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HomeMy WebLinkAboutAgenda Packet 11/08/2005 UTILITY ADVISORY COMMITTEE PUSLIC WORKS CONFERENCE ROOIVl PORT ANGEL£S~ WA NOVEMBER B, ~00~ 3:00 P.M. AGP'NDA I. CALL TO ORDER Ii. ROLL ~ALL III. APPROVAL OF MINUTES FOR OCTOBER 1 1 ~ 2005 IV. LATE ITEMS V. DISCUSSION ITEMS B. WATE~ASTEWATER RATE STUDY PRESENTATION (LARRY/HDR) (YvoNNE) D.PUD WH~LE~ALE WATER ~ONTRA~T EXTENSION E,~TORMWATER PHASE II BRANT APPLICATION (GARY) F,ELECTRI~ LEGISLATION SUMMARY {S~OTT) VII. ADUDU~NMENT UTILITY ADVISORY COMMITTEE GUEST SIGN UP SHEET PRINT NAME ORGANIZATION N: \PWKS\LIGHT\CONS\CATE\SIGNUP.wpd UTILITY ADVISORY COMMITTEE Port Angeles, Washington October 11, 2005 L Call to Order: ~ Chairman Rogers called the meeting to order at 3:00 p.m. Il. Roll Call: Members Present: Chairman Rogers, Allen Bentley, Mayor Headrick, Dean Reed Members Absent: Councilmember Erickson Staff Present: Mark Madsen, William Bloor, Glenn Culler, Scott McLain, Gary Kenworthy, Steve Sperr, Cate Rinehart. Others Present: None III. Approval of Minutes: Chairman Rogers asked if there were any corrections to the meeting minutes of August 9, 2005 or September 13, 2005. Allen Bentley moved to approve the minutes. Dean Reed seconded the motion, which carried unanimously. IV. Late Items: Eclipse.4nnexation - Electrical Executive Session V. Discussion Items: A. Department Of Ecology Fiscal Year 2007 Funding Cycle Application Steve Sperr, Engineering Manager, reviewed the information contained in the packet, responded to questions, and provided clarification. It was noted that the application for grant and/or loan funding through the Department of Ecology was due October 31, 2005. Dean Reed moved to recommend City Council authorize the Mayor to sign the Fiscal Year 2007 Funding Cycle Application certification, in an amount not to exceed $600,000. In addition, ifa grant or loan is approved~ to authorize the Mayor to execute the agreement. Mayor Headrick seconded the motion, which carried unanimously. B. Stormwater Phase 2 Rules Gary Kenworthy, City Engineer, noted that the public review draft had been delayed largely because after comments had been requested 700 responses had been received. Because there is so much information to 1 UTILITY ADVISORY COMMITTEE October 11, 2005 go through the draft review is not expected until the last part of 2006. Information only. No action taken. C. Northwest Coalition For Affordable Power Scott McLain, Deputy Director for Power Systems, explained that a broad based group of utilities, government agencies, industrial and commercial customers, and other organization had formed a coalition to put pressure on the Bonneville Power Administrator to propose a wholesale power rate for the next rate period that is more in line with rates in effect prior to the energy crisis of 2001. No definite budget had been developed but $1 per customer was suggested to help with costs. Allen Bentley moved to recommend forwarding to City Council a resolution in support of the Northwest Coalition for Affordable Power including $8,000 for financial assistance. Dean Reed seconded the motion, which carried unanimously. VI. Late Item: Eclipse Annexation - Electrical Scott McLain, Deputy Director for Power Systems, advised that negotiations had taken place with Clallam County PUl) to assume the load in the western annexation. A purchase price of about $363,000 had been reached. Transferring facilities east of Eclipse will be done no later than the end of December 2005 with western part taking place by March 2006. Information only. No action taken. VII. Adjourn To Executive Session - 3:34 p.m. Return to regular session - 4:13 p.m. VIII. Next meeting date: November 8, 2005 XI. Adjournment: The meeting was adjourned at 4:13 p.m. Chairman Rogers Cate Rinehart, Administrative Specialist II 2 ,p A W A S H I N G T O N, U. $, A, UTILITY ADVISORY COMMITTEE MEMO J J DATE: November 8, 2005 To: UTILITY ADVISORY COMMITTEE FROM: Jeff Young, Wastewater Division Superintendent SUBJECT: Septage Receiving Update Summary: Since March 2005 the septage receiving loading on the plant has doubled and continues at that rate. Recommendation: Information only. Background/Analysis: The Wastewater Treatment Plant (WWTP) has processed 1,311,602 gallons of septage from private haulers since September 23, 2003. Since the authorization of long-term contracts in March 2005, there has been a noticeable increase in the amount of septage received. Offering the long-term stability in the rates because of the long-term contracts has increased revenues due to the increased disposal volumes. There have been no permit violations or negative impact on the plant processes during that time. Additional loading of the WWTP is beneficial since it allows the plant to operate more effectively by being closer to its design parameters. The current rate for accepting septage is eleven cents per gallon. PWOIO1 06 [Revised07~24/03] 1)ORTANGELES UTILITY ADVISORY GOMMITTEE ME O DATE: November 8, 2005 To: UTILITY ADVISORY COMMITTEE FROM: Larry Dunbar, Power Resources Manager SUBJECT: Water and Wastewater Rate Adjustments Summary: HDR Engineering, Inc. and City staff completed a rate study for thc Water and Wastewater Utilities. Thc study will be presented to the Utility Advisory Committee including the recommended retail rate adjustments. It will be necessary to adjust retail water and wastcwater rates at this time to maintain the funds in a financially prudent position. Recommendation: Forward a favorable recommendation to City Council to proceed with a public hearing on the rate study and proposed rate adjustments. Background/Analysis: The City contracted with HDR Engineering, Inc. earlier this year to assist staff with a rate study for the Water and Wastewater Utilities. A rate study includes a load forecast, review of the revenue requirements, capital projects, and reserves. The last rate study was completed in 2002, which was the basis for setting rates for years 2003 through 2005. The City Council set a public hearing date on November 15, 2005 for a presentation of the study and to allow public input to the process after the presentation. The public heating will be continued to December 6, 2005 at which time the public heating will be closed. City Council will be requested to consider adoption of new rate ordinances at the December 6, 2005 City Council meeting. Proposed changes to the rate ordinances include: water base and consumption charges; water system development fee; wastewater base and consumption charges (including combined sewer overflows); and sewer system development fee. The proposed retail rate adjustments will be included in the presentation. Staffrecommends forwarding a favorable recommendation to City Council to proceed with a public hearing on the rate study and the proposed rate adjustments. N:\UAC~Final\Water & Wastewater Rate Adjustments.doc City of Port Angeles Water and Wastewater Rate Study Results Presentation to the Utility Advisory Committee November 8, 2005 Presented bY: Angie sanchez VlrnoChe, Financial Services Manager Glossary of Acronyms · AWC - Association of Washington Cities · CF - Cubic Feet · CIP - Capital Improvement Plan · CSO - Combined Sewer Overflow · DOE - Department of Ecology · O&M - Operation & Maintenance · PWTF - Public Works Trust Fund · SDC - System Development Charge Overview & Purpose of the Presentation · Overview of the rate setting process & previous studies · Review the results of the water & wastewater rate studies · Review the proposed rates · Moving forward Overview of the Rate Setting Process Compares the revenUes of the utility to its eXPenses to determine the overall level of rate adjuStment Design rates for each class of service to meet the revenue needs of the utility~ along with any other rate design goals and objectives Note: No cost of service completed 2 Water Utility Looking Back · Water rate study completed in 2002 · 2002 study projected a 29% increase required by 2006 · Previous rate adjustments: - 2003 - 4% - 2004 - 4% - 2005 - 3% · Projected approximately $1 M Ilion of reserves used to supplement revenue deficiency while rates phased in Wastewater Utility Looking Back · Wastewater rate study completed in 2002 · 2002 study projected a 1.4% required increase by 2006 · No rate adjustments implemented in 2003-2005 · Overall utility rates were sufficient for the time period - $229,000 of rate stabilization reserve used in 2003 for one time increase in professional services · In 2005, DOE mandated CSO fees in the amount of 5.5% increase 3 Developing Revenue i Requ rements I--D~ 6 Overview of the water& Wastewater Revenue · Reviews an extended time period (2006-2011) · Utilizes a "cash basis" approach - O&M - Taxes/transfers - CIP funded from rates - Debt service · Applied the City's financial/rate setting policies 4 Key Assumptions Revenues Debt Service - Wastewater - Rate revenues based on 2005 - Combination of existing bonds Budget & City's load forecast & loans - Miscellaneousrevenues - Useofnewdebtissues(2OO7- escalated 0%-3% per year 2010) · Operation & Maintenance · Includes DOE mandated 2015 CSO schedule - Utilized 2005 Budget to develop . Taxes & Transfers baseline expenditures - Escalation factors range from - State & City Utility Taxes .5% to 10% per year - Departmental Transfers Debt Service - Water · Water & Wastewater Capital - Combination of existing bonds & Projects loans - From City's Capital - Use of new debt issues (2007- Improvement Plans 2010) Review of Water Revenue Requirement 5 Water Utility Key Factors Water capital expenditures total $9.8 Million during 2006-2011 Annual capital funding from rates below depreciation target Capital projects funded by: - Reserves - $1,2 Million - SDC's- From $42,000to$204,000 per year - Donations - $3.2 Million - New PVVTF - $1.8 Million - New Bond Issues - $2,9 Million Use of $367.000 of reserves in 2006 to minimize rate adjustment Debt obligation is 22% of revenue capacity in 2006, Increases up to 35% by 2011 Summary of the Water Revenue Requirement ($000's) Budget Pmj~l~d ,~0~ ~ 2007 2{~8 20Q0 20t0 2011 [~ ~ ~2 ~5 ~o ~7 ~5 1,0~ 1,03; 6 Water Capital Improvement Projects Budgd Pro,coted Ending Water Reserve Fund Balances ($O00's) $'~,~6/ $,1,1Sl $t;002 s842 $936 Note: Used total of $367,000 from Rate Stabilization Reserve in 2006 7 Summary & Conclusions of the Water Revenue Requirement · Rates are insufficient for the test period · Required rate increase of $4.67 for average residential customer in 2006 - Additional future adjustments are required - Will revisit projected adjustments annually · Reserves used in 2006, not sufficient to fund future deficiencies Note: Rate increase for Residential 5/8" Meter Review of Wastewater Revenue 8 Wastewater Utility Key Factors Wastewater capital expenditures total $28.6 Million during 2006-2011 - $18.8 Million related to CSO Annual capital funding from rates below depreciation target Capital projects funded by: - Reserves- $675,000 - SDC's - From $37,000 to $191,000 per year - Donations - $7.35 Million - New debt issues - $1.23 Million Less CSO & $18.0 Million related to CSO Debt obligation is 31% of revenue capacity in 2006. increases up to 60% by 2011 with addition of CSO debt Summary of the Wastewater Less CSO Revenue Requirement ($O00's) 9 Wastewater Capital Less CSO Improvement Projects Budge~ Pro,iected Ending Wastewater Less CSO Reserve Fund Balances ($O00's) Rate Stab~iza~o 1.~30 1,130 1,1~0 1,130 1,130 1,1 10 Summary of the Wastewater CSO Revenue Requirement ($O00's) 22 Wastewater CSO CaPital Improvement Projects Budget iP~e(~ed 200~ 2O06 2O0? ~ 2O09 ~tO ~t C~ Pmf~s~ ~s~ 65,~ 75,~ 0 0 0 0 0 U~ ~ ~ ~ 0 ~,~ 0 0 0 0 0 N~ Fr~is S~t Gr~ ~ 0 ~ 2,~,~ 0 0 0 0 R~er Tank Mo~s 0 0 ~,~ 2,~,~ 0 0 0 11 Ending Wastewater CSO Reserve Fund Balance ($000's) Fe¢a City Taf~Jet Ending B~lince $2~111 [Total Re.rye BalanCe $9 $304 $S91 $1,1~8 ~l?G Summary & ConclUsions of the Wastewater Revenue Requirement Wastewater rates less CSO's are slightly deficient for the test pedod Proposed rate increase of $1.55 for 2006 Currently minimal capital funding - Proposed rate edjuatmer~s attempt to buiLd-up cash reserves for future capital rleeds - Proposed rate adjustments for 2006~ 2008 CSO fees are deficient for test period CSO capital projects require significant funding from debt Proposed rate increase of $2,20 in 200~ - Pursue other f~nding sltemstives - Proposed and projected fees build-up cash reserve to a~count for long-term debt payments ~-'-~ Note: Rate increase for Residential > 430 CF 26 12 Proposed Rates Key Assumptions of the Rate Designs · Maintain current rate structures · Rates are based on an overall adjustment - Residential Water (5/8" Meter) · Proposed increase of $2.85 monthly for 2006 · Proposed increase of $0.23 per 100 CF consumption charge for 2006 - Residential Wastewater Less CSO's (~- 430 CF) · Proposed increase of $1.55 monthly for 2006, $1.80 for 2007 & $2.10 for 2008 - Residential CSO's (> 430 CF) · Proposed increase of $2.20 monthly for 2006, $2.30 for 2007 & $2.40 for 2008 ,.,ombined monthly increase $8.42 for 2006 (based on 790 CF) 13 Ke~¢ Assumptions of the Rate Designs (continued) · VVater & Wastewater System Development Fees - Increased Water fee from $1,025 in 1999 to $1,200 in 2006. Future year adjustments are based on inflation - Increased Wastewater fee from $745 in 1999 to $870 in 2006. Future year adjustments are based on 10% per year · VVater Connection & Sewer Permit Fees -/~Clarifying that the cost of, street cuts are not included Note: City calculated fees Water :PropOSed Rates 14 Water Monthly Bill Comparison (1,000 CF) Notes: Residential rate ~J.~-""~ AWC 2004 Rate Survey 32 Wastewater Proposed Rates 15 Wastewater Monthly Bill Comparison Less CSO (1,000 CF) Notes: Pod[ A~geles residential rate = fiat rate AWC 2004 Rate Survey 34 Combined Water & WasteWater Monthly Bill Comparison (1,000 CF & Less CSO) Notes~ Residential rates ^wc 200. Rate Survey 16 Water Connection & Development Fees Comparison il Wastewater Connection & Development Fees Comparison 17 Concluding Comments The proposed rates reflect the findings and conclusions of the rate studies · Recommend proposed adjustments to water & wastewater rates effective January 2006 Recommend an equal adju.stment to all classes of service · Policy direction needed to develop final rate proposal Questions/Discussions 18 W A S H I N G T O N, U. S, a. UTILITY ADVISORY COMMITTEE MEMO DAXE: November 8, 2005 TO: UTILITY ADVISORY COMMITTEE FROM: Yvonne Ziomkowski, Finance Director G/cnn A. Cutler, Director of Public Works and Utilities SUBJECT: Utility Bill Delinquency Summary: A reduction to the number of days before a utility bill becomes delinquent is proposed. The proposed reduction is intended to improve cash flow and customer service. .. Recommendation: Forward a favorable recommendation to City Council to approve a 5- day reduction to the number of days before a customer utility bill becomes delinquent. Background/Analysis: The current ordinance allows customers up to 30 days to pay utility bills before payment becomes delinquent. It is proposed that the number of days before a utility bill becomes delinquent is changed from 30 lo 25 days. The change would apply to all of the City's utilities (e.g., electric, water, wastewater, refuse). The change will reduce the number of utility bills that indicate the prio~ month charges are unpaid in the current month's billing. This frequently results in customer inquiries to verify their prior month's payment was received. By reducing the number of days before a utility bill becomes de]inquenl, all City-owned utilities would improve cash flow. The reduction in working capital required ,x ould help keep rates down. The proposed amendment would be effeclive on utility bills beginning ,lanuary 1,2006. N :\UAC~Final~A¢counts P.~eeivabteCJumge.doc ORDINANCE NO. AN ORDINANCE of the City of Pon Angeles, Washington, amending the Pon Angeles Municipal Code relating to utili'q~ rates. THE CITY COUNC1L OF THE CITY OF PORT ANGELES DO HEREBY ORDAIN as follows: Section .1. Section 3.64.075 and all provisions of Title 13 PAMC relating to utility rates and charges are hereby amended to provide thru all amounts for utili~, services remaining unpaid after the twenty-fifth da3, after the mailing of the bill shall be delinquent. Section 2. Section 3,64,060 PAMC is amended, in its entirety, to read as follows: 5.64.060 Delinquent Bills - ~rnen. From and after Januaw_ l, 2006, all utiliW charges accrued pursuant to any provision of this code All b,,~, ~^~w ,,~'-,~ ~ ,, shall be delinquent if payment therefor is nol received by the CiD: on or before the thM~cth twenty-fifth day after the mailing of the bill Section 3. All other provisions of PAMC sections relating to delinquency of utility accounts are ratified and remain in full force and effect as currently wrinen. Section 4. Section 3.64.090 PAMC is deleted. Section 5 - Severabiliw. lfany provisions oftl~s Ordinance, or its application to any person or circumstances, is held invalid, the remainder of the Ordinance, or application of the provisions of the Ordinance to other persons or circumstances, is nol affecled. Section 6 - Effective Dale. This Ordinance shall take effecl on all billings beginning January 1. 2006. PASSED by the City Council of the CiD' of Pon Angeles m a regular meeting of said Council held on the 6th day of December. 2005. R/chard A. Headrick Mayor ATTEST: APPRO\rlSD AS TO FORM: Beck), J. Upton, City Clerk William E. Bloor, City Anomey PUBLISHED: By Summary G:\Legal_ Backup\ORDiNANCES&RE~OLU'r 1ON$\2005-33.Ulili~yBillReleAmencJmenl.wpd Seplember 21, 2005 -2- pORTANGELE$ W A $ H I N (~ T O N, U.S. ,6,. UTILITY ADVISORY GOMMITTEE ME O DATE: November 8, 2005 '~o: UTILITY ADVISORY COMMITTEE FROM: Scott McLain, Deputy Directo~ for Power Systems SUBJECT: PUD Wholesale Water Contract Extension Summary: City staffhas been negotiating with the PUD staffto formulate a new wholesale water contract. Staffschedules and workload have delayed work on the new contract and require an extension lo the existing wholesale contract. Recommendation: Forward a favorable recommendation to CiW Council to extend the current wholesale water contract with Clallam PUD # 1 for a term of three months with the rate adjustment January 1, 2006 equal to the same percentage increase as other classes of customers and authorize the Cit), Manager to sign the contract extension. Background/Analysis: City staff has had several meetings with Clallam PUD staffwith the inlen! to creal¢, a new, long-term wholesale waler contract 1o serve the area in the Eastern UGA. Several major issues have been discussed along with different contractual relationships. Contracl language is now being written, but il is expected to be later than the first of the year before the comract is finished and approved by both the Cily Council and the PUD Board of Commissioners. In order to complete the conlract with the PUD, staffrecommends that the current contract be extended by three months, wilh a new contract period ending March 31, 2006. The City is also in the process of a rate study for the water utility. That study and its recommendalions will be presented to UAC loday and Council in the near fmure. Staff recommends Ii,at any rate changes for the wmer utility also be applied to the wholesale water contract with ll~e PUD al the same percentage increase that is applied Io other classes of service whhin the wmer ut/lily. N: UAC~Fina]~U] ) Wholesale water con~ract extension doc pORTANGELES WASHINGTON, U.S.A. ADVISORY COMMITTEE MEMO / UTILITY 1 DATE: November 8, 2005 TO: UTILITY ADVISORY COMMITTEE FROM: Gary W. Kenworthy P.E., Deputy Director of Public Works/City Engineer SUBJECT: Stormwater Phase II Grant Application Summary: The City has been designaled by the Department of Ecology (DOE) to be regulated under the NPDES Phase I1 SIormwater Permit. We have requested DOE to reconsider this designation. DOE is offering a $75,000 stormwater management ~ant to the City ~o implement the Phase II requirement. In the event our request for reconsideration is not successful would be advisable to take advantage of the grant offer. ecommendation: Forward a favorable recommendation to Council in support of submitting a Phase II Municipal Stormwater Management Granl Application and authorize the Mayor to execute the grant should the City remain a Phase Il designated mnnicipaliD, and be selected to receive the grant funding. Background/Analysis: The City has been designated by the Department of Ecology (DOE) to be regulated under the NPDES Phase I1 Smrmwater Permit. We have requested DOE to reconsider lhis designation. In view of the large number of responses to the proposed DOE Phase ll implementation, DOE has delayed further action until spring and our status will not be known until that time. As part of the Phase I1 implementalion, DOE is offering grants to provide financial assistance to the listed agencies. The City submitted a letter of intenl to apply for the grant offering on August 29, 2005 lo keep our options open in the event we remained designated. DOE has offered a $75,000 stormwater managemenl ~ant lo the City to implement the Phase I1 requirement. In the event our request for reconsideration is not successful it would be advisable lo take advantage of the grant offer. It is recommended that the UAC forward a favorable recommendation to City Council in support of submitting a Phase II Municipal Stormx~ ater Management Grant Application and amhorize the Mayor lo execute the grant should the City remain a Phase II designaled municipality and be selected to receive the grant funding. N: UAC'~DepDir'$tormwaler 1I Grant.doc UTILITY ADVISORY COMMITTEE MEMO DATE: November 8, 2005 To: UTILITY ADVISORY COMMITTEE FROM: Scott McLain, Deputy Director for Power Systems SUBJECT: Electric Legislation Summary Summary: New legislation as been enacted this year at bolh the Federal and State level that effects the elecIric utility. This memo is a summary of issues that the utility will need to address in the upcoming year. Recommendation: Information only. Background/Analysis: New legislation has passed at both the Federal and State level that the electric utility xxill need to address in the upcoming year. Federal Issues: In August, the Energy Policy Act ol-2005 was passed. This Act amended or made additions to the Public Utility Regulatory Policy Act of 1978 (PURPA). This new law puts several requirements on utilities that must be carried out in one to lhree years. These include the following: Net Metering Services: The State implemented a similar slandard a few years ago, which exempts the Chy from this standard. This requirement will he rolled into the intercormection standards below. Time Based Rale Schedules: The City will be required Io offer lime-based rate schedules within 1 $ months (by February 2007). Charges for time-based rates would vary by both time-of-day and month, based on our wholesale cost of power. Customers that request the rate would have a smart meter installed. Installation of Smart Meters for All Customers: The City must conduct an investigation and issue a decision as to whether or not smar~ meters should be installed for all customers. This would include a public hearing where both staff and the public would provide testimony for the City Council, x~ hich would then make a decision on installing smart meters for all customers. This hearing musl take place by September 2006, with a delermination made by September 2007. N:'~UAC\Final~,Eleclric legislation summary.doc Utility Advisory Committee Page 2 November 8, 2005 lntercormection Services: EPA 2005 added language to PURPA that states: "utilities must, upon request, provide interconneclion service to any customer that it serves". The City must hold a public hearing on this issue by September 2006, and establish interconnection service agreements by September 2007. For the past two months, public utilities, along with the investor owned utilities in Washington have been meeting 1o establish inlerconnection standards for generation facilities up to 20 megawatts in size. These ulilities have been working together to establish these standards so they will be uniform throughout Washinglon. The standards are also melding the requirements of the Net Metering Services requirement (RCW 80.60), SSB 5101 (an incentive bill for certain renewable generation facilities), and the revised PURPA standards. Of course, these standards will vary considerably based on the size of the generation facility, and the group is breaking the 20 mW size into several levels that will have different standards. The group has finished the first standard, which covers generation up to 25 kW. (Most distribuled generation will be in this range). The group is currently working on standards for generation from 25 to 300 kW, which will be completed by the end of the year. Staffwill be bringing these standards to the UAC and council for adoption as a group once all the standards are complete. Cogeneration and Small Power Purchase and Sale Requirements: PURPA has also been amended so utilities are no longer required to purchase power from Qualifying Facilities under certain circumstances. This has been a conlentious issue for some private utilities that had a high marginal rate for power resources. For public utilities that are served by the BPA, this has not been a major issue. State Issues: The two State issues are the Net Metering Services requirement (RCW 80.60), and SSB 5101. These two issues are being rolled inlo the work being done on Jntercormection services above. The above informal/on is provided for information only. N:',UAC~Final',Electric legislation summary.doc pOR?ANGEI, ES W AS H ~ N G T O N, U, $. ~, UTILITY ADVISORY COMMITTEE MEMO DATE: Novo-nber 8, 2005 To: UTILITY ADVISORY COMMITTEE FROM: Gary W. Kenworthy P.E., Deputy Director of Public Works/City Engineer SUBJECT: WUGA Utility Connection Fees Ordinance ;ummary: New utility facilities are almost constructed to provide water, wastewater, and lectrical service to the recently adopted Western Urban Growth Area (WUGA). Connection fees ~ve been developed for the water and wastewater utilities to assist in recovery of the extension COSTS. Recommendation: Forward a favorable recommendation to the CiD' Council to adopt the proposed WUGA Connection Fees ordinance. Background / Analysis: The construction project for the extension of the water, wastewater, and electrical service to the recently adopted Western Urban Growth Area (WUGA) is nearly complete. At the start of the project, meetings were held with the project proponents and the residents of the annexed area. In order to fund the utility extensions to Port Angeles Hardwood, the major industrial client agreed to provide $500,000 toward the construction project. The balance of the funding would come from the utilities involved and the General Fund. The utilities would recover a portion of their funding contributions through WUGA connection fees (Water & Wastewater) and Rates (Electrical). The WUGA connection fees are in addition to the normal connection and system development fees paid by all new development in the City. Water connection fees were to be held to the value of the Dry Creek Water Association fees so that existing customers, when connecting Io the new system, would nol have to pay additional fees. Their connection fee would be equal Io lhe fee being refunded by the Dry Creek Water Association. New water customers or existing customers fha! expand their water service would pay the added WUGA connection fees. The proposed water connection base fee is $3,500 for existing residential service and $5,600 for existing commercial service. New and expanded water services would be charged a $3,500 base fee plus $4,500 for each additional Equivalent Residential Unit (ERU). These fees were developed on the iota] estimated water system construction and engineering costs of $2,930.000 with the utility subsidizing 50% of the construction cost and all of the engineering costs. W]3GA Utility Connection Fees Ordinance November 8, 2005 Page 2 Wastewater connection fees were developed on the full costs of the wastewater extension expense, since there was no existing service in the area. This will allow the City to also serve customers in the WUGA that have not been annexed into the City. The proposed wastewater base fee is $4,600 plus $1,900 for each additional ERU. These fees were developed on the total estimated waslewater construction and engineering costs of $862,000. There are no proposed electrical connection fees. The cost of the electrical construction, engineering, and PUD system acquisition costs will be recovered through a five-year sumharge on the electrical rates. The surcharge for electric customers in the WUGA will be 80% of the difference between the City and PUD rates for a period of five years. The ordinance provides for recovery of City Water and Wastewater Ulility costs, including interest, from each owner only when they connect to the sewer. As noted above, existing Dry Creek water customers will be connected to the new water system without net additional costs. The individual connection costs to be collected are based on ERU's as estimated in the attached Exhibit "A". Exhibil "B", also attached, shows the total cost associated with the water main, wastewater force main, and appurtenant pumping facilities needed to serve the WUGA. The connection fee ordinance notes that at the time of payment, inlerest at the rate applicable (6%) to the City at the completion of construction (11/18/2005) and accruing subsequently will be added to the connection fee for a per/od not to exceed ten years. All requests for water and wastewater service in the service area will be assessed accordingly. Any water or wastewater service outside the original service area, which connects to or utilizes the water or waslewater mains, will also be assessed using the above methods. Attachments will be passed out at UAC meeting. Attachments: Proposed Ordinance Exhibit A - Fee Development Spreadsheet Exhibit B - Project Cost Estimate Spreadsheet N:\UAC'xFinaI~WUGA Utility Connection Fees Ordinance doc pORTA GELES UTILITY ADVISORY COMMITTEE MEMO DATE: November 8, 2005 To: UTILITY ADVISORY COMMITTEE FROM: Scott McLain, Deputy Director for Power Systems SUBJECT: Electric Service Area Agreement, Western UGA Summary: City staff has negotiated an agreement with Clallam PUD staff to apply the 1992 Electrical Service Area Agreement to the specific electrical infrastructure in the newly annexed Western UGA. Recommendation: Forward a favorable recommendation to City Council to authorize the City Manager to sign the Electrical Service Area Agreement, Western UGA, for electrical facilities in the Western UGA. Background/Analysis: In 1992, the City and Public Utility District No. 1 of Clallam County (PUD) entered into an agreement that specified the boundaries for the two utilities and how those boundaries would change in the event of annexations. Also specified in the agreement was the purchase price for the transfer of utilities should the City's boundaries change through annexation. The physical transfer of the facilities will take place in two phases as the City builds new infrastructure that is required in the area. The first phase of construction is complete and the transfer of customers will occur about the first of December. The second phase, which consists of the customers along the highway west of Eclipse Drive, will be transferred before March 31, 2006. To satisfy the rights and obligations of the 1992 agreement, the City will pay the PUD $370,344.42 for PUD facilities, along with severance costs at actual cost for PUD crews to disconnect various infrastructure. A:\City-PUD annexation agreement.doc