HomeMy WebLinkAbout2009-11-20 - Board of Directors Meeting Agenda Packet
'rb Linda
Water District
AGENDA
YORBA LINDA WATER DISTRICT
BOARD OF DIRECTORS WORKSHOP MEETING
Friday, November 20, 2009, 9:00 AM
1717 E Miraloma Ave, Placentia CA 92870
1. CALL TO ORDER
2. PLEDGE OF ALLEGIANCE
3. ROLL CALL
John W. Summerfield, President
William R. Mills, Vice President
Paul R. Armstrong
Michael J. Beverage
Ric Collett
4. ADDITIONS/DELETIONS TO THE AGENDA
5. PUBLIC COMMENTS
Any individual wishing to address the Board is requested to identify themselves and state the matter on which
they wish to comment. If the matter is on the agenda, the Board will recognize the individual for their comment
when the item is considered. No action will be taken on matters not listed on the agenda. Comments are limited
to matters of public interest and matters within the jurisdiction of the Water District. Comments are limited to five
minutes.
6. DISCUSSION ITEMS
This portion of the agenda is for matters that cannot reasonably be expected to be concluded by action of the
Board of Directors at the meeting, such as technical presentations, drafts of proposed policies, or similar items for
which staff is seeking the advice and counsel of the Board of Directors. Time permitting, it is generally in the
District's interest to discuss these more complex matters at one meeting and consider formal action at another
meeting. This portion of the agenda may also include items for information only.
6.1. Alternative Water Rate Structures
7. ADJOURNMENT
7.1. The next regular meeting of the Board of Directors will be held November 25, 2009 at
8:30 a.m.
Items Distributed to the Board Less Than 72 Hours Prior to the Meeting
Pursuant to Government Code section 54957.5, non-exempt public records that relate to open session agenda items
and are distributed to a majority of the Board less than seventy-two (72) hours prior to the meeting will be available for
public inspection in the lobby of the District's business office located at 1717 E. Miraloma Avenue, Placentia, CA 92870,
during regular business hours. When practical, these public records will also be made available on the District's internet
website accessible at http://www.ylwd.com/.
Accommodations for the Disabled
Any person may make a request for a disability-related modification or accommodation needed for that person to be
able to participate in the public meeting by telephoning the Executive Secretary at 714-701-3020, or writing to Yorba
Linda Water District, P.O. Box 309, Yorba Linda, CA 92885-0309. Requests must specify the nature of the disability and
the type of accommodation requested. A telephone number or other contact information should be included so the
District staff may discuss appropriate arrangements. Persons requesting a disability-related accommodation should
make the request with adequate time before the meeting for the District to provide the requested accommodation.
Presented by:
Greg Clumpner
Senior Financial Manager
HDR Engineering, Inc.
L nvy,ma.+ nwmgiwf i
Monthly Comm Charges for Residential by Consumption Lml g
City of Pbmara
$250
$225 0Currawd2-TrorRaksw/Rate fncreases
O Now!-71wRaks w/Ride lncreares
$200 New Charges are Higher
$175 than Previous -
$150
$125 New Charges are -..
Lower tlwn Previous spa_sw�mH
$100 � torsumpo— Ix
a.�Wav ?B.IFd-
$75
$50 ro N
ro
$25 M w Tn
so
15 her 25 hef 40 M! - 60 hcf 80 her Ifohcf 150 hcf
Morviow of the prosontallf
Typical Water Consumption
k Patterns & Customers
Types of Rate Structures
(Rate Designs)
Components of a Cost-of-
Service Rate Study I
Irvine Ranch Water District,
Aurora and Boulder, CO
Yorba Linda's Customers and
Consumption
Conclusions
Basic Points:
❑ There is a limited relationship between
consumption and increasing lot sizes, and
water budgets rely heavily on this concept.
❑ Water budget rates have not been proven to
be more effective at reducing consumption
than inclining block rates.
❑ Not everyone thinks it is "fair and equitable"
when residential customers using less water
end up having a higher water bill, which will
happen with water budgets.
I ❑ Water budget proponents agree that water
budget rate benefits often don't justify the
Iadditional time, cost and effort.
HDR - YLWD Workshop 3
Typical Water Consumption
Patterns a Customers
HDR - YLWD Workshop 4
Water Consumption Patterns
Typical Consumption Patterns by Customer Classes:
700,000
600,000
500,000
a�
400,000
s
c 300,000
200,000
0
100,000
•
Monthly Consumption by Class*
City of Pomona
Multi-Family
Single Famil
Commercial
Jan Feb Mar April May June July Aug Sept Oct Nov Dec
*2-Period rollina averages were used to smooth out differences in customer arouos.
HDR - YLWD Workshop 5
IWater Consumption Patterns feelill
Seasonal Averages - Single-Family Customers:
Water Use & No. of Residential Customers (2006)
City of Pomona
650
600 '
4---------4
550 Average Winter
--�--- -4---------
Consumption (11.9hd) '
500 '
-- .---------W .-----
cn 450 '
---- ------ -------- ---;
Average Monthly
�L `-----' ------1
400 �----- r---------� .--�
A Consumption (16.6hc)
350 -------------- -- ---------L-- -.
O 300 ---- ' --------- ---------
' Average Summer
z 250 - -----r------
Consumption (25.1 hc)
200 ----�---------}---
150 '
r---------r------ -Tolra1-Cu stomers
100 -=------ -- ----zfr,HO--------
B
50 - ----------------------
0 h cf 5 h cf 10 h cf 15 h cf 20 h cf 25 h cf 30 h cf 35 h cf 40 h cf 45 h cf 50 h cf
Avg. Mo. Consumption
HDR - YLWD Workshop 6
IWater Consumption Patterns leelill
Water Consumption by Lot Size (city or Modesto)
Average Monthly Water Consumption by LotSize
35
30
25
0
20
E15
X10
5
0
O O O O O O O O O O O O O O O O O O O O O O O O O
O O O O O O O O O O O O O O O O O O O O O O O O O
O_ O O O O O O O O O O O O O O O O O O O O O O O O
N_ M_ V_ Ln (6 r-_ 00_ O_ N_ M_ Ln (6 P _ 00 O_ O N M V_ Ln
Lot Size (in Square Feet)
HDR - YLWD Workshop 7
Water Consumption Customers
Number of Lots by Size (Modesto)
25,000
22,500
20,000
17,500
015,000
O
J
012,500
6
Z 10,000
7,500
5,000
2,500
0
Distribution of Residential Lots
0 0 s 100%
90%
80%
70%
60% c
J
o No. of Lots by Size 50% c
H
Cumulative % of Lots 40% c
0
30%
20%
10%
T. T 0%
O O O O O O O O O O O O O O O O O O O O O O O O O
O O O O O O O O O O O O O O O O O O O O O O O O O
O O O O O O O O O O O O O O O O O O O O O O O O O
r N M le M W I- w a) O r N M l M (S I�: 00 a O r N M le M
T r T- T- T- T- T- T- T- T- N N N N N N
Lot Size (Square Feet)
------- - ---- -
HDR - YLWD Workshop 8
Types of Rate Structures
( Rate Designs )
HDR - YLWD Workshop
Defining a ConservationmBased Rate Structure
LJCalifornia Urban Water
Conservation Council (CUWCC)
➢ No clear industry accepted definition
➢ BMP 11 provides four rate structures
• Uniform rates (single-tier)
• Tiered (inclining blocks)
• Seasonal (winter-summer)
• Water budget-based rates
➢ To be considered conservation based,
rates must collect at least 70% of
revenue from variable charges
HDR - YLWD Workshop 10
Rate Structure Alternatives
Uniform Volume Rate Structures:
$5
,- $4
U
U
... $
� 3
w $2
E
0
> $1
$0 f
Uniform Volume Rates
0 5
10 15 20 25 30
Monthly Water Use (ccf)
➢Volume charges are a
constant price ($/ccf)
➢ Prices may change by
customer class based on
cost-of-service
➢Considered to be a
conservation rate, but
not an aggressive rate
structure
HDR - YLWD Workshop 11
Rate Structure Alternatives
Seasonal Rate Structures:
➢Volume charges are a
constant price ($/ccf),
but vary by season
➢ Prices still may change
by customer class based
on cost-of-service
; Considered to be a
more aggressive rate
structure than uniform
rates
$5
w $4
U
U
� $
� 3
ca
w $2
E
3
O
> $1
$0
Seasonal Rate Structure
0 5 10 15 20 25 30
Monthly Water Use (ccf)
HDR - YLWD Workshop 12
Rate Structure Alternatives
Increasing Block Rate Structures:
$5
% $4
U
U
. . $
� 3
w $2
E
3
O
> $1
$0
➢volume charges ($/ccf)
Increasing Block Rates increase in blocks (tiers)
U 5 lU 15 LU LS iU 15
Monthly Water Use (ccf)
�-- Tiered Rates may
change by customer class
based on cost-of-service
Considered to be more
aggressive than uniform
and seasonal rates
HDR - YLWD Workshop 13
Rate Structure Alternatives
Water Budget Rate Structures:
➢Volume charges ($/ccf)
increase by blocks but
vary by individual $s
customer $4
U
Typically used only for $3
residential customers w
w $2
E
➢An aggressive rate > $1
structure $0
Complicated, data
intensive, and difficult to
administer
Water-Budget Rates
0 5 10 15 20 25 30 35
Monthly Water Use (ccf)
HDR - YLWD Workshop 14
IAre Water Budget Rates Perfect*.
❑ Imperfect from aconservation/efficiency
perspective.
❑ By "grandfathering" existing landscape choices,
water budgets can give insufficient incentives to
change those choices over the long-term .
❑ This imperfection increases the political
implementation feasibility.
❑ Water budget rates require more customer-level
data than traditional
rate structures
and may
be
more expensive and
labor-
intensive
to put in
place.
1
HDR - YLWD Workshop 15
Rate Structure Alternatives
Volumetric Water Rate Structures
34%
9% Other/Not Reported
2%
Declining
55%
0 Inclining 0 Declining 0 Uniform 0 Other/Not Reported
Source: 2007 California-Nevada AWWA Rate Survey
HDR - YLWD Workshop 16
Components of a CostmofmService
Rate Study
HDR - YLWD Workshop 17
IRate Study Components:
1 . Financial Plan — Identifies Revenue
Requirements, Funding Sources , etc.
2. Cost-of-Service Analysis — Allocates
Costs to each Customer Class , Ensures
Equity and Fairness , Compliance with
Prop 218
3. Rate Design — Evaluates how Costs are
Allocated to Fixed vs . Variable Rates , the
Rate Structure that Best Suits the
Agency's Needs
HDR - YLWD Workshop 18
Irvine Ranch Water District ,
Aurora and Boulder, CO.
HDR - YLWD Workshop 19
Water Budget Rates in IRWO
❑ Irvine Ranch Water District water budget rates
have been in place since early 1990's, yet still
have a significant amount of consumption in the
"penalty" tiers
Percent of Monthly Billed Consumption -
Irvine Ranch Water District
30%
25%
Q Excessive (Tier4)
E 20%
0 15% -- ---- ---
10% Inefficient(Tier3)
15 2
4- 5%
0
Wasteful (Tier S)
IT - q- "t .0
0 0 0 0 0 0 0 0 0 0 0 0
LL(B Q > � � � Q j > U
2� Q 2 Q U) 0 Z 0 li
HDR - YLWD Workshop 20
Water Budget Rates in Boulder, CO
LJ Boulder has 5 tiers, the Tier 1 is $ 1 .95/ccf
and Tier 5 is $ 13 ,00/ccf
LJ In 2008 , 69% of SFR rate revenue was
collected through the 5 water budget tiers
Ll 9% of Billed SFR water is in the " penalty
tiers" (top 3 tiers)
LJ Is 91 % of consumption in the first two tiers
because of water budgets, the 6x rate
differential , or both ?
HDR - YLWD Workshop 21
Aurora, Co. - If they Had Water Budgets...
U Water Budget-Based Rates from Boulder,
CO, were Applied to Aurora Consumption
for Lots between 5,000 and 9,000 sf
Ll Results indicate that Many Customers with
Exactly the Same Level of Consumption
had Significantly Different Bills
❑ Unfortunately, this also means that Some
Customers Using "X" Amount of Water
Have Higher Bills than Others Using
" Less-than X" Amount of Water
HDR - YLWD Workshop 22
IAnalysis of Aurora, Co., SFR Bills
HDR - YLWD Workshop 23
Equity of Water Budget Rates*.
LI Equity is not a universally defined concept
LI The " Hummer vs. Prius" Example
LI The " Big Mac" Example
LI The industry accepted standard for setting
"fair and equitable" rates is cost-of-service
rate analysis
LI "Cost-of-service" and "fair and equitable"
rates can be accomplished by several
types of rate structures
HDR - YLWD Workshop 24
YLWO Customers and Consumption:
om Single-Family Accounts
(5/8" — 1 " Meters)
HDR - YLWD Workshop 25
4,000
3,600
3,200
2,800
02,400
02,000
61 ,600
Z 1 ,200
Single-Family Accounts — hv lot Size
Numberof Lots by Size (Square Feet)
Single-Family Lots (5/8 to 1 " Meters) :
* Total of 20,875 Lots
F.wml�
M LO ti M M L ti M M L ti M � M LO ti M � M LO ti M O O O
- N N N N N M M M M M V- V- V- V- V- 0 0 O
Lot Size (in Square Feet) `
HDR - YLWD Workshop 26
4,000
3,600
3,200
2,800
1,400
0 2,000
613600
Z1 ,200
800
400
0
Single-Family Accounts — hv lot Size
Numberof Lots by Size (Square Feet)
0
90%
I fl 85% n
70%
2%
-ntq. (S/8 to
" Meters)
00 0 0 0 0 0 0 0 0 O O O O O O O O O O O O O O O O O O 0 0 0 0 O O O O O O O O O O O O O O O O O O O
O O O c O O O O O O O O O O O O O O O O O O O
Vi L0 ti cD ti
a Ir: Cl Lci ti a Ir: Cl Lci ti a Ir: ci Lci ti a 0 0 0
� sV N ,N M M met) 4e 4e � 0 0 0
Lotize (in Square Feet)
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
HDR - YLWD Workshop 27
ISingle-Family Consumption — hV lot Size
Average Monthly Consumption (ccf/mo-)
110
100 - ------------------------------ Single-f=amily Lots
90 -
0 80 -
E 70 - q verage Mo.
60 - Consumption
0 50 - (25 ccf/mo.)
40 - n
30 - H
= 20 -
c�� 10 - ]DOOR
0
0000000000000000000000000000
0000000000000000000000000000
0000000000000000000000000000
M L r-: cr 11 M L r- c � M W ti c � M L ti 6 11 M L ti 6 0 0 0
N N N N N M M M M CO V- V- V- V- V- O O O
Lot Size (in Square Feet) r-- "' U')
1
HDR - YLWD Workshop 28
ISingle-Family Consumption — hV lot Size
HDR - YLWD Workshop 29
Average Monthly Consumption
(ccf/mo.)
110
4000
100
- single-Fami
3500
80
_ f518 to 1 Meters)
____.
3000
0
E
70
- -------
------
2500
60
-
2000
=
0
50
-
CL
40
- n
1500
E
30
- z rl
— , ,
1000
N
_
0
20
10
- � � � I
-i
500
,n
fl�
0 -
0
O O O O O O O O O O O O O O O O O
O O O O O O O O O O O O O O O O O
O O O
O O O
O O O O O O O O
O O O O O O O O
O O O O O O O O O O O O O O O O O
O O O
O O O O O O O O
M L6 r-: 0 1-:, M L6 r,-- M M L6 r-: 0 M
N N N N N M M
L6 r-: c
M M M
1-:, M LP-� 0 o 0 0
� � � � � O O O
Lot Size (in Square
Feet)
r-- CO LO
HDR - YLWD Workshop 29
ISingle-Family Accounts — bv lot Size
HDR - YLWD Workshop 30
Average
Monthly Consumption (ccf/mo.)
110
100
-
Single-Famil j, 1 rate.
90
8 to 1 Meters)
�5 " i
c
80
- -------a
E
70
- Average Mo.
60
- Consum
0
50
- (2 /mo.)
CL
40
-
n
E
30
-
II
=
20
0
10
nH[
0 -
0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0
_
0 0 0 0 0 0 0 0 0 0 0 0 0 0
M6 ti M
W ti O M W ti O MU-) ti 6 O C O
N N N N N CO CO CO CO CO V- V- 'T 'T 'T O O O
Lot Size (in Square Feet) r-- "' U')
HDR - YLWD Workshop 30
ISingle-Family Accounts — bv lot Size
Avg. Monthly Consumption Per 1,000 Sg. Ft.
4.0 - Avg. Mo.
3.5 - Single-Family Lots Consumption
3.0 - (5/8 to 1 " Meters) Per 1,000 sf
o (2.2 ccf/m o.)
2.5 -
�
i
2.0 -
CL
1 .5 -
1 .0 -
00.5 -
U
0.0 -
0 0 0 O O O o 0 0 0 0 0 00 00 0 0 0 0 0 00 0 00 0 0
O 00 O O O o 0 0 0 0 0 00 00 0 0 0 0 0 00 0 00 0 0
O 00 O O O O O O 0 0 0 00 00 O O O O O 00 O 00 O O
M L ti C M U ti C M L ti C M U ti ai � M L ti d 0 0 0
- N N N N N M M M M M � � � � � O O O
Lot Size (in Square Feet) r-- "' U')
HDR - YLWD Workshop 31
Single-Family Accounts — hv lot Size
Water Budgets that Increase in Proportion to
Lot Size would :
• Over-Allocate Water to Larger Lots
• Under-Allocate to Smaller Lots
• Sell Larger Amounts of Water to Large
Lots at Lower-Tier Prices than would be
sold under aCost-of-Service Rate Design
HDR - YLWD Workshop 32
Single-Family Accounts — bv Lot Size
0 - 10,000 sq. ft.
464
71%
305
55%
150
38%
101000 - 20,000 sq. ft.
161
25%
226
41%
214
54%
> 30,000 sq. ft.
24
4%
23
4%
36
9%
Total
649
100%
553
100%
400
100%
Smallest Lot
21936 Sq.
Ft.
21708 Sq.
Ft.
51000 Sq.
Ft.
Largest Lot
419,851 Sq.
Ft.
2061798 Sq.
Ft.
507,515 Sq.
Ft.
HDR - YLWD Workshop 33
YLWB Customers and Consumption:
Single-Family Accounts
Em Lots Over 50,000 Sq. Ft.
HDR - YLWD Workshop 34
4,000
3,600
3,200
2,800
0 2,400
0
2,000
61 ,600
Z 1 ,200
101,11H
X11
I
Single-Family Accounts — hv lot Size
Number of Lots by Size (Square Feet)
Large Lots (>50,,000 S.F.) :
* Total of 1,514 Lots
* 77b of All SFR Lots
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
C6 6 P. 6 C6 6 P. 6 C6 6 P. 6 C6 6 r` 6 1-: C6 6 P. 6 0 0 0
N N N N N M M M M M V- V- V- V- V- O O O
Lot Size (in Square Feet) r-- CO LO
HDR - YLWD Workshop 35
ISingle-Family Accounts — hv lot Size
HDR - YLWD Workshop 36
Number of Lots Over 50,000 Sq. Ft.
200
180
Large Lots (>50,000 S.F.) :
160
* Total of 1,514 Lots
140
* 7% of All SFR Lots
120
100
0
80
6
Z
60
40
20
0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
to 00 O N le to 00 O N qe to 00 O N le to 00 O N le to 00 O N le
N N N N N M M M M M g q q Iq 4e W W W
Lot Size (in Square Feet)
HDR - YLWD Workshop 36
ISingle-Family Accounts — bv lot Size
HDR - YLWD Workshop 37
Average Mo. Consumption (Lots > 5%000
SF)
110
100
- ------------------------------
90
Large Lots (>5 0,00 0 S.F.):
-------------------
°
80
_
* Total of 1,514 Lots
_ --------------------
E70
60
_
* o
_ 7 / of All S F R Lots
-------------------
____________________
50
_ _ __
---------------------------
CL
40
- ---------------------------------
E
30
-
----------
v20
-
----------
0
10
-
U
111111111111111inuo 00H nn Mnn n rinn
0
. . 1 . 1 1 1 1 .
O O O O O O O O O O O O O O O O O O O
O O O O O O O O O O O O O O O O O O O
O O O O O O
O O O O O O
O O O O O O O O O O O O O O O O O O O
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
O O O O O O
0 0 0 0 0 0
Co 00 O N CD 04 N N N CD W N OM M M CO M V- �
V- V- O� � �
Lot S ize (i n S uare Feet)
HDR - YLWD Workshop 37
Conclusions
HDR - YLWD Workshop 38
conclusions:
❑ There is a limited relationship between
consumption and increasing lot sizes, and
water budgets rely heavily on this concept.
❑ Water budget rates have not been proven to
be more effective at reducing consumption
than inclining block rates.
❑ Not everyone thinks it is "fair and equitable"
when residential customers using less water
end up having a higher water bill, which will
happen with water budgets.
I ❑ Water budget proponents agree that water
budget rate benefits often don't justify the
Iadditional time, cost and effort.
HDR - YLWD Workshop 39
Questions?
,, .
YLWO Customers and Consumption:
Single-Family Accounts
Em IS' and 2" Meters
HDR - YLWD Workshop 41
ISingle-Family Accounts — hv lot Size
HDR - YLWD Workshop 42
Number of SFR Lots for 1 .5" and 2"
Meters
14
Lots (1.5" & 2" Meters):
12
* Total of 191 Lots
35 Lots
10
* 0.9% of All SFR
o
J
s
Lots
O
6
0
Z
4
2
�U 11111 0 0 1111 11
0
1
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0
0 0 0 0 0 0 0
0 0 0 0 0 0 0
r. a r M LCD 1` a V- M wi 1` a r M LCD 1` C�
r r r r r N N N N N M M M M M
r M LCD 1` a O O
O O
r M
Lot Size (in Square Feet)
HDR - YLWD Workshop 42
Single-Family Consumption — hV lot Size
Avg. Mo. Consumption for 1 .5" and 2" SFR Meters
150 -1
* Avg. Mo. Consumption = 57 ccf
125 (vs. 25 ccf for5/8" to 1" meters)
c Avg. Mo.
E100 Consumption
(51 cc /mo.)
= 75
° � n
E 50
N
o 25 nn
0 JH nn n nnIIII n H I n
I
0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
1` Ir M wi 1` ci � M w 1` Q; O O
N N N N N M M M M M it it it it it O O
� M
Lot Size (in Square Feet)
HDR - YLWD Workshop 43
ISingle-Family Consumption — hV lot Size
6.0
5.5
5.0
06' 4.5
E 4.0
3.5
3.0
2.5
E 2.0
N 1 .5
0 1 .0
v 0.5
0.0
Avg. Mo. Consumption Per 1 ,000 Sq. Ft. (1 .5" & 2" Meters)
* Avg./1,000 Sq.Ft. = 0.8 ccf
(vs. 2.2 ccf for5/8" to 1" meters)
Trend Line
Z------------
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
ti ai M W ti ai M L ti Qi M W ti Qi V M Ld ti Qi o 0
r M
Lot Size (in Square Feet)
HDR - YLWD Workshop 44
Conservation Rates a
legal Framework
HDR - YLWD Workshop 45
Legal Framework of Water Rates
LIAB 2882 — "Allocation -Based Conservation
Water Pricing "
➢ Aimed at two major water priorities in Calif. :
1 . Preventing unreasonable waste of water
2. Ensuring costs are proportionally spread among
customers
➢ But the focus is on providing legal foundation for
allocation-based conservation pricing :
"A basic use allocation is established for each
customer account that provides a reasonable
amount of water for the customer's needs and
property characteristics. " (Chapter 3.4, Section 372 (a) (2))
HDR - YLWD Workshop 46
Legal Framework of Water Rates feeliZ.]
LJ AB 2882 — Additional Requirements for
Allocation -Based Pricing :
➢ Rates must be based on metered usage
➢ Must use increasing blocks (tiers) to encourage
conservation
➢ Rates must be proportional to:
• Customer classes
• Basic use allocations
• Meter size
• Water consumption
• "Discretionary Allocation of
incremental costs between
tiers"
HDR - YLWD Workshop 47
Water Budget Rate Proponents
HDR - YLWD Workshop 48
Are Individualized Rates' Perfect:.)
• Imperfect from aconservation/efficiency
perspective
• By "grandfathering"
existing landscape
choices, water budgets can give insufficient
incentives to change those choices over the
Long-term
• This imperfection increases the political
implementation feasibility
Source: Peter Mayer, Aquacraft, Inc. , Water Budgets and Rate
Structures - Innovative Management Tools
* Individualized Rates = Water Budget Rates
HDR - YLWD Workshop 49
Water Budget Proponent Offer Caution:
"Water budget-based rate structures are
probably not for everyone. This rate structure
form requires more customer-level data than
traditional rate structures and may be more
expensive and labor-intensive to put in place.
Utilities without a pressing need to encourage
water conservation are not good candidates
for water budgets because implementation
costs might exceed any nonconservation
benefits:'
� Source: Peter Mayer, et.al. , " Water Budgets and Rate
Structures — Innovative Management Tools" Journal
� AVWVA, p. 117 , May 2008.
HDR - YLWD Workshop 50
Analysis of Aurora's SFH Bills Based
on Boulder's Water Budget Rates
HDR - YLWD Workshop 51
Anaivsis o urora Co., s
Results : Water Bills for Water Budget Rates vs. Multi-Tiered Rates
Avg. Resid. Summer Water Bills: Two Rate Structures
$75 -
(Avg. Consumption Levels of 25 to 30 hcf/mo. - Aurora, CO)
$170
Boulder's Water Budget-Based Rates
$70 -
Boulder/Aurora Hybrid Rates - -
$160
ry $65 -
From Lot Sizes of 5,000-6,000 - - -
$150
$60 -
and 8,000-9,000 square feet.
$140
Total No. of Lots = 3,400
m
$55 -
=
$130 0
$50 -
-
$120 Q
o
m $45 -
Higher consumption but lower bill
�
$110 m°
$40 -
Lower consumption but higher bill
$100
$35
$90
- 1 1 1 1 1 1 1 1
O lie M N W N O C7
N N N N N N N N N
Avg. Summer Consumption (hcf/mo.)
HDR - YLWD Workshop 52
Water Budget Tiered Rates
Addressing Major Agency Issues :
1 . Revenue Stability
2. Conservation
3. Customer Fairness
What Does AWWA Say About Water
Budget Rate Structures
For the Agency: For the Customer:
• More data collection Individual needs are recognized
• Strive for allocation accuracy
• More education for customers
• Requires more staff training
• Accurate targeting
• Consistent water savings tool
• Reduces demand
• Reduces urban runoff
• Funds conservation programs
• Creates more customer
satisfaction
— More assistance
— Recognition of individual needs
• Provides a practical water use
target
• Places the responsibility of water
efficiency on the end-user
"Once thought to be impractical because of
technical constraints, water budgets linked with
increasing blocks have been implemented
successfully in more than 20 utilities. Water
Budget rate structures are attractive to agencies
searching for stable revenue generation,
improved customer acceptance and increased
water-use efficiency..." AWWA 2008
Who is Using Water Budget Rates
• Boulder, Co
Highlands Ranch, Co
• Capistrano Valley Water District
Irvine Ranch WD
• Castle Rock, Co
Lake Arrowhead
• Centennial Water and Sanitation
Las Vegas Valley Water District
District
•
Marco Island
• City of Albuquerque
•
Monterey District Tariff Area
• City of Aurora
•
Otay Water District
• City of Boulder
•
Quartz Hill Water District
• City of Castle Rock
•
Rancho California Water District
• City of Indio
0
Redwood City
• City of Morrisville
•
Salt Lake City department of Public
• City of Pasadena
Utilities
• City of Rohnert Park
San Clemente
• City of Santa Barbara
•
San Juan Capistrano
• Coachella Valley WD
•
Santa Rosa
• Contra Costa Water District
•
Southern Nevada Water Authority
• East Bay MUD
•
Town of Cary, NC
• Eastern Municipal WD
0
Western Municipal Water District
Water Budget Rate Structures
From the AWE:
"A water budget is a formal definition of what constitutes an efficient level of use. A water budget rate
structure combines both a target or goal-based allocation with a tiered rate structure. This
provides an agency the potential to send appropriate economic signal for efficient water use to
customers."
Why Adopt a Water Budget Rate Structure?
— Drought and / or water restrictions
— Increased wholesale price increases
— Regional allocations
— Revenue loss due to reduced water sales
In 1991 why did IRWD Design and Adopt a Water Budget Tiered Rate Structure?
4. To conserve water (continuing drought, groundwater allocations, MWD price increase)
3. To send an economic signal/incentive to customers to use water more efficiently
2. To stabilize fixed revenues regardless of the amount of water sales
1 . To help get elected board members re-elected
IRWD Philosophy
• Make water budget allocations fair for customers
— Individualize allocations account by account
— Give customers the water they need for business, home and landscapes (based
on science, benchmark standards and measurement of actual use)
• Drive increased water efficiency
— Set tight and accurate efficiency standards/targets for end users
— Establish economic incentives that motivate customers to use water efficiently
and/or to retrofit to decrease water use
— Provide more customer conservation programs that are easier to access and fund
• Recover necessary costs independent of water sales (for revenue
stability)
— Accurately set fixed cost on the bill (for more stable revenue and to end agency subsidy of
water rates)
— Place the true cost of water (fixed cost, MET tier 1 , MET tier 2, marginal cost such as
desalinization, etc.) on the water bill for customers to see
Solving the Agency Dilemma of
Stable Revenue and Conservation
Revenues Conservation
• Recover "fixed" costs • Reduce demand
• Cover "cost of services"
• Reduce "peaking"
• Maintain high Bond rating
• Reduce water runoff
• Stretch infrastructure
• Stretch infrastructure
• Drought management
and/or pay for future tool (ET) F (SF) F
water � � � � � � �
• Send consistent and
• Mechanism to fund defensible message of
conservation programs efficiency to customers
Achieving "Fairness":
Individual Allocations:
Acct. #1 :
4 Residents
3,500 sf of landscape + pool (500 sf)
Allocation: 14 ccf's/month
100% Account Allocation
Inside
Use
Outside
Use
a
D
Acct. #2:
2 Residents
1 ,500 sf of landscape area
Allocation: 6 ccf's/month
101-125%
2x
n
D D
126-150%
4x
a a
D D
a a
D D
151%- & above
8x
a a
D 1
1 1
a a
D D
a a
D D
Impact of Implementing Individualized Tiered Water Rates
• Reduced Landscape water use
by 58%
• Reduced Residential water use
by 19%
• Stabilized Fixed Revenues
• Infrastructure/capacity needs
declined
• Reduced Urban Runoff
• Fully Funded Conservation
programs from water wasters
• Increased Customer
Satisfaction (90%+)
• 100% re-election of all water
board members since 1991
30
R
O
`m 25
Q
N
C
20
0 15
c 10
R
E 5
m
8
0
Date
Water Budget Bill : The Waster
8/10/98 9/09/98 1255
1337
USAGE - LOW VOLUME DISCOUNT
USAGE - CONSERVATION BASE RATE
USAGE - PENALTY
USAGE - EXCESSIVE
USAGE - ABUSIVE
WATER SERVICE CHARGE
SEWER SERVICE CHARGE
YOUR ALLOCATION FOR THIS BILL
BILL CALCULATION BASED ON
(4 People & 3,500 sf of landscape area)
82 CCF
�
1 Z-'AMES
6 .480
23 .640
'0 1 .280
9 2.560
4 5.120
$7.68
$14.72
$25.60
$48.64
$20.48
$3.90
$6.90
$127.92
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nay Dec
=Indoor Allocation m Landscape Allocation —Natal Allocation —@—Actual Usage
Water Budget Bill : Reformed Waster
2/11/99 3/15/99 1532
USAGE - LOW VOLUME DISCOUNT
USAGE - CONSERVATION BASE RA
==>�\ WATER SERVICE CHARGE
SEWER SERVICE CHARGE
1548
16 CCF
11 .480
5 .640
YOUR ALLOCATION FOR THIS BILL 27 CCF
BILL CALCULATION BASED ON .12 ACRES
:........................................................................................
$5.28
$3.20
$3.90
$6.90
$19.28
Note: Service Charges cover a majority (70%) of the
fixed costs to maintain revenue stability despite lower
water use...
Why it Worked
• Board had political "will"
• Agency Staff was confident
• Efficiency became a core business of
the agency (saving water did not hurt
agency fixed cost recovery)
• Agency bent over backwards to get
allocations (customer data) right
• Customers saw that water budgets
were based on good science, were
logical and fair
• Creative programs helped water
wasters to lower use/bills
• Wanted customers to call or interact
with the agency
• Significant economic incentives were
obvious to customers
• Attitude
— All departments worked together
— Central point of contact
What We Missed
• Accurate ET data in early years
(customers noticed)
• Took 18 months to get rebate
programs rolled out
• Didn't have websites, GIS, Google
Earth, etc. so we had to do make more
assumptions than agencies might do
today
• Used rebate "checks" mailed to
customers (today use billing "credits")
What Agencies Still Miss Today
• Most are willing to continue w/ a rate structure that does not meet their
needs (revenue stability, conservation and fairness)
• Most fear the data collection (# of people, size of landscape, etc.) and the
perceived complexity
• Focus is on tiers and high tier prices not revenue stability
• Staff and directors are not sufficiently trained and conversant in the
rate structure design, intent and flexibility
• Flexibility is key (don't set hard rules that tick-off customers)
• Most believe they must continue the low-fixed cost recovery model
• Don't strive to solve the 3 major issues at the same time (revenue
stability, conservation and fairness)
• Don't contemplate coordination of staff training, customer services
and conservation programs that assist customers after the rate
structure implementation
#1 Water Agency Problem :
From an Agency CFO:
"... 70% of our cost to deliver water is
fixed. We chose to recover 29% of fixed
costs in our `readiness to serve" charge.
The rest of the fixed costs being
recovered in the variable side... "
"Yes, we know we will have to raise
rates almost every year...if we see more
than 2% conservation then we will be
raising rates due to conservation. "
"We have been borrowing from
reserves the last couple of years.
Politically our board has not had the will
to raise the rates as much as has been
required, so we are playing catch-up."
osts Breakdown
❑Variable
■Fixed
ical Allocation of Cost Reco
0
Scenario 1
Fixed = 75%
Variable = 25%
Allocations Inputs- SFR customers
Scenario 2
25%
75%
Example Rate Structure
Model: ,
Total Parcel Area(TA) 8,000 sq ft
Area Factor(AF) 45% of total area
Landscape factor(LF) 70% of ETo by State of California Code of Regulation Title 23, Section 490-495
Household size (Size) 4 residents per acct
GPCD 60 gallons per capita day
Drought factor 100% to control demand at different water supply conditions
Tier Definitions %of water budgets Indoor(ccf) _ GPCD*Size*Days
Tier 1 100% 748gallon
7/1 C cf
Tier 2 125% ET *TA*AF*LF*DF
Tier 3 150% Outdoo�ccf) = 12inch f 3
�f 100 t
Tier 4 175% t lcc f
Tier 5 above 175 %
CY 2009 CY 2010 CY 2011 CY 2012 CY 2013 CY 2014
100% 98% 97% 97% 98% 99%
Monthly Bills (S) Monthly Bill Comparisons (excluded Water Quality Fees)
$140 T Based on Adjusted 3-yr Average Consumption
$120 Usage = 100% of 3-yr monthly average usage
$100
$80
$60
Example of 840 fln nr �n �
Rate Structure
Model... $>o
Nov
Dec
Ave
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
o Scenario 1: FV= 75 /25
$44
$42
$38
$40
$41
$56
$64
$67
$99
$65
$66
$55
$51
0 Scenario 2: FV= 25 / 75
$41
$37
$34
$40
$44
$68
$81
$83
$117
$73
$70
$54
$56
moo=Existing Bills
$29
$28
$28
$35
$38
$52
$58
$57
$57
$45
$40
$32
$41
Water Budget Rates Conclusion
• Traditional rate structures don't solve problems, they may
create problems
• Attitude and confidence is key to success
• Customers respond positively to good science and
transparency of costs
• The costs and effort to implement are well worth the effort (paid
back many times over)
• If the water world gets worse (MET rebates may go away, Climate
Change may impact supplies, State may take more public agency
dollars. . .) a sound rate structure will the agency/customers out
of a hole
• Take a "best" shot at making the rate structure changes (set the
true costs for water in place) and then work to help customers keep
water bills low
Todav's Water Budget Rate Structure � o
D D
• "Individualized" customer allocations
• Cite the "true" cost of water
to customers (tixea costsivariable costs)
V11114t: dLA;UFdlt: Wt:dlllt:f
data and site data
• Uses the water bill to "finance"
conservation programs
• meet Prop 21
a a
D D
a a
D D
Indoor Outdoor
Water Water Inefficient Excessive Unsustainable
Need Need Water Use Water Use Water Use
33°3.0.'00•
;Weether,RAW ■
Climate C:tntar ■
Potential Evapotranspiration
June
117°15'00' 117°00'00'
tifa
_ . + + nr
r`
117'15'00' 117'00'00•
33930'00`
Where Agencies & Rate
Structures are Going :
• Implement water budget rate structures
to gain access to State grant funding
• Establishing individualized allocations
for customers to maximize fairness
• Download daily ET for every microzone
in the service area for accurate customer
allocations as weather changes
• Coordinate conservation and customer
services to help maintain low water bills
for customers
• Finance the cost of conservation devices
directly on the water bill
• MWD conservation rebate dollars are
going away
• Every agency will have to become
self-sufficient for conservation
• Build customer satisfaction through
increased assistance to help the customer
keep water bills as low as possible
Evaputranspiration in Inches
■
■
o.Gcr.-
0.0-0.2
115-13
310-3.2
4.4-4,5
5.5-6.0
■
TWUnte
0.4-0.4
1.6-2.0
3.2-3.4
4.6-4.6
8.0-8.2
■
■
■
Bowie
0.8-0.8
20-22
3A-3.8
4.6-0.0
8-2-8A
-
■
■
■
N
Interrtete
R8.1.0
22-24
3.6.3.8
E.0.5.2
8.4.6.6
■ 1.0-1.2
■ 24-2.8
&8-4.0
6.2-6.4
. 8.6
-8.8
C.-Y
■ 1.2-1A
2.8-18
4.0.4.2
r,.4-H.r,
■
as-7.4
■ 1.4-1.8
2.8-3.0
4,2-4.4
6.6-6.8
77.07
33930'00`
Where Agencies & Rate
Structures are Going :
• Implement water budget rate structures
to gain access to State grant funding
• Establishing individualized allocations
for customers to maximize fairness
• Download daily ET for every microzone
in the service area for accurate customer
allocations as weather changes
• Coordinate conservation and customer
services to help maintain low water bills
for customers
• Finance the cost of conservation devices
directly on the water bill
• MWD conservation rebate dollars are
going away
• Every agency will have to become
self-sufficient for conservation
• Build customer satisfaction through
increased assistance to help the customer
keep water bills as low as possible
Water Budget Bill : The Waster
04* 9109198 1255 1337
USAGE - LOW VOLUME DISCOUNT
USAGE - CONSERVATION BASE RATE
USAGE — PENALTY
USAGE - EXCESSIVE
USAGE - ABUSIVE
WATER SERVICE CHARGE
SEWER SERVICE CHARGE
YOUR ALLOCATION FOR THIS BILL
BILL CALCULATION BASED ON
82 CCF
16 .480
$7.68
23 .640
$14.72
20 1 .280
$25.60
1 2.560
$48.64
5.120
$20.48
$3.90
$6.90
39 CCF
........................
..1..2.. ..ACRES. . . .. ......
$127.92
(penalty of $67.20/mo.)
Conservation Fee - $14.951mo.15 yrs.
(1 toilet, 2 shower heads, 1 smart controller)
*Financed by the agency to cover the cost of installation and products, w/ the agency
recovering the cost of the program over time
Where to Start :
Build a rate structure that solves the Agency Issues
• Agree on Agency Goals
— Stop losing fixed revenues when customers use less water
(stabilize fixed revenue recovery)
— Eliminate water waste
• to avoid high MWD tier 2 rates,
• avoid over-drafting of the aquifer, maximize the delivery system
• avoid building more infrastructure to deliver water that would be
wasted
— Create a "fair" allocation and incentive system for customers
• Use existing rate structure experiences to develop the Agency
plan
• Seek to slow down rate hikes and increase rate transparency
• Put the responsibility of water use on the users (customers)
and use the "market incentives" and "human nature" to
enforce water efficiency