Water briefing by SJWC for elected officials

1. Water Briefing
for Elected Officials
and Staff
February 17, 2017

2. Agenda
• Introductions
• Drought Update
• Water Rates
• Looking Ahead
• Q&A
CUSTOMERS
CONSERVED 29%
2013 2016
13 BILLION
GALLONS SAVED

3. Drought Update
US Drought Monitor
January 3, 2017 February 7, 2017

4. Drought Update
■ Much improved conditions (snowpack,
reservoirs, groundwater)
■ Surcharges and allocations removed effective
February 1, 2017
■ Santa Clara Valley Water District extends 20%
conservation target
■ State Water Resources Control Board extends
water conservation emergency regulations

5. Need for Investments
■ “D” grade from American Society of Civil
Engineers
■ Infrastructure replacement era (Nation - $384
billion, California - $45 billion by 2030)
■ Investments in water system critical to provide
safe, high quality and reliable water service
■ Our turn to invest for future generations
*United States Environmental Protection Agency

6. Rate Setting Process
■ Authorized by the California Public Utilities
Commission (CPUC) through comprehensive
review process
■ Balances just and reasonable rates with safe
and reliable water service
■ General Rate Case (GRC) application once
every 3 years
■ Cost of service rates (revenue requirement)
■ Forward looking projections

7. Rate Increases
■ SJWC’s CPUC-approved rates through GRC
averaged 5.1%
■ Santa Clara Valley Water District (SCVWD)
wholesale rate increases averaged 9.6%

8. Where Your Dollar Goes
$0.38
$0.22
$0.21
$0.11
$0.08
Water Supply Operating Costs
System Improvements Taxes and Fees
Cost of Capital

9. ■ CPUC approves sale projection of 10 units of
water in coming year
■ Regulatory requirement to invert fixed-variable
proportions
■ Projected usage equals actual usage
Utility (cost of service)
- Fixed 7.00
- Variable 3.00
Total Cost $10.00
Customer Bill
- Service 3.00
- Quantity 7.00
Total Billed $10.00
Rates-Conservation Nexus

10. Customer Bill
- Service 3.00
- Quantity ($0.70/unit) 7.00
Total Billed $10.00
Customer Bill
- Service 3.00
‐ Tier 1 Quantity (1-5 @ $0.50/unit) 2.50
- Tier 2 Quantity (6-8 @ $0.82/unit) 2.46
- Tier 3 Quantity (>9 @ $1.02/unit) 2.04
Total Billed $10.00
Uniform Rate Design
Tiered Rate Design
Rates-Conservation Nexus

11. Rates-Conservation Nexus
■ 20% conservation scenario
■ Fixed costs remain same, savings on variable
costs
Utility (cost of service)
- Fixed 7.00
- Variable 2.40
Total Cost $9.40
Customer Bill
- Service 3.00
- Quantity 5.60
Total Billed $8.60
■ Deficit between cost and bill
■ Results in higher unit water rates

12. Rates and Drought Surcharges
■ Rates set based on
cost of service
■ Water Conservation
Memorandum
Account (WCMA) in
place to track
uncollected revenue
from drought rules
and restrictions
■ Drought surcharges
are price signals
designed to
encourage
conservation
■ Collected and tracked
separately
■ To be disposed of as
directed by CPUC

13. Rates and Drought Surcharges
■ WCMA 2014 ($4.3M)
■ $0.08/CCF surcharge from December 2015 through
December 2016
■ WCMA 2015 ($19.8M)
■ $0.1441/CCF surcharge from May 2016 through May
2017
WCMA 2015 $19.8M
Surcharges 2015 ($12.1M)
Net Recovery $7.7M

14. Looking Ahead
■ Conservation as a way of life
■ Maximize reliability of current supplies
■ Delta fix, reservoir upgrades/expansions
■ New water supplies critical
■ Continued pressure on water rates
■ Infrastructure replacement, water supply,
conservation, and water quality
■ Continued stakeholder engagement

15. Q&A