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HomeMy WebLinkAbout10. Adopt proposed revisions to BP 030 - Cost of Service Studies Page 1 of 5 Item 10. CENTRAL SAN BOARD OF DIRECTORS POSITION PAPER MEETING DATE: SEPTEMBER 5, 2019 SUBJECT: APPROVE PROPOSED REVISIONS TO BOARD POLICY NO. BP 030 - COST OF SERVICE STUDIES SUBMITTED BY: INITIATING DEPARTMENT: DANEA GEMMELL, PLANNING & SECRETARYOF THE DISTRICT DEVELOPMENT SERVICES DIVISION MANAGER REVIEWED BY: KATIE YOUNG, SECRETARYOF THE DISTRICT PHILIP LEIBER, DIRECTOR OF FINANCE AND ADMINISTRATION Roger S. Bailey Kenton L. Alm General Manager District Counsel 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 Studies. While staff had no proposed changes, the Committee recommended clarifying language regarding two statutes relating to the frequency of conducting cost of service studies. District Counsel Kent Alm reviewed the statutes and recommended changes to the policy, as indicated in Attachment 1. September 5, 2019 Regular Board Meeting Agenda Packet- Page 136 of 201 Page 2 of 5 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 proposed revisions clarify that issue. FINANCIAL IMPACTS None. 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 proposed revisions to B P 030 - Cost of Service Studies, effective immediately. Stratedc 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. BP 030 (strikeout) 2. BP 030 (with proposed changes accepted) September 5, 2019 Regular Board Meeting Agenda Packet- Page 137 of 201 Page 3 of 5 Number: BP 030 ATTACHMENT 1 Related Admin. Procedure AP 030 Authority: Board of Directors Effective: July 6, 2017 Revised: September 5, 2019 ' CENTRALSAN Reviewed: 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 Sections 54999.7 and 53756, r-equireshave 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 the-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. SII. A cost of service study or update addressing rates subject to Proposition 218 shall generally be conducted not less than once every te-n-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 new or updated Gost of serviGe study may be appropriate more frequeRtly Gertain nirnumstannecassessedto be assessedby staff each time rate nhannes are proposed Staff shall repert to the Board at the time of the nrenese`J rate GhaRge OR whether, in staff's e the Cost of Service study remaiRs a valid September 5, 2019 Regular Board Meeting Agenda Packet- Page 138 of 201 Page 4 of 5 Number: BP 030 COST OF SERVICE STUDIES Page 2of2 maintained by the General Manager, [Original Retained by the Secretary of the District] September 5, 2019 Regular Board Meeting Agenda Packet- Page 139 of 201 Page 5 of 5 Number: BP 030 ATTACHMENT 2 Related Admin. Procedure AP 030 Authority: Board of Directors Effective: July 6, 2017 ---- Revised: September 5, 2019 Reviewed: 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 Sections 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] September 5, 2019 Regular Board Meeting Agenda Packet- Page 140 of 201