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Review draft Position Paper authorizing the General Manager to waive the volumetric fee for commercial recycled water truck fill customers up to a limit of 50,000 gallons per year, per customer for calendar years 2019 and 2020 Page 1 of 3 Item 3.a. . � CENTRAL SAN CENTRAL SAN BOARD OF DIRECTORS -- POSITION PAPER CENTRAL CONTRA COSTA SANITARY DISTRICT DRAFT MEETING DATE: NOVEMBER 14, 2018 SUBJECT: REVIEW DRAFT POSITION PAPER AUTHORIZING THE GENERAL MANAGER TO WAIVE THE VOLUMETRIC FEE FOR COMMERCIAL RECYCLED WATER TRUCK FILL CUSTOMERS UP TO A LIMIT OF 50,000 GALLONS PER YEAR, PER CUSTOMER FOR CALENDAR YEARS 2019 AND 2020 SUBMITTED BY: INITIATING DEPARTMENT: JUSTIN WAPLES,ASSOCIATE ENGINEER ENGINEERING AND TECHNICAL SERVICES- PDS-PLANNI NG AND APPLIED RESEARCH REVIEWED BY: DAN FROST, SENIOR ENGINEER DANEA GEMMELL, PLANNING AND DEVELOPMENT SERVICES DIVISION MANAGER JEAN-MARC PETIT, DIRECTOR OF ENGINEERING AND TECHNICAL SERVICES ISSUE Since the assessment of recycled water rates is codified in the District Code, the Board of Directors (Board) must authorize any modifications. BACKGROUND n November 2015, the Board approved sone-year emergency drought relief pilot project to waive the volumetric fee for the cost of recycled water obtained through Central San's Truck Fill Program as a way to encourage the use of recycled water to save limited potable water resources. I n April 2015, Governor Jerry Brown issued an executive order directing mandatory water use reductions for the first time in California's history, saying the state's four-year drought had reached near-crisis proportions after a winter of record-low snowfalls. In that executive order, Govenor Brown directed the State Water Resources Control Board to impose a 25 percent reduction on the state's 400 local water supply agencies. These restrictions were later lifted in May 2016. When the one-year pilot was complete, the Board authorized the General Manager to continue to waive the volumetric fee for both calendar year 2017 and calendar year 2018, as a continued incentive to use recycled water for construction purposes. November 14, 2018 REEP Committee Meeting Agenda Packet- Page 3 of 26 Page 2 of 3 Since the fee waived program was extended in 2017, Central San has dispensed 1,175,695 gallons of recycled water through the truck fill program. If staff had assessed volumetric fees, it would have represented approximately$4,207 in revenue to Central San. Currently there are 17 customers, with 2018 usage per customer(to date) ranging from less than 1,000 gallons to more than 500,000 gallons. The number of customers and level of usage fluctuates greatly each year, as many of the customers have been contractors who use the service when they are near the Zone 1 system or the automated truck fill station. Truck Fill Program (Hydrants and AutoFill Station) CY 2017 CY 2018 (To Date) S ubtotal Recycled Water- 63 7,3 40 538,355 13175,695 Gallons Used Approximate Recycled Water $2,250 $1,957 $4,207 Value There are several large construction projects that will start soon, including the Highway 4 expansion projects and the Interstate 680 Southbound Express Lane project. Staff is recommending that if the recycled water truck fill fee waiver is extended a second time, that a ceiling be placed at 50,000 gallons per year, per customer, and customers would be charged for any use above that amount. This would continue to incentivize use of recycled water for construction purposes, but places a limit on the extent at which Central San provides this valuable resource at no cost to the customer, while recognizing that producing recycled water comes at a cost. If the Board approves this extension, staff will return to the Board at the end of calendar year 2020 to seek direction on this issue for the year 2021. ALT ERNAT IVES/CONSIDERATIONS Alternative 1: The Board could chose to begin re-assessing the volumetric fee for all recycled water obtained through the Commercial Truck Fill Program and not renew the fee waiver. Alternative 2: The Board could continue to waive the volumetric fee for all recycled water obtained through the Commercial Truck Fill Program, regardless of volume used. This is not recommended as some customers have used up to 500,000 gallons per year, and new customers have been identified that will likely require over 1 million gallons per year. These large additional demands would increase the operational costs to produce recycled water(pumping, filtration, chemicals, power, etc.). FINANCIAL IMPACTS Commercial customers obtaining recycled water for truck filling have historically been assessed Central San's recycled water rate, which is currently$3.69 per 1,000 gallons (effective July 1, 2018). The latest effective recycled water rate would be applied to each customer's usage that exceeds the proposed limit of 50,000 gallons per year. Staff time associated in preparing the customer billings is estimated to be approximately four hours per month. COMMITTEE RECOMMENDATION The Real Estate, Environmental & Planning Committee reviewed this item at its November 14, 2018 meeting, and ... November 14, 2018 REEP Committee Meeting Agenda Packet- Page 4 of 26 Page 3of3 RECOMMENDED BOARD ACTION Authorize the General Manager to waive the volumetric fee for commercial recycled water truck fill customers up to a limit of 50,000 gallons per year per customer for calendar years 2019 and 2020. Strategic Plan Tie-In GOAL SIX:Embrace Technology, Innovation and Environmental Sustainability Strategy 1 -Augment the region's water supply November 14, 2018 REEP Committee Meeting Agenda Packet- Page 5 of 26