HomeMy WebLinkAbout05.a. (Revised) Comprehensive Wastewater Cost of Service StudyCENTRAL
CONTRA COSTA
SANITARY DISTRICT
Comprehensive Wastewater Cost of Service Study
BOARD WORKSHOP - WASTEWATER COST OF SERVICE/ MARCH 5, 2015
!A5
Summary 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
2
Reserve Policy
= Unfunded Actuarial Accrued Liability (UAAL)
FY 2015/2016 Capital Improvement Budget
Staffing Needs Assessment
3
�q a
L (- (fl
'
lJ 4J L",—u �, ✓ t
• 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
21
i
• 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
Revenue I - Cost of Service.,_
by Customer
Requirements A"A MlMl* Class
p 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
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
c Fully Funded by 2020
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%
A
CAPITAL IMPROVEMENT
PLAN UPDATE
10
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 Program • ■
Expenditurel
Treatment Plant
$
12.91 million
Collection System
$
16.45 million
General Improvements
$
4.03 million
Recycled Water
$
0.50 million
Estimated Budget:
$
33.89 million
(As presented on Dec. 18, 2014 Board Meeting)
12
FY 2015-16 CIB
Scenario A
Scenario
Al
lik.- Program
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
FY 2015 -16 CIB
Scenario A
Scenario B
Scenario C
Program
Treatment Plant
$ 8.17 million
Collection
$ 13.65 million
System
General
$ 3.67 million
Improvements
Recycled Water
$ 0.23 million
Estimated
$ 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
• 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
17
• 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
IN
• 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
Ow
FY 2016 -17 CIB
Program
Scenario A
Scenario B
Scenario C
Treatment Plant
$
17.27 M
$
15.96 M
$
12.96 M
Collection System
$
16.93 M
$
15.93 M
$
14.55 M
General
Improvements
$3.87M
$3.74M
$3.89M
Recycled Water
$
0.50 M
$
0.44 M
$
0.16 M
Total CIB:
$
38.57 M
$
36.07 M
$
31.56 M
20
FINANCIAL SCENARIOS
21
Updated O &M Budget
— Staffing Plan
Retirement (CCCERA data)
— Medical A $33.29 M $38.57 M
UAAL ($2.5M additional
payment for two years) g $30.79 M $36.07 M
• Board Preliminary Reserves
Targets (by FY 2020)
C $25.71 M $31.56 M
22
Orange shading indicates 30/6 COL increase 23
Engineering's CIP figures are inflated 3% yearly starting in Year 2
Summary of Updated Scenarios
Scenario
ID
Description
Class
2015 -16
Rate
Increase
2016 -17
Rate
Increase
2017 -18
Rate
Increase
2018 -19
Rate
Increase
2019 -20
Rate
Increase
2020 -21
Rate
Increase
2021 -22
Rate
Increase
2022 -23
Rate
Increase
2023 -24
Rate
Increase
2024 -25
Rate
Increase
10 -Year
Ending
Total
Prior Year 2014 -15 Scenario
Prior
used for Rate Setting (June
ALL
$ 34
$ 33
$ 32
$ 6
$ -
$ -
$ -
$ -
$ -
N/A
$ 544
Year
2014)
Percentage Increase
7.7%
7.0%
6.3%
1.1%
0.0%
0.0%
0.0%
0.0%
0.0%
N/A
18.2%
Updated Data, Full CIP Program,
$2.5M UAAL Paydown for Two
SFR
$ 38
$ 38
$ 20
$ 20
$ 20
$ 20
$ 20
$ 19
$ 19
$ 20
$ 671
Years
Percentage Increase
1 8.7%
8.0 °0
3.8%1
3.7%
3.6%
3.4%
3.3%
3.1%
3.0%
3.0-/or
34.6%
A
Updated Data, Full CIP Program,
$2.5M UAAL Paydown for Two
MFR
$ 30
$ 30
$ 19
$ 19
$ 19
$ 19
$ 19
$ 18
$ 18
$ 19
$ 650
Years
Percentage Increase
6.8%
6.4%
3.8%
3.7%
3.6%
3.4%
3.3%
3.1%
3.0%
3.0%
32.5%
Updated Data, Reduced CIP
Program, $2.5M UAAL Paydown
SFR
$ 32
$ 32
$ 25
$ 25
$ 24
$ 22
$ 21
$ 21
$ 20
$ 20
$ 680
for Two Years
B
Percentage Increase
7.3%
6.8%
4.9%
4.7%
4.3%
3.8%
3.5%
3.4%
3.1%
3.0%
35.4%
Updated Data, Reduced CIP
Program, $2.5M UAAL Paydown
MFR
$ 24
$ 24
$ 24
$ 24
$ 23
$ 21
$ 20
$ 20
$ 19
$ 19
$ 658
for Two Years
Percentage Increase
11
5.5%
5.2%1
4.9%
4.7%
4.3%
3.8%
3.5%
3.4%
3.1%
3.0%
33.3%
Updated Data, Minimum CIP
Program, $2.5M UAAL Paydown
SFR
$ 29
$ 29
$ 31
$ 31
$ 29
$ 18
$ 18
$ 19
$ 19
$ 20
$ 682
for Two Years
C
Percentage Increase
6.6%
6.2%
6.2%
5.8%
5.2%
3.1%
3.0%
3.0%
3.0%
3.0%
35.6%
Updated Data, Minimum CIP
Program, $2.5M UAAL Paydown
MFR
$ 21
$ 21
$ 30
$ 28
$ 25
$ 16
$ 16
$ 17
$ 17
$ 18
$ 648
for Two Years
Percentage Increase
4.8%
4.6%
6.2%
5.8%
5.2%
3.1%1
3.0%1
3.0%1
3.0%1
3.0%1
32.2%
Orange shading indicates 30/6 COL increase 23
Engineering's CIP figures are inflated 3% yearly starting in Year 2
Scenario Comparison - % Annual Revenue Increase
10% 9.3%
9%
8.3
$.0% -
8%
7.2%
7%
6%
5%
4%
.1%
3%
2%
1%
0%
FY 2016
4.9% 4.7%
3.9 3.7
.2% .8%
FY 2018
Scenario A
4.3% 3.8%
3.6 3.51.1%
.2%
FY 2020
Scenario B
3.5% 3.4%
3.3%
3.11.0%
1.0%
FY 2022
Scenario C
3.1%
3.0%
.9%
FY 2024
3.0%
3.0%
1-0%
24
$800
$750
$700
$650
$600
$550
$500 $477
$471
$450
46'8
$400 --
FY 2016
$515
$503
497
Scenario Comparison - Single Family Rates
$554
$535 $552
$528
1. 52.8
FY 2018
Scenario A
4.71..1
$680
$660 $671
$640
$619 $651 $632
$598 $613
$576 $594 ~
$574
662 682
624 643
.1606
587 ;
FY 2020 FY 2022 FY 2024
Scenario B Scenario C
25
COST OF SERVICE ANALYSIS
26
• Determine revenue requirements from rates
• Conduct mass balance based on customer loadings
0
Allocate O &M and capital costs to functional components
• Example: Collection, Treatment, Customer, General, etc.
Allocate functional costs to cost components
• Example: Flow, BOD, TSS, Customer, and General
)evelop unit costs
k1locate costs to customer class based on unit costs
27
Non-
Residential
3%
MFR
2%
Accounts
Sewer Service Charge Revenue
Total Accounts 1141745
• SFR SFR
— Single Family Residential — Single Family Residential
— Condominiums MFR
— Second Living Units — Apartments
— Duplexes -- Condominiums
— Mobile Homes — Second Living Units
MFR — Duplexes
— Apartments - Mobile Homes
-, SFR &MFR charged the same rate SFR & MFR charged separate rates
29
Non-
Residential
3%
MFR
17%
Accounts Sewer Service Charge Revenue
Total Accounts 1141745
Based on Customer Loadings developed through Cost of Service 30
" 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 68% of the total
dwelling units in the District
— MFR customers account for the remaining 32% of the total
dwelling units
'Source: 2010 Census Data for CCCSD service area
31
Separate the following customer classes from
the Standard Commercial class because industry
standards have these classes at higher loadings
Standard Commercial
150
165
150
165
Hotels /Motels
150
165
310
120
Automotive Repair
150
165
180
280
Supermarkets with
150
165
700
360
Food Service
32
Auto Repair Facilities — repair and maintenance
facilities,, auto dealerships, body and painting
facilities,, similar facilities for aircraft and boats.
Hotels and Motels —with food service
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
Intermediate Schools
High Schools
5 gallons per student per
school day
5.3 gallons per student per
school day
5.6 gallons per student per
school day
Annual Charge assumes 180 school days per calendar year
5 gallons per student per
school day
10 gallons per student per
school day
15 gallons per student per
school day
34
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 $77,771,035 8.0%
35
Basis for Rates
Flow Component
($ /hcf of WW) $1.68 $3.42 103%
BOD Component
($ /Ib) $0.93 $1.13 21
TSS Component
($ /Ib) $0.67 $0.53 -21%
Fixed Component
per customer $0 $81.38
($ /acct /yr)
36
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
Bakeries
$3,316
$3,644
9.9%
Supermarkets
$370,577
$785,813
112.1%
Mortuaries
$35,047
$46,912
33.9%
Restaurants
$1,438,412
$1,504,903
4.6%
Industrial
$582,829
$740,086
27.0%
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
$172,816
$190,330
10.1%
Highlighted classifications indicate rates greater than 25%
37
Rate Group XE
$198,021
$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 XJ
$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
$6,685,807
$7,364,252
10.1%
Hotels /Motels
$509,293
$1,008,040
97.9%
Service Stations
$217,898
$285,384
31.0%
Total Non - Residential
$12,353,452
$14,764,734
19.5%
GRAND TOTAL
$72,023,555
$77,771,035
8.0%
Highlighted classifications indicate rates greater than 25% 38
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
go
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 20%
Total fixed costs in the system are approximately 80%
Fixed costs are applied to all dwelling units
SFR 911871 614361719 $368.81 $99.57 $469
MFR 44,052
Total 135,923
2, 623,444
9,060,162
$368.81 $84.63 $454
41
Residential Impacts — FY 2016 and
Residential
Dwelling
Units
Current
Charge
FY 2017
FY 15 -16
Increase
FY 16 -17
Increase
FY 17
Annual
Charge
Non - Residential*
Bakeries
Supermarkets
Mortuaries
Resta u ra nts
Industrial
Church
Schools (Daycare, Preschool,
University)
Schools (Elementary)
Schools (Intermediate)
Schools (High School)
$11.22
$12.33
9.9%
4
$4.07
$8.71
114.0%
31
$7.99
$10.70
33.9%
8
$8.32
$8.71
4.7%
216
Based on
unit rates
13
$4.07
$4.64
14.0%
113
$4.07
$4.33
6.4%
14
$5.62
$5.77
2.7%
51
$5.94
$11.34
90.9%
18
$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
Rate Group XB
Rate Group XC
Rate Group XD
Rate Group XE
Rate Group XF
Rate Group XG
Rate Group XH
Rate Group XI
Rate Group XJ
Rate Group XK
Rate Group XL
Rate Group XM
Rate Group XN
Rate Group XO
Standard Commercial
Hotels /Motels
Automotive Repair
*Subject to a minimum charge equal to MFR charge
$4.46
$4.96
11.2%
8
$4.85
$5.38
10.9%
4
$5.25
$5.81
10.7%
17
$5.64
$6.22
10.3%
15
$6.03
$6.64
10.1%
20
$6.42
$7.05
9.8%
25
$6.81
$7.47
9.7%
23
$7.21
$7.88
9.3%
27
$7.60
$8.31
9.3%
30
$8.72
$9.97
14.3%
1
$9.08
$9.62
5.9%
2
$9.79
$10.18
4.0%
1
$10.15
$10.50
3.4%
1
$10.51
$10.76
2.4%
1
$10.74
$10.90
1.5%
0
$4.07
$4.64
14.0%
2,203
$4.07
$8.06
98.0%
21
$4.07
$5.34
31.2%
182
Highlighted classifications indicate rates greater than 25% 44
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
45
Led by District Staff
Food Service Classification Audit
— Establishment of Bars and Delis 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
M.
Provide direction to staff to finalize Cost of
Service Study consistent with Scenario 6 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
— Four affirmative votes are needed for rate
increase
47
Millions
$75
$70
$65
$60
$55
$50
$45
$40
Projected O &M and Capital Res
FY 2015 FY 2016
Scenario A
FY 2017 FY 2018 FY 2019 FY 2020
Scenario B Scenario C
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
Bakeries
$3,316
$3,644
9.9%
Supermarkets
$370,577
$785,813
112.1%
Mortuaries
$35,047
$46,912
33.9%
Restaurants
$1,438,412
$1,504,903
4.6%
Industrial
$582,829
$740,086
27.0%
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
$172,816
$190,330
10.1%
Highlighted Classifications indicate Rates greater than 25%
Rate Group XE
$198,021
$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 XJ
$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
$6,685,807
$7,364,252
10.1%
Hotels /Motels
$509,293
$1,008,040
97.9%
Service Stations
$217,898
$285,384
31.0%
Total Non - Residential
$12,353,452
$14,764,734
19.5%
GRAND TOTAL
$72,023,555
$77,771,035
8.0%
Highlighted Classifications indicate Rates greater than 25% 51
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
Cis]
Board Directed Cash Allocation By Fund July 1, 2014
($000's)
Operating Fund Capital Fund Insurance Fund Total
$45,000
$40,000
$35,000
$30,000
$25,000
$20,000
$15,000
$10,000
$5,000
Revenue
Expenditures
-Cash Balance
53
$20,000
$18,000
$16,000
$14,000
$12,000
$10,000
$8,000
$6,000
$4,000
$2,000
Me,,
yPQ �o ��
Revenue
Expenditures
Cash Balance
54
City of HHW Other
Concord $895 $2,390
$13,500
--AM000
Sewer
Service
Charges
$69,447
City of
Other
Capacity
Concord
$1,142
Fees
$3,305
L
$5,890
service
Charges
$3,784
Ad
Valorem
Tax
$13,695
55