Cost of Service and Rate Study City of Port Hueneme Cost of Service and Rate Study City Council Workshop #2 December 21, 2017

Recap – Special Questions 5 Special questions plus a question about capital reserve level (Total 6 decisions before council) Two were preliminarily answered last time: RO Off Reserves = 7.5% Leaves 4 to answer today

Recap - 5 Special Questions SQ #1: How much does the City owe for Water? Shall we reduce the principal owed to the General Fund by approximately $800,000? TBD SQ #2: The General Fund loan interest rate is 5% (2008). Current interest rates are lower. Shall we “refinance” the loan to 2.87% (approximate 30-yr Treasury)? TBD SQ#3: Shall we shut down RO treatment – which saves about 90 to 100k per year? RO Off

Recap - 5 Special Questions 4. SQ#4: How much shall the City invest in Capital Replacement? Full Staff Recommended CIP ($33M over 5 years)? WMP CIP (Lower expense over the next 5 years, but long-term same amount, $19M over 5 years)? No CIP? Something else? TBD 5. SQ #5: How much fixed revenue shall the City collect through its rate structure – which affects a customers fixed charge/bill Current is about 59% So. California Average around 26 to 30%, Mid-point – 45%? Tendency to reduce the fixed charge for lower bills for low water users

Recap - Reserves Do you want to modify your reserve goals? 7.5% of asset value, was 10% Avg of Fully City is $7 M Avg of Water Master Plan CIP is $4M

End of Presentation