CITY OF LINCOLN AD HOC WATER RATE COMMITTEE MEETING #6 - AGENDA Monday, May 22, 2017, 3:00 PM City Hall - First Floor Meeting Room  I. II.  Summary of Prior Committee Meeting  Proposed Uniform Volumetric Rate Structure  IlI. Potential Peak Day Additional Capacity Charge  IV. Parking Lot Issues  V. Committee Final Recommendations    RAFTELIS dc FINANCIAL CONSULTANTS.INC.  City of Lincoln  Water Rate Study  6th Water Rate Committee Meeting  May 22,2017    TODAY's AGENDA  1. Summary of Prior Committee Meeting  2. Proposed Uniform Volumetric Rate Structure  3. Potential Peak Day Additional Capacity Charge  4. "Parking Lot Issues"  5. Committee Recommendations    Summary    PREVIOUS MEETING SUMMARY  1. Continued Zone B/ PCWA Capacity issues discussion  2. Presented three rate options A. Citywide Uniform Rate  B. Uniform Rate by Zone - Recovery of approx. $4 M of 2006  PCWA Costs  C. Uniform Rate by Zone with Additional Capacity Costs-  Includes 2006 PCWA cost recovery  D. Committee seemed to prefer Citywide Uniform Volumetric  Rate without recovery of prior 2006 PCWA costs  3. Introduced Additional Capacity concept - two possible  methodologies presented  4. City to review costs of installing AMI for Zone B 5. City to provide PCWA/NID WCCaccounting    Volumetric Rate Structure    CITYWIDE UNIFORM VOLUMETRIC RATE  FOR ALL CUSTOMERS  This volumetric uniform rate to be applied citywide  Customers will also be charged a fixed charge per account,  based on meter size  Uniform Rate component Calculation  Line #  Total  1  Total Variable Costs to be Recovered  $6,917,860  2  Total Use (K gal)  2 2,486,121  3  Uniform Rate for All Customers ($/ Kgal)  $2.79  Note: Above rate does not include most latest changes to City's water budget,  although indications are that changes will be minimal.    Peak Day Additional  Capacity Charge    CURRENT ZONE B EDUS  AND PEAK DEMAND  City of Lincoln  Status of Zone B (Unregulated Zone) Water EDU's  EDU's 632.15  Current PCWA Unregulated Contract  Building Permits for Unregulated EDU's as of. June 30, 2016:  Residential Irrigation & Commercial  706.00 68.54  Total Paid EDU's as of June 30, 2016  774.54 75.00 849.54  Building Permits Issued-  July 1, 2016 to April 15, 2017:  Total Paid EDU's as of April 15, 2017  July 31, 2016- Unregulated peak day demand  989.57 215.03  EDU Consumption in excess of Paid EDU's (989.57-774.54)  Data provided by the City of Lincoln    TOTAL ZONE B MAX DAY USE Vs.  CAPACITY PURCHASED (2016)  Line #  1 Current PCWA Unregulated (Zone B) Capacity (EDUS)  632.15  2 2006 Purchased EDUS  + 3 351.70  3 Total Unregulated (Zone B) Purchased Capacity in EDUS  983.85  4 Peak Day EDU Use (July 31, 2016)  989.57  5 Surplus (Shortfall) EDUS (assuming same Peak Day use)  (5.72)  Source: City of Lincoln    WHAT WILL TRIGGER A NEED FOR  ADDITIONAL EDU CAPACITY?  Additional capacity charges will only be calculated and applied to accounts exceeding PCWA EDU peak day allotments when capacity is  exceeded and PCWA bills the City for additional capacity  Based on historic usage data, it is unlikely that additional capacity will be required in Zone A (regulated water) for existing accounts Even with the already purchased PCWA EDU capacity 632.15 + 351.7=983.85 EDU, current purchased capacity has been exceeded in Zone B on peak water use days (by 5.72 EDU, see slides 8 and 9) Additional capacity charges will not likely be charged to the City by PCWA until the new pipeline and additional 8" meter is installed in  Zone B (unregulated water zone)  Ifthe total unregulated water capacity is exceeded on any given day, PCWA will charge the City additional Water Connection Charges (WCCs) per gallon based on total Peak Day water capacity needs  10    ADDITIONAL CAPACITY CHARGES  OTHER CONSIDERATIONS  To the extent that average Zone B Peak Day water usage is reduced, the need to purchase additional capacity in Zone B  will be commensurately reduced  Only those accounts that are estimated to cause the additional  PCWA WCC charges to the City will be charged  Additional EDU capacity purchased by the charges will be added to the capacity of the accounts charged going forward; the city will need to adjust and track these accounts  accordingly  Additional Capacity Charges would be fully due upon billing  11    WCC PEAK DAY ADDITIONAL CAPACITY  CHARGE: ONE POSSIBLE METHODOLOGY  Identify the accounts causing either Zone (A or B) to  exceed purchased EDUS  Apply a Maximum Day ("Max Day") Factor derived from the City of Lincoln Draft Water Master Plan to monthly water consumption data available by  account  Charge accounts exceeding the max day capacity for number of gallons based on their current purchased  capacity (e.g., # EDUS X 1,150 GPD)  See slides 13 and 14 for example of calculations  12    DERIVATION OF PROPOSED ADDITIONAL  CAPACITY CHARGE (WCC)  This method assumes that specific peak day account data is unavailable.  Line #  Max Day Factor  1 System-Wide Max Day Factor 2 Zone B Max Month Factor  2.00 1 1.72 1.16  3 Ratio of Max Day to Max Month  Line # Cost Per GPD of Capacity  1 PCWA Capacity Charge per EDU  $18,337 1 1,150 $15.95  2 GPD Per EDU  3 $ Per Gallon (of Max Day Capacity)  13    EXAMPLE PEAK DAY  CAPACITY CHARGE CALCULATION  Line #  Sample Calculation  1 Max Month Use 2 Days (July)  35,000 +31 1,129 x1 1.16 1,313 1,150 163 x $15.95 $2,599.85 40,70  3 Average Gallons per Day  4 Ratio of Max Day to Max Month 5 Projected Gallons on Max Day 6 Max Day Capacity (GPD) Per EDU 7 Max Day Gallons Above Capacity  8 $ Per Gallon ($18,337/EDU *1 EDU/1,150GPD)  9 Charge For Exceeding Capacity by Projected 163 Gallons 10 Revised Monthly Maximum Capacity for account  11 Days (July)  12 Revised Maximum Gallons per Day Before Triggering Additional Charges  I  1,3 14    USE OF AMI FOR ADDITIONAL CAPACITY  CHARGE CALCULATIONS  More detailed account data could be available if AMI isi implemented in Zone B (at a minimum cost of approximately $300,000) to replace Max Day Factor  estimates  AMI will provide actual Peak Day values and city will not have to use calculations to estimate peak day  water use  Additionally, AMI will help customers be cognizant of their peak day usage in real time and allow them to voluntarily conserve to avoid going over capacity and  incurring charges.  15    "Parking Lot" Issues    CITY OF LINCOLN  ZONE B CONTRIBUTIONS AND COSTS  Line #  1 Credit for 67% of City Water impact fees paid by Zone B  $2,423,000  2 Credit for Capital Replacement funding to date  $319,055  3 5 Year R&R (See slides 18-19 for calculations)  +$1,010,660  4 Total funding to be provided by Zone B  $3,752,715  5 215.03 EDUS on July 31,2016 (Max Day Peak) based on EDU cost of $18,337 (Cost in Zone B)  $3,943,005  Source: City of Lincoln; RFC for Line 3 calculations  17    ZONE B R&R CALCULATION  Line #  From Volumetric Revenue  1 2 3 4 5  Total 5 Year R&R Costs (Inflated) % of Capital Funded by Volumetric Rates Total Volumetric Capital Recovery Zone B's % of Total Consumption  $19,431,995 x90.51% $17,587,865 x5 5.43% $954,448  Projected Zone B Variable Contribution to Pipeline R&R  Line #  From Fixed Charge Revenue  1 2 3 4 5  Total 5 Year R&R Costs (Inflated) % of Capital Funded by Fixed Charges Total Fixed Charge Capital Recovery Zone B's % of Fixed Charge Payments  $19,431,995 x9.49% $1,843,130 x 3 3.03% $56,21  Projected Zone B Fixed Charge Contribution to Pipeline R&R  18    ZONE B R&R CALCULATION  (CONT.)  Line # 1 2 3  Total Cost  Projected Zone B Variable Contribution to Waterline R&R Projected Zone B Fixed Charge Contribution to Waterline  $954,448 +$56,212 $1,010,660  R&R  Zone B's Total Projected Pipeline R&R Cost (5 years)  Note: Calculations in slides 18 and 19 vary slightly from "hand"  calculations due to rounding.  19    CITY OF LINCOLN PCWA/NID WCC  FUND ACCOUNTING  Line #  Water Connection Charge (WCC) Fund - Current Cash  1  Balance  $26,109,967  Prepaid Capacity (Regulated) - Prepaid PCWA WCC's for projects (primarily Twelve Bridges) in Zone A. Phase 3 Pipeline Construction - Funds committed to construct PCWA Phase 3 pipeline along eastern border of  2  $11,791,969  3  the City.  $3,866,000  Zone B Payments Received since July1,2016 -Funds reserved to purchase additional PCWA EDUS for new Zone  4  B development  $751,817  NID Treatment Plant project - City Council has been and will continue to review the timing and funding participation  5  level of a new treatment plant with NID.  $9,700,181  $0  All data provided by City of Lincoln.  20    ZONE B IRRIGATION USAGE  The following is the City of Lincoln Department of Public Work's estimate of EDU savings due to transition of three accounts in Zone B from potable to  irrigation "ditch" water.  031082  031080  030561 Usage of meters to All Irrigation Meters  Month Sep-16 Aug-16 Jul-16 Average Summer Month Usage Average EDUS  Usage (K gal) Usage (Kgal) Usage (K gal) be converted (K gal) Usage (K gal)  145 128 163  1,345 1,374 1,363  593 573 154 440.00 12.57  2,083 2,075 1,680 1,946.00 55.60  3,549 3,433 3,123 3,368.00 97.60 102.87 60.38  145.33 1,360.67 4.15  38.88  Max Month Irrigation EDUS (Sep-16) Max of Converted EDUS Remainder of EDUS required for Irrigation Purposes in Zone B  (Detailed calculations shown in next slide.)  42.49  21    ZONE B IRRIGATION USAGE (CONT'D)  Due to Max Month water usage, 42.49 EDU will still be needed. (Max Day requirements would likely be even higher.) No reimbursements for  converted accounts are therefore indicated.  031082  031080  030561 Usage of Meters to All Irrigation Meters  Max Month Sep-16  Usage (K gal) Usage (K gal) Usage (K gal) be Converted (gal) Usage (gal)  145  1,345  593  2,083,000 +30 69,433 +1,150 60.38  3,549,000 +30 118,300 +1,150 102.87 60.38  Days in Max Month Average Gallons per Day Gallons per EDU Average EDUS Needed for Irrigation Per Day Average Max Month Use of Converted EDUS Remainder of EDUS required for Irrigation Purposes in Zone B after Conversion of3 Accounts to "ditch" Water  42.49  22    COMMITTEE RECOMMENDATIONS  FOR REVIEW AND VERIFICATION  33% Operating Reserve Fund Rate  Mid-Range (10 year) Pipeline Repair and Replacement CIP  Single citywide, uniform volumetric rate  Additional Capacity Charge, to be imposed when necessary  AMlinstallation in Zone B  23