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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 09/24/2013 - PROPOSED 2014 UTILITY RATE AND FEES ADJUSTMENTSDATE: September 24, 2013 STAFF: Steve Catanach, Kevin Gertig, Jon Haukaas, Lance Smith Pre-taped staff presentation: available at fcgov.com/clerk/agendas.php WORK SESSION ITEM FORT COLLINS CITY COUNCIL SUBJECT FOR DISCUSSION Proposed 2014 Rate and Fees Adjustments. EXECUTIVE SUMMARY The purpose of this work session presentation and discussion is to provide City Council with a prelude of the proposed rate and fee adjustments for 2014, before consideration of First Reading of the Rate Ordinances on October 15th. The proposed rate increases are consistent or less than what was anticipated during the 2013-14 Budget process. Electric development fees are proposed to increase in 2014. Reductions in water and wastewater rates are proposed for certain rate classes. Water and wastewater plant investment fees are proposed to be adjusted downward for standard connections due to reduced average usage per customer although the per gallon per day charges are proposed to be increased. A new development fee, the Water Right Utilization Fee (WRUF), is proposed for the Water Fund to provide sufficient funding to fully utilize accepted water rights throughout the year. An increase in the permit fees associated with the Stormwater Utility to better reflect actual costs for reviewing those permits is also proposed. GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED 1. Does the Council support or have concerns phasing in the increase to electric development fees over two years? September 24, 2013 Page 2 2. Does the Council support or have concerns with the proposed changes to the water and wastewater rates? 3. Does the Council support or have concerns with the proposed changes to the water and wastewater plant investment fees? 4. Does the Council support or have concerns the adjustment to the stormwater permit fees? 5. Does the Council support or have concerns the proposed WRUF? BACKGROUND / DISCUSSION Electric Rates and Fees A 2.0% increase in Platte River Power Authority’s wholesale rates results in a retail increase of approximately 1.5%. The increased cost for purchased power is passed through to all customer classes in the energy charge of each rate schedule with no change in the associated demand charges. Since the energy charge makes up a larger portion of the overall costs of service for large customer classes, the retail rate increases will be greater for the large commercial and industrial customers. In addition, the 2014 retail increase includes the second phase of funding for the Fort Collins Solar Program. This is an additional $500,000 per year for a total of $1,000,000 in annual funding for the Council-approved program. The $500,000 is approximately equivalent to a 0.5% retail rate increase. The following graph shows the proposed retail increase by season for each customer class. The annual review of the Electric Development Fees indicates that a fee increase is necessary to insure that development costs are reimbursed properly. The increase this year is the result of both an increase in material costs and the correction of an error in the fee calculation. The model used to calculate the fees was downloading warehouse data for unjacketed 750 MCM cable and should have been using data for 220 mil jacketed 750 MCM cable. This change increased the fees for a typical single family residential lot by 6.7% and a model commercial development by 8.0%. September 24, 2013 Page 3 Staff is presenting two options to the Energy Board and to City Council. The first is full implementation of the increase in 2014 and the other is to level the increase over a two year period, half in 2014 and half in 2015. Staff recommends phasing the increase over a two year period. Water Rates and Fees The rate increases proposed for the Water Utility are the same as those outlined in the adopted 2014 budget. For the Water Utility, a 4% increase is requested ,with 3% for capital improvements and 1% for ongoing potential expenses related to the High Park Fire. The proposed increase will vary by rate class. The cost of service study which forms the basis for allocating costs between rate classes and thereby the rate adjustment for each rate class has been updated in 2013. The proposed 2014 overall increase of 4% based on the cost of service study results in the rate class specific adjustments as shown in blue below. These changes are not in keeping with the principle of gradualism in rate design so staff is recommending that the adjustments to the rate classes are smoothed with the rate class specific adjustments as shown in green. The plant investment fee model has also been updated in 2013. As a result of effective conservation efforts, the average use per customer has decreased in recent years. The impact of this change in customer behavior is to lessen the amount of plant capacity necessary to treat a new customer. This results in a decrease in the plant investment fees for standard tap sizes in 2014. Increased capital investments limited this decrease as the cost per gallon of treatment will increase in 2014. For connections 3 inches and larger, it is recommended that the plant investment fee be based on specific customer requirements. Currently, any connection larger than 3 inches is treated this way. Staff is recommending extending this to 3-inch connections to maintain consistency between the water and wastewater plant investment fee calculations (see staff recommendation below for more explanation on why this change is being recommended). September 24, 2013 Page 4 A new fee is being proposed for the Water utility. This fee, called the Water Right Utilization Fee (WRUF), is necessary to ensure that new development not only provides water rights necessary to serve the development but also the capital associated with developing the water storage required to fully utilize those water rights. Currently, the City of Fort Collins accepts water rights from several different irrigation companies to meet the raw water requirements for development purposes. Some of these water rights come with short-term storage, but most do not have any storage associated with them. Many of these rights are for ditches which only flow during the peak runoff each year. In order to fully utilize those rights to meet the demand for water throughout the year it is necessary to have sufficient storage capacity. Because the duration and magnitude of the flows from each of the irrigation ditch companies is unique, the amount of such storage depends on the specific water rights. Thus, the new fee will vary by the water right source. This fee will be presented and discussed as a separate agenda item at the same Council work session as this item. Wastewater Rates and Fees The 3.0% overall rate increase proposed for the Wastewater Utility is what is in the adopted 2014 budget. As with the Water Utility, the proposed increase will vary by rate class based on an updated cost of service study. The proposed 2014 overall increase of 3%, based on the cost of service study results in the rate class specific adjustments as shown in blue below. Staff is recommending that September 24, 2013 Page 5 the adjustments to the rate classes are smoothed with the rate class specific adjustments as shown in green. The wastewater plant investment fee model has also been updated in 2013. As with the Water Utility, effective conservation efforts have reduced the average use per customer in recent years resulting in a decrease in the proposed plant investment fees for standard tap sizes in 2014. The table below summarizes the proposed plant investment fees. September 24, 2013 Page 6 The second to last row of the table above is highlighted to show the significant increase in the average volume for 3 inch connections and the resulting model increase of 43.9% in the plant investment fee. Rather than treating every new 3-inch service connection the same and applying a standard plant investment fee, it is recommended that 3-inch connections be treated the same as larger connections by basing the plant investment fee on specific customer requirements. Stormwater Fees Although no rate adjustment is proposed for the Stormwater utility in 2014, Chapter 10 (Flood Prevention and Protection) of the City Code specifies three review fees associated with floodplain administration: • An applicant for a floodplain use permit shall pay twenty-five dollars ($25); • An applicant who is required to furnish a floodplain modeling analysis shall pay an additional fee of three hundred dollars ($300.); and • An applicant who is requesting a variance shall pay a variance processing fee of three hundred dollars ($300). These fees and their respective dollar amounts have not increased since they were originally adopted. The current fees do not provide a mechanism to properly account for the significant review times associated with certain types of floodplain reviews, including Conditional Letters of Map Revision (CLOMRs), Letters of Map Revision (LOMRs) and variance requests. Stormwater Master Planning and Floodplain Administrative (Stormwater) staff recommend that a new fee structure be established to better assign costs to floodplain review applicants. The intent of the proposed floodplain administration review fees is to institute a “user pay” approach wherein an applicant who is requesting floodplain review services pays for those instead of having those costs charged to stormwater utility customers through existing stormwater service fees. Stormwater staff performed an internal analysis using data collected over the last 3 years to determine the approximate average amount of staff time associated with specific floodplain reviews. The results show that the current review fees do not appropriately reflect the staff effort necessary to perform the review functions. The floodplain permit application fee is proposed to increase from $25 to $50. The proposed fee structure has categories of review fees that would be collected based on the level of review. In order to promote more complete submittals and reduce the number of floodplain analysis/CLOMR/LOMR reviews, staff has proposed a fee structure that collects an initial fee for up to 2 reviews. Each additional floodplain analysis/CLOMR/LOMR review after the first 2 reviews would have a $500 fee plus $50 for each review hour over 10 hours. This concept is similar to that used by several other Colorado communities. The variance fee is also proposed at $1,000 to better reflect the average number of hours (20) of staff review and preparation time associated with presenting the variance to the Water Board. Typical Residential Utility Bill The standard residential customer’s bill will increase in 2014 under the proposed rate changes by 4.0% in the summer and 3.4% the rest of the year. The tables below show the impacts of each of the proposed rate changes on the overall utility bill. September 24, 2013 Page 7 ATTACHMENTS 1. Powerpoint presentation 1 2014 Utility Rates and Fees City Council Work Session September 24, 2013 2 Agenda  Electric Utility  Water Utility  Wastewater Utility  Stormwater Utility 3 Electric Utility 4 Electric Rate Increase  Two components in 2.0% increase  + 1.5% retail impact from Platte River Power Authority’s wholesale rate increase  + 0.5% for the Fort Collins Solar Program 5 Impacts by Rate Class & Season 6 FULL IMPLEMENTATION IN 2014 Current 2013 Proposed 2014 $ Change % Change $3,156 $3,366 $210 6.7% Current 2013 Proposed 2014 $ Change % Change $30,471 $32,895 $2,424 8.0% Typical Single Family Lot 8600 square feet, 70 foot of street frontage, 150 amp service, 4/0 secondary service Model Commercial Development 82,000 sq ft, 190 ft street frontage, 250 ft primary srv, 600 amps, 208Volt, 3-phase, 1-transformer Option 1: Implement the full increase in 2014 Electric Development Fees 7 50% IMPLEMENTATION IN 2014 Current 2013 Proposed 2014 $ Change % Change $3,156 $3,261 $105 3.3% Current 2013 Proposed 2014 $ Change % Change $30,471 $31,683 $1,212 4.0% Model Commercial Development 82,000 sq ft, 190 ft street frontage, 250 ft primary srv, 600 amps, 208Volt, 3-phase, 1-transformer Typical Single Family Lot 8600 square feet, 70 foot of street frontage, 150 amp service, 4/0 secondary service Option 2: Implement 50% of the increase in 2014 and the remainder plus any additional changes in 2015 Electric Development Fees 8 Water Utility 9 Water Rate Increase  Two components in 4.0% increase  + 3.0% for increased capital investment in infrastructure  + 1.0% for additional costs associated with the High Park Fire  Updated Cost of Service study 10 Impacts by Rate Class 9.0% ‐16.4% ‐1.8% 7.7% 3.5% 4.0% 6.6% ‐5.0% 0.0% 5.3% 3.5% 4.0% ‐20.0% ‐15.0% ‐10.0% ‐5.0% 0.0% 5.0% 10.0% 15.0% Single Family Multifamily Duplex Commercial High Volume Industrial System‐wide 2013 Water Cost of Service Study Recommendations for 2014 Rates COS Recommendation Staff Recommendation  Staff recommends gradual rate adjustments 11 Plant Investment Fees 2013 2014 Customer Class / Meter Size Peak Day Usage PIF Fee Peak Day Usage Change PIF Fee Change gpd $ gpd % $ % PIF $/gpd $ 4.26 $ 4.43 4.0% Single Family Res Domestic Use (base) 172 $730 162 -6% $720 -1.4% Peak Use (per sqft) 785 $0.39 627 -20% $0.32 -17.9% Multi-family (per unit) Domestic Use (base) 120 $510 121 1% $540 5.9% Peak Use (per sqft) 217 $0.27 192 -12% $0.25 -7.4% Nonresidential Meter Size inches 3/4 1,850 $7,880 1,580 -15% $7,000 -11.2% 1 5,340 $22,750 4,300 -19% $19,050 -16.3% 1 1/2 11,130 $47,410 9,390 -16% $41,600 -12.3% 2 16,970 $72,290 14,540 -14% $64,410 -10.9% 3 38,800 $165,290 32,730 -16% $144,990 -12.3% > 3 inches Based on specific customer requirements 12 Water Right Utilization Fee  In addition to Raw Water Requirement  Necessary to fully utilize accepted water rights  Specific to the irrigation company 13 Wastewater Utility 14 Wastewater Fund  Per 2014 City Budget 3.0% rate increase  Increase necessary for capital improvements  Updated Cost of Service study  Plant Investment Fees for 3” connections specific to customer like > 3” connections 15 Impacts by Rate Class  Staff recommends gradual rate adjustments 7.5% ‐5.6% 4.2% ‐3.6% 3.0% 6.1% ‐2.5% 2.8% ‐1.5% 3.0% ‐8.0% ‐6.0% ‐4.0% ‐2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% Single Family Duplex Multifamily Commercial System‐wide 2013 Wastewater Cost of Service Study Recommendations for 2014 Rates COS Recommendation Staff Recommendation 16 Plant Investment Fees Current Fees Proposed 2014 Volume Volume gpd Proposed Fee Customer Class 05-'08 data Fees 09-'12 data Change PIF Change gpd $ gpd % $ % PIF $/gpd $ 11.46 $ 12.35 7.8% Single family Res 300 $ 3,440 250 -17% $ 3,090 -10.2% Duplex & Multi-fam 210 $ 2,410 200 -5% $ 2,470 2.5% Nonresidential Meter Size (inches) 3/4" 600 $ 6,880 530 -12% $ 6,550 -4.8% 1" 1,510 $ 17,300 1,250 -17% $ 15,440 -10.8% 1 1/2" 2,660 $ 30,480 2,420 -9% $ 29,890 -1.9% 2" 4,670 $ 53,520 4,760 2% $ 58,790 9.8% 3" 12,680 $ 145,310 16,930 34% $ 209,090 43.9% > 3 inches Based on specific customer requirements 17 Stormwater Utility 18 Stormwater Fund  Per 2014 City Budget no rate increase  Proposed adjustments to Floodplain Permit fees  No changes to these fees since adoption  New rates based on actual cost of reviews Stormwater Permit Fees Current $ Proposed $ Floodplain Use Permit $25 $50 Floodplain Model Analysis Review $300 $500 Floodplain Variance $300 $1,000 19 Typical Residential Utility Bill 20 Typical Residential Summer Utility Bill SUMMER Current 2013 Estimated 2014 $ Increase % Increase Electric 700 kWh / mo Wastewater 4,800 gal / mo WQA Stormwater 8,600 sq. ft. lot, light runoff Water 15,000 gal / mo Total Estimated Average Monthly Utility Bill $ 30.87 $ 32.76 $ 14.26 $ 14.26 $ - Typical Residential Customer - Monthly Utility Bill 4.0% 6.6% $ 6.75 $ 3.52 $ 174.71 $ 56.89 $ 167.96 $ 53.37 0.0% $ 69.46 $ 70.80 $ 1.34 1.9% $ 1.88 6.1% 21 Typical Residential Winter Utility Bill WINTER Current 2013 Estimated 2014 $ Increase % Increase Electric 700 kWh / mo Wastewater 4,800 gal / mo WQA Stormwater 8,600 sq. ft. lot, light runoff Water 15,000 gal / mo Total Estimated Average Monthly Utility Bill $ 26.59 $ 28.35 $ 1.76 6.6% $ 133.96 $ 138.57 $ 4.61 3.4% 6.1% $ 14.26 $ 14.26 $ - 0.0% $ 30.87 $ 32.76 $ 1.88 $ 62.24 $ 63.21 $ 0.97 1.6% Typical Residential Customer - Monthly Utility Bill 22 Rate Communication Plan 23 Rates Communication Plan • Outcome of plan • Communication based on type of customer • Focus on:  Why  What  Rates  Fees  Conservation Programs 24 Rates Communication Plan Key Activities: • News releases • Residential – Year-End Brochure in utility bill – Newsletters – Website/social media • Commercial – Three commercial rate brochures with letter – Website/social media 25 Rates Communication Plan Key Activities (cont.): • Key Accounts – Key Account Meetings – One-on-One with brochures –Email – Website/social media • Special Interest Group – Presentations – Newsletter Articles 26 In Summary  2014 Proposed Rate Increases:  Electric 2.0%  Wastewater 3.0%  Water 4.0%  Stormwater 0.0%  Plant Investment and Development Fees updated  New Water Utilization Fee proposed 27 Questions and Discussion