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Sewer Service Charge Charge Current 3/1/2015 7/1/2015 7/1/2016 7/1/2017 7/1/2018 Commodity Charge $0.345 $0.304 $0.331 $0.360 $0.392 $0.426 ($ /HCF) Capital Recovery $1.00 $1.10 $1.18 $1.30 $1.40 Charge ($ /bill) Lateral Repair $1.40 $1.52 $1.66 $1.80 $1.96 Program ($ /bill) FOG Program ($ /bill) $34.80 $37.86 $41.20 $44.82 $48.76 *The Capital Recovery, Lateral Repair, and FOG Program Charges are billed bi- monthly. REASONS FOR PROPOSED INCREASES The City examined on -going operations and capital needs for both the water and sewer utilities and determined that rate adjustments were needed to continue to provide reliable services to its customers. The main reasons for the increases are listed below: 1. Rising Cost to Purchase Import Water —The costs of purchasing import water has seen significant increases in the past five years due to increased costs for source of supply, electricity, and water treatment. Specifically the sources of supply from the State Water Projects and the Colorado River have seen increased regulatory restrictions that have put a strain on the limited supplies and have resulted in increased water costs. Over the last three years, purchased water costs have increased 25 percent and account for almost 43 percent of the Water Enterprise annual budget. 2. Aging Infrastructure —The City's water and sewer infrastructure is aging and in need of upgrades to ensure reliable service to the community. It also requires long -term maintenance to keep it running efficiently and effectively. The average age of both the water and sewer systems is 50 years. More than 70 percent of the water system (and greater than 85 percent of the sewer system was installed prior to the 1980s. Many of the existing water pipelines and sewer mains have been in operation since before the 1930's. The City has examined the critical needs of the water and sewer systems and identified $86 million worth of improvements required to address repairs that have a high probability of failure over the next five years. For the water system, approximately 5 percent of the distribution system (13 miles) has a very high likelihood of failure within the next five years. For the sewer collection system, about 12 percent of sewer assets (44 miles) has a very high likelihood of failure over the next five years. 3. Level of Service Sustainability — To maintain the level of service provided to rate payers, the City is proposing to increase its current level of pipelines replacement from 0.5 percent (water) and 0.1 percent (sewer) to the minimum industry standard of 1 percent. HOW DO I PROTEST THE RATE CHANGES? If you wish to oppose the proposed rate increases, you must submit a written protest to be considered, even if you plan to attend the public hearing. If written protests are submitted by a majority of the affected property owners, the proposed rate changes will not be imposed. Your written protest must be received by the Clerk of the Council prior to the close of the public hearing on February 17, 2015. Email protest will not be accepted. Written protest must contain a description of the property, such as a parcel number or address and account number. The protest must also bear the original signature of either the property owner or the water customer of record. Only one protest for each property or address will be counted. Please indicate that it is the water and /or sewer rate change that you are protesting and send or deliver your written protest to Clerk of the Council, Santa Ana City Hall, 20 Civic Center Plaza, Santa Ana, CA 92702. For question or additional information call (714) 647 -5454. Page 3 75A -13