The Zone 7 Water Agency Board of Directors will consider what components to include in a planned untreated water rate study at a special workshop on Wednesday, starting 6 p.m.
Current agriculture and golf course users in the eastern part of Zone 7's service area receive untreated water directly from the South Bay Aqueduct, according to General Manager Valerie, who also told the Weekly that a water rate consultant was hired in 2018 and 2019 to conduct the untreated water rate study.
"The consultant recommended Zone 7 consider including various components in the untreated water rate study," Pryor said. "Before we do the rate study for the calendar year 2022 rate, we are looking for policy guidance from the Board on what components should be included in the rate study that will be done later this fall."
Six total components outlined in a staff report include the costs of water supply, water supply management -- including staff labor for "administration of water supply" -- local water rights administration, groundwater monitoring and management, agency overhead and capital projects.
"There are administrative rate-setting techniques that will be included in untreated water rates and cost of service study that will be considered by the Finance Committee" as well as policy issues, staff said.
Per the annual rate setting process, staff added a rate reconciliation will also be done "once all actual costs have been reported to determine the water readjustment charge/credit to be applied to the following year’s rate."
"The water readjustment charge/credit is a mechanism to true up all realized untreated cost components," staff said. "The untreated water program does not have a fund balance to mitigate against fluctuations in year-to-year costs and rates are set annually based on planned expenses for the following year."
Dry-year conditions during 2021 are expected to "have a significant impact on future untreated water rates." The rate reconciliation for this year will be implemented around June 2022 by staff, who will also present the findings to the Finance Committee, at which time they will receive guidance on best practices for applying the water readjustment charge to the future untreated water rates.
A second workshop will be held later in September; once input from untreated water stakeholders is reviewed, the untreated water rates and cost of study services will be delivered for consideration to the Finance Committee. The final service study and rates will be brought to the Board for a final vote in October.