Utilities Rate Advisory Commission Meeting – December 9, 2020

The Utilities Rate Advisory Commission (URAC) held a virtual meeting on December 9, 2020, due to the COVID-19 pandemic. Commissioners unanimously approved the previous meeting’s minutes, discussed a proposed rate adjustment for recycling and solid waste services (RSW), received updates on the Department of Utilities’ accountability and financial status, and approved the 2021 meeting calendar. A single public comment opposed the rate increase.

Consent Calendar

• Item 1 – Approval of Minutes (October 28, 2020): Passed unanimously. Roll call: Melissa Lee (yes), Brian Beering (yes), Megan Fidel (yes), Rachel Ann Vanderwerf (yes), Tani Gutowski (yes), April Javis (yes), Anthony Thomas (yes).

Public Comments & Testimony

• E-comment on Item 2 (RSW Rate Adjustment): One commenter expressed opposition, stating: “rates continue to increase while services remain the same or are reduced, thinking of bi-monthly recycle many years ago instead of weekly. I agree with Mayor Steinberg that a first step is to look at ways to become more efficient.”
• No public comments were made on other agenda items or matters not on the agenda.

Discussion Items

• Item 2 – Workshop on Proposed Rate Adjustment for Recycling and Solid Waste Services (RSW):

  • Presented by Jerome Council, Recycling and Solid Waste manager. The presentation covered:
    • Service-level comparison to other municipalities (e.g., weekly garbage, recycling bi-weekly in some cities, weekly green waste, loose-in-street pickup, street sweeping seasonal). The City of Sacramento offers the most comprehensive services among peers.
    • Current rate: $42.59 per month; proposed rate: $48.80. A server program discount of $6.99 brings the server customer rate to $41.81. Over 8,300 participants enrolled.
    • Proposed rate increase details: $2.50 for garbage (two incremental increases), no change for recycling/yard waste, $6.03 for organics/green waste (driven by state mandate SB 1383), $0.45 for street sweeping – total increase of $8.98 over the rate period.
    • Outreach efforts: 48 organizations contacted; bill stuffer in December; 218 notices planned for January; public hearing before URAC in February; City Council passage scheduled for April with July 2021 implementation.
  • Commissioner questions:
    • Commissioner Beering asked about days of working capital (target 90 days) and future rate stability. Staff responded that the increase will achieve the 90-day reserve and that after this adjustment, rates are expected to remain stable until about 2025, with only modest increases afterward unless new regulations arise.
    • Commissioner Fidel asked about fleet electrification costs. Staff confirmed one all-electric refuse truck on order for testing, but full electrification is not yet ready to scale.
    • Commissioner Lee requested outreach materials be shared with all commissioners; staff agreed while noting Brown Act limits on attendance (no more than three commissioners per meeting).

• Item 3 – Department of Utilities Accountability Plan Update:

  • Presented by Pravani Vandeyar (Water Division Manager) and Bill Busath (Director). Highlights:
    • The “Partner Report” newsletter debuted in February 2018; latest (September 2020) focused on water quality, efficiency, and storm drainage.
    • McKinley Water Vault project (6 million gallon capacity, 15 Olympic pools) – concrete roof poured December 9, 2020; completion of phase 2; park restoration to follow.
    • Water Capital Improvement Program (CIP): financed with $173.1 million SRF loan; as of Sept 30, 2020, $121.7 million spent, $24.7 million encumbered. Refunding of 2013 water revenue bonds saved ~$30 million.
    • Wastewater CIP: $32 million bond issued April 2019; $15.9 million expended; refunding of 2013 bonds saved ~$4.8 million.
    • Days of working capital: Water (320 days), Wastewater (174 days), Storm Drainage (598 days) – all above the 120-day target. Surplus due to conservative modeling, project savings, and interest income. DOU plans to program $80 million in water CIP over four years and $9.5 million in storm drainage CIP over two years to reduce reserves.
    • Progress on sustainability: demonstration garden, smart irrigation controller rebates (up to $400 direct or instant rebate via SMUD Energy Store).
    • COVID-19 revenue impact: no trend detected yet; penalties on delinquent utility charges suspended; estimated revenue reduction of $1.1 million (water), $335k (wastewater), $425k (storm drainage) for FY21.
    • Non-rate revenue (not subject to Prop 218/26): ~$57,000 total – small amount.

• Item 4 – Department of Utilities Financial Update:

  • Presented by Jackie Rice (Supervising Financial Analyst). Key points:
    • FY20 year-end projections (unaudited): Water fund net revenue ~$30 million; wastewater ~$9.6 million; storm drainage ~$1.3 million. Savings due to conservative modeling, lower operating expenses, higher interest/development revenues.
    • Days of working capital: Exceed 120-day target for all three funds; DOU plans to invest surpluses in CIP to bring reserves closer to target (e.g., $80 million in water CIP over 4 years, $9.5 million in storm drainage over 2 years).
    • FY21 budget (adopted May 12, 2020): no rate increases in any fund. Estimated revenue loss due to temporary penalty suspension from COVID: $1.1 million (water), $335,000 (wastewater), $425,000 (storm drainage). DOU expects to maintain debt service coverage and reserve targets.
    • Days of working capital (projected FY20): water 320 days, wastewater and storm drainage also above 120-day guideline – due to conservative modeling and project savings. Planned CIP investments and reserve policy will bring balances closer to 120 days.
  • Commissioner questions:
    • Commissioner Fidel asked about translating smart irrigation water savings (13,000 gallons/year per controller) into dollar savings; staff agreed to add that. Also suggested using $57,000 non-rate revenue to help customers in arrears due to COVID. Staff will research feasibility and report back.
    • Commissioner Lee asked about bond refunding and SRF loan terms; staff explained refinancing similar to mortgage, and that principal payments on SRF loan begin after construction completion (amended to 2022).

• Item 5 – 2021 URAC Meeting Calendar:

  • Proposed calendar: meetings on fourth Wednesday of each month except November (17th) and December (15th). Unanimously approved.

Key Outcomes

• Approved: Minutes of October 28, 2020 (unanimous).
• Approved: 2021 URAC Meeting Calendar (unanimous).
• Directive: Staff will share outreach materials on the RSW rate proposal with all commissioners.
• Referral: Staff to research whether URAC can direct non-rate revenue toward COVID-related customer assistance; report back at next meeting.
• Next Steps: The critical February 24, 2021 meeting (218 hearing on RSW rate adjustment) will proceed as planned; other meetings may be postponed due to county stay-at-home order.