HomeMy WebLinkAbout2014 Rate Increase Notice - Commercial Sewer ServiceNOTICE OF PUBLIC HEARING
In Connection with Proposed
INCREASES TO RATES, FEES, AND CHARGES
FOR COMMERCIAL SEWER 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
sewer service 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 sewer service providers; 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 average sewer rate increase of 7.9 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, the sewer rate increase is proposed to
take effect with sewer service billed on or after January 1, 2014,
and may apply to sewer service 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 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 sewer system. The proposed
rate, fee, and charge structure will provide revenue that recovers
costs reasonably borne in providing sewer service; are equitable
to all customer classes; and are proportionate to the cost of
providing the service to each customer class.
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 sewer service providers. If
adopted, the customer’s sewer rates, fees, and charges will be
adjusted annually in relation to all increased or decreased costs
and charges from the District’s sewer service providers. The
pass‐through costs apply to rates, fees, and charges from the
District’s treatment and disposal providers. The providers include
but are not limited to the County of San Diego 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 pass‐through costs, the District will consider
authorizing, for a period of five years, overall 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 sewer service, including amounts required to meet
bond covenants and to maintain adequate reserves and rate
stability.
The proposed sewer rate increase will pass‐through increases
implemented by the District’s sewer service providers and will
allow the District to recover other increases in operational costs.
WHY ARE YOU RECEIVING THIS NOTICE?
As the record owner or customer of record of a property
identified to be subject to the imposition of proposed rate, fees,
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 Commercial Sewer 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 sewer service
billed on or after January 1, 2014 and may apply to sewer service
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 sewer service 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 property‐related fees such as sewer
service. This letter serves as notice that the District will hold a
public hearing to consider changes to its current sewer service
rates, fees, and charges.
(Continued on page 2)
Page 2
WHAT DO SEWER RATES FUND?
Each end user of the public sewer system pays his or her fair
share of the costs associated with sewage disposal, including
energy or pumping costs, labor and benefits, materials,
chemicals used in sewage treatment, administrative expenses,
operations, construction and repair. Such costs include
inspection and preventative maintenance of the public sewer
system and facilities and replacement of aging sewer
infrastructure.
The actions proposed will help protect the public’s investment
in the public sewer system, reduce the possibility of pipeline
breaks, blockages or spills, and keep rates affordable.
WHY ARE SEWER RATE CHANGES NECESSARY?
The District is a revenue‐neutral public agency that provides
sewer service to your community. “Revenue‐neutral” means that
sewer bills reflect only those rates, fees, and charges sufficient to
support sewer service. To continue to provide reliable service,
the District must implement and pass through to its customers
the higher cost of sewer disposal services imposed by service
providers. As a non‐profit public agency, the District does not
make a profit from providing sewer service, and it cannot
operate at a loss.
OTHER PROPOSED ACTIONS
As a result of the Cost of Service and the Rate Study, the
following changes will be made to Commercial Sewer Account
rate calculations:
• The elimination of the Assigned Service Unit (ASU)
calculation
• Creation of a system fee by water meter size and using the
annual average water consumption for the usage charge
• Adjust commercial sewer strengths to match changes to
current industry standards
• Match water meter equivalencies used for sewer base fees
that are consistent with those of the American Water Works
Association
• Eliminate special formulas for schools and churches and
adopt a charge methodology comparable to commercial
accounts
The District may also reclassify a commercial sewer customer’s
Strength Factor classification, at the discretion of the District,
from time to time or when made aware of the need to reclassify
a business based on a change in that businesses’ operations.
WHAT CAN I DO TO SAVE MONEY?
Customers interested in learning ways in which they can reduce
their sewer bills should look to minimizing their average annual
water consumption. For program information and conservation tips,
please 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.
(Continued from page 1)
PROPOSED COMMERCIAL SEWER RATES AND FEES
PROPOSED FORMULA FOR SEWER RATES AND FEES – ALL CUSTOMER CATEGORIES
To be consistent with industry standard, the District proposes to calculate a monthly bill based on the customer’s water use and the size
of the customer’s water meter. The current calculation uses Assigned Service Units or ASUs, which is no longer the industry standard.
The new method of calculating sewer bills is more equitable among customer classes. The current and proposed formulas for calculating
Commercial Sewer Rates and Fees are as follows:
The special formulas used for schools will be eliminated. The proposed method for calculating a school’s sewer bill will be the same as
all commercial accounts. Schools and churches will also be categorized as Low Strength Commercial customers.
CURRENT COMMERCIAL SEWER BILL CALCULATION
Step 1: ASU = ((Flow in Gallons Per Day(1)x .85(2))/250(3))
x Strength Factor(4)
Step 2: ASU x Usage Fee(7) = Sewer Billing
PROPOSED COMMERCIAL SEWER BILL CALCULATION
(((Average Annual Consumption(5)x .85(6)) x Usage Fee(7))
x Strength Factor(4)) + System Fee(8)
CURRENT FORMULA FOR SEWER RATES AND FEES
FOR SCHOOLS
The flow for public schools is based on the average daily
attendance for the prior year as reported by schools to meet
state requirements. For elementary schools, 50 students equal
one ASU; for junior high schools, 40 students equal one ASU;
for high schools, 24 students equal one ASU. For colleges, flow
is based on the number of certified and classified staff, and
students enrolled in each school session.
PROPOSED CURRENT FORMULA FOR SEWER RATES AND
FEES FOR SCHOOLS
(((Average Annual Consumption(5)x .85(6))x Usage Fee(7)) x
Strength Factor) + System Fee(8)
Footnotes:
1. Flow in Gallons Per Day (Flow) is calculated using monthly
readings from the commercial account’s water meter.
2. Flow is reduced by 15 percent to reflect that not all water
purchased is disposed of into the public sewer system.
3. Flow is divided by 250 to convert it to a residential equivalence.
4. Strength Factors for business customers are categorized as low,
medium or high strength as shown on the Strength Factor table.
5. The Average Annual Consumption is defined as the units of
water billed from January through December of the previous
year.
6. The Average Annual Consumption is reduced by 15 percent to
reflect that not all water used flows into the public sewer
system.
7. The Usage Fee is based on the commercial account’s Strength
Factor as shown on the Usage Fee table as being either Low,
Medium, or High.
8. The System Fee is based on the size of the water meter.
9. Projected rates are for informational purposes only, and are
increased annually by 7.9 percent inflator.
Page 3
The District is required to determine sewer rates in accordance with the State’s Revenue Program Guidelines. The State Water
Resources Control Board (SWRCB) has grouped commercial customers into various categories and has identified Strength Factors for
each of these business categories. The standard of measure for Strength Factors is the typical sewer strength of a single‐family
residence (SFR). The Strength Factors established by the SWRCB are listed below and are used by the District in the calculation of
commercial sewer rates. These factors are in terms of the strength relative to a SRF, with a SFR having a strength factor of 1.
The District proposes to adjust Strength Factors to match industry standard. The proposed Strength Factors will be effective for bills
January 2014. The following are the current and proposed Strength Factors:
STRENGTH FACTOR
DESCRIPTION CURRENT PROPOSED
Schools Based on attendance 1.000
Churches 1.000 1.000
Low Strength Commercial 1.000 1.000
Medium Strength Commercial 1.238 2.000
High Strength Commercial 2.203 4.000
METER
SIZE
PROPOSED
2014(8)
PROJECTED
2015(8)(9)
PROJECTED
2016(8)(9)
PROJECTED
2017(8)(9)
PROJECTED
2018(8)(9)
.75” $25.83 $27.87 $30.07 $32.45 $35.01
1” $38.03 $41.03 $44.28 $47.77 $51.55
1.5” $68.53 $73.94 $79.78 $86.08 $92.89
2” $105.12 $113.43 $122.39 $132.06 $142.49
3” $190.52 $205.57 $221.81 $239.33 $258.24
4” $312.51 $337.20 $363.83 $392.58 $423.59
6” $617.48 $666.27 $718.90 $775.69 $836.97
8” $983.46 $1,061.15 $1,144.98 $1,235.43 $1,333.03
10” $1,410.42 $1,521.85 $1,642.07 $1,771.80 $1,911.77
SYSTEM FEE and 2015 ‐ 2018 PROJECTED
CURRENT
$13.30
$13.30
$13.30
$13.30
$13.30
$13.30
$13.30
$13.30
$13.30
The following tables show the proposed rate increases for Usage and System Fees effective for all bills January 1, 2014, and the
projected rates for 2015 through 2018 inflated by 7.9 percent thereafter. These fees include the impact of any pass‐through increases.
Therefore, actual fees in each of the future years below may differ.
STRENGTH
FACTOR
CURRENT
PROPOSED
2014(7)
PROJECTED
2015(7)(9)
PROJECTED
2016(7)(9)
PROJECTED
2017(7)(9)
PROJECTED
2018(7)(9)
Low $45.30 $2.35 $2.54 $2.74 $2.96 $3.19
Medium $45.30 $3.37 $3.64 $3.93 $4.24 $4.57
High $45.30 $5.37 $5.80 $6.26 $6.75 $7.28
USAGE FEE and 2015—2018 PROJECTED
This information reflects only rates that are proposed to change. For a comprehensive listing of rates, please see the
Otay Water District’s Code of Ordinances at www.otaywater.gov
NOTICE OF PUBLIC HEARING
IMPORTANT INFORMATION ABOUT YOUR
COMMERCIAL SEWER SERVICE
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www.otaywater.gov
NOTICE OF PUBLIC HEARING
IMPORTANT INFORMATION ABOUT YOUR
COMMERCIAL SEWER SERVICE