SR - - 2015 UTILITY BILL PASS THROUGH CHARGEAGENDA ITEM
November 25, 2014
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TO: Honorable Mayor and
Members of the City Council
THRU: John W. Sibley
City Manager
FROM: Joe DeFrancesco cp
Public Works Di ector
Reviewed/Verif By:
City Manager
Finance Direct
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To Be Presente Joe DeFrancesco
X Cons Calendar
City Mgr Rpts
Council Rpts
Legal Affairs
Boards /Crates
Public Hrgs
Admin Rpts
Plan /Environ
1. SUBJECT
Notice to the City Council that a pass through charge will be added to the water utility bill for
Calendar Year (CY) 2015 to take effect on January 1, 2015.
2. SUMMARY
Black and Veatch, the City's water rate consultant, calculated the pass through charge for CY
2015 using the formula approved by Council in March 2012. The calculation concluded that an
additional $0.023 (two cent) per billing unit increase was needed to compensate for cost
increases in water purchases and electricity costs necessary to supply water to the City.
3. RECOMMENDED ACTION
Receive and File.
4. FISCAL IMPACT
Pass Through charges collected will be deposited as follows:
600.8011.47111.00000 Water Consumption Charge $300,000 (Estimated)
5. STRATEGIC PLAN GOAL(S)
lb) Provide for a safe community— Provide and maintain infrastructure necessary to ensure the
safety of the public.
2d) Be a fiscally healthy community - Effectively manage and develop City assets.
4b) Provide outstanding public service - Provide facilities and services to meet customer
expectations.
ITEM 11/25/2014
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6. GENERAL PLAN IMPLEMENTATION
Infrastructure Element Goal 6.0: Ensure water, sewer, and storm drain systems that meet the
needs of residents and businesses.
Policy 1.1: Provide sufficient levels of water, sewer, and storm drain service throughout the
community.
Economic Development Element Goal 6.0: Provide sufficient infrastructure to support
anticipated economic development and growth.
Policy 6.1: Provide public improvements to support commercial, industrial and institutional uses.
7. DISCUSSION and BACKGROUND
On March 27, 2012, Council approved Resolution No. 10638. Amending and Revising the
Master Schedule of Fees and Charges for Water Rates. This Resolution approved a five year rate
structure and a pass through charge. The pass through charge is calculated every year and takes
into account only increases in purchases of water and electricity costs required to supply water to
the City
Based upon the results generated by the approved pass through formula, using the current values
for the Replenishment Assessment, electric rates, and Import Water costs, staff is recommending
a pass through charge to City of Orange water customers for Calendar Year (CY) 2015.
Therefore, the overall rate increase approved by Council on March 27, 2012, of 3 %, will take
effect on January 1, 2015 in addition to the pass through charge of two cents.
Black and Veatch, the City's water rate consultant, calculated the pass through charge for CY
2015 using the formula approved by Council in March 2012. The calculation concluded that an
additional $0.023 (two cent) per billing unit increase was needed. The $0.023 adjustment
represents approximately $300,000 in revenue to the Water Fund.
The pass through calculation takes into account costs for the three major elements contributing to
the Water Supply cost. These include: import water costs (Metropolitan Water District of
Southern California via the Municipal Water District of Orange County), ground water costs
(Orange County Water District) and power costs (Southern California Edison).
Rate payers will receive postcards with the pass through information at least 30 days prior to the
pass through implementation.
8. ATTACHMENTS
• Postcard containing pass through information.
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ITEM 2 11/25/2014