Page 9 - Yucaipa Valley Water District - Board Workshop

Workshop Memorandum No. 18-262 Page 3 of 10

From the District’s staff perspective, the main points from the workshop on September 13, 2018
include:
• The San Gorgonio Pass Water Agency is interested in working with retail water customers
and receiving input about the proposed rate at future meetings.
• There is a consensus that there will be uncertainty about the quantity of imported water
available each year from the State Water Project. The amount of imported water available
is beyond the control of the San Gorgonio Pass Water Agency since it is determined by the
Department of Water Resources.
• The proposed imported water rate is likely to include the following components:
o San Gorgonio Pass Water Agency Operational Overhead - 50% of annual operations
cost of one employee
o San Gorgonio Pass Water Agency Administrative Overhead - 5% of the annual
administrative budget.
o East Branch Extension Operational Costs - 50% of the annual overall expenses will
be included in the imported water rate.
o Department of Water Resources Energy and Transmission Costs - This is the largest
component to the imported water rate and will likely include a projection of anticipated
energy increases based on prior year data.
o Yuba Dry Year Transfers - This cost component provides additional water supplies
to the region.
o Nickel Water Supplies - This cost component is the second most significant
component and will be a factor in future rates for the remaining term of the contract
(about 19 years).
o Water Quality Cost - The cost for reducing algae in the State Water Project will likely
be an ongoing expense.

On October 16, 2018, the Yucaipa Valley Water District Board of Directors sent correspondence with
suggestions for the Board of Directors of the San Gorgonio Pass Water Agency to consider during
their deliberation of the proposed imported water rates (attached).

On November 19, 2018, the San Gorgonio Pass Water Agency hosted a meeting with retail water
managers to discuss the process of implementing the proposed SGPWA imported water rate. During
this meeting, a concept was discussed about the creation of a rate setting process that would allow
the Board of Directors of the San Gorgonio Pass Water Agency to evaluate and adjust imported
water rates on an annual basis. This methodology would provide the retail water agencies with
advanced notice of the imported water rate adjustments and participation in the process to fully
communicate and understand the rate elements.

The purpose of this agenda item is to discuss the proposed methodology.

Financial Impact to Existing District Customers

At this time, the current rate charged by the San Gorgonio Pass Water Agency results in a charge to
our customers in Calimesa at a rate of $0.66 per 1,000 gallons. With a typical home using 22,000
gallons per month, the current rate results in a monthly charge of $14.52. This is a direct pass-
through rate from the San Gorgonio Pass Water Agency. The table below shows the anticipated
changes in the rates to customers in the San Gorgonio Pass Water Agency service area (Calimesa).

Yucaipa Valley Water District - December 11, 2018 - Page 9 of 111