PUBLIC WORKS DEPARTMENT
November 19, 2024
COMPREHENSIVE
WATER COST OF SERVICE STUDY
1 ATTACHMENT 7
STUDY OBJECTIVES
❖Evaluate impact of higher costs of
purchased (imported) water
❖Evaluate impact of reduced water sales
❖Develop 5-year financial plan for the Water
Utility
❖Determine water rates based on study’s
goals and objectives and in compliance with
Proposition 218
❖Document study in a comprehensive report
to serve as the City’s administrative record
C I T Y O F T O R R A N C E
T O R R A N C E P U B L I C W O R K S D E P A R T M E N T 2
CHANGES AND CHALLENGES
❖Metropolitan Water District water rate increases
by 11% in CY2025 followed by 9.5% increase in
CY2026 and 13%+ increases in CY2027 and CY2028
❖Wet winters in FY2023 and FY2024 have resulted in
reduced water sales revenues
❖$26.3 million Capital Improvement Program over
five years to be rate funded
❖Maintain reserve targets
❖Operations: 25% of O&M expenses
❖Capital: One-year average annual capital
expenditures
❖Emergency: $500,000 3
Rate Setting
Framework
• Financial goals
and policies
• Pricing objectives
Financial Plan
•Evaluation of CIP
and financing
options
• Cash flow
analysis for
financial
sufficiency
Cost of Service &
Rate Design
• Cost allocations
• Rate design
• Rate calculations
• Customer impact
analyses
1 2 3 4
RATE STUDY AT A GLANCE
Final Rate
Adoption
• Report
• Prop 218 Notice
• Public Hearing
T O R R A N C E P U B L I C W O R K S D E P A R T M E N T 4
TORRANCE WATER SERVICE AREA
T O R R A N C E P U B L I C W O R K S D E P A R T M E N T 5 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
Revenue Adjustments 6.50% 6.50% 6.00% 6.00% 6.00%
Effective Month January January January January January
FINANCIAL PLAN RESULTS
T O R R A N C E P U B L I C W O R K S D E P A R T M E N T 6
CAPITAL IMPROVEMENT PROJECTS
❖Van Ness Ave Water Wells and
Transmission Main
❖Water Main Replacements
❖High Pressure Zone Modifications
❖North Torrance Well Field Scrubber
❖Vista Montana Hillside Rehabilitation
C I T Y O F T O R R A N C E
T O R R A N C E P U B L I C W O R K S D E P A R T M E N T 7 Current Proposed Proposed Proposed Proposed Proposed
Meter Service
Charge
(Monthly)
CY 2024 CY 2025 CY 2026 CY 2027 CY 2028 CY 2029
3/4” (81.1%) $7.48 $7.48 $7.97 $8.45 $8.96 $9.50
1” (11.1%) $10.74 $10.57 $11.26 $11.94 $12.66 $13.42 1 ½” (4.0%) $18.89 $18.29 $19.48 $20.65 $21.89 $23.21 2” (2.7%) $28.68 $27.55 $29.35 $31.12 $32.99 $34.97 3” (0.5%) $59.64 $56.88 $60.58 $64.22 $68.08 $72.17 4” (0.3%) $105.30 $100.09 $106.60 $113.00 $119.78 $126.97 6” (0.1%) $214.49 $203.51 $216.74 $229.75 $243.54 $258.16 8” (0.1%) $393.83 $373.30 $397.57 $421.43 $446.72 $473.53 10” (0.1%) $622.03 $589.39 $627.71 $665.38 $705.31 $747.63 PROPOSED 5 -YEAR RATE SCHEDULE
METER SERVICE CHARGE
T O R R A N C E P U B L I C W O R K S D E P A R T M E N T 8 Current Proposed Proposed Proposed Proposed Proposed
Pumping Service
Charge (Monthly) CY 2024 CY 2025 CY 2026 CY 2027 CY 2028 CY 2029 3/4” (87.0%) $6.40 $8.35 $8.90 $9.44 $10.01 $10.62 1” (11.3%) $10.66 $13.91 $14.82 $15.71 $16.66 $17.66 1 ½” (0.8%) $21.29 $27.82 $29.63 $31.41 $33.30 $35.30 2” (0.7%) $34.08 $44.51 $47.41 $50.26 $53.28 $56.48 3” (0.2%) $75.54 $97.37 $103.70 $109.93 $116.53 $123.53 4” (0.1%) $134.17 $175.26 $186.66 $197.86 $209.74 $222.33 6” (0.0%) $276.84 $361.64 $385.15 $408.26 $432.76 $458.73 8” (0.0%) $511.10 $667.64 $711.04 $753.71 $798.94 $846.88 10” (0.1%) $809.22 $1,057.10 $1,125.82 $1,193.37 $1,264.98 $1,340.88 PROPOSED 5 -YEAR RATE SCHEDULE
HIGH PRESSURE PUMPING CHARGE
T O R R A N C E P U B L I C W O R K S D E P A R T M E N T
1. Applies to high pressure zone only. Approximately 2,000 services
2. High pressure zone includes hillside area located south of PCH
3. Fee established to recover energy and maintenance costs due to pumping in high pressure zone 9 Current Proposed Proposed Proposed Proposed Proposed
Fire Service
Charges (Monthly) CY 2024 CY 2025 CY 2026 CY 2027 CY 2028 CY 2029 2” (6.5%) $6.43 $7.77 $8.28 $8.78 $9.31 $9.87 3” (0.5%) $13.71 $17.15 $18.27 $19.37 $20.54 $21.78 4” (21.5%) $26.29 $33.32 $35.49 $37.62 $39.88 $42.28 6” (34.9%) $71.40 $91.36 $97.30 $103.14 $109.33 $115.89 8” (30.5%) $149.24 $191.46 $203.91 $216.15 $229.12 $242.87 10” (6.0%) $266.32 $342.03 $364.27 $386.13 $409.30 $433.86 12” (0.2%) $428.60 $550.72 $586.52 $621.72 $659.03 $698.58 PROPOSED 5 -YEAR RATE SCHEDULE
PRIVATE FIRE CHARGE
T O R R A N C E P U B L I C W O R K S D E P A R T M E N T Dedicated service line for fire protection for commercial properties 10 Commodity Charges Per Unit
(ccf)
Current Proposed Proposed Proposed Proposed Proposed
CY 2024 CY 2025 CY 2026 CY 2027 CY 2028 CY 2029
Single Family
Tier 1 (0-7 units) $3.42 $3.55 $3.79 $4.02 $4.27 $4.53
Tier 2 (8-12 units) $5.77 $5.47 $5.83 $6.18 $6.56 $6.96 Tier 3 (13+ units) $6.98 $7.46 $7.95 $8.43 $8.94 $9.48
All Other Standard
Customers
Tier 1 (0-10 units) $3.89 $4.09 $4.36 $4.63 $4.91 $5.21 Tier 2 (11+ units) $5.55 $6.04 $6.44 $6.83 $7.24 $7.68
Low Income Senior or
Disabled
Tier 1 (0-7 units) $2.93 $2.78 $2.97 $3.15 $3.34 $3.55
Tier 2 (8-12 units) $5.29 $5.06 $5.39 $5.72 $6.07 $6.44 Tier 3 (13+ units) $6.50 $5.82 $6.20 $6.58 $6.98 $7.40
PROPOSED 5 -YEAR RATE SCHEDULE
VARIABLE RATES
T O R R A N C E P U B L I C W O R K S D E P A R T M E N T
1. 1 billing unit (ccf) = 748 gallons of water
2. Typical Single Family uses 11 ccf of water on a monthly basis (7 units Tier 1 + 4 units Tier 2)
3. Single Family: Proposed CY 2025 Variable Cost (7 units x $3.55) + (4 units x $5.47) = $46.73
4. Gross household income < $37,650 for the prior calendar year AND 62 yrs old OR permanently disabled 11 5 YEAR PROPOSED MONTHLY BILLS
SINGLE FAMILY CUSTOMERS
Single Family
Monthly Bill 3/4"
meter
Usage
(ccf)
Current
Monthly
Proposed
CY 2025
Difference
($)
Proposed
CY 2026
Difference
($)
Proposed
CY 2027
Difference
($)
Proposed
CY 2028
Difference
($)
Proposed
CY 2029
Difference
($)
Low Use 4 $21.14 $21.68 $0.54 $23.13 $1.45 $24.53 $1.40 $26.04 $1.51 $27.62 $1.58 Below Avg Use 7 $31.39 $32.33 $0.94 $34.50 $2.17 $36.59 $2.09 $38.85 $2.26 $41.21 $2.36 Typical Use 11 $54.45 $54.21 -$0.24 $57.82 $3.61 $61.31 $3.49 $65.09 $3.78 $69.05 $3.96 High Use 17 $95.13 $96.98 $1.85 $103.40 $6.42 $109.64 $6.24 $116.35 $6.71 $123.41 $7.06 Very High Use 25 $150.99 $156.66 $5.67 $167.00 $10.34 $177.08 $10.08 $187.87 $10.79 $199.25 $11.38
T O R R A N C E P U B L I C W O R K S D E P A R T M E N T
1. Proposed CY 2025 Typical Use 11ccf: $46.73 variable cost + $7.48 fixed cost meter charge = $54.21
2. Excludes customers in the high pressure pumping zone
3. Water conservation efforts monitored since 1990 indicate a reduction in monthly water usage from 20ccf to 11ccf. A typical SFR user in 2025 would pay an additional $65.15 per month if they used 20ccf 12 5 YEAR PROPOSED MONTHLY BILLS
ALL OTHER STANDARD CUSTOMERS
All Other Standard
Customers
Monthly Bill 1"
meter
Usage
(ccf)
Current
Monthly
Proposed
CY 2025
Difference
($)
Proposed
CY 2026
Difference
($)
Proposed
CY 2027
Difference
($)
Proposed
CY 2028
Difference
($)
Proposed
CY 2029
Difference
($)
Low Use 10 $49.61 $51.47 $1.86 $54.86 $3.39 $58.24 $3.38 $61.76 $3.52 $65.52 $3.76 Below Avg Use 25 $132.85 $142.07 $9.22 $151.46 $9.39 $160.69 $9.23 $170.36 $9.67 $180.72 $10.36 Typical Use 50 $271.57 $293.07 $21.50 $312.46 $19.39 $331.44 $18.98 $351.36 $19.92 $372.72 $21.36 High Use 100 $549.02 $595.07 $46.05 $634.46 $39.39 $672.94 $38.48 $713.36 $40.42 $756.72 $43.36 Very High Use 500 $2,768.62 $3,011.07 $242.45 $3,210.46 $199.39 $3,404.94 $194.48 $3,609.36 $204.42 $3,828.72 $219.36
T O R R A N C E P U B L I C W O R K S D E P A R T M E N T Includes commercial, industrial, and multi-family properties 13 5 YEAR PROPOSED MONTHLY BILLS
LOW INCOME SENIOR OR DISABLED
CUSTOMERS
Low Income
Senior or
Disabled Monthly
Bill 3/4" meter
Usage
(ccf)
Current
Monthly
Proposed
CY 2025
Difference
($)
Proposed
CY 2026
Difference
($)
Proposed
CY 2027
Difference
($)
Proposed
CY 2028
Difference
($)
Proposed
CY 2029
Difference
($)
Low Use 4 $19.21 $18.60 -$0.61 $19.85 $1.25 $21.05 $1.20 $22.32 $1.27 $23.70 $1.38 Typical Use 7 $28.01 $26.94 -$1.07 $28.76 $1.82 $30.50 $1.74 $32.34 $1.84 $34.35 $2.01 High Use 11 $49.16 $47.18 -$1.98 $50.32 $3.14 $53.38 $3.06 $56.62 $3.24 $60.11 $3.49 Very High Use 17 $86.95 $81.34 -$5.61 $86.71 $5.37 $92.00 $5.29 $97.59 $5.59 $103.55 $5.96
T O R R A N C E P U B L I C W O R K S D E P A R T M E N T To qualify, the applicant must:
1. Have a total gross household income less than $37,650 for the prior calendar year; AND
2. Be a minimum of 62 years of age OR permanently disabled
3. Applicant must apply via Finance Department for initial eligibility
4. Applicant must verify eligibility every 2 years via Finance Department 14 Single Family Residential Monthly
Bill Comparison
$54.45 $54.21
$69.41
$85.79 $87.64 $96.63 $101.39 $102.59 $103.49
$-
$20
$40
$60
$80
$100
$120
11 CCF Monthly
T O R R A N C E P U B L I C W O R K S D E P A R T M E N T 15 PROPOSITION 218 NOTICES
❖Public Notice regarding November 19th Public
Hearing on the proposed water rate increases
mailed on October 2, 2024
❖Legal Notice for the November 19th Public
Hearing was published in the Daily Breeze on
❖October 31, 2024
❖November 9, 2024
❖November 16, 2024
T O R R A N C E P U B L I C W O R K S D E P A R T M E N T 16
RECOMMENDATION
Recommendation of the Water Commission
and the Public Works Director that City Council
approve the five-year water rates to become
effective on January 1, 2025 with subsequent
adjustments on January 1 of each year from
2026 through 2029, in accordance with the
Resolution.
T O R R A N C E P U B L I C W O R K S D E P A R T M E N T 17
P U B L I C W O R K S D E P A R T M E N T
QUESTIONS?
18