Transcript Proposed Third Amended Water Control Plan

City of Cocoa
Water, Sewer & Reclaimed Water
Rates Discussion
April 28, 2010
Presented by:
Michael Burton - President
Andrew Burnham - Sr. Vice President
Eric Grau - Project Consultant
1
Introduction and Overview

Burton & Associates

Multi-year financial planning and rate services to local governments


Some of our other similar clients in FL


Over 300 water and wastewater rate/financial planning projects
Overview of presentation


2
Co-author of AWWA manual M54 Rate Making for Small Systems
Andrew Burnham – Sr. Vice President – 10 yrs of industry experience


St. Pete, Pinellas County, Deltona, Lake Worth, St. Cloud, Fort Lauderdale
Michael Burton – President – 30 yrs of industry experience


Emphasis in water resources rate making
Scope of Rate Study
Results of each component of the Rate Study
Scope of Study
Components of the Rate Study:
Development of a plan(s) of multi-year rate revenue adjustments
1.

2.
3.
4.
5.
3
Applicable to Water, Sewer, and Reclaimed Water services
Evaluation of current rate structure and development of
recommended modifications as appropriate
Preparation of comparative monthly residential rate survey
Update of water and sewer impact fees
Assist City staff with cost computation templates for the update
of certain miscellaneous service charges
Multi-Year Rate Revenue Adjustments Overview

Key Financial Parameters

3 Month Operating Reserve


Minimum Debt Service Coverage of 1.50x net income


$10 million per year per CH2MHill asset inventory/assessment
Total expenditures currently exceed total revenues

4
Target of Rating Agencies for Good Utility Systems
Funding or renewal and replacement requirements


Common Industry Target & Level for Good Utility Systems per Rating Agencies
FY 2010 operating cash flow shortfall of over $3 million
Multi-Year Rate Revenue Adjustments Results

Plan of annual rate revenue adjustments are required





5
Higher near-term adjustment(s) for cash flow and to maintain reserves
Annual 5% increases starting on 10/1/11 to fund R&R requirements,
increases in O&M and to maintain reserves and debt coverage
Developed two alternative plans for near-term
 Option 1: 17% rate revenue increase on 10/1/10
 Option 2: 9% rate revenue increase on 7/1/10, 8% increase on
10/1/10
Rate structure changes can be implemented with either option and will
result in different customer impacts
Staff & Consultant recommend Option 2 w/rate structure changes on
7/1/10
Rate Structure Modifications

Current rate structure is generally fair and equitable

Recommend minor modifications to water rate structure to:



Water rate structure modifications include:





Changing tiers for 3/4” customers from 8/16/24/24+ to 6/12/24/24+
Adjusting rates in each tier to provide greater price signal to discretionary use
Adjusting consumption in tiers for all other meter sizes based upon average
use by meter size
Recommended rates embody 9% revenue increase from Option 2 and would
be effective 7/1/10
No rate structure changes for sewer or reclaimed water rates

6
Provide stronger price signal to discretionary use to promote conservation
and maintain affordability for low volume users
Reflect current average use for all customers by meter size
Existing rates adjusted for 9% rate revenue increase and price elasticity effects
Customer Impacts – Outside City Water Only
Option 2 (Includes 9% Revenue Increase)

Low volume users (41%)



Typical/Avg. users (32%)



Up to 3,000 gal. / mo.
$.10 to $.40 increase
4,000 - 6,000 gal. / mo.
$.50 - $.70 increase
Higher volume users (27%)



7
>6,000 gal. / mo.
Bills increase at same use
Conserve to avoid
increase
Single Family Residential Monthly Bill Comparison
(Outside City Water Only Customer with a 3/4" Meter)
Use (TGAL) % of Bills Cumulative %
0
6.8%
6.8%
1
8.1%
14.9%
2
12.0%
26.9%
3
13.7%
40.7%
4
13.1%
53.8%
5
10.9%
64.7%
6
8.4%
73.0%
7
6.2%
79.2%
8
4.5%
83.7%
9
3.3%
86.9%
10
2.3%
89.3%
11
1.7%
91.0%
12
1.4%
92.4%
13
1.1%
93.4%
14
0.9%
94.3%
15
0.7%
95.0%
16
0.6%
95.6%
17
0.5%
96.1%
18
0.4%
96.5%
19
0.4%
96.8%
20
0.3%
97.2%
Current
$ 11.52
$ 13.83
$ 16.14
$ 18.45
$ 20.76
$ 23.07
$ 25.38
$ 27.69
$ 30.00
$ 33.38
$ 36.76
$ 40.14
$ 43.52
$ 46.90
$ 50.28
$ 53.66
$ 57.04
$ 62.02
$ 67.00
$ 71.98
$ 76.96
Proposed
$ 11.62
$ 14.03
$ 16.44
$ 18.85
$ 21.26
$ 23.67
$ 26.08
$ 30.70
$ 35.32
$ 39.94
$ 44.56
$ 49.18
$ 53.80
$ 59.82
$ 65.84
$ 71.86
$ 77.88
$ 83.90
$ 89.92
$ 95.94
$ 101.96
$ Change
$ 0.10
$ 0.20
$ 0.30
$ 0.40
$ 0.50
$ 0.60
$ 0.70
$ 3.01
$ 5.32
$ 6.56
$ 7.80
$ 9.04
$ 10.28
$ 12.92
$ 15.56
$ 18.20
$ 20.84
$ 21.88
$ 22.92
$ 23.96
$ 25.00
% Change
0.9%
1.4%
1.9%
2.2%
2.4%
2.6%
2.8%
10.9%
17.7%
19.7%
21.2%
22.5%
23.6%
27.5%
30.9%
33.9%
36.5%
35.3%
34.2%
33.3%
32.5%
Customer Impacts – Inside City Water & Sewer
Option 2 (Includes 9% Revenue Increase)

Low volume users (51%)



Typical/Avg. users (30%)



Up to 3,000 gal. / mo.
$1 to $2.50 increase
4,000 - 6,000 gal. / mo.
$3 - $4 increase
Higher volume users (29%)



8
>6,000 gal. / mo.
Bills increase at same use
Conserve to avoid
increase
Single Family Residential Monthly Bill Comparison
(Inside City Water & Sewer Customer with a 3/4" Meter)
Use (TGAL) % of Bills Cumulative %
0
8.6%
8.6%
1
11.2%
19.8%
2
15.3%
35.1%
3
15.4%
50.5%
4
12.9%
63.4%
5
10.2%
73.5%
6
7.2%
80.7%
7
5.1%
85.8%
8
3.5%
89.3%
9
2.5%
91.8%
10
1.7%
93.6%
11
1.3%
94.8%
12
1.0%
95.8%
13
0.7%
96.6%
14
0.5%
97.1%
15
0.4%
97.6%
16
0.3%
97.8%
17
0.3%
98.1%
18
0.2%
98.3%
19
0.1%
98.5%
20
0.2%
98.6%
Current
$ 20.24
$ 26.97
$ 33.70
$ 40.43
$ 47.16
$ 53.89
$ 60.62
$ 67.35
$ 74.08
$ 81.78
$ 89.48
$ 97.18
$ 104.88
$ 107.95
$ 111.02
$ 114.09
$ 117.16
$ 121.69
$ 126.22
$ 130.75
$ 135.28
Proposed
$ 21.22
$ 28.47
$ 35.72
$ 42.97
$ 50.22
$ 57.47
$ 64.72
$ 73.98
$ 83.24
$ 92.50
$ 101.76
$ 111.02
$ 120.28
$ 125.75
$ 131.22
$ 136.69
$ 142.16
$ 147.63
$ 153.10
$ 158.57
$ 164.04
$ Change
$ 0.98
$ 1.50
$ 2.02
$ 2.54
$ 3.06
$ 3.58
$ 4.10
$ 6.63
$ 9.16
$ 10.72
$ 12.28
$ 13.84
$ 15.40
$ 17.80
$ 20.20
$ 22.60
$ 25.00
$ 25.94
$ 26.88
$ 27.82
$ 28.76
% Change
4.8%
5.6%
6.0%
6.3%
6.5%
6.6%
6.8%
9.8%
12.4%
13.1%
13.7%
14.2%
14.7%
16.5%
18.2%
19.8%
21.3%
21.3%
21.3%
21.3%
21.3%
Other Customer Impacts
Option 2 (Includes 9% Revenue Increase)
Business
Type
New Monthly
Bill w/ rate
Current
structure
Monthly Bill
changes
$ Chg.:
New vs.
Current
% Chg.:
New vs.
Current
restaurant
1.5
inside
x
14
$
176.86
$
187.88
$
11.02
6.2%
restaurant
0.75
inside
x
3
$
40.43
$
42.97
$
2.54
6.3%
restaurant
0.75
inside
x
50
$
498.34
$
570.08
$
71.74
14.4%
3"
outside
x
183
$
2,243.89
$
2,404.24
$
160.35
7.1%
motel
1.5"
inside
x
76
$
629.04
$
705.72
$
76.68
12.2%
motel
1.5
inside
x
67
$
559.74
$
622.38
$
62.64
11.2%
motel
1.5
inside
x
36
$
324.92
$
347.38
$
22.46
6.9%
multi-family
1"
inside
x
22
$
193.61
$
219.07
$
25.46
13.2%
multi-family
1"
inside
x
29
$
247.51
$
283.89
$
36.38
14.7%
multi-family
1.5"
inside
x
43
$
374.94
$
400.14
$
25.20
6.7%
multi-family
1.5"
inside
x
55
$
467.34
$
511.26
$
43.92
9.4%
multi-family
2"
inside
x
38
$
462.33
$
491.42
$
29.09
6.3%
government
10"
outside
X
17,466
$ 40,060.94
$ 41,645.43
$ 1,584.49
4.0%
government
10"
outside
X
24,593
$ 63,254.99
$ 68,732.47
$ 5,477.48
8.7%
government
10"
outside
X
27,254
$ 72,249.17
$ 81,026.29
$ 8,777.12
12.1%
Auto service
9
Meter
water water &
size Location only sewer
12-month
avg. usage
thru Jan.
2010 in 1,000
gallons
Water Residential Rate Survey Results
10
Water & Sewer Residential Rate Survey Results
11
Update of Impact Fees

Definition:


Calculation:


Charges intended to recover unit cost of expansion-related facilities
from new connections
Based upon reconstruction cost new less depreciation of existing
facilities (these facilities will be used to serve growth in the near-term)
Results - $ per ERC (Equivalent Residential Connection):

Water Impact Fee:



Sewer Impact Fee:




12
Current = $1,000
New = $1,802
Current = $1,250 + $1,450 = $2,700
New = $2,715
Results are in-line with others
Discretionary fees
Water Impact Fee Survey Results
Average Water
13
Fee (Excluding Cocoa) = $1,725
Updated Water
Fee for Cocoa = $1,802
Water & Sewer Impact Fee Survey Results
Average Water
Average
14
Fee (Excluding Cocoa) = $1,725
Sewer Fee (Excluding Cocoa) = $2,475
Updated Water
Updated
Fee for Cocoa = $1,802
Sewer Fee For Cocoa = $2,715
Miscellaneous Service Charges




15
Charges to individual customers for specific services
requested
Include such things as meter testing, service initiation,
reconnection, service charges, etc.
Provided cost computation templates to City staff to
update costs of providing various services
City staff will populate the templates and bring back
appropriate ordinance/resolution amendments
Discussion
16