HomeMy WebLinkAboutF-1.1. Annual Adjustment of Replacement Water Cost Adjustment Factor for FY 21-22INFORMATION ITEM
TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY
BOARD
FROM: MANNY ROBLEDO, DIRECTOR OF UTILITIES
DATE: JUNE 28, 2021
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 Basin. Effective July 1, 2021, the
Replacement Water Cost Adjustment Factor (RWCAF) will be decreased from $0.4888 to
$0.4319 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, 2022. 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 5, 2021, the Watermaster Board approved the RDA per acre foot to
remain the same as the current fiscal year at $175 per acre foot in FY 2021-22 for all water
agencies in the Basin. The RDA of $175 per acre foot will be included in the RWCAF formula
effective July 1, 2021 and will impact ALW assessments by an estimated $3,480,441.
F-1Approved
Utility Board
6/28/21
Annual Update of RWCAF
June 28, 2021
Page 2
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 2021-22, 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 $55,408 for FY 2021-22.
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 $0.4319
for FY 2021-22 from the rate of $0.4888 set previously in July 2020. The RWCAF will be
decreased to $0.4319 effective July 1, 2021 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
$3,480,441 ($1,293,751 for City of Azusa production and $1,958,126 for Azusa Valley Water
Company production). Calculations were based on FY 2021-22 projected water sales of
8,058,588 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) RWCAF Replacement Water Cost Adjustment Factor Worksheet FY 21-22