Drought Rate Study Continued from May 19, 2015 CITY OF SAN JUAN CAPISTRANO Drought Rate Study Continued from May 19, 2015 Water Drought Rate Study for City Council Discussion and Consideration June 2, 2015

State Order and Revised Ordinance State Water Resources Control Board mandate 28% reduction June 2015 through February 2016 based on calendar year 2013 Fiscal impact $2.76 million Reduced sales Groundwater plant local supply reduction Drought related implementation and management costs Proposed cost mitigations $1.18 million Total estimated impact $1.58 million

Drought Rates, Allocations, or Surcharge Personal Services Agreement to Raftelis Financial Consultants, Inc; not to exceed $37,016 Perform drought rate analysis to set drought rates, allocation changes, surcharges Utilize rate model recently completed (last year) Staff would return with drought rate analysis at the July 21, 2015 meeting If approved, implement Prop. 218 process with new rates Will require a Proposition 218 process implemented by November 1, 2015 (60 day process) Appropriate $37,016 to Water Operations Fund

Drought Rate or Surcharge vs Penalties Penalties would go into effect quickly- as soon as they can be programmed into the next billing cycle Penalty revenues may be reinvested back to the community to pay for incentives and other water conservation programs If drought limits are met, there would be no revenues Drought rates require a rate model/study update and a Proposition 218 process and would go into effect Mid-August or early September

Drought Rate or Surcharge vs Penalties Drought rate revenue pays for loss of sales, increased supply costs, and other drought incurred costs Drought rates wouldn’t go away until lost revenues and additional drought costs are recovered Once drought rates are in place, penalties could be reduced/eliminated Incentive program costs could be included in rate study

Fiscal Impact

Items for Discussion/Consideration: Approve a Personal Services Agreement with Raftelis Financial Consultants, Inc. to develop drought rates Appropriate $37,016 from Water Operations Fund (60) deficit reserve