HomeMy WebLinkAboutITEM NO. 7 - TUSTIN WATER RATE STUDY PRESENTATIONWater Rate Study
January 2020 – Public Hearing
City of Tustin
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Timeline on Proposed Water Rates
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•July 1, 2014: Last increase on water rates went into effect
•September 17, 2019: Council set public hearing for January
1, 2020 and authorized staff to mail Proposition 218 notice
•November 21, 2019: The Value of Water flyer mailed to
14,271 customers/property owners
•December 6, 2019: Prop 218 notices mailed to the 14,271
customers/property owners
•As of 5:30 pm on January 21, 2020: The City received 65
protest notices
•January 21, 2020: Public Hearing on the proposed water
rates
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Water Utility Financials
Primary Drivers to Study
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Financial Plan
•Ensure positive net operating income each Fiscal Year (FY).
•Meet any bond coverage requirements.
•Adequately fund capital through surcharge.
•Model reserve policies to meet minimum requirement and identify ideal
reserve targets above minimums to reflect a strong financial position.
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•Recover actual cost of delivering water
•Revise amount recovered from fixed charges versus variable charges
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Current Financials
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Current Capital Plan
•FY 2020 includes Simon Ranch Reservoir
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Projected Reserves Balances
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Proposed Financial Plan
•Approach
›Step 1 – Generate positive net income each year
›Step 1 – Meet debt coverage requirements
›Step 2 – Fund all capital R&R expenses through PAYGO
›Step 3 – Maintain healthy reserves
•Proposed Financial Plan
›5% revenue adjustments in FYE 2020 – FYE 2024
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Proposed Reserve Balances
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Cost of Service
Cost of Service
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SUPPLY BASE DELIVERY PEAKING METER MAINTENANCE CUSTOMER SERVICE FIRE
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COST-OF-SERVICE
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Fixed / Variable Revenue Recovery
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Fixed Components Variable Components
Accounts MeterSize Supply Conveyance
35%65%
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Proposed Fixed Charges: Bi-Monthly
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Meter Size Customer
Component
Meter
Component R&R Charge Proposed
Charges
Current
Charges Difference ($)
3/4" or less $10.38 $13.38 $16.00 $39.76 $46.85 ($7.09)
1" $10.38 $33.45 $39.99 $83.82 $103.65 ($19.83)
1 1/2" $10.38 $66.90 $79.97 $157.25 $197.29 ($40.04)
2" $10.38 $107.04 $127.96 $245.38 $311.86 ($66.48)
3" $10.38 $234.15 $279.90 $524.43 $574.86 ($50.43)
4" $10.38 $421.47 $503.82 $935.67 $956.38 ($20.71)
6" $10.38 $966.60 $1,119.58 $2,066.56 $1,893.76 $172.80
8" $10.38 $1,605.60 $1,919.28 $3,535.26 $1,893.76 $1,641.50
10" $10.38 $2,542.20 $3,038.86 $5,591.44 $1,893.76 $3,697.68
MFR Meters $10.38 $10.38 $37.70 ($27.32)
•City does not currently have any 8” and 10” meters
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Variable Rate Comparison - Residential
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Tiers Proposed
Variable Rate
Current
Charges Difference (+/-) Difference ($)
Residential
Tier 1 $2.79 $0.84 +$1.95
Tier 2 $2.79 $1.48 +$1.31
Tier 3 $2.79 $1.94 +$0.85
Tier 4 $2.79 $2.41 +$0.38
Tier 5 $2.79 $3.05 -($0.26)
Tier 6 $2.79 $3.53 -($0.74)
Tier 7 $2.79 $4.05 -($1.26)
Water Supply - $1.86
Total Commodity - $2.79
$0.00
$4.05
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Increased Cost of Water
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Regional Comparison – Tustin Uniform
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Regional
Average
$68.50
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Recommendations:
•Conduct public hearing to receive testimony on the
proposed water rates for FY 2019-2020 through FY 2023-
2024.
•If there are no majority protest, Adopt Resolution No. 20-04
approving the proposed water rates for FY 2019-2020
through FY 2023-2024.
•Requires 2/3 vote of the Council for approval.
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