Ferndale City Council REQUEST FOR COUNCIL ACTION...Angie Sanchez Virnoche Vice President - Principal...
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Ferndale City Council REQUEST FOR COUNCIL ACTION Department Prepared By: CITY CLERK’S OFFICE AGENDA BILL #19-12-003 TITLE: Public Hearing – Utility Rates Ordinance Resolution Motion Info Only Discussion Date Council Action Requested: Prepared by: Susan Duncan, City Clerk Reviewed By: Date: 10/02/2019 SUBJECT: Public Hearing – Utility Rates Committee: P&LU PW&U F&A Mayor City Administrator X City Clerk’s Office X Community Development Dept Public Works Department City Attorney’s Office X Finance Department Police Department Board/Commission Hearings Examiner ACTION REQUESTED: VOTE NEEDED TO PASS: SUMMARY: The utility rate study has been completed and the consultant’s recommendations have been made for the cost of service and rate design for water, sewer, and storm utilities. Council will be asked to approve the ordinances reflecting the consultant’s recommendations at the December 16, 2019 meeting. DISCUSSION/ANALYSIS/ISSUES: RECOMMENDATIONS: No action required until December 16, 2019. ATTACHMENTS: Consultant’s Report F
Transcript of Ferndale City Council REQUEST FOR COUNCIL ACTION...Angie Sanchez Virnoche Vice President - Principal...
Ferndale City Council
REQUEST FOR COUNCIL ACTION Department Prepared By: CITY CLERK’S OFFICE
AGENDA BILL #19-12-003
TITLE: Public Hearing – Utility Rates
Ordinance Resolution Motion Info Only Discussion Date Council Action Requested: Prepared by: Susan Duncan, City Clerk Reviewed By: Date: 10/02/2019
SUBJECT: Public Hearing – Utility Rates
Committee: P&LU PW&U F&A
Mayor
City Administrator X
City Clerk’s Office X
Community Development Dept
Public Works Department
City Attorney’s Office X
Finance Department
Police Department
Board/Commission
Hearings Examiner ACTION REQUESTED: VOTE NEEDED TO PASS:
SUMMARY: The utility rate study has been completed and the consultant’s recommendations have been made for the cost of service and rate design for water, sewer, and storm utilities. Council will be asked to approve the ordinances reflecting the consultant’s recommendations at the December 16, 2019 meeting.
DISCUSSION/ANALYSIS/ISSUES: RECOMMENDATIONS: No action required until December 16, 2019. ATTACHMENTS: Consultant’s Report
F
Presentation of the Water,
Wastewater Rate Study
Cost of Service Results
Presented by:
Martin Chaw, Project Manager
Ferndale City Council
October 7, 2019
City of Ferndale, WA
DRAFT
Page 2FCS GROUP
What We Were Asked To Do
Pre-Study Communication
Financial Rate Study
Cost of Service Study and Rate
Design
Connection Fee Study
Final Documentation
1. 2. 3. 4. 5.
COMPLETED COMPLETED --------------PRELIM RESULTS--------------CC: Oct 2 & Oct 7
Page 3FCS GROUP
Overview of the Rate Setting Process
Base
Define Customer Classes
Fixed Charges Variable Charges
Design Rates by Class
Allocate Costs by Function
Allocate Costs to Customer Classes
Revenue Requirement
Establish Fiscal Policies
Forecast
Operating Costs
Define Capital
Needs: CIP
Peak Fire
Customer
Water
FlowCustomer
Strength
Wastewater
Page 4FCS GROUP
Agenda
Recap where we have been
Connection fee update
Update water and sewer rates
Next steps
Page 5FCS GROUP
Recap: Revenue Requirements Analysis What: Determine what annual level of adjustment to rates is needed to fully fund
utility operations in each year.
Outcome: Council reviewed on Aug 14 and 19.
WATER
Page 6FCS GROUP
What Is A Connection Fee
One-time charge imposed as a condition of service on
new development or on increased system demand.
Represents a prorated share of the capital investment
made to provide system capacity.
Governing state law: RCW 35.92.025: In general, each
connection shall bear a proportionate share of the cost
of the system capacity required to serve it.
Page 7FCS GROUP
Current vs Updated Connection Fee
Water Utility
$6
,44
6
$6
,03
3
$5
,99
1
$5
,88
5
$5
,09
5
$4
,44
4
$4
,00
0
$2
,97
0
$2
,90
0
$2
,62
3
$-
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000Fe
rnd
ale
(Cu
rren
t)
Lake
Wh
atco
m (
20
20
)
Fern
dal
e (U
pd
ated
)
Lake
Wh
atco
m (
20
19
)
Lyn
den
Be
llin
gham
Ever
son
Bir
ch B
ay
Sum
as
Bla
ine
Page 8FCS GROUP
Current vs Updated Connection Fee
Sewer Utility
$1
2,1
82
$1
0,2
44
$1
0,0
71
$8
,11
7
$7
,91
9
$7
,63
7
$6
,98
6
$6
,53
7
$6
,40
0
$4
,26
0
$3
,12
5
$-
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000Ea
st L
ynd
en
Fern
dal
e (U
pd
ated
)
Fern
dal
e (C
urr
ent)
Lake
Wh
atco
m (
20
20
)
Lake
Wh
atco
m
Be
llin
gham
Lyn
den
Bla
ine
Ever
son
Bir
ch B
ay
Sum
as
Notes: Blaine/B’ham/LW (also FCS GROUP clients): adopted charges at full rate.See related City Financial Policy on ‘growth pays for growth’
Page 9FCS GROUP
Cost of Service & Rate Design
Two Different but Related Tasks
Step 1:
Cost of Service
Goal: An equitable distribution of cost shares
that considers utility specific data.
- # accounts
- Plant and equipment
- Budget
- Water consumption
- Wastewater flow
Step 2:
Rate Design
Goal: Recovery of allocated cost shares through rates.
- Evaluate fixed and volume charges
- Governed by City and financial policies
- Sufficiency of revenue
- Cost based and equitable
- Collects target revenue from each class
- Administrative simplicity
- Rate payer understandability
Page 10FCS GROUP
Cost of Service Objectives
An equitable distribution of cost shares that considers utility specific data:
– Measures of usage and demand
– Planning, engineering and design criteria
– Facility requirements
Total cost by class (equity)
Unit costs ( /usage; /customer)
Fundamental question: Do cost differences exist to serve different customer
classes of service?
Page 11FCS GROUP
Cost of Service Process
Step 1: Allocate total utility costs to cost pools
Step 2: Develop allocation factors using class specific information
Step 3: Allocate costs to customer classes
Water Utility Functions
• Customer• Meters & Services• Base Demand (Average Use)• Peak Demand (Peak Use)• Fire Protection
Sewer Utility Functions
• Customer• Flow• Strength
-Suspended Solids (TSS)-Biochemical Oxygen Demand (BOD)
Page 12FCS GROUP
Water Cost of Service – COS Based Shifts Were
Insignificant; No Changes Recommended
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2019 Revenues 2020 Revenues (w/ ATBrate increase)
2020 Revenue (w/ COSAAdjustments)
SFR MFR COMM IRR
4.4%
17.2%
11.4%
66.9%
4.4%
17.2%
11.4%
66.9%
4.4%
18.0%
8.9%
68.8%
Page 13FCS GROUP
Sewer Cost of Service – COS Based Shifts Were
Significant; Changes Recommended
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2019 Revenues 2020 Revenues (w/ ATBrate increase)
2020 Revenue (w/ COSAAdjustments)
SFR MFR COMM
18.7%
10.2%
71.1%
18.7%
10.2%
71.1%
21.4%
10.5%
68.1%
Page 14FCS GROUP
Guiding Principles in Rate Design
Administrative ease
Simplicity and understandability
Revenue stability
Interclass and Intraclass customer equity
Affordability
Page 15FCS GROUP
Water Rate Design – Options
FIXED CHARGE1” and below
Above 1”
VOLUME CHARGE4 Tiers
MAINTAIN EXISTING RATE STRUCTUREApply Across the Board Increases Only
COS: FIXED CHARGEBased on meter size for all classes
COS VOLUME CHARGE – OPT ASFR & IRR: 4 Block Inclining StructureMFR & COMM: Single Block Structure
COS VOLUME CHARGE – OPT BSFR & IRR: 3 Block Inclining StructureMFR & COMM: Single Block Structure
Page 16FCS GROUP
Sewer Rate Design – Options
FIXED CHARGEAll customersBase charge
VOLUME CHARGEAll customers
4 Tiers
MAINTAIN EXISTING RATE STRUCTUREApply Across the Board Increases Only
COS: OPTION ASFR: Base Charge only
Non-SFR: Base Charge + Uniform Volume Charge
COS: OPTION BSFR: Base Charge + Winter Volume ChargeNon-SFR: Base Charge + Uniform Volume
Charge
Page 17FCS GROUP
SFR Sample Bi-Monthly Bills - WATER$
37
.76
$5
6.1
6
$8
9.2
8
$1
97
.00
$4
29
.98
$4
9.4
5
$7
3.5
5
$1
16
.93
$2
57
.85
$5
62
.66
$4
7.5
3
$7
0.4
9
$1
19
.68
$2
96
.19
$6
35
.76
$4
7.5
3
$7
0.9
3
$1
19
.53
$2
88
.28
$6
19
.03
$-
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
LOW (6 ccf, 3/4" Meter) MODERATE (11 ccf,3/4" Meter)
HIGH (20 ccf, 3/4"Meter)
LARGE (47 ccf, 3/4"Meter)
VERY LARGE (96 ccf,3/4" Meter)
2019 Billing 2020 ATB 2020 Opt A - Meter+4Block Vol Chg 2020 Opt B - Meter+3Block Vol Chg
98% of City customers within 0-30 ccf
Page 18FCS GROUP
SFR Sample Bi-Monthly Bills - SEWER$
75
.41
$1
11
.61
$1
76
.77
$3
90
.73
$8
52
.43
$8
2.6
0
$1
22
.25
$1
93
.62
$4
27
.97
$9
33
.84
$1
18
.73
$1
18
.73
$1
18
.73
$1
18
.73
$1
18
.73
$8
8.0
6
$1
32
.66
$2
12
.94
$4
53
.78
$8
90
.86
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
LOW (6 ccf) MODERATE (11 ccf) HIGH (20 ccf) LARGE (47 ccf) VERY LARGE (96 ccf)
2019 Billing 2020 ATB 2020 Opt A - Base Charge Only 2020 Opt B - Base+Winter Volume Charge
98% of City customers within 0-30 ccf
Page 19FCS GROUP
SFR Interjurisdictional Comparison – Combined
Water, Sewer, Storm Bi-Monthly Billing
Bimonthly bill – assumes 11 ccf of bimonthly water/sewer usage. Calculated billings based upon 5/8” meter or lowest available and using prevailing city rates as published per city websites.
Page 20FCS GROUP
SFR Interjurisdictional Comparison – Combined
Water, Sewer, Storm Bi-Monthly Billing Data Table
ATB: Across the board increase to current 2019 rates. This represents the minimum increase necessary to address identified operating and capital needs of each utility.
Jurisdiction Water Sewer Storm Taxes Total
Blaine 47.85 213.22 11.34 24.52 296.93
Lake Whatcom 120.21 163.40 - - 283.61
Ferndale - Proposed 4 Block (2020) 64.15 120.72 33.11 18.28 236.26
Ferndale - ATB (2020) 66.90 111.26 33.11 17.62 228.89
Everson 45.21 148.52 - 12.37 206.10
Lynden 81.47 93.72 16.00 12.91 204.09
Ferndale - Current (2019) 51.11 101.57 31.53 15.10 199.30
Average 60.45 116.04 10.55 11.49 198.53
Nooksack 66.16 101.76 - 10.08 178.00
Bellingham 54.18 78.80 13.57 22.34 168.89
Birch Bay 51.60 59.00 - - 110.60
Sumas 19.80 89.11 - - 108.91
Page 21FCS GROUP
Combined Water/Sewer/Stormwater Billings
Selected MFR Customers
$6,027 $6,023$5,222
$-
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
2020 Proposed 2020 ATB Increase Existing 2019
Park Place Apartments
Water Sewer Storm
$5,657 $5,763$4,979
$-
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
2020 Proposed 2020 ATB Rate Existing 2019
Pacific Park Apartments
Water Sewer Storm
$6,503 $6,599
$5,700
$-
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
2020 Proposed 2020 ATB Rate Existing 2019
Fernview Apartments
Water Sewer Storm
$4,647 $4,768$4,131
$-
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
2020 Proposed 2020 ATB Rate Existing 2019
Mercy Housing A/P
Water Sewer Storm
Page 22FCS GROUP
Combined Water/Sewer/Stormwater Billings
Selected COMM Customers
$15,628 $15,850
$13,721
$-
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
2020 Proposed 2020 ATB Increase 2019 Existing
Haggen
Water Sewer Storm
$2,410 $2,412
$2,216
$-
$500
$1,000
$1,500
$2,000
$2,500
$3,000
2020 Proposed 2020 ATB Increase 2019 Existing
Metrie
Water Sewer Storm
Page 23FCS GROUP
Recap
Updated Connection charge
Cost of Service Results
Rate Design Options
Impacts to Customer Classes
Page 24FCS GROUP
Next Steps
Continuation of workshop / discussion?
Direct staff to prepare Ordinance with new rates for Council adoption for 2020
– 2022; and opportunity to review annually
Recommend revisiting cost of service and equity of allocated costs in 3-5
years
Council Questions?
Angie Sanchez VirnocheVice President - Principal
425.336.4157
www.fcsgroup.com
Martin ChawProject Manager
425.274.2853
Melanie HobartProject Consultant
425. 615.6948
Page 26FCS GROUP
Billing Impacts – Other Customer Classes
Page 27FCS GROUP
MFR Sample Bi-Monthly Bills - WATER
$1
04
.37
$1
61
.47
$2
42
.67
$9
25
.67
$1
36
.66
$2
11
.41
$3
17
.61
$1
,21
1.1
1
$1
13
.41
$1
92
.61
$3
32
.42
$1
,16
5.4
7
$0
$500
$1,000
$1,500
$2,000
$2,500
LOW (15 ccf, 1" Meter) MODERATE (30 ccf, 1" Meter) HIGH (50 ccf, 1 1/2" Meter) LARGE (200 ccf, 2" Meter)
2019 Billing 2020 ATB 2020 Opt - Meter+Uniform Volume Charge
67% of City customers
Page 28FCS GROUP
COMM Sample Bi-Monthly Bills - WATER
$7
0.8
8
$1
61
.47
$2
42
.67
$9
25
.67
$9
2.8
3
$2
11
.41
$3
17
.61
$1
,21
1.1
1
$9
1.9
3
$1
77
.01
$3
47
.47
$1
,17
0.9
3
$0
$500
$1,000
$1,500
$2,000
$2,500
LOW (15 ccf, 3/4" Meter) MODERATE (30 ccf, 1" Meter) HIGH (50 ccf, 2" Meter) LARGE (200 ccf, 3" Meter)
2019 Billing 2020 ATB 2020 Opt - Meter+Uniform Volume Charge
84% of City customers
Page 29FCS GROUP
IRR Sample Bi-Monthly Bills - WATER$
34
.08
$8
9.2
8
$3
38
.67
$1
,12
8.6
7
$4
4.6
3
$1
16
.93
$4
43
.21
$1
,47
6.6
1
$4
1.0
3
$1
08
.41
$4
48
.25
$1
,52
2.4
7
$4
1.0
3
$1
02
.53
$4
33
.37
$1
,54
0.9
7
$0
$500
$1,000
$1,500
$2,000
$2,500
LOW (5 ccf, 3/4" Meter) MODERATE (20 ccf, 3/4"Meter)
HIGH (70 ccf, 2" Meter) LARGE (250 ccf, 2" Meter)
2019 Billing 2020 ATB 2020 Opt A - Meter+4Block Vol Chg 2020 Opt B - Meter+3Block Vol Chg
84% of City customers
Page 30FCS GROUP
MFR Sample Bi-Monthly Bills - SEWER
$1
40
.57
$2
53
.37
$4
14
.97
$1
,76
9.9
7
$1
53
.97
$2
77
.52
$4
54
.52
$1
,93
9.0
2
$1
71
.48
$3
07
.53
$4
88
.93
$1
,84
9.4
3
$0
$500
$1,000
$1,500
$2,000
$2,500
LOW (15 ccf) MODERATE (30 ccf) HIGH (50 ccf) LARGE (200 ccf)
2019 Billing 2020 ATB 2020 Opt A / B
67% of City customers
Page 31FCS GROUP
COMM Sample Bi-Monthly Bills - SEWER
$1
40
.57
$2
53
.37
$4
14
.97
$1
,76
9.9
7
$1
53
.97
$2
77
.52
$4
54
.52
$1
,93
9.0
2
$1
76
.90
$3
17
.15
$5
04
.15
$1
,90
6.6
5
$0
$500
$1,000
$1,500
$2,000
$2,500
LOW (15 ccf) MODERATE (30 ccf) HIGH (50 ccf) LARGE (200 ccf)
2019 Billing 2020 ATB 2020 Opt A / B
82% of City customers
Page 32FCS GROUP
Appendix – Rate Schedules
Page 33FCS GROUP
Water Fixed Rate Schedule
Meter Size2019 Fixed
Charge
2020 ATB Fixed
Charge
Proposed 2020
Fixed Charge
3/4" 15.68$ 20.53$ 20.53$
1" 49.17 64.36 34.21
1 1/2" 49.17 64.36 68.42
2" 49.17 64.36 109.47
3" 49.17 64.36 218.93
4" 49.17 64.36 342.09
6" 49.17 64.36 684.17
All Classes
Page 34FCS GROUP
Volume Rate Schedule
Option A (4 Block)
Usage Tier 2019 Charge 2020 ATB
0-25 ccf 3.68$ 4.82$
26-50 ccf 4.06 5.31
51-150 ccf 4.80 6.28
151+ ccf 4.06 5.31
Existing - All Customers
Usage Tier 2020 Opt. A
0-10 ccf 4.50$
11-15 ccf 4.96
16-30 ccf 5.87
31+ ccf 6.93
Residential - Proposed (Opt. A)
Usage Tier 2020 Opt. A/B
All Usage 5.28$
MFR - Proposed (Opt. A/B)
Usage Tier 2020 Opt. A/B
All Usage 4.76$
COM - Proposed (Opt. A/B)
Usage Tier 2020 Opt. A
0-6 ccf 4.10$
7-40 ccf 4.52
41-116 ccf 5.35
117+ ccf 6.18
Irrigation - Proposed (Opt. A)
Page 35FCS GROUP
Water Volume Rate Schedule
Option B (3 Block)
Usage Tier 2020 Opt. A/B
All Usage 5.28$
MFR - Proposed (Opt. A/B)
Usage Tier 2020 Opt. A/B
All Usage 4.76$
COM - Proposed (Opt. A/B)
Usage Tier 2019 Charge 2020 ATB
0-25 ccf 3.68$ 4.82$
26-50 ccf 4.06 5.31
51-150 ccf 4.80 6.28
151+ ccf 4.06 5.31
Existing - All Customers
Usage Tier 2020 Opt. B
0-10 ccf 4.50$
11-30 ccf 5.40
31+ ccf 6.75
Residential - Proposed (Opt. B)
Usage Tier 2020 Opt. B
0-25 ccf 4.10$
26-100 ccf 4.92
101+ ccf 6.40
Irrigation - Proposed (Opt. B)
Page 36FCS GROUP
Sewer Rate Schedule
Option A (Uniform Vol. Charge)
2019 Charge 2020 ATB
Fixed Charge 31.97$ 35.02$
0-25 ccf 7.24 7.93
26-50 ccf 8.08 8.85
51-150 ccf 9.51 10.42
151+ ccf 8.08 8.85
Rate Structure - All Classes
2020 Charge
Fixed Charge 35.43$
All Usage 9.07
MFR - Opt. A/B
2020 Charge
Fixed Charge 36.65$
All Usage 9.35
COM - Opt. A/B
2020 Charge
Fixed Charge 118.73$
SFR - Opt. A
Note: Single family residences will not be billed for any consumption
Page 37FCS GROUP
Sewer Rate Schedule
Option B (Uniform Vol. Charge)
2019 Charge 2020 ATB
Fixed Charge 31.97$ 35.02$
0-25 ccf 7.24 7.93
26-50 ccf 8.08 8.85
51-150 ccf 9.51 10.42
151+ ccf 8.08 8.85
Rate Structure - All Classes
2020 Charge
Fixed Charge 34.54$
All Usage 8.92
SFR - Opt. BNote: residential billing proposed to be based on average winter usage (currently based on total usage)
2020 Charge
Fixed Charge 35.43$
All Usage 9.07
MFR - Opt. A/B
2020 Charge
Fixed Charge 36.65$
All Usage 9.35
COM - Opt. A/B
