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