MPWMD BOARD MEETING--APRIL 16, 2012--ITEM 12E--REVIEW AND ADOPT RATE STUDY REPORT

ITEM:		PUBLIC HEARING

12 E.	review and adopt rate study REPORT

Meeting Date:			April 16, 2012	Budgeted:

From:			David J. Stoldt,	Program/
			General Manager	Line Item No.:

Prepared By:			David J. Stoldt	Cost Estimate:

General Counsel Approval: N/A
Committee Recommendation: The Administrative Committee met on April 9, 2012 and voted 3 to 0 in favor of recommending approval by the Board; the Water Supply Planning Committee met on April 9, 2012 and voted 2 to 0 in favor of recommending approval by the Board.
CEQA Compliance: N/A

SUMMARY: At its February 23, 2012 meeting, the Board directed staff to implement a Proposition 218 process for the development of water fees and charges, including the hiring of a rate consultant and the development of the necessary ordinances, resolutions, and notices for implementation thereof.

This item seeks approval of the rate consultant’s report (Exhibit 12-E).

RECOMMENDATION: The General Manager recommends the Board adopt the rate study. The Administrative Committee met on April 9, 2012 and voted 3 to 0 in favor of recommending approval by the Board; the Water Supply Planning Committee met on April 9, 2012 and voted 2 to 0 in favor of recommending approval by the Board.

BACKGROUND: The District’s rate consultant Bartle Wells Associates has developed a method of allocation of the $3.7 million revenue requirement on an annual water use fee basis of 30% allocation to meter equivalents and 70% allocation to water consumption. This is consistent with the California Urban Water Conservation Council’s best management practices in their 2009 Memorandum of Understanding Regarding Urban Water Conservation in California.

Meter equivalents are commonly used by utilities as a proxy for the maximum day demand of various customer types. Many water agencies in California use meter equivalents as a basis for fixed charges and system capacity or connection fees. As the MPWMD manages surface and groundwater sources within the Monterey Peninsula to serve customers, Bartle Wells Associates finds it appropriate to use meter equivalents as the basis for MPWMD’s water use fee.

Water consumption can be allocated within type of use categories such as those utilized by other agencies such as MRWPCA or CAWD.

The American Water Works Association (AWWA) Manual M1 states that both fixed and variable fees are a valid method of cost recovery. Fixed charges should be used to recover costs that will be the same regardless of the amount of water used. Variable charges should be used to recover costs that increase with the amount of water used.

The rate study shows the executed allocation of $3.7 million of revenue requirement using this approach, with resulting rates for numerous categories of single-family residential, multi-family, and commercial uses.

EXHIBIT

12-E Bartle Wells Associates Technical Memorandum

U:\staff\Boardpacket\2012\20120416\PubHrng\12\item12e.docx

April 16, 2012

Budgeted:

General Counsel Approval: N/A

Committee Recommendation: The Administrative Committee met on April 9, 2012 and voted 3 to 0 in favor of recommending approval by the Board; the Water Supply Planning Committee met on April 9, 2012 and voted 2 to 0 in favor of recommending approval by the Board.