Utilities Rate Advisory Commission Meeting - June 23, 2021

The Utilities Rate Advisory Commission (URAC) held a teleconference meeting on June 23, 2021, starting at 5:31 p.m. The primary agenda item was the Department of Utilities Accountability Plan Update for the third quarter of Fiscal Year 2021, which included financial reporting, updates on the SUERA rate assistance program, and an overview of the Proposition 218 process for a potential storm drainage rate adjustment. Commissioners also discussed water conservation efforts, COVID-19 impacts, and changes to city staff.

Consent Calendar

• Approval of Minutes for May 26, 2021: The minutes were approved with a vote of 5 yes, 1 abstention (Commissioner Vanderwerf abstained as she was not present at the prior meeting). Motion passed.

Public Comments & Testimony

• No public comments were received during the meeting.

Discussion Items

• Department of Utilities Accountability Plan – 3rd Quarter FY2021: Director William Busath presented the update. Key points included:
  • Financing: A $173 million State Revolving Fund loan for the water fund had $131 million expended and $18 million encumbered; approximately $20 million will not be spent, reducing debt service. A $32 million wastewater bond issued in 2019 had $18.8 million spent and $3.5 million encumbered, with a deadline to spend 85% by April 2022.
  • Fund Balances: Water fund balance stood at $117 million, with a 120-day working capital requirement of $36 million. Surpluses were attributed to conservative rate modeling, lower project costs, and favorable interest rates. The wastewater fund was balanced. The storm drainage fund, which has not had a rate adjustment in nearly 25 years, showed a high balance due to deferred capital improvements.
  • Rate Adjustment Timing: No water rate adjustment is anticipated until FY2026, and no wastewater adjustment until FY2025.
  • SUERA (Rate Assistance) Program: 8,300 participants were enrolled. Third-quarter FY2021 expenses were nearly $900,000, with $2.7 million spent from the $3.8 million budget. Staff will bring recommendations to City Council in July/August 2021 to shift from a rate-adjustment-based discount to a flat percentage discount for sustainability.
  • Water Conservation: Due to drought conditions, the city plans to message a voluntary 10% water conservation target. Ongoing programs include rebates for river-friendly landscaping, smart controllers, toilet replacements (including “Redo the Loo” for disadvantaged communities), and leak detection.
  • COVID-19 Impacts: Revenue was not significantly impacted by COVID-19. The city waived late fees totaling $1.1 million (water), $335,000 (wastewater), and $425,000 (storm drainage). Suspension of water termination will likely continue. Federal and state assistance is being coordinated.
• Proposition 218 Process for Storm Drainage Rates: Senior Deputy City Attorney Mike Voss explained that storm drainage rate increases require a two-step process: a protest mailer (45 days) and a mailed ballot election requiring a majority of returned ballots to approve the increase. This differs from water, wastewater, and solid waste rates. Staff emphasized that education and outreach would be conducted but the city cannot advocate for a “yes” vote.
• Commissioner Questions: Commissioners inquired about COVID-19 revenue impacts, SUERA changes, storm drainage outreach plans, and details on water efficiency rebate guidelines. Director Busath noted that many residents automatically enroll in SUERA through SMUD data matching and that the city will likely return to normal late fee collection when the COVID-19 emergency is rescinded.
• Member Comments: Commissioner Fidel noted that the City of Sacramento is hiring an Integrated Waste General Manager to replace Jerome Council, who left on June 11, 2021. Commissioners expressed appreciation for Council’s service and discussed sending a farewell acknowledgment.

Key Outcomes

• The minutes from the May 26, 2021 meeting were approved.
• The Department of Utilities Accountability Plan Update for the third quarter of FY2021 was received and filed without objection.
• Staff will continue to develop a storm drainage rate increase proposal, including a Proposition 218 process involving a mailed ballot election.
• Recommendations for adjustments to the SUERA program will be presented to City Council in July/August 2021.