efc.sog.unc.edu

Financial Revenue Trends and Sustainability

Jeff Hughes Director, Environmental Finance CenterUniversity of North Carolina at Chapel Hilljhughes@unc.eduwww.efc.unc.edu

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http://efc.sog.unc.edu

Enhancing the ability of governments and other organizations to provide environmental programs in fair, effective, and financially sustainable ways through:

• Applied Research• Education and Outreach• Program Design and Evaluation

www.waterrf.org and www.efc.unc.edu

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4.0

4.5

5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

9.0

10,000

12,000

14,000

16,000

18,000

20,000

22,000

Actual Water Sales Accounts

Wat

er S

ales

(m

illi

on

gal

lon

s p

er d

ay

aver

age)

Cu

stom

er Acco

un

ts

Need a New Business Model?

Reclaimed Water Use

Begins

Conservation Pricing Changes in 2002 and 2007

Source: Orange Water and Sewer Authrority

Water Use is Declining for Many Utilities

MGD sales in 2012 compared to 2006 among 129 utilities nationwide

Water Utility 2.0?

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Many Utilities, Many Pricing Approaches

Block Rate Structures Among Participants

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Industry Revenue Growth Roller Coaster

Annual change in total operating revenues among the same 485 utilities nationwide

2004 to 2005

2005 to 2006

2006 to 2007

2007 to 2008

2008 to 2009

2009 to 2010

2010 to 2011

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Series1

Median

Ann

ual C

hang

e to

the

Tota

l Ope

ratin

g Re

venu

es

Betw

een

Year

s

Data analyzed by the Environmental Finance Center at the University of North Carolina, Chapel Hill and Raftelis Financial Consultants, Inc. Data Source: Moody's Water and Sewer Municipal Financial Ratio Analysis. The cohort of 485 utilities is consistent across all years.

Rev

enue

s in

crea

sed

Revenue

s decrea

sed

High revenue growth

Low revenue growth

Revenue vs. rate adjustments(2004 to 2010)

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Data analysis by the Environmental Finance Center at the University of North Carolina. Data sources: 2010 and 2004 RFC/AWWA Water and Wastewater Rates Survey Data for 82 Utilities

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Key Take Aways

• Figure out what you want to sell• Business Intelligence!• Learn to live in a variable world• Reserves• Pricing 2.0

Where Can You Find More?

http://efc.unc.edu

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http://efc.web.unc.edu