Transcript Agenda - Metropolitan St. Louis Sewer District

RATE SETTING WORKSHOP
February 23, 2015
1
RATE CHANGES
In accordance with Section 7.270 of the Charter Plan of
the District, any proposed rate change must:
1. Be consistent with constitutional, statutory or
common law as amended from time to time;
2. Enhance the District’s ability to provide sewer and
drainage systems and facilities, or related services;
3. Be consistent with and not in violation of any
covenant or provision relating to any outstanding
bonds or indebtedness of the District;
4. Not impair the ability of the District to comply with
applicable Federal or State laws or regulations as
amended from time to time; and
5. Impose a fair and reasonable burden on all classes
of ratepayers.
2
RATE SETTING PROCESS
Step 5 – Assess Effectiveness of Addressing Pricing Objectives
Step 4 – Design Rate Structure
Step 3 – Allocate Costs
Step 2 Identify Revenue Requirements & Demand
Projections
Step 1 – Identify
Financial & Pricing
Objectives
3
IDENTIFY PRICING
OBJECTIVES
Financial Sufficiency
Economic
Development
Rate Stability
Minimal
Customer Impacts
Revenue Stability
Affordability
Cost-of-Service
Based Allocations
Water Efficiency
Ease of
Implementation
Customer
Understanding
4
RATE SETTING PROCESS
Step 5 – Assess Effectiveness of Addressing Pricing Objectives
Step 4 – Design Rate Structure
Step 3 – Allocate Costs
Step 2 Identify Revenue
Requirements & Demand
Projections
Step 1 – Identify Financial & Pricing
Objectives
5
REVENUE REQUIREMENTS
6
RATE DESIGN
Step 5 – Assess Effectiveness of Addressing Pricing Objectives
Step 4 – Design Rate Structure
Step 3 – Allocate Costs
Step 2 Identify Revenue Requirements & Demand
Projections
Step 1 – Identify Financial & Pricing
Objectives
7
ALLOCATE COSTS
» Cost of service concept
» Allocate costs to functional and cost
components
» Classes of customers
» Units of service
8
INFLOW & INFILTRATION
» Flow that enters sanitary
sewer system as a result of
high groundwater or
precipitation (infiltration) or
manholes, roof drains, etc.
(inflow)
» Not a consequence of
directly measured service
demands
» Contributing factors
include groundwater
levels, age of pipe, and soil
conditions.
9
ALLOCATE COSTS
Net Wastewater Revenue Requirements
Categorize by Functions
Collection
Treatment
Disposal
Commercial
Compliance
Billing &
Customer Service
Support &
Administration
Allocate to Cost Components
Volume
Capacity
BOD
Customer
Service
TSS
Develop Unit Costs
Variable Costs
Industrial
Monitoring
Service Costs
Customer Classes
Billing
Charge
Commercial
Industrial
MultiFamily
Single
Family
10
Customer
Charge
Compliance
Charge
RATE DESIGN
Step 5 – Assess Effectiveness of Addressing Pricing Objectives
Step 4 – Design Rate Structure
Step 3 – Allocate Costs
Step 2 Identify Revenue Requirements & Demand
Projections
Step 1 – Identify Financial & Pricing
Objectives
11
RATE DESIGN
Process aligns rates and
charges with pricing objectives
12
DESIGNING THE
RATE STRUCTURE
» Fixed charges vs. variable charges
» Basis of billing
» Current rate structure
13
PRIMARY CHARGE TYPES
Fixed Charges
Variable Charges
• Invariant with
customer water usage
• Vary with amount of
water used
• Cost of service fixed
charges reflect
customer related costs
• Recover utility costs
that vary with
customer usage
patterns
• Fixed charges may
include readiness-toserve component
14
BASIS OF BILLING
» Metered and Unmetered Residential
Customers
» Average Winter Quarter for Residential
Customers
» Commercial customer loading –
Monitored strength
15
CUSTOMER USAGE
Variable
Charges
Wastewater Flow
• Average Flows
• Peak Flows (Capacity)
Wastewater Strengths
•
•
Biochemical Oxygen Demand
Total Suspended Solids
Fixed
Charges
Customers
• Billing & Collection
• System Availability
• Compliance Charge
16
CURRENT RATE STRUCTURE
(FY 2015 / Effective July 1, 2014)
Base Charge - $/Bill
Billing & Collection Charge
System Availability Charge
Total Base (Residential) Service Charge
Compliance Charge - $/Bill
Tier 1
Tier 2
Tier 3
Tier 4
Tier 5
$
$
$
3.55
12.70
16.25
$
9.00
$ 43.55
$ 92.75
$ 136.00
$ 179.25
Total Non-Residential Service Charge (Tier 1) $
25.25
Volume Charge
Metered - $/Ccf
$
2.82
Unmetered - $/Bill
Each Room
Each Water Closet
Each Bath
Each Separate Shower
$
$
$
$
1.83
6.88
5.73
5.73
Extra Strength Surcharges - $/ton
Suspended Solids over 300 mg/l
Biochemical Oxygen Demand over 300 mg/l
Chemical Oxygen Demand over 600 mg/l
$
$
$
244.03
620.14
310.07
17
RATE DESIGN
» Critical Issues
− Understanding of pricing objectives
− Data needs
− Awareness of rate design implications
− Understanding impact on District’s
customer base
18
QUESTIONS & ANSWERS
OTHER DISCUSSION
19