MONTEREY RATES


INTRODUCTION:

Every day, water utilities around the world set rates to collect the revenue necessary to operate water systems. While this sounds simple, it can be much more difficult in actuality. Here in Monterey, we have competing goals to achieve in our rate designs, which blend strong rate signals to conserve with recovery of infrastructure investments to augment our water supply. We’ve developed this website to provide customers with a more detailed explanation about Monterey’s water rates.


Principles Guiding the Rate Design Change

Before implementation of the current rate design in 2017, there was a complex rate structure based on allotments or “budgets” of water. The pre-2017 rate design did not allow for a simplified and understandable conservation and rationing plan, and did not permit the timely recovery of the revenue requirement. The old rate design was also insufficient to obtain cost-effective financing for the Monterey Peninsula Water Supply Project.

To address these issues, California American Water sought authorization to implement the current rate design based on the following key principals:

1) Simplify the rate design to make it easier to understand.

2) Eliminate the allotment system, which was intrusive and created inequities.

3) Align bills closer to the actual cost of providing service.

4) Increase monthly fixed cost recovery to reduce corrective billing surcharges.
 

WRAM and MCBA

Both California American Water and the California Public Utilities Commission (CPUC) support the State of California’s policy of encouraging water conservation and efficiency. California American Water and the CPUC also recognize that reduced consumption can create a revenue shortfall. Reductions in revenue reduce funding available to California American Water to maintain the infrastructure necessary to provide reliable, safe drinking water.

In 2010, to promote continued conservation and revenue stability, the CPUC authorized the Water Revenue Adjustment Mechanism (WRAM) and the Modified Cost Balancing Account (MCBA) for the Monterey District. The WRAM tracks the difference between authorized revenues and actual recovered revenues related to fixed costs. The MCBA tracks the cost savings and cost increases associated with purchased water, power, and pump taxes (variable costs). A surcharge is placed on customer bills if the company under collects its authorized revenue. Customers receive a credit on their monthly bills if there are over collections of authorized revenue.

Water distribution is also impacted by the restrictions and limitations put in place by the State Water Resources Control Board and the Seaside Basin Watermaster. In response to these restrictions, California American Water implemented an aggressive, five-tiered rate design in 2010 to promote necessary conservation by customers.

The five-tiered rate design did not increase overall revenues to the company. It reallocated revenue collection so that high-water-using customers paid a higher rate, and low-water-using customers paid a lower rate.

The rate design worked and consumption was significantly lowered. However, California American Water’s revenue also fell. The company was unable to collect the revenue needed to provide water service and continue with improvements to infrastructure.

In response to this problem, the Commission authorized California American Water to recover those under-collections for the years 2010-2014 over a five-year period.

Currently, there are two WRAM/MCBA surcharges on Monterey County District residential customer bills. The first surcharge appears on customer bills as the Pre-2015 WRAM Surcharge, which will be in place until February 28, 2022, at a meter based rate. This surcharge recovers under-collections for the years 2010-2014. The second surcharge appears on customer bills as the 2015 WRAM/MCBA Surcharge, which will be in place until March 30, 2019 at a rate of $0.1824 per CGL of all water used. This surcharge recovers under-collections from 2015.

It is important to know that California American Water does not make money based on the volume of water sold. It is provided the opportunity, but not guarantee, to earn an authorized rate of return on its level of capital investment. The WRAM and MCBA are rate-making mechanisms that break the link between water sales and revenues to encourage conservation.


The Annual Consumption Adjustment Mechanism

The Public Utilities Commission recently approved an Annual Consumption Adjustment Mechanism (ACAM) for Monterey that will set rates each year based on the previous year’s total water consumption. A timely process for adjusting rates based on current production forecasts will ensure more efficient revenue collection, which significantly cut down or even eliminate WRAM/MCBA balances.

The ACAM, although new to customers in the water industry, it is similar to approaches used by energy utilities to better match demand, cost allocation and rate design. The proposed ACAM is a pilot program limited to the Monterey District.


FAQ

What were the major changes to the rate design implemented in March 2017?

  • The prior residential allotment system, in which the amount of water each customer is allowed at each tier of the inclining block rate system, was based on individual survey information, including the number of people in each home and other factors, was eliminated. The current system, widely employed by other water providers, will allow the same amount of water at each tier of the rate structure for all residential customers.
  • The monthly fixed water charge increased for all residential customers, while the percentage of revenue collected through volumetric or quantity charges, decreased.
  • Application of Pre-2015 WRAM Surcharge to collect approximately $32 million of previously approved, but uncollected revenues over a five-year period. The charge is based on meter size and will end in March 2022.


CURRENT RATES

The average monthly rates estimated are as follows:

 

Consumption
100 gallon units (CGL)    

Current Rates

(Effective November, 2018)
 

 Single Family

        37

$77.57

 

   - Meter Charge
   - Water Usage
   - Surcharges
   - Taxes/Fees

 

  $16.80
  $32.47
  $25.03
  $  3.27

 

Multi-Family

        25

$60.92

 

   - Meter Charge
   - Water Usage
   - Surcharges
   - Taxes/Fees

 

  $16.80
  $21.59
  $21.13
  $  1.40

 

Low Income

        38

$62.37

 

   - Meter Charge
   - Water Usage
   - Surcharges
   - Taxes/Fees

 

  $16.80
  $33.97
  $  8.97
  $  2.63

 

Non-Residential*

        50

$115.80

 

   - Meter Charge
   - Water Usage
   - Surcharges
   - Taxes/Fees

 

  $19.76
  $75.33
  $17.12
  $  3.59

 

*Assume Division 1 customer

 

How does the residential rate plan work? 

Residential rates feature five pricing tiers, as before the rate design change. However, the amount of water allowed at each tier is now standardized for single family and multi-family residential customers.

During each billing period, your household water use starts in the first tier, where the price per 100 gallons is the lowest. Each tier has a certain amount of water allocated to it – if you use more water than is allocated to a particular tier, you move to the next higher-priced tier.

Single Family Rates

Tier 1  

0 to 29.9 CGL

$0.73

Tier 2  

30 to 59.8 CGL

$1.50

Tier 3  

59.9 to 104.7 CGL

$3.51

Tier 4  

104.8 to 172 CGL

$6.76

Tier 5  

More than 172 CGL  

$8.26

 

Multifamily Rates

Tier 1  

0 to 18.7 CGL

$0.68

Tier 2  

18.8 to 37.4 CGL

$1.42

Tier 3  

37.5 to 50.5 CGL

$3.32

Tier 4  

50.6 to 69.2 CGL

$6.41

Tier 5  

More than 69.2 CGL  

$7.83

 

Non-residential Rates

Division 1  

Rate for all units   

$1.40

Division 2  

Rate for all units  

$1.66

Division 3  

Rate for all units  

$1.85

Division 4  

Rate for all units  

$3.69

 

What are the monthly service charges?

Meter Size    

Residential    

Non-Residential

5/8”

$16.80

$19.76

¾”

$29.41

$29.64

1”

$58.77

$49.40

1 ½

$184.25

$98.80

2”

$314.45

$158.08

3”

$589.60

$296.39

4”

$1,031.80

$493.99

6”

$2,212.99

$987.98

8”

$3,537.59

$1,580.77

 

WRAM Surcharge

Meter Size    

Residential    

Non-Residential

5/8”

$10.08

$4.21

¾”

$20.16

$8.42

1”

$30.23

$12.63

1 ½”

$50.39

$21.05

2”

$80.62

$33.68

3”

$151.17

$63.15

4”

$251.95

$102.25

6”

$503.91

$210.50

8”

$806.25

$336.80


How does the Low Income Ratepayer Assistance program affect rates?

Qualifying low-income customers receive a 30-percent discount on the monthly service charge and the rates in Tiers 1 through 4.Customer can find the application here: https://dnnh3qht4.blob.core.windows.net/portals/2/Customer%20Service%20and%20Billing/CA_H2O-2017_v5-rev.pdf?sr=b&si=DNNFileManagerPolicy&sig=sLPV9kLnDNJcr9Byaoj41KMzQWx4bGU4vcH%2BZsKU9KU%3D


What resources are available to help customers save water and money on their bills?

California American Water offers robust conservation incentives including generous rebates for indoor appliances and efficient outdoor irrigation technology. Free devices including low flow showerheads, sink aerators and positive shut-off hose nozzles are also available at our business office during normal hours. Also, customers may schedule a water-wise house call, in which our conservation specialists will visit your home and make recommendations on ways to save water.

Visit www.montereywaterinfo.org or call 831-646-3205 for more information.


Are there any tools available to help in estimating my next bill?  

For customer convenience, we have an online single-family home Customer Bill Calculator. The calculations are intended for estimating purposes and are not a replacement for an actual utility bill.

CLICK HERE

 

I need help reading and understanding the charges on my bill. What can you do to help?

We offer a step-by-step instruction worksheet on how to read your bill. This online document will help you learn about how your bill is calculated as well as how to analyze your comparative monthly usage. It also includes important payment information and information regarding various surcharges that may appear on your bill.

CLICK HERE


What sort of conservation programs does Cal-Am offer?

You are not alone in your effort to conserve water. We offer services, information and free water devices that could help you save water. This includes our Water Wise House calls where you can schedule one of our customer service representatives to come to your home and look for leaks and other opportunities for water savings.

CLICK HERE