Utilities Rate Advisory Commission Meeting - April 22, 2015

The Utilities Rate Advisory Commission (URAC) met on April 22, 2015, at 5:30 PM in the City Hall Council Chambers, 915 I Street, Sacramento. The meeting included approval of previous minutes, revisions to the 2015 meeting calendar, a detailed update on the Department of Utilities rate structure study, and a drought update from city staff. Commissioners discussed equity between metered and unmetered customers, conservation pricing, and recent legal rulings on tiered rates.

Consent Calendar

• Approval of Minutes for February 25, 2015 – The motion passed unanimously on a voice vote (all present in favor).

Public Comments & Testimony

• No members of the public spoke during the public comment period. Commissioner April Butcher noted that the stakeholder group for the rate study lacked Hispanic and African American representation, which together account for 40-50% of Sacramento’s population, and urged broader outreach.

Discussion Items

• Item 2: Utility Rate Advisory Commission Meeting Calendar Revisions – Susan Goodison (Business Services Manager, Department of Utilities) presented a request to add three new meeting dates (September 9, October 7, and November 4, 2015) to the current schedule to accommodate potential rate adjustment discussions. A brief discussion clarified that July 22 remains a regularly scheduled meeting. Staff confirmed the addition would keep the total annual meetings at 12, within the commission’s limit. The motion to add the three dates passed unanimously.

• Item 3: Department of Utilities Utility Rate Development Planning Update – Robert Armijo (project manager) introduced two consultants: Kate Taylor (Crocker & Crocker) on public outreach, and Sanjay Gar (Raftelis Financial Consultants) on rate structure evaluation.

  Public Outreach (Kate Taylor): Taylor described stakeholder engagement conducted in summer 2014, involving four meetings with a diverse group including large customers (e.g., Dr Pepper/Snapple), business groups (Metro Chamber, Sacramento Business Coalition), environmental organizations (Native Plants Association, ECOS, Save the American River Association), and neighborhood associations. Key themes from stakeholders included equity, financial stability, economic development friendliness, simplicity, accuracy, and conservation. She noted the city plans continued comprehensive outreach similar to the “Your Utilities, Your Voice” program.

  Rate Structure Evaluation (Sanjay Gar): Gar presented findings from the ongoing rate structure study, emphasizing that rates are a means to meet defined objectives (rate stability, defensibility under Prop 218, revenue stability, simplicity, and conservation). For water rates, current fixed/variable split is 56% fixed, 44% variable – high compared to other agencies (typical ~30%). Options evaluated for metered customers included keeping the current uniform rate, adjusting meter ratios to AWWA standards, lowering fixed to 30% (1B), or implementing a two-tiered residential structure (2A). For unmetered customers, staff recommended retaining the current flat rate due to the ongoing transition to full metering. For wastewater, recommended keeping the current structure for residential, and for non-residential, using a 90% return factor with a variance program for customers who do not discharge (e.g., bottlers). For storm drainage, staff recommended moving from a room-based charge to an impervious-area-based tiered residential system, which would result in a 60% decrease for most residential customers but significant increases for commercial accounts. Gar also discussed potential drought surcharges and conservation pricing, noting a recent court ruling (San Juan Capistrano) did not ban tiered rates but required cost-of-service justification.

• Drought Update (Dan Sherry, DOU): Sherry reported that the April 1 executive order mandates a 28% reduction for Sacramento compared to 2013 baseline. City achieved ~19% reduction in 2014 but needs to intensify efforts. Planned actions include increased enforcement (40 staff working 7 days/week), public outreach (billboards, bus wraps), expanded rebate programs (cash for grass, toilet/washer), acoustic leak detection, and potential code changes (e.g., suspending 21-day variance for new landscaping, prohibiting irrigation during/after rain, restricting median irrigation). If targets are not met, stage three restrictions may be considered.

Key Outcomes

• Consent Calendar: Approved unanimously.
• Meeting Calendar Revisions: Approved unanimously – added September 9, October 7, and November 4, 2015, as regular meeting dates.
• Rate Development Planning Update: Received and filed; staff will continue refining rate structure options and engage in further public outreach. No formal vote on rate changes was taken.
• Drought Update: Received; staff to present additional code changes to City Council in May.
• Commissioner Comments: Several members emphasized the need to update conservation metrics given the worsening drought, to explore three-tiered water rates, and to balance revenue stability with affordability. Commissioner Butcher suggested recognizing positive water-saving behaviors rather than only penalizing excess use.