Utilities Rate Advisory Commission Meeting Summary - August 26, 2020

The Utilities Rate Advisory Commission (URAC) met on August 26, 2020, at 5:30 p.m. at 915 I Street, 1st Floor, Council Chambers, Sacramento, CA, to receive a financial update on the Recycling and Solid Waste division. The commission approved the consent calendar and heard a detailed presentation from Jerome Council, Integrated General Waste Manager, and Janice Conerly-Coleman, Support Services Manager. The discussion focused on the division's financial outlook, challenges, and the need for a future rate adjustment. The meeting adjourned at 6:13 p.m.

Consent Calendar

• Motion to approve minutes of July 22, 2020: Passed unanimously (8-0). All commissioners voted yes: Melissa Lee, Brian Beering, Megan Fidel, Rachel Ann Vanderwerf, Connie Gutowski, April Javis, and P. Anthony Thomas.

Public Comments & Testimony

• No public comments were made during the 'Matters Not on the Agenda' period.

Discussion Items

• Recycling and Solid Waste Financial Update (Receive and File):
  • Organizational Overview: Jerome Council summarized services provided by the utility, including weekly garbage collection with two bulky item appointments and one free junk coupon, weekly yard waste (year-round containerized, plus leaf season November–January), every-other-week recycling with appliance/e-waste pickup, seasonal street sweeping (February–October, currently every 6 weeks), and additional services like battery/lamp drop-off, used oil collection, and household hazardous waste drop-off.
  • Financial Overview: Janice Conerly-Coleman presented a high-level financial snapshot. FY20 closed June 30 with numbers about 80% finalized. The current rate increase (approved for 1.5 years, not the requested 3.5 years) covered six months of FY20 and all of FY21. The fund is projected to fall below the 90-day reserve target beginning in FY22 and into a deficit by FY25 without further rate increases. The accounting was revised to allocate fund balance to each service (garbage, recycling, green waste, street sweeping) to show fee-for-service cost coverage. Garbage and recycling are projected to finish FY20 and FY21 strong, but garbage falls below reserve targets in FY22. Recycling's healthy balance is partly due to an additional 12% allocation and unexpended processing costs still under negotiation. Green waste faces a 100% increase in disposal costs (not the assumed 10%), leading to deficits by end of FY23. Street sweeping will also be in deficit by end of FY22 if no increase is approved.
  • Accomplishments: New equipment and staff for street sweeping frequency improvement (aim to move from 6-week to monthly service), five additional side loaders ordered, five equipment operators hired (not yet onboard), and a CNG station approved in June 2020.
  • Challenges: Expenses continue to exceed revenue; ongoing negotiations with Waste Management on recycling processing terms (affected by China National Sword); staffing and equipment needs; COVID-19-related disposal cost increases of 10-15% and operational impacts.
  • Next Steps: A rate proposal will be brought to URAC next month with more details.

Member Comments & Questions

• Street Sweeping Frequency Change: Commissioner Gutowski asked why street sweeping is changing from 6-week to 4-week (likely a misstatement; the presentation says increasing frequency). Jerome Council explained that customer satisfaction surveys rated street sweeping low, and a more robust schedule would reduce debris in storm drains, improving water quality.
• Recycling Fund Balance: Commissioner Beering questioned the positive recycling balance given past revenue losses. Council clarified that the China National Sword policy cut off the Chinese market, and some recyclables now have negative value (e.g., mixed paper). The city is negotiating with Waste Management to pay only for negative-value materials, rather than a flat rate. The balance is inflated because costs for processing have not yet been realized.
• Planning for Rate Case: Commissioner Beering requested a clearer picture of the sustainable 90-day fund balance path, including uncertainties in contracting and hiring.
• Council's Previous Rejection: Commissioner Fidel noted the City Council had rejected the 3.5-year rate increase and asked what would be different this time. Council stated he couldn't speak to the Council's rationale, but Janice Conerly-Coleman noted that this time they have concrete green waste contract costs, which the Council is aware of.
• Creativity in Funding: Commissioner Vanderwerf asked about creative funding methods beyond rate increases. Council cited operational efficiencies, such as installing oil boxes on recycling trucks to eliminate a dedicated used-oil collection route, freeing up staff for appliance/e-waste appointments.
• Electric Vehicle Interest: Commissioner Fidel requested cost and savings data for the new electric side loader truck; Council agreed to provide it.
• Timing Concerns: Commissioner Fidel expressed concern that the schedule for the upcoming rate process is similar to last time, leaving inadequate time for meaningful commission input before 218 notifications. She suggested more collaborative work.
• Outreach and COVID: Commissioner Vanderwerf inquired about public outreach during COVID-19. Janice Conerly-Coleman described using alert systems, updating the website, resuming compost seminars (next on September 10), and managing route interruptions with notifications.
• Commissioner Terms: Commissioner Beering noted his and April Javis's terms expire at the end of 2020, and discussed transitioning for new commissioners. Council indicated that commissioners can continue serving until reappointed or replaced, and that new commissioners may be briefed before voting.

Key Outcomes

• Consent Calendar Approved: Minutes of July 22, 2020 approved unanimously.
• Receive and File: The Recycling and Solid Waste Financial Update was received and filed with no formal vote needed.
• Future Actions: Staff will return next month with a detailed rate proposal and answer outstanding questions (e.g., electric vehicle costs). The commission will consider the proposal in upcoming meetings, with the goal of a rate adjustment to avoid fund deficits.