Water Advisory Committee to advise scope of work for rate study

When the City Council repealed the water rates it had passed in September, it also decided to pursue a new water rate study to help set a fair and appropriate rate structure to be implemented once a water plan is agreed upon.

The council originally passed the higher water rates in September to fund the surface water project that would siphon water from the Sacramento River, treat it and pipe it into Davis. The city’s estimated cost for the project would be $160 million.

In November, the council also directed the newly formed Water Advisory Committee, now made up of 15 members of the council’s choosing, to participate in the rate study by providing input on what the study should accomplish.

The committee began its work on that process at Thursday night’s meeting. Dianna Jensen, the city’s principal civil engineer, gave a presentation about the scope of work for the study.

“The scope includes a discussion of several rate structures, maybe between seven and 10 (possibilities) that will be presented and shared with the group,” Jensen said.

“From that discussion we’re going to narrow it down to three different structures that the model will take all the way through so we can see how the different structures look for the project. … It’s really a comprehensive rate study for lots of opportunity for this group to weigh in.”

On Jan. 24, the City Council approved City Manager Steve Pinkerton to enter into an agreement with Bartle Wells Associates to conduct the $125,000 water rate study.

The rate study will:

* Assess the existing customer service fee structure, identify other potential areas for service and system charges and recommend changes, if appropriate;

* Recommend annual operating fund balance targets and reserve levels for operating costs, capital replacement, bond requirements and as well cash flow and unforeseen events;

* Evaluate water consumption data so an informed estimate of water conservation can be made to build into the rates;

* Evaluate rate structure alternatives and, with input from the WAC, narrow it down to three options to analyze for final comparison;

* Conduct a regional rate survey to compare projected rates to those in nearby cities;

* Develop 10-year cash flow projections for the revenue and expenses including the large capital project, repair and replacement projects and annual operations and maintenance;

* Evaluate alternative funding methods available including state and federal grants and loans, city revenue bonds, Certificate of Participations, bank loans and lines of credit for major projects;

* Evaluate financial impacts on customers in all user classes; and

* Develop an Electronic Rate Model that will be an easy-to-use model for future rate setting.

According to the timeline Jensen provided at the meeting, city staff hope the study can be completed by May, to be presented to the City Council in June.

— Reach Tom Sakash at tsakash@davisenterprise.net or (530) 747-8057. Follow him on Twitter @TomSakash.

Short URL: http://www.davisenterprise.com/?p=136053

Posted by Tom Sakash on Feb 10 2012.
Last Login: Mon 21 May 2012 09:28:43 AM PDT
Filed under City government, Water. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry