Utilities Rate Advisory Commission Meeting – December 9, 2015

The Utilities Rate Advisory Commission (URAC) met on Wednesday, December 9, 2015, at 5:30 p.m. in the Council Chambers at 915 I Street, Sacramento. The meeting covered two major discussion items: the Department of Utilities (DOU) Utility Rate Development Planning Update and the DOU Accountability Plan Update. Commissioners received detailed presentations on proposed rate adjustments, capital improvement programs, community outreach, and drought conservation efforts. No public comments were offered. The meeting adjourned at 7:10 p.m.

Consent Calendar

• Approval of Minutes for October 28, 2015 – The Commission unanimously approved the minutes from the previous meeting. Motion by April Butcher, second by Brian Biering, with all present members voting aye (Brian Biering, Timothy Horner, April Butcher, Andrew Day, Carolyn Veal-Hunter). Ryan McManus was absent.

Discussion Items

1. Department of Utilities – Utility Rate Development Planning Update (Item 3, moved ahead of Item 2)

DOU Director Bill Busath presented an overview of the rate development process, covering six areas:

• Community Engagement Plan ("Your Utilities, Your Community"): A microsite (yourutilitiesyourcommunity.com), fact sheets in multiple languages (Russian, Spanish, Hmong), utility bill inserts, and presentations at neighborhood association meetings (three held so far: Cabrillo area, Natomas, Tahoe Park).
• Storm Drainage Rate Proposal: Proposed structure change from room count/gross parcel area to impervious area basis, plus a rate adjustment that would require a mail ballot election. A surgical change for vacant parcels (charging 20% of area) would be brought to council in January 2016. The storm drainage rate is higher than neighboring communities due to older infrastructure, a mandatory combined system, and 104 pumped basins out of 135.
• Best Practice Replacement Cycle: City Manager’s scenario to achieve a 100-year replacement cycle for water, wastewater, and storm drainage systems, with associated annual rate increases (red dots on slides) – not a formal proposal.
• Return on Investment (Dan Sherry): Detailed capital improvement program (CIP) for FY17–20: Water $265.5 million (including $230M for meter retrofit), Wastewater $53.5 million (including $28M for McKinley Park underground storage for combined sewer overflow), Storm Drainage $58 million (including corrugated steel pipe replacement and detention basins). Presenter emphasized regulatory compliance risks and potential fines if rate adjustments are not approved.
• IT Master Plan (Rod Van Buskirk, consultant): Critical need to replace the customer service/billing system (CIS) as it is obsolete and risky. Other priorities: GIS, work management, capital asset planning, cybersecurity.
• Utility Rate Assistance Program (Susan Goodison): Currently 1,600+ enrolled (increase of 100 since October); 4,500 applications received (about 25% of eligible households). Program funding would be exhausted by FY19 without rate increases. Proposed outreach includes partnering with SMUD to identify eligible customers.
• Prop 218 Process: Notice mailed December 2, 2015; 45-day protest period ends mid-January; public hearing before URAC on January 27, 2016. Written protests by a majority of property owners would block the rates. Commissioners asked about ballot timing and consequences of failure.
• Commission Questions/Comments:
  • Commissioner Horner requested that the January 27 presentation include a reminder of when last rate increases occurred to correct misinformation.
  • Commissioner Biering noted the new website should list URAC meetings and council dates; questioned impact of rate delay on meter rollout and tiered rate structure (Bill Busath said it would likely delay tiered rates).
  • Commissioner Butcher asked about community meeting turnout (low but with follow-up via newsletters) and suggested targeting underserved areas like Oak Park and MacRoad; also asked about permeable pavement incentives (under development as a fee mitigation credit).
  • Commissioner Day asked about documentation required for rate assistance (SMUD verification or wage proof at 200% poverty level) and turnout at meetings.
  • Commissioner Biering also asked about Prop 218 protest procedures (clarified by Deputy City Attorney Joe Robinson: only written protests counted, past protests were less than 1%).

2. Department of Utilities – Accountability Plan Update (Item 2)

Bill Busath provided a brief update covering:

• Bond Expenditures: On track to spend 85% of tax-exempt bond proceeds within three years (water deadline May 2016, wastewater June 2016).
• Capital Program Dashboards: Available online; included in report.
• Drought and Water Conservation: City is under a Governor’s mandate to conserve 28% from June 1 to end of February; currently at 32% conservation; municipal conservation at 40%. Expect to meet the target. Governor’s mandate extended to at least end of calendar year 2016, with potential reduction to 20%.
• Rate Assistance: Already covered in previous item.

The presentation concluded with a reminder that detailed information was in the meeting packet.

Public Comments & Testimony

• No members of the public submitted speaker slips or spoke during the public comment period.

Key Outcomes

• Consent Calendar Approved: Unanimous.
• Received and Filed: Both discussion items (Rate Development Planning Update and Accountability Plan Update) were received and filed by the Commission. No formal votes were taken on the rate proposals; the Commission’s role is to review and make recommendations to the City Council.
• Next Steps: The Prop 218 public hearing will be held on January 27, 2016. The Commission is expected to make final rate recommendations at that meeting, which will then go to City Council in February or March 2016. The storm drainage mail ballot is targeted for April 2016 with a potential effective date of July 1, 2016 (or FY18 if delayed).
• Commissioner Requests: Staff to include historical rate context in the January presentation; add URAC and council dates to the outreach website; explore direct data sharing with SMUD for rate assistance enrollment; and continue developing a storm drainage fee mitigation credit program.