Water Connection Fee Analysis

Elk Grove Water DistrictFinance CommitteeJanuary 30, 2013

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• Project Overview• Existing Fee Structure Review• What is a capacity fee?• What does the capacity fee cover?• Why the increase is needed?• How are connection fees calculated?

What we’ll cover today

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Project Overview

Background• Water capacity fee was originally

established in 2003• Water meter fee was established in 2006• Fees have been updated periodically, but

have not been comprehensively updated to reflect additional capital needs

Purpose• To identify appropriate fee levels to

recuperate new development’s share of planned water facilities

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• Meter and Installation Charges– Recovers cost of new meter and

installation• Capacity Charges

– Applicable to Service Area 1– Based on cost of CIP in 2003 – Total CIP cost allocated to existing and

new equivalent dwelling units (EDU)– Cost per EDU converted into fee

schedule based on meter size

Existing Fee Methodology

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Existing Fee Schedule

Meter Size EDU

Meter Charge

Capacity Charge Total

1” 1.0 $580 $3,895 $4,475

1-1/2” 2.3 866 8,959 9,825

2” 4.0 1,102 15,580 16,682

3” 9.0 2,645 35,055 37,700

4” 16.0 4,470 62,320 66,790

6” 36.0 8,452 140,220 148,672

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• Cost to serve new development• Supply improvements• Distribution improvements• Information technology• Treatment improvements

What the Capacity Charge Cover?

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• Current fees do not:– Reflect updated system demands – Cover needs for expanded or additional

facilities• Would prevent existing rate payers

from incurring the cost• Prevents reduced levels of service

Why the Adjustment is Needed?

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• To equitably and fairly allocate costs, one of two methodologies are used:1. Plan-Based Methodology – Allocates

future costs related to the District’s Capital Improvement Plan (CIP) via a growth and existing needs basis

2. Buy-In Methodology - used when existing components have excess capacity available 

How is the Capacity Fee calculated?

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Questions & Answers