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HomeMy WebLinkAbout3.c. Revision of BP 030 - Cost of Service Study Page 1 of 5 Item 3.c. CENTRAL SAN BOARD OF DIRECTORS . , , . POSITION PAPER . , DRAFT MEETING DATE: AUGUST20, 2019 SUBJECT: REVIEW DRAFT POSITION PAPER TO APPROVE PROPOSED REVISIONS TO BOARD POLICY NO. BP 030 - COST OF SERVICE STUDY, REFLECTING THE COMMITTEE'S INPUT FROM THE AUGUST 6, 2019 MEETING SUBMITTED BY: INITIATING DEPARTMENT: DANEA GEMMELL, PLANNING & SECRETARYOF THE DISTRICT DEVELOPMENT SERVICES DIVISION MANAGER REVIEWED BY: KATIE YOUNG, SECRETARYOF THE DISTRICT PHILIPLEIBER, DIRECTOR OF FINANCE AND ADMINISTRATION ISSUE Revisions to Board policies must be approved by Central San's Board. BACKGROUND As part of the biennial review of Board Policies, staff brought before the Administration Committee Board Policy No. BP 030 - Cost of Service Study. The Committee recommended clarifying language regarding the frequency of conducting cost of service studies. ALTERNATIVES/CONSIDERATIONS The Board could elect to leave the existing policy as is but, as pointed out at the August 6, 2019 Committee meeting, the policy language should specify that an appropriate level of cost of service study be conducted any time rates are considered. The recommended changes clarify that issue. FINANCIAL IMPACTS None. August 20, 2019 Regular ADMIN Committee Meeting Agenda Packet- Page 19 of 52 Page 2 of 5 COMMITTEE RECOMMENDATION This item was reviewed at the August 6 and August 20, 2019, Administration Committee meetings. The Committee recommended Board approval of the proposed changes. RECOMMENDED BOARD ACTION Approve the proposed revisions to B P 030 - Cost of Service Study. Strategic Plan Tie-In GOAL TWO: Strive to Meet Regulatory Requirements Strategy 3- Comply with all federal, state, and local regulations related to District administration ATTACHMENTS: 1. Proposed Revisions to BP 030 - Cost of Service Study (strikeout) 2. Proposed Revisions to BP 030 - Cost of Service Study (clean version) August 20, 2019 Regular ADMIN Committee Meeting Agenda Packet- Page 20 of 52 Page 3 of 5 Number: BP 030 Related Admin. Procedure AP 030 Authority: Board of Directors Effective: July 6, 2017 -� Revised: Reviewed: August 620, 2019 CENTRALSAN Initiating Dept./Div.: Administration/Finance BOARD POLICY COST OF SERVICE STUDIES PURPOSE Central San, as a public utility, calculates and sets rates based on the cost of providing services to customers. The State of California Government Code, including Section 54999.7 and 53756, requ♦reshave the effect to require that public agencies periodically conduct a cost of service study for both capital charges and sewer service fees. This pP-olicy directs thee-Central San to comply with theses requirements. An accompanying administrative procedure provides other guidance related to the need to ensure adequate cost support exists for changes in Central San rates. POLICY I. A new or updated cost of service study shall be prepared not less frequently than required by California law and may be appropriate more frequently in certain circumstances, to be assessed by staff each time rate changes are proposed. Staff shall report to the Board at the time of the proposed rate change on whether the most recent Cost of Service study and applicable updates remains a valid basis for the proposed rates. An administrative procedure addressing this assessment is maintained by the General Manager. III. A cost of service study or update addressing rates subject to Proposition 218 shall generally be conducted not less than once every te-R-five years. This policy is also consistent with state law specifying that any public utility serving a public school must perform a cost of service study for capital charges not less than once every ten years. A Rew or updated Gest of serViGe study may be appropriate rnere frequently Certain nirni imstaRGeo to be assessed by staff each time rate nhaRges are proposed. Staff taf+�shall report to the Board at the a of the proposed rate change OR whether, OR staff's OPiniOR the GGSt E)f CeFV+Ge{udy omaiRs a valid August 20, 2019 Regular ADMIN Committee Meeting Agenda Packet- Page 21 of 52 Page 4 of 5 Number: BP 030 COST OF SERVICE STUDIES Page 2 of 2 mnintaiRed by the I eReral Manager [Original Retained by the Secretary of the District] August 20, 2019 Regular ADMIN Committee Meeting Agenda Packet- Page 22 of 52 Page 5 of 5 Number: BP 030 Related Admin. Procedure AP 030 Authority: Board of Directors Effective: July 6, 2017 ---- Revised: Reviewed: August 20, 2019 CENTRALSAN Initiating Dept./Div.: Administration/Finance BOARD POLICY COST OF SERVICE STUDIES PURPOSE Central San, as a public utility, calculates and sets rates based on the cost of providing services to customers. The State of California Government Code, including Section 54999.7 and 53756, have the effect to require that public agencies periodically conduct a cost of service study for both capital charges and sewer service fees. This policy directs Central San to comply with these requirements. An accompanying administrative procedure provides other guidance related to the need to ensure adequate cost support exists for changes in Central San rates. POLICY I. A new or updated cost of service study shall be prepared not less frequently than required by California law and may be appropriate more frequently in certain circumstances, to be assessed by staff each time rate changes are proposed. Staff shall report to the Board at the time of the proposed rate change on whether the most recent Cost of Service study and applicable updates remain a valid basis for the proposed rates. An administrative procedure addressing this assessment is maintained by the General Manager. Il. A cost of service study or update addressing rates subject to Proposition 218 shall generally be conducted not less than once every five years. This policy is also consistent with state law specifying that any public utility serving a public school must perform a cost of service study for capital charges not less than once every ten years. [Original Retained by the Secretary of the District] August 20, 2019 Regular ADMIN Committee Meeting Agenda Packet- Page 23 of 52