Identifying strategies and actions to achieve the District’s mission

Moulton Niguel Water District delivers potable water, recycled water, and wastewater services to more than 172,000 customers in Southern California. A leader in conservation and environmental protection, Moulton Niguel maintains the lowest average water bill in South Orange County and exerts significant effort to reduce dependence on imported water supplies. Today, more than 1,300 recycled water customers account for approximately 25% of the District’s total water demand. In order to meet its goals, the District has implemented several water‐use efficiency programs, most notably the Water Budget‐Based Rate Structure, and extensive rebate programs for customers.

The District retained RDN to perform a peer review of the District’s Long-Range Financial Plan (LRFP), Cost of Service Analysis, and Rate Design Report for the District’s three utility systems: potable water; recycled water; and wastewater. The chief financial objective was to identify strategies and actions to ensure that there are sufficient financial resources for effectively achieving the District’s mission. The LRFP incorporates the District’s reserve policies, debt policies, coverage ratios, water demand needs, water rates, capital improvement program, and operating budget to provide a financial roadmap for the District.

The District’s rate design focuses on the cost of service for the efficient use of water as the primary basis for setting rates. The rates are also structured to ensure that an appropriate level of fixed expenses are recovered with fixed revenue. The conservation-based rate design has proven to be the most effective tool for the District in reducing water usage, while still providing the necessary revenues to recover the District’s expenses regardless of changing water demands. As a result, the District has managed to remain financially strong despite a significant reduction in water use. The State Water Resources Control Board (SWRCB) has recognized the District’s specific rate design as a best practice among more than 400 urban water utilities statewide.

At the end of the study, RDN helped District staff present its findings to the Board, demonstrating a strong nexus between costs and rates to ensure Proposition 218 compliance for the newly proposed rate structures.