1. 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

2. 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

3. 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

4. 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

5. 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

6. Fiscal Impact

7. 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