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Home My WebLink AboutL- 7 Water Rate Study for Azusa Municipal Water Division 7 , ,,,,e,„ February 4, 1974 TO: CITY COUNCIL AND CITY ADMINISTRATOR FROM: DIRECTOR OF PUBLIC WORKS RE: WATER RATE STUDY FOR AZUSA MUNICIPAL WATER DIVISION THE NEED TO INCREASE RATES The legal action adjudicating our underground water basin has finally been completed and all producers of ground water in the basin have been perscribed certain extraction rights. Unfortunately, the basis for perscribing these rights was the actual water extracted by each producer during a time period when the City of Azusa had rather low extractions. The result of this is that the city will be extracting from the ground water basin a good deal more water than it has the rights to. We may extract all the water we need, however, we must pay for our overextractions at the rate of $40.00 per acre feet so that Feather River water may be brought in to recharge the basin. It is estimated that the city will have to pay in the neighborhood of $70,000 to $100,000 per year for over- extractions in the years to come. In order to make up this cost it will be necessary to raise the water rates. Due to the energy crisis, electrical energy and natural gas costs have risen. Our water is pumped from the ground and distributed to our customers partially by the use of electric motors and partially by the use of natural gas-fired internal combustion engines. These increased energy costs are also contributing to the need for a water rate increase. COST OF WATER PRODUCTION The cost of producing and distributing water to all of our customers during the next several years has been computed and these costs are discussed as follows. The average cost of producing and distributing water for all users is 17 per hundred cubic feet. The city bears a cost of approximately 25 per hundred cubic feet for the very minimum water users and a cost of approximately 9 per hundred cubic feet for the very large water users such as American Cyanamid Company, Miller Brewery and the golf course. Included in this report are exhibits which show the water rates charged by the majority of the other purveyors in the basin, as well as the water rates presently charged by the City of Azusa, and the water rates recommended by this report. GOLF COURSE WATER The city presently supplies the golf course with water at a rate of 5. 19 cents per hundred cubic feet. This cost is based on an agreement between the city and the golf course which provides -2- that the golf course will be charged the city's actual cost plus 6% profit. The rate was adjusted the last time in early 1970. Because of the additional costs for replenishment water, increased power costs, and the natural inflationary trend, the rate should now be recalculated. Exhibit B of this report indicates that a rate of 10o per hundred cubic feet would more accurately reflect the terms of the agreement. The water rates charged by cities and private water companies to other golf courses in the surrounding area are given in the table below. It is apparent from this data that even with the increased golf course water rate, our price is the lowest charged in the area. Figures are for 100 cubic feet of water City Owned Private County Alhambra 10o Pasadena 19. 10 21 . 10 24. 10 (outside of city) Arcadia 18o 18o Montebello 18o Azusa (Presently) 5. 190 Azusa (Proposed) 10c RECOMMENDATION: It is the recommendation of the Director of Public Works that the City Council revise the existing water rate resolution to reflect the following costs: SERVICE CHARGE: For 5/8" or 3/4" Meter $ 3.00 For 1 " Meter 3.50 For 1-1/2" Meter 6.00 For 2" Meter 8.50 For 3" Meter 15.50 For 4" Meter 25.00 For 6" Meter 45.00 For 8" Meter 70.00 For 10" Meter 95.00 For 12" Meter 120.00 QUANTITY RATES: First 1,000 Cu. Ft. included with Service Charge Next 9,000 Cu. Ft., per 100 Cu. Ft. $ .24 Next 90,000 Cu. Ft., per 100 Cu. Ft. . 16 Next 990,000 Cu. Ft., per 100 Cu. Ft. . 14 Over 1,000,000 Cu. Ft., per 100 Cu. Ft. . 10 Golf Course rate, per 100 Cu. Ft. . 10 Respectfully submitted, MICHAEL W. WELLS, Director of Public Works MWW:dm Attach. EXHIBIT "A" CITY OF AZUSA WATER RATE STUDY BASIC WATER PRODUCTION COST DATA BASIC DATA Azusa Perscriptive Right * 3996 Acre Feet Azusa Ag. Perscriptive Right * 1893 Acre Feet Total Perscriptive Right * 5889 Acre Feet 1972 Water Production 7787 Acre Feet 1973 Water Production 7429 Acre Feet Average of two years 7608 Acre Feet Cost of ground water replenishment $ 40.00 per Acre Feet Estimated yearly replenishment - 7608 - 5889 = 1719 Acre Feet Cost of replenishment - 1719 x $40 = $68,760.00 Average cost per acre feet = $6$,760 = $9.04 per Acre Feet 7b08 Cost of Power Cost of Power (1973) $ 16,427 20% increase effective in 1974 3,285 Cost per acre feet = $19,712 = $2.59 per Acre Feet 7608 * Based on safe ground water yield for basin in fiscal year 1974-1975. EXHIBIT "B" GOLF COURSE WATER COST ANALYSIS BASIC DATA 1 . Agreement dated March 1964 2. Annual use 180,000 hundreds of cubic feet, 413.22 acre feet 3. Average cost of replenishment based on 7608 acre feet per year = $ 9.04 per acre feet 4. Cost of power = $2.59 per acre feet Estimated cost of customer accounting $ 69,000 General administrative expense 68,000 Depreciation 70,000 TOTAL $ 207,000 Cost per customer = $207,000 = $ 41 .40 5000 customers Cost per acre feet = $41 .40 = $ 0. 10 per acre feet 413.22 Maintenance of source of supply $ 26,000 Maintenance of transmission and distribution system - - 85,000 TOTAL $ 111,000 Cost per acre feet = 111.000 $ 29.18 7608 TOTAL COSTS Power costs $ 2.59 per acre feet Replenishment costs 9.04 per acre feet Accounting & administration 0. 10 per acre feet Maintenance 29. 18 per acre feet In lieu of taxes 1 .60 per acre feet $ 42.51 per acre feet Exhibit '°B" Page 2 Cost of water per 100 cubic feet = $ .098 6% profit per agreement = .006 TOTAL $ . 104 Recommended Golf Course water rate $ 0. 10 per hundred cu. ft. EXHIBIT "C" CITY'S WATER COST FOR LARGE USERS Cost of Power — - - $ 2.59 per acre feet Replenishment Costs 9.04 per acre feet Maintenance 29.18 per acre feet In lieu of taxes 1 .60 per acre feet Accounting, administration and depreciation $41 .40 per customer 275.48 . 15 per acre feet (Based on 10,000 hundred cubic feet per month) TOTAL $ 42.56 per acre feet Cost per 100 cubic feet = $ .09 CITY'S AVERAGE COST FOR WATER FOR TOTAL USERS Water Division Budget $ 500,000 Water Production per year - - - - 7608 Cost per acre feet $ 65.72 per acre feet Replenishment Cost 9.04 per acre feet $ 74.76 per acre feet Cost per 100 cubic feet T 17 per hundred cubic feet EXHIBIT " D" Z UJ Q w v d o Z Z Z Z j> Q >- w >- QQ w w N d U m Z 5 N-' cwn Z < z Q Z a v) Q v=i 0 �? N N N0 w Q Q a. Q O U 0 MINIMUM 1 .95 3J5 3.00 2.65 2.'s 3.00 2„15 3.00 2.50 3.00 2.65 2,.15 2.50 2.60 100'S CU. FT. ti 1 2 3 4 5 algom 6 _ ` 7 8 9 p N p — 10 20 30 h 40 N _ 50 _ 60 70 _ N c\! 1!°' 80N 90 N "'- N - N 100 200 300 _ 400 N 500 N `� a 600 — N 700 800 m 900 1000 2000 • 3000 h 4000 5000 6000 7000 8000 9000 10000 20000 - . . r