Rates In Water, Sew er Proposed Increase In and Reclaimed June 9, - - PDF document

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Proposed Increase In Rates In Water, Sew er and Reclaimed

June 9, 2009

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WATER

3 153

Pl';:1~~ Residential Per Capita Wa er Usage

138 125 122 118 113

110 110 106 106 105 107 100

96 93 93

89-90 90-91 91-92 92-93 93-94 94.95 95-96 95.97 97-98 98-99 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08

• A. Annual usage is calculated by using six consecutive bi-monthly billing periods (1 year of billing).
• B. Population is calculated by taking the total number of

single-family accounts multiplied by 2.31 persons per household, plus multi-family

accounts multiplied by 1.31 persons per household for those accounts that had six consecutive billing periods.

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24,863 387

• 2,500

5,000 7,500 10,000 12,500 15,000 17,500 20,000 22,500 25,000 27,500 F Y 9 6 F Y 9 7 F Y 9 8 F Y 9 9 F Y F Y 1 F Y 2 F Y 3 F Y 4 F Y 5 F Y 6 F Y 7 F Y 8

Reclaimed Water Accounts

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Monthly Water Purchase FY 2005 ‐ 2009

55 60 65 70 75 80 85 90 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Month MGD FY 05 FY 06 FY 07 FY 08 FY 09

SWFWMD enters into a Phase III Extreme Water Shortage on 10/28/08 SWFWMD enters into a Phase IV Critical Water Shortage on 4/03/09.

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Water Sales

(MGD)

53.28

57.03 59.29

62.74

61.73 58.56 60.99 59.18 65.52 67.08 68.32 68.33 65.87 65.97 64.12

52.28

50.00 53.00 56.00 59.00 62.00 65.00 68.00 71.00 F Y 9 5 F Y 9 6 F Y 9 7 F Y 9 8 F Y 9 9 F Y F Y 1 F Y 2 F Y 3 F Y 4 F Y 5 F Y 6 F Y 7 F Y 8 F Y 9 * F Y 1 * *

*Projection **Budget

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Retail Water Volumetric Rates

(per 1,000 gallons)

$2.25 $4.62

$0.50 $1.50 $2.50 $3.50 $4.50 $5.50 F Y 9 5 F Y 9 6 F Y 9 7 F Y 9 8 F Y 9 9 F Y F Y 1 F Y 2 F Y 3 F Y 4 F Y 5 F Y 6 F Y 7 F Y 8 F Y 9 F Y 1 *

*Proposed

NOTES: In FY 99, TBW began to supply all of our water.

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Wholesale Water Volumetric Rates

(per 1,000 gallons)

$1.79 $3.18

$0.50 $1.50 $2.50 $3.50 $4.50 $5.50 F Y 9 6 F Y 9 7 F Y 9 8 F Y 9 9 F Y F Y 1 F Y 2 F Y 3 F Y 4 F Y 5 F Y 6 F Y 7 F Y 8 F Y 9 F Y 1 *

*Proposed

NOTES: In FY 99, TBW began to supply all of our water.

9 $49,424 $46,484 $9,294

$5,000 $15,000 $25,000 $35,000 $45,000 $55,000 F Y 9 8 F Y 9 9 F Y F Y 1 F Y 2 F Y 3 F Y 4 F Y 5 F Y 6 F Y 7 F Y 8 F Y 9 * F Y 1 * *

Amount Paid to Tampa Bay Water

(in $1,000’s) *Projection **Budget

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SEWER

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Sewage Billed

(MGD)

28.29 28.44 29.54 28.12 28.66 28.04 28.02 27.00 26.53 26.53 28.85

25.00 26.00 27.00 28.00 29.00 30.00 31.00 F Y F Y 1 F Y 2 F Y 3 F Y 4 F Y 5 F Y 6 F Y 7 F Y 8 F Y 9 * F Y 1 *

*Budget

NOTE: FY 03 increase due to 73” of rainfall

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Retail Sewer Volumetric Rates

(per 1,000 gallons)

$3.83 $3.65 $3.10 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 F Y 9 9 F Y F Y 1 F Y 2 F Y 3 F Y 4 F Y 5 F Y 6 F Y 7 F Y 8 F Y 9 F Y 1 *

*Proposed

NOTE: There is a proposed increase in monthly base rate charge from $10.00 to $10.50

2.1% average annual increase over 11 years

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Wholesale Sewer Volumetric Rates

(per 1,000 gallons)

$2.56 $2.82 $2.96 $2.00 $2.50 $3.00 $3.50 F Y 1 F Y 2 F Y 3 F Y 4 F Y 5 F Y 6 F Y 7 F Y 8 F Y 9 F Y 1 *

*Proposed

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507 566 582 500 550 600 F Y 3 F Y 4 F Y 5 F Y 6 F Y 7 F Y 8 F Y 9 F Y 1 *

*Budget

Water and Sewer Number of F/T Permanent Positions

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Water and Sewer Cost Reductions

Current Year

► Positions

Reduction of 9 permanent positions

► Operating & Maintenance Budget

Water and Sewer

Reduced by 9%

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Water and Sewer Budget Reductions

FY 09/10

► Positions

Reduction of 44 permanent positions Reduction of 8 temporary positions

► Operating & Maintenance Budget

Water

Reduction of $3,976,500

Sewer

Reduction of $4,424,240

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Water System FY 09/10 Operating Expenses

Tampa Bay Water 59% Intragovernmental Services 9% Chemicals & Other 4% Personal Services 21% Maintenance & Other 5% Electricity & Other 2%

Uncontrollable 74% Controllable 26%

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Sewer System FY 09/10 Operating Expenses

Chemicals & Other 11% Maintenance & Other 9% Electricity & Other 15% Intragovernmental Services 14% Contract Services 8% Personal Services 43%

Uncontrollable 48% Controllable 52%

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Burton & Associates

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Agenda

► Introduction of Burton & Associates ► Study Objectives

Revenue Sufficiency

Water System Sewer System

Reclaimed Water

Rate Design / Other

Conservation Rates Miscellaneous Fees & Charges ► Conclusions ► Recommendations

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Introduction of Burton & Associates

► Firm Background

Multi-year financial planning & rate services to local governments

Interactive modeling process and tools

Emphasis in water resources financial planning & economics Some of our clients in the greater Tampa area

Clearwater, St. Petersburg, Tarpon Springs, New Port Richey, Dunedin, Safety Harbor, Indian Rocks Beach ► Project Staff

Mike Burton – President & Principal In Charge Andy Burnham – Senior Vice President & Project Manager Eric Grau – Consultant & Project Analyst

Revenue Sufficiency Analysis Revenue Sufficiency Analysis

Water System

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Water System – Financial Summary

► Key Challenges

Recent & Projected Retail & Wholesale Demand Reductions

16% total billed demand reduction from FY 2006 – FY 2009 17% total billed demand reduction from FY 2009 – FY 2014

Tampa Bay Water Rate Increases

7% in FY 2010, 10% in FY 2011 Total expense continues to increase despite demand reductions

Funding of Infrastructure R&R - $70M (FY 2009 – FY 2014) Some of the major CIP projects are:

Water Transmission Main & Distribution Replacement - $18M Belcher Road 48” Main Replacement - $11M Relocation of Water Lines - US 19 - $7M Does not include Blending Facility Costs

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Water System – Financial Summary

► Key Challenges

Full Allocation of Reclaimed Water Revenue Shortfall

Increases from $3.2M to $8.2M annually by FY 2017

Maintaining Adequate Reserves

Operating Reserve target of 2.5 months of O&M Expenses R&R Reserve target of 5% of prior year gross revenues

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Water System – Results

► Negative Annual Cash Flow

$5M in FY 2010, increasing to $10M in FY 2011 with current rates Without rate adjustments, reserve requirements would not be met by FY 2011

5-Year Projection of Water Rate Revenue Increase Requirements FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Retail 8.00% 15.00% 15.00% 3.00% 3.00% Wholesale 8.00% 15.00% 15.00% 3.00% 3.00%

Wholesale Rate

• Res. Bill

(6000 Gallons)

$43.46 $42.19 $40.96 $35.62 $30.97 $28.68 $4.47 $4.34 $4.21 $3.66 $3.18 $2.95 FY 2014 FY 2013 FY 2012 FY 2011 FY 2010 FY 2009 Impacts of Identified Water Rate Revenue Increase Requirements

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Water System - Future Rates

► Future Rate Increases Needed for Cash Flow & Reserves ► Rate Revenue Increase Requirements Will Be Affected By:

Timing & Extent of Wholesale Demand Reductions

1 MGD in FY 2010 & FY 2011 – Clearwater 3.5 MGD in FY 2012 – Tarpon Springs

Funding of Capital Improvement Requirements

Currently cash-funded consistent with past practice Could use financing to minimize/spread rate increase requirements

Projection of Water Rate Revenue Increases with $20M of Borrowing FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Retail/Wholesale 8.00% 10.50% 10.50% 10.50% 3.50%

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FY 2009 Residential Rate Survey

Current PCU = $28.68 FY 2010 PCU = $30.97 Survey Average = $27.00

$- $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00 $40.00

Oldsmar Pinellas Park Gulfport Clearwater Dunedin Pinellas County Hillsborough County

• St. Petersburg

Safety Harbor Tarpon Springs Port Richey Pasco County Oldsmar Pinellas Park Gulfport Clearwater Dunedin Pinellas County Hillsborough County St. Petersburg Safety Harbor Tarpon Springs Port Richey Pasco County Water Bill $36.24 $34.73 $30.40 $30.20 $29.84 $28.68 $28.35 $25.93 $23.06 $21.93 $21.90 $20.75

Water Bill Survey @ 6000 Gallons Per Month

Water Bill

Revenue Sufficiency Analysis Revenue Sufficiency Analysis

Sewer System

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Sewer System – Financial Summary

► Key Challenges

Recent Retail & Wholesale Demand Reductions

5% total billed demand reduction from FY 2006 – FY 2009

Funding of Infrastructure R&R - $100M (FY 2009 – FY 2014) Some of the major CIP projects are:

Series 2008 Bonded Projects - $36M

Includes: Pump Station Renewal & Replacement - $14M Two-Phase Digester Conversion - $6M Public Works Road Projects - $5M

South Cross & WE Dunn WRF Improvements - $27M Collection System Modifications/Improvements - $10M

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Sewer System – Financial Summary

► Key Challenges

Meeting Debt Service Coverage Requirements/Covenants

Minimum net income to debt service ratio is 1.15 / 1.25 Set rates based upon a target ratio of 1.50

• Target planning level for good utilities set by rating agencies
• Provides buffer for future unplanned circumstances
• Rate plan achieves target starting in FY 2011

Maintaining Adequate Reserves

Operating Reserve target of 2.5 months of O&M Expenses R&R Reserve target of 5% of prior year gross revenues

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Sewer System – Results

► Very close to minimum required debt service coverage ratio

FY 2009 estimated at 1.29 / 1.33 Without rate adjustments, FY 2010 projected at 1.21 / 1.24

5-Year Projection of Sewer Rate Revenue Increase Requirements FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Retail 5.00% 2.50% 2.50% 2.50% 2.50% Wholesale 5.00% 2.50% 2.50% 2.50% 2.50%

Wholesale Rate

• Res. Bill

(6000 Gallons)

$36.97 $36.07 $35.19 $34.33 $33.50 $31.90 $3.27 $3.19 $3.11 $3.04 $2.96 $2.82 FY 2014 FY 2013 FY 2012 FY 2011 FY 2010 FY 2009 Impacts of Identified Sewer Rate Revenue Increase Requirements

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FY 2009 Residential Rate Survey

Current PCU = $31.90 FY 2010 PCU = $33.50 Survey Average = $35.73

$- $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00 $40.00 $45.00

Pinellas Park Hillsborough County Safety Harbor Dunedin Clearwater Port Richey Tarpon Springs Pasco County Oldsmar Pinellas County Gulfport

• St. Petersburg

Pinellas Park Hillsborough County Safety Harbor Dunedin Clearwater Port Richey Tarpon Springs Pasco County Oldsmar Pinellas County Gulfport St. Petersburg Sewer Bill $42.11 $39.25 $38.90 $37.50 $37.49 $37.01 $36.03 $35.64 $32.99 $31.90 $31.65 $31.59

Sewer Bill Survey @ 6000 Gallons Per Month

Sewer Bill

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FY 2009 Residential Rate Survey

Current PCU = $60.58 FY 2010 PCU = $64.47 Survey Average = $62.73

$- $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 $80.00 $90.00

Pinellas Park Oldsmar Clearwater Hillsborough County Dunedin Gulfport Safety Harbor Pinellas County Port Richey Tarpon Springs

• St. Petersburg

Pasco County Pinellas Park Oldsmar Clearwater Hillsborough County Dunedin Gulfport Safety Harbor Pinellas County Port Richey Tarpon Springs

• St. Petersburg

Pasco County Water Bill $34.73 $36.24 $30.20 $28.35 $29.84 $30.40 $23.06 $28.68 $21.90 $21.93 $25.93 $20.75 Sewer Bill $42.11 $32.99 $37.49 $39.25 $37.50 $31.65 $38.90 $31.90 $37.01 $36.03 $31.59 $35.64

Combined Water & Sewer Bill Survey @ 6000 Gallons Per Month

Water Bill Sewer Bill

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Reclaimed Water System

► Performed Cost of Service vs. Revenue Analysis

Includes O&M, Existing Capital Investment, and CIP FY 2010 Cost of Service = $16.3M vs. Revenue of $2.3M

► Market Precludes Full Cost Recovery Reclaimed Water Rates ► Developed Plan of Annual Rate Adjustments & Allocated

Annual Shortfall to Water (51%) & Sewer (49%)

5-Year Plan of Reclaimed Water Rate Revenue Increases FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 % Increase 11.11% 10.00% 9.09% 8.33% 7.69%

• Res. Bill

$14.00 $13.00 $12.00 $11.00 $10.00 $9.00 FY 2014 FY 2013 FY 2012 FY 2011 FY 2010 FY 2009 Impacts of Identified Reclaimed Water Rate Revenue Increases

Rate Design Rate Design

Conservation Rates Miscellaneous Fees & Charges

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Sample of Conservation Rate Structure

Customer Service Charge Customer Service Charge Readiness Readiness-

• to

to-

• Serve Charge

Serve Charge

Monthly Usage in 1,000 Gallons Monthly Usage in 1,000 Gallons

5 5 10 10 15 15 … …

Monthly Bill Monthly Bill

$10 $10 $20 $20 $30 $30 $40 $40 $50 $50

The first tier of a conservation rate structure can The first tier of a conservation rate structure can be a "life be a "life-

• line like rate

line like rate“ “ applied at the lower end of the applied at the lower end of the consumption spectrum consumption spectrum … ….. .. ....and conservation rates, which ....and conservation rates, which discourage unnecessary usage by discourage unnecessary usage by increasing the cost per 1,000 gallons increasing the cost per 1,000 gallons at higher levels of usage at higher levels of usage … …. which . which shelters essential shelters essential domestic water usage domestic water usage from high rates from high rates..... ..... Customer Service Charge Customer Service Charge Readiness Readiness-

• to

to-

• Serve Charge

Serve Charge

Monthly Usage in 1,000 Gallons Monthly Usage in 1,000 Gallons

5 5 10 10 15 15 … …

Monthly Bill Monthly Bill

$10 $10 $20 $20 $30 $30 $40 $40 $50 $50

The first tier of a conservation rate structure can The first tier of a conservation rate structure can be a "life be a "life-

• line like rate

line like rate“ “ applied at the lower end of the applied at the lower end of the consumption spectrum consumption spectrum … ….. .. ....and conservation rates, which ....and conservation rates, which discourage unnecessary usage by discourage unnecessary usage by increasing the cost per 1,000 gallons increasing the cost per 1,000 gallons at higher levels of usage at higher levels of usage … …. which . which shelters essential shelters essential domestic water usage domestic water usage from high rates from high rates..... .....

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Conservation Rates

► Analyze Conservation Related Rate Structure Modifications

To promote water conservation via larger price signals to discretionary use Shelter lower volumes of use for essential domestic requirements to maintain affordability

► Analysis Will Include Review of:

Various Inclining Block Rates, Drought Rate Surcharge, Other TBD

► Implementation Requires One-Time Billing System Modifications

Current cost estimate is $500k Timeframe to complete changes is significant

► Target Implementation is Mid-Year FY 2010 (Spring 2010)

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Miscellaneous Service Fees & Charges

► Specific Service Charges That Benefit Certain Customers

Examples include turn-off/turn-on fees, backflow inspections, meter sets, tap fees, grease hauler fees, etc.

► Provided Cost Computation Templates to Staff

Update cost of service for existing fees

► Staff Has Populated Initial Templates & Reviewed with Burton &

Associates

► Staff is Performing Final Modifications to Cost of Service

Calculations

► Once Finalized, Staff Will Bring Back Appropriate

Ordinance/Resolution Amendments

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Discussion

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Wholesale & Retail Water & Sewer Rates TIMETABLE

DATE TASK

June 9, 2009 Rate workshop with BCC July 7 BCC meeting to authorize advertisement and public hearing July 15 Mail certified letters to wholesale customers; begin mailing notices to retail customers along with bills (per Florida Statute 180.136) September 22 BCC meeting for public hearing and adoption

• f new rates

October 1 New rates effective

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Thank You!

www.pinellascounty.org/utilities