Pasadena Water and Power

PROPOSED CHANGES TO THE PURCHASED WATER

ADJUSTMENT CHARGE (“PWAC”)Item # 13

City Council MeetingJune 15, 2015

Pasadena Water and Power

Recommendation

That the City Council open the public hearing and receive public comment on the proposed water rate adjustments, close the public hearing and in the absence of a majority protest, take the following action:

1. Find that the proposed changes to the Purchased Water Adjustment Charge are statutorily exempt from the California Environmental Quality Act (“CEQA”) pursuant to State CEQA Guidelines Section 15273 (Rates, Tolls, Fares, and Charges);

2. Approve the proposed water rate adjustments to:a) Increase the Purchased Water Adjustment Charge (“PWAC”) by

$0.05 per billing unit effective October 2015 b) Increase by an additional $0.02 per billing unit effective October

2016

2

Pasadena Water and Power

Water Rate Components

Water Rate Components

Commodity Charge • volumetric charge • generates revenues to cover the costs of actual

water • both groundwater and purchased water Purchased Water Adjustment Charge (PWAC)• volumetric charge • mechanism to recover the increased cost of water

purchased from the Metropolitan Water District (“MWD”)

Distribution and Customer (D&C) Charge• fixed charge• generates revenues to recover maintenance and

operations costs• Includes Fire Protection Surcharge which covers the

cost of fire hydrant replacements and upgrades that are not directly related to new development

Capital Improvement Charge (CIC)• volumetric charge • generates revenues dedicated to capital

improvements as approved in the Water Distribution System Master Plan

• Revenues also cover the debt service of bonds issued for investment in the water infrastructure.

3

$-

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

$5.00

SYSTEM AVERAGE RATEPer Billing Unit

Proposed$4.35

PWAC$0.42

Commodity$1.84

D&C$1.38

Proposed PWAC In-

crease$0.07

CIC$0.64

Current$4.28

Pasadena Water and Power

Revenues from Water Rates

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Commodity; 30,023,620

PWAC (current), $5,498,289 PWAC (proposed),

$927,422.30

Distribution & Cus-tomer Charge, $18,304,122

Capital Im-provement

Charge, $8,442,485

Pasadena Water and Power

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Purchased Water Cost and MWD Rates

PWP’s Purchased Water Costs are driven by rates charged by the Metropolitan Water District of Southern California (MWD)

* Purchased water costs for 2015 through 2016 are projected numbers, while MWD rates are the approved rates

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 * 2016 *$0

$250

$500

$750

$1,000

$1,250

$1,500

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

$20,000

$22,000

$24,000

$408 $418$443 $453

$478$508

$620

$701$744

$794$847

$890$923 $942

$489 $499$524

$549$574

$606

$724

$811

$869$920

$997$1,032

$1,055 $1,076

MWD Tier 1 MWD Tier 2 PWP Purchased Water Cost

MW

D R

ate

s (

$ /

Acre

Ft)

Pu

rch

ased

Wate

r costs

($

00

0’s

) A

cre

Ft)

Pasadena Water and Power

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Proposal Summary and Schedule

• Why are there PWAC changes now?>Metropolitan Water District rate actions approved:

January 2015 - 3% rate increase January 2016 - Additional 1% rate increase Increased costs passed directly to water purchases

Rate Proposal ScheduleApril 28 Notice of hearing mailed to all customers

April – June Newspaper publication, social media, public outreach

June 15 Conduct public hearing

October 2015 Implement 1st PWAC increase of $0.05 per billing unit

October 2016 Implement 2nd PWAC increase of $0.02 per billing unit