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Transcript of Member Agency Managers Meeting June 15, · PDF file January 1, 2013 would need to be...

  • 6/18/2012

    1

    Member Agency Managers Meeting June 15, 20121

    Member Agency Managers Meeting

    June 15, 2012

    Key IssuesKey Issues Status of Key IssuesStatus of Key IssuesStatus of Key IssuesStatus of Key Issues What are the Priorities?What are the Priorities? Schedule/Process to move forwardSchedule/Process to move forward

    Member Agency Managers Meeting June 15, 20122

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    Issues related to Purchase OrderIssues related to Purchase Order •• Tier 1 limit / trading Tier 1 limitsTier 1 limit / trading Tier 1 limits •• Fixed commitment to pay for the system (contracts)Fixed commitment to pay for the system (contracts)Fixed commitment to pay for the system (contracts)Fixed commitment to pay for the system (contracts)

    ReplenishmentReplenishment Issues related to fixed revenueIssues related to fixed revenue •• Property Tax optionsProperty Tax options •• Treatment cost recoveryTreatment cost recovery

    Member Agency Managers Meeting June 15, 20123

    Member Agency Managers Meeting June 15, 20124

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    Component of rate structure effective January 1, 2003Component of rate structure effective January 1, 2003 1010‐‐year term, January 1, 2003 to December 31, 2012year term, January 1, 2003 to December 31, 2012 Aspects of the Purchase OrderAspects of the Purchase OrderAspects of the Purchase OrderAspects of the Purchase Order •• VoluntaryVoluntary •• Offered price incentives; allowed more water sales to be Offered price incentives; allowed more water sales to be 

    purchased at the lower Tier 1 Supply Ratepurchased at the lower Tier 1 Supply Rate •• Additional level of financial commitment to MetropolitanAdditional level of financial commitment to Metropolitan •• Not tied to reliabilityNot tied to reliability

    Member Agency Managers Meeting June 15, 20125

    23 member agencies executed Purchase Orders23 member agencies executed Purchase Orders •• Growing agencies met their commitments within 6 yearsGrowing agencies met their commitments within 6 years •• All agencies fulfilled their commitments by midAll agencies fulfilled their commitments by mid‐‐20112011

    Purchase Orders expire December 31, 2012 Purchase Orders expire December 31, 2012  Path to move forwardPath to move forward •• Continue Purchase Orders?Continue Purchase Orders? •• Adjustments to rate structure?Adjustments to rate structure?

    Under the current Administrative Code Under the current Administrative Code  provisions, without Purchase Orders, the Tier 1 provisions, without Purchase Orders, the Tier 1  limit drops to 60% of Base Firm Demandlimit drops to 60% of Base Firm Demand

    Member Agency Managers Meeting June 15, 20126

    limit drops to 60% of Base Firm Demandlimit drops to 60% of Base Firm Demand Action is required to change the default Action is required to change the default  outcomeoutcome

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    Existing Purchase Orders expire December 31, Existing Purchase Orders expire December 31,  2012 2012  Wh h d dli h M b AWh h d dli h M b AWhat are the deadlines at the Member Agency What are the deadlines at the Member Agency  level in order to implement a new Purchase level in order to implement a new Purchase  Order?Order? •• Suggested that a new Purchase Order effective Suggested that a new Purchase Order effective 

    January 1, 2013 would need to be negotiated and January 1, 2013 would need to be negotiated and  ready for Member Agency action by October 2012ready for Member Agency action by October 2012

    Member Agency Managers Meeting June 15, 20127

    •• Allows for staff preparation and schedulingAllows for staff preparation and scheduling •• Requires Metropolitan Board action by September Requires Metropolitan Board action by September 

    20122012

    Member Agency Managers Meeting June 15, 20128

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    Member Agency workgroup convenedMember Agency workgroup convened Board adopted policy principles November 2011Board adopted policy principles November 2011

    d bd bProposed Program Concepts December 2011Proposed Program Concepts December 2011 •• Multilevel ProgramMultilevel Program •• Available to all member agencies on a voluntary basisAvailable to all member agencies on a voluntary basis •• Full service rate program with incentives based on Full service rate program with incentives based on 

    performance and regional benefitsperformance and regional benefits

    No Replenishment rate effective January 1, 2013No Replenishment rate effective January 1, 2013

    Member Agency Managers Meeting June 15, 20129

    p y ,p y ,

    Member Agency Managers Meeting June 15, 201210

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    Status quo: tax revenues will continue to declineStatus quo: tax revenues will continue to decline Metropolitan is authorized to use property tax Metropolitan is authorized to use property tax p p p yp p p y revenues to fund payments under the State revenues to fund payments under the State  Water ContractWater Contract Even holding the tax rate constant could lead to Even holding the tax rate constant could lead to  revenue benefits in the long termrevenue benefits in the long term

    Mitigate impacts on future water rates

    Member Agency Managers Meeting June 15, 201211

    g p Used to offset SWP costs, including future DHCCP costs SWP reliability benefits all users in Metropolitan’s service area Provides a long‐term revenue source that does not vary with  water sales to cover fixed costs

    $120 s

    status quo

    pegged tax rate and 2.5% AV annual increase

    pegged tax rate and 5% AV annual increase

    $40

    $60 

    $80 

    $100 

    $

    M ill io ns

    Member Agency Managers Meeting June 15, 201212

    $‐

    $20 

    $40 

    2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

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    Member Agency Managers Meeting June 15, 201213

    Member Agency Managers Meeting June 15, 201214 14

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    $250

    $300 Capital Other O&M Chemicals, power, sludge

    6  21  

    13 7 41  

    41  

    36  

    46   61   45  

    56   62

     

    71  

    71   79   77   79  

    9  11  

    14   25   3 1  34  

    34   3 1  27  

    28   23   23   2 9 

    $100

    $150

    $200

    $250

    M ill io n  D ol la rs

    Member Agency Managers Meeting June 15, 201215

    52  

    49  

    53  

    54  

    58   79  

    74  

    90  

    91  

    97  

    10 6

    12 1

    $0

    $50

    20 00

    20 01

    20 02

    20 03

    20 04

    20 05

    20 06

    20 07

    20 08

    20 09

    20 10

    20 11

    20 12 *

    Fiscal Year Ending * FY 2012 projected

    2.5 Untreated Treated

    0.5

    1.0

    1.5

    2.0

    M ill io n  A cr e  Fe et

    Member Agency Managers Meeting June 15, 201216

    0.0

    20 00

    20 01

    20 02

    20 03

    20 04

    20 05

    20 06

    20 07

    20 08

    20 09

    20 10

    20 11

    M

    Cash Year Ending 64%    60%     61%    60%     64%    62%    67%    64%    58%    56%     54%   58%

    Treated as a  % of Total

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    $

    $297 $300

    $350

    $82 $92 $112 $122

    $147 $157 $167

    $217 $217 $234

    $254

    $50

    $100

    $150

    $200

    $250

    $/ A F

    Member Agency Managers Meeting June 15, 201217

    $0

    $50

    Effective January 1* *2010 increase effective 9/1/2009

    Many rate options have been explored Treatment is a significant portion of the  revenue requirement, and most costs are  fixed Recovering 10% of treatment costs in a fixed  charge adds 2% to total fixed revenues Continue to explore options to develop a 

    Member Agency Managers Meeting June 15, 201218

    p p p fixed charge

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    Member Agency Managers Meeting June 15, 201219

    Member Agency Managers meetings June 15, July 13, August 24, September 14 M t bli h i itiManagers establish priorities

    Rate Refinement Workgroup to meet  between Managers meetings

    Dates to be established 

    Board Information letter in October 2012 h h d

    Member Agency Managers Meeting June 15, 201220

    Consistent with Purchase Order timing

    Board Action letter in November 2012

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    Milestones

    2011 2012

    A ug

    Sep

    O ct

    N ov

    D ec

    Jan

    Feb

    M ar