For purposes of allocating costs associated with meeting Average Day demands, 67% is allocated to the Average Day service and 33% is allocated to the Base Day service, as shown in Table 4-1. Maximum Day demand includes Base Day, Average Day, and Maximum Day components. Maximum Hour demand has all four service levels of demand.
While system capacity is essentially designed to meet peak demands, it is important to understand that the cost of facilities that are sized for peak demands is not borne by only customers that peak.
Using distribution pipelines as an example, they are sized to meet Maximum Hour demands. Even though they are sized for the highest level of service, lower peak demands are also accommodated by these pipelines. Hence, the cost of the pipelines is not allocated 100% to the Maximum Hour service level. The cost is apportioned across the lower service levels, too, as shown in Table 4-2. Thus the costs of peaking are shared by all customers and not exclusively allocated to those who peak the most.
Base Average Maximum Maximum
Day Day Day Hour
Demand (HCF per day)1 7,270 10,802 17,371 ÷24 hours 24 24 24 Demand (HCF per hour)1 303 450 724 1,211 Incremental Change 147 274 487 Allocation Percentage Calculations Total HCF
Base Day 303 303
% of Total 100% 100%
Average Day 303 147 450 % of Total 67% 33% 100%
Maximum Day 303 147 274 724 % of Total 42% 20% 38% 100%
Maximum Hour 303 147 274 487 1,211 % of Total 25% 12% 23% 40% 100%
Demand Service Levels
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Table 4-2. Demand Allocation Factors – Systemwide Flows Table 4-3 shows the allocation of the functionalized costs to the demand and customer service categories. Costs associated with the demand services are allocated using the factors in Table 4-1, which are based on systemwide AMI data. Costs associated with customer service are used for calculating water and fire service charges.
Table 4-3. Functional Cost Allocations (FY 2018-19)
Note: Numbers may not sum exactly due to rounding
Allocation factors from Table 4-2.
Non-Peaking
Base Average Day Maximum Day Maximum Hour
Source of Supply
Groundwater extraction 67% 33%
Water treatment 67% 33%
MWD purchased water 67% 33%
MWD readiness‐to‐serve charge 100%
Transmission
Conveyance 42% 20% 38%
Pumping 42% 20% 38%
Balancing storage 42% 20% 38%
Distribution
Conveyance 25% 12% 23% 40%
Pumping 25% 12% 23% 40%
Water quality 25% 12% 23% 40%
Balancing storage 25% 12% 23% 40%
Conservation 25% 12% 23% 40%
Customer Services
Admin, billing, meter reading, installs 100%
Demand Service Levels
Operating and Capital Extra Capacity Peaking
Expenses
Customer
Service
Base Average Maximum Maximum
Day Day Day Hour
O&M Expenses
Water Supply
Groundwater $2,195,498 Average Day $1,477,575 $717,923 $0 $0 $2,195,498 $0 $2,195,498 Water Treatment $662,375 Average Day $445,780 $216,595 $0 $0 $662,375 $0 $662,375 MWD ‐ Quantity Charge $10,968,651 Average Day $7,381,927 $3,586,725 $0 $0 $10,968,651 $0 $10,968,651 MWD ‐ Readiness‐to‐Serve Charge $1,208,310 Customer Service $0 $0 $0 $0 $0 $1,208,310 $1,208,310 Water Quality ‐ Distribution $662,375 Max Hour $165,675 $80,498 $149,714 $266,488 $662,375 $0 $662,375 Maintenance & Repair $3,317,471 Max Day $1,388,334 $674,562 $1,254,575 $0 $3,317,471 $0 $3,317,471 Water Services & Installations $1,595,271 Customer Service $0 $0 $0 $0 $0 $1,595,271 $1,595,271 Capital Project O&M $1,434,688 CIP Composite $648,473 $315,079 $259,038 $60,255 $1,282,845 $151,843 $1,434,688 Conservation $843,626 Max Hour $211,011 $102,526 $190,681 $339,409 $843,626 $0 $843,626 Fire (e.g., hydrants, meters, etc.) $58,812 Customer Service $0 $0 $0 $0 $0 $58,812 $58,812 Subtotal ‐ O&M Expenses $22,947,078 $11,718,774 $5,693,908 $1,854,008 $666,152 $19,932,842 $3,014,236 $22,947,078 Capital Expenses
PAYGo projects $7,061,200 CIP Composite $3,191,631 $1,550,747 $1,274,927 $296,560 $6,313,865 $747,335 $7,061,200 Debt Service $5,995,488 D/S Composite $1,718,078 $834,778 $1,552,550 $1,564,555 $5,669,961 $325,526 $5,995,488 Subtotal ‐ Capital Expenses $13,056,688 $4,909,709 $2,385,526 $2,827,477 $1,861,115 $11,983,826 $1,072,861 $13,056,688 CIP Composite 37.6% 18.3% 21.7% 14.3% 91.8% 8.2% 100.0% Total O&M and Capital $36,003,765 $16,628,484 $8,079,434 $4,681,485 $2,527,266 $31,916,669 $4,087,097 $36,003,765 Exp Composite 46.2% 22.4% 13.0% 7.0% 88.6% 11.4% 100.0% Internal Service Funds (Overhead) $7,154,525 Fixed/Variable $4,525,823 $0 $0 $0 $4,525,823 $2,628,701 $7,154,525 Non‐Operating Revenue ($930,358) Customer Service $0 $0 $0 $0 $0 ($930,358) ($930,358) Contribution From Reserves ($4,019,575) Exp Composite ($1,856,457) ($902,014) ($522,656) ($282,152) ($3,563,278) ($456,297) ($4,019,575) Net Revenue Requirement $38,208,357 $19,297,850 $7,177,421 $4,158,829 $2,245,114 $32,879,214 $5,329,144 $38,208,358 Allocation Factor Total
Demand Services
Coststo be Allocated
Subtotal ‐
Customer
Service
Subtotal ‐
Demand
Services
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Table 4-4 shows the derivation of the customer class allocation factors that are applied to the demand service allocations at the bottom of Table 4-3. The allocation factors apportion the cost of the demand service among the customer classes. It can be seen that the allocation to single family customers increases with each level of demand because of the peak irrigation demands that single family customers place on the facilities relative to the multi-family and commercial classes. The resulting allocations establish the cost of providing service to each customer class for each level of demand.2 The allocated demand service costs are used to determine the quantity charge rates for each class and for each tier for those classes with tiered rates.
Table 4-4. Demand Allocation Factors – Customer Classes Note: Numbers may not sum exactly due to rounding
1 Net demand services revenue requirement from Table 4-3. 2 Source: 2017 AMI data.
The customer service costs are the basis for the water and fire service charge rates. Service charge rates are based on the size of the service connection and are independent of whether the customer is single family, multi-family, commercial, or irrigation. The derivation of the quantity and service charge rates is described in Section 5. Important conclusions about the cost of base and extra capacity demand are indicated in Table 4-4. $19.3 million (59%) of the total $32.9 million is related to non-seasonal base day demand.
2 Note that the flows for Base Day, Average Day, and Maximum Day are for 24-hour periods and that the flow for Maximum Hour is for a one-hour period.
Base Average Maximum Maximum
Day Day Day Hour
Net Demand Services Revenue Requirement1 $19,297,850 $7,177,421 $4,158,829 $2,245,114 $32,879,214 Units of Service (HCF) by Customer Class2
Single Family 3,318 6,065 10,969 1,039
Multi Family 1,890 2,072 2,203 87
Commercial 2,062 2,665 4,200 84
Total Units of Service 7,270 10,802 17,371 1,211
Proportional Allocation to Customer Classes
(% of Total Units of Service)
Single Family 45.64% 56.15% 63.14% 85.82%
Multi Family 26.00% 19.18% 12.68% 7.21%
Commercial 28.36% 24.67% 24.18% 6.97%
Total 100.00% 100.00% 100.00% 100.00%
Net Revenue Requirement by Customer Class
Single Family $8,807,681 $4,029,907 $2,626,081 $1,926,737 $17,390,405 Multi Family $5,016,593 $1,376,746 $527,344 $161,921 $7,082,605 Commercial $5,473,576 $1,770,767 $1,005,405 $156,456 $8,406,204 Total $19,297,850 $7,177,421 $4,158,829 $2,245,114 $32,879,214 Demand Services
Total
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In effect, if there were no peak demands, the facilities could be sized much smaller, reducing the cost to 59% of the current cost. However, peaking occurs and the cost to provide extra capacity for this service increases incrementally.
The resulting average cost of service allocations shown in Table 4-5 indicate that Single Family Residential customers are the most costly to serve ($8.03 per HCF); Multi Family customers are the least costly to service ($7.03 per HCF) and Commercial customers are in between ($7.35 per HCF). These results are in line with expectations as those customer which tend to peak the most are more costly to serve. Analysis of the City’s AMI data indicates Single Family customers peak the most and Multi Family customers peak the least.
Table 4-5. Average Cost of Service
Rates need to be designed to generate each class’s share of the revenue requirement related to quantity charges and fixed service charges. Table 4-6 compares the revenue projected from current rates to the cost of service by customer class for the quantity charges and the revenue projected from current rates to the cost of service for the fixed serve charge. Table 4-6 indicates that the revenue from existing quantity charge rates differs from each class’ share of the cost of service. Single family and multi-family quantity charge rates need to increase to bring them in line with the cost of serving the respective classes and commercial rates need to decrease; service charges for all classes need to general 5.5% more revenue in total.
Table 4-6. Current Rate Revenue Compared With the Cost of Service Quantity Charge Proj. FY2018/19 Average
Rev. Req.1 Demand (HCF) Cost per HCF
Single Family $17,390,405 2,166,786 $8.03
Multi Family $7,082,605 1,007,664 $7.03
Commercial $8,406,204 1,143,890 $7.35
Total $32,879,214 4,318,340 $7.61
FY 2018‐19
Customer Class Current* COS $ %
Quantity Charges
Single Family 15,129,244 $ $ 15,914,148 $ 784,904 5.2% Multi Family 6,131,867 $ $ 6,538,400 $ 406,533 6.6% Commercial 8,179,100 $ $ 7,740,991 $ ‐ (438,109) 5.4% Subtotal $ 29,440,211 $ 30,193,538 $ 753,327 2.6% % of Total 85.4% 87.5%
Service Charges $ 5,049,510 $ 5,329,143 $ 279,633 5.5% % of Total 14.6% 15.5%
Grand Total $ 34,489,721 $ 35,522,681 $ 1,032,960 3.0% * Current revenue at current rates and projected FY 2018‐19 demand Difference
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Section 5 provides the recommended modifications to the quantity charges and service charges in order to meet the current cost of service requirements shown in Table 4-6.
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RATE DESIGN
DESIGN OBJECTIVES
The rate design analysis links the revenue requirements identified in Section 2 with the water rates necessary to achieve full cost recovery. The focus of this process is to set rates and substantiate that each rate reflects its fair and proportionate share of system costs.
Setting rates in California is subject to key laws and court decisions of which Article XIIID of the California Constitution is most important. Article XIIID has three substantive provisions that must be met: (1) the revenue from rates must not exceed the cost of providing service, (2) the revenue from rates must be used for providing service, and (3) the fees and charges must be proportional to the cost of providing the service. In meeting these provisions, the water supplier is responsible for meeting the burden of proof. The first two provisions are more closely related to developing revenue requirements and revenue projections. The last provision is the primary objective in rate structure design.
The San Juan Capistrano decision is a 2015 appellate court decision that found that tiered rates must be proportionate to the cost of service across the range of consumption. While acknowledging that such an analysis may be complex, no formulas, rules, or specific procedures are prescribed in the decision for how to set tiered rates, only that each tier must be cost-based.
The City has historically charged water customers the combination of a fixed service charge and a variable quantity charge based on metered water use. As previously discussed, this is a very common set of charges that is prevalent throughout the water industry. This section explains the derivation of the Quantity and service charge rates that reflect the projected cost of service.
SUMMARY OF RATE DESIGN MODIFICATIONS
Based on discussion with City staff, the Public Works Commission, and the City Council/Public Works Liaison Committee, and careful review of the cost of service analysis, the following rate design elements were discussed, and in some cases modified from current, as noted. The calculation of rates and the rationale for any recommended modifications follow this section. Maintain three separate customer classes for quantity charge rates: single family, multi family, and commercial.
Maintain four tiers for single family quantity charge rates and adjust the breakpoints of the four tiers based on current water demand patterns.
5.1 5.2
SECTION 5.
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Reduce the number of multi-family quantity charge tiers from four to two and adjust the breakpoints based on current water demand patterns. Maintain a uniform (no tiers) quantity charge rate for commercial customers. Replace the 1.25 multiplier on the quantity charge rates for outside city customers, which was an approximation of the additional cost to service outside city customers, with rates that are based on a more exacting cost analysis. Create irrigation rates for each customer class.
Develop rate stabilization factors to be applied to quantity charge rates during declared water shortages to maintain revenue stability. Derive 15.0% of rate revenue from service charges rates, which is a slight increase from the current 14.6%, to maintain revenue stability.
Develop a water reliability charge to cover the WEP costs.
QUANTITY CHARGE RATE DESIGN AND CALCULATIONS
The City has separate quantity charges for single family residential, multi-family residential, and commercial customers, which is appropriate as different levels of service are being provided to the average customer within each class. However, within the single family and multi-family customer classes, we have identified some recommended changes in the number and/or size of the tiers. Our analysis of historical customer water use data, by customer class, has led to our recommended changes. Each class’ rate design is described below.
The quantity charges calculated in Section 5.3.A (Single Family Residential), Section 5.3.B (Multi Family Residential), and Section 5.3.C (Commercial), which are the same for Inside City and Outside City customers, reflect the cost to provide service before adjustments for contributions and services provided by the City’s General Fund. Adjustments to these calculated rates due to the General Fund contributions and service impact the Inside City customer rates differently than Outside City customer rates. The rationale and calculations for adjusting the rates can be found in Section 5.3.D and the resulting adjusted quantity charge rates for Inside City and Outside City customers can be found in Section
5.3.E.
Single Family Residential Quantity Charges
Tiered rate structures are well suited to single family residential quantity charges because of the wide variation in peak demand patterns. The use of four tiers has been in place for the City’s single family residential customers and continues to be appropriate. With four tiers, it is possible to size tiers corresponding to non-seasonal base demand, average day demand, maximum day demand, and maximum hour peak demand. The size of the tiers
5.3 A.
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is based on the demand pattern for single family customers using AMI data. The proposed breakpoints align the cost associated with each level of demand with the demand in each tier.
The rate for each tier is calculated by dividing the cost of service associated with each tier (see Table 4-4) by the quantity of water subject to the rate in each tier. The size of the tiers is based on the demand pattern for single family customers using AMI data, which is summarized in Table 5-1. The division between each tier – the “breakpoint” – corresponds to the four base/extra capacity levels of demand.
Table 5-1. Single Family Tier Structure - Breakpoints
1 Source: 2017 AMI data.
The rate for each tier is the quotient of the cost of service divided by the demand within the tier. Table 5-2 shows the step-wise calculation. For example, the Tier 1 rate applies to all billed water usage. Any bi-monthly water use that exceeds the Tier 1 breakpoint will be subject to the Tier 2 rate. The quantity charge will be the sum of the amounts for the successive tiers. Whereas low water use will only pay the Tier 1 quantity charge rate, high water use will pay the sum of the quantity charges for each tier. Table 5-2 tabulates the cost increment for each of the four levels of demand. The quantity charge rate for each tier sums the increments that are added with each successive tier.
Table 5-2 shows the calculation of the per-unit cost to be paid by both Inside and Outside City single family customers, before adjustments for general fund contributions for nonoperating lease revenue and general fund service reimbursements. The total revenue requirement for the class was distributed across the tiers as shown in Table 4-4.
Base Average Maximum Maximum
Single Family Day Day Day Hour
HCF per Day1 3,318 6,065 10,969 ÷ days per billing period 60 60 60 HCF per billing period 199,079 363,900 658,146 ÷ Single Family dwelling units 7,623 7,623 7,623 Average flow per dwelling unit (HCF) 26 48 86 > 86 City of Beverly Hills Water Rate Study – Final Report
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Table 5-2. Single Family Tier Structure - Rates
1 Net revenue requirement from Table 4-4.
Multi-Family Residential Quantity Charges
The multi-family quantity charge rate structure is also tiered. The derivation of the multifamily quantity charge rate structure follows the same steps as the single family quantity charge rate structure. The size of the multi-family tiers is based on the demand pattern for multi-family customers using AMI data. For single family customers, the demand pattern is broader than it is for multi-family customers because of the variation in dwelling unit size, which is larger for single family customers, and in lot size, which for multifamily customers consists of common landscape area, if any. In both cases, smaller dwelling and lot sizes result in a much narrower range of demand for multi-family customers, as shown in Table 5-3. The separation between base, non-seasonal demand and peak demand is so close that the number of tiers for multi-family customers should be reduced from the current four tiers to two tiers to avoid tiers that are only one HCF in size.
Tier 1 Tier 2 Tier 3 Tier 4
Single Family Cost‐of‐Service per Unit Base Average Maximum Maximum Day Day Day Hour
Demand services revenue requirement1 $8,807,681 $4,029,907 $2,626,081 $1,926,737 Demand per Tier
Tier 1: 0 ‐ 26 HCF 892,880
Tier 2: 27 ‐ 48 HCF 418,778 418,778 Tier 3: 49 ‐ 86 HCF 376,905 376,905 376,905 Tier 4: over 86 HCF 478,223 478,223 478,223 478,223 ÷ Total HCF per Tier 2,166,786 1,273,906 855,128 478,223 Cost‐of‐Service per Unit (HCF) $4.06 $3.16 $3.07 $4.03
Single Family Unit Cost Calculation Tier 1 Tier 2 Tier 3 Tier 4 Maximum Hour Component $4.03
Maximum Day Component $3.07 $3.07
Average Day Component $3.16 $3.16 $3.16
Base Day Component $4.06 $4.06 $4.06 $4.06
Unit Cost per HCF (by Tier) $4.06 $7.23 $10.30 $14.33
I
I
I
B.
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Table 5-3. Multi Family Tier Structure - Breakpoints
1 Source: 2017 AMI data.
It is recommended that the Tier 1 breakpoint for the proposed rate structure be set at 8 HCF, which is the base day demand as shown in Table 5-3. With this breakpoint, the proposed Tier 1 rate remains at a similar amount as the current Tier 1 rate and the proposed Tier 2 rate is comparable to the current Tier 4 rate. With this design, the proposed Tier 1 rate remains affordable for base day demand, which includes minimal peaking.
The proposed Tier 2 rate covers the costs associated with higher rates of peaking, which are attenuated compared to single family peaking but that nonetheless exist.
Table 5-4 shows the calculation of the per-unit cost to be paid by both Inside and Outside City multi-family customers, before adjustments for general fund contributions for nonoperating lease revenue and general fund service reimbursements. The total revenue requirement for the class was distributed across the tiers as shown in Table 4-4.
Table 5-4. Multi Family Tier Structure - Rates
Note: Numbers may not sum exactly due to rounding
1 Net revenue requirement from Figure I-5.
Base Average Maximum Maximum
Multi Family Day Day Day Hour
HCF per Day1 1,890 2,072 2,203 ÷ days per billing period 60 60 60 HCF per billing period 113,389 124,320 132,162 ÷ Multi Family dwelling units 13,645 13,645 13,645 Average flow per dwelling unit (HCF) 8 9 10 > 10 Tier 1
Multi Family Cost‐of‐Service per Unit Base Average Maximum Maximum Day Day Day Hour
Demand servicesrevenue requirement1 $5,016,593 $1,376,746 $527,344 $161,921 Demand per Tier
Tier 1: 0 ‐ 8 HCF per Dwelling Unit 746,582
Tier 2: Over 8 HCF per Dwelling Unit 261,082 261,082 261,082 261,082 ÷ Total HCF per Tier 1,007,664 261,082 261,082 261,082 Cost‐of‐Service per Unit (HCF) $4.98 $5.27 $2.02 $0.62
Multi Family Unit Cost Calculation Tier 1 Tier 2
Maximum Hour Component $0.62
Maximum Day Component $2.02
Average Day Component $5.27
Base Day Component $4.98 $4.98
Unit Cost per HCF (by Tier) $4.98 $12.89
Tier 2
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Commercial Quantity Charges
The commercial quantity charges are a uniform, untiered rate that does not vary depending on the level of consumption. This structure has been in place for over ten years. We recommend maintaining the current structure because the commercial class is not homogeneous the way the residential classes are. The types of customers, the amounts of their water use, and the seasonality of their water use are so diverse as to make it problematic to determine the location of breakpoints. For that reason, tiered rates are not well suited for the commercial customer class.
Table 5-5 shows the calculation of the per-unit cost to be paid by both Inside and Outside City commercial customers, before adjustments for general fund contributions for nonoperating lease revenue and general fund service reimbursements. The total revenue requirement for the commercial class was distributed across the tiers as shown in Table 4-
4. Table 5-5. Calculation of Commercial Quantity Charge Rate (before General Fund contribution adjustments)
Quantity Charge Rate Adjustments
The quantity charge rates summarized in Table 5-6 reflect the cost to provide service before adjustments for contributions and services provided by the City’s General Fund.
At this point, both Inside City and Outside City customers would pay the same quantity charge rates because the services provided to Inside and Outside City customers are approximately the same. c.
Uniform Rate - No Tiers
Commercial Cost-of-Service per Unit Base Average Maximum Maximum Day Day Day Hour
Demand services revenue requirement $5,473,576 $1,770,767 $1,005,405 $156,456 + Total HCF 1,143,890 1,143,890 1,143,890 1,143,890
-
Cost-of-Service per Unit (HCF) $4.79 $1.55 $0.88 $0.14
Commercial Unit Cost Calculation
Maximum Hour Component
Maximum Day Component
Average Day Component
Base Day Component
Unit Cost per HCF
D.
Uniform Rate
$0.14
$0.88
$1.55
$4.79
$7.35
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Table 5-6. Summary of Cost-of-Service Quantity Charge Rates (before General Fund contribution adjustments)
1 From Table 5-2
2 From Table 5-4
3 From Table 5-6
During our analysis, we found the City’s General Fund has contributed to the Water Enterprise in two ways: 1) the General Fund has reimbursed the Water Enterprise for the lease of two properties owned by the Water Enterprise but leased out at below market rates; and, 2) the General Fund has incurred costs to serve water customers for public safety services, governmental facilities, and right-of-way maintenance. These contributions have not been accounted for in the revenue requirement used to derive the quantity charge rates shown in Table 5-6. The contributions (one of cash and one of services) impact the quantity charge rates in different ways.
The following subsections discuss the rationale and calculations for adjusting the quantity charge rates for Inside City and Outside City customers. The adjusted quantity charge rates are summarized in Section 5.3.E.
Non-Operating Lease Revenue Credit
The Water Enterprise owns two properties that are no longer used to provide water service. One property is located at 333 La Cienega/Robertson Yard and was formerly the site of the City’s water treatment plant. The other property is located at 345 Foothill and previously used by Water Enterprise for storage. Both properties are now leased for nonutility purposes. The City has entered into leases of these properties, at below-market rates, and has agreed to reimburse the Water Enterprise at market rates starting in FY 2016-17. The differential between the market and below-market rates has been estimated (based on a market survey done by the City) to be $3,109,000.
Tier Size $/HCF
Single Family1
Tier 10 ‐ 26 HCF $4.06
Tier 2 27 ‐ 48 HCF $7.23
Tier 3 49 ‐ 86 HCF $10.30
Tier 4 Over 86 HCF $14.33
Multi Family2
Tier 10 ‐ 8 HCF $4.98
Tier 2 Over 8 HCF $12.89
Commercial3
no tiers $7.35
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The revenue from the general fund for these leases will be credited to the quantity charge rates shown in Table 5-6, for both Inside City and Outside City customers because these revenues are the result of leasing properties that are owned by the Water Enterprise and both Inside City and Outside City customers support the Water Enterprise. Table 5-7 shows the calculation and the resulting credit to each tier within each customer class at $0.72 per HCF. Originally, the Public Works Commission was presented with a recommendation which provided the lease revenue credit to only the Inside City customers, which resulted in a $0.82 per HCF credit to Inside City customers and no credit to Outside City customers. However, the Public Works Commission has recommended spreading the lease revenue credit to both Inside City and Outside City customers.
Table 5-7. Quantity Charge Rate Adjustment for Lease Revenue Credit
General Fund Services Provided to the Water Enterprise
Generally speaking, City enterprise funds receive administrative services from the General Fund for which reimbursement is appropriately due. One category of these services is considered governmental overhead of which the City Manager, City Attorney, Finance, IT, and Human Resources are examples. The reimbursements from the enterprises are typically based on overhead cost allocation plans that derive the reimbursements using commonly accepted cost allocation formulae. The Water Enterprise currently reimburses the General Fund for overhead through the annual budgeting process.
A second category of services is related to specific activities that are directly charged to the enterprise. Public Works engineering associated with enterprise capital improvements is an example. The Water Enterprise also reimburses the General Fund for these services.
A third category of services is typically not considered to be overhead (therefore not included in the annual overhead cost allocation payment from the Water Enterprise to the General Fund) and is not charged directly as is the case with the second category. These services can include public safety, the use of governmental facilities such as city halls and corporation yards, and right-of-way maintenance.
As part of the cost of service analysis, we conducted a cost-based analysis3 which indicated the City’s General Fund is projected to incur approximately $2,440,000 in costs to
3 Cost Allocation Study. Prepared for the City of Beverly Hills by HF&H Consultants, LLC. November 6, 2017.
FY 2018‐19
Lease Revenue Contributions $3,109,000
Total Projected Flow (HCF) 4,318,340
Lease Revenue Credit ($/HCF) $0.72
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provide public safety, governmental facilities, and right-of-way maintenance to the Water Enterprise. Of the total $2,440,000, the General Fund incurs $2,015,000 per year to serve Inside City customers and $425,000 per year to serve Outside City customers.
For Inside City customers, these costs are covered by property taxes paid to the City; therefore, no adjustment to the quantity charge rates will be made to the Inside City customers for this item.4 Outside City customers do not contribute property taxes to the City; therefore, an adjustment needs to be made to the Outside City quantity charges rates so the General Fund can recoup the cost of these services. The reimbursement by Outside City customers (through the quantity charge rate adjustment) for public safety services, governmental facilities, and right-of-way maintenance is required to maintain parity with Inside City customers, which has previously been paying the entire cost through property tax revenue.
The entire $425,000 cost can be recovered by adding $0.82 per HCF (see Table 5-8) to the Outside City quantity charges for its single family, multi family, and commercial customers.
Table 5-8. Quantity Charge Rate Adjustment for General Fund Services Adjusted Quantity Charge Rates
Table 5-9 summarizes the recommended FY 2018-19 quantity charge rates, to be effective March 8, 2019. The recommended rates reflect the cost of service calculations that resulted in the common FY 2018-19 quantity charge rates paid by both Inside City and Outside City customers (see Table 5-6), with the recommended adjustments to reflect the contributions made by the City’s General Fund (discussed in Section 5.3.B).
4 The City plans to continue to cover Beverly Hills’ share of these three enterprise reimbursements with property tax revenue and not to include them in the Inside City quantity charge water rates.
Less: Amount
Covered by
Property Taxes
Net
needed
from Rates
Less: Amount
Covered by
Property
Net
needed
from Rates
Public Safety $743,050 82.6% $613,759 ($613,759) $0 17.4% $129,291 $0 $129,291 Government Facility $359,066 82.6% $296,588 ($296,588) $0 17.4% $62,477 $0 $62,477 Right‐of‐Way Maintenance $1,340,947 82.6% $1,107,622 ($1,107,622) $0 17.4% $233,325 $0 $233,325 $2,443,063 ($2,017,970) $0 $0 $425,093
Proj. FY 2018‐19 Flow (HCF) 516,562
Quantity Charge rate adjustment: None Quantity Charge rate adjustment: $0.82 ($ per HCF) 1
Cost Allocation Study. Prepared for the City of Beverly Hills by HF&H Consultants, LLC. November 6, 2017. 2 Based on proportional share of total water connections Service
FY 2018‐19
Projected
Cost1
Inside City Customers Outside City Customers
Allocation2 Allocation2
E.
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Table 5-9. Recommended FY 2018-19 Quantity Charge Rates (effective 3/8/2019) 1 From Table 5-6
2 From Table 5-7
3 From Table 5-8
Table 5-10 compares the current and recommended quantity charge rates to be effective March 8, 2019 (derived in Table 5-9) with subsequent 3% annual adjustments, which corresponds with the respective annual increases in the Water Enterprises revenue requirement as shown in Table 3-2.
Tier Size $/HCF1
Lease
Revenue2
General
Fund Cost
Allocation3
Total
($/HCF)
Inside City
Single Family
Tier 10 ‐ 26 HCF $4.06 ($0.72) $0.00 $3.34
Tier 2 27 ‐ 48HCF $7.23 ($0.72) $0.00 $6.51
Tier 3 49 ‐ 86HCF $10.30 ($0.72) $0.00 $9.58
Tier 4 Over 86 HCF $14.33 ($0.72) $0.00 $13.61
Multi Family
Tier 10 ‐ 8HCF $4.98 ($0.72) $0.00 $4.26
Tier 2 Over 8HCF $12.89 ($0.72) $0.00 $12.17
Commercial $7.35 ($0.72) $0.00 $6.63
Outside City
Single Family
Tier 10 ‐ 26 HCF $4.06 ($0.72) $0.82 $4.16
Tier 2 27 ‐ 48HCF $7.23 ($0.72) $0.82 $7.33
Tier 3 49 ‐ 86HCF $10.30 ($0.72) $0.82 $10.40
Tier 4 Over 86 HCF $14.33 ($0.72) $0.82 $14.43
Multi Family
Tier 10 ‐ 8HCF $4.98 ($0.72) $0.82 $5.08
Tier 2 Over 8HCF $12.89 ($0.72) $0.82 $12.99
Commercial $7.35 ($0.72) $0.82 $7.45
Cost‐of‐Service Analysis Adjustments
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Table 5-10. Current and Recommended Quantity Charge Rates
SERVICE CHARGE RATES
Service charge rates are fixed rates charged per account that are billed each billing period.
The service charge rates are graduated in proportion to the capacity of the service serving a property. Service charge rates are charged for water service and for those customers with separate services for fire service.
Water Service Charge Rates
The cost of service analysis determined how much of the revenue requirement is attributable to the customer service function. The function has two components – customer accounts and customer capacity – each of which is itemized in the cost of service analysis in Table 5-12. Costs attributable to customer accounts are allocated to customers in proportion to the number of accounts. Costs attributable to customer capacity are allocated to customers in proportion to the capacity of their services. The sum of the two components equals the service charge rate per connection.
Table 5-11 lists the units of service corresponding to each of the cost components. The 9,923 meters are used for apportioning the customer accounts cost component.
Tier Size $/HCF Tier Size 3/8/2019 1/1/2020 1/1/2021 1/1/2022 Single Family Single Family
Tier 10 ‐ 10 HCF $4.02 Tier 10 ‐ 26 HCF $3.34 $3.44 $3.54 $3.65 Tier 2 11 ‐ 55 HCF $5.30 Tier 2 27 ‐ 48 HCF $6.51 $6.71 $6.91 $7.12 Tier 3 56 ‐ 120 HCF $8.36 Tier 3 49 ‐ 86 HCF $9.58 $9.87 $10.17 $10.48 Tier 4 Over 120 HCF $16.15 Tier 4 Over 86 HCF $13.61 $14.02 $14.44 $14.87 Multi Family Multi Family
Tier 10 ‐ 4 HCF $4.02 Tier 10 ‐ 8 HCF $4.26 $4.39 $4.52 $4.66 Tier 25 ‐ 9 HCF $5.30 Tier 2 Over 8 HCF $12.17 $12.54 $12.92 $13.31 Tier 3 10 ‐ 16 HCF $8.36
Tier 4 Over 16 HCF $16.15
Commercial $6.86 Commercial $6.63 $6.83 $7.03 $7.24
Single Family Single Family
Tier 10 ‐ 10 HCF $5.01 Tier 10 ‐ 26 HCF $4.16 $4.28 $4.41 $4.54 Tier 2 11 ‐ 55 HCF $6.63 Tier 2 27 ‐ 48 HCF $7.33 $7.55 $7.78 $8.01 Tier 3 56 ‐ 120 HCF $10.45 Tier 3 49 ‐ 86 HCF $10.40 $10.71 $11.03 $11.36 Tier 4 Over 120 HCF $20.18 Tier 4 Over 86 HCF $14.43 $14.86 $15.31 $15.77 Multi Family Multi Family
Tier 10 ‐ 4 HCF $5.01 Tier 10 ‐ 8 HCF $5.08 $5.23 $5.39 $5.55 Tier 25 ‐ 9 HCF $6.63 Tier 2 Over 8 HCF $12.99 $13.38 $13.78 $14.19 Tier 3 10 ‐ 16 HCF $10.45
Tier 4 Over 16 HCF $20.18
Commercial $8.58 Commercial $7.45 $7.67 $7.90 $8.14
Current Quantity Charge Rates Recommended Quantity Charge Rates $/HCF
Inside City
Outside City
5.4 A.
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Capacity costs associated with the distribution system are apportioned among the connections in proportion to the capacity associated with each connection. Accounts are converted to Equivalent Meter Units (EMUs) to apportion the customer capacity cost component. An EMU represents the number of 1-inch meters to which a larger meter is equivalent. For example, a 2-inch meter provides 3.2 times as much capacity as a 1-inch meter. The capacity multipliers are based on the safe maximum operating capacity by meter size per the current AWWA standards included in Table B-2 of AWWA’s M-1 manual, seventh edition. For example, the 1,121 2-inch meters equal 3,587 EMUs. There are 16,251 total EMUs. In effect, the 9,923 services of various sizes have the equivalent capacity as 16,251 1-inch meters.
Table 5-11. Service Charge Units of Service
Table 5-12 derives the unit costs for the customer accounts and customer capacity cost components. Each account is allocated $12.07 for the customer account cost component.
That amount represents the costs incurred to maintain an account regardless of the capacity of the service. Each account is also allocated $36.91 per EMU. That amount represents a portion of the cost of providing distribution system capacity for each account, and increases based on the capacity of the meter.
Service Total # of Meter Capacity
Size Meters Ratings (gpm) Multiplier* EMUs
a bc = b ÷ 50 d = a * c
1" 6,671 50 1.00 6,671
1‐1/2" 1,879 100 2.00 3,758
2" 1,121 160 3.20 3,587
3" 147 320 6.40 941
4" 87 500 10.00 870
6" 17 1,000 20.00 340
8" 0 1,600 32.00 0
10" 1 4,200 84.00 84
Total Meters 9,923 Total EMUs 16,251
* Capacity multiplier assumes 1" meter = 1 EMU = 50 gals/min City of Beverly Hills Water Rate Study – Final Report
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Table 5-12. Service Charge Unit Costs
Source: FY 2015-19 Customer Service Expenses from Table 4-3 Source: Units of service from Figure 5-11
Table 5-13 combines the customer service and capacity components into a single service charge for each size service.
Table 5-13. Recommended Monthly Service Charge Rates (effective 3/8/2019) Source: Figures 5-11 and 5-12.
Tables 5-14 compares the current and recommended service charge rates. Historically, the City charged separate rates for Inside and Outside City customers. We recommend a single set of service charge rates that does not differentiate between a customer’s location within the City’s service area. In this way, the increased cost of serving Outside City customers will be recovered from only the quantity Charge rates.
Customer Customer
FY 2018‐19 Customer Account Capacity
Service Expenses Component Component Total
O&M Expenses 1,314,939 1,699,297 $3,014,236 Capital Expenses $560,872 $511,989 $1,072,861
Administrative Overhead $173,886 $2,454,815 $2,628,701
Non‐Operating Revenue ($1,139,780) ($246,875) ($1,386,655) Total FY 2018‐19 $909,918 $4,419,226 $5,329,143
Less: Fire Service Revenue ($191,542) ($820,376) ($1,011,918) Net Revenue Requirement $718,376 $3,598,850 $4,317,225
Units of Service 9,923 16,251 Meters EMUs
Unit Cost (bi‐monthly) $12.07 $36.91
per Account per EMU
Account Fixed
Service Component Capacity Service Charge
Size ($/bi‐month) $/EMU Multiplier Total ($/bi‐month)
a b cd = b * ce = a + d
1" $12.07 $36.91 1.00 $36.91 $48.97
1‐1/2" $12.07 $36.91 2.00 $73.82 $85.88
2" $12.07 $36.91 3.20 $118.11 $130.17
3" $12.07 $36.91 6.40 $236.22 $248.28
4" $12.07 $36.91 10.00 $369.09 $381.16
6" $12.07 $36.91 20.00 $738.18 $750.25
8" $12.07 $36.91 32.00 $1,181.09 $1,193.15
10" $12.07 $36.91 84.00 $3,100.36 $3,112.42
Capacity Component
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The service charge rates projected for 1/1/2020 and the subsequent two years are based on the proposed rates to be effective March 8, 2019 with 3% annual adjustments, which corresponds with the respective annual increases in the Water Enterprises revenue requirement as shown in Figure 3-2.
Table 5-14. Current and Recommended Water Service Charge Rates Fire Service Charge Rates
All customers pay service charges based on the size of their connection. Some customers have additional Fire Service connections. Fire Service connections are for sprinkler systems that provide water on a stand-by basis for fire suppression. Revenue from fire service charges covers about 3% of the total revenue requirement. The cost of service analysis is currently limited in deriving the full cost of fire service because costs directly related to fire service are not identified in the budget. As a result, the allocation is limited by the level of detail in the budget’s cost breakdown. For that reason, it would be appropriate to maintain the current Fire Service rates on March 8, 2019 until such time as budget detail is sufficient to allow for thorough cost of service analysis.
It is recommended that the Outside City Fire Service rates be set equal to the Inside City Fire Service rates effective March 8, 2019. Subsequently, each January 1 thereafter, we recommend 3% annual adjustments which correspond with the respective annual increases in the projected revenue requirement as shown in Figure 3-2.
Meter Size Inside City Outside City 3/8/2019 1/1/2020 1/1/2021 1/1/2022 1" $44.66 $55.83 $48.97 $50.44 $51.95 $53.51
1.5" $77.41 $96.77 $85.88 $88.46 $91.11 $93.84
2" $116.72 $145.91 $130.17 $134.08 $138.10 $142.24
3" $208.43 $260.53 $248.28 $255.73 $263.40 $271.30
4" $339.44 $424.30 $381.16 $392.59 $404.37 $416.50
6" $666.96 $833.69 $750.25 $772.76 $795.94 $819.82
8" $1,071.86 $1,339.82 $1,193.15 $1,228.94 $1,265.81 $1,303.78 10" $1,857.96 $2,322.44 $3,112.42 $3,205.79 $3,301.96 $3,401.02 Current Recommended (Inside and Outside City)
$ per bi‐monthly bill $ per bi‐monthly bill
B.
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Table 5-15. Current and Recommended Bi-monthly Fire Service Rates
IRRIGATION CUSTOMER CLASS AND RATES
Meeting the needs for irrigation is an increasing challenge in California. Legislation has been in place that calls for a 20% reduction in urban water use by 2020. The Governor recently signed SB 606 which places further conditions on urban water suppliers to eliminate excessive water use. Irrigation is one of the easiest types of water use to eliminate excessive use. Improving irrigation efficiency is facilitated by separately metering irrigation. This is recognized by the City, which is requiring new customers with potentially significant irrigation to install separate irrigation meters. Requiring the installation of separate irrigation services leads to creating an irrigation class or classes.
It is not uncommon to see a single irrigation class. This class is typically for large turf irrigation at municipal parks, industrial parks, and commercial sites such as golf courses.
Residential irrigation is usually not included. In Beverly Hills’ case, separate irrigation meters can be mandatory for any class – single family, multi family, and commercial (which includes municipal irrigation). In this case, it is appropriate to establish irrigation classes within the single family, multi family, and commercial classes.
Review of Current Irrigation Water Use
In our review of water use during 2017, we found the following:
There are currently 245 irrigation meters in place, which is 2.5% of the total meters currently connected. The aggregated outdoor water use from irrigation meters is currently only 3% of total water use in the City by all customer classes.
The quantity charge revenue from the aggregated irrigation customers is 12% of the total seasonal quantity charge revenue. This is not surprising because irrigation demand is inherently seasonal. If the irrigation class were to double in size, it could amount to a quarter of the seasonal demand.
In non-drought years, variations in seasonal water demand can fluctuate by 5% to 10%, which is slightly greater than the current total demand of the aggregated irrigation customers.
Meter Size Inside City Outside City 3/8/2019 1/1/2020 1/1/2021 1/1/2022 2" orsmaller $27.20 $34.00 $27.20 $28.02 $28.86 $29.73
2 1/2" $40.56 $50.71 $40.56 $41.78 $43.03 $44.32
3" $59.08 $73.86 $59.08 $60.85 $62.68 $64.56
4" $114.11 $142.64 $114.11 $117.53 $121.06 $124.69
6" $311.62 $389.53 $311.62 $320.97 $330.60 $340.52
8" $652.26 $815.32 $652.26 $671.83 $691.98 $712.74
10" $1,164.63 $1,455.79 $1,164.63 $1,199.57 $1,235.56 $1,272.63 Current Recommended (Inside and Outside City)
5.5 A.
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The growth in the number of irrigation services is likely to vary by irrigation subclass.
None of the irrigation subclasses is currently large enough to warrant a separate rate because the number of services in each subclass is so small.
Recommendation
The proposed irrigation subclasses would be charged the same rates as the domestic subclass within each class. These irrigation customers would pay service and quantity charges as though they were domestic customers. However, during water shortages, it is proposed that irrigation water use would be reduced six times more than domestic water use.
It was recommended that the City review the irrigation quantity charge rates in the future to evaluate whether to continue to charge irrigation customers the same quantity charge rates as the domestic customers in the same class.
The point at which the irrigation customers become a large enough class in the aggregate to warrant a separate rate is not an absolute point. The class should be large enough so that seasonal fluctuations are not so great that deriving cost allocation factors based on demand are reasonably stable. The problem is compounded because irrigation demand is inherently seasonal. Multi-year averages of irrigation demand can smooth the fluctuations.
A doubling in size of the irrigation class would be a reasonable point to re-evaluate whether a separate rate is warranted for the aggregated irrigation class. However, at twice its size, the irrigation class would still be a distant third in size compared with the domestic subclasses. At that time, the question should also be considered as to whether a change is warranted simply because it becomes possible to calculate a separate irrigation rate with reasonable stability. It is possible that, if the cost of service analysis accounts for the fact that irrigation water may be interruptible during water shortage conditions, therefore less reliable, a new irrigation rate may be lower than continuing to charge the irrigation subclasses the same rate as the domestic subclasses.
WATER SHORTAGE REVENUE STABILIZATION FACTORS
During prolonged shortages, customers are required to conserve or even ration their water use. These shortages can include locally declared water shortages caused by facility operations, State mandated reductions, or natural disasters including droughts. The magnitude of the water savings can significantly reduce water sales revenue from quantity charges.
B.
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During shortages, costs do not decrease in direct proportion to decreases in water use because typically over 70% of the costs are fixed regardless of how much water is supplied. Hence, a 10% reduction in water use may only reduce costs about 3% (i.e., 10% of the 30% of costs that vary in proportion to water use). Because the City only receives 15% of its revenue from fixed charges, a 10% reduction in water sales results in an 8.5% reduction in revenue (i.e., 10% of 85% of the revenue from quantity charges). This means that, in a year-long 10% shortage, 97% of the costs are incurred while only 91.5% of the revenue is received, which is a 5.5% revenue shortfall.
Ten percent shortages are not uncommon or as severe as the 2016 shortage, when the State mandated a 32% reduction for the City. Reserves may be able to cover the revenue shortfall during brief rationing periods. For longer or more severe rationing periods, rate increases are needed to offset this revenue shortfall in order to maintain service levels.
On average, the rate increases are designed to be revenue neutral. In other words, customers that reduce their demand by the required amount will pay quantity charge rates, which when multiplied by their reduced demand, will generate only enough quantity charge revenue to cover costs.
The City proposes to use Water Shortage Revenue Stabilization Factors to make the rate adjustments that are needed during shortages declared by the City Council to offset the revenue shortfalls caused by conservation. Although the rate increases are designed to be revenue neutral, they must be implemented in compliance with the Proposition 218 protest process. Revenue stabilization adjustments can be implemented that would eliminate the need for a Proposition 218 process every time revenue-neutral adjustments are needed during shortages.
Methodology
Since the passage of Proposition 218, water shortages have occurred that have led an increasing number of water suppliers to adopt revenue stabilization adjustments that do not trigger the Proposition 218 protest process each time an adjustment is made. This is accomplished by including the Water Shortage Revenue Stabilization Adjustment procedure in the Proposition 218 notice at the time rates are adopted in compliance with Proposition 218. The notice describes the process, which rate payers have the right to protest.
Barring a majority protest, the adjustment process is adopted as part of the rate increase and can be implemented as needed during the term of the adopted rate increases.
The adjustment process includes factors by which quantity charge rates are adjusted in conjunction with the reduction stages in the Water Shortage Contingency Plan. The factors are only applied to the quantity charge rates and not to the service charge rates to give effect only to customer’s changes in water demand. The City’s current Water Shortage Contingency Plan is based on the same reduction in water use for all classes in each of the five stages. As part of the recommended Water Shortage Revenue Stabilization Adjustments, it is proposed that the shortage reductions will vary by customer class. Each A.
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class’ reduction will be determined by reducing “outdoor” water use (seasonal water use) six times more than “indoor” (average winter water use) water use.5 It is assumed that seasonal “outdoor” water demand is primarily for irrigation, which is a lower beneficial use than non-seasonal “indoor” demand, which is primarily related to health and safety needs.
Analysis
Based on calendar year 2017 AMI data, the resulting reductions are summarized in Table 5-16. The reductions shown represent the customer class reductions required to achieve the reduction associated with each shortage stage. The customer class reductions are greater or less than the overall average for each stage depending on how much of each class’ water demand is seasonal.
Table 5-16. Shortage Reductions by Class
Table 5-17 shows the calculation of each customer class’ respective shortage reduction required during each shortage stage. The annual demand for each class is separated into indoor and outdoor water use where indoor water use is defined as the period from January through March multiplied times four to get the annualized indoor water use over 12 months. Subtracting indoor water use from the total annual water use determines the seasonal outdoor water use. In the case of the irrigation customer class, all of the demand is considered to be outdoor water use.
The percentage reductions for each customer class required to achieve the overall reduction for a particular stage are derived so that outdoor consumption is reduced six times indoor consumption. In a Stage A shortage, a 1.9% reduction in indoor water use and an
11.4% reduction in outdoor water use are required to achieve an overall 5% reduction.
Applying the same reduction factors to each class results in different overall reductions for the class based on the relative proportions of their indoor and outdoor water use.
To achieve the 5% Stage A reduction, single family and irrigation customers are required to conserve more than 5% because they have higher seasonal use compared to multi-
5 This 6-to-1 reduction formula was implemented by the San Francisco Public Utilities Commission during the 1987-1992 drought.
Stage A Stage B Stage C Stage D Stage E
Class 5% Reduction 10% Reduction 20% Reduction 30% Reduction 50% Reduction Single Family 6% 12% 24% 36% 58%
Multi Family 3% 5% 11% 16% 31%
Commercial 4% 7% 15% 22% 40%
Irrigation 11% 22% 45% 67% 100%
Shortage Reductions By Class
B.
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family and commercial customers. This pattern is consistently repeated for Stages A, B, C, and D. Note that the 50% reduction required in Stage E is so great that all outdoor water use is eliminated and indoor water use has to be cut back 24.5%, which is a 4.8-to1.0 relationship, not 6.0-to-1.0. In Stage E, a 100% reduction in water use by irrigation customers is required.
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Table 5-17. Calculation of Shortage Reductions by Stage and Customer Class 5% Stage A Reduction
Class Total Indoor Outdoor Indoor Outdoor Indoor Outdoor Total Total Single Family 2,124,994 1,172,836 952,157 1.9% 11.4% 22,239 108,326 130,564 6% Multi Family 737,223 676,030 61,193 1.9% 11.4% 12,818 6,962 19,780 3% Commercial 898,704 717,328 181,376 1.9% 11.4% 13,602 20,635 34,236 4% Irrigation ‐ 113,132 113,132 1.9% 11.4% ‐ 12,871 12,871 11% Total 3,874,052 2,566,194 1,307,859 1.9% 11.4% 48,659 148,793 197,452 5% 10% Stage B Reduction
Class Total Indoor Outdoor Indoor Outdoor Indoor Outdoor Total Total Single Family 2,124,994 1,172,836 952,157 3.7% 22.3% 43,633 212,537 256,170 12% Multi Family 737,223 676,030 61,193 3.7% 22.3% 25,150 13,659 38,809 5% Commercial 898,704 717,328 181,376 3.7% 22.3% 26,687 40,486 67,173 7% Irrigation ‐ 113,132 113,132 3.7% 22.3% ‐ 25,253 25,253 22% Total 3,874,052 2,566,194 1,307,859 3.7% 22.3% 95,470 291,936 387,405 10% 20% Stage C Reduction
Class Total Indoor Outdoor Indoor Outdoor Indoor Outdoor Total Total Single Family 2,124,994 1,172,836 952,157 7.4% 44.6% 87,265 425,075 512,340 24% Multi Family 737,223 676,030 61,193 7.4% 44.6% 50,300 27,318 77,619 11% Commercial 898,704 717,328 181,376 7.4% 44.6% 53,373 80,972 134,346 15% Irrigation ‐ 113,132 113,132 7.4% 44.6% ‐ 50,506 50,506 45% Total 3,874,052 2,566,194 1,307,859 7.4% 44.6% 190,939 583,871 774,810 20% 30% Stage D Reduction
Class Total Indoor Outdoor Indoor Outdoor Indoor Outdoor Total Total Single Family 2,124,994 1,172,836 952,157 11.2% 67.0% 130,898 637,612 768,510 36% Multi Family 737,223 676,030 61,193 11.2% 67.0% 75,451 40,978 116,428 16% Commercial 898,704 717,328 181,376 11.2% 67.0% 80,060 121,459 201,518 22% Irrigation ‐ 113,132 113,132 11.2% 67.0% ‐ 75,759 75,759 67% Total 3,874,052 2,566,194 1,307,859 11.2% 67.0% 286,409 875,807 1,162,216 30% 50% Stage E Reduction
Class Total Indoor Outdoor Indoor Outdoor Indoor Outdoor Total Total Single Family 2,124,994 1,172,836 952,157 24.5% 100.0% 287,551 952,157 1,239,708 58% Multi Family 737,223 676,030 61,193 24.5% 100.0% 165,746 61,193 226,939 31% Commercial 898,704 717,328 181,376 24.5% 100.0% 175,871 181,376 357,247 40% Irrigation ‐ 113,132 113,132 24.5% 100.0% ‐ 113,132 113,132 100% Total 3,874,052 2,566,194 1,307,859 24.5% 100.0% 629,168 1,307,859 1,937,026 50% Baseline Annual Demand (HCF) Reductions
Baseline Annual Demand (HCF) Reductions
Baseline Annual Demand (HCF) Reductions
Baseline Annual Demand (HCF) Reductions
Baseline Annual Demand (HCF) Reductions
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The service charge rates are fixed and generate about 15% of the total rate revenue regardless of shortages. The remaining 85% of revenue is generated by the quantity charge rates. In deriving the revenue stabilization factors, the factors will only apply to the quantity charge rates because fluctuations in water use correlate with fluctuations in variable costs. Each customer class has its own set of revenue stabilization factors corresponding to its reduction in each stage of shortage.
The formula for the revenue stabilization factors comprises conservation and variable cost components. The conservation component adjusts to account for the required reduction in water demand. The variable cost component adjusts to account for the portion of variable costs that is covered by the quantity charges. The revenue stabilization factors are the product of the conservation component multiplied by the variable cost component. Each component is defined as follows:
Revenue Stabilization Factor = Conservation Component multiplied times Variable Cost Component, where Conservation Component = 1/(1 - a), where
a = required percentage reduction, which varies by customer class.
Variable Cost Component = (b - (c * a))/b, where
a = required percentage reduction, which varies by customer class; b = percentage of revenue from total service and quantity charges for all customer classes that is attributable to quantity charges, an amount that is currently 85%; and
c = percentage of total revenue requirement covered by service and quantity charges that varies based on fluctuations in demand, an amount that is currently 35%.6 The following example illustrates how the formula determined the 1.039 revenue stabilization factor in Table 5-18 for the single family customer class in a Stage A shortage in which an overall conservation goal of 5% if required.
Conservation Component: 1/(1 - a) = 1/(1 - 0.0614) = 1.0654, where
6 The cost of MWD water is the largest example of a variable cost, which varies with water demand.
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a = required percentage reduction is 6.14% for the single family customer class (see Figure V-17, where a rounded 6% is shown).
Variable Cost Component: (b - (c * a))/b = (0.85 - (0.35 * 0.0614))/0.85 = 0.9747, where
a = 6.14% reduction for single family customers in a Stage A shortage. b = 85% of total rate revenue is generated by quantity charges; and c = 35% of revenue requirement is related to variable costs.
Revenue Stabilization Factor = 1.0654 * 0.9747 = 1.0385 or 1.039 rounded.
The single family residential quantity charge rates in effect under non-shortage conditions would be multiplied by 1.039 to derive the quantity charge rates to be in effect during a Stage A water shortage. Table 5-18 shows the adjustment factors that would be applied to the rates that would normally be in effect absent declared shortages. 7 Table 5-18. Water Shortage Revenue Stabilization Factors by Class Implementation
The recommended water shortage revenue stabilization adjustments in Table 5-18 are implemented only during periods of declared shortages. The adjustments can go in either direction from stage to stage depending on whether the level of reduction is increasing or decreasing during the shortage. At least 30 days prior to making the adjustment, notice must be provided to rate payers, which can be included in the customer’s bills. No protest process is required.
7 In Stage E, there is no adjustment factor in Table 5-18 for irrigation because irrigation is 100% curtailed.
Irrigation water use in Stage E is prohibited and would be subject to sanctions.
Stage A Stage B Stage C Stage D Stage E
Class 5% Reduction 10% Reduction 20% Reduction 30% Reduction 50% Reduction Single Family 1.039 1.081 1.187 1.333 1.824
Multi Family 1.016 1.033 1.069 1.110 1.262
Commercial 1.023 1.048 1.103 1.170 1.388
Irrigation 1.076 1.169 1.474 2.192 n/a
To be applied to the non‐shortage rates in effect prior to the shortage has been declared.
Revenue Stabilization Factors By Class
C.
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They act similarly to the pass-through adjustment for the cost of MWD purchased water, which was incorporated into the Proposition 218 notice in last year’s rate increase. The pass-through adjustment allows the City to adjust quantity charge rates to track any difference between the MWD rates that were included in the model and the actual rates adopted each year by MWD. The pass-through adjustment can also be made by providing 30-day notice in the customer bills without triggering the need for a Proposition 218 protest process.
WATER RELIABILITY CHARGE
The City Council is considering the development of local water supplies in order to diversify and expand its sources of supply. By doing so, reliability will be improved during shortages. In addition, the need to rely on purchased water from Metropolitan Water District will be reduced. In return for these benefits, a new, separate water reliability charge is proposed that would provide a steady source of funding over the lifecycle of the WEP project.
The water reliability charge will pay for the cost of developing local water supplies that will augment existing water supplies, thereby improving reliability by reducing the impact of water shortages. This new charge would be created so that customers will understand and help pay for the improved level of service that will lessen the level of cutback during shortages.
This new charge would be uniformly applied to all water use, on a per-HCF basis. The effect of applying an equal, uniform rate to all water use is that the same cost of additional reliability is paid for all water used by all customers. The principle is that all customers get the same benefit of improved reliability regardless of their customer class or their level of water use.
To determine the necessary per-unit charge to fund the La Brea Subarea water reliability project, we develop a 30-year cash flow model (See Appendix A-1 and A-2). The capital expenses are based on the La Brea Subarea Preliminary Design Report (PDR) prepared by Michael Baker International, in association with Richard C. Slade & Associates, LLC and Carollo Engineers. The La Brea Subarea project is anticipated to add 1,700 acre feet per year of additional ground water supply to the City, which amounts to approximately 18% of the Water Enterprise’s total water supply. The project includes the following components:
1. Three (3) groundwater production wells in the La Brea Subarea
2. Raw water transmission main from the production wells to the Foothill Water Treatment Plant (approximately 4 miles)
The project is anticipated to be producing the 1,700 acre feet of groundwater by FY 2023-
24. Projected expenses for the project are based on the PDR, which projects a cost of
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$60.3M ($55.8 million in capital expenses and $4.5 million in additional staffing and O&M expenses; Table 5-19) to bring the La Brea Subarea wells to full production by FY 2023-
24. Certain adjustments were made to the PDR cost projections through discussions with staff. For example, land acquisitions were originally projected to occur in FY 2016-17 and FY 2017-18; while some of the land was acquired in 2018, the remaining acquisitions are now projected to occur between now and the end of FY 2019-20. The land acquisition costs in the cash-flow analysis were inflated and shifted to later dates to reflect the new projections. After start up, operating costs are estimated to be $2.15 million 2018 dollars) annually.
Table 5-19. Projected Water Reliability Construction Costs Due to the front loading of capital expenses during the first six to seven years of the project, simply raising water rates would be too much of a burden on current rate payers.
Therefore, working with staff, and input from the Public Works Commission and Public Works Liaison Committee, we developed the following funding strategy, which would require a combination of the water reliability charge, issuing debt, and the use of reserves.
1. $41.85 million Revenue Bond. To be issued in FY 2019-20 for a 30-year term at 4% interest. Annual debt service payments would be made from revenues generated by the water reliability charge.
FY 2017‐18 FY 2018‐19 FY 2019‐20 FY 2020‐21 FY 2021‐22 FY 2022‐23 FY 2023‐24 Total Capital Expenses
Preliminary Design Report $0 $874,182 $0 $0 $0 $0 $0
Land Acquisition (3rd Well Site) $9,000,000 $2,787,250 $2,787,250 $0 $0 $0 $0 CEQA $0 $327,818 $0 $0 $0 $0 $0
Final Design $0 $1,678,092 $1,296,326 $1,335,216 $0 $0 $0 Engineerings Svcs During Const. $0 $542,766 $559,049 $575,821 $593,095 $610,888 $0 Construction Mgmt and Inspection $0 $687,503 $708,128 $729,372 $751,254 $773,791 $0 Well Drilling (3 sites) $0 $1,122,941 $2,313,258 $0 $0 $0 $0 Transmission Main $0 $0 $3,664,342 $3,774,272 $3,887,500 $0 $0 Well Equipping (3 sites) $0 $464,553 $0 $3,107,874 $3,201,110 $0 $0 Treatment Plant $0 $0 $0 $0 $3,092,381 $3,200,302 $0
System Permitting & Testing $0 $0 $0 $0 $0 $660,375 $680,186 Total Capital Expenses $9,000,000 $8,485,106 $11,328,354 $9,522,555 $11,525,340 $5,245,356 $680,186 $55,786,896 Operational Expenses
O&M per PDR $0 $0 $0 $347,782 $358,216 $368,962 $380,031 Additional City Staffing
Project Manager 3 $0 $206,837 $212,895 $219,135 $225,562 $232,182 $239,000 Water Treatment Operator 1 $0 $0 $0 $0 $0 $163,573 $168,480 Pump/Well Mechanic $0 $109,273 $112,551 $115,927 $119,405 $122,987 $126,677 Pump/Well Electrician $0 $109,273 $112,551 $115,927 $119,405 $122,987 $126,677 Total Operational Expenses $0 $425,382 $437,997 $798,772 $822,588 $1,010,692 $1,040,866 $4,536,298 Annual Expenditures (until start up) $9,000,000 $8,910,488 $11,766,351 $10,321,327 $12,347,928 $6,256,049 $1,721,052 $60,323,193 City of Beverly Hills Water Rate Study – Final Report
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2. Water Enterprise Reserves. $12,500,000 in reserves is available during the construction period, on an as-needed basis. The reserves are drawn down during the construction period and subsequently restored as quickly as possible from revenues generated from the water reliability charge.
3. Water Reliability Charge Revenue. Revenue generated by the water reliability charge, over a 30-year period, will be used to cover annual O&M costs, restore reserves, and make debt service payments for any debt-funded costs during construction.
We developed a 30-year cash flow model to calculate the uniform quantity charge rates to be charged equally to Inside City and Outside City customers (see Appendix A-1), on all water use, and the same rate for all customer classes (i.e., single family, multi family, and commercial). Based on the funding strategy described above, the average unit cost equals $0.38 per HCF starting in 2019, with annual $0.01 increases through 2049.
The potential is being explored whereby the City of Beverly Hills’ general fund would subsidize a portion of the water reliability charge for Inside City customers through a $10 million cash contribution during the construction phase of the project. With a $10 million subsidy, the water reliability charge for Inside City customers would be reduced from $0.38 per HCF to $0.23 per HCF starting in 2019. The Outside City customer rate would not change. We modeled the impacts of the $10 million cash contribution (see Appendix A-2). The $10 million contribution would reduce the amount of the revenue bond to be issued from $41.85 million to $31.85 million, saving approximately $7.1 million in interest expense over the 30-year period. The combination of the $10 million cash contribution and the $7.1 million in interest cost savings results in a subsidy to the Inside City water reliability charge of $0.15 per HCF. The Outside City customer water reliability charge remains unchanged. The results are summarized in Table 5-20.
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Table 5-20. Summary of Water Reliability Charge Analyses and Recommended Rates Assumptions: No GF Subsidv With GF Subsidy
Bond (30yr$, 4.0%) $41.85M $31.85M
Total Interest Incurred $30.5M $23.4M
Contribution from Reserves $12.5M $12.5M
- - General Fund Subsidy Amount - $10M
- -
Interest Savings from GF Subsiy - $7.1M
Inside Cty Subs~iy for 30 years (Shct $0.00 $0.15
Rates per HCF
Annual Rate Increase 1cent per HCF 1cent per HCF
Inside & Outside Inside outside
Fiscal Year $/HCF
FY 2018-19 (Year 1) $0.38 $0.23 $0.38
FY 2019-20 $0.39 $0.24 $0.39
FY 2020-21 $0.40 $0 25 $0.40
FY 2021-22 $0.41 $0.26 $0.41
FY 2022-23 $0.42 $0.27 $0.42
FY 2023-24 $0.43 $0.28 $0.43
FY 2024-25 $0.44 so 29 $0.44
FY 2025-26 $0.45 $0.30 $0.45
FY 2026-27 $0.46 $0.31 $0.46
FY 2027-28 $0.47 $0.32 $0.47
FY 2028-29 $0.48 $0.33 $0.48
FY 2029-30 $0.49 $0.34 $0.49
FY 2030-31 $0.50 $0.35 $0.50
FY 2031-32 $0.51 $0.36 $0.51
FY 2032-33 $0.52 $0.37 $0.52
FY 2033-34 $0.53 $0.38 $0.53
FY 2034-35 $0.54 $0.39 $0.54
FY 2035-36 $0.55 $0.40 $0.55
FY 2036-37 $0.56 $0.41 $0.56
FY 2037-38 $0.57 $0.42 $0.57
FY 2038-39 $0.58 $0.43 $0.58
FY 2039-40 $0.59 $0.44 $0.59
FY 2040-41 $0.60 $0.45 $0.60
FY 2041-42 $0.61 $046 $0.61
FY 2042-43 $0.62 $0.47 $0.62
FY 2043-44 $0.63 $0.48 $0.63
FY 2044-45 $0.64 $0.49 $0.64
FY 2045-46 $0.65 $0.50 $0.65
FY 2046.47 $0.66 $0.51 $0.66
FY2047.48 $0.67 $0.52 $0.67
FY 2048-49 (Year 30 $0.68 $0.53 $0.68
Total Revenue from Charges
(Year 1 through Year 30)
hside City Customers $60.4M $43.3M
Outside City Customers $8.0M $8.0M
Total $68.8M $51.4M
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CUSTOMER BILL IMPACTS
Based on the recommended quantity charge rates summarized in Table 5-10, the recommended service charge rates summarized in Table 5-14, and the recommended water reliability charge rates summarized in Table 5-20 (with general fund subsidy), the bimonthly customer bill impacts were evaluated.
Tables 6-1 through 6-3 provides sample bills impacts for Inside City customers. Tables 6-4 through 6-6 provide sample bills impacts for Outside City customers. Each table includes the bill impacts for low (half of average), average, and high (three time average) water use for each customer class. The multi-family sample bill impacts are based on a 10-unit complex which is the most-common size within the City’s service area.
Table 6-1. Bill Impacts – Inside City Customers – Low Water Use Meter Water Current
Size Use (HCF) Bill 3/8/2019 1/1/2020 1/1/2021 1/1/2022 Single Family 1" 24
Service Charge $44.66 $48.97 $50.44 $51.95 $53.51
Quantity Charge $114.40 $80.16 $82.56 $85.04 $87.59
Water Reliability Charge $0.00 $5.52 $5.76 $6.00 $6.24
Total Bill $159.06 $134.65 $138.76 $142.99 $147.34
$ Change ($24.41) $4.11 $4.23 $4.35
Multi Family (10 units) 1" 45
Service Charge $44.66 $48.97 $50.44 $51.95 $53.51
Quantity Charge $213.80 $213.00 $219.39 $225.97 $232.75 Water Reliability Charge $0.00 $10.35 $10.80 $11.25 $11.70 Total Bill $258.46 $272.32 $280.63 $289.17 $297.96
per Dwelling Unit $25.85 $27.23 $28.06 $28.92 $29.80
$ Change per Dwelling Unit $1.39 $0.83 $0.85 $0.88
Commercial 1" 63
Service Charge $44.66 $48.97 $50.44 $51.95 $53.51
Quantity Charge $432.18 $417.69 $430.22 $443.13 $456.42 Water Reliability Charge $0.00 $14.49 $15.12 $15.75 $16.38 Total Bill $476.84 $481.15 $495.78 $510.83 $526.31
$ Change $4.31 $14.63 $15.05 $15.48
Proposed
SECTION 6.
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Table 6-2. Bill Impacts – Inside City Customers – Average Water Use Meter Water Current
Size Use (HCF) Bill 3/8/2019 1/1/2020 1/1/2021 1/1/2022 Single Family 1" 48
Service Charge $44.66 $48.97 $50.44 $51.95 $53.51
Quantity Charge $241.60 $230.06 $236.96 $244.07 $251.39 Water Reliability Charge $0.00 $11.04 $11.52 $12.00 $12.48 Total Bill $286.26 $290.07 $298.92 $308.02 $317.38
$ Change $3.81 $8.85 $9.10 $9.36
Multi Family (10 units) 1" 90
Service Charge $44.66 $48.97 $50.44 $51.95 $53.51
Quantity Charge $425.80 $462.50 $476.38 $490.67 $505.39 Water Reliability Charge $0.00 $20.70 $21.60 $22.50 $23.40 Total Bill $470.46 $532.17 $548.41 $565.12 $582.30
per Dwelling Unit $47.05 $53.22 $54.84 $56.51 $58.23
$ Change per Dwelling Unit $6.17 $1.62 $1.67 $1.72
Commercial 1.5" 126
Service Charge $77.41 $85.88 $88.46 $91.11 $93.84
Quantity Charge $864.36 $835.38 $860.44 $886.25 $912.84 Water Reliability Charge $0.00 $28.98 $30.24 $31.50 $32.76 Total Bill $941.77 $950.24 $979.14 $1,008.86 $1,039.45
$ Change $8.47 $28.90 $29.73 $30.58
Proposed
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Table 6-3. Bill Impacts – Inside City Customers – High Water Use Meter Water Current
Size Use (HCF) Bill 3/8/2019 1/1/2020 1/1/2021 1/1/2022 Single Family 1.5" 144
Service Charge $77.41 $85.88 $88.46 $91.11 $93.84
Quantity Charge $1,209.70 $1,383.48 $1,424.98 $1,467.73 $1,511.77 Water Reliability Charge $0.00 $33.12 $34.56 $36.00 $37.44 Total Bill $1,287.11 $1,502.48 $1,548.00 $1,594.84 $1,643.05 $ Change $215.37 $45.52 $46.84 $48.21
Multi Family (10 units) 1.5" 270
Service Charge $77.41 $85.88 $88.46 $91.11 $93.84
Quantity Charge $2,787.50 $2,653.10 $2,732.69 $2,814.67 $2,899.11 Water Reliability Charge $0.00 $62.10 $64.80 $67.50 $70.20 Total Bill $2,864.91 $2,801.08 $2,885.95 $2,973.28 $3,063.16 per Dwelling Unit $286.49 $280.11 $288.59 $297.33 $306.32 $ Change per Dwelling Unit ($6.38) $8.49 $8.73 $8.99
Commercial 2" 378
Service Charge $116.72 $130.17 $134.08 $138.10 $142.24
Quantity Charge $2,593.08 $2,506.14 $2,581.32 $2,658.76 $2,738.53 Water Reliability Charge $0.00 $86.94 $90.72 $94.50 $98.28 Total Bill $2,709.80 $2,723.25 $2,806.12 $2,891.36 $2,979.05 $ Change $13.45 $82.87 $85.24 $87.69
Proposed
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Table 6-4. Bill Impacts – Outside City Customers – Low Water Use Meter Water Current
Size Use (HCF) Bill 3/8/2019 1/1/2020 1/1/2021 1/1/2022 Single Family 1" 24
Service Charge $55.83 $48.97 $50.44 $51.95 $53.51
Quantity Charge $142.92 $99.84 $102.84 $105.92 $109.10
Water Reliability Charge $0.00 $9.12 $9.36 $9.60 $9.84
Total Bill $198.75 $157.93 $162.63 $167.47 $172.45
$ Change ($40.82) $4.70 $4.84 $4.98
Multi Family (10 units) 1" 45
Service Charge $55.83 $48.97 $50.44 $51.95 $53.51
Quantity Charge $266.70 $254.00 $261.62 $269.47 $277.55 Water Reliability Charge $0.00 $17.10 $17.55 $18.00 $18.45 Total Bill $322.53 $320.07 $329.61 $339.42 $349.51
per Dwelling Unit $32.25 $32.01 $32.96 $33.94 $34.95
$ Change per Dwelling Unit ($0.25) $0.95 $0.98 $1.01
Commercial 1" 63
Service Charge $55.83 $48.97 $50.44 $51.95 $53.51
Quantity Charge $540.54 $469.35 $483.43 $497.93 $512.87 Water Reliability Charge $0.00 $23.94 $24.57 $25.20 $25.83 Total Bill $596.37 $542.26 $558.44 $575.09 $592.21
$ Change ($54.11) $16.18 $16.65 $17.13
Proposed
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Table 6-5. Bill Impacts – Outside City Customers – Average Water Use Meter Water Current
Size Use (HCF) Bill 3/8/2019 1/1/2020 1/1/2021 1/1/2022 Single Family 1" 48
Service Charge $55.83 $48.97 $50.44 $51.95 $53.51
Quantity Charge $302.04 $269.42 $277.50 $285.83 $294.40 Water Reliability Charge $0.00 $18.24 $18.72 $19.20 $19.68 Total Bill $357.87 $336.63 $346.66 $356.98 $367.59
$ Change ($21.24) $10.03 $10.32 $10.61
Multi Family (10 units) 1" 90
Service Charge $55.83 $48.97 $50.44 $51.95 $53.51
Quantity Charge $531.90 $536.30 $552.39 $568.96 $586.03 Water Reliability Charge $0.00 $34.20 $35.10 $36.00 $36.90 Total Bill $587.73 $619.47 $637.93 $656.91 $676.44
per Dwelling Unit $58.77 $61.95 $63.79 $65.69 $67.64
$ Change per Dwelling Unit $3.17 $1.85 $1.90 $1.95
Commercial 1.5" 126
Service Charge $96.77 $85.88 $88.46 $91.11 $93.84
Quantity Charge $1,081.08 $938.70 $966.86 $995.87 $1,025.74 Water Reliability Charge $0.00 $47.88 $49.14 $50.40 $51.66 Total Bill $1,177.85 $1,072.46 $1,104.46 $1,137.38 $1,171.25 $ Change ($105.39) $32.00 $32.92 $33.87
Proposed
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Table 6-6. Bill Impacts – Outside City Customers – High Water Use Meter Water Current
Size Use (HCF) Bill 3/8/2019 1/1/2020 1/1/2021 1/1/2022 Single Family 1.5" 144
Service Charge $96.77 $85.88 $88.46 $91.11 $93.84
Quantity Charge $1,512.02 $1,501.56 $1,546.61 $1,593.01 $1,640.80 Water Reliability Charge $0.00 $54.72 $56.16 $57.60 $59.04 Total Bill $1,608.79 $1,642.16 $1,691.22 $1,741.72 $1,793.68 $ Change $33.37 $49.06 $50.49 $51.96
Multi Family (10 units) 1.5" 270
Service Charge $96.77 $85.88 $88.46 $91.11 $93.84
Quantity Charge $3,483.20 $2,874.50 $2,960.74 $3,049.56 $3,141.04 Water Reliability Charge $0.00 $102.60 $105.30 $108.00 $110.70 Total Bill $3,579.97 $3,062.98 $3,154.49 $3,248.67 $3,345.59 per Dwelling Unit $358.00 $306.30 $315.45 $324.87 $334.56 $ Change per Dwelling Unit ($51.70) $9.15 $9.42 $9.69
Commercial 2" 378
Service Charge $145.91 $130.17 $134.08 $138.10 $142.24
Quantity Charge $3,243.24 $2,816.10 $2,900.58 $2,987.60 $3,077.23 Water Reliability Charge $0.00 $143.64 $147.42 $151.20 $154.98 Total Bill $3,389.15 $3,089.91 $3,182.08 $3,276.90 $3,374.45 $ Change ($299.24) $92.17 $94.82 $97.55
Proposed
APPENDIX A.
WATER RELIABILITY CHARGE CASH FLOW
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 1 Assumptions
2 Annual Inflation ‐ Expenses 3.0%3 Annual Interest Rate ‐ Bonds 4.0%4 Annual Interest Rate ‐ GF Loan 3.0%5 WR Charge Year 1 (2019) ‐ unsubsidized $0.386 Annual change in WR Charge $0.017 Inside City Subsidy ($/HCF) $0.00 89 Results
10 Inside City WRC Revenue $60,420,00011 Outside City WRC Revenue $7,950,00012 2049 Ending Cash Balance ($369,492)13 Annual Ending Cash Balance $0 $406,512 $29,742,261 $18,721,034 $5,716,205 $746,256 $554,304 $392,174 $284,017 $230,162 $230,949 $286,726 14 Interest on Bond(s) $30,752,01515 Interest on GF Loan $016 Reserves Remaining to be Paid $017 Fiscal Year Ending: 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 18 Revenues
19 Water Reliability Charge Revenue20 Inside City Customers21 Inside City Flow (HCF) 1,900,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,00022 $/HCF WR Charge $0.38 $0.39 $0.40 $0.41 $0.42 $0.43 $0.44 $0.45 $0.46 $0.47 $0.4823 Subtotal ‐ Inside City $0 $722,000 $1,482,000 $1,520,000 $1,558,000 $1,596,000 $1,634,000 $1,672,000 $1,710,000 $1,748,000 $1,786,000 $1,824,00024 Outside City Customers25 Inside City Flow (HCF) 250,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,00026 $/HCF WR Charge $0.38 $0.39 $0.40 $0.41 $0.42 $0.43 $0.44 $0.45 $0.46 $0.47 $0.4827 Subtotal ‐ Outside City $0 $95,000 $195,000 $200,000 $205,000 $210,000 $215,000 $220,000 $225,000 $230,000 $235,000 $240,000 2829 Total Water Reliability Charge Revenue $0 $817,000 $1,677,000 $1,720,000 $1,763,000 $1,806,000 $1,849,000 $1,892,000 $1,935,000 $1,978,000 $2,021,000 $2,064,0003031 General Fund Contributions $9,000,00032 General Fund Loans33 Bond Proceeds $41,845,000 34 Transfer in from Reserves $0 $8,500,000 $0 $0 $0 $1,900,000 $2,100,000 $0 $0 35 Total Revenue $9,000,000 $9,317,000 $43,522,000 $1,720,000 $1,763,000 $3,706,000 $3,949,000 $1,892,000 $1,935,000 $1,978,000 $2,021,000 $2,064,000363738 Expenditures 39 Capital Expenses40 Preliminary Design Report $0 $874,182 $0 $0 $0 $0 $0 $0 $0 $0 $0 $041 Land Acquisition (3rd Well Site) $9,000,000 $2,787,250 $2,787,250 $0 $0 $0 $0 $0 $0 $0 $0 $042 CEQA $0 $327,818 $0 $0 $0 $0 $0 $0 $0 $0 $0 $043 Final Design $0 $1,678,092 $1,296,326 $1,335,216 $0 $0 $0 $0 $0 $0 $0 $044 Engineerings Svcs During Const (ESDC) $0 $542,766 $559,049 $575,821 $593,095 $610,888 $0 $0 $0 $0 $0 $045 Construction Mgmt and Inspection $0 $687,503 $708,128 $729,372 $751,254 $773,791 $0 $0 $0 $0 $0 $046 Well Drilling (3 sites) $0 $1,122,941 $2,313,258 $0 $0 $0 $0 $0 $0 $0 $0 $047 Transmission Main $0 $0 $3,664,342 $3,774,272 $3,887,500 $0 $0 $0 $0 $0 $0 $048 Well Equipping (3 sites) $0 $464,553 $0 $3,107,874 $3,201,110 $0 $0 $0 $0 $0 $0 $049 Treatment Plant $0 $0 $0 $0 $3,092,381 $3,200,302 $0 $0 $0 $0 $0 $050 System Permitting & Testing $0 $0 $0 $0 $0 $660,375 $680,186 $0 $0 $0 $0 $051 Subtotal Capital Expenses $9,000,000 $8,485,106 $11,328,354 $9,522,555 $11,525,340 $5,245,356 $680,186 $0 $0 $0 $0 $05253 Operational Expenses54 O&M per PDR $0 $0 $0 $347,782 $358,216 $368,962 $380,031 $1,467,870 $1,511,906 $1,557,263 $1,603,981 $1,652,10055 Additional Staffing56 Project Manager 3 $0 $206,837 $212,895 $219,135 $225,562 $232,182 $239,000 $246,170 $253,556 $261,162 $268,997 $277,06757 Water Treatment Operator 1 $0 $0 $0 $0 $0 $163,573 $168,480 $173,535 $178,741 $184,103 $189,626 $195,31558 Pump/Well Mechanic $0 $109,273 $112,551 $115,927 $119,405 $122,987 $126,677 $130,477 $134,392 $138,423 $142,576 $146,85359 Pump/Well Electrician $0 $109,273 $112,551 $115,927 $119,405 $122,987 $126,677 $130,477 $134,392 $138,423 $142,576 $146,85360 Total Operational Expenses $0 $425,382 $437,997 $798,772 $822,588 $1,010,692 $1,040,866 $2,148,530 $2,212,986 $2,279,375 $2,347,756 $2,418,1896162 Debt Service $2,419,900 $2,419,900 $2,419,900 $2,419,900 $2,419,900 $2,419,900 $2,419,900 $2,419,900 $2,419,900 $2,419,900 63 Reserves Repayment6465 Less: MWD Water Purchase Savings ($2,514,300) ($2,589,729) ($2,667,421) ($2,747,443) ($2,829,867)6667 Net Expenditures/(Cost Savings) $9,000,000 $8,910,488 $14,186,251 $12,741,227 $14,767,828 $8,675,949 $4,140,952 $2,054,130 $2,043,157 $2,031,855 $2,020,213 $2,008,223 6869 Net Operating Suprlus/(Shortfall) $0 $406,512 $29,335,749 ($11,021,227) ($13,004,828) ($4,969,949) ($191,952) ($162,130) ($108,157) ($53,855) $787 $55,77770 Cash Balance for WR Expenditures $0 $406,512 $29,742,261 $18,721,034 $5,716,205 $746,256 $554,304 $392,174 $284,017 $230,162 $230,949 $286,726 Water Reliability Charge 30-year Cash Flow Analysis (No General Fund contribution) Appendix A-1 <<Page 1 of 3>>
1 Assumptions
2 Annual Inflation ‐ Expenses3 Annual Interest Rate ‐ Bonds4 Annual Interest Rate ‐ GF Loan5 WR Charge Year 1 (2019) ‐ unsubsidized6 Annual change in WR Charge7 Inside City Subsidy ($/HCF)89 Results 10 Inside City WRC Revenue11 Outside City WRC Revenue12 2049 Ending Cash Balance 13 Annual Ending Cash Balance14 Interest on Bond(s)15 Interest on GF Loan16 Reserves Remaining to be Paid17 Fiscal Year Ending:
18 Revenues19 Water Reliability Charge Revenue20 Inside City Customers21 Inside City Flow (HCF)22 $/HCF WR Charge23 Subtotal ‐ Inside City24 Outside City Customers25 Inside City Flow (HCF)26 $/HCF WR Charge27 Subtotal ‐ Outside City2829 Total Water Reliability Charge Revenue3031 General Fund Contributions32 General Fund Loans33 Bond Proceeds34 Transfer in from Reserves35 Total Revenue363738 Expenditures39 Capital Expenses40 Preliminary Design Report41 Land Acquisition (3rd Well Site)42 CEQA43 Final Design44 Engineerings Svcs During Const (ESDC)45 Construction Mgmt and Inspection46 Well Drilling (3 sites)47 Transmission Main48 Well Equipping (3 sites)49 Treatment Plant50 System Permitting & Testing51 Subtotal Capital Expenses5253 Operational Expenses54 O&M per PDR55 Additional Staffing56 Project Manager 357 Water Treatment Operator 158 Pump/Well Mechanic59 Pump/Well Electrician60 Total Operational Expenses6162 Debt Service63 Reserves Repayment6465 Less: MWD Water Purchase Savings6667 Net Expenditures/(Cost Savings)6869 Net Operating Suprlus/(Shortfall)70 Cash Balance for WR Expenditures 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 $397,853 $564,702 $787,653 $1,067,099 $1,403,446 $1,297,110 $1,248,521 $1,258,122 $1,326,367 $1,453,727 $1,640,685 $1,387,738 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 $0.49 $0.50 $0.51 $0.52 $0.53 $0.54 $0.55 $0.56 $0.57 $0.58 $0.59 $0.60 $1,862,000 $1,900,000 $1,938,000 $1,976,000 $2,014,000 $2,052,000 $2,090,000 $2,128,000 $2,166,000 $2,204,000 $2,242,000 $2,280,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 $0.49 $0.50 $0.51 $0.52 $0.53 $0.54 $0.55 $0.56 $0.57 $0.58 $0.59 $0.60 $245,000 $250,000 $255,000 $260,000 $265,000 $270,000 $275,000 $280,000 $285,000 $290,000 $295,000 $300,000 $2,107,000 $2,150,000 $2,193,000 $2,236,000 $2,279,000 $2,322,000 $2,365,000 $2,408,000 $2,451,000 $2,494,000 $2,537,000 $2,580,000$2,107,000 $2,150,000 $2,193,000 $2,236,000 $2,279,000 $2,322,000 $2,365,000 $2,408,000 $2,451,000 $2,494,000 $2,537,000 $2,580,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $1,701,663 $1,752,713 $1,805,295 $1,859,454 $1,915,237 $1,972,694 $2,031,875 $2,092,831 $2,155,616 $2,220,285 $2,286,893 $2,355,500 $285,379 $293,940 $302,759 $311,841 $321,197 $330,832 $340,757 $350,980 $361,510 $372,355 $383,525 $395,031$201,174 $207,210 $213,426 $219,829 $226,424 $233,216 $240,213 $247,419 $254,842 $262,487 $270,362 $278,472$151,259 $155,797 $160,471 $165,285 $170,243 $175,351 $180,611 $186,029 $191,610 $197,359 $203,279 $209,378$151,259 $155,797 $160,471 $165,285 $170,243 $175,351 $180,611 $186,029 $191,610 $197,359 $203,279 $209,378 $2,490,735 $2,565,457 $2,642,421 $2,721,693 $2,803,344 $2,887,444 $2,974,068 $3,063,290 $3,155,188 $3,249,844 $3,347,339 $3,447,759$2,419,900 $2,419,900 $2,419,900 $2,419,900 $2,419,900 $2,419,900 $2,419,900 $2,419,900 $2,419,900 $2,419,900 $2,419,900 $2,419,900 $500,000 $500,000 $500,000 $500,000 $500,000 $500,000 $1,000,000 ($2,914,763) ($3,002,206) ($3,092,272) ($3,185,040) ($3,280,591) ($3,379,009) ($3,480,379) ($3,584,791) ($3,692,334) ($3,803,104) ($3,917,197) ($4,034,713) $1,995,872 $1,983,152 $1,970,049 $1,956,554 $1,942,653 $2,428,336 $2,413,589 $2,398,399 $2,382,754 $2,366,640 $2,350,042 $2,832,947 $111,128 $166,848 $222,951 $279,446 $336,347 ($106,336) ($48,589) $9,601 $68,246 $127,360 $186,958 ($252,947)$397,853 $564,702 $787,653 $1,067,099 $1,403,446 $1,297,110 $1,248,521 $1,258,122 $1,326,367 $1,453,727 $1,640,685 $1,387,738 Water Reliability Charge 30-year Cash Flow Analysis (No General Fund contribution) Appendix A-1 <<Page 1 of 3>>
1 Assumptions
2 Annual Inflation ‐ Expenses3 Annual Interest Rate ‐ Bonds4 Annual Interest Rate ‐ GF Loan5 WR Charge Year 1 (2019) ‐ unsubsidized6 Annual change in WR Charge7 Inside City Subsidy ($/HCF)89 Results 10 Inside City WRC Revenue11 Outside City WRC Revenue12 2049 Ending Cash Balance 13 Annual Ending Cash Balance14 Interest on Bond(s)15 Interest on GF Loan16 Reserves Remaining to be Paid17 Fiscal Year Ending:
18 Revenues19 Water Reliability Charge Revenue20 Inside City Customers21 Inside City Flow (HCF)22 $/HCF WR Charge23 Subtotal ‐ Inside City24 Outside City Customers25 Inside City Flow (HCF)26 $/HCF WR Charge27 Subtotal ‐ Outside City2829 Total Water Reliability Charge Revenue3031 General Fund Contributions32 General Fund Loans33 Bond Proceeds34 Transfer in from Reserves35 Total Revenue363738 Expenditures39 Capital Expenses40 Preliminary Design Report41 Land Acquisition (3rd Well Site)42 CEQA43 Final Design44 Engineerings Svcs During Const (ESDC)45 Construction Mgmt and Inspection46 Well Drilling (3 sites)47 Transmission Main48 Well Equipping (3 sites)49 Treatment Plant50 System Permitting & Testing51 Subtotal Capital Expenses5253 Operational Expenses54 O&M per PDR55 Additional Staffing56 Project Manager 357 Water Treatment Operator 158 Pump/Well Mechanic59 Pump/Well Electrician60 Total Operational Expenses6162 Debt Service63 Reserves Repayment6465 Less: MWD Water Purchase Savings6667 Net Expenditures/(Cost Savings)6869 Net Operating Suprlus/(Shortfall)70 Cash Balance for WR Expenditures 2042 2043 2044 2045 2046 2047 2048 2049
$1,195,400 $1,064,199 $994,679 $987,401 $1,042,941 $1,161,894 $1,344,873 ($369,492) 2042 2043 2044 2045 2046 2047 2048 2049
3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 1,900,000 $0.61 $0.62 $0.63 $0.64 $0.65 $0.66 $0.67 $0.68
$2,318,000 $2,356,000 $2,394,000 $2,432,000 $2,470,000 $2,508,000 $2,546,000 $1,292,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 250,000 $0.61 $0.62 $0.63 $0.64 $0.65 $0.66 $0.67 $0.68
$305,000 $310,000 $315,000 $320,000 $325,000 $330,000 $335,000 $170,000 $2,623,000 $2,666,000 $2,709,000 $2,752,000 $2,795,000 $2,838,000 $2,881,000 $1,462,000$2,623,000 $2,666,000 $2,709,000 $2,752,000 $2,795,000 $2,838,000 $2,881,000 $1,462,000 $0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0
$2,426,165 $2,498,950 $2,573,919 $2,651,136 $2,730,670 $2,812,590 $2,896,968 $2,983,877 $406,882 $419,089 $431,661 $444,611 $457,949 $471,688 $485,839 $500,414$286,827 $295,431 $304,294 $313,423 $322,826 $332,511 $342,486 $352,761$215,659 $222,129 $228,793 $235,657 $242,726 $250,008 $257,508 $265,234$215,659 $222,129 $228,793 $235,657 $242,726 $250,008 $257,508 $265,234 $3,551,192 $3,657,728 $3,767,460 $3,880,484 $3,996,898 $4,116,805 $4,240,309 $4,367,518$2,419,900 $2,419,900 $2,419,900 $2,419,900 $2,419,900 $2,419,900 $2,419,900 $2,419,900$1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,500,000 ($4,155,755) ($4,280,427) ($4,408,840) ($4,541,105) ($4,677,339) ($4,817,659) ($4,962,189) ($5,111,054) $2,815,338 $2,797,201 $2,778,520 $2,759,279 $2,739,460 $2,719,047 $2,698,021 $3,176,365 ($192,338) ($131,201) ($69,520) ($7,279) $55,540 $118,953 $182,979 ($1,714,365) $1,195,400 $1,064,199 $994,679 $987,401 $1,042,941 $1,161,894 $1,344,873 ($369,492) Water Reliability Charge 30-year Cash Flow Analysis (No General Fund contribution) Appendix A-1 <<Page 1 of 3>>
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 1 Assumptions
2 Annual Inflation ‐ Expenses 3.0%3 Annual Interest Rate ‐ Bonds 4.0%4 Annual Interest Rate ‐ GF Loan 3.0%5 WR Charge Year 1 (2019) ‐ unsubsidized $0.386 Annual change in WR Charge $0.017 Inside City Subsidy ($/HCF) $0.1589 Results 10 Inside City WRC Revenue $43,320,00011 Outside City WRC Revenue $7,950,00012 2049 Ending Cash Balance ($120,462) 13 Annual Ending Cash Balance $0 $10,121,512 $29,465,562 $18,452,636 $5,456,108 $494,460 $310,809 $156,980 $57,124 $11,570 $20,658 $84,73614 Interest on Bond(s) $23,402,98515 Interest on GF Loan $016 Reserves Remaining to be Paid $017 Fiscal Year Ending: 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 18 Revenues
19 Water Reliability Charge Revenue20 Inside City Customers21 Inside City Flow (HCF) 1,900,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 22 $/HCF WR Charge $0.23 $0.24 $0.25 $0.26 $0.27 $0.28 $0.29 $0.30 $0.31 $0.32 $0.3323 Subtotal ‐ Inside City $0 $437,000 $912,000 $950,000 $988,000 $1,026,000 $1,064,000 $1,102,000 $1,140,000 $1,178,000 $1,216,000 $1,254,00024 Outside City Customers 25 Inside City Flow (HCF) 250,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 26 $/HCF WR Charge $0.38 $0.39 $0.40 $0.41 $0.42 $0.43 $0.44 $0.45 $0.46 $0.47 $0.4827 Subtotal ‐ Outside City $0 $95,000 $195,000 $200,000 $205,000 $210,000 $215,000 $220,000 $225,000 $230,000 $235,000 $240,0002829 Total Water Reliability Charge Revenue $0 $532,000 $1,107,000 $1,150,000 $1,193,000 $1,236,000 $1,279,000 $1,322,000 $1,365,000 $1,408,000 $1,451,000 $1,494,0003031 General Fund Contributions $9,000,000 $10,000,00032 General Fund Loans33 Bond Proceeds $31,845,00034 Transfer in from Reserves $0 $8,500,000 $0 $0 $0 $1,900,000 $2,100,000 $0 $0 35 Total Revenue $9,000,000 $19,032,000 $32,952,000 $1,150,000 $1,193,000 $3,136,000 $3,379,000 $1,322,000 $1,365,000 $1,408,000 $1,451,000 $1,494,000 363738 Expenditures to Start Up
39 Capital Expenses40 Preliminary Design Report $0 $874,182 $0 $0 $0 $0 $0 $0 $0 $0 $0 $041 Land Acquisition (3rd Well Site) $9,000,000 $2,787,250 $2,787,250 $0 $0 $0 $0 $0 $0 $0 $0 $0 42 CEQA $0 $327,818 $0 $0 $0 $0 $0 $0 $0 $0 $0 $043 Final Design $0 $1,678,092 $1,296,326 $1,335,216 $0 $0 $0 $0 $0 $0 $0 $044 Engineerings Svcs During Const (ESDC) $0 $542,766 $559,049 $575,821 $593,095 $610,888 $0 $0 $0 $0 $0 $045 Construction Mgmt and Inspection $0 $687,503 $708,128 $729,372 $751,254 $773,791 $0 $0 $0 $0 $0 $046 Well Drilling (3 sites) $0 $1,122,941 $2,313,258 $0 $0 $0 $0 $0 $0 $0 $0 $047 Transmission Main $0 $0 $3,664,342 $3,774,272 $3,887,500 $0 $0 $0 $0 $0 $0 $0 48 Well Equipping (3 sites) $0 $464,553 $0 $3,107,874 $3,201,110 $0 $0 $0 $0 $0 $0 $0 49 Treatment Plant $0 $0 $0 $0 $3,092,381 $3,200,302 $0 $0 $0 $0 $0 $0 50 System Permitting & Testing $0 $0 $0 $0 $0 $660,375 $680,186 $0 $0 $0 $0 $051 Total Capital Expenses $9,000,000 $8,485,106 $11,328,354 $9,522,555 $11,525,340 $5,245,356 $680,186 $0 $0 $0 $0 $0 5253 Operational Expenses
54 O&M per PDR $0 $0 $0 $347,782 $358,216 $368,962 $380,031 $1,467,870 $1,511,906 $1,557,263 $1,603,981 $1,652,10055 Additional Staffing56 Project Manager 3 $0 $206,837 $212,895 $219,135 $225,562 $232,182 $239,000 $246,170 $253,556 $261,162 $268,997 $277,06757 Water Treatment Operator 1 $0 $0 $0 $0 $0 $163,573 $168,480 $173,535 $178,741 $184,103 $189,626 $195,31558 Pump/Well Mechanic $0 $109,273 $112,551 $115,927 $119,405 $122,987 $126,677 $130,477 $134,392 $138,423 $142,576 $146,85359 Pump/Well Electrician $0 $109,273 $112,551 $115,927 $119,405 $122,987 $126,677 $130,477 $134,392 $138,423 $142,576 $146,85360 Total Operational Expenses $0 $425,382 $437,997 $798,772 $822,588 $1,010,692 $1,040,866 $2,148,530 $2,212,986 $2,279,375 $2,347,756 $2,418,1896162 Debt Service $1,841,600 $1,841,600 $1,841,600 $1,841,600 $1,841,600 $1,841,600 $1,841,600 $1,841,600 $1,841,600 $1,841,60063 Reserves Repayment6465 Less: MWD Water Purchase Savings ($2,514,300) ($2,589,729) ($2,667,421) ($2,747,443) ($2,829,867)6667 Net Expenditures/(Cost Savings) $9,000,000 $8,910,488 $13,607,950 $12,162,926 $14,189,527 $8,097,648 $3,562,651 $1,475,829 $1,464,856 $1,453,554 $1,441,912 $1,429,9226869 Net Operating Suprlus/(Shortfall) $0 $10,121,512 $19,344,050 ($11,012,926) ($12,996,527) ($4,961,648) ($183,651) ($153,829) ($99,856) ($45,554) $9,088 $64,07870 Cash Balance for WR Expenditures $0 $10,121,512 $29,465,562 $18,452,636 $5,456,108 $494,460 $310,809 $156,980 $57,124 $11,570 $20,658 $84,736 Water Reliability Charge 30-year Cash Flow Analysis (with $10 million General Fund contribution) Appendix A-2 <<Page 1 of 3>>
1 Assumptions
2 Annual Inflation ‐ Expenses3 Annual Interest Rate ‐ Bonds4 Annual Interest Rate ‐ GF Loan5 WR Charge Year 1 (2019) ‐ unsubsidized6 Annual change in WR Charge7 Inside City Subsidy ($/HCF)89 Results 10 Inside City WRC Revenue11 Outside City WRC Revenue12 2049 Ending Cash Balance13 Annual Ending Cash Balance14 Interest on Bond(s)15 Interest on GF Loan16 Reserves Remaining to be Paid17 Fiscal Year Ending:18 Revenues19 Water Reliability Charge Revenue20 Inside City Customers21 Inside City Flow (HCF)22 $/HCF WR Charge23 Subtotal ‐ Inside City24 Outside City Customers25 Inside City Flow (HCF)26 $/HCF WR Charge27 Subtotal ‐ Outside City2829 Total Water Reliability Charge Revenue3031 General Fund Contributions32 General Fund Loans33 Bond Proceeds34 Transfer in from Reserves35 Total Revenue363738 Expenditures to Start Up39 Capital Expenses40 Preliminary Design Report41 Land Acquisition (3rd Well Site)42 CEQA43 Final Design44 Engineerings Svcs During Const (ESDC)45 Construction Mgmt and Inspection46 Well Drilling (3 sites)47 Transmission Main48 Well Equipping (3 sites)49 Treatment Plant50 System Permitting & Testing51 Total Capital Expenses5253 Operational Expenses54 O&M per PDR55 Additional Staffing56 Project Manager 357 Water Treatment Operator 158 Pump/Well Mechanic59 Pump/Well Electrician60 Total Operational Expenses6162 Debt Service63 Reserves Repayment6465 Less: MWD Water Purchase Savings6667 Net Expenditures/(Cost Savings)6869 Net Operating Suprlus/(Shortfall)70 Cash Balance for WR Expenditures 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 $4,164 $4,314 $5,566 $4,313 $4,961 $4,926 $5,638 $5,540 $6,086 $6,747 $7,006 $7,360 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 $0.34 $0.35 $0.36 $0.37 $0.38 $0.39 $0.40 $0.41 $0.42 $0.43 $0.44 $0.45 $1,292,000 $1,330,000 $1,368,000 $1,406,000 $1,444,000 $1,482,000 $1,520,000 $1,558,000 $1,596,000 $1,634,000 $1,672,000 $1,710,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 $0.49 $0.50 $0.51 $0.52 $0.53 $0.54 $0.55 $0.56 $0.57 $0.58 $0.59 $0.60 $245,000 $250,000 $255,000 $260,000 $265,000 $270,000 $275,000 $280,000 $285,000 $290,000 $295,000 $300,000 $1,537,000 $1,580,000 $1,623,000 $1,666,000 $1,709,000 $1,752,000 $1,795,000 $1,838,000 $1,881,000 $1,924,000 $1,967,000 $2,010,000$1,537,000 $1,580,000 $1,623,000 $1,666,000 $1,709,000 $1,752,000 $1,795,000 $1,838,000 $1,881,000 $1,924,000 $1,967,000 $2,010,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $1,701,663 $1,752,713 $1,805,295 $1,859,454 $1,915,237 $1,972,694 $2,031,875 $2,092,831 $2,155,616 $2,220,285 $2,286,893 $2,355,500 $285,379 $293,940 $302,759 $311,841 $321,197 $330,832 $340,757 $350,980 $361,510 $372,355 $383,525 $395,031$201,174 $207,210 $213,426 $219,829 $226,424 $233,216 $240,213 $247,419 $254,842 $262,487 $270,362 $278,472$151,259 $155,797 $160,471 $165,285 $170,243 $175,351 $180,611 $186,029 $191,610 $197,359 $203,279 $209,378$151,259 $155,797 $160,471 $165,285 $170,243 $175,351 $180,611 $186,029 $191,610 $197,359 $203,279 $209,378 $2,490,735 $2,565,457 $2,642,421 $2,721,693 $2,803,344 $2,887,444 $2,974,068 $3,063,290 $3,155,188 $3,249,844 $3,347,339 $3,447,759$1,841,600 $1,841,600 $1,841,600 $1,841,600 $1,841,600 $1,841,600 $1,841,600 $1,841,600 $1,841,600 $1,841,600 $1,841,600 $1,841,600 $200,000 $175,000 $230,000 $289,000 $344,000 $402,000 $459,000 $518,000 $576,000 $635,000 $695,000 $755,000 ($2,914,763) ($3,002,206) ($3,092,272) ($3,185,040) ($3,280,591) ($3,379,009) ($3,480,379) ($3,584,791) ($3,692,334) ($3,803,104) ($3,917,197) ($4,034,713) $1,617,571 $1,579,851 $1,621,748 $1,667,253 $1,708,352 $1,752,035 $1,794,288 $1,838,099 $1,880,453 $1,923,339 $1,966,741 $2,009,646 ($80,571) $149 $1,252 ($1,253) $648 ($35) $712 ($99) $547 $661 $259 $354 $4,164 $4,314 $5,566 $4,313 $4,961 $4,926 $5,638 $5,540 $6,086 $6,747 $7,006 $7,360 Water Reliability Charge 30-year Cash Flow Analysis (with $10 million General Fund contribution) Appendix A-2 <<Page 1 of 3>>
1 Assumptions
2 Annual Inflation ‐ Expenses3 Annual Interest Rate ‐ Bonds4 Annual Interest Rate ‐ GF Loan5 WR Charge Year 1 (2019) ‐ unsubsidized6 Annual change in WR Charge7 Inside City Subsidy ($/HCF)89 Results 10 Inside City WRC Revenue11 Outside City WRC Revenue12 2049 Ending Cash Balance13 Annual Ending Cash Balance14 Interest on Bond(s)15 Interest on GF Loan16 Reserves Remaining to be Paid17 Fiscal Year Ending:18 Revenues19 Water Reliability Charge Revenue20 Inside City Customers21 Inside City Flow (HCF)22 $/HCF WR Charge23 Subtotal ‐ Inside City24 Outside City Customers25 Inside City Flow (HCF)26 $/HCF WR Charge27 Subtotal ‐ Outside City2829 Total Water Reliability Charge Revenue3031 General Fund Contributions32 General Fund Loans33 Bond Proceeds34 Transfer in from Reserves35 Total Revenue363738 Expenditures to Start Up39 Capital Expenses40 Preliminary Design Report41 Land Acquisition (3rd Well Site)42 CEQA43 Final Design44 Engineerings Svcs During Const (ESDC)45 Construction Mgmt and Inspection46 Well Drilling (3 sites)47 Transmission Main48 Well Equipping (3 sites)49 Treatment Plant50 System Permitting & Testing51 Total Capital Expenses5253 Operational Expenses54 O&M per PDR55 Additional Staffing56 Project Manager 357 Water Treatment Operator 158 Pump/Well Mechanic59 Pump/Well Electrician60 Total Operational Expenses6162 Debt Service63 Reserves Repayment6465 Less: MWD Water Purchase Savings6667 Net Expenditures/(Cost Savings)6869 Net Operating Suprlus/(Shortfall)70 Cash Balance for WR Expenditures 2042 2043 2044 2045 2046 2047 2048 2049
$8,323 $8,423 $9,204 $10,227 $14,068 $14,322 $15,602 ($120,462) 2042 2043 2044 2045 2046 2047 2048 2049
3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 1,900,000 $0.46 $0.47 $0.48 $0.49 $0.50 $0.51 $0.52 $0.53
$1,748,000 $1,786,000 $1,824,000 $1,862,000 $1,900,000 $1,938,000 $1,976,000 $1,007,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 250,000 $0.61 $0.62 $0.63 $0.64 $0.65 $0.66 $0.67 $0.68
$305,000 $310,000 $315,000 $320,000 $325,000 $330,000 $335,000 $170,000 $2,053,000 $2,096,000 $2,139,000 $2,182,000 $2,225,000 $2,268,000 $2,311,000 $1,177,000$2,053,000 $2,096,000 $2,139,000 $2,182,000 $2,225,000 $2,268,000 $2,311,000 $1,177,000 $0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0 $2,426,165 $2,498,950 $2,573,919 $2,651,136 $2,730,670 $2,812,590 $2,896,968 $2,983,877 $406,882 $419,089 $431,661 $444,611 $457,949 $471,688 $485,839 $500,414$286,827 $295,431 $304,294 $313,423 $322,826 $332,511 $342,486 $352,761$215,659 $222,129 $228,793 $235,657 $242,726 $250,008 $257,508 $265,234$215,659 $222,129 $228,793 $235,657 $242,726 $250,008 $257,508 $265,234 $3,551,192 $3,657,728 $3,767,460 $3,880,484 $3,996,898 $4,116,805 $4,240,309 $4,367,518$1,841,600 $1,841,600 $1,841,600 $1,841,600 $1,841,600 $1,841,600 $1,841,600 $1,841,600 $815,000 $877,000 $938,000 $1,000,000 $1,060,000 $1,127,000 $1,190,000 $215,000 ($4,155,755) ($4,280,427) ($4,408,840) ($4,541,105) ($4,677,339) ($4,817,659) ($4,962,189) ($5,111,054) $2,052,037 $2,095,900 $2,138,219 $2,180,978 $2,221,159 $2,267,746 $2,309,720 $1,313,064 $963 $100 $781 $1,022 $3,841 $254 $1,280 ($136,064)
$8,323 $8,423 $9,204 $10,227 $14,068 $14,322 $15,602 ($120,462) Water Reliability Charge 30-year Cash Flow Analysis (with $10 million General Fund contribution) Appendix A-2 <<Page 1 of 3>>
APPENDIX J
Local Hazard Mitigation Plan
Beverly Hills Local Hazard Mitigation Plan, April 2025
Found at the following link:
City-of-Beverly-Hills---Local-Hazard-Mitigation-Plan-2026-2031
Attachment 3
City of Beverly Hills
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8 WATER SHORTAGE CONTINGENCY PLANNING
Water supplies may be interrupted or reduced by droughts, earthquakes, and power outages which hinder a water agency’s ability to effectively deliver water. Drought impacts increase with the length of a drought, as supplies in reservoirs and other storage programs are depleted and water levels in groundwater basins decline. The ability to manage water supplies in times of drought or other emergencies is an important part of water resource management for a community. In anticipation of such water supply challenges; the Water Code requires suppliers to prepare and adopt a Water Shortage Contingency Plan (WSCP), which includes water shortage response actions that they would take in response to six standard levels of water shortage. This WSCP describes the water supply shortage policies the City has in place to respond to events including reductions and catastrophic interruption in water supply.
Water Supply Reliability Analysis
The City obtains its water supply from two sources: imported surface water purchased from Metropolitan and local groundwater extracted from the local Hollywood Basin and the La Brea Subarea of the Central Groundwater Basin. The imported water is treated by Metropolitan, and the groundwater is treated at the City’s Foothill WTP before being distributed to the City’s water system.
Every urban water supplier is required to assess the reliability of their water service to its customers under normal, dry, and five consecutive dry water years. There are various factors that may impact reliability of supplies such as environmental, regulatory, water quality and climatic, which are discussed in Section 7.2 of the 2025 UWMP.
Imported water supplies are subject to demand increases and reduced supplies during dry years.
However, Metropolitan modeling in its draft 2025 UWMP, as referenced in Section 7, results in 100 percent reliability for full-service demands through the year 2050 for all climatic conditions. Based on the conditions described above, the City anticipates the ability to meet water demand for all climatic conditions for the near future. In addition, the natural replenishment of the local groundwater basins from surface and subsurface flows (in addition to percolation from precipitation) and available groundwater storage provide a local source of supply and moderate dry season supply protection.
The combination of projects and programs implemented by Metropolitan and the City provide for reliable water supplies that are projected to meet full-service demands. The long-term supply and demand assessment to year 2050 is included in Section 7.3 of the UWMP with the results summarized in Table 8-1A below (UWMP Submittal Tables 7.2, 7.3, and 7.4). As shown, the City anticipates being able to meet water demand with adequate supplies through the year 2050 under normal, single dry, and multiple dry year conditions. The Drought Risk Assessment (DRA) for the next five years is included in Section 7.5 of the UWMP with the results of the analysis summarized in Table 7-5. There are no shortages projected if a drought were to occur over the next five years, thus it is anticipated that shortfall mitigation measures will not be needed.
Annual Water Supply and Demand Assessment Procedures
Beginning in 2022, each supplier was required to prepare and submit to DWR an Annual Water Supply and Demand Assessment (Annual Assessment) on or before July 1 of each year. The
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Annual Assessment and associated reporting are to be conducted based on procedures outlined in this section.
Decision-Making Process
Beginning in January of each year, the Annual Assessment will be prepared by the City’s Water Utility. During the Annual Assessment, or any unexpected water shortage period, the Water Utility will determine the extent of the conservation required based on water supply availability from its groundwater and imported water sources. As a member agency, the City will incorporate Metropolitan’s analysis and applicable response actions into its Annual Assessment if the information is available prior to the July 1 deadline. If the Annual Assessment results in a water shortage where response actions are required, the Department will recommend the adoption of a water reduction plan in the City’s Emergency Water Conservation Plan, last updated by Ordinance 20-O-2819 (effective October 16, 2020) that is necessary to address the level of water shortage.
The Emergency Water Conservation Ordinance was adopted and updated by the City Council to address the 2014 and 2015 State-mandated water conservation regulations. The water shortage stages are described in Section 8.4.
The Annual Assessment process will begin in January with the evaluation of supply and demand data and of current water supply conditions. The analysis will be reviewed by the Water Utility to determine any necessary shortage response actions by the end of April. By the month of June, Metropolitan staff will present its completed Annual Assessment for approval by Metropolitan’s Board of Directors along with any recommended specific shortage response actions resulting from the assessment. As a member agency, the City will incorporate Metropolitan’s analysis and response actions into its Annual Assessment if the information is available prior to the deadline for delivery to DWR by July 1. If a shortage response action is necessary to address an identified water shortage, the City’s Water Utility will seek the necessary approvals for implementation. See Table 8-1A below for procedures and timeline.
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Table 8-1A: Annual Assessment Timeline and Procedures
Annual Assessment Timeline and Procedures
Month(s) Activities
Data Phase
Jan-Feb Collect water supply by source for current year: Describe and quantify sources by provider along with any current constraints and related adjustments Jan-Feb Determine unconstrained water demand for current year: Describe and quantify demand and any influencing factors on demand along with related adjustments Jan-Mar Quantify "Dry Year" supplies and demands based on historical hydrologic data and input from Metropolitan
Feb-Mar Calculate the water supply reliability by comparing expected dry year supplies and demands to identify potential shortage.
Feb-Apr Determine any shortage and related actions
Decision Phase
May Draft Annual Assessment Report including water shortage response actions as needed Jun Finalize Annual Assessment. Deadline for incorporating data or analysis from Metropolitan.
1-Jul Send Final Annual Assessment Report to DWR
As Needed Implement water shortage response actions as required Data and Methodologies
The purpose of the Annual Assessment is to evaluate the water supply reliability for the coming year by conservatively assuming conditions will be dry and to determine how a perceived shortage may relate to WSCP shortage stage response actions. This information will be based on information available to the City at the time of the analysis. The Annual Assessment will utilize information from Metropolitan and current groundwater conditions for the expected supply of imported water and groundwater, respectively. The assessment will also consider the unconstrained water demand, planned water use, and infrastructure conditions. The analysis will look at current year water supply and demand conditions and assumed dry year conditions for the following year. The conditions of what defines a dry year will be determined based on current information from Metropolitan and will likely involve historic hydrology as is typically used in the dry-year analysis for the UWMP. The balance between projected water supplies and anticipated demand will be used to determine what, if any, shortage stage is expected under the WSCP framework.
The following steps outline the procedures for completing the Annual Assessment:
1. Water Supply - Quantify water supply by each source for the current year and anticipated supply for the subsequent year. The City will rely on coordination with Metropolitan for projected imported supply availability.
2. Unconstrained Water Demands - Quantify unconstrained customer demand for the current year and one year to follow. Use current year water demand by sector (available from monthly billing data) and adjust as needed to account for weather, prior8.2.2 City of Beverly Hills
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year conditions, anticipated new demands for the coming year, and any other factors pertinent to the land use and customer use patterns.
3. Subsequent Dry Year Analysis - Determine how the following year’s supply and demand quantities will be impacted anticipating that the year will be dry. Determine dry year conditions using methods similar to those used in the UWMP which consider historical hydrology, data from Metropolitan, and any additional sources available at the time.
4. Infrastructure Considerations - Evaluate infrastructure capabilities and any constraints within the City, Metropolitan, and groundwater supplies that may affect the ability to deliver supplies to meet expected demand in the coming year, including anticipated capital improvement projects.
5. Other Factors - Address any other applicable factors that can influence or disrupt supplies.
6. Evaluation - Compare the anticipated supply and demand that have been calculated for the following year, assuming dry conditions to determine any potential shortage in supply and the appropriate response action as developed in the WSCP.
The steps above will be documented with supporting text including coordination with other agencies, sources of data, and assumptions.
Water Shortage Levels
The State developed six standard shortage levels pursuant to Water Code Section 10632(a)(3)(B).
The State’s shortage levels correspond to progressive ranges of up to 10, 20, 30, 40, and 50 percent shortages, and greater than 50 percent shortages. Each of the six shortage levels represents an increasing gap between the City’s estimated supplies and the unconstrained demand as determined in the Annual Assessment or the gap between supply and demand at any time due to an unforeseen event that interrupts water supplies. A supplier’s existing water shortage categories that use different shortage levels may comply with these six levels by developing a cross-reference relating the existing categories to the six standard water shortage levels. The City has five existing shortage level categories, included in its Emergency Water Conservation Plan, that will be utilized in this WSCP and cross-referenced to the standard six levels. Submittal Table 8-1 shows a graphic of the City’s adopted water shortage levels and their relationship to the six standard water shortage levels prescribed by the Water Code.
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Table 8-1: Cross-reference of City and State Standard Shortage Levels Water Shortage Contingency Plan Levels
State Standard Levels Beverly Hills Corresponding Shortage Levels Shortage
Level
Percent
Shortage
Range
Beverly Hills
Shortage Level
Supply
Reduction Water Supply Condition
1 Up to 10%
A 5%
A stage A shortage shall be declared when the city
manager determines that a five percent (5%) reduction in potable water use is required
B 10%
A stage B shortage shall be declared when the city
manager determines that a ten percent (10%) reduction in potable water use is required
2 Up to 20% C 20%
A stage C shortage shall be declared when the city
manager determines that a twenty percent (20%)
reduction in potable water use is required
3 Up to 30%
D 30%
A stage D shortage shall be declared when the city
manager determines that a thirty percent (30%) or higher reduction in potable water use is required.
4 Up to 40%
5 Up to 50%
E
50%
A stage E shortage shall be declared when the city
manager determines that a catastrophic interruption of
potable water supply has occurred or is foreseen
6 >50% E & ERP >50% A stage E shortage plus activation of Emergency Response Plan
Shortage Response Actions
CWC directs that the WSCP contains shortage response actions that align with the defined shortage levels, and include:
• Supply Augmentation Actions
• Demand Reduction Actions
• Operational Changes
• Additional, mandatory prohibitions against specific water use practices that are in addition to state-mandated prohibitions and appropriate to the local conditions • An estimate of the extent to which the gap between supplies and demand will be reduced by implementation of each action
Metropolitan Water Shortage Contingency Plan
The City relies on imported water from Metropolitan. Metropolitan’s WSCP describes preparedness and response actions for droughts and other impacts on water supplies and outlines the measures to manage and mitigate water shortage. A copy of Metropolitan’s WSCP is included in Appendix 4
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of their 2025 UWMP. As a member agency, the City will coordinate and cooperate with programs implemented by Metropolitan in response to water shortages.
Table 8-2A (Table A.4-5, Metropolitan WSCP) indicates Metropolitan’s shortage responses to meet the circumstance for the six shortage levels defined by DWR. Metropolitan’s planning involves a complex mix of variables. To determine specific actions at each standard shortage level, Metropolitan will evaluate conditions specific to cost, timing, distribution needs and capabilities, and other variables that include SWP allocation, Colorado River conditions, demand reduction measures, supply program take capacities, and storage balances.
Table 8-2A: Metropolitan Water Shortage Contingency Plan Shortage Levels Metropolitan’s WSCP is designed to be consistent with their previously adopted Water Surplus and Drought Management (WSDM) and Water Supply Allocation Plan (WSAP).
City of Beverly Hills Response Actions
During a water shortage period, the Water Utility will determine the extent of the conservation required based on water supply availability from its groundwater and imported water sources. As a Metropolitan member agency, the City will follow Metropolitan’s adopted WSCP and required actions. Depending on the severity of the water shortage, the Department will recommend to the Shortage
Stage
Shortage
Percentage
1 Up to 10%
• Take from Storage
• Execute Flexible Supplies
• Implement Voluntary Demand Reduction
• Implement Supply Allocations
• 0 to 100% met by Storage
• 0 to 100% met by Flexible Supplies
• 0 to 20% of total retail w ater use met by implementing Communication Plan • 0 to 50% of total base demand met by supply allocation 2 10% to 20%
• Take from Storage
• Execute Flexible Supplies
• Implement Voluntary Demand Reduction
• Implement Supply Allocations
• 0 to 100% met by Storage
• 0 to 100% met by Flexible Supplies
• 0 to 20% of total retail w ater use met by implementing Communication Plan • 0 to 50% of total base demand met by supply allocation 3 20% to 30%
• Take from Storage
• Execute Flexible Supplies
• Implement Voluntary Demand Reduction
• Implement Supply Allocations
• 0 to 100% met by Storage
• 0 to 100% met by Flexible Supplies
• 0 to 20% of total retail w ater use met by implementing Communication Plan • 0 to 50% of total base demand met by supply allocation 4 30% to 40%
• Take from Storage
• Execute Flexible Supplies
• Implement Voluntary Demand Reduction
• Implement Supply Allocations
• 0 to 100% met by Storage
• 0 to 100% met by Flexible Supplies
• 0 to 20% of total retail w ater use met by implementing Communication Plan • 0 to 50% of total base demand met by supply allocation 5 40% to 50%
• Take from Storage
• Execute Flexible Supplies
• Implement Voluntary Demand Reduction
• Implement Supply Allocations
• 0 to 100% met by Storage
• 0 to 100% met by Flexible Supplies
• 0 to 20% of total retail w ater use met by implementing Communication Plan • 0 to 50% of total base demand met by supply allocation 6 More than
50%
• Take from Storage
• Execute Flexible Supplies
• Implement Voluntary Demand Reduction
• Take from Emergency Storage, if needed
• Implement Supply Allocations
• 0 to 100% met by Storage
• 0 to 100% met by Flexible Supplies
• 0 to 20% of total retail w ater use met by implementing Communication Plan • 0 to 50% of total base demand met by supply allocation • Take from emergecy storage during a catastrophic event Metropolitan WSCP Shortage Stages and Response Actions
Shortage Response
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City Manager the adoption of a water reduction plan, as detailed in Ordinance 20-O-2819, that is necessary to address the level of water shortage.
In 1992, the Beverly Hills City Council adopted an Emergency Water Conservation Ordinance (Ordinance 92-O-2139) last updated in 2020 by Ordinance 20-O-2819, which establishes five stages of water shortage severity based on predicted or actual water supply reductions as shown in Table 8-2B. The City implements certain initiatives to optimize water supply during water shortages or drought conditions. The City will manage water supplies to minimize the social and economic impacts of water shortages. Additionally, in an emergency which leads to catastrophic supply interruption, the City has an emergency response plan in place to respond to catastrophic interruption.
Table 8-2B: City Stages of Water Shortage
City Stages of Water Shortage
Stage
Supply
Reduction Water Supply Condition
A 5%
A stage A shortage shall be declared when the city
manager determines that a five percent (5%) reduction
in potable water use is required.
B 10%
A stage B shortage shall be declared when the city
manager determines that a ten percent (10%) reduction
in potable water use is required.
C 20%
A stage C shortage shall be declared when the city
manager determines that a twenty percent (20%)
reduction in potable water use is required.
D 30% or higher
A stage D shortage shall be declared when the city
manager determines that a thirty percent (30%) or
higher reduction in potable water use is required.
E 50%
A stage E shortage shall be declared when the city
manager determines that a catastrophic interruption of
potable water supply has occurred or is foreseen.
The Water Conservation Ordinance is designed to provide the amount of conservation needed for various conditions. This ranges from a minor drought (Stage A) to the occurrence of an unforeseen catastrophic interruption of potable water supply (Stage E). The City's two potable water sources are local groundwater and imported deliveries through Metropolitan. Rationing stages may be triggered by a shortage in one source or a combination of sources, and shortages may trigger a stage at any time. In the event of a shortage, the City Manager will declare the appropriate water conservation stage by resolution.
Table 8-2 includes the City’s water shortage response actions classified at the State’s six standard shortage levels. The response actions correspond to the City’s established stages of water shortage as shown previously in Table 8-1 and also the City’s Emergency Response Plan for shortage levels above 50 percent. The shortage response actions are further detailed below and in Table 8-3.
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Table 8-2 Water Shortage Contingency Plan Levels
Water Shortage Contingency Plan Levels
State
Shortage
Level
Percent Shortage
Range
Shortage Response Actions
(Narrative description)
1 Up to 10%
City Manager declares a Stage B shortage: All users reduce to 90 percent of baseline water use, restaurants serve water upon request only, customers must repair leaks and breaks in a timely manner.
2 Up to 20% City Manager declares a Stage C shortage: All restrictions of Stage B and users reduce to 80 percent of baseline water use.
3 Up to 30%
City Manager declares a Stage D shortage: All restrictions of Stage C, users reduce to 70 percent of baseline water use, limit landscape irrigation days, pool filling allowed only when appropriate cover is in place, restrict water feature use, prohibit potable use for vehicle washing, construction, dust control, and washing hard surfaces. 4 Up to 40%
City Manager declares a Stage D: All restrictions of Stage D, users further reduce use to 60 percent of baseline.
5 Up to 50%
City Manager declares a Stage E shortage: All restrictions of Stage D, users reduce to 50 percent of baseline water use, prioritize water use to health and safety needs, subsequent water use is prioritized to maintain commerce, then enhance aesthetic, and last to facilitate construction.
6 >50%
City Manager declares a Stage E shortage and activates Emergency Response Plan: All restrictions of Stage D, ERP standardized response and recovery protocol, contact planning partnerships as part of Mutual Aid Agreements to respond to catastrophic supply interruption.
Supply Augmentation Actions
The City has two primary sources of supply, imported water from Metropolitan and local groundwater. The reliability of these supplies and the response to shortages have been integrated into the City’s normal water management planning. The reliability of these water supplies under normal and dry conditions is documented in Chapter 7 of the 2020 UWMP.
If there is a specified shortage in supply as shown in Table 8-2, then it is assumed that one or both sources are limited to the extent to cause such a shortage. As no alternative sources are available, supply is not a response triggered by the WSCP’s shortage level but already represented in the determination of any gap between supply and customer water use.
Demand Reduction Actions
When a water reduction plan is not in effect, the City encourages all customers within the service area to use water efficiently by avoiding wasteful activities as specified in Article 2 of the City’s City of Beverly Hills
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Water Use Efficiency Regulations, Section 9-4-201: Permanent Water Use Restrictions and Waste Prevention. The City’s Emergency Water Conservation Plan adopted priorities for making water available from highest to lowest are as follows:
1. Health and Safety including consumption and sanitation for all water users; fire suppression; hospitals, emergency care, nursing and other convalescent homes and other similar health care facilities; shelters and water treatment
2. Institutions, including government facilities and schools such as public safety facilities, essential government operations, public pools, and recreation areas
3. All non-essential commercial and residential water uses
4. Landscaped areas of significance, including parks, open spaces, and government-facility landscaped areas
5. New water demand
The City has developed various restrictions and prohibitions on end uses for each of the five stages indicated in Table 8-3. Water conservation measures become more restrictive with each progressive stage to address the increasing differential between water supply and demand. These prohibitions and restrictions include the following type of areas where these prohibitions or restrictions would be imposed:
• Landscape Irrigation
• Commercial, Industrial, and Institutional
• Water Features
• Swimming Pools and Spas
• Other
Table 8-3 presents the restrictions or prohibitions that would be implemented with each conservation stage along with the estimated percent reduction that could be anticipated. The City will also work in conjunction with Metropolitan to implement water shortage plans on a regional level.
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Table 8-3: Restrictions and Prohibitions on End Uses
Demand Reduction Actions
State
Shortage
Level
Demand Reduction Actions
How much is
this going to
reduce the
shortage gap?
Additional Explanation or Reference
(optional)
Penalty, Charge,
or Other
Enforcement?
1 Other 5% Stage A 5% system-wide reduction is
required No
1 Expand Public Information
Campaign
Enhancing effectiveness of other
actions No
1 Improve Customer Billing 1% No
1 Provide Rebates on Plumbing
Fixtures and Devices 1% No
1 Reduce System Water Loss 1% No
1 Other - Customers must repair
leaks, breaks, and malfunctions in a
timely manner
3% to 5% Yes
1 Other 5% Stage B 10% system-wide reduction is
required Yes
2 Other 10% All restrictions and prohibitions of Stage
B (Level 1)
Yes
2 Other 10% Stage C 20% system-wide reduction is
required Yes
2 Landscape – Limit irrigation to
specific days 5% Limit to specific days and times Yes
3 Other 20% All restrictions and prohibitions of Stage
C (Level 2) Yes
3 Other 5% - 20% Stage D 30% or more system-wide
reduction is required Yes
3 Other water feature or swimming
pool restriction 1% Allow filling swimming pools only if needed for health and safety Yes 3 Other - Prohibit use of potable
water for washing hard surfaces 2%
Limit to specific situations. Includes
buildings. Details in City’s Emergency
Water Conservation Plan
Yes
3 Other 1% Prohibits use of hydrant water and
flushing. Limit use to firefighting only Yes
4 Other 30% or more
Same as Level 3: Stage D system-wide
reduction is required Yes
5 Other 30% or more All restrictions and prohibitions of Stage D (Levels 3 & 4) Yes
5 Other 10% to
Unknown
All users to reduce to 50% or percent
needed due to interruption in supply Yes
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Demand Reduction Actions (cont.)
State
Shortage
Level
Demand Reduction Actions
How much is this going
to reduce the shortage
gap?
Additional Explanation
or Reference
(optional)
Penalty, Charge, or
Other
Enforcement?
5 Landscape - Prohibit all landscape
irrigation 20% to 50%
Priority to health and
safety needs. Subsequent
water uses are prioritized
to maintain and expand
commerce, then to
enhance the aesthetics of
the environment, and then
to facilitate construction
activities.
Yes
6 Other 50% +
All restrictions and
prohibitions of Stage E
(Level 5)
Yes
6 Other Ration water supplies as
needed
ERP response and
recovery protocol to
catastrophic supply
interruption
Yes
NOTES: (1) Reduction percentages are estimated based on experience with existing DMMs and are subject to refinement after monitoring observed outcomes. (2) Reduction Actions are selected from a DWR drop down list. These are the only categories that are accepted for online submittal. See Additional Explanation for “Other.” (3) Shortage Level based on State’s six standard levels which can be mapped to the City’s Shortage Stages using UWMP Table 8-1.
The City has developed a number of consumption reduction program methods that include:
• Public Information Campaign
• Enhancement of City’s Advanced Meter Infrastructure (AMI) Customer Portal Program • Customer Billing
• Frequency of Meter Reading
• Water Use Landscape Audits
• Rebates or Giveaways of Plumbing Fixtures and Devices • Rebates for Landscape Irrigation Efficiency
• Reduction of Water System Loss
Table 8-3A presents the various consumption reduction methods employed by the City that are not quantifiable as far as percentage of closing the shortage gap but supplement the shortage response actions shown in Table 8-3.
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Table 8-3A: Consumption Reduction Methods
Consumption Reduction Methods by Conservation Stage
Conservation
Stage
Consumption Reduction
Methods Additional Explanation or Reference
All Stages Offer Water Use Audits
The City's water audits are aimed at developing residential customer water use efficiency for both landscape and indoor water use.
All Stages
Provide Rebates on
Plumbing Fixtures and
Devices
The City's residential, commercial, industrial, & institutional plumbing retrofit programs involve providing customers with water efficient plumbing devices such as low-flow showerheads, highefficiency washing machines, and low-flush toilets.
All Stages Expand Public Information
Campaign
These programs provide the public information to promote water conservation and water conservation-related benefits.
All Stages Improve Customer Billing Through this program, the City provides economic incentives to customers to use water efficiently.
All Stages Reduce System Water Loss
System water audits, leak detection and repair conducted by water operations/maintenance staff; these programs aim at reducing water losses through a water agency's system.
All Stages Other City’s Water Conservation Administrator works with other City staff to enhance water conservation measures.
All Stages Other The City has deployed SMART timers and drip irrigation systems used in City landscaped areas to improve water use efficiency.
The following consumption reduction methods, also discussed in Chapter 9 (Demand Management Measures), have been undertaken by the City to reduce water demand within their service area:
Public Information Campaign
The City maintains a website titled BHsaves.org which provides information regarding:
• Methods to reduce water use;
• Watering restrictions;
• Fines and surcharges associated with violation of watering restrictions; • Water rebates for installing certain water saving devices; • Individual water metering monitoring; and
• Other frequently asked questions regarding water use and conservation.
In addition, the City has hired a Sustainability Program Administrator to assist in the public information campaign to educate the public on water conservation. Moreover, the City has partnered with Metropolitan in school education outreach programs that provide information to children to learn the importance of water conservation.
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Customer Billing
The City has developed conservation pricing to provide economic incentives to customers to use water efficiently. In addition, the City has installed SMART water meters that allow individual residential customers to view their water usage on a daily basis through the City’s website BHsaves.org.
Frequency of Meter Reading
The City employs an Advanced Metering Infrastructure (AMI). The AMI uses new Neptune Water Meters that are SMART meters that can detect a suspected leak if it is on the customer’s property.
The new water meters use a fixed network system where the water meter sends the water meter reading hourly to a Data Collection Unit. The Data Collection Unit calls into the network computer each morning around 2:00 A.M. These meters will determine if there is an apparent leak on the customer’s property. If there is continuous usage of water over a 24-hour period, the system will send out an alarm (noting the address) to the City’s Customer Service Representative who can notify the customer that they have a suspected leak on their property.
Water Use Surveys
The City has developed water survey programs for both single and multi-family residential customers. The City's water surveys are aimed at developing residential customer water use efficiency for both landscape and indoor water use.
Rebates or Giveaways of Plumbing Fixtures and Devices
The City maintains a residential plumbing retrofit program that involves providing customers with rebates for water efficient plumbing devices such as low-flow showerheads, ultra-low flush toilets, high-efficiency washing machines, and rain-collection barrels.
Reduction of Water System Loss
The City regularly conducts water system audits, leak detection and repairs as part of its overall operations. These activities are conducted by water operations/maintenance staff and are aimed at reducing water losses through the City’s water mains.
Implementation of Drought Rate Structure or Surcharge
The City has developed a tiered rate pricing structure which incorporates drought rates into the overall rate structure. The quantity charge under non-drought conditions varies depending on the amount of metered use in each billing period with tiered or increasing block rates across four use volume tiers. The City of Beverly Hills Water Rate Study (January 2019) describes the City’s rate structure and water storage revenue stabilization factors that may be put into effect during water shortages. The City may implement water shortage revenue stabilization factors during periods of water use restrictions to allow rate adjustments on quantity charges based on the level of restriction as specified in the WSCP. This rate structure is in the City’s Water Regulations, Title 9, Chapter 4, Article 3.
Other
In early 2016, the City hired a full time Water Sustainability Program Administrator and Water Sustainability Analyst who are responsible for the City’s water conservation programs including
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water and landscape audits, public education on water efficiency and the overall water conservation efforts of the City of Beverly Hills and the portion of West Hollywood the City serves.
In addition, the City’s Parks Department has deployed SMART timers and drip irrigation systems for landscaped areas for many of the City-owned properties within the City’s service area.
Moreover, the City is revising its overall landscape strategy for the City’s parks and medians to incorporate water conservation methods using drought tolerant vegetation and upgrading water features including high-efficiency filters, sensors, pumps, and other devices to reduce overall water loss.
Catastrophic Supply Interruption
Given the great distances that imported supplies travel to reach Southern California, the region is vulnerable to interruptions along hundreds of miles of aqueducts, pipelines and other facilities associated with delivering the supplies to the region. Additionally, the infrastructure in place to deliver supplies is susceptible to damage from earthquakes and other disasters.
Metropolitan
Metropolitan has comprehensive plans for stages of actions it would undertake to address a catastrophic interruption in water supplies through its WSDM Plan and WSAP. In addition, Metropolitan’s Emergency Storage Objective is the regional planning estimate for emergency storage and is based on the potential for a major earthquake that would damage all supply aqueducts, thus isolating southern California from its imported water sources or a similar disaster.
In 2019, Metropolitan and its member agencies completed a process to update the planning estimate of Metropolitan’s Emergency Storage Objective. This represents the amount of water that Metropolitan would store for the region in preparation for catastrophic damage to aqueducts.
Emergency storage allows Metropolitan to deliver reserve supplies to the member agencies to supplement local production and avoid severe water shortages. Seismic risk assessment is also addressed in Metropolitan’s seismic resiliency reports in Appendix 8 to their 2025 UWMP.
Metropolitan staff routinely participate in emergency response training exercises that are often based on a postulated seismic event. In 2019, Metropolitan started a new five‐year emergency exercise plan that will allow all member agencies to participate in at least one of Metropolitan’s annual emergency exercises. The first of these exercises was a tabletop exercise for the Orange County member agencies on August 29, 2019, which focused on a hypothetical incident at the Diemer Water Treatment Plant (Metropolitan, 2025 UWMP).
Metropolitan is working with the State to implement a comprehensive improvement plan to address catastrophic occurrences outside of the southern California region, such as a maximum probable seismic event in the Delta that would cause levee failure and disruption of SWP deliveries. Details on Metropolitan’s planned responses to catastrophic interruption can be found in Metropolitan’s 2025 UWMP.
City of Beverly Hills
The City of Beverly Hills Potable Water Emergency Response Plan (ERP) includes a standardized response and recovery protocol to prevent, minimize, and mitigate injury and damage resulting from emergencies or disasters caused by man, natural, or of dependency/proximity origin.
The goals of this ERP are to:
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• Minimize negative impacts on public health and employee safety • Provide emergency public information concerning customer service • Rapidly restore water service after an emergency
• Ensure adequate water supply for fire suppression
• Minimize water system damage
• Minimize impact and loss to customers
The ERP describes how the City of Beverly Hills will respond to potential threats or actual scenarios identified in the vulnerability assessment, as well as additional emergency response situations.
Included in the ERP are specific action plans that will be used to respond to events and incidents.
As part of the overall ERP planning process, the City has developed Planning Partnerships with other parties who have agreed to help the utility in an emergency situation. In addition, the City has developed Mutual Aid Agreements with both internal and external agencies and organizations in the event of a disaster or event that causes a catastrophic supply interruption.
The planning process also includes a vulnerability assessment and the development of Disaster Events or Scenarios and associated specific action plans. The action plans would include:
• Initiation and Notification Requirements
• Required Equipment
• Specific Activities that would be performed
o Assess the problem
o Isolation of the problem and fixing
o Monitoring of the problem
o Recovery from the problem and return to normal operations o Reporting of findings
Due to the sensitive nature of the information contained in the ERP, distribution of the document is limited to those individuals directly involved in the emergency planning and response activities for the City.
8.5.2.1 City Emergency Connections
The City of Beverly Hills has three emergency water supply connections with the City of Los Angeles’ Department of Water and Power (LADWP). The metered connections have design capacities of 2.6 MGD, 13.5 MGD, and 4.8 MGD. City staff must contact the City of Los Angeles to request the activation of either connection. Activation of the connection(s) is dependent upon and subject to the prior needs of the LADWP customers and availability of surplus water. In accordance with the water transfer agreement, both agencies are required to meet in the field at each connection and agree to the volumetric reading of the meter prior to activation.
8.5.2.2 Electrical Outages
Metropolitan has also developed contingency plans that enable it to address both planned and unplanned electrical outages. These plans include the following key points:
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• In event of power outages, water supply can be maintained by gravity feed from Diamond Valley Lake, Lake Mathews, Castaic Lake, and Silverwood Lake • Maintaining water treatment operations is a key concern. As a result, all Metropolitan treatment plants have backup generation sufficient to continue operating in event of supply failure on the main electrical grid
• Valves at Lake Skinner (Riverside) can be operated by the backup generation at the Lake Skinner treatment plant
• Metropolitan owns mobile generators that can be transported quickly to key locations if necessary
Seismic Risk Assessment and Mitigation Plan
The Disaster Mitigation Act of 2000 required state and local governments to develop hazard mitigation plans by November 2004. The Beverly Hills City Council approved the development of such a plan which was adopted and approved by FEMA in 2004. As required by FEMA, the Plan must be updated every five years. The City has prepared a draft 2025 City of Beverly Hills Local Hazard Mitigation Plan (LHMP) update. Previously, the City prepared the 2017 Local Hazard Mitigation Action Plan to implement a hazard mitigation strategy within the community. The plan provides a list of activities that may assist the City in reducing risk and preventing loss from future hazard events. The strategies address multi-hazard issues, as well as activities for specific hazard events including earthquakes. Thus, the 2025 iteration of the plan serves as a comprehensive hazard mitigation plan update.
The LHMP identified earthquakes and wildfires as high risk and the most likely and most devastating hazards to occur within the City. The City is located in a region that is subject to high seismic activity. Due to the City’s proximity to active faults, the area is likely to be impacted by future earthquakes, however the strength and timing of these earthquakes is unknown. A major earthquake occurring on any one of these faults could result in a substantial number of deaths and injuries and extensive damage to both public and private property. The economic impact in direct and indirect costs will be billions of dollars. Listed among the critical infrastructure in the LHMP are the water treatment plant, reservoirs, pump stations, and public works facilities.
The LHMP explicitly classifies water systems as critical facilities and community lifelines, recognizing that potable water, fire suppression, and pressure-dependent systems are essential to post-earthquake response and recovery. Because these assets are designated as lifeline infrastructure, they are prioritized in both the seismic vulnerability assessment and mitigation strategy. The plan notes that seismic damage can simultaneously reduce water availability and increase water demand, particularly for fire suppression following earthquakes, creating compounding risk.
As part of the seismic vulnerability assessment, the LHMP evaluates:
• Exposure of water reservoirs and treatment facilities to strong ground shaking • Dependence of water delivery on other vulnerable lifelines, such as power and communications
• Potential system-wide service disruptions, not just isolated facility damage
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The LHMP’s mitigation strategies align closely with seismic risk reduction for water infrastructure, particularly under the Structure and Infrastructure Projects category. Relevant approaches include:
• Seismic retrofitting of reservoirs, pump stations, and treatment facilities • Pipeline improvements or replacement in high-risk seismic or liquefaction zones • Integration of water system upgrades into the Capital Improvement Program • Coordination with emergency water supply and continuity planning to ensure minimum service levels after earthquakes
These actions are framed to support eligibility for FEMA Hazard Mitigation Assistance funding, including BRIC and HMGP, which are commonly used for water system seismic upgrades. Among existing mitigation activities are the seismic modifications for water system reservoirs and pump stations. The City constructed 5 new steel tank reservoirs and pump stations to meet seismic requirements. The final reservoir was constructed and placed into service in 2015.
The LHMP includes the development of a plan for the water storage and distribution system during the event of infrastructure failure which can occur during an earthquake. This study is to be carried out by the Public Works Department and is associated with the Office of Emergency Management.
The Public Works subcommittee meets to develop policy recommendations on a variety of issues such as reviewing and recommending modifications to stages of emergency, water storage capacity, and making recommendations with staff to take back to the Commission for review of recommendations. Also included is an inter-jurisdictional coordination plan to continue to coordinate with and support Los Angeles County departments in carrying out inspections and emergency responses. The City’s Draft LHMP is included in Appendix J.
One of the priorities of the City’s IWRMP is Emergency Resiliency, or ensuring the City is implementing projects that make systems more resilient to emergencies. The primary focus of the analysis was emergency storage for the water system. The emergency storage goal is 7-days of emergency storage during summer months. The analysis considered the conditions with the Foothill WTP both online and offline. With the Foothill plant offline, and assuming an emergency outage of Metropolitan water supply were to occur, the City has a maximum of 3.4 to 5.7 days of storage when the reservoirs are full.
In 2025-2026, the City completed the installation of three (3) Reservoir Management Systems (RMSs) in three of its largest reservoirs at Coldwater, Greystone, and Sunset reservoirs respectively. The RMSs provide automated active mixing and chemical disinfection at each site.
By doing so, the RMSs enable these key reservoirs to operate at higher operational levels providing increased operational storage availability during an emergency.
Additionally, the City is currently moving forward with the design of the Cabrillo Reservoir Forebay and Pump Station project. Upon completion, these improvements will enhance fire flow capacity and resiliency for Pressure Zone 9 Montecielo pump station and provide pumping capacity redundancy for Pressure Zone 8.
The IWRMP also recommends maximizing the City’s groundwater supply to increase emergency storage duration. A groundwater well with backup power capability provides additional local supply and reduces reliance on Metropolitan.
As discussed in Section 8.5.2, the City has an ERP to provide the City of Beverly Hills with a standardized response and recovery protocol to prevent injury and damage resulting from emergencies and disasters. Due to the sensitive nature of the information contained in the ERP, City of Beverly Hills
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distribution of the document is limited to those individuals directly involved in the emergency planning and response activities for the City.
The City of Beverly Hills assures that this emergency response plan incorporates the results of a vulnerability assessment for the water system and includes plans, procedures, and identification of equipment that can be implemented or used in the event of any and all hazards, including natural, caused by man, or due to dependency on or proximity to the water system. The City of Beverly Hills has also provided a copy of the ERP to the local State Water Resources Control Board (SWRCB) Division of Drinking Water (DDW) District 22 Angeles Office in Glendale, California.
Communication Protocols
As outlined in Section 8.2, beginning in 2022 each supplier will be required to prepare and submit to DWR an Annual Water Supply and Demand Assessment on or before July 1 of each year. The Annual Assessment will be prepared by the City Water Utility and presented to the Public Works Commission if any specific shortage response actions are triggered by the WSCP resulting from the assessment.
For any unexpected water shortage period, the Water Utility will determine the extent of the shortage and action required based on water supply availability from its groundwater and imported water sources. Depending on the severity of the water shortage, the Water Utility and Public Works Commission will recommend to City Council the adoption of a water reduction plan that is necessary to address the level of water shortage under the WSCP and Ordinance 20-O-2819, the Emergency Water Conservation Plan.
As a Metropolitan member agency, the City will also follow Metropolitan’s adopted WSDM Plan. By the month of June, Metropolitan staff will present its completed Annual Assessment for approval by Metropolitan’s Board of Directors along with any recommended specific shortage response actions resulting from the assessment. As a member agency, the City will incorporate Metropolitan’s analysis and response actions into its Annual Assessment if the information is available prior to the approval deadline by the Public Works Commission for delivery to DWR by July 1.
The City will communicate any current or predicted water shortage, water shortage actions, and customer use restrictions to their customers and the general public through an expansion of the public education and outreach programs described in Section 9.1. Information will be provided using billing inserts and publications in newsletters, local newspapers, and the City’s water conservation website (BHsaves.org). Water conservation information will be displayed in the City libraries, community centers, and police stations.
Compliance and Enforcement
The City maintains water meters on all residential, commercial, industrial, and institutional uses within the service area. Bimonthly billing cycle water use comparisons provided in units or acrefeet are often provided on the bi-monthly bills sent to the consumer. In addition, all customers can access information on their water usage via water.beverlyhills.org or through the City’s BHsaves.org website. Through the City’s customer portal program, customers can view their usage every hour, day, week, month, billing cycle or year. The customer portal also has an alert feature so customers can be alerted if there is abnormal water use occurring at their property.
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In the event that the Emergency Water Conservation Plan is violated, the City reserves the right to impose penalties. Penalties will be imposed depending on the water conservation stage, as defined under City Municipal Code Section 9-4-304, and summarized in Table 8-4A.
Table 8-4A: Penalties and Fines for Violations in Each Conservation Stage Penalties and Fines for Violations in Each Conservation Stage Conservation
Stage Monetary Fine
Possible Water Service
Termination or Reduction Imprisonment
A No No No
B Up to $100 No No
C Up to $500 No No
D Up to $1,000 Yes No
E Up to $1,000 Yes Yes, 6 Months
The City’s adopted Ordinance 20-O-2819 amending the City’s municipal code regarding emergency water conservation provisions is included in Appendix E.
Legal Authorities
The City has legal authority to implement and enforce its shortage response actions and emergency response actions. The City is authorized and directed to implement the applicable provisions of the City's Emergency Water Conservation Plan under Chapter 4 of Title 9 (Water Regulation) of the City of Beverly Hills Municipal Code. Under Article 9-4-301, the City Manager is authorized and directed to implement the applicable provisions to protect the public health, safety, and welfare of the public under an unforeseeable disaster such as an earthquake, reservoir failure or other major disruption in the water supply. In the event of a foreseeable water emergency, such as an extended drought, the City Manager is authorized to implement the applicable provisions of the ordinance after holding a public hearing before the City Council. The City Manager is authorized to determine and declare that a water shortage emergency exists and implement actions to relieve the shortage, and the City Council may modify any determination by the City Manager.
The City will declare a water shortage emergency condition to prevail within the service area whenever it finds and determines that the ordinary demands and requirements of water consumers cannot be satisfied without depleting the water supply to the extent that there would be insufficient water for human consumption, sanitation, and fire protection. Additionally, the City shall coordinate with the City of Los Angeles and Los Angeles County for the possible proclamation of a local emergency under California Government Code, California Emergency Services Act.
Financial Consequences of WSCP
During prolonged shortages, customers are required to conserve or even ration their water use. A reduction in water consumption could result in loss of revenues needed to maintain and operate the water system. The City included Water Shortage Revenue Stabilization Adjustments within their Water Rates Ordinance whereby quantity charge rates are adjusted in conjunction with the reduction stages in the WSCP. The water shortage revenue stabilization factors are by water conservation stage and class and are implemented only during periods of declared shortages. At least 30 days prior to making the adjustment, notice will be provided to rate payers, which can be included in the customer’s bills.
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In addition, the City may elect to delay capital improvement projects to lower costs. The City’s tiered water rate structure and revenue stabilization factor is designed to cover the total system costs of providing water to its customers and account for the impact of long-term conservation on revenue and reserves. Additional information on conservation rates and rate stabilization is provided in Appendix I, City of Beverly Hills 2019 Water Rate Study.
Monitoring and Reporting
The City’s supply and demand data are recorded and reviewed daily. Month-end water meter readings are also collected and compiled into Monthly and FY to date water system reports. Data will be monitored and compared from week to week and used to measure the effectiveness of any water shortage contingency stage that may be implemented. Additionally, the City has a full-time Water Conservation Coordinator that is responsible for the City’s water conservation program including water system surveys, public education on water conservation, and the overall water conservation efforts of the City.
The City will follow Metropolitan's WSDM Plan and other regional guidelines as the City enters water shortage stages. If Metropolitan calls for extraordinary conservation, Metropolitan’s Drought Program Officer will coordinate public information activities directly with the City and monitor the effectiveness of ongoing conservation programs. Monthly reporting on estimated conservation water savings will be provided.
Metropolitan will provide each member agency with water use monthly reports that will compare each member agency’s current cumulative retail usage to their allocation baseline. Metropolitan will also provide quarterly reports on its cumulative retail usage versus its allocation baseline.
The City’s staff will also participate in regular groundwater monitoring to be aware of groundwater conditions on a timely basis.
WSCP Refinement Procedures
The WSCP is prepared and implemented as an adaptive management plan. Based on the monitoring and reporting program presented in Section 8.9, the City will evaluate the need to revise its WSCP. The WSCP will be refined as needed to ensure that the shortage response actions are effective and produce the desired results. If potential refinements or new actions are identified, the City will evaluate the effectiveness and incorporate them into the WSCP if deemed appropriate.
The action will be identified and implemented at the appropriate water shortage level. Refinements to the WSCP will be presented by the Water Utility to the City Council for approval and adoption, including any necessary additions or revisions to the Municipal Code.
Special Water Feature Distinction
For purposes of this WSCP, water features that are not pools or spas are analyzed and defined separately from pools and spas. Non-pool and non-spa water features may use or be able to use recycled water, whereas pools and spas must use potable water for health and safety considerations. In this WSCP, the term ‘pool’ refers to both pools and spas that must use potable water and the term ‘water feature’ or ‘decorative water feature’ refers to non-pool and non-spa features. Any actions for these two classifications are designated separately in this WSCP.
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Plan Adoption, Submittal and Availability
This WSCP was adopted and implemented with the 2025 UWMP. The adoption process included external coordination and outreach activities carried out by the City and their corresponding dates shown in Chapter 10 of the UWMP.
8.13