9/7/2023
1 RiversideCA.gov
1 RiversideCA.gov
WATER UTILITY
FIVE-YEAR RATE PLAN PROPOSAL
City Council
September 19, 2023
Public Utilities Department
RiversideCA.gov
2 PROPOSED RESIDENTIAL 5 YEAR WATER RATE PLAN
WATER: $0.15 Per Day
ELECTRIC: $0.21 Per Day
REFUSE: + $0.09 Per Day
$0.45 Per Day
or
$13.50 Per Month
Average rate
increase per year
for 5 years
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2 RiversideCA.gov
3 PROPOSED RATES
In year 1, the rate increase will amount to an additional $4.07 per month for the
average residential customer
RiversideCA.gov
4 $117 $112 $111 $107 $103 $101 $94 $92 $89
$67
$58
$10
$5
$5 $12
$2
$4
$9
$7
$-
$20
$40
$60
$80
$100
$120
Current Known Increase - Year 1 Proposed Increase - Year 1 Drought Charges
WATER RATE PLAN COMPARISON
Average Residential Monthly Bill at 21 CCF Per Month – Year One RPU
RPU RATES
REMAIN
LOW
RPU = 66K Service Connections
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3 RiversideCA.gov
5 OVERVIEW OF WATER
100%
of the City’s
potable (drinking)
water has been
supplied from local
groundwater
sources since 2009
66K
Service
Connections
Current Rate Plan Expired 6/30/2023
Established
1913
Highest State
operational
classification
rating due to
size and
complexity
Riverside
Public Utilities
Western
Municipal
Water District
Eastern
Municipal
Water District
RiversideCA.gov
6 OVERVIEW OF WATER
Maintain
826 Miles
Water Distribution Pipeline
Average age of system: 47 years
35% are over 50 years old
1-50 Years Old (57%) 50-80 Years Old (35%) 80+ Years Old (8%) 5 6
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7 WATER RELIABILITY
20222021202020192018201720162015201420132012Types of Leaks 1021268113111610712511496112122Main Leaks
1,1721,1301,1581,2211,1991,1171,0291,0141,0251,1051,102Service Leaks RPU responded to an average of
3.6 leaks per day over the last ten years.
RiversideCA.gov
8 WATER SUPPLY-GROUNDWATER BASINS
RPU produces water from four
groundwater basins adjacent
to the Santa Ana River
• San Bernardino (Bunker Hill)
• Rialto-Colton
• Riverside North
• Riverside South
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5 RiversideCA.gov
9 RPU team members work
24/7 to keep the water flowing
RPU: ALL DAY EVERY DAY
RiversideCA.gov
10 WATER SUPPLY-FACILITIES
Pressure
Stations
60 Water Treatment
Facilities
6 Reservoirs
1650
Domestic
Wells
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11 WATER SUPPLY-FACILITIES
34 Miles
of Supply
Pipeline
System “Arteries”
(16-72 inches)
98 Miles
of Transmission
Pipeline
826 Miles
of Distribution
Pipeline
RiversideCA.gov
12 GROUND WATER SUPPLY CHALLENGES
Sustainability Challenges to Riverside Requiring Vital Solutions City of
Riverside
Growth
Water Rights Climate
Change
Groundwater
Conditions
2040 Potable &
Recycled Water
Demand
Water Quality
Regulation
Changes
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13 Water Wheeling & Surplus Water Sales
• Sale of surplus water supply and
delivery to neighboring water utilities
• $4.5 to $6.0 million in annual revenue
Payments for Water Clean Up Costs
• Treatment plants and
operational costs currently paid by
Lockheed Martin Corporation
WHAT’S BEEN DONE TO KEEP RATES LOW
RiversideCA.gov
14 DateAgenda Topic
August 8, 2022Rate Trends Analysis
June 12, 2023Conceptual approval of five-year rate
plan proposal
June 26, 2023Fiscal Policy and Cash Reserve Policy
update
July 10, 2023Alternative rate scenarios
August 14, 2023Capital Improvement Plan
accomplishments
BOARD ENGAGEMENT
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15 BOARD ENGAGEMENT
FISCAL POLICY AND CASH RESERVES
(The following slides are a synopsis of a presentation to the Board of Public Utilities on June 26, 2023. Refer to Attachment 4 for the complete slide deck) RiversideCA.gov
16 PURPOSE OF THE RESERVE POLICIES
Properly designed reserve policies send a positive signal to ratepayers, investors, and regulatory and credit rating agencies that the Board and City Council are committed to maintaining the long-term fiscal strength of RPU.
Strong and transparent financial policies, including maintaining prudent reserves for emergencies, rate stability, working capital, capital improvements and debt service, are consistent with best practices in the utility industry.
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17 RESERVE CATEGORIES
1. Restricted Reserves are established and utilized for narrowly defined purposes as specified by legal restrictions, bond covenants, and other regulations or ordinances.
2. Designated Reserves are that portion of unrestricted reserves that meet specific purposes set aside by the Board and City Council. Designated reserve funds ensure stable service delivery, meet future needs, and protect against financial instability. Designated reserves may be held for specific capital and operating purposes.
3. Undesignated Reserves are the remaining unrestricted reserves that may be used for any lawful purpose and have not been designated for specific capital and operating purposes; however, maintaining a proper level of undesignated reserves is critical to ensure the utility can meet its fluctuating cashflow demands and mitigate financial volatility.
RiversideCA.gov
18 RESERVES - EXAMPLES AND DEFINITIONS
DefinitionRestricted Reserve
This reserve is set aside for future bond payments that are governed by bond covenants.
Bond Redemption Reserve
(Debt Service)
May 2004 City Council approved 10-year monthly surcharge of 1.5% of the total water charge to provide financing to create and encourage water conservation and efficiency programs, renewed March 2014.
Water Conservation Fund
DefinitionUndesignated Reserve
Ensures sufficient resources to pay budgeted operating and maintenance expenses, including power supply costs, recognizing the timing differences between payment of expenditures and receipt of revenues.
Operating (Working Capital)
Provide funds to ensure continuity of construction over fiscal years to be reimbursed by bond proceeds or other resources.
System Improvements Capital
DefinitionDesignated Reserve
Monies held on behalf of RPU’s customers as required to be utilized if a customer fails to pay their utility bill.
Customer Deposits
Established June 2014 to set aside funds for a recycled water program. Funding was from a legal settlement from the City.
Recycled Water
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19 WATER RESERVES WITH PROPOSED RATE INCREASES
$0
$20
$40
$60
$80
$100
$120
$140
$160
FYE 2018 FYE 2019 FYE 2020 FYE 2021 FYE 2022 FYE 2023 FYE 2024 FYE 2025 FYE 2026 FYE 2027 FYE 2028 Millions
ALL Reserves WITH Proposed 5-Year Rate Plan
Undesignated Cash Balance Line of Credit Designated Cash Balance Restricted Cash Balance Min Target Source: Refer to Board presentation on Cash Reserve Policy (Attachment 5)
RiversideCA.gov
20 BOARD ENGAGEMENT
ALTERNATIVE RATE SCENARIOS
(The following slides are a synopsis of a presentation to the Board of Public Utilities on July 10, 2023. Refer to Attachment 5 for the complete slide deck) 19 20
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21 WATER 5-YEAR RATE PLAN
SCENARIO – 4% SYSTEM AVERAGE
$0
$20
$40
$60
$80
FYE 2018 FYE 2019 FYE 2020 FYE 2021 FYE 2022 FYE 2023 FYE 2024 FYE 2025 FYE 2026 FYE 2027 FYE 2028 Millions
Undesignated Reserve WITH 4% Annual Rate Increases
Undesignated Cash Balance Line of Credit Min Target
RiversideCA.gov
22 WATER 5-YEAR RATE PLAN
SCENARIO – 5% SYSTEM AVERAGE
$0
$20
$40
$60
$80
FYE 2018 FYE 2019 FYE 2020 FYE 2021 FYE 2022 FYE 2023 FYE 2024 FYE 2025 FYE 2026 FYE 2027 FYE 2028 Millions
Undesignated Reserves WITH 5% Annual Rate Increases
Undesignated Cash Balance Line of Credit Min Target
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23 WATER 5-YEAR RATE PLAN
SCENARIO – 6% SYSTEM AVERAGE
$0
$20
$40
$60
$80
FYE 2018 FYE 2019 FYE 2020 FYE 2021 FYE 2022 FYE 2023 FYE 2024 FYE 2025 FYE 2026 FYE 2027 FYE 2028 Millions
Undesignated Reserves WITH 6% Annual Rate Increases
Undesignated Cash Balance Line of Credit Min Target
Source: Refer to Board presentation on Alternative Rate Scenarios (Attachment 6)
RiversideCA.gov
24 BOARD ENGAGEMENT
CAPITAL IMPROVEMENT PROJECTS
(The following slides are a synopsis of a presentation to the Board of Public Utilities on August 14, 2023. Refer to Attachment 6 for the complete slide deck) 23 24
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13 RiversideCA.gov
25 WATER CIP
The Water Plan rate increases support investment in the water system. The following is a summary of the 2018 investment plan, the 2018-2023 expenses, and the projects to be funded by the currently proposed for the Water Utility Five-Year Rate Plan.
5 Year Plan
(2024-2028)
Expenditures
2018-2023
Budgeted
(2018-2023)
10 Year Plan
(2018-2028)
Project Category
$28,000,000$10,026,110$12,291,304$10,791,0001. Water Supply $1,296,0000$1,296,0002. Water Treatment
$15,552,000$11,718,676$15,124,388$30,499,0003. Well Projects $36,142,000$20,787,935$29,681,357$65,823,0004. Transmission Pipelines $74,317,000$56,249,000$46,573,283$117,790,0005. Distribution Pipelines $7,872,000$16,197,230$11,581,246$19,268,0006. Distribution Facilities $1,288,0000$2,440,0007. Reservoir Projects
$19,225,000$2,844,856$17,859,939$39,209,0008. System Automation $183,692,000$117,823,807$133,111,517$287,116,000Total:
6.5%5.7%Rate Increase:
RiversideCA.gov
26 COMPLETED AND PLANNED – WATER WELLS
Well Projects: $30,499,000 10-Year Investment (FY 2018-2028) • 3-5 well rehabilitations annually
• 5 new drinking water wells
• 2 new irrigation wells
Completed:
14 Wells Rehabilitated
2 new water wells (Warren 4R and
Gage 29-3R)
Planned:
Drilling and equipping Gage 29-2R
Rehabilitation of wells - Garner 6 and
Garner D
Source: Refer to Board presentation on CIP (Attachment 7) 25 26
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14 RiversideCA.gov
27 RATES
RATES 2009 - PRESENT
RiversideCA.gov
28 HISTORY OF WATER RATES
Rate IncreaseWater
10.00%11/1/2009
10.00%11/1/2010
0%7/1/2011
0%7/1/2012
0%7/1/2013
0%7/1/2014
0%7/1/2015
0%7/1/2016
0%7/1/2017
No Rate Increases
from 2011 - 2017
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29 HISTORY OF WATER RATES
Rate IncreaseWater
4.50%7/1/2018
5.75%7/1/2019
5.75%7/1/2020
5.75%7/1/2021
6.50%7/1/2022
Current Rate Plan Expired
6/30/2023
RiversideCA.gov
30 THE WHY
0.0 10.0
20.0 30.0
40.0 50.0
60.0 70.0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 RPU Water Rate Increases vs CPI (Water & Sewerage Index) Cumulative Rate Increase Cumulative Increase in Water CPI 29 30
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31 Increased construction/equipment costs
The State of California drought messaging and increased Citywide water efficiency have decreased water revenue
without decreasing operational costs
2011 – 2017 there were no rate increases resulting in a Water Fund Balance that doesn’t meet the minimum reserve levels set by City Council without the line of credit.
THE WHY
RiversideCA.gov
32 THE WHY
($40)
($20)
$0
$20
$40
$60
$80
FYE 2018 FYE 2019 FYE 2020 FYE 2021 FYE 2022 FYE 2023 FYE 2024 FYE 2025 FYE 2026 FYE 2027 FYE 2028 Millions
Undesignated Reserves WITHOUT Rate Increases
Undesignated Cash Balance Line of Credit General Fund Subsidy Min Target 31 32
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33 90.2%
9.3%
0.5%
WATER CUSTOMER COUNTS
Residential - 59,876
Commercial/ Industrial
- 6,153
Other - 343
Total Customer Count - 66,372
62.8%
33.8%
3.4%
WATER YTD ACTUAL REVENUES
Residential - $45,784
Commercial/
Industrial - $24,635
Other - $2,446
(In Thousands)
Total Water Revenues - $72,865
WATER CUSTOMER STATISTICS
Note: As of June 30, 2022; Commercial includes Landscape and City Interruptible. Other includes Agriculture, Recycled, Hydrants, Fire and Temp.
RiversideCA.gov
34 PROPOSED WATER 5-YEAR RATE PLAN
Year 5
% Increase
Year 4
% Increase
Year 3
% Increase
Year 2
% Increase
Year 1
% Increase
CustomersCustomer Class
6.6%6.7%6.6%6.6%5.7%58,731
Single Family Residential
(3 tiers per class)
6.6%6.7%6.6%6.6%4.6%1,145
Multi Family Residential
(2 tiers per class)
6.0%6.3%6.1%6.0%8.6%5,137 Commercial/ Industrial
5.8%6.1%5.8%5.9%13.6%500 Landscape
6.3%5.8%6.0%6.3%5.8%530
City Interruptible/
Recycled
6.5%6.4%6.5%6.4%1.8%224
Agriculture
(up to 3 tiers per class)
6.9%7.2%7.0%7.1%19.3%24
Riverside Water Co.
Irrigators (3 tiers per class)
7.0%7.1%6.9%7.0%12.0%72 Temporary Service
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35 PROPOSED WATER 5-YEAR RATE PLAN
Average Years 2-5
% Increase
Year 1
% Increase
Avg CCF
Usage
(Tier 1 and Tier 2)
Single Family
Customer Class
Examples
6.7%3.8%10Residential - Low User
6.6%7.0%21Residential – Typical
6.6%7.1%26Residential - High User
$0.15
Average Cost Per Day
over 5 years at 21 CCF
$4.07
Average Monthly increase
year 1 at 21 CCF
RiversideCA.gov
36 PROPOSED WATER 5-YEAR RATE PLAN
Average
Years 2-5
% Increase
Year 1
% Increase
Avg CCF
Usage
(Tier 1)
Customer Class
6.1%8.5%37
Commercial/
Industrial
Example
$0.26
Average Cost Per Day
over 5 years
$9.02
Average monthly
increase year 1
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19 RiversideCA.gov
37 THE WHY
($40)
($20)
$0
$20
$40
$60
$80
FYE 2018 FYE 2019 FYE 2020 FYE 2021 FYE 2022 FYE 2023 FYE 2024 FYE 2025 FYE 2026 FYE 2027 FYE 2028 Millions
Undesignated Reserves WITHOUT Rate Increases
Undesignated Cash Balance Line of Credit General Fund Subsidy Min Target RiversideCA.gov
38 THE WHY
$0
$20
$40
$60
$80
FYE 2018 FYE 2019 FYE 2020 FYE 2021 FYE 2022 FYE 2023 FYE 2024 FYE 2025 FYE 2026 FYE 2027 FYE 2028 Millions
Undesignated Reserves WITH Proposed 5-Year Rate Plan
Undesignated Cash Balance Line of Credit Min Target
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39 WATER 5-YEAR RATE PLAN
SCENARIO – 6% SYSTEM AVERAGE
$0
$20
$40
$60
$80
FYE 2018 FYE 2019 FYE 2020 FYE 2021 FYE 2022 FYE 2023 FYE 2024 FYE 2025 FYE 2026 FYE 2027 FYE 2028 Millions
Undesignated Reserves WITH 6% Annual Rate Increases
Undesignated Cash Balance Line of Credit Min Target
RiversideCA.gov
40 $117 $112 $111 $107 $103 $101 $94 $92 $89
$67
$58
$10
$5
$5 $12
$2
$4
$9
$7
$-
$20
$40
$60
$80
$100
$120
Current Known Increase - Year 1 Proposed Increase - Year 1 Drought Charges
WATER RATE PLAN COMPARISON
Average Residential Monthly Bill at 21 CCF Per Month – Year One RPU
RPU RATES
REMAIN
LOW
RPU = 66K Service Connections
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41 LOW-INCOME PROGRAM - WATER
$3.25
Current Monthly Water
SHARE Credit
$4.25 Year 1
6.25 by Year 5
Projected future Monthly
Water SHARE Credit
2,144
Residential Water Customers
Assisted (01/2023)
Established
1989
Sharing Households Assist Riverside’s Energy (SHARE) Program RiversideCA.gov
42 WATER EFFICIENCY PROGRAMS
Turf Replacement High Efficiency
Clothes Washers
Rotating Sprinkler
Nozzles
Premium High
Efficiency Toilets
Weather Based
Irrigation Controllers
Additional Information on Programs & Rebates available at:
RiversidePublicUtilities.com/Rebates
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43 $15.5M ($8.5 existing appropriation,
$7.0 additional appropriation)
Diversifies Riverside’s water supply portfolio
options while securing additional
perpetual water rights.
Ensures water supply reliability for current
and future demand. Future Proofing
EXPAND WATER SUPPLY PORTFOLIO
Seven Oaks Dam Enhanced Recharge
RiversideCA.gov
44 $12M Project
Creates a regional recycled water pipeline to deliver
recycled water to irrigation customers and improves
select tributaries
EXPANDED WATER SUPPLY PORTFOLIO
Riverside Habitat Parks & Water Project
West Branch
Habitat Conservation Plan Tributaries Restoration
$0.75M Project
Adds resiliency to local water supplies through
sustainable and environmentally ethical efforts,
working to revitalize the Santa Ana River.
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45 RECOMMENDATIONS
That the City Council:
1. Conduct a public hearing to consider all oral comments and written protests to the proposed water utility five-year rate plan;
2. If a majority protest does not exist, adopt a Resolution approving and establishing the FY2023/24-2027/28 water
rates, to be effective October 1, 2023; and
3. Approve an increase to the low-income water assistance program from $3.25 per month to $4.25 per month for
qualifying customers.
45