Alameda County Water District

Transcription

1 Alameda County Water District Water Supply Conditions Water Rates Month, Day, Year

2 Presentation Overview ACWD Overview Water Supply Conditions Water Rates 2

3 Presentation Overview ACWD Overview Water Supply Conditions Water Rates 3

4 ACWD at-a-glance Founded in 1914 ACWD serves the residents, businesses, and schools of Fremont, Newark, and Union City Special District Form of Local Government Elected Board: 5 Directors (John Weed, Paul Sethy, Aziz Akbari, James Gunther and Judy Huang) Personnel: 230 Authorized Positions FY 2016/17 Amended Budget $120M Total Expenditures $90M Operating Expenses $30M Capital & Debt Service 4

5 ACWD Water Supply Sources Typical 20% Alameda Creek 40% Watershed Runoff 40% State Water Project San Francisco PUC 5

6 Niles Cone Groundwater Basin Alameda Creek 6

7 Peralta-Tyson Blending Facility Groundwater from pumped wells is blended SFPUC Hetch- Hetchy Water 50 MGD Capacity

8 Newark Desalination Facility Desalination of brackish groundwater, 12.5 MGD Capacity Originally constructed in 2003, expanded in 2009

9 Water Treatment Plant No. 2 Constructed MGD Capacity Ozone Generation Hydropower at WTP2 9

10 Mission San Jose Water Treatment Plant Originally constructed Upgrades are needed. Lower water demands, both during and after the drought anticipated. District Decommissioned the plant in 2015 to save capital and operating costs over the next 10+years.

11 ~900 Miles of Water Mains 11

12 What services does ACWD provide? Reliable supply of high quality drinking water Fire protection 24/7 operation & emergency response Watershed and groundwater resources management and protection Customer service Community education and awareness Water conservation assistance Open space and recreation opportunities 12

13 Presentation Overview ACWD Overview Water Supply Conditions Water Rates 13

14 Water Supply Conditions 2014/ 2015/ 2016: 2014: were dry CY 2014: One of the driest years in CA recorded history. March 13, 2014: ACWD declares a water shortage emergency and implements a Water Use Restrictions Ordinance. July 21, 2014: ACWD implements drought surcharges. 2015: Statewide drought conditions worsen. Water supply situation in many areas of the State deteriorated. Locally, ACWD water supply situation much improved. State requires continued emergency conservation. 2016: ACWD water supplies in great shape. May 2016: State provides more local flexibility. July 1, 2016: ACWD rescinds drought surcharges. 2017:??? Lake Oroville in January

15 Presentation Overview ACWD Overview Water Supply Conditions Water Rates 15

16 Why are water rates increasing? Are increasing water rates unique to ACWD? Are ACWD s water rates reasonable? What is ACWD doing to be efficient and to minimize water rate increases? 16

17 Why are water rates increasing? Are increasing water rates unique to ACWD? Are ACWD s water rates reasonable? What is ACWD doing to be efficient and to minimize water rate increases? 17

18 Why are Water Rates Increasing? Capital Costs Aging Infrastructure Water Main Replacement Program (~900 miles of water mains) Hayward Fault Pipeline Crossings Union City Spine Main along Alvarado-Niles Blvd. Replace 5 to 10 miles of pipeline per year ($10M/year) Water Treatment Plant Upgrades Storage Tanks and Reservoirs, Pump Stations, and Pressure Regulating Stations Appian Tank Seismic Improvements Environmental Regulations Alameda Creek Fisheries Restoration Program ($40M) Other Agency Projects (Measure BB, $7.785B from 2015 to 2045) 18

19 Number of AC Pipeline Failures Per Mile Forecast Water Pipe Failures Age of ACWD AC Distribution Mains We are here Age Range (years) 19

20 Why are Water Rates Increasing? Operating Expenses Long-term trend: Increases in the cost of purchased water, electricity, and chemicals used to supply and treat water Employee Compensation Salaries Benefits All public agencies have an obligation to fund the long-term pensions and health benefits promised to retirees More stringent federal and state clean-water and environmental regulations Increased security safeguards: Surveillance, information systems 20

21 Cost of Purchased Water 21

22 Why are Water Rates Increasing? The Drought has financial impacts Sharply reduced revenue Approximately $60M in reduced revenue as a result of the drought - Historically, over 70% of water revenue is from commodity sales ACWD customers reduced overall water use by about 30%, more than ACWD anticipated. Drought surcharges (rescinded July 1, 2016) resulted in $12.6M in revenue. Increased costs Enhanced conservation programs Acquire dry year water supplies Unlike investor-owned utilities, ACWD is a governmental agency and cannot collect more revenue than is necessary to operate the District. 22

23 Conservation during the Drought 23

24 Water Revenues $$$ 24

25 Fixed vs Variable Costs and Revenues OPERATING COSTS HIGHLY FIXED COSTS WATER REVENUES HIGHLY VARIABLE REVENUES O&M - Fixed, ~50% O&M - Variable, ~20% Commodity ~75% Capital - Fixed, ~30% Fixed Service Charges ~25% 25

26 Fixed vs Variable Costs and Revenues OPERATING COSTS HIGHLY FIXED COSTS WATER REVENUES HIGHLY VARIABLE REVENUES O&M - Fixed, ~50% O&M - Variable, ~20% Commodity ~75% Capital - Fixed, ~30% Fixed Service Charges ~25% Reduction in water demand decreases revenue more than it decreases costs 26

27 Forecast Water Demands Forecast water demand Revised forecast water demand 27

28 Forecast Water Demands $$$ 28

29 Forecast Water Demands $ $ $ 6% Permanent reduction to future Water Demands as a result of changed customer behavior 29

30 Why are water rates increasing? Are increasing water rates unique to ACWD? Are ACWD s water rates reasonable? What is ACWD doing to be efficient and to minimize water rate increases? 30

31 Are Increasing Water Rates Unique to ACWD? Water & Sewer CPI (1983=100) 31

32 California Water Rate Increases Source: AWWA 7/17/

33 Other Recently Announced Rate Increases 33

34 Recent Notable Rate Increases* WATER UTILITY BILL IMPACT ACWD 0% (Jan 2016), rescinded drought surcharges, effective July 1, 2016 CITY OF MILPITAS 35% (Jan 2016), 28% (Apr 2016) CITY OF REDWOOD CITY 16% (Aug 2016), 8% (Jul 2017), 8% (Jul 2018) 28% (Oct 2016), 19% (Jul 2017), 6% (Jul CITY OF SANTA CRUZ 2018), 6% (Jul 2019), 6% (Jul 2020) MARIN MUNICIPAL WATER DISTRICT 22% (Jan 2016), 4% (May 2016) SAN JOSE WATER COMPANY 21% (Jun 2016) SANTA CLARA VALLEY WATER DISTRICT SCOTTS VALLEY WATER DISTRICT 19.9% (2016) 25% (Dec 2016), 15% (Dec 2017), 10% (Dec 2018), 10% (Dec 2019), 10% (Dec 2020) ZONE 7 WATER AGENCY 33% (Jan 2016), 14% (Jan 2017) *Percentages are approximate. Comparisons based on available data as of November

35 Why are water rates increasing? Are increasing water rates unique to ACWD? Are ACWD s water rates reasonable? What is ACWD doing to be efficient and to minimize water rate increases? 35

36 Bay Area Water Rates 36

37 Bi-monthly bill comparison 30 Bay Area Agencies - 23 Units per Billing Period $300 ACWD Same Year Comparison CONTRA COSTA WATER DIST MARIN MUNICIPAL WATER DISTRICT DUBLIN SAN RAMON SERVICE DIST CALIF WATER SVS. CO. - LIVERMORE CITY OF LIVERMORE $250 NORTH MARIN WATER DIST - NOVATO EAST BAY MUD CITY OF PLEASANTON CITY OF BURLINGAME $200 CITY OF PALO ALTO NORTH COAST COUNTY WATER DISTRICT MID-PENINSULA WATER DISTRICT CITY OF SAN BRUNO $150 CALIF WATER SVS. CO. - BEAR GULCH CITY OF MILLBRAE $100 $50 $- ACWD FY 03/04 FY 05/06 FY 07/08 FY 09/10 FY 11/12 FY 13/14 FY15/16 Proposed SAN FRANCISCO WATER DEPT (SFPUC) CALIF WATER SVS CO. - MID-PENINSULA CALIF WATER SVS. CO. - SOUTH SF (BAYSHORE) CITY OF HAYWARD CITY OF REDWOOD CITY CITY OF EAST PALO ALTO (AMERICAN WATER) CITY OF DALY CITY SAN JOSE WATER COMPANY CALIF WATER SVS. CO. - LOS ALTOS CITY OF MOUNTAIN VIEW CITY OF FOSTER CITY ( ESTERO) CITY OF SUNNYVALE CITY OF MILPITAS CITY OF SAN JOSE MUNICIPAL WATER CITY OF SANTA CLARA 37

38 Average Single Family Residential Bills 170 ( a tale of 2 households) CCF Bi-monthly Demand No conservation $ $ $ Cost Savings $ $ $ $ $ $90.71 $95.51 $ CCF BiMonthly Demand transitions to 16 CCF /1/2013 2/1/2014 7/21/2014 5/1/2015 7/1/2016 3/1/

39 Why are water rates increasing? Are increasing water rates unique to ACWD? Are ACWD s water rates reasonable? What is ACWD doing to be efficient and to minimize water rate increases? 39

40 What is ACWD Doing to Be Efficient and to Minimize Water Rate Increases? Staying Lean - reduced employees from 239 to 230 Continued focus on employee productivity and efficiency Decommissioned Mission San Jose Water Treatment Plant Water supply cost control Deferred ~$30M in Capital Projects Leveraged historically low interest rates and ACWD s excellent AAA S&P credit rating to finance critical capital improvement projects Rescinded Drought Surcharges, effective July 1, 2016 Aggressively Pursue Grant Opportunities Conservation Assistance and Rebates Proposed Customer Assistance Program 40

41 California Water Agency Comparative Benchmarking (2012) 20 Measures Identified 23 Agencies Selected Questionnaires Distributed 15 Agencies responded: Region Agency Name Agency Abbreviation Northern Alameda County Water District ACWD Northern Central Contra Costa Sanitary District CCCSD Northern Dublin San Ramon Services District DSRSD Northern East Bay Municipal Utility District EBMUD Northern El Dorado Irrigation District EDID Northern Union Sanitary District USD Southern Coachella Valley Water District CVWD Southern Eastern Municipal Water District EMWD Southern Elsinore Valley Municipal Water District EVMWD Southern Fallbrook Public Utilities District FPUD Southern Helix Water District HWD Southern Inland Empire Utilities Agency IEUA Southern Las Virgenes Municipal Water District LVMWD Southern Rancho California Water District RCWD Southern Western Municipal Water District WMWD 41

42 Benchmarking (cont d) ACWD 42

43 ACWD s Water Conservation Programs For Residential Customers and Commercial Industrial and Institutional Customers Toilet Rebates Rain Barrel Rebates Water Saver Kits Water Smart Home Water Use Reports Leak Detection Turf Replacement Incentives Water-wise Gardening Online tool Landscape Workshops California Youth Energy Services Partnership (CYES) The Aqueduct and ACWD website seasonal irrigation notices 43

44 Proposed Customer Assistance Program Help on Tap Program ~1,593 responses expressing interest (as of 11/17/16) Proposed $15 flat bimonthly credit for eligible participants March 1, 2017: Proposed program implementation Subject to Board approval on February 9,

45 Potential consequences of no rate increase? ~$22M revenue shortfall over the next 2-years Possible alternatives to a rate increase Large cuts to infrastructure investment budget Water Main Replacement Program Alameda Creek Fish Restoration Program Defer addressing Pension and OPEB liabilities Use emergency reserves Secure additional debt Reduce staffing 45

46 Summary ACWD acknowledges the concerns and questions raised by the proposed rate increase. ACWD's water rates are consistently below the Bay Area average. ACWD programs to assist customers Conservation Proposed Help on Tap customer assistance program ACWD deferred important infrastructure projects during the drought. Continuing to defer critical projects will result ultimately in service disruptions, additional costs, and economic impacts to the community. All public agencies have an obligation to fund the long-term pensions and benefits promised to retirees. ACWD is staffed lower than comparable agencies and employs wellqualified and highly-trained water professionals to protect public health and the environment. Additional information: 46

47 Testing for Lead in K-12 Schools ACWD, as well as all other water utilities in California, were notified on January 17, 2017 Drinking Water Permit Amendment ACWD proactively informing school districts and K-12 private schools K-12 Schools may request assistance to perform testing for lead If requested, testing must be completed within 90 days No cost to schools for sampling/testing ACWD to provide notification within two school business days if results exceed 15 ppb, resampling required Schools are responsible to pay for any on-site corrective actions Approximately 100 schools in ACWD service area Estimated ACWD cost: Between $150,000 and $250,000 One-time program extends through November 1,

48 To learn more or to submit comments/protests to the ACWD Board of Directors: To address the ACWD Board: Public Hearing -- ACWD Headquarters, South Grimmer Blvd., Fremont, February 9, 2017 at 6:00 pm Thank you! 48

49 Financial Challenges Reduced Water Sales/Revenue Pre-Recession Water Demand: 44.7 MGD (FY 2006/07) Pre-Drought Water Demand: 41.7 MGD (FY 2012/13) Estimated FY 2016/17 Demand: 32.8 MGD (~21% reduction from FY 2012/13) Net Drought Revenue Impact through FY 2015/16: -$19.6 million Unfunded Liabilities Pension: $71.8 million (2015 Actuarial Valuation) OPEB: $36.0 million (2015 Actuarial Valuation) Operating Revenues insufficient to cover annual depreciation for FY 2015/16 Salaries and Benefits Aging Infrastructure: Deferred Capital Projects due to Drought: Main Replacement Program ($10.0 million/year) Environmental Regulations: Alameda Creek Fish Restoration Project Total ACWD Share: $40.3 million/spending to Date (7/12/16): $15.5 million December 6, ACWD - Financial Workshop

50 Help on Tap Program Number of Persons in Total Gross Annual Household Income* Household 1-2 $32,040 or less 3 $40,320 or less 4 $48,600 or less 5 $56,880 or less 6 $65,160 or less 7 $73,460 or less 8 $81,780 or less For each additional person, add $8,320 Valid through May 31, *Income guidelines based on CPUC program. Income before taxes based on current income sources. Income guidelines subject to change annually. December 6, ACWD - Financial Workshop

51 Rates: Local Service Charge Comparison (3/4-inch meter) 51