Utilities Rate Advisory Commission Meeting - August 27, 2025
Utilities Rate Advisory Commission Meeting – August 27, 2025
The Utilities Rate Advisory Commission (URAC) met on August 27, 2025, at 1:45 PM (call to order at 1:53 PM) to receive presentations and provide comments on the City Attorney’s Office review of URAC roles and responsibilities, the Department of Utilities’ (DOU) timeline and overview of the water and wastewater rate study stages, the prioritization process for rate needs, and the designated reserve policy. No public testimony was offered. The consent calendar was approved unanimously.
Consent Calendar
- Item 1 – Approval of Meeting Minutes: The commission approved the minutes from the June 25, 2025 regular meeting and the July 23, 2025 special meeting by a vote of 8 ayes, with members Burdock and Shambhai absent.
Public Comments & Testimony
- No members of the public submitted speaker slips or testified on any agenda item.
Discussion Items
- Item 2 – City Attorney’s Office URAC Roles and Responsibilities Presentation: Senior Deputy City Attorney Mike Voss presented the origins of URAC (created in 2008 after a 2007 rate increase controversy), its statutory powers and duties (reviewing rate proposals, developing recommendations, holding Prop 218 rate hearings, acting as community liaison, and annual reporting), and its limitations (no authority to review or revise utility service levels). Commissioners asked about permissible probing of department operations, Brown Act restrictions on one-on-one staff conversations (allowed), and communication with council members (allowed as individuals). Chair Zito encouraged reserving highly technical questions for direct follow-up with DOU staff outside of meetings.
- Item 3 – DOU Timeline and Overview of Water and Wastewater Rate Study Stages: David Levine, Long Range Financial Planning Manager, outlined the rate study process: financial plan development (fall 2025), cost of service analysis (early 2026), rate design (spring 2026), and community engagement (three phases in 2026). Key deadlines: final financial plan and proposed rates in June 2026, Prop 218 mailer and protest period (including new AB 2257 written objection process), city council review of objections, and URAC rate hearing in December 2026. Constraints include a linear path, the 30-day AB 2257 extension, six commissioner seats terming out on December 31, 2026, and no schedule flexibility. The goal is to implement new rates by July 1, 2027. Commissioner Olson raised concerns about loss of institutional knowledge from terming-out commissioners. Commissioner Tran asked about public engagement at the June 2026 meeting. Levine noted that the rate hearing will be the primary public forum.
- Item 4 – DOU Water and Wastewater Rate Needs Prioritization Process: David Levine presented the department’s methodology for identifying and prioritizing over 600 rate needs. Since the last rate adjustment in FY2020 (10% water, 9% wastewater), the wastewater fund projects a 45% expense increase with no revenue growth. Fund balances are projected to be exhausted by FY2028. Three priority levels were established (Priority 1: health/safety/legal risk; Priority 2: critical but lesser impact; Priority 3: optimization). Of 426 needs forwarded to the executive team, 255 were designated Priority 1. Water fund needs total over $1 billion over five years, with a spike in FY2030 for WaterPlus ($155M) and RiverARC ($250M). Wastewater fund Priority 1 needs total $163 million. The executive team focused on Priority 1, shifted needs to later years, and plans to issue debt for large projects. Key objectives: ensure continuity of service, meet policy targets (120 days working capital, 1-year capital reserve, 1.20 debt service coverage ratio), and minimize deferred maintenance. Commissioner Nelson requested benchmarking against comparable cities. Commissioner Olson asked about the Fund Review (RAFTELUS 2024) and whether DOU accepted all recommendations. Vice Chair Eberle clarified the narrowing process.
- Item 5 – DOU Designated Reserve Presentation: Kelly Shurfee, Supervising Financial Analyst, reviewed the department’s reserve policies (codified in January 2023 and amended in 2024). Three reserves: operating reserve (unrestricted, minimum 120 days working capital), capital reserve (unrestricted, target of 1 year of CIP expenditures, but policy aims for 5 years), and rate stabilization reserve (restricted, currently zero balance). Historical trends showed water fund operating reserves at 120 days and capital reserves at $31.6 million (boosted by transfer of rate stabilization funds). Wastewater capital reserve was used for three critical projects (e.g., a manhole repair that prevented a sinkhole). Days of working capital for available fund balances: water 230 days, wastewater 255, storm drainage 240. However, without rate adjustments, reserves will dip below minimums by FY2028. Commissioner Olson asked about restricted vs. unrestricted definitions. Vice Chair Eberle noted the clarification helped explain why reserve balances appeared high. Commissioner Olson requested a future list of regulatory compliance costs.
Key Outcomes
- Consent Calendar approved (8-0-2).
- All other items were received and commented on – no formal votes taken.
- Next meeting scheduled for October 29, 2025.
- The commission will continue to receive detailed presentations on water fund needs (October) and wastewater fund needs (December) to inform the rate study process.
- Staff will consider requests for benchmarking data, regulatory cost estimates, and prior studies (e.g., Stantec drainage audit) for future commission packets.
Meeting Transcript
Okay. Good evening and welcome to the August 27th, 2025 meeting of the utilities rate advisory commission. It is now 53, and the meeting is now called to order. Will the clerk please call the role to establish a quorum? Thank you, Chair. Members please unmute your microphones. Member Tanakella. Member Gasbard. Present. Member Burdock is absent. Member Shambhai is absent. Member Nelson? Here. Member Olson. Here. Member Everly? Here. Member Johnson. Here. Member Tran. Here. And Chair Zito. Here. Thank you. We have quorum. I would like to remind members of the public in chambers that if you would like to speak on an agenda item, please turn in a speaker slip when the item begins. You will have two minutes to speak once you are called on. After the first speaker, we will no longer accept speaker slips. And we will now proceed with today's agenda. So okay. So we're going to start with the land acknowledgement. Please rise for the opening acknowledgments in honor of Sacramento's Indigenous Peoples and Tribal Lands. To the original people of this land, the Nissan people, the Southern Maidu, Valley and Plains, Miwok, Patwin, Wintong, Peoples, and the people of the Wilton Rancheria, Sacramento's only federally recognized tribe. May we acknowledge and honor the Native people who came before us and still walk beside us today on these ancestral lands by choosing to gather together today in the active practice of acknowledgement and appreciation for Sacramento's Indigenous People's History Contributions and Lives. Thank you. Please remain standing for the Pledge of Allegiance. I pledge allegiance to the flag of the United States of America and to the Republic for which it stands. One nation under God, indivisible with liberty and justice for all. Thank you. Okay. First up. I wasn't here last time, so it's good to see everybody. But I did, I did stream you, so I was sort of kind of here to watch what was going on. It's all very interesting. Okay, so anyway, um, let's go ahead with the I think the first order is the um consent calendar. So let me just find where we have that. Are there any members of the public who wish to speak on the consent calendar? Thank you, Chair. I have no speaker slips. Are there any um let's see, are there any commissioners that wish to speak on this item?
openpublica.com