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Home My WebLink AboutItem 10a - Accept Water and Sewer Cost of Service Study UpdateAccept Water and Sewer Cost of Service Study Update and Set Prop 218 Public Hearing October 20, 2020 Page 1 of 9 DATE: October 20, 2020 TO: Honorable Mayor and City Council FROM: Tom Tait, Public Works Services Director By: Jacquelyn Mercado, Senior Management Analyst SUBJECT: ACCEPT THE WATER AND SEWER RATE COST OF SERVICE STUDY UPDATE, DIRECT THE PUBLIC WORKS SERVICES DEPARTMENT TO FOLLOW PROPOSITION 218 BALLOTING PROCEDURES TO ESTABLISH WATER & SEWER RATES, AND CONDUCT A PUBLIC HEARING AT THE DECEMBER 15, 2020, CITY COUNCIL MEETING Recommendation: Approve SUMMARY In July 2019, the City Council awarded a Professional Services Agreement to Carollo Engineers (“Carollo”) to complete an update to the 2015 Water and Sewer Rate Cost of Service Study (“Cost Study”) and to recommend a new five-year water and sewer rate adjustment schedule for calendar years 2021 through 2025. Since then, Carollo and the Public Works Services Department (“PWSD”) have been gathering and analyzing data on the City’s water and sanitary sewer operations to determine appropriate rate adjustments in order to fund operations, maintenance, water supply costs, capital expenditures, and maintain a sufficient Reserve Fund balance. At the September 1, 2020, City Council meeting, the City Council directed the PWSD to proceed with the implementation of water and sewer rate adjustments for calendar years 2021 through 2025 based on the completed Cost Study update. It is recommended that the City Council accept the completed Water and Sewer Rate Cost of Service Study Update, direct the Public Works Services Department to follow Proposition 218 balloting procedures to establish water and sewer rates, and conduct a public hearing at the December 15, 2020, City Council meeting. BACKGROUND The City provides and maintains water and sewer services to more than 56,000 residents. Utility rate increases are necessary to fund ongoing operations, maintenance, Accept Water and Sewer Cost of Service Study Update and Set Prop 218 Public Hearing October 20, 2020 Page 2 of 9 and capital improvements, and to maintain adequate Reserve Fund balances for the water and sanitary sewer systems, in order to provide quality services to Arcadia residents and businesses. In February 2014, the City Council awarded a Professional Services Agreement to Carollo for the preparation of the Water and Sewer Cost of Service Study and the development of a financial model that would determine how best to recover projected ongoing operational costs, capital improvements to water and sewer infrastructure, and water supply costs over a five-year period. The PWSD and Carollo gathered and analyzed data on the City’s water and sanitary sewer operations and established a seasonal tiered water rate structure that would meet the City’s primary objectives of providing revenue stability, while encouraging water use efficiency. On January 19, 2016, the City Council adopted a seasonal tiered water rate structure and approved a five-year water and sewer rate adjustment schedule for calendar years 2016 through 2020. The PWSD annually reviews water and sewer operating budgets, revenues, expenditures, and Reserve Fund balances to determine whether the approved maximum rate adjustment is necessary. The City of Arcadia’s water and sewer rates are among the lowest in the area and have remained so even with annual rate adjustments over the past five years. Although the Governor declared the drought emergency to be over in 2017, local regions continue to suffer from long-term drought impacts. In the Main Basin, from which the City draws most of its water, basin levels have not recovered to minimum operating levels. In response, the Main Basin Watermaster adopted a Drought Management Plan that includes a Resource Development Assessment (“RDA”), which is a pass-through fee based on each individual producer’s annual amount of water pumped from the Main Basin. The purpose of the RDA is to restore ground water levels by purchasing imported water from the State Water Project, separate from the purchase of Replacement Water. The RDA has continued to increase annually and is anticipated to cost the City over $2 million dollars in Fiscal Year 2021-22. The Main Basin Watermaster implemented the RDA in Fiscal Year 2016-2017; therefore, this cost was not accounted for in the 2015 Cost Study, and the City has not been able to recover the costs of this charge from ratepayers. The goal of the 2015 Cost Study was to utilize Reserve Funds to minimize larger rate adjustments. Due to changes in water use trends resulting from the last drought emergency, increases to operations and maintenance budgets, mainly due to the cost of the RDA and Replacement Water, and funding capital improvements, an update to the 2015 Cost Study is necessary. In July 2019, the City Council approved a Professional Services Agreement with Carollo to complete an update to the 2015 Cost Study and to recommend a new five-year water and sewer rate adjustment for calendar years 2021 through 2025. Accept Water and Sewer Cost of Service Study Update and Set Prop 218 Public Hearing October 20, 2020 Page 3 of 9 DISCUSSION The Cost Study Update relies on the City’s financial and rate models, which were exclusively developed for the City by Carollo during the 2015 Cost Study, and they were subsequently updated and refined in 2017. These models have again been updated to include actual revenues and operational expenditures, capital improvement costs, and customer usage data, along with additional items that were necessary to develop financial projections for Fiscal Years 2020-21 through 2024-25. The current sewer and tiered water rate structures remain the same, but minor modifications have been recommended to the seasonal tier allotments. These changes include increasing and decreasing allotments based on the analysis of actual tiered customer usage data during the last five years. Adjusting the tier allotments is necessary in order to realign tier usage with meter size and current customer demand patterns. The tier allotments are now more proportional across all tiers and meter sizes, which makes the proposed rate structure fairer and more legally defensible. The following goals were identified in the 2015 Cost Study and carried forward through the Cost Study Update: • Generate enough revenue to fund continued operations and maintenance of the City’s sewer and water supply and distribution system, including increases in water supply costs driven by the Main Basin’s Drought Management Plan to restore the health of the basin. • Provide for equipment replacement and improvements to the water and sewer systems infrastructure through capital improvements. • Review reserve policies and set rates to adequately maintain a Reserve Fund to make necessary repairs in the event of an emergency. Based on discussions and previous direction from the City Council, rate adjustments have been designed to eliminate the ongoing use of Reserve Funds to fund operations and capital improvement expenditures. Water Rates Operations and maintenance expenditures comprise most of the expenses within the Water budget, with the single largest line item being water supply costs. The updated Cost Study financial model was used to forecast water sales and expenditures that include looking at the cost of current and future water supplies, including the rising cost of replacement water, system operation costs, and Watermaster’s imposed RDA fee. In addition to regular replacement water costs, the RDA fee has increased annually since Fiscal Year 2016-17, from $40 per acre-foot to $175 per acre-foot in Fiscal Year 2020-21. To date, the City has paid over $6 million dollars in RDA fees without passing Accept Water and Sewer Cost of Service Study Update and Set Prop 218 Public Hearing October 20, 2020 Page 4 of 9 any of those charges on to ratepayers. The RDA fee will continue for the foreseeable future and is estimated to cost the City approximately $2 million annually. The RDA fee has been included in the Cost Study Update and the proposed five-year water rate adjustments has accounted for this cost. The previous annual rate adjustments were designed to use Reserve Funds to lessen the amount of annual water rate adjustments. Accordingly, the City Council agreed to lower the water Reserve Fund balance from $20 million to $12 million over the five-year period. The updated Cost Study has estimated the value of the City’s water system replacement at $236 million. Based on industry standards for such a valuation, the Cost Study determined that $7.1 million in capital reserve (or 3% of the replacement value) is required, combined with about $3.8 million required to fund operation and maintenance costs for at least 90 days. As such, the total reserve required for an emergency is $11 million. Based on those factors and taking into account the current pandemic, the Cost Study Update recommends that the City increase water revenues by 5% for calendar years 2021 and 2022, and 6% for each of the following calendar years through 2025, in order to fund expected operations, maintenance, and CIP expenditures, and maintain a sufficient Reserve Fund balance. The proposed water rates shown in the tables below will not exceed the estimated amount necessary to fund the operation of the City Water System. The table below shows the proposed increase to the current fixed bimonthly meter charge for all customer classes to adequately reflect the actual cost of service incurred: Proposed Meter Charge ($/Meter Size) Meter Size (in inches) Current Rate 2021 2022 2023 2024 2025 5/8” $30.33 $31.96 $33.56 $35.57 $37.71 $39.97 3/4” $32.40 $34.15 $35.86 $38.01 $40.29 $42.71 1” $36.55 $38.53 $40.46 $42.88 $45.46 $48.18 1 1/2” $46.93 $49.48 $51.96 $55.07 $58.38 $61.88 2” $59.39 $62.62 $65.75 $69.70 $73.88 $78.31 3” $88.45 $93.29 $97.95 $103.83 $110.06 $116.66 4” $ 129.97 $137.09 $143.95 $152.58 $161.74 $171.44 6” $ 254.53 $268.51 $281.93 $298.85 $316.78 $335.79 8” $ 399.85 $421.83 $442.92 $469.49 $497.66 $527.52 10” $ 607.45 $640.85 $672.89 $713.27 $756.06 $801.43 Accept Water and Sewer Cost of Service Study Update and Set Prop 218 Public Hearing October 20, 2020 Page 5 of 9 Additionally, the Cost Study Update has proposed a few minor adjustments to some of the tier break points, which are necessary to realign tier usage with each meter size to current water demand patterns. These tier break points are shown seasonally in the following tables: Bimonthly Tier Break Points (in HCF) for Winter Water Usage (November through April) Meter Size Tier 5/8” 3/4” 1” 1 1/2” 2” Tier 1 0 - 22 0 - 22 0 - 22 0 - 22 0 - 22 Tier 2 23 - 32 23 - 34 23 - 42 23 - 48 23 - 60 Tier 3 33 - 42 35 - 44 43 - 58 49 - 70 61 - 90 Tier 4 43+ 45+ 59+ 71+ 91+ Bimonthly Tier Break Points (in HCF) for Summer Water Usage (May through October) Meter Size Tier 5/8” 3/4” 1” 1 1/2” 2” Tier 1 0 - 22 0 - 22 0 - 22 0 - 22 0 - 22 Tier 2 23 - 34 23 - 42 23 - 60 23 - 70 23 - 94 Tier 3 35 - 44 43 - 58 61 - 92 71 - 112 95 - 148 Tier 4 45+ 59+ 93+ 113+ 149+ A seasonal single-family tiered water rate structure assists in managing customer demand for water by pricing discretionary water uses, such as landscape irrigation, at a higher rate than water used for drinking and sanitation purposes. This is to provide a price signal to customers to use water efficiently and to offer an incentive to reduce excess water use. As water usage increases, so does the cost per unit of additional water; this methodology has proven effective in curtailing wasteful water practices. The table below shows the proposed single-family rates: Proposed Single-Family Rates for Commodity Charges ($/HCF) Tier Current Rate 2021 2022 2023 2024 2025 Tier 1 $1.82 $1.91 $2.00 $2.12 $2.25 $2.38 Tier 2 $2.23 $2.32 $2.44 $2.59 $2.74 $2.91 Tier 3 $2.53 $2.39 $2.51 $2.66 $2.82 $2.99 Tier 4 $2.72 $3.00 $3.15 $3.34 $3.54 $3.75 Accept Water and Sewer Cost of Service Study Update and Set Prop 218 Public Hearing October 20, 2020 Page 6 of 9 The table below shows the two-tier water allocations based on the number of dwelling units in each multi-family complex, followed by a table showing the proposed multi- family rates: Bimonthly Tier Allotments (Per Dwelling Unit) Tier Tier (HCF) x Per Dwelling Unit Tier 1 12 Tier 2 13 + Proposed Multi-Family Rates for Commodity Charges ($/HCF) Tier Current Rate 2021 2022 2023 2024 2025 Tier 1 $1.69 $1.82 $1.91 $2.02 $2.14 $2.27 Tier 2 $1.97 $2.01 $2.11 $2.23 $2.37 $2.51 Finally, the following table shows specific uniform rates for Commercial, Government, and Institutional classes: Proposed Rates for Commodity Charges ($/HCF) Current Rate 2021 2022 2023 2024 2025 Commercial $1.81 $1.92 $2.02 $2.14 $2.27 $2.40 Government & Institutional $2.13 $2.27 $2.38 $2.52 $2.67 $2.83 The net change to a customer’s water bill will be affected by the customer’s ability to use water efficiently. A typical single-family customer with a 1” water meter and 55 Hundred Cubic Feet (“HCF”) usage in the summer will see a $6.93, or 4.6%, bimonthly increase in their water bill. The exact percent increase will vary among customers based on usage. Sewer Rates The City’s sewer system includes 138 miles of pipe and is, on average, 75 years old. The Sewer Master Plan is a comprehensive report outlining a long-range program of capital improvements and preventative maintenance measures to upgrade and maintain the City’s sewer system. Annual sewer rate adjustments are necessary to fund the Accept Water and Sewer Cost of Service Study Update and Set Prop 218 Public Hearing October 20, 2020 Page 7 of 9 operations and maintenance activities of the sewer system to ensure that the system is following state regulations that mandate the elimination of sewer overflows. The Cost Study Update determined that the current sewer rate structure equitably recovers costs from each customer class but that the City must increase sewer revenues annually in order to fund ongoing capital improvement projects and meet projected operating expenditures. The Cost Study Update has estimated the value of the City’s sewer system replacement at $90 million. Based on industry standards for such a valuation, the Cost Study determined that $1.3 million in capital reserve (or 1.5% of replacement value) is required. The Capital Improvement Program will primarily be funded with cash from sewer rates as well as a small amount of reserve usage in certain years. Based on the Cost Study projections, reserves will be held relatively steady between $1.99 and $2.26 million. Therefore, the updated Cost Study is recommending that the City increase sewer revenues by 2% for calendar years 2021 through 2025, in order to fund ongoing operations and achieve a 75-year replacement cycle for the City’s sewer system. The proposed sewer rates shown in the tables below will not exceed the estimated amount necessary to fund the operation of the City Sewer System: The table below shows Single-Family Residential and Multi-Family Residential Dwellings Bimonthly Rates: Current Rate 2021 2022 2023 2024 2025 $16.97 $17.35 $17.70 $18.05 $18.41 $18.78 Commercial Dwellings Bimonthly Rates (Fixed Rate + Variable Per HCF Billed Water Usage) are shown in the following table: Current Rate 2021 2022 2023 2024 2025 $50.69 + $0.28 Variable Per HCF $52.04 + $0.28 Variable Per HCF $53.09 + $0.29 Variable Per HCF $54.15 + $0.29 Variable Per HCF $55.23 + $0.30 Variable Per HCF $56.33 + $0.31 Variable Per HCF The proposed sewer rates are increased proportionally each year to generate the necessary projected level of revenues provided in the Cost Study Update. Should the City find that revenue requirements are less than those projected in the study, the City Council could opt to forgo rate increases in any given year or implement rates lower than the proposed increase for that year. Accept Water and Sewer Cost of Service Study Update and Set Prop 218 Public Hearing October 20, 2020 Page 8 of 9 Implementation of New Rates In accordance with Proposition 218, the City must engage in a proper voter approval process when increasing rates for the “property-related” service of water delivery. These requirements include mailing a written notice detailing the proposed rate increases to all property owners and tenants who are responsible to pay the utility bill. The PWSD will, at least 45 days before the proposed December 15, 2020, Public Hearing, mail a notice to all water and sewer customers detailing the proposed water and sewer rate increases in accordance with Proposition 218 requirements. The notice will be approved through the City Attorney’s office to ensure that the City is following Proposition 218 regulations. Following the close of the Public Hearing, if there is no majority protest, the City Council can choose to vote on the proposed new water and sewer rate adjustment. The new water and sewer rates will become effective for all billings sent after January 1, 2021. FISCAL IMPACT Water and sewer rate increases are necessary to fund ongoing operations and maintenance budgets and the Capital Improvement Program while maintaining an adequate Reserve Fund balance in case of an emergency. The lack of a rate adjustment would not allow the City to recover increasing water supply costs, and operations and maintenance costs for the City’s water and sewer systems. The Water and Sewer Costs of Service Study Update recommends that the City increase water revenues by 5% for calendar years 2021 and 2022, and 6% for the following three years through 2025 in order to fund expected operations, maintenance, and Capital Improvement Program expenditures. Based on study projections, the City must increase water revenue annually in order to meet expected revenue needs. Below is a chart showing the amount of annual revenue required for the next 5 years: Year Water Revenue Requirement 2021 (5%) $821,920.77 2022 (5%) $685,091.50 2023 (6%) $849,359.58 2024 (6%) $993,649.42 2025 (6%) $1,061,919.27 Additionally, the Cost Study Update recommends that a 2% sewer rate adjustment for calendar years 2021 through 2025 is necessary to fund expected operations, maintenance and Capital Improvement Programs expenditures for the City’s sewer system. Based on study projections, the City must increase sewer revenue annually in order to meet expected revenue needs. Below is a chart showing the amount of annual revenue required for the next 5 years: Accept Water and Sewer Cost of Service Study Update and Set Prop 218 Public Hearing October 20, 2020 Page 9 of 9 Year Sewer Revenue Requirement 2021 (2%) $52,067.63 2022 (2%) $48,577.76 2023 (2%) $52,382.43 2024 (2%) $52,051.79 2025 (2%) $52,230.32 At the September 1, 2020, City Council meeting, the City Council requested information on how much potential revenue the City could lose if the proposed water and sewer rates were delayed somewhat. The PWSD ran the City’s water and sewer financial models and the approximate projected loss of revenue for a three-month delay is as follows: 2021 Total Projected Water Revenue With Rate Adjustment (January 2021) $15,796,470 With Rate Adjustment (March 2021) $15,674,045 Difference in Delayed Rate Implementation $ 122,425 2021 Total Projected Sewer Revenue With Rate Adjustment (January 2021) $ 2,567,621 With Rate Adjustment (March 2021) $ 2,559,236 Difference in Delayed Rate Implementation $ 8,385 Projected Water & Sewer Revenue Loss Under Delayed Rate Implementation $ 130,810 RECOMMENDATION It is recommended that the City Council accept the completed Water and Sewer Rate Cost of Service Study Update, direct the Public Works Services Department to follow Proposition 218 balloting procedures to establish water and sewer rates, and conduct a public hearing at the December 15, 2020, City Council meeting. Attachment: Water and Sewer Rate Cost of Service Study Update 2020 WATER AND SEWER RATE STUDY UPDATE FINAL REPORT CCity of Arcadia October 2020 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ| i Contents 2020 Water and sewer rate study update 1 FINAL REPORT 1 Section 1 1 Introduction 1 ͭ.ͭ Background ͭ ͭ.ͭ.ͭ About the City of Arcadia ͭ ͭ.ͭ.ͭ Study Purpose ͭ ͭ.ͭ.ͮ Forward-Looking Statement ͮ ͭ.ͮ Overview of Water Rate-Setting Process ͮ ͭ.ͮ.ͭ Revenue Requirement Analysis ͮ ͭ.ͭ.ͯ Water Demand Analysis ͮ ͭ.ͭ.Ͱ Cost of Service Analysis ͯ ͭ.ͭ.ͱ Rate Design & Calculation ͯ ͭ.ͮ.ͮ Sewer Rate Setting ͯ ͭ.ͭ.Ͳ Rate Adoption ͯ ͭ.ͯ Existing Water Rate Structure Ͱ ͭ.ͯ.ͭ Fixed Charge Ͱ ͭ.ͯ.ͮ Commodity Charges ͱ ͭ.Ͱ Existing Sewer Rate Structure ͳ Section 2 7 Water Demand and Growth 7 ͮ.ͭ.ͭ Water Customer Classes ͳ ͮ.ͭ.ͮ Population and Account Growth ʹ ͮ.ͭ.ͯ Water Supply ͵ ͮ.ͭ.Ͱ Projected Water Production Costs ͭͬ Section 3 11 Water Revenue Requirement Analysis 11 ͯ.ͭ Projected Revenues ͭͮ ͯ.ͮ Projected Expenditures ͭͯ 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | ii ͯ.ͮ.ͭ Capital Projects ͭͰ ͯ.ͮ.ͮ Capital Funding ͭͰ ͯ.ͯ Reserve Needs ͭͱ ͯ.Ͱ Recommended Rate Revenue Requirements ͭͲ Section 4 19 Water Cost of Service Analysis 19 Ͱ.ͭ Functional Cost Components ͭ͵ Ͱ.ͮ Customer Class Peak Factor Analysis ͮͭ Ͱ.ͮ.ͭ Functional Allocation Peak Factors ͮͭ Ͱ.ͮ.ͮ Customer Class Allocation Peak Factors ͮͮ Ͱ.ͯ Functional Allocation Results ͮͱ Ͱ.Ͱ Supply Allocation ͮͲ Ͱ.ͱ Customer Class Allocation ͮͳ Ͱ.ͱ.ͭ Fixed Cost Allocation ͮʹ Ͱ.ͱ.ͮ Variable Cost Allocation ͮʹ Section 5 31 Water Rate Design 31 ͱ.ͭ Proposed Fixed Charge ͯͮ ͱ.ͮ Commodity Rates ͯͯ ͱ.ͮ.ͭ Single Family Residential Rates ͯͰ ͱ.ͮ.ͮ Multi-Family Residential Rates Ͱͬ ͱ.ͮ.ͯ Commercial Rates Ͱͮ ͱ.ͮ.Ͱ Government, Institutional, and Irrigation Rates Ͱͯ Section 6 44 Water Customer Class Bill Impacts 44 Ͳ.ͭ Single Family Residential Bill Impact ͰͰ Ͳ.ͮ Multi-Family Residential Bill Impact Ͱͱ Ͳ.ͯ Commercial Bill Impact ͰͲ Ͳ.Ͱ Government, Institutional, and Irrigation Bill Impact Ͱͳ Ͳ.ͱ Regional Water Rate Comparison Ͱͳ 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | iii Section 7 49 Sewer Revenue Requirements 49 ͳ.ͭ Projected Sewer Revenues Ͱ͵ ͳ.ͮ Projected Sewer Expenditures Ͱ͵ ͳ.ͮ.ͭ Capital Projects ͱͬ ͳ.ͮ.ͮ Capital Funding ͱͭ ͳ.ͯ Reserve Needs ͱͭ ͳ.Ͱ Recommended Sewer Rate Revenue Requirements ͱͭ Section 8 53 Sewer Cost of Service Analysis 53 ʹ.ͭ Functional Allocation ͱͯ ʹ.ͮ Customer Class Allocation ͱͰ Section 9 55 Sewer Rate Design 55 ͵.ͭ Proposed Sewer Rates ͱͱ ͵.ͭ.ͭ Residential Fixed Charges ͱͱ ͵.ͭ.ͮ Commercial Rates ͱͲ ͵.ͭ.ͯ Proposed Sewer Rates ͱͳ Tables Table ͭ Current Bi-Monthly Fixed Charges Ͱ Table ͮ Seasonal Bi-Monthly Tier Break Points (Existing Rate Structure) ͱ Table ͯ Single Family ͮ-year Average Usage by Month Ͳ Table Ͱ Current SFR Volumetric Tiered Rates Ͳ Table ͱ Summary of Customer Classes ʹ Table Ͳ Projected Water Production and Costs ͭͭ Table ͳ Projected Water Revenues ͭͯ Table ʹ Projected Water Operating Expenditures ͭͯ Table ͵ Water CIP ͭͰ Table ͭͬ Recommended Water Rate Revenue Requirement ͭʹ Table ͭͭ Water Functional Allocation ͮͬ 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | iv Table ͭͮ System Demand Factors (FY ͮͬͭʹ/ͭ͵) ͮͮ Table ͭͯ Extra Capacity Allocations ͮͮ Table ͭͰ Max Day Demand Calculation ͮͰ Table ͭͱ Max Hour Demand Calculation ͮͱ Table ͭͲ Allocation Results ͮͱ Table ͭͳ Functional Allocation Results ͮͲ Table ͭʹ Water Supply Allocation Results ͮͳ Table ͭ͵ Customer Class Characteristics ͮʹ Table ͮͬ Base Customer Allocation ͮ͵ Table ͮͭ Max Day Customer Allocation ͮ͵ Table ͮͮ Max Hour Customer Allocation ͯͬ Table ͮͯ Supply ͭ Customer Allocation ͯͬ Table ͮͰ Supply ͮ Customer Allocation ͯͭ Table ͮͱ Water Fixed Unit Costs ͯͮ Table ͮͲ Bi-Monthly Fixed Charge Components (FY ͮͬͮͬ/ͮͭ) ͯͮ Table ͮͳ Proposed Bi-Monthly Fixed Charge ͯͯ Table ͮʹ Proposed Water Rates ͯͰ Table ͮ͵ Proposed Updated Seasonal Bi-Monthly Tier Break Points ͯͲ Table ͯͬ Single Family Base Rate Component Allocation ͯͳ Table ͯͭ Single Family Max Day Rate Component Allocation ͯͳ Table ͯͮ Single Family Max Hour Rate Component Allocation ͯʹ Table ͯͯ Single Family Tier Supply Allocations ͯ͵ Table ͯͰ Single Family Supply ͭ Rate Component Allocation ͯ͵ Table ͯͱ Single Family Supply ͮ Rate Component Allocation Ͱͬ Table ͯͲ Proposed Single Family Rates Ͱͬ Table ͯͳ Multi-Family Base Rate Component Allocation Ͱͬ Table ͯʹ Multi-Family Max Day Rate Component Allocation Ͱͭ Table ͯ͵ Multi-Family Max Hour Component Allocation Ͱͭ Table Ͱͬ Multi-Family Tier Supply Allocation Ͱͭ Table Ͱͭ Multi-Family Supply ͭ Rate Component Allocation Ͱͮ Table Ͱͮ Multi-Family Supply ͮ Component Allocation Ͱͮ Table Ͱͯ Proposed Multi-Family Rates Ͱͮ 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | v Table ͰͰ Proposed Commercial Rates Calculation Ͱͯ Table Ͱͱ Proposed Government, Institutional, and Irrigation Rates ͰͰ Table ͰͲ Projected Sewer Revenues Ͱ͵ Table Ͱͳ Projected Sewer Operating Expenditures ͱͬ Table Ͱʹ Sewer CIP ͱͬ Table Ͱ͵ Recommended Sewer Rate Revenue Requirement ͱͮ Table ͱͬ Sewer Customer Class Characteristics ͱͰ Table ͱͭ Sewer Customer Class Cost Allocation (FY ͮͬͮͬ/ͮͭ Revenue Requirements) ͱͱ Table ͱͮ Sewer Residential Fixed Charge Calculation ͱͲ Table ͱͯ Sewer Commercial Fixed Charge Cost Allocation ͱͲ Table ͱͰ Sewer Commercial Fixed Charge Calculation ͱͳ Table ͱͱ Sewer Commercial Variable Charge Calculation ͱͳ Table ͱͲ Proposed Sewer Rates ͱͳ Figures Figure ͭ Conceptual Overview of the Rate-Setting Process ͮ Figure ͮ Total Annual Water Sales (AF) ͳ Figure ͯ Percent of Annual Consumption per Customer Class ʹ Figure Ͱ Historical Water Production (acre-ft), by Source ͭͬ Figure ͱ Single Family Tiers’ Cost Components ͯͲ Figure Ͳ Single Family Customer Bi-Monthly Bill Impact – ͭ”, Winter Ͱͱ Figure ͳ Single Family Customer Bi-Monthly Bill Impact – ͭ”, Summer Ͱͱ Figure ʹ Multi-Family Customer Bi-Monthly Bill Impact ͰͲ Figure ͵ Commercial Customer Bi-Monthly Bill Impact ͰͲ Figure ͭͬ Government, Institutional, and Irrigation Customer Bi-Monthly Bill Impact Ͱͳ Figure ͭͭ Regional Water Rate Comparison, Single Family (ͭ” meter, ͯͳ HCF bi-monthly winter usage) Ͱʹ Equations Equation ͭ Max Day Peaking Factor Calculation ͮͯ Equation ͮ Max Hour Peaking Factor Calculation ͮͰ 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | vi Appendices Appendix A Water Operations & Maintenance Budget Analysis Appendix B Water Functional Allocation Appendix C Water Supply Allocation Appendix D Projected Water Demands Appendix E Water Residential Tier Analysis Appendix F Sewer Operations & Maintenance Budget Analysis Appendix G Sewer Functional Allocation 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 1 Section 1 INTRODUCTION 1.1 Background 1.1.1 About the City of Arcadia The City of Arcadia (City) operates public water and sewer utilities that are responsible for providing water and sewer services to the City’s ͱͲ,ͱͬͬ residents, as well as many public and commercial institutions. The water utility currently provides total water deliveries of approximately ͱ.ͱ million hundred cubic feet (HCF) per year, or roughly ͭͮ,Ͳͬͬ-acre feet, to the nearly ͭͰ,ͬͱͬ water customer accounts. The approximate customer distribution is as follows: ʹͯ percent single-family residential homes, ʹ percent apartments and condominiums, and Ͳ percent commercial and industrial, with the remaining ͯ percent of accounts made up of irrigation, City, and government and institutional accounts. The City owns and operates wells in three groundwater basins to provide potable water to its customers. The City’s primary water source is the Main San Gabriel Basin (MSGB), from which approximately ͳͱ percent of water is produced. The remaining water is pumped from the East and West Raymond Basins. Additionally, the City typically budgets to purchase a small amount of imported water in each year. Since the last drought that occurred in ͮͬͭͰ through ͮͬͭͲ, the operating safe yield of the MSGB has been set to a level lower than historic norms and as such, the City’s acre-ft per year allotment has been decreased. As a result of this decrease in inexpensive groundwater supplies, the City has had to rely more heavily on replenishment water purchased from the Metropolitan Water District of Southern California to augment its supplies at a current cost of approximately ͈͵ͱʹ per acre-ft for untreated water. Further, the MSGB implemented a resource development assessment charge per acre-ft for all water pumped from the basin that will reach its maximum charge level of ͈ͭͳͱ per acre-ft in FY ͮͬͮͬ/ͮͭ. A key component of the previous rate study was the development of rates that reflect the City’s water supply characteristics and the relationship between each customer’s bill and the cost of producing, treating, and delivering water. This cost of service study update builds on the previous study to maintain the nexus between water supply costs and rates. The sewer utility currently services approximately ͭͯ,ʹͬͬ sewer customer accounts. The approximate customer account distribution is as follows: ʹͱ percent single-family residential homes, ʹ percent apartments and condominiums, and ͱ percent commercial and industrial, with the remaining ͮ percent of accounts made up sewer only accounts. Sewer only accounts are outside the City’s water service area, but are connected to the City’s sanitary sewer system. The City’s ͭ,ͬʹͭ multi-family sewer accounts provide sewer service for ͳ,ʹͱͯ individual dwelling units. 1.1.1 Study Purpose The City retained Carollo Engineers to conduct a water and sewer cost of service study for Fiscal Years ͮͬͮͬ/ͮͭ through ͮͬͮͰ/ͮͱ. The study builds on the ͮͬͭͱ Cost of Service and Rate Study and included the development of a five-year financial plan and comprehensive cost of service rate analysis, including water and sewer rate structures. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 2 To develop updated user rates, an in-depth study of each utility’s revenue needs, customer usage characteristics, capital improvement program (CIP), and additional future drivers of service costs and revenue was conducted. This report documents the methodology and assumptions used to develop the financial plan and cost of service analysis, outlines the policy decisions reached, and summarizes the proposed water and sewer rates and the resulting customer impacts. 1.1.2 Forward-Looking Statement The projections and forecasts of this analysis are based on reasonable expectations of future events. Should the proposed revenue increases be delayed or postponed, or cost escalation, operating expenditures, or capital needs exceed forecasted levels prior to FY ͮͬͮͰ/ͮͱ, the City might be required to begin a new rate adoption process to increase rates above currently projected levels. The City may similarly be required to begin a new Proposition ͮͭʹ process if revenues do not materialize as projected. 1.2 Overview of Water Rate-Setting Process Carollo’s rate-setting methodology is consistent with industry guidelines established by the Mͭ Manual, which is published by the American Water Works Association (AWWA), a national industry trade group that makes recommendations on generally accepted practices in the water industry. An overview of this approach is outlined in Figure ͭ. 1.2.1 Revenue Requirement Analysis The revenue requirement analysis compares the forecasted revenues of the City (under existing rates and forecasted water demands) to its forecasted operating and capital costs. This step tests the adequacy of the existing rates to recover the City’s forecasted costs. If there are shortfalls, increases to rate revenue are recommended until the tests are passed. 1.1.3 Water Demand Analysis Forecasting water sales and purchases is a critical component in the rate setting process. As part of the budget process, the City forecasts the expected water usage based on historical demand, proposed changes to rates, regulatory impacts, weather, water resources and water availability, and other variables. Revenue Requirement Analysis Compares existing revenues of the City to its operating, capital reserves, and policy driven costs to establish the adequacy of the existing cost recovery levels. Water Demand Analysis Forecasts water sales based on historical billings, modifications to the rate structure, and any regulatory restrictions. Cost of Service Analysis Identifies and apportions annual revenue requirements to functional components based on its application to the City's system, and then allocates to customer classes and tiers based on system usage. Rate Design & Calculation Considers both the level and structure of the rate design to collect the distributed revenue requirements from each class of service Rate Adoption The Study presents the basis for the rates proposed to be adopted in compliance with Proposition 218 Figure ͭ Conceptual Overview of the Rate-Setting Process 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 3 Future demands are based on historic sales and escalated for projected growth and per capita demand changes. These forecasted water demands are then compared against forecasted revenue requirements and rates are developed to recover costs. 1.1.4 Cost of Service Analysis This step builds a link between the City’s cost of water service and the proposed rates for each customer. After determining the revenue requirement, this step outlines the cost to deliver each unit of water and to serve each customer. This process takes each item in the water system’s budget and allocates the items based on what function is served. For example, some cost items support the ability to deliver additional, more expensive water, while other costs are incurred to provide customer service or to fund capital replacement. Organizing the budget in terms of end function allows the creation of a nexus between the budget item and the rate. This organization bridges the costs incurred by the City and the unique and varied benefits delivered to each customer. 1.1.5 Rate Design & Calculation The rate design involves developing a rate structure that equitably and proportionately recovers costs from customers. This rate equity is built upon each customer’s relative use of the system. The rate structure must be tailored to customer account and demand profiles. The rate design requires a fine balance of objectives. Rates should be resilient and flexible enough to handle changing cost and demand scenarios while maintaining affordability, equity, and ease of understanding. By collecting different cost drivers from different rate components, the agency can ideally balance these goals. The rate calculation provides the final nexus between the revenue requirements, functional cost allocation, and final rates that customers are charged. This process connects planned expenditures to the designed rates by establishing rates to match the estimated revenue generation with expenditures. 1.2.2 Sewer Rate Setting The process used to develop sewer rates mirrors that discussed above for water rates. A revenue requirement analysis is performed to determine the amount of sewer rate revenue needed to cover all of the sewer program’s operational and capital costs. Next, an analysis of customer billing data is completed to estimate the sewer discharge and sewer capacity requirements of residential and commercial customers. Next, a cost of service analysis distributed the costs of the sewer system based on function and then to customer class. Lastly, rates are determined based on the costs allocated to each class of customer and each class’ sewer discharge and capacity requirements. 1.1.6 Rate Adoption Public agencies in California are required to meet procedural requirements for adoption of new or increased rates for property-related fees under Proposition ͮͭʹ. The City must hold a public hearing to consider the proposed rates, and must provide written notice to all customers at least Ͱͱ days in advance of said hearing. Any property owner or tenant that is directly liable to the public agency for payment of the property-related fees may submit a written protest against the new or increased rates at any time until the close of the public hearing. The City Council may not adopt the proposed new or increased rates if property owners or tenants directly liable for payment submit written protests on behalf of more than ͱͬ percent of the properties upon which the proposed rates will be imposed. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 4 1.3 Existing Water Rate Structure The City’s current water rate structure includes two charges for its retail customers. x A bimonthly fixed charge assessed per meter equivalent. x A commodity charge per HCF. 1.3.1 Fixed Charge The bi-monthly fixed charge is a combination of a capacity and customer service component. The capacity component is assessed based on meter size, while the customer service component is the same for all accounts. The bi-monthly fixed charge is intended to capture costs associated with providing customer service for each account, as well as the costs of providing the system capacity to serve each account. The customer service component of the fixed charge is intended to account for costs associated with service that do not vary based on meter size—services such as meter reading, billing costs, and access to customer service representatives. Every customer benefits from these services, regardless of meter size or usage, and the same fee is charged to all customers. The capacity component of the bi-monthly fixed charge is assessed based on meter equivalent units (MEUs). MEUs are a measure of each connection’s capacity requirement. Meter ratios are calculated based on the relative maximum flow of a given meter compared with the maximum flow of a typical SFR meter. The City uses MEU ratios based on the standard maximum flow values for each meter size provided in the AWWA Mͭ manual. Table ͭ summarizes the current bi-monthly fixed charge imposed by the City, regardless of customer class. The total bimonthly fixed charge is a combination of both the customer and capacity components and the charges for each meter size are the same for all customer classes. Table ͭ Current Bi-Monthly Fixed Charges Meter Size (inches) Meter Equivalent Units Current Bi-Monthly Charge (ͭ) ͱ/ʹ ͭ.ͬͬ ͈ͯͬ.ͯͯ ͯ/Ͱ ͭ.ͱͬ ͯͮ.Ͱͬ ͭ ͮ.ͱͬ ͯͲ.ͱͱ ͭ.ͱ ͱ.ͬͬ ͰͲ.͵ͯ ͮ ʹ.ͬͬ ͱ͵.ͯ͵ ͯ ͭͱ.ͬͬ ʹʹ.Ͱͱ Ͱ ͮͱ.ͬͬ ͭͮ͵.͵ͳ Ͳ ͱͱ.ͬͬ ͮͱͰ.ͱͯ ʹ ͵ͬ.ͬͬ ͯ͵͵.ʹͱ ͭͬ ͭͰͬ.ͬͬ Ͳͬͳ.Ͱͱ Notes: (ͭ) Rates effective January ͭ, ͮͬͮͬ. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 5 1.3.2 Commodity Charges Commodity charges are per unit rates charged for each individual unit of water used. As the customer uses more water, that customer is charged an increasing amount of commodity charges. The City maintains commodity charges based on four distinct rate classes: ͭ. Single Family Residential. ͮ. Multi-Family Residential. ͯ. Commercial. Ͱ. Government, Institutional, and Irrigation. 1.3.2.1 Single Family Residential Single Family Residential customers are charged based on a four-tiered inclining block rate structure, with tier allotments that are specific to each meter size and vary seasonally. The unit cost per HCF of water consumed in each tier will remain constant throughout the course of the year. Allotments in excess of Tier ͭ are adjusted seasonally to reflect varying outdoor water usage needs during winter and summer. Table ͮ shows the winter and summer tier break points under the existing rate structure. Table ͮ Seasonal Bi-Monthly Tier Break Points (Existing Rate Structure) Meter Size ͱ/ʹ” ͯ/Ͱ” ͭ” ͭ.ͱ” ͮ” Winter (November through April) Tier ͭ ͮͮ HCF ͮͮ HCF ͮͮ HCF ͮͮ HCF ͮͮ HCF Tier ͮ ͮʹ ͯͲ Ͱͮ ͰͲ Ͳͬ Tier ͯ ͯͰ ͰͲ ͱʹ Ͳͮ ʹͲ Tier Ͱ >ͯͰ >ͰͲ >ͱʹ >Ͳͮ >ʹͲ Summer (May through October) Tier ͭ ͮͮ HCF ͮͮ HCF ͮͮ HCF ͮͮ HCF ͮͮ HCF Tier ͮ ͯͰ Ͱʹ Ͳͮ ͲͲ ͵Ͱ Tier ͯ ͰͰ ͲͲ ͵ͮ ͵Ͳ ͭͰͬ Tier Ͱ >ͰͰ >ͲͲ >͵ͮ >͵Ͳ >ͭͰͬ Notes: (ͭ) One unit equals one HCF. Seasonal Adjustments Seasonal adjustments of the tier structure allow allotments to be tailored to consumption patterns and promote year-round efficient water usage recognizing that additional water for outdoor use is required in the summer months. Seasons were determined based on historical consumption patterns as well as long- term weather patterns and the rate structure is designed to account for winter and summer usage. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 6 Table ͯ Single Family ͮ-year Average Usage by Month Month Season ͮ-Year Average Use(ͭ,ͮ) % Of Total Usage January Winter ͮͬͭ,ʹͭʹ Ͳ% February Winter ͭʹ͵,ͲͲͮ Ͳ% March Winter ͮͬͯ,ͱͯͬ Ͳ% April Winter ͮͯʹ,ͰͲͰ ͳ% May Summer ͮͳͲ,ͱͱͯ ʹ% June Summer ͯͭͮ,Ͳͯͬ ͭͬ% July Summer ͯͲͮ,ͳͲͲ ͭͭ% August Summer ͯͲͳ,ͮͯͰ ͭͭ% September Summer ͯͰͭ,ͲͲͮ ͭͬ% October Summer ͮ͵͵,Ͱͯͬ ͵% November Winter ͮͱͰ,ͱͬͱ ʹ% December Winter ͮͮͳ,ͭ͵͵ ͳ% TOTAL ͯ,ͮͳͱ,Ͱͱͬ HCF ͭͬͬ% Notes: (ͭ) A ͮ-year average of FYE ͮͬͭʹ and FYE ͮͬͭ͵ usage data was used as the basis for the cost of service analysis as they represent both a dry and wet year, respectively. (ͮ) All usage in HCF. The summer months accounted for Ͳͳ percent of the total customer demand, while only ͯͯ percent was used during winter months. The single family commodity rates increase for each tier to account for the profile of usage within each tier (peaking) and based on the water supplies that are used to cover consumption within each tier. As a user’s demand progresses through the tiers, a greater share of those demands are covered by the City’s more expensive sources of water. Table Ͱ presents the current volumetric rates for single family users. Single Family Commodity Rates Table Ͱ Current SFR Volumetric Tiered Rates Tier Description Current Volumetric Rate(ͭ,ͮ) Tier ͭ Indoor Use ͈ͭ.ʹͮ Tier ͮ Efficient Outdoor Use ͮ.ͮͯ Tier ͯ High Outdoor Use ͮ.ͱͯ Tier Ͱ Inefficient Outdoor Use ͮ.ͳͮ Notes: (ͭ) Rates effective January ͭ, ͮͬͮͬ. (ͮ) ͈/HCF. 1.3.2.2 Multi-Family Residential Multi-Family Residential customers are charged based on a two-tier inclining block rate structure. Each customer’s Tier ͭ allotment is set based on the number of dwelling units served by the account and a bi- monthly allotment per dwelling unit of ͭͮ HCF. 1.3.2.3 Commercial, Governmental, Institutional, and Irrigation Rates All commercial, governmental, institutional and irrigation customers are uniform commodity rates per HCF of water used. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 7 1.4 Existing Sewer Rate Structure The City’s current sewer rate structure consists of rates for residential and commercial customers. x Residential Customers pay a flat bi-monthly charge per residence. Multi-family customers are charged the flat rate per each dwelling unit. The current bi-monthly charge per residence or dwelling unit is ͈ͭͲ.͵ͳ. x Commercial Customers pay a bi-monthly flat charge per account plus a commodity rate per HCF of water usage. The current bimonthly flat charge is ͈ͱͬ.Ͳ͵ and the commodity rate is ͈ͬ.ͮʹ per HCF of water usage. Section 2 WATER DEMAND AND GROWTH Water sales are the City’s primary source of water revenues as well as a primary driver of water expenditures; thus, it is critical to examine and analyze potential shifts in short and long-term water demands. Carollo evaluated the previous four years of billing data to examine historical water demand patterns and potential developing trends. Figure ͮ on the next page shows a summary of the City’s water sales over the past four years. Following the recent drought and high level of conservation that ended in ͮͬͭͲ, water sales rebounded by ʹ.Ͳ percent and ͵.ͮ percent in FY ͮͬͭͲ/ͭͳ and FY ͮͬͭͳ/ͭʹ, respectively. However, sales have not rebounded to pre-drought levels and such a rebound is unlikely due to demand hardening. In FY ͮͬͭʹ/ͭ͵, sales dropped ͵.ͯ percent as compared to FY ͮͬͭͳ/ͭʹ due to a very wet winter. Figure ͮ Total Annual Water Sales (AF) 2.1.1 Water Customer Classes The City’s water customers are each assigned to one of eight customer classes. Each class was analyzed independently to determine, and account for, distinct consumption patterns. Monthly and seasonal demand patterns were analyzed to establish overall consumption characteristics and each class’s use of the system. 8.6% 9.2% -9.3% - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 FY 2015/16 FY 2016/17 FY 2017/18 FY 2018/19 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 8 Table ͱ Summary of Customer Classes Customer Class Consumption Characteristics Single-Family SF Meters typically serve only one residence; consumption peaks in summer months due to increased outdoor usage. Multi-Family MF Each meter serves multiple units; consumption pattern is relatively flat throughout the year due to minimal outdoor use. Commercial CA Meters might serve one or more businesses; consumption is relatively flat throughout the year due to minimal outdoor use. Irrigation IM Used only for outdoor irrigation; consumption peaks heavily in summer. Consumption pattern closely matches GV and AR accounts. Government and Institutional GV Meters serve primarily outdoor usage; consumption peaks heavily in summer due to increased outdoor usage. Consumption pattern closely matches IM and AR accounts. City of Arcadia AR Meters serve primarily outdoor usage; consumption peaks heavily in summer due to increased outdoor usage. Consumption pattern closely matches GV and IM accounts. Figure ͯ shows the percent of annual consumption from each customer class based on a two-year average of billing records for FY ͮͬͭͳ/ͭʹ and FY ͮͬͭʹ/ͭ͵. Residential accounts (consisting of single and multi-family) are the primary user of water making up roughly ͳͱ percent of annual water sales. The remaining ͮͱ percent is split between commercial, irrigation, government, and institutional, and City of Arcadia accounts. Figure ͯ Percent of Annual Consumption per Customer Class 2.1.2 Population and Account Growth According to the California Department of Finance, the population of the City was ͱʹ,ʹ͵ͭ as of January ͭ, ͮͬͭ͵. City records indicate that the water utility serves ͵Ͳ percent of the City’s total population, or approximately ͱͲ,ͱͬͬ residents. This analysis assumes that population growth will not increase water demand as new developments include high efficiency water fixtures and it is expected that continued conservation efforts will offset any new demands. Additionally, it is assumed that there will be no material account growth through the projection period as the City is almost entirely built-out. AR - CITY 1% CA - COMMERCIAL 14% GV - GOVERNMENT 5% IM - IRRIGATION 5% MF - MULTI FAMILY 15% SF - SINGLE FAMILY 60% 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 9 2.1.3 Water Supply In recent years, all of the water provided by the City has been pumped from three ground water basins that underlie or are adjacent to the City. These include the Main San Gabriel Basin and the East and West Raymond Basins. Additionally, the City maintains a ͮͬ cubic feet per second potable water connection to the Metropolitan Water City of Southern California (MWD) to provide service if needed. 2.1.3.1 Main San Gabriel Basin The MSGB is a groundwater basin surrounded by the San Gabriel Mountains on the north, the San Jose Hills on the southeast, Puente Hills on the southwest, and the Raymond Fault on the northwest. Approximately ʹͬ municipalities, water districts, and private companies pump groundwater from the MSGB. The Main San Gabriel Basin Watermaster (Watermaster) manages pumping activities from the basin, which includes setting the basin’s annual operating safe yield, setting annual allotments for each pumper, managing water replenishment operations, and managing the administration of the basin. The MSGB is the City’s primary source of ground water; historically, approximately Ͳͱ percent of the water produced by the City has been sourced from the MSGB. More recently, supply driven reductions in pumping from the East and West Raymond Basins have increased the share of water pumped from the MSGB to over ͳͱ percent of total water production. The MSGB’s operating safe yield (OSY) is the maximum amount of water that can be pumped from the basin without requiring groundwater replenishment from outside sources (primarily untreated water from MWD). The OSY is set by the Watermaster each year based on certain criteria, including groundwater elevations, rainfall, local water in surface reservoirs, local water conserved, and the availability of supplemental water. The OSY has been reduced in recent years, and is currently set at ͭͱͬ,ͬͬͬ AF per year (AFY). The City’s annual pumping allotment is set at Ͱ.ͮͯͬ͵͵ percent of the MSGB OSY and the City must purchase replenishment water for any pumping above that amount. Water supply costs have become a primary driver of the City’s revenue requirements due to lower OSY’s that have resulted in increased replenishment water obligations for the City as well as the MSGB resource development assessment (RDA) charge that is currently set at ͈ͭͳͱ per all acre-ft pumped. Based on discussion with City staff, this analysis has been completed under the conservative assumption that the OSY will remain at ͭͱͬ,ͬͬͬ AFY, resulting in annual pumping allotments of Ͳ,ͯͰͲ AFY for the City. 2.1.3.2 The Raymond Basins The northern half of the City overlies the East and West Raymond Basins. Historically, the City held pumping rights of ͯ,ͱͮʹ AFY in the East Raymond Basin and ͮ,ͭͭʹ AFY in the West Raymond Basin and approximately ͯͱ percent of the City’s annual water production has been pumped from the Raymond Basins. More recently, the managing body of the Raymond basins has decreased annual pumping rights due to water levels and other conditions in the basins. The City’s current pumping rights are ͮ,ͯͮͭ AFY in the East Basin and ͭ,Ͱʹͯ in the West Basin. In practice, the City has pumped below its total pumping rights due to operational constraints. The City is initiating capital projects to increase production from the West Raymond Basin, in turn decreasing the need for Main Basin pumping and replenishment water purchases. This study assumed total Raymond Basin (East and West) production of ͯ,ͮͬͬ AFY, approximately ͮͯ percent of total water production. In addition, the City will purchase a minimum amount of imported MWD treated water as necessary. Figure Ͱ shows historical and projected water production from each source. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 10 Figure Ͱ Historical Water Production (acre-ft), by Source 2.1.4 Projected Water Production Costs Water production and costs have been forecasted based on the demand projection and supply constraints discussed above. These projections assume that production from the East and West Raymond Basins will remain at ͯ,ͮͬͬ AFY the current annual pumping rights, that the City will purchase a minimal amount of imported treated water (ͮͱͬ AF) each year, and that all additional water needs will be pumped from the MSGB. Additionally, the study assumes that the MSGB OSY will remain at ͭͱͬ,ͬͬͬ AFY. If more pumping is needed than is allotted from these supplies, then City will need to purchase additional untreated replenishment water from MWD to meet its total supply needs. The City’s water supply constraints create an environment in which water conservation can substantially lower annual water supply costs. The primary mechanism by which costs can be lowered is by decreasing customer demand. Any supply needs greater than the allotment from the East and West Raymond Basins and MSGB requires the need for replenishment water to be purchased from MWD, which is much more expensive than water produced within the City’s allotment. The recent decreases in the City’s MSGB allotment, and the Watermaster’s expectation that the OSY will remain below the long-term average, have increased the importance of conservation efforts to promote basin sustainability and to control costs. Less demand for water will result in less replenishment water purchased from MWD, leading to lower supply costs. Table Ͳ summarizes projected water production and associated costs through FY ͮͬͮͰ/ͮͱ. Projected water demands for each customer class are included for reference in Appendix D. - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 Main Basin within Allotment Main Basin above Allotment Raymond Basin Imported Water Projected 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 11 Table Ͳ Projected Water Production and Costs Item FY ͮͬͮͬ/ͮͭ FY ͮͬͮͭ/ͮͮ FY ͮͬͮͮ/ͮͯ FY ͮͬͮͯ/ͮͰ FY ͮͬͮͰ/ͮͱ Projected Water Sales (AF) ͭͮ,ͲͰͱ ͭͮ,ͲͰͱ ͭͮ,ͲͰͱ ͭͮ,ͲͰͱ ͭͮ,ͲͰͱ System Losses/ Unaccounted for Water(ͭ) ʹ.ͭ% ʹ.ͭ% ʹ.ͭ% ʹ.ͭ% ʹ.ͭ% Projected Water Production (AF) ͭͯ,ͳͲͲ ͭͯ,ͳͲͲ ͭͯ,ͳͲͲ ͭͯ,ͳͲͲ ͭͯ,ͳͲͲ Change from Previous Year ͬ.ͬ% ͬ.ͬ% ͬ.ͬ% ͬ.ͬ% ͬ.ͬ% Main Basin Production (within allotment) (AF) Ͳ,ͯͰͲ Ͳ,ͯͰͲ Ͳ,ͯͰͲ Ͳ,ͯͰͲ Ͳ,ͯͰͲ Main Basin Production (above allotment - Replenishment need) (AF) ͯ,͵Ͳ͵ ͯ,͵Ͳ͵ ͯ,͵Ͳ͵ ͯ,͵Ͳ͵ ͯ,͵Ͳ͵ Raymond Basin Production (AF) ͯ,ͮͬͬ ͯ,ͮͬͬ ͯ,ͮͬͬ ͯ,ͮͬͬ ͯ,ͮͬͬ Imported Treated Water, MWD (AF) ͮͱͬ ͮͱͬ ͮͱͬ ͮͱͬ ͮͱͬ Replenishment Water Cost ͈ͯ.͵ͮ ͈Ͱ.ͬͯ ͈Ͱ.ͭͲ ͈Ͱ.ͮʹ ͈Ͱ.Ͱͭ All Other Main Basin Costs ͮ.ͬͲ ͮ.ͬͲ ͮ.ͬͲ ͮ.ͬͲ ͮ.ͬͲ Raymond Basin Costs ͬ.ͮͰ ͬ.ͮͰ ͬ.ͮͰ ͬ.ͮͰ ͬ.ͮͰ MWD Standby Cost ͬ.ͬͬͮ ͬ.ͬͬͮ ͬ.ͬͬͮ ͬ.ͬͬͮ ͬ.ͬͬͮ Treated Water Cost ͬ.ͮʹ ͬ.ͮ͵ ͬ.ͯͬ ͬ.ͯͬ ͬ.ͯͭ CDPH Permit Administration ͬ.ͬͲ ͬ.ͬͲ ͬ.ͬͲ ͬ.ͬͲ ͬ.ͬͲ Total Water Supply Costs ͈Ͳ.ͱͲ ͈Ͳ.Ͳ͵ ͈Ͳ.ʹͮ ͈Ͳ.͵ͱ ͈ͳ.ͬ͵ Cost per AF (no replenishment) ͈ͮͰʹ ͈ͮͰʹ ͈ͮͰʹ ͈ͮͰʹ ͈ͮͰ͵ Replenishment Water (͈/AF) ͈ͭ,ͬͯͬ ͈ͭ,ͬͲͬ ͈ͭ,ͬ͵ͬ ͈ͭ,ͭͮͮ ͈ͭ,ͭͱͱ Blended Cost per AF ͈Ͱͳͳ ͈ͰʹͲ ͈Ͱ͵ͱ ͈ͱͬͱ ͈ͱͭͱ Notes: (ͭ) Based on a comparison of the past ͱ-years of the City’s water production records and customer billings, the system’s annual losses and unaccounted for water has ranged between ʹ.ͭ% percent and ͭͭ.ͱ-percent. Staff indicated that the lower end of that range, ʹ.ͭ percent was most appropriate for future projections. (ͮ) All monetary values are in millions of dollars. (ͯ) Totals may not tie due to rounding. Section 3 WATER REVENUE REQUIREMENT ANALYSIS The revenue requirement analysis is a test of a utility’s fiscal health, scrutinizing the adequacy of current revenues against funding needs. This test sets the basis for rate planning and reviews the viability of the utility’s revenues against expenses, debts, and reserve policies. Where cash flows and balances are insufficient, the revenue requirement analysis recommends the needed additional cash flows to meet all funding goals. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 12 Carollo compiled the City’s projected fiscal year (FY) ͮͬͮͬ/ͮͭ budget expenses as the base year for O&M costs.1 Carollo collected actual and budgeted revenues and expenditures, water production costs, reserve fund balances and policies, budgeted capital improvement plan expenditures, current and future annual debt service, and other relevant financial data to forecast funding needs. Once this forecast is established, three tests define the annual revenues necessary. ͭ. The Cash Flow Sufficiency Test looks for a net positive cash flow at the end of each fiscal year. This test looks at whether revenues exceed expenses. When they do not, this test recommends additional revenue. ͮ. The Debt Service Coverage Test assesses the ability of the utility to cover debt service payments. As the City currently has no debts associated with its water or sewer funds, this test was not necessary for this study. ͯ. The Reserves Target Test considers the City’s reserve balances and looks at operating, capital, and other funds’ performance against City policy minimums. When the reserves targets are not met, this test recommends additional revenue. Each of the tests is evaluated in each year of the projection to assess the need for revenue increases. As noted, because the City does not currently have any debt, the Debt Service Coverage test does not impact the results of this analysis. If the City elects to issue debt to fund capital projects in the future, the debt coverage obligation should be evaluated and may become a driver of future rate revenue needs. 3.1 Projected Revenues The City collects most of its water revenues through bimonthly fixed Service Charge per meter and potable commodity rates per HCF consumed. These items made up ͵ͯ percent of operating revenues in FYE ͮͬͭ͵. As detailed in Section ͭ, there is a fixed and a variable component to the current rate structure. Currently, the fixed rate component approximately ͮͮ.ͱ percent of total rate revenue, or about ͈ͯ.ͯ million in FY ͮͬͭ͵/ͮͬ. The variable rate component generated ͈ͭͭ.Ͱ million in revenues in FY ͮͬͭ͵/ͮͬ. The City’s other revenues include charges for other services, interest earnings, and other miscellaneous revenues. Table ͳ shows revenues from FY ͮͬͮͬ/ͮͭ budgeted to FY ͮͬͮͰ/ͮͱ projections. Each revenue item was projected based on an assumed growth factor as outlined in Appendix A. For sound financial operations of the City’s water system, the revenues generated must be sufficient to meet the expenditures or cash obligations of the utility. The revenue needs are defined as the amount of revenues that must be recovered through water rates in order to cover annual expenditures, less any offsetting revenues. Offsetting revenues include interest earnings and other non-operating revenues as outlined in Table ͳ. 1 The City’s fiscal year begins on July ͭ and ends on June 30 of the following year. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 13 Table ͳ Projected Water Revenues Revenue Item FY ͮͬͮͬ/ͮͭ FY ͮͬͮͭ/ͮͮ FY ͮͬͮͮ/ͮͯ FY ͮͬͮͯ/ͮͰ FY ͮͬͮͰ/ͮͱ User Rate Revenues (Without Further Increases) ͈ͭͰ.Ͳ͵ ͈ͭͰ.Ͳ͵ ͈ͭͰ.Ͳ͵ ͈ͭͰ.Ͳ͵ ͈ͭͰ.Ͳ͵ Other Charges for Services(ͭ) ͬ.ͭͰ ͬ.ͭͰ ͬ.ͭͰ ͬ.ͭͰ ͬ.ͭͰ Interest Earnings ͬ.ͭͲ ͬ.ͭͭ ͬ.ͬ͵ ͬ.ͬʹ ͬ.ͬʹ Other Revenues(ͮ) ͬ.Ͱͯ ͬ.Ͱͮ ͬ.Ͱͮ ͬ.Ͱͮ ͬ.Ͱͮ Total Revenues ͈ͭͱ.Ͱͯ ͈ͭͱ.ͯͲ ͈ͭͱ.ͯͰ ͈ͭͱ.ͯͯ ͈ͭͱ.ͯͯ Notes: (ͭ) Other Charges for services include backflow charges, meter inspection fees, miscellaneous fines, and charges for maps and publications. (ͮ) Other Revenues include rents and royalties, sale of property, and miscellaneous revenues. (ͯ) All monetary values are in millions of dollars. (Ͱ) Totals may not tie due to rounding. 3.2 Projected Expenditures The City’s FY ͮͬͮͬ/ͮͭ operating budget served as the basis for forecasting future operating expenses. The budget was compared to prior year actual financial information to identify any anomalies or one-time expenditures not appropriate for forecasting in future years. City staff also reviewed the budget for costs that may need to be adjusted due to future operational changes. Unless manually calculated, future years were forecasted using escalation factors appropriate for the type of expense. The escalation factors used as the basis for the study forecast are shown in Appendix A. Operating expenses are grouped by division, including Water Administration, Water Main and Replacement, Water Meter Customer Service, and Water Production/Quality. The City typically tracks the water supply costs presented previously in Table Ͳ within the Water Production/Quality division, however they are presented separately throughout this report as they are a major component of revenue requirements. Table ʹ shows expenditures from FY ͮͬͮͬ/ͮͭ to FY ͮͬͮͰ/ͮͱ projections. Line-item O&M budget detail is provided in Appendix A. Table ʹ Projected Water Operating Expenditures Expense Division FY ͮͬͮͬ/ͮͭ FY ͮͬͮͭ/ͮͮ FY ͮͬͮͮ/ͮͯ FY ͮͬͮͯ/ͮͰ FY ͮͬͮͰ/ͮͱ Water Administration ͈ͯ.ͯͲ ͈ͯ.ͰͰ ͈ͯ.ͱͮ ͈ͯ.ͱ͵ ͈ͯ.Ͳͳ Water Main and Replacement ͭ.ͱͮ ͭ.ͱͱ ͭ.ͱʹ ͭ.Ͳͭ ͭ.ͲͰ Water Meter Customer Service ͬ.ʹͲ ͬ.ʹʹ ͬ.ʹ͵ ͬ.͵ͭ ͬ.͵ͯ Water Production/Quality ͮ.Ͳͱ ͮ.ͳʹ ͮ.ʹͯ ͮ.ʹͳ ͮ.͵ͯ Dues and Assessments (Supply Cost) Ͳ.ͱͲ Ͳ.Ͳ͵ Ͳ.ʹͮ Ͳ.͵ͱ ͳ.ͬ͵ Total Operating Expenses ͈ͭͱ.ͬͯ ͈ͭͱ.Ͱͭ ͈ͭͱ.ͳͮ ͈ͭͲ.ͬͭ ͈ͭͲ.ͯͯ Notes: (ͭ) Based on projected end of year figures. (ͮ) All monetary values are in millions of dollars. (ͯ) Totals may not tie due to rounding. Operating expenses are projected to increase to ͈ͭͲ.ͯͯ million by FY ͮͬͮͰ/ͮͱ, representing an ʹ.ͳ percent overall increase from the FY ͮͬͮͬ/ͮͭ level of ͈ͭͱ.ͬͯ million. This total expenditure change represents an average annual increase of ͮ.ͭ percent. The projected annual operating expenditures are significantly influenced by the amount of replenishment water purchased in each year. The projected operating expenditures have been developed with the water demand assumptions discussed previously in this report. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 14 If usage increases significantly, operating expenditures could be higher than expected. For example, if water consumption increased by ͭ percent per year beginning in FY ͮͬͮͬ/ͮͭ, operating expenditures could reach over ͈ͭͳ.ͱ million by FY ͮͬͮͰ/ͮͱ. Conversely, if the MSGB OSY is raised above ͭͱͬ,ͬͬͬ AFY, operating expenditures could fall, as the need for replenishment water would be diminished. 3.2.1 Capital Projects The City’s CIP includes a variety of capital projects that involve repairing or replacing existing water system assets, as well as purchasing or replacing other small equipment. The City’s planned CIP expenditures average about ͈ͮ.ͯͳ million per year. Table ͵ identifies the five-year CIP used in the revenue requirement analysis, the projects and costs were developed by the City for the most recent capital improvement budget. Project costs shown in the table have been escalated to the midpoint of construction. Table ͵ Water CIP Water CIP Project FY ͮͬͮͬ/ͮͭ FY ͮͬͮͭ/ͮͮ FY ͮͬͮͮ/ͮͯ FY ͮͬͮͯ/ͮͰ FY ͮͬͮͰ/ͮͱ Annual Meter Replacement Program ͈ͬ.ͮͱ ͈ͬ.ͮͱ ͈ͬ.ͮͱ ͈ͬ.ͮͱ ͈ͬ.ͮͱ Public Works Facility Improvements - ͬ.ͬͰ ͬ.ͬͮ ͬ.ͬͭ ͬ.ͬͭ SCADA System Upgrades and Computerized Utilities System ͬ.ͬͯ ͬ.ͬͯ ͬ.ͬͯ ͬ.ͬͯ ͬ.ͬͯ Valve Replacement Program - ͬ.ͭͱ ͬ.ͭͱ ͬ.ͭͱ ͬ.ͭͱ Well Inspection and Rehabilitation Program - ͬ.ͮͱ ͬ.ͮͱ ͬ.ͮͱ ͬ.ͮͱ New Well Design (ͮͬ/ͮͭ) Construction (ͮͭ/ͮͮ) ͭ.ʹͬ - - - - City Parking Lot Rehabilitation Program - - - ͬ.ͬͳ ͬ.ͬͳ Live Oak Well Emergency Generator - ͬ.Ͳͱ - - - Destroy Existing Out of Service Wells - - ͬ.ͭͰ - - Longden Facility Improvements - - ͬ.ͳͱ - - St. Joseph Treatment Facility - Design - - - - ͬ.Ͱͬ St. Joseph Perimeter Wall Extension - ͬ.ͬͰ - - - Water Main Replacement ͬ.ʹͬ ͬ.Ͱͬ ͬ.Ͱͬ ͬ.Ͱͬ ͬ.Ͱͬ Urban Water Management Plan ͬ.ͬͰ - - - - Chapman Blending Project ͭ.Ͱͭ - - - - Equipment Acquisition Total ͬ.ͬͯ ͬ.ͭͱ ͬ.ͮͰ ͬ.ͯͲ ͬ.ͮͰ Total Water CIP ͈Ͱ.ͯͱ ͈ͭ.͵Ͳ ͈ͮ.ͮͯ ͈ͭ.ͱͮ ͈ͭ.ʹͬ Notes: (ͭ) All monetary values are in millions of dollars. (ͮ) Totals may not tie due to rounding. 3.2.2 Capital Funding The CIP will be funded using existing funds held in the City’s water Facilities Reserve as well as revenues directly from water Service Fees. Throughout the next five years, the City expects to fund almost all capital expenditures by first spending down the Facilities Reserve and then utilizing pay as you go (PAYGO) financing. All capital projects for FY ͮͬͮͬ/ͮͭ will be funded using existing reserves. By FY ͮͬͮͭ/ͮͮ, capital projects are forecasted as PAYGO and funded directly through revenues form water rates. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 15 At that time, PAYGO funding is expected to become a significant driver of annual revenue needs. The City’s water utility does not have any outstanding debt obligations and no future debt is expected as the City intends to cash fund all future capital projects. 3.3 Reserve Needs In addition to the operating and capital expenses, discussed above, there are also revenue requirements related to maintaining the City’s water reserve funds. It is good practice to maintain funds to meet unexpected emergency capital outlays or other expenses, or to hedge against revenue shortfalls due to decreases in demands. As a component of this study, Carollo worked with City staff to refine the targeted reserve balance based on system characteristics and revenue needs. The recommended target reserve is the sum of an operating reserve component and a facilities reserve component. Operating Reserve Water agencies maintain operating reserves to ensure availability of funds during fluctuations in operating costs or revenues. These could include month-to-month or seasonal shifts in revenue collection or more pronounced operational changes such as decreased revenues due to a drought or increased water purchase costs in the event that one of the City’s local supplies becomes unavailable. Operating reserve targets are typically set based on a number of days’ worth of operating expenses. While all agencies face unique circumstances that dictate their specific policies, operating reserves typically target between Ͱͱ and ͭʹͬ days of operating expenses. Ideally, a greater percentage of a water utility’s revenues being derived from variable rates (commodity revenues) would correspond to higher operating reserve. Based on the City’s characteristics, the recommended operating reserve is ͵ͬ days of operating expenses. Thus, the revenue requirement analysis targets a total minimum operating fund balance equivalent to ͵ͬ days of operating expenses. The minimum reserve amount is adjusted annually as dictated by changes to the City’s operating expenditures. The ͵ͬ day operating reserve equates to approximately ͈ͯ.ͳ million for FY ͮͬͮͬ/ͮͭ and would increase to approximately ͈Ͱ.ͬ million by FY ͮͬͮͰ/ͮͱ as operating expenses increase due to inflation. The City should continue to monitor revenues and reserve levels on an annual basis. The reserve target may also be adjusted further as policy dictates to minimize rates or to smooth future rate increases. Should the water utility reach and maintain desired reserve levels, it is recommended that the City implement a reserve policy to formally define desired funding levels, needs, and uses. Facilities Reserve Water agencies maintain capital or facilities reserves to provide funds for continuity of construction in the event that revenues decrease and to provide an immediate source of funds for capital projects in the event of an emergency. While it would be impractical to reserve against major system-wide failures such as those resulting from a catastrophic earthquake, it is reasonable and prudent to identify and quantify possible failures of individual system components. Facilities reserve targets are often set based on a percentage of the physical system’s overall value, typically between 1 and 3 percent. Due to the volatility of water revenues and the expense to rectify the types of failures that could occur in the water system (reservoir, well, or booster station failures) the recommended Facilities Reserve is ͯ percent of the water system’s replacement value. An analysis of the water system’s capital assets determined the replacement value of the water system to be approximately ͈ͮͯͲ million. The recommended ͯ-percent reserve equates to approximately ͈ͳ.ͭ million. This amount would give the City sufficient funds to undertake emergency repairs in the event of a failure of one of the water system’s key components, or to provide continuity of construction in the event of revenue shortfalls. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 16 Equipment Reserve The City also maintains an Equipment reserve to fund purchases of capital equipment such as vehicles and mobile equipment or capital replacement items such as pumps, valves, computer systems, etc. The Equipment reserve will be drawn down to pay for equipment purchases throughout the study period (FY ͮͬͮͬ/ͮͭ through FY ͮͬͮͰ/ͮͱ). After that time, the City will set aside cash from rate revenues to fund equipment purchases in each year. 3.4 Recommended Rate Revenue Requirements Based on the study projections, the City must increase water revenues annually in order to meet projected revenue needs due to annual increases in expenditures and to fund the CIP. Both the bimonthly fixed charges and the volumetric rates will be increased. Operating Costs Operating costs are expected to increase in each year driven by the inflationary increases discussed previously. The City has worked to increase operational efficiency in an effort to control operating cost increases. Over the study period, operating costs (including water supply costs) are expected to increase at an average of ͮ.ͭ percent per year. Capital Funding As noted above, the majority of capital expenditures through FY ͮͬͮͭ/ͮͮ will be funded with existing reserves. However, the onset of rate funded capital improvements in FY ͮͬͮͮ/ͮͯ contributes to the need for revenue increases within the next five years. The proposed revenue increases allow the City to build the necessary revenue generation capacity to fund capital projects in the long term. Water Supply Costs The extent of the proposed revenue adjustments is largely contingent upon the amount of replenishment water that the City is required to purchase, which is driven by the OSY and by water demands. If weather and basin conditions lead to the Watermaster increasing the OSY in subsequent years, the City might be able to implement lower rate increases. However, if the OSY is decreased further, the City might need to implement higher rate increases, defer capital projects, or further draw down reserves in order to support the cost of replenishment water. Revenue Increases Increases in water supply costs, capital funding, and operating cost increases, have driven a need for water rate revenue increases. Currently, reserves are being utilized to fund existing shortfalls. Based on the study projections, the City will need to increase revenues by ͱ percent in FY ͮͬͮͬ/ͮͭ (January ͭ, ͮͬͮͭ) and in FY ͮͬͮͭ/ͮͮ (January ͭ, ͮͬͮͮ). In FY ͮͬͮͮ/ͮͯ through FY ͮͬͮͰ/ͮͱ, annual Ͳ percent increases are forecasted to fund expected operation and capital expenditures. Table ͭͬ provides a summary of the recommended water rate revenue increases for the rate study period. As shown in Table ͭͬ the City will need to rely on reserves to fund capital projects and to make up for cash flow shortfalls due to cash funding of CIP projects. Total reserves would fall below the ͈ͭͮ million target in FY ͮͬͮͬ/ͮͭ and reach a minimum of ͈ͳ.Ͳͯ million in FY ͮͬͮͮ/ͮͯ. The use of reserve balances offsets the need to further increase rates. Long-term projections show that reserves could rebound to the ͈ͭͮ million target in FY ͮͬͮͲ/ͮͳ if increases in O&M costs, customer usage, and annual capital costs remain at the status quo following the end of this rate cycle in FY ͮͬͮͰ/ͮͱ and the City is able to implement inflationary rate increases. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 17 The last section of the tables shows the determination of the “Required Rate Revenues through Rate Design”. This number represents the amount of revenue that would be generated by the rates if they were in place for each full fiscal year. However, as of the completion of this analysis, the City anticipates implementation of rate increases on January ͭ, ͮͬͮͭ, and in January of each following year. Because the rate increases will be implemented in the middle of each fiscal year, the rate revenue requirements for each year include an “Adjustment for Mid-year Increase.” This line item adjusts the required rate revenue to reflect a full year increase to match the full year of projected usage that is used to calculate the rates for each year. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 18 Table ͭͬ Recommended Water Rate Revenue Requirement FY ͮͬͮͬ/ͮͭ FY ͮͬͮͭ/ͮͮ FY ͮͬͮͮ/ͮͯ FY ͮͬͮͯ/ͮͰ FY ͮͬͮͰ/ͮͱ Pre-Rate Increase Revenues Rate Revenues (prior to rate increases)(ͭ) ͈ͭͰ.Ͳ͵ ͈ͭͰ.Ͳ͵ ͈ͭͰ.Ͳ͵ ͈ͭͰ.Ͳ͵ ͈ͭͰ.Ͳ͵ Other Revenues(ͭ) ͬ.ͳͰ ͬ.Ͳͳ ͬ.Ͳͱ ͬ.ͲͰ ͬ.ͲͰ Total Revenues ͈ͭͱ.Ͱͯ ͈ͭͱ.ͯͲ ͈ͭͱ.ͯͰ ͈ͭͱ.ͯͯ ͈ͭͱ.ͯͯ Expenditures Operating Costs(ͮ) ͈ʹ.Ͱͳ ͈ʹ.ͳͯ ͈ʹ.͵ͬ ͈͵.ͬͲ ͈͵.ͮͰ Water Supply Costs(ͯ) Ͳ.ͱͲ Ͳ.Ͳ͵ Ͳ.ʹͮ Ͳ.͵ͱ ͳ.ͬ͵ Rate Funded Capital(Ͱ) - - ͭ.ͱͭ ͭ.ͭͲ ͭ.ͱͲ Total Expenditures ͈ͭͱ.ͬͯ ͈ͭͱ.Ͱͭ ͈ͭͳ.ͮͯ ͈ͭͳ.ͭͳ ͈ͭͳ.ʹ͵ Cash Flows (prior to rate increases) ͈ͬ.Ͱͬ (͈ͬ.ͬͱ) (͈ͭ.ʹ͵) (͈ͭ.ʹͰ) (͈ͮ.ͱͲ) Rate Revenue Increase ͱ.ͬ% ͱ.ͬ% Ͳ.ͬ% Ͳ.ͬ% Ͳ.ͬ% Month of Adoption January January January January January Revenues from Rate Increases ͈ͬ.ͯͳ ͈ͭ.ͭͮ ͈ͭ.͵͵ ͈ͮ.͵͵ ͈Ͱ.ͬͱ Resulting Cash Flows ͈ͬ.ͳͲ ͈ͭ.ͬͳ ͈ͬ.ͭͬ ͈ͭ.ͭͱ ͈ͭ.ͱͬ Consolidated Reserves Balance Beginning Balance ͈ͭͮ.Ͳʹ ͈͵.ͬ͵ ͈ʹ.ͮͰ ͈ͳ.Ͳͯ ͈ʹ.Ͱͮ Operating Cash Flow ͬ.ͳͲ ͭ.ͬͳ ͬ.ͭͬ ͭ.ͭͱ ͭ.ͱͬ Equipment Acquisition (ͬ.ͬͯ) (ͬ.ͭͱ) (ͬ.ͮͰ) (ͬ.ͯͲ) (ͬ.ͮͰ) Use of Reserve for Capital (Ͱ.ͯͯ) (ͭ.ͳͳ) (ͬ.Ͱͳ) - - Total Reserves Ending Balance ͈͵.ͬ͵ ͈ʹ.ͮͰ ͈ͳ.Ͳͯ ͈ʹ.Ͱͮ ͈͵.Ͳʹ Reserve Components Operating Reserve ͈ͭ.Ͳͳ ͈ͮ.ͳͰ ͈ͮ.Ͳͯ ͈ͯ.Ͱͮ ͈Ͱ.ͬͯ Facilities Reserve ͳ.ͭͬ ͱ.Ͱͳ ͱ.ͬͬ ͱ.ͬͬ ͱ.Ͳͱ Equipment Reserve ͬ.ͭ͵ ͬ.ͬͰ - - - Available For Other Projects ͈ͬ.ͭͰ ͈ͬ.ͬͬ ͈ͬ.ͬͬ ͈ͬ.ͬͬ ͈ͬ.ͬͬ Expected Fiscal Year Rate Revenues ͈ͭͱ.ͬͲ ͈ͭͱ.ʹͭ ͈ͭͲ.Ͳʹ ͈ͭͳ.Ͳʹ ͈ͭʹ.ͳͰ Adjustment for Mid-Year Increase ͬ.ͯͳ ͬ.ͯ͵ ͬ.Ͱ͵ ͬ.ͱͮ ͬ.ͱͱ Required Rate Revenues for Rate Design ͈ͭͱ.Ͱͯ ͈ͭͲ.ͮͬ ͈ͭͳ.ͭͳ ͈ͭʹ.ͮͬ ͈ͭ͵.ͮ͵ Notes: (ͭ) From Table ͳ. (ͮ) From Table ʹ (ͯ) From Table Ͳ (Ͱ) Total from Table ͵ adjusted to reflect ”Use of Reserve for Capital” and “Equipment Acquisition” shown below in this table (Table 10) (ͱ) All monetary values are in millions of dollars. (Ͳ) Totals may not tie due to rounding. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 19 Section 4 WATER COST OF SERVICE ANALYSIS The purpose of a cost-of-service analysis is to provide a rational basis for distributing the full costs of the City of Arcadia’s Public Water Utility service to each customer class in proportion to the benefits received from and burdens or demands they place on the system. Carollo developed a detailed cost allocation that serves as the basis for the proposed rate adjustments. This analysis yields an appropriate method for allocating costs, which could be sustained unless substantial changes in cost drivers or customer consumption patterns occur. The cost of service allocation completed in this study is established on the base-extra capacity method as defined by the AWWA. Under the base-extra capacity method, revenue requirements are allocated based on the demand placed on the water system. The first step in the cost of service analysis is the functional allocation which assigns annual revenue requirements by major function. The City groups its operating costs in functional divisions based on the activities that it undertakes to operate and maintain the water system. The functional divisions include: Water Administration: Includes the costs of administration, management, and technical support for the operation of the water Utility. Water Main and Replacement: Includes the costs of operating and maintaining the City’s water distribution infrastructure. Water Meter Customer Service: Includes the costs of reading, installing and maintaining water meters as well as customer service and billing activities. Water Production and Quality: Includes the costs to operate and maintain the City’s water production and treatment infrastructure as well as the costs that are paid to outside entities for water supply. 4.1 Functional Cost Components The Utility’s primary functions are related to base demand, peak demand, customer costs (customer and capacity), and water supply costs. These functional cost pools include the rate paid for water supplied by outside agencies, the system's existing operations and maintenance (O&M) expenditures, and rate-funded capital costs. The cost of service analysis has been completed using FY ͮͬͮͬ/ͮͭ revenue requirements as the test year. The City’s budget was analyzed line-item by line-item and expenditures were distributed between the available functions: Customer: Customer costs are fixed expenditures that relate to the City’s support activities, which include utility billing, customer service, and administrative support. These expenditures are common to all customers and uniformly recovered from each customer through the monthly delivery charge. Capacity: Capacity costs are annual expenditures that the City will incur each year regardless of the quantity of water sold. Capacity costs are fixed expenditures that include meter- and capacity-related costs, such as meter maintenance, that are included based on the meter’s hydraulic capacity. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 20 Base: Base costs are operating and capital costs incurred by the water system to provide a basic level of service to each customer. It is assumed that allocated costs benefit all customers uniformly and do not vary based on peak or overall volume of water used. This category also includes the costs for the planned minimal purchase of imported water. Because that purchase is driven by City policy, the costs are spread evenly over each unit of water purchased by customers. Max Day: Max day costs are operating and capital costs incurred by the water system to provide a maximum day level of service to each customer. These costs are tied to the amount of maximum day demand, as calculated in the cost of service analysis. Max Hour: Max hour costs are operating and capital costs incurred by the water system to provide a maximum hour level of service to each customer. These costs are tied to the amount of system-wide maximum hour demand, as calculated in the cost of service analysis. Supply ͭ: Supply ͭ costs include water costs for Raymond Basin and Main Basin – within allotment. These costs are further allocated to each customer class through the supply allocation. Supply ͮ: Supply ͮ costs include water cost for Main Basin – outside of allotment. These costs represent the City’s highest cost source of water. They are further allocated to each customer class through the supply allocation. Table ͭͭ details the overall allocation by expense category and division to each functional component. The allocations presented are the result of a detailed allocation that assigned each individual expense account, within each division, to each functional cost component. A table showing the line item detail of the functional allocation is included in Appendix B. Table ͭͭ Water Functional Allocation Division / Line- Item Customer Capacity Base Max Day Max Hour Supply ͭ Supply ͮ Water Admin Salaries & Wages ͭͬͬ% - - - - - - Supplies ͭͬͬ% - - - Operating Expenses Ͱʹ% Ͱͯ% - ͭͬ% - - - Water Main & Replacement Salaries & Wages - - ͱͮ% ͮʹ% ͮͬ% - - Supplies - - ͱͮ% ͮʹ% ͮͬ% - - Operating Expenses - - ͱͮ% ͮʹ% ͮͬ% - - Special Programs - ͲͰ% ͭ͵% ͭͬ% ͳ% - - Water Meter Customer Service Salaries & Wages ͮͱ% ͳͱ% - - - - - Supplies ͮͱ% ͳͱ% - - - - - Operating Expenses ͮͱ% ͳͱ% - - - - - Special Programs Ͳͯ% ͯͳ% - - - - - 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 21 Table ͭͭ Water Functional Allocation (continued) Division / Line- Item Customer Capacity Base Max Day Max Hour Supply ͭ Supply ͮ Water Production / Quality Salaries & Wages - - Ͳͱ% ͯͱ% - - - Supplies - - Ͳͱ% ͯͱ% - - - Operating Expenses - - ʹ% ͮ% - ͮͭ% Ͳ͵% Special Programs - - ͱͯ% ͮͳ% ͮͬ% - - Notes: (ͭ) Totals may not tie due to rounding. 4.2 Customer Class Peak Factor Analysis Water agencies must maintain a fair and equitable methodology for recovering costs both across and within customer classes. To accomplish this, peak factors are a standard industry practice for identifying relative demands on the utility system. The following peak factor calculations exhibit how Arcadia’s customers place demands on the system and provide a basis for recovering costs. This methodology is outlined in AWWA Mͭ Manual and is industry standard practice for allocation costs. For the remainder of this report, all City (AR), Government (GV), and Irrigation (IM) customers have been grouped together into the Government, Institutional, and Irrigation rate class, whom are all charged the same commodity rate. 4.2.1 Functional Allocation Peak Factors With the City’s costs outlined from its budget, water production and distribution costs, as well as other costs to be recovered through commodity rates, must be assigned to either the Base, Max Day, Max Hour, or Supply categories, as defined in Appendix B. The first step to allocating variable costs among these categories is the development of system demand factors. Table ͭͮ illustrates total system demand factors for the City in HCF based on FY ͮͬͭʹ/ͭ͵ usage data. Average day demand is calculated based on total usage divided by ͯͲͱ days. Max day production, max hour production, and average day of max month production were obtained from water production data provided by City staff. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 22 Table ͭͮ System Demand Factors (FY ͮͬͭʹ/ͭ͵) System Demand Factor HCF or Peak Factor(ͭ) Note/Source Average Day Demand (ADD)(ͭ) ͭͱ,ͬ͵ͭ Annual demand / ͯͲͱ Days Max Day Demand (MDD)(ͮ) ͮ͵,͵ͳͳ From SCADA data, max day production occurred in September ͮͬͭ͵ MHD / MDD (“Max Hour/Max Day Factor”) ͭ.ͮͱ Standard Max Hour / Max Day Factor Max Hour Demand (MHD) ͯͳ,Ͱͳͭ MDD times ͭ.ͮͱ Average Day Demand of Max Month ͭ͵,Ͱ͵ͭ Max month demand of ͱ͵ͮ,͵ͮͭ divided by ͯͬ.Ͱͮ average days per month MDD / MM (“Max Day/Max Month Factor”) ͭ.ͱͰ MDD / ADD (“Max Day/Average Day Factor”) ͬ.ͱͬ MHD / ADD (“Max Hour/Average Day Factor”) ͮ.Ͱʹ Notes: (ͭ) Average day demand calculated as projected sales of ͱ,ͱͬʹ,ͮͲͲ HCF divided by ͯͲͱ. (ͮ) City staff provided daily water production data for ͮͬͭͱ through ͮͬͭ͵, based on that information the maximum daily production occurred in September ͮͬͭ͵. The resulting Max Day/Average Day and Max Hour/Average Day Factors that are calculated from the system demand factors are used to determine the extra capacity allocations, which allocate base, max day, and max hour costs within the functional allocation analysis, as presented in Table ͭͯ. To develop the “Base / Max Day” functional allocation factor presented in Table ͭͯ. The Max Day/Average Day Factor is divided between base and max day, where base represents ͭ.ͬͬ of the ratio, and max day represents the remainder. The resulting “Base / Max Day” allocation factor is Ͳͱ percent to base and ͯͱ percent to max day. The same methodology is applied to the “Base / Max Day / Max Hour” functional allocation factor using the Max Hour/Average Day Factor, which results in ͱͮ percent to base, ͮʹ percent to max day, and ͮͬ percent to max hour. Table ͭͯ Extra Capacity Allocations Factor Ratio Extra Capacity Allocation (%) MDD / ADD ͭ.ͱͰ ͭͬͬ% Base ͭ.ͬͬ Ͳͱ% Max Day ͬ.ͱͰ ͯͱ% MHD / ADD ͭ.͵ͮ ͭͬͬ% Base ͭ.ͬͬ ͱͮ% Max Day ͬ.ͱͰ ͮʹ% Max Hour ͬ.ͯʹ ͮͬ% 4.2.2 Customer Class Allocation Peak Factors With the budget costs allocated to either Base, Max Day, and/or Max Hour, as well as the other functional cost categories outlined in Table ͭͭ, the next step of the cost of service analysis is to allocate each of these revenue requirement categories to a customer class. This forms the basis for recovering each function cost category from each customer class in a fair and equitable manner based on system usage. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 23 For both the Max Day and Max Hour allocations, the max day and max hour demand for each class is be calculated as follows: ͭ. Develop Max Day and Max Hour peaking factors. ͮ. Calculate max day and max hour demand. ͯ. Calculate extra capacity needed above average day demand. 4.2.2.1 Max Day Demand Peak Analysis The Max day peaking factor is calculated for each customer class as shown in Equation ͭ below. Equation ͭ Max Day Peaking Factor Calculation ܯܽݔܦܽݕܲ݁ܽ݇݅݊݃ܨܽܿݐ݋ݎ ൌ ܣݒ݃Ǥܦܽݕܦ݁݉ܽ݊݀݋݂ܯܽݔܤ݈݈݅݅݊݃ܲ݁ݎ݅݋݀ ܣݒ݃Ǥܦܽݕܦ݁݉ܽ݊݀݋݂ܨܻܧʹͲͳͻ ൈ ܵݕݏݐ݁݉ܯܽݔܦܽݕܦ݁݉ܽ݊݀ ܵݕݏݐ݁݉ܯܽݔܯ݋݊ݐ݄ܦ݁݉ܽ݊݀ ൈ ܹ݈݁݁݇ݕܷݏܽ݃݁ܣ݆݀ݑݏݐ݉݁݊ݐܨܽܿݐ݋ݎ The max day peaking factor is then multiplied by the average day demand for each class to determine the max day demand for each customer class as shown in Table ͭͰ. ADD minus max day demand equals the extra capacity that each customer class places on the system. The percent of max day extra capacity that each customer places on the system is used to allocate the total max day revenue requirement to be recovered between each class. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 24 Table ͭͰ Max Day Demand Calculation Customer Class ADD(ͮ) % of ADD Weekly Usage Adjustment Factor(ͯ) MDD Peaking (Ͳ) MDD Capacity(ͳ) Extra Capacity(ʹ) % Max Day Extra Capacity Single Family Residential - Tier ͭ ͯ,Ͳͮʹ ͮͰ.ͬ% ͭ.ͬͬ ͭ.ͲͰ ͱ,͵Ͳͯ ͮ,ͯͯͱ Ͳ.ʹ% Single Family Residential - Tiers ͮ, ͯ, & Ͱ ͱ,ͯ͵Ͱ ͯͱ.ͳ% ͮ.ͯͯ(Ͱ) ͱ.ͱͬ ͮ͵,ͲͰͯ ͮͰ,ͮͰ͵ ͳͬ.͵% Multi-Family Residential - Tier ͭ ͭ,ͯʹͲ ͵.ͮ% ͭ.ͬͬ ͭ.ͱʹ ͮ,ͭ͵ͱ ʹͬʹ ͮ.Ͱ% Multi-Family Residential - Tier ͮ ʹͮͰ ͱ.ͱ% ͭ.ͮͬ(ͱ) ͮ.ͯͰ ͭ,͵ͯͮ ͭ,ͭͬʹ ͯ.ͮ% Commercial ͮ,ͬ͵ͮ ͭͯ.͵% ͭ.ͬͬ ͭ.ʹʹ ͯ,͵ͯͰ ͭ,ʹͰͮ ͱ.Ͱ% Government, Institution, Irrigation ͭ,ͳͲͳ ͭͭ.ͳ% ͭ.Ͱͬ(ͱ) ͯ.ͭ͵ ͱ,ͲͰͭ ͯ,ʹͳͰ ͭͭ.ͯ% Total ͭͱ,ͬ͵ͭ ͭͬͬ.ͬ% Ͱ͵,ͯͬʹ ͯͰ,ͮͭͲ ͭͬͬ.ͬ% Notes: (ͭ) All figures are in HCF unless noted otherwise. (ͮ) ADD calculated as the total annual demands for each customer (Table ͭ͵) class divided by ͯͲͱ days. (ͯ) Weekly usage adjustments applied only to classes, tiers, or consumption portions that are designated as outdoor usage. (Ͱ) For residential customers, irrigation is allowed for a maximum of ͯ days per week in the summer months. (ͱ) For commercial, governmental, institutional, and irrigation customers, irrigation on properties can occur any day with approval if necessary and efficient. This assumes irrigation during business days when personnel are present (ͱ days per week). (Ͳ) Equals the product of (ADD of max billing period / ADD of FYE ͮͬͮͭ) x (System MDD / System Max Month Demand) X Weekly Usage Adjustment Factor. (ͳ) MDD Capacity is equal to the product of the MDD Peaking Factor and ADD. (ʹ) Extra Capacity is equal to the MDD Capacity minus ADD. (͵) Totals may not tie due to rounding. 4.2.2.2 Max Hour Demand Peak Analysis Similarly, a Max Hour Peaking Factor is calculated for each customer class on Equation ͮ. Equation ͮ Max Hour Peaking Factor Calculation ܯܽݔܪ݋ݑݎܲ݁ܽ݇݅݊݃ܨܽܿݐ݋ݎ ൌ ܯܽݔܦܽݕܲ݁ܽ݇݅݊݃ܨܽܿݐ݋ݎ ൈ ܵݕݏݐ݁݉ܯܽݔܪ݋ݑݎܦ݁݉ܽ݊݀ ܵݕݏݐ݁݉ܯܽݔܦܽݕܦ݁݉ܽ݊݀ The max hour peaking factor is then multiplied by the average day demand for each class to determine the max hour demand for each customer class as shown in Table ͭͱ. Average day demand minus max hour demand equals the extra capacity that each customer class places on the system. The percent of max hour extra capacity that each customer places on the system is used to allocate the total max hour revenue requirement to be recovered between each class. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 25 Table ͭͱ Max Hour Demand Calculation Customer Class ADD(ͮ) MHD Peaking Factor(ͯ) Total MHD Capacity(Ͱ) Extra Capacity(ͱ) % Max Hour Extra Capacity Single Family Residential - Tier ͭ ͯ,Ͳͮʹ ͮ.ͬͱ ͳ,ͰͱͰ ͱ,ͭͭ͵ ͭʹ.ͳ% Single Family Residential - Tiers ͮ, ͯ, & Ͱ ͱ,ͯ͵Ͱ Ͳ.ʹͳ ͯͳ,ͬͱͰ ͭͮ,ʹͬͱ ͰͲ.ͳ% Multi-Family Residential - Tier ͭ ͭ,ͯʹͲ ͭ.͵ʹ ͮ,ͳͰͯ ͭ,͵ͯͱ ͳ.ͭ% Multi-Family Residential - Tier ͮ ʹͮͰ ͮ.͵ͯ ͮ,Ͱͭͱ ͭ,ͯͬͳ Ͱ.ʹ% Commercial ͮ,ͬ͵ͮ ͮ.ͯͱ Ͱ,͵ͭͳ ͯ,ͬͳͱ ͭͭ.ͮ% Government, Institution, Irrigation ͭ,ͳͲͳ ͯ.͵͵ ͳ,ͬͱͭ ͯ,ͭͳͳ ͭͭ.Ͳ% Total ͭͱ,ͬ͵ͭ Ͳͭ,ͲͯͰ ͮͳ,Ͱͭʹ ͭͬͬ.ͬ% Notes: (ͭ) All figures are in HCF unless noted otherwise. (ͮ) ADD calculated as the total annual demands for each customer (Table ͭ͵) class divided by ͯͲͱ days. (ͯ) Equals the product of (MDD Peaking Factor (Table ͭͰ) x (System MHD / System MDD). (Ͱ) MHD Capacity is equal to the product of the MHD Peaking Factor and ADD. (ͱ) Extra Capacity is equal to the MHD Capacity minus ADD. (Ͳ) Totals may not tie due to rounding. 4.3 Functional Allocation Results Table ͭͲ summarizes the results of the functional cost allocation analysis based on the forecasted expenses for FY ͮͬͮͬ/ͮͭ. The results presented are the result of the line-item allocation of the City’s revenue requirements including operating expenditures, capital expenditures, and offsetting revenues. The full detail of the functional allocation is included for reference in Appendix B. Table ͭͲ Allocation Results Category Cost of Service Allocation Results Rate Component Customer ͭͱ.ͭ% Fixed Service Charge – recovered on a per account basis. Capacity ͳ.ͱ% Fixed Service Charge – recovered on a MEU basis. Base ͮͬ.ͭ% Commodity Charge – recovered on all units of water. Max Day ͵.ͳ% Commodity Charge – recovered from all units of water, corresponding to tier usage level. Max Hour Ͱ.ͳ% Commodity Charge – recovered from all units of water, corresponding to tier usage level. Supply ͭ ͭͬ.ͭ% Commodity Charge – recovered from all units of water, corresponding to tier usage level. Supply ͮ ͯͮ.͵% Commodity Charge – recovered from all units of water, corresponding to tier usage level. Total ͭͬͬ% Notes: (ͭ) Totals may not tie due to rounding. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 26 Using the percentage results outlined in Table ͭͲ, the total projected revenue requirement calculated (Table ͭͬ) is divided between each of the functional categories. The results of this allocation are summarized in Table ͭͳ. Table ͭͳ Functional Allocation Results Category FY ͮͬͮͬ/ͮͭ FY ͮͬͮͭ/ͮͮ FY ͮͬͮͮ/ͮͯ FY ͮͬͮͯ/ͮͰ FY ͮͬͮͰ/ͮͱ Customer ͈ͮ.ͯͮ ͈ͮ.ͰͰ ͈ͮ.ͱ͵ ͈ͮ.ͳͰ ͈ͮ.͵ͭ Capacity ͭ.ͭͲ ͭ.ͮͮ ͭ.ͮ͵ ͭ.ͯͳ ͭ.Ͱͱ Base ͯ.ͭͭ ͯ.ͮͲ ͯ.ͰͲ ͯ.ͲͲ ͯ.ʹʹ Max Day ͭ.Ͱ͵ ͭ.ͱͲ ͭ.ͲͲ ͭ.ͳͲ ͭ.ʹͲ Max Hour ͬ.ͳͮ ͬ.ͳͲ ͬ.ʹͬ ͬ.ʹͱ ͬ.͵ͬ Supply ͭ ͭ.ͱͲ ͭ.Ͳͯ ͭ.ͳͯ ͭ.ʹͰ ͭ.͵ͱ Supply ͮ ͱ.ͬͳ ͱ.ͯͮ ͱ.ͲͰ ͱ.͵ʹ Ͳ.ͯͰ Total ͈ͭͱ.Ͱͯ ͈ͭͲ.ͮͬ ͈ͭͳ.ͭͳ ͈ͭʹ.ͮͬ ͈ͭ͵.ͮ͵ Notes: (ͭ) All monetary values are in millions of dollars. (ͮ) Totals may not tie due to rounding. 4.4 Supply Allocation The available water supplies are allocated based on unit costs. Raymond Basin and Main Bain – within allotment (i.e., Supply ͭ), the lower cost sources, is used to fulfill all base demand requirements. Main Basin – outside of allotment (i.e., Supply ͮ), the more expensive source, is used to fulfill peak demand requirements. The available supply from each priority is the basis to allocate costs to each customer class and then usage to each tier (where applicable). In practice, this means that the costs of outside of allotment water are recovered from each class based on each class's incremental peak demands. Further, this approach recovers costs associated with the higher cost source of supply through the upper tiers. Allocation proportions are based on the projected consumption from each customer class for FYE ͮͬͮͭ. The allocation of available supply to each customer class was performed using the four step process described below. Step 1: Allocate MWD purchased water to all classes based on their proportional amount of total usage. Each year the City budgets to purchase a small amount (ͮͱͬ AF) of treated MWD water to cover any intermittent shutdowns of City production facilities or interruptions of City supplies due to system maintenance. These purchases are minimal, and driven by system maintenance needs rather than water demands. As such, these costs will be allocated straight to the Base functional category, and are not included in the Supply ͭ or Supply ͮ costs. Step 2: Allocate Supply ͮ water to all classes based on incremental max month usage. The incremental max month demand is assumed to represent the maximum peak monthly usage for each class. The remaining Supply ͮ water is available to be allocated to all customers in step three of the supply allocation. Step 3: Allocate remaining Supply ͮ demand to all classes based on incremental maximum ͯ-month demand. This represents each class’s incremental needs during the months when outdoor usage is most prevalent. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 27 Step 4: Allocate the remaining Supply ͮ and all of Supply ͭ to all classes based on total annual demand. This represents each class’s total usage need and allocate the remaining supplies proportionally. Table ͭʹ shows the results of the supply allocation. As shown, customer classes that place a greater burden on the system during times of peak usage (Government, Institution, Irrigation and Single Family Residential) are responsible for a greater share of the more expensive Supply ͮ water. Those that place a lower peak burden on the system (Multi-Family and Commercial) have a greater share of their consumption covered by the lower cost source of supply, Supply ͭ, as compared to the higher peaking classes. A detailed table of the supply allocation is included for reference in Appendix C. Table ͭʹ Water Supply Allocation Results Total Supply Allocation By Class Base MWD Imported Purchase Supply ͮ Main Bain Out Supply ͭ Raymond Basin + Main Basin In Class Total Government, Institution, & Irrigation Percent of Class Allocation ͭͭ,ͳͭͭ ͭ.ʹ% ͮͬ͵,͵͵ͬ ͯͮ.Ͳ% Ͱͮͯ,ͭͰͱ Ͳͱ.Ͳ% ͲͰͰ,ʹͰͲ ͭͬͬ% Commercial Percent of Class Allocation ͭͯ,ʹͲͳ ͭ.ʹ% ͮͬͯ,ͳͬͲ ͮͲ.ͳ% ͱͰͱ,͵ͳͰ ͳͭ.ͱ% ͳͲͯ,ͱͰͲ ͭͬͬ% Multi-Family Residential Percent of Class Allocation ͭͰ,Ͳͱͬ ͭ.ʹ% ͮͬͱ,ͱͲͲ ͮͱ.ͱ% ͱʹͲ,Ͱͳͭ ͳͮ.ͳ% ʹͬͲ,Ͳʹͳ ͭͬͬ% Single Family Residential Percent of Class Allocation ͱ͵,ʹͬʹ ͭ.ʹ% ͵Ͳ͵,ͬͭʹ ͮ͵.Ͱ% ͮ,ͮͲͰ,ͯͲͮ Ͳʹ.ʹ% ͯ,ͮ͵ͯ,ͭʹͳ ͭͬͬ% Total Supply Allocation (HCF) ͭͬͬ,ͬͯͲ ͭ.ʹ% ͭ,ͱʹʹ,ͮͳ͵ ͮʹ.ʹ% ͯ,ʹͭ͵,͵ͱͭ Ͳ͵.Ͱ% ͱ,ͱͬʹ,ͮͲͲ ͭͬͬ% Notes: (ͭ) All values are in HCF. (ͮ) Totals may not tie due to rounding. 4.5 Customer Class Allocation The functional allocation results presented in Table ͭͳ are next allocated to each customer class based on their projected usage, accounts, meter equivalents, max day use, max hour use, and supply allocations. Functionalized costs are allocated to each customer class based on their respective use of the overall system. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 28 Table ͭ͵ Customer Class Characteristics Category Accounts(ͭ) MEUs(ͭ) Annual Usage(ͮ,ͯ) MDD Extra Capacity(ͮ,Ͱ) MHD Extra Capacity(ͮ,ͱ) Supply ͭ Usage(ͮ,Ͳ) Supply ͮ Usage(ͮ,Ͳ) Single Family Residential ͭͭ,ͳͮͭ ͯͮ,Ͱͳ͵ ͯ,ͮ͵ͯ,ͭʹͳ ͮͲ,ͱʹͰ ͭͳ,͵ͮͰ ͮ,ͮͲͰ,ͯͲͮ ͵Ͳ͵,ͬͭʹ Multi-Family Residential ͭ,ͬʹͭ Ͱ,͵ͮͭ ʹͬͲ,Ͳʹͳ ͭ,͵ͭͲ ͯ,ͮͰͮ ͱʹͲ,Ͱͳͭ ͮͬͱ,ͱͲͲ Commercial ʹͭͰ ͯ,ͱ͵Ͳ ͳͲͯ,ͱͰͲ ͭ,ʹͰͮ ͯ,ͬͳͱ ͱͰͱ,͵ͳͰ ͮͬͯ,ͳͬͲ Government, Institution, & Irrigation Ͱͯͮ ͯ,ͬͯͰ ͲͰͰ,ʹͰͲ ͯ,ʹͳͰ ͯ,ͭͳͳ Ͱͮͯ,ͭͰͱ ͮͬ͵,͵͵ͬ Total ͭͰ,ͬͰʹ ͰͰ,ͬͮ͵ ͱ,ͱͬʹ,ͮͲͲ ͯͰ,ͮͭͲ ͮͳ,Ͱͭʹ ͯ,ʹͭ͵,͵ͱͭ ͭ,ͱʹʹ,ͮͳ͵ Notes: (ͭ) Number of accounts and MEUs based on FY ͮͬͭʹ/ͭ͵ customer billing data. (ͮ) All values are in HCF. (ͯ) Annual usage projections are set based on an analysis of the past four years of customer billing data. Projected usage for each customer class was set at the average of FY ͮͬͭʹ/ͭʹ and FY ͮͬͭʹ/ͭ͵ actual usage, to recognize that FY ͮͬͭͳ/ͭʹ represented a relatively dry year with increased water usage, and that FY ͮͬͭʹ/ͭ͵ represented a relatively wet year with decreased demands. (Ͱ) Developed in Table ͭͰ. (ͱ) Developed in Table ͭͱ. (Ͳ) Developed in Table ͭʹ and Appendix C. (ͳ) Totals may not tie due to rounding. 4.5.1 Fixed Cost Allocation The revenue requirements for Customer and Capacity functional categories presented in Table ͭͳ are allocated directly to all accounts and MEUs. The customer revenue requirement is divided by the total projected bills to produce the monthly charge per account. Similarly, the capacity revenue requirement is divided by the total projected MEUs to produce the monthly MEU charge. These two components are combined into the total monthly service charge assessed by account for each customer. This calculation follows in Table ͮͲ. 4.5.2 Variable Cost Allocation The revenue requirements for Base, Max Day, Max Hour, Supply ͭ, and Supply ͮ functional categories presented previously are recovered through commodity rates and must be distributed among each customer class as follows. 4.5.2.1 Base Allocation The Base functional category supports the City’s baseline water service. As a result, the Base category is allocated directly to each customer class based on their percent of total annual usage. Table ͮͬ summarizes the allocation of Base to each customer class. The allocated Base costs (Table ͭͳ) are distributed to each customer class based on their share of annual usage. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 29 Table ͮͬ Base Customer Allocation Category Annual Usage (HCF)(ͭ) % Annual Usage FY ͮͬͮͬ/ͮͭ FY ͮͬͮͭ/ͮͮ FY ͮͬͮͮ/ͮͯ FY ͮͬͮͯ/ͮͰ FY ͮͬͮͰ/ͮͱ Single Family Residential ͯ,ͮ͵ͯ,ͭʹͳ ͱ͵.ʹ% ͈ͭ.ʹͲ ͈ͭ.͵ͱ ͈ͮ.ͬͳ ͈ͮ.ͭ͵ ͈ͮ.ͯͮ Multi-Family Residential ʹͬͲ,Ͳʹͳ ͭͰ.Ͳ% ͬ.Ͱͱ ͬ.Ͱʹ ͬ.ͱͭ ͬ.ͱͰ ͬ.ͱͳ Commercial ͳͲͯ,ͱͰͲ ͭͯ.͵% ͬ.Ͱͯ ͬ.Ͱͱ ͬ.Ͱʹ ͬ.ͱͭ ͬ.ͱͰ Government, Institution, & Irrigation ͲͰͰ,ʹͰͲ ͭͭ.ͳ% ͬ.ͯͲ ͬ.ͯʹ ͬ.Ͱͬ ͬ.Ͱͯ ͬ.Ͱͱ Total ͱ,ͱͬʹ,ͮͲͲ ͭͬͬ% ͈ͯ.ͭͭ ͈ͯ.ͮͲ ͈ͯ.ͰͲ ͈ͯ.ͲͲ ͈ͯ.ʹʹ Notes: (ͭ) From Table ͭ͵. (ͮ) All monetary values are in millions of dollars. (ͯ) Totals may not tie due to rounding. 4.5.2.2 Max Day Allocation The Max Day functional category supports the peak, maximum day water demand of all customers. To determine the amount of max day demand that each customer class places on the system, a max day peaking factor is calculated for each class (see Equation ͭ). The max day peaking factor is then multiplied by the average day demand for each class to determine the max day demand for each customer class (see Table ͭͰ). Average day demand minus max day demand equals the extra capacity that each customer class places on the system. The percent of max day demand that each customer class places on the system is presented in Table ͮͭ. The total revenue to be recovered through max day shown in Table ͭͳ is allocated to each class by applying the percent max day usage derived in Table ͭͰ. Table ͮͭ Max Day Customer Allocation Category % Max Day Usage FY ͮͬͮͬ/ͮͭ FY ͮͬͮͭ/ͮͮ FY ͮͬͮͮ/ͮͯ FY ͮͬͮͯ/ͮͰ FY ͮͬͮͰ/ͮͱ Single Family Residential ͳͳ.ͳ% ͈ͭ.ͭͲ ͈ͭ.ͮͭ ͈ͭ.ͮ͵ ͈ͭ.ͯͲ ͈ͭ.Ͱͱ Multi-Family Residential ͱ.Ͳ% ͬ.ͬʹ ͬ.ͬ͵ ͬ.ͬ͵ ͬ.ͭͬ ͬ.ͭͬ Commercial ͱ.Ͱ% ͬ.ͬʹ ͬ.ͬʹ ͬ.ͬ͵ ͬ.ͬ͵ ͬ.ͭͬ Government, Institution, & Irrigation ͭͭ.ͯ% ͬ.ͭͳ ͬ.ͭʹ ͬ.ͭ͵ ͬ.ͮͬ ͬ.ͮͭ Total ͭͬͬ% ͈ͭ.Ͱ͵ ͈ͭ.ͱͲ ͈ͭ.ͲͲ ͈ͭ.ͳͲ ͈ͭ.ʹͲ Notes: (ͭ) All monetary values are in millions of dollars. (ͮ) Totals may not tie due to rounding. 4.5.2.3 Max Hour Allocation The Max Hour functional category supports the max water demand of all customers. Like max day demand, a max hour demand peaking factor is calculated for each class to determine the max hour demand that each customer class places on the system. The max hour peaking factor is then multiplied by the average day demand for each class to determine the max hour demand for each customer class. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 30 Average day demand minus max day demand represents the extra capacity that each customer class places on the system. The percent of max day demand that each customer class places on the system is presented in Table ͮͮ. The total revenue to be recovered through max hour shown in Table ͭͳ is allocated to each class by applying the percent max hour usage derived in Table ͭͱ. Table ͮͮ Max Hour Customer Allocation Category % Max Hour Usage FY ͮͬͮͬ/ͮͭ FY ͮͬͮͭ/ͮͮ FY ͮͬͮͮ/ͮͯ FY ͮͬͮͯ/ͮͰ FY ͮͬͮͰ/ͮͱ Single Family Residential Ͳͱ.Ͱ% ͈ͬ.Ͱͳ ͈ͬ.ͱͬ ͈ͬ.ͱͯ ͈ͬ.ͱͲ ͈ͬ.ͱ͵ Multi-Family Residential ͭͭ.ʹ% ͬ.ͬ͵ ͬ.ͬ͵ ͬ.ͭͬ ͬ.ͭͬ ͬ.ͭͭ Commercial ͭͭ.ͮ% ͬ.ͬʹ ͬ.ͬ͵ ͬ.ͬ͵ ͬ.ͭͬ ͬ.ͭͬ Government, Institution, & Irrigation ͭͭ.Ͳ% ͬ.ͬʹ ͬ.ͬ͵ ͬ.ͬ͵ ͬ.ͭͬ ͬ.ͭͬ Total ͭͬͬ% ͈ͬ.ͳͮ ͈ͬ.ͳͲ ͈ͬ.ʹͬ ͈ͬ.ʹͱ ͈ͬ.͵ͬ Notes: (ͭ) All values are in millions of dollars. (ͮ) Totals may not tie due to rounding. 4.5.2.4 Supply 1 Allocation The Supply ͭ functional category supports the supply costs associated with Raymond Basin and Main Basin – within allotment water supplies. Using the results of the Supply Allocation, the percent of Supply ͭ demand for each customer class developed in Table ͭʹ is used to proportionally allocate Supply ͭ costs (Table ͭͳ) to each customer class, as shown in Table ͮͯ. Table ͮͯ Supply ͭ Customer Allocation Category % Supply ͭ Usage FY ͮͬͮͬ/ͮͭ FY ͮͬͮͭ/ͮͮ FY ͮͬͮͮ/ͮͯ FY ͮͬͮͯ/ͮͰ FY ͮͬͮͰ/ͮͱ Single Family Residential ͱ͵.ͯ% ͈ͬ.͵ͮ ͈ͬ.͵ͳ ͈ͭ.ͬͯ ͈ͭ.ͬ͵ ͈ͭ.ͭͱ Multi-Family Residential ͭͱ.Ͱ% ͬ.ͮͰ ͬ.ͮͱ ͬ.ͮͳ ͬ.ͮʹ ͬ.ͯͬ Commercial ͭͰ.ͯ% ͬ.ͮͮ ͬ.ͮͯ ͬ.ͮͱ ͬ.ͮͲ ͬ.ͮʹ Government, Institution, & Irrigation ͭͭ.ͭ% ͬ.ͭͳ ͬ.ͭʹ ͬ.ͭ͵ ͬ.ͮͬ ͬ.ͮͮ Total ͭͬͬ% ͈ͭ.ͱͲ ͈ͭ.Ͳͯ ͈ͭ.ͳͯ ͈ͭ.ʹͰ ͈ͭ.͵ͱ Notes: (ͭ) All values are in millions of dollars. (ͮ) Totals may not tie due to rounding. 4.5.2.5 Supply 2 Allocation The Supply ͮ functional category supports the supply costs associated with Main Basin – outside of allotment water supplies. Similar to Supply ͭ, using the results of the Supply Allocation (Table ͭʹ), the percent of Supply ͮ demand for each customer class is used to proportionally allocate Supply ͮ costs (Table ͭͳ) to each customer class, as shown in Table ͮͰ. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 31 Table ͮͰ Supply ͮ Customer Allocation Category % Supply ͮ Usage FY ͮͬͮͬ/ͮͭ FY ͮͬͮͭ/ͮͮ FY ͮͬͮͮ/ͮͯ FY ͮͬͮͯ/ͮͰ FY ͮͬͮͰ/ͮͱ Single Family Residential Ͳͭ.ͬ% ͈ͯ.ͬ͵ ͈ͯ.ͮͱ ͈ͯ.ͰͰ ͈ͯ.Ͳͱ ͈ͯ.ʹͳ Multi-Family Residential ͭͮ.͵% ͬ.ͲͲ ͬ.Ͳ͵ ͬ.ͳͯ ͬ.ͳͳ ͬ.ʹͮ Commercial ͭͮ.ʹ% ͬ.Ͳͱ ͬ.Ͳʹ ͬ.ͳͮ ͬ.ͳͳ ͬ.ʹͭ Government, Institution, & Irrigation ͭͯ.ͮ% ͬ.Ͳͳ ͬ.ͳͬ ͬ.ͳͱ ͬ.ͳ͵ ͬ.ʹͰ Total ͭͬͬ% ͈ͱ.ͬͳ ͈ͱ.ͯͮ ͈ͱ.ͲͰ ͈ͱ.͵ʹ ͈Ͳ.ͯͰ Notes: (ͭ) All values are in millions of dollars. (ͮ) Totals may not tie due to rounding. Section 5 WATER RATE DESIGN The rate design analysis links the customer class costs with the water rates necessary to achieve cost recovery. The focus of this process is to achieve full cost recovery and substantiate that each customer class and individual user is paying their fair and proportionate share of system costs. With costs equitably allocated to each customer class as outlined in Section Ͱ, the City has some flexibility in designing a rate structure that meets its policy and fiscal objectives. In determining the appropriate rates and rate structure, Carollo analyzed various rate design alternatives, considering the impacts to both the City and its customers. Carollo used the following criteria in selecting an appropriate rate structure: x Clear and understandable. x Easily administered. x Follows cost of service principles. x Provides revenue stability. x Provides affordability. x Complies with legal and regulatory requirements. Given the numerous and competing elements of rate design, selection of an appropriate rate structure is complex. There is no single structure that meets all objectives equally. Furthermore, priority objectives vary across agencies. Each objective has merit and plays an important role when implementing changes and evaluating the overall effectiveness of proposed changes. These elements and competing objectives were discussed and evaluated at length throughout the financial and rate study process. Based on discussion with City staff and detailed review of the cost of service analysis and customer usage data, Carollo recommends the following rate design updates: x Maintain fixed service charge to best reflect how actual system costs are incurred. x Maintain a four-tier rate structure for Single Family residential customers with seasonally adjusted, meter size specific tier allotments. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 32 x Update Single Family tier limits to better reflect system usage. x Maintain a two tier rate structure for Multi-Family customers with water allocations based on the number of dwelling units in each multi-family complex. x Maintain customer class specific uniform rates for other customer classes. 5.1 Proposed Fixed Charge The City’s current bimonthly fixed charge is a cost recovery mechanism that facilitates recovery of fixed expenditures, including meter and customer related costs. This charge includes a portion of the capacity related costs to provide a stable source of revenue independent of monthly water demand. The fixed charge is a combination of the Customer and Capacity functional components. The Customer component covers costs that apply to all accounts in the system, regardless of usage or the size of the connection to the system. The Capacity component is applied to each customer based on their water meter size and its associated number of MEUs. Unit costs for each fixed component are calculated by dividing the allocated Customer and Capacity costs by the number of accounts and number of MEUs, respectively, as shown in Table ͮͱ. Table ͮͱ Water Fixed Unit Costs Functional Component FY ͮͬͮͬ/ͮͭ Cost (millions)(ͭ) Units(ͮ) FY ͮͬͭ͵/ͮͬ Bi-Monthly Unit Cost Customer ͈ͮ.ͯͮ ͭͰ,ͬͰʹ Accounts ͈ͮͳ.ͱͳ Capacity ͈ͭ.ͭͲ ͰͰ,ͬͮ͵ MEUs ͈Ͱ.ͯʹ Notes: (ͭ) From Table ͭͳ. (ͮ) From Table ͭ͵. (ͯ) Totals may not tie due to rounding. The bi-monthly fixed charges are determined by adding the bi-monthly customer component to the bi- monthly capacity component as shown in Table ͮͲ. To determine the capacity component for each meter size, the meter unit cost is multiplied by the meter capacity ratios previously developed by the City to calculate the meter capacity cost. These ratios are based on the typical maximum flow for each meter size identified in the AWWA Mͭ Manual. Table ͮͲ Bi-Monthly Fixed Charge Components (FY ͮͬͮͬ/ͮͭ) Meter Size Capacity Ratio Capacity Component Customer Component Total Bi-Monthly Charge (ͭ) ͱ/ʹ" ͭ.ͬͬ ͈Ͱ.ͯʹ ͈ͮͳ.ͱͳ ͈ͯͭ.͵Ͳ ͯ/Ͱ" ͭ.ͱͬ Ͳ.ͱͳ ͮͳ.ͱͳ ͯͰ.ͭͱ ͭ" ͮ.ͱͬ ͭͬ.͵ͱ ͮͳ.ͱͳ ͯʹ.ͱͯ ͭ.ͱ" ͱ.ͬͬ ͮͭ.͵ͬ ͮͳ.ͱͳ Ͱ͵.Ͱʹ ͮ" ʹ.ͬͬ ͯͱ.ͬͰ ͮͳ.ͱͳ Ͳͮ.Ͳͮ ͯ" ͭͱ.ͬͬ Ͳͱ.ͳͭ ͮͳ.ͱͳ ͵ͯ.ͮʹ Ͱ" ͮͱ.ͬͬ ͭͬ͵.ͱͭ ͮͳ.ͱͳ ͭͯͳ.ͬ͵ Ͳ" ͱͱ.ͬͬ ͮͰͬ.͵ͯ ͮͳ.ͱͳ ͮͲʹ.ͱͬ ʹ" ͵ͬ.ͬͬ ͯ͵Ͱ.ͮͱ ͮͳ.ͱͳ Ͱͮͭ.ʹͮ ͭͬ" ͭͰͬ.ͬͬ Ͳͭͯ.ͮͳ ͮͳ.ͱͳ ͲͰͬ.ʹͱ Notes: (ͭ) Totals may not tie due to rounding. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 33 Table ͮͳ summarizes the proposed bi-monthly fixed charge for the five-year rate setting period. Table ͮͳ Proposed Bi-Monthly Fixed Charge Meter Size Current Rate FY ͮͬͮͬ/ͮͭ FY ͮͬͮͭ/ͮͮ FY ͮͬͮͮ/ͮͯ FY ͮͬͮͯ/ͮͰ FY ͮͬͮͰ/ͮͱ Increase N/A ͱ.ͬ% overall with COS(ͭ) ͱ.ͬ% Ͳ.ͬ% Ͳ.ͬ% Ͳ.ͬ% ͱ/ʹ" ͈ͯͬ.ͯͯ ͈ͯͭ.͵Ͳ ͈ͯͯ.ͱͲ ͈ͯͱ.ͱͳ ͈ͯͳ.ͳͭ ͈ͯ͵.͵ͳ ͯ/Ͱ" ͯͮ.Ͱͬ ͯͰ.ͭͱ ͯͱ.ʹͲ ͯʹ.ͬͭ Ͱͬ.ͮ͵ Ͱͮ.ͳͭ ͭ" ͯͲ.ͱͱ ͯʹ.ͱͯ Ͱͬ.ͰͲ Ͱͮ.ʹʹ Ͱͱ.ͰͲ Ͱʹ.ͭʹ ͭ.ͱ" ͰͲ.͵ͯ Ͱ͵.Ͱʹ ͱͭ.͵Ͳ ͱͱ.ͬͳ ͱʹ.ͯʹ Ͳͭ.ʹʹ ͮ" ͱ͵.ͯ͵ Ͳͮ.Ͳͮ Ͳͱ.ͳͱ Ͳ͵.ͳͬ ͳͯ.ʹʹ ͳʹ.ͯͭ ͯ" ʹʹ.Ͱͱ ͵ͯ.ͮ͵ ͵ͳ.͵ͱ ͭͬͯ.ʹͯ ͭͭͬ.ͬͲ ͭͭͲ.ͲͲ Ͱ" ͭͮ͵.͵ͳ ͭͯͳ.ͬ͵ ͭͰͯ.͵ͱ ͭͱͮ.ͱʹ ͭͲͭ.ͳͰ ͭͳͭ.ͰͰ Ͳ" ͮͱͰ.ͱͯ ͮͲʹ.ͱͭ ͮʹͭ.͵ͯ ͮ͵ʹ.ʹͱ ͯͭͲ.ͳʹ ͯͯͱ.ͳ͵ ʹ" ͯ͵͵.ʹͱ Ͱͮͭ.ʹͯ ͰͰͮ.͵ͮ ͰͲ͵.Ͱ͵ Ͱ͵ͳ.ͲͲ ͱͮͳ.ͱͮ ͭͬ" Ͳͬͳ.Ͱͱ ͲͰͬ.ʹͱ Ͳͳͮ.ʹ͵ ͳͭͯ.ͮͳ ͳͱͲ.ͬͲ ʹͬͭ.Ͱͯ Notes: (ͭ) Proposed rates for FY ͮͬͮͬ/ͮͭ include a cost of service (COS) adjustment based on the updated analysis. Proposed rates for FY ͮͬͮͭ/ͮͮ are calculated by applying the revenue requirement increase of ͱ.ͬ percent, and FY ͮͬͮͮ/ͮͯ through FY ͮͬͮͰ/ͮͱ are calculated by applying the revenue requirement increases of Ͳ.ͬ percent per year to the COS adjusted rates. (ͮ) Bi-monthly charges are rounded to the nearest ͈ͬ.ͬͭ. 5.2 Commodity Rates The commodity rates are developed for each customer class group and are designed to recover the costs proportionate to water demands. Cost of service based rates were developed for each customer class based on the principle of maintaining vertical and horizontal customer-class equity. Customer classes, such as single-family residential or commercial, only pay for their assigned share of costs of service, and within each customer class, each account will pay a fair share of the costs assigned to that customer class. Customer related commodity costs are calculated based on the class group’s average annual water usage and its annualized summer consumption. The water commodity rate for each customer class group is calculated based on the customer class’ cost (required revenues) and the forecasted annual water demands. The proposed bimonthly commodity based rates are shown in Table ͮʹ. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 34 Table ͮʹ Proposed Water Rates Customer Class Current Rate FY ͮͬͮͬ/ͮͭ FY ͮͬͮͭ/ͮͮ FY ͮͬͮͮ/ͮͯ FY ͮͬͮͯ/ͮͰ FY ͮͬͮͰ/ͮͱ Increase N/A ͱ.ͬ% overall with COS(ͭ) ͱ.ͬ% Ͳ.ͬ% Ͳ.ͬ% Ͳ.ͬ% Single Family Residential Tier ͭ ͈ͭ.ʹͮ ͈ͭ.͵ͭ ͈ͮ.ͬͬ ͈ͮ.ͭͮ ͈ͮ.ͮͱ ͈ͮ.ͯʹ Tier ͮ ͮ.ͮͯ ͮ.ͯͮ ͮ.ͰͰ ͮ.ͱ͵ ͮ.ͳͰ ͮ.͵ͭ Tier ͯ ͮ.ͱͯ ͮ.ͯ͵ ͮ.ͱͭ ͮ.ͲͲ ͮ.ʹͮ ͮ.͵͵ Tier Ͱ ͮ.ͳͮ ͯ.ͬͬ ͯ.ͭͱ ͯ.ͯͰ ͯ.ͱͰ ͯ.ͳͱ Multi-Family Residential Tier ͭ ͈ͭ.Ͳ͵ ͈ͭ.ʹͮ ͈ͭ.͵ͭ ͈ͮ.ͬͮ ͈ͮ.ͭͰ ͈ͮ.ͮͳ Tier ͮ ͭ.͵ͳ ͮ.ͬͭ ͮ.ͭͭ ͮ.ͮͯ ͮ.ͯͳ ͮ.ͱͭ Commercial ͈ͭ.ʹͭ ͈ͭ.͵ͮ ͈ͮ.ͬͮ ͈ͮ.ͭͰ ͈ͮ.ͮͳ ͈ͮ.Ͱͬ Government, Institutional, and Irrigation ͈ͮ.ͭͯ ͈ͮ.ͮͳ ͈ͮ.ͯʹ ͈ͮ.ͱͮ ͈ͮ.Ͳͳ ͈ͮ.ʹͯ Notes: (ͭ) Proposed rates for FY ͮͬͮͬ/ͮͭ include a cost of service (COS) adjustment based on the updated analysis. Proposed rates for FY ͮͬͮͭ/ͮͮ are calculated by applying the revenue requirement increase of ͱ.ͬ percent, and FY ͮͬͮͮ/ͮͯ through FY ͮͬͮͰ/ͮͱ are calculated by applying the revenue requirement increases of Ͳ.ͬ percent per year to the COS adjusted rates. (ͮ) Rates are rounded to the nearest ͈ͬ.ͬͭ. 5.2.1 Single Family Residential Rates It is important that the proposed water rate structure passes the true cost of providing water service on to the customers who utilize that service and in doing so promotes efficient water usage. Continuing the use of a tiered rate structure for single-family customers is critical in order to achieve these objectives. The study reviewed Single Family tiered usage to determine what adjustments should be made to continue accurately allocating costs to each tier. The proposed Single Family rate structure is designed to proportionately allocate a greater share of the costs of service to those whose higher water usage generates additional costs to the water utility and incidentally promotes efficient water usage and conservation, while avoiding and minimizing administrative impacts associated with a more complex rate structure such as individual water budgets. The proposed rate structure is an inclining block rate structure designed to reflect the City’s various sources of supply coupled with a single-family home’s specific consumption patterns. 5.2.1.1 Tier Allotments The Single Family residential customer class has been split to recognize each of the available meter sizes. As was adopted in the ͮͬͭͱ Cost of Service Study, the tier allocations were determined by analyzing the relationship between meter size, MEUs, and consumption patterns. The proposed rates retain this structure. Historically and in the proposed rate structure, the City’s fixed service charges have been based on the size of each customer’s water meter. Charges are higher for larger meters based on the MEUs associated with each size of meter. By paying these higher fixed charges, customers with larger meters have reserved additional system capacity as compared to those with smaller meters. As such, the tier breaks for each meter size can reflect the incremental capacity maintained by each meter size. Setting the tier allotments in 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 35 this manner allows for demands from users with each meter size to be satisfied with a similar blend of water from the City’s water sources. Additionally, this analysis provides that each meter size is being apportioned an equivalent allocation of peak costs based on system characteristics, rather than demand alone. Rather than adjusting allotments based only on MEUs, an analysis of the customers’ seasonal usage used to determine the incremental water needs for each meter size. Seasonal adjustments of the tier structure allow rates to be tailored to consumption patterns and effectively recover the costs of providing water for each tier throughout the year. They also allow for the capacity reserved by each meter size to be reflective of the varied capacity need during the winter and summer months. Allotments are decreased in the winter months to reflect that if used efficiently, less water is needed for outdoor uses in the winter months. During the winter months, users move more quickly through Tier ͮ and Tier ͯ, paying for a greater share of more expensive water supplies. During the summer, Tier ͮ and Tier ͯ are expanded to reflect the additional capacity that is required for and reserved by each meter size during the hotter and dryer part of the year. As a secondary benefit, the seasonal adjustments help to promote year-round efficient water usage. As was adopted in the ͮͬͭͱ Cost of Service Study, seasons were determined based on historical consumption patterns as well as long-term weather patterns. The rate structure accounts for winter and summer usage. Bills for water usage in the months of November through April will be calculated using winter allotments. Bills for water usage in the months of May through October will be calculated using the higher summer allotments. An analysis of Single Family Residential water demand for FY ͮͬͭͳ/ͭʹ and FY ͮͬͭʹ/ͭ͵ was performed to assess the current tier break points. Based on the analysis adjustments to some of the tier breakpoints are necessary to realign tier usage with each meter size to current demand patterns. The following tier break adjustments are proposed in Table ͮ͵. These updated tier break points reflect the actual usage of the Single Family Residential customer class in FY ͮͬͭͳ/ͭʹ and FY ͮͬͭʹ/ͭ͵. Tier ͭ, Indoor Usage: Tier ͭ is intended to provide a basic allotment of water for indoor usage. The Tier ͭ break point will remain set at ͭͭ HCF per month (ͮͮ HCF bi-monthly). The allotment is not seasonally adjusted as indoor usage is not impacted by seasonal weather patterns. This allotment would provide a household of ͱ people with approximately ͱͱ gallons per person per day, consistent with State guidance. Tiers ͮ, ͯ, and Ͱ, Outdoor Usage: Tiers ͮ, ͯ, and Ͱ are intended to cover outdoor water usage. The breakpoints were initially developed for the ͮͬͭͱ through an analysis of usage by meter size, assumed irrigable area, and typical water needs for native landscaping and turf. The pricing for each tier is increased by allocating progressively more expensive water to the upper tiers. Tier ͮ, Efficient Outdoor Usage: Tier ͮ is intended to provide an allotment of water to each customer for efficient landscape use such as minimal turf or native plants. The break points are seasonally adjusted to recognize that more water is required in the summer months due to the weather. Tier ͮ break points were adjusted for specific meter sizes based on the consumption characteristics observed in the FY ͮͬͭͳ/ͭʹ and FY ͮͬͭʹ/ͭ͵ customer billing data. Tier ͯ, High Outdoor Usage: Tier ͯ is intended to provide an allotment of water to each customer for high water use landscaping use such a full turf yard. The break points are set such that the sum of the Tier ͮ and Tier ͯ allotments would support high use landscaping. The break points are seasonally adjusted to recognize that more water is required in the summer months due to the weather. Tier ͯ break points were adjusted for specific meter sizes based on the consumption characteristics observed in the FY ͮͬͭͳ/ͭʹ and FY ͮͬͭʹ/ͭ͵ customer billing data. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 36 Tier Ͱ, Inefficient Outdoor Usage: Tier Ͱ is intended to recover the costs of water usage beyond what is considered to be efficient. The need to provide water for this level of consumption drives additional purchases of replenishment water and impacts the operation of the system by driving a higher seasonal and daily peak. Table ͮ͵ Proposed Updated Seasonal Bi-Monthly Tier Break Points Meter Size ͱ/ʹ” ͯ/Ͱ” ͭ” ͭ.ͱ” ͮ” Winter (November through April) Tier ͭ ͮͮ HCF ͮͮ HCF ͮͮ HCF ͮͮ HCF ͮͮ HCF Tier ͮ ͯͮ ͯͰ Ͱͮ Ͱʹ Ͳͬ Tier ͯ Ͱͮ ͰͰ ͱʹ ͳͬ ͵ͬ Tier Ͱ >Ͱͮ >ͰͰ >ͱʹ >ͳͬ >͵ͬ Summer (May through October) Tier ͭ ͮͮ HCF ͮͮ HCF ͮͮ HCF ͮͮ HCF ͮͮ HCF Tier ͮ ͯͰ Ͱͮ Ͳͬ ͳͬ ͵Ͱ Tier ͯ ͰͰ ͱʹ ͵ͮ ͭͭͮ ͭͰʹ Tier Ͱ >ͰͰ >ͱʹ >͵ͮ >ͭͭͮ >ͭͰʹ Notes: (ͭ) One unit equals one HCF. 5.2.1.2 Tiered Rates Cost Components The recommended rate calculation approach is based on a rate component “layering” methodology using the remaining cost components that are not recovered through the fixed charges – water supply (Supply ͭ and Supply ͮ), Base, Max Day, and Max Hour. Costs are allocated to each tier based on specific parameters that define the incremental burden of satisfying demands in each tier. For example, Max Day costs are allocated to each tier based on tier specific peak factors that were determined through an analysis of customer billing data. The following section outlines the specific allocation process for each cost component. Figure ͱ below summarized the cost components that are collected through each tier’s rate. Figure ͱ Single Family Tiers’ Cost Components 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 37 5.2.1.3 Proposed Single Family Volumetric Rates As discussed above, single Family commodity rates recover costs allocated to Base, Max Day, Max Hour, Supply ͭ, and Supply ͮ functional categories. The rates are calculated by allocating the Single Family class’ share of each cost to each of the tiers, then dividing the total cost allocated to each tier by the consumption per tier. The following tables outline the allocation costs from each functional category to each tier and the calculation of the proposed rates for FY ͮͬͮͬ/ͮͭ. Proposed rates for FY ͮͬͮͭ/ͮͮ are calculated by applying the revenue requirement increase of ͱ.ͬ percent to the FY ͮͬͮͬ/ͮͭ cost of service adjusted rates, and Ͳ.ͬ percent per year from FY ͮͬͮͮ/ͮͯ through FY ͮͬͮͰ/ͮͱ. The base cost component is allocated to each Single Family tier based on the max month/average month usage within each tier. These calculations are shown in Appendix E. The weighting factor is then used to proportionally allocate the total base cost to each Single Family tier, as shown in Table ͯͬ. Table ͯͬ Single Family Base Rate Component Allocation Tier Base Cost Allocation to Tier FY ͮͬͮͬ/ͮͭ Costs (million) Single Family Base Costs ͭͬͬ% ͈ͭ.ʹͲ Tier ͭ Ͱͬ% ͈ͬ.ͳͱ Tier ͮ ͯͬ% ͬ.ͱͲ Tier ͯ ͭͮ% ͬ.ͮͮ Tier Ͱ ͭʹ% ͬ.ͯͯ Notes: (ͭ) All monetary values in millions of dollars. (ͮ) Totals may not tie due to rounding. The Single Family max day rate is allocated to each tier based on specific weighting factors as shown in Table ͯͭ. To allocate the max day revenue to Tier ͭ, the total revenue to recover is divided by the sum- product of each tier’s allocation weight and demand, multiplied by the allocation weight for Tier ͭ, as shown in Appendix E. Table ͯͭ presents the max day rate component allocated to each tier. Table ͯͭ Single Family Max Day Rate Component Allocation Tier Max Day Cost Allocation to Tier FY ͮͬͮͬ/ͮͭ Costs(million) Single Family Max Day Costs ͭͬͬ% ͈ͭ.ͭͲ Tier ͭ ͯͭ% ͈ͬ.ͯͲ Tier ͮ ͯͰ% ͬ.ͯ͵ Tier ͯ ͭͰ% ͬ.ͭͳ Tier Ͱ ͮͬ% ͬ.ͮͯ Notes: (ͭ) All monetary values in millions of dollars. (ͮ) Totals may not tie due to rounding. Similar to the max day rate component, the Single Family max hour rate is allocated to each tier based on specific weighting factors as shown in Table ͯͮ. To allocate the max hour revenue to Tier ͭ, the total revenue to recover is divided by the sum-product of each tier’s allocation weight and demand, multiplied by the allocation weight for Tier ͭ, as shown in Appendix E. Table ͯͮ presents the max hour rate component allocated to each tier. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 38 Table ͯͮ Single Family Max Hour Rate Component Allocation Tier Max Hour Cost Allocation to Tier FY ͮͬͮͬ/ͮͭ Costs (million) Single Family Max Hour Costs ͭͬͬ% ͈ͬ.Ͱͳ Tier ͭ ͯͭ% ͈ͬ.ͭͱ Tier ͮ ͯͰ% ͬ.ͭͲ Tier ͯ ͭͰ% ͬ.ͬͳ Tier Ͱ ͮͬ% ͬ.ͭͬ Notes: (ͭ) All monetary values in millions of dollars. (ͮ) Totals may not tie due to rounding. Usage in each of the single family tiers is satisfied with a blend of water from the City’s water supply source. As usage progresses up through the tiers, it is satisfied with an increasing share of water from the more expensive source of supply, main basin pumping above allotment, defined in this report as Supply ͮ. The blend of supply ͭ and Supply ͮ water in each tier is based on an allocation of supplies to each tier that relies on the peak profile of each tier. Additionally, the allocation is set such that no water from the City’s most inexpensive source, the Raymond Basins, is used to cover usage in Tier Ͱ. Supplies are allocated to each tier using a three-step process. First, water from Supply ͭ and Supply ͮ is allocated to Tier Ͱ to cover excessive outdoor usage. The blend of Supply ͮ (more expensive water) and Supply ͭ (lower cost water) is determined by adjusting the overall blend of Supply ͭ and Supply ͮ water available to the Single Family class, adjusted such that no water from the Raymond basins (the City’s lowest cost resource) is allocated to Tier Ͱ. Next, the remaining supplies are allocated among Tiers ͭ, ͮ, and ͯ based on each tier’s usage and peak factor. Table ͯͯ shows the allocation of supplies to each tier. The amount of Supply ͭ and Supply ͮ water allocated covers all usage in each tier less each tier’s proportional allocation of MWD treated imported water. Additional detail of the supply allocation to each tier is included for reference in Appendix E. The Supply ͭ and Supply ͮ costs allocated to each Single Family tier are shown in Table ͯͰ and Table ͯͱ. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 39 Table ͯͯ Single Family Tier Supply Allocations Tier MWD Imported Supply ͭ Supply ͮ Tier Total Allocated HCF(ͭ) Tier ͭ ͮͰ,ͬͱͬ ͭ,ͬͯʹ,ͯͬͰ ͮͲͭ,͵ͮͬ ͭ,ͯͮͰ,ͮͳͰ Tier ͮ ͭʹ,ͬͰͱ Ͳ͵ͬ,͵ͭʹ ͮʹͰ,ͲͰ͵ ͵͵ͯ,Ͳͭͮ Tier ͯ ͳ,ͮͰͬ ͮͳͭ,ͱͲͬ ͭͭ͵,ʹͳͲ ͯ͵ʹ,ͲͳͲ Tier Ͱ ͭͬ,Ͱͳͮ ͮͲͯ,ͱʹͬ ͯͬͮ,ͱͳͮ ͱͳͲ,ͲͮͰ Total ͱ͵,ʹͬʹ ͮ,ͮͲͰ,ͯͲͭ ͵Ͳ͵,ͬͭʹ ͯ,ͮ͵ͯ,ͭʹͳ Percent Share per Tier(ͮ) Tier ͭ Ͱͬ% ͰͲ% ͮͳ% Ͱͬ% Tier ͮ ͯͬ% ͯͭ% ͮ͵% ͯͬ% Tier ͯ ͭͮ% ͭͮ% ͭͮ% ͭͮ% Tier Ͱ ͭʹ% ͭͮ% ͯͭ% ͭʹ% Total ͭͬͬ% ͭͬͬ% ͭͬͬ% ͭͬͬ% Notes: (ͭ) Water supplies allocated to single family in Table ͭʹ are allocated to each tier as shown in Appendix E. (ͮ) Percent share of water from each supply based on the above supply allocations. (ͯ) Totals may not tie due to rounding. Table ͯͰ Single Family Supply ͭ Rate Component Allocation Tier Supply ͭ Cost Allocation to Tier(ͭ) FY ͮͬͮͬ/ͮͭ Costs (million)(ͮ) Single Family Supply ͭ Costs ͭͬͬ% ͈ͬ.͵ͮ Tier ͭ ͰͲ% ͈ͬ.Ͱͮ Tier ͮ ͯͭ% ͬ.ͮʹ Tier ͯ ͭͮ% ͬ.ͭͭ Tier Ͱ ͭͮ% ͬ.ͭͭ Notes: (ͭ) From Table ͯͯ. (ͮ) Total single family share of supply ͭ costs from Table ͮͯ. (ͯ) All monetary values in millions of dollars. (Ͱ) Totals may not tie due to rounding. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 40 Table ͯͱ Single Family Supply ͮ Rate Component Allocation Tier Supply ͮ Cost Allocation to Tier(ͭ) FY ͮͬͮͬ/ͮͭ Costs (million)(ͮ) Single Family Supply ͮ Costs ͭͬͬ% ͈ͯ.ͬ͵ Tier ͭ ͮͳ% ͈ͬ.ʹͰ Tier ͮ ͮ͵% ͬ.͵ͭ Tier ͯ ͭͮ% ͬ.ͯʹ Tier Ͱ ͯͭ% ͬ.͵ͳ Notes: (ͭ) From Table ͯͯ. (ͮ) Total single family share of supply ͮ costs from Table ͮͰ. (ͯ) All monetary values in millions of dollars. (Ͱ) Totals may not tie due to rounding. The combination of the Base, Max Day, Max Hour, Supply ͭ, and Supply ͮ costs allocated to each Single Family tier divided by the total projected usage within each tier equals the total rate for each tier as shown in Table ͯͲ. Table ͯͲ Proposed Single Family Rates Tier FY ͮͬͮͬ/ͮͭ Total Costs (millions)(ͭ) Consumption (HCF)(ͮ) FY ͮͬͮͬ/ͮͭ Proposed Rate (͈/HCF) Tier ͭ ͈ͮ.ͱͮ ͭ,ͯͮͰ,ͮͳͰ ͈ͭ.͵ͭ Tier ͮ ͮ.ͯͭ ͵͵ͯ,Ͳͭͮ ͈ͮ.ͯͮ Tier ͯ ͬ.͵ͱ ͯ͵ʹ,ͲͳͲ ͈ͮ.ͯ͵ Tier Ͱ ͭ.ͳͯ ͱͳͲ,ͲͮͰ ͈ͯ.ͬͬ Notes: (ͭ) Total of allocated costs for each tier from Table ͯͬ, Table ͯͭ, Table ͯͮ, Table ͯͰ, and Table ͯͱ. (ͮ) Consumption per tier outlined in Appendix E. (ͯ) Totals may not tie due to rounding. 5.2.2 Multi-Family Residential Rates Multi-family rates are calculated using a similar process to that discussed above for Single Family. The following tables outline the allocation costs from each functional category to each tier and the calculation of the proposed rates for FY ͮͬͮͬ/ͮͭ. Proposed rates for FY ͮͬͮͭ/ͮͮ are calculated by applying the revenue requirement increase of ͱ.ͬ percent to the FY ͮͬͮͬ/ͮͭ cost of service adjusted rates, and Ͳ.ͬ percent per year from FY ͮͬͮͮ/ͮͯ through FY ͮͬͮͰ/ͮͱ. Base, Max Day, and Max Hour rate components are allocated to each Multi-Family Residential tier similarly to the Single Family allocation. These rate components are shown in Table ͯͳ, Table ͯʹ, and Table ͯ͵. Table ͯͳ Multi-Family Base Rate Component Allocation Tier Base Allocation(ͭ) FY ͮͬͮͬ/ͮͭ(ͮ) Multi Family Base Costs ͭͬͬ% ͈ͬ.Ͱͱ Tier ͭ Ͳͯ% ͈ͬ.ͮ͵ Tier ͮ ͯͳ% ͬ.ͭͳ Notes: (ͭ) Base costs are allocated to each tier based on the total amount of usage within each tier as outlined in Appendix E. (ͮ) All monetary values in millions of dollars. (ͯ) Totals may not tie due to rounding. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 41 Table ͯʹ Multi-Family Max Day Rate Component Allocation Tier Max Day Allocation(ͭ) FY ͮͬͮͬ/ͮͭ(ͮ) Multi Family Max Day Costs ͭͬͬ% ͈ͬ.ͬʹ Tier ͭ ͱʹ% ͈ͬ.ͬͱ Tier ͮ Ͱͮ% ͬ.ͬͰ Notes: (ͭ) Max day allocation based on analysis of usage by tier and tier peak factors shown in Appendix E. (ͮ) Total multi-family share of max day costs from Table ͮͭ. (ͯ) All monetary values in millions of dollars. (Ͱ) Totals may not tie due to rounding. Table ͯ͵ Multi-Family Max Hour Component Allocation Tier Max Hour Allocation(ͭ) FY ͮͬͮͬ/ͮͭ(ͮ) Multi Family Max Hour Costs ͭͬͬ% ͈ͬ.ͬ͵ Tier ͭ ͱʹ% ͈ͬ.ͬͱ Tier ͮ Ͱͮ% ͬ.ͬͰ Notes: (ͭ) Max hour allocation based on analysis of usage by tier and tier peak factors shown in Appendix E. (ͮ) Total multi-family share of max day costs from Table ͮͮ. (ͯ) All monetary values in millions of dollars. (Ͱ) Totals may not tie due to rounding. Supplies are allocated to each tier based on peak factors to assign a blend of water from each supply to cover usage in each tier. Table Ͱͬ shows the allocation of water supplies to each tier. Supply ͭ and Supply ͮ costs are allocated to each Multi-Family tier based on Table Ͱͭ and Table Ͱͮ. The amount of Supply ͭ and Supply ͮ water allocated covers all usage in each tier less each tier’s proportional allocation of MWD imported water. Additional detail of the supply allocation to each tier is included for reference in Appendix E. Table Ͱͬ Multi-Family Tier Supply Allocation Tier MWD Imported Supply ͭ Supply ͮ Tier Total Allocated HCF(ͭ) Tier ͭ ͵,ͭʹ͵ ͯͳͳ,ʹͱͲ ͭͭʹ,͵ͮͮ ͱͬͱ,͵Ͳͳ Tier ͮ ͱ,ͰͲͮ ͮͬʹ,ͲͭͰ ʹͲ,ͲͰͰ ͯͬͬ,ͳͮͬ Total ͭͰ,Ͳͱͭ ͱʹͲ,Ͱͳͬ ͮͬͱ,ͱͲͲ ʹͬͲ,Ͳʹͳ Percent Share per Tier(ͭ) Tier ͭ Ͳͯ% ͲͰ% ͱʹ% Ͳͯ% Tier ͮ ͯͳ% ͯͲ% Ͱͮ% ͯͳ% Total ͭͬͬ% ͭͬͬ% ͭͬͬ% ͭͬͬ% Notes: (ͭ) Water supplies allocated to multi-family in Table ͭʹ are allocated to each tier as shown in Appendix E. (ͮ) Percent share of water from each supply based on the above supply allocations. (ͯ) Totals may not tie due to rounding. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 42 Table Ͱͭ Multi-Family Supply ͭ Rate Component Allocation Tier Supply ͭ Allocation(ͭ) FY ͮͬͮͬ/ͮͭ(ͮ) Multi Family Supply ͭ Costs ͭͬͬ% ͈ͬ.ͮͰ Tier ͭ ͲͰ% ͈ͬ.ͭͱ Tier ͮ ͯͲ% ͬ.ͬ͵ Notes: (ͭ) From Table Ͱͬ. (ͮ) Total multi-family share of supply ͭ costs from Table ͮͯ. (ͯ) All monetary values in millions of dollars. (Ͱ) Totals may not tie due to rounding. Table Ͱͮ Multi-Family Supply ͮ Component Allocation Tier Supply ͮ Allocation(ͭ) FY ͮͬͮͬ/ͮͭ(ͮ) Multi Family Supply ͮ Costs ͭͬͬ% ͈ͬ.ͲͲ Tier ͭ ͱʹ% ͈ͬ.ͯʹ Tier ͮ Ͱͮ% ͬ.ͮʹ Notes: (ͭ) From Table Ͱͬ. (ͮ) Total multi-family share of supply ͮ costs from Table ͮͰ. (ͯ) All monetary values in millions of dollars. (Ͱ) Totals may not tie due to rounding. The combination of the Base, Max Day, Max Hour, Supply ͭ, and Supply ͮ costs allocated to each Multi- Family tier divided by the total projected usage within each tier equals the total rate for each tier as shown in Table Ͱͯ. Table Ͱͯ Proposed Multi-Family Rates Tier FY ͮͬͮͬ/ͮͭ Total Costs (millions) (ͭ) Consumption (HCF) (ͭ) FY ͮͬͮͬ/ͮͭ Rate (͈/HCF) Tier ͭ ͈ͬ.͵ͮ ͱͬͱ,͵Ͳͳ ͈ͭ.ʹͮ Tier ͮ ͈ͬ.Ͳͬ ͯͬͬ,ͳͮͬ ͈ͮ.ͬͭ Notes: (ͭ) Total of allocated costs for each tier from Table ͯͳ, Table ͯʹ, Table ͯ͵, Table Ͱͭ, and Table Ͱͮ. (ͮ) Consumption per tier outlined in Appendix E. (ͯ) Totals may not tie due to rounding. 5.2.3 Commercial Rates The Commercial customer class uses water relatively consistently throughout the course of the year, exhibiting a much lower peak than the other customer classes and the overall system average. The proposed commercial volumetric rates reflect the lowered peak burden placed on the water system by commercial customers. Commercial rates are calculated by dividing the sum of all Base, Max Day, Max Hour, Supply ͭ, and Supply ͮ costs that are allocated to the class customers by the total projected usage for the class. Table ͰͰ shows the calculation of Commercial rates for FY ͮͬͮͬ/ͮͭ. Proposed rates for FY ͮͬͮͭ/ͮͮ are calculated by applying the revenue requirement increase of ͱ.ͬ percent to the FY ͮͬͮͬ/ͮͭ cost of service adjusted rates, and Ͳ.ͬ percent per year from FY ͮͬͮͮ/ͮͯ through FY ͮͬͮͰ/ͮͱ. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 43 Table ͰͰ Proposed Commercial Rates Calculation Commercial Rates Calculation FY ͮͬͮͬ/ͮͭ Base Costs (millions) (ͭ) ͈ͬ.Ͱͯ Max Day Costs (millions) (ͮ) ͬ.ͬʹ Max Hour Costs (millions) (ͯ) ͬ.ͬʹ Supply ͭ Costs (millions) (Ͱ) ͬ.ͮͮ Supply ͮ Costs (millions) (ͱ) ͬ.Ͳͱ Total Variable Costs (millions) ͈ͭ.ͰͲ FY ͮͬͮͬ/ͮͭ Usage (HCF) (Ͳ) ͳͲͯ,ͱͰͲ FY ͮͬͮͬ/ͮͭ Rate (͈/HCF) ͈ͭ.͵ͮ Notes: (ͭ) Commercial share of base costs from Table ͮͬ. (ͮ) Commercial share of max day costs from Table ͮͭ. (ͯ) Commercial share of max hour costs from Table ͮͮ. (Ͱ) Commercial share of supply ͭ costs from Table ͮͯ. (ͱ) Commercial share of supply ͮ costs from Table ͮͰ. (Ͳ) Commercial consumption from Table ͭ͵. (ͳ) Totals may not tie due to rounding. 5.2.4 Government, Institutional, and Irrigation Rates The Government, Institutional, and Irrigation customer class uses significantly more water during the summer months due as it serves predominantly private and public outdoor irrigation usage. Thus, it exhibits a higher peak than the other customer classes and the overall system average. The proposed Government, Institutional, and Irrigation volumetric rates reflect the higher peak burden placed on the water system by the customers’ demand patterns. Government, Institutional, and Irrigation rates are calculated by dividing the sum of all Base, Max Day, Max Hour, Supply ͭ, and Supply ͮ costs that are allocated to the class customers by the total projected usage for the class. Table Ͱͱ shows the calculation of Government, Institutional, and Irrigation rates for FY ͮͬͮͬ/ͮͭ. Proposed rates for FY ͮͬͮͭ/ͮͮ are calculated by applying the revenue requirement increase of ͱ.ͬ percent to the FY ͮͬͮͬ/ͮͭ cost of service adjusted rates, and Ͳ.ͬ percent per year from FY ͮͬͮͮ/ͮͯ through FY ͮͬͮͰ/ͮͱ. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 44 Table Ͱͱ Proposed Government, Institutional, and Irrigation Rates Government, Institutional, and Irrigation Rates Calculation FY ͮͬͮͬ/ͮͭ Base Costs (millions) (ͭ) ͈ͬ.ͯͲ Max Day Costs (millions) (ͮ) ͬ.ͭͳ Max Hour Costs (millions) (ͯ) ͬ.ͬʹ Supply ͭ Costs (millions) (Ͱ) ͬ.ͭͳ Supply ͮ Costs (millions) (ͱ) ͬ.Ͳͳ Total Variable Costs (millions) ͈ͭ.ͰͲ FY ͮͬͮͬ/ͮͭ Usage (HCF) (Ͳ) ͲͰͰ,ʹͰͲ FY ͮͬͮͬ/ͮͭ Rate (͈/HCF) ͈ͮ.ͮͳ Notes: (ͭ) Government, Institutional, and Irrigation share of base costs from Table ͮͬ. (ͮ) Government, Institutional, and Irrigation share of max day costs from Table ͮͭ. (ͯ) Government, Institutional, and Irrigation share of max hour costs from Table ͮͮ. (Ͱ) Government, Institutional, and Irrigation share of supply ͭ costs from Table ͮͯ. (ͱ) Government, Institutional, and Irrigation share of supply ͮ costs from Table ͮͰ. (Ͳ) Government, Institutional, and Irrigation consumption from Table ͭ͵. (ͳ) Totals may not tie due to rounding. Section 6 WATER CUSTOMER CLASS BILL IMPACTS Carollo analyzed the impact of the above proposed water rates for Single Family, Multi-Family, Commercial, and Government, Institutional, and Irrigation customers bi-monthly bills compared to the currently adopted rates. 6.1 Single Family Residential Bill Impact A typical Single Family customer has a ͭ” meter and uses ͯͳ HCF in the winter, and ͱͱ HCF in the summer per bi-monthly bill. These customers would see a ͈ͱ.ͯͭ per bill increase in the winter and a ͈Ͳ.͵ͯ per bill increase in the summer with the proposed rates in FY ͮͬͮͬ/ͮͭ, as shown in Figure Ͳ and Figure ͳ. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 45 Figure Ͳ Single Family Customer Bi-Monthly Bill Impact – ͭ”, Winter Figure ͳ Single Family Customer Bi-Monthly Bill Impact – 1”, Summer 6.2 Multi-Family Residential Bill Impact A typical Multi-Family customer has a ͭ” meter service Ͱ dwelling units and uses Ͳʹ HCF bi-monthly. These customers would see a ͈͵.ͬͯ per bill increase with the proposed rates in FY ͮͬͮͬ/ͮͭ as shown in Figure ʹ. $36.55 $38.53 $40.46 $42.88 $45.46 $48.18 $40.04 $42.02 $44.00 $46.64 $49.50 $52.36 $33.45 $34.80 $36.60 $38.85 $41.10 $43.65 $110.04 $115.35 $121.06 $128.37 $136.06 $144.19 $- $20.00 $40.00 $60.00 $80.00 $100.00 $120.00 $140.00 $160.00 Current FY 2019/20 FY 2020/21 FY 2021/22 FY 2022/23 FY 2023/24 FY 2024/25 Bi-Monthly Fixed Charge Tier 1 Tier 2 Tier 3 Tier 4 $36.55 $38.53 $40.46 $42.88 $45.46 $48.18 $40.04 $42.02 $44.00 $46.64 $49.50 $52.36 $73.59 $76.56 $80.52 $85.47 $90.42 $96.03 $150.18 $157.11 $164.98 $174.99 $185.38 $196.57 $- $50.00 $100.00 $150.00 $200.00 $250.00 Current FY 2019/20 FY 2020/21 FY 2021/22 FY 2022/23 FY 2023/24 FY 2024/25 Bi-Monthly Fixed Charge Tier 1 Tier 2 Tier 3 Tier 4 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 46 Figure ʹ Multi-Family Customer Bi-Monthly Bill Impact 6.3 Commercial Bill Impact A typical Commercial customer has a ͭ” meter and uses ͭͱͲ HCF bi-monthly. These customers would see a ͈ͭ͵.ͭʹ per bill increase with the proposed rates in FY ͮͬͮͬ/ͮͭ as shown in Figure ͵. Figure ͵ Commercial Customer Bi-Monthly Bill Impact $36.55 $38.53 $40.46 $42.88 $45.46 $48.18 $81.12 $87.36 $91.68 $96.96 $102.72 $108.96 $39.96 $40.77 $42.80 $45.23 $48.07 $50.91 $157.63 $166.66 $174.94 $185.07 $196.25 $208.05 $- $50.00 $100.00 $150.00 $200.00 $250.00 Current FY 2019/20 FY 2020/21 FY 2021/22 FY 2022/23 FY 2023/24 FY 2024/25 Bi-Monthly Fixed Charge Tier 1 Tier 2 $36.55 $38.53 $40.46 $42.88 $45.46 $48.18 $282.97 $300.17 $315.80 $334.56 $354.88 $375.21 $319.52 $338.70 $356.26 $377.44 $400.34 $423.39 $- $50.00 $100.00 $150.00 $200.00 $250.00 $300.00 $350.00 $400.00 $450.00 Current FY 2019/20 FY 2020/21 FY 2021/22 FY 2022/23 FY 2023/24 FY 2024/25 Bi-Monthly Fixed Charge Variable Charge 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 47 6.4 Government, Institutional, and Irrigation Bill Impact A typical Government, Institutional, and Irrigation customer has a ͮ” meter and uses ͮͰ͵ HCF bi-monthly. These customers would see a ͈ͯʹ.ͬͲ per bill increase with the proposed rates in FY ͮͬͮͬ/ͮͭ as shown in Figure ͭͬ. Figure ͭͬ Government, Institutional, and Irrigation Customer Bi-Monthly Bill Impact 6.5 Regional Water Rate Comparison Carollo conducted a water rate survey of neighboring agencies. Although every agency has differing priorities, including fiscal and policy objectives when setting rates, it is common to establish benchmarks between neighboring agencies. Figure ͭͭ compares a typical bi-monthly bill for a Single Family customer (ͭ” meter, ͯͳ HCF winter usage) with the current and proposed rates against nine neighboring agencies. When comparing rates between utilities, it is important to be mindful of differing factors that make each utility unique, including location, source of supply, consumer profile and demographics, age of the system, and various other operational and capital related needs that all play a part in rate design. $59.39 $62.62 $65.75 $69.70 $73.88 $78.31 $529.91 $564.74 $592.10 $626.93 $664.25 $704.06 $589.30 $627.36 $657.85 $696.63 $738.13 $782.37 $- $100.00 $200.00 $300.00 $400.00 $500.00 $600.00 $700.00 $800.00 $900.00 Current FY 2019/20 FY 2020/21 FY 2021/22 FY 2022/23 FY 2023/24 FY 2024/25 Bi-Monthly Fixed Charge Variable Charge 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 48 Figure ͭͭ Regional Water Rate Comparison, Single Family (1” meter, 37 HCF bi-monthly winter usage) $179.73 $110.04 $115.35 $120.88 $152.62 $118.69 $77.52 $188.81 $166.80 $226.71 $241.08 $155.51 $289.86 $- $50.00 $100.00 $150.00 $200.00 $250.00 $300.00 $350.00 Arcadia Current (FY 2019/20) Arcadia Proposed (FY 2020/21) Arcadia Proposed (FY 2021/22) Alhambra Azusa LADWP Monrovia Pasadena DWP San Gabriel (Golden State Water Co.) Sierra Madre San Marino (American Water) South PasadenaTotal Bi-Monthly BillFixed Charge Tier 1 Tier 2 Tier 3 Tier 4 Regional Average (excludes Arcadia) 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 49 Section 7 SEWER REVENUE REQUIREMENTS The sewer revenue requirement analysis follows the same methodology as previously outlined in the water revenue requirements discussion. 7.1 Projected Sewer Revenues The City’s primary source of sewer revenues are sewer Service Fees from residential, commercial, and industrial customers, which make up ͵ͳ percent of total sewer revenues. The City’s other sewer revenues include interest earnings and other miscellaneous revenues. Table ͰͲ shows revenues from FY ͮͬͮͬ/ͮͭ budgeted to FY ͮͬͮͰ/ͮͱ projections. Each revenue item was projected based on an assumed growth factor as outlined in Appendix E. Table ͰͲ Projected Sewer Revenues Revenue Item FY ͮͬͮͬ/ͮͭ FY ͮͬͮͭ/ͮͮ FY ͮͬͮͮ/ͮͯ FY ͮͬͮͯ/ͮͰ FY ͮͬͮͰ/ͮͱ Sewer Service Fees ͈ͮ.Ͱʹ ͈ͮ.ͱͮ ͈ͮ.ͱʹ ͈ͮ.Ͳͯ ͈ͮ.Ͳʹ Other Revenues ͬ.ͬͳ ͬ.ͬͳ ͬ.ͬͳ ͬ.ͬͳ ͬ.ͬͳ Total Revenues ͈ͮ.ͱͰ ͈ͮ.ͱ͵ ͈ͮ.ͲͰ ͈ͮ.ͳͬ ͈ͮ.ͳͱ Notes: (ͭ) All monetary values are in millions of dollars. (ͮ) Totals may not tie due to rounding. 7.2 Projected Sewer Expenditures For sound financial operations of the City’s sewer system, the revenues generated must be sufficient to meet the expenditures or cash obligations of the utility. The revenue needs are defined as the amount of revenues that must be recovered through sewer rates in order to cover annual expenditures, less any offsetting revenues. Offsetting revenues include interest earnings and other non-operating revenues shown as “Other Revenues” above in Table 46. The City’s FY ͮͬͮͬ/ͮͭ operating budget served as the basis for forecasting future operating expenses. The budget was compared to prior year actual financial information to identify any anomalies or one-time expenditures not appropriate for forecasting in future years. City staff also reviewed the budget for costs that may need to be adjusted due to future operational changes. Unless manually calculated, future years were forecasted using escalation factors appropriate for the type of expense. The escalation factors used as the basis for the study forecast are shown in Appendix E. Table Ͱͳ shows expenditures from FY ͮͬͮͬ/ͮͭ budgeted to FY ͮͬͮͰ/ͮͱ projections. Line-item O&M budget detail is provided in Appendix E. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 50 Table Ͱͳ Projected Sewer Operating Expenditures Expense Item FY ͮͬͮͬ/ͮͭ FY ͮͬͮͭ/ͮͮ FY ͮͬͮͮ/ͮͯ FY ͮͬͮͯ/ͮͰ FY ͮͬͮͰ/ͮͱ Salaries & Wages ͈ͬ.͵Ͱ ͈ͬ.͵ͳ ͈ͬ.͵͵ ͈ͭ.ͬͭ ͈ͭ.ͬͯ Supplies ͬ.ͬͭ ͬ.ͬͭ ͬ.ͬͭ ͬ.ͬͭ ͬ.ͬͮ Operating Expenses ͬ.Ͱʹ ͬ.Ͱ͵ ͬ.ͱͬ ͬ.ͱͭ ͬ.ͱͮ Total Operating Expenditures ͈ͭ.ͰͲ ͈ͭ.Ͱ͵ ͈ͭ.ͱͮ ͈ͭ.ͱͱ ͈ͭ.ͱʹ Notes: (ͭ) All monetary values are in millions of dollars. (ͮ) Totals may not tie due to rounding. Sewer operating expenses are projected to increase to ͈ͭ.ͱʹ million by FY ͮͬͮͰ/ͮͱ, representing a ͵ percent overall increase from the FY ͮͬͭ͵/ͮͬ level of ͈ͭ.ͰͲ million. This total expenditure change represents an average annual increase of ͮ.ͮ percent. 7.2.1 Capital Projects The City’s sewer CIP includes a variety of capital projects that involve repairing or replacing existing sewer system assets, as well as purchasing or replacing other small equipment. The City’s planned sewer CIP expenditures average about ͈ͭ.ͭ million per year. Table Ͱʹ identifies the five-year CIP used in the revenue requirement analysis. The capital projects and costs were developed by the City for the latest capital improvement budget. Project costs shown in the table have been escalated to the midpoint of construction. The City is expected to cash fund these projects through use of reserves and annual rate revenues. The City’s sewer utility does not have any outstanding debt obligations. No future debt is expected as the City intends to cash fund all future capital projects. Table Ͱʹ Sewer CIP Sewer CIP Projects FY ͮͬͮͬ/ͮͭ FY ͮͬͮͭ/ͮͮ FY ͮͬͮͮ/ͮͯ FY ͮͬͮͯ/ͮͰ FY ͮͬͮͰ/ͮͱ(ͭ) Annual Sewer CCTV Inspection ͈ͬ.ͬͱ ͈ͬ.ͬͱ ͈ͬ.ͬͱ ͈ͬ.ͬͱ ͈ͬ.ͬͱ Public Works Facility Improvements - ͬ.ͬͮ ͬ.ͬͭ - - SCADA System Upgrades and Computerized Utilities System Mapping ͬ.ͬͭ ͬ.ͬͭ ͬ.ͬͭ ͬ.ͬͭ ͬ.ͬͭ Miscellaneous Sewer Main Repair Project ͬ.ͭͬ - ͬ.ͭͬ - ͬ.ͭͬ Cost of Service Study - - - - - Sewer Main CIPP Lining - - ͬ.ͮͱ ͬ.ͮͱ ͬ.ͮͱ Sewer Easement Along ͮͭͬ Freeway - - ͬ.ͭͱ - - Sewer Main Replacement Program ͬ.͵ͬ ͬ.ͳͱ ͬ.ͳͱ ͬ.ͳͱ ͬ.ͳͱ Equipment Expenditures - ͬ.ͬͮ ͬ.ͬͭ ͬ.ͬͭ ͬ.ͬͭ Total Sewer CIP ͈ͭ.ͬͲ ͈ͬ.ʹͱ ͈ͭ.ͯͯ ͈ͭ.ͬͳ ͈ͭ.ͭͳ Notes: (ͭ) All values are in millions of dollars. (ͮ) Totals may not tie due to rounding. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 51 7.2.2 Capital Funding The CIP will be funded using cash from existing funds held in the City’s reserve funds held for the sewer system as well as revenues directly from sewer rates. The City’s sewer utility does not have any outstanding debt obligations. No future debt is expected as the City intends to cash fund all future capital projects. 7.3 Reserve Needs In addition to the operating and capital expenses, discussed above, there are also revenue requirements related to maintaining the City’s sewer reserve funds. Operating Reserve The revenue requirement analysis targets a total minimum operating fund balance equivalent to ͵ͬ days of operating expenses. The minimum reserve amount is adjusted annually driven by changes to the City’s operating expenditures. The City should continue to monitor revenues and reserve levels on an annual basis. The reserve target may also be adjusted further as policy dictates, to minimize rates, or to smooth future rate increases. Should the City reach and maintain desired reserve levels, it is recommended that it implement a reserve policy to formally define desired funding levels, needs, and uses. Sewer Capital Projects Fund The Capital Projects Fund is a fund maintained by the City that is used to fund capital improvements to the sewer system and to provide a source of funds for capital projects in the event of an emergency. One component of the Capital Projects Fund is a targeted emergency capital reserve. This is set at ͈ͭ.ͯ million, based on ͭ.ͱ percent of the estimated system replacement value of ͈͵ͬ million. If an event were to require emergency funding for the sewer system greater than the analyzed reserve levels, the sewer Capital Projects fund could presumably borrow from the water Facilities Reserve. If this occurred, the City would need to put in place proper repayment structures to refund the water Facilities Reserve, and to avoid possible equity concerns. 7.4 Recommended Sewer Rate Revenue Requirements Based on the study projections, the City must increase sewer revenues annually in order to meet projected revenue needs due to annual increases in expenditures and to fund the CIP. Operating Costs Operating costs are expected to increase in each year driven by the inflationary increases discussed previously. The City has worked to increase operational efficiency in an effort to control operating cost increases. Over the study period, operating costs are expected to increase at an average of ͮ.Ͳ percent per year. Capital Funding The CIP will be primarily funded with cash from sewer rates as well as a small amount of reserve drawdown in certain years. In most years, operating cash flows will be sufficient to fund the CIP without any net drawdown of reserves. Based on the study projections, reserves will be held relatively steady over the course of the study varying between ͈ͭ.͵͵ and ͮ.ͮͲ million. The proposed revenue increases allow the City to build the necessary revenue generation capacity to fund capital projects in the long term. Long-term projections show that reserves could be maintained at the target and anticipated capital projects could be funded with continued inflationary rate increases if increases in O&M costs, customer usage, and annual capital costs remain at the status quo following the end of this rate cycle in FY ͮͬͮͰ/ͮͱ. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 52 Revenue Increases Increases in water supply costs, capital funding, and operating cost increases, have driven a need for sewer rate revenue increases. Currently, reserves are being utilized to fund existing shortfalls. Based on the study projections, the City will need to increase revenues by ͮ percent in each year of the study period (FY ͮͬͮͬ/ͮͭ through FY ͮͬͮͰ/ͮͱ). Rate increases will be implemented on January ͭ of each year beginning on January ͭ, ͮͬͮͭ. Table Ͱ͵ provides a summary of the recommended sewer rate revenue increases for the rate study period. Table Ͱ͵ Recommended Sewer Rate Revenue Requirement Item FY ͮͬͮͬ/ͮͭ FY ͮͬͮͭ/ͮͮ FY ͮͬͮͮ/ͮͯ FY ͮͬͮͯ/ͮͰ FY ͮͬͮͰ/ͮͱ Pre-Rate Increase Revenues Rate Revenues (prior to increases)(ͭ) ͈ͮ.ͱͮ ͈ͮ.ͱͮ ͈ͮ.ͱͮ ͈ͮ.ͱͮ ͈ͮ.ͱͮ Other Revenues(ͭ) ͬ.ͬͰ ͬ.ͬͯ ͬ.ͬͮ ͬ.ͬͮ ͬ.ͬͯ Total Revenues ͈ͮ.ͱͱ ͈ͮ.ͱͰ ͈ͮ.ͱͰ ͈ͮ.ͱͰ ͈ͮ.ͱͰ Expenditures Operating Costs(ͮ) ͈ͭ.Ͱͬ ͈ͭ.ͰͲ ͈ͭ.Ͱ͵ ͈ͭ.ͱͮ ͈ͭ.ͱͱ Total Expenditures ͈ͭ.Ͱͬ ͈ͭ.ͰͲ ͈ͭ.Ͱ͵ ͈ͭ.ͱͮ ͈ͭ.ͱͱ Cash Flows (prior to increases) ͈ͭ.ͭͱ ͈ͭ.ͬʹ ͈ͭ.ͬͱ ͈ͭ.ͬͮ ͈ͬ.͵͵ Rate Revenue Increase ͮ.ͬ% ͮ.ͬ% ͮ.ͬ% ͮ.ͬ% ͮ.ͬ% Month of Adoption January January January January January Revenues from Rate Increase ͈ͬ.ͬͱ ͈ͬ.ͭͬ ͈ͬ.ͭͱ ͈ͬ.ͮͭ ͈ͬ.ͮͲ Resulting Operating Cash Flows ͈ͭ.ͭͬ ͈ͭ.ͭͯ ͈ͭ.ͭͱ ͈ͭ.ͭͳ ͈ͭ.ͮͬ 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 53 Table Ͱ͵ Recommended Sewer Rate Revenue Requirement (continued) Item FY ͮͬͮͬ/ͮͭ FY ͮͬͮͭ/ͮͮ FY ͮͬͮͮ/ͮͯ FY ͮͬͮͯ/ͮͰ FY ͮͬͮͰ/ͮͱ Consolidated Reserves Balance Beginning Balance ͈ͭ.͵Ͱ ͈ͭ.͵͵ ͈ͮ.ͮͲ ͈ͮ.ͬʹ ͈ͮ.ͭʹ Operating Cash Flows ͭ.ͭͬ ͭ.ͭͯ ͭ.ͭͱ ͭ.ͭͳ ͭ.ͮͬ Use of Reserves for Capital (ͭ.ͬͲ) (ͬ.ʹͱ) (ͭ.ͯͯ) (ͭ.ͬͳ) (ͭ.ͭͳ) Ending Balance ͈ͭ.͵͵ ͈ͮ.ͮͲ ͈ͮ.ͬʹ ͈ͮ.ͭʹ ͈ͮ.ͮͬ Expected Fiscal Year Rate Revenues ͈ͮ.ͱͳ ͈ͮ.Ͳͮ ͈ͮ.Ͳͳ ͈ͮ.ͳͮ ͈ͮ.ͳʹ Adjustment for Mid-Year Increase ͬ.ͬͯ ͬ.ͬͯ ͬ.ͬͯ ͬ.ͬͯ ͬ.ͬͯ Required Rate Revenues For Rate Design ͈ͮ.ͱ͵ ͈ͮ.ͲͰ ͈ͮ.ͳͬ ͈ͮ.ͳͱ ͈ͮ.ʹͬ Notes: (ͭ) From Table ͰͲTable ͳ. (ͮ) From Table Ͱͳ. (ͯ) All monetary values are in millions of dollars. (Ͱ) Totals may not tie due to rounding. Section 8 SEWER COST OF SERVICE ANALYSIS After revenue requirements for the City’s sewer system were determined, a cost of service analysis was completed to validate the City’s existing sewer rate structure and to update the rates based on the projected revenue requirements. The sewer cost of service analysis follows a methodology similar to that used for the water cost of service analysis. 8.1 Functional Allocation The City’s sewer budget was analyzed line-item by line-item and expenditures were distributed between the functions of Customer and Flow as shown in Appendix G. x Customer: Expenditures are fixed expenditures that relate to operational support activities including accounting, billing, customer service, and administrative and technical support. These expenditures are essentially common-to-all customers and are reasonably uniform across the different customer classes. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 54 x Flow/Capacity: Expenditures include those that are incurred based on the actual amount of flow discharged into the system, as well as those associated with potential discharges into the sewer system. These costs include operating and maintaining the sewer system, as well as capital costs, since the system is sized based on flow requirements. Approximately ͵Ͱ percent of the City’s sewer costs fall in the Flow/Capacity function, with the remaining costs allocated to the customer function. 8.2 Customer Class Allocation Costs are allocated to each customer class based on each class’s characteristics and the results of the functional allocation. Customer costs are allocated to each class based on the number of accounts, Flow/Capacity costs are allocated to each class based on annual sewer flows. Table ͱͬ shows the characteristics of each sewer customer class. The average estimated sewer flow per Residential connection is ͵.ͭͰ HCF, equal to approximately ͮͮͱ gallons per day, based on an analysis of winter water use, which was performed to estimate annual sewer flows. This value is consistent with typical residential sewer flows form similar agencies. Table ͱͬ Sewer Customer Class Characteristics Customer Class Accounts EDUs(ͮ) Annual Water Usage(ͯ) Winter Water Usage (HCF)(Ͱ) Return to Sewer Factor(ͱ) Estimated Annual Sewer Flow(Ͳ) Residential(ͭ) ͭͯ,ͬͲͲ ͭ͵,ʹͯʹ ͯ,ͳͬͲ,͵͵Ͳ ʹ͵Ͳ,ͳͯͱ ʹͯ% ͮ,ͮͮʹ,ͭ͵ͳ Commercial ͳͱͲ ͮ,ͮͲʹ ͱʹͳ,ͳ͵ͮ ͭͲͯ,ʹͰ͵ ͵ͬ% ͰͰͮ,ͯ͵ͯ Total ͭͰ,ͭͲͭ ͮͮ,ͲͰʹ Ͱ,Ͱͬͬ,ͬͭͭ ͭ,ͬͲͬ,ͱʹͱ ͮ,Ͳͳͬ,ͱ͵ͬ Notes: (ͭ) Residential data include single family, multi-family, and sewer only users. Water consumption for sewer only accounts has been assumed at the average single family usage. (ͮ) Single Family Equivalent Dwelling Units (EDUs) are based on one EDU per single family account. Multi-family EDUs are based on the total number of individual units shown in the City's billing data. Each commercial account is assumed to be equivalent to ͯ EDUs, based on an analysis of estimated sewer flows per residence or commercial account. The analysis found that on a per connection basis, commercial flows are approximately ͱ.ͮ times higher than residential. A commercial EDU factor of ͯ is assumed to recognize the potential variation of flows and capacity requirements from commercial accounts. (ͯ) FY ͮͬͭʹ/ͭ͵ water usage for accounts with sewer service. (Ͱ) FY ͮͬͭʹ/ͭ͵ water usage for accounts with sewer service in December, January, February, and March. This is used as a proxy for assumed non-irrigation water usage. (ͱ) Estimated return to sewer (RTS) factor for water usage in the months of December, January, February, and March. The residential RTS is based on assuming single family indoor usage of ͭͭ HCF per month and a ͵ͬ percent RTS for multifamily accounts. The commercial RTS is assumed at a typical level of ͵ͬ percent. (Ͳ) Calculated based on winter water usage and winter return to sewer factor. Table ͱͭ shows cost allocation for each customer group based on the forecasted revenue requirement. Customer costs are allocated to each class based on the number of accounts, Flow/Capacity costs are allocated to each class based on the Estimated Annual Sewer Flow from Table ͱͬ. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 55 Table ͱͭ Sewer Customer Class Cost Allocation (FY ͮͬͮͬ/ͮͭ Revenue Requirements) Customer Class Customer Flow/Capacity Total Residential ͈ͬ.ͭͮ ͈ͭ.͵͵ ͈ͮ.ͭͮ Commercial ͬ.ͬͭ ͬ.Ͱͬ ͬ.Ͱͭ Total ͈ͬ.ͭͰ ͈ͮ.ͯ͵ ͈ͮ.ͱͮ Notes: (ͭ) All monetary values in millions of dollars. (ͮ) Totals may not tie due to rounding. Section 9 SEWER RATE DESIGN The rate design analysis determines how the customer class costs identified above in Table ͱͭ are recovered from each customer class through sewer rates. The focus of this process is to achieve full cost recovery and substantiate that each customer class is paying its fair and proportionate share of system costs. 9.1 Proposed Sewer Rates The results of the cost of service analysis indicate that the current sewer rate structure equitably recovers costs from each customer class. It is recommended that the City retain the current rate structure, and update it to reflect the increased revenue requirements and the updated cost of service analysis. As detailed in the following sections, Residential does not have a variable rate. Residential sewer flows are viewed to be consistent (homogeneous) and are already built into the calculated rate. Because the Commercial class more heterogeneous than the Residential class, a fixed and variable structure provides greater proportionality and reflect of a commercial user’s use of the system. As sewer flows are not metered, water demands are used as a proxy for sewer flows. 9.1.1 Residential Fixed Charges Residential fixed charges are calculated by dividing the total costs allocated to the Residential class by the total number of residences served (single family residences or multi-family dwelling units). Table ͱͮ shows the calculation of the proposed bi-monthly charge for FY ͮͬͮͬ/ͮͭ. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 56 Table ͱͮ Sewer Residential Fixed Charge Calculation Residential Rate Calculation FY ͮͬͮͬ/ͮͭ Residential Customer Costs (millions)(ͭ) ͈ͬ.ͭͮ Residential Flow/Capacity Costs (millions) (ͮ) ͭ.͵͵ Total Residential Costs (millions) ͈ͮ.ͭͮ Residences Served(ͯ) ͮͬ,ͯͮͰ Bi-monthly Fixed Charge per Residence ͈ͭͳ.ͯͱ Notes: (ͭ) Residential share of Customer costs from Table ͱͭ. (ͮ) Residential share of Flow/Capacity costs from Table ͱͭ. (ͯ) Totals may not tie due to rounding. 9.1.2 Commercial Rates Commercial fixed charges are calculated based on the Customer costs allocated to the commercial class and a portion of the allocated Flow/Capacity costs. The commercial fixed charge is set to recover the average flow associated with ͯ residential EDUs. Flow/Capacity costs are assigned to the fixed charge by multiplying the number of commercial EDUs by the average flow per EDU and further multiplying that product by the overall unit cost per HCF of sewer flow. The bi-monthly fixed charge is calculated by dividing the sum of the Customer costs and fixed portion of Flow/Capacity costs by the number of Commercial accounts. The allocation of commercial Flow/Capacity costs to the fixed charge and variable rate is shown in Table ͱͯ. Table ͱͯ Sewer Commercial Fixed Charge Cost Allocation Commercial Flow/Capacity Cost Allocation FY ͮͬͮͬ/ͮͭ Commercial Flow/Capacity Costs (millions) (ͭ) ͈ͬ.Ͱͬ Estimated Commercial Sewer Flows (HCF) (ͮ) ͰͰͮ,ͯ͵ͯ Unit Cost per HCF of Flow (͈/HCF) ͈ͬ.ʹ͵ Average Monthly Flow per Residential EDU (HCF) (ͯ) ͵.ͭͰ Commercial Accounts(ͭ) ͳͳͱ Commercial EDU Factor ͯ Commercial Flows for Fixed Charge Allocation (HCF) (Ͱ) ͮͭ,ͮͮʹ Flow/Capacity Costs to Collect through Fixed Charge (millions) (ͱ) ͈ͬ.ͮͯ Flow/Capacity Costs to Collect through Variable Rate (millions) (Ͳ) ͈ͬ.ͭͳ Notes: (ͭ) Commercial share of Flow/Capacity costs from Table ͱͭ. (ͮ) Estimated commercial flows from Table ͱͬ. (ͯ) Average monthly flow per residential based on information in Table ͱͬ and discussed in Section ʹ.ͮ. (Ͱ) Product of (Average Monthly Flow per Residential EDU) x (Commercial Accounts) x (Commercial EDU Factor). (ͱ) Product of (Commercial Flows for Fixed Charge Allocation) x (Unit Cost per HCF of Flow). (Ͳ) Commercial Flow/Capacity Costs from Table ͱͭ minus Flow/Capacity Costs to Collect through Fixed Charge. (ͳ) Totals may not tie due to rounding. Table ͱͰ and Table ͱͱ show the calculation of the Commercial fixed charges and variable rates, respectively. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | 57 Table ͱͰ Sewer Commercial Fixed Charge Calculation Commercial Fixed Charge Calculation FY ͮͬͮͬ/ͮͭ Customer Costs (millions) (ͭ) ͈ͬ.ͬͭ Flow/Capacity Costs to Collect Though Fixed Charge (millions) (ͮ) ͬ.ͮͯ Total Costs for Fixed Charge (millions) ͈ͬ.ͮͰ Number of Accounts(ͯ) ͳͳͱ Bi-monthly Fixed Charge per Account ͈ͱͮ.ͬͰ Notes: (ͭ) Commercial share of Customer costs from Table ͱͭ. (ͮ) From Table ͱͯ. (ͯ) Commercial accounts from Table ͱͬ. (Ͱ) Totals may not tie due to rounding. Table ͱͱ Sewer Commercial Variable Charge Calculation Commercial Variable Rate Calculation FY ͮͬͮͬ/ͮͭ Flow/Capacity Costs to Collect Through Variable Charge (millions) (ͭ) ͈ͬ.ͭͳ Billed Water Usage (HCF) (ͮ) Ͳͬͮ,ͭ͵ͯ Variable Charge (͈/HCF of water use) ͈ͬ.ͮʹ Notes: (ͭ) From Table ͱͯ. (ͮ) Commercial billed water usage from Table ͱͬ. (ͯ) Totals may not tie due to rounding. 9.1.3 Proposed Sewer Rates Table ͱͲ shows the proposed sewer rates for each year of the analysis. Proposed rates for FY ͮͬͮͬ/ͮͭ include a cost of service (COS) adjustment based on the updated analysis. Proposed rates for FY ͮͬͮͭ/ͮͮ through FY ͮͬͮͰ/ͮͱ are calculated by applying the revenue requirement increases of ͯ.ͬ percent per year to the COS adjusted rates. Table ͱͲ Proposed Sewer Rates Customer Class Current Rate FY ͮͬͮͬ/ͮͭ FY ͮͬͮͭ/ͮͮ FY ͮͬͮͮ/ͮͯ FY ͮͬͮͯ/ͮͰ FY ͮͬͮͰ/ͮͱ Increase N/A ͮ.ͬ% overall with COS(ͭ) ͮ.ͬ% ͮ.ͬ% ͮ.ͬ% ͮ.ͬ% Residential (Bimonthly Fixed) ͈ͭͲ.͵ͳ ͈ͭͳ.ͯͱ ͈ͭͳ.ͳͬ ͈ͭʹ.ͬͱ ͈ͭʹ.Ͱͭ ͈ͭʹ.ͳʹ Commercial (Bimonthly Fixed) ͱͬ.Ͳ͵ ͱͮ.ͬͰ ͱͯ.ͬ͵ ͱͰ.ͭͱ ͱͱ.ͮͯ ͱͲ.ͯͯ Commercial (Variable, per HCF) ͬ.ͮʹ ͬ.ͮʹ ͬ.ͮ͵ ͬ.ͮ͵ ͬ.ͯͬ ͬ.ͯͭ Notes: (ͭ) Proposed rates for FY ͮͬͮͬ/ͮͭ include a cost of service (COS) adjustment based on the updated analysis. Proposed rates for FY ͮͬͮͭ/ͮͮ through FY ͮͬͮͰ/ͮͱ are calculated by applying the revenue requirement increases of ͯ.ͬ percent per year to the COS adjusted rates. (ͮ) Rates are rounded to the nearest ͈ͬ.ͬͭ. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | A-1 Appendix A WATER OPERATIONS & MAINTENANCE BUDGET ANALYSIS The O&M budget analysis looks at each category of costs and applies an escalation factor to project revenues and expenses into the future, at least through the time period of the rate study. In this case, these costs were escalated through FY ͮͬͮͰ/ͮͱ. Table Aͭ Cost Escalation Factors Cost Escalator Description Labor Inflation Labor rates are assumed to increase at the long-term average of ͮ percent. Construction Cost Inflation Estimated at ͬ percent for the O&M budget analysis, as inflation is included in the CIP projection. Utilities This escalator applies to costs such as electricity and fuel, and it is set at ͮ percent. General Inflation This escalator is set at the long-term inflation rate of ͮ percent. Customer Account Growth This escalator is used for revenues stemming from water sales and fixed charges. It is assumed at ͬ percent over the long-term. Metered Water Demand This escalator is assumed at ͬ percent over the long-term. Interest Income Estimated at ͭ percent based on discussions with City staff. Cost Escalator Constant General Inflation ͮ.ͬ% Labor Inflation ͮ.ͬ% Utilities Inflation ͮ.ͬ% Construction Inflation ͬ.ͬ% Depreciation Funding ͬ.ͬ% Interest Income ͭ.ͬ% Customer Growth ͬ.ͬ% General Inflation + Customer Growth ͮ.ͬ% No Annual Increase ͬ.ͬ% One Time Expense -ͭͬͬ.ͬ% Delivered Water Demand ͬ.ͬ% Utilities + Delivered Water Demand ͮ.ͬ% All water revenues are projected off of FY ͮͬͭʹ/ͭ͵ end-of-year actuals, while expenses are projected off of FY ͮͬͮͬ/ͮͭ budgeted costs as shown in the table below. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | A-2 Table Aͮ Projected Water O&M Revenues & Expenditures Revenues Revenues FY 2018/19 FY 2019/20 FY 2020/21 FY 2021/22 FY 2022/23 FY 2023/24 FY 2024/25 Actual (Post-Rate Increase) Projection (Pre- Rate Increase) Projection (Pre- Rate Increase) Projection (Pre- Rate Increase) Projection (Pre- Rate Increase) Projection (Pre- Rate Increase) Projection (Pre- Rate Increase) User Rate Revenues Water Sales Revenue Without Additional Increases - For Reference Water Sales Prior to New Increases Delivered Water Demand 12,661,158$ 13,729,872$ 14,690,963$ 14,690,963$ 14,690,963$ 14,690,963$ 14,690,963$ Includes Adopted Increase Escalator 3512 Water Sales Delivered Water Demand 12,661,158$ 13,729,872$ 14,690,963$ 15,425,511$ 16,196,786$ 17,168,593$ 18,198,709$ XXXX Customer Growth - - - - - - - Other User Rate Revenues General Inflation - - - - - - - Total User Rate Revenues 12,661,158$ 13,729,872$ 14,690,963$ 15,425,511$ 16,196,786$ 17,168,593$ 18,198,709$ Other Charges for Services 3201 Miscellaneous Fines No Annual Increase 1,200$ 1,200$ 1,200$ 1,200$ 1,200$ 1,200$ 1,200$ 3501 Maps & Publications No Annual Increase 1,228 800 1,000 1,000 1,000 1,000 1,000 3505 Engineering Charges No Annual Increase - - - - - - - 3510 Meter Services No Annual Increase - - - - - - - 3540 Meter Inspection Fees No Annual Increase 43,911 40,000 50,000 50,000 50,000 50,000 50,000 3541 Demand Response No Annual Increase 210 210 210 210 210 210 210 3546 Backflow Charges No Annual Increase 96,845 80,000 90,000 90,000 90,000 90,000 90,000 Total Other Charges for Services 143,395$ 122,210$ 142,410$ 142,410$ 142,410$ 142,410$ 142,410$ Grant Income 3420 Federal Funds One Time Expense -$ -$ -$ -$ -$ -$ -$ 3447 EPA-Restoration Program One Time Expense - - - - - - - 3450 Grants-Other Agencies One Time Expense - - - - - - - Other Grant Income One Time Expense Total Grant Income -$ -$ -$ -$ -$ -$ -$ Interest Earnings 3301 Interest --Funding Page--410,958$ 212,781$ 161,682$ 108,862$ 86,680$ 79,368$ 80,268$ 3305 Interest --Funding Page--(60,451) 3307 Interest --Funding Page-- Total Interest Earnings 350,506$ 212,781$ 161,682$ 108,862$ 86,680$ 79,368$ 80,268$ Other Revenues 3306 Unrealized Gain/Loss No Annual Increase 389,314$ 389,314$ 389,314$ 389,314$ 389,314$ 389,314$ 389,314$ 3320 Rent & Royalties No Annual Increase 27,600 27,600 27,600 27,600 27,600 27,600 27,600 3505 Engineering Charges No Annual Increase - - - - - - - 3801 Miscellaneous No Annual Increase 2,227 2,227 2,227 2,227 2,227 2,227 2,227 3818 Sale of Property One Time Expense 10,529 10,000 15,000 - - - - Total Other Revenues 429,671$ 429,141$ 434,141$ 419,141$ 419,141$ 419,141$ 419,141$ Total Revenues 13,584,729$ 14,494,004$ 15,429,196$ 16,095,924$ 16,845,018$ 17,809,513$ 18,840,529$ 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | A-3 Expenditures FY 2018/19 FY 2019/20 FY 2020/21 FY 2021/22 FY 2022/23 FY 2023/24 FY 2024/25 Escalator DIVISION: 7201 WATER-ADMIN SALARIES & WAGES 7201 4010 REGULAR EMPLOYEES Labor Inflation 886,221$ 928,200$ 938,300$ 946,200$ 965,124$ 984,426$ 1,004,115$ 7201 4011 SPECIALIST PAY Labor Inflation 1,640 1,600 1,600 1,600 1,632 1,665 1,698 7201 4013 VACATION PAY OFF Labor Inflation 723 10,000 5,000 5,000 5,100 5,202 5,306 7201 4014 VACATION SELL BACK Labor Inflation 12,934 15,000 12,000 12,000 12,240 12,485 12,734 7201 4015 ALLOWANCES Labor Inflation 1,832 2,100 2,200 2,200 2,244 2,289 2,335 7201 4016 DEF COMP-CITY PAID Labor Inflation - - - - - - - 7201 4019 STAND BY PAY Labor Inflation - - - - - - - 7201 4021 LONGEVI TY PAY Labor I nflation 10,518 10,800 11,200 11,200 11,424 11,652 11,886 7201 4032 TEMPORARY Labor Inflation 18,234 15,000 15,000 15,000 15,300 15,606 15,918 7201 4130 OVERTIME Labor Inflation - - - - - - - 7201 4241 P.E.R.S Labor Inflation 291,797 350,300 370,900 393,800 401,676 409,710 417,904 7201 4242 .5% CITY CONTRIBUTION Labor Inflation 2,456 2,800 2,500 2,500 2,550 2,601 2,653 7201 4244 MEDICAL/DENTAL Labor Inflation 146,522 149,100 149,100 149,100 152,082 155,124 158,226 7201 4245 LONG TERM DISABILITY Labor Inflation 903 800 1,000 1,000 1,020 1,040 1,061 7201 4247 LIFE INSURANCE Labor Inflation 1,721 1,800 1,900 1,900 1,938 1,977 2,016 7201 4248 RETIREE MEDICAL Labor Inflation 30,045 37,400 31,300 31,900 32,538 33,189 33,853 7201 4250 FICA/HOSPITAL INSURANCE Labor Inflation 14,261 13,900 14,200 14,300 14,586 14,878 15,175 7201 4299 VACANCY RATE Labor Inflation - (46,200) (64,500) (45,700) (46,614) (47,546) (48,497) NEW Pension Bond Debt [Input] - - - - - - Total: SALARIES & WAGES 1,419,805 1,492,600 1,491,700 1,542,000 1,572,840 1,604,297 1,636,383 SUPPLIES 7201 5110 OFFICE SUPPLIES General Inflation 17,203$ 16,000$ 17,800$ 17,800$ 18,156$ 18,519$ 18,890$ 7201 5111 WATER BILL POSTAGE General Inflation 49,932 48,000 48,000 48,000 48,960 49,939 50,938 7201 5120 DRAFTING SUPPLIES General Inflation 1,130 3,000 2,500 2,500 2,550 2,601 2,653 7201 5125 PRINT SHOP General Inflation 19,666 23,000 23,000 23,000 23,460 23,929 24,408 Total: SUPPLIES 87,932 90,000 91,300 91,300 93,126 94,989 96,888 OPERATING EXPENSES 7201 6145 WATER CONSERVATION COST General Inflation 31,525$ 40,000$ 71,500$ 71,500$ 72,930$ 74,389$ 75,876$ 7201 6160 CONTRACT SERVICES General Inflation 174,809 161,400 170,000 170,000 173,400 176,868 180,405 7201 6210 TELEPHONE General Inflation - - - - - - - 7201 6505 GENERAL LIABILITY General Inflation 111,700 112,700 118,000 118,700 121,074 123,495 125,965 7201 6507 WORKERS' COMPENSATION General Inflation 84,400 92,200 92,200 92,200 94,044 95,925 97,843 7201 6540 TAXES General Inflation 7,091 - - - - - - 7201 6730 OFFICE EQUIPMENT General Inflation - 1,000 1,000 1,000 1,020 1,040 1,061 7201 6750 VEHICLE MAINTENANCE General Inflation 3,273 3,000 1,100 1,100 1,122 1,144 1,167 7201 6751 VEHICLE FUEL USAGE General Inflation - - 300 300 306 312 318 7201 6752 VEHICLE 3RD PARTY SVC General Inflation - - 700 700 714 728 743 7201 6760 BUILDING REPAIR & MAINT General Inflation 2,299 2,000 2,000 2,000 2,040 2,081 2,122 7201 6904 RENTS General Inflation 878,410 916,300 946,400 965,000 984,300 1,003,986 1,024,066 7201 6930 MEMBERSHIP & PUBLICATIONS General Inflation 3,348 5,200 5,200 5,200 5,304 5,410 5,518 7201 6940 OFFICIAL MEETINGS General Inflation 4,143 2,800 2,800 2,800 2,856 2,913 2,971 7201 6970 TRAINING General Inflation 4,000 5,000 4,000 4,000 4,080 4,162 4,245 7201 6971 TUITION REIMBURSEMENT General Inflation 5,463 14,000 9,000 9,000 9,180 9,364 9,551 7201 6987 DUES & ASSESSMENTS General Inflation 12,752 14,800 14,800 14,800 15,096 15,398 15,706 7201 6990 DEPRECIATION General Inflation No - - - - - - - 7201 6995 GENERAL FUND CHARGES General Inflation 408,600 408,600 422,800 431,300 439,926 448,725 457,699 Total: OPERATING EXPENSES 1,731,812 1,779,000 1,861,800 1,889,600 1,927,392 1,965,940 2,005,259 SPECIAL PROGRAMS 7201 XXXXXSpecial Programs XXXXX General Inflation -$ -$ -$ -$ -$ -$ -$ Total: SPECIAL PROGRAMS -$ -$ -$ -$ -$ -$ -$ DIVISION: 7201 WATER-ADMIN 3,239,549$ 3,361,600$ 3,444,800$ 3,522,900$ 3,593,358$ 3,665,225$ 3,738,530$ 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | A-4 DIVISION: 7204 WATER-MAIN & REPLACEMENT SALARIES & WAGES 7204 4010 REGULAR EMPLOYEES Labor Inflation 585,398$ 599,400$ 610,800$ 618,300$ 630,666$ 643,279$ 656,145$ 7204 4014 VACATION SELL BACK Labor Inflation 6,656 9,000 9,000 9,000 9,180 9,364 9,551 7204 4019 STAND BY PAY Labor Inflation 9,537 10,000 10,000 10,000 10,200 10,404 10,612 7204 4021 LONGEVI TY PAY Labor I nflation 11,549 12,200 12,200 12,200 12,444 12,693 12,947 7204 4032 TEMPORARY Labor Inflation 2,619 10,000 13,300 13,300 13,566 13,837 14,114 7204 4130 OVERTIME Labor Inflation 23,107 25,000 25,000 25,000 25,500 26,010 26,530 7204 4241 P.E.R.S Labor Inflation 191,971 230,700 246,000 262,100 267,342 272,689 278,143 7204 4242 .5% CITY CONTRIBUTION Labor Inflation 168 200 200 200 204 208 212 7204 4244 MEDICAL/DENTAL Labor Inflation 132,281 129,900 129,900 129,900 132,498 135,148 137,851 7204 4245 LONG TERM DISABILITY Labor Inflation 832 800 900 900 918 936 955 7204 4247 LIFE INSURANCE Labor Inflation 642 600 700 700 714 728 743 7204 4250 FICA/HOSPITAL INSURANCE Labor Inflation 9,586 9,500 9,800 9,900 10,098 10,300 10,506 7204 4299 VACANCY RATE Labor Inflation - (31,100) (30,300) (31,000) (31,620) (32,252) (32,897) Total: SALARIES & WAGES 974,346 1,006,200 1,037,500 1,060,500 1,081,710 1,103,344 1,125,411 SUPPLIES 7204 5260 FIELDS General Inflation 4,924$ 4,500$ 5,000$ 5,000$ 5,100$ 5,202$ 5,306$ 7204 5280 UNIFORM General Inflation 7,877 9,000 9,000 9,000 9,180 9,364 9,551 7204 5410 TOOLS General Inflation 5,048 5,000 5,000 5,000 5,100 5,202 5,306 Total: SUPPLIES 17,848 18,500 19,000 19,000 19,380 19,768 20,163 OPERATING EXPENSES 7204 6750 VEHICLE MAINTENANCE General Inflation 109,376$ 110,000$ 55,200$ 55,200$ 56,304$ 57,430$ 58,579$ 7204 6751 VEHICLE FUEL USAGE General Inflation - - 22,900 24,800$ 25,296 25,802 26,318 7204 6752 VEHICLE 3RD PARTY SVC General Inflation - - 28,300 28,300$ 28,866 29,443 30,032 7204 6760 BUILDING REPAIR & MAINT General Inflation 501 500 500 500 510 520 531 7204 6771 WAREHOUSE & SHOP General Inflation 6,114 4,500 4,500 4,500 4,590 4,682 4,775 7204 6995 GENERAL FUND CHARGES General Inflation 232,000 232,000 244,500 249,400 254,388 259,476 264,665 Total: OPERATING EXPENSES 347,991 347,000 355,900 362,700 369,954 377,353 384,900 SPECIAL PROGRAMS 7204 7540 REPAIRS TO MAINS General Inflation 35,016$ 40,000$ 38,000$ 38,000$ 38,760$ 39,535$ 40,326$ 7204 7550 REPAIRS TO SERVICES General Inflation 58,427 55,000 50,000 50,000 51,000 52,020 53,060 7204 7560 REPAIRS TO HYDRANTS General Inflation 8,318 12,000 17,000 17,000 17,340 17,687 18,041 Total: SPECIAL PROGRAMS 101,761 107,000 105,000 105,000 107,100 109,242 111,427 DIVISION: 7204 WATER-MAIN & REPLACEMENT 1,441,946$ 1,478,700$ 1,517,400$ 1,547,200$ 1,578,144$ 1,609,707$ 1,641,901$ 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | A-5 DIVISION: 7205 WATER-METER CUSTOMER SV SALARIES & WAGES 7205 4010 REGULAR EMPLOYEES Labor Inflation 209,579$ 210,800$ 221,000$ 227,300$ 231,846$ 236,483$ 241,213$ 7205 4014 VACATION SELL BACK Labor Inflation 1,670 2,000 2,000 2,000 2,040 2,081 2,122 7205 4019 STAND BY PAY Labor Inflation 2,962 4,000 2,000 2,000 2,040 2,081 2,122 7205 4021 LONGEVI TY PAY Labor I nflation 2,351 2,400 2,400 2,400 2,448 2,497 2,547 7205 4130 OVERTIME Labor Inflation 2,115 2,500 2,500 2,500 2,550 2,601 2,653 7205 4241 P.E.R.S Labor Inflation 64,821 78,900 86,600 93,900 95,778 97,694 99,647 7205 4242 .5% CITY CONTRIBUTION Labor Inflation 164 200 200 200 204 208 212 7205 4244 MEDICAL/DENTAL Labor Inflation 46,626 47,100 47,100 47,100 48,042 49,003 49,983 7205 4245 LONG TERM DISABILITY Labor Inflation 305 300 300 300 306 312 318 7205 4247 LIFE INSURANCE Labor Inflation 286 300 300 300 306 312 318 7205 4250 FICA/HOSPITAL INSURANCE Labor Inflation 3,468 3,200 3,300 3,400 3,468 3,537 3,608 7205 4299 VACANCY RATE Labor Inflation - (10,500) (10,800) (11,200) (11,424) (11,652) (11,886) Total: SALARIES & WAGES 334,345 341,200 356,900 370,200 377,604 385,156 392,859 SUPPLIES 7205 5410 TOOLS General Inflation 1,000$ 1,000$ 1,000$ 1,000$ 1,020$ 1,040$ 1,061$ Total: SUPPLIES 1,000 1,000 1,000 1,000 1,020 1,040 1,061 OPERATING EXPENSES 7205 6750 VEHICLE MAINTENANCE General Inflation 21,906$ 19,000$ 9,900$ 9,900$ 10,098$ 10,300$ 10,506$ 7205 6751 VEHICLE FUEL USAGE General Inflation - - 6,300 7,000 7,140 7,283 7,428 7205 6752 VEHICLE 3RD PARTY SVC General Inflation - - 1,900 1,900 1,938 1,977 2,016 7205 6771 WAREHOUSE & SHOP General Inflation 442 500 500 500 510 520 531 7205 6995 GENERAL FUND CHARGES General Inflation 384,900 384,900 395,300 403,200 411,264 419,489 427,879 Total: OPERATING EXPENSES 407,247 404,400 413,900 422,500 430,950 439,569 448,360 SPECIAL PROGRAMS 7205 7510 REPAIRS TO METERS General Inflation 7,851$ 12,000$ 30,500$ 30,500$ 31,110$ 31,732$ 32,367$ 7205 7570 METERS & SERVICE CONN General Inflation - - - - - - - 7205 7610 METER READING SUPPLIES General Inflation 18,168 19,600 53,000 53,000 54,060 55,141 56,244 Total: SPECIAL PROGRAMS 26,019 31,600 83,500 83,500 85,170 86,873 88,611 DIVISION: 7205 WATER-METER CUSTOMER SV 768,612$ 778,200$ 855,300$ 877,200$ 894,744$ 912,639$ 930,892$ DIVISION: 7206 WATER-PRODUCTION/QUALITY SALARIES & WAGES 7206 4010 REGULAR EMPLOYEES Labor Inflation 268,936$ 302,500$ 302,900$ 316,900$ 323,238$ 329,703$ 336,297$ 7206 4014 VACATION SELL BACK Labor Inflation 8,377 7,000 7,000 7,000 7,140 7,283 7,428 7206 4019 STAND BY PAY Labor Inflation 16,268 11,000 13,000 13,000 13,260 13,525 13,796 7206 4021 LONGEVI TY PAY Labor I nflation 4,847 4,500 6,000 6,000 6,120 6,242 6,367 7206 4130 OVERTIME Labor Inflation 9,451 10,000 10,000 10,000 10,200 10,404 10,612 7206 4241 P.E.R.S Labor Inflation 84,154 114,200 120,800 133,000 135,660 138,373 141,141 7206 4242 .5% CITY CONTRIBUTION Labor Inflation 164 200 200 200 204 208 212 7206 4244 MEDICAL/DENTAL Labor Inflation 42,287 60,900 60,900 60,900 62,118 63,360 64,628 7206 4245 LONG TERM DISABILITY Labor Inflation 329 400 400 400 408 416 424 7206 4247 LIFE INSURANCE Labor Inflation 301 300 400 400 408 416 424 7206 4250 FICA/HOSPITAL INSURANCE Labor Inflation 4,961 4,800 4,900 5,100 5,202 5,306 5,412 7206 4299 VACANCY RATE Labor Inflation - (15,500) (36,800) (15,700) (16,014) (16,334) (16,661) Total: SALARIES & WAGES 440,073 500,300 489,700 537,200 547,944 558,903 570,081 SUPPLIES 7206 5260 FIELDS General Inflation 513$ 200$ 200$ 200$ 204$ 208$ 212$ 7206 5410 TOOLS General Inflation 800 800 800 800 816 832 849 Total: SUPPLIES 1,313 1,000 1,000 1,000 1,020 1,040 1,061 OPERATING EXPENSES 7206 6210 TELEPHONE General Inflation 6,651$ 8,800$ 6,200$ 6,300$ 6,426$ 6,555$ 6,686$ 7206 6614 WATER General Inflation 2,088 2,200 2,400 2,400 2,448 2,497 2,547 7206 6750 VEHICLE MAINTENANCE General Inflation 42,307 39,000 21,200 21,700 22,134 22,577 23,028 7206 6751 VEHICLE FUEL USAGE General Inflation - - 11,600 13,100 13,362 7206 6752 VEHICLE 3RD PARTY SVC General Inflation - - 6,700 6,900 7,038 7206 6760 BUILDING REPAIR & MAINT General Inflation 65,236 65,000 65,000 65,000 66,300 67,626 68,979 7206 6771 WAREHOUSE & SHOP General Inflation 6,114 5,000 6,000 6,000 6,120 6,242 6,367 7206 6903 PERMITS FEES General Inflation 6,025 6,700 6,700 6,700 6,834 6,971 7,110 7206 6987 DUES & ASSESSMENTS -- Consumption Forc. --5,651,036 6,075,384 6,560,335 6,687,951 6,819,395 6,954,783 7,094,232 7206 6995 GENERAL FUND CHARGES General Inflation 252,900 252,900 266,600 271,900 277,338 282,885 288,542 Total: OPERATING EXPENSES 6,032,357 6,454,984 6,952,735 7,087,951 7,227,395 7,350,135 7,497,491 SPECIAL PROGRAMS 7206 7206 BULK MAILING General Inflation -$ -$ -$ -$ -$ -$ -$ 7206 7410 POWER PURCHASED ities + Delivered Water Demand 1,358,357 1,600,000 1,500,000 1,500,000 1,530,000 1,560,600 1,591,812 7206 7420 PUMPING SUPPLIES General Inflation 56,958 70,000 65,000 135,000 137,700 140,454 143,263 7206 7425 WATER TESTING General Inflation 28,693 35,000 40,000 40,000 40,800 41,616 42,448 7206 7440 UNSCHEDULED REPAIR General Inflation 87,338 135,000 135,000 135,000 137,700 140,454 143,263 WELLS 7206 7450 REPAIRS TO PUMP General Inflation 16,075 26,000 26,000 26,000 26,520 27,050 27,591 FACILITIES 7206 7530 REPAIRS TO RESERVOIRS General Inflation 5,000 5,000 5,000 5,000 5,100 5,202 5,306 Total: SPECIAL PROGRAMS 1,552,420 1,871,000 1,771,000 1,841,000 1,877,820 1,915,376 1,953,684 DIVISION: 7206 WATER-PRODUCTION/QUALITY 8,026,163 8,827,284 9,214,435 9,467,151 9,654,179 9,825,455 10,022,317 Total Expenditures 13,476,270$ 14,445,784$ 15,031,935$ 15,414,451$ 15,720,425$ 16,013,026$ 16,333,640$ 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | B-1 Appendix B WATER FUNCTIONAL ALLOCATION City of Arcadia Water Financial & Rate Model Cost Allocation Basis FY 2020/21 Functional Allocation Supply 1 Supply 2 Allocation Index Customer Capacity Fire Protection Base Max Day Max Hour Raymond Basin + Main Basin In Main Bain Out As All Others Customer Only 100%0% Capacity Only 100%0% Base Only 100%0% Max Day Only 100%0% Max Hour Only 100%0% Source of Supply 5% 22% 73%0% Base / Max Day 65% 35%0% Base / Max Day / Max Hour 52% 28% 20%0% Max Day / Max Hour 80% 20%0% Customer / Capacity 25% 75%0% Allocated CIP 0% 14% 53% 24% 9% As Fixed Assets 0% 3% 0% 54% 25% 18% As All Others 0% 0% 0% 0% 0% 0% 100% Resulting Allocation 15.1% 7.5% 20.1% 9.7% 4.7% 10.1% 32.9% Applies to max hour functions only. Notes Applies to customer service functions only. Applies to capacity maintenance functions only. Applies to base supply functions only. Applies to max day supply functions only. Based on supply cost allocation. See "Source of Supply" tab. Allocation of FY 2019/20 through FY 2022/23 CIP Allocation of Physical Assets Replacmeent Cost Weighted average reallocated based on the resulting functional allocation. 25/75 split between Customer Service and Capacity Maintenance functions. Based on system peaking analysis. See "Units of Service" tab. Based on system peaking analysis. See "Units of Service" tab. Based on system peaking analysis. See "Units of Service" tab. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | B-2 FY 2020/21 Allocation Basis Customer Capacity Fire Protection Base Max Day Max Hour Raymond Basin + Main Basin In Main Bain Out As All Others Operating Expenses WATER-ADMIN SALARIES & WAGES REGULAR EMPLOYEES 938,300$ Customer Only 938,300$ -$ -$ -$ -$ -$ -$ -$ -$ SPECIALIST PAY 1,600 Customer Only 1,600 - - - - - - - - VACATION PAY OFF 5,000 Customer Only 5,000 - - - - - - - - VACATION SELL BACK 12,000 Customer Only 12,000 - - - - - - - - ALLOWANCES 2,200 Customer Only 2,200 - - - - - - - - DEF COMP-CITY PAID - Customer Only - - - - - - - - - STAND BY PAY - Customer Only - - - - - - - - - LONGEVITY PAY 11,200 Customer Only 11,200 - - - - - - - - TEMPORARY 15,000 Customer Only 15,000 - - - - - - - - OVERTIME - Customer Only - - - - - - - - - P.E.R.S 370,900 Customer Only 370,900 - - - - - - - - .5% CITY CONTRIBUTION 2,500 Customer Only 2,500 - - - - - - - - MEDICAL/DENTAL 149,100 Customer Only 149,100 - - - - - - - - LONG TERM DISABILITY 1,000 Customer Only 1,000 - - - - - - - - LIFE INSURANCE 1,900 Customer Only 1,900 - - - - - - - - RETIREE MEDICAL 31,300 Customer Only 31,300 - - - - - - - - FICA/HOSPITAL INSURANCE 14,200 Customer Only 14,200 - - - - - - - - VACANCY RATE (64,500) Customer Only (64,500) - - - - - - - - Pension Bond Debt - As All Others - - - - - - - - - Total SALARIES & WAGES 1,491,700$ 1,491,700$ -$ -$ -$ -$ -$ -$ -$ -$ SUPPLIES OFFICE SUPPLIES 17,800$ Customer Only 17,800$ -$ -$ -$ -$ -$ -$ -$ -$ WATER BILL POSTAGE 48,000 Customer Only 48,000 - - - - - - - - DRAFTING SUPPLIES 2,500 Customer Only 2,500 - - - - - - - - PRINT SHOP 23,000 Customer Only 23,000 - - - - - - - - Total SUPPLIES 91,300$ 91,300$ -$ -$ -$ -$ -$ -$ -$ -$ OPERATING EXPENSES WATER CONSERVATION COST 71,500$ Max Day Only -$ -$ -$ -$ 71,500$ -$ -$ -$ -$ CONTRACT SERVICES 170,000 As All Others - - - - - - - - 170,000 TELEPHONE - Customer Only - - - - - - - - - GENERAL LIABILITY 118,000 Customer Only 118,000 - - - - - - - - WORKERS' COMPENSATION 92,200 Customer Only 92,200 - - - - - - - - TAXES - Customer Only - - - - - - - - - OFFICE EQUIPMENT 1,000 Customer Only 1,000 - - - - - - - - VEHICLE MAINTENANCE 1,100 Customer Only 1,100 - - - - - - - - BUILDING REPAIR & MAINT 2,000 Customer Only 2,000 - - - - - - - - RENTS 946,400 As All Others - - - - - - - - 946,400 MEMBERSHIP & PUBLICATIONS 5,200 Customer Only 5,200 - - - - - - - - OFFICIAL MEETINGS 2,800 Customer Only 2,800 - - - - - - - - TRAINING 4,000 Customer Only 4,000 - - - - - - - - TUITION REIMBURSEMENT 9,000 Customer Only 9,000 - - - - - - - - DUES & ASSESSMENTS 14,800 Customer Only 14,800 - - - - - - - - DEPRECIATION - Customer Only - - - - - - - - - GENERAL FUND CHARGES 422,800 Customer / Capacity 105,700 317,100 - - - - - - - Total OPERATING EXPENSES 1,860,800$ 355,800$ 317,100$ -$ -$ 71,500$ -$ -$ -$ 1,116,400$ SPECIAL PROGRAMS Special Programs XXXXX -$ As All Others -$ -$ -$ -$ -$ -$ -$ -$ -$ Total SPECIAL PROGRAMS -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Total WATER-ADMIN 3,443,800$ 1,938,800$ 317,100$ -$ -$ 71,500$ -$ -$ -$ 1,116,400$ 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | B-3 FY 2020/21 Allocation Basis Customer Capacity Fire Protection Base Max Day Max Hour Raymond Basin + Main Basin In Main Bain Out As All Others Operating Expenses WATER-MAIN & REPLACEMENT SALARIES & WAGES REGULAR EMPLOYEES 610,800$ Base / Max Day / Max Hour -$ -$ -$ 318,140$ 170,500$ 122,160$ -$ -$ -$ VACATION SELL BACK 9,000 Base / Max Day / Max Hour - - - 4,688 2,512 1,800 - - - STAND BY PAY 10,000 Base / Max Day / Max Hour - - - 5,209 2,791 2,000 - - - LONGEVITY PAY 12,200 Base / Max Day / Max Hour - - - 6,354 3,406 2,440 - - - TEMPORARY 13,300 Base / Max Day / Max Hour - - - 6,927 3,713 2,660 - - - OVERTIME 25,000 Base / Max Day / Max Hour - - - 13,021 6,979 5,000 - - - P.E.R.S 246,000 Base / Max Day / Max Hour - - - 128,131 68,669 49,200 - - - .5% CITY CONTRIBUTION 200 Base / Max Day / Max Hour - - - 104 56 40 - - - MEDICAL/DENTAL 129,900 Base / Max Day / Max Hour - - - 67,660 36,260 25,980 - - - LONG TERM DISABILITY 900 Base / Max Day / Max Hour - - - 469 251 180 - - - LIFE INSURANCE 700 Base / Max Day / Max Hour - - - 365 195 140 - - - FICA/HOSPITAL INSURANCE 9,800 Base / Max Day / Max Hour - - - 5,104 2,736 1,960 - - - VACANCY RATE (30,300) Base / Max Day / Max Hour - - - (15,782) (8,458) (6,060) - - - Total SALARIES & WAGES 1,037,500$ -$ -$ -$ 540,391$ 289,609$ 207,500$ -$ -$ -$ SUPPLIES FIELDS 5,000$ Base / Max Day / Max Hour -$ -$ -$ 2,604$ 1,396$ 1,000$ -$ -$ -$ UNIFORM 9,000 Base / Max Day / Max Hour - - - 4,688 2,512 1,800 - - - TOOLS 5,000 Base / Max Day / Max Hour - - - 2,604 1,396 1,000 - - - Total SUPPLIES 19,000$ -$ -$ -$ 9,896$ 5,304$ 3,800$ -$ -$ -$ OPERATING EXPENSES VEHICLE MAINTENANCE 55,200$ As All Others -$ -$ -$ -$ -$ -$ -$ -$ 55,200$ BUILDING REPAIR & MAINT 500 Base / Max Day / Max Hour - - - 260 140 100 - - - WAREHOUSE & SHOP 4,500 Base / Max Day / Max Hour - - - 2,344 1,256 900 - - - GENERAL FUND CHARGES 244,500 Base / Max Day / Max Hour - - - 127,350 68,250 48,900 - - - Total OPERATING EXPENSES 304,700$ -$ -$ -$ 129,954$ 69,646$ 49,900$ -$ -$ 55,200$ SPECIAL PROGRAMS REPAIRS TO MAINS 38,000$ Base / Max Day / Max Hour -$ -$ -$ 19,793$ 10,607$ 7,600$ -$ -$ -$ REPAIRS TO SERVICES 50,000 Capacity Only - 50,000 - - - - - - - REPAIRS TO HYDRANTS 17,000 Capacity Only - 17,000 - - - - - - - Total SPECIAL PROGRAMS 105,000$ -$ 67,000$ -$ 19,793$ 10,607$ 7,600$ -$ -$ -$ Total WATER-MAIN & REPLACEMENT 1,466,200$ -$ 67,000$ -$ 700,034$ 375,166$ 268,800$ -$ -$ 55,200$ 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | B-4 FY 2020/21 Allocation Basis Customer Capacity Fire Protection Base Max Day Max Hour Raymond Basin + Main Basin In Main Bain Out As All Others Operating Expenses WATER-METER CUSTOMER SV SALARIES & WAGES REGULAR EMPLOYEES 221,000$ Customer / Capacity 55,250$ 165,750$ -$ -$ -$ -$ -$ -$ -$ VACATION SELL BACK 2,000 Customer / Capacity 500 1,500 - - - - - - - STAND BY PAY 2,000 Customer / Capacity 500 1,500 - - - - - - - LONGEVITY PAY 2,400 Customer / Capacity 600 1,800 - - - - - - - OVERTIME 2,500 Customer / Capacity 625 1,875 - - - - - - - P.E.R.S 86,600 Customer / Capacity 21,650 64,950 - - - - - - - .5% CITY CONTRIBUTION 200 Customer / Capacity 50 150 - - - - - - - MEDICAL/DENTAL 47,100 Customer / Capacity 11,775 35,325 - - - - - - - LONG TERM DISABILITY 300 Customer / Capacity 75 225 - - - - - - - LIFE INSURANCE 300 Customer / Capacity 75 225 - - - - - - - FICA/HOSPITAL INSURANCE 3,300 Customer / Capacity 825 2,475 - - - - - - - VACANCY RATE (10,800) Customer / Capacity (2,700) (8,100) - - - - - - - Total SALARIES & WAGES 356,900$ 89,225$ 267,675$ -$ -$ -$ -$ -$ -$ -$ SUPPLIES TOOLS 1,000$ Customer / Capacity 250$ 750$ -$ -$ -$ -$ -$ -$ -$ Total SUPPLIES 1,000$ 250$ 750$ -$ -$ -$ -$ -$ -$ -$ OPERATING EXPENSES VEHICLE MAINTENANCE 9,900$ Customer / Capacity 2,475$ 7,425$ -$ -$ -$ -$ -$ -$ -$ WAREHOUSE & SHOP 500 Customer / Capacity 125 375 - - - - - - - GENERAL FUND CHARGES 395,300 Customer / Capacity 98,825 296,475 - - - - - - - Total OPERATING EXPENSES 405,700$ 101,425$ 304,275$ -$ -$ -$ -$ -$ -$ -$ SPECIAL PROGRAMS REPAIRS TO METERS 30,500$ Capacity Only -$ 30,500$ -$ -$ -$ -$ -$ -$ -$ METERS & SERVICE CONN - Customer / Capacity - - - - - - - - - METER READING SUPPLIES 53,000 Customer Only 53,000 - - - - - - - - Total SPECIAL PROGRAMS 83,500$ 53,000$ 30,500$ -$ -$ -$ -$ -$ -$ -$ Total WATER-METER CUSTOMER SV 847,100$ 243,900$ 603,200$ -$ -$ -$ -$ -$ -$ -$ 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | B-5 FY 2020/21 Allocation Basis Customer Capacity Fire Protection Base Max Day Max Hour Raymond Basin + Main Basin In Main Bain Out As All Others Operating Expenses WATER-PRODUCTION/QUALITY SALARIES & WAGES REGULAR EMPLOYEES 302,900$ Base / Max Day -$ -$ -$ 197,210$ 105,690$ -$ -$ -$ -$ VACATION SELL BACK 7,000 Base / Max Day - - - 4,558 2,442 - - - - STAND BY PAY 13,000 Base / Max Day - - - 8,464 4,536 - - - - LONGEVITY PAY 6,000 Base / Max Day - - - 3,906 2,094 - - - - OVERTIME 10,000 Base / Max Day - - - 6,511 3,489 - - - - P.E.R.S 120,800 Base / Max Day - - - 78,650 42,150 - - - - .5% CITY CONTRIBUTION 200 Base / Max Day - - - 130 70 - - - - MEDICAL/DENTAL 60,900 Base / Max Day - - - 39,650 21,250 - - - - LONG TERM DISABILITY 400 Base / Max Day - - - 260 140 - - - - LIFE INSURANCE 400 Base / Max Day - - - 260 140 - - - - FICA/HOSPITAL INSURANCE 4,900 Base / Max Day - - - 3,190 1,710 - - - - VACANCY RATE (36,800) Base / Max Day - - - (23,959) (12,841) - - - - Total SALARIES & WAGES 489,700$ -$ -$ -$ 318,830$ 170,870$ -$ -$ -$ -$ SUPPLIES FIELDS 200$ Base / Max Day -$ -$ -$ 130$ 70$ -$ -$ -$ -$ TOOLS 800 Base / Max Day - - - 521 279 - - - - Total SUPPLIES 1,000$ -$ -$ -$ 651$ 349$ -$ -$ -$ -$ OPERATING EXPENSES TELEPHONE 6,200$ Base / Max Day -$ -$ -$ 4,037$ 2,163$ -$ -$ -$ -$ WATER 2,400 Base / Max Day - - - 1,563 837 - - - - VEHICLE MAINTENANCE 21,200 Base / Max Day - - - 13,803 7,397 - - - - BUILDING REPAIR & MAINT 65,000 Base / Max Day - - - 42,320 22,680 - - - - WAREHOUSE & SHOP 6,000 Base / Max Day - - - 3,906 2,094 - - - - PERMITS FEES 6,700 Base / Max Day - - - 4,362 2,338 - - - - DUES & ASSESSMENTS 6,560,335 Source of Supply - - - 337,206 - - 1,461,999 4,761,130 - GENERAL FUND CHARGES 266,600 Base / Max Day - - - 173,576 93,024 - - - - Total OPERATING EXPENSES 6,934,435$ -$ -$ -$ 580,772$ 130,534$ -$ 1,461,999$ 4,761,130$ -$ SPECIAL PROGRAMS BULK MAILING -$ Customer Only -$ -$ -$ -$ -$ -$ -$ -$ -$ POWER PURCHASED 1,500,000 Base / Max Day / Max Hour - - - 781,288 418,712 300,000 - - - PUMPING SUPPLIES 65,000 Base / Max Day / Max Hour - - - 33,856 18,144 13,000 - - - WATER TESTING 40,000 Base Only - - - 40,000 - - - - - UNSCHEDULED REPAIR 135,000 Base / Max Day / Max Hour - - - 70,316 37,684 27,000 - - - REPAIRS TO PUMP 26,000 Base / Max Day / Max Hour - - - 13,542 7,258 5,200 - - - REPAIRS TO RESERVOIRS 5,000 Base / Max Day / Max Hour - - - 2,604 1,396 1,000 - - - Total SPECIAL PROGRAMS 1,771,000$ -$ -$ -$ 941,606$ 483,194$ 346,200$ -$ -$ -$ Total WATER-PRODUCTION/QUALITY 9,196,135$ -$ -$ -$ 1,841,860$ 784,946$ 346,200$ 1,461,999$ 4,761,130$ -$ Total O&M Expenditures 14,953,235$ 2,182,700$ 987,300$ -$ 2,541,894$ 1,231,612$ 615,000$ 1,461,999$ 4,761,130$ 1,171,600$ Reallocation of As All Others 2,368,255$ 1,071,232$ -$ 2,757,984$ 1,336,314$ 667,282$ 1,586,286$ 5,165,882$ 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | B-6 FY 2020/21 Allocation Basis Customer Capacity Fire Protection Base Max Day Max Hour Raymond Basin + Main Basin In Main Bain Out As All Others Rate Revenue Requirement Total O&M Expenditures 14,953,235 [Calculated Above] 2,368,255$ 1,071,232$ -$ 2,757,984$ 1,336,314$ 667,282$ 1,586,286$ 5,165,882$ -$ Additional O&M Max Day / Max Hour - - - - - - - - - Debt - As All Others - - - - - - - - - Capital Projects 4,353,000 Allocated CIP - 614,414 - 2,315,567 1,029,859 393,160 - - - Replacement Funding (Depreciation) - As All Others - - - - - - - - - Adjustment for Mid-Year Increase 367,274 As All Others - - - - - - - - 367,274 Cashflow 764,535$ Allocated CIP -$ 107,912$ -$ 406,692$ 180,878$ 69,052$ -$ -$ -$ (Less) Offsetting Revenues Use of Reserves for Capital Projects (4,325,000) Allocated CIP -$ (610,462)$ -$ (2,300,673)$ (1,023,234)$ (390,631)$ -$ -$ -$ Use of Equipment Fund (28,000) Allocated CIP - (3,952) - (14,895) (6,624) (2,529) - - - Use of Bond Proceeds - As All Others - - - - - - - - - Other Capital Funding Sources - As All Others - - - - - - - - - Other Charges for Services (142,410) As All Others - - - - - - - - (142,410) Grant Income - As All Others - - - - - - - - - Interest Earnings (161,682) As All Others - - - - - - - - (161,682) Other Revenues (434,141) As All Others - - - - - - - - (434,141) Total Rate Revenues to be Collected 15,346,811$ 2,368,255$ 1,179,144$ -$ 3,164,677$ 1,517,192$ 736,334$ 1,586,286$ 5,165,882$ (370,959)$ Reallocation of As All Others 2,312,361$ 1,151,315$ -$ 3,089,986$ 1,481,384$ 718,956$ 1,548,848$ 5,043,961$ Total Allocation 2,312,361$ 1,151,315$ -$ 3,089,986$ 1,481,384$ 718,956$ 1,548,848$ 5,043,961$ 15% 8% 0% 20% 10% 5% 10% 33% 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | C-1 Appendix C WATER SUPPLY ALLOCATION Step Allocation Factor Less Previously Allocated Remaining to Allocate MWD Purchase Main Bain Out Raymond Basin + Main Basin In Total Total Supply Produced (HCF) ͭͬʹ,͵ͬͬ ͭ,ͳͮ͵,ͬͮͮ Ͱ,ͭͱʹ,ͰͰ͵ ͱ,͵͵Ͳ,ͯͳͭ System Losses (ʹ,ʹͲͰ) (ͭͰͬ,ͳͰͮ) (ͯͯʹ,Ͱ͵ʹ) (Ͱʹʹ,ͭͬͱ) Total Supply Available (HCF) ͭͬͬ,ͬͯͲ ͭ,ͱʹʹ,ͮͳ͵ ͯ,ʹͭ͵,͵ͱͭ ͱ,ͱͬʹ,ͮͲͲ Step ͭ Total Usage ͭͬͬ,ͬͯͲ ͭͬͬ,ͬͯͲ Government, Institution, & Irrigation ͲͰͰ,ʹͰͲ ͭͭ,ͳͭͭ ͭͭ,ͳͭͭ Commercial ͳͲͯ,ͱͰͲ ͭͯ,ʹͲͳ ͭͯ,ʹͲͳ Multi-Family Residential ʹͬͲ,Ͳʹͳ ͭͰ,Ͳͱͬ ͭͰ,Ͳͱͬ Single Family Residential ͯ,ͮ͵ͯ,ͭʹͳ ͱ͵,ʹͬʹ ͱ͵,ʹͬʹ Total MWD Allocation ͱ,ͱͬʹ,ͮͲͲ ͭͬͬ,ͬͯͲ ͭͬͬ,ͬͯͲ Remaining to Allocate ͭ,ͱʹʹ,ͮͳ͵ ͯ,ʹͭ͵,͵ͱͭ ͱ,Ͱͬʹ,ͮͯͬ Step ͮ Incremental Max Month ͭͰͮ,͵ʹͯ ͭͰͮ,͵ʹͯ Government, Institution, & Irrigation ͮͱ,͵ͱͰ ͬ ͮͱ,͵ͱͰ ͮͱ,͵ͱͰ ͮͱ,͵ͱͰ Commercial ͭͰ,ͭͳͯ ͬ ͭͰ,ͭͳͯ ͭͰ,ͭͳͯ ͭͰ,ͭͳͯ Multi-Family Residential ʹ,ͬͱͱ ͬ ʹ,ͬͱͱ ʹ,ͬͱͱ ʹ,ͬͱͱ Single Family Residential ͵Ͱ,ʹͬͭ ͬ ͵Ͱ,ʹͬͭ ͵Ͱ,ʹͬͭ ͵Ͱ,ʹͬͭ Total Incremental Max Month Allocation ͭͰͮ,͵ʹͯ ͬ ͭͰͮ,͵ʹͯ ͭͰͮ,͵ʹͯ ͭͰͮ,͵ʹͯ Remaining to Allocate ͭ,ͰͰͱ,ͮ͵ͳ ͯ,ʹͭ͵,͵ͱͭ ͱ,ͮͲͱ,ͮͰʹ Step ͯ Incremental ͯ Max Months ͮͯ͵,ͰͬͰ ͮͯ͵,ͰͬͰ Government, Institution, & Irrigation ͳͲ,Ͱͭͭ (ͮͱ,͵ͱͰ) ͱͬ,Ͱͱͳ ͱͬ,Ͱͱͳ ͱͬ,Ͱͱͳ Commercial ͯͭ,ͯͱͮ (ͭͰ,ͭͳͯ) ͭͳ,ͭͳ͵ ͭͳ,ͭͳ͵ ͭͳ,ͭͳ͵ Multi-Family Residential ͮͬ,Ͱͮͳ (ʹ,ͬͱͱ) ͭͮ,ͯͳͮ ͭͮ,ͯͳͮ ͭͮ,ͯͳͮ Single Family Residential ͮͱͰ,ͭ͵ʹ (͵Ͱ,ʹͬͭ) ͭͱ͵,ͯ͵Ͳ ͭͱ͵,ͯ͵Ͳ ͭͱ͵,ͯ͵Ͳ Total Incremental Max ͯ- Month Allocation ͯʹͮ,ͯʹͳ (ͭͰͮ,͵ʹͯ) ͮͯ͵,ͰͬͰ ͮͯ͵,ͰͬͰ ͮͯ͵,ͰͬͰ Remaining to Allocate ͭ,ͮͬͱ,ʹ͵ͯ ͯ,ʹͭ͵,͵ͱͭ ͱ,ͬͮͱ,ʹͰͰ Step Ͱ Total Usage ͭ,ͮͬͱ,ʹ͵ͯ ͯ,ʹͭ͵,͵ͱͭ ͱ,ͬͮͱ,ʹͰͰ 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | C-2 Step Allocation Factor Less Previously Allocated Remaining to Allocate MWD Purchase Main Bain Out Raymond Basin + Main Basin In Total Government, Institution, & Irrigation ͲͰͰ,ʹͰͲ (ʹʹ,ͭͮͮ) ͱͱͲ,ͳͮͱ ͭͯͯ,ͱʹͬ Ͱͮͯ,ͭͰͱ ͱͱͲ,ͳͮͱ Commercial ͳͲͯ,ͱͰͲ (Ͱͱ,ͮͭʹ) ͳͭʹ,ͯͮʹ ͭͳͮ,ͯͱͰ ͱͰͱ,͵ͳͰ ͳͭʹ,ͯͮʹ Multi-Family Residential ʹͬͲ,Ͳʹͳ (ͯͱ,ͬͳͳ) ͳͳͭ,Ͳͭͬ ͭʹͱ,ͭͯ͵ ͱʹͲ,Ͱͳͭ ͳͳͭ,Ͳͭͬ Single Family Residential ͯ,ͮ͵ͯ,ͭʹͳ (Ͳͳ,͵ͳʹ) ͭ,ͱͱͳ,ͬͭͲ ͳͭͰ,ʹͮͬ ͮ,ͮͲͰ,ͯͲͮ ͮ,͵ͳ͵,ͭʹͮ Total Usage Allocation ͱ,ͱͬʹ,ͮͲͲ (ͮͯͲ,ͯ͵ͱ) ͯ,Ͳͬͯ,Ͳͳʹ ͭ,ͮͬͱ,ʹ͵ͯ ͯ,ʹͭ͵,͵ͱͭ ͱ,ͬͮͱ,ʹͰͰ Total Supply Allocation By Class MWD Imported Purchase Main Bain Out Raymond Basin + Main Basin In Total Government, Institution, & Irrigation ͭͭ,ͳͭͭ ͮͬ͵,͵͵ͬ Ͱͮͯ,ͭͰͱ ͲͰͰ,ʹͰͲ Commercial ͭͯ,ʹͲͳ ͮͬͯ,ͳͬͲ ͱͰͱ,͵ͳͰ ͳͲͯ,ͱͰͲ Multi-Family Residential ͭͰ,Ͳͱͬ ͮͬͱ,ͱͲͲ ͱʹͲ,Ͱͳͭ ʹͬͲ,Ͳʹͳ Single Family Residential ͱ͵,ʹͬʹ ͵Ͳ͵,ͬͭʹ ͮ,ͮͲͰ,ͯͲͮ ͯ,ͮ͵ͯ,ͭʹͳ Total Supply Allocation ͭͬͬ,ͬͯͲ ͭ,ͱʹʹ,ͮͳ͵ ͯ,ʹͭ͵,͵ͱͭ ͱ,ͱͬʹ,ͮͲͲ 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | D-1 Appendix D PROJECTED WATER DEMANDS Class Forecast FY 2015/16 FY 2016/17 FY 2017/18 FY 2018/19 FY 2019/20 FY 2020/21 FY 2021/22 FY 2022/23 FY 2023/24 FY 2024/25 Actual Actual Actual Actual Projection Projection Projection Projection Projection Projection Average of FY 2017/18 and FY 2018/19 AR - CITY 35,048 59,603 65,361 69,394 67,377 67,377 67,377 67,377 67,377 67,377 CA - COMMERCIAL 757,370 776,413 776,486 750,606 763,546 763,546 763,546 763,546 763,546 763,546 DC - FIRE SERVICE 791 774 405 71 - - - - - - GV - GOVERNMENT 168,146 218,244 311,088 230,838 270,963 270,963 270,963 270,963 270,963 270,963 IM - IRRIGATION 257,739 292,392 329,215 283,797 306,506 306,506 306,506 306,506 306,506 306,506 MF - MULTI FAMILY 747,764 783,752 829,546 783,827 806,687 806,687 806,687 806,687 806,687 806,687 SF - SINGLE FAMILY 2,900,182 3,156,819 3,464,830 3,121,544 3,293,187 3,293,187 3,293,187 3,293,187 3,293,187 3,293,187 Total (HCF) 4,867,040 5,287,997 5,776,931 5,240,077 5,508,266 5,508,266 5,508,266 5,508,266 5,508,266 5,508,266 Government, Institution, Irr 460,932 570,239 705,664 584,028 644,846 644,846 644,846 644,846 644,846 644,846 Total AF Sold 11,173 12,140 13,262 12,030 12,645 12,645 12,645 12,645 12,645 12,645 Annual Change 8.65% 9.25% -9.29% 5.12% 0.00% 0.00% 0.00% 0.00% 0.00% Total HCF Sold 4,867,040 5,287,997 5,776,931 5,240,077 5,508,266 5,508,266 5,508,266 5,508,266 5,508,266 5,508,266 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | D-2 Tier Forecast FY 2016/17 FY 2017/18 FY 2018/19 FY 2019/20 FY 2020/21 FY 2021/22 FY 2022/23 FY 2023/24 FY 2024/25 Actual Actual Actual Projection Projection Projection Projection Projection Projection Single Family Residential - Tier Splits Tier 1 44%40% 44%42%40%40% 40% 40% 40% Tier 2 29%30% 29%29%30%30% 30% 30% 30% Tier 3 10%11% 10%10%12%12% 12% 12% 12% Tier 4 17%19% 17%18%18%18% 18% 18% 18% Total 100% 100% 100% 100% 100% 100% 100% 100% 100% Single Family Residential - Use per Tier Tier 1 1,389,000 1,383,774 1,382,720 1,386,987 1,324,274 1,324,274 1,324,274 1,324,274 1,324,274 Tier 2 915,478 1,029,498 893,370 960,496 993,612 993,612 993,612 993,612 993,612 Tier 3 315,682 380,529 307,426 343,004 398,676 398,676 398,676 398,676 398,676 Tier 4 536,659 671,030 538,028 602,700 576,624 576,624 576,624 576,624 576,624 Total 3,156,819 3,464,830 3,121,544 3,293,187 3,293,187 3,293,187 3,293,187 3,293,187 3,293,187 TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE Mutli Family Residential - Tier Splits Tier 1 55%61% 64%63%63% 63% 63% 63% 63% Tier 2 45%39% 36%37%37% 37% 37% 37% 37% Total 100% 100% 100% 100% 100% 100% 100% 100% 100% Multi Family Residential - Use per Tier Tier 1 431,063 507,370 503,851 505,967 505,967 505,967 505,967 505,967 505,967 Tier 2 352,688 322,176 279,976 300,720 300,720 300,720 300,720 300,720 300,720 Total 783,752 829,546 783,827 806,687 806,687 806,687 806,687 806,687 806,687 Current Tier Breaks UPDATED TIER BREAKS 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | E-1 Appendix E WATER RESIDENTIAL TIER ANALYSIS To allocate Base, Max Day, and Max Hour rate components to each Single Family and Multi-Family tier, a tier analysis was performed. The Base allocation is based on tier percent of total usage. To determine the Max Day and Max Hour allocations, first the max month was divided by the average month of FY ͮͬͭͳ/ͭʹ and FY ͮͬͭʹ/ͭ͵ to calculate the peak factor of each tier. The sum-product of the percent of total usage and peak factor yield the Max Day and Max Hour allocations shown in Table Cͭ below. Table Dͭ Projected Water O&M Revenues & Expenditures Single Family Residential Tier Usage % of Total Usage Peak factor Allocation Basis Base Max Day Max Hour Tier 1 40%1.07 Max Month / Average Month 40% 31% 31% Tier 2 30%1.55 Max Month / Average Month 30% 34% 34% Tier 3 12%1.63 Max Month / Average Month 12% 14% 14% Tier 4 18%1.59 Max Month / Average Month 18% 20% 20% Multi-Family Residential Tier Usage % of Total Usage Peak factor Allocation Basis Base Max Day Max Hour Tier 1 63%1.05 Max Month / Average Month 63% 58% 58% Tier 2 37%1.29 Max Month / Average Month 37% 42% 42% 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | E-2 Single Family Residential water supplies are allocated to each tier using a three-step process to assign a blend of water from each supply to cover usage in each tier. First, water form Supply ͭ and Supply ͮ is allocated to Tier Ͱ to cover excessive outdoor usage. The blend of Supply ͮ (more expensive water) and Supply ͭ (lower cost water) is determined by adjusting the overall blend of Supply ͭ and Supply ͮ water available to the Single Family class, adjusted such that no water from the Raymond basins (the City’s lowest cost resource) is allocated to Tier Ͱ. Next, the remaining supplies are allocated among Tiers ͭ, ͮ, and ͯ based on each tier’s usage and peak factor. Table Dͮ and Dͯ detail this methodology and the resulting allocation of supplies to each tier for FY ͮͬͮͬ/ͮͭ. Table Dͮ SFR Supply ͭ Composition and Breakout SFR Supply Allocation Among Tiers Methodology: Acre-ft % of Supply 1 Raymond Basin 3,200 34% A Main Basing Within Allotment 6,346 66% B Supply 1 Total 9,546 100% C = A + B Supplies Allocated to SFR Supply 1 HCF 2,264,362 70% D Supply 2 HCF 969,018 30% E SFR Supply 1 Breakout Raymond Basin HCF 759,018.38 Main Basing Within Allotment HCF 1,505,343 Supply 1 Allocation for Tier 4 47% F = D x B Overall blend adjusted so that no Raymond Basin Water is used in Tier 4 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | E-3 Table Dͯ SFR Tier Supply Allocation Details Multi-family Residential water supplies are allocated to each tier based on peak factors to assign a blend of water from each supply to cover usage in each tier. The amount of Supply ͭ and Supply ͮ water allocated covers all usage in each tier less each tier’s proportional allocation of MWD imported water. Table DͰ details this methodology and the resulting allocation of supplies to each tier for FY ͮͬͮͬ/ͮͭ. Table DͰ MFR Tier Supply Allocation Details Tier Usage (HCF) MWD Imported Water Allcoation (HCF) Tier Use Less MWD Allocation (HCF) Max Month Peak Supply 1 (HCF) Supply 2 (HCF)Supply 1 Supply 2 Total Allocation 3,293,187 59,808 3,233,379 2,264,362 969,018 70% 30% Outdoor Excessive - Tier 4 576,624 10,472 566,152 1.59 263,580 302,572 47% 53% Remaining for Usage Within Allotments 2,000,782 666,445 Tier Use Less MWD Allocation (HCF) Max Month Peak Peak Weighted Demand Percent of Peak Weighted Demand Supply 1 Supply 2 Supply 1 Supply 2 Indoor - Tier 1 1,324,274 24,050 1,300,224 1.07 1,391,094 39% 1,038,304 261,920 80% 20% Outdoor Efficient - Tier 2 993,612 18,045 975,567 1.55 1,511,807 43% 690,918 284,649 71% 29% Outdoor High Use - Tier 3 398,676 7,240 391,436 1.63 636,680 18% 271,560 119,876 69% 31% Tier Usage (HCF) MWD Imported Water Allocation (HCF) Tier Use Less MWD Allocation (HCF) Max Month Peak Peak Weighted Demand Percent of Peak Weighted Demand Supply 1 (HCF) Supply 2 (HCF)Supply 1 Supply 2 Total Allocation 806,687 14,651 792,036 586,471 205,566 74% 26% Tier 1 505,967 9,189 496,778 1.05 523,971 58% 377,856 118,922 76% 24% Tier 2 300,720 5,462 295,258 1.29 381,754 42% 208,614 86,644 71% 29% 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | F-1 Appendix F SEWER OPERATIONS & MAINTENANCE BUDGET ANALYSIS Similar to the water O&M budget analysis, the sewer budget analysis looks at each category of costs and applies an escalation factor to project revenues and expenses through the time period of the rate study. In this case, these costs were escalated through FY ͮͬͮͰ/ͮͱ. Table Eͭ Sewer Cost Escalation Factors Cost Escalator Description Labor Inflation Labor rates are assumed to increase at the long-term average of ͮ percent. Construction Cost Inflation Although capital cost inflation is commonly linked to the Engineering News Record (ENR) Construction Cost Index (CCI), the inflation rate assumes the ENR’s long-term average of ͯ.ͱ percent. Utilities This escalator applies to costs such as electricity and fuel, and it is set at ͮ percent. General Inflation This escalator is set at the long-term inflation rate of ͮ percent. Customer Account Growth This escalator is used for revenues stemming from water sales and fixed charges. It is assumed at ͬ percent over the long-term. Interest Income Estimated at ͭ percent based on discussions with City staff. Cost Escalator Constant General Inflation ͮ.ͬͬ% Labor Inflation ͮ.ͬͬ% Utilities Inflation ͮ.ͬͬ% Construction Inflation ͯ.ͱͬ% Depreciation Funding ͯ.ͱͬ% Interest Income ͭ.ͬͬ% Customer Growth ͬ.ͬͬ% General Inflation + Customer Growth ͮ.ͬͬ% No Annual Increase ͬ.ͬͬ% One Time Expense -ͭͬͬ.ͬͬ% All sewer revenues are projected off of FY ͮͬͭʹ/ͭ͵ end-of-year actuals, while expenses are projected off of FY ͮͬͮͬ/ͮͭ budgeted costs as shown in the table below. 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | F-2 AIL FY 2018/19 FY 2019/20 FY 2020/21 FY 2021/22 FY 2022/23 FY 2023/24 FY 2024/25 Revenues Escalator Actual (Post- Rate Increase) Projection (Pre- Rate Increase) Projection (Pre- Rate Increase) Projection (Pre- Rate Increase) Projection (Pre- Rate Increase) Projection (Pre- Rate Increase) Projection (Pre- Rate Increase) Revenues Sewer System Charge Revenue Without Additional Increases - For Reference Sewer System Charge Customer Growth 2,367,693$ 2,403,208 2,475,305 2,475,305 2,475,305 2,475,305 2,475,305 Industrial Waste Fee Customer Growth 40,008$ 40,608 41,200 41,200 41,200 41,200 41,200 Includes Adopted Increase Sewer System Charge Customer Growth 2,367,693 2,403,208 2,475,305 2,524,811 2,575,307 2,626,813 2,679,349 Industrial Waste Fee Customer Growth 40,008 40,000 40,000 40,800 41,616 42,448 43,297 Public Works Inspection General Inflation - - - - - - - Engineering Charges No Annual Increase - - - - - - - Interest Earnings No Annual Increase 74,799 35,697 27,163 24,932 24,764 27,640 26,439 Investments One Time Expense (10,680) - - - - - - Unrealized Gain/Loss No Annual Increase 64,573 Other Income No Annual Increase 664 500 500 500 500 500 500 Total Revenues 2,537,056$ 2,479,405$ 2,542,968$ 2,591,042$ 2,642,187$ 2,697,402$ 2,749,586$ Expenditures DIVISION: 3SEWER-MAINTENANCE Escalator SALARIES & WAGES 3306 4010 REGULAR EMPLOYEES Labor Inflation 561,918$ 572,300$ 579,800$ 585,600$ 597,312$ 609,258$ 621,443$ 3306 4013 VACATION PAYOFF Labor Inflation 11,656$ 1,000$ 1,000$ 1,000 1,020 1,040 1,061 3306 4014 VACATION SELL BACK Labor Inflation 7,882 9,000 8,000 8,000 8,160 8,323 8,490 3306 4015 ALLOWANCES Labor Inflation 256 200 300 300 306 312 318 3306 4019 STANDBY PAY Labor Inflation 317 - - - - - - 3306 4021 LONGEVI TY PAY Labor Inflation 9,234 8,100 9,200 9,200 9,384 9,572 9,763 3306 4032 PART-TIME NON-PERS Labor Inflation 2,071 7,500 13,300 13,300 13,566 13,837 14,114 3306 4130 OVERTIME Labor Inflation 3,553 2,000 2,000 2,000 2,040 2,081 2,122 3306 4241 P.E.R.S Labor Inflation 187,446 217,400 231,100 245,700 250,614 255,626 260,739 3306 4242 NON-PERSABLE COMPENSATION Labor Inflation 848 900 900 900 918 936 955 3306 4244 MEDICAL/DENTAL INSURANCE Labor Inflation 102,341 104,500 104,500 104,500 106,590 108,722 110,896 3306 4245 LONG TERM DISABILITY Labor Inflation 658 600 700 700 714 728 743 3306 4247 LIFE INSURANCE Labor Inflation 859 900 900 900 918 936 955 3306 4248 RETIREE MEDICAL Labor Inflation 7,556 8,500 7,700 7,900 8,058 8,219 8,384 3306 4249 UNEMPLOYMENT INSURANCE Labor Inflation - - - - - - - 3306 4250 FICA/HOSPITAL INSURANCE Labor Inflation 9,433 8,600 8,800 8,900 9,078 9,260 9,445 NEW Pension Bond Debt [Input] - - - - - - SALARIES & WAGES TOTAL: 906,029$ 941,500$ 968,200$ 988,900$ 1,008,678$ 1,028,852$ 1,049,429$ SUPPLIES 3306 5125 PRINT SHOP General Inflation 4,456$ 5,000$ 5,000$ 5,000$ 5,100$ 5,202$ 5,306$ OFFICE SUPPLIES General Inflation - - 700 700 714 728 743 3306 5260 FIELDS General Inflation 5,962 6,000 6,000 6,000 6,120 6,242 6,367 3306 5280 UNIFORM General Inflation 1,378 2,000 2,000 2,000 2,040 2,081 2,122 3306 5410 TOOLS General Inflation 647 500 500 500 510 520 531 SUPPLIES TOTAL: 12,443$ 13,500$ 14,200$ 14,200$ 14,484$ 14,774$ 15,069$ OPERATING EXPENSES 7201 6160 CONTRACT SERVICES General Inflation 48,847$ 75,300$ 105,700$ 105,700$ 107,814$ 109,970$ 112,170$ 7201 6505 GENERAL LIABILITY General Inflation 18,400 18,600 19,500 19,600 19,992 20,392 20,800 7201 6507 WORKERS' COMPENSATION General Inflation 23,600 25,800 25,800 25,800 26,316 26,842 27,379 7201 6614 WATER General Inflation 217 200 200 200 204 208 212 7201 6750 VEHICLE MAINTENANCE General Inflation 60,930 65,000 32,000 32,000 32,640 33,293 33,959 7201 6751 VEHICLE FUEL USAGE General Inflation - - 23,300 24,100 24,582 25,074 25,575 7201 6752 VEHICLE 3RD PARTY SVC General Inflation - - 7,300 7,300 7,446 7,595 7,747 7201 6902 DISPOSAL CHARGES General Inflation 1,627 2,500 2,000 2,000 2,040 2,081 2,122 7201 6903 PERMITS FEES General Inflation 11,000 11,000 11,000 11,000 11,220 11,444 11,673 7201 6970 TRAINING General Inflation 2,000 2,400 2,400 2,400 2,448 2,497 2,547 7201 6990 DEPRECIATION General Inflation - - - - - - - 7201 6995 GENERAL FUND CHARGES General Inflation 242,300 242,300 251,300 256,300 261,426 266,655 271,988 OPERATING EXPENSES TOTAL:408,920$ 443,100$ 480,500$ 486,400$ 496,128$ 506,051$ 516,172$ SPECIAL PROGRAMS 7201 7990 Special Programs XXXXX General Inflation -$ -$ -$ -$ -$ -$ -$ SPECIAL PROGRAMS TOTAL: -$ -$ -$ -$ -$ -$ -$ DIVISION: 3306 (OLD 7201) SEWER-MAINTENANCE 1,327,391$ 1,398,100$ 1,462,900$ 1,489,500$ 1,519,290$ 1,549,676$ 1,580,669$ 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | G-1 Appendix G SEWER FUNCTIONAL ALLOCATION City of Arcadia Sewer Financial and Rate Model Functional Allocation Time Period for Allocation FY 2020/21 5.6% 0.0% 94.4% 0.0% 0.0% 0.0% Allocation Index CUSTOMER CAPACITY FLOW BOD TSS Six As All Others Total Customer Only Costs associated with providing services (common to all accounts)100% 0% 0% 0% 0%0% 0% 100% Capacity Only 0% 100% 0% 0% 0%0% 0% 100% Flow Only Costs based on water usage 0% 0% 100% 0% 0%0% 0% 100% BOD Only Costs associated with assumed BOD strength 0% 0% 0% 100% 0%0% 0% 100% TSS Only Costs associated with assumed TSS strength 0% 0% 0% 0% 100%0% 0% 100% As All Others Catch all basis that uses the weighted average of the system allocation 0% 0% 0% 0% 0%0% 100% 100% As Labor 13% 0% 87% 0% 0% 100% 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | G-2 Operating Expenditures FY 2020/21 Allocation CUSTOMER CAPACITY FLOW BOD TSS Six As All Others Total SEWER-MAINTENANCE SALARIES & WAGES 3306 4010 REGULAR EMPLOYEES 579,800$ As Labor 13% 0% 87% 0% 0% 0% 0% 100% 3306 4013 VACATION PAYOFF 1,000 As Labor 13% 0% 87% 0% 0% 0% 0% 100% 3306 4014 VACATION SELL BACK 8,000 As Labor 13% 0% 87% 0% 0% 0% 0% 100% 3306 4015 ALLOWANCES 300 As Labor 13% 0% 87% 0% 0% 0% 0% 100% 3306 4019 STANDBY PAY - As Labor 13% 0% 87% 0% 0% 0% 0% 100% 3306 4021 LONGEVITY PAY 9,200 As Labor 13% 0% 87% 0% 0% 0% 0% 100% 3306 4032 PART-TIME NON-PERS 13,300 As Labor 13% 0% 87% 0% 0% 0% 0% 100% 3306 4130 OVERTIME 2,000 As Labor 13% 0% 87% 0% 0% 0% 0% 100% 3306 4241 P.E.R.S 231,100 As Labor 13% 0% 87% 0% 0% 0% 0% 100% 3306 4242 NON-PERSABLE COMPENSATION 900 As Labor 13% 0% 87% 0% 0% 0% 0% 100% 3306 4244 MEDICAL/DENTAL INSURANCE 104,500 As Labor 13% 0% 87% 0% 0% 0% 0% 100% 3306 4245 LONG TERM DISABILITY 700 As Labor 13% 0% 87% 0% 0% 0% 0% 100% 3306 4247 LIFE INSURANCE 900 As Labor 13% 0% 87% 0% 0% 0% 0% 100% 3306 4248 RETIREE MEDICAL 7,700 As Labor 13% 0% 87% 0% 0% 0% 0% 100% 3306 4249 UNEMPLOYMENT INSURANCE - As Labor 13% 0% 87% 0% 0% 0% 0% 100% 3306 4250 FICA/HOSPITAL INSURANCE 8,800 As Labor 13% 0% 87% 0% 0% 0% 0% 100% 0 NEW Pension Bond Debt - As All Others 0% 0% 0% 0% 0% 0% 100% 100% SUPPLIES 3306 5125 PRINT SHOP 5,000$ Flow Only 0% 0% 100% 0% 0% 0% 0% 100% 3306 5260 FIELDS 6,000 Flow Only 0% 0% 100% 0% 0% 0% 0% 100% 3306 5280 UNIFORM 2,000 Flow Only 0% 0% 100% 0% 0% 0% 0% 100% 3306 5410 TOOLS 500 Flow Only 0% 0% 100% 0% 0% 0% 0% 100% OPERATING EXPENSES 7201 6160 CONTRACT SERVICES 105,700$ Flow Only 0% 0% 100% 0% 0% 0% 0% 100% 7201 6505 GENERAL LIABILITY 19,500 Flow Only 0% 0% 100% 0% 0% 0% 0% 100% 7201 6507 WORKERS' COMPENSATION 25,800 Flow Only 0% 0% 100% 0% 0% 0% 0% 100% 7201 6614 WATER 200 Flow Only 0% 0% 100% 0% 0% 0% 0% 100% 7201 6750 VEHICLE MAINTENANCE 32,000 Flow Only 0% 0% 100% 0% 0% 0% 0% 100% 7201 6902 DISPOSAL CHARGES 2,000 Flow Only 0% 0% 100% 0% 0% 0% 0% 100% 7201 6903 PERMITS FEES 11,000 Flow Only 0% 0% 100% 0% 0% 0% 0% 100% 7201 6970 TRAINING 2,400 Flow Only 0% 0% 100% 0% 0% 0% 0% 100% 7201 6990 DEPRECIATION - Flow Only 0% 0% 100% 0% 0% 0% 0% 100% 7201 6995 GENERAL FUND CHARGES 251,300 As All Others 0% 0% 0% 0% 0% 0% 100% 100% SPECIAL PROGRAMS 7201 7990 Special Programs XXXXX -$ As All Others 0% 0% 0% 0% 0% 0% 100% 100% Operating Expenditures Sub Total 1,431,600$ 126,969$ -$ 1,053,331$ -$ -$ -$ 251,300$ 1,431,600$ Reallocation of "As All Others"27,033$ -$ 224,267$ -$ -$ -$ (251,300)$ Total Allocation 1,431,600$ 154,003$ -$ 1,277,597$ -$ -$ -$ -$ Percentage Allocation 100.0%10.8% 0.0% 89.2% 0.0% 0.0% 0.0% 0.0% 22020 WATER AND SEWER COST OF SERVICE RATE STUDY | CITY OF ARCADIA OCTOBER ͮͬͮͬ | G-3 Rate Revenue Requirement FY 2020/21 Allocation CUSTOMER CAPACITY FLOW BOD TSS Six As All Others Total Operating Expenses 1,431,600$ As O&M 9% 0% 74% 0% 0% 0% 18% 100% Additional O&M - As All Others 0% 0% 0% 0% 0% 0% 100% 100% Debt - As All Others 0% 0% 0% 0% 0% 0% 100% 100% Rate Funded Capital - As All Others 0% 0% 0% 0% 0% 0% 100% 100% Additional Policy Expenditures - As All Others 0% 0% 0% 0% 0% 0% 100% 100% Additions to Meet Minimum Fund Balances - As All Others 0% 0% 0% 0% 0% 0% 100% 100% Coverage Driven Increase As All Others 0% 0% 0% 0% 0% 0% 100% 100% Cashflow 1,104,721$ Flow Only 0% 0% 100% 0%0% 0% 0% 100% Less Offsetting Revenues Public Works Inspection - As All Others 0% 0% 0% 0% 0% 0% 100% 100% Engineering Charges - As All Others 0% 0% 0% 0% 0% 0% 100% 100% Interest Earnings (27,163) As All Others 0% 0% 0% 0% 0% 0% 100% 100% Investments - As All Others 0% 0% 0% 0% 0% 0% 100% 100% Other Financing Sources - As All Others 0% 0% 0% 0% 0% 0% 100% 100% Industrial Waste Fees With Full Year Increase (40,800) As All Others 0% 0% 0% 0% 0% 0% 100% 100% Total Rate Revenues to be Collected 2,468,358$ 126,969$ -$ 2,158,051$ -$ -$ -$ 183,337$ 2,468,358$ Reallocation of "As All Others"10,187$ -$ 173,150$ -$ -$ -$ (183,337)$ Total Allocation 2,468,358$ 137,157$ -$ 2,331,201$ -$ -$ -$ -$ Percentage Allocation 100.0%5.6% 0.0% 94.4% 0.0% 0.0% 0.0% 0.0% Allocation With Mid-Year Increase Adjustment CUSTOMER CAPACITY FLOW BOD TSS Six As All Others Total Adjustment for Mid-Year Increase 24,753$ Flow Only 0% 0% 100% 0% 0% 0% 0% 100% Allocated Adjustment 24,753$ -$ -$ 24,753$ -$ -$ -$ -$ 24,753$ Total Rate Revenues to be Collected 2,468,358$ 126,969$ -$ 2,158,051$ -$ -$ -$ 183,337$ 2,468,358$ Reallocation of "As All Others"10,078$ -$ 173,259$ -$ -$ -$ (183,337)$ Final Allocation 2,493,111$ 137,048$ -$ 2,356,063$ -$ -$ -$ -$ Final Percentage Allocation 100.0% 5.5% 0.0% 94.5% 0.0% 0.0% 0.0% 0.0%