AgdaPkt 2013-06-10 Interview Closed and Joint

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7.A. - Page 2 Council's Guiding Principles for the Water Enterprise Fund state that fixed costs and basic service charge revenue shell be in balance. • Variable Usage Rates: The Variable Usage Rates are based on the principle of rewarding conservation and the methodology "the more you use, the more you pay." It has been in existence since the drought of 1989 to promote water conservation. This component provides the financial support for the purchase of wholesale water from the San Francisco Regional Water System, electrical power from PG&E, capital improvements, the City's water conservation programs, and the City's recycled water bond payment. ANALYSIS The San Francisco Public Utilities Commission (SFPUC) increased wholesale water rates 49.8% over the past two years. Further, an increase of 45% is projected over the next five years. This includes the Bay Area Water Supply and Conservation Agency's (BAWSCA) bond surcharge, which replaces some SFPUC costs. The City has worked to smooth out increases in water costs for its customers, which is why moderate rate increases have been adopted. This City action is in contrast to those adopted by the SFPUC. The City Council Utilities Committee recommends a 9% increase in the cost of delivering water service for next three fiscal years, 2013-14, 2014-15, and 2015-16, respectively. These increases are consistent with those imposed by other local water agencies and are necessary to balance the Water Fund. The Utilities Committee and staff recommend for Council consideration the following increases to the water service charges: 1. Increase monthly residential Basic Service Charge from $22.00 to $23.98, effective August 1, 2013; from $23.98 to $26.13, effective July 1, 2014; and from $26.13 to $28.49, effective July 1, 2015. 2. Increase residential water consumption rates as follows: Current August 1, 2013 July 1, 2014 July 1, 2015 Rate Tiers Cost Proposed Proposed Cost Proposed Cost per Unit Cost per Unit per Unit per Unit 0-10 units $2.93 $3.20 $3.49 $3.80 11-25 units $3.72 $4.05 $4.42 $4.82 26-50 units $6.08 $6.63 $7.23 $7.88 51+ units $8.58 $9.35 $10.19 $11.11 3. Increase monthly commercial and commercial irrigation Basic Service Charge for a 5/8" meter from $22.00 to $23.98, effective August 1, 2013; from $23.98 to $26.13, effective July 1, 2014; and from $26.13 to $28.49, effective July 1, 2015.