Director of Finance Tracy McCraner provides an overview of the Water Authority's rates. She reviews what makes up rates, why they are increasing, what the rate drivers are and what the future may hold for the San Diego region. From the September Water Talks: Water Rates: Funding a Reliable Future

1. Finance Director/Treasurer, Tracy McCraner
September 18, 2012
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2.  What do we spend our money on
 How do we manage costs/fiscal
responsibility
 Key Rate and Charge Drivers
 Summary
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3. Water purchases & treatment $700,474 49%
CIP Expenditures $321,129 23%
Debt service $280,394 20%
Operating departments $87,715 6%
Hodges operations $6,052 <1%
Equipment replacement $1,220 <1%
Other expenditures $20,449 1%
$1,417,434 100%
Three categories account for 92% of the total budget:
Water Purchases
CIP Debt Service
and Treatment
49% 23% 20%
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4.  Water Authority’s Two-Year Budget for Fiscal
Years 2012 and 2013 reflects a number of cost
reduction and rate mitigation strategies in light
of the “new normal – decrease of 16% from
previous two-year budget
◦ Significant staffing reductions
 31.33 positions (FTEs) or 16.4% eliminated in the Budget
 Shift from building to managing existing assets
◦ Two-year no net cost MOUs
◦ Increased PERS employee cost sharing
 Strong Fiscal Policies: Debt/Reserves/Investment
 Rate Relief approved by the Board by lowering
debt coverage level for FY 2013
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5.  Increasing cost of water from suppliers
 Significant investment in capital
improvements and planned debt service
 Reduced water sales volumes
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6. Projected CY 2013 M&I Cost of Water
Purchases/QSA Exchange 39%
61%
QSA Transportation
Costs with MWD
29%
CY 2013 Water Sales
Canal Water MWD Supply
Purchases* Costs
<1% 52%
IID Water
Purchases*
19%
Total Cost = $285M
 MWD represents 81% of the Water Authority’s cost of
water purchased and/or transported
* Excludes the debt service for capital projects and recovery of settlement expenditures.
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7. 7

8. $200
Senior Lien Debt
$180 Service Increase -
$21M
$160
Millions ($)
$140
$120
$100
$80
$60
2012 2013 2014 2015 2016
2011 Projected Debt Service $114 $138 $144 $148 $153
2012 Projected Debt Service $114 $135 $141 $145 $151
Fiscal Year
* Excludes CP program fees and trustee services 8

9. 700
600
36%
500 Reduction
1,000 acre feet
400
300
200
100
0
2006 2007 2008 2009 2010 2011 2012 prelim
Fiscal Year
 Water sales in FY 2011 were 36% lower than in FY
2006
 Water sales are projected to be relatively flat
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10. Untreated Water Treated Water Rate
$88/AF Increase $111/AF Increase
26% 31%
48% 48%
12%
10%
11%
14% MWD Costs
Increase in IID Supplies
Increase in IID Water Rate
Primarily Debt Service and Other Factors
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11. Wholesale Monthly Cost of Water
to Households
Estimated CY 2013
Wholesale Costs per  Cost of water purchases is 63%
Household * of the wholesale cost of water
 The remaining 37% or
$19.22/month is for the Water
MWD Costs $27.93 63% is the Authority to:
Cost of Water
◦ Deliver water and maintain the
system
IID/QSA $5.30
Costs ◦ Rapidly diversify the region’s water
Water Authority $4.52 supplies
Operating Costs
37% is Water ◦ Provide in-region emergency water
Water Authority
Capital Costs $14.70 Authority storage
Costs
◦ Develop in-region water storage
capacity
TOTAL: $52.45/month
* Based upon 0.5 AF of consumption a year
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12.  5 Retail Agency Average Composite Cost (CY 2012)
o Fixed Charge: $19.83 monthly
o Commodity Charge: $51.40
o Composite Monthly Residential Bill: $71.23
Proposed Rates Percent Retail
Wholesale
Monthly Retail Cost Impact
Charges
Untreated $3.03 4.2%
Treated $3.82 5.4%
Actual rate impact will vary by member agency
Notes:
1. Analysis based on retail rates for the City of Carlsbad, Helix Water District, the City of San Diego, Sweetwater Authority, and
Otay Water District.
2. Tier 1 and Tier 2 pricing blocks vary by member agency.
3. Historic total water demand used to calculate member agency specific weighting factors.
4. Individual member agency commodity charge calculated using its average single family residential water use (hcf).
5. Composite commodity charge is the sum of the individual member agency's commodity charge times its weighting factor.
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13.  Key rate and charge drivers for CY 2013
◦ 8.5% increase in MWD costs
◦ $21 million (18%) increase in senior lien debt service – significant
planned capital investment in our facilities and infrastructure
◦ Increasing IID deliveries and scheduled IID cost increase
◦ Persistent low water sales environment
 MWD rate and charge volatility mitigation
◦ Succeeded in limiting MWD’s average rate increase to 5%
◦ Coverage level reduced to 1.35x in FY 2013; target of 1.5X will be
achieved in FY2014
 Overall rate and charge increase will vary by member agency
depending upon the fixed charge allocations
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14. Any Questions please contact:
Tracy McCraner
Finance Director/Treasurer
tmccraner@sdcwa.org
858-522-6671
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