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Chelan PUD commissioners heard a recommendation on March 18, 2013, for changes to PUD water and sewer rates that will continue the move to sustainable, stable finances for those utility services.
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Water and Wastewater Systems
Rate Proposal 2013 through 2016
March 18, 2013
Water Wastewater
Water and Wastewater Rate Proposal
2
Purpose today: • Share information and staff recommendation • Seek confirmation from Board on next steps Covering today: • Staff recommendation on rate adjustment • Review of the rate-setting timeline • Meeting dates and next steps
Strategic Planning
3
Rate recommendation supports District financial policies, guiding principles and customer priorities
• Keeps water and wastewater systems on track to close
financial gaps • Meets customer priorities; modest, predictable increases
over time • Aligns with the cost of service • Full implementation of postage stamp rates • Multi-year rate increase supports long-term planning
5 Source Black & Veatch June 13, 2012
Top Utility System Issues Nationwide
0 5 4 3 2 1
Water and Wastewater
National trends for utility rates: 2010, 50 largest US cities average annual increase in
typical residential water bills was approximately 5.3 percent from 2001 through 2009, while the increase in typical residential sewer bills was approximately 5.5 percent.
Source: Black and Veatch
6
Water/Wastewater Rate History
7
1.0
1.2
1.4
1.6
1.8
2.0
1998 2000 2002 2004 2006 2008 2010 2012 2014
Cum
ulat
ive
incr
ease
Year
Average annual increase = 5.31%
Chelan County PUD Water/Wastewater System Overview
Wenatchee
Ollala Canyon
Dryden Water
Dryden WW
Peshastin WW
Lk Wenatchee WW
Chelan Ridge
Wastewater System (500 Connections) Water System (5,600 Connections)
$0
$10
$20
$30
$40
$50
$60
2012 Monthly rate for 7,500 gallons
Residential Water Rate Comparison
$0
$10
$20
$30
$40
$50
$60
$70
$80
Wenatchee Entiat Leavenworth Chelan PUD Cashmere
2012 basic monthly rate
Residential Wastewater Rate Comparison
Factors Affecting PUD Cost of Service
11
• Aging infrastructure
• Highly regulated small rural systems
• Multiple systems serving a relatively low number of connections
• Reliable service provided 24 hours per day/7 days per week
Peshastin wastewater treatment facility
Water Business Plan
Reduced capital spending projected Staff reductions (2003 = 15 FTEs now 2013 = 9 FTEs)
- Workforce planning to evaluate sustainability Increased operational efficiency through revised
staff assignments Capacity available to meet the demands of future
growth
12
Wastewater Business Plan
Shared cost allocation reductions incorporated into forecasts
– Approximately $14/month per connection which offsets cost increases
Increased regulatory requirements Seek grants to reduce future debt service requirements
13
Rate Committee Recommendation
Yearly increase for 2013-2016 (reviewed annually)
• Water 5% per year 2013 thru 2016 – 4.6% residential; 6% commercial to align with cost of service – Moves Dryden to the postage stamp rates by 2014 – Squilchuck $6.55 per month debt service is ending
• Wastewater 15% per year 2013 thru 2016 – 15% average increase across rate classes – Align base and volume charges with cost of service
14
Forecasted Financial Indicators - Water
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(Includes recommended 5% rate increase)
-0.2% 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% 1.4%
2013 2014 2015 2016 2017
Rate of Return (min)
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
2013 2014 2015 2016 2017
Debt Leverage Ratio (max)
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
2013 2014 2015 2016 2017
Debt Coverage Ratio (min)
Actual Target
0 500
1,000 1,500 2,000 2,500 3,000 3,500 4,000
2013 2014 2015 2016 2017
Unrestricted Liquidity (000's)
Actual Target
Forecasted Financial Indicators - Wastewater
16
(Includes recommended 15% rate increase)
-6.0%
-5.0%
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
2013 2014 2015 2016 2017
Rate of Return (min)
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
2013 2014 2015 2016 2017
Debt Leverage Ratio (max)
-4.00 -3.00 -2.00 -1.00 0.00 1.00 2.00 3.00 4.00
2013 2014 2015 2016 2017
Debt Coverage Ratio (min)
Actual Target
0
200
400
600
800
1,000
1,200
2013 2014 2015 2016 2017
Unrestricted Liquidity (000's)
Actual Target
Residential Rate Proposal
17
Wenatchee, Dryden, Ollala & Chelan Ridge (Water Systems) Current
2013 Proposed
2016 Proposed
Basic Monthly Charge (5/8") $28.25 $29.75 $36.00
First 3,000 gallons per month $2.30 $2.40 $2.65
3,001 to 10,000 gallons per month $3.15 $3.25 $3.50
Over 10,000 Gallons per month $4.00 $4.10 $4.40
Lake Wenatchee, Dryden & Peshastin (Wastewater Systems) Current
2013 Proposed
2016 Proposed
Basic Monthly Charge $61.80 $71.00 $107.70
Commercial Rate Proposal
18
Wenatchee, Dryden & Chelan Ridge Water Systems Current 2013
Proposed 2016
Proposed
Basic Monthly Charge (5/8") $47.50 $52.00 $67.00
Charge per 1,000 Gallons per month $2.86 $3.00 $3.45
Lake Wenatchee Wastewater System Current 2013
Proposed 2016
Proposed
Medium General Service Basic Monthly Charge (up to 20,000) $361.75 $415.00 $625.00
Charge per 1,000 Gallons per month (over 20,000) $17.25 $19.75 $30.00
Peshastin Wastewater System Current 2013
Proposed 2016
Proposed
Commercial 1 $129.10 $150.00 $225.00
Charge per 1,000 Gallons per month $2.35 $2.70 $4.15
Commercial 2 per unit $93.50 $108.00 $164.00
Examples of Water Rate Impacts
19
Average monthly residential bill
Category Current 2013 2014 2015 2016
5/8” meter (3,000 gals) $35.15 $36.95 $39.50 $41.65 $43.95
5/8” meter (7,500 gals) $49.53 $51.58 $54.58 $56.95 $59.70
5/8” meter (25,000 gals) $109.33 $113.08 $117.58 $121.45 $125.70
Senior/Disabled - Low Income Discount
($8.00) ($8.50) ($9.00) ($9.50) ($10.00)
Future Considerations
• System growth projections – Lower than projected growth resulting in lower revenue
• Rate review to meet financial targets – Higher than projected resulting in increased revenue
• Rate review to meet financial targets
• Unforeseen regulations or expenses – Capital improvements
• Potential revenue impacts dependent upon financing package (i.e. loan terms, grant funding)
– Operation and Maintenance • Will have a direct impact on delivery costs and rates
20
Timeline
21
• Water and wastewater financial policies approved • Recommended multi-year (2013-2016) rate
increases to close the operating gaps • 6% per year for water and 15% per year for
wastewater
June 2012
• 2012 District budget approved • Included 6% water and 15% wastewater placeholders
for rate increases December 2012
• Staff recommendation • Set information meetings and public hearing
dates March 2013 (today)
• Hold public information meetings April 2013
• Rate hearing – May 6 (proposed) • Rates effective - June 1 (If approved) May/June 2013
Proposed dates April 16 & April 24
22
Water Wastewater
39 Years of Public Service