Sound and Stable Utilities

From the City Manager's budget message:

Having well-run, reliable, low-cost, city-owned utilities has proven an economic advantage to Roseville over the years. As a full-service city, key infrastructure decisions are under the control of a single entity, which makes the development process more streamlined and reliable, allows the City to maintain rates among the lowest in the region, and keeps the protection of utility assets a high priority. In FY2015-16, our concern will focus on 

  • Water supply reliability issues related to the ongoing drought,
  • Water supply reliability issues related to the Bay Delta Conservation Plan,
  • Legislative and regulatory advocacy regarding new laws and regulations that affect the operations and costs of running the City’s electric, water, wastewater, and solid waste utilities, and 
  • Investment in infrastructure to renew and continue our utility services.
Water reliability

As California and the western United States enter the fourth full year of drought, it brings into sharp focus the ongoing policy attention needed to address California’s water supply challenges. Staff is developing a long-term integrated resource plan to ensure Roseville’s continued water supply reliability, with focus on regulatory change and needed water infrastructure partnerships and investments. The focus is on developing an infrastructure plan to access water from Placer County Water Agency. A high level of certainty regarding water supplies is the key to investment in our region – leading to economic growth, more jobs, and a rise in our region’s standard of living. Roseville continues to take a proactive stance on issues that both affect our water supply and protect our community’s and our rate payers’ interests. We anticipate an adequate supply of water for 2015 as conservation measures continue.

Rate cases

While Roseville residents and businesses enjoy utility rates that are among the lowest in the region, cost pressures continue to increase.  Rate studies were conducted for the water, wastewater, and solid waste utilities to ensure the utilities remain fiscally stable. At the City Council’s direction of having smaller, regular rate adjustments instead of larger periodic ones, the utilities undertake rate studies every two years with the intention of having adjustments that balance immediate and longer term needs and give customers more frequent, reliable projections for planning and budgeting their expenses. The FY2014-15 study included a 10-year financial forecast that resulted in recommendations for a rate increase in wastewater, but not solid waste.  Water rates are currently being analyzed.  The wastewater increase is expected to take effect in July 2015.  Roseville Electric Utility is not recommending a general rate increase for FY2015-16, but will continue to restructure its rates to better align revenues with costs.

The water, wastewater and solid waste utilities have seen success in meeting state mandates; namely in the areas of water conservation and solid waste recycling. That success is accompanied by increases in expenses directly tied to new state regulations, and potential additional expenses related to legislation involving organic waste, among other issues. As those costs continue to put pressure on the utilities and its customers, the City is working its legislative and regulatory avenues for clarification and relief. The City is a member of several legislative advocacy groups on the regional, state and federal level that combine the strength of their unified voice to advocate for utility customers.

In FY2014-15 in response to the drought, the water utility fast-tracked construction of two groundwater wells to augment surface-water supplies and added staff to promote conservation and awareness.  As drought-related costs increased, revenues from water sales decreased in FY2014-15 since the City required water cutbacks from its customers, and its customers achieved the required 20 percent savings. In fact, the City was recognized widely in the media for the results of its successful education and awareness efforts and by the California Municipal Utilities Association with a 2015 award for water efficiency.

Another drought-related expense came in the form of a small rate surcharge for both electric and water customers.  The ordinance allowing an electric surcharge was adopted in 2009 as a way to fund the purchase of electricity that was not provided from hydroelectric resources due to lower-than-average precipitation.  The ordinance for the water surcharge was adopted in 2009 as well and helps address bond covenants, revenue decline, and cost increases that are impacted from drought conditions. We anticipate this year’s drought will mean continuing with the surcharges for FY2015-16.  New rate cases will consider these impacts on costs and revenues and also take into account the need for higher economic reserves in support of potential operating risk, system emergencies, and fluctuating revenue streams, ensuring both reliability in supply and consistency in rates.