3PM Wednesday, July 29 - Helix WD Committee of the Board Package - Discuss Proposed Water Rates

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Dear Friends,

 Here is the  board package link for our Committee of the Board Helix Water District Board Meeting:

  AGENDA
COMMITTEE OF THE BOARD
REGULAR MEETING OF THE BOARD OF DIRECTORS
Wednesday, July 29, 2015 - 3 p.m.
7811 University Avenue, La Mesa, CA 91942-0427
 
BRAND NEW WATER RATE STRUCTURE & WATER RATES BEING PROPOSED – 5 YEAR PLAN (Page 52 pdf Prop 218 Notice).

 A very thorough review of our rates, with a strong correlation of water use and cost. Of course, I do have some comments, suggestions and questions after reading the Board Report and the 60 page Comprehensive Water Cost of Service & Rate Study.

 Please note: The main changes in our rates is due to the amount of water anticipated in being sold. We are estimating to sell only 27,700 Acre Feet compared to the 2014/15 budget of selling 34,500 Acre Feet – Governor Browns REQUIRED 20% Reduction. As you know, selling less in commodity – with the same budget results in a higher unit price to the customer. That is why last May the Board went over critical water rate guidelines and had recommended some important suggestions – some that were amiss in this report.

 Item of Discussion:

 The Board Consider the Recommendations Contained in the Helix Water District  Comprehensive Water Cost of Service and Rate Study Report Prepared by

Raftelis Financial Consultants Inc., Review Proposed Water Service Fees for Water Rates, and Provide Comments on the Corresponding Draft Proposition 218

Customer Notice of Public Hearing on October 7, 2015

 PROPOSED FOR WEDNESDAY DISCUSSION - final vote slated for the August 5th meeting, with incorporating the Public and Board comments… I think there are definitely some modifications that need to be considered.

• Quite a few miscellaneous changes proposed:
  
  
  • Residential Tier 1: 0-14 Units
    
    
  • Residential Tier 2: 15-34 Units
    
    
  • Residential Tier 3: 35+ Units
    
    
  • SDCWA Pass through costs – I think this is a good idea, shows transparency on your bill what increase is Helix and what increase is SDCWA
    
    
  • Irrigation customers Tier 3 is eliminated.
    
    
  • New rates will be on bills after January 1, 2016 (water used after November 1) to correlate with SDCWA increase (finally -I have asked this for 9 years!)
    
    
  • Meter charges change significantly for fire service line.
    
    
  • Capacity Ratio changed for Meters equal or greater than 3” (page 27 of report - they used a different class, turbine class versus compound, we install compound meters, those numbers have to change and may affect other meter sizes, also there appears to be 650 meters missing since last year, which would change some of the cost impacts.)
    
    

1. Water Rate Assumptions used:
   
   
   1. Water sales 27,700 acre-feet (20% reduction)
      
      
   2. SDCWA water rate increase 13.7% for 2015-16
      
      
   3. Fixed/variable cost split of 24 percent/76 percent (meter charges)
      
      
   4. Utilize 0 Million from rate stabilization fund this year 2015/2016;
      
      
   5. Utilize $1.0 Million El Capitan settlement to designate to an asset for use this year 2015/2016
      
      
   6. Defer $3.0 Million in the districts capital improvement program
      
      

 2014/15 Budget Estimate Actual Revenue $76,444,057; Budget Total Expenses $79,380,679

2015/16                             Budget Revenue $74,540,919; Budget Total Expenses $83,060,869

Conclusion:  Proposed residential rates would result in an increase bi-monthly bill for the average residential customer 26 Units From:

                                    2015/16 an 9.0%        ($142.70 to $155.53)
                                    2016/17 an 11.6%      ($155.53 to $173.55)
                                    2017/18 an 11.8%      ($173.55 to $194.09)
                                    2018/19 an 7.3%        ($194.09 to $208.19)
                                    2019/20 an 7.6%        ($208.19 to $223.93)

Please note:

1. On May 13, 2015 the Board had a Five Year Projection Workshop, to help provide staff guidance for developing proposed water rates (Minutes: http://hwd.com/board/minutes051315.pdf ). At this meeting we directed staff to go with Scenario 2 which included:
   
   
   1. SDCWA water rate increase impact Helix at 6.6% for 2015-16 (confirmed in June http://www.sdcwa.org/water-authority-adopts-15-billion-budget-fiscal-years-2016-and-2017 )
      
      
   2. Water sales 27,700 acre-feet (20% reduction)
      
      
   3. Fixed/variable cost split of 26%/74% (meter charges – currently we are at 23.5%/76.5%)
      
      
   4. Utilize $1.5 Million from rate stabilization fund this year 2015/2016
      
      
   5. Utilize $1.0 Million El Capitan settlement to designate to an asset for use this year 2015/2016
      
      
   6. Defer $3.0 Million in the districts capital improvement program
      
      

2014/15 Budget Estimate Actual Revenue $76,444,057; Budget Total Expenses $79,380,679

2015/16                             Budget Revenue $74,702,700; Budget Total Expenses $82,617,057

Conclusion:  Proposed residential rates would result in an increase bi-monthly bill for the average residential customer 26 Units From:

                                 2015/16 an 8.0%
                                 2016/17 an 7.9%
                                 2017/18 an 7.3%
                                 2018/19 an 7.0%
                                2019/20 an 6.5%

I know that the May meeting was “DRAFT Numbers” but, they should have used all the guidance that we provided them, items c, d. Also, not sure why the SDCWA rate was increased? I also, do not know how our end of the year June 30, 2015 budget revenue/expense numbers came out. Our Director of Administration Lisa Stoia said that she would have the information available for this important meeting. They could not provide a Treasurer Report on July 15th, due to the first two Tuesday accounting conflict. Many questions to ask and discuss on Wednesday – Hope you can make it!

As always, I welcome your comments and feedback.

Per the request of the Helix Water District Board on May 16, 2012, the following language is to be added by all Board Directors in all outgoing Director correspondence. "This correspondence, and any documents attached hereto, reflects the individual opinions and positions of the above-named Director and does not represent the opinions or positions of the District's Board of Directors or the District.  Pursuant to Section 9.1-11(A) of the Helix Water District Policies and Procedures Manual, individual Directors, except as otherwise authorized by the Board, shall have no power to act for the District or the District's Board of Directors."

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