Transcript Water Conservation Ordinance

Upcoming Rate Case
February 2009
Department of Waterworks
• Owns and manages Indianapolis Water.
• Bi-partisan seven member Board of
Directors oversees department policy,
finances, contract and captial projects.
• Department has eight employees.
• System is operated by Veolia Water
Indianapolis.
Waterworks System
• Indianapolis Water serves nearly 1 million people in 7
counties.
• 83% of customers and 89% of revenues are from Marion
County.
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77% of treated water comes from surface sources.
68 groundwater wells supplement surface water sources.
Average daily production of finished water is 140 MGD.
Peak day record is 228 MGD on June 13, 2007.
Total rated capacity of the system is 220 MGD.
Morse Reservoir
White River North
Treatment Plant
Flow of Funds
• Customers pay water bills
• DOW pays for the operation
of the Waterworks
• Payments are made on debt
service borrowed to finance
major capital improvements
• Remaining $ are spent on
TOTAL REVENUE
-
-
O&M, PILOTS, G&A
-
DEBT SERVICE
-
CASH CAPITAL
=
END OF YEAR
BALANCE
capital projects
• End of Year cash balance is
carried over to the next fiscal
year & reflects no profit for
the DOW
Upcoming Rate Case will have two
parts:
• Emergency
• Non-emergency or general
Emergency Rate Case:
Variable rate debt
• Waterworks took a direct hit from the
financial market crisis.
• Interest expense on variable rate debt
increased dramatically.
– Interest rates rose from about 3 percent to 9
percent.
– Financial impact to Waterworks is more than
$20 million more in interest payments for
2008 than in 2007.
Combined Variable Rate Debt
$4,000,000
$3,500,000
$3,000,000
2006
$2,500,000
2007
$2,000,000
2008
2009
$1,500,000
$1,000,000
$500,000
$0
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Emergency Rate Case:
• Without immediate additional revenue,
Waterworks’ financial situation will
continue to decline.
• Waterworks and the City of Indianapolis
could face a downgraded credit rating.
• Lower credit rating would make it more
expensive to borrow money for future
projects.
• Higher interest rates = higher water rates
Revenue Collected by Month - Unaudited Data
$16,000,000
$14,000,000
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
$0
January
February
March
April
May
2006
June
2007
July
2008
August
September
October
November
December
Emergency Rate Case:
• Waterworks intends to petition the Indiana
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Utility Regulatory Commission for about a 20
percent across-the-board emergency rate
increase to stabilize the financial situation.
For the average household using 7,000 gallons,
this translates to about $5 per month.
The average water bill is $25 per month.
An emergency rate increase may be approved by
late Spring 2009.
General Rate Case:
• Waterworks also intends to petition the
IURC for a general rate increase at the
same time as the emergency petition.
• The general rate increase will fund
important capital projects, improvements
to the water system, increased operational
costs and other general needs.
• A general rate increase could be approved
sometime in the first half of 2010.
Questions?