HomeMy WebLinkAboutF-1.1 Annual Adjustment of Replacement Water Cost Adjustment Factor for FY 23-24INFORMATION ITEM F-1
TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY
BOARD
FROM: TIKAN SINGH, GENERAL MANAGER
DATE: JUNE 26, 2022
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 delivering
potable water to its customers from the Main San Gabriel Basin. Effective July 1, 2023, the
RWCAF will be decreased from $0.9350 to $0.6026 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) with a projection of such charges through June 30, 2024. The RWCAF requires an
annual calculation to be performed and the General Manager to inform the Utility Board of any
adjustments.
RECOMMENDATION:
Staff recommends that 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 by a Resource Development Assessment (RDA) for the purpose of
purchasing supplemental water. On May 4, 2022, 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 2023-24 for all
water agencies in the Basin. The RDA of $175 per acre-foot will be included in the RWCAF
formula effective July 1, 2023, and will impact Azusa Light & Water (ALW) assessments by an
estimated $3,917,111.
Approved
Utility Board
06/26/2023
Annual Adjustment of RWCAF
June 26, 2023
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 2023-24, 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 $624,331 for FY 2023-24.
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 $0.6026
for FY 2023-24 from the rate of $0.9350 set previously in July 2022. The RWCAF will be
decreased to $0.6026 effective July 1, 2023, 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 an estimated total Replacement Water cost of
$3,917,111. Calculations were based on FY 2023-24 projected water sales of 6,500,000 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 Tikan Singh
Utilities Administrative & Financial Services Manager General Manager
Reviewed and Approved:
Sergio Gonzalez
City Manager
Attachments:
1) RWCAF Replacement Water Cost Adjustment Factor Worksheet FY 23-24