UTILITIES OPTIMIZATION PROGRAM UTILITY USER FEE ADJUSTMENTS: FOG - - PowerPoint PPT Presentation

UTILITIES OPTIMIZATION PROGRAM

UTILITY USER FEE ADJUSTMENTS: FOG FEES

JULY 9, 2019

FEE REVISION BACKGROUND

UTILITY USER FEE ADJUSTMENTS: FOG FEES

KEY POINTS

• Budget priority is to

generate full cost recovery on services with highly individualized benefits

• FOG fees have not been

adjusted in 25 years so ratepayers are subsidizing these services

• Revenue identification

and full cost recovery are goals of the Utilities Optimization Program

Rate Revenue User Fee Revenue

• Basic services to all customers
• Adjusted annually since 2010
• Specific services to individual users
• Adjusted irregularly prior to 2019

1

Background

• Program cost analysis completed in early 2019
• ~100 other utility fee adjustments approved April 16, 2019
• Fats, Oils, and Grease (FOG) Program fees were delayed to

address stakeholder feedback received

CURRENT COST RECOVERY

UTILITY USER FEE ADJUSTMENTS: FOG FEES

KEY POINTS

• Program costs include:
• Permitting/inspection

program

• Sewer line

maintenance

• Fees include:
• Annual permit fee
• Monthly grease

maintenance fee

• $388,278 in undercharged

fees are subsidized by rates

2

$1.6 Million

20% Costs Unrecovered

Current Fee Revenue $281,292 Unrecovered Cost $388,278

CUSTOMER OUTREACH SUMMARY

UTILITY USER FEE ADJUSTMENTS: FOG FEES

KEY POINTS

• Stakeholders include all

food establishments and the Kansas Restaurant & Hospitality Association (KRHA)

• Feedback from

stakeholders centers around sudden jump in fee amount and equity

• f the current monthly

fee structure

3

• Original plan: Retain fee structure and raise fees
• 1st comment period: February – March 2019
• Direct mailing to all food establishments
• Conversations with Kansas Restaurant & Hospitality

Association

• Comments received from 11 individuals and KRHA
• Increases too large
• Gradual increases preferred
• Fee burden unfair to small or limited menu businesses
• Concern that other businesses such as apartment

complexes are not sharing the cost burden

• High cost of installing best available technology

CUSTOMER OUTREACH SUMMARY

UTILITY USER FEE ADJUSTMENTS: FOG FEES

KEY POINTS

• In response to

feedback, staff have developed a new fee structure

• Received several phone

calls asking for clarification on new fee categories, but only

• ne negative comment

4

• New fee structure proposed
• Grease maintenance costs shared

by more users

• Discount for low grease producers
• Increases phased in over 4 years
• Rebate offered for voluntary

equipment upgrade

• 2nd comment period: May 2019
• Direct mailings
• Meeting with KRHA small group
• One comment received from an

individual who wants a discount for small, local businesses

AUTOMATIC GREASE REMOVAL DEVICE (AGRD)

FINAL TAKEAWAYS

UTILITY USER FEE ADJUSTMENTS: FOG FEES 5

• Proposed ordinance changes will implement new fee structure with fee

increases over four years

• First year’s fee increase will be effective September 1, 2019
• Ordinance revisions include several updates to reflect current practices
• Today’s action would generate approximately $400,000 in new revenue by

year 4 (2023)

• Program costs and revenue will be evaluated regularly after the 4th year to

determine if fee adjustments are needed

End of Presentation

Remaining slides are for reference and are not a part of the presentation

GREASE FEES – ORIGINAL PROPOSAL

BUSINESS PLAN & FEE REVISIONS: FOG FEES

KEY POINTS

• Annual fee assessed to all

food service facilities to cover regulatory inspections

• Monthly fee only charged

to food services facilities that do not have a grease interceptor

• Extra costs for sewer

inspections and cleanouts to prevent grease blockages are covered by the monthly fee

7

Description Cost Labor $215,981 Fleet & Fuel $3,243 Program Software $4,600 Supplemental Treatment $20,160 Franchise Fees (5%) $12,199 Total $256,183 Permitted Facilities 1,554 Total / Facilities $164.85 Original Proposed Fee $165 ANNUAL FOOD SERVICE PERMIT MONTHLY GREASE MAINTENANCE Description Cost Labor $357,012 Fleet & Fuel $31,182 Franchise Fees (5%) $19,410 Total $407,604 Participating Facilities as

• f February 6, 2019

313 Monthly Total / Facilities $108.52 Original Proposed Fee $110

GREASE FEES – CURRENT PROPOSAL

BUSINESS PLAN & FEE REVISIONS: FOG FEES

KEY POINTS

• Generates same total

revenue as original plan

• 4‐year phase in of new

fees

• Accounts for inflation
• Monthly fee spread

among more users – adds new fee to 370 AGRD users

• Low grease discount
• Achieves full cost recovery

8

Current Fee New Fee (Year 4) Annual permit fee (all users) $50 $180 Monthly fee (Grease interceptor) $0 $0 Monthly fee (AGRD user/Low Grease) $0 $22 Monthly fee (AGRD user/Standard) $0 $45 Monthly fee (No Device/Low Grease) $0* or $41.20 $45 Monthly fee (No Device/Standard) $0* or $41.20 $89 *Some establishments were previously grandfathered in with no monthly fee

Plus users who pay the monthly grease maintenance fee are eligible for a rebate for voluntarily installing an underground gravity grease interceptor equivalent to the past 12 months of monthly fees paid (value up to $1,068)

GREASE FEES – LOW GREASE DISCOUNT

BUSINESS PLAN & FEE REVISIONS: FOG FEES

KEY POINTS

• Applies only to users who

pay the monthly grease maintenance fee

• Discount intended for

bakeries, delis, coffee shops, and convenience stores who do not engage in any of the prohibited activities

• Approximately 30% of

establishments will qualify for the discount

9

Low Grease Discount Eligibility Guidelines:

At the discretion of the Superintendent of the Water Resource Recovery Division, facilities may be eligible for a discounted monthly fee after review of menu and food preparation and handling practices. Facilities might be eligible if they prepare and/or serve only baked goods, coffee, ice cream, or precooked foods that are stored in the original packaging until heated for service, such as hot dogs on a roller grill. Food preparation activities or situations which are ineligible for a discount include, but are not limited to, the following: 1. Frying, including donuts 2. Cooking meat, poultry, seafood, or pizza 3. Washing dishes from catered meals or foods prepared offsite 4. Presence of a garbage disposal 5. Any facility which has been found to be contributing grease in quantities sufficient to cause sanitary sewer line stoppages or to necessitate increased maintenance on the sanitary sewer collection system in order to keep main line stoppages from occurring.