italics are estimates. Insufficient data are available for statistical analysis.
1 Bdrm
2 Bdrm
3 Bdrm
4 Bdrm
5 Bdrm
6 Bdrm
Number of Single
Family Dwellings
540
1 4,4271
9,4481
1,926
260
16
Percent of Single
Family Dwellings
3.2%
1 27.0%1
57.0%1
12.0%
1.6%
0.1%
MONTHLY WASTEWATER BILL WITH CURRENT RATES
$20.81 1 $27.74 1 $34.68 1 $41.61 1 $48.55
$55.48
MONTHLY WASTEWATER BILL WITH PROPOSED RATES
Low Volume User
Winter Use
CCF
2
3
3
4
4
5
Monthly Bill
$23.25
$25.40
$25.40
$27.55
$27.55
$29.70
Median Volume User
Winter Use
CCF
4
7
7
8
8
9
Monthly Bill
$27.55
$34.00
$34.00
$36.15
$36.15
$38.30
High Volume User
1 Winter Use
CCF
8
1 13
14
16
17
18
Monthly Bill
1 $36.15
1 $46.90
$49.05
$53.35
$55.50
$57.65
Notes:
(1) Low volume use defined as 10th percentile for specified home size.
(z) Median volume use defined as 501h percentile for specified home size.
(3) High volume use defined as 901h percentile for specified home size.
(4) Amounts shown in italics are estimates. Insufficient data are available for statistical analysis.
City of Lodi
Receive Advisory Water and Wastewater
Usage -Based Rates
January 6, 2010
The Reed Group, Inc.
1
Usage -Based Rates
City must begin billing based on metered
water usage by January 2011
"Advisory" rates are proposed for 2010 so
customers have information to ascertain
impacts of new billing requirements
New rates will be formally presented for
adoption in summer of 2010 for
implementation in January 2011
2
Key Rate Structure Issues
Revenue neutrality
Water conservation incentive
. BMP#11
);�, Single family customer base
. Total services 165600
. Currently metered ~27800
. Metered with use data ~875
)�� Metering timeline and transition
3
Proposed Water Rates
Water rates to include a fixed monthly
service charge and a 3 -tier water usage
rate structure
y Tier 1 — Indoor water needs
s Tier 2 — Irrigation usage
; Tier 3 — Excess water usage
No changes to current metered water
rates at this time
12
NronoseC
Monthly Fixed Service Charge
Up to 314" meter
1 If
meter
1 112" meter
2" meter
Water Usage Rates
Tier 1 0-10 CCF per month
Tier 2 11-50 CCF per month
Tier 3 > 50 CCF per month
$ 22.25
$ 36.15
$ 70.60
$ 112.10
$ 0.86
/CCF
$ 1.29
/CCF
$ 1.71
/CCF
Notes:
(1) Estimated to be revenue neutral relative to current water
rates implemented in July 2008.
(2) All existing rate components are to be consolidated into
the fixed service charge and water usage rates.
Proposed Wastewater Rates
Wastewater rates will be a fixed monthly charge
that incorporates a service charge and a usage
charge based on winter water usage
• Winter water usage is reflective of flow contribution to
the wastewater system
• Winter usage determined each winter for each
residential account; billing to be adjusted each July
n
Pronof
If ca %-D
L I
V,qtP
% Accts
iJMT
do
Monthly Fixed Service Charge $ 18.95
Wastewater Flow Charge $ 2.15 /CCF
Based on Winter Water Usage (2)
Monthly Wastewater Bills (for various usages)
Winter Water Use (CCF)
% Accts
0
$
18.95
0%
• 1
$
21.19
1%
2
$
23.25
3%
3
$
25.40
5%
4
$
27.55
6%
5
$
29.70
9%
6
$
31.85
9%
7
$
34.00
13%
8
$
36.15
9%
9
$
38.30
8%
10
$
40.45
6%
11
$
42.69
7%
12
$
44.75
5%
13
$
46.90
3%
14
$
49.05
3%
15
$
51.20
3%
16
$
53.35
1 %
17
$
55.50
1 %
18
$
57.65
1 %
19
$
59.80
1 %
20
$
61.95
1 %
Notes:
(1) Estimated to be revenue neutral relative
to the wastewater
rates implemented in July 2009.
(2) Winter water usage determined as average
monthly usage
from December through February.
Rate Implementation Process
Receive "advisory" rates
Provide customers with water usage and flat vs.
usage -based bill information during 2010
Formally adopt new usage -based rates in
summer 2010
Implement adopted rates in Jan. 2011
Monitor rates/revenue throughout meter
transition process
Questions
9