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Item 2b: Tiered Water Rate Study
4 o Ra' •9,d ~ 1110141, 7 ...• i:'�t Inver P u d AuquuS 5. I4PJ 01unitY °C% STAFF REPORT Public Works Services Department DATE: January 18, 2011 TO: Mayor and City Council FROM: Tom Tait, Public Works Services Director 0 Prepared by: Ken Herman, Deputy Public Works Services Director SUBJECT: TIERED WATER RATE STUDY Recommendation: Approve SUMMARY In December 2009, the City Council awarded a Professional Services Agreement to Raftelis Financial Consultants (RFC) to conduct a Tiered Water Rate Study. As a result, staff has been gathering and analyzing data for the water distribution system to determine the best rate structure to achieve the following: • Enhance water conservation measures. • Meet new state mandates. • Continue to generate sufficient revenue to fund continued operations and maintenance activities. • Continue to maintain a reserve fund in case of a catastrophic event. Subsequently, at the November 2010 City Council Study Session, the City Council directed staff to proceed with an inclining block three tiered water rate structure that could promote efficient water use, while maintaining revenue stability. Therefore, staff's recommendation is for the City Council to approve the proposed Tiered Water Rate Study and provide staff direction on moving forward with implementing a tiered water rate structure. BACKGROUND The decision to consider and study the implementation of tiered water rates came about in response to several factors: three consecutive dry years, low reservoir storage, restrictions on pumping and reduced Colorado River supplies. These factors have created the perfect storm of challenges that has triggered the first statewide drought declaration in 16 years. California Governor Schwarzenegger proclaimed a statewide drought on June 4, 2008 and later escalated the drought to a state of emergency in February 2009. In response to the current water crisis, a comprehensive water package Page 1 of 5 Mayor and Council January 18, 2011 was passed by the California Legislature in November 2009. Included in this package was the Governor's plan to achieve a 20 percent (20 %) reduction in per capita water use statewide by 2020 (and the interim 2015 target of 10 percent). This directive led to the passage of the Water Conservation Act of 2009, also known as Senate Bill SBx7 -7. The State Department of Water Resources also recognizes 14 Water Demand Management Measures (DMM) as being an effective means to reduce the unnecessary use of water and comply with the requirements of SBx7 -7. Water agencies are required to report their implementation of these measures to the State in their Urban Water Management Plan every five (5) years. One of the measures included in the DMM is Conservation Pricing (Tiered Water Rate Structure). While the City currently has within its municipal code, penalties for the overuse of water under certain extreme conditions, the addition of a tiered water rate structure would greatly improve the City's ability to meet the goals of the Conservation Pricing measure. Environmental challenges have also affected the City on a local level. Local climate conditions affect the City of Arcadia's annual allocation of water that can be pumped from the groundwater basins free of Replenishment water costs. The current drought has affected local groundwater tables in the Raymond Basin and Main San Gabriel Basin which have lowered significantly, reaching record low levels in 2009. Arcadia typically meets roughly seventy percent (70 %) of the City's annual demand with local groundwater rights. The remaining annual water supply is imported from the Colorado River Aqueduct system and the California State Water Project through Metropolitan Water District (MWD) as replenishment water. Recently however, the statewide drought and the court ordered pumping restrictions on the State Water Project to protect endangered species of fish have resulted in MWD's allocation of water to be reduced. This reduction in water moving from Northern California to Southern California has caused MWD to increase its rates for imported treated surface water and replenishment water significantly. MWD has also limited the availability of replenishment water making it available only three (3) out of ten (10) years rather than seven (7) out of ten (10) years as it has been in the past. Each year the City purchases an average of 3,500 acre feet (AF) of replenishment water to cover the over - pumping of allocated water rights. Since FY 2007 -08, the cost of replenishment water has increased from $252/ AF to $587/AF, an increase of 133 %. Staff believes that implementation of tiered water rates will help provide an incentive to the City's water customers by being aware of their water use and reduce unnecessary uses, thereby reducing the City's need to purchase costly replenishment water. Tiered water rates will also put the burden of paying for replacement water on the customers who tend to use more water than the average customer. Subsequently, on December 2009, the City Council awarded a Professional Services Agreement to Raftelis Financial Consultants (RFC) to conduct a Tiered Water Rate Study and during the November 2010 study session, the City Council directed staff to proceed with looking into the establishment of a three -tier water rate structure. Page 2 of 5 Mayor and Council January 18, 2011 DISCUSSION The primary objective of the Tiered Water Rate Study was to develop a financial plan and a three -tier water rate structure that ensures the City's financial stability with rates that are .fair and equitable among the customers while promoting conservation and compliance for future regulatory requirements to reduce per capita water consumption. Attached is the Tiered Water Rate Study. The Tiered Water Rate Study examined historic, current and projected water use by various customer class types and found that Single - Family Residential class has the highest water demand. For instance, Single Family Residents account for 66% of the total water used; Multi - Family Residents account for 13 %; and the non - residential groups account for 21% (non - residential group includes commercial, businesses, government agencies or schools). Therefore, the recommended approach was to implement a three - tiered water rate structure for Single Family Residents and Multi- family Residents only and to work independently with the non - residential high -users to determine the most appropriate way for these users to reduce their water demands. Proposed Three - Tiered Water Rate Structure and Rates Projections show the City's total revenue requirements for FY 2011 -12 is approximately $10.3 million. As the study indicated, in order to sustain operations and adequately maintain the $20 million Emergency Reserve Fund the City will need to continue to increase water rates based on the annual Consumer Price Index (CPI). For the purposes of the Tiered Water Rate Study, staff assumed that rates would be increased by 2% over the next four (4) years. The proposed tiered water rate structure presented in this study incorporates the American Water Works Association's (AWWA) recommended methodologies to meet the City's specific needs and provide for a system of user charges that will enhance the proportionate recovery of costs from various water users or customer groups. Again, the three - tiered rate structure will apply only to single and multi - family residents. A bi- monthly meter charge, however, will continue to be assessed to each customer and will vary depending on the customer's meter size which affects the level of demand in the water system. The meter charge costs also include the customer service component (i.e. meter reading, billing, accounts receivables, and accounting) and the equipment component necessary to deliver water to the properties. The City currently implements a uniform commodity rate of $1.33 per unit for all customers regardless of the amount of water consumption (1 unit = 100 cubic feet or 748 gallons). The unit price for the proposed inclining three - tiered rate structure matches the City's current water rates and then subsequently, with the assumption that the rates would increase according to the Consumer Price Index (CPI) each year. The Page 3 of 5 Mayor and Council January 18, 2011 table below illustrates the City's existing uniform rate versus the proposed three - tiered water rate structure formulated through the Study: Existing Rates (FY 2010 -11) vs. Proposed Tiered Rate Structure (FY 2012 -16) Bi- Monthly Service Charge FY 11 2012 2013 2014 2015 2016 Meter Size Existing Proposed Proposed Proposed Proposed Proposed 5/8" $ 10.95 $ 10.94 $ 11.16 $ 11.38 $ 11.61 $ 11.84 3/4" $ 12.32 $ 10.94 $ 11.16 $ 11.38 $ 11.61 $ 11.84 1" $ 13.69 $ 14.21 $ 14.49 $ 14.78 $ 15.08 $ 15.38 1 -1/2" $ 20.53 $ 22.37 $ 22.82 $ 23.27 $ 23.74 $ 24.21 2" $ 28.75 $ 32.16 $ 32.81 $ 33.46 $ 34.13 $ 34.82 3" $ 50.64 $ 55.02 $ 56.12 $ 57.24 $ 58.39 $ 59.55 4" $ 75.29 $ 87.67 $ 89.42 $ 91.21 $ 93.04 $ 94.90 6" $ 143.03 $ 169.30 $ 172.68 $ 176.14 $ 179.66 $ 183.25 8" $ 225.06 $ 267.25 $ 272.59 $ 278.04 $ 283.61 $ 289.28 Commodity Rates FY 11 Existing Tiers SFR $ 1.33 16 $ 1.06 $ 1.09 $ 1.12 $ 1.15 $ 1.18 64 $ 1.35 $ 1.38 $ 1.41 $ 1.44 $ 1.47 $ 1.60 $ 1.64 $ 1.68 $ 1.72 $ 1.76 Multi- Family $ 1.33 8 $ 1.06 $ 1.09 $ 1.12 $ 1.15 $ 1.18 12 $ 1.35 $ 1.38 $ 1.41 $ 1.44 $ 1.47 $ 1.60 $ 1.64 $ 1.68 $ 1.72 $ 1.76 Non Residential $ 1.33 $ 1.35 $ 1.38 $ 1.41 $ 1.44 $ 1.47 The attached Tiered Water Rate Study describes in detail a proposed three - tiered water rate structure that can be implemented in Fiscal Year 2011/12. It is staff's opinion that a tiered water rate structure is the best balance of meeting water conservation goals, that incentivize water conservation and provide a stable revenue stream to ensure the sustainability of the City -owned water system. Additionally, a tiered water rate structure will help the City meet the state mandate of reducing the per capita water demand 20% by the year 2020. Also in accordance with Proposition 218, the City must engage in a proper voter approval process when increasing rates because they are imposed for the "property- related" service of water delivery. Proposition 218 requires written notice by mail to all property owners and tenants who are responsible to pay the water bill. Additionally, staff will need to conduct a public hearing no Tess than 45 days after the mailing of the Page 4 of 5 Mayor and Council January 18, 2011 notices. All written protests against the fee increase will be considered at the hearing and if a majority protest exists, the increased rate cannot be established. It should be noted that the City is currently in the third (3) year of an approved five (5) year Utility Rate Program for water and sewer rates, which are based on the Consumer Price Index (CPI). One option would be to continue on with the current program, which leaves the existing "uniform" water rate structure. Another option would be to move forward with a tiered water rate structure based on the Tiered Water Rate Study, which would require compliance with Proposition 218. Therefore, staff's recommendation is for the City Council to approve the proposed Tiered Water Rate Study and provide staff direction on moving forward with implementing a tiered water rate structure. RECOMMENDATION Approve Tiered Water Rate Study Approved by: map Donald Penman, City Manager Attachment TT:KH Page 5 of 5 City of rca is A EA DRAFT WATER RATE STUDY RFC RAFTELIS FINANCIAL CONSULTANTS, INC. January 2011 RFC 201 S. Lake Ave, Suite 803 ■ Phone 626.583.1894 ■ www.raftelis.com Pasadena • CA • 91101 Fax 626.583.1411 RAFTEUS FINANCIAL CONSULTANTS, INC. January 5, 2011 Tom Tait City of Arcadia 11800 Goldring Rd. Arcadia, CA 91066 Subject: Water Rate Study Report Dear Mr. Tait: Raftelis Financial Consultants, Inc. (RFC) is pleased to present this final report regarding the water rate study that was conducted for the City of Arcadia (City). The study involved a comprehensive review of the City's financial plan and water rate structure. The proposed financial plan calls for rate increases of 1.3% in FY12 and 2% in FY13 through FY16. The recommended inclining tiered rate structure reflects the cost of service to each customer class and along with other programs implemented by the City will provide incentives for conservation. It was a pleasure working with you and we wish to express our thanks to you and other City staff members for their support and cooperation extended throughout the study. If you have any questions, please call me at (626) 583 -1894. Sincerely, Raftelis Financial Consultants Steve Vuoso Senior Consultant 4, ' 4, 1 • L Sudhir Pardiwala Vice President TABLE OF CONTENTS I. EXECUTIVE SUMMARY 3 A. REVIEW FINDINGS 3 REVIEW OF REVENUE REQUIREMENTS 3 COST OF SERVICE (COS) 4 RATE DESIGN 4 RESERVES 5 II. INTRODUCTION 6 A. CURRENT ENVIRONMENT 6 B. STUDY AND PRICING OBJECTIVES 6 C. SCOPE OF THE STUDY 6 III. WATER SYSTEM AND CURRENT WATER RATE STRUCTURE 8 A. SOURCE OF SUPPLY 8 B. EXISTING WATER RATE STRUCTURE 9 C. GROWTH 9 IV. REVENUE REQUIREMENTS 10 A. PROJECTED REVENUES 10 B. OPERATING AND CAPITAL EXPENSES 11 C. RESERVES 12 D. PROPOSED REVENUE ADJUSTMENTS 15 V. PROPOSED RATES & CUSTOMER IMPACTS 16 A. OVERVIEW OF RATE SETTING 16 B. COST OF SERVICE ANALYSIS 16 C. UNIT COSTS OF SERVICE 17 D. PROPOSED WATER RATE STRUCTURE AND RATES 18 E. CUSTOMER RATE IMPACTS 21 G. FIRE LINE SERVICE CHARGES 23 H. COMPARISON OF SERVICE CHARGES WITH SURROUNDING UTILITIES 24 January 2011- DRAFT 2 I. EXECUTIVE SUMMARY The City of Arcadia (City) wished to conduct a comprehensive water rate study that included a review of revenue requirements, user classifications, costs of services, and the design of a system of user charges for the City's water service that would promote water conservation. The City engaged Raftelis Financial Consultants, Inc. (RFC) to develop a rate and financial planning model (Model) that will be used to evaluate alternative rate structures and to provide more detailed forecasts to assist in planning and updating rates in future years. This report documents the results of the study and suggests changes to cost allocations and the water rate structures that will serve to better meet the City's pricing objectives during the planning period of Fiscal Years 2012 through 2016. The specific objectives of this study include the development of a rate structure that: • is consistent with the cost of providing service; • establishes adequate reserve levels; • provides adequate debt service coverage; • promotes conservation; • provides financial sufficiency to meet the expenses of the enterprise; and • provides revenue stability. A. REVIEW FINDINGS REVIEW OF REVENUE REQUIREMENTS Revenue requirements from rates include all the cash operating and capital expenses for any given year after taking into account the miscellaneous revenues such as interest earnings. Projections show the City's total revenue requirements for fiscal year (FY) 2012 are approximately $10.3 million. The Capital Improvement Program (CIP) will be financed through rate revenue capital replacement reserves. As the City has minimal growth and a steady CIP, debt financing of capital projects is not recommended at this time. In order to sustain operations and adequately fund reserves the City will need to increase revenues by 1.3% in FY12 and 2% each year beginning in FY13 through FY16. The two main issues driving the need to increase revenues are: • Increases in water supply costs. These costs comprise approximately 20% of the City's operating expenses and are forecasted to increase by 5% annually over the next several years. January 2011 - DRAFT 3 • General cost of living increases. The City forecasts annual budget increases of approximately 3% due to inflation over the forecast period. COST OF SERVICE (COS) The total FY12 cost of service of approximately $10.3 million are allocated in this study based on the Base -Extra Capacity method endorsed by the American Water Works Association (AWWA), a nationally recognized industry group. Under the Base -Extra Capacity method, revenue requirements are allocated to the different user classes proportionately to their use of the water system. Allocations for commodity rates are based on average day (base) usage, maximum day peak (Max Day) usage, and maximum hour peak (Max Hour) usage. Fixed service charges are based on the costs associated with meters, customer billing and customer service. This allocation method is used determine proposed bi- monthly meter charges. RATE DESIGN The rate alternative presented in this study incorporates AWWA recommended methodologies adapted to meet the City's specific characteristics and provide for a system of user charges that will enhance the proportionate recovery of costs from the various user classes. Specifically, the recommendations outlined in this report are to move from a uniform commodity rate structure to an inclining tiered rate structure to more accurately reflect the cost of service and to provide a reasonable conservation incentive. The proposed rate structure and rates are outlined in Table ES -1. The proposed rates in this report reflect current reserve levels. January 2011- DRAFT 4 TABLE ES -1 EXISTING AND PROPOSED FY12 -FY16 RATES Bi- Monthly Service Charge FY 11 2012 2013 2014 2015 2016 Meter Size Existing Proposed Proposed Proposed Proposed Proposed 5/8" $ 10.95 $ 10.94 $ 11.16 $ 11.38 $ 11.61 $ 11.84 3/4" $ 12.32 $ 10.94 $ 11.16 $ 11.38 $ 11.61 $ 11.84 1" $ 13.69 $ 14.21 $ 14.49 $ 14.78 $ 15.08 $ 15.38 1 -1/2" $ 20.53 $ 22.37 $ 22.82 $ 23.27 $ 23.74 $ 24.21 2" $ 28.75 $ 32.16 $ 32.81 $ 33.46 $ 34.13 $ 34.82 3" $ 50.64 $ 55.02 $ 56.12 $ 57.24 $ 58.39 $ 59.55 4" $ 75.29 $ 87.67 $ 89.42 $ 91.21 $ 93.04 $ 94.90 6" $ 143.03 $ 169.30 $ 172.68 $ 176.14 $ 179.66 $ 183.25 8" $ 225.06 $ 267.25 $ 272.59 $ 278.04 $ 283.61 $ 289.28 Commodity Rates FY 11 Existing Tiers SFR $ 1.33 16 $ 1.06 $ 1.09 $ 1.12 $ 1.15 $ 1.18 64 $ 1.35 $ 1.38 $ 1.41 $ 1.44 $ 1.47 $ 1.60 $ 1.64 $ 1.68 $ 1.72 $ 1.76 Multi - Family $ 1.33 8 $ 1.06 $ 1.09 $ 1.12 $ 1.15 $ 1.18 12 $ 1.35 $ 1.38 $ 1.41 $ 1.44 $ 1.47 $ 1.60 $ 1.64 $ 1.68 $ 1.72 $ 1.76 Non Residential $ 1.33 $ 1.35 $ 1.38 $ 1.41 $ 1.44 $ 1.47 RESERVES The City reserves consist of the following: an operating reserve, a facility reserve, and an equipment reserve. The City's existing reserve fund targets are consistent with industry practices and we do not recommend revisions to them at this time. The reserve targets currently are: • Operating Reserve - 25% of annual operating expenses • Facility Reserves - $20 million dollars • Equipment Reserve - As needed January 2011- DRAFT 5 II. INTRODUCTION The City of Arcadia (City) engaged Raftelis Financial Consulting, Inc. (RFC) to perform a water cost of service study. The key deliverables of the study were a financial plan and water rates that would ensure the financial stability of the City and promote conservation. The rates were developed in a financial planning and rate model to be used to evaluate alternative rate structures and to provide more detailed forecasts to assist in future years. The goal of the study was to revise and update the current water rates to ensure revenue requirements are met in a manner that reflect cost of service. A. CURRENT ENVIRONMENT The City water system currently serves a population of approximately 54,000 people, with approximately 14,100 water accounts. In Fiscal Year 2012 (FY12), water supply needs are forecasted to be 16,500 acre feet (AF). The City's current conservation objectives are driven by the limited water resources and future regulatory requirements to reduce per capita water consumption. B. STUDY AND PRICING OBJECTIVES The primary objective of the study was to develop a financial plan and rates to ensure the financial stability of the City. Rates should be consistent with cost of service principles to ensure fairness and equity amongst customer classes. C. SCOPE OF THE STUDY The scope of this study results in the development of cost -based water user rates through a comprehensive cost of service and rate design study process. Figure 2 -1 on the following page provides a graphical representation of the various steps involved in the comprehensive cost of service and rate design process. The steps involved are: • Financial Planning: Revenue requirements are projected for FY12. Financial planning involves estimation of annual operating and maintenance (O &M) and capital expenditures, reserve targets, operating and capital revenue sources and the determination of required annual user revenues from rates and charges. January 2011- DRAFT 6 • Cost of Service Analysis: Cost of service analysis involves identifying and apportioning annual revenue requirements to the different user classes proportionate to their demand on the water system. • Rate Design: Rate design involves the development of a fixed and variable schedule of rates for different user classes to proportionately recover the costs attributable to them. Policy objectives, such as encouraging conservation, are considered at this stage. FIGURE 2 -1 COST OF SERVICE /RATE DESIGN PROCESS Review Revenue Financial Step 1 Requirements and °BTU Tabulation/ Planning Determine Revenues ! Usage Anslys�s Required from Rates Step 2 Allocate Revenue Requirements to Functional Cost Components e.g. Base, Max Day, and Max Hour Cost of Service Step 3 Determine Unit Cost of Components 1 Step 4 Determine User Class Costs • Rate Design Step 5 V January 2011- DRAFT 7 III. WATER SYSTEM AND CURRENT WATER RATE STRUCTURE This section of the report presents a brief overview of the water sources, existing rates, and user /usage characteristics. A. SOURCE OF SUPPLY City customers demand water for a number of purposes, including residential, commercial, and irrigation uses. The City serves its customers primarily with pumped groundwater from the Main San Gabriel Basin (MSGB) and the Raymond Basin (RB). The City also purchases some treated water from Metropolitan Water District (MWD) when necessary. Among the three sources, the City budgets for 16,500 AF of water production each year of the forecast period. Although total water production may vary slightly from year -to -year, an analysis of historical water production suggests that 16,500 AF per year is a reasonable average for the forecast period of FY12 -FY16. Table 3 -1 breaks down the 16,500 AF by source. TABLE 3 -1 ANNUAL SOURCE OF SUPPLY — FY12 THROUGH FY16 Source 2012 2013 2014 2015 2016 Main San Gabriel Basin 11,008 11,276 11,531 11,773 12,003 Raymond Basin 5,362 5,094 4,839 4,597 4,367 MWD Water 130 130 130 130 130 Total 16,500 16,500 16,500 16,500 16,500 The water rights for the MSGB is estimated to be 8,000 AF in FY12 and 9,500 AF per year thereafter through FY16. The 9,500 AF figure is the 20 -year average of water rights in the MSGB. As shown in table 3 -1, the City is pumping beyond its rights in each year of the forecast period. The cost for this source of supply is significant. Beyond administrative costs for all water pumped from the MSGB, there is a premium of $616 per AF for water over the sustainable yield in FY12. Our forecast assumes this increases at an annual rate of 5% per year, which results in a rate of $749 per AF by FY16. This amount pumped over the sustainable yield results in expenses of between $1.2 million and $1.9 million during the forecast period. These expenditures make up a significant portion of the City's operating budget. January 2011- DRAFT 8 B. EXISTING WATER RATE STRUCTURE The City currently implements a uniform commodity rate of $1.33 per unit' for all customer classes. This rate structure also includes a meter service charge that varies by meter size and a billing and customer service charge that is the same for all potable users. Billing is done on a bi- monthly basis. The City last updated its rates with a 1.3% revenue increase on July 1, 2010. Table 3 -2 outlines existing rates. TABLE 3 -2 EXISTING BI- MONTHLY WATER RATE STRUCTURE Bi- Monthly Service Charge FY 11 Meter Size Existing 5/8" $ 10.95 3/4" $ 12.32 1" $ 13.69 1 -1/2" $ 20.53 2" $ 28.75 3" $ 50.64 4" $ 75.29 6" $ 143.03 8" $ 225.06 Commodity Rates Existing Rate per HCF $ 1.33 C. GROWTH The City service area is built out and the number of customer accounts is forecasted to remain constant over the study period. 1 One billing unit is equal 100 cubic feet (hcf) or 748 gallons January 2011- DRAFT 9 IV. REVENUE REQUIREMENTS A review of a utility's revenue requirements is a key first step in the rate design process. The review involves an analysis of annual operating revenues under existing rates, O &M expenses, capital expenditures, reserves, and transfers between funds. This section of the report provides a discussion of the projected revenues, operating and capital expenditures, debt coverage requirements, reserve funding policies, and the revenue adjustments required to ensure the financial stability of the water enterprise. A. PROJECTED REVENUES The largest expenses in FY12 are the general O &M expenses and water supply costs. Figure 4 -1 below displays the City's water revenue and revenue requirements projected by the rate model over a five year period. FIGURE 4 -1 REVENUE REQUIREMENTS H $14 0 $12 $10 $s $6 $4 1 $2 FY 2012 FY 2014 FY 2016 ® Revenue Required —Rev. From Existing Rates —Rev. From Proposed Rates As you can see from the red line in Figure 4 -1, the City's existing rate revenue stream is insufficient to meet current and future revenue requirements. Revenue adjustments will be needed. January 2011- DRAFT 10 B. OPERATING AND CAPITAL EXPENSES The City's FY11 water budget was used as the base year in the Rate Model. Various escalation rates were used to project future O &M expenses. O &M expenses are subject to an annual 3% inflation increase (based on historical CPI). An O &M summary is shown in Table 4 -1. TABLE 4 -1 FY 2012 -2016 O &M SUMMARY Line FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 No. 7201 - Admin $ $ $ $ $ 1 Salaries & Wages 1,092,253 1,125,021 1,158,771 1,193,535 1,229,341 2 Supplies 107,120 110,334 113,644 117,053 120,565 3 Operating Expenses 2,217,065 2,283,577 2,352,084 2,422,646 2,495,326 4 Special Programs - - - - - 5 Total 3,416,438 3,518,931 3,624,499 3,733,234 3,845,231 7204 - Main & Replacement 6 Salaries & Wages 714,851 736,296 758,385 781,137 804,571 7 Supplies 20,265 20,873 21,499 22,144 22,809 8 Operating Expenses 114,124 117,548 121,074 124,706 128,448 9 Special Programs 115,360 118,821 122,385 126,057 129,839 10 Total 964,600 993,538 1,023,344 1,054,045 1,085,666 7205 - Meter Customer Sv 11 Salaries & Wages 347,991 358,430 369,183 380,259 391,667 12 Supplies 309 318 328 338 348 13 Operating Expenses 18,962 19,531 20,117 20,721 21,342 14 Special Programs 24,720 25,462 26,225 27,012 27,823 15 Total 391,982 403,741 415,854 428,329 441,179 7206 - Production /Quality 16 Salaries & Wages 418,819 431,383 444,325 457,654 471,384 17 Supplies 979 1,008 1,038 1,069 1,101 18 Operating Expenses 2,487,978 1,803,039 2,053,908 2,316,617 2,591,747 19 Special Programs 2,364,169 2,435,094 2,508,147 2,583,392 2,660,893 20 Tota I 5,271,944 4,670,524 5,007,418 5,358,732 5,725,125 Water - Total 21 Salaries & Wages 2,573,913 2,651,131 2,730,665 2,812,585 2,896,962 22 Supplies 128,673 132,533 136,509 140,604 144,822 23 Operating Expenses 4,838,129 4,223,694 4,547,184 4,884,690 5,236,862 24 Special Programs 2,504,249 2,579,377 2,656,758 2,736,461 2,818,555 25 Total 10, 044, 964 9,586,735 10, 071,115 10, 574, 340 11, 097, 201 January 2011 - DRAFT 11 The City Capital Improvement Program (CIP) list of proposed projects through FY2016 is shown in Table 4 -2 below. Capital costs are also subject to a 3% annual inflation rate. The CIP is shown in Table 4 -2. TABLE 4 -2 FY 2012 -2016 CAPITAL IMPROVEMENTS Line FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 No. $ $ $ $ Project 1 Annual Meter Replacement Program 257,500 265,225 273,182 281,377 289,819 2 SCADA System Upgrades and Computerized Utilities System 30,900 31,827 32,782 33,765 34,778 3 Valve Program for Santa Anita and Second © Camino Real 206,000 4 Valve Replacement Program 41,200 42,436 43,709 45,020 46,371 5 Greenscape Maintenance and Irrigation Upgrades 17,510 18,035 18,576 19,134 6 Replacement of Calsense Irrigation Controller Components 10,300 10,609 10,927 11,255 7 Metals Total Maximum Daily Load (Metals TMDL) Special Stu 8,652 8,912 8 Annual Replacement of HVAC Rooftop Units 11,593 9 Public Works Facilities Improvements 4,635 4,774 4,917 5,065 10 Booster Station Discharge Meters 123,600 11 East Raymond Basin Water Resources Program 221,450 809,467 652,358 671,929 12 Hydraulic Water System Model Calibration 185,400 13 Orange Grose Reservoir Recoating 318,270 14 Water Main Replacement 412,000 106,090 109,273 112,551 115,927 15 Water Master Plan Update 131,127 16 Orange Grove Blending Analysis 28,840 17 Longden Booster Reconstruction - Design 347,782 18 Zone 3 - 30" Transmission Main - Valve Maintenance/Replacement 225,102 19 Torrey Pines Reservoir Relining 56,275 20 Baldwin Booster Station Replacement 517,734 1,507,056 21 Live Oak Reservoir Recoating 231,855 22 Reservoir Inlet/Outlet Separation 231,855 23 Total 1,547,987 1,615,645 1,276,851 1,979,207 2,817,036 C. RESERVES The City water reserves consist of the following: an operating reserve, a facility reserve, and an equipment reserve. We recommend that in the near term, the City should utilize reserves to mitigate proposed rate increases. Reserve targets will remain above target during the forecast period. Reserve fund end -of -year balances are shown in Figures 4 -2 and 4 -3. The equipment reserve does not have a targeted balance and is utilized as needed. Table 4 -3 displays the reserve fund cash flows. Operating reserves are used for working capital requirements to meet the ongoing expenses of the City. Because the City's cash flows are stable, the City's current target of three months of annual operating expenses is appropriate. As shown in Figure 4 -2, the City is meeting its operating reserve target that is forecasted to over the study period. January 2011- DRAFT 12 FIGURE 4 -2 OPERATING RESERVE . $3.0 c 0 $2.5 ''' ,- $2.0 `' M1 p }� $1.5 $1.0 n' ' t s' 4i :� d J".;` `� r rs. 4' As p ea $0.5� Vi 5 �,.. A., n.t: ir�� "�' Mme ' FY 2012 FY 2014 FY 2016 rr + Operating Reserve Target The Facility Reserve is used to ensure adequate funding for capital needs and system repairs in the case of a catastrophic event. This reserve is well- funded and is shown in Figure 4 -3. FIGURE 4 -3 FACILITY RESERVE _ 530 Faci lity Reserve —f— Target _o 525 520 515 510 55 5 FY 2012 FY2014 FY2016 January 2011 - DRAFT 13 TABLE 4 -3 RESERVE FUND CASH FLOW Line FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 No. $ $ $ $ $ Operating 1 Source of Funds 2 Beginning Balance 2,455,172 2,511,241 2,396,684 2,517,779 2,643,585 3 Net Annual Cash Balance 447,488 1,119,661 868,994 579,460 274,498 4 Total Funds Available 2,902,660 3,630,902 3,265,678 3,097,238 2,918,083 Use of Funds 5 Net Annual Cash Balance - - - - - 6 Excess Transfer to Capital 391,419 1,234,218 747,899 453,653 143,782 7 Total Use of Funds 391,419 1,234,218 747,899 453,653 143,782 8 Ending Fund Balance 2,511,241 2,396,684 2,517,779 2,643,585 2,774,300 9 Target 25% of O &M 2,511,241 2,396,684 2,517,779 2,643, 585 2,774,300 Facility Reserve 10 Source of Funds 11 Beginning Balance 25,887,802 25,237,425 25,356,933 25,580,754 24,799,740 12 Transfer from Operating 391,419 1,234,218 747,899 453,653 143,782 13 Total Funds Available 26,279,222 26,471,643 26,104,832 26,034,408 24,943,522 Use of Funds 14 CIP 1,547,987 1,615,645 1,276,851 1,979,207 2,817,036 15 Total Use of Funds 1,547,987 1,615,645 1,276,851 1,979,207 2,817,036 16 Fund Balance Before Interest 24,731,235 24,855,999 24,827,980 24,055,200 22,126,486 17 Interest 506,190 500,934 752,774 744,539 703,893 18 Ending Fund Balance 25,237,425 25,356,933 25,580,754 24,799,740 22,830,379 Equipment Reserve 19 Source of Funds 20 Beginning Balance 1,383,490 1,411,159 1,439,383 1,482,564 1,527,041 21 Transfer from Operating 156,510' 156,510 156,510 156,510 156,510 22 Total Funds Available 1,540,000 1,567,669 1,595,893 1,639,074 1,683,551 Use of Funds 23 Equipment Purchase 156,510 156,510 156,510 156,510 156,510 24 Total Use of Funds 156,510 156,510 156,510 156,510 156,510 25 Fund Balance Before Interest 1,383,490 1,411,159 1,439,383 1,482,564 1,527,041 26 Interest 27,670 28,223 43,181 44,477 45,811 27 Ending Fund Balance 1,411,159 1,439,383 1,482,564 1,527,041 1,572,852 January 2011- DRAFT 14 D. PROPOSED REVENUE ADJUSTMENTS The pro forma operations statement or cash flow summary presented in Table 4 -4 provides a basis for evaluating the timing and level of water revenue adjustments required to meet the projected revenue requirements for the study period. In order to meet projected revenue requirements and to maintain desired reserve fund balances, a revenue increase of 1.3% is recommended for the FY12 fiscal year and 2% adjustments thereafter through FY16 (shown on lines 2 through 6 in Table 4 -4) based on anticipated values of the Consumer Price Index (CPI). Revenue adjustments are forecasted to increase on July 1 of each fiscal year. TABLE 4-4 CASH FLOW Line FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 No. $ $ $ $ $ 1 Revenue from Existing Retail Rates 10,173,084 10,173,084 10,173,084 10,173,084 10,173,084 Additional Revenue Required: Months FY Percent Effective 2 2012 1.3% 12 132,300 132,300 132,300 132,300 132,300 3 2013 2.0% 12 206,100 206,100 206,100 206,100 4 2014 2.0% 12 210,200 210,200 210,200 5 2015 2.0% 12 214,400 214,400 6 2016 2.0% 12 218,700 7 Additional Rate Revenue Required 132,300 338,400 548,600 763,000 981,700 8 Total Rate Revenue 10,305,384 10,511,484 10,721,684 10,936,084 11,154,784 9 Non -Rate Revenue 290,000 290,000 290,000 290,000 290,000 10 Interest 53,578 61,421 84,935 84,225 83,425 11 Total Revenue 10,648,962 10,862,906 11,096,620 11,310,309 11,528,209 Revenue Requirements 12 O &M 10,044,964 9,586,735 10,071,115 10,574,340 11,097,201 13 Transferto Equipment Reserve 156,510 156,510 156,510 156,510 156,510 14 Total Revenue Requirements 10,201,474 9,743,245 10,227,625 10,730,850 11,253,711 15 Net Annual Cash Balance 447,488 1,119,661 868,994 579,460 274,498 January 2011 - DRAFT 15 V. PROPOSED RATES & CUSTOMER IMPACTS The recommended water rates are calculated based on the projected revenue requirements for FY12. As mentioned in the previous section, these revenue requirements are forecasted using the FY11 budget as a base year. The rate model is designed to accommodate annual updates for each year's budget and provides a tool for evaluating rate and financial impacts of proposed budget changes. A. OVERVIEW OF RATE SETTING As an enterprise fund, water operations are financed and operated as a distinct business. Appropriate fees and charges should be established to ensure that the water operations can operate on a self- sustaining basis. For a water utility, the majority of revenue is normally derived through user charges. These service fees, rates, and billings are charged to the beneficiaries of the water services. Development of a user charge system is defined as the total process of identifying costs, allocating costs to the water beneficiaries, and designing a rate structure to recover allocated costs. B. COST OF SERVICE ANALYSIS One of the key objectives was to evaluate the consistency of the existing water rate structure with the actual cost of service for each of the existing customer classes. In order to evaluate this, the rate model included a cost of service analysis based on FY12 as a test year to determine more appropriate allocation of costs among the customer classes. The total cost of water service is analyzed by system function in order to equitably distribute costs of service to the various classes of customers. For this analysis, water utility costs of service are assigned to three basic functional cost components: base costs, extra capacity costs, and customer service related costs. Base costs are those operating and capital costs of the water system associated with serving customers at a constant average rate of use. Extra capacity costs represent those operating and capital costs incurred to meet customer peak demands for water in excess of average day usage. Total extra capacity costs are subdivided into costs associated with maximum day and maximum hour demands. RFC used the City's peaking factors to allocate among base, maximum day and maximum hour, shown below in Table 5 -1. January 2011- DRAFT 16 • TABLE 5 -1 SYSTEM PEAKING FACTORS Base 1.00 Max Day 1.90 Max Hour 3.00 Customer costs are subdivided into customer service and meter costs. Customer service costs are uniform for all customers and include expenses such as meter reading, billing, accounts receivables, and accounting. Meter costs include maintenance and capital costs associated with meters and services. These costs are assigned based on meter size or meter capacity. In addition, some of the peaking costs may be assigned to meter costs to ensure a stable source of revenues. The separation of costs of service into these principal components provides the means for further allocation of such costs to the customer classes on the basis of their demands. The total FY12 cost of service to be recovered from the City's users, shown on the following page in Table 5 -2 on line 11, is roughly $10.3 million. The cost of service analysis is based upon the premise of generating annual revenues adequate to meet the estimated annual revenue requirements. Deductions from revenue requirements include miscellaneous operating revenues and interest revenue. Adjustments are also made to account for cash balances and mid -year rate increases to avoid collecting more revenue than is shown in the operating cash flow. C. UNIT COSTS OF SERVICE In order to allocate costs of service to the different user classes, unit costs of service need to be developed for each cost category. The unit costs of service are developed by dividing the total annual costs allocated to each parameter by the total annual units of the respective category. Different units are used for the different cost categories. The volume related cost categories are based on volumetric units of one hundred cubic feet. The extra capacity categories of maximum day and maximum hour are based on a rate of usage so they are calculated in hcf per day and per hour. Customer service related cost categories are based on accounts and meter - related costs on equivalent meters. Once the total number of units is known they can be used to calculate unit costs. The allocated costs are simply divided by the total number of units for each category to determine the unit costs of each category. January 2011- DRAFT 17 TABLE 5 -2 FY 12 COST OF SERVICE TO BE RECOVERED FROM RATES Line Operating Capital No Expense Expense Total $ $ $ Revenue Requirements 1 O &M 10,044, 964 10, 044, 964 2 Transfer to Facility Reserve - - 3 Transfer to Equipment Reserve 156,510 156,510 4 Subtotal 10,044,964 156,510 10,201,474 Less Rev. Requirements Met from Other Sources 5 Non -Rate Revenue 290,000 290,000 6 Interest 53,578 53,578 7 Subtotal 343,578 - 343,578 Less Adjustments 8 Adjustment for Annual Cash Balance (447,488) (447,488) 9 Adjustment to Annualize Rate Increase - - 10 Subtotal (447,488) - (447,488) 11 Net Revenue to be Recovered from Rates 10,148,874 156,510 10,305,384 D. PROPOSED WATER RATE STRUCTURE AND RATES The proposed water rates were designed to adjust the volumetric rates charged to each customer class to be more consistent with the actual cost of service differences among the residential and remaining classes. The revised rates also attempt to more accurately identify costs that should be recovered through the bi- monthly meter charges versus volume charges. A bi- monthly meter charge will continue to be assessed to each customer and will vary depending on the customer's meter size. The bi- monthly meter charge includes a customer service component and a meter cost component. The meter cost component varies based on meter size by reflecting the difference in potential demand that can be placed on the system by different sized meters. This portion of the proposed bi- monthly meter charge has been revised to more accurately reflect standardized capacity ratios from the American Water Works Association. The remaining revenue requirements will be recovered from a volumetric or consumption charge. A January 2011- DRAFT 18 uniform volume rate per hundred cubic feet is computed for the whole City and then tiers and the corresponding rates are designed for the residential classes. Details and proposed modifications to the commodity rate structure are outlined in the following sections. Single Family Residential (SFR) Commodity Rates: RFC recommends that the City implement a three -tier inclining rate structure for SFR customers. In FY12, the first sixteen (16) units of usage in each bi- monthly period will be charged at a rate of $1.06. This provides the basic domestic usage for an average SFR. Units seventeen (17) through sixty -four (64) will be charged at a rate of $1.35. The second tier provides the average usage for all SFR customers. All usage above sixty -four (64) units of usage will be charged at a rate of $1.60 to incentivize conservation. In the remaining years of the forecast period, rates charged will increase 2% each year across the board. This tiered rates structure more closely reflects the fact that water pumped from the MSGB over the sustainable yield is significantly more expensive than water pumped that is within the City's rights. The tiered rate structure proposed more closely reflects cost of service principles and will incentivize conservation among City customers. It should also be noted that while consumption at different tiers are charged different rates, the average rate for the SFR class is $1.35 in FY12. The proposed tiered water rates are those rates that most closely match the City's current rates. The proposed SFR rates are summarized in Table 5 -3. Multi Family Residential (MFR) Commodity Rates: Similar to the Single Family customers, RFC recommends that the City implements a three -tier inclining rate structure for MFR customers. For the MFR class, however, the first tier cutoff is eight (8) units of bi- monthly usage. The second tier cutoff is twelve (12) units of usage. The differences in tiers between the SFR and MFR classes reflects the fact that MFR accounts have a lower household density and do not have external landscaping needs. The tiers are based on the number of dwelling units in an account, for example, a ten unit account would receive an allotment of 80 units bimonthly in Tier 1. Rates paid for the three tiers are identical to the SFR class. As with the SFR class, while consumption at different tiers are charged different rates, the average rate for the MFR class is $1.35 in FY12. In the remaining years of the forecast period, rates charged will increase 2% across the board. The proposed MFR rates are summarized in Table 5 -3. Non - Residential: RFC recommends that the City retain a uniform commodity rate for all non - residential customers. This recommendation results from this customer class being January 2011- DRAFT 19 very non - homogenous and it is difficult to apply a standard tiered rate structure to these customers without being overly - punitive to large customers. In addition, they are generally motivated to control costs and therefore limit unnecessary water use. The uniform commodity rate is $1.35 in FY12. In the remaining years of the forecast period, rates charged will increase 2% each year across the board. The proposed Non - Residential rates are summarized in Table 5 -3. TABLE 5 -3 CURRENT (FY11) AND PROPOSED RATES (FY12 - FY16) Bi- Monthly Service Charge FY 11 2012 2013 2014 2015 2016 Meter Size Existing Proposed Proposed Proposed Proposed Proposed 5/8" $ 10.95 $ 10.94 $ 11.16 $ 11.38 $ 11.61 $ 11.84 3/4" $ 12.32 $ 10.94 $ 11.16 $ 11.38 $ 11.61 $ 11.84 1" $ 13.69 $ 14.21 $ 14.49 $ 14.78 $ 15.08 $ 15.38 1 -1/2" $ 20.53 $ 22.37 $ 22.82 $ 23.27 $ 23.74 $ 24.21 2" $ 28.75 $ 32.16 $ 32.81 $ 33.46 $ 34.13 $ 34.82 3" $ 50.64 $ 55.02 $ 56.12 $ 57.24 $ 58.39 $ 59.55 4" $ 75.29 $ 87.67 $ 89.42 $ 91.21 $ 93.04 $ 94.90 6" $ 143.03 $ 169.30 $ 172.68 $ 176.14 $ 179.66 $ 183.25 8" $ 225.06 $ 267.25 $ 272.59 $ 278.04 $ 283.61 $ 289.28 Commodity Rates FY 11 Existing Tiers SFR $ 1.33 16 $ 1.06 $ 1.09 $ 1.12 $ 1.15 $ 1.18 64 $ 1.35 $ 1.38 $ 1.41 $ 1.44 $ 1.47 $ 1.60 $ 1.64 $ 1.68 $ 1.72 $ 1.76 Multi - Family $ 1.33 8 $ 1.06 $ 1.09 $ 1.12 $ 1.15 $ 1.18 12 $ 1.35 $ 1.38 $ 1.41 $ 1.44 $ 1.47 $ 1.60 $ 1.64 $ 1.68 $ 1.72 $ 1.76 Non Residential $ 1.33 $ 1.35 $ 1.38 $ 1.41 $ 1.44 $ 1.47 January 2011- DRAFT 20 E. CUSTOMER RATE IMPACTS An important component of the rate study was an analysis of how the proposed rate structure would impact the bi- monthly bills of water customers. RFC worked closely with City staff to ensure that appropriate revenue requirements would be recovered, while still paying close attention to the related impacts on customers. The proposed water rate structure results in meter charges and different volume charges for all customer classes. Tables 5 -4 through 5 -8 demonstrate the impacts of the proposed rates on the City's regular potable customers across varying usage levels. TABLE 5-4 FY 12 BI- MONTHLY SFR RATE IMPACT - 3/4" METER Total Bill Existing Proposed Usage Charge Charges $ Change % Change 4 $ 17.64 $ 15.18 $ (2.46) -14% 8 $ 22.96 $ 19.42 $ (3.54) -15% 16 $ 33.60 $ 27.90 $ (5.70) -17% 32 $ 54.88 $ 49.50 $ (5.38) -10% 50 $ 78.82 $ 73.80 $ (5.02) -6% 64 $ 97.44 $ 92.70 $ (4.74) -5 %I 100 $ 145.32 $ 150.30 $ 4.98 3% 150 $ 211.82 $ 230.30 $ 18.48 9% 200 $ 278.32 $ 310.30 $ 31.98 11% 64 units = Average Bi- Monthly Usage for SFR TABLE 5 -5 FY 12 BI- MONTHLY SFR RATE IMPACT -1" METER Total Bill Existing Proposed Usage Charge Charges $ Change % Change 4 $ 19.01 $ 18.45 $ (0.56) -3% 8 $ 24.33 $ 22.69 $ (1.64) -7% 16 $ 34.97 $ 31.17 $ (3.80) -11% 32 $ 56.25 $ 52.77 $ (3.48) -6% 50 $ 80.19 $ 77.07 $ (3.12) -4% I 64 $ 98.81 $ 95.97 $ (2.84) -3 %I 100 $ 146.69 $ 153.57 $ 6.88 5% 150 $ 213.19 $ 233.57 $ 20.38 10% 200 $ 279.69 $ 313.57 $ 33.88 12% 64 units = Average Bi Monthly Usage for SFR January 2011 - DRAFT 21 TABLE 5 -6 FY 12 BI- MONTHLY MFR RATE IMPACT - 1" METER (4 unit building) Total Bill Existing Proposed Usage Charge Charges $ Change % Change 8 $ 24.33 $ 22.69 $ (1.64) -7% 16 $ 34.97 $ 31.17 $ (3.80) -11% 20 $ 40.29 $ 35.41 $ (4.88) -12% 40 $ 66.89 $ 58.93 $ (7.96) -12% 48 $ 77.53 $ 69.73 $ (7.80) -10% 56 $ 88.17 $ 82.53 $ (5.64) -6% 64 $ 98.81 $ 95.33 $ (3.48) -4% 80 $ 120.09 $ 120.93 $ 0.84 1% 100 $ 146.69 $ 152.93 $ 6.24 4% 120 $ 173.29 $ 184.93 $ 11.64 7% 20 units = Avg. Bi- Monthly Usage for MFR per dwelling unit TABLE 5 -7 FY 12 BI- MONTHLY NON - RESIDENTIAL RATE IMPACT - 3/4" METER Total Bill Existing Proposed Usage Charge Charges $ Change % Change 10 $ 25.62 $ 24.44 $ (1.18) -5% 25 $ 45.57 $ 44.69 $ (0.88) -2% 50 $ 78.82 $ 78.44 $ (0.38) 0% 75 $ 112.07 $ 112.19 $ 0.12 0% 100 $ 145.32 $ 145.94 $ 0.62 0% 125 $ 178.57 $ 179.69 $ 1.12 1% 150 $ 211.82 $ 213.44 $ 1.62 1% 175 $ 245.07 $ 247.19 $ 2.12 1% 200 $ 278.32 $ 280.94 $ 2.62 1% TABLE 5 -8 FY 12 BI- MONTHLY NON - RESIDENTIAL RATE IMPACT - 2" METER Total Bill Existing Proposed Usage Charge Charges $ Change % Change 25 $ 62.00 $ 65.91 $ 3.91 6% 50 $ 95.25 $ 99.66 $ 4.41 5% 75 $ 128.50 $ 133.41 $ 4.91 4% 150 $ 228.25 $ 234.66 $ 6.41 3% 200 $ 294.75 $ 302.16 $ 7.41 3% 250 $ 361.25 $ 369.66 $ 8.41 2% 300 $ 427.75 $ 437.16 $ 9.41 2% 350 $ 494.25 $ 504.66 $ 10.41 2% 400 $ 560.75 $ 572.16 $ 11.41 2% January 2011- DRAFT 22 G. FIRE LINE SERVICE CHARGES Fire service systems, including hydrants, automatic sprinkler systems, standpipes, etc., benefit the properties being served by improving control over fire, decreasing damage to property and injury to personnel, and reducing insurance costs. This benefit may be based on the value of the property. However, to avoid conflicts in assessing real estate and personal properties, the value of this service is based on the cost of providing service rather than on the value of the protection offered to the customer. The City has to size its system to provide fire service. There are costs associated with maintenance of the system to provide this service. These costs are shared between public and private services in proportion to the demand they place on the system. Costs to the public system are redistributed in the service charges. The charges for private fire service are then determined for the several different sizes of private fire service connections. A schedule of private fire service charges is shown in Table 5 -10. TABLE 5 -10 PROPOSED BI- MONTHLY PRIVATE LINE FIRE SERVICE CHARGES Proposed Existing Service Meter Service Charge Size Charge 1 7/1/2012 7/1/2013 7/1/2014 7/1/2015 7/1/2016 2" 10.81 $ 17.95 $ 18.31 $ 18.67 $ 19.05 $ 19.43 3" 21.62 $ 28.37 $ 28.93 $ 29.51 $ 30.10 $ 30.70 4" 32.43 $ 43.25 $ 44.11 $ 45.00 $ 45.90 $ 46.81 6" 43.23 $ 80.45 $ 82.06 $ 83.70 $ 85.38 $ 87.09 8" 54.05 $ 125.10 $ 127.60 $ 130.15 $ 132.76 $ 135.41 January 2011 - DRAFT 23 H. COMPARISON OF SERVICE CHARGES WITH SURROUNDING UTILITIES City SFR customers with a 1" meter and average usage of 32 hcf per month are currently charged $98.91 per bill for water services. Under the proposed rate structure implementation this charge would decrease to $95.57. Figure 5 -1 compares the proposed charges to the charges expected to be in place at a group of surrounding utilities. FIGURE 5 -1 • BI- MONTHLY BILL COMPARISON SFR Bi- Monthly Bill - 1" Meter - 64 HCF $250 $ 217.09 $200 $194.68 $169.75 $150 $95.97 $98.81 $100 s + $50 -1 � t Arcadia - Arcadia - Glendora Sierra Madre Pasadena Proposed Existing January 2011- DRAFT 24