CC SR 20210420 03 - Cal Water Rate Report
CITY COUNCIL MEETING DATE: 04/20/2021
AGENDA REPORT AGENDA HEADING: Regular Business
AGENDA TITLE:
Consideration and possible action to receive and file a review of Cal Water’s recent rate
increase.
RECOMMENDED COUNCIL ACTION:
(1) Receive and file a summary of Cal Water’s recent rate increase.
FISCAL IMPACT: None
Amount Budgeted: N/A
Additional Appropriation: N/A
Account Number(s): N/A
ORIGINATED BY: McKenzie Bright, Administrative Analyst
Jesse Villalpando, Emergency Services Coordinator
REVIEWED BY: Karina Bañales, Deputy City Manager
APPROVED BY: Ara Mihranian, AICP, City Manager
ATTACHED SUPPORTING DOCUMENTS:
A. CPUC Decision Report for Cal Water Rates
B. Cal Water letter regarding new rates, dated March 8, 2021 (page B-1)
BACKGROUND AND DISCUSSION:
In October 2020, California Water Service Co. (Cal Water) announced the completion of
the Palos Verdes Peninsula Water Reliability Project, which added seven miles of new
drinking water pipeline and a pump station on Crenshaw Boulevard north of Silver Spur
Road. Prior to the completion of the project, 90% of the Peninsula relied on one 60-
year-old pipeline and a single pump station.
Every three years, Cal Water is required to submit an Infrastructure Improvement Plan
to the California Public Utilities Commission (CPUC), including all rate changes. The
CPUC approved the most recent rate changes to customers’ bills in the Palos Verdes
water system on December 3, 2020 (Attachment A). This rate increase was specifically
structured so only Palos Verdes ratepayers would see the billing impact of the $96
million Palos Verdes Peninsula Water Reliability Project.
1
Prior to the CPUC decision, ratemaking is also reviewed by the California Pu blic
Advocates Office (Cal PA), an independent organization within the CPUC that
advocates on behalf of utility ratepayers. Cal PA also approved the rate increase.
Cal Water mailed residents materials prior and after the rate increase which indicated
that a typical customer who uses 14,212 gallons, or 19 Ccf (one-hundred cubic feet) of
water per month would see a monthly water bill increase of $16.21, or 14.38%
(Attachment B). The amount of water in each tier for residential quantity rates also
changed, increasing Tier 1 from 1-15 Ccf to 1-17 Ccf, and adjusting Tier 2 and Tier 3 to
18-25 Ccf and over 25 Ccf, respectively. The table below shows the percent increase at
each tier and for different meter sizes. Usage between 15-17 Ccf* moved from Tier 2
under the previous category into Tier 1, resulting in a 0.21% decrease for usage at that
level.
Change in Cal Water Rates in RPV
Previous Rate Current Rate Percent Change
Service Charge:
5/8” Meter $21.14 $31.78 33.48%
1” Meter $52.85 $79.45 50.33%
Usage Charge ($/Ccf):
Tier 1 (1-15 Ccf) $4.7026 $4.9799 5.57%
Tier 1 (15-17 Ccf)* $4.9902 $4.9799 -0.21%
Tier 2 (18-25 Ccf) $4.9902 $6.2276 19.87%
Tier 3 (25+ Ccf) $5.9832 $9.3539 36.04%
Bills are calculated by adding the service charge, plus usage by tier. If usage is 26 Ccf,
the first 17 Ccf are charged at the current rate of $4.9799 per Ccf (Tier 1), plus the next
eight Ccf charged at the current rate of $6.2276 (Tier 2), plus one Ccf charged at the
current rate of $9.3539 (Tier 3).
For example, a resident with a 5/8” meter, using 15 Ccf of water per month should
expect to see their bill increase by $14.80, or 16.14%. A resident with a 1” meter using
the same 15 Ccf of water per month should expect to see their bill increase by $30.76,
or 24.93%.
Residents have expressed confusion over the rate increase, and concern over the
substantial increase in bills. As such, Staff reached out to Angie Gilbride, Regional
Community Affairs Specialist for Cal Water, who confirmed her participation at tonight’s
meeting to provide a presentation outlining the rate increase and will be available to
answer any questions. Specifically, the presentation will provide an overview of the rate
increase, address concerns about Tier 1 users experiencing the highest percent total
increase and compare rates to those in other districts and with other companies.
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calwater.com
March 8, 2021
Dear California Water Service customer:
We’re reaching out to you regarding changes to your bill. In last month’s bill, we included a
notice about the rate change authorized by the California Public Utilities Commission (CPUC). As
another reminder, beginning February 1, customers’ bills in the Palos Verdes system reflected
new rates set by the CPUC from Cal Water’s 2018 Infrastructure Improvement Plan and
associated rate changes approved in 2019 and 2020, the completion of the Palos Verdes
Peninsula Water Reliability Project, and changes in purchased water costs for 2021.
Cal Water is required to submit its Infrastructure Improvement Plan, including all operating
costs, every three years to ensure customer rates reflect the actual costs to provide a safe,
reliable water supply; however, approval and implementation were delayed for about one year
due in part to the coronavirus pandemic. As such, the IIP filed in July 2018, which would have
taken effect in 2020, instead took effect in February 2021.
For a typical residential customer who uses 14,212 gallons (19 Ccf) of water per month – the
average amount used each month – the monthly water bill will increase by $16.21, or 14.38%,
due primarily to the Palos Verdes Peninsula Water Reliability Project. The amount of water in
each tier for residential quantity rates have also changed; the new tiers are 1 – 17 Ccf, 18-25 Ccf,
and over 25 Ccf.
To illustrate the changes, attached are a fact sheet with more information about the rate change
and an example of what bills would be for residential customers with two different meter sizes
using various amounts of water.
We look forward to continuing to provide our Palos Verdes Peninsula customers with quality,
service, and value for decades to come.
Sincerely,
California Water Service
B-1
Quality. Service. Value.®
™
REV 2020-11
Where each dollar will go
Capital Improvements WaterProduction Other Operations & Maintenance
22%53%6%
Local Water Professionals
(Pump Operators, Utility Workers, etc.)
Centralized Services
(Water Quality, Engineering, etc.)
Conservation
8%10%1%
Replace 49,600 Feet
of Water Main
To prevent failure of aging
and high-risk pipelines
Palos Verdes Peninsula
Water Reliability Project
7 miles of new pipeline and a new
pump station to increase reliability
for everyday and emergency needs
Infrastructure Improvement Planning
for Palos Verdes
California Water Service (Cal Water) proposed improvements in our triennial Infrastructure Improvement
Plan (IIP) for 2020–2021 to ensure we are able to continue providing a reliable supply of high-quality
water for customers’ everyday needs and sufficient resources for firefighters. While separate from the IIP
filing, new rates for the Palos Verdes Peninsula Water Reliability Project went into effect at the same time.
Here are the major improvements approved by the California Public Utilities Commission:
For a typical customer
who uses 14,212 gallons
(19 Ccf) of water per
month, the monthly
water bill will increase
by $16.21, or 14.38%,
due primarily to the
Palos Verdes Peninsula
Water Reliability
Project. Please note that
the amount of water in
each tier for residential
quantity rates have also
changed; the new tiers
are 1–17 Ccf, 18–25 Ccf,
and over 25 Ccf.
For more information on the improvements in your district,
contact us at (310) 257-1400 or infoRD@calwater.com
Retrofit and
Replace Equipment
To increase reliability
throughout the system
B-2
Quality. Service. Value.®
Get more information at www.calwater.com
Water Bill Impact
How completion of these
infrastructure upgrades will
affect customer bills
W
A
TER S E R VICECAL I F O RN
I
A
TM
Based on the rate changes
authorized by the California
Public Utilities Commission
(CPUC) from California Water
Service’s 2018 Infrastructure
Improvement Plan and the
Palos Verdes Peninsula Water
Reliability Project, the following
are examples of what bills
would be for customers using
various amounts of water. These
calculations include only the
service and quantity charge,not
any surcharges or credits.
Service Charge
Meter size
5/8x3/4” meter $31.78
1” meter $79.45
Quantity Rate
Per Ccf
1-17 Ccf $4.9799
18-25 Ccf $6.2276
26+ Ccf $9.3539
A customer with a 5/8 x 3/4” meter...
Using 9,724 gallons (13 Ccf) per
month:
Service charge $31.78
Quantity charge (13 x $4.9799) $64.74
Total $96.52
Using 14,212 gallons (19 Ccf) per
month:
Service charge $31.78
Quantity charge (17 x $4.9799) $84.66
Quantity charge (2 x $6.2276) $12.46
Total $128.90
Using 22,440 gallons (30 Ccf)
per month:
Service charge $31.78
Quantity charge (17 x $4.9799) $84.66
Quantity charge (8 x $6.2276) $49.82
Quantity charge (5 x $9.3539) $46.77
Total $213.03
A customer with a 1” meter...
Using 9,724 gallons (13 Ccf) per
month:
Service charge $79.45
Quantity charge (13 x $4.9799) $64.74
Total $144.19
Using 14,212 gallons (19 Ccf) per
month:
Service charge $79.45
Quantity charge (17 x $4.9799) $84.66
Quantity charge (2 x $6.2276) $12.46
Total $176.57
Using 22,440 gallons (30 Ccf)
per month:
Service charge $79.45
Quantity charge (17 x $4.9799) $84.66
Quantity charge (8 x $6.2276) $49.82
Quantity charge (5 x $9.3539) $46.77
Total $260.70
B-3