Laserfiche WebLink
<br />/}/-/d <br /> <br />requirements. Based on the final rate adjustments implemented, rate impacts may vary <br />based on customer class, type of usage, and amount of water consumption. The City can <br />continue adopting rate adjustments each year or can choose to adopt a multi-year rate <br />increase every few years. <br /> <br />Financial Impacts of a Drought <br />Without a reliable alternative source of supply and an active conservation program, the <br />City could face severe financial consequences due to a drought. Droughts typically result <br />m: <br /> <br />a. higher wholesale water costs due to increased drought rates, and <br />b. revenue shortfalls due to a decrease in water sales. <br /> <br />During the last SFPUC system-wide drought, water supply assurances from the SFPUC <br />were reduced by about 20%. Agencies that could not immediately reduce water demand <br />faced drought wholesale rates that were two to 10 times higher than nonnal-year SFPUC <br />rates for water use in excess of a temporarily-reduced supply assurance level. Based on <br />this historical infonnation, a moderate 20% SFPUC system-wide drought could result in <br />a financial impact to the City of about $7 - $10 million per year, accounting for a <br />reasonably attainable level of local conservation and construction of the water recycling <br />project. Without the recycled water project, the financial impact of a drought would be <br />substantially higher. <br /> <br />Minimum Fund Reserve Target <br />Based on longstanding City policy and prior financing plan recommendations, the water <br />enterprise aims to maintain a minimum fund reserve target comprised of two <br />components: <br />a. emergency operating reserves ($2 million per Council policy), and <br />b. rate stabilization reserves ($8.3 million as of June 30, 2005), to provide the City <br />with a cushion for moderating the financial impacts of a drought <br /> <br />The City can periodically review and update its fund reserve targets. Bartle Wells <br />Associates does not currently recommend any revisions to the City's water fund reserve <br />targets. <br /> <br />Policy Issues <br /> <br />This financing plan provides a long-tenn roadmap for funding of the City's water <br />operating and capital programs including the recycled water project. However, a number <br />of outstanding policy issues remain unresolved including: <br /> <br />. Upcoming water rate structure adjustments <br /> <br />. Procedure for adopting rate adjustments <br /> <br />. Recycled water pricing <br /> <br />. Facilities Fees update <br /> <br />6 <br />