HomeMy WebLinkAboutMinutes Water Resources Advisory Committee - 03/29/2007 APPROVED MINUTES .2�25���,.�
Water Resources Advisory Committee
11:30 a.m. — March 29,2007 4-7.) �`
Water Department Conference Room Jl:C ' ' -
\ .
t�r,^4211 d W
C tl�Ecr CE :l ll/S
2,4477
Members present: Jerry Garcia, City Council Liaison, Carola Se: T10-Cp§i0
Ruth Blake, Frank Brogan, Lena Coleman, Michael Cox, Mary--Fant,
Leland Johnson and Mark Stroop
Member absent: Kimberly Stockseth
Staff Present:
Ron Massey, Assistant City Manager
Eduardo Garana, P.E. Water Director
Danny Ybarra, P.E. Assistant Water Director
Gary Smith, Assistant City Attorney
Max Castaneda, Water Resources Management Advisor
Mucio Garza, P.E. Water System Optimizer
Ivan Luna, Business Practices Manager
Yolanda R. Marruffo, Public Relations and Marketing Coordinator
Visitors:
Tony Bagwell, HDR Engineering, Inc.
Carl Crull, P. E. HDR Engineering, Inc.
Mrs. Carola Serrato called the meeting to order at 11:35 a.m.
I. Welcome
Mrs. Serrato asked that everyone introduce themselves and welcomed new
committee members.
II. Approval of Minutes
The minutes of January 18, 2007 and February 9, 2007 were reviewed. Mrs.
Coleman motioned that the minutes be approved; seconded by Mr. Brogan and
approved unanimously by Committee members.
III. Presentation on the Utility Rate Study
Mr. Garana introduced Tony Bagwell of HDR Engineering, Inc. to provide an
update to the Committee on the progress made on the water rate study.
Mr. Bagwell stated that the City Council was briefed on January 23, 2007 on HDR's
concepts. The City Council provided them with direction and asked that they meet
with stakeholder groups and report discussions back to them. Stakeholder
meetings including the concept discussion that occurred on February 9, 2007 and
today's cost of service allocations meeting are in response to the City Council's
directive. A third meeting would be scheduled to discuss rate revenue requirements
SCANNED
1
r+ f
and rate design. The City Council plans to develop a new rate structure as part of
the annual budget process.
Mr. Bagwell stated that the major steps in the rate study included:
• Assessment of existing customer user patterns;
• Evaluation of"base year" utility cost and revenues;
• Forecasting service demand;
• Forecasting utility capital and O&M expenses to "test year" and beyond;
• Allocation of cost of service to customer classes; and
• Development of rate revenue requirements, proposed rate designs and
pricing levels for each customer class.
A table of water demand forecast was shown identifying raw and treated water
customers based on fiscal year 2005, 2006 and estimated fiscal year 2007 and
projected water use for fiscal year 2008 at 23,958.7 billion gallons.
Mr. Bagwell reported that the underlying cost factor forecasts identified no new
staffing or program changes and inflation rates associated to salaries (3.0%),
energy and fuels (5.0%) and other (3.7%). Additional forecast costs included
recent and future bond issues, financing of new debt at current rates/terms and
interim financing costs at TexPool average rate. By 2008, a total 5.1 percent
increase is expected on the cost of service.
Mr. Bagwell explained the general concept on the cost of service allocations
relative to the use of the City's raw water system, the City's treatment system and
the City's network. He identified the numerous composite, contract, raw water and
ratepayers that utilize the various segments of the City's facilities. He stated that
this methodology is an acceptable rate making concept that assesses the
infrastructure utilized by inside and outside limit customers.
A table with two columns was shown to identify eight customer/rate classes and
functional cost center/rate components. For example, the rate class identified the
cities of Beeville, Mathis and Alice to equate to a functional cost center of raw water
without a return on equity.
Mr. Bagwell stated that the City should consider cost of service allocations for the
Assistant City Manager for Public Works, Utility Billing Office, Utility Field
Operations, Public Education and Communications, Utility Support Services and
Economic Development— Utilities.
A second cost of service allocation included storm water cost reallocations to allow
the cost recovery of managing the storm water operations. He stated that the
system is currently not included in the raw water rates, but is included in the treated
water rate. It would be ideal to have the storm water funded by its own revenue;
however, if it continues to be funded by water rates, it should be assigned only to
inside city limit retail customers. Mrs. Serrato expressed concern that the storm
water charges provided no benefit to wholesale customers and that this problem
had been expressed to the City in the past.
2
Mr. Bagwell also reported that OCL raw water customers such as Beeville, Alice
and Mathis should be allocated their appropriate share of water losses, which are
being incurred by the City, interim capital financing costs and fiscal agent fees. He
stated that the City must have sufficient revenue to pay its debt.
Further discussion included an overview of methodology leading to volume cost of
service allocations including raw water systems, raw water diversion and
conveyance systems and treatment and network systems and retail distribution
system and other factors.
The volume cost of service by rate class identified each of the raw and treated
wholesale water customers. The rate cost of service was shown for Fiscal Year
2006, Fiscal Year 2007 and the projected Volume Cost of Service for Fiscal Year
2008. The volume cost of service is the pending volume rate being recommended
by HDR. The rate design concept as recommended by HDR featuredthefollowing:
• Discouraged use of a declining block rate which is often discouraged by
TCEQ and TWDB.
• Consider a inclining block rate for homogeneous customer classes with
highly seasonal use patterns
• Consider a series of uniform rates for customer classes with relatively flat
use patterns or where the customers are not homogeneous. This offers
wholesale and large volume users and commercial users a revenue neutral
concept.
A graph identifying residential water use patterns identified the summertime peak
factor of approximately 2X due largely to lawn irrigation.
A graph on commercial water use patterns showed a peak factor of 1.5X due to a
mixed class of users. Mr. Bagwell suggested utilizing a uniform rate structure
rather than the existing declining block rate structure.
Mr. Bagwell stated that the stakeholders groups will be reviewing the preliminary
rate structure design and the suggested water pricing. They hoped to brief the City
Council in early May and thereafter, identify an implementation plan and schedule.
A motion to adjourn was made by Ms. Fant and seconded by Mr. Brogan. With no
further business, the meeting adjourned at 1:00 pm.
3