HomeMy WebLinkAboutCC 11 WTR COMMOD RATE 2-21-84DATE:
Feb. 15, 1984
CONSENT CALENDAR
NO. ll
Inter-Corn
FROH:
SUBJECT:
HONORABLE MAYOR AND CITY COUNCIL
BILL HUSTON, CITY MANAGER
WATER COMMODITY RATE ADJUSTMENT - PASS THROUGH FORMULA
RECOI,~ENDATZON
That the City Council adopt Resolution No. 84-21 which permits administrative
adjustments of water rates.
BACKGROUND
As part of the Montgomery Engineering analysis of the City's water rate
structure, a recommendation was made that water rates should be adjusted
periodically to offset direct cost increases in;
a) purchased water;
b) energy;
c) pump taxes and/or basin equity assessments.
These fixed operating expenses of the water fund are tied directly to charges
established by the East Orange County Water District and the Edison Company.
Increases in purchased wa%er and energy rates have a substantial affect upon the
financial position of the water fund since these expenses are major components
of the water system operating budget.
DISCUSSION
Resolution No. 84-21 provides the authorization for staff to administratively
adjust water commodity rates to pass through increased operating expenses for
purchased water (including pump taxes and/or basin equity assessments set by the
Water District) and energy. The resolution establishes a base year with a
methodology to calculate future adjustments which must be reported to the City
Council within five (5) days of any adjustment.
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RESOLUTION NO. 84-21
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
TUSTIN, CALIFORNIA ADDING A COMMODITY ADJUSTMENT
CHARGE TO THE WATER SERVICE RATES
WHEREAS, a study of the Tustin water service rate structure
has been completed; and
WHEREAS, the study hereinabove mentioned recommended that
the rate structure of the Tustin water service be amended to pro-
vide for a commodity adjustment charge to permit administrative
adjustment of water rates to permit changes in water rates so
certain increased costs over the Base Year costs, including the
pump tax and/or basin equity assessment imposed by the Orange
County Water District, cost of purchased water and cost of electri-
cal energy to pump water can be charged to water customers of
Tustin; and
WHEREAS, the City Council finds and determines that it is
appropriate to amend the resolution of the City of Tustin
establishing water service rates to include a commodity adjustment
charge for the PUrposes described above.
NOW, THEREFORE, the City Council of the City of Tustin does
hereby resolve as follows:
1. Resolution No. 83-7 is hereby amended by adding a new
paragraph as follows:
"F. Effective April 1, 1984, there is hereby
imposed a commodity adjustment charge applicable
to all water usage charges for water sold pursuant
to the provisions of Resolution No. 83-7. The City
Manager is hereby ~uthorized and directed to make
or cause to be made the charg.es associated with
the commodity adjustment charge as provided in
this subsection F. When the commodity adjustment
charge is first charged to customers under the
water service rates or it is increased or de-
creased, the City Manager shall within five (5)
days notify the City Council in writing of the
action taken pursuant to this subsection.
The comm6dity adjustment charge shall be
added to the water usage charges for water sold to
each customer and shall provide for the automatic
adjustment for each 100 cubic feet of water sold
whenever the cost per acre foot (A.F.) of water is
increased with respect to the Base Year of 1982-83
due to changes in the Orange County Water District
(OCWD) pump tax and/or basin equity assessment,
. the East Orange County Water District (EOCWD) acre
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foot charge for treated water and/or the costs of
electricity associated with underground water
production.
The Base Year Costs (Based on 1982-83 fiscal year
figures-~are as follows:
Dollars Per
Acre Foot
Cost of purchased water
from EOCWD
$ 155
OCWD Pump Tax
Electrical Pumping Cost
Basin Equity Assessment
Base Year Water Cost
21
60
61
Purchased Water
155
Pumped Water 81
The Basin ~roduction Percentage established for
the City 'of Tustin by OCWD is currently 60%
pumped and 40% purchased water. If pumped water
exceeds 70% of total, the acre foot charge as-
sociated with the-Basin Equity Assessment is ap-
plicable. The OCWD has the authority to change
these percentages on an annual basis. In the Base
Year Tustin water service rates did not include a
basin equity assessment because Tustin did not
pump 70% of the water sold to its customers.
To the extent that in years after the Base Year
any of the costs shown above are increased or the
Basin Equity Assessment is applicable, such in-
creased costs would be recovered by the commodity
adjustment charge."
2. The attached Exhibit A illustrates the method
determining the amount of a commodity adjustment charge.
3. Except as provided in this Resolution,
III
III
III
III
of
all terms and
· 1 conditions of Resolution No. 83-7 shall remain in f~ll force and
effect.
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ATTEST:
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7 CITY CLERK
8 JGR:ARW:cjs:D:09/O1/83:32
JGR:ARW:cj~:R:09/26/83:32
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PASSED A~D ADOPTED at a regular meeting of the City Council
the city of Tustin held on the day of
, 1983.
MAYOR
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EX}{I B IT "A"
Example of a commodity Adjustment
Base Year Water Sales
Total Sales
Lifeline Rate Sales
Sales above Lifeline
Base Year Water Requirement
Pumped Water
Purchased Water
(Cubic Feet)
5,000,000
497,042
4,502,958
(Acre Feet)
5,940
7,260
Total Water Supply 13,200
Increase of Purchased Water Costs to $187 per Acre Foot
New Rate $187
Old Rate 155
Increase Unit Cost $ 32 per Acre Foot
Amount of Water Purchased in Base Year 7,260 Acre Foot
times increase in unit cost of $32 is $232,320
$ 232,320 Increase Water Cost
4,502,958 CCF Net Sales in Base Year
= $0.052/CCF
Commodity
Adjustment