SAN ANT AN ANTONIO W ONIO WATER TER SYS SYSTEM TEM Rate - - PowerPoint PPT Presentation

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SAN ANT AN ANTONIO W ONIO WATER TER SYS SYSTEM TEM

Rate Advisory Committee – Meeting #5

December 10, 2019

Ra Rate Adv e Adviso isory y Co Commi mmitt ttee ee (R (RAC) C) Me Meetin ting #5 A g #5 Age gend nda

1. Call to Order – Chairperson 2. Dinner & Deliberation 30 minutes 3. Citizens to be Heard (3 minutes per person) 10 minutes 4. Mission Statement and Ground Rules 3 minutes 5. Meeting Objectives 5 minutes 6. Pricing Objectives Ranking 30 minutes 7. Revenue Requirements 25 minutes 8. Customer Classes and Characteristics 40 minutes 9. Status of Follow-up Items 5 minutes

• 10. Closing Comments

2 minutes

• 11. Adjournment – Chairperson

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Citiz Citizens t ens to be Hea

• be Heard

4

Call t Call to Or

• Order

der

Mis Missio sion n St Stat atem emen ent

The mission of the Rate Advisory Committee is to assemble a diversity of perspectives that represent our community to evaluate and advise on the water, sewer and recycled water rate structures

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Gr Grou

• und

nd R Rul ules es

• 1. Take your own breaks.
• 2. Silence or turn off cell phones.
• 3. One conversation at a time. No side conversations.
• 4. One person talks at a time. No interruptions.
• 5. Everyone participates. Everyone’s input matters and is valuable.
• 6. Be respectful of the ideas of others. Good listening requires concentration and attention.
• 7. Tangent topic or questions? Put it in the “Parking Lot.”
• 8. We share responsibility for making the discussion constructive.
• 9. It’s OK to agree to disagree.

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Me Meetin ting #4 Minu g #4 Minutes es

• Provided in Member Binder
• Includes Matrix of Parking Lot Questions

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Me Meetin ting #5 Obje g #5 Objecti ctives ves

• 1. Discuss Results of Pricing Objectives Exercise
• 2. Discuss Revenue Requirements
• 3. Begin Discussion of Cost of Service Process
• Identify appropriate customer classes for cost of service

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Prici Pricing Objecti ng Objectives ves Resu esults lts

Res esul ults ts

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Classification Objective Score Essential

Affordability 74 Conservation 59

Very Important

Minimize Customer Impacts/Rate Stability 50 Cost of Service Based Allocations 49 Revenue Stability 48

Important

Simple to Understand 41 Equity 40 Drought Management 38

Least Important

Practicality of Implementation 29 Economic Development 23

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Revenue R venue Requi equirements rements

Ra Rate Stud e Study Pr y Proce

• cess

ss

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December 10, 2019 Page 13

2020 Revenue Requirements 1

• Operations & Maintenance

2

• Debt Service & Reserve Fund Requirements

3

• Transfer to the City

4

• Any Surplus Transferred to R&R

(provides debt coverage and cash for funding future capital program)

Rates and Charges Waterfall – SAWS’ Founding Ordinance

Generate Gross Revenues sufficient to pay:

December 10, 2019 Page 14

2020 Revenue Requirements

2020 Budgeted Sources & Uses of Funds

Sources of Funds 2020 Budget Operating Revenues $ 807.1 Non-operating Revenues 22.0 Capital Recovery Fees (Impact Fees) 100.1 T

• tal Sources of Funds

$ 929.2 Uses of Funds 2020 Budget Operations and Maintenance $ 436.0 Debt Service & Expenses 235.9 Transfer to COSA 31.7 Available for R&R – Restricted Funds 108.1 Available for R&R – Unrestricted Funds 117.5 T

• tal Uses of Funds

$ 929.2

(in millions)

December 10, 2019 Page 15

2020 Revenue Requirements

2020 Budgeted Debt Coverage Calculation

SAWS Internal Target of 1.75X --- Other Similarly Rated Credits > 2.0X

Debt Coverage Calculation $ Millions Total Sources of Funds 929.2 $ Less Revenues from: Capital Recovery Fees 100.1 CPS Energy Contract 3.2 Interest on Project Funds 3.0 Gross Revenues as Defined by Ordinance No. 75686 822.9 $ Less: Operations & Maintenance 436.0 Pledged Revenues as Defined by Ordinance No. 75686 386.9 $ Bonded Debt Service 225.3 $ Total Bonded Debt Coverage Ratio 1.72 X

December 10, 2019 Page 16

2020 Revenue Requirements

2020 Sources & Uses by Core Business

(in thousands)

Sources of Funds Water Supply Water Delivery Wastewater Chilled Water T

• tal

T

• tal Operating Revenues

$ 295,991 $ 226,289 $ 274,385 $ 10,415 $ 807,080 Non-Operating Revenues 6,637 6,583 8,815

• 22,035

Capital Recovery Fees 38,363 30,100 31,612

• 100,075

T

• tal

$ 340,991 $ 262,972 $ 314,812 $ 10,415 $ 929,190 Uses of Funds Water Supply Water Delivery Wastewater Chilled Water T

• tal

Operations and Maintenance $ 208,556 $ 94,372 $ 125,618 $ 7,436 $ 435,982 Debt Service and Expenses 43,674 81,562 107,367 3,298 235,901 Transfer to City of San Antonio 10,762 9,256 11,247 417 31,682 R&R - Restricted 44,048 31,084 32,951

• 108,083

R&R - Unrestricted 33,951 46,698 37,629 (736) 117,542 T

• tal

$ 340,991 $ 262,972 $ 314,812 $ 10,415 $ 929,190

December 10, 2019 Page 17

2020 Revenue Requirements

Chilled Water Business Unit

• Chilled Water – Provides cooling services to various

downtown hotels, Convention Center, Alamodome and Port San Antonio tenants

• RAC Bylaws

– The RAC will provide input to the Board of Trustees on a comprehensive study of SAWS rates and fees. – The purpose of the Rate Design Study is to provide SAWS with recommendations regarding the rate structures for water, wastewater and recycled water services.

Not Part of this Rates Advisory Process

December 10, 2019 Page 18

2020 Revenue Requirements

2020 Net Revenues From Rates by Core Business ($ in thousands)

Sources of Funds Water Supply Water Delivery Wastewater

Total Operating Revenues 295,991 226,289 274,385 Non-Operating Revenues 6,637 6,583 8,815 Capital Recovery Fees 38,363 30,100 31,612 Total Sources of Funds 340,991 262,972 314,812

Non-Rate Revenues Water Supply Water Delivery Wastewater

Recovery of EAA Fee 23,616

• Recovery of TCEQ Fee
• 1,822

538 Rate Implementation Timing Adjustment (3,330)

• Special Service Fees and Other Customer Penalties

3,161 12,265 7,082 Stormwater Revenues 5,204

• Reduction for Bill Adjustments & Uncollectible Accounts

(3,987) (3,881) (3,333) Reduction for Affordability Discount Program (1,795) (1,440) (3,308) Intercompany Revenue Reallocation 5,630 (5,630)

• CPS Contract

3,223

• Interest Earned

6,000 6,000 8,000 Build America Bond Subsidy 637 583 815 Capital Recovery Fees 38,363 30,100 31,612 Total Non-Rate Revenues 76,722 39,819 41,406

Net Revenues From Rates 264,269 223,153 273,406

December 10, 2019 Page 19

2020 Revenue Requirements

2020 Capital Improvement Program

By Core Business Wastewater

$413 Million

Water Delivery

$95 Million

Water Resources

$100 Million

Chilled Water

$1 Million

TOTAL

$608.9M

$6M Acquisition $27M Design $547M Construction $29M Overhead

78% Replacement 22% Growth

December 10, 2019 Page 20

2020 Revenue Requirements

2020 Capital Improvement Program Funding

December 10, 2019 Page 21

2020 Revenue Requirements

Texas Residential Water Rate Structure Comparison

$- $10.00 $20.00 $30.00 $40.00 $50.00 $60.00

• 1,000

2,000 3,000 4,000 5,000 6,000 7,000

Texas’ 5 Largest Cities Residential Water Rates 0 – 7,000 Gallons

Austin Dallas Fort Worth Houston San Antonio

SAWS Rate Structure Has Highest Fixed Charge but Relatively Low Volumetric Rates for Low Usage

December 10, 2019 Page 22

2020 Revenue Requirements

Texas Residential Water Rate Structure Comparison

$- $100.00 $200.00 $300.00 $400.00 $500.00 $600.00 $700.00 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000

Texas’ 5 Largest Cities Residential Water Rates 5,000 – 50,000 Gallons

Austin Dallas Fort Worth Houston San Antonio

SAWS Rate Structure Has Highest Fixed Charge but Relatively Low Volumetric Rates for Low Usage UPDATE

December 10, 2019 Page 23

2020 Revenue Requirements

T exas Residential Wastewater Rate Structure Comparison

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

• 1,000

2,000 3,000 4,000 5,000 6,000 7,000

Texas’ 5 Largest Cities Residential Wastewater Rates 0 – 7,000 Gallons

Austin Dallas Fort Worth Houston San Antonio

SAWS Rate Structure Has Highest Fixed Charge but Relatively Low Volumetric Rates

December 10, 2019 Page 24

2020 Revenue Requirements

T exas Residential Water & WW Rate Structure Comparison

$- $20.00 $40.00 $60.00 $80.00 $100.00 $120.00 $140.00

• 1,000

2,000 3,000 4,000 5,000 6,000 7,000

Texas’ 5 Largest Cities Residential Combined Water & WW Rates 0 – 7,000 Gallons

Austin Dallas Fort Worth Houston San Antonio

SAWS Combined Residential Rates are Comparable to Other T exas Cities at Volumes Between 1,000 – 7,000 Gallons

December 10, 2019 Page 25

2020 Revenue Requirements

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Cus Customer Classes and

• mer Classes and

Char Charact acteris eristics tics

Ra Rate Stud e Study Pr y Proce

• cess

ss

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Co Cost of t of Se Servi vice Pr ce Proce

• cess

ss

• Determines the amount of revenue to be recovered from each customer class

based on the costs they impose on the utility

• Follow cost allocation principles as adopted by the American Water Works

Association (AWWA) and Water Environment Federation (WEF)

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All Alloca

• cate R

e Reven venue ue Req equi uire remen ment* t*

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Residential General Class Irrigation Wholesale Recycled Water

TOTAL REVENUE REQUIREMENT

*For illustrative purposes only

Wat ater er Co Cost of t of Se Servi vice ce

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Single Family Residential

Number and size of meters Water Demands Differing Service Characteristics

Multifamily Residential Commercial

Co Cost Al t Allo locat catio ion

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Revenue Requirement

• Cash-Basis
• Utility-Basis

Functionalization

• Budget

Categories* Cost Classification

• Base
• Max Day
• Max Hour
• Meters
• Billing
• Recycled Water
• Fire Protection

Cost Distribution

• Residential
• General Class
• Irrigation
• Wholesale
• Recycled Water

*Categorized or split between Water Supply and Water Delivery

Ex Exis istin ting Cus g Custom

• mer Cla

er Classe sses

Residential (Water/WW)

Inside-City Limits Outside-City Limits

General Class (Water/WW)

Inside-City Limits Outside-City Limits Includes:

• Commercial
• Industrial
• Multi-family

Irrigation (Water Only)

Inside-City Limits Outside-City Limits

Wholesale (Water/WW) Recycled Water

Edwards Exchange Customers Non Edwards Exchange Customers

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Mon Monthl thly Cons y Consum umpti ption

• n (2

(2018 8 Consum Consumption) ption)

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Pr Proce

• cess f

ss for

• r C

Cla lass Dema ss Demand nd F Fact actor

• rs

Annual Consumption

• Based on

Historical Billing Data by Class Average Day

• Divide

Historical Annual Consumption by 365 Days Max Month

• Highest

Month of Historical Usage by Class

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Ca Calcu lcula latio tion of Peaki n of Peaking ng Fact actor

• rs

Day Peaking Factor

• Divide Max

Month by Average Day System Max Day

• Based on

Actual System Data Max Day Peaking Factor

• Multiply Day

Peaking Factor times System Max Day

• 3-Year

Average Max Hour Peaking Factor

• Multiply Max

Day Peaking Factor by MH/MD Ratios*

• 3-Year

Average

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*Based on M1 Manual and Industry Standards

IC ICL 2020 L 2020 For Forec ecas ast t – Un Units its of S

• f Ser

ervi vice ce

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OC OCL 2020 L 2020 For Forec ecas ast t – Un Units its of S

• f Ser

ervice vice

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*

*Max Hour Total of the sub-parts does not equal the General Max Hour Total due to weighting of the individual peaking factors. Results in a 1% difference of the max hour total.

December 10, 2019 Page 37

Customer Classes & Characteristics

What Rate Classes should SAWS have?

• Purpose of rate classes

– Recovery of costs imposed on utility by customer (ie. cost of service) – Potential differentiation in rate design for each rate class

• Disaggregating SAWS General Class

– What do we want to accomplish? – Are there objective parameters to define a new class? – What will be the impact?

• No effect on residential class cost of service
• New subgroups may have cost of service that differs from combined General Class

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December 10, 2019 Page 38

Customer Classes & Characteristics

What do other cities do?

Water Rate Structures

General/Commercial Gas Well Irrigation City/County Residential Non-Residential Multi-Family Industrial Large Volume Drilling Lawn/Outdoor Austin X X X X Dallas X X El Paso X X X X Fort Worth X X X X X Houston X X X X X San Antonio X X X

December 10, 2019 Page 39

Customer Classes & Characteristics

What do other cities do?

Wastewater Rate Structures

General/Commercial One Overall City/County Residential Non-Residential Multi-Family Industrial Large Volume Rate Class Austin X X X X Dallas X X El Paso X Fort Worth X X Houston X X X X San Antonio X X

December 10, 2019 Page 40

Customer Classes & Characteristics

What data is available to disaggregate General Class?

• General Class Subgroups
• Multi-family – water meter serves more than two residential units
• Industrial - accounts requiring sewer related surcharges, fees and

permits

• Commercial - all other non-residential accounts (excluding wholesale

and irrigation)

• Volume usage for individual customers
• Large users

December 10, 2019 Page 41

Customer Classes & Characteristics

What data is available to disaggregate General Class?

• North American Industry Classification System (NAICS)

– Coding system developed by the Office of Management and Budget – Classifies businesses for statistical analysis – In 2018, SAWS Conservation staff assigned NAICS codes to General Class accounts

• Codes are available for 88% of accounts, accounting for approximately 94% of

2018 General Class usage

• Over 700 unique NAICS codes identified

– Data would need to be verified with customers if used as a basis for determining new rate classes

December 10, 2019 Page 42

Customer Classes & Characteristics

What Rate Classes should SAWS have?

Rate Classes Y/N Residential Multi-family Commercial/Non-residential Irrigation Wholesale Other - TBD

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Ques Questions? tions?

Top

• pics

ics f for

• r U

Upco pcomi ming ng Me Meetin tings gs

• January 14th

› Income and Price Elasticity Results › Cost of Service, Part 2

– Allocation of costs to customer classes

• February 4th

› Finalize Cost of Service › Rate Design Introduction

• February 18th

› Rate Design, Part 2

– Affordability Considerations

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