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Home My WebLink About05.a. Review draft Position Paper to authorize the General Manager to continue to waive the volumetric fee for commercial recycled water truck fill program customers up to a limit of 100,000 gallons per year, per customer for calendar years 2021 and 2022 Page 1 of 3 Item 5.a. CENTRAL SAN BOARD OF DIRECTORS . , , . POSITION PAPER . , DRAFT MEETING DATE: NOVEMBER 2, 2020 SUBJECT: REVIEW DRAFT POSITION PAPER TO AUTHORIZE THE GENERAL MANAGER TO CONTINUE TO WAIVE THE VOLUMETRIC FEE FOR COMMERCIAL RECYCLED WATER TRUCK FILL PROGRAM CUSTOMERS UP TO A LIMIT OF 100,000 GALLONS PER YEAR, PER CUSTOMER FOR CALENDAR YEARS 2021 AND 2022 SUBMITTED BY: INITIATING DEPARTMENT: RICHARD FOSS, ASSOCIATE ENGINEER ENGINEERING AND TECHNICAL SERVICES- PDS-PLANNI NG AND APPLI ED RESEARCH REVIEWED BY: DAN FROST, SENIOR ENGINEER DANEA GEMMELL, PLANNING AND DEVELOPMENT SERVICES DIVISION MANAGER JEAN-MARC PETIT, DIRECTOR OF ENGINEERINGAND 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 I n November 2015, the Board approved a one-year emergency drought relief pilot project to waive the volumetric fee for the cost of recycled water obtained through Central San's Commercial Recycled Water 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 snowfall. I n that executive order, Governor 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 calendar years 2017 and 2018, as a continued incentive to use recycled water. I n 2018, the Board authorized the continuation of the fee waiver for calendar years 2019 and 2020, with a limit that November 2, 2020 REEP Committee Meeting Agenda Packet- Page 23 of 51 Page 2 of 3 the fees would be waived for each customer up to their first 100,000 gallons of recycled water used. Since the fee waiver program was extended in 2018, Central San has provided over 4.5 million gallons per year to Commercial Recycled Water Truck Fill Program customers. I n 2020 (to date), there have been 10 customers with usage ranging from around 1,000 gallons to several millions of gallons. Nearly 75 percent of the recycled water used in 2020 was for the nearby Interstate 680/State Route 4 Interchange construction project. The number of customers and usage by customers fluctuates each year, and total program usage is mostly influenced by large construction projects that elect to use recycled water, and when drought restrictions encourage or require contractors to use recycled water in lieu of potable water. Below is a table summarizing the Commercial Recycled Water Truck Fill Program usage for the last four years. 2020 Commercial Recycled Water Truck Fill Program 2017 2018 2019 (as of 10/13/20) Total Recycled Water Gallons Provided to Customers 637,340 600,240 4,679,814 4,548,861 Total Recycled Water Value (if 100% of usage were to billed to customers) $2,242 $2,201 $17,662 $17,532 Limit on Annual Waiver of Recycled Water Fees No No 100,000 100,000 Limit Limit Gallons Gallons Total Recycled Water Billed to Customers $0 $0 $16,261 $16,079 Number of Customers 11 11 12 10 Number of Customers Using More than 100,000 Gallons per Year 2 Amount of Recycled Water Provided to Customers Using Less than 59,473 39,537 75,174 182,129 100,000 Gallons per Year Value of Recycled Water Not Billed to Customers $2,242 $2,201 $1,403 $1,453 The current fee waiver provides an incentive to use recycled water but places a limit on the extent to 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 2022 to seek direction on this issue for calendar year 2023. ALTERNATIVES/CONSIDERATIONS Alternative 1: The Board could choose to begin re-assessing the volumetric fee for all recycled water obtained through the Commercial Recycled Water 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 Recycled Water Truck Fill Program, regardless of volume used. FINANCIAL IMPACTS Commercial customers obtaining recycled water for truck filling have historically been assessed Central San's recycled water rate, which is currently$3.91 per 1,000 gallons (effective July 1, 2020). The latest effective recycled water rate would be applied to each customer's usage that exceeds the limit of 100,000 gallons per year. Staff time associated in preparing the customer billings is estimated to be approximately four hours per month. COMMITTEE RECOMMENDATION November 2, 2020 REEP Committee Meeting Agenda Packet- Page 24 of 51 Page 3 of 3 The Real Estate, Environmental & Planning Committee reviewed this item at its November 2, 2020 meeting and recommended RECOMMENDED BOARD ACTION Authorize the General Manager to continue to waive the volumetric fee for Commercial Recycled Water Truck Fill Program customers up to a limit of 100,000 gallons per year, per customer for calendar years 2021 and 2022. Strategic Plan re-In GOAL ONE: Customer and Community Strategy 1—Deliver high-quality customer service, Strategy 2—Maintain a positive reputation GOAL THREE: Fiscal Responsibility Strategy 2—Ensure integrity and transparency in financial management November 2, 2020 REEP Committee Meeting Agenda Packet- Page 25 of 51