HomeMy WebLinkAbout2014 Rate Increase Notice - Residential Water ServiceNOTICE OF PUBLIC HEARING
In Connection with Proposed
CHANGES TO RATES, FEES, AND CHARGES FOR RESIDENTIAL WATER SERVICE
NOTICE IS HEREBY GIVEN that the Otay Water District (the “District”)
will hold a Public Hearing on September 4, 2013, at 3:30 p.m. in the
Board of Directors Meeting Room, 2554 Sweetwater Springs Blvd.,
Spring Valley, CA 91978, to consider: (1) the adoption of rate, fee, and
charge increases that apply to water billed beginning January 1, 2014;
(2) the authorization for a period of five years of all future pass‐through
increases or decreases to cover changes to rates, fees, or charges from
the District’s water suppliers; and, (3) the authorization for a period of
five years, overall average rate increases, in addition to the pass
through increases, not to exceed 10 percent per year, of all costs other
than pass‐through costs. These rates, fees, and charges apply to
property for which you are shown as the record owner or customer of
record. The purpose of the hearing is to consider all written protests
against the proposed rates, fees, and charges that, if approved, will be
imposed on properties served by the District. The amount of the
proposed rate, fee, and charge increases and the basis upon which they
were determined is described in more detail as follows.
PROPOSED RATE INCREASES
An overall water customer average rate increase of 7.5 percent was
considered by the District’s Board of Directors as part of the annual
budget review process. If adopted after the public hearing noticed
above, for a typical single‐family residential water customer using 14
units per month (14 Hundred Cubic Feet or 10,472 gallons of water),
your water bill will increase by $4.08 per month. The water rate
increase is proposed to take effect with water billed on or after January
1, 2014, and may apply to water used as early as the beginning of
December 2013.
The District has performed a Cost of Service Study and Rate Study
(i.e. reviewed rates, fees, charges, costs, and the consumption usage
structure) and determined that increases in the rates, fees, and charges
are necessary in order to recover sufficient revenues to operate and
maintain the public water system. The proposed rate, fee, and charge
structure will provide revenue that recovers costs reasonably borne in
providing the service; are equitable to all customer classes; and are
proportionate to the cost of providing the service to each customer
class.
The rate structure has two basic components: (1) fixed monthly fees
and (2) variable monthly rates and fees, which are based on water
consumption. The fixed fees are calculated to recover the cost of
operating and maintaining the public water system and are based on
the size of the water meter serving the record owner or customer of
record. Fixed fees include the Metropolitan Water District of Southern
California and San Diego County Water Authority (MWD & CWA) fee,
and the District’s System Fee. The variable rates, fees, and charges are
consumption based and include but are not limited to supply,
treatment and transportation costs. Variable rates and fees generally
impose greater charges as the level of consumption increases. The
variable components are structured in such a way as to deter waste and
encourage conservation. Variable components of the bill include the
Water Rate, Energy Charge, and Water Charge by Improvement District.
The fixed and variable components are calculated to recover the
proportionate cost of providing the service attributable to each class of
customer.
The District will also consider authorizing, for a period of five years,
passing through to customers the increased or decreased costs imposed
by the District’s water suppliers. If adopted, the average customer’s
water rates, fees, and charges will be adjusted annually for all increased
or decreased costs and charges from the District’s wholesale water
suppliers. The pass‐through costs apply to rates, fees, and charges from
the District’s water suppliers. The suppliers include but are not limited
to the Metropolitan Water District of Southern California, San Diego
County Water Authority, and the City of San Diego. Any changes to
rates, fees, and charges subsequently imposed by the District will be
subject to a 30‐day prior written notice, but will not be subject to
additional hearings or protests.
In addition to the wholesale pass‐through costs, the District will
consider authorizing, for a period of five years, average rate increases
not to exceed 10 percent per year for all costs related to labor, benefits,
materials, energy, maintenance, administrative expenses, as well as
other operational costs of providing water service, including amounts
required to meet bond covenants and to maintain adequate reserves
and rate stability.
The proposed water rate increase in the average amount of 7.5
percent will pass‐through increases implemented by the District’s water
wholesalers (MWD’s 5 percent increase and CWA’s increase of 4.3
percent) and will allow the District to recover other increases in
operational costs. Water wholesalers do not anticipate additional rate
increases in 2014, but they do expect to implement increases in January
2015 and in subsequent years.
As the record owner or customer of record of a property identified to
be subject to the imposition of proposed rate, fee, or charge increases,
you may submit a written protest against the proposed actions.
Provided, however, if the identified property has more than one record
owner and/or customer of record, only one written protest will be
counted. Each protest must be in writing; state the specific rate
increase for which the protest is being submitted in opposition; provide
the location of the identified property (by assessor’s parcel number or
street address); and include the original signature of the record owner
or customer of record submitting the protest. Protests submitted by e‐
mail, facsimile, or other electronic means will not be accepted. Written
protests may be submitted by mail to the Board Secretary, Otay Water
District, 2554 Sweetwater Springs Blvd., Spring Valley, CA 91978, or in
person at the public hearing, so long as they are received prior to the
conclusion of the public hearing. Please identify on the front of the
envelope for any protest, whether mailed or submitted in person to
the Board Secretary, that the enclosed letter is for the Public Hearing
on the Proposed Increase to Residential Water Rates, Fees, and
Charges.
At the conclusion of the public hearing, the Board of Directors will
consider adopting the proposed actions as described above. Oral
comments at the public hearing will not qualify as formal protests
unless accompanied by a written protest. If, at the close of the public
hearing, written protests against the proposed rate increase, fees, and
charges are not presented by a majority of the record owners or
customers of record of the identified properties upon which they are to
be imposed, the Board of Directors will be authorized to adopt the
proposed actions. If adopted, the rates, fees, and charges will apply to
water billed on or after January 1, 2014 and may apply to water used as
early as the beginning of December 2013. This letter serves as a 45‐day
notice of the hearing on the proposed rate increases, and as notice of
the increases for water billed on or after January 1, 2014, if adopted.
This notice is being provided to you by the District pursuant to the
California Constitution Article XIIID (collectively known as “Proposition
218”). Under terms of Proposition 218, the District is required to notify
the record owner or customer of record of proposed changes to
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$112.27
$109.42
$106.91
$103.26
$92.87
$91.40
$88.24
$87.81
$84.64
$80.40
$78.87
$78.34
$78.30
$77.84
$77.44
$77.35
$75.32
$74.00
$72.31
$71.56
$67.97
$65.78
$61.59
$- $20 $40 $60 $80 $100 $120
Rainbow
*Padre Dam E
*Padre Dam W
Ramona
Valley Center
Vista
Escondido
*Fallbrook
Sweetwater
*Del Mar
*Olivenhain
Rincon
*Santa Fe
Otay
San Diego
*Carlsbad
*Vallecitos
*Oceanside
Helix
Poway
San Dieguito
Yuima
Lakeside
SURVEY OF MEMBER AGENCY WATER RATES
14 Unit Water Use and 3/4" Meter-Projected water bill effective Fiscal Year 2014
*With Otay's estimated
average rate increase
property‐related fees such as water services. This letter serves as notice
that the District will hold a public hearing to consider changes to its
current water rates, fees, and charges.
WHY ARE WATER RATE CHANGES NECESSARY?
The District is a revenue‐neutral public agency that provides water
service to your community. “Revenue‐neutral” means that water bills
reflect only those rates, fees, and charges sufficient to support water
service. To continue to provide reliable, safe and high‐quality service,
the District must implement and pass through to its customers the
higher cost of water imposed by suppliers. This year, as in recent years,
a large percentage of the increase is a direct result of higher costs from
suppliers and represents a direct pass‐through from those suppliers.
The water suppliers include the MWD, CWA, and the City of San Diego.
WHAT DO WATER RATES FUND?
In the District, each end user pays his or her fair share of the cost of
purchasing water, energy or pumping costs, labor and benefits,
materials, chemicals used in water treatment, administrative expenses,
operations, construction and maintenance of the public water system
and facilities. This also includes amounts required to meet bond
covenants and to maintain adequate reserves and rate stability. The
District is a non‐profit public agency, it does not make a profit from
providing water service and it cannot operate at a loss.
WHY ARE WHOLESALER WATER SUPPLIERS RAISING THEIR RATES?
Wholesale suppliers are raising their rates as they work to obtain new
and more reliable supplies of water. This includes more reliable
emergency supplies, agricultural to urban water transfers, expansion of
existing reservoirs, pipeline relining projects, new water treatment
plants, and new supplies including ocean water desalination. In
addition, rate increases cover the cost of acquiring imported water
from the Colorado River and Northern California.
In 2016, for instance, the San Diego County Water Authority
anticipates increasing rates, fees, and charges in anticipation of the
Carlsbad Desalination Project (ocean water desalination) becoming
operational. The Carlsbad project, while providing San Diego County
with a new locally controlled, drought‐proof supply of water, could
have significant upward pressure on water rates for all San Diego
County water customers.
For its part the District works continually to reduce internal costs to
absorb rate increases from suppliers. The District recognizes and is
sensitive to the impact the higher cost of water has on its customers. As
a result the District is committed to becoming as efficient as possible,
providing the services its customers expect and rely upon, while
continuing to be one of the lower cost water service providers in San
Diego County.
RELIABILITY AND SUPPLY DIVERSIFICATION
Water is essential to our region’s quality of life. Our economy
depends on it. Families and businesses cannot survive without it.
Unfortunately for San Diego residents, our county does not benefit
from an abundant natural supply of water. San Diego receives an
average just 10 inches of rainfall per year, meeting only 5 percent of
local demand, and that is not enough to support our region’s
population of 3.1 million people or its $188 billion economy. Because of
our semi‐arid climate, 82 percent of the water used locally is imported
from Northern California and the Colorado River. Not only is the cost of
importing water becoming increasingly costly, but population growth,
drought, environmental regulations, litigation, competition for a scarce
resource, and increased power costs are driving the price we pay
higher.
San Diego County’s wholesale and retail water agencies recognized
the region was highly dependent on imported water during a severe
drought that occurred in the late 1980s and early 1990s. The entities
have continued to work aggressively to develop a more reliable water
supply system ‐ one that would increase water independence, provide
for future population and economic needs, and reduce the likelihood of
a future water shortage. Since then, major initiatives have been
undertaken to develop new supplies and improved reliability.
At the regional level, CWA signed a milestone agreement to address
decades of water disputes over the allocation of water from the
Colorado River. As part of that agreement, San Diego residents paid to
have old, leaky earthen canals in Imperial County lined to save water.
This “saved water” is now used by customers in San Diego County. This
year, the region will receive 80,000 acre‐feet of water from the canal
lining projects (enough water to supply approximately 160,000 homes).
Through a combination of land fallowing and efficiency‐based water
conservation measures with farmers in Imperial County, the region was
able to purchase another 100,000 acre‐feet of water in 2012 (enough
water to supply 200,000 existing homes). The water we receive from
this part of the agreement will ramp up to 200,000 acre‐feet per year
by 2021.
Since the 1990s, the District embarked on its own efforts to develop
new supply and today operates one of the largest recycled water
networks in California. As a benefit, when the drought hit our region in
2008, because of your investments in a recycled water system used for
landscape irrigation, mandatory water conservation was not imposed
on Otay Water District customers. Additionally, the District is actively
supporting the development of an ocean water desalination facility in
Rosarito Beach, Mexico. When built, the water from this facility could
replace up to two‐thirds of the water we receive from Northern
California and the Colorado River.
A result of these major projects, such as the canal linings, water
transfers, and reservoir construction and expansion efforts, is that the
wholesale cost of water has gone up dramatically in recent years, and it
is an expense being borne by all water users. Rising costs are financially
difficult for everyone, but having made these investments in new
supply and improved reliability, the region is better able to ensure that
families, businesses, and the local economy will always have the water
it needs.
WHAT CAN I DO TO SAVE MONEY?
Customers interested in learning ways in which they can reduce their
water usage and therefore minimize the effects of the rising cost of
imported water on their family’s budget, can visit the District’s
Conservation page at www.otaywater.gov. Additionally, the Water
Conservation Garden located on the campus of Cuyamaca Community
College in Rancho San Diego is open to the public and offers various
conservation exhibits, programs and classes. For more about the Water
Conservation Garden, visit www.thegarden.org. For information about
the Otay Water District, please visit www.otaywater.gov or contact us
via email at info@otaywater.gov.
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Footnotes:
1. These are fixed fees, are based on meter size, and ensure that customers pay
their proportionate share of the higher water system replacement,
maintenance, and operating expenses. The MWD & CWA Fixed Fee matches in
total the cost charged by wholesale water suppliers. As a result of the Cost of
Service Study, Otay’s System Fee for customers with 3/4” meters will decrease
and the System Fee for customers with 1” or larger meters will increase.
2. This cost varies based on water usage and can be calculated using the
consumption block tables. One unit of consumption equals 748 gallons of
water or one HCF (hundred cubic feet). The example used above is based on
14 units of consumption.
3. The Conservation Tier discount applies toward the first five units of water
when overall consumption is ten units or less.
4. The Energy Charge represents the cost of the energy required to pump or lift
each unit of water 100 feet in elevation. This is charged proportionately for
every foot of elevation over 450 feet. The increase is due to increased power
costs charged by the District’s power supplier.
5. This charge is a per unit charge and your bill will vary based on water
consumption. Improvement District charges do not apply to the first five units
of water per month.
6. Charges collected through the property tax role (availability fees and general
obligation debt) are not included in this total.
7. Fire Service requires a separate meter and is a monthly fee based on meter
size. The Fire Service Fee is decreasing based on the Cost of Service Study.
Future year projections are for information purposes only.
8. Your bill will vary based on meter size, water consumption in units, and
geographic location.
9. Projected rates are for information purposes only. Rates were inflated by 7.5
percent in 2015 through 2017 and by 2.3 percent in 2018.
Typical Bill Based on 14 HCF (or Water Units) per Month
MWD & CWA
Fixed Fee(1)
Otay
System Fee(1) Water Rate(2)
Energy
Charge(4)
Otay Water Charge by
Improvement District(5) Total(6)
Current $13.28 $16.74 $40.90 $2.05 $0.79 $73.76
Proposed $14.45 $16.19 $44.08 $2.33 $0.79 $77.84
$4.08 Increase in monthly water bill(8)
This information reflects only changes to rates.
For a comprehensive listing of rates, please see the Otay Water District’s Code of Ordinances.
Consumption Blocks in Units(2) and Usage Fee(2) ‐ 2014 Proposed and 2015‐2018 Projected(9)
Consumption Blocks
(in Units) Current
2014
Proposed
2015
Projected
2016
Projected
2017
Projected
2018
Projected
Conservation Tier(3) $1.73 $1.86 $2.00 $2.15 $2.31 $2.37
6 ‐ 10 $2.69 $2.90 $3.11 $3.35 $3.60 $3.68
11 ‐ 22 $3.50 $3.77 $4.05 $4.35 $4.68 $4.79
23 or more $5.39 $5.80 $6.24 $6.71 $7.21 $7.37
Otay System Fee(1) ‐ 2014 Proposed and 2015‐2018 Projected(9)
Meter
Size Current
2014
Proposed
2015
Projected
2016
Projected
2017
Projected
2018
Projected
3/4" $16.74 $16.19 $17.40 $18.71 $20.11 $20.58
1" $21.26 $22.87 $24.59 $26.43 $28.41 $29.06
1 1/2" $32.57 $39.58 $42.55 $45.74 $49.17 $50.30
2" $46.13 $59.62 $64.09 $68.90 $74.07 $75.77
MWD & CWA Fixed Fees(1) ‐ 2014 Proposed and 2015‐2018 Projected(9)
Meter
Size Current
2014
Proposed
2015
Projected
2016
Projected
2017
Projected
2018
Projected
3/4" $13.28 $14.45 $15.53 $16.70 $17.95 $18.36
1" $22.12 $26.79 $28.80 $30.96 $33.28 $34.05
1 1/2" $44.31 $60.61 $65.16 $70.04 $75.30 $77.03
2" $70.85 $103.08 $110.81 $119.12 $128.06 $131.00
Other Charges Current
2014
Proposed
2015
Projected
2016
Projected
2017
Projected
2018
Projected
Energy Charges(4) $0.042 $0.048 $0.051 $0.055 $0.059 $0.061
Improvement District(5)
No. 3 $0.21 $0.21 $0.21 $0.21 $0.21 $0.21
Improvement District(5)
No. 10 $0.27 $0.27 $0.27 $0.27 $0.27 $0.27
La Presa(5) $0.08 $0.08 $0.08 $0.08 $0.08 $0.08
Fire Service(7) $34.57
≤3” Meter
$21.14
≤3” Meter
$22.73
≤3” Meter
$24.43
≤3” Meter
$26.26
≤3” Meter
$26.87
≥4” Meter
$28.49
≥4” Meter
$30.63
≥4” Meter
$32.92
≥4” Meter
$35.39
≥4” Meter
$36.21
Other Charges(8) ‐ 2014 Proposed and 2015‐2018 Projected(9)
NOTICE OF PUBLIC HEARING
IMPORTANT INFORMATION ABOUT
WATER SERVICE
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2554 Sweetwater Springs Blvd.
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www.otaywater.gov
NOTICE OF PUBLIC HEARING
IMPORTANT INFORMATION ABOUT
WATER SERVICE