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HomeMy WebLinkAbout04/12/78 AGENDA WATER BOARD ~ CITY OF BAKERSFIELD WEDNESDAY, .APRIL 12, 1978 4: 00 P Call Meeting to order Roll Call -Board Members: 'Rogers, Chairman; Barton, Bergen, Hoagland, Ratty 1. Approve minutes of regular board meeting of April 5, 1978. 2. Presentation of Domestic Water Revenue Study by. Mr. Tom Stetson. BOARD TO DISCUSS AND TAKE ACTION ON A GENERAL RATE INCREASE. 3. Staff Comments 4. Board Comments .Adjournment MINUTES WATER BOARD - CITY OF BAKERSFIELD WEDNESDAY, APRIL 5, 1978 4: 00 p .M. The me, ting was called to order by Chairman Rogers in the City Hall Caucus Room. The secretary called the roll as follow, s: Present: Rogers, Bergen, Hoagland, Ratty Absent: Barton Chuck Williams, Manager~Engineer for North Kern Water Storage District and Tom Ashlock, Manager Kern-Tulare Water District, also~ attended the meeting. The minutes from the regular meeting of March 1, 1978, were approved as presented. A memorandum from Gene Bogart, Water Superintendent~ suggesting agricultural water rates for the Kern River in 1978 was presented to the board for approval. Upon motion by Mr. Hoagland which was passed the following rates were approved: Per Ac. Ft. 1) Beardsley Lateral consumers ~' 12.00 2) Miscellaneous Water Sales 12.00 ~ 3) Rosedale-Rio Bravo (per contract) 6.00 4) K.R.Co & Irr. Co. 30% ent'lo sale 6.00 5) City water sold for groundwater replenishment 1.50 A Letter Agreement between City of Bakersfield and Tenneco West, Inc. for the sale of water to Tenneco West, Inc. was presented to the Board. Mr. Chafin, informed the board that this water would be for agricultural crops and be sold at a price of Twelve Dollars ($12.00) per acre foot. This agreement would be effec- tive immediately and run through October 31, 1978. Also, in- cluded in the agreement is a One Dollar Fifty Cents ($1.50) per acre foot charge for the groundwater replenishment which is going on now off the Carrier Canal. Mr. Ratty made a motion that the~board approve the agreement and authorize the Chairman to sig~'~ The motion was carried. An Agreement of Assignment between Kern-Tulare Water District and Tenneco West, Inc. for Kern-Tulare five (5) year assignment of basic contract water to Tenneco West, Inc. was brought before ~the board for approval. After a brief discussion a motion was made by Dr. Ratty that the board approve the agreement and autho- rize the Chairman to sign and, also, have the City Attorney approve as to form. A Letter Agreement from Bidart Bros. setting forth the under- Standing regarding the purchase of irrigation water by Bidart Bros? from the City of Bakersfield was presented for approval. The price for the water shall be $12.00 per acre foot. Payment shall be made by Bidart Bros. in the amount of $24,000.00, (2,000 A/F X $12.00 = $24,000.00), to be paid in advance not later than April 10, 1978. Upon motion by Mr. Bergen, Which was carried the agreement was approved and the Chairman autho- rized to sign. An Agreement between Chevron U.S.A., City of Bakersfield and North Kern Water Storage Districtp for the disposal of Chevron water to the Beardsley Canal was brought before the board. After discussion Mr. Bergen made a motion that the agreement be approved by the board and signed by the Chairman subject to approval by the City Attorney. The motion was carried. Staff Comments Kim Combs, Accountant for the Dep~rtment of Water informed the board that he has been talking with Harold Ulrich of California Water Service in San Jose trying to get the mechanics of the rate change for Domestic Water in motion. Mr. Ulrich has suggested that May 1, 1978 would be an opportune date to go to the new rates to implement the 50% surcharge to outside City users, instead of April 23, 1978, which had been set as the time to go to the new rates. and staff with copies~ Mr. Con~s, also, presented the board members February~ 7the Operating Statements for the months of January and 8 for the Domestic Water Enterprise. Board C~m~ents Mr. Hoagland presented a letter to the board for Don Rogers signature addressed to the Board of Directors of Kern Delta Water District relative to their proposed exchange with Kern County Water Agency on the "Power Flow" water. This letter was read and. approved by Burnham Enersen. At this time Mr. Hoagland suggested that Chairman Rogers and one of the other board members meet periodically with the board members of'Kern Delta Water District and it was decided that an informal luncheon would be set up for the following week if possible. After further discussion the letter was approved and the chairman authorized to sign. The being no further business to come before the board, Chairman Rogers adjourned the meeting at 4:45 P.M. Linde Hostmyer, SeO/retary City of Bakersfield Water Board CITY OF BAKERSFIELD ASHE WATER SYSTEM WATER REVENUE STUDY April 3, 1978 · STETSON ENGINEERS INC. ETSON ENG_[NEER$ INC, I CIVIL AND CONSULTING ENGINEERS 3104 East Garvey Avenue 550 Kearny Street- Suite 650 West Covina, California 91791 April 3, 19'7 8 San Francisco, California 94108 (213) 967-6202 (415) 781-4297 REPLY TO: West Covina The City of Bakersfield Water Board City of Bakersfield 1501 Truxton Avenue Bakersfield, CA 93301 Gentlemen: Transmitted herewith is our report entitled "City of Bakersfield Ashe Water System Water Revenue Study." We have concluded that in order to meet the cash re- quirements attributable to the domestic water system, an increase in rates is necessary. We are proposing an increase in rates-of about 35 percent. This increase is proposed to be in addition to the 50 percent surcharge already imposed by the City, on customers outside of~the City limits. we are als° proposing to change the rate structure by dropping the l__ife-lin_e_e rate and increasing the service charge. The life-line rate is not a generally accepted concept by muni- cipa~water systems. The service charge has been increased so as to recover more of the fixed expenses incurred by the City. Finally, we are proposing two additional rate schedules to be used during construction of tract houses and subdivisions. It has been a pleasure to prepare this report for the Board. Very truly yours, Stetson Engineers Inc. TMS:jk Enclosure TABLE OF CONTENTS Table No. Page No. CHAPTER I INTRODUCTION I-1 CHAPTER II REVENUES AT EXISTING RATES 1. Estimated Number of Customers II-1 · 2. Estimated No. of Active Customers Inside &.~Outside The City II-2 3. Estimated Sales Hundreds of Cubic Feet II-3 · 4. Existing Water Service Rates II-3 5. Revenues At Present Rates With No Surcharge II-4 6. Revenues At Present Rates With 50 Percent Surcharge For Outside City. Services II-5 CHAPTER III OPERATING EXPENSES 7. Current End Projected Operating Expenses III-1 8. Components of Expense III-2 9. Net Revenues III-3 · i TABLE OF CONTENTS (Con't) Table No. Page.'No~ CHAPTER IV CASH'REQUIREMENTS 10. Estimate of Bond Repayment 1976 Bond Issue IV-1 11.' Estimates Advance'Payments IV-2 12. Source and Application of Funds IV-3 CHAPTER V SU~{MARY AND CONCLUSIONS 13. Total Required Revenues V-1 14. General Metered Service V-2 15. General Construction Water Service V-3 16. Service to Tract Houses During Construction V-4 · ii CITY OF BAKERSFIELD ASHE WATER SYSTEM WATER REVENUE STUDY April 3, 1978 Chapter I Introduction The Ashe Water System was acquired by the City of Bakersfield on December 22, 1976, along with other water proper- ties and assests of Tenneco West, Inc. It was the domestic water system portion of Kern Island Water Company, having been merged into that company in 1968. ' The Ashe Water System serves domestic, commercial and industrial customers in and adjacent to the westerly portion of the City of Bakersfield. It was established in the early 1960's and grew rather steadily from about 300 customers in mid-1963 to about 1,000 customers in mid-1969 and to about 4,300 customers at the beginning of 1978. Plate 1 is a.map of the Ashe Water System showing, among other things, the portions inside and outside of the City boundaries. The water supply of the system is produced from nine wells. Eight of the wells are equipped with electrically driven pumps ranging from 75 to 300 horsepower.. The ninth well is powered by a natural gas engine. There is a 250,00 gallon ground ~ ............ . ® ." '.. I.~.:~:.~'..-:::~'-:C2C ..... ?~P:' ' ~~'~ ~f ~ ........ ~i' ~"~ . . . ~ -, , ,~. ~ .,. ,= :~ = ~:~ : .~4 ,'. ' ~~:~-. ....:, ... : ~ , ' ', :~:" ' PLANZ : ~ RO . ..,.. , i , .. ~ // ' '~:----:---~:~ ......... ~. ~:-. ............... :,' -- ~ ...... ' ' I : ' , s ~e ' -''L ~,~.,,.,. ~ ~, '. .... ~ CITy BOUNDARY ...... STUDY AREA BOUNDARY '(PRESENT AND ANTICIPATED SERVICE AREA surface storage reservoir, but no elevated storage in the system. Water from the 250,000 gallon reservoir is boosted to system pressure by two electric pumps and one natural gas pump. The system is operated for.the City of Bakersfield by California Water Service Company. A field inspection of the system was made in conneCtion with this study. It is the purpose of this report to develop a schedule of water rates which will provide proper revenues for the next several years. A rate schedule has been developed which we recommend be applicable'for the next three years. I-2 Chapter II Revenues At Existing Rates The service area is currently experiencing a rather ~ · remarkable growth rate. In calendar year 1977, the Company grew from 3,370 customers to 4,336 customers, an increase in 966 customers or almost 29 percent. Discussions with City planning ~ officials indicate that this rate of growth will continue over the next several years. For purposes of this report, we have assumed that about 900 new customers will be added each year. · The nummber of customers used for computing revenues for the years 1978, 1979 and 1980 are the average of the assumed number of customers at the beginning and e~d of each year. . · The average number of customers in 1977 was 3,853, of which 65 were inactive. It is assumed that this number of inactive customers would prevail in the test years of this rate study. ~ Table 1 sets forth the average number of customers billed during 1977 and the estimated number of customers assumed to be~ ~ ?~le 1 ~ billed in 1978, 1979 and 1980. RstimatedNumber °fCust°mer$ ,They are presented by meter Meter Size Average For Calendar Year S i ze. Inches 1977 1978 1979 198'0 · The City serves cus- 5/8 x 3/4 3075 3815 4547 5279 3/4 1 2 2 2 1 466 568 6'77 786 tomers outside as well as 1-1/2 103 125 149 173 2 113 142 170 197 3 12 14 17 20 inside the City boundaries. 4 10 i3 15 17 6 3 3 4 5 · The customers outside-the 8 5 6 ? 9 Total 3788 4688 5588 6488 City are for the most part · II-1 county islands surrounded by the City. Furthermore, they are generally fully developed areas. Thus, growth is expected to occur only in the City areas. Plate 1 shows the area antici- pated to be served by the water system as well as the boundaries · of the City. For purposes of establishing water rates, we have assumed that all of the customer growth would be inside the City. There are currently 1,360 customers outside of the City boundaries. Table 2 shows the estimated number of customers inside the City and the number of customers outside the City for 1978, · 1979, and 1980 by meter sizes. The City sold 1,613,990 ccf (hundred cubic feet) of water, exclusive of construction water, during calendar year · 1977. The average number of active customers was 3,788 customers for that period. Thus, the average customer purchased 426 ccf during the year. It is assumed for this study that in future Table 2 Estimated N~ber of ActiVe Customers Inside & Outside The City '0utside City Inside City Meter.Size 1978-80 1978 1979 1980 5/8 x 3/4 1107 2708 3440 4172 3/4 0 2 2 2 1 165 403 512 621 1-1/2 36 89 113 137 2 41 101 129 156 3 4 10 13 16 · 4 4 9 11~ 13 6 1 2 3 4 ~' 8 2' 4 5 7 Total 1360 3328 4228 ~128 II-2 years, the customers will use this same quantity of water. Table 3 is the estimated ~amount of water to Table3 be sold in future Estimated Sales · years to customers Hundreds of Cubic Feet inside and outside Domestic Sales 1978 1979 1980 of the city. Inside City 1,417,728 1,801,128 2,184,528 By resolu- Outside City 579,360 579~360 579,.360 Total Domestic 1,997,088 2,380,488 2,763,888 tion 45-77, dated Construction 113,245 113,245 113~2~ June 20,. 1977, the Total Sales ccf 2,110,333 2,493,733 2,877,133 · City council adopt- Total Sales A.F. 4,844.66 5,724.82 6,604.99 ed a rate schedule similar to the then · eixsting rate sched- ule of California Water Service Company. That rate schedule is Shown as Table 4. It is designed in accordance with State of · California, Public Table4 Utilities Commission Zxisting water service ~ates (PUC) , standards o Per Meter Quantity ~tes: Per Month · It provides for a For the first 500 cu.ft., per 100 cu. ft ........... $ .199 service charge based For all over 500 cu.ft., per 100 cu. ft ............ 241 Service Charge: on meter size; the For 5/8 x 3/4-inch meter ........................... 3.24 For 3/4-inch meter ........................... 3.56 · larger the meter For 1-inch meter ........................... 4.86 For 1-1/2-inch meter ........................... 6.48 size, the greater For 2-inch meter ........................... 8.75 For 3-inch meter ........................... 16.20 For 4-inch meter ........................... 22.03 the service charge For 6-inch meter ........................... 36.61 For 8-inch meter ........................... 54.42 · usually offsets For 10-inch meter ........................... 67.38 some of the fixed costs of the water Note~ C~rently there is no separate rate for construction water. system. II-3 There is also a "life-line" rate'which provides for the first 500 ccf per month to be sold at only 19.9 cents per ccf. Monthly water sales to each customer in excess of 500 ccf are charged at a rate of 24.1 cents per ccf. ' It is the policy Of the PUC to allow increases in rates only on water deliveries in excess of the life-line quantity and to allow increases in the service charge on all sizes of meters except the smallest size in the system. In the City of Bakersfield Water system, this is the 5/8 x 3/4-inch meter. Recently the PUC has determined that the life-line quantity should be 300~ccf per month instead of 500 ccf per month. Table 5 sets forth the expected water system revenues using the existing rates for 1977 through 1980. The rates shown for 1977 do not coincide with the revenues actually received. This is because the City increased the rates in mid-year and the revenue shown on Table 5 assumes that the rates were in effect all year. The revenue shown Table 5 as "other" revenue ~¥enues At Present ~tes ~ith No Surcharge · is from the sale of Description 1977 1978 1979 1980 water for construction - ~ ~$ervice Charge $176,210 $217,970 $259,770 $ 301,490 Life-line ~te 42,970 53,180 63,390 73,590 purposes. Non-Life-line Rate 364,230 450,790 '537,340 623,880 · Recently the Total Metered Revenue $583,410 $721,940 $860,500 $ 998,960 "Other" Revenue* 22,000 22,000 22,000 ~'22,000 City adopted a 50 ~tal Revenue $605,410 $743,940 ~8~2,500 $1,020,960 percent surcharge for wa%er service · Construction water to customers out- . side of the City. II-4 Table 6 sets forth the revenues using existing rates and including the 50 percent surcharge. The surcharge has the effect of increas- ing the revenues by about $101,900 in each of the three estimated years. Should any area currently outside the City annex to the City, revenues to the City would be reduced. Accordlingly for purposes of this report, we have assumed that none of the outside areas would annex to the City. Table 6 ,..i Revenues.at Present,Rates With '50 Percent surcharge For Outside City Service Description 1977 1978' 1979 1980 Service Charge $207,880 $249,640 $ 291,440 $ 333,160 Life Line Rate 50,370 60,580 70,790 80,990 Non Life-line Rate 427,020 513,580 600,220 686,670 Total Metered Revenue $685,270 $823,800 $ 962,450 $1,100,820 "Other" Revenue* 22,000 22,000 22,000 22,000 Total Revenue $707,270 $845,800 $ 984,450 $1,122,820 * ~onstruction water '11-5 ~Chapter III 'Operating Expenses The City incurs several major components of expnese. The four largest, annual expenses are for power, pump taxes, deprecia- tion and fees paid to California Water Service Company for opera- · tion and maintenance of the system. Table 7 sets forth the recorded expenses for 1977 and estimate of expense for 1978 through 1980. Operating expenses · are expected to increase by $463,190 by 1980. This is an increase of more than 91 percent in three years. This increase is due in part to inflation and in part to the increased number of customers. The City contracts with California Water Service Company (CWS) for the operation and maintenance of the system. At the beginning of each year CWS furnishes an estimate of cost to operate · the system for that calendar year. At the end of the year, all of the costs are recon- ciled and adjusted T~l~7 -~ · accordingly. For Current Md Projected ~977 the cost was Operating E~enses $134,830. This in- Records4 Estimated · cluded all operation 1977 ~978 1979 1980 Cal Water Service $134,830 $175,240 $219,330 $267,370 and maintenance and Power 146,100 196,380 255,220 323,890 City Overheads 14,610 16,070 17,680 . 19,450 Instance 7,680 12,040 12,040 12,040 billing expense, but p~mp Taxes 75,910 107,030 144,520 166,740 Ad valorem Taxes 23,570 7,540 8,300 9,130 it does not include ~preciation 78,760 95,780 114,160 132,550 Miscellaneous 24,330 28,560 33,150 37,810 the management fee. Total O & M Costs $505,790 $638,640 804,400 968,980 · III-1 The cost for this service (excluding the management fee) was · $35.60 per customer in 1977. It is estimated that this unit cost will increase.by five percent per year. For 1977, the cost of power for pumping was $29.19 per acre-foot of production. This cost has been projected to in- crease at the rate of 10 percent per year. The groundwater production assessment levied by the Kern County Water Agency · is currently $15.00 per acre-foot. It will increase to $20.00 per acre-foot beginning July 1, 1978. Currently, that is the maximum rate that can be charged. · For 1977, the annual depreciation was $78,760. The plant value on June 30, 1977 was $3,074,870. Thus, depreciation is 2.56 percent of plant value. The depreciation rate has not been . · projected to increase in the future. Gross plant to which the depreciation rate is applied is expected to increase in proportion to customer growth. Table 8 shows the four major unit components of expense. In addition T~le 8 to the above expense, Major Unit Components of E~ense the City incurs its own overhead expense, 1977 1978 1979 1980 property taxes in the ms E~ense $~ustomer 35.60 37.38' 39.25 41.21 · unincorporated portion Power E~ense S/Acre-Feet 29.19 32.11 35.32 38.85 of the service area, P~p Taxes $~cre-~eet 15.00 15.00/20.00 20.00 20.00 Depreciation ~te, in % 2.56 2.56 2.56 2.56 insurance and other miscellaneous expense. · III-2 The major portion of miscellaneous expense is the manage' ment fee levied by CWS. The management fee is established by contract at 1/2 of one percent of the gross plant value. For 1977 this fee was about $15,300. Table 9 sets forth the net revenues of the system. These are not actual revenues for 1977--they are the revenues that would have resulted if the current rates had applied throughout the year. It would appear that the system has sufficient revenues to meet its operating expense. However, in order to determine the need for revenue, a cash flow analysis, including capital related costs, is necessary. Such an analysis is made in Chapter 4 of this study. · Table 9 Net Revenues · 1977 1978 1979 1980 Revenues $707,270 $845,800 $984,450 $1,122,820 Operating Expenses 505,790 638,640 804,400 968,980 Net Reveneus $201,480 $207,160 ' $180,050' $ 153,840 · III-3 Chapter IV Cash Requirements In additional to the operating expense, the City has · requirements for cash to meet other financial obligations attributable to the water system. One of these requirements is. the repayment of principal and interest of a portion of the · General Obligation Bonds used to purchase the Kern Island Canal Company. Other requirements include repayment of funds advanced by subdividers and the financing of new plant additions. · The City of Bakersfield issued General Obligation Bonds for the purchase of the Kern Island Canal Company and other pro- perty and facilities from Tenneco West, Inc. Table 10 sets forth . · the annual principal and interest repayment for the portion of the acquisition allocated to the domestic water system. The City has determined that the domestic water system is responsible for · 17.2 percent of the total annual bond payments. Table 10 also sets forth the amount to be repaid from the domestic water fund. One of the policies of Table 10 · the City is to utilize Rule Estimate of Bond Repayment 1976 Bond Issue- 1-5 of the Public utilities Portion c~mmission. Rule 15 provides Total of P&I Year P&I* From Domestic · that subdividers will con- 1977 $ 835,940 $143,780 struct in-tract water systems 1978 $1,045,940 $179,900 in accordance with City 1979 $1,048,340 $180,310 · Standards. These facilities 1980 $1,044,840 $179,710 are then dedicated to the City. * Principal and interest IV-1 The City in turn accepts the system for operation and maintenance and repays the subdividers for the cost of the facilities from 22 percent of the revenues received from the customers served from thoser facilies. This is continued each year until such time as the subdivider has been repaid (without interest) or until 20 years has elapsed, whichever is the earlier. Rule 15 provides for other special facility contracts that are not considered herein for rate making purposes. Most of the new customers to the City water system will be from new subdivisions. Thus, it is assumed that 22 percent of revenues generated from new customers will be returned to the subdivider. Table 11 sets forth an estimate of the amount of the refunds to be paid each year. Refunds will probably increase more than any other item of cash outlay. The City also needs to finance improvements to the water system. The City's capital improvement budget for 1978 is estimated by CWS to be $565,000. Not all of the money will be spent during 1978. We have'.estimated T~l~ll Esti~tes Advance Payments that'the City will need about $4001000 1977 1978 1979 1980 -' Estimated Revenues per year. @ Present ~te $707,270 $845,800 $ 984,450 $1,122,820 Ess 1977 Revenues 707,270 707a.270 . 707,270 7.07,270 There are New Revenues Subject to Refund Contracts 0 $138,530 $ 277,180 $ 415,550 several possible Estimated Ref~ds 0 $ 30,480 $ 60,980 $ 91,420 1977 Refunds 2,560 2,560 2~560 2~560 methods of finan- Total Refunds $ 2,560 $ 33,040 $ 63,540 $ 93,980 @ Present ~tes cing such improve- Estimated Refunds ments. One method @ 30 Percent ~te Increase $ 3,300 $ 42,950 $ 82,600 $ 122,170 · IV-2 would be, at least partly, through special facility contracts with developers; another would be through revenue bonds. Also, the City can finance these improvements through retained earnings, once earnings are sufficient to do so. For purposes of this study, we have assumed that they would be financed through retained earnings. In order to determine the cost and best method for financing capital improvements, the City should initiate a master plan study' which would analyze the operating cost of the City as well'as capital costs and methods of financing. The net amount of funds available for improvements, princi- pal and interest payments and refunding contracts can be defined as net revenues plus depreciation plus other income such as bond funds, loans or grants. These funds are then applied to principal and interest payments, repayment of advances, and capital improve- ' ments. Table 12 sets forth the excess or deficiency of funds for each of the study years. It should be noted that based on Table 12 Source and Application of ~nds current water rates, 1977 1978 1979 1980 ~ the water system is expected to have a Net Revenue $201,480 . $207,160 $180,050 $153,840 ~preciation 78,760 95,780 114,160 132,550 cash deficiency for S~total $280,240 $302,940 $294,210 $286,390 each of the study Appli~tlon of F~d$ years reviewed P & ! $143,780 $179,900 $180,310 $179,710 ~funds 3,300 42,950 82,600 122,170 City Financed 78,960 400,000 400,000 400,000 Improvem~ts herein. Thus, a S~total $226,040 $622,850 $662,910 '$701,880 · rate increase is zxcess Or Deficien~ of Funds $ 54,200 ($319,910) ($368,700) ($415,490} necessary. · IV-3 Chapter V · Summary And Conclusions The need for revenue for use in the water system has been deomonstrated in Chapter IV. Table 13 indicates the amount, of the increased revenue requirements of the water system. It demonstrates the need for an increase in rates of about ~ percent. Several things were noted during this study. First, the City sold 3,965 acre-feet during 1977, but it produced 5,005 acre- feet. This, the unaccounted for water was 1,040 acre-feet, or about ~ percent of sales. This is an unusually large amount of un'accounted for water. A reasonable amount of unaccounted for water would be on the order of 5 percent. · The unaccounted for water may be attributable to several causes. It may be that the production meters or the sales meters are inaccurate. It is also possible that a Considerable amoutn of · construction water is being used without being measured and paid for. Therefore, the City should immediately cause all production meters to be tested, adopt a customer meter service program, and adopt a ~ constr~ction water rate which would include penalties for persons~ taking water without proper authorization. This would require routine surveillance of the system to detect violation. Table 13 Total Required Revenues Revenues @ Existing Rates $ 845,800 $ 984,450 $1,122,820 · Definiency of Funds 319~910 368,700 415,490 Total Revenue Requirements $1,165,710 $1,353,150 $1',538,310 Percent Increase 37.82% 37.45% 37.00% V-1 The cost of power for pumping was found to be $29.19 per acre-foot of production, assuming that the production meters are accurate. This appears to be too great a cost for production of water. A review of the operation of the system should be under- taken to determine if savings can be achieved through more effi- cient operations. We are proposing a general metered service schedule which will increase metered rates by about 35 percent. The additonal 2 percent of required revenue would be from savings or additonal revenue when the unaccounted for water is accounted for or re- ducted and/or it may result from savings in power costs and pump taxes. Table 14 sets forth the propoSed rate schedule for general metered service. The life-line rate would be eliminated from the tariff schedule. The life-line rate is a concept prescribed by the PUC. It has not -- been generally ac- cepted by municipal water purveyors. The service ~harge of the pro- posed rate schedule has been increased substantially. About one-half of the City's opera- ting costs are fixed costs. The remaining portions (consisting of power and pump taxes) are variable costs. It would, therefore, seem appropriate to recover about one-half of the revenue for service charge and the balance from the quantity rates. If the quantity price of water to the customer is low, there is little incentive to conserve water. Currently the City is re- covering about 30 percent of its revenues from service charges. The proposed rates would recover 40 percent of the fixed costs from the service charge, with the remainder to be recovered from the quantity charge. The City should also adopt a rate schedule for water and for general purposes .............. - ................ which is designed to discourage the un- authorized use of water. Table 15 sets forth this schedule. In addi- tion,'the City should have a sepa- © rate rate schedule for tract house construction as a © part of a total real estate develop- ment. © Table 16 sets forth such a rate schedu_~ " - After field review and giving consideration to the data presented herein, we recommend: 1. The City should adopt the rate schedules shown in Tables 14, 15 and 16.  should a study to determine the cause authorize of the unaccounted for water. .. ~3.~ The City should initiate a study to determine if better efficiency of power use can be achieved. /~f4. I The City should begin a master plan of its water system which would include at least the following~ a. Required improvements b. Potential financing methods c. Possible availability of low cost loans or grants. © V-4