HomeMy WebLinkAboutI-10 Staff Report - Annual Adjustment of Replacement Water Cost Adjustment FactorUB CONSENT ITEM
I-10
TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY
BOARD
FROM: MANNY ROBLEDO, DIRECTOR OF UTILITIES
DATE: JUNE 15, 2020
SUBJECT: ANNUAL ADJUSTMENT OF REPLACEMENT WATER COST
ADJUSTMENT FACTOR
BACKGROUND:
The Replacement Water Cost Adjustment Factor (RWCAF) water rate schedule authorizes the
recovery of replacement water costs incurred by Azusa Light & Water pursuant to the delivery of
potable water to its customers from the Main San Gabriel Valley Water Basin. Effective July 1,
2020, the Replacement Water Cost Adjustment Factor (RWCAF) will be decreased from
$0.5318 to $0.4888 per hundred cubic feet of water (CCF). The RWCAF is based on actual
replacement water charges and assessments paid to the Main San Gabriel Basin Watermaster
(Watermaster) and the San Gabriel Valley Municipal Water District (SGVMWD) and a
projection of such charges through June 30, 2021. The RWCAF requires an annual calculation to
be performed and the Director of Utilities to inform the Utility Board of any adjustments.
RECOMMENDATION:
Staff recommends the Utility Board take the following action:
1)Receive and file this information report.
ANALYSIS:
ALW is part of an adjudicated basin under the administration of a court appointed Watermaster.
The rules of the adjudication give the Watermaster the authority to assess each acre foot of water
produced in the basin a Resource Development Assessment (RDA) for the purpose of purchasing
supplemental water. On May 13, 2020, the Watermaster Board approved a change in the RDA
from $140 per acre foot in the current fiscal year to $175 per acre foot in FY 2020-21 for all
APPROVED
UTILITY BOARD
6/15/2020
Annual Update of RWCAF
June 15, 2020
Page 2
water agencies in the Basin. The RDA of $175 per acre foot will be included in the RWCAF
formula effective July 1, 2020 and will impact ALW assessments by an estimated $3,090,399.
SGVMWD is responsible for importing and transmitting state water allocated to its members –
Azusa, Monterey Park, Alhambra, and Sierra Madre. State water imported by the district satisfies
about 40% of ALW’s demand. The March 2016 Water Rate Study performed for ALW by NBS,
established a baseline Water Replacement cost for Replacement Water of $795,500. Based on
the district rate of $200 per acre foot for FY 2020-21, this amounts to a baseline delivered water
volume of 3,978 AF. Based on SGVMWD’s rate for water delivered by Watermaster, ALW’s
cost to replace water pumped from the Basin is estimated to be $454,790 for FY 2020-21.
By this memorandum, Staff is providing notice to the Utility Board, as required by the Water
Rate Schedule, that the RWCAF was re-calculated and the new rate will be adjusted to $0.4888
for FY 2020-21 from the rate of $0.5318 set previously in January 2020. The RWCAF will be
decreased to $0.4888 effective July 1, 2020 and will be applied to all water bills beginning the
first billing cycle of the new fiscal year.
Accordingly, ALW’s lower RWCAF will provide estimated total Replacement Water cost of
$3,545,189 ($1,651,750 for City of Azusa production and $1,893,439 for Azusa Valley Water
Company production). Calculations were based on FY 2020-21 projected water sales of
7,252,771 CCF.
FISCAL IMPACT:
The RWCAF is designed to offset the costs of water supply against forecasted sales; therefore,
the pass-through transaction will not have any anticipated fiscal impact.
Prepared by: Reviewed and Approved:
Danny Smith Manny Robledo
Utilities Administrative & Financial Services Manager Director of Utilities
Reviewed and Approved:
Sergio Gonzalez
City Manager
Attachments:
1) Replacement Water Cost Adjustment Factor Worksheet
Replacement Water Cost Adjustment Factor (RWCAF) Worksheet
FY 2020-21 Annual Re-Calculation
Water Production (P)
2019-2020 Groundwater (CCF)Surface Water (CCF)Totals (CCF)
July 529,974 278,048 808,022
August 522,771 306,243 829,014
September 461,017 308,824 769,841
October 442,101 298,142 740,243
November 358,157 248,449 606,606
December 279,375 198,209 477,584
January 423,815 90,227 514,042
February 418,274 126,430 544,704
March 289,986 214,372 504,358
April 341,250 178,663 519,913
May 469,736 233,382 703,118
June *427,005 247,995 675,000
FY Total (CCF)4,963,461 2,728,984 7,692,445
FY Total (AF)*11,394.54 6,264.89 17,659.42
* Previous year production data Estimated Miller Sales (AF)560
Net Production (FY
Total Production less
Miller) in AF 17,099.42
Integrated Production Rights (R)150,000
Pumping Right (AF)Pumping Component Share Diversion Right (AF)Totals (AF)
City of Azusa 224.82 0.14988%363.00 587.82 Resource Development Assessment $175
Azusa Valley Water Company 10144.49 6.76299%3422.00 13566.49 SGV Replacement Water $200
Miller 1800.71 1.20047%Upper District Replacement Water $980
Total IP Rights 14154.31
RWCAF
(R)City of Azusa Rights (AF)587.82 (R)Azusa Valley Water Company Rights (AF)13566.49
(P)Production (less Miller) x 40% (AF)6839.77 (P)Net Production X 60% (plus Miller) (AF)10819.65
($)Production x $175 RDA Assessment 1,196,959.66$ ($)Production x $175 RDA Assessment 1,893,439.50$
(W) = (R - P)Replacement Water Obligation (AF)6251.95 (W) = (R - P) ***Replacement Water Obligation (AF)0
(W) - 4,300 AF baseline **Replmt Water Oblig. above baseline (3,978 AF)2273.95 **Replmt Water Oblig. above baseline (3,978 AF)0
($)454,789.90$ Replmt Water Oblig. X $980 Upper District Rate -$
RWCAF = Total ($)/(S)Total Costs/Total Estimated Sales (p/CCF)0.2277$ RWCAF = Total ($)/(S)Total Costs/Total Estimated Sales (p/CCF)0.2611$
(S) Total Estimated Sales for FY20-21 (CCF)7,252,771 Total Net Increase 3,545,189.06$
RWCAF for FY20-21 per CCF 0.4888$
CCF = Hundred Cubic Feet
AF = Acre Feet (435.6 CCF)
WM = Main San Gabriel Basin Watermaster
SGV = San Gabriel Valley Municipal Water District
* Previous year production data
**ALW Water Division Rate Study performed by NBS in 2016 accounted for $795,500 in Replacement Water Requirement expenses. At the current SGV rate of $200 AF, this would
equal 3,978 AF. The RWCAF includes replacement water obligations and assessments above what is covered in existing water rates to maintain cost of service.
See March 2016 NBS Water Rate Study Final Report - Azusa Light & Water, Cost of Service Analysis - Appendix C Table 18.
***Replacement Water Obligation under USGVMWD is 0 and leaves an excess of 2,482.24 AF of available water rights for cyclic storage or temporary leases.
Replmt Water Oblig. X $200 SGV Rate
San Gabriel Valley Municipal Water District (SGV)Upper San Gabriel Valley Municipal Water District (USGVMWD)
Safe Yield (AF) Adopted May 2, 2018 Main San Gabriel Basin Watermaster Assessments per AF:
Attachment 1