HomeMy WebLinkAbout0232.094, '
April 28, 1994
THE HONORABLE CITY COUNCIL
Palo Alto, California
Attention: Finance Co~ittee
lL2Rossd water Rate Deor~ft9'-
Members of the Council:
BUDGff 9lt-95
This report reCOITIJ'I'lends Council adoption of the attached resolution
authorizing a $2.37 million water rate decrease effectlva July 1,
1994. This rate proposal is based upon an anticipated San
Francisco 'Wate'r' Department wholesale water rate incL'ease liJlJited to
10 percent or less. If the SFIW should propose a Whoh~!nal(J ('ate
increase substantially in excess of 10 percent, staff may ret~lrn to
Council during the budget process with a revised rata 11 rate
proposal.
Baokglound
curiny the recent six-year drought, the Water Fund financial
reserves had become" nearly depleted and the poor tinancia.l
condition of the Fund was well publicized. Howevor, since the
drought ended, water sales have been rising at a moderate rate.
Furthermo~e, direct funding of the Rate Stabilization Roserve (RSR)
from current rates is expected to account for approximately $1.8
million of an estimated $2~8 million increase to the resotve in
1993-94. Finally, projected cost savings in excess of $1.1 million
in· the current oper.ating budget and approximately $1 mi 11 ion
already achieved from 1992-93 will favorably impact the reserve
balance. As a result of these factors, the financial health of tho
water Fund has improved and the Utility is well-positioned to
reduce rates.
CHlU 232 I i:4
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staff recomelids ad~ption of a': 15' percent rate decrease proposal,
even though the San Francisco water Department (SFWO) may increase
wholesale rates to "Palo Alto and other suburban cities.
Traditionally, Palo Alto staff develops the-proposed budget and
rate recomme'ndations before the SFWO announces a wholE!sale rate
adjustment. That. is the case again this year. At the time of this
report, however, preliminary information from the Bay Area Water
Users Association indicates that the SFWD rnay increase wholesale
rates in excess of 10 percent effective July 1, 1994. AccordinglYt
this 15 percent retail rate decrease is based upon a presumed 10
percent SFWD wholesale rate increase. In the event the SFWO rate
proposal substantially' differs from a 10 percent increase, staff
lllay revise 'this retail rate proposal during the budg€t process.
staff updates on the SFWD rate issue will be provided during the
budget hearings.
To illustrate the turnar-ound in the Water F\lnd, two graphs aro
shown. The first graph (Figure 1) charts annual water sales in
units for a ten-year period. The impact of the mandate to reduce
consumption during the drought P98?-1992) is. evident from the
graph. It also illustrates that since FV 1991-92, water
consumption has been riSing steadily and is expected to reach 5.6
million units this fisc.al year.
Figure 2, on the
next page, graphs
the upward trend in M~~_I'«"
sales revenue during 8
this period, _.
primarily due to
rate increases tc-
recover the
lo,rholesale cost of
water from SFWD.
More i~portantly,
the graph also
ind.icate's the
corresponding
balance of thE! Rate • -""
Stabilization
Reserve during the
Water Sales
period. The RSR 0 -----'------.1-------l"-"-:-'7:-::-:':' ___ < __ ~
b a 1 a nee was ,,·n ~, III1-U ea-Oi n·lo 'C·" n·n 111-" il"'~ I4-U
extremely low until flloaJ ¥lou r-'-"',~_)
1992-93 when it Figure 1
began to rise. Due
to the positive factors mentio"ned
prOjected to reach an ending balance
previously, the RSR is now
for the current fiscal year in
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o)(~ess of $6.2 million. (BocaUSO-the RSR was not introduced until
FY 1993-94 1 the 9raph depicts the sum ,of the Transfer Stabilization
Reserve and system Improvement Reserve for the applicable years).
Water Sato$ Revenue vs Reserves
.. '-"-~-""-' ----------------~---.-----~
since 1991-92, the
correlation between
rising sales revenue
and a rising RSR
balance is apparent
in Figure 2. wi th a
significant portion
of the water rate
earmarked to fund
the RSR over tha
past two years, the
"'-'"'r" reserve is projecteci
/' to end FY1993-9~ .. " -. / . ' '·--"'1 well above its /'_ minimum guideline
:::-~i::::-;:;C"",_""'or'._7~--,*, __ "_-_ I --t~=-___ :::L _____ L __ ~ __ l-..-_..J !~r~lon. ~rtis m~!~:
N-n Jot," IHI H-n 11"0 Ic.-", nit It'" u·tj II"" that major funding
fllQ.ll v.., !""'I .. ~,",l c.......,.. .... ) of thp. RSR can be
pigure 2
discontinued for
1994-95, triggering
the 15 percent, rate
reduction rocommendation. With a 15 percent, or $2.31 million
"i'e.venue decrease, effective July 1, 1994, the RSR is still
projocted to end 1994-95 above its target level but below its
m8xi~uM guideline for that fiscal year.
St6tt is also recommending that the 1994-95 Water Fund TranRfcr to
the General Fund be based upon a full equity rate of return of 9.76
porcent, which is equivalent to the return granted the California
Wat"" Service company. 1994-95 had been planned to be the fin.l
year tor continuing to ramp up the water ~}nd Transfer based on a
rate of return of 9.50 percent. The difference between these two
rataa of tcturn represents approximately $47,000. However, qiven
the i_proved financial condition of the Water Fundi the impact of
$41,000 is not significant. On that basis, staff recommends that
the Water FUnd transfer $1,741,000 to the General Fund for 1994-95
based upon a 9.76 rate of return on the,ratebase.
HAter Rate ~!tl!:!PJ\tls.PJL.Hith surrounding cities
,The final two graphs compare Palo Alto's proposed rates with the
current water rat,es of Menlo park, Redwood City, Mountain View, and
Los Altos (which is served by California Water Service). Figures
3 and 4 depict a range of usage levels for residential and a
madium~si2.e business. In Palo Alto, the cur.rent year-round
average residential water usaqe is 12 units per month. At this
lev6l, palo Alto water bills are approximately 10 percent above
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RESIDENTIAL WATER IlILL COMPARISON
Effem1v$ April 1994
1~' ~r& 1: /w>tijjj/mrtmfl~nt o ~-L ... J .•.. 7.., .. , ... _. __ L~
1~ ro 100
l"'~ICCr.)
l'i'IUr .. 3
III r. A. I1'l M. r. II Fl c. !i) M. V. III L. A.
C.oMMERClAL WATER IlILL COMPARISON
METER SIZE 3'
100 300
lkil!1CCf .)
• Po II. 1111.1. Po • Fl C. mt.t v. a L. A.
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:..~";<~~~_._ :, ""'*"":~,';.",",,.,._ .• ~,:,,·_t~~_~:"''':;;-~~~~~~
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surrounding areas. At
hi.gher. uSAge levels,
Palo Alto "esidential
lIInd cOJnmercial water
bills ar(l approximately
14 percent to 21 })ercent
higher than surrounding
areas.
It should be recognized
that. Gorne of these
cities may De developing
rate proposals to raise
rates to offset an
anticipated SFWD
Increase, ~t a time whon
Palo Alto is lowering
its rate,o;, If this
occurs, Palo Altots
w~ter rates will be more
comp~titive than
indicated by the charts
sho· .... n here.
Ii. review of pre.vious
rate cornp~u:isons in 1991
and 1992 (CMRS:300:91 1
310:92) indicate. that
significant gains have
bacn made in closing the
rate differential
bstween Palo Alto and
surrounding oities. For
example, in July 1991, a
Palo Alto resident using
35 units a month paid
approximately $191
cO)'l'lpared to a resident
in surrounding cities
paying an averaqe of
$69. With the current
rate proposal, the
comparison improves to
approximately $80 in
Palo Alto and
approximately $66 in
appro~imately 450 residonts,
residflnts J consu~e J5 units of
surround i ng areas. In
the summer months,
representing 3 percent of all
water.
. ," ~
Although Palo Alto continues to charg8 amQn9 the lowoot rAtes for
residents who consume below average amounts ot water, PAlo Alto
water rateR ~re approKimatel}' 20 percent hig"her {or Above average
consumers than slmilar users in nearby ciths. 'This Is a
reflection of, among other thin9s, Palo Alto's strong cODlllltn.~nt to
encourage conservation through its ratQ: s.tructures. Uotlathalo89 t
for competitive re.asons l future rate ad;h.l,Gtllenta will l1ksly be
proposed by staff to narro,", this rat6 differential Cor tho larger
users. This is the princip.l r~te ... kl"9 objoctiv6 sou9ht in
proposing this rate deoroase.
The revenue decrease was spread unifondy bet.'iiOlln RQsidential. Rate
Sohedule Wr-l and Non-residential Rate schedule W ... ~ 60 that the
business sector and residential sector cOlltinue to h~v-e l"Ilte
parity. In order to continuo the transit.ion {["on steeply inverted
rates, this rate decre~se was applied to those c~stoners c~rr-ently
payinq the highest rates. Thus, residents and busin03Sag, using
more than the average af'Jount of ""'tter (or the appl icable rat£!
schedule, may experience decr~~lses in excess of 1S percent. For
exaraple., an estimated 750 residonts represonting approx1~ately 5
percent of all rCf;idents consu)'!',e in <'xcess of .)5 units In a summer
month. The projected bill decrease at )5 units 1s 22.8 porcent.
The averaqe residential usage In the SUOl"HJt" :months 1e approxinl'Jitely
11 units of W.atQL At this loval, residents will 3xp&rience
a,pproximately a .\3.5 percent rech..>ctlon 1n their wAter bi 11 under
this proposal. On the other hand. clIsto!::'!-Ora, \o!ho use relatively
small amounts of water and are already payintJ tho lo'Wost rates on
the system, will experience no change in thoir bill aft(] w.111
continue to be charged the lowest r~tes,
Usage Monthly Irmount of Percent
~5tQme:t: ill£l llU 1l~~B~"'l1C ~f.ME
Snql. ram. Residential 7 $ 13.S0 $ .00 0
Snql. Fam. Res. (av9') 12 24.65 -L90 -7.2
Sngl. Fam. Resident ia 1 H 28.99 -2.66 -8.4
5n91. Faro. Residential 20 43.45 -8.60 -16.5
Sn9'l. Fam. Residential 35 79.60 -23.45 -22.8
Sn9'l. Fam. Residential 50 115.75 -)8.30 -24.9
Non-Residential:
Small (Rate \i-4A)
5/8" meter 9 n.oo .00 0
5/8 11 meter 18 40.00 -3.20 -7.4
5/8" meter 21 58.00 -11.00 -15.9
CKR113l19.
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Non~ReBid.ntial:
Medium (Rate W~4B)
3 u nato!"
3" meter
3" meter
Large (Rate W~4C)
6" meter
6 11 meter
6 H meter
ReCOmmendation
Usage Monthly
~ Il.ill
100 $211. 30
300 638.30
600 1319.30
500 1030.00
1200 2595.00
3000 6681. 00
0
Amount of Percent
PECRF;.I\SJ> pECReASE
$.00 0
~73.00 ~10.3
~292.00 ~18.1
.00 0
~25S.00 ~8.9
-1281.00 -16.1
Staff recommends Council approval of the attached R~solution by
"'hich Water Rate Schedules W-l and W-4 are amended, therehy
decreasing annual water t"evenue approximately $2.31 million
effective July 1, 1994.
ReGpectfully submitted,
"t./. ?~ gl'~h-____ ,_
W. RANDY I{LDSCHUN
Assistant Director of Utilities,
Administrative Services /. II #£.._. /
EDli;J;: ~-;;g:r
'rector of x ities
Attachments: Resolution
Rate Sphedules W-l, W-4
. "c.'
RESOLUTION NO.
RES01,UTION OF THE COUNCIL OF THIlCITY OF PALO ALTO
AMENDING UTILITY RATE SCHEDULBS W·l AND 101·4 OF
THE CITY OF PALO ALTO UTILITIES RATES AND CHARGES
PERTAINING TO GENERAL WATER SERVICE
The Coutlcil of the City of Palo Alto does hereby RBSOLV.B as
follows:
SHCTlON 1. Pursuant to Section 12.20.010 of the Palo Alto
Municipal Code, Schedule w~ 1 (General Residential Hater Service)
and Scnedule, W-4 (General Non·Residential Water Service) of the
Palo Alto Utilities Rates and Charges are amended to read in
accordance with Sheets W-l-.l. W-4-1 and \'1-4-2, attached hereto and
incorporated herein by refel"ence. The foregoing Utility Rate
Sched\,lles, as amended, shall become effective July I, 1994.
fm.CTION 2. The Council finds that the revenue derived from
the authorized adjustments of the general water service ratea shall
be used only for the purposes set forth in Article VII, Section 2~
of the Charter of the City of Palo Alto.
~CTIO~. 'J1he Coun<:il finds that the adoption of this
rcosalution does not constitute a project under the California
Environmental Quality Act, California Public Resourc~s Code section
21080. aubdivision (b) (8) .
INTRODUCED AND PASSED:
AYES:
NOES:
MlSENT:
ABSTBNTIONS:
ATTEST: APPROVED:
City Clerk Mayor
APPROVED AS TO FORB:
City ttfanager ------------
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GENERAL RESIDENTIAL WATER SERVICE
J.lllI.lIY.BATE SCHEDULE W·l
A. APPLICABII.ITY:
Thls sdlOOulo applies to all residential single family waler service.
B. TERRITORY:
Inslde Md O\!1si<le th<i> Incorporaled ~mns 01 the City of Palo Mo and land owned or leased
by the City.
C. RATES:
Per Meter
fiLM2o!h
For 5/8-!n-;:l, meier. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. $ 4.00
F<x 3/4 irdl metor . . . . . . . . . . . . . . . . . .................. 4.00
For 1 ir\Cll meter ....................................... 4.50
For 1 1/2 inch nwter ..................................... 5.20
For 2·1nch melor ....................................... 6.80
for a·lochmeler ...................................... 11.30
For 4-trict1 meier ...•.................................. 16.20
For 6·lr\CIl meter ..•.•................................. 30.00
For a·1nch melor ...................................... 46.75
For 1 D-lIlcIl metor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58.00
.QQm1llQdi1Y Rals' (To be added Service Charge and applicable 10 all pressure zones.)
Per Meter
~lllel.i!( Per Hundred Cubic Feel
Allpresswe~
Flfst 7 Ccf . . . . . .. . . . . . . . .. . . . . . . . .. . ............. $1.40
Noxt 7Cc1 •............•............................ 2 .17
Over 14 CcI ......................................... 2.41
Temporary unmete red service to r&sidential
subdMslon developers, per COI1nection ....................... $4.00
"-'-"'-•.... _----
CITY OF PALO ALTO UTILITIES
Issued l')I tM City Council
SUp6ISed(j!J Sheel No. W·1·1 daled 7·1·93 Effective 7·1·94
Sheet No. W·l·1
GENERAL NON·RESIDENTIAl WATER SERVICE
UTILITY MIE S.QllEDUlE..'&1
A. APPUCABILlTY:
This schedule appIias 10 non·resldential WllW servk;o in the City of Palo Alto and ~s
distribution area. This scl!edule is also appiicabi~ to mu~i·famjly rosldenua! cuslomers served
through a maslsr metsr.
8. TERRITORV:
InsIOO the iooorp<lra!ed lim~s of the City 01 PalO Mo. on lond owne<l or laased by the City.
and MY other IlIDd serv'.ced by tho Palo Mo Wale< Utility.
C. RATES:
Service Cherge
POI Moter
£Mj,!Qlllll
For SIS· inch matur . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4.00
For 3/4.1nc/l mater ...........•........................... 4.00
for l·lnch mstor .. , ......................... , .......... 4.50
For 1 1/2lnctl meier ... ' •....•............................. 5.20
For 2 II1ch mater ................•...•................•. 6.8()
For 3·lnch meier ........ "" " ........ " .... " . " " ." 11.30
For 4·looh mele< .... "" .. " .. " ........ " .......... " 16.20
For 6-Jnch meier •••. , .....•.........•................. 30.00
For a·lnch mate< ....••••........•......•......•.•..... 46.75
For j()·Jnch meter ••...•...•••. ; •......•..•.•.....•.••.. 58.00
CommQdity Rl!W;,..(IQ be added 10 SetyiCe Char~!!l
Based 0/1 Meier Sizes
Rate SttuclUre W4 A
For Meter Sizes SiS· Inch. 3/4 Inch. 1 Inch. 1·1/2 ioch
Per Metor
~MllllltJ
Per Hundred Cubic Feet
ll!Lf!!lssuro ZQ~
First 30 ('.cf ... , .............•• , . , . . . . . . . • . . . . . . . . . .• $2.00
Over 30 Cd . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.27
CITY OF PALO ALTO UTILITIES
Issued by the City Council
SUpelSedas Sheet No. W+1 deled 7-1·93
Effective 7·1-94
Original Sh~el No. W-4·1
lJ
8asad on Metsr Sizes
Ba!!! S!nJC!um W-4 8
For Meter Sizes 2 Inch, 3 Inch. 4 Inch
Per Maler
E.eLMMlh
GENERAL NON·RESIDENTIAl WATER SERVICE
J..tID.J.IX..B!lli..SCHE PULE W=i
((CooliQo()(l)
Per Hulld<e<l Cubic Feat
All Prossu(ll.ll1oos
First 200 Cd ......... . . . . . . . . . . . . . . . .. . . . . . . . . . . . . .. $2.00
Over 200 Ccf ..........................•.............. 2.21
For All Metars Greater th~n 4 Inch
Per Meier
Per Month Per Ilundr(!(! Cubic Foot
MPLe.~~
Firsl "100 Ccf ........ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . •. $2.00
Over 700 Gcf ........ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2.27
CITY OF PALO ALTO UTIUTIES
Issued by the City Council
Supercedas Shear No. W-4·1 dated 7·1-93
-,,-..
--_._._ ...• -.•. _--
EffecHve 7·1·94
Original Sheel No. W+2
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