| | | | | | | | Agenda Item - 7.c.
City of Garden Grove
INTER-DEPARTMENT MEMORANDUM
| To: | Scott C. Stiles
| From: | William E. Murray
| | Dept.: | City Manager
| Dept.: | Public Works
| | Subject: | Review of the Water Commodity Rate Analysis Report for the pass-through adjustment for wholesale water cost increases. (Action Item) | Date: | 12/13/2016 |
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| | | | | | | | OBJECTIVE
To request that the City Council review the automatic pass-through adjustment for increased wholesale water charges, effective February 1, 2017, imposed by the Metropolitan Water District of Southern California (MET), the Municipal Water District of Orange County (MWDOC) and Orange County Water District (OCWD). |
| | | | | | | | BACKGROUND
The City’s Water Enterprise Fund pays commodity charges to the MET/MWDOC for its imported water supply. The City also pays a replenishment assessment to the Orange County Water District (OCWD) for its groundwater supply. Increases in commodity charges by wholesale suppliers for purchased water are passed on to the water customers so that the City can maintain its water infrastructure system, to provide water, and ensure that the Water Enterprise Fund remains solvent.
In February 2012, in compliance with Government Code Section 53756 and Proposition 218, the City Council adopted Ordinance No. 2809 providing for automatic adjustments for increases and decreases in purchased water costs, subject to review by the City Council. In accordance with Ordinance No. 2809, the data documenting the basis of the calculation of the pass-through rate adjustments is available to the public for review in the City Clerk's office and Staff will provide at least thirty (30) days advance notice of the adjustments to all customers. |
| | | | | | | | DISCUSSION
MET/MWDOC and OCWD have adopted their rate and fee adjustments for FY 2016-2017. As a result, the City's automatic pass-through of its water commodity adjustment charge (WCAC) will adjust to reflect the adjustments in these water costs. The last adjustment to the WCAC, a charge per water billing unit (100 cubic feet), was in January 2015.
Based on the calculations for the WCAC adjustment in FY 2016/2017, the WCAC will increase by $0.15 per billing unit. The increase does not exceed the actual total cost increase to the City. This will result in the WCAC component of the current water rate schedule increasing from $0.67 per one hundred cubic feet (“HCF”) of water (748 gallons) used to $0.82 per HCF. None of the other rate components will be increased. Under this adjustment, the average residential customer’s water bill will increase by approximately $2.25 per month (assuming a 5/8 x 3/4-inch meter and 15 HCF of water use), or $4.50 per every bi-monthly bill. The increased Water Commodity Adjustment Charge will go into effect on February 1, 2017. |
| | | | | | | | FINANCIAL IMPACT
There is no impact to the General Fund. The WCAC pass-through adjustment will allow for the Water Enterprise Fund to continue meeting its financial obligations and carry out its capital improvement and replacement programs. |
| | | | | | | | RECOMMENDATION
It is recommended that the City Council:
- Review and receive and file the Water Commodity Rate and Analysis Report regarding the automatic pass-through adjustment to the Water Commodity Adjustment Charges to be effective February 1, 2017.
By: Katie Victoria, Senior Administrative Analyst
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