AgdaPkt 2003-07-14 - Laserfiche WebLink

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B. A variable usage rate, based on the principle of rewarding conservation and the methodology "the more you use, the more you pay ", has been in existence since the drought of 1989, created for the purpose of promoting conservation. This component provides the financial support for purchase of wholesale water, electrical power from PG &E, capital improvements, conservation rebate programs and the City's rights -of -way compe isation charge. For the fiscal year ending June 30, 2003, the "Lifeline" rate (up to 10 units of water per bimonthly billing period) remained unchanged at $0.88 cents per unit (100 cubic feet or 748 gallons). The practice of matching the "Lifeline" rate with the wholesale cost was continued. Recently, the San Francisco Public Utilities Commission and the Board of Supervisors approved a 25% increase in "suburban" wholesale water rates effective July 1, 2003, increasing the wholesale cost to $1.10 per unit. In summary, the City Council Utilities Committee and staff recommend that the City Council approve: • Increase residential and commercial fixed monthly Basic Service Charge by 3.5% for Fiscal Year 2003/04. The current basic service charge of $10.80 per month would increase to $11.17. • Increase the "Lifeline" usage rate from $0.88 to $1.10 to continue the practice of matching the San Francisco wholesale rate. • Increase all other usage rates per "Option 2 -A ", in order to equitably spread the financial burden of both the SF wholesale cost increase and funding of the "active" conservation program at 100% as delineated in the recently amended Urban Water Management Plan. The proposed increase in water bills will not change the City's position in the benchmarking study of other neighboring agencies: Redwood City remains the third most cost effective agency surveyed. Alternatives The City Council could choose Option 1, 2 -B, or 2 -C, which were considered by the Utilities Committee and staff, but passed over in favor of the recommended Option 2 -A. The Committee worked hard to reconcile their recognition of the benefits to all existing customers of a fully active conservation program vs. their concerns about cost increases to households and businesses in a time of economic recession. One of the key factors for recommending that the City proceed with conservation funding is that rate increases now better position all water customers to take advantage of conservation sooner to reduce their water use and therefore their costs, while giving the Council more flexibility to control future increases as the regional cost of water goes up. Fiscal Impact If the Council approves the proposed changes, the monthly residential water bill at the City's average consumption level of 11 units will increase by $2.55 or 9.9 %. Increases would take effect with the bills sent beginning August 28, 2003. See attachments for summary of fund revenues and expenditures, impacts to water /sewer bills at various levels of water use and benchmarking data. Page 2 of 3