On February 10, 2020 the EID Board of Directors heard and received the preliminary cost-of-service rate study preliminary report.
Visit the Proposition 218 Notice 2020 webpage to learn more, view the full proposed rate structures, and use the calculator to estimate your 2021 rates.
In 2012, the Board adopted a cost-of-service analysis (COSA) that laid the foundation for the District’s adoption of water, wastewater, and recycled water rates since that time.
District staff have updated that COSA, using the same rate model and methodology developed in 2012, with adjustments to the model adopted in 2016, in order to guide the District’s rate setting over the next several years.
The COSA relies upon the District’s five-year financial plan. The financial plan was presented and adopted in December 2019 reflecting the revenue requirements needed to meet the District’s annual operating and maintenance costs, maintain a sufficient capital improvement program, and meet debt service requirements.
The revised financial plan will adequately manage the debt service previously incurred as well as the anticipated future debt service that will be needed to fund major infrastructure replacements reflected within the 5-year capital improvement plan (CIP) which was adopted in October 2019.
The financial plan was also designed to fund pay-as-you-go construction projects within the water utility, as directed by the Board. The CIP now includes approximately $5 million annually to replace smaller transmission lines and another $5 million to replace water service lines. The adopted financial plan also reflects changes to previous revenue sources such as the surcharges for lining and covering of water reservoirs in the past which expire in a few years and also PG&E power sales decreasing by $2 million per year from $8 million to $6 million. This change reflects the lower pricing related to the solar power glut.
With the five-year forecast adopted by the Board, staff then completed the COSA. The COSA has been updated and has been designed to comply with Proposition 218 with a complete the picture of the total District revenues necessary to meet operating expenses, fund financial reserves, meet bond coverage requirements, and pay the annual debt service on outstanding bonds. Additional revenue bonds will be used to finance large water infrastructure projects included in the 2020-2024 CIP and the debt service associated with it are built into the COSA.
The updated COSA reflects the appropriate rates from each customer class within the District to balance out the revenue needed. In the update, staff followed the principles adopted in 2012 which were reviewed at the August 26th and November 12, 2019 Board meetings. This update uses the same rate model used for the 2012 COSA but uses updated financial, customer billing data and the most recent water consumption records within each of the customer classes.