SR 02-23-2016 9A
City Council
Report
City Council Meeting: February 23, 2016
Agenda Item: 9.A
To: Mayor and City Council
From: Martin Pastucha, Director, Public Works, Water Resources
Subject: State of the Water Fund
Recommended Action
Staff recommends that the City Council suspend part of the 9% water rate increase
authorized by Council to go into effect on January 1, 2016 and authorize a 5% increase.
The partial suspension would reduce the water rate increase scheduled to go into effect
on January 1, 2016 from 9% to 5%. This rate adjustment would be in effect until
December 31, 2016.
Executive Summary
This report recommends the City Council adopt a 5% water rate increase for 2016
instead of the previously approved 9% increase.
s, projected expenses and revenues and projected
fund balances over the next 5 years. On February 24, 2015, Council approved annual
9% water rate increases for the 5-year period beginning March 1, 2015 and ending
December 31, 2019. The first 9% increase went into effect on March 1, 2015, with
second 9% rate increase scheduled to go into effect on January 1, 2016. The resolution
approving these annual water rate increases authorized the increases to go into effect
automatically each year unless Council suspended all or part of the increase, beginning
with the January 1, 2016 scheduled rate increase. Based upon review of Water Fund
performance for Fiscal Year 2014-15, including greater than anticipated revenues,
decreased operating expenses, and decreased capital project expenditures, staff is
recommending a partial suspension of the 9% rate increase, and implementation of a
5% increase effective January 1, 2016. The change in rate is only effective for 2016,
returning to the adopted 9% increase authorized for subsequent years, evaluated
annually. Council can take action to adjust future rate increases at the next annual
review.
Background
On February 24, 2015 Council approved the following schedule of rate increases:
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2015, 2016, 2017, 2018, 2019,
effective effective effective effective effective
Calendar Year
March 1, January 1, January 1, January 1, January 1,
2015 2016 2017 2018 2019
Maximum
Projected 9% 9% 9% 9% 9%
Increase
The rate increases go into effect automatically on an annual basis unless Council
suspends a scheduled rate increase. The circumstances which might demonstrate that
decreased operating expenses, or decreased capital project expenditures. Based upon
staff review of Water Fund revenues and expenses for Fiscal Year 2014-15, staff is
recommending a suspension of the yearly 9% rate increase and the implementation of a
5% increase which would go into effect for water consumption beginning on January 1,
2016. Since water bills reflect the pr
water bills prepared beginning March 1, 2016 would reflect the revised rate, if Council
approves the recommended rate adjustment.
Discussion
The multi-year rate adjustment schedule approved by the City Council in February 2015
was based upon projected revenue and cost estimates in the Water Fund through the
year 2019. The financial forecast approved in the 2015 Rate Study (Attachment D)
submitted to Council on December 16, 2014 is presented in Figure 1 (Attachment A).
For the first year, Council adopted a 9% increase, effective March 1, 2015, with
direction to staff to return later in the year with a recommendation for the following
At the time rate increases were being considered by Council, reductions in proposed
capital programs were deemed necessary to avoid higher increases than the 9% annual
rate increases approved by Council over the 5-year rate period. In order to
accommodate the series of 9% increases over the 5-year period, $2.5 million in water
main replacements, and $5 million in Advanced Meter Infrastructure programs were
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eliminated (from the higher 13% rate increase option).
Specifically, the revenue plan approved by Council at the February 24, 2015 meeting
(Figure 1, Attachment A) projected that the water utility would collect sufficient revenue
to cover fixed expenses, maintain cash reserves consistent with adopted Council policy,
fund capital improvements on a pay as you go basis, and create a Water Fund balance
in the later years of the planning period that would allow for future bond funding.
Past Year Water Fund Performance and the Implications for Year 2 Rate Suspension
In considering whether to suspend all or part of the scheduled 9% rate adjustment for
calendar year 2016, staff analyzed the FY 2014-15 actual performance of the Water
Fund. Using financial performance information from a full fiscal year basis coincides
financial reporting period, allowing the use of the ending fund balance to
be considered along with the five-year projections in formulating a rate adjustment
recommendation. Consequently, the ending Fiscal Year performance of the Water
Fund, considered along with the five year projections of future operations and capital
project expenditures are the key elements in determining future rate adjustment
recommendations in the remainder of the 5-year planning period.
It is important to note that FY 2014-15 information only reflects performance of the fund
through June 30, 2015. Accordingly, the effects of the rate increase approved at the
February 24, 2015 meeting (which became effective for water use beginning March 1,
2015) are not fully reflected in the FY 2014-15 numbers. For example, the first bills at
the new rates were sent out May 1, 2015. As a result, any impact on revenues which
may have been due to the rate increase generated by the 2015 rate adjustment were
limited to only one billing cycle. Similarly, the end-of-year ramp-up of conservation
programs and implementation
very little effect on the FY 2014-15 financial results due to timing.
Going forward, the ending fund balance of the Water F
performance, in combination with newly projected five year forecasts, typically prepared
in December, will serve as the most up-to-date projections upon which to base a
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potential rate adjustment recommendation to be implemented annually at the beginning
of March.
Considerations to Suspend a Part of the 2016 Rate Increase
Utilizing FY 2014-15 actuals, the fund balance projection has been updated to show the
implications over the remainder of the 5-year planning period of suspending all or a
portion of the 9% rate increase previously authorized for 2016. Current and proposed
rates are listed in Table 4 (Attachment C). In all options, it is assumed the suspension
remains in effect only for 2016 followed by the full 9% increase authorized for
subsequent years, evaluated annually. Each option is included in Figure 1 (Attachment
A), which indicates the projected performance (ending fund balance) of the Water Fund
for the total suspension (Table 1, Attachment B), partial suspension resulting in 5%
versus the full 9% increase (Table 2, Attachment B), and the full 9% increase
automatically authorized unless suspended (Table 3, Attachment B) relative to the 5-
year rate plan (the February 2015 revenue plan) without any suspension of rates as
indicated in Figure 1. For all three options presented, the ending fund balance estimates
project the changes in revenue realized with the respective proposed change in the
rate. For all options, projections in operating and capital expenses are the same.
It should be noted that the actual ending fund balance for FY 2014-15 begins at a point
higher than envisioned in the rate study forecast (Figure 1). This is due to actual
revenues being higher than projected, as the impact of conservation programs had not
fully taken effect in FY 2014-15; operating expenses being lower, and capital budget
amounts decreasing through review of projects and programs which eliminated
substantial amounts from the Capital Improvement Program (CIP). Also contributing to
the fund balance was a one-time infusion of $33.4 million in MTBE settlement funds
transferred into the Water Fund at the end of FY 2012-13. These funds had been kept
in a separate Charnock/Arcadia-only fund; upon completion of treatment plant
improvements they were transferred into the Water Fund. These funds are used to
offset certain water treatment costs, and in doing so, they effectively subsidize a portion
of the water rates.
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Total Suspension of the 9% Increase (0% Increase)
Suspension in its entirety of the previously authorized 9% rate increase for 2016 leaves
water rates unchanged from those effective as of March 1, 2015. This is represented
graphically in Figure 1 and Table 1.
Advantages:
No increase in rates for 2016; rates are not increased beyond the increase
adopted by Council in March 2015.
Disadvantages:
As indicated in Figure 1 and Table 1, the minimum recommended reserve fund
balance of $7 million is not achieved for the last two years of the planning period.
Financial conditions are not met which would allow the City to bond for future
Capital projects.
Partial Suspension Resulting in a 5% vs. 9% Increase For 2016 (staff recommendation)
As indicated in Figure 1 and Table 2, a 5% increase in year 2 of the planning period
shows a forecast of fund balances in the later years of the planning period at levels less
than the projections for the full 9%. Ending fund balances through FY 2019-20 meet the
minimum reserve level of $7 million.
Advantages:
Lower increase in unit price compared to the 9% increase option discussed
below.
Bond issuance criteria for future capital projects (revenues exceeding
expenditures by 20% or more) are met by FY2018-19.
Disadvantages:
Reduced ability to address unforeseen emergency situations due to the lower
fund balances in the outer years than the 9% option.
No Suspension 9% Increase
Based on the five-year forecast prepared annually in December, the ending fund
balance for the Water Fund with a 9% increase this year (effective January 1) and 9%
increases in the following years is indicated in Figure 1 and Table 3.
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Advantages:
Creates the strongest financial position (ending fund balances) throughout the
planning period in excess of adopted minimum reserve levels.
Bond issuance criteria for future capital projects are met by FY 2018-19.
Disadvantages:
Highest increase in water rates, compounded over the maximum increase in
the prior year.
Summary and Recommendation
producing potable water, meeting capital project goals, and supporting ongoing
conservation and drought response plans includes the challenge of accounting for an
uncertainty of water usage throughout the service area. Various factors come into play
in consideration of the recommended rate adjustment.
Water Conservation: Although the City has experienced a sizeable water use reduction
starting from approximately March 2015 to present, for FY 2014-15 (period ending June
30, 2015) water use was only reduced 4% from the prior year. In comparison, water
conservation city-wide has averaged beyond 20% for the period from March 2015 and
analysis and subsequent rate recommendation.
Revenues: Revenue projections assumed a water use pattern which included
increased water demand in a rebounding economy, a 10% level of conservation
throughout the year, and a 9% rate increase. However, since water demand did not fall
as much as anticipated during FY 2014-15, revenues came in higher than projected.
Revenue from water sales were $3 million higher in FY 2014-15 than projected in the
rate study.
Capital Expenditures: After significant review and scrubbing of capital program
expenditures, which had previously included rollover amounts from prior year
there were $6.8 million in savings from projects completed under budget or deferred to
later years.
Operating Expenses: Operating expenses were less than anticipated by $2.7 million.
Conservation Program Expenses: Implementation of conservation programs, for which
additional funding was approved by Council in order to accelerate carrying out the
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Stage 2 Water Shortage Response Plan, took several months to implement and it was
not until late summer 2015, during FY 2015-16, that they became fully operational. The
Water Fund-budgeted expenses were $1.9 million less than budgeted in FY 2014-15.
In comparing full implementation of the 9% increase previously authorized by Council in
February 2015 versus a partial suspension of that increase amounting to a 5% increase
over rates in place as of December 31, 2015 clearly creates a stronger fund balance at
the end of the planning period, as would be expected with a higher rate increase.
However, the 5% increase option does increase fund balances in later years, while still
meeting minimum reserve balances and debt issuance criteria. Additionally, the bond
issuance criteria is met by the 5% increase, similar to the conditions established by the
9% increase.
The 5% water rate increase for 2016 allows the City to continue the current fiscal
management of the water utility while ensuring the operation, maintenance, and
infrastructure investments necessary to continue the delivery of safe drinking water to
the community.
The adjusted rate, if approved by Council, will be effective for water use commencing
January 1, 2016. Billings for water use beginning this date will begin March 1, 2016,
and will reflect the adjusted rate. Council complied with Proposition 218 public notice
requirements when it approved a schedule of rate increases (up to 9% per year) in
February 2015. Since the rate adjustment does not exceed the maximum 9%, the
Proposition 218 public notice period of 45 days is not required.
Cost of Service Analysis
Subsequent to the adoption of the City's latest 2015 water rate increases, the Court of
Appeal, Fourth Appellate District, issued its opinion in the case Capistrano Taxpayers
th
Association, Inc. v. City of San Juan Capistrano (2015) 235 Cal.App.4 1493. In its
decision, the court held that for tiered water rates to be valid under Proposition 218, the
various water tiers must correspond to the actual cost of delivering water. Because the
City of Capistrano could not demonstrate that its tiers followed this principle, the Court
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ruled ag
the Governor, who is considering proposing an initiative to modify Proposition 218, and
while the court's opinion runs counter to the statewide practice of using tiered rates to
encourage water conservation, the court did not reject tiered pricing altogether.
In light of the Capistrano opinion, staff has reviewed the cost assumptions in the 2015
rate study. Even taking into consideration the Capistrano decision, staff has concluded
that the City's rate structure meets Proposition 218 requirements. In performing its
analysis, Staff compared current water rates with updated FY 2014-15 cost-of-service
data, which is the most recent data available, as well as with the data utilized in the
development of the Rate Study.
As demonstrated in the tables and attachments, t
-of-service. This is true at each Tier breakpoint (the
point at which the price for each additional unit of water usage increases) in each
customer class, as indicated in Tables 5 and 6 in Attachment E.
Moreover, the effective water rate paid by water customers that is, the actual water
rate paid for water used, which takes into account the progression of rates through the
various Tiers is also below the actual cost of service. An example helps to illustrate.
A single family residential customer, who uses 40 hundred cubic feet (HCF) of water,
where 1 HCF = 748 gallons, would pay $2.73/HCF at the Tier 1 rate, for the first 14
HCF, and $4.09/HCF at the Tier 2 rate, for next 26 HCF (based upon 2015 prices). The
combined or effective blended rate paid for all the water purchased is $3.61/HCF, for 40
HCF of water. However, the actual cost of service to provide 40 HCF to a single family
residential customer in FY 2014-15 was $5.51/HCF, based upon the data provided in
the 2015 rate study. Thus, a single family customer using 40 HCF of water paid
$1.90/HCF less than the actual cost-of-service.
The difference between the actual costs-of-service and the amount paid by each
customer class represents essentially a subsidy. The subsidy is being funded from
$33.4 million in Charnock settlement proceeds and $56.1 million in Olympic Basin
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settlement proceeds from FY 2014-15 through FY 2018-19, as indicated in Table 5B of
1
the Rate Study. The settlement proceeds are offsetting certain capital and operation
and maintenance costs that otherwise would need to be funded by water sales.
As represented by the example above, tiered pricing is a form of progressive or blended
pricing. Customers in Tiers 2 and above pay a water rate that is a combination or blend
of rates. A Tier 2 customer, for instance, pays Tier 1 pricing for the first 14 HCF of
water used and then pays Tier 2 pricing for the balance of the water used. Because of
the tiered pricing and the subsidy of rates provided by the various settlements, lower tier
water users are benefitted and subsidized more heavily by the Water Fund reserves
than higher tier users in each classification. Water users that primarily pay lower tier
rates are those with the lower water consumption. As consumption increases, water
users graduate to the higher tiers and lower subsidies. However, rate payers at the
higher tiers still benefit from paying a blended rate that remains partially subsidized at
all tier levels. Nothing in Proposition 218 prevents subsidies of water rates and nothing
in Proposition 218 requires the City to subsidize all water customers in the same
amount.
It must be acknowledged, however, that the 2015 Rate Study assumes certain cost-of-
service savings that cannot be anticipated with precision. Because of this, and given
that the current rate structure anticipates partial or whole suspension of rates on a year
to year basis, staff anticipates that actual revenue and cost scenarios can be adjusted
to ensure that the implementation of the annual 9% rate increase authorized in 2015 is
warranted on a year to year basis. Furthermore, the legal status of tiered pricing may
be further clarified by future court decisions or possible changes Proposition 218.
Task Force on the Environment Action
the following motion:
1 See, e.g., footnote (d) of Table 5B of the 2015 Rate Study (Attachment D).
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The City of Santa Monica Task Force on the Environment recommends a 5% rate
increase for the coming year and requests revisiting the rate structure within the next
year, particularly in regards to a conservation based block rate structure and fixed
charges.
Financial Impacts and Budget Actions
The revenue budget established at account 25671.402310 will be reduced by $300,867
in FY 2015-16 and reduced by $776,064 in FY 2016-17 to reflect implementation of the
partial suspension of water rates for calendar year 2016.
Prepared By:
Gil Borboa, Water Resources Manager
Approved Forwarded to Council
Attachments:
A. Attachment A - Figure 1 - Water Fund Revenue Plan Options
B. Attachment B - Tables 1 to 3 - Water Fund Balance 5-Year Projections at 0%,
5% and 9% 2016 Increases
C. Attachment C - Table 4 - Water Rate Summary
D. Attachment D - Water Rate and Revenue Plan - February 2015
E. Attachment E - Tables 5 and 6 - Cost of Service and Water Rate Comparison by
Tier
F. Staff Report - Water Rate Analyses and Proposed Water Rate Options - 12/16/14
- Item 8-A (web link)
G. Staff Report - Public Hearing to Adopt Water Rates - 2/24/15 - Item 9-A (web
link)
H. Powerpoint
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FIGURE1WaterFundRevenuePlanOptions
$40.0
$30.0
$20.0
$10.0
$0.0
FY201314FY201415FY201516FY201617FY201718FY201819FY201920
EndingCashBalanceOriginalProjectionEndingCashBalance9%Increase
February2015RevenuePlan9%Increase
EndingCashBalance5%IncreaseEndingCashBalance0%Increase
MinimumRecommendedFundReserveBalance
TABLE 1 - FULL SUSPENSION OF THE 9% INCREASE FOR 2016
Water Fund - 2
5
SCENARIO 1 - 0% INCREASE
Financial Status Update
FY 2015-16 to FY 2019-20
FY 2014-15FY 2014-15FINANCIAL STATUS UPDATE
FY 2015-16
Rev. Bud./RevisedFY 2016-17
Est. ActualsBudgetBudget Plan
ActualsFY 2017-18FY 2018-19FY 2019-20
BEGINNING FUND BALANCE 46,011,392 46,011,392 43,131,22521,950,247 14,924,777 9,715,491 3,730,214
Revenues22,924,019 23,579,659 20,737,53421,997,828 23,070,811 24,794,287 26,299,387
Charges for services (650)22,111,54222,664,71219,970,728 22,330,81121,156,022 24,198,28725,649,387
Interest Income (659)300,000371,274300,000375,000270,000126,000180,000
Other (662)512,477543,673466,806466,806470,000470,000470,000
Expenditures (24,418,876) (20,003,529) (26,237,853)(22,578,372) (23,347,550) (21,057,666)(20,135,059)
Salaries and Wages(5,869,325)(5,415,953)(5,974,470)(6,235,587)(6,465,890)(6,679,784)(6,906,198)
Supplies and Expenses(18,549,551)(14,587,575)(20,263,383)(16,342,785)(16,881,661)(14,377,882)(13,228,861)
Non-Dept.Transactions (1,601,524) (1,262,647) (2,308,313) (1,614,794) (1,650,164) (1,689,683) (1,733,586)
All Other Transactions (274)(160,900)48,266(56,226)(57,973)(60,127)(62,377)(64,729)
Transfers In (695)20,000364,706104,000104,000 104,000104,000104,000
Transfers Out (695)(1,460,624) (2,356,087)(1,675,619) (1,660,821) (1,694,037) (1,731,306)(1,772,858)
Capital Improvement Program (CIP)
(5,193,651)(19,579,459) (13,372,346) (7,330,132) (3,282,382) (8,032,215) (3,402,215)
Exception Based Requests -
- - -2,500,000 - -
PROJECTED ENDING FUND
BALANCE
23,335,552 43,131,225 21,950,24714,924,777 9,715,491 3,730,214 4,758,740
MINIMUM ESTABLISHED
- 7,000,000- 7,000,000- 7,000,000- 7,000,000- 7,000,000
COUNCIL RESERVE
7,924,77714,950,247 2,715,491 (2,241,260)(3,269,786)
VARIANCE
TABLE 2 - PARTIAL SUSPENSION OF THE 9% INCREASE FOR 2016
Water Fund - 2
5
SCENARIO 2 - 5% INCREASE
Financial Status Update
FY 2015-16 to FY 2019-20
FY 2014-15FY 2014-15FINANCIAL STATUS UPDATE
FY 2015-16
Rev. Bud./RevisedFY 2016-17
Est. ActualsBudgetBudget Plan
ActualsFY 2017-18FY 2018-19FY 2019-20
BEGINNING FUND BALANCE46,011,392 46,011,392 43,131,225 22,326,332 16,270,942 12,119,043 7,286,318
Revenues 22,924,019 23,579,659 21,113,619 22,967,908 24,128,198 25,946,839 27,526,446
Charges for services (650)22,111,542 22,664,712 20,346,813 22,126,102 23,388,198 25,350,839 26,876,446
Interest Income (659)300,000 371,274 300,000 375,000 270,000 126,000 180,000
Other (662)512,477 543,673 466,806 466,806 470,000 470,000 470,000
Expenditures(24,418,876) (20,003,529) (26,237,853) (22,578,372) (23,347,550) (21,057,666) (20,135,059)
Salaries and Wages(5,869,325) (5,415,953) (5,974,470) (6,235,587) (6,465,890) (6,679,784) (6,906,198)
Supplies and Expenses(18,549,551) (14,587,575) (20,263,383) (16,342,785) (16,881,661) (14,377,882) (13,228,861)
Non-Dept.Transactions(1,601,524) (1,262,647) (2,308,313) (1,614,794) (1,650,164) (1,689,683) (1,733,586)
All Other Transactions (274)(160,900) 48,266 (56,226) (57,973) (60,127) (62,377)
(64,729)
Transfers In (695)20,000 364,706 104,000 104,000 104,000 104,000 104,000
Transfers Out (695)(1,460,624) (1,675,619) (2,356,087) (1,660,821) (1,694,037) (1,731,306) (1,772,858)
Capital Improvement Program (CIP)
(5,193,651)(19,579,459) (13,372,346) (7,330,132) (3,282,382) (8,032,215) (3,402,215)
Exception Based Requests -- - 2,500,000 - - -
PROJECTED ENDING FUND
BALANCE
43,131,22523,335,552 22,326,332 16,270,942 12,119,043 7,286,318 9,541,903
MINIMUM ESTABLISHED
- 7,000,000- 7,000,000- 7,000,000- 7,000,000- 7,000,000
COUNCIL RESERVE
9,270,94215,326,332 5,119,043 286,318 2,541,903
VARIANCE
TABLE 3 - NO SUSPENSION OF THE 9% INCREASE FOR 2016
Water Fund - 2
5
SCENARIO 3 - 9% INCREASE
Financial Status Update
FY 2015-16 to FY 2019-20
FY 2014-15FY 2014-15FINANCIAL STATUS UPDATE
FY 2015-16
Rev. Bud./RevisedFY 2016-17
Est. ActualsBudgetBudget Plan
ActualsFY 2017-18FY 2018-19FY 2019-20
BEGINNING FUND BALANCE46,011,392 46,011,392 43,131,225 22,627,199 17,347,873 14,041,883 10,131,199
Revenues 22,924,019 23,579,659 21,414,486 23,743,972 24,974,107 26,868,880 28,508,093
Charges for services (650)22,111,542 22,664,712 20,647,680 22,902,166 24,234,107 26,272,880 27,858,093
Interest Income (659)300,000 371,274 300,000 375,000 270,000 126,000 180,000
Other (662)512,477 543,673 466,806 466,806 470,000 470,000 470,000
Expenditures(24,418,876) (20,003,529) (26,237,853) (22,578,372) (23,347,550) (21,057,666) (20,135,059)
Salaries and Wages(5,869,325) (5,415,953) (5,974,470) (6,235,587) (6,465,890) (6,679,784) (6,906,198)
Supplies and Expenses(18,549,551) (14,587,575) (20,263,383) (16,342,785) (16,881,661) (14,377,882) (13,228,861)
Non-Dept.Transactions(1,601,524) (1,262,647) (2,308,313) (1,614,794) (1,650,164) (1,689,683) (1,733,586)
All Other Transactions (274)(160,900) 48,266 (56,226) (57,973) (60,127) (62,377)
(64,729)
Transfers In (695)20,000 364,706 104,000 104,000 104,000 104,000 104,000
Transfers Out (695)(1,460,624) (1,675,619) (2,356,087) (1,660,821) (1,694,037) (1,731,306) (1,772,858)
Capital Improvement Program (CIP)
(5,193,651)(19,579,459) (13,372,346) (7,330,132) (3,282,382) (8,032,215) (3,402,215)
Exception Based Requests -- - 2,500,000 - - -
PROJECTED ENDING FUND
BALANCE
43,131,22523,335,552 22,627,199 17,347,873 14,041,883 10,131,199 13,368,431
MINIMUM ESTABLISHED
- 7,000,000- 7,000,000- 7,000,000- 7,000,000- 7,000,000
COUNCIL RESERVE
10,347,87315,627,199 7,041,883 3,131,199 6,368,431
VARIANCE
Table4WaterRateSummarybyAccountType,TierandMeterSize
FullSuspension/
PartialSuspensionNoSuspensionUsageRange
TierCurrentRate
With5%AdjustmentWith9%AdjustmentperBillingPeriod
(perHCF)(perHCF)(perHCF)(HCF's)
SingleFamilyAccounts
Tier1$2.73$2.87$2.980to14
Tier2$4.09$4.29$4.4615to40
Tier3$6.13$6.44$6.6841to148
Tier4$9.59$10.07$10.45149+
MultiFamilyAccounts
Tier1$2.73$2.87$2.980to4perdwellingunit
Tier2$4.09$4.29$4.465to9perdwellingunit
Tier3$6.13$6.44$6.6810to20perdwellingunit
Tier4$9.59$10.07$10.4521+perdwellingunit
NonResidentialAccounts
Tier1$3.88$4.07$4.23Dependsonmetersize*
Tier2$9.55$10.03$10.41Dependsonmetersize*
RecycledWater$3.49$3.66$3.80Allusage
1HCF=1HundredCubicFeetofwater=748gallons
Eachbillingperiodisapproximately61days(~6billingperiodsperyear)
FirelineServiceRates
FullSuspensionPartialSuspensionNoSuspension
MeterSizeFixedChargeWith5%AdjustmentWith9%Adjustment
perBillingPeriodFixedChargeFixedCharge
11/2"meter$39.05$41.00$42.56
2"meter$62.65$65.78$68.29
3"meter$107.82$113.21$117.52
4"meter$172.32$180.94$187.83
6"meter$333.52$350.20$363.54
8"meter$526.97$553.32$574.40
10"meter$752.66$790.29$820.40
*NonResidentialAccountsTierDesignationsbyMeterSizeandUsageRange
Tier1UsageTier2Usage
MeterSize
(HCF's)(HCF's)
3/4"meter0to210211+
1"meter0to210211+
11/2"meter0to465466+
2"meter0to870871+
3"meter0to1,7001,701+
4"meter0to2,5502,551+
6"+meter0to5,2805,281+
for the:
City of Santa Monica,
Water Resources Division
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3210 El Camino Real, Suite 150
Irvine, CA 92602
949-261-1577
949-261-2134 (Fax)
City of Santa Monica
Water Rate and Revenue Plan
February 2015
City of Santa Monica
Water Resources Division
1212 Fifth Street Third Floor
Santa Monica, CA 90401
K/J Project No. 1283015*00
3210 El Camino Real, Suite 150
Irvine, California 92602
949-261-1577
949-261-2134 (Fax)
2 February 2015
Mr. Gil Borboa, P.E.
Water Resources Manager
City of Santa Monica, Water Resources Division
rd
1212 Fifth Street, 3 Floor
Santa Monica, California 90401
Subject: Final Report – Water Rate and Revenue Plan
K/J 1283015*00
Dear Mr. Borboa:
Kennedy/Jenks Consultants is pleased to submit the Final Water Rate and Revenue Plan to
the City of Santa Monica (City). By way of process, we have submitted this report as a
digital “.pdf” file for your distribution as appropriate.
This Rate Study Report is a compilation of the analysis and findings of the City’s Water
Fund and incorporates the City’s comments obtained from previous draft work products
and team discussions. The results of the study are intended to serve as a plan for future
revenue and rate adjustments based on the projected costs, water demands, and capital
improvement program requirements.
It has been a pleasure working with you and City staff on this interesting project. Please
contact us if you have any questions or need additional information.
Very truly yours,
KENNEDY/JENKS CONSULTANTS
Roger Null, V.P.
Vice President and Project Manager
KENNEDY/JENKS CONSULTANTS
Table of Contents
List of Tables ................................................................................................................................. ii
List of Figures............................................................................................................................... iii
List of Appendices ........................................................................................................................ iii
Section 1:Introduction ............................................................................... 1-1
1.1Background and Objectives ................................................................ 1-1
Section 2:Historical and Current Conditions ............................................ 2-1
2.1Evaluation of Historical & Current Financial Condition ........................ 2-1
2.2Customer Accounts and Water Demands ........................................... 2-2
Section 3:Future Revenue Requirements .................................................. 3-1
3.1Projected Customer Growth and Water Sales .................................... 3-1
3.2Budgeted/Projected Operating Expenses ........................................... 3-1
3.3Projected Capital Improvement & Debt Service Financing
Program .............................................................................................. 3-3
3.4Summary of Projected Revenue Requirements ................................... 3-4
3.5Projected Revenue Requirements Using Assumed Rate
Scenarios ............................................................................................ 3-5
3.5.1Option 1: Projected Revenue Plan – Consumer Price
Index (CPI) Based Annual Water Rate Increase
(Baseline Option) ..................................................................... 3-6
3.5.2Option 2: Projected Revenue Plan – 9% Annual Water
Rate Increase .......................................................................... 3-6
3.5.3Option 3: Projected Revenue Plan – 9/13% Annual
Water Rate Increase ................................................................ 3-6
3.5.4Recommended Revenue Plan ................................................. 3-7
Section 4:Current Water Rates .................................................................. 4-1
Section 5:Alternative and Proposed Water Rates and Structures ........... 5-1
5.1Fixed and Variable Rate Considerations ............................................. 5-1
5.2Development of Alternative Water Rate Structures and Revised
Water Rates ........................................................................................ 5-1
5.2.1Development of Alternative Rate Structures ............................ 5-2
5.2.2Development of Alternative Water Rates and Typical Bills ....... 5-3
5.3Comparison of Monthly Bills with Other Communities ........................ 5-4
5.4Summary of Findings and Proposed Water Rates .............................. 5-4
Water Rate and Revenue Analysis, City of Santa Monica i
Table of Contents (cont'd)
List of Tables
1 Historical Operating Revenues and Expenses
2 Current and Projected Accounts and Water Consumption
3A Budgeted and Projected Operation and Maintenance Expenses
3B Projected Water Supply and Production Plan
4 Proposed Capital Improvement Program
5A Projected Revenue Plan – Consumer Price Index (CPI) Increases
5B Projected Revenue Plan – 9% Rate Increases (Reduced CIP)
5C Projected Revenue Plan –9/13% Rate Increases
6 Current Water Rates
7 Rate Adjustment Options
8 Examples of Typical Bi-Monthly Bills
9 Comparison of Bi-Monthly Water Bills – Single Family Residential
List of Figures
5A - Projected Revenue Plan with Annual CPI Based Water Rate Increase
5B - Projected Revenue Plan with 9% Annual Water Rate Increase
5C - Projected Revenue Plan with 9/13% Annual Water Rate Increase
9 - Water Rate Comparison with Neighboring Agencies, Single Family Account
10 - Water Rate Comparison with Neighboring Agencies, Non-Residential 2–inch meter
List of Appendices
Appendix A - Miscellaneous Tabular Support Information
Appendix B - Miscellaneous Alternative Rate Restructuring Support Information
Water Rate and Revenue Analysis, City of Santa Monica ii
KENNEDY/JENKS CONSULTANTS
Section 1:Introduction
The City of Santa Monica (City) is a coastal community located in Los Angeles County. The
City provides commonly sought services, including water and sewer services, to approximately
91,000 residents covering an area of approximately 8 square miles. To provide a reliable and
quality water supply to its customers, the City is now in the implementation phase of a
comprehensive long range water system improvement program with the goal of having a
reliable infrastructure and a sustainable water supply by eliminating its dependence on imported
water sources to meet potable water needs by 2020.
1.1Background and Objectives
The City’s desire to maintain appropriate infrastructure investments and meet a sustainable
water self-sufficiency goal are integral elements of a Sustainable Water Master Plan (SWMP)
that is also underway. Implementation of SWMP capital improvements and programs, as well
as other factors will affect the financial performance of the City’s water utility. These factors
include:
The need to evaluate the future operating and non-operating revenues and expenses
and their effect on the utility’s operation,
The need to fund capital improvements associated with the City’s Sustainable Water
Master Plan (SWMP) and other water system capital projects to improve reliability and
system efficiencies,
The need to develop programs and strategies to meet the City’s water conservation
goals and objectives,
The need to assess and project the impact of reduced water usage from new water use
efficiency programs, other water conservation measures, and the current drought
conditions in California,
The need to develop updated rates to fund the projected water enterprise financial
requirements, and
A need to review and develop an appropriate rate structure to maintain the Water Fund’s
obligations, meet various cost recovery requirements, and support overall customer
understanding and acceptance.
It is important to note that this report integrates several important considerations that have
affected the short and long-term financial obligations of the Water Fund. This approach phases
in the increased use of local groundwater supplies and water treatment related improvements to
address water quality and incorporates other capital improvement projects to meet water self-
sufficiency by reducing/eliminating reliance on imported water, phases in projected reductions in
water sales-based revenues as the result of an increased effort for additional water
conservation and account-level usage reductions in response the statewide water shortage,
begins a methodical use of fund reserves to fund other local capital projects that are the result
of aging infrastructure and other needed system improvements, and is consistent with the
recommendations of the SWMP.
Water Rate and Revenue Analysis, City of Santa Monica 1-1
KENNEDY/JENKS CONSULTANTS
Together, these factors have placed an increased burden on short-term water rates to improve
the financial position of the Water Fund, and are the basis for the capital, operational, and rate-
related findings presented herein.
Water Rate and Revenue Analysis, City of Santa Monica 1-2
KENNEDY/JENKS CONSULTANTS
Section 2:Historical and Current Conditions
This section of the report is developed to provide a background of the water utility’s historical
and current financial conditions and customer account summary information. A discussion of
these elements is provided in the following subsections.
2.1Evaluation of Historical & Current Financial Condition
The financial condition of the City’s water utility was reviewed and a summary of financial
performance is presented in Table 1. The information presented in this table was derived
largely from the City’s Finance Department and Comprehensive Annual Financial Reports
(CAFRs) as appropriate.
The financial condition of a water utility is assessed by contrasting several financial parameters
with the financial performance as reported in the City’s financial data. Foremost among these
parameters are criteria for net operating revenues and an assessment of the utility’s fund balance.
The findings related to each of these elements are provided as follows.
Net operating revenues are an important financial parameter of a utility’s performance. This
financial parameter is generally desired to be at least 20% of total operating revenues to generate
adequate capital improvement funding for new and replacement (depreciation-based) assets. As
shown in Table 1, the water utility has historically fallen short of this parameter in the last three
years. During the three year period, this parameter has ranged from a positive 2% to 10%, well
short of the 20% benchmark. As such, the utility currently is not generating sufficient funds to
provide for future capital expenditures and increased water utility operating expenses.
In addition to this operational performance, the impact of various non-operating revenues and
capital expenditures is included so that an assessment of the annual ending cash fund balance
or reserves can be derived. As indicated by the net increase or decrease in cash value, the
water income has essentially broken even in Fiscal Year (FY) 10-11 and FY 11-12. The
significant increase in performance and cash in FY 12-13 can be attributed to the consolidation
of the Fund 25 and Fund 05 (Charnock) for both cash and expenses.
In consideration of these factors and the need for increased capital investment in the coming
years, additional revenues from water rates are needed to improve the financial position of the
Water Fund. The following sections of this study provide the supporting information for the level
and timing of proposed rate adjustments to meet the Water Fund’s current and future financial
requirements.
Water Rate and Revenue Analysis, City of Santa Monica 2-1
KENNEDY/JENKS CONSULTANTS
TABLE 1
HISTORICAL OPERATING REVENUES AND EXPENSES
Actuals
Sources and Uses of FundsFY 10/11FY 11/12FY 12/13
Operating Revenues
Charges for Service$17,507,315$19,897,464$22,254,867
Total Operating Revenues$17,507,315$19,897,464$22,254,867
Operating Expenses
Personnel Services$5,322,057$5,238,400$4,882,720
Administrative Indirect$1,056,418$1,088,111$1,142,516
Contractual Services$551,924$486,458$967,553
Repairs and Maintenance$191,172$221,386$848,669
Materials and Supplies$2,134,167$3,242,253$2,444,691
Utilities$572,180$601,593$730,299
Water Purchases$4,526,073$6,460,974$6,334,786
Casualty Property and Liability Costs$140,000$314,023$327,332
Miscellaneous Fees and Costs$0$0$7,825
Depreciation$1,119,172$1,001,793$1,096,572
Other$801,881$858,017$1,292,094
Total Operating Expenses$16,415,044$19,513,008$20,075,057
Net Operating Income (Loss)$1,092,271$384,456$2,179,810
Net Op Rev as % of Total Op Rev6%2%10%
Non-Operating Revenue (Expense)
Investment Income$200,555$156,939($14,565)
Interest Expense($5,074)($6,892)($6,755)
Gain (Loss) on Disposal of Capital Assets($148,130)$0$0
Other Non-Operating$356,559$400,333$673,019
Total Non-Op Revenues (Exp.)$403,910$550,380$651,699
Net Income (Loss) Before Capital/Transfers/Other Costs$1,496,181$934,836$2,831,509
Net Increase (Decrease) in Cash (a)($273,582)($1,220,473)$34,313,740
Beginning Cash and Equivalents (b)$18,135,516$17,861,934$16,641,461
Ending Cash and Equivalents (b)$17,861,934$16,641,461$50,955,201
Source: City of Santa Monica Comprehensive Annual Financial Reports
(a) FY 12-13 benefited from a cash infusion of $33,413,430 from the transfer of the pollution remediation recovery assets.
(b) Cash and Cash Equivalents does not include depreciation as it is a non-cash expense.
KENNEDY/JENKS CONSULTANTS
2.2Customer Accounts and Water Demands
As noted in the City’s water billing data, the City provides water service to its residential and
non-residential customers through approximately 16,650 metered water accounts (does not
include dedicated fire protection meters). A summary of the water utility customer information
related to general customer types, number of accounts, and water demands are detailed in
Table 2. As shown, the majority of these water accounts are residential customers.
Recent and projected water demand is also provided in Table 2. For FY 11/12, the total annual
water consumption was approximately 5,408,605 hundred cubic feet (HCF) and the average
consumption per account was approximately 329 HCF per year, or 27.5 HCF per month (674
gallons per day). Based on the current water rate structure, this level of water usage generates
approximately $17 million.
It should be noted that while water sales have increased slightly over the last few years,
additional water conservation-related activities will reduce water usage in the coming years.
Incorporating the planning projections from the 2010 UWMP, and the recent drought compliance
planning, water demand in FY 14/15 is projected to reduce to approximately 4,906,120 HCF and
further reduce to 4,360,995 in FY 15/16. Appendix A includes copies of the water system
reports submitted annually to the Department of Water Resources (DWR) to document the
City's water system statistics as an aid to detailing the City’s recent water usage and customer
account trends.
Water Rate and Revenue Analysis, City of Santa Monica 2-2
KENNEDY/JENKS CONSULTANTS
TABLE 2
CURRENT AND PROJECTED ACCOUNTS AND WATER CONSUMPTION
ActualsProjected
(a,b)
FY 12/13FY 13/14FY 14/15FY 15/16FY 16/17FY 17/18FY 18/19FY 19/20
Customer Type
c
Service Area Population()
91,14591,19491,24391,29291,34191,38991,43891,487
Single Family Residential
(d)
Metered Accounts7,5107,5147,5187,5227,5267,5307,5347,538
(e)
Equivalent Meters12,12312,13012,13612,14312,14912,15612,16212,169
(f)
Water Demand (HCF)1,365,2731,358,2351,278,0181,135,9741,135,9321,136,5481,137,1641,137,780
Multi-Family Residential2,086,4461,854,6701,854,7201,855,8451,856,9711,858,096
(d)
Metered Accounts6,3026,3056,3096,3126,3156,3196,3226,326
(e)
Equivalent Meters16,11716,12516,13416,14316,15116,16016,16816,177
(f)
Water Demand (HCF)2,398,4892,322,6052,086,4461,854,6701,854,7201,855,8451,856,9711,858,096
Commercial/Institutional1,301,5191,156,9291,156,9521,157,6451,158,3391,159,033
(d)
Metered Accounts2,2532,2542,2552,2572,2582,2592,2602,261
(e)
Equivalent Meters7,8127,8167,8217,8257,8297,8337,8377,841
(f)
Water Demand (HCF)1,576,1151,507,2861,301,5191,156,9291,156,9521,157,6451,158,3391,159,033
Landscape Irrigation240,136213,422213,390213,482213,574213,666
(d)
Metered Accounts570570571571571572572572
(e)
Equivalent Meters1,4121,4131,4131,4141,4151,4161,4161,417
(f)
Water Demand (HCF)247,047263,116240,136213,422213,390213,482213,574213,666
(g)
Water System Totals
4,906,1194,360,9944,360,9944,363,5214,366,0474,368,574
Metered Accounts16,63516,64416,65316,66216,67116,68016,68816,697
(e)
Equivalent Meters37,46437,48437,50437,52437,54437,56437,58437,604
(f)
Water Demand (HCF)5,586,9255,451,2434,906,1194,360,9944,360,9944,363,5214,366,0474,368,574
Notes:
(a) Source: City of Santa Monica; Rate Study Billing Usage Data 2012. Does not include dedicated Fire Service accounts.
(b) Source: City of Santa Monica; Summary of FY 12/13 billing data provided by the City 8/28/13.
(c) Population projections from the City's 2010 UWMP, which provides population projections for the years 2015 and 2020. All other years assume a linear rate of growt
h
(d) Account projections assume linear growth as a function of population using a growth rate of the number of FY 12/13 accounts by FY 12/13 service area populatio
n
(e) Equivalent meters derived using AWWA Manual M6 meter factor sizes.
(f) Demand projections from the City's 2010 UWMP, which provides demand projections for the years 2015 and 2020. All other years assume a linear rate of growth
(g) Excludes Fire Service accounts and miscelaneous usage.
KENNEDY/JENKS CONSULTANTS
Section 3:Future Revenue Requirements
An evaluation of future revenue requirements can be focused in the projection of four specific
areas. These areas are customer growth, water supply costs, operating costs, and capital-
related expenditures. The following sections discuss the impact of these factors on the City’s
water utility revenue requirements through FY 19/20.
3.1Projected Customer Growth and Water Sales
Customer growth affects the revenue requirements of the City's water utility in two ways. First, it
increases the customer base that is paying for more water usage through the water usage rate
and pays a connection fee to buy into to system capacity. Second, it increases the level of
those costs that vary with the quantity of water used such as water supply, treatment, and
pumping expenses. In financial planning, applying low to moderate growth factors provides a
conservative assessment of future utility revenue requirements.
Based on population projection data taken from the City’s 2010 Urban Water Management Plan
and the Land Use and Circulation Element (LUCE) of the General Plan, a very small annual
growth is included in this financial plan. In fact, at a projected increase of approximately 0.5%,
an addition of only 20 equivalent meter units (EMUs) per year is included in the five year
planning projection. As previously noted, for Santa Monica, foremost among the factors that
needs to be considered is the impact of reduced water usage associated with increased
conservation activities, enhanced customer awareness, and upcoming excess water usage
surcharges or penalties in response to mandatory water usage reductions.
It should be noted that predicting annual growth and water usage can not be derived as precise
values. As such, the future growth and water demand values used herein are to be considered
as estimates only and are intended to provide a conservative forecast of new customers so that
connection fee revenues and water sales are not overestimated. Similarly, while it can be
assumed that water usage should decline with the forthcoming increase in water costs and
rates, behavioral changes are difficult to quantify. Accordingly, the magnitude of future water
conservation included in this financial plan is only an estimate used for the purpose of projecting
future water sales. All of these factors should be evaluated and integrated as an element of the
City’s ongoing rate and budget review process to evaluate the financial performance of the
City’s Water Fund.
3.2Budgeted/Projected Operating Expenses
Costs associated with the management, administration, and operations of the City’s water utility
are grouped in two primary categories:
Water Fund 25, Department No. 500 Expenses – This consists of Divisions 671, 672,
and 673, which include operation and maintenance costs associated with the Arcadia
Water Treatment Plant (673), Charnock Water Treatment Plant (672), and General
Water (671). Note that Water Fund 05, the Charnock Fund, was also consolidated with
Water Rate and Revenue Analysis, City of Santa Monica 3-1
KENNEDY/JENKS CONSULTANTS
Water Fund 25 for the management, administration and accounting of overall water
utility activities in FY 12/13.
SWMP Program Budget Adjustments and New Program Expenses – This consists of
items that will promote and support the City’s transition from purchasing imported water
to meeting potable water demands with local groundwater sources in accordance with
the City’s Sustainable Water Master Plan.
The budgeted and projected water utility costs for these categories are shown in Table 3A.
Note that the Water Fund 25 Department 500 costs included herein are based on the City’s
projected budget and are primarily inflation driven, with the integration of some additional costs
associated with anticipated future personnel and cost allocation adjustments. The SWMP
Program Expenses category develops estimated changes in these budgeted cost and funds
new programs to implement the SWMP findings and recommendations. Table 3B includes a
summary of the water supply and production plan that forms the basis for the budget adjustment
categories and a table of enhanced/new water conservation activities that are programmed to
be implemented as part of the SWMP self- sufficiency goals and objectives.
The budgeted and projected water utility costs for these categories are shown in Table
3A. Table 3B includes a summary of the water supply and production plan that forms the basis
for the budget adjustment categories. Note that the Water Fund 25 Department 500 costs
included herein are based on the City’s projected budget and are primarily inflation driven, with
the integration of some additional costs associated with anticipated future personnel and cost
allocation adjustments. The SWMP Program Expenses category develops estimated changes
in these budgeted cost and funds new programs to implement the SWMP findings and
recommendations. Notable among the programs are the costs associated with additional
conservation programs that are needed to enhance water use efficiency and support self-
sufficiency. Given the new statewide water shortage conditions and the City’s adoption of its
Stage II Water Shortage provisions, these program costs may need to be accelerated to better
align with the City’s short-term water conservation goals and objectives. Should that occur, the
City should plan on an annual review of revenues and expenses as some offsetting reductions
in capital or operational costs may be required to meet the funds available in the Water Fund. A
table of enhanced/new water conservation activities that are programmed to be implemented as
part of the SWMP self- sufficiency goals and objectives is provided in Appendix A.
It is important to note that the City has a long-standing practice for the development and
integration of new and updated Best Management Practices (BMPs) to improve utility system
operational efficiencies and control or reduce both operating and capital costs. In fact, since
2003, while the water system has increased from 14,979 accounts to 17,709 accounts
(including approximately 1,100 fire service accounts), the number of full time equivalent
employees used to manage, operate, and maintain the system has remained the same.
Moreover, upon completion of the new Advanced Meter Infrastructure (AMI) program, it is
anticipated that additional efficiencies and cost reductions will be realized. This and other
projected capital improvement projects are discussed in the following section.
Water Rate and Revenue Analysis, City of Santa Monica 3-2
KENNEDY/JENKS CONSULTANTS
TABLE 3A
BUDGETED AND PROJECTED OPERATION AND MAINTENANCE EXPENSES
ActualForecasted in City Budget Projected
Description
FY 12/13FY 13/14FY 14/15FY 15/16FY 16/17FY 17/18FY 18/19FY 19/20
Water Enterprise, Fund 25, Dept. No. 500 - Budget
(a)
Division 671 (General Water Division)
-Supplies and Expenses$5,900,900$5,479,900$4,859,700$5,108,700$5,254,800$5,405,900$5,561,700$5,723,000
-Water Purchase$6,334,800$5,608,500$5,125,500$5,253,600$5,385,000$5,519,600$5,657,600$5,799,000
-Brine Disposal$593,400$650,000$650,000$666,300$682,900$700,000$717,500$735,400
-Salaries and Wages$5,261,600$5,671,400$5,796,800$6,070,500$6,374,600$6,621,600$6,898,200$7,194,500
Subtotal Division 671$18,090,700$17,409,800$16,432,000$17,099,100$17,697,300$18,247,100$18,835,000$19,451,900
Division 672 (Charnock WTP Division)
(a), ( e)
-Supplies and Expenses
$1,493,200$2,511,100$2,548,700$2,627,800$2,710,000$2,795,400$2,835,900$2,877,400
(b)
-Salaries and Wages
$0$0$0$0$0$0$0$0
Subtotal Division 672$1,493,200$2,511,100$2,548,700$2,627,800$2,710,000$2,795,400$2,835,900$2,877,400
Division 673 (Arcadia WTP Division)
(a)
-Supplies and Expenses
$1,135,200$2,149,000$2,339,900$2,420,700$2,504,900$2,592,800$2,684,500$2,780,300
(b)
-Salaries and Wages
$0$0$0$0$0$0$0$0
Subtotal Division 673$1,135,200$2,149,000$2,339,900$2,420,700$2,504,900$2,592,800$2,684,500$2,780,300
Subtotal - Water Fund 25, Dept. No. 50020,719,10022,069,90021,320,60022,147,60022,912,20023,635,30024,355,40025,109,600
SWMP Program Budget Adjustments and New Program Expenses
Budget Adjustment - Water Purchase Cost
$1,509,800$294,800$374,200($749,400)($610,500)($451,800)($2,395,300)($3,955,400)
Budget Adjustment - Groundwater Production Costs
$0$0$0$0$0$0$0$411,700
Budget Adjustment - Arcadia WTP Cost
$0$0$0$0$0($802,400)($399,600)
Budget Adjustment - Brine Disposal Cost
$296,500$343,800$377,200$412,800$450,400$129,400$350,700
(d)
$862,000$592,000
Stage II Program Costs
Water Cons. Program - Salaries and Wages$100,000$105,000$110,300$115,800$121,600$127,700$134,100
(c)
Water Cons. Program - Supplies and Expenses
$1,620,400$1,297,900$1,789,600$1,599,000$922,700$943,400$1,421,500
Subtotal - Sustainable Program Expenses$1,509,800$2,311,700$2,982,900$2,119,700$1,517,100$1,042,900($1,997,200)($2,037,000)
Total Projected O&M Expenses$22,228,900$24,381,600$24,303,500$24,267,300$24,429,300$24,678,200$22,358,200$23,072,600
Notes:
(a) Source: Div. 671, 672, and 673 data provided by City Finance Dept. Water Purchases and Brine Disposal shown seperately.
(b) Salaries and Wages associated with Div. 672 and 673 are included in Div 671 costs.
(c) Programmatic expenses, including public outreach. Public outreach budget assumed to be 20% of average annual programmatic budget. Does not include labor.
(d) Water Shortage Response Plan Program costs reflected in only two years; source: City Finance Dept.
(e) Changes in Div 672 Charnock WTP costs from FY 12/13 to FY 13/14 are due to increases in energy, chemicals and filter media replacement costs.
TABLE 3B
PROJECTED WATER SUPPLY AND PRODUCTION PLAN
DescriptionFY 12/13FY 13/14FY 14/15FY 15/16FY 16/17FY 17/18FY 18/19FY 19/20
Projected Annual Water Demand (AF)
Projected Water Demand (a)12,82612,04411,26310,01110,01110,01710,02310,029
Unaccounted for Water (9%)1,1541,0841,014901901902902903
Arcadia WTP Brine1,2101,6201,6201,6201,6201,6201,1361,210
Total Annual Water Demand (AF)15,19014,74813,89712,53212,53212,53912,06112,141
Average Annual Water Supply (AF)
Local Water Production
Olympic Treatment Plant000004,0354,035
Arcadia Treatment Plant6,7209,0009,0009,0009,0009,0006,3106,310
Arcadia Treatment Plant Expansion1,396
Groundwater Well - SM 1400400400400400400400400
Imported Water (MWD)8,0705,3484,4973,1323,1323,1391,3160
Total Water Supply (AF)15,19014,74813,89712,53212,53212,53912,06112,141
Imported Water Purchases
$6,621,400$4,645,100$4,122,000$3,043,900$3,226,500$3,427,000$1,523,000$0
Total Annual Water Purchase Cost
RTS (Readiness to Serve) Charge$1,022,000$1,048,600$1,145,600$1,214,300$1,287,200$1,364,400$1,446,300$1,533,000
Capacity Reservation$201,200$209,600$232,100$246,000$260,800$276,400$293,000$310,600
Total Annual Water Purchase Cost$7,844,600$5,903,300$5,499,700$4,504,200$4,774,500$5,067,800$3,262,300$1,843,600
Local Water Production Costs
(b)$847,616$2,149,000$2,339,900$2,420,700$2,504,900$2,592,800$1,882,133$2,380,698
Arcadia Treatment Plant
$1,493,200$2,511,100$2,548,700$2,627,800$2,710,000$2,795,400$2,835,900$2,877,400
(c)
Charnock Treatment
(d)$0$0$0$0$0$0$0$0
Olympic Treatment Plant
Additional Groundwater Production (Fund 25)$411,703
(e)$673,047$946,472$993,795$1,043,485$1,095,659$1,150,442$846,917$1,086,066
Brine Disposal
Total Local Water Purchase Cost$3,013,863$5,606,572$5,882,395$6,091,985$6,310,559$6,538,642$5,564,950$6,755,867
Total Annual Finished Water Production Cost$10,858,500$11,509,900$11,382,100$10,596,200$11,085,100$11,606,400$8,827,300$8,599,500
Notes:
(a) Source: 2010 UWMP/New Water Shortage Plan. Includes unaccounted-for water (estimated to be 9%). Does not include recycled water or fire service.
Source for FY 11/12 and FY 12/13 water demand: City rate study billing usage data 2012 & 2013. Source for FY 13/14 through FY 19/20 water demand = 2010 UWMP, assuming linear change
in demand between FY11/12 and FY14/15 and FY14/15 and FY19/20. UWMP adjusted for Water Shortage impact (October, 2014)
(b) Variable operating costs only. Does not include labor. Assumes reduction in local production at Arcadia/Charnock when the Olympic WTP comes online in FY 18/19.
(c) Variable operating costs only. Does not include labor.
(d) Olympic Treatment Plant costs will be paid for out of the Olympic settlement funds and are therefore not a Water Fund 25 obligation.
(e) Water Fund brine disposal costs represent 8.7% of total Hyperion disposal costs. City budget based on approx. 6,000 AFY of local WTP production.
TABLE 3B
PROJECTED WATER SUPPLY AND PRODUCTION PLAN
UNIT COST CALCULATIONS
Fiscal YearFY 12/13FY 13/14FY 14/15FY 15/16FY 16/17FY 17/18FY 18/19FY 19/20
Calendar Year20132014201520162017201820192020
IMPORTED WATER (MWD)
MWD Tier 1 Cost/AF (FY)$821$869$917$972$1,030$1,092$1,157$1,227
$847$890$943$1,000$1,060$1,124$1,191$1,262
(f)
MWD Tier 1 Cost/AF (calendar year)
MWD RTS (FY)$1,048,610$1,145,566$1,214,300$1,287,158$1,364,387$1,446,251$1,533,026
$985,020$1,112,200$1,178,932$1,249,668$1,324,648$1,404,127$1,488,374$1,577,677
(f)
MWD RTS (calendar year)
MWD Capacity Charge (FY)$209,600$232,080$246,004$260,765$276,411$292,995$310,575
$193,880$225,320$238,839$253,170$268,360$284,461$301,529$319,621
(f)
MWD Capacity Charge (calendar year)
LOCAL WATER PRODUCTION
Arcadia/Charnock WTP Variable Production Costs$1,135,200$2,149,000$2,339,900$2,420,700$2,504,900$2,592,800$2,684,500$2,780,300
Charnock Treatment Variable Production Costs$1,493,200$2,511,100$2,548,700$2,627,800$2,710,000$2,795,400$2,835,900$2,877,400
(g)
Additional Groundwater Production to Arcadia $/AF$100$106$112$118$125$132$139$295
(h)
Total Estimated Local Treatment Costs $/AF $359$630$657$678$701$724$740$757
BRINE DISPOSAL
(i)1,2101,6201,6201,6201,6201,6201,1361,387
Volume of Brine Disposed
(j)$556$584$613$644$676$710$746$783
Base Brine Disposal Unit Cost $/AF
Notes:
(f) MWD Adopted Rates for 2013 and 2014. A 6% annual increase is estimated thereafter.
(g) Assumed cost of $100/AF in FY 12/13. Increased by rate of electricty cost increase (5.7%) annually thereafter. Energy cost doubled in FY 19/20 to account for increased well distances.
(h) Local costs are for Div 671 & 672 variable costs only. Does not include labor. Increase in FY 13/14 is due to increases in energy, chemicals and filter media replacement costs.
(i) Volume of brine produced assumed to be 18% of City's total groundwater production at the Arcadia WTP; Olympic WTP costs paid from settlement funds.
(j) FY 11/12 brine disposal cost source: Brine Flow April 11 - March 12. FY 12/13 and beyond inflated 5% annually.
KENNEDY/JENKS CONSULTANTS
3.3Projected Capital Improvement & Debt Service Financing
Program
Utility systems are by nature capital intensive operations. To evaluate system capacity and long
range water supply reliability, the City is implementing a Sustainable Water `Master Plan. This
program will serve as the basis for the development of many of the City’s capacity-related water
system capital improvement program needs.
The City’s water system Capital Improvement Program (CIP) is comprised of the following
primary project categories:
General Water System Capital Improvement Program. This category includes
infrastructure improvements associated with replacing aging existing infrastructure that
are approaching the end of their useful lives, begins to fund a new Advanced Meter
Infrastructure (AMI) program, plans for reliability and water transmission improvements
for the City’s highest pressure zone (zone 500) with a new booster pump station, and
funds various other ongoing rehabilitation and facility specific improvements or studies.
SWMP Program Expenditures. SWMP program expenditures are those items additional
expenditures that have been identified as short-term Water Fund obligations related to
decreased reliance on imported water.
Olympic Water Treatment Program. While not an obligation of the Water Fund (funding
source is from settlements with the Olympic basin pollution responsible parties), other
water system improvements have been noted that are associated with the Olympic well
field and associated water treatment plant construction as these facilities are necessary
improvements for water self sufficiency. Much like the implementation and
administration of settlement funds used to construct and operate the Charnock WTP
during the last decade, the Olympic WTP Program will clean this area of the underlying
groundwater basin and provide a source of very high quality water to the City’s water
customers at essentially no cost for many years.
A summary of the capital improvement plan for these primary project categories is provided in
Table 4. While not highlighted in Table 4, the resulting revenue plan also includes the potential
need for a debt financing program in later years. Although debt funding of capital expenditures
is common among utilities, the City has historically funded most of its water fund obligations on
a pay-as-you-go basis. From the cash flow pro forma derived herein, approximately $10 million
in additional cash has been programmed in FY 18/19 to fund various pipeline or water supply-
related capital improvements. It is assumed that the need and viability of any external
borrowing to support Water Fund activities will be evaluated during the City's annual budget
process. As discussed with the City Finance Department staff, the City will contract with its
Municipal Financial Advisor for the evaluation and support of such actions as required.
Water Rate and Revenue Analysis, City of Santa Monica 3-3
KENNEDY/JENKS CONSULTANTS
TABLE 4
PROPOSED CAPITAL IMPROVEMENT PROGRAM
FY 13/14 FY 14/15FY 15/16
Estimated ActualsBudgetBudget
Project TitleAccount#FY 16/17FY 17/18FY 18/19FY 19/20
General Water System Capital Improvement Program - Fund 25
Tennant Improvements$100,000$450,000$450,000
San Vicente Emergency GeneratorC250784.589000$275,000$2,500,000$0$0$0$0$0
Automatic Meter Reading Pilot Project C250388.589000$5,000$1,000,000$1,000,000$1,000,000$1,000,000$1,000,000$1,000,000
Valve ReplacementC259040.589000$71,542$500,000$500,000$250,000$250,000$0$0
Water Main Replacement - CitywideC250136.589000$3,250,000$2,000,000$2,000,000$2,000,000$2,000,000$2,000,000$2,000,000
Water Main Replacement - Olympic LoopC259043.589000$63,600$1,000,000$0$0$0$0$0
Water Main Replacement - City forcesM250193.589000$200,000$100,000$100,000$250,000$250,000$250,000$250,000
California Incline Water Main ReplacementC250652.589000$0$1,100,000$0$0$0$0$0
Water Meter Shop RenovationsC254086.589000$150,000$75,000$0$0$0$0$0
Expo Water Betterments C257064.589000$1,557,690$725,000$0$0$0$0$0
Colorado Ave. Esplanade C257040.589000$0$250,000$0$0$0$0$0
Arcadia - Pressure Vessel RehabilitationC250878.589000$256,120$900,000$0$0$0$0$0
Booster Pumps and Actuaters EvaluationC25.589000$0$300,000$100,000$0$0$0$0
Booster Pump Station for 500-foot zoneC25____.589000$0$0$0$2,500,000$0$0$0
Annual Paving and Sidewalk RepairM250152.589000$332,941$300,000$300,000$300,000$300,000$300,000$300,000
Climate Action PlanC25____.589000$0$75,000$250,000$0$0$0$0
Sustainable Urban Water Master Plan C25____.589000$0$0$50,000$0$0$0$0
Groundwater Management Plan C25____.589000$0$200,000$0$0$0$0$0
Water Modeling SoftwareC259039.589000$50,000$150,000$0$0$0$0$0
Ultility Billing SoftwareC250785.589000$19,830$65,000$0$0$0$0$0
SCADA System Upgrades C259015.589000$75,000$200,000$50,000$50,000$0$0$0
Water Systems Data IntegrationC258020.589000$26,000$50,000$50,000$0$0$0$0
Fleet Vehicle Replacement ProjectIS250167.589000$328,536$330,373$363,430$392,855$395,105$394,938$394,938
Telecommunications ServicesIS250006.589000$41,757$41,757$41,757$41,757$41,757$41,757$41,757
Computer Equipment Replacement IS250003.589000$53,895$45,520$45,520$45,520$45,520$45,520$45,520
City Yards StudyP254028.589000$5,000
Charnock Water Treatment PlantC250973.589000$1,143,818
Water Master PlanP250829.589000$323,628
Pico Library Harvesting SystemC254032.589000$61,810
Charnock Wellfield RestorationC250878.589250$89,633
Charnock Wellfield RestorationC250878.589300$10,000
Charnock Wellfield RestorationC250878.589500$2,135
Charnock Wellfield RestorationC250878.589600$333,444
Charnock Wellfield RestorationC250878.589900$554,955
Total Fund Amount (a)$9,281,300$12,007,700$5,300,700$7,280,100$4,282,400$4,032,200$4,032,200
SWMP Program Expenditures - Fund 25
New Production Wells
$1,500,000
Additional Groundwater Evaluations/Well Siting$200,000
Multijurisdictional Water Supply Participation$50,000$150,000
Additional Infrastructure Capacity Improvements$1,000,000$1,000,000$1,000,000
Supporting Operational/Capacity Studies$300,000
Charnock Improvements (Greensand/Duplex GAC)$250,000
$50,000$200,000$1,150,000$3,050,000$1,000,000
Subtotal Sustainable Program Expenditures
$5,032,200
Total Fund 25 Amount$9,281,300 $12,007,700 $5,350,700 $7,480,100 $5,432,400 $7,082,200
Olympic Water Treatment Program - Olympic Basin Settlement Funds
Olympic Treatment Plant - Pilot Study $650,000$0$0$0$0$0
Olympic Treatment Plant - Well Hyrdology, Design & Construction$500,000$2,000,000$0$2,000,000$2,000,000$0
Olympic Treatment Plant - Full Scale Construction $0$1,000,000$20,000,000$20,000,000$0$0
Olympic Subbasin Management Plan$2,000,000$1,000,000$1,000,000$4,000,000$0$0
$0
Total Settlement Fund Amount (Capital Only)$3,150,000$4,000,000$21,000,000$26,000,000$2,000,000
(a) Source: City of Santa Monica. FY 19-20 is based on FY 18-19 budget. Totals are rounded.
KENNEDY/JENKS CONSULTANTS
3.4Summary of Projected Revenue Requirements
The City’s Water Fund is projected to experience a decrease in water sales associated with the
implementation of additional self sufficiency-related water conservation programs and the City's
adoption of a Stage II Water Shortage, resulting in an immediate 20% reduction in water sales
from 2013 levels. Since most of the water utility’s costs are fixed, the Water Fund is projected
to be adversely affected by these increases in program costs and reduction in water sales-
based revenues. To evaluate the impact of these changes, three projected revenue plan
scenarios were developed to compare the water utility’s revenues and revenue requirements
through FY 19/20. They include the following:
1. Implement a water rate increase in accordance with the estimated increase of the
consumer price index (CPI). This scenario is a baseline option; essentially a status quo
or no change alternative.
2. Implement a water rate increase of 9% per year. This increase would improve the Water
Fund's financial position over the CPI-only plan, but would limit the City's ability to fully
invest in all of its programmed capital improvements, require annual/bi-annual cash flow
balancing by prioritization of capital projects and programs, and place additional
vulnerability on fund reserves and debt financing capabilities in later years of the
projection.
3. Implement a water rate increase of 9% in year one, and 13% per year thereafter. This
increase would improve the financial position of the Water Fund, reduce the risk of
revenue shortfalls from reduced water sales, fund identified self sufficiency related
improvements, and improve net operating parameters that are required to issue new
municipal debt that may be needed for future water system improvements.
The financial projection for each scenario is based on the City’s projected customer account
characteristics, the projected O&M expenses, and the inclusion of the City’s comprehensive
capital improvement program. Additionally, several ratemaking criteria were also integrated in
the revenue plan. These key criteria include:
Short term growth is based on the projections indicated in the City’s 2010 Urban Water
Management Plan and estimated annualized LUCE projections. This is expected to
yield a modest increase in new accounts through 2020.
Water usage is projected to reduce by approximately 10% during FY 14/15, and an
additional 10% during FY 15/16. Water usage is projected to essentially remain at these
reduced levels during the balance of the planning period.
A placeholder for an additional cash infusion of approximately $10 million is programmed
for FY 18/19. This may be available through a new debt issuance, potential short-term
inter-fund borrowing, or other strategies as determined appropriate by the Finance
Department at that time.
With potential rate increases commencing in FY 14/15, no change in rates are proposed
for FY 19/20, as this and later years are beyond the five years of rate increases, the
maximum allowed by state law.
Water Rate and Revenue Analysis, City of Santa Monica 3-4
KENNEDY/JENKS CONSULTANTS
Rate increases that are greater than inflation are programed to be implemented in
January of each year, or as soon as possible thereafter. Implementation of new rates in
this time frame will minimize the immediate impact of any rate increase as customer
water use is at its lowest during the winter.
Target Water Fund reserves have been established based on the sum of the following
financial criteria:
Operating Reserve – equivalent to 50% of the budget for MWD purchases (3 year
running average), with a minimum level of $3 million.
Capital Reserve – equivalent to 50% of the annual capital program expenditure, with
a minimum level of $3 Million, and
Rate Stabilization Reserve – established at $1 million.
Combining these three reserves suggest a minimum goal of approximately $7 million
in reserves for the Water Fund in any fiscal year throughout the planning period.
To demonstrate the potential short and long-term implications of the alternative rate-related
approaches, a revenue plan of the City’s water utility was developed for each scenario by
integrating the ratemaking criteria with the projected water system costs and projected capital
improvement program expenditures. The results of these financial projections are provided in
the following section.
3.5Projected Revenue Requirements Using Assumed Rate
Scenarios
As expected, the results of the revenue plan projections indicate that the baseline option is
unsustainable and additional revenues are needed to meet the future obligations of the Water
Fund if the objectives of the City’s Sustainable Water Master Plan are to be partially or fully
implemented under current and projected drought conditions. Several cash flow evaluations
and alternatives were prepared with City staff to balance financial performance with ratepayer
impact. These alternatives varied the debt financing strategies, alternative capital improvement
program phasing, projected growth and water consumption levels, rate increase levels/phases,
and rate structure elements such as fixed meter and water usage charges so that short term
cash flow obligations were met and provisions for future debt service coverage ratios may be
attained, if practical. Based on these evaluations, projected revenue plans for the three
scenarios previously described were prepared to project the water utility annual financial
obligations and revenues through the 2020 planning period, and assess the ability to sustain
positive financial performance. The tabular and graphical depictions of these revenue plans are
presented at the conclusion of Section 3 of this water rate report.
Water Rate and Revenue Analysis, City of Santa Monica 3-5
KENNEDY/JENKS CONSULTANTS
3.5.1Option 1: Projected Revenue Plan – Consumer Price Index
(CPI) Based Annual Water Rate Increase (Baseline Option)
Table 5A presents a revenue plan using annual rate increase based on the estimated increase
in CPI. This percentage is consistent with the City's basis of planning as reflected in its recent
budget forecasts.
As shown, following actual CPI increases in FY 13/14 and FY 14/15, a projected increase of
2.5% is included in all subsequent years through FY 19/20. The results of this analysis are
shown graphically in Figure 5A; demonstrating the inadequacy of this level of increased funding
and the projected negative fund balance during FY 16/17.
3.5.2Option 2: Projected Revenue Plan – 9% Annual Water Rate
Increase
Table 5B presents a revenue plan using a 9% annual water rate increase, which is inclusive of
CPI. This percentage is less than the annual increases adopted during the 2007 Rate Study,
but higher than the average annual CPI increases derived in the Option 1 baseline plan.
Similar to the prior plan, following actual CPI increases in FY 13/14 and FY 14/15, a projected
increase of 9% is included in all subsequent years through FY 18/19. No rate increase is
schedule for FY 19/20 as this is year six of a proposed five year rate plan. The results of this
analysis are shown graphically in Figure 5B. While this rate plan provides a much stronger
financial performance than the CPI only (baseline) alternative and achieves a positive net
operating performance in the later years of the forecast, it does fall short of some Water Fund
financial goals and performance metrics. These shortfalls are as follows:
Approximately $5 Million in capital projects would have to be eliminated; a reduction in
general system planned capital improvements of 20%.
The Water Fund is projected to fall short of the adopted minimum annual reserve fund
targets in four of the five planning years, and
Net operating revenues may not be adequate to issue the $10 million in new debt
forecasted to be needed in FY 18/19.
3.5.3Option 3: Projected Revenue Plan – 9/13% Annual Water Rate
Increase
Table 5C presents a revenue plan using a 13% annual water rate increase. As previously
noted, this plan is based on a 9% increase in the first year, and a 13% increase in each of the
remaining four years of the financial plan. The results of this analysis are shown graphically in
Figure 5C.
As expected, this rate plan provides a much stronger financial performance over the previous
rate plans and therefore provides additional financial stability for the Water Fund to meet
unforeseen expenses, potential emergency system improvements, and absorb further than
Water Rate and Revenue Analysis, City of Santa Monica 3-6
KENNEDY/JENKS CONSULTANTS
projected declines in water demands and water sales revenues. A summary of the benefits of
this option follows:
The $5 million in capital projects would no longer have to be eliminated from the budget,
although there may need to be a small reduction in capital spending in FY 17/18,
The Water Fund is projected to fall short of the adopted minimum annual reserve fund
targets in essentially only one of the five planning years, and
Net operating revenues should be adequate to issue new debt in the FY 18/19 forecast.
3.5.4Recommended Revenue Plan
Based on the findings derived herein, the rate plan that incorporates the 13% increases in water
rates is recommended at this time. Proceeding with Option 3, the 9%/13% rate plan, provides
the City with the most financial stability to adjust to changing conditions and fund the projected
programs and projects that will be necessary to reach self sufficiency, promote additional water
use efficiency, and remain financially stable during the projected level of continued drought in
California.
While the magnitude of these increases may vary based on change in costs, demand
conditions, or other unforeseen conditions, this rate plan is projected to provide a reasonable
estimate of the projected revenue requirements of the City’s Water Fund through 2020. Since
state law only permits the adoption of rates up to five-years, no rate increase is schedule for FY
19/20 as this is year six of a proposed five year rate plan. As discussed with staff, additional
review of the cost components and revenue requirements should be made during the annual
budget development and review process. Accordingly the level of the required annual rate
increases may differ from the rate and revenue projections derived herein based on those
annual findings.
A discussion of the City’s current and proposed rates and rate structure is provided in the
following sections.
Water Rate and Revenue Analysis, City of Santa Monica 3-7
KENNEDY/JENKS CONSULTANTS
TABLE 5A - PROJECTED REVENUE PLAN WITH CPI INCREASES
ForecastedProjected
Description
FY 13/14FY 14/15FY 15/16FY 16/17FY 17/18FY 18/19FY 19/20
Revenues
(a)
Consumption Charges (All Classes)
$20,325,400$18,485,300$16,971,400$17,395,800$17,840,300$18,296,100$18,763,600
Miscellaneous Revenues
$691,100$445,000$445,000$445,000$445,000$445,000$445,000
Total Operating Revenues
$21,016,500$18,930,300$17,416,400$17,840,800$18,285,300$18,741,100$19,208,600
Operating Expenses
General Water, Division No. 671
$17,409,800$16,432,000$17,099,100$17,697,300$18,247,100$18,835,000$19,451,900
(b)
Charnock Treatment Plant, Division No. 672
$2,511,100$2,548,700$2,627,800$2,710,000$2,795,400$2,835,900$2,877,400
(c)
Arcadia Treatment Plant, Division No. 673
$2,149,000$2,339,900$2,420,700$2,504,900$2,592,800$2,684,500$2,780,300
SWMP Program Expenses
$2,311,700$2,982,900$2,119,700$1,517,100$1,042,900($1,997,200)($2,037,000)
Total Operating Expenses
$24,381,600$24,303,500$24,267,300$24,429,300$24,678,200$22,358,200$23,072,600
Net Operating Revenue
($3,365,100)($5,373,200)($6,850,900)($6,588,500)($6,392,900)($3,617,100)($3,864,000)
Non-Operating Revenue (Expense)
Interest Revenue
$1,527,200$1,187,400$694,900$342,500$0$0$0
Interfund Transfers In (671.402370)
$351,400$431,100$347,000$348,000$348,900$349,900$350,900
Interfund Transfers Out (Fund 25 Non-Dept)
($1,466,300)($1,505,100)($1,497,100)($1,534,600)($1,572,900)($1,611,300)($1,650,600)
Miscellaneous Non-Operating Revenues
$307,100$253,300$259,600$266,100$272,800$279,600$286,600
Facility Charge Revs/Mitigation Fees
$600,000$600,000$650,000$650,000$650,000$650,000$650,000
Total Debt Service
$0$0$0$0$0$0$0
Total Non-Op Revenues/Expenses
$1,319,400$966,700$454,400$72,000($301,200)($331,800)($363,100)
Net Income Before Capital Activity
($2,045,700)($4,406,500)($6,396,500)($6,516,500)($6,694,100)($3,948,900)($4,227,100)
Capital Expenditures
$9,281,300$12,007,700$5,350,700$7,480,100$5,432,400$7,082,200$5,032,200
Capital Financing`
Proposed Debt Issuance
$0$0$0$0$0$0$0
Net Change in Funds Avail. After Capital Activity
($11,327,000)($16,414,200)($11,747,200)($13,996,600)($12,126,500)($11,031,100)($9,259,300)
(d)
Beginning Cash Balance
$50,906,112$39,579,100$23,164,900$11,417,700($2,578,900)($14,705,400)($25,736,500)
Ending Cash Balance
$39,579,100$23,164,900$11,417,700($2,578,900)($14,705,400)($25,736,500)($34,995,800)
Target Reserve Fund Balance
$8,640,700$10,003,900$7,000,000$7,740,100$7,000,000$7,541,100$7,000,000
Operating
$3,000,000$3,000,000$3,000,000$3,000,000$3,000,000$3,000,000$3,000,000
Capital
$4,640,700$6,003,900$3,000,000$3,740,100$3,000,000$3,541,100$3,000,000
Rate Stabilization
$1,000,000$1,000,000$1,000,000$1,000,000$1,000,000$1,000,000$1,000,000
Minimum Target Reserve Fund Balance
$7,000,000$7,000,000$7,000,000$7,000,000$7,000,000$7,000,000$7,000,000
Description/Support Data
No. Months New Rate Effective in FY
12121212121212
CPI Increase (Assumes July 1, when applicable)
2.5%0.5%2.5%2.5%2.5%2.5%2.5%
(e)
Proposed Average Usage Rate Increase
2.5%0.0%
Total Annual Water Demands (HCF)
5,451,2434,906,1194,360,9944,360,9944,363,5214,366,0474,368,574
Net Water Sales/Consumption (AF)
12,51411,26310,01110,01110,01710,02310,029
Notes: Costs and revenues have been rounded
(a) Includes fire service charge revenues.
(b) Does not include salaries and wages associated w/the Charnock Treatment Plant. All staff costs are located in Div. 671 program costs.
(c) Does not include salaries and wages associated w/the Arcadia Treatment Plant. All staff costs are located in Div. 671 program costs.
(d) FY 13/14 beginning fund balance includes a one-time transfer of approximately $33.4 Milllion from the Charnock (05 Fund) to Water (Fund 25) in FY 12/13 (See Table 1).
KENNEDY/JENKS CONSULTANTS
FIGURE5A
RevenuePlanWithAnnualCPIBasedWaterRateIncreases
$50.0
$40.0
$30.0
Millions)
$20.0
($
Expenses
$10.0
$0.0
&
Revenues
FY201314FY201415FY201516FY201617FY201718FY201819FY201920
$10.0
$20.0
$30.0
$40.0
TotalOperatingRevenuesTotalOperatingExpensesCapitalExp/NewDebtIssuanceEndingCashBalance
KENNEDY/JENKS CONSULTANTS
TABLE 5B - PROJECTED REVENUE PLAN WITH REDUCED CIP AND 9% INCREASES
ForecastedProjected
Description
FY 13/14FY 14/15FY 15/16FY 16/17FY 17/18FY 18/19FY 19/20
Revenues
(a)
Consumption Charges(All Classes)
$20,325,400$19,266,100$18,730,400$20,340,600$22,105,800$24,029,100$25,649,200
Miscellaneous Revenues
$691,100$445,000$445,000$445,000$445,000$445,000$445,000
Total Operating Revenues
$21,016,500$19,711,100$19,175,400$20,785,600$22,550,800$24,474,100$26,094,200
Operating Expenses
General Water, Division No. 671
$17,409,800$16,432,000$17,099,100$17,697,300$18,247,100$18,835,000$19,451,900
(b)
Charnock Treatment Plant, Division No. 672
$2,511,100$2,548,700$2,627,800$2,710,000$2,795,400$2,835,900$2,877,400
(c)
Arcadia Treatment Plant, Division No. 673
$2,149,000$2,339,900$2,420,700$2,504,900$2,592,800$2,684,500$2,780,300
SWMP Program Expenses
$2,311,700$2,982,900$2,119,700$1,517,100$1,042,900($1,997,200)($2,037,000)
Total Operating Expenses
$24,381,600$24,303,500$24,267,300$24,429,300$24,678,200$22,358,200$23,072,600
Net Operating Revenue
($3,365,100)($4,592,400)($5,091,900)($3,643,700)($2,127,400)$2,115,900$3,021,600
Non-Operating Revenue (Expense)
Interest Revenue
$1,527,200$1,187,400$718,400$419,400$90,200$20,000$116,700
Interfund Transfers In (671.402370)
$351,400$431,100$347,000$348,000$348,900$349,900$350,900
Interfund Transfers Out (Fund 25 Non-Dept)
($1,466,300)($1,505,100)($1,497,100)($1,534,600)($1,572,900)($1,611,300)($1,650,600)
Miscellaneous Non-Operating Revenues
$307,100$253,300$259,600$266,100$272,800$279,600$286,600
Facility Charge Revs/Mitigation Fees
$600,000$600,000$650,000$650,000$650,000$650,000$650,000
Total Debt Service
$0$0$0$0$0$0($688,100)
Total Non-Op Revenues/Expenses
$1,319,400$966,700$477,900$148,900($211,000)($311,800)($934,500)
Net Income Before Capital Activity
($2,045,700)($3,625,700)($4,614,000)($3,494,800)($2,338,400)$1,804,100$2,087,100
Capital Expenditures
$9,281,300$12,007,700$5,350,700$7,480,100$0$7,082,200$5,032,200
Capital Financing
Proposed Debt Issuance
$0$0$0$0$0$10,000,000$0
Net Change in Funds Avail. After Capital Activity
($11,327,000)($15,633,400)($9,964,700)($10,974,900)($2,338,400)$3,221,900($2,945,100)
Beginning Cash Balance
$50,906,112$39,579,100$23,945,700$13,981,000$3,006,100$667,700$3,889,600
Ending Cash Balance
$39,579,100$23,945,700$13,981,000$3,006,100$667,700$3,889,600$944,500
Target Reserve Fund Balance
$8,640,700$10,003,900$7,000,000$7,740,100$7,000,000$7,541,100$7,000,000
Operating
$3,000,000$3,000,000$3,000,000$3,000,000$3,000,000$3,000,000$3,000,000
Capital
$4,640,700$6,003,900$3,000,000$3,740,100$3,000,000$3,541,100$3,000,000
Rate Stabilization
$1,000,000$1,000,000$1,000,000$1,000,000$1,000,000$1,000,000$1,000,000
Minimum Target Reserve Fund Balance
$7,000,000$7,000,000$7,000,000$7,000,000$7,000,000$7,000,000$7,000,000
Description
No. Months New Rate Effective in FY
126666612
CPI Increase (Assumes July 1, when applicable)
2.5%0.5%2.5%
(e)
Proposed Average Usage Rate Increase
2.5%9.0%9.0%9.0%9.0%9.0%0.0%
Total Annual Water Demands (HCF)
5,451,2434,906,1194,360,9944,360,9944,363,5214,366,0474,368,574
Net Water Sales/Consumption (AF)
12,51411,26310,01110,01110,01710,02310,029
Notes: Costs and revenues have been rounded
(a) Includes fire service charge revenues.
(b) Does not include salaries and wages associated w/the Charnock Treatment Plant. All staff costs are located in Div. 671 program costs.
(c) Does not include salaries and wages associated w/the Arcadia Treatment Plant. All staff costs are located in Div. 671 program costs.
(d) FY 13/14 beginning fund balance includes a one-time transfer of approximately $33.4 Milllion from the Charnock (05 Fund) to Water (Fund 25) in FY 12/13 (See Table 1).
KENNEDY/JENKS CONSULTANTS
FIGURE5B
RevenuePlanWith9%AnnualWaterRateIncreases
$50.0
$40.0
$30.0
Millions)
$20.0
($
Expenses
$10.0
&
Revenues
$0.0
FY201314FY201415FY201516FY201617FY201718FY201819FY201920
$10.0
$20.0
$30.0
TotalOperatingRevenuesTotalOperatingExpensesCapitalExp/NewDebtIssuanceEndingCashBalance
KENNEDY/JENKS CONSULTANTS
TABLE 5C - PROJECTED REVENUE PLAN WITH 9%/13% INCREASES
ForecastedProjected
Description
FY 13/14FY 14/15FY 15/16FY 16/17FY 17/18FY 18/19FY 19/20
Revenues
(a)
Consumption Charges(All Classes)
$20,325,400$19,266,100$19,066,600$21,423,200$24,096,300$27,115,400$29,427,500
Miscellaneous Revenues
$691,100$445,000$445,000$445,000$445,000$445,000$445,000
Total Operating Revenues
$21,016,500$19,711,100$19,511,600$21,868,200$24,541,300$27,560,400$29,872,500
Operating Expenses
General Water, Division No. 671
$17,409,800$16,432,000$17,099,100$17,697,300$18,247,100$18,835,000$19,451,900
(b)
Charnock Treatment Plant, Division No. 672
$2,511,100$2,548,700$2,627,800$2,710,000$2,795,400$2,835,900$2,877,400
(c)
Arcadia Treatment Plant, Division No. 673
$2,149,000$2,339,900$2,420,700$2,504,900$2,592,800$2,684,500$2,780,300
SWMP Program Expenses
$2,311,700$2,982,900$2,119,700$1,517,100$1,042,900($1,997,200)($2,037,000)
Total Operating Expenses
$24,381,600$24,303,500$24,267,300$24,429,300$24,678,200$22,358,200$23,072,600
Net Operating Revenue
($3,365,100)($4,592,400)($4,755,700)($2,561,100)($136,900)$5,202,200$6,799,900
Non-Operating Revenue (Expense)
Interest Revenue
$1,527,200$1,187,400$718,400$429,500$133,100$5,900$194,800
Interfund Transfers In (671.402370)
$351,400$431,100$347,000$348,000$348,900$349,900$350,900
Interfund Transfers Out (Fund 25 Non-Dept)
($1,466,300)($1,505,100)($1,497,100)($1,534,600)($1,572,900)($1,611,300)($1,650,600)
Miscellaneous Non-Operating Revenues
$307,100$253,300$259,600$266,100$272,800$279,600$286,600
Facility Charge Revs/Mitigation Fees
$600,000$600,000$650,000$650,000$650,000$650,000$650,000
Total Debt Service
$0$0$0$0$0$0($688,100)
Total Non-Op Revenues/Expenses
$1,319,400$966,700$477,900$159,000($168,100)($325,900)($856,400)
Net Income Before Capital Activity
($2,045,700)($3,625,700)($4,277,800)($2,402,100)($305,000)$4,876,300$5,943,500
Capital Expenditures
$9,281,300$12,007,700$5,350,700$7,480,100$3,932,400$7,082,200$5,032,200
Capital Financing
Proposed Debt Issuance
$0$0$0$0$0$10,000,000$0
Net Change in Funds Avail. After Capital Activity
($11,327,000)($15,633,400)($9,628,500)($9,882,200)($4,237,400)$6,294,100$911,300
Beginning Cash Balance
$50,906,112$39,579,100$23,945,700$14,317,200$4,435,000$197,600$6,491,700
Ending Cash Balance
$39,579,100$23,945,700$14,317,200$4,435,000$197,600$6,491,700$7,403,000
Target Reserve Requirement per Policy
$8,640,700$10,003,900$7,000,000$7,740,100$7,000,000$7,541,100$7,000,000
NetFund Balance Less Reserves
$30,938,400$13,941,800$7,317,200($3,305,100)($6,802,400)($1,049,400)$403,000
Description
No. Months New Rate Effective in FY
126666612
CPI Increase (Assumes July 1, when applicable)
2.5%0.5%2.5%
Proposed Average Usage Rate Increase
2.5%9.0%13.0%13.0%13.0%13.0%0.0%
Total Annual Water Demands (HCF)
5,451,2434,906,1194,360,9944,360,9944,363,5214,366,0474,368,574
Net Water Sales/Consumption (AF)
12,51411,26310,01110,01110,01710,02310,029
Notes: Costs and revenues have been rounded.
(a) Includes fire service charge revenues.
(b) Does not include salaries and wages associated w/the Charnock Treatment Plant. All staff costs are located in Div. 671 program costs.
(c) Does not include salaries and wages associated w/the Arcadia Treatment Plant. All staff costs are located in Div. 671 program costs.
(d) FY 13/14 beginning fund balance includes a one-time transfer of approximately $33.4 Milllion from the Charnock (05 Fund) to Water (Fund 25) in FY 12/13 (See Table 1).
KENNEDY/JENKS CONSULTANTS
FIGURE5C
RevenuePlanWith9%/13%AnnualWaterRateIncreases
$50.0
$40.0
$30.0
Millions)
$20.0
($
Expenses
$10.0
&
Revenues
$0.0
FY201314FY201415FY201516FY201617FY201718FY201819FY201920
$10.0
$20.0
$30.0
TotalOperatingRevenuesTotalOperatingExpensesCapitalExp/NewDebtIssuanceEndingCashBalance
KENNEDY/JENKS CONSULTANTS
Section 4:Current Water Rates
The City provides water service to three primary customer types: single-family, multi-family and
non-residential. The current water rate structure was adopted in July 2008, with a focus on
increasing customer awareness on water usage in an effort to promote additional water
conservation. To that end, the rate structure adopted in 2008 eliminated the bi-monthly fixed
service charge so that the water bill became entirely based on actual water usage, clearly a pay
for what you use approach.
In addition to the elimination of the fixed charge to increase the financial incentive for reduced
consumption, new block tiers were also introduced to further support a goal for reduced per
capita water usage. For residential customers, the previously existing three tier structure was
replaced with a four tier structure. For non-residential customers, a uniform commodity rate was
established, applicable to nearly all water use. A second tier for non-residential customers was
developed for high end of water consumption in order to provide a strong disincentive for
excessive water use. Finally, in 1999, a resolution to annually increase rates by the actual
Consumer Price Index (CPI) increase was adopted and has been implemented with each
annual budget.
The City's present water rates and rate structure went into effect on July 1, 2014. It consists of
a water volume charge that is charged for all water used by the City’s customers. The
characteristics of the present rate structure are described below for residential and non-
residential customers.
Current Usage Based Rates: Residential Customers. The City's current usage based
rates (or variable rates) are applied to water usage using a tiered rate structure.
Current Usage Based Rates: Non-Residential Customers. The City's current usage
based rates (or variable rates) are applied to water usage using a tiered rate structure by
meter size.
Tiered rates are commonly used by water utilities to recover the costs of providing water service
to its customers. Usage based or commodity rates correlate a customer’s costs of service with
the quantity of water consumed in any given tier or block to calculate a bi-monthly water bill. As
such, a customer’s water bill will fluctuate in proportion to the change in water usage for each
billing cycle. This usage based rate element supports a fundamental pay-for-use ratemaking
philosophy. The City’s current water quantity rates and rate structures are shown in Table 6.
Water Rate and Revenue Analysis, City of Santa Monica 4-1
KENNEDY/JENKS CONSULTANTS
TABLE 6
CURRENT WATER RATES
Single-Family Residential Water Rates ($/HCF)
Start of
Meter SizeEnd of
(b)(c)(d)
Tier (HCF)FY 12/13FY 13/14FY 14/15
(Inches)TierTier (HCF)
N/A1014$2.43$2.48$2.50
15$3.65$3.74$3.75
N/A240
41$5.47$5.60$5.62
N/A3148
149$8.55$8.76$8.80
N/A4
Multi-Family Water Rates ($/HCF)
Start of
Meter SizeEnd of
(b)(c)(d)
Tier (HCF)FY 12/13FY 13/14FY 14/15
(Inches)TierTier (HCF)
N/A104$2.43$2.48$2.50
5$3.65$3.74$3.75
N/A29
10$5.47$5.60$5.62
N/A320
21$8.55$8.76$8.80
N/A4
Non-Residential Water Rates ($/HCF)
Meter Size
Start ofEnd of
(b)(c)(d)
(Inches)FY 12/13FY 13/14FY 14/15
TierTier (HCF)Tier (HCF)
3/4"102103.483.563.57
3/4"22118.558.768.80
1"102103.483.563.57
1"22118.558.768.80
1 1/2"104653.483.563.57
1 1/2"24668.558.768.80
2"108703.483.563.57
2"28718.558.768.80
3"1017003.483.563.57
3"217018.558.768.80
4"1025503.483.563.57
4"225518.558.768.80
6"+1052803.483.563.57
6"+252818.558.768.80
Notes:
Source: City of Santa Monica website: Water and Sewer Rates. Customers billed bi-monthly.
(a) Rates effective July 1, 2011
(b) Rates effective July 1, 2012
(c) Rates effective July 1, 2013
(d) Rates effective July 1, 2014
KENNEDY/JENKS CONSULTANTS
Section 5:Alternative and Proposed Water Rates and
Structures
As previously discussed, upon completing various comprehensive studies of the City’s water
supplies and overall water system, the City has embarked on a proactive program to assure the
long-term reliability and sustained quality of the City’s water system. To meet the objectives of
the Sustainable Water Master Plan, additional revenue is needed to meet the City’s current and
projected obligations. The proposed rate increases are developed as staged adjustments to the
current variable water rates. To minimize ratepayer impact, annual increases are suggested to
be implemented in January of each year when water usage is typically at its lowest. A
discussion of the City’s variable rates, development of alternative service and usage charges,
development of monthly bills, and a comparison of charges with other communities are provided
in this section of the financial plan.
5.1Fixed and Variable Rate Considerations
An important element when considering a change in rate structure is the need to consider the
utility’s vulnerability to short-term revenue shortfalls. Depending on the utility’s rate structure
and water supply situation, short-term revenue shortfalls can occur during periods of drought,
economic downturn, or wet or atypical weather conditions that reduce water sales.
As previously noted, in 2008, the City eliminated the fixed bi-monthly service charge from its
rate structure in favor of a structure that was entirely based on a customer’s water usage.
Because water systems are capital and labor intensive, total system costs for most water utility
systems are generally recognized as approximately 60 to 75% fixed. It is for this reason that
many water agencies throughout the United States utilize a fixed rate or monthly service charge
to complement the variable water usage rate component of its water rate structure. Proceeding
in this manner generally improves the financial stability of the water system and enables the
utility to operate with lower fund reserves needed to react to rate stabilization and/or conditions
of economic uncertainty. It is for these reasons that strong consideration was given to
reintroducing a fixed bi-monthly service charge into the City’s water rate structure. The
recommended rate structure is discussed later in this section of the report.
5.2Development of Alternative Water Rate Structures and
Revised Water Rates
Potential adjustments to the City’s water rates were developed to support the financial health of
the City’s water utility while meeting the Sustainable Water Master Plan objectives through the
2020 planning period. The rates and rate structures derived herein are based upon an analysis
of future system costs and financial obligations established by the City’s Public Works/Water
Resources Division and the recommendations from the SWMP. Input from the City’s Task
Force on the Environment and the SWMP Advisory Committee were obtained throughout the
development of the SWMP’s self-sufficiency strategies and activities and financial elements
contained in this financial plan.
Water Rate and Revenue Analysis, City of Santa Monica 5-1
KENNEDY/JENKS CONSULTANTS
To more thoroughly explore alternative water rates and rate structures, extensive discussions
occurred with the Advisory Committee over the last year via group meetings, emails and
conference calls. This committee is comprised of: Mark Gold, Chair of the City’s Environmental
Task Force, Associate Director UCLA Institute of the Environment and Sustainability; Andy
Lipkis, Tree People Founder and President; Conner Everts, Southern California Watershed
Alliance Executive Director; Ed Osann, Natural Resources Defense Council Senior Policy
Analyst, Water Program; Judy Abdo, Santa Monica representative on the MWD Board of
Directors, former Santa Monica Mayor and Councilmember; Caryn Mandelbaum, Environment
Now Freshwater Program Director, Staff Attorney; and Tracy Quinn, Natural Resources
Defense Council Policy Analyst, Water Program.
A discussion of the development of alternative water rate structures and water rates is provided
in this section of the study.
5.2.1Development of Alternative Rate Structures
As discussed, there was extensive discussion among City staff, the Advisory Committee, and
the Task Force on the Environment regarding enhancements that could be made to the existing
rate structure, adopted in 2008. The alternative structures that were considered by these
groups included:
Modifying the existing tiered block rate structure for changes in water allocation per
block,
Increasing the number of blocks,
Altering the current basis of change in price between blocks,
Re-introducing a fixed bimonthly service charge back into the structure,
Consideration for a base level water allocation to be include with the new service
charge,
Abandoning the current structure and migrate to a full water budget based rate structure
at this time, and
Conformance with costs of service findings.
To support the consideration for alternative rate structures, two key areas of service were
performed. First, a cost of service assessment was performed to provide a basis for the
recovery of system costs from each customer class. Second, account level demand models
were constructed so that changes in price, block size, and/or structure could be evaluated
based on its impact on the City’s customers. To demonstrate the level of effort associated with
evaluating and deliberating water rate restructuring, and document the basic customer class
related costs of service, a representative sample of the tabular rate structure alternatives
analysis and discussion items is included in Appendix B. Appendix B also includes a summary
of findings for the water system cost of service analysis. This analysis indicates that the current
rate structure continues to provide a reasonable recovery of system costs as allocated among
the City’s customer classes.
Water Rate and Revenue Analysis, City of Santa Monica 5-2
KENNEDY/JENKS CONSULTANTS
The result of this process was the development of a small group of alternatives structures that
was being considered for dissemination to the City Council for final direction. This short-list of
structures included: a) the current structure, b) a structure with the current blocks and a new
fixed service charge with a potential water allowance, and c) a structure with new blocks and a
new fixed service charge with a potential water allowance. The study group, which included the
Advisory Committee, was inclined to recommend item “c” above when on July 15, 2014, the
State Water Resources Control Board (SWRCB) adopted an Emergency Regulation for
Statewide Urban Water Conservation, requiring the City and other urban retail water agencies
implement all requirements and actions of their water shortage contingency plans that impose
mandatory outdoor irrigation restrictions.
Subsequently, on August 12, 2014, the City Council adopted a resolution declaring a Stage 2
Water Supply Shortage requiring mandatory water conservation to achieve a 20% reduction in
water use (compared to 2013). Much discussion ensued regarding the appropriate basis for
new drought surcharges or penalties and the associated administrative structure to implement
these charges. From this discussion, it became apparent that a concise and understandable
community outreach program will be critically important in achieving this drought response goal.
Based on these new conditions, additional water rate restructuring discussions evolved and it
was believed that the community would benefit from a continuation of the current rate structure,
as this approach would produce a more understandable message associated with the rate
increase and minimize the potential confusion associated with drought compliance related
charges and structures. As such, no change in the current tiered water rate structure is being
proposed at this time. The City’s current water rate structure is very common in California as it
provides a built in mechanism to support water conservation on a pay for what you use basis, is
simple to understand, generally fosters public acceptance, and provides relatively predictable
revenues.
5.2.2Development of Alternative Water Rates and Typical Bills
Consistent with the revenue requirements derived in Section 3 - Future Revenue Requirements,
three options were derived to generate additional revenues for the Water Fund. These three
rate adjustment options are shown in Table 7. As previously shown, the Water Fund’s financial
stability and funding flexibility increases with the higher rate adjustment options.
Typical customer bills are often developed to evaluate the impact of a water rate schedule on a
utility’s customers. Current typical bills are derived by correlating the current schedule of charges
shown in Table 6 with the average or typical consumption values for various customer types.
Similarly, projected typical bills are calculated by applying the proposed increase to the usage
charge components of the alternative water rate schedule. Table 8 reflects the resulting impacts
of the proposed rate increases for the next five years under various rate options. As shown, the
calculated typical bills are not projected to increase materially for those customers that meet the
reductions in mandated water use.
Water Rate and Revenue Analysis, City of Santa Monica 5-3
KENNEDY/JENKS CONSULTANTS
TABLE 7
RATE ADJUSTMENT OPTIONS
FY 14/15FY 15/16FY 16/17FY 17/18FY 18/19
Option 12.5%2.5%2.5%2.5%2.5%
Option 29.0%9.0%9.0%9.0%9.0%
Option 39.0%13.0%13.0%13.0%13.0%
Notes:
Adjustments for Option 1 is applied on July 1 each year.
Adjustments for Options 2 and 3 are applied in January of each year.
KENNEDY/JENKS CONSULTANTS
TABLE 8
EXAMPLES OF TYPICAL BI-MONTHLY BILLS
Example of Proposed Bi-Monthly Bill, Single Family Residential, ¾-inch meter, 30 HCF current average use
Description of Rate OptionsYear 1Year 2Year 3Year 4Year 5
Current Bill, without conservation$90.63
(a)
$72.50 $74.31 $76.17 $78.07 $80.03
Option 1,Current Rates, with 20% conservation(24HCF)
(b)
$79.03 $86.14 $93.90 $102.35 $111.56
Option 2,9% increase in unit prices, with 20% conservation
(c)
$79.03 $89.30 $100.91 $114.03 $128.86
Option 3, 13% increase in unit prices, with 20% conservation
Example of Proposed Bi-Monthly Bill, Multi-Family Residential, 1 ½ - inch meter, 77 HCF current average use
Description of Rate OptionsYear 1Year 2Year 3Year 4Year 5
Current Bill, without conservation$342.30
(a)
$273.84 $280.69 $287.70 $294.90 $302.27
Option 1,Current Rates, with 20% conservation (62HCF)
(b)
$298.49 $325.35 $354.64 $386.55 $421.34
Option 2, 9% increase in unit prices, with 20% conservation
(c)
$298.49 $337.29 $381.14 $430.69 $486.68
Option 3, 13% increase in unit prices, with 20% conservation
Example of Proposed Bi-Monthly Bill, Non- Residential, 1- inch meter, 37 HCF current average use
Description of Rate OptionsYear 1Year 2Year 3Year 4Year 5
Current Bill, without conservation$132.09
(a)
$108.31 $111.02 $113.80 $116.64 $119.56
Option 1, Current Rates, with 20% conservation (30 HCF)
(b)
$115.18 $125.55 $136.85 $149.16 $162.59
Option 2, 9% increase in unit prices, with 20% conservation
(c)
$115.18 $130.16 $147.08 $166.20 $187.80
Option 3, 13% increase in unit prices, with 20% conservation
Example of Proposed Bi-Monthly Bill, Non- Residential, 2 - inch meter, 192 HCF current average use
Description of Rate OptionsYear 1Year 2Year 3Year 4Year 5
Current Bill, without conservation$687.23
(a)
$549.78 $563.52 $577.61 $592.05 $606.85
Option 1, Current Rates, with 20% conservation (154 HCF)
(b)
$599.26 $653.19 $711.98 $776.07 $845.90
Option 2, 9% increase in unit prices, with 20% conservation
(c)
$599.26 $677.16 $765.20 $864.67 $977.08
Option 3, 13% increase in unit prices, with 20% conservation
Example of Proposed Bi-Monthly Bill, Non-Residential, 4 - inch meter, 709 HCF current average use
Description of Rate OptionsYear 1Year 2Year 3Year 4Year 5
Current Bill, without conservation$2,531.13
(a)
$2,075.53 $2,127.41 $2,180.60 $2,235.12 $2,290.99
Option 1,Current Rates, with 20% conservation (62HCF)
(b)
$2,207.15 $2,405.79 $2,622.31 $2,858.32 $3,115.57
Option 2, 9% increase in unit prices, with 20% conservation
(c)
$2,207.15 $2,494.07 $2,818.30 $3,184.68 $3,598.69
Option 3, 13% increase in unit prices, with 20% conservation
Note:
(a) CPI Increase only in all years, effective July 1 each year
(b) 9% increase effective January 1 each year
(c) 13% increase effective years 2 through 5, 9% increase year 1 effective January 1 each year
KENNEDY/JENKS CONSULTANTS
5.3Comparison of Monthly Bills with Other Communities
In addition to the development of typical bills for City customers, Table 9 provides a comparison
of the City’s current and proposed bimonthly single-family bill with other local adjacent agencies.
The comparison is based on an average Single Family residential bi-monthly water usage of 30
HCF. These results are graphically depicted in Figure 9.
As shown, the City’s current water bill is in the lower third when compared to the neighboring
agencies, suggesting that other regional agencies have faced similar water system funding
needs in their communities. Moreover, even when the 13% rate increase is applied, the City’s
residential water bills will compare favorably with the current average rate of the other
communities surveyed. A similar comparison for a non-residential commercial account is
presented in Figure 10.
In addition to this finding, it should be noted that rate surveys often do not provide the full picture
of the utility’s position. For example, some of the agencies may have additional increases that
are in process or being proposed, may have varying water supply program cost, quality, and
reliability issues or objectives, and certainly there is often a wide range of variance in local level
of service, capital reinvestment, and preventive maintenance considerations. Given the current
condition and direction of the City’s water utility and water resource requirements, it appears the
City’s water rates are consistent with other local communities.
5.4Summary of Findings and Proposed Water Rates
In consideration of the financial performance, customer impact, and agency survey findings, the
9/13% increase option is recommended herein. It is believed that this option provides the
highest return on investment for the City and its ratepayers. Coupling the projected level of
decline in fund reserves and the current uncertainty surrounding water usage-based revenues,
this option offers the greatest stability and increases the probability of having adequate funding
in place to meet the goals and objectives of the Sustainable Water Master Plan and the
associated water use efficiency improvements. This increase is recommended to be
implemented as early as possible in 2015 to begin improving the performance of the Water
Fund.
In addition to the rate-related adjustments provided herein, the City should continue its
methodical review of system costs, water demands, and utility rates. Much of this work can be
incorporated as an element of the annual budget process as additional information is being
developed and evaluated.
Water Rate and Revenue Analysis, City of Santa Monica 5-4
TABLE 9
COMPARISON OF BI-MONTHLY WATER BILLS
SINGLE FAMILY RESIDENTIAL
Monthly Meter Water Usage/ Water Usage Calculated Bi-
Fixed RateQuantity Rate(HCF)Monthly Bill
Community
Beverly Hills$40.49$3.29 - $13.2730$160.59
Burbank$10.78$1.114 - $1.72730$104.24
Culver City (GSWC)$26.55$3.86 7 - $5.06430$173.57
Glendale - 2014$24.83$1.59 - $4.3430$111.62
Glendale - 2015$27.05$1.87 - $4.3330$123.80
Long Beach$0.44$2.283 - $3.80630$103.00
Los Angeles$0.00$4.685 - $5.90130$143.48
Pasadena$17.51$1.212 - $4.01630$93.36
Santa Monica - Current
$0.00$2.50 - $8.8030$95.00
Santa Monica - FY 14/15 (9% Proposed)
$0.00$2.73 - $9.5930$103.00
Santa Monica - FY 15/16 (13% Proposed)
$0.00$2.83 - $9.9430$117.00
Agency Average $126.71
Notes: Fixed rate based on 5/8 or 3/4-inch meter. Agency average excludes Santa Monica values.
FIGURE9
WaterRateComparisonwithNeighboringAgencies
SingleFamilyAccount
$200
$180
$160
$140
$120
$100
$80
$60
$40
$20
$0
PasadenaSantaMonicaLongBeachBurbankGlendale(1)LosAngelesBeverlyHillsCulverCity(2)
(1)
201314201415
Notes:Typicalbillsarebasedona3/4inchmeterand30HCFBimonthlywateruse.
1.TheactualwaterratesforFY201415wasonlyavailableforGlendale.ForSantaMonica,a9%rateincreasewasassumedforFY201415.
2.ThewaterrateincludestheassessedCaliforniaAlternativeRateforWater(CARW)surchargeandexcludesothertemporarysurcharges.
FIGURE10
WaterRateComparisonwithNeighboringAgencies
NonResidentialAccount
$1,400
$1,200
$1,000
$800
$600
$400
$200
$0
BurbankLongBeachGlendalePasadenaSantaMonicaCulverCityLosAngelesBeverlyHills
Note:Typicalbillsarebasedona2inchmeterand192HCFbimonthlywateruse.
Appendix A
Miscellaneous Tabular Support Information
A - 1
DEPARTMENT OF WATER RESOURCES
State of CaliforniaCalifornia Natural Resources Agency
PUBLIC WATER SYSTEM STATISTICS
2013
Calendar Year
PWS #1910146Santa Monica, CA 5th Street Third Floor Gil Borboa, Water Resources Mgr
1. General Information2. Active Service Connections
Recycled Water
Potable Water
Please follow the provided instructions.
Customer Class
Contact :Gil Borboa
MeteredUnmeteredMeteredUnmetered
Title:Water Resources Manager Single Family Residential
7518
Phone:310-458-8230 Multi-family Residential
6326
Fax:310-496-6697 Commercial/Institutional
22582
E-mail:gil.borboa@smgov.net Industrial
0
Website:water.smgov.net Landscape Irrigation
58015
Los Angeles
County: Other
Population91,094
served: Agricultural Irrigation
Names
of communities served:Santa Monica, portions of Los TOTAL
1668217
3. Total Water Into the System-Units of production:
MG
AFMGCCF
(Select:=acre-feet;=million gallons; =hundred cubic feet)
JanFebMarAprMayJunJulAugSepOctNovDecTotal
Wells
234.1219240.1225.5237.7128.1234.2240.6226.6235.82302322683.7
Surface
0000000000000
Potable
1/
Purchased
94.582.9118135.3154.4287.7198.1198.4190.8172.6148.4122.61903.7
Total Potable
328.6301.9358.1360.8392.1415.8432.3439417.4408.4378.4354.64587.4
Untreated Water
0000000000000
2/
Recycled
2.10.0930.125.350.166.120.286.530.254.890.1429.03
1/ Potable wholesale supplier(s): 2/ Recycled wholesale supplier(s):
MWDCity of Santa Monica
Level of treatment:
4. Metered Water Deliveries-Units of delivery:
MGAFMGCCF
(Select:=acre-feet;=million gallons; =hundred cubic feet)
JanFebMarAprMayJunJulAugSepOctNovDecTotal
If recycled is included, X box
56.0259.9167.0184.1786.3490.26104.37109.8582.88109.8582.8889.30
A.SingleFamilyResidential
1022.84
152.88116.81169.64134.99161.87131.52167.7296.33178.38142.98147.06135.85
B.Multi-family Residential
1736.031
x
C.Commercial/Institutional
111.4236.47118.5743.02129.9341.77141.1543.61148.5842.22136.3143.071036.12
D.Industrial
0000000000000
9.583.5214.335.4721.647.2628.956.8033.997.8224.505.88
x
E.Landscape Irrigation
169.74
F.Other
1.930.0922.70.15.470.135.440.245.970.224.410.1226.822
Total Urban Retail
331.83216.803372.25267.75405.25270.94447.63256.83449.8303.09395.16274.223991.553
)
(A thru F
Agricultural Irrigation
Wholesale
(to other agencies)
A - 2
DWR 38 (Rev. 8/12)Page 1 of 1
DEPARTMENT OF WATER RESOURCES
State of CaliforniaCalifornia Natural Resources Agency
PUBLIC WATER SYSTEM STATISTICS
2012
Calendar Year
PWS #1910146Santa Monica, CA 5th Street Third Floor Gil Borboa, Water Resources Mgr
1. General Information2. Active Service Connections
Recycled Water
Potable Water
Please follow the provided instructions.
Customer Class
Contact :Gil Borboa
MeteredUnmeteredMeteredUnmetered
Title:Water Resources Manager Single Family Residential
7544
Phone:310-458-8230 Multi-family Residential
6385
Fax:310-496-6697 Commercial/Institutional
2352
E-mail:gil.borboa@smgov.net Industrial
0
Website:water.smgov.net Landscape Irrigation
58010
Los Angeles
County: Other
11032
Population89,735
served: Agricultural Irrigation
0
Names
of communities served:Santa Monica, portions of Los TOTAL
1796412
3. Total Water Into the System-Units of production:
MG
AFMGCCF
(Select:=acre-feet;=million gallons; =hundred cubic feet)
JanFebMarAprMayJunJulAugSepOctNovDecTotal
Wells
203.3209.1268.2223.1231.3229.4235.7219.7206213.9204.7254.12698.5
Surface
0000000000000
Potable
1/
Purchased
142.1152124.9141.1180.3201.9219.2251.5237.4218.4188.376.82133.9
Total Potable
345.4361.1393.1364.2411.6431.3454.9471.2443.4432.3393330.94832.4
Untreated Water
0000000000000
2/
Recycled
1.650.42.750.473.970.826.470.346.240.254.660.1228.14
1/ Potable wholesale supplier(s): 2/ Recycled wholesale supplier(s):
MWDCity of Santa Monica
Level of treatment:
4. Metered Water Deliveries-Units of delivery:
MGAFMGCCF
(Select:=acre-feet;=million gallons; =hundred cubic feet)
JanFebMarAprMayJunJulAugSepOctNovDecTotal
If recycled is included, X box
62.0878.1760.7777.9976.9682.24107.2398.9593.69108.5587.9979.78
A.SingleFamilyResidential
1014.405
183.82112.22172.07109.28185.79115.22185.83131.52168.57134.78164.95129.26
B.Multi-family Residential
1793.312
x
C.Commercial/Institutional
123.583146.5069132.017548.10986139.67147.64386161.416252.88734158.693452.46248146.045545.932441154.97
D.Industrial
0000000000000
11.276.4115.176.2221.266.7937.638.4639.758.6328.836.30
x
E.Landscape Irrigation
196.7165
F.Other
0.0284240.0964920.2475880.0852720.2610520.0905080.2266440.1630640.1817640.13090.1967240.1151921.823624
Total Urban Retail
380.7821243.3977380.2757241.69423.9499251.978492.3321291.9781460.8877304.5579428.0071261.39014161.226
)
(A thru F
Agricultural Irrigation
Wholesale
(to other agencies)
A - 3
DWR 38 (Rev. 8/12)Page 1 of 1
A - 4
DEPARTMENT OF WATER RESOURCES
State of CaliforniaCalifornia Natural Resources Agency
PUBLIC WATER SYSTEM STATISTICS
2010
Calendar Year
1. General Information2. Active Service Connections
Recycled Water
Potable Water
Please follow the provided instructions.
Customer Class
Contact :Gil Borboa
MeteredUnmeteredMeteredUnmetered
Title:Water Resources Manager Single Family Residential
7546
Phone:310-458-2830 Multi-family Residential
6323
Fax:310-393-6697 Commercial/Institutional
23372
E-mail:gil.borboa@smgov.net Industrial
Website:water.smgov.net Landscape Irrigation
5679
Los Angeles
County: Other
1063
Population89,735
served: Agricultural Irrigation
Names
of communities served:Santa Monica/Los Angeles TOTAL
1783611
3. Total Water Into the System-Units of production:
AF
AFMGCCF
(Select:=acre-feet;=million gallons; =hundred cubic feet)
JanFebMarAprMayJunJulAugSepOctNovDecTotal
Wells
259.01287.97267.73279.43242.23283.24257.04270.15250.44199.8823.08608.013228.21
Surface
0000000000000
Potable
1/
Purchased
728.94563.67791.48800.15894.45903.91979.49989.43939.81902.27990.92327.589812.1
Total Potable
987.95851.641059.211079.581136.681187.151236.531259.581190.251102.151014.00935.5913040.31
Untreated Water
2/
Recycled
0.3994841.6964640.4854523.8753880.9888565.2838721.1691245.0445120.9133082.8491320.3687641.4286824.50304
1/ Potable wholesale supplier(s):2/ Recycled wholesale supplier(s):
Metropolitan Water District
Level of treatment:
AFMGCCF
4. Metered Water Deliveries-Units of delivery:(Select:=acre-feet;=million gallons; =hundred cubic feet)
AF
JanFebMarAprMayJunJulAugSepOctNovDecTotal
If recycled is included, X box
A.SingleFamilyResidential
199.6274154.0747221.9985214.7825291.2631267.9369334.0837255.0776285.2525207.1763248.8305181.99272862.096
B.Multi-family Residential
294.1215553.6509281.6525522.1811321.9063533.6147359.5175537.1894276.4018521.4671348.7062549.63315100.042
C.Commercial/Institutional
134.6607366.8873134.6102402.6504153.627428.5916172.6415430.4375139.5853416.8206155.6864367.09633303.295
D.Industrial
E.Landscape Irrigation
11.2314829.752419.425567.3475528.2761489.6153635.1155994.0808628.8409357.3971821.4504731.40085513.9343
F.Other
Total Urban Retail
639.6411104.365657.68671206.962795.07261319.759901.35841316.785730.08061202.861774.67361130.12311779.37
)
(A thru F
Agricultural Irrigation
Wholesale
(to other agencies)
City of Santa Monica
A - 5
DWR 38 (Rev. 1/11)Page 1 of 2
State of California DEPARTMENT OF WATER RESOURCES California Natural Resources Agency
PUBLIC WATER SYSTEM STATISTIC
S
Calendar Year 2009
1. General Information2. Active Service Connections
Potable WaterRecycled Water
Please follow the provided instructions.
Customer Class
Contact :Gil Borboa
MeteredUnmeteredMeteredUnmetered
Title:Water Resources Manager Single Family Residential
7545
Phone:310-458-8230 Multi-family Residential
6269
Fax:310-393-9967 Commercial/Institutional
23232
E-mail:gil.borboa@smgov.net Industrial
Website: Landscape Irrigationwater.smgov.net
5499
Los Angeles
County: Other
1023
84084
Population served: Agricultural Irrigation
Names of communities served:Santa Monica
TOTAL
1770911
AF
-
3. Total Water Into the SystemUnits of production:
(Select:AF=acre-feet;MG=million gallons; CCF=hundred cubic feet)
JanFebMarAprMayJunJulAugSepOctNovDecTotal
Wells
166.03153.7173.59160.45158.84175.14116.33173.85168.32100.96237.05278.212062.47
Surface
0000000000000
Potable
1/
Purchased
905.44742.8921.321016.831100.631028.551165.681119.961060.421080.83860.42682.4511685.33
Total Potable
1071.47896.51094.911177.281259.471203.691282.011293.811228.741181.791097.47960.6613747.8
Untreated Water
2/
Recycled
1.410.222.1616.963.8923.274.519.23.612.041.378.99107.6
1/ Potable wholesale supplier(s):2/ Recycled wholesale supplier(s):
MWD
Level of treatment:
-
4. Metered Water DeliveriesUnits of delivery:
(Select:AF=acre-feet;MG=million gallons; CCF=hundred cubic feet)
AF
JanFebMarAprMayJunJulAugSepOctNovDecTotal
If recycled is included, X box
A.SingleFamilyResidential
214.83231.72246.77256.58316.91278.8323.16283.02326.52240.48270.5205.733195.02
B.Multi-family Residential
333.23590.33326530.36336.68611.6289.59663.3288.16528.97364.97545.115408.3
C.Commercial/Institutional
121.99402.43130.31457.97148.98459.39101.47491.31138.51404.75162.56354.13373.77
D.Industrial
E.Landscape Irrigation
14.2251.7115.2989.7926.78126.8924.68120.8530.8980.4421.7148.73651.98
F.Other
Total Urban Retail
684.271276.19718.371334.7829.351476.68738.91558.48784.081254.64819.741153.6712629.07
)
(A thru F
Agricultural Irrigation
Wholesale
(to other agencies)
DWR 38 (Rev. 10/09)Page 1 of 2
A - 6
State of California DEPARTMENT OF WATER RESOURCES California Natural Resources Agency
PUBLIC WATER SYSTEM STATISTICS
Calendar Year 2008
1. General Information2. Active Service Connections
Potable WaterRecycled Water
Please follow the provided instructions.
Customer Class
Contact :Gilber M. Borboa, Jr., P.E.
MeteredUnmeteredMeteredUnmetered
Title:Water Resources Manager Single Family Residential
7538
Phone:310-458-8230 Multi-family Residential
6223
Fax:310-393-6697 Commercial/Institutional
2319
E-mail:gil.borboa@smgov.net Industrial
Website:water.smgov.net Landscape Irrigation
52711
Los Angeles
County: Other
991
Population
served:84084
Agricultural Irrigation
Names
of communities served: TOTAL
City of Santa Monica
1759811
Note: Beginning in 2008 we are reporting all connections in the system whether or not there is an current customer (vacant).
million gallonshundred cubic feet
Units of production:acre-feet
3. Total Water Into the System -
JanFebMarAprMayJunJulAugSepOctNovDecTotal
Wells
5450.754.953.753.254.15551.355.77163.354.3671.2
Potable
Surface
1
/
Purchased
278.8268.8312.5334.9368.8374.2397.7390.9357.3351.4305.7274.64015.6
Total Potable
332.8319.5367.4388.6422428.3452.7442.2413422.4369328.94686.8
Untreated Water
2/
Recycled
2.020.002.060.865.831.087.541.067.240.965.770.5735.00116
1/ Potable wholesale supplier(s):2/ Recycled wholesale supplier(s):
Metropolitan Water DistrictCity of Santa Monica
Level of treatment:
Secondary
Units of delivery:
4. Metered Water Deliveries -
million gallonshundred cubic feet
acre-feet
If recycled is included, box JanFebMarAprMayJunJulAugSepOctNovDecTotal
A.SingleFamilyResidential
94.5760.9367.6584.89101.16109.22117.31107.83112.5110.7284.0999.091149.96
B.Multi-family Residential
168.98122.41162.93130.71168.05137.85185.49122.63183.28130.56168135.681816.57
C.Commercial/Institutional
126.4838.83132.547.64141.2351.32159.3249.8163.7851.87144.5949.051156.41
D.Industrial
E.Landscape Irrigation
14.53.3515.767.5633.311.2936.6911.9541.2211.6531.828.16227.25
F.Other
Total Urban Retail
404.53225.52378.84270.8443.74309.68498.81292.21500.78304.8428.5291.984350.19
)
(A thru F
Agricultural Irrigation
Wholesale
(to other agencies)
DWR 38 (Rev. 1/09)Page 1 of 2
A - 7
A - 8
Department of Water Resources
State of CaliforniaThe Resources Agency
PUBLIC WATER SYSTEM STATISTICS
Calendar Year 2006
1. General Information2. Active Service Connections
Recycled Water
Potable Water
Please follow the provided instructions.
Customer Class
Contact :Gil Borboa
MeteredUnmeteredMeteredUnmetered
Title:Water Resources Manager Single Family Residential
7473
Phone:310-458-8230 Multi-family Residential
6090
Fax:310-393-6697 Commercial/Institutional
2221
E-mail:gil.borboa@smgov.net Industrial
Website:santa-monica.org/epwm/water resources Landscape Irrigation
46710
Los Angeles
County: Other
924
Population84184
served: Agricultural Irrigation
Names
of communities served:Santa Monica and Los Angele TOTAL
1717510
million gallonshundred cubic feet
3. Total Water Into the System -Units of production:acre-feet
JanFebMarAprMayJunJulAugSepOctNovDecTotal
Wells
57.241.946.141.549.344.645.555.551.256.139.242.4570.5
Potable
Surface
1/
Purchased
316.9312.1298.8317354.1392.9424.8416.4385.8382.4353.43524306.6
Total Potable
374.1354344.9358.5403.4437.5470.3471.9437438.5392.6394.44877.1
Untreated Water
2/
Recycled
3.20.13.40.14.10.17.20.26.40.25.60.230.6
1/ Potable wholesale supplier(s):2/ Recycled wholesale supplier(s):
Metropolitan Water DistrictCity of Santa Monica
Level of treatment:
Title 22 Stormwater
4. Metered Water Deliveries - Units of delivery:
million gallonshundred cubic feet
acre-feet
JanFebMarAprMayJunJulAugSepOctNovDecTotal
If recycled is included, box
A.SingleFamilyResidential
1187.822
91.9471.81133.5762.9278.7383.10113.00118.64124.43110.36111.1688.17
B.Multi-family Residential
1911.534
155.08131.60179.73138.44155.87159.29162.01177.32164.14168.71170.03149.31
C.Commercial/Institutional
141.526840.62612152.568844.47533146.107651.10336164.626659.4847167.846752.8275162.02846.634811229.856
D.Industrial
N/A
E.Landscape Irrigation
21.058444.5478416.62433.43182418.92446.7544436.8300210.7854139.614088.16591631.235735.960064203.9325
F.Other
Total Urban Retail
409.6048248.5843482.4884249.2658399.6347300.2442476.4655366.2358496.031340.0662474.4504290.07374533.145
)
(A thru F
Agricultural Irrigation
Wholesale
(to other agencies)
DWR 38 (Rev. 12/06)Page 1 of 2
A - 9
State of CaliforniaThe Resources Agency
Department of Water Resources
PUBLIC WATER SYSTEM STATISTICS
Calendar Year 2005
Complete this portion if the system serves all or
1. General Information2. Active Service Connections
part of an incorporated city
Please follow the guidelines on the
Customer ClassRecycledPotable WaterInside City LimitsOutside City Limits
back of this form.
Water
MeteredUnmeteredMeteredUnmeteredMeteredUnmetered
Contact :Gil Borboa Single Family Residential
743925
Title:Water Resources Mgr Multi-family Residential
6072
Phone:310-458-8230 Commercial/Institutional
2214
Fax:310-393-6697 Industrial
E-mail:gil.borboa@smgov.net Landscape Irrigation
10451
Website: Other
912
Communities served: Agricultural Irrigation
Cities of Santa Monica & Los Angeles
County:Los Angeles
TOTAL
Population served84084
101708825
million gallonshundred cubic feet
Units of production:acre-feet
3. Total Water Into the System -
JanFebMarAprMayJunJulAugSepOctNovDecTotal
Wells
55.78348.37654.13447.07256.43553.80556.72253.22552.5547.37945.46944.751615.701
Potable
Surface
\\
1
/
Purchased
278.3260.9283.5347.2364.5379.9405.3420368.8365.5326.5328.64129
Total Potable
334.083309.276337.634394.272420.935433.705462.022473.225421.35412.879371.969373.3514744.701
2/
Recycled
10.239.2410.239.910.239.99.39.399.3910.23115.86
1/ Potable wholesale supplier(s):Metropolitan Water District2/ Recycled wholesale supplier(s):City of Santa Monica
Level of treatment:Title 22 Stormwater
Units of delivery:
4. Metered Water Deliveries -
million gallonshundred cubic feet
acre-feet
JanFebMarAprMayJunJulAugSepOctNovDecTotal
A. Single Family Residential
1082.501
71.4462.2269.6667.4294.2091.15118.77107.80125.1198.8898.6877.18
B. Multi-family Residential
169.9306129.7324170.4842137.9282164.5039155.68199164.8255191.6002177170.2321154.2585117.94461904.122
C. Commercial/Institutional
111.963645.51131124.264549.463129.4346748.8631139.007670.33668143.665448.66264138.087534.084121083.344
D. Industrial
E. Landscape Irrigation
9.8833243.8469648.931124.50595225.9690649.86163234.0190413.7093436.632558.32000424.761045.2382449.883324
F. Other
)
Total Urban Retail
(A thru F363.2221241.3093373.3418259.3136414.10776305.55202456.6233383.448482.4032326.0921415.79234.44264079.851
Agricultural Irrigation
Wholesale
(
to other agencies)
DWR 38 (Rev. 4/05)Page 1 of 2
A - 10
A - 11
State of CaliforniaThe Resources Agency
Department of Water Resources
PUBLIC WATER SYSTEM STATISTICS
Calendar Year 2003
Complete this portion if the system serves all or
1. General Information2. Active Service Connections
part of an incorporated city
Please follow the guidelines on the
Customer ClassRecycledPotable WaterInside City LimitsOutside City Limits
back of this form.
Water
MeteredUnmeteredMeteredUnmeteredMeteredUnmetered
Contact :Gil Borboa, P. E. Single Family Residential
743324
Title:Water Resources Mgr. Multi-family Residential
6059
Phone:310-458-8230 Commercial/Institutional
2202
Fax:310-393-6697 Industrial
E-mail: Landscape Irrigation
9420
gil-borboa@santa-monica.org
Website:santa-monica.org Other
865
Communities served: Agricultural Irrigation
Santa Monica and a portion of Los Ange
County:Los Angeles
TOTAL
Population served84084
91697924
million gallonshundred cubic feet
Units of production:acre-feet
3. Total Water Into the System -
JanFebMarAprMayJunJulAugSepOctNovDecTotal
Wells
88.3851.2111.8611.5622.424.5624.1522.4323.8521.1720.119.49341.16
Potable
Surface
1
/
Purchased
296.52269.5362.8379.4393.7405.6435.2460.5409.2393.2349.1354.24508.92
Total Potable
384.9320.71374.66390.96416.1430.16459.35482.93433.05414.37369.2373.694850.08
2/
Recycled
0.530.022.280.122.080.252.463.222.2713.23
1/ Potable wholesale supplier(s):Metropolitan Water District2/ Recycled wholesale supplier(s):City of Santa Monica
Level of treatment:Treated stormwater
Units of delivery:
4. Metered Water Deliveries -
million gallonshundred cubic feet
acre-feet
JanFebMarAprMayJunJulAugSepOctNovDecTotal
A. Single Family Residential
92.1773.1364.7999.0786.66102.69107.6110116.94114.970.06104.031142.04
B. Multi-family Residential
162.3150.34155.36143.5155.56151.29176.09169.92164.89186.24122.07190.521928.08
C. Commercial/Institutional
48.24125.0546.51132.2347.37141.6752.95171.0252.81160.3543.94147.771169.91
D. Industrial
------------
E. Landscape Irrigation
3.8412.754.6316.167.7821.819.4430.5310.9228.55.921.22173.48
F. Other
)
Total Urban Retail
(A thru F306.55361.27271.29390.96297.37417.46346.08481.47345.56489.99241.97463.544413.51
Agricultural Irrigation
Wholesale
(
to other agencies)
DWR 38 (Rev. 03/02)Page 1 of 2
A - 12
TABLE OF WATER CONSERVATION PROGRAMS
Source: Sustainable Water Master Plan
Notes: HE – High Efficiency, HET – High Efficiency Toilet, WBIC – Weather Based Irrigation Controller
A - 13
THIS PAGE INTENTIONALLY LEFT BLANK
Appendix B
Miscellaneous Alternative Rate Restructuring
Support Information
B - 1
CURRENT AND ALTERNATIVE RATES & RATE STRUCTURES
Single-Family Residential Water Rates ($/HCF)ALTERNATIVE RATE STRUCTURE CONSIDERATIONS
Same TiersSame TiersSame TiersNew TiersNew TiersNew TiersNew Tiers
Increase Same Volume Lower Volume Increase Increase Lower Volume Lower Volume
Volume RateRateRateVolume RateVolume RateRate,1st Tier=0Rate,1st Tier=0
Start of
Meter SizeEnd of
+ 9% Inc +$10 Fixed +$15 FixedNo FixedNo Fixed+$10 Fixed+$10 Fixed
(c)
Tier (HCF)FY 13/14
(Inches)TierTier (HCF)Alt 1Alt 2Alt 3Alt 4Alt 4Alt 4bAlt 4b
N/A1014$2.48$2.70$2.48$2.230 to 14$2.640 to 4$0.00
15$3.74$3.37
N/A240$4.08$3.7415 to 30$4.045 to 25$3.18
41$5.60$5.04
N/A3148$6.10$5.6031 to 68$5.7126 to 68$5.04
149$8.76$7.88
N/A4$9.55$8.7669 to 148$8.9469 to 148$8.32
nanana$9.74
5Over 148Over 148$9.57
$0.00$10.00$15.00$0.00$10.00
Bimonthy Fixed Meter Charge ($/EM)
Multi-Family Water Rates ($/HCF)
Start of
Meter SizeEnd ofSee AboveSee AboveSee Above
(c)
Tier (HCF)FY 13/14
(Inches)TierTier (HCF)Alt 1Alt 2Alt 3Alt 4Alt 4Alt 4bAlt 4b
N/A104$2.48$2.70$2.48$2.36tbdtbdtbdtbd
N/A259$3.74$4.08$3.74$3.55tbdtbdtbdtbd
N/A31020$5.60$6.10$5.60$5.32tbdtbdtbdtbd
N/A421$8.76$9.55$8.76$8.32tbdtbdtbdtbd
Bimonthy Fixed Meter Charge ($/EM)$0.00$10.00$15.00
tbdtbdtbdtbd
Non-Residential Water Rates ($/HCF)
Meter Size
Start ofEnd ofSee AboveSee AboveSee Above
(c)
(Inches)FY 13/14
TierTier (HCF)Tier (HCF)Alt 1Alt 2Alt 3Alt 4Alt 4Alt 4Alt 4
3/4"10210$3.56$3.88$3.56$3.38tbdtbdtbdtbd
3/4"2211$8.76$9.55$8.76$8.32tbdtbdtbdtbd
1"10210$3.56$3.88$3.56$3.38tbdtbdtbdtbd
1"2211$8.76$9.55$8.76$8.32tbdtbdtbdtbd
1 1/2"10465$3.56$3.88$3.56$3.38tbdtbdtbdtbd
1 1/2"2466$8.76$9.55$8.76$8.32tbdtbdtbdtbd
2"10870$3.56$3.88$3.56$3.38tbdtbdtbdtbd
2"2871$8.76$9.55$8.76$8.32tbdtbdtbdtbd
3"101700$3.56$3.88$3.56$3.38tbdtbdtbdtbd
3"21701$8.76$9.55$8.76$8.32tbdtbdtbdtbd
4"102550$3.56$3.88$3.56$3.38tbdtbdtbdtbd
4"22551$8.76$9.55$8.76$8.32tbdtbdtbdtbd
6"+105280$3.56$3.88$3.56$3.38tbdtbdtbdtbd
6"+25281$8.76$9.55$8.76$8.32tbdtbdtbdtbd
Bimonthy Fixed Meter Charge ($/EM)$0.00$10.00$15.00
tbdtbdtbdtbd
Notes:
Source: City of Santa Monica website: Water and Sewer Rates. Customers billed bi-monthly.
B - 2
City of Santa Monica -- Water Utility
Comparison of Typical Water Bills Under Current and Alternative Rate Structures
FY 14-15 Alternative Structures
Bi-Monthly
MeterWaterCurrentV plus 9%F =$10, Same VF=$15, Less VNEWNEW
Customer ClassUsage DataSizeUse (HCF)Rates/Structurelt 1lt 2lt 3lt 4lt 4 b
AAAAA
Winter Median3/4"21.00$60.90$66.38$70.90$69.81$65.25$64.04
Annual Average3/4"30.00$94.56$103.07$104.56$100.10$101.60$101.96
Single Family
Summer 75th Percentile3/4"47.00$171.16$186.56$181.16$169.04$198.71$187.64
Summer 90th Percentile3/4"68.00$288.76$314.75$298.76$274.88$318.66$293.48
Winter Median1 1/2"9.00$28.62$31.20$30.05$29.33tbdtbd
Annual Average1 1/2"11.00$39.82$43.40$41.25$39.97tbdtbd
Multi-Family *
Summer 75th Percentile1 1/2"12.00$45.42$49.51$46.85$45.29tbdtbd
Summer 90th Percentile1 1/2"17.00$73.42$80.03$74.85$71.89tbdtbd
Winter Median1 1/2"35.00$124.60$135.81157.93$174.60tbdtbd
Annual Average1 1/2"70.00$249.20$271.63282.53$299.20tbdtbd
Non-Residential
Summer 75th Percentile1 1/2"100.00$356.00$388.04389.33$406.00tbdtbd
Summer 90th Percentile1 1/2"203.00$722.68$787.72756.01$772.68tbdtbd
* Fixed Charges were spread to each DU, based on 7 DU's/Meter.
Where V=Volume Rate, F= Fixed Service Charge
Meter SizeBi Monthly Meter Charge Alts
5/8 & 3/4$10.00$15.00
1$16.67$25.00
1.5$33.33$50.00
2$53.33$80.00
3$100.00$150.00
4$166.67$250.00
6$200.00$300.00
8$333.33$500.00
B - 3
Santa Monica
Demand Model to Evaluate Block Structure for Single Family Water Rates
ALT 1
K/J 1283015*00
Block Range (Hcf)Existing Rate StructureBlock Range (Hcf)Proposed Block Rate Structure
2011Projected
%
Less Than Less Than
Annual Unit Usage Annual
Water Rate Greater % Annual Rate (per Annual Greater Rate (per % Rate Projected Annual % Annual
or Equal or Equal
Usage 1 Usage
BlocksThanUsageHcf)RevenueThanHcf)ChangeAnnual RevenueRevenue
Reduction
ToTo
22
Usage
(Hcf)(Hcf)
Block 1014566,91243.3%$2.48$1,405,943014$2.709.0%0.0%566,91243.3%$1,532,47830.3%
Block 21440518,12039.6%$3.74$1,937,7701440$4.089.0%0.0%518,12039.6%$2,112,16941.8%
Block 340148213,28216.3%$5.60$1,194,38140148$6.109.0%0.0%213,28216.3%$1,301,87625.8%
Block 41481000011,3810.9%$8.76$99,69514810000$9.559.0%0.0%11,3810.9%$108,6682.1%
Block 5100001000000.0%$8.76$01000010000$9.559.0%0.0%00.0%$00.0%
Block 6100001000000.0%$8.76$01000010000$9.559.0%0.0%00.0%$00.0%
Block 7100001000000.0%$8.76$01000010000$9.559.0%0.0%00.0%$00.0%
Block 8100001000000.0%$010000100000.0%00.0%$00.0%
Block 9100001000000.0%$010000100000.0%00.0%$00.0%
Block 10100001000000.0%$0100001000000.0%$00.0%
Fixed Charge (Bi-Monthly/DU):
$0.00$0.00
Totals:1,309,696100.0%1,309,696100%
Variable Revenue:$4,637,789Calculated IncreaseVariable Revenue:$5,055,190
Fixed Revenue:$0Assuming No ConservationFixed Revenue:$0
Total Revenue:$4,637,7899.0%Total Revenue:$5,055,190100.0%
Yellow cells are manually inputted values.
Estimated Change in Bi-Monthly Bill by Usage (Both Fixed and Quantity Charge)
Average
Bi-MonthlyTypical Bi-Monthly BillCumulative
UsageCurrentBlock RateChange In BillNo. of% of TotalNo. of% of Total
(Hcf)StructureStructure($)(%)DUDUDUDU
6$14.88$16.22$1.349.0%4135.4%4135.4%
9$22.32$24.33$2.019.0%4075.3%82010.7%
10$24.80$27.03$2.239.0%1461.9%96612.6%
14$34.72$37.84$3.129.0%78510.3%175122.9%
20$57.16$62.30$5.149.0%119615.6%294738.5%
21$60.90$66.38$5.489.0%2082.7%315541.2%
25$75.86$82.69$6.839.0%7429.7%389750.9%
30$94.56$103.07$8.519.0%86511.3%476262.3%
35$113.26$123.45$10.199.0%6798.9%544171.1%
40$131.96$143.84$11.889.0%5777.5%601878.7%
47$171.16$186.56$15.409.0%5707.5%658886.1%
52$199.16$217.08$17.929.0%2693.5%685789.6%
60$243.96$265.92$21.969.0%2953.9%715293.5%
68$288.76$314.75$25.999.0%1832.4%733595.9%
70$299.96$326.96$27.009.0%280.4%736396.3%
75$327.96$357.48$29.529.0%660.9%742997.1%
80$355.96$388.00$32.049.0%450.6%747497.7%
85$383.96$418.52$34.569.0%370.5%751198.2%
95$439.96$479.56$39.609.0%400.5%755198.7%
100$467.96$510.08$42.129.0%180.2%756999.0%
110$523.96$571.12$47.169.0%160.2%758599.2%
115$551.96$601.64$49.689.0%110.1%759699.3%
120$579.96$632.16$52.209.0%80.1%760499.4%
130$635.96$693.20$57.249.0%120.2%761699.6%
140$691.96$754.24$62.289.0%80.1%762499.7%
160$841.88$917.65$75.779.0%110.1%763599.8%
190$1,104.68$1,204.10$99.429.0%70.1%764299.9%
225$1,411.28$1,538.30$127.029.0%40.1%7646100.0%
250$1,630.28$1,777.01$146.739.0%20.0%7648100.0%
>250--------------------10.0%7649100.0%
B - 4
C:\\Users\\RogerN\\Desktop\\sm_rates1\\Santa Monica Base SFR Water Demand Model Rev04_Alt 1.xls
Santa Monica
Demand Model to Evaluate Block Structure for Single Family Water Rates
ALT 2
K/J 1283015*00
Block Range (Hcf)Existing Rate StructureBlock Range (Hcf)Proposed Block Rate Structure
2011Projected
%
Less Than Less Than
Annual Unit Usage Annual
Water Rate Greater % Annual Rate (per Annual Greater Rate (per % Rate Projected Annual % Annual
or Equal or Equal
Usage 1 Usage
BlocksThanUsageHcf)RevenueThanHcf)ChangeAnnual RevenueRevenue
Reduction
ToTo
22
Usage
(Hcf)(Hcf)
Block 1014566,91243.3%$2.48$1,405,943014$2.480.0%0.0%566,91243.3%$1,405,94330.3%
Block 21440518,12039.6%$3.74$1,937,7701440$3.740.0%0.0%518,12039.6%$1,937,77041.8%
Block 340148213,28216.3%$5.60$1,194,38140148$5.600.0%0.0%213,28216.3%$1,194,38125.8%
Block 41481000011,3810.9%$8.76$99,69514810000$8.760.0%0.0%11,3810.9%$99,6952.1%
Block 5100001000000.0%$8.76$01000010000$8.760.0%0.0%00.0%$00.0%
Block 6100001000000.0%$8.76$01000010000$8.760.0%0.0%00.0%$00.0%
Block 7100001000000.0%$8.76$01000010000$8.760.0%0.0%00.0%$00.0%
Block 8100001000000.0%$010000100000.0%00.0%$00.0%
Block 9100001000000.0%$010000100000.0%00.0%$00.0%
Block 10100001000000.0%$0100001000000.0%$00.0%
Fixed Charge (Bi-Monthly/DU):
$0.00$10.00
Totals:1,309,696100.0%1,309,696100%
Variable Revenue:$4,637,789Calculated IncreaseVariable Revenue:$4,637,789
Fixed Revenue:$0Assuming No ConservationFixed Revenue:$727,396
Total Revenue:$4,637,78915.7%Total Revenue:$5,365,185100.0%
Yellow cells are manually inputted values.
Estimated Change in Bi-Monthly Bill by Usage (Both Fixed and Quantity Charge)
Average
Bi-MonthlyTypical Bi-Monthly BillCumulative
UsageCurrentBlock RateChange In BillNo. of% of TotalNo. of% of Total
(Hcf)StructureStructure($)(%)DUDUDUDU
6$14.88$24.88$10.0067.2%4135.4%4135.4%
9$22.32$32.32$10.0044.8%4075.3%82010.7%
10$24.80$34.80$10.0040.3%1461.9%96612.6%
14$34.72$44.72$10.0028.8%78510.3%175122.9%
20$57.16$67.16$10.0017.5%119615.6%294738.5%
21$60.90$70.90$10.0016.4%2082.7%315541.2%
25$75.86$85.86$10.0013.2%7429.7%389750.9%
30$94.56$104.56$10.0010.6%86511.3%476262.3%
35$113.26$123.26$10.008.8%6798.9%544171.1%
40$131.96$141.96$10.007.6%5777.5%601878.7%
47$171.16$181.16$10.005.8%5707.5%658886.1%
52$199.16$209.16$10.005.0%2693.5%685789.6%
60$243.96$253.96$10.004.1%2953.9%715293.5%
68$288.76$298.76$10.003.5%1832.4%733595.9%
70$299.96$309.96$10.003.3%280.4%736396.3%
75$327.96$337.96$10.003.0%660.9%742997.1%
80$355.96$365.96$10.002.8%450.6%747497.7%
85$383.96$393.96$10.002.6%370.5%751198.2%
95$439.96$449.96$10.002.3%400.5%755198.7%
100$467.96$477.96$10.002.1%180.2%756999.0%
110$523.96$533.96$10.001.9%160.2%758599.2%
115$551.96$561.96$10.001.8%110.1%759699.3%
120$579.96$589.96$10.001.7%80.1%760499.4%
130$635.96$645.96$10.001.6%120.2%761699.6%
140$691.96$701.96$10.001.4%80.1%762499.7%
160$841.88$851.88$10.001.2%110.1%763599.8%
190$1,104.68$1,114.68$10.000.9%70.1%764299.9%
225$1,411.28$1,421.28$10.000.7%40.1%7646100.0%
250$1,630.28$1,640.28$10.000.6%20.0%7648100.0%
>250--------------------10.0%7649100.0%
B - 5
C:\\Users\\RogerN\\Desktop\\sm_rates1\\Santa Monica Base SFR Water Demand Model Rev04_Alt 2.xls
Santa Monica
Demand Model to Evaluate Block Structure for Single Family Water Rates
ALT 3
K/J 1283015*00
Block Range (Hcf)Existing Rate StructureBlock Range (Hcf)Proposed Block Rate Structure
2011Projected
%
Less Than Less Than
Annual Unit Usage Annual
Water Rate Greater % Annual Rate (per Annual Greater Rate (per % Rate Projected Annual % Annual
or Equal or Equal
Usage 1 Usage
BlocksThanUsageHcf)RevenueThanHcf)ChangeAnnual RevenueRevenue
Reduction
ToTo
22
Usage
(Hcf)(Hcf)
Block 1014566,91243.3%$2.48$1,405,943014$2.23-10.0%0.0%566,91243.3%$1,265,34930.3%
Block 21440518,12039.6%$3.74$1,937,7701440$3.37-10.0%0.0%518,12039.6%$1,743,99341.8%
Block 340148213,28216.3%$5.60$1,194,38140148$5.04-10.0%0.0%213,28216.3%$1,074,94325.8%
Block 41481000011,3810.9%$8.76$99,69514810000$7.88-10.0%0.0%11,3810.9%$89,7262.1%
Block 5100001000000.0%$8.76$01000010000$7.88-10.0%0.0%00.0%$00.0%
Block 6100001000000.0%$8.76$01000010000$7.88-10.0%0.0%00.0%$00.0%
Block 7100001000000.0%$8.76$01000010000$7.88-10.0%0.0%00.0%$00.0%
Block 8100001000000.0%$010000100000.0%00.0%$00.0%
Block 9100001000000.0%$010000100000.0%00.0%$00.0%
Block 10100001000000.0%$0100001000000.0%$00.0%
Fixed Charge (Bi-Monthly/DU):
$0.00$15.00
Totals:1,309,696100.0%1,309,696100%
Variable Revenue:$4,637,789Calculated IncreaseVariable Revenue:$4,174,010
Fixed Revenue:$0Assuming No ConservationFixed Revenue:$1,091,093
Total Revenue:$4,637,78913.5%Total Revenue:$5,265,104100.0%
Yellow cells are manually inputted values.
Estimated Change in Bi-Monthly Bill by Usage (Both Fixed and Quantity Charge)
Average
Bi-MonthlyTypical Bi-Monthly BillCumulative
UsageCurrentBlock RateChange In BillNo. of% of TotalNo. of% of Total
(Hcf)StructureStructure($)(%)DUDUDUDU
6$14.88$28.39$13.5190.8%4135.4%4135.4%
9$22.32$35.09$12.7757.2%4075.3%82010.7%
10$24.80$37.32$12.5250.5%1461.9%96612.6%
14$34.72$46.25$11.5333.2%78510.3%175122.9%
20$57.16$66.44$9.2816.2%119615.6%294738.5%
21$60.90$69.81$8.9114.6%2082.7%315541.2%
25$75.86$83.27$7.419.8%7429.7%389750.9%
30$94.56$100.10$5.545.9%86511.3%476262.3%
35$113.26$116.93$3.673.2%6798.9%544171.1%
40$131.96$133.76$1.801.4%5777.5%601878.7%
47$171.16$169.04-$2.12-1.2%5707.5%658886.1%
52$199.16$194.24-$4.92-2.5%2693.5%685789.6%
60$243.96$234.56-$9.40-3.9%2953.9%715293.5%
68$288.76$274.88-$13.88-4.8%1832.4%733595.9%
70$299.96$284.96-$15.00-5.0%280.4%736396.3%
75$327.96$310.16-$17.80-5.4%660.9%742997.1%
80$355.96$335.36-$20.60-5.8%450.6%747497.7%
85$383.96$360.56-$23.40-6.1%370.5%751198.2%
95$439.96$410.96-$29.00-6.6%400.5%755198.7%
100$467.96$436.16-$31.80-6.8%180.2%756999.0%
110$523.96$486.56-$37.40-7.1%160.2%758599.2%
115$551.96$511.76-$40.20-7.3%110.1%759699.3%
120$579.96$536.96-$43.00-7.4%80.1%760499.4%
130$635.96$587.36-$48.60-7.6%120.2%761699.6%
140$691.96$637.76-$54.20-7.8%80.1%762499.7%
160$841.88$772.69-$69.19-8.2%110.1%763599.8%
190$1,104.68$1,009.21-$95.47-8.6%70.1%764299.9%
225$1,411.28$1,285.15-$126.13-8.9%40.1%7646100.0%
250$1,630.28$1,482.25-$148.03-9.1%20.0%7648100.0%
>250--------------------10.0%7649100.0%
B - 6
C:\\Users\\RogerN\\Desktop\\sm_rates1\\Santa Monica Base SFR Water Demand Model Rev04_Alt3.xls
Santa Monica
Demand Model to Evaluate Block Structure for Single Family Water Rates
ALT 4
K/J 1283015*00New Blocks, No Fixed Rate
Block Range (Hcf)Existing Rate StructureBlock Range (Hcf)Proposed Block Rate Structure
2011Projected
%
Less Than Less Than
Annual Unit Usage Annual
Water Rate Greater % Annual Rate (per Annual Greater Rate (per % Rate Projected Annual % Annual
or Equal or Equal
Usage 1 Usage
BlocksThanUsageHcf)RevenueThanHcf)ChangeAnnual RevenueRevenue
Reduction
ToTo
22
Usage
(Hcf)(Hcf)
Block 1014566,91243.3%$2.48$1,405,943014$2.646.5%0.0%566,91243.3%$1,497,32928.0%
Block 21440518,12039.6%$3.74$1,937,7701430$4.048.0%0.0%389,78629.8%$1,574,42529.5%
Block 340148213,28216.3%$5.60$1,194,3813068$5.712.0%0.0%276,82821.1%$1,581,23929.6%
Block 41481000011,3810.9%$8.76$99,69568148$8.942.0%0.0%64,7894.9%$578,89910.8%
Block 5100001000000.0%$8.76$014810000$9.7411.2%0.0%11,3810.9%$110,8412.1%
Block 6100001000000.0%$010000100000.0%00.0%$00.0%
Block 7100001000000.0%$010000100000.0%00.0%$00.0%
Block 8100001000000.0%$010000100000.0%00.0%$00.0%
Block 9100001000000.0%$010000100000.0%00.0%$00.0%
Block 10100001000000.0%$0100001000000.0%$00.0%
Fixed Charge (Bi-Monthly/DU):
$0.00$0.00
Totals:1,309,696100.0%1,309,696100%
Variable Revenue:$4,637,789Calculated IncreaseVariable Revenue:$5,342,734
Fixed Revenue:$0Assuming No ConservationFixed Revenue:$0
Total Revenue:$4,637,78915.2%Total Revenue:$5,342,734100.0%
Yellow cells are manually inputted values.
Estimated Change in Bi-Monthly Bill by Usage (Both Fixed and Quantity Charge)
Average
Bi-MonthlyTypical Bi-Monthly BillCumulative
UsageCurrentBlock RateChange In BillNo. of% of TotalNo. of% of Total
(Hcf)StructureStructure($)(%)DUDUDUDU
6$14.88$15.85$0.976.5%4135.4%4135.4%
9$22.32$23.77$1.456.5%4075.3%82010.7%
10$24.80$26.41$1.616.5%1461.9%96612.6%
12$29.76$31.69$1.936.5%3714.9%133717.5%
14$34.72$36.98$2.266.5%4145.4%175122.9%
21$60.90$65.25$4.357.1%140418.4%315541.2%
25$75.86$81.41$5.557.3%7429.7%389750.9%
30$94.56$101.60$7.047.4%86511.3%476262.3%
35$113.26$130.16$16.9014.9%6798.9%544171.1%
40$131.96$158.72$26.7620.3%5777.5%601878.7%
47$171.16$198.71$27.5516.1%5707.5%658886.1%
52$199.16$227.27$28.1114.1%2693.5%685789.6%
60$243.96$272.96$29.0011.9%2953.9%715293.5%
68$288.76$318.66$29.9010.4%1832.4%733595.9%
70$299.96$336.53$36.5712.2%280.4%736396.3%
75$327.96$381.21$53.2516.2%660.9%742997.1%
80$355.96$425.88$69.9219.6%450.6%747497.7%
85$383.96$470.56$86.6022.6%370.5%751198.2%
95$439.96$559.91$119.9527.3%400.5%755198.7%
100$467.96$604.59$136.6329.2%180.2%756999.0%
110$523.96$693.94$169.9832.4%160.2%758599.2%
115$551.96$738.61$186.6533.8%110.1%759699.3%
120$579.96$783.29$203.3335.1%80.1%760499.4%
130$635.96$872.64$236.6837.2%120.2%761699.6%
140$691.96$961.99$270.0339.0%80.1%762499.7%
160$841.88$1,150.35$308.4736.6%110.1%763599.8%
190$1,104.68$1,442.53$337.8530.6%70.1%764299.9%
225$1,411.28$1,783.41$372.1326.4%40.1%7646100.0%
250$1,630.28$2,026.89$396.6124.3%20.0%7648100.0%
>250--------------------10.0%7649100.0%
B - 7
C:\\Users\\RogerN\\Desktop\\sm_rates1\\Santa Monica Base SFR Water Demand Model Rev05_Alt 4.xls
Santa Monica
Demand Model to Evaluate Block Structure for Single Family Water Rates
ALT 4 b
K/J 1283015*00$10.00 Fixed - Block 1 Price = $0.00
Block Range (Hcf)Existing Rate StructureBlock Range (Hcf)Proposed Block Rate Structure
2011Projected
%
Less Than Less Than
Annual Unit Usage Annual
Water Rate Greater % Annual Rate (per Annual Greater Rate (per % Rate Projected Annual % Annual
or Equal or Equal
Usage 1 Usage
BlocksThanUsageHcf)RevenueThanHcf)ChangeAnnual RevenueRevenue
Reduction
ToTo
22
Usage
(Hcf)(Hcf)
Block 1014566,91243.3%$2.48$1,405,94304$0.00-100.0%0.0%177,18713.5%$00.0%
Block 21440518,12039.6%$3.74$1,937,770425$3.18-15.0%0.0%686,52852.4%$2,182,47146.5%
Block 340148213,28216.3%$5.60$1,194,3812568$5.04-10.0%0.0%369,81128.2%$1,863,85039.7%
Block 41481000011,3810.9%$8.76$99,69568148$8.32-5.0%0.0%64,7894.9%$539,17111.5%
Block 5100001000000.0%$8.76$014810000$9.579.2%0.0%11,3810.9%$108,9172.3%
Block 6100001000000.0%$010000100000.0%00.0%$00.0%
Block 7100001000000.0%$010000100000.0%00.0%$00.0%
Block 8100001000000.0%$010000100000.0%00.0%$00.0%
Block 9100001000000.0%$010000100000.0%00.0%$00.0%
Block 10100001000000.0%$0100001000000.0%$00.0%
Fixed Charge (Bi-Monthly/DU):
$0.00$10.00
Totals:1,309,696100.0%1,309,696100%
Variable Revenue:$4,637,789Calculated IncreaseVariable Revenue:$4,694,409
Fixed Revenue:$0Assuming No ConservationFixed Revenue:$727,396
Total Revenue:$4,637,78916.9%Total Revenue:$5,421,805100.0%
Estimated Change in Bi-Monthly Bill by Usage (Both Fixed and Quantity Charge)
Average
Bi-MonthlyTypical Bi-Monthly BillCumulative
UsageCurrentBlock RateChange In BillNo. of% of TotalNo. of% of Total
(Hcf)StructureStructure($)(%)DUDUDUDU
6$14.88$16.36$1.489.9%4135.4%4135.4%
9$22.32$25.90$3.5816.0%4075.3%82010.7%
10$24.80$29.07$4.2717.2%1461.9%96612.6%
12$29.76$35.43$5.6719.1%3714.9%133717.5%
14$34.72$41.79$7.0720.4%4145.4%175122.9%
21$60.90$64.04$3.145.2%140418.4%315541.2%
25$75.86$76.76$0.901.2%7429.7%389750.9%
30$94.56$101.96$7.407.8%86511.3%476262.3%
35$113.26$127.16$13.9012.3%6798.9%544171.1%
40$131.96$152.36$20.4015.5%5777.5%601878.7%
47$171.16$187.64$16.489.6%5707.5%658886.1%
52$199.16$212.84$13.686.9%2693.5%685789.6%
60$243.96$253.16$9.203.8%2953.9%715293.5%
68$288.76$293.48$4.721.6%1832.4%733595.9%
70$299.96$310.12$10.163.4%280.4%736396.3%
75$327.96$351.73$23.777.2%660.9%742997.1%
80$355.96$393.34$37.3810.5%450.6%747497.7%
85$383.96$434.95$50.9913.3%370.5%751198.2%
95$439.96$518.17$78.2117.8%400.5%755198.7%
100$467.96$559.78$91.8219.6%180.2%756999.0%
110$523.96$643.00$119.0422.7%160.2%758599.2%
115$551.96$684.61$132.6524.0%110.1%759699.3%
120$579.96$726.22$146.2625.2%80.1%760499.4%
130$635.96$809.44$173.4827.3%120.2%761699.6%
140$691.96$892.66$200.7029.0%80.1%762499.7%
160$841.88$1,074.08$232.2027.6%110.1%763599.8%
190$1,104.68$1,361.19$256.5123.2%70.1%764299.9%
225$1,411.28$1,696.15$284.8720.2%40.1%7646100.0%
250$1,630.28$1,935.41$305.1318.7%20.0%7648100.0%
>250--------------------10.0%7649100.0%
B - 8
C:\\Users\\RogerN\\Desktop\\sm_rates1\\Santa Monica Base SFR Water Demand Model Rev05_Alt 4 new_B.xls
COST OF SERVICE ACCOUNT AND EQUIVALENT METER DATA
Percent MeterNumber Percent
CustomerBill Meter SizeNumberof TotalCapacityof of Total
ClassCode(Inches)of MetersMetersRatioEquiv. MetersEquiv. Meters
Single Family7,60446%12,11732%
WASF013 / 41171.00117
WASF021401.6767
WASF031.553.3317
WASF13 / 43,5691.003,569
WASF212,8081.674,680
WASF31.51,0063.333,353
WASF42595.33315
Multi-Family6,08537%16,10843%
WAMF013 / 4191.0019
WAMF02121.673
WAMF031.523.337
WAMF053010.000
WAMF064016.670
WAMF076033.330
WAMF088053.330
WAMF13 / 41,2071.001,207
WAMF211,3821.672,303
WAMF31.52,3233.337,743
WAMF424725.332,517
WAMF535710.00570
WAMF642916.67483
WAMF6A4116.6717
WAMF76933.33300
WAMF88253.33107
WAMF910096.670
WASF013 / 471.007
WASF02111.672
WASF031.513.333
WASF04205.330
WASF13 / 43381.00338
WASF211901.67317
WASF31.5353.33117
WASF4245.3321
WASF53010.000
WASF64016.670
WASF76033.330
WASF88053.330
WASF910096.670
WANR31.523.337
WANR53210.0020
Comm./Inst.2,17513%7,80821%
0
1.000
WANR013 / 4
605
WANR13 / 41.00605
476
WANR211.67793
544
WANR31.53.331,813
365
WANR425.331,947
118
WANR5310.001,180
47
WANR6416.67783
19
WANR7633.33633
1
WANR8853.3353
Landscape5553%1,4114%
0
WANR013 / 41.000
184
WANR13 / 41.00184
160
WANR211.67267
124
WANR31.53.33413
75
WANR425.33400
8
WANR5310.0080
4
WANR6416.6767
0
WANR7633.330
WANR88053.330
TOTAL16,419100%37,445100%
B - 9
SUMMARY OF COST OF SERVICE FINDINGS
Cost of Service Percent
Actual
CostsDifference
Equivalent MetersAvg Annual UsagePeak Hour Usage Revenues
Customer Type
Number%Hcf%Hcf%$'s$'s%
Single Family Residential12,11732.4%1,323,99424.5%77,22626.6%$4,017,232$4,276,700106%
Multi-Family Residential16,10843.0%2,354,68743.5%113,39439.1%$7,209,647$7,124,13499%
Commercial/Institutional9,21924.6%1,729,92432.0%99,16834.2%$5,652,328$5,478,37397%
Water System Totals37,444100%5,408,605100%289,788100%$16,879,206$16,879,206100%
Fire Services2,381$1,128,975
B - 10
CostofService
SummaryofFindings
12.0
10.0
8.0
6.0
4.0
2.0
0.0
SingleFamilyResidentialMultiFamilyResidentialCommercial/Institutional
ActualRevenuesCostofServiceCosts
Note:BasedonFY201112Actuals
B - 11
/źƷǤƚŅ{ğƓƷğaƚƓźĭğ
May21,2014
B - 12
MeetingAgenda
1.WaterFundrevenuerequirements
2.Waterraterestructuring
1.Summaryof2007ratechanges
2.Currentrateconsiderations
3.NextSteps/OpenDiscussion
B - 13
WaterFundRevenueRequirements
Notablereductionsinwaterusage
•
Increasedfundingforconservationprograms
•
Historicalrateincreasesoffsetbylowerwater
•
sales
B - 14
2007WaterRateStudy
WaterFundRevenueRequirements
2007RateStudyΑ!ǝĻƩğŭĻSFRusage=35Hcf
2014RateStudyΑ!ǝĻƩğŭĻSFRusageΑЌЉHcf
B - 15
WaterFundRevenueRequirements
2014FindingsΑ/tLIncreasesonly
B - 16
WaterFundRevenueRequirements
2014FindingsΑВіAnnualIncreases
B - 17
RateRestructuringConsiderations
SFRWaterRateComparisonSurvey
B - 18
WaterRateRestructuring
Summaryof2007ratestructurechanges
•
Costofservicefindings
•
Currentrateconsiderations
•
B - 19
2007WaterRateStudy
Thencurrentwaterrates
•
Summaryofwaterratechanges
•
B - 20
ThenCurrentWaterRates(2007)
FixedBiMonthlyServiceCharge
B - 21
ThenCurrentWaterRates(2007)
CommodityCharges
B - 22
Summaryof2007RateChanges
Demandassessment
•
SFR&MFRexhibithomogeneousdistributionofuse
–
NonResexhibitlargediversity(averagebimonthly
–
useistwotimesmedianuse)
Toptierappliedto2%ofwateruseperclass
–
Conservationsupport
•
AllClasses:Fixedservicechargeeliminated
–
SFR/MFR:3tiersincreasedto4tiers
–
NonRes:3tierssimplifiedto2tiers;toptierset
•
for2%ofusepermetersize
Sametierstoday,capturetop5%
–
B - 23
RateRestructuringConsiderations
CurrentCostofServiceFindings
Currentratestructurereasonablyrecoversthecostsofservice
B - 24
RateRestructuringConsiderations
BasicRateStructureAlternatives
StatusQuoΑĭǒƩƩĻƓƷtierswithincremental
•
increaseinunitrates
New$10FixedCharge:rateincreases/meter
•
size,currenttiers&rates
New$15FixedCharge:rateincreases/meter
•
size,currenttiers&lowerrates
OtherΑ.ǒķŭĻƷBasedRates,NewTiers
•
B - 25
RateRestructuringConsiderations
AlternativeRateStructures
RefertoDemandSummaryTables
•
Refertohandoutsfor:
•
Currentratesandstructure
–
Alternativerates/ratestructures
–
Usageparametersbycustomerclass
–
Typicalbillsanddollarimpactbyusagebycustomer
–
class
DetailedalternativeanalysisforSFRaccounts
–
B - 26
RateRestructuringConsiderations
UsageSummary
UsageTypeSFRValueMFRValue
WinterMedian218
AnnualAverage2911
AnnualMedian259
SummerMedian2910
Summer75thPercentile4611
Summer90thPercentile6817
AverageAnnual(hcf/du/BC)
90thPercentile5316
95thPercentile6519
98thPercentile8325
B - 27
RateRestructuringConsiderations
SFRRateTiersCurrent
B - 28
RateRestructuringConsiderations
NonResidential
Basisofcurrentratestructure
•
Essentiallyuniform
–
Toptierincludes45%ofannualwateruse
–
Currentcostofservicefindings
•
Raterestructuringconsiderations
•
Statusquo/tweak/overhaul
–
Stillunderreview
–
Waterusageinformation
–
B - 29
RateRestructuringConsiderations
UsageSummary
NonResidential
UsagebyMeterSize(hcf/BC)
UsageType0.75122346
WinterMedian916356823626116
AnnualAverage21327012928697226
AnnualMedian142038631661111
SummerMedian1019419231127612
Summer75thPercentile25411022506748162584
Summer90thPercentile5581203519108915784402
AverageAnnual
90thPercentile487015831868427350
95thPercentile68972345038955821686
98thPercentile10415033867312859733101
B - 30
FinancialPlanningUpdate
Summary
Waterusageisdownfromthe2007RateStudy
•
Anincreaseinwaterrevenuesisneeded;aseries
•
ofincreasesareproposed
Wateruseefficiencywillcontinuetobeacore
•
Cityprogram,butnotwithoutacost
Raterestructuringfocusingonsimplicity,equity,
•
andrevenuegenerationatthistime
SantaaƚƓźĭğsratesareamongthelowestofthe
•
othercitiessurveyed
B - 31
NextSteps&OpenDiscussion
B - 32
ATTACHMENT E
TABLE 5 COST OF SERVICE
Tiered Rates & Costs by Customer Class
2015 Water Rate Study Data
Single-Family Water Rates ($/HCF)
Costs of Service
TierFY 13/14FY 14/15FY 15/16
1$5.13$5.95$5.36
2$5.46$6.30$5.68
3$8.99$10.39$9.97
4$9.14$10.58$10.15
Adopted Rates
1$2.48$2.50$2.73
$3.74$3.75
2$4.09
$5.60$5.62
3$6.13
$8.76$8.80
4$9.59
Multi-Family Water Rates ($/HCF)
Costs of Service
TierFY 13/14FY 14/15FY 15/16
1$5.02$6.11$5.51
2$5.35$6.45$5.83
3$8.88$10.55$10.11
4$9.04$10.73$10.30
Adopted Rates
1$2.48$2.50$2.73
$3.74$3.75
2$4.09
$5.60$5.62
3$6.13
4$8.76$8.80$9.59
Non-Residential Water Rates ($/HCF)
Costs of Service
TierFY 13/14FY 14/15FY 15/16
1$5.02$6.29$5.67
$9.03$10.91$10.46
2
Adopted Rates
13.56$3.57$3.88
28.76$8.80$9.55
Costs shown herein are based on Water Rate Study projections.
Water Rate Study assumes the integration of additional Olympic
Water Treatment Plant related Water Fund Subsidies.
ATTACHMENT E
TABLE 6 COST OF SERVICE
Tiered Rates & Costs by Customer Class
FY 14-15 Actual Costs
Single-Family Water Rates ($/HCF)
Costs of Service
TierFY 14/15FY 15/16
1$4.43$5.71
$5.51
2$6.50
$9.39
3$14.54
$9.39
4$14.54
Adopted Rates
1$2.50$2.73
$3.75
2$4.09
$5.62
3$6.13
$8.80
4$9.59
Multi-Family Water Rates ($/HCF)
Costs of Service
TierFY 14/15FY 15/16
1$4.23$5.46
$5.44
2$6.25
$9.20
3$14.28
$9.20
4$14.28
Adopted Rates
1$2.50$2.73
$3.75
2$4.09
$5.62
3$6.13
$8.80
4$9.59
Non-Residential Water Rates ($/HCF)
Costs of Service
TierFY 14/15FY 15/16
1$4.43$5.71
$9.39
2$14.53
Adopted Rates
1$3.57$3.88
2$8.80$9.55
FY 14-15 findings based on actual costs.
FY 15-16 findings based on new projections.
Last Year’s Adopted Rate Schedule (February 24, 2015):
Calendar Year20152016201720182019
Maximum Projected
9%9%9%9%9%
Increase
Council approved up to 9% annual increase with provisions for “suspension” of all or part of
•
each following year’s adjustment
9% increase for the first year beginning March 1, 2015,
•
Council directed staff to return with a State of the Water Fund report and a
•
recommendation for each following year’s rate adjustment, up to the maximum 9%.
Recommendation presented for 2016 is a Partial Suspension, = 5% increase for 2016
•
Three options for year 2 rate adjustment:
No suspension
-9% Increase
Strongest financial position of the three options at end of planning period
Reserve fund minimums exceeded throughout the planning period
Bonding requirements achieved FY 18/19
Tier 1 Residential rate rises from $2.73/HCF to $2.98/HCF
Tier 1 Commercial rises from $3.88/HCF to $4.23/HCF
Partial Suspension
-5% Increase
Tier 1 Residential rate rises from $2.73/HCF to $2.87/HCF
Tier 1 Commercial rises from $3.88/HCF to $4.07/HCF
Minimum reserves barely met FY 18/19
Bonding requirements achieved by FY 18/19
Total Suspension
-No Increase (0%)
Rates remain the same as adopted 2/24/15
Reserves not met in later years of the planning period
Bonding requirements not met by FY 18/19
FIGURE 1 -Water Fund -Revenue Plan Options
$40.0
Water Fund Balance ($ Millions)
$30.0
$20.0
$10.0
$0.0
FY 2013-14FY 2014-15FY 2015-16FY 2016-17FY 2017-18FY 2018-19FY 2019-20
Ending Cash Balance - Original Projection
February 2015 Revenue Plan
FIGURE 1 -Water Fund -Revenue Plan Options
$40.0
Water Fund Balance ($ Millions)
$30.0
$20.0
$10.0
$7 M
$0.0
FY 2013-14FY 2014-15FY 2015-16FY 2016-17FY 2017-18FY 2018-19FY 2019-20
Ending Cash Balance - Original Projection
February 2015 Revenue Plan
MinimumRecommended Fund Reserve Balance
FIGURE 1 -Water Fund -Revenue Plan Options
$40.0
Water Fund Balance ($ Millions)
$30.0
$20.0
$10.0
$7 M
$0.0
FY 2013-14FY 2014-15FY 2015-16FY 2016-17FY 2017-18FY 2018-19FY 2019-20
Ending Cash Balance - Original Projection
Ending Cash Balance –9% Increase
February 2015 Revenue Plan
MinimumRecommended Fund Reserve Balance
FIGURE 1 -Water Fund -Revenue Plan Options
$40.0
Water Fund Balance ($ Millions)
$30.0
$20.0
$10.0
$0.0
FY 2013-14FY 2014-15FY 2015-16FY 2016-17FY 2017-18FY 2018-19FY 2019-20
Ending Cash Balance - Original ProjectionEnding Cash Balance - 9% Increase
February 2015 Revenue Plan
Ending Cash Balance - 5% Increase
MinimumRecommended Fund Reserve Balance
FIGURE 1 -Water Fund -Revenue Plan Options
$40.0
Water Fund Balance ($ Millions)
$30.0
$20.0
$10.0
$0.0
FY 2013-14FY 2014-15FY 2015-16FY 2016-17FY 2017-18FY 2018-19FY 2019-20
Ending Cash Balance - Original ProjectionEnding Cash Balance - 9% Increase
February 2015 Revenue Plan
Ending Cash Balance - 5% IncreaseEnding Cash Balance - 0% Increase
MinimumRecommended Fund Reserve Balance
Water Rate Comparison with Neighboring Agencies
Single Family Residential Accounts
Average use 23 HCF per billing period
$200
$180
Monthly Water Bill (23 HCF)
$160
$140
$120
$100
$80
-
Typical Bi
$60
$40
$20
$-
Santa MonicaBurbankLong BeachLos AngelesPasadenaBeverly HillsGlendaleCulver City*
CurrentBills issued after 3/1/16 w/5% Increase
.
*The water rate includes the accessed California Alternative Rate for Water (CARW) surcharge
Onehundred cubic feet (HCF) of water = 748 gallons.
Presented to Water Advisory Committee, February 2, 2016
•
Presented to City’s Task Force on the Environment, January 25, 2016;
•
The City of Santa Monica Task Force on the Environment recommends
•
a 5% rate increase for the coming year, and
•
requests revisiting the rate structure within the next year, particularly in
•
regards to a conservation based block rate structure and fixed charges.
RECOMMENDATION TO COUNCIL, February 23, 2016 meeting:
In consideration of,
Conservation effects not fully realized in FY 14/15
•
Actual revenues +$3M, actual expenses -$2.7M, actual CIP expenditures -
•
$6.8M
Objectives can be achieved with 5% increase at this time,
•
Recommend,
Approve a partial suspension, 5% increase in unit water rates, effective
March 1, 2016
Calendar Year20152016201720182019
Maximum Projected
5%
Increase
9%9%9%9%
(Recommended)