UTILITIES OPTIMIZATION PROGRAM UTILITY USER FEE ADJUSTMENTS: FOG FEES JULY 9, 2019
FEE REVISION BACKGROUND Rate Revenue User Fee Revenue KEY POINTS • • Basic services to all customers Specific services to individual users Budget priority is to • • Adjusted annually since 2010 Adjusted irregularly prior to 2019 generate full cost recovery on services with Background highly individualized benefits FOG fees have not been • Program cost analysis completed in early 2019 adjusted in 25 years so ratepayers are subsidizing • ~100 other utility fee adjustments approved April 16, 2019 these services • Fats, Oils, and Grease (FOG) Program fees were delayed to Revenue identification and full cost recovery are address stakeholder feedback received goals of the Utilities Optimization Program UTILITY USER FEE ADJUSTMENTS: FOG FEES 1
CURRENT COST RECOVERY KEY POINTS Program costs include: Permitting/inspection program Sewer line Current Fee maintenance Revenue $281,292 Fees include: Unrecovered Cost Annual permit fee $388,278 Monthly grease maintenance fee $1.6 Million $388,278 in undercharged 20% Costs Unrecovered fees are subsidized by rates UTILITY USER FEE ADJUSTMENTS: FOG FEES 2
CUSTOMER OUTREACH SUMMARY Original plan: Retain fee structure and raise fees KEY POINTS 1 st comment period: February – March 2019 Stakeholders include all Direct mailing to all food establishments food establishments Conversations with Kansas Restaurant & Hospitality and the Kansas Restaurant & Association Hospitality Association Comments received from 11 individuals and KRHA (KRHA) Increases too large Feedback from Gradual increases preferred stakeholders centers Fee burden unfair to small or limited menu businesses around sudden jump in Concern that other businesses such as apartment fee amount and equity of the current monthly complexes are not sharing the cost burden fee structure High cost of installing best available technology UTILITY USER FEE ADJUSTMENTS: FOG FEES 3
CUSTOMER OUTREACH SUMMARY New fee structure proposed KEY POINTS Grease maintenance costs shared In response to by more users feedback, staff have Discount for low grease producers developed a new fee Increases phased in over 4 years structure Rebate offered for voluntary Received several phone equipment upgrade calls asking for 2 nd comment period: May 2019 clarification on new fee categories, but only Direct mailings one negative comment Meeting with KRHA small group One comment received from an individual who wants a discount for small, local businesses AUTOMATIC GREASE REMOVAL DEVICE (AGRD) UTILITY USER FEE ADJUSTMENTS: FOG FEES 4
FINAL TAKEAWAYS 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 4 th year to determine if fee adjustments are needed UTILITY USER FEE ADJUSTMENTS: FOG FEES 5
End of Presentation Remaining slides are for reference and are not a part of the presentation
GREASE FEES – ORIGINAL PROPOSAL ANNUAL FOOD SERVICE PERMIT MONTHLY GREASE MAINTENANCE KEY POINTS Description Cost Description Cost Annual fee assessed to all Labor $215,981 Labor $357,012 food service facilities to cover regulatory Fleet & Fuel $3,243 Fleet & Fuel $31,182 inspections Program Software $4,600 Monthly fee only charged Franchise Fees (5%) $19,410 Supplemental Treatment $20,160 to food services facilities that do not have a grease Total $407,604 Franchise Fees (5%) $12,199 interceptor Total $256,183 Participating Facilities as 313 Extra costs for sewer of February 6, 2019 Permitted Facilities 1,554 inspections and cleanouts to prevent grease Monthly Total / Facilities $108.52 Total / Facilities $164.85 blockages are covered by the monthly fee Original Proposed Fee $110 Original Proposed Fee $165 BUSINESS PLAN & FEE REVISIONS: FOG FEES 7
GREASE FEES – CURRENT PROPOSAL KEY POINTS Current Fee New Fee (Year 4) Annual permit fee (all users) $50 $180 Generates same total Monthly fee (Grease interceptor) $0 $0 revenue as original plan Monthly fee (AGRD user/Low Grease) $0 $22 4‐year phase in of new Monthly fee (AGRD user/Standard) $0 $45 fees Monthly fee (No Device/Low Grease) $0* or $41.20 $45 Accounts for inflation Monthly fee (No Device/Standard) $0* or $41.20 $89 Monthly fee spread *Some establishments were previously grandfathered in with no monthly fee among more users – adds new fee to 370 AGRD Plus users who pay the monthly grease maintenance fee are users eligible for a rebate for voluntarily installing an underground Low grease discount gravity grease interceptor equivalent to the past 12 months of Achieves full cost recovery monthly fees paid (value up to $1,068) BUSINESS PLAN & FEE REVISIONS: FOG FEES 8
GREASE FEES – LOW GREASE DISCOUNT Low Grease Discount Eligibility Guidelines: KEY POINTS At the discretion of the Superintendent of the Water Resource Recovery Division, facilities Applies only to users who may be eligible for a discounted monthly fee after review of menu and food preparation and pay the monthly grease handling practices. Facilities might be eligible if they prepare and/or serve only baked maintenance fee 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 Discount intended for which are ineligible for a discount include, but are not limited to, the following: bakeries, delis, coffee 1. Frying, including donuts shops, and convenience 2. Cooking meat, poultry, seafood, or pizza stores who do not engage in any of the prohibited 3. Washing dishes from catered meals or foods prepared offsite activities 4. Presence of a garbage disposal 5. Any facility which has been found to be contributing grease in quantities sufficient to Approximately 30% of cause sanitary sewer line stoppages or to necessitate increased maintenance on the establishments will qualify sanitary sewer collection system in order to keep main line stoppages from occurring. for the discount BUSINESS PLAN & FEE REVISIONS: FOG FEES 9
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