HomeMy WebLinkAbout0300.091•
Kay 30, 1991
~ne Honorable city council
Palo Alto, California
'JUDGET q 1-92
Attention: Finance and Public Wor-ks committee
Kater Bate Increase Proposal
Member. of the council;
Report. in Brief
At its April 23, 1991 meeting, the San Francisco Public utilities
COlIDLie:sion approved .a 40 percent wholesale. rate increase and
continued aandatory water rationinq, which had been requested by
the San Francisco water Department (SFWD}. These actions have a
direct inpact upon the financial condition of the Palo Alto Water
Utility_ In order to allow the utility to offset this wholesale
rate increase and meet its financial obligations, staff recommends
council approval of an 18 percent retail rate increase efrectlve
July 1, 1991.
Discussion
The revenue requirement of the Palo Alto water utility consists of
a number of components including the cost to purchase water,
operate and mainta.in It reliable system, .finance an appropriate
portion of the capital improvements .from current operating
revenues.. fund prudent reserve levels, and proouce a return on
invest.ent which is then transferred to the City's Ceneral Fund.
A siqnificant change in anyone of these factors.. as well as a
change in sales growth, may warrant a rate increase or decrease.
rt can be noted that the SFWD 40 percent Wholesale rate increase
necessarily translates to a 18 percent retail rate increase because
the pelo ~to water utility'S remaining rinancial obligations and
expenditures are DQt also rising by 40 percent. Some expenditures
are holding steady or declining such as contract services.
An analysis of the Water FUnd for FY 1991-92 shows that the costs
of various Water utility programs are expected to increase While
others decrease. Yet overall .. the primary expense which is
ClIlU300. Ii
--'----.. --.-
.. -:.
•
'.,
-----------~---------------------------------....... -
o
proposed to change significantly from the current year is the SFWD
wholesale cost of water. Due to a reduced water supply, Palo
Altols wholesale supplier is continulnq its requirement for
mandatory vater use reductions in conjunction with a wholesale rate
increase Ceft"ecti .... e 7-1-91J. To respond to the. SFWD imposed 28
percent reduction in consumption from 1987 levels, the staff has
developed a -1991 Drought Response Plan-(CMR:292:91) of which the
proposed rate schedules contained in this report are an integral
part.
The SFWD increase in purchased water costs, coupled with an
increase of approximately $300,000 to fund the expansion of
proqraas related to Palo Alto'll 1991 Drought Response Plan and
returninq to a full equity transfer' to the General Fund, requires
an 18 percent retail rate increase for IT 1991-92. Approval of
this rate adjustment will allow tile utility to meet all its
financial obligations.
This report requests approval of revised rates for General water
Service (Rate Schedule W-l) and Drought Rate Schedules W-6 ana! W-7.
These rate schedules will likely remain in effect until the water
situation eases considerably and it makes sense to ret.urn to a
normal pricing strate9'I for this commodity. When this occurs staff
intends to return to the Council with two new general service water
rate schedules rather than continue charqinq all customer classes
on Rate Schedule W-1. Tbe reason for this is twofold. First, the
proposed General water Service Rate Schedule W-l has been
redesigned to accommodate the need tc, provide additional water for
tamilles of six to ten persons. Secondly, staff recommends
·unbundllnq~ General Service water Rate Schedule W-1, so that
residential and non-residential customers can be priced on separate
rate schedules. Xn this regard, a Cost of Service Study will be
performed for F~ 1990-91 to aid in ·unbundling-the rates.
Introduction of a Maximum Cap and Per Capita Allow~
As discussed in Palo Alto's 1991 D~ou9ht Response Plan, the staff
proposes some siqnificant changes to the existing water rates.
Specifically, staff recommends the introduction or a maximum cap of
SO units for residential users and a maximum cap of five times the
baseline consumption allowance (BCA} for non-residential customers.
By adopting the principle of a maximum cap. a stronq message is
sent to the community. A maximum cap program can also help
identify large users for further investigation and action by the
utility. 1f such cust01llers fail to meet certain criteria they
~ be subject to a fl.:>\II' restrictor installed on their water
service. Tbe proposed rate schedules make reference to this new
provision.
CXRIlOGz91
, -
•
..
j$!t . --------"-'.~~* ,
Additionally, the proposed rate schedules reflect a cbange in
pricing strategy ~hereby th~ last rateblock for consuaptlon aboVe
50 units (Schedule W-l and W-6) or five times the BCA (Sched~le W-
7) is set at a very high ra.te of $18 per unit. Thi .. is three times
hiqher than the current highest price of $6.00 per unit. By
eatabllahlnq a rate at this level. the price differential for
consumption above this maximum cap will rise dramatically and send
a strong price slqnal to customers ~ OVer the past year I the number
of residential accounts using more than 50 unit,s in a given month
ranqed from 20 to 400, depending on the season. A si5ilar number
of BCA customers used in excess of live times their BCA.
Another significant change with respect to Palo Alto water rates is
a proposal to provide ;additional water at .odeI'"ate rates tor
residents with relatively larqe families. The need tor such an
allowance arises in part because of the much higher prices for
vater use betiieen 20 and 40 units, and many bouseholds with six to
ten individuals consume at this level. In desiqning Drought Rate
Schedule W-6, the price of vater is priced moderately up to 20
units, which should accommodate households up to five persons.
Tor househOldS with six to ten persons, staff proposes a ha~dship
application proces.s, which will enable customers to switch. from
Rate Schedule W-6 to service under Rate Schedule W-1 and thereby
pay tor additiona.l water at .ode-rate ra.tes~ Rate schedule W-l has
been redesi911ed ~or this purpose. Staff recommends that once a
custo.er qualifies for service under Schedule V-l. that tlillinq
under Rate SChedule V-I be prospective and not retroactive.
tlPAgt of Retail Bate Increase
In spreading this 18 percent residential incr-ease to the rate
schedules, incr-eases applied to the rateblocks varil!d in accordance
with the tollowinq pricing strategy:
o Do not change the price of the initial rate:block and thereby
shield the .ost conserving customers from this rats increase;
o Design the rates so that residential customers who are able to
saintain their usage at or below the Su.Der target of 14 ccf
would experience approximately one half the system averag-e
rate increase;
o set the last rateblock at $18 per unit to provide a very
strong price signal to those who are excessive users and/or
1arge users, who may otherwise be indifferent to the cost of
vater at lower price levels;
o Recover much of the revenue increase from customers whose
uS4Q8 falls within the last two rateblocks.
C!lRUDD.n
!
e-._
j
'101
/
::) 0
xapac\ of .ate lacre_a ••
cu,tSlMT
Monthly
~
Drought Bate Scbedyles
Residential (sm) 7
Residential (av) 14
Residential (lq) 20
Residential (lq) 35
Residential (lq) 50
comm.,rcial (av) 1. 5 BCA
Commercial Cav} 2.0 BCA
Commercial (av) 5.0 BCA
Rate Schedule V-I
Residential (lq)
RP~idential (lq)
(hardship
35
50
Proposed
Iiill
$ 9.50
24.83
59.33
190.58
321. 83
exeZllption)
55.35
123.80
Increase
CDeere"se)
$ 0
2.03
19.73
90.98
162.23
(44.25)
(35.80)
.ater lill COMparl.on
Usage Palo Menlo Mountain
custoM r .!£tll llll2 nu Yin!
Percent
Change
o
8.9
49.5
91.3
101. 6
o
3.7
93.3
-44 .4
-22.4
Redwood Los
~ All2.I.
Residential 7 $ 9.50 $16.38 $ 11.07 $12.78 $14.66
Residential 14 24.83 26.82 22.44 22.58 22.62
Residentiilll 20 59.33 35.97 32.44 30.98 29.H
Residential 35 190.58 61.50 77 .06 51.98 60.79
Residential 50 321. 83 83.26 121. 69 72.98 77.85
The table above indicates a comparison of Palo Alto's drought rates
with surroundinq communities. The rates shown are those expected
to be effective 7-1-91.
CXRllOOZll
BeAAueMAtion
staff' reCOlmIer.ids that Council approve the attached Resolution
revising Water Rate Schedules W-l, W-6 and W-1 to increase rates
approxt.ately 18 percent effective July 1, 1991.
~6spectfu11y .ubmitted,
-0.~~~tL
II. RANDOLI'll BALDSCIiUN
Assistant Director of Utilitias
A~inistrativ. services
-~..(.~
IUCP.i<RD L. yomfG /
Di~ctor of otilities
Attacn.ent&: Resolution
c:IIa.300.U
Utility Rate SChedule 11-1
utility Rate Schedule 11-6
utility Rate Schedule W-7
----...... •••• ... "1I1nIillll5io11ii· .. f ..................... -~' •• _ ... --
j
j
I
•
~--------~~--~---~':-::"
r
RESOWTION NO.
RESOWTION OF THE COUNCIL OF THE CITY OF PAUl ALTO
ADOPl'ING UTILITY RATE SCHEDULES W-l, W-6, AND W-7
IN ORDER TO IKPLEKENT DROUGHT RATE SCHEDULES FOR
THE CITY
WHEREAS I the council of the City of Palo Alto has conducted
a public bearinq an declared in Ordinance No. 3960 that a water
shortage emergency exists.
NOW , THEREFORE~ the councilor the City of Palo Alto does
hereby RESOLVE as follows:
SECTION 1. Pursuant to Section 12.20.010 of the Palo
Alto .Municipal Code, utility Rate Schedules W-l, W-6 .. and W-7.
copies ot which are attached hereto, are hereby approved and
adopted as shown on Sheets W-l-l, W-6-1, W-6-2, W-7-1, and W-7-2.
SECTrON 2. The foregoing rate schedules shall become
effective as of July 1 .. 1991.
SECTION J. The Council finds that the revenue derived
fro. the authorized adjustments of said rates by the city Manager
shall be used only for the purposes set forth in the Palo Alto City
Charter, Artl~le ViI, Section 2, entitled -Public Utilities
Revenue.-The adoption of this Resolution is, therefore, speci~i
cally exempted under the Public Resources Code Section 21080{b){8)
fro.a the requirements of CEQA4 Moreover, the Council finds that
enactment of this reSCIlution is exempt from provisions of the
California Environmental Quality Act because it is immediate action
necessary to mitiqate a water shortaqe emergency.
APPROVED:
Mayor
City Manager
1
----..... -'" .... (-.--~ .• --"",,,-,,,",,,,,-"<---------',. -,--.-
-.-.
,
-.
'.
o
Director of Finance
Director ot utilities
2
tlQ51f .. tI05QMl
,
.-, "'.
,_l '.' ...
-
'---------
GENERAL VATER SERYltE
UJum BATE SCHEOOLE V-I
APPt]tABIlIlY :
1Ms schedule applfes t. an •• ter service and l1.y complement Drou9ht R.te
Sc~edul. V-& and V-l when a w.ter short.ge emergency exists in the City of Palo
Alto.
lERRll0R1:
RATES:
Inside and outside the incorponted limits of tho CHy of Palo ... lto and land
owned Dr le.sed by th2 Cfty.
service Cnarge;
ror S/8-1nch meter
For 3/4 Inch meter
For 1 Inch meter _
for 1 1/2 inch meter
for l-fnch .. ter
For J-Inch meter
For 4-lnch meter
For 6-1.<h .. ter
For 8-1nch meter
For 10-inch meter
CommodIty ~.tes: (To be added to Servite Charge)
Per Meter
Per IWntb
$ l.50
2.60
2.80
3.90
5.10
8.50
Il.SO
22.65
35.15
43.50
Per Hundred Cybic Feet
Pressure lones Per Meter
Per Month 1 thrpugh 4 5 through 7
first
Next
Hext
Next
O"er
20 Ctf
20 Ccf
10 Ccf
SO Ccf
100 Cd
$1.00
2.19
5.7S
8.75
18.00
Temporary u~tered service to residential
subdivision developer£t per connection ..
CITl OF PALO ALTO UTILITIES
Issued by the City Council
Superseded Sh.et No. V·I·] dated 7·1·90
$1.16
l.4S
6.12
9.15
111.39
Sl.50 per month
Eff.ctl,e 7'1-91
Sheet No. ~·I·I
•
4
/
APPLICABILITY:
o
DROUGIIT RATE StHEDUlE
I1TILITY RATE SCHEDULE W-5
ThIs schellul. cOllPle"",nts Rote Schedule W-I and appl ies to sIngle family
resfdentfal water service during a period when i water shortage emergency
condition exists in the tlty of Palo Alto and its distribution area.
TElUIITORY:
Inside the fncorporilted 1 i.its of the City of Palo Alto, on 1 and owned or leas£d
by the City, and any other land serviced by the Palo Alto Water Utility.
RATES:
For
For
For
for 1
For
For
For
F.r
For
For
Service Charge
SIB-inch meter
3/4-inch meter
I-inch meUr
1/2 inch meter
2 Inch met ..
3-lnch .. ter
4-iPJch lleter
6-I"h meter
8-inch meter
lO-inch IlJeter
Commodity Rates; [to be added to Service Charge]
Per Meter
Per Mont!
First 7 ccf {Bas.line All.oance)
8 ccf -14 ccf.
15 ccf -20 ctf.
21 cef -SO cef. Over SO ccf __ .
HAROSHI' EXCEPTIONS:
s
hr Meter
Per Month
2.S0
2.60
2.80
3.90
5.10
8.SO
12.20
22.&5
35.15
43.50
Per Hundr@d Cub,c Feet
All Pressure Zones
s 1.00
2.19
5.75
8.75
18.00
Any person seeking an exteption to any prQvis)on of this rate schedule shall file
i written applfcation with the Supervisor, Utilities Customer Service Center. The
·Superyfsor-or his/her designee may act upon said applfcation, seek further
'Ill OF PAlO AlTO UTILITIES
Issued by the City Council
Supersedes Sheet No. V-5-1 dated 6-1-90
Effective 7-1-91
Sheet No_ V-5-1
•
>
:-
"
DROUGHT RATE SCHEDULE
UTILITY RATE SCHEDULE ~-5
infD~ation, or ~old an informal hearing. The burden of establishing .I hardship
shall be upon the ippllcant.
Applications shall be granted only after the customer has adopted ill practicable
water -conservation ..easures, and If the applicant establishes that this ri:te
schedule or its application to applicant's situation creates or would tend to
create~ .) ill detrillenta' condition affecHng th..! health, sanitation or safety of the
applicant or the general public, Dr b) have an extraordinary Dr unusual adverse
economic impact such as Toss of production or jobs, or c) the applicant has six or
RIOre full tiao permanent residents at the dwelling and complies wit" the Utilfty
Departments criterh. for I ·per capita-allowance. Based i,ln the applicant
establ;s~ing t~at one or moTe of the foregoing hardship conditions exists, t~e
·Su'perv~sor" may adjust the customer's bill Of servl! such customer under art
alternate water rate sc~edule. Tne ·Supervisor· ~ay denY an applicants reQuest for
an exemption to t~ls rate sc~edule if ~e or s~e deems that granting such ex.-ption
is ineQuitable, administratively impracticab1e, or materially impacts the Utility
system costs in an adverse manner. Applfcations d~nied by t~~ ·Supervisor· ~ay be
appealed to the Director of utilities within fiye days thereafter. The deciSion of
the Director of Utilities shall be final.
CHARGES fOR fLO~ RESTRICTIN6 DEYICES:
Under certain conditfon;. customers who use in excess of SO ccf/lOOnth may be
subjected to instal htion af iI flo" restricting device. III the event It becomes
necessary to install or remove a flow-restricting devfce on the service line of any
customer Yiolat~ng any provisions of the CHy's ordinance on water use or exceedlng
the • ..... i."" cap' of 50 ccf/mont~, the following charges will apply for installation
of flow-restricting devices ~r fOf restoring service:
Meter Size
SIS" to I'
I-liZ' to Z'
3· and larger
Installation Cost
$25.00
SO.OO
Actuol Cost
Removal Cost
$25.00
50.00
Aotual Cost
Actual ccst will fnclude all material, labor, equipment, and overhead char~e$.
DISCOKTINIIAHCE OF WATEK SERYICE.
Continued water consumption in violation of ttle City's ordinance on Water Use
Restrfctions lIay resU'lt in the disc.ontinuance of water service by t~e C.ity. A
charge of $250 sholl be paid prior to reactiYoting the serYice.
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Superseded Sheet No. V-6-2 dated 6-1-90
EffectiYe 7-1-91
Sheet V·6-2
·
•
-.
'~-..
:i
"
I
o
APPLICABILITY :
"-.,--
QROUGIIT RATE SCHEDULE
UTILITY RATE SCKEDutE ~,.z
T~is schedul< complement. Rate Schedule V-I ind applies to non-residenti.l water
service during i period when I water s~ortage emerge~cy condition exists in the
City of Pilo Alto and its distribution ire.. This schedule Is also applicable
to .ulti-family residential cust~rs served through I Master meter and in some
cases) sing1e family re$,d~nt;al customers vho have been granted an exemption
frOM $er~ice under Rate Schedule W-&.
TERRITORY,
Inside the Incorporated limits of the City of Palo Alto, on hnd owned or leased
by the City. and '"y other land ser.iced by the Palo Alto Water Utility.
RATES,
for
For
for
For I
For
For
For
for
For
For
Service Charge
S/B-inc~ meter
3/4-inch meter
I-inch meter
1/2 inch meter
2 inch meter
3-inch meter
4-inch aeter
6 - ; nch meter
B-lnch meter
IO-inc'h meter
~jty Rates: {to be added to Service Charge)
ProPQrtjeD of Baseline Consumption
l\11owanco lSCAl
NOTES:
o to .90 Bell ..•
.90 to I.SO SCA •
I.~O to 2.0 stA.
2.0 to 5 stA.
CNer 5 stA.
$
Per Meter
Per Mpnth
2.S0
2.60
2.80
3.90
5.10
8.50
12.20
22.65
35.15
H.50
Per Hundred Cubic Feet
All Pr~$syrg 19n9s
$ 1.50
2.00
3.30
9.00
18.00
The Basel ine Consumption Allowance (atAj is intended to represent a customer's
IIOnthly essential water consumption rfquirement for indoor use or blJsiness
operatfons. The 8CA is based on the average consumption (in units of bundred c~bic
feet) for an individual customer (meter) during the billing periods of February and
fi!arch 1990 .. Under certain cfrcumshnces. such as the unavailability of billing data
or the granting of a cu.stomer's requ.es.t for a. varh.nee, the Util ity lIay select
alternative IIOnths or methods to arrive at I reisonable BeA. Variances may be
granted based on a d~nstritian of seasonal fluctuations in internal business
CITY OF PALO ALTO UTIlITIES
Issued by the City Council
Supersedes Original Sheet No. W-7-1 dated 6-1·90
Effecttve 7-1·91
Sheet No. W-7·1
•
,-
,
•
•
r 'lUGIIT RATE SCHEDULE
UTIL., ( RATE $CHElMllE V-Z
water needs or other ev1dence-of ecor.omlcal bus.iness hardship. lSee HardsMp Exceptior.s
below}.
\!ARDSIIlP £XC EPT lOllS,
Any person seeking an exception to any provision of this rate scbedule shall file
I 'IIritten appl ication wi.th the Supervisor .. Util iti.es Customer Serv1ce. Center. The
·Supervisor-Dr hisjher dUignee lIay ad upon said appl ication, seek further
information, or ~old an inform.l hearing. The burden of establishing a hardship
shall be upon the applicant.
Applications shall be granted only after the cust~r ha. adopted all practicable
water conservation measures, and if t~e appl ;cant establ ;shes that thi 5 rate
schedule or its application to applicant's situation create-s or 'Would tend to
creatl!': a} a detrimental condition affecting the health t sanitatfor. or safety of the
appl1cant or the general public, or bJ have ~n extraordinary or unus~al adverse
economic impact suc'n iJ.S loss of production of jobs~ Based on the applicant
establishing that one Dr more of the foregOing hardship <onditlons exists, the
IIISuperv1sor-may adjust tne customer's. bill including the baseline consumption
allo'fllance or servt s.uch customer under an alternatt water n.te schedu1e. The
IIIS uperv isor· may deny an applicants request for an exemption to this rite schedule
if he or she deems that granting such exemption is fnequitable, administratively
impr .. ct1cable, or materially impacts the Utility system costs. in an adverie manner~
Applications denied by the ·Supervisor-may be appealed to tne Oirector of Utilities
~ith;n five days thereafter. The decision of the Director of Utilities shall be
final.
tllAJl6ES FOR FLOV RESTUCTING DEVICES:
Under certaln conditions, customers who use in excess of 5 times their BCA ~ay be
subjected to instalht10n of a flow restricting device. In the event it becomes
necessary to install or remove a flow-restri(ting dewice on the service line of any
cus.tomer ~iolating any provisions of the City's Drdinance on water use or exceeding
the ' .. ximuo cap' of 5 SCA per month. the follooting charges will apply for
installation of flow-restricting devices Dr for restDring service:
tleter Size
5/S' to I'
1-1/2' to 2'
3-and larger
Installation (ost
125.00
50.00
Actual Cost
Removal Cost
525.00
50.00
Actual Cost
Actual cost will include all materialt labor, eqUipment, and overhead charges.
DISCONTINUANCE OF VATER SERVICE:
Continued water consumption in violation of tne City's ordinance on Witer Use
Restrictions may result in the discontinuance of water service by the City. A
c~arge of 5250 shall be paid prior to rea:tivating the service.
CITY OF PALO ALTO IITi1iTlES
Issued by the C~ty Council
Supersedes Original Sheet No. W-7-2 dated 6-1-90
Effective 7-1-91
Sheet No_ W-7-2