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HomeMy WebLinkAboutMINUTES - 09241996 - SD2 TO: BOARD OF SUPERVISORS - 1 ra FROM: WATER COMMITTEE '�� l Supervisor Gayle Bishop, Chair Costa Supervisor Tom Torlakson DATE: September 24, 1996 SUBJECT: REPORT FROM WATER COMMITTEE OR RECOMMENDATIONS FOR NEGOTIATION WITH EBMUD ON INDEPENDENT CONSULTANT REVIEW OF EBMUD RATES SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION RECOMMENDATIONS AUTHORIZE Chair to sign a letter indicating the County's response, in continuance of negotiations with the East Bay Municipal Utility District (EBMUD), relative to the County's request for independent consultant review of water rates. The letter response, as recommended by the Board's Water Committee includes County cost sharing with EBMUD, and cost determination by expanded study scope and consultant competitive bid, rather than the $17,000 cost ceiling set by EBMUD. FISCAL IMPACT Costs incurred for the independent review of rates would be shared by EBMUD and the County, in this current scenario. The County originally proposed that costs would be borne entirely by EBMUD. If cost sharing should prevail, the County portion of costs would be covered by County Water Agency funds. Should the County and EBMUD move toward cost-sharing, a cost limit for use of Water Agency funds should be set. REASONS FOR RECOMMENDATION For some time, the issue of EBMUD's tiered rate system, and its effects on customers in different areas of the district has been problematic. Customers in central County and the San Ramon Valley are quite angry, paying much higher rates for higher volume water use in those areas, while customers west of the hills (low volume users) pay for water at less than cost of delivery. At issue is the differences in geographic area, climate and land use, resulting in higher water use east of the hills, despite continuing conservation efforts. The perception by central County customers is that they are subsidizing customers west of the hills. While this may not be the case, this is not apparent, nor is it clear that one, tiered rate system is appropriate for two such disparate areas with differing needs. CONTINUED ON ATTACHMENT: _X YES SIGNATURE: RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE _APPROVE OTHER SIGNATURE(S): A& ✓ �''�r v O�l� � Super isor Gayle Bis p, Chair Supervisor Tom Torlakson ACTION OF BOARD ON September 24, 1996 APPROVED AS RECOMMENDED OTHER Bill Highfield, 1035 Hillmeadow Place,. Danville, commented on the recommendations. The Board of Supervisors APPROVED the Pp-commendations as presented above,, 1 voting against the motion, Supervisors Rogers and DeSaulnier stated their opposition to the. County con ributing to the costs of an independent consultant. VOTE OF SUPERVISORS UNANIMOUS (ABSENT I HEREBY CERTIFY THAT THIS IS A TRUE AND AYES: III, V and II NOES: I and IV CORRECT COPY OF AN ACTION TAKEN AND ABSENT: ABSTAIN: ENTERED ON THE MINUTES OF THE BOARD OF SUPERVISORS ON THE DATE SHOWN. Contact: Roberta Goulart (510) 335-1226 ATTESTED September 24, 1996 cc: Community Development Department a0ARD L BATCHELOR, ERK OF E O SUP VI R ND UN DMINI R , RG:rw RRG4:9-24WC.6bd r Board Order Water Committee September 24, 1996 - Page 2 - REASONS FOR RECOMMENDATIONS (Cont'd) On May 7, 1996 the County Board of Supervisors voted to request the EBMUD to embark upon and fund a fully independent study of EBMUD's existing rate scenarios, and to include involvement by the County (with input from the cities) in selection of a consultant, scope of the study, and in the rate review itself. The County elected not to become involved in legislation sponsored by Assemblyman Rainey relative to rate setting and LAFCO involvement, in the hope that this issue could be worked out by the local agencies. The Board's Water Committee also indicated concern with EBMUD's raising of rates during the rate controversy, requesting postponement of rate increases. EBMUD has indicated that they would conduct a rate review with the County if it did not exceed $17,000 in cost, and was cost-shared with the County. EBMUD also elected to go forward with a 4.5% rate increase for all residential tiers, on June 25, 1996. RRG4:9-24wc.6bd I The Board of Supervisors Contra �koftthe�rd Costa and County Administration Building County Administrator 651 Pine Street,Room 106 (510)646-2371 Martinez,California.94553-1293 County Jim Ropers.1st District Jeff Smith,2nd District Gayle Bishop,3rd District G ' Yark DeSawniar,4th District Tam Torlskson,5th District May 14, 1996 Mr.John Gioia President,Board of Directors East Bay Municipal Utility District P.O.Box 24055 Oakland,CA 94623 Dear Mr. Gioia: On May 7, 1996,the Contra Costa County Board of Supervisors voted to request EBMUD to embark upon and fund a fully independent study of existing rate scenarios,and to include involvement by the County(with some level of input by the cities),in selection of a consultant and in the rate review itself. The Board sees completion of an independent study of this nature to be immensely helpful in bringing to closure the rate issues which have been plaguing the District(and the County to some degree),over the past year. The Board of Supervisors also voted not to take action on Assemblyman Rainey's legislation regarding rates and LAFCO primary jurisdiction at this time,to enable the District to satisfactorily resolve these issues at the local level. The tiered rate system(for single family residential customers in particular),will remain at issue because of the two very separate and distinct type of geographic areas served under this system. Unless an evaluation of the rates and underlying assumptions by a neutral third party can be shown to be valid,we expect the fight over rates and evaluation of potential for sucession from the District to continue. The rate study commissioned by EBMUD in 1995 cannot be used for this purpose because there were clear parameters specified by the District to be addressed in the study,although the study could certainly be an important component of the independent review. The Board of Supervisors sincerely hopes EBMUD will give serious thought to this proposal,recognizing it's potential as a good investment to move us beyond the rate debate and onto our regular business enterprises. We look forward to hearing your reasoned response to our request at youe earliest convenience. If you have any questions,please do not hesitate to call me at 646-2080,or Roberta Goulart of our staff at 335-1226. Sincerely, J mith Chair EBMUD GENERAL MGR ID :510-287-0188 JUN 03196 14 :28 No .002 P .03 The Honorable Jeff Smith May 23, 1996 page 2 We look forward to bearing from you at your earliest convenience. If you would like to discuss this proposal with me,please call. If the proposal is agreeable to the County and your staff would like to begin working with us to develop the scope of work for the consultant,then please have your staff contact Gary Breaux,Director of Finance, who can be reached at 287-0310. S' rely. hn M. Gioia President EBMUD Board of Directors JMG:CF:glc .cc: Board of Directors z/ i The Board of SupervisorsContra Phil Batchelor Gsrk o,tr»Board and tCounty. County Administration Building CosCounty Administrator - " 851 Pine Street, Room 106 A O�n t (5 t o)846.2371 Martinez,CalilomCounty 94553.1293 y am ttioore,tst District J JW tt)INK 2nd District G"1111 3rd District i- Mark Deieukrir,ft District y / Tan Torlaimm.sar District Mr. John Gioia, President June 11, 1996 Board of Directors East Bay Municipal Utility District P.O. Box 24055 Oakland, CA 94623 Dear Mr. Gioia: On June 3, 1996, the Board of Supervisors' Water Committee met, and discussed the EBMUD proposed rate increases for Fiscal Year 1997. The Board's Water Committee is sending this letter in order to convey our concern regarding the EBMUD Board's intent to implement rate increases at this time. The Board's Water Committee is requesting that the EBMUD Board defer any rate increases until after the independent study has been completed, and the EBMUD Board has this additional information to aid in future rate decisions. Given the significant controversy over rates, recent changes to tiered rates, and recent communications regarding independent rate review, increases appear to be premature at this time. For some time now, rates, and the tiered rate structure, coupled with differences in climatic factors and land use has created a dichotomy between EBMUD users east and west of the hills, and is the subject of much consternation by ratepayers in central and southern Contra Costa County. - The Board of Supervisors, recognizing the need to work through these issues, requested an independent study of rates and it is hoped that the two Boards will agree on the scope and content of this study. The Board is hopeful that information from this study will provide some additional direction to the EBMUD Board as to how to resolve these problematic rate issues. The Board's Water Committee understands that the EBMUD Board of Directors will be addressing rate increases at the June 11, 1996 meeting, and requests that our letter be included into the hearing record on this matter. We hope that the Board of Directors will seriously consider our request to defer rate increases at this time. Sincerely, Supervisor Gayle Bishop Supervisor Tom Torlakson Chair, Water Committee RG:ebmudite.ttr EBMUD GENERAL MGR I•D':510-287-0188 JUN 03196 14 :27 No .002 P .02 "STRAY MUNICIPAL UTILITY DISTRICT May 23, 1996 The Honorable Jeff Smith Chair,Board of Supervisors Contra Costa County 651 Pine Street,Room 106 Martinez,CA 94553-1293 Dear Supervisor Smith: Thank you for your letter of May 14 conveying the Contra Costa County Board of Supervisor's w . request for an independent review of the existing EBMUD rate structure. The EBMUD Board of Directors discussed the concept of an independent review at our May 14 Board meeting. While we continue to be fully confident of the work done in the 1995 report by CH2M-Hill because it followed widely recognized water rate-setting standards and practices,we are prepared to join with the County in sponsoring an independent review in the hopes that it will help resolve lingering questions about the rates. EBMUD wants to ensure that if additional ratepayer funds are spent on an independent review of ! the rate structure,that we do not re-do the.independent analytical work ratepayers already funded at a cost of$170,000. We have previously offered to cover all expenses related to having the CH2M-Hill rate consultant meet with EBMUD and County representatives to answer any and all questions,but we understand that the County does not feel comfortable with this approach. As an alternative,we are prepared to work with the County to establish a scope of work that will result in an independent review of the reasonableness and appropriateness of the underlying V assumptions,methodology,and analytical work done in the 1995 rate study. We propose that EBMUD and Contra Costa County jointly agree to limit the total cost of an independent review to an amount not exceed$17,000,that we jointly approve the selection of the consultant,and that we share equally in the cost of the study. We would like to ensure broad public participation in any discussions that come out of this independent study. We propose that the results of the review would be presented to a joint meeting of the EBMUD Board and the Contra Costa Board of Supervisors by the independent consultant. We would take responsibility for inviting representatives from each of the cities in the EBMUD service area that are located east of the hills to participate in the review process, and 1 for distributing the results•of the study to all cities throughout the EBMUD service area and to + Alameda County officials. SISELEVENTN STREET, OAKLAND.CA#W?-Q40.MIDI IIS 2M SOARD OP PRECTORS TONNA.COLE"".KATY POULKES.JOHN M."a RANK MELLON. NANCYJ.NAM. MARY ULKIRK.KENNETH IL•IMMONS EAST BAY ON 1 R,; G0S I A DENNIS M.DIEMER MUNICIPAL UTILITY DISTRICT GENERAL MANAGER �I�V�Y 96 JUL I I PM 3: 16 DEVELGPME!;T DEPT July 9, 1996 Supervisor Gayle Bishop, Chair Supervisor Tom Torlakson, Member Board of Supervisors' Water Committee Contra Costa County 651 Pine Street, Room 106 Martinez, CA 94553-1293 Dear Supervisors Bishop and Torlakson: Thank you for your recent letter conveying your committee's request for a postponement of EBMUD action on water rates until the proposed independent review of the existing EBMUD rate structure takes place. The EBMUD Board of Directors was informed of this request at the time of Board action on the rates, which was originally scheduled for June 11 but was subsequently deferred until June 25. At the June 25 meeting,the EBMUD Board of Directors adopted a 4.5%rate increase which affects all types of customers and each tier of residential rates. The rate increase was necessary to cover costs associated with many projects, including improving protection of natural resources and securing our customers' future water supply, a switchover to safer chemicals at our water treatment plants and our wastewater treatment plant, and investments in recycled water projects in both western and central Contra Costa County. The rate action is separate from any potential outcome of an independent review; a review would not affect the services provided and the costs of providing those services. t I understand that at your June 11 meeting,the Board of Supervisors discussed the concept of an independent review again and that the item was tabled due to a lack of consensus on a funding approach. EBMUD staff was prepared to review the rate decisions with you at your June meeting,which was canceled, and does plan to attend your next Committee meeting to provide an update. We would appreciate being placed on the agenda for that purpose. If the Board of Supervisors decides to take up the idea of the independent study on a future agenda, I would appreciate your informing EBMUD staff and me in advance so we can attend the meeting. 375 ELEVENTH STREET. OAKLAND. CA 94607-4240. (570) 287.0707 BOARD OF DIRECTORS JOHN A.COLEMAN. KATY FOULKES . JOHN M.GIOIA FRANK MELLON. NANCY J.NADEL. MARY SELKIRK. KENNETH H.SIMMONS t July 9, 1996 Contra Costa County Board of Supervisors' Water Committee Page 2 As I have stated previously,EBMUD continues to be fully confident of the work done in the 1995 report by CH2M-Hill because it followed widely recognized water rate-setting standards and practices,but we are prepared, as described in my May 1996 letter to you,to join with the County in sponsoring an independent review in the hopes that it will help resolve lingering questions about the rates. Sincerely, hn M. Gioia President EBMUD Board of Directors JMG:CF cc: EBMUD Board of Directors Dennis Diemer The Board of SupervisorsCo-n'tra S� Ce'rkloffathe hBoard Costa r and County Administration Building ( � County Administrator Oc 651 Pine St., Room 106 C�VJJ s J (510)646-2371 Martinez, California 94553-1290 County Tom Powers,1st District Jeff Smith,2nd District Gayle Bishop.3rd District ��E.•sE','L•..o� Sunne Wright McPeak.4th District r Tom Torlakson,5th District .• Mr. John Gioia '" `" tea.- �-�;� = �� :,4�z October 15, 1996 President oS,�q,c6iiri'ti c3 East Bay Municipal Utility District Board of Directors P.O. Box 24055 Oakland, CA 94623 Dear Mr. On September 24, 1996, the Contra Costa County Board of Supervisors authorized this letter in order to convey the Board's intent related to the proposed scope and cost of a jointly-sponsored, independent study of EBMUD rates. As you are aware, EBMUD's past and current tiered rate system remains contentious. The need for and terms of an independent rate review has been the subject of discussion on a number of occasions by the Board of Supervisors and the Board's Water Committee. In your letter of May 23, 1996, you stated that the EBMUD Board of Directors had agreed to move forward with an independent review, but had set several conditions on cost and parameters of the study. Among these conditions were a cost cap of$17,000 to be cost-shared with the County and a scope of work that is limited to independent review of the prior study conducted by CH2M-Hill. The Board of Supervisors, recognizing that the assumptions used in the previous study for EBMUD may be at issue, prefers that the study scope not be limited to the confines of the previous study, and, instead, be determined by the County and EBMUD, with input from other interested parties, such as the cities east of the hills. It is also prudent to allow scope of the independent study to be the guide to costs, through a competitive bidding process. The Board of Supervisors has elected to share costs of the study. The Board of Supervisors looks forward to your favorable response so that we may commence with the independent review, with the hope that we can move beyond the long-standing rate controversy. gffn Chair, Board of Supervisors