Page 8 March 26, 2015 EL SEGUNDO HERALD Rate Increases from front page consumption charge is based on the actual commodity (water) and the rate, which is tiered, depends on the amount of water consumed. The second component consists of a readiness to serve/operations and maintenance charge--a fixed rate based on the size of the customer’s water meter. Since 2010, the City has increased its consumption charges by the same percentage as West Basin’s pass-through increases with the goal of keeping the water division self-sustaining. It has also increased its readiness-to-serve charge in accordance with the last rate schedule adopted in 2009. In looking at how to implement the new rates, the City Council opted to consolidate the previous eight-tier rate structure into four tiers broken down into the amount of water consumed per 100 cubic feet—with each 100 cubic feet considered as one unit. The new tiers will be set between 0-10, 10-20, 20-50, and 50-plus units. Under the first tier in the new rate structure, all single-family residence water customers will pay the same rate: $2.32 per unit for the first 10 units of usage. Once they exceed that, they move to the second tier and every additional unit from 10-20 is charged at $4.27. From 20-50, the new per unit rate goes to $4.85. For over 50, it’s $4.27 per unit. According to the study, the average single-family residential water customer in El Segundo consumes 12 units per month. Here is the breakdown showing the estimated difference in the consumption cost for such a customer’s water bill starting next month. The figures shown are for monthly consumption. Since water bills cover two months of usage, the final total paid will be double. Water Consumption Monthly Charges for a 12-Unit User See Graph A Of particular note on the above, a customer who uses exactly 10 units per month will end up paying less than before for consumption ($23.95 down to $23.20, or a savings of 75 cents). Meanwhile over the next five years, water rates are projected to rise five percent annually depending on the pass-through costs from MWD. According to estimates, the $2.32 price for the first tier will jump to $2.82 by 2019. But if MWD were to raise rates, say, nine percent more instead of five, the City would adjust customer rates accordingly. “MWD has indicated that it does not plan to exceed the five percent increase in the upcoming period, though we can’t guarantee it given the drought,” Katsouleas said. “If higher than five percent, residents will ultimately pay for the actual increases, which have the potential to run a little higher than the amounts originally projected depending on what MWD does with future rates.” In addition to consumption, capacity charges (based on meter size) will also rise starting in July. A typical resident has a 5/8 x 3/4 meter. For this size, the fixed rate currently set at $9.36 will go up to $9.83 and eventually to $11.95 after five years. With that in mind, 12-unit users in July will see a $1.36 combined increase in consumption and capacity charges (from $40.21 up to $41.57). Even with the coming increases, Katsouleas noted that El Segundo water charges remain markedly lower than those of neighboring communities. The study showed that Manhattan Beach ($71.59), Hawthorne and Lawndale ($71.80), and Hermosa Beach and Redondo Beach ($55.86) all run substantially higher per month. Of all the nearby cities, only Santa Monica has lower water bills than El Segundo and that is mainly due to that city’s ability to pump groundwater to help offset its imported water supply. “We know people are not happy about having to pay higher water bills, but the City does not control the commodity cost,” Katsouleas said. “We are fortunate that El Segundo’s rates are still relatively low, all things considered.” That said, the most significant difference in future customer bills will actually result from the first sewer rate increase since 2009—also set to kick in starting in July. The three components to sewer charges address volume, readiness to serve and treatment fees. Under the new rates, the current monthly volume fee will increase from 50 to 58 cents per unit. The flat service fee now at $4.50 will increase to $5.24, while the treatment fee will swell from $10.58 to $15.59 for users west of Sepulveda. Similar to the case with MWD on the water side, the dramatic increase in sewer treatment fees is due to the pass-through costs from the Hyperion Treatment Plant to the City. Future volume and service fee increases are projected at eight percent annually. “The big jump this year in treatment fees is to realign what we are charging with what we are paying Hyperion,” Katsouleas said. The treatment fee is expected to go up another 6.7 percent in 2016-17. Because of reduced capital requirements at Hyperion projected in 2017-18 and 2018-19, treatment fees will likely not increase those years. Sewer Monthly Fees (12-Unit User/Standard Meter 3/4”) See Graph B Again looking at typical 12-unit consumers, their water/sewer bills combined will go up from $61.29 to $69.36 per month—a difference of $8.07 per month. The following chart reflects the total increase for 12-unit users with standard-size meters: Again, the final bill always reflects a two-month period, so the actual total will be $138.72 (up $16.14 from $122.58). See Graph C These rates don’t apply to those qualifying for the Lifeline low-income eligibility program. On water bills, these customers will pay only 50 percent of the first tier rate, or $1.16 per unit for the first 10 units (and then the standard rate for whatever amounts exceed 10 units). Comparing these numbers to the prior eight-tiered system for 12-unit users, those on Lifeline will actually see a slight decrease (about 38 cents per month) in the cost for their water consumption. Lifeline users will also receive 50 percent off sewer rates. Also of note, multi-family (two or more households on a parcel) and non-residential customers will now pay different rates than single family—whereas before everyone paid the same rate. Tier one will start out higher at $2.82 per unit, but the increases in tiers two through four will be less steep ($3.45, $3.65 and $3.83 respectively) than those paid by single family residence owners. In explaining why, Katsouleas said the Council did not wish to unfairly penalize customers who by default will consume water in the higher tiers when considering there are multiple families connected to a single water meter. “If you have an owner of a six-unit apartment complex where there is one water meter for that property, then the usage will show the total consumption of all the tenants combined, which will automatically bump the reading into the higher tiers even if individual users are conserving water,” she said. “Similarly, two homes in a duplex together might each use 12 units of water, but the meter will collectively show 24 units consumed, placing those users in the third tier. The alternate tier structure provides some relief for those multi-family complexes, as well as commercial and industrial customers who use a lot of water as part of their business process and are not able to significantly conserve.” In addition to trying to offset the rising costs of the water itself, the City also hopes to use the increased revenues from the rate hikes to shore up its capital improvement fund. Most glaringly, El Segundo has 65 miles of aging water mains and much of them need immediate attention. “It would cost well over $50 million to replace the entire water main system,” Katsouleas said. “Our goal is to make sure the capital program has about $3 million a year in it so we can replace one to two miles per year while also addressing other issues such as valves, meters, pumps and tanks repair and/or replacement.” And the City is also evaluating the need to build a new reservoir to meet emergency supply demand in the event of a large earthquake or other catastrophe, but the $20 million price tag is for the moment prohibitive. Katsouleas pointed out that while the City hopes to keep its enterprise funds selfsustaining, it will still continue to subsidize a portion of customer water bills even after the new increases. “A unit of water costs us $2.76 today, so if we are only charging people $2.32 for the first 10 units consumed, we are definitely covering that difference,” she said. • Graph A Graph B Sewer Monthly Fees (12-Unit User/Standard Meter 3/4”) Current Charge With July Increase Volume-Variable Cost $0.50 x 12 units = $6.00 $0.58 x 12 units = $6.96 Service Fee Fixed Cost $4.50 Fixed Cost $5.24 Treatment Fixed Cost $10.58 Fixed Cost $15.59 Total $21.08 $27.29 ($6.71 difference) Water Consumption Monthly Charges for a 12-Unit User Old Eight-Tiered Structure New Four-Tiered Structure Tier One 0-5 Units $2.0435 x 5 units=$10.22 0-10 Units $2.32 x 10 units=$23.20 Tier Two 5-10 Units $2.7467 x 5 units=$13.73 10-20 Units $4.2698 x 2 units=$8.54 Tier Three 10-20 Units $3.4497 x 2units=$6.90 Total $30.85 $31.74 ($0.89 difference) Graph C User Units Tiers Old Rate Total (Old) Tiers New Rate Total (New) Difference Single Family 12 0-5 $ 2.04 $ 10.22 0-10 $ 2.32 $ 23.20 $ (0.75) 5-10 $ 2.75 $ 13.73 10-15 $ 3.45 $ 6.90 10-20 $ 4.27 $ 8.54 $ 1.64 Commodity Cost $ 30.85 $ 31.74 $ 0.89 Meter Charge 5/8 x 3/4 $ 9.36 $ 9.83 $ 0.47 Total Water $ 40.21 $ 41.57 $ 1.36 Sewer - Variable Cost 12 $ 0.50 $ 6.00 $ 0.58 $ 6.96 $ 0.96 Treatment - Fixed Cost $ 10.58 $ 15.59 $ 5.01 Service Fee - Fixed Cost $ 4.50 $ 5.24 $ 0.74 Total Sewer $ 21.08 $ 27.79 $ 6.71 Total Monthly Bill $ 61.29 $ 69.36 $ 8.07
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