Transcript Heading - Wareham

Sewer Rate Evaluation
Wareham, Massachusetts
January 14, 2014
Michael J. Schrader, P.E.
Project Goals
Make an informed decision relative to:
1. What should the basis of the sewer rate be:
EDU’s or Gallons?
2. What should the rate itself be?
Ratemaking Goal No. 1
To ensure that the utility has revenue sufficient to
-
Operate the utility (pay the bills)
-
Maintain all facilities in working order (upkeep)
-
Replace/upgrade equipment as required (capital)
-
Repay debt (sustainability)
What do Rates Cover?
Expenses:
Direct & Indirect
Payroll & Benefits
Electricity
Utilities
Chemicals
Capital
Debt Service
Capital Outlay
41%
59%
What do Rates Cover?
Fixed vs. Variable costs:
Fixed (independent of flow)
Payroll & Benefits
Capital
Debt
Variable (Flow dependent)
Chemicals
Electricity
Sludge
50%
50%
Ratemaking Goal No. 2
To allocate or distribute those costs back to users
fairly and proportionally
What does fairly and proportionally mean?
It means that bills reflect cost to treat
What does THAT mean?
Variables effecting cost
Flow:
It costs more money to treat more gallons,
but is each gallon equal?
No.
High strength waste
costs more to treat.
Why?
It’s all about the bugs
Wastewater is food for the
bugs.
More food = more bugs
More bugs = more air
more sludge
more chemicals
more cost
Ratemaking Goal No. 3
To predict the need for future rate changes by planning
ahead.
 Costs will generally go up
 Capital planning will impact debt and rates
The Importance of Capital Planning
Wastewater infrastructure is replaced due to:
■ Service condition: Equipment is subject to harsh operating
conditions and 24/7 operation. A 20 year service life is generally
assumed and often optimistic.
The Importance of Capital Planning
Wastewater infrastructure is replaced due to:
■ Obsolescence – equipment design changes over
time.
■ New requirements – Increasingly stringent permit
requirements can require new equipment.
■ Failure
The Importance of Capital Planning
■ Failure is always more expensive than planned
replacement
The Importance of Capital Planning
The Town is planning to complete a Capital
Improvement Program (CIP) to help identify future
needs based upon
■ Likelihood of failure (Condition)
■ Consequence of failure
Projecting the Town’s capital needs over the next 20
years will bring an additional degree of predictability to
rates and reduce chance of failure.
Ideal Rates
The idealized rate would incorporate volume and
strength, but that is not realistic: Instead…
■ Town’s charge per gallon and set limits on
wastewater strength (non residential users only)
–
Some stuff costs more to treat so you pay more
–
Some stuff is toxic and you just can’t discharge it
■ How does this compare to what we’re doing now?
Current Rate Structure
The EDU or “Equivalent Dwelling Unit” is commonly
used to develop wastewater projections
Pro’s and Con’s of using EDU’s
 Pro’s
– Convenient
– Steady revenue
 Con’s
– May not be equitable
– Hard to defend
1 EDU
Flow based Rate Structure
Each user would be billed for sewage discharged
using water use as a surrogate measurement.
Pro’s and Con’s to using water usage for sewer
 Pro’s
– Accurate
– Fair and equitable
 Con’s
– Increased complexity, added parties
– High Strength waste is not addressed
– Susceptible to loss of big users / weather/ usage
What do other Town’s do?
■ Rate Structure
11%
1%
Flat rate
Ascending
Rate
Flat Fee
Other
32% 56%
Wareham, Progress to date
■ Step one – Data gathering
■ Wastewater Plant
–
Expenses: last three years, budget and Actual
– Debt schedule
–
Operating costs
■ Water System(s)
-
Water usage
-
Annual statistical reports
Who has what?
■ To evaluate going to water consumption based
rates we need to understand how many customers
have water and sewer.
■ To do this we compared lists… lots of lists
■ And we made maps
This is what we found:
Who has what?
59% of Town is sewered
8,744
(42%)
6,150
(59%)
Total Parcels:
14,894
Who has what?
535
(9%)
Onset
Water
2,215
(36%)
Wareham
FD
3,400
(55%)
91% have both
water and sewer,
9% are on wells
Trends
Residential water use is decreasing
Commercial / Industrial water use is increasing
Consumption
(million gallons per year)
500
450
-6.6%
400
350
300
250
200
150
100
+ 2.5%
50
0
2006
2007
2008
2009
Wareham Fire District
2010
Trends
Residential water use is decreasing
Commercial / Industrial water use is increasing
160
140
-4.5%
120
100
80
60
40
+ 0.9%
20
0
2009
2010
2011
Onset Water District
2012
Distribution of Users
■ Wareham Fire District
–
–
10% of usage comes from top 20 users (0.3% of total)
50% of usage comes from top 1121 user (16% of total)
■ Onset Water District
– 10% of usage comes from top 10 users
– 50% of usage comes from top 563 users (9%)
0.28
%
10%
90%
99.72
%
Next Steps
Decide which option best suits Wareham:
■ Keep EDU based system
■ Adopt usage based system with
- one rate
- one rate with a minimum charge
- ascending rate
- separate rate for residential and
commercial