Emergency Financial Response: Drought Rates
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1 Emergency Financial Response: Drought Rates May 15, 2014
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Emergency Financial Response: Drought Rates. May 15, 2014. As water managers, how should we plan for financial uncertainty?. How do I measure the potential impacts? What issues should I reasonably plan for? What is an acceptable level of risk? - PowerPoint PPT Presentation
Transcript of Emergency Financial Response: Drought Rates
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Emergency Financial Response:
Drought Rates
May 15, 2014
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As water managers, how should we plan for financial uncertainty?
• How do I measure the potential impacts?• What issues should I reasonably plan for?• What is an acceptable level of risk?• How and what should I communicate to my
constituents and elected officials?• How do I measure whether my financial
position is sound prior to a disruptive event?
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Understanding your key hurdles will help guide your approach
System
Needs
Usage
5
20
30
40
50
2000 2005 2010 2015 2020 2025
Tota
l ave
rage
flow
(MG
D)
Annual Growth Rate of 0.75% for Riverside
Annual Growth Rate of 1.09% for Riverside
Annual Growth Rate of 1.50% for Riverside
52.2 mgd49.4 mgd47.3 mgd
Absent an adaptive program, disruptive events can have severe financial impacts
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System planning…
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ConsiderationsRate
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Detailed analysis of customer data provides basis for recommended rate structure design
Data management of the agency’s historical consumption records
Consumption profile analysis and changes in demands
Inter and intra-class behavior
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Consumption analysis creates the basis for setting rate tiers and assessing ratepayer impacts and revenue stability
0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.5 6 6.5 7 7.5 8 8.5 9 9.5 1010.51111.51212.51313.51414.5150
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0.9
1
0%
10%
20%
30%
40%
50%
60%
70%
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100%
19%
80%
46%
88%
SFR Monthly Consumption
Cumulative AccountsCumulative Usage
Consumption (ccf)
Num
ber
of A
ccou
nts
* San Francisco Public Utilities Commission
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Rate setting can account for changes in supplies and address revenue stability
Upper Tier
Base
$2.20
$1.92
8 ccf
Base Rates
8 ccf
Upper Tier
Base
$4.13
$1.92
$2.20Middle
Tier
13 ccf
Drought Level 2
6 ccf
Upper Tier
Base
$4.13
$1.92
$2.20 Middle Tier
11 ccf
Drought Level 3
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Effective communication is central to influencing customer behaviors and opinions
• Align process, policies, and recommendations with communities values
• Engage stakeholders and community advocates
• Translate complex technical and financial concepts into simple language and clear illustrations
• Pay close attention to equity and affordability…
– Recognize the natural tendency to resist change
• Make rates and resulting bills simple and controllable
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San Diego CountyCase Study
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San Diego County Water Authority
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1989 Water Distribution Plan• Increase system capacity and reliability• 10 projects• $530 million CIP budget
89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 06 08 09 10 11 12 13
Emergency Storage Project• Add 92 kaf of emergency storage• Add $730 million to CIP• $1.594 billion CIP budget
History of supply planning decisions and capital improvements
2006 Comprehensive Reliability and Cost Assessment “CRACA”•Analyze cost/reliability of CIP •Validate storage decisions•Carlsbad desal is local project
2004 Water Facilities Master Plan Update• Preferred alternative “supply from the west”• Add 89 kaf of regional desalination• Add 100 kaf of carryover storage• Add 50-100 MGD of treatment capacity• $3.229 billion CIP budget
2009 CRACA “lite”•Validate CIP scope/cost•Drought mgmt impacts
1993 Water Resource Plan
1995 Urban WaterManagement Plan
2000 Urban Water Management Plan
1997 Water Resource Plan• Add IID water transfer 2005 Urban Water Management
Plan• Add 56kaf desalination
2003 Quantification Settlement Agreement IID water transfer, 35-yr take or pay, 4.88 maf• $1.45 billionCanal linings, 110 yrs, 4.32 maf
• $175 million
Carlsbad Desal Project•30 year Water Purchase agreement•56 kaf local supply •Add $80 million To CIP for existing system improvements* Ken Weinberg SDCWA
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300000
350000
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650000
700000
750000
800000
Sale
s (0
00's
/AF)
0
200
400
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All-I
n Tr
eate
d Ra
te ($
/AF)
Bui
ldin
g Pe
rmits
Issu
ed (i
n 00
0s)
Relationship between building permits, sales & rates
89 90 91 92 93 94 95 96 97 98 99 0001 02 03 04 0506 07 08 0910 11
Building Permits
Sales
All-In Treated Rate
* Ken Weinberg SDCWA
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Implement new charges to support CIP•Standby Charge•Capacity Charge
Implement new charges to support ESP/CIP•Infrastructure Access Charge•Special Ag Water Rate
Unbundle rate and create new fixed charges•Customer Service Charge•Storage Charge•Transportation Rate
Implement melded rates•Supply Rate•Treatment Rate
Enhance financial policies•Rate Stab Fund•Debt Service Coverage
Rate setting was an evolutionary process design to achieve fiscal sustainability
Transitional Ag Rates
Sale
s (T
AF)
Rainfall (inches)
* Ken Weinberg SDCWA
