Agenda - 06-12-2007-3d - Laserfiche WebLink

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Third, OWASA's rates and fees should encourage conservation. Conservation can significantly reduce long-term OWASA system costs to its customers by avoiding or deferring the need to develop an additional water source such as Jordan Lake. The estimated capital cost of obtaining water from Jordan Lake is about $40 million. Conservation is why OWASA implemented seasonal water rates for all customers in May, 2002. The increasing block rates proposed for individually metered single-family. residential customers will strengthen OWASA's pricing signal, especially for. non-essential water uses. Increasing block rates will also help offset rate increases and eliminate the seasonal penalty for small volume users. (See the attached examples of water and sewer bills with increasing block rates and with the current seasonal rates). The seasonal rate structure is proposed to continue for other customers because the increasing block rate structure would not fit or be fair to the variety of commercial, institutional and master-metered multi-family customers who generally do not have irrigation needs. Seasonal rates have also proven to be an effective pricing strategy for reducing peak water demand by non-residential customers. While education and information are an important part of OWASA's overall conservation program, an appropriate rate structure is essential to achieve its conservation goals. Increasing block rates for residential customers have proven successful in many other communities and are common where water is scarce. The block rate structure would also more equitably allocate a greater share of water system costs to high-volume residential customers whose demand creates the need for higher system capacity. At the same time, water-wise customers will typically experience lower bill increases than the combined 9.5% rate increase because they will benefit from the lower block rates applicable to consumption under 6,000 gallons per month FINANCIAL IMPACT: Minimal impact to the County except for increased water and sewer rates for existing County facilities and Chapel Hill-Carrboro schools and increased fees for future County and Chapel Hill-Carrboro School System facilities in the OWASA service area. RECOMMENDATION(S): The Manager recommends that the Board receive the presentation, report and attached materials as information and for comment and questions as the Board desires.