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Home My WebLink About05.a. Comprehensive Wastewater Cost of Service StudySummary from General Manager Assumptions Reserves UAAL Capital Improvement Plan Update Updated Financial Plan Scenarios Cost of Service Analysis Proposed Changes Wastewater Rate Design Residential Rates Non - Residential Rates Recycled Water Rates Wrap -Up Reserve Policy Unfunded Actuarial Accrued Liability (UAAL) FY 2015/2016 Capital Improvement Budget Staffing Needs Assessment 3 Reserves — Operating Reserves: 5 months of budgeted expenditures — Capital Reserves: 6 months annual CIP budget - Insurance Reserves: Increase to $1.5 million with a total of 3 incidents per year. Deductible decreased from $1 million to $0.5 million per event Emergency Reserves: $5 million Unfunded Actuarial Accrued Liability (UAAL): Reduce extra payment from $5 million to $2.5 million for the next two fiscal years 2/27/2015 N F, Capital Improvement Budget — Baseline Budget as presented to the Board on December 18, 2014 — Reduced Baseline to cover cost of funding UAAL ($2.5 million) Hypothetical Strict Minimum Budget Staffing Needs Assessment — 287 staff members — Reorganization to align functions s Cost of Service Revenue Customer Requirements Class • The method to recover costs from users in proportion to their use of the system, recognizing the impact of each class on system facilities and operations — Ensure Compliance with Proposition 218 — A cost -based process of converting revenue requirements into a fair equitable rate structure — Allocation of cost of service to customer classes is based on customer usage characteristics • Cost of Service is the fundamental benchmark used for establishing utility rates in the United States 2/27/2015 3 ASSUMPTIONS Operating Fund Working Capital Reserves - 5 months budgeted expenditures Capital Fund Working Capital Reserves - 6 months annual CIP Budget Increase Insurance Reserves $1.5 million — reduce self insured retention from $1 million to $.5 million per event Emergency Reserves - $5 million Fully Funded by 2020 8 2/27/2015 N 12/31/2013 120,790,000 206,700,000 63% $5m 12/31/2014 104,880,000 246,590,000 70% $5m 12/31/2015 92,330,000 287,030,000 76% $2.5M 12/31/2016 80,850,000 310,340,000 79% $2.5M 12/31/2017 70,850,000 332,840,000 82% 12/31/2018 62,560,000 356,970,000 85% 12/31/2019 55,020,000 382,850,000 87% 12/31/2020 46,720,000 410,610,000 90% 12/31/2021 37,430,000 440,370,000 92% 12/31/2022 26,970,000 472,300,000 95% 12/31/2023 15,230,000 506,540,000 97% CAPITAL IMPROVEMENT PLAN UPDATE 9 10 2/27/2015 Scenario A: As presented on Dec. 18, 2014 Board Meeting FY 15 -16: $33.9M CIB FY 16 -17: $38.6M CIB Scenario B (Scenario A less $2.5 M) Scenario C: Hypothetical Strict Minimum Budget 11 FY 2015-16 CIB Program E�penditures Treatment Plant $ 12.91 million Collection System $ 16.45 million General Improvements $ 4.03 million Recycled Water $ 0.50 million Estimated Budget: S 33.89 million (As presented on Dec. 18, 2014 Board Meeting) 12 2/27/2015 Treatment Plant Program — Pump and Blower Seismic Project — Centrifuges and Cake Pumps — Some Asset Replacement • Collection System Program — Pleasant Hill Phase 2 Renovation • General Improvements Program — Vac -Truck — Lowered Equipment Purchase by 50% — Reduced Buildings Improvements Projects • Recycle Water Program — Reduced Tertiary Plant Replacement Project 14 2/27/2015 7 Scenario B CIB Budget 1 FY 2015-16 C1 B Scenario Program Scenario) Treatment Plant $ 10.41 million Collection System $ 15.95 million General Improvements $ 3.98 million Recycled Water - $ 0.45 million Estimated Budget: $ 33.29 million* $ 30.79 million *(Moved Co -Gen to O &M) 13 Treatment Plant Program — Pump and Blower Seismic Project — Centrifuges and Cake Pumps — Some Asset Replacement • Collection System Program — Pleasant Hill Phase 2 Renovation • General Improvements Program — Vac -Truck — Lowered Equipment Purchase by 50% — Reduced Buildings Improvements Projects • Recycle Water Program — Reduced Tertiary Plant Replacement Project 14 2/27/2015 7 FY 2015 -16 CIB Scenario A Scenario B Scenario C Program Treatment Plant S 8.17 million Collection S 13.65 million System General S 3.67 million Improvements Recycled Water $ 0.23 million Estimated 33.29 miiii_ 30.79 riiii,t S 25.71 million Budget: 15 Wastewater Master Plan (CS and TP, and REW) IT Master Plan Implementation Safety Related Projects Regulatory Requirements Projects already under Construction Sewer Renovation related to River Watch 16 2/27/2015 E:3 Treatment Plant Program — Pump and Blower Seismic Project — Centrifuges and Cake Pumps — Electrical Switchgear Refurbishments — Equipment and Piping Replacements Security Related Projects Canceling the Pilot Testing Program Plant Network Upgrade PG &E SST Energy Project • Collection System Program Grayson Creek (more in 16 -17) North Orinda Phase 6 (shifted to 17 -18) Lafayette Phase 10 Sewer Renovation Planning (shifted to 17 -18) Pleasant Hill Phase 2 Renovation Planning (shifted to 17 -18) Manhole Remote Monitoring v 18 2/27/2015 E • General Improvements Program — Vac -Truck Purchase — Reduced Equipment Budget 50% — No HOB, POD, CSO, or Annex buildings Improvements Projects No Security Improvement Projects • Recycle Water Program No Tertiary Plant Improvements Projects 19 2/27/2015 10 FINANCIAL SCENARIOS ALL SCENARIOS Updated O&M Budget — Staffing Plan — Retirement (CCCERA data) — Medical UAAL ($2.5M additional payment for two years) Board Preliminary Reserves Targets (by FY 2020) 21 Scenario FY 15 -16 FY 16-T1 A $33.29 M $38.57 M B $30.79 M $36.07 M C $25.71 M $31.56 M 22 2/27/2015 11 Scenario Comparison - %Annual Revenue Increase 24 2/27/2015 12 COST OF SERVICE ANALYSIS 2/27/2015 13 • Determine revenue requirements from rates • Conduct mass balance based on customer loadings • Allocate O &M and capital costs to functional components • Example: Collection, Treatment, Customer, General, etc. �-� functional costs to cost components • Example: Flow, BOD, TSS, Customer, and General Non - Residential 3% MFR 2% • Develop unit costs • Allocate costs to customer class based on unit costs Accounts 27 Sewer Service Charge Revenue Total Accounts 114,745 28 2/27/2015 14 • SFR — Single Family Residential — Condominiums — Second Living Units — Duplexes — Mobile Homes • MFR — Apartments • SFR — Single Family Residential • MFR — Apartments — Condominiums — Second Living Units — Duplexes — Mobile Homes • SFR & MFR charged the same rate • SFR & MFR charged separate rates Non - Residential 3% MFR 17% 29 Accounts Sewer Service Charge Revenue Total Accounts 114,745 Based on Customer Loadings developed through Cost of Service 30 2/27/2015 15 Residential density data' is used to estimate wastewater flow Total average is 2.5 people per household SFR average density is 2.61 people per household; MFR average density is 2.21 people per household MFR is about 85% of SFR (2.21/2.61) Separate residential class into Single Family Residential (SFR) and Multi - Family Residential (MFR) SFR customers account for approximately 80% of the total dwelling units in the District MFR customers account for the remaining 20% of the total dwelling units 'Source: 2010 Census Data for CCC5D service area 31 Separate the following customer classes from the Standard Commercial class because industry standards have these classes at higher loadings Category Standard Commercial 150 165 150 165 Hotels /Motels 150 165 310 120 Automotive Repair 150 165 180 280 Supermarkets with 150 165 700 230 Food Service 32 2/27/2015 16 Auto Repair Facilities — repair and maintenance facilities, auto dealerships, body and painting facilities, similar facilities for aircraft and boats. Hotels and Motels Mortuaries — facilities with on -site embalming and similar facilities. Supermarkets — with one or more of: meat cutting, delicatessens, bakeries and other activities resulting in the discharge of high - strength wastewater. 33 Elementary Schools 5 gallons per student per 5 gallons per student per schoolday schoolday Intermediate Schools 5.3 gallons per student per 10 gallons per student per schoolday schoolday High Schools 5.6 gallons per student per 15 gallons per student per schoolday schoolday Annual Charge assumes 180 school days per calendar year 34 2/27/2015 17 Scenario B Total Residential $59,670,103 $63,006,301 5.6% Total Non - Residential $12,353,452 $14,764,734 19.5% GRAND TOTAL $72,023,555 $77,771,035 8.0% 35 36 2/27/2015 M Basis for Rates Flow Component $1.68 $3.42 103% ($ /hcf of WW) BOD Component $0.93 $1.13 21% ($ /Ib) TSS Component $0.67 $0.53 -21% ($ /Ib) Fixed Component per $0 $81.38 customer ($ /acct /yr) 35 36 2/27/2015 M Residential SFR $40,331,272 $44,380,286 10.0% MFR $19,338,832 $18,626,015 -3.7% Total Residential $59,670,103 $63,006,301 5.6% Non - Residential $303,692 $331,675 9.2% Bakeries $3,316 $3,644 9.9% Supermarkets $370,577 $785,813 14.3% Mortuaries $35,047 $46,912 5.9% Restaurants $1,438,412 $1,504,903 4.6% Industrial $582,829 $740,086 3.4% Church $253,541 $290,866 14.7% Schools (Daycare, Preschool, University) $36,292 $38,600 6.4% Schools (Elementary) $158,132 $162,180 2.6% Schools (Intermediate) $88,192 $168,234 90.8% Schools (High School) $125,255 $338,125 169.9% Rate Group XA $136,239 $151,367 11.1% Rate Group XB $48,665 $53,973 10.9% Rate Group XC $171,733 $189,771 10.5% Rate Group XD $172,616 $190,330 10.1% Highlighted Classifications indicate Rates greater than 25% Classification Rate Group XE Current Structure $198,021 Proposed Structure Difference $217,854 10.0% Rate Group XF $248,701 $273,087 9.8% Rate Group XG $221,985 $243,401 9.6% Rate Group XH $303,692 $331,675 9.2% Rate Group XI $283,920 $310,076 9.2% Rate Group Xl $5,024 $5,744 14.3% Rate Group XK $23,980 $25,384 5.9% Rate Group XL $5,120 $5,321 3.9% Rate Group XM $5,735 $5,932 3.4% Rate Group XN $23,229 $23,779 2.4% Rate Group XO $0 $0 0.0% Standard Commercial $7,412,998 $7,364,252 16.8% Hotels /Motels $0 $1,008,040 Service stations $0 $285,384 Total Non - Residential $12,353,452 $14,764,734 19.5% GRAND TOTAL $72,023,555 $77,771,035 8.01A Highlighted Classifications indicate Rates greater than 25% 37 38 2/27/2015 19 M M XA Standard Commercial+ XI Standard Commercial+ 1 to 10 % Restaurant 81 to 90 % Restaurant XB Standard Commercial + XJ Standard Commercial + 11 to 20 % Restaurant 65 to 69 % Bakery XC Standard Commercial + XK Standard Commercial + 21 to 30 % Restaurant 70 to 79 % Bakery XD Standard Commercial + XL Standard Commercial + 31 to 40 % Restaurant 80 to 84 % Bakery XE Standard Commercial + XM Standard Commercial + 41 to 50 % Restaurant 85 to 89 % Bakery XF Standard Commercial + XN Standard Commercial + 51 to 60 % Restaurant 90 to 95 % Bakery XG Standard Commercial + XO 10 to 15% Restaurant + 61 to 70 % Restaurant 85 to 90 % Bakery XH Standard Commercial + 71 to 80 % Restaurant WASTEWATER RATE DESIGN 40 2/27/2015 20 • Residential charges will continue to be fixed charges — SFR and MFR charges will be different based on wastewater flow — Condos, duplexes, mobile homes, and second living units will be treated as MFR • Total variable costs, including chemicals, utilities, hauling /disposal, and net capital costs, that can be allocated to flow are approximately 15.5% Total fixed costs in the system are approximately 84.5% • Fixed costs are applied to all dwelling units SFR 91,871 6,436,719 MFR 44,052 2,623,444 Total 135,923 9,060,162 $368.81 $99.57 $469 $368.81 $84.63 $454 Staff Recommends Scenario B SFR 91,871 $439 $32 7.3% $32 6.8% $503 MFR 44,052 $439 $24 5.5% $24 5.2% $487 41 42 2/27/2015 21 Non - Residential* Bakeries $11.22 $12.33 9.9% 4 Supermarkets $4.07 $8.71 114.0° 31 Mortuaries $7.99 $10.70 33.9": 8 Restaurants $8.32 $8.71 4.7% 216 Industrial $6.03 $7.98 10.1% 13 Church $4.07 $4.64 14.0% 113 Schools (Daycare, Preschool, University) $4.07 $4.33 6.4% 14 Schools (Elementary) $5.62 $5.77 2.7% 51 Schools (Intermediate) $5.94 $11.34 90.9% 18 Schools (High School) $6.27 $16.93 170.0% 19 *Subject to a minimum charge equal to MFR charge Highlighted Classifications indicate Rates greater than 25% 43 Non - Residential* Rate Group XA $4.46 $4.96 11.2% 8 Rate Group XB $4.85 $5.38 10.9% 4 Rate Group XC $5.25 $5.81 10.7% 17 Rate Group XD $5.64 $6.22 10.3% 15 Rate Group XE $6.03 $6.64 10.1% 20 Rate Group XF $6.42 $7.05 9.8% 25 Rate Group XG $6.81 $7.47 9.7% 23 Rate Group XH $7.21 $7.88 9.3% 27 Rate Group XI $7.60 $8.31 9.3% 30 Rate Group XJ $8.72 $9.97 14.3% 1 Rate Group XK $9.08 $9.62 5.9% 2 Rate Group XL $9.79 $10.18 4.0% 1 Rate Group XM $10.15 $10.50 3.4% 1 Rate Group XN $10.51 $10.76 2.4% 1 Rate Group XO $10.74 $10.90 1.5% 0 Standard Commercial $4.07 $4.64 14.0% 2,203 Hotels /Motels $4.07 $8.06 98.09.6 2.1 Automotive Repair $41.07 $5.3.4 31.2% 182 *Subject to a minimum charge equal to MFR charge Highlighted Classifications indicate Rates greater than 25% 44 2/27/2015 22 Now Subject to Proposition 218 Noticing 3% Increase proposed for both FY 2015 -16 and FY 2016 -17 per District Code Section 6.38.030 Total cost of the recycled water program, including operating and capital costs to be reviewed in April at Real Estate, Environmental, and Planning Committee Led by District Staff Food Service Classification Audit Establishment of Deli and Bar Categories need to be further reviewed; Currently, Bars and Delis are Classified in Multiple Categories: 15 Mixed Use Rates • Standard Commercial Explore Simplification of Mixed Use Rate Categories Implement over next rate cycle 45 46 2/27/2015 23 Provide direction to staff to finalize Cost of Service Study consistent with Scenario B for purposes of Proposition 218 Notice and FY 2015 -16 budget preparation. Next steps Raftelis to prepare final Cost of Service report Public Hearing on rates is scheduled June 4, 2015 4 affirmative votes are needed for rate increase 47 Q 2/27/2015 Wil