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Home My WebLink About0313.000i r " , ," ... ~~'. • c. " .-, I d I L , ;' •• ;' ;~i ~r -" . . -. . , . -".-> ..... -:; ----. -,- SL.:...L.;-=~ . " . .,,~ ~ ".', ,', ...... Kay 24, 1990 The Honorable City Council Palo Alto l California Attention: Finance and Public Works Committee Water Rate Increase Proposal Melr.bers ryf the council: At its May 8~ 1990 mcctinq, the San Francisco Public Utilities Commission app,roved a 27 .. 6 percent wholesale rate increase and instituted mandatory water rationing, which had been requested by ~he San Francisco water Department (SFWD). These actions have a direct impact upon the financial condition of the Palo Alto Water utility. In order to allo~ the utility to offset this wholesale rate increase aPd meet its financial ooligations l staff recommends Council approval of a 10.6 percent retail rate increase effective July I, 1990. DiscussiQD The revenue requirement of the Palo Alto Water utility ~onsists of a number of components including the cost to ~rchase ~ater. the cost to operate and maintain a relia~le systeD, financing an app,ropriate po,rtion of the capital improvements from current operating reVenljeS, funding prudent reserve levels., and producing a return ~ investment which is then transferred to the City's Ceneral Fund. A significant change in anyone of these fa~tors~ as well as a change in sales qro~h.# Eay ~arrant a rate incr~ase or decrease .. An analysis of the Water ~nd for FY 1990-91 sbo~s that the costs of various Water Utility programs are expected to increase vhile others decrease .. Yet overall, there are two factors ~hich are proposed to change significantly from the current. year.. The t~o Ca~tors relate directly to recent actions taken by SFWD. Due to a reduced water supply, Palo Alto's wholesale supplier is requiring mandatory water use reductions in conjuncticn with a 27.6 percent wholesale z'ate increase (effective 6-26-90). To respond to the 5FWD im~-ed 27 percent reduction in ~sumption Trom 1981 levels, Palo Alto's water sales will necessarily decline. CMR:311:0 1 " • I I r I , " r ... ',,- , ,. \ ' .. ~ --. I i I , j • -'---~-"----- o The SFWD's increase in purcbased ~ater costs coupled with a decline in sales have combined to require a 10.6 percent retail rate increase for FY 1990-91. Approval of this rate adjustment will allow the Utility to meet all its financial obligations including the repayment of a $1,155 1 371 obligation in back rent that is owed by the Water Fund to the city for a prior year. It may be noted that, in order to minimize this rate increase, the transfer to the General Fund ($],581,0'0'0 based on a 11.3 percent rate of return) is recommended to be reduced to zero in order to belp ease the financial burden on the Water Fund this year. This zero transfer is reflected in the proposed rates. This report requests approval of revised rate schedules for Gene:l"al Water service (Rate Schedule W-IJ.. During the current drought# water service to th~ community is beIng provided under Drought Rate Schedules W-6 and W-7 (CMR:302:0J. Hopefully. the drought situation will end before ne~t year. When the drought is over and Council rescinds the Drought Rate Schedules,. then General Water Service Rate Sched,ule W-l -will become activated to provide service to the community. ThUS,. the attached rate schedule w-l would be activated and enable the Utility to continue to offset the SFWD 27 .. 6 percent wholesale rate increase. Based on past experience, staff does not anticipate that water sales will rise quickly to a normal level for some time .. However. if sales do recover soon after the drought,. sta~f may return -with a proposal to decrease water rates if revenues appr~ch a surplus .. In addition, this report recommends some minor changes to the Reclaimed Water Service and Hauling Rate Schedule W-I-B whIch removes the commodity rate charge and institute~ an annual permit .fee instead. Finally. it may be no,ted that the F'i 1990-91 Preliainary Annual ~~get document was prepared ~efore the SFWD announcement regarding rationing and therefore ~s not reflect this rate increase proposal. In spreading this revenue increase to Rate Schedule W-l# each rateblock was increased an equal cents PEr hundred cubic feet (ccf). Thus~ although industrial customers received the same cents per ccf lr~rease as residential customecs. their percentage increase will necessarily appear lower because their existing rates are higher than the residential users average rate. The table below summariles the n~t effect of the propo~ed revenue increase effective July 1, 1990 on the average Palo Alto customer. CMR:)}3:0 .1"" •••• '", ... ~~_"'~_ • ..:110<_"_ L ,.-. \ - '" • , . , , , ThQ table below indicates a comparison of PalG Alto's qeneral service water rate-with surrounding communities. The rates shown are those expected t~ be effective 1-1-90. Usage Palo Menlo MountaIn Redwood Los CUst.omer (eel) AllQ ~ yiew £lly Altos Single Fam. ( $ 6.53 $ 9.16 $ 5.34 $ 7.80 $ li:l.)) Residential Single Fall. 14 22.82 Residentiai 21.13 18.86 18.80 23.73 Commercial .9 93.77 91.72 7!.13 11.50 71. 48 Industrial 576 976.72 747.15 797.42 730.00 649.56 0IR:313:0 ':.' ···r~~JF; . -... : 7"'--' ~ .. , ; ' . ...... --. _ i "l:" """"'=-, L'C2',' ," .,'::c-,-,,--,-,-.l. o 4 E~_Qrn.lDendation staff recommends that Council approve the attached Resolution revising Water Rate Schedules W-l and W-l-B to increase ,oates approximately 10.6 percent effective July 1, lq90. Respectfully su~itted, r> 1. ,'_,1_ --, . -d",~ 1>,,1£.----'-" , W. RANOOLPH BALOSCHUN Manager of Rates and Regulations .; .I' i -/ RICHARD L~ YOUNG "," Director of Utilities ----, ,Ji.< - W!LLiAH 1 ZAliER<' '" Cl ty Ma1ager I Attachments: CP'.R: 313: 0 :i~W~f~~ .3·"" . ' •.•. - • .-. " .;.~,;- ~" .-?:- '. -- • • '--" , --:-----, ---------'='. ----------.!-- o o RESOWTION NO. RESOWTION OF THE COUNCIL OF THECITY OF PALO ALTO AMENDING ~CHEDULES V-} AND W-1-B OF THE CITY OF PAID ALTO UTILITIES RATES AND CHARGES PERTAINING TO GENERAL WATER SERVICE The Council of tbe city of Palo Alto does hereby RESOLVE as follows: SEcrIQ_~. PUrsuant to section 12~20.010 of thE: Palo Al to Municipal Code, Sched,ule W-l (General Water Service) r SChedule W-l-B,lR~claimed ~~ter service), of the Palo Alto Utilities Rates and Charges is hereby amended to read as shown on Sheets W-1-1 and W-I-B-l, attached hereto and incorporated herein; SECtION 2. 't'bis Council finds that the revenue derived from the authorized adjustments of said rates by the City Manager sball be used only for the pu~ses set forth in the Palo Alto City Cha~~err Article VIt, Section 2, entitled ·Public utilities Revenue.-The aaoption of this Resolution iS 6 theretore 6 specifi cally exempted under the Public Resources Code Section 210aO(b) (8) fr~.the requirements of CEQA~ ~~<;'1TON ). The foregoing changes shall become effective July 1. 1990~ H!TRODOCEO AND PASS ED: AYES, NOES: ABSENT: ABSTENTIONS: ATTEST: APPROVED: City Clerk Kayor APPROVED AS TO f'ORJII: Acting city Attornei City M~nager Director of finance Director of utilities a<:b: 05/11/90 .:-~ ~'" ~' ,. '.' APPlIC.l8I1I TY: f~is &chedule applies to ill water service. HRAITORl': , &ENERAl WATER seRVICE l!lliill RATE s( HEDUl ,-~':1 \ " I~slde and o~tside the incorporated limits of t~e Cit, of P~To Alto and land ~ed Q< l •• ,~ by the Cit}. RATES: SerW'ice Charge: For Sj8-incll meter ~ fo~ 3/4 inch meter . fo," I irK" n1ete,. . for 1/2 inek meter for 2·inch meter for 3-ine. meter far 4-in(\ meter For fi-in~_ meter for 8-inc~ meter for 10-inc~ ~eter Quantity Rate: {Tm be added to Ser~ice Ckarge) .Per Meter Per Meter Per Mont" $ 2.!;lI 2.60 2.80 3.90 UO 8.~0 11.50 22.65 3~.IS 43.Se , ~er ____ 1I'Qntit Per Hund'\'"ed Cubi_~_ fe"et,,-__ .=== .. P""r.e...ssu.re lones 1..1!Jrougll « Sthroy'lh...L first Ned Next Next next Oller C Cef 6 Cef 10 Cd 30 (cf 950 Ccf 1,000 Cef $1.00 1.62 1.6~ I. 57 L6B J. 70 lemp{) ..... £r)' L~metered serv;ce._t_~ re'Sid~ntfi:1 subdivIsion de~elopers. per ~onnection _ . CITY OF PAl~ ALT~ WTlllTIES Issued by t~e City Council Super,eded Sheet No. !i-I·l ~ated 1-1-89 $1. 16 1.88 2.02 2.07 2.08 2.09 S2.50 per mor.t. ~----- Effect!ve 1-1-90 Sneet No_ W·I-I • _c. --------.. -''; - ' .. ~ o o RECIAIMED IlATER SERVICE • HAULING UTIP T'i AA TE seRE OOLE"'=!'-!! APPLI CAB! LIT'i: This scbedale applies to all reclaimed vater service including reclaimed 'Water available for hauling for uses specified by Authorization No. 21B!.80()1 issued by the California State Regional Water Quality Control Board on July 14~ ~977. TERRITORY: The Reclaimed Water Service Charge applies inside the incorporated limits of the City of ?~~~ Alto and land owned or leased by the city. Hauled water l.S available to any entity Obtaining a reclaimed water permit and paying the indicated fee. RATES: Reclalim~d Water service Annual Permit Fee .••••••••••••.•• $35.00 CITY OF PALO ALTO OTILITIES Issued by the City Council superseded Sheet No~ lC8.1a dated 7/1jB9 Effective 7"'1-9Q Sheet No. W-I-B-1 .. ' . ,) " .. , , , ~ , . , • ._-"'.