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Amador Water Agency
System-Wide Cost of Serviceand Wastewater Rate Study
October 9, 2014
The Reed Group, Inc.
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Study Objectives Develop wastewater rates that accurately reflect
the cost of providing service Improve equity for customers across all wastewater
service areas Improve Agency’s financial stability Avoid more costly multiple, duplicative rate-setting
processes Provide rates that reduce administrative and
customer service costs Support more efficient budgeting and accounting
practices
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Study Approach
Develop 5-year financial plan Identify annual wastewater rate revenue
requirements Perform detailed cost of service analysis Design wastewater rates that reflect the
cost of providing service Recommend a multi-year rate plan to fully
meet financial needs
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Wastewater Service AreasNo. of Accts.
No. of EDUs
WWFlow
Current WW Rate
WW ID#1* 305 351 14.5 MG $94.35/mo.**
Camanche 346 353 15.8 MG $102.65/mo.
Martell 160 577 20.3 MG $74.05/mo.***
Totals 811 1,281 50.6 MG
* Wastewater ID#1 includes Eagles Nest, Surrey Junction, Wildwood, Gayla Manor, Viewpoint, Fairway Pines, Jackson Pines, Pine
Grove, and Tiger Creek Estates. ** Monthly rate in Pine Grove is $109.35, due to a debt obligation.*** Non-residential rates include a fixed service charge and usage
charges tied to sewage strength.
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Financial Plan Assumptions
FY 13-14 estimates and year-end balances FY 14-15 approved budget
Combine wastewater service areas Staffing and cost analysis consistent with water
rate study Debt service schedules and 5-year CIP
Debt obligations remain with each area Inflation and interest assumptions No new growth
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Changes Since September
Reduced operating reserve target to 2-months (16.7%), rather than 3-months (25%), of annual O&M expenses
Reduced level of rate increases in January 2015 and July 2015
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Preliminary and Revised Wastewater Rate Plans
Preliminary Revised
January 2015 4.5%* 2.5%*
July 2015 5% 4%
July 2016 5% 6%
July 2017 5% 6%
July 2018 3% or Infl.** 3% or Infl.**
July 2019 3% or Infl.** 3% or Infl.**
Compounded 28.3% 27.1%
* Includes proposed rate restructuring.** Rate adjustments could be indexed to changes in
inflation, as with water rates.
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Total Wastewater SystemCost Summary
Personnel40%
Admin.12%
Collect./Disposal
10%
Treatment18%
Other O&M 3%
Rehab/Re-plac Projects
5%
Debt Service13%
Total = $1,604,000
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Wastewater Rate Revenue Requirement Summary
Current rate revenues $1,377,000
2015 WW rate rev. reqmt. $1,412,000
Increase $35,000
Proposed overall system-wide wastewater rate revenue increase is 2.5%
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Summary of System-WideNet Cost Allocation
Fixed O, M & R
Costs40%
Variable Collect./ Disposal Costs
23%
Vari-able
Trtmt. Costs37%
System-Wide O, M & R Costs$1,302,000
WW ID#147%
Ca-manch
e41%
Martell11%
Debt Service$110,000
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Wastewater Rate Structure Monthly service charges
For each dwelling unit or equivalent dwelling unit (EDU)
Wastewater usage rate Based on winter water usage Low, medium, and high strength categories for
non-residential accounts Monthly debt service charge
Distinct for each service area for each DU or EDU
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Current Wastewater Rates
WW ID#1 Pine Grove Camanche Martell
Resid. Charge (per DU) $94.35 $109.35 $102.65 $74.05
Non-Resid. Chrg. (per EDU) $94.35 $109.35 $102.65 $23.91
Low Strength ($/CCF)* $9.14
Medium Strength ($/CCF)* $11.15
High Strength ($/CCF)* $15.18
* Usage charges based on winter water use.
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Proposed Wastewater Rates
System-Wide WW
Rates
Debt Service Charges
WW ID#1Pine
GroveCamanche Martell
Residential (per DU) $86.68 $9.88 $21.40 $10.80 $1.83
Non-Resid. (per EDU) $34.29 $9.88 $21.40 $10.80 $1.83
Low Strength ($/CCF)* $10.48
Med. Strength ($/CCF)* $12.35
High Strength ($/CCF)* $16.10* Usage charges based on winter water use.
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Monthly Single Family Wastewater Bills
WW ID#1 Pine Grove Camanche Martell $-
$20
$40
$60
$80
$100
$120
$140
$160 CurrentProposed
Mo
nth
ly W
aste
wat
er B
ill
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Benefits of Proposed System-Wide Wastewater Rates
Improves financial stability and ability to meet financial obligations
Accurately reflects the cost of providing service and improves equity for all customers
Avoids more costly multiple, duplicative rate setting processes
Reduces administrative and customer service costs Supports more efficient budgeting and accounting
practices Completes water/wastewater rate realignment efforts
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Why Not Have Separate Rates for Each Wastewater System?
Conflicts with Grand Jury recommendation Conflicts with Agency’s direction for past decade Not supported by data, and would require
additional costly accounting and tracking processes
Not legally required, and not a standard industry practice either in rate-setting or in utility management
Adds financial risk and uncertainty to both the Agency and to customers of each system
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Next Steps
Initiate Prop. 218 rate hearing notification process, and prepare final report
Conduct public workshop on proposed wastewater rates (date to be determined)
Conduct public hearing on proposed wastewater rates (date to be determined)
If approved, implement new wastewater rates in January 2015