WATER SUPPLY
UPDATE AND
WATER RATE
DISCUSSION
GROVERBEACH.ORG
Greg Ray, Public Works Director/City Engineer
Gabriel Munoz - Morris, Senior Engineer
Nick Szamet, Administrative Services Director
Discussion Sections Tonight
GROVERBEACH.ORG
1. Overall Water Supply Conditions
2. Water Supply and Demand Estimates
3. Water Supply Risks
-Council Questions4. Additional Water Supply Sources
-Council Questions5. Water Rate Structure Update Options -Council Questions, Public Comment, Council Direction-
Overall Water Supply Conditions
GROVERBEACH.ORG
• Only 2 sources of water
supply
• Lopez Lake: 100% full
currently
• Groundwater: levels have
rebounded
Supply and Demand Estimates
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Supply and Demand Estimates
GROVERBEACH.ORG
Estimated Demand – Next Five Years
GROVERBEACH.ORG
Estimated Demand – Next Five Years
GROVERBEACH.ORG
Estimated Supply and Demand Beyond Five
Years
GROVERBEACH.ORG
GROVERBEACH.ORG
Lopez Lake LRRP
GROVERBEACH.ORG
• Low Reservoir Response Plan – Adopted 2014
• Activated at 20,000 AF
• 10% Supply Reduction at 15,000 AF
Estimated Demand – Six Years vs. Drought
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Estimated Demand – Six Years vs. Drought
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Estimated Demand – Six Years vs. Drought
GROVERBEACH.ORG
Estimated Demand – 2030-2050
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Estimated Demand – 2030-2050
GROVERBEACH.ORG
Estimated Demand – 2030-2050
GROVERBEACH.ORG
Water Supply Conditions
GROVERBEACH.ORG
Questions?
Additional Water Supply Sources
GROVERBEACH.ORG
• Staff recommends additional 500 AF of reliable, drought-resilient supply
• Operational buffer of 15-20%
• Research – starting in the 1960s
• Northern Cities Management Area Technical Group studies • Meetings: County, NCMA partners
• Public input over the last 8 months
Desalination
GROVERBEACH.ORG
• Three opportunities for
desalination considered by
staff and NCMA TG
• County Desalination Study
(DESAL Plan)
• South County Desalination
Project
• Diablo Canyon Nuclear
Power Plant Desalination
Project
DESAL Plan
GROVERBEACH.ORG
• Desalination Executable
Solution and Logistics Plan
(DESAL Plan)
• Regional in nature - no
guarantee of any water for
Grover Beach currently
• County estimate for
construction – 2041 to 2045
(dates uncertain)
South County Desal Project
GROVERBEACH.ORG
• Grover Beach cannot finance desal project on its own
• Coastal Commission
• Desal projects may be permitted only if local agencies have done everything possible to exhaust other possible sources of supply including recycled water
• No salt water intrusion barrier
• Treatment costs: 3.4 times more per AF than recycled water • Energy demand: 3.3 times more per AF than recycled water Diablo Canyon NCPP Desal Project
GROVERBEACH.ORG
• 2016 Pipeline Feasibility
Study
• No indication of PG&E
interest in project
• Environmental constraints
uncertain – could impact
project feasibility
State Water Project - Purchase
GROVERBEACH.ORG
• Two sources
• Oceano CSD
• County of San Luis Obispo
• SWP water through OCSD/County is not reliable long-term solution – available during normal/wet years
Lopez Lake Spillway Raise
GROVERBEACH.ORG
• 2013 Stetson Engineers
report
• Reviewed by County staff,
Zone 3 TAC, NCMA TG
• Modification to dam operating
permit
• Habitat Conservation Plan
Storm Water Retention
GROVERBEACH.ORG
• Existing storm water basins
prevent flooding
• SLO County Stormwater
Resource Plan – 2020
• Feasibility of regional stormwater
basins
• Potential to generate 26 AF per
year in region
Water Conservation
GROVERBEACH.ORG
• Only available means to address water shortage
• “Decade of conservation”
• 2022-2023 Stage 3 Declaration
• Mandatory 20% reductions, $300 fines, retrofit programs, public information campaign • In effect 4 months – only 5% reduction achieved
Recycled Water
GROVERBEACH.ORG
• NCMA TG Recommended recycled water project
• Partnership with Pismo Beach and Arroyo Grande since 2016 – 2022 JPA • Increase of 510 AF for Grover Beach
• $3 million spent by Grover Beach to date
• March 18, 2024 Central Coast Blue JPA Board Meeting
• Drastically different water supply conditions than 2020-2023 • Significant cost increase
• Temporary pause on detailed design work
• Seek out additional grant opportunities
• Arroyo Grande April 9, 2024 decision
• Staff recommends continued development of a recycled water project
Additional Water Supply Sources
GROVERBEACH.ORG
Questions?
Rate Structure Update
GROVERBEACH.ORG
• Overview
• Assumptions informing rate scenarios
• Overview of scenarios.
• Rate comparisons to regional municipal operators.
• Questions.
• None of these scenarios consider Wastewater Fund (sewer) Rates for which staff recommends no changes for consideration currently.
Assumptions
GROVERBEACH.ORG
39% 36% 25%
Total Pismo
Beach
Grover
Beach
Arroyo
Grande
Construction Costs $146,000,000 $56,940,000 $52,560,000 $36,500,000 Eligible Pre-Construction Costs $6,342,073 $1,338,958 $1,909,428 $3,093,688 Total Project Costs $152,342,073 $58,278,958 $54,469,428 $39,593,688 Grants ($33,100,000) ($12,909,000) ($11,916,000) ($8,275,000) Amount to be Financed $117,903,116 $44,031,000 $42,553,428 $31,318,688 • Adjust Central Coast Blue Construction to $146 Million. • Reduce grant funding by $10 Million.
Option 1
GROVERBEACH.ORG
• Leave December 2023 Rate Structure in Place
• Leaves existing rate structure in place using the previous $93M average cost estimate for the Central Coast Blue project. • Option is not viable given increase in project cost to $146M. • Rate payers would see no immediate impact on water bills unless rates were increased at time of construction through another Proposition 218 process.
Option 2
GROVERBEACH.ORG
• Increase Rates Now to Fund Revised Cost of Central
Coast Blue Project
• Assumes moving forward with project construction using the $146M cost estimate with limited delay.
• Proposition 218 process would need to commence
immediately to adjust rate structure to accommodate
increased debt burden from financing.
• Rate payers would see sizable increases in water bills upon adoption of new rate structure.
Option 3
GROVERBEACH.ORG
• Decrease Rates Near-Term and Increase When Needed for Construction of a Water Recycling Project
• Provides near-term relief to rate payers afforded by pausing the project. • While rates would lower this year, there would need to be a water revenue increase of 52% in fiscal year 2025-26.
• Proposition 218 process would commence by the end of 2024 for this option. • Rate payers would see initial short-term decrease in water bills but sizable increase upon adoption of a new rate structure.
Option 4
GROVERBEACH.ORG
• Remove Construction Costs for Central
Coast Blue Project and Maintain Funds
for Water Resiliency Efforts
• Remove all construction-related expenses
for Central Coast Blue from the rate
structure but continue to provide funding
for recycling water efforts.
• Decreases revenue requirements by 9.7%
in 2023 with 3.3% annual increase for
water projects not related to recycled
water and other water resiliency.
• Rate payers would see decreased costs
on future bills and a credit for the
difference on charges collected since
February 1, 2024.
• Less costly given compounding effect
leading to lower future increases.
• Continues work on securing sustainable
water supply.
• City would have the lowest water rates in
the county under this option.
Option 5
GROVERBEACH.ORG
• Remove All Costs for Central
Coast Blue and Water Resiliency
Efforts
• Removes all expenses for construction of
Central Coast Blue project and not include
any funding for water resiliency efforts
• Decrease overall revenue requirements by
15.5% from the adopted rate structure with
4.2% annual increase for water system
projects and needs not related to recycled
water and other water resiliency.
• Rate payers would see decreased costs on
future bills and a credit for the difference on
charges collected since February 1, 2024.
• More costly than Option 4 as funding will not
be compounded at the same rate.
• Removes all funding for the City’s water
resiliency efforts, including withdrawing from
the Central Coast Blue project and Joint
Powers Authority.
• City would have the lowest water rates in the
county under this option.
Regional Comparison
GROVERBEACH.ORG
Estimates Only.
Regional Comparison
GROVERBEACH.ORG
Estimates Only.
Regional Comparison Continued
GROVERBEACH.ORG
Avg. Bi-Monthly Bill
$-
$50
$100
$150
$200
$250
2024 2025 2026 2027 2028
Grover Beach Sce. 5 Grover Beach Sce. 4
Grover Beach 2/1/2024 SLO Countywide Average
Why are others
so much
higher?
Summary
GROVERBEACH.ORG
• Scenarios 4 and 5 will result in Grover Beach having the lowest rates in San Luis Obispo County for surveyed operators. • Scenario 4 maintains minimal investment in water resiliency. • Scenario 5 removes all investment in water resiliency. • All Scenarios maintain revenue capacity for capital projects outside of Central Coast Blue.
• None of these scenarios consider Wastewater Fund (sewer) Rates for which staff recommends no changes.
• Staff will return on May 13 to present rates based on Council’s direction.
Recommendation
GROVERBEACH.ORG
Receive a report on the City’s water supply conditions and estimated future water demand along with water supply alternatives and provide direction to staff regarding potential modifications for the City’s current water rate structure.
Rate Structure Update
GROVERBEACH.ORG
Questions?