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ATTACHMENT 3 E PMADgq P `le�` ALAMEDA COUNTY FLOOD CONTROL AND WATER CONSERVATION DISTRICT,ZONE 7 �O� 57 100 NORTH CANYONS PARKWAY,LIVERMORE,CA 94551-9486 • PHONE(925)454-5000 19 o�0 9A 4 � R 0,, iL000 QQ ' ORIGINATING SECTION:ADMINISTRATION CONTACT:Osborn Solitei AGENDA DATE: October 17, 2018 ITEM NO. 9 SUBJECT: Treated Water Rates for Calendar Years 2019-2022 SUMMARY: • In 2015, Zone 7 hired Raftelis to prepare a Wholesale Water Rate Study to determine treated water rates for Calendar Years 2016,2017 and 2018. • Calendar Year 2018 is the last year of the adopted rate schedule. Zone 7 has hired Raftelis to conduct another Wholesale Water Rate Study to determine a four-year rate schedule for Calendar Years 2019, 2020,2021 and 2022. There is separate process for determining untreated water rates. • On September 5,2018, staff presented four rate scenarios at a Board Workshop on Water Rates. • On September 19, 2018 staff presented two additional rate scenarios which included funding for water supply reliability projects ranging from$9M to$15.2M through FY 2021-22. • Staff has taken a closer look at the proposed funding of future water supply reliability projects and recommends reducing the amount to$3M over the next four years until more information is available. • Staff also recommends funding the Operating, Emergency and Drought Contingency reserves at target levels and leave the Rate Stabilization Reserve unfunded during this study period. While this is a reasonable approach to reduce customer impacts, it's recommended that the Agency fund water supply reliability projects in the future and also review the current reserve policy based on industry standards and practices. • Staff has prepared to two additional rate scenarios for the Board's consideration. Staff recommends Scenario 1 -(3%CPI +$3M for Water Supply Reliability Projects+Fully Funding Three Reserves at Target Levels+3.7%Rate Adjustments). • Staff recommends that the Board adopt a four-year rate schedule with target levels met in four years, however the Board reserves the right to adopt a different rate schedule(i.e.,2 or 3 years). FUNDING: Treated Water Sales revenue accrues to Fund 100—Water Enterprise and provides capital funding to Fund 120—Renewal, Replacement and System-Wide Improvements. RECOMMENDED ACTION: Adopt the attached resolution approving treated water rates for calendar years 2019-2022. BACKGROUND: On September 19, 2018 staff presented two additional rate scenarios which included funding for water supply reliability projects ranging from $9M to $15.2M through FY 2021-22. Staff has taken a closer look at the proposed funding of future water supply reliability projects and recommends reducing the amount to $3M over the next four years until more information is available. Staff also recommends funding the Operating, Emergency and Drought Contingency reserves at target levels and leave the Rate