To: Members of the Castle Rock Water Commission
From:
Anne Glassman, Business Solutions Manager
Mark Marlowe, P.E., Director of Castle Rock Water
Title
Customer Class COS Equity
Body
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Executive Summary
The purpose of this memorandum is to provide Commission with an update on ensuring equity amongst customer classes that was identified in the 2019 Rates and Fees Study. In the post season, staff along with our outside rates and fees consultant, conducted an analysis of the actual 2018 billing data for volumetric and fixed rates versus cost of service rates for both water and wastewater.
Generally, the cost of service rates and projected revenues were in line with the adopted rates and actual revenues generated in fiscal year 2018 and in the five year planning window. In the water fund, the monthly fixed water service charge revenue is performing well compared to the cost of service requirements for all customer classes with the exception of a slight shortfall in projected revenues in the residential customer class in the five year planning period. On the volumetric side, the projected revenues compared to the cost of service model is showing an over collection of revenues within the irrigation customer class with all other customer classes in line.
Again in the wastewater fund the overall comparison between the cost of service model and the actual revenues generated are performing well. All indications in the wastewater fund are that the reduction to rates in 2020 was supported by the cost of service model and the appropriate action to take. There is a consistent equity amongst the customer classes across the board. Residential however, seems to have a flip between the volumetric revenues being too low and the fixed charges being too high based on the cost of service model, but a net 0 across the residential customer class.
Staff Recommendation
Water Fund:
Staff recommends doing some further detailed analysis during the 2020 Rates and Fees Study on the residential trend in the water fund to see if functional allocation of cost is appropriate or if some other factor is driving this slight shortfall trend in the five year planning period. Staff will take a closer look at the irrigation customer class and how the block rates are calculated and allocated to the different customer classes. We will look at this customer class to see if the current rates are an incentive for conservation and equitable given the lack of captured reuse water and the peak demands this customer class imposes on the distribution system. Based on the findings, staff will bring back to commission a recommendation in the 2020 Rates and Fees Study if any rate action should be considered for the irrigation customer class and over what time period.
Wastewater Fund:
Staff recommends doing further detailed analysis during the 2020 Rates and Fees Study to determine why the volumetric and the fixed monthly charges for the residential customer class are flipped. Based on the findings, staff will bring back to commission a recommendation in the 2020 Rates and Fees Study as to whether any rate action should be taken and if so what time period would that rate action be implemented.