Member Agency Managers Meeting June 15, · January 1, 2013 would need to be negotiated and ready...

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Member Agency Managers Meeting June 15, 20121

Member Agency Managers Meeting

June 15, 2012

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


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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)

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



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Component of rate structure effective January 1, 2003Component of rate structure effective January 1, 20031010‐‐year term, January 1, 2003 to December 31, 2012year term, January 1, 2003 to December 31, 2012Aspects 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


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


limit drops to 60% of Base Firm Demandlimit drops to 60% of Base Firm DemandAction 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


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

20122012


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Member Agency workgroup convenedMember Agency workgroup convenedBoard 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


p y ,p y ,


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Status quo: tax revenues will continue to declineStatus quo: tax revenues will continue to declineMetropolitan is authorized to use property tax Metropolitan is authorized to use property tax p p p yp p p yrevenues to fund payments under the State revenues to fund payments under the State Water ContractWater ContractEven 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


g pUsed to offset SWP costs, including future DHCCP costsSWP reliability benefits all users in Metropolitan’s service areaProvides 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

$

Millions


$‐

$20

$40

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

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Member Agency Managers Meeting June 15, 201214 14

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$250

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

6 21

137 41

41

36

46 61 45

56 62

71

71 79 77 79

9 11

14 25 31

34

34 31

27

28 23 23 29

$100

$150

$200

$250

Million Dollars


52

49

53

54

58 79

74

90

91

97

106

12 1

$0

$50

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012*

Fiscal Year Ending* FY 2012 projected

2.5Untreated Treated

0.5

1.0

1.5

2.0

Million Acre Feet


0.0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

M

Cash Year Ending64% 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

$/AF


$0

$50

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

Many rate options have been exploredTreatment is a significant portion of the revenue requirement, and most costs are fixedRecovering 10% of treatment costs in a fixed charge adds 2% to total fixed revenuesContinue to explore options to develop a


p p pfixed charge

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

Rate Refinement Workgroup to meet between Managers meetings

Dates to be established

Board Information letter in October 2012h h d


Consistent with Purchase Order timing

Board Action letter in November 2012

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Milestones

2011 2012

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Board Updates

2013 Rates


Rate Refinement

PO Expiration

Schedule Rate Refinement Workgroup meeting Schedule Rate Refinement Workgroup meeting for June 2012for June 2012for June 2012for June 2012• Work topic(s) based on Managers’ determination of

priorities

Update to Board on Rate Refinement progressUpdate to Board on Rate Refinement progress• Finance and Insurance Committee

Future Workgroup meeting dates to beFuture Workgroup meeting dates to be


Future Workgroup meeting dates to be Future Workgroup meeting dates to be determineddetermined

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Member Agency Managers Meeting June 15, · January 1, 2013 would need to be negotiated and ready...

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