View
213
Download
0
Category
Preview:
Citation preview
1
Water Utility Regulation Straw Proposal
October 13, 2015
Straw Proposal• Topics
– Goals and Objectives
– Service Charge
– Quantity Rates
– Tiered Residential Rate Structure
– Non-Residential Rate Structure
– Public Purpose Balancing Account
2
Goals and Objectives
• Simplify and Rationalize Existing Rate Design
• Maintain Protections for Low-Income Customers
• Strengthen Conservation Incentives
• Align Utility Risk and Reward
• Eliminate Need for WRAM/MCBA
• Eliminate Need for Sales Forecasting and Sales Adjustment
Mechanisms in Setting Rates
3
Service Charge
– Recovers 100% of fixed costs and return
– Low-income and conservation program costs removed from recovery in service charge (see Public Purpose Balancing Account)
– Existing equity premium reduced to account for lower utility risk and improved utility cash flow
4
Quantity Rates
– Recover variable costs:• Purchased Water and Purchased Power (less fixed
components)
• Pump Tax
• Chemicals
– Variable costs subject to incremental cost balancing account treatment between GRCs
– Variable costs remain offsettable expenses
5
Tiered Residential Rate Structure– Tier 1
• Average variable costs per ccf• Allotment of 2 ccf per month per capita (50 gallons per day per capita)
– Tier 2 • % of long-run marginal cost of water (e.g. desalination or recycled
water)• Applies to next 5 ccf per month per household over Tier 1 allotment
– Tier 3• 100% of long-run marginal cost of water• Applies to all consumption in excess of Tier 2 allotment
– All Tier 2 and Tier 3 revenue in excess of Tier 1 rates are booked to Public Purpose Balancing Account
6
Non-Residential Rate Structure
– Quantity rate set equal to residential Tier 2 rates for all consumption• All revenues above residential Tier 1 rates booked to
public purpose balancing account
– Service charge recovers 100% of fixed costs and return
7
8
Public Purpose Balancing Account• Tracks revenue in excess of Tier 1 variable costs
• Tracks low-income and conservation program costs
• Low-income Program•Low-income credits increase to offset increase in service charge
• Conservation Program
• Residential Ratepayer Reward•Monthly/Bi-monthly bill credit to all residential customers whose consumption is within Tier 1 level
Questions?
9
Recommended