Utilities Rate Advisory Commission Meeting - June 26, 2013

The Utilities Rate Advisory Commission convened at 5:31 p.m. on June 26, 2013, with a quorum present. The sole substantive agenda item was the Department of Utilities (DOU) Accountability Plan Update, which covered bond financing, capital project status, the utility rate assistance program, organizational restructuring, and future rate structure planning. The consent calendar was approved unanimously, and no public comments were offered.

Consent Calendar

• Approved the meeting minutes from February 6, 2013 and March 27, 2013 by unanimous vote.

Discussion Items

• DOU Accountability Plan Update – Dave Brent (Director), with Brian Wong (Treasurer's Office) and Susan Goodison (Business Services), presented the quarterly accountability update.
• Bond financing outcomes: Water bonds closed in March for ~$215 million with a 3.82% average interest rate over 30 years, rated AA- by Fitch and S&P. Wastewater bonds closed the following day (June 27) for ~$30 million with a 4.29% average rate over 29 years, rated AA and AA- by Fitch and S&P. Both rates were well below the 5% modeled assumption. No capitalized interest was required on water; wastewater included a rate stabilization reserve and one year of capitalized interest.
• Capital program progress: The utility is working to spend ~$300 million on infrastructure. Highlights: the water treatment plant (design and bid complete; construction started; ribbon-cutting July 16), a $77 million water meter program (adding about 15,000 meters and bringing the city above 50% metered), groundwater well condition assessments, and the Oak Park Regional Storage Project (four million gallon underground storage; bids came in at $12 million vs. $14 million estimate; completion required by December). A public-facing project dashboard is being developed for the website.
• Utility rate assistance program: Funded from the general fund portion of rate revenues, the program currently serves homeowners at or below 100% of the federal poverty level. Roughly 1,500 applications have been received, but only ~350 qualified. Staff are considering raising the threshold to 200% of poverty to align with SMUD/PGE programs and expand eligibility. The estimated eligible pool was discussed—presenter cited ~2,000 households at poverty level with a 68% penetration rate implying ~14,000 potential qualified applicants, though later discussion referenced 20,000 estimates. Commissioners suggested using SMUD/PGE data for targeted outreach, tracking all applicants for future notifications, and analyzing demographic reasons for low uptake.
• Organizational changes: Effective July 1, DOU reorganizes from four divisions to three, merging plant and field services, adding security/emergency preparedness and logistics, integrating planning and business services, and moving the water quality lab under engineering with a new R&D function. A five-year strategic plan has been completed.
• Future rate structure work: Consultant Rafelis has been hired to review water, wastewater, and drainage rate structures. Drainage rates have not increased since 1996; any change in drainage rate structure would likely require a Prop 218 majority vote. Tiered water rates are under consideration, but implementation is challenging before full metering is achieved. The department anticipates returning to the commission in about 18 months to begin the next rate increase discussion.

Commission Ideas, Questions and Announcements

• Staff reminded commissioners whose terms expire this year to submit applications by July 11.
• Staff noted that city recycling, garbage, and yard waste service changes take effect on Monday, July 1.

Key Outcomes

• The consent calendar was approved unanimously.
• The DOU Accountability Plan Update was received and filed as recommended.
• Staff will provide additional information on rate assistance program demographics, application processing times, and potential coordination with SMUD/PGE.
• The commission requested the capital project dashboard include total project costs, uniform milestones, and links to detailed project information.
• A city council water workshop is scheduled for July 23 to consider the updated water conservation plan and water principles.