Public Utility Commission

~ ~ P".·•• City of ,i"gto.. IVuter/ JV"ste,vt.ter AG .... .. for the regular meeting of the Public Utility Commission of the City of Farmington, Wednesday, October 8.2014, at 3:00 PM at the Executive Conference Room at City Hall, 800 Municipal Dr., Farmington, New Mexico. I. GENERAL A. Roll Call B. Convening of Meeting by Amanda Weese, Chair C. Minutes of September 10, 2014 regular meeting submitted for approval .............. 1 II. BUSINESS A. Consideration of a recommendation from staff for the Public Works Department to implement water/wastewater rate changes resulting from a Cost of Service study performed by Red Oak Consulting. The department requests a recommendation from the Public Utility Commission to the City Council - (1 hour) ...... ..... ....... ............................... ...... ....... 2 B. Electric Utility Report- Sue Nipper (5 min) .............................................................. 3 C. Director's Report - Mike Sims (5 min) ...................... ...... ................................ .... .. .. 4 III. ADJOURNMENT The next regular meeting will be on November 12, 2014 The City of Farmington will make every effort to provide reasonable accommodations for people with disabilities who wish to attend a public meeting. If you need to request that an accommodation be made, please notify the Electric Administration office (599-1160) at least 24 hours prior to the meeting.  BOARD OF PUBLIC UTILITY COlvfMISSIONERS The special meeting of the CITY OF FARMINGTON BOARD OF PUBLIC UTILITY COMMISSIONERS was held Wednesday, September 10, 2014 at 3:00 p.m., in the Executive Conference Room at City Hall, 800 Municipal Dr., Farmington, New Mexico, in full conformity with th e laws and ordinances of the Municipality. 1. GENERAL I. Commission members present: Amanda Weese James Spence JefT Parkes Marty Johnson Bilil-lall Chris Hunter Keith Johns Bill Standley Carol Cloer Commission members absent: Tory Larsen City Council Liaison: Gayla McCulloch City personnel present: Electric Utility Director Mike Sims Public Works Director David Sypher Water/Wastewater Jeff S maka OMI/CI-I2MHill Ron Rosen PUC Secretary Amy McKinley Utility Business Operations Susan Nipper Electric Generation Jim McNicol City Manager Rob Mayes Administrative Services Andy Mason Accounting Sheree Wilson Legal Jennifer Breakell Guests: Public Works Paul Montoia Red Oak Consulting Jennifer R. Ivey vi a telephone Red Oak Consulting Shireen Abdullah via telephone 2. Chair Weese called the meeting to order at 3:00 PM with a quorum present to conduct the business of the Commission. 3. Commissioner Standley made a motion to approve the Minutes of the August 13,2014 regular meeting as presented and Commissioner John son seconded the motion. The Motion passed unanimously. II. BUSINESS 1. Water/Wastewater Cost of Serv ice Study-Webinar with Red Oak Consulting: Public Works Director David Sypher, introduced Jennifer R. lvcy, P.E Principal Consultant, and Shireen Abdullah , Senior Management Consult,lIlt, Red Oak Consulting, the firm contracted to prepare the Cost of Service Study for Water/Wastewater. Ms. lvey and Ms. Abdullah co-presented the Cost of Service Study and stated that the purpose ofthe study is to recommend fees and charges suflicient to fund utility revenue requirements, appropriately allocate costs across customer classes and meet established financial objectives. - 1­  General discussion ensued among the Commission, City staff' and the consultants regarding the proposed rate increases and thejustifications for the proposed increases. Mr. Sypher stated an informational only presentation of this Cost of Service Study wi II take place at the October 7,2014 City Council Work session. 2. Water/Wastewater Report: Mr. Smaka briefly reviewed the activities of the water/wastewater utilities for the month of August. No discussion occurred regarding this report. 3. Water/Wastewater Operations Report: Mr. Rosen reported on water/wastewater operations for the month of August. 4. Praxair Agreement: Ms. Nipper reported that Praxair, [nco wi II be signing a new ten year service agreement with the electric utility. Ms. Nipper stated that Praxair currently has an agreement with the utility but this agreement will expire toward the end of September. Ms. Nipper stated the load that Praxair has agreed to in the new agreement is 10 MW; 4 MW as a long-term bulk power agreement under Rate 21 and 6 MW as an interruptible load under Rate 9-INT. 5. Electric Utility Report: Ms. Nipper briefly revievved the Electric Utility Report for the month of August. No discussion occurred. 6. Director's Report: Mr. Sims presented the monthly Director's Report which details the various project and other operations of the utility. Mr. Sims informed the Commission of a recent matter at the Bluffview Power Plant where metal particulates were detected in the lube oil in two different locations of the machine. Mr. Sims stated that General Electric has been on site and performed an inspection and the oil has been analyzed. Mr. Sims reported that it is General Electric's recommendation, and utility staff agrees, that the machine most likely necds a major inspection and the inspection recommended by General Electric requires the machine be removed and sent to Houston. III. ADJOURNMENT There being no further business to come before the Commission, upon motion du Iy made and seconded, the meeting was adjourned. The meeting was adjourned at 4:57 p.m. Approved this 8th day of October, 2014. Amanda Weese, Chair -2­  PUC ACTION ITEM REQUEST DATE: October 1,2014 DEPARTMENT: WaterlWastewater MEETING DATE: October 8,2014 1. ITEMITOPIC: Red Oak Consulting--Presentation of the Water and Wastewater Cost of Service Rate Study. 2. ACTION REQUESTED OF PUC: Recornmendation to City Council for the proposed changes to the water and wastewater rate structure as presented in the Water and Wastewater Cost of Service Rate Study by Red Oak Consulting . 3. BACKGROUND I RATIONALE: The water and wastewater rate structure for all customer classes last changed in 2007. The rate structure proposed in the Red Oak report separates customer charges into three main areas: 1) Service Charge; 2) Volume Charge; and, 3) Renewal and Replacement. The rate structure as proposed will establish the required foundation for the water and wastewater utility to meet all system requirements . It will allow us to meet the expectations of our customer base by providing a reliable and adequate treatment, distribution and collection system. The service and volume charges are intended to recover the cost incurred for the operation, maintenance, debt service and some capital expenditures to keep the system functioning on a daily basis. -2­  The third component, the Renewal and Replacement (R&R) charge is based on the demand upon the system determined by meter size. It is intended to provide a sufficient and reliable source of capital funds to ensure that aging and failing components of the distribution and collection system can be systematically replaced and upgraded. Another feature of the rate structure is the increasing volume teir structure for residential customers. This rate structure serves to encourage conservation, while making water for basic domestic use (the first 7,000 gallons) available at a reasonable volume charge. As presented, the Red Oak report recommends that rate changes be phased in over a five-year period. In the interest of securing the utilities water rights portfolio, a $0.03 per 1,000 gallon volume charge for water rights acquisition will be continued for all customers. Finally, the report recognizes the inevitability of cost increases and the undesirability of playing catch-up with large, single year increases, and therefore recommends that in year six and subsequent years, adjustments to all rate components be automatically tied to changes in the Producer Price Index (PPI) @75% to assist with the inflationary demand. Keeping the level at 75% will incentivise staff stewardship for efficiency and timely review. 4. STAFF RECOMMENDATION: Staff recommends the Public Utility Commission forward to City Council, a recommendation that the rates for water and sewer service set forth in the City Code, be amended by ordinance to reflect the charges and structure contained in the Red Oak Water and Wastewater Cost of Service . Rate Study Presentation, (Water Rates: Tables B-1 through Table B-4) and (Wastewater Rates: Tables C­ 1 through Tables C-4) including the phasing in of rate changes over fiscal years 2015 through 2019, with annual adjustments thereafter tied to changes in the Producer Price Index (PPI) at 75% of the PPI. 5. INSTRUCTIONS UPON APPROVAL: Instruct Staff to proceed to the City Council with the PUC recommendation. -2.1­ Proposed Water Rates Monthly Service Charge Table B-1 FARMINGTON. NEW MEXICO Water Utility Comparison of Existing and Transition Monthly Service Charges I Transition Rates Meter Size Existing 2015 2016 2017 2018 2019 (inches) $ per bill $ per bill $ per bill $ per bill $ per bill $ per bill 5/8" 13. 90 15.70 17.66 19.83 22.21 24.83 3/4" 13.90 15.70 17.66 19.83 22 .21 24 .83 1" 15.64 18.26 21 .13 24.29 27.76 31 .58 1 1/2" 23.49 29.05 35.17 41 .89 49.29 57.42 2" 27.42 34.96 43.26 52 .38 62.42 73.45 3" 62.97 82 .73 104.47 128.38 154.68 183.60 4" 96.31 127.96 162.77 201.06 243.18 289.51 6" 140.66 186.26 236.42 291.59 352.29 419.04 8" 140.66 213.07 292.71 380.31 476.67 582 .67 10" 140.66 246.56 363.04 491 .17 632.12 787.15 12" 140.66 311.40 499.21 705.80 933.05 1,183.02 Table 8-2 FARMINGTON. NEW MEXICO Water Utility Comparison of Existing and Transition Seniors Monthly Service Charges I Transition Rates Meter Size Existing 2015 2016 2017 2018 2019 (inches) $ per bill $ per bill $ per bill $ per bill $ per bill $ per bill 5/8" 7.64 8.63 9.72 10.91 12.22 13.66 3/4" 7.64 8.63 9.72 10.91 12.22 13.66 1" 7.64 8.63 9.72 10.91 12.22 13.66 1 1/2" 7.64 8.63 9.72 10.91 12.22 13.66 -2.2­ Proposed Water Rates Monthly Renewal and Replacement Charge Table B-3 FARMINGTON, NEW MEXICO Water Utility Comparison of Existing and Cost of Service R&R Charges I Transition Rates Meter Size Existing 2015 2016 2017 2018 2019 (inches) $ per bill $ per bill $ per bill $ per bill $ per bill $ per bill 5/8 6.60 8.10 9.60 11 .10 12.60 14. 10 3/4 9.90 12.15 14.40 16.65 18.90 21.15 1 16.50 20 .25 24 .00 27.75 31.50 35.25 1-1/2 33.00 40.50 48.00 55.50 63.00 70 .50 2 52 .80 64.80 76.80 88.80 100.80 112.80 3 105.60 129.60 153.60 177.60 201 .60 225.60 4 165.00 202 .50 240.00 277.50 315.00 352.50 6 330.00 405.00 480 .00 555.00 630.00 705.00 8 330.00 648.00 768.00 888.00 1,008.00 1,128.00 10 330.00 931.50 1,104.00 1,276.50 1,449.00 1,621.50 12 330.00 1,741 .50 2,064.00 2,386.50 2,709.00 3,031 .50 -2.3­ Proposed Water Volume Rates Table B-4 FARMINGTON, NEW MEXICO Water Utility Comparison of Existing and Transition Volume Rates I Transition Rates Customer Class Existing 2015 2016 2017 2018 2019 Single Family Residential and Duplex 0-7 $2.09 $2.19 $2.29 $2.40 $2.52 $2 .65 8 - 20 2.61 2.74 2.86 3.00 3.15 3.31 20 - 40 3.26 3.43 3.58 3.75 3.94 4.14 > 40 4.90 5.16 5.39 5.64 5.93 6.23 Multi-family and Nonresidential All 2.34 2.69 3.06 3.48 3.93 4.43 Recreational User All 1.37 1.48 1.60 1.73 1.87 2.02 Senior Citizen 0-7 2.09 2.19 2.29 2.40 2.52 2.65 8 - 20 2.61 2.74 2.86 3.00 3.15 3.31 20 - 40 3.26 3.43 3.58 3.75 3.94 4.14 > 40 4.90 5.16 5.39 5.64 5.93 6.23 Untreated Water All 1.37 1.53 1.71 1.90 2.10 2.33 -2.4­ Proposed Water Volume Rates Table B-4 FARMINGTON, NEW MEXICO Water Utility Comparison of Existing and Transition Volume Rates I Transition Rates Customer Class Existing 2015 2016 2017 2018 2019 Flora Vista Ail 1.79 1.87 1.95 2.04 2.14 2 .27 Navajo Tribal Utility Authority Ail 1.72 1.80 1.88 1.97 2.06 2.18 Upper La Plata Water Users Assoc . Ail 1.81 1.89 1.97 2.06 2.16 2.29 Lower Vailey Water Users Corporation Ail 1.81 1.89 1.97 2.06 2.16 2.29 -2.5­ Proposed Wastewater Rates Monthly Service Charge Table C-1 FARMINGTON, NEW MEXICO Wastewater Utility Comparison of Existing and Transition Monthly Service Charges I Transition Rates Meter Size Existing 2015 2016 2017 2018 2019 (inches) $ per bill $ per bill $ per bill $ per bill $ per bill $ per bill 5/8" 7.47 9.25 11.30 13.65 16.35 19.46 3/4" 7.47 9.25 11 .30 13.65 16.35 19.46 1" 12.35 14.03 15.97 18.19 20.74 23.67 1 1/2" 20.48 23.80 27.61 31 .99 37.02 42.81 2" 30.24 33.38 37.00 . 41 .15 45.92 51.41 3" 56.26 68.54 82.65 98.88 117.54 139.00 4" 85.53 105.52 128.50 154.93 185.32 220 .26 6" 166.85 184.83 205.51 229.28 256.63 288.07 8" 166.85 198.06 233.96 275.23 322.70 377.28 Table C-2 FARMINGTON, NEW MEXICO Wastewater Utility Comparison of Existing and Cost of Service Seniors Monthly Service Charges I Transition Rates Meter Size Existing 2015 2016 2017 2018 2019 (inches) $ per bill $ per bill $ per bill $ per bill $ per bill $ per bill 5/8" 4.08 5.06 6.19 7.49 8.99 10.70 3/4" 4.08 5.06 6.19 7.49 8.99 10.70 1" 5.14 6.31 7.66 9.20 10.98 13.02 1 1/2" 9.95 11.97 14.29 16.96 20.02 23.55 -2.6­ Proposed Wastewater Rates Monthly Renewal and Replacement Charge Table C-3 FARMINGTON, NEW MEXICO Wastewater Utility Comparison of Existing and Cost of Service R&R Charges I Transition Rates Meter Size Existing 2015 2016 2017 2018 2019 (inches) $ per bill $ per bill $ per bill $ per bill $ per bill $ per bill 5/8 5.65 6.65 7.65 8.65 9.65 10.65 3/4 8.48 9.98 11.48 12.98 14.48 15.98 1 14.13 16.63 19.13 21.63 24.13 26.63 1-1/2 28.25 33.25 38.25 43.25 48.25 53.25 2 45.20 53.20 61.20 69.20 77.20 85.20 3 90.40 106.40 122.40 138.40 154.40 170.40 4 141 .25 166.25 191.25 216.25 241.25 266.25 6 282.50 332.50 382 .50 432.50 482.50 532.50 8 282.50 532.00 612.00 692.00 772.00 852.00 9 282.50 764.75 879.75 994.75 1,109.75 1,224.75 10 282.50 1,429.75 1,644.75 1,859.75 2,074.75 2,289.75 -2.7­ Proposed Wastewater Rates Monthly Volume Rates Table C-4 FARMINGTON, NEW MEXICO Wastewater Utility Comparison of Existing and Transition Volume Rates I Transition Rates Customer Class Existing 2015 2016 2017 2018 2019 Residential and Commercial All $1.76 $1 .80 $2.02 $2.30 $2 .64 $3.05 Senior Citizens All 1.76 1.80 2.02 2.30 2.64 3.05 Septic Haulers $39.78 $42.56 $45.54 $48.73 $52.14 $55.79 -2.8­