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Water and Sewer Rate Study Water and Sewer Rate Study Stakeholder Meetings Stakeholder Meetings Stakeholder Meetings Stakeholder Meetings Meeting No. 2 April 30, 2009 Pathways to Lasting Solutions © 2008 Malcolm Pirnie, Inc. All Rights Reserved ---PAGE BREAK--- Agenda Agenda Agenda Agenda g Review Prior Meeting Utility Performance – Key Issues Utility Performance – Benchmarks Water Cost of Service Wastewater Cost of Service Implications for Rate Design Implications for Rate Design Committee Discussion and Interim Guidance Summary and Conclusions Pathways to Lasting Solutions ---PAGE BREAK--- Background: Background: Rate Study Uses A Sequential Approach Rate Study Uses A Sequential Approach Background: Background: Rate Study Uses A Sequential Approach Rate Study Uses A Sequential Approach Rate Study Uses A Sequential Approach Rate Study Uses A Sequential Approach Rate Study Uses A Sequential Approach Rate Study Uses A Sequential Approach Project Orientation Orientation Financial Plan Presentation to City Staff and Stakeholder Workshop 1 Workshop with Staff Cost Analysis Rate Design Finance Committee Stakeholder Workshop 2 Workshop 1 g Draft Report Stakeholder Workshop 3 City R i Final Report Final Presentation Review Pathways to Lasting Solutions ---PAGE BREAK--- Annual Annual Revenue Revenue Adjustments Needed to Adjustments Needed to Sustain Financial Health Sustain Financial Health Annual Annual Revenue Revenue Adjustments Needed to Adjustments Needed to Sustain Financial Health Sustain Financial Health Sustain Financial Health Sustain Financial Health Sustain Financial Health Sustain Financial Health Year Water Wastewater 2009 0% 0% 2010 19% 18% 2011 17% 18% 2012 17% 17% 2012 17% 17% 2013 17% 16% Cumulative 91% 89% (revenue increase – or rates across all classes) Pathways to Lasting Solutions ---PAGE BREAK--- Overview of Overview of Cost Cost ofof Service Service Rate Design Process Rate Design Process Overview of Overview of Cost Cost ofof Service Service Rate Design Process Rate Design Process Cost Cost-ofof-Service Service Rate Design Process Rate Design Process Cost Cost-ofof-Service Service Rate Design Process Rate Design Process Pathways to Lasting Solutions 5 ---PAGE BREAK--- UTILITY PERFORMANCE UTILITY PERFORMANCE KEY ISSUES KEY ISSUES UTILITY PERFORMANCE UTILITY PERFORMANCE KEY ISSUES KEY ISSUES UTILITY PERFORMANCE UTILITY PERFORMANCE – KEY ISSUES KEY ISSUES UTILITY PERFORMANCE UTILITY PERFORMANCE – KEY ISSUES KEY ISSUES Pathways to Lasting Solutions ---PAGE BREAK--- Key Issues Key Issues Key Issues Key Issues y Indirect Cost Reimbursement to the General Fund Monolith Ranch E penses Monolith Ranch Expenses Communications Benchmarks Benchmarks Benchmarks Benchmarks Renewal and Replacement of Infrastructure Number of utility personnel (or “Employee Efficiency”) Financial Benchmarks Debt Service Coverage Cash Reserves Pathways to Lasting Solutions Cash Reserves ---PAGE BREAK--- Indirect Cost Reimbursement Indirect Cost Reimbursement Indirect Cost Reimbursement Indirect Cost Reimbursement Enterprise Fund Indirect Expenses Indirect Expenses Enterprise Fund (City) (Red Oak) Water $187,100 $450,347 (365,226) $85 121 $85,121 Wastewater $102,700 $255,126 Total $289,800 $340,247 typically pay between 8 and 15 percent of the typically pay between 8 and 15 percent of the general fund internal services budget Pathways to Lasting Solutions ---PAGE BREAK--- Communication Communication Communication Communication City is developing a i ti communication strategy. City and Red Oak City and Red Oak will prepare a City website for stakeholders stakeholders. Other communication programs. Pathways to Lasting Solutions ---PAGE BREAK--- Monolith Ranch Monolith Ranch Monolith Ranch Monolith Ranch The purpose of the ranch is to secure a long-term reliable water supply water supply Available water from the ranch (various rights, approximate): 30 f (21 700 AFA) i l l 30 cfs (21,700 AFA) agricultural 15 cfs (10,800 AFA) municipal (50% conversion) Based on water rights valuations in comparable western i h l b $10 000 d $40 000 states, water rights value between $10,000 and $40,000 per acre foot annually (AFA) Comparable value of $100,800,000 (at $10,000 per AFA) Red Oak included $275,000 in FY2009 and increasing to $546,000 over the study period to operate the ranch. Cost of ownership - between 0.2% and 0.5% Pathways to Lasting Solutions ---PAGE BREAK--- UTILITY PERFORMANCE UTILITY PERFORMANCE – UTILITY PERFORMANCE UTILITY PERFORMANCE – BENCHMARKS BENCHMARKS BENCHMARKS BENCHMARKS Pathways to Lasting Solutions ---PAGE BREAK--- Renewal and Replacement Renewal and Replacement - Overview Overview Renewal and Replacement Renewal and Replacement - Overview Overview p Current Renewal and Replacement Charge: $4.24 per account Generates approximately $365,000 annually Not based on cost of service Insufficient to fund renewal and replacement needs needs. Equivalent to approximately $4.5 million in debt service. Pathways to Lasting Solutions ---PAGE BREAK--- Financial Plan Supports a Water and Financial Plan Supports a Water and W t t CIP f $85 650 000 W t t CIP f $85 650 000 Financial Plan Supports a Water and Financial Plan Supports a Water and W t t CIP f $85 650 000 W t t CIP f $85 650 000 Wastewater CIP of $85,650,000 Wastewater CIP of $85,650,000 (2009 Dollars) (2009 Dollars) Wastewater CIP of $85,650,000 Wastewater CIP of $85,650,000 (2009 Dollars) (2009 Dollars) ( ) ( ) ( ) ( ) Pathways to Lasting Solutions ---PAGE BREAK--- Renewal and Replacement Renewal and Replacement - Water Water Renewal and Replacement Renewal and Replacement - Water Water p $14,000,000 $8,000,000 $10,000,000 $12,000,000 $ $4,000,000 $6,000,000 $2,000,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Median Benchmark Median - Benchmark City of Laramie, Distribution System Investment Minimum - Benchmark Pathways to Lasting Solutions ---PAGE BREAK--- Renewal and Replacement Renewal and Replacement - Wastewater Wastewater Renewal and Replacement Renewal and Replacement - Wastewater Wastewater p $4 500 000 $5,000,000 C1 Line Re nolds 30th McConnell $3,000,000 $3,500,000 $4,000,000 $4,500,000 C1-Line Reynolds 30th - McConnell C-Line 15 Kearney N. Canby West Laramie Outfall $1,000,000 $1,500,000 $2,000,000 $2,500,000 $500,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 City of Laramie Collection System Investment City of Laramie, Collection System Investment Minimum - Benchmark Median - Benchmark Pathways to Lasting Solutions ---PAGE BREAK--- Financial Plan Supports Financial Plan Supports 11 Additional Employees 11 Additional Employees Financial Plan Supports Financial Plan Supports 11 Additional Employees 11 Additional Employees 11 Additional Employees 11 Additional Employees 11 Additional Employees 11 Additional Employees Year Water Utility Additi l FTE Wastewater Utility Additi l FTE ea Additional FTEs Additional FTEs 2009-10 1.0 1.0 2010-11 0 0 1 0 2010-11 0.0 1.0 2011-12 0.0 1.0 2012-13 1.0 1.0 2013-14 0 0 1 0 2013 14 0.0 1.0 2014-15 0.0 1.0 2015-16 1.0 1.0 2016-17 0.0 0.0 0 6 7 0.0 0.0 2017-18 1.0 0.0 2018-19 0.0 0.0 Total 4.0 7.0 Pathways to Lasting Solutions ---PAGE BREAK--- Employee Efficiency Employee Efficiency – Water Water Customer Accounts per Employee Customer Accounts per Employee Employee Efficiency Employee Efficiency – Water Water Customer Accounts per Employee Customer Accounts per Employee Customer Accounts per Employee Customer Accounts per Employee Customer Accounts per Employee Customer Accounts per Employee 500 400 450 350 [PHONE REDACTED] 2010 2011 2012 2013 2014 2015 2016 2017 2018 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Median Accounts - Benchmark City Customer Accounts per Water Employee Pathways to Lasting Solutions Minimum Accounts - Benchmark ---PAGE BREAK--- Employee Efficiency Employee Efficiency – Sewer Sewer Customer Accounts per Employee Customer Accounts per Employee Employee Efficiency Employee Efficiency – Sewer Sewer Customer Accounts per Employee Customer Accounts per Employee Customer Accounts per Employee Customer Accounts per Employee Customer Accounts per Employee Customer Accounts per Employee 650 700 500 550 600 350 400 450 [PHONE REDACTED] 2010 2011 2012 2013 2014 2015 2016 2017 2018 Median Benchmark Median - Benchmark City Customer Accounts per Employee Minimum - Benchmark Pathways to Lasting Solutions ---PAGE BREAK--- Levels of Service Levels of Service Levels of Service Levels of Service No single right answer g g These are “level of service” questions What level of service is best for the City? Pressure, Fire flow Unplanned outages (reactive) Line breaks Line breaks Regulatory compliance Does one benchmark (capital investment) allow f ff t f th b h k for some offset of other benchmarks (employees)? Pathways to Lasting Solutions ---PAGE BREAK--- Cost of Ser ice Anal sis Cost of Ser ice Anal sis Cost of Ser ice Anal sis Cost of Ser ice Anal sis Cost of Service Analysis Cost of Service Analysis Cost of Service Analysis Cost of Service Analysis Pathways to Lasting Solutions ---PAGE BREAK--- Overview of Overview of Cost Cost ofof Service Service Rate Design Process Rate Design Process Overview of Overview of Cost Cost ofof Service Service Rate Design Process Rate Design Process Cost Cost-ofof-Service Service Rate Design Process Rate Design Process Cost Cost-ofof-Service Service Rate Design Process Rate Design Process Pathways to Lasting Solutions 21 ---PAGE BREAK--- Cost of Service Process Cost of Service Process f Cost of Service Process Cost of Service Process for Water Rates for Water Rates for Water Rates for Water Rates Pathways to Lasting Solutions ---PAGE BREAK--- Customer Characteristics Customer Characteristics Customer Characteristics Customer Characteristics Pi h ti R h l Pipe schematic - Rachel Pathways to Lasting Solutions ---PAGE BREAK--- Billed Water Use by Month Billed Water Use by Month - % of Annual % of Annual Use by Class Use by Class Billed Water Use by Month Billed Water Use by Month - % of Annual % of Annual Use by Class Use by Class Use by Class Use by Class Use by Class Use by Class Pathways to Lasting Solutions ---PAGE BREAK--- Peak Day Ratio Comparison Peak Day Ratio Comparison Peak Day Ratio Comparison Peak Day Ratio Comparison y p y p y p y p Customer Class Peak Day Residential 2.75 Commercial 2.00 University 2 35 University 2.35 Irrigation 6.20 Wholesale 1.90 Pathways to Lasting Solutions ---PAGE BREAK--- Water Annual Revenue vs. Year 2010 Water Annual Revenue vs. Year 2010 Cost of Service at Current Rates Cost of Service at Current Rates Water Annual Revenue vs. Year 2010 Water Annual Revenue vs. Year 2010 Cost of Service at Current Rates Cost of Service at Current Rates Cost of Service at Current Rates Cost of Service at Current Rates Cost of Service at Current Rates Cost of Service at Current Rates Pathways to Lasting Solutions Inside City customers ---PAGE BREAK--- Allocation to Functional Cost Components Allocation to Functional Cost Components Allocation to Functional Cost Components Allocation to Functional Cost Components Volume IPP Strength Test Year 2010 Customer Volume g O&M Capital Debt Service Pathways to Lasting Solutions Other ---PAGE BREAK--- Current Customer Classes Current Customer Classes - Sewer Sewer Current Customer Classes Current Customer Classes - Sewer Sewer Residential Commercial CA - Restaurants CB - Bars & Taverns CC E i & S i CC - Entertainment & Service CD - Laundries, Schools & Stores CE - Office Buildings CF - Hotels & Motels CF Hotels & Motels CG - Hospitals, Athletic Clubs, Apt, Daycares University UC – University Food Service y UE – University School Buildings UG – University Dorms, Residences Wholesale Pathways to Lasting Solutions ---PAGE BREAK--- Flow and Load by Customer Classes Flow and Load by Customer Classes Flow and Load by Customer Classes Flow and Load by Customer Classes y Customer Class Flow (1,000 gal.) BOD (mg/l) TSS (mg/l) Class (1,000 gal.) (mg/l) (mg/l) Residential 540,594 185 296 Commercial-CA 27,528 1,000 600 Comercial-CB 2,867 1,000 600 Commercial-CC 38,793 185 296 Commercial-CD 92,786 450 240 Commercial-CE 29,003 130 80 Commercial-CF 51,597 500 600 Commercial CG 44 184 250 100 Commercial-CG 44,184 250 100 University-UC 1,107 185 296 University-UE 31,906 130 80 Pathways to Lasting Solutions University-UG 157,225 250 100 Wholesale 1,665 185 296 ---PAGE BREAK--- Wastewater Annual Revenue vs. Year Wastewater Annual Revenue vs. Year 2010 Cost of Service at Current Rates 2010 Cost of Service at Current Rates Wastewater Annual Revenue vs. Year Wastewater Annual Revenue vs. Year 2010 Cost of Service at Current Rates 2010 Cost of Service at Current Rates 2010 Cost of Service at Current Rates 2010 Cost of Service at Current Rates 2010 Cost of Service at Current Rates 2010 Cost of Service at Current Rates Pathways to Lasting Solutions Inside City customers ---PAGE BREAK--- Wastewater Annual Revenue vs. Cost of Wastewater Annual Revenue vs. Cost of Service at Current Rates Service at Current Rates Wastewater Annual Revenue vs. Cost of Wastewater Annual Revenue vs. Cost of Service at Current Rates Service at Current Rates Commercial and University Classes Commercial and University Classes Commercial and University Classes Commercial and University Classes 74.0% 21.2% 0% 15.9% Pathways to Lasting Solutions Inside City customers ---PAGE BREAK--- Implications for Rate Design Implications for Rate Design Implications for Rate Design Implications for Rate Design Implications for Rate Design Implications for Rate Design Implications for Rate Design Implications for Rate Design Pathways to Lasting Solutions ---PAGE BREAK--- Who Pays? Who Pays? Who Pays? Who Pays? y City staff expressed a preference for “true cost of service” rates for each enterprise. Red Oak will design tiered conservation rates Red Oak will design tiered conservation rates Water is the issue Prepared to charge University accounts more Prepared to charge University accounts more than residents? Irrigation class – with a large increase? Sewer rates are currently close to cost of service Pathways to Lasting Solutions ---PAGE BREAK--- Committee Disc ssion and G idance Committee Disc ssion and G idance Committee Disc ssion and G idance Committee Disc ssion and G idance Committee Discussion and Guidance Committee Discussion and Guidance Committee Discussion and Guidance Committee Discussion and Guidance Pathways to Lasting Solutions ---PAGE BREAK--- Discussion Discussion Discussion Discussion Monolith Ranch – cost of water “insurance”? Maintain the renewal and replacement charge? Maintain the renewal and replacement charge? Are the level of service goals appropriate? How should service levels be communicated? How should service levels be communicated? “true cost of service” rates for each enterprise? Prepared to charge University accounts more? p g y Should the City have an irrigation class? Maintain sewer rate classes? Pathways to Lasting Solutions ---PAGE BREAK--- Stakeholder Meeting Schedule Stakeholder Meeting Schedule Stakeholder Meeting Schedule Stakeholder Meeting Schedule g Meeting Financial Plan April 9 2009 Meeting Financial Plan – April 9, 2009 Meeting Cost of Service – April 23 30, 2009 Meeting Cost of Service April 23 30, 2009 Meeting Rate Design – May 7, 2009 Pathways to Lasting Solutions ---PAGE BREAK--- For Additional Information Contact For Additional Information Contact For Additional Information Contact For Additional Information Contact Dennis Jackson Dennis Jackson Project Manager [EMAIL REDACTED] Isalah Rounds Red Oak Consulting - Denver 100 Fillmore Street Suite 200 Isalah Rounds Analyst [EMAIL REDACTED] John Gallagher 100 Fillmore Street, Suite 200 Denver, CO 80206 Phone: (303) 316-6500 F (303) 316 6599 John Gallagher Principal, Quality Assurance [EMAIL REDACTED] Fax: (303) 316-6599 Pathways to Lasting Solutions ---PAGE BREAK--- Current Water Rates Current Water Rates Current Water Rates Current Water Rates Charge Amount Base Fee by Meter Size ¾” $ 13.67 1” $ 22.97 1 ½” $ 45 22 1 ½ $ 45.22 2” $ 73.21 3” $ 136.39 $ 4” $ 227.53 6” $ 455.14 8” $ 727.94 Metered Water Charge $2.30 per 1,000 gallons * Waterline replacement program charge of $4.24 is assessed to each meter in addition to the base charge Pathways to Lasting Solutions each meter in addition to the base charge. Outside city limits is $2.87 per 1,000 gallons. ---PAGE BREAK--- Current Residential Wastewater Rates Current Residential Wastewater Rates Current Residential Wastewater Rates Current Residential Wastewater Rates Charge Amount Charge Amount Base Fee – All Meter Sizes $ 9.83 Consumption Charge* $2.22 per 1,000 gallons * B d J F b d M h t ti f th * Based on January, February and March water consumption from the previous year usage for the residence. The average of the three months is the consumption used each month for the entire year. Pathways to Lasting Solutions ---PAGE BREAK--- Current Commercial Wastewater Rates Current Commercial Wastewater Rates Current Commercial Wastewater Rates Current Commercial Wastewater Rates Charge Description Amount Base Rate $9.83 Consumption Rate CA Restaurants $ 3.73 CB Bars & Taverns $ 4.75 CC Entertainment & Service $ 3.55 CD Laundries Schools & Stores $3 23 CD Laundries, Schools & Stores $3.23 CE Office Buildings $ 2.98 CF Hotels & Motels $ 2.59 CG Hospitals, Athletic Clubs, Apt, Daycares, Dorms, Residences $2.21 Pathways to Lasting Solutions