Water and Wastewater Rates in Alabama Webinar on June 22, 2017 - - PowerPoint PPT Presentation

http://efc.sog.unc.edu @EFCatUNC

Water and Wastewater Rates in Alabama

Webinar on June 22, 2017

Bellingrath Gardens

Dedicated to enhancing the ability of governments and other

• rganizations to provide environmental programs and services in

fair, effective, and financially sustainable ways through:

• Applied Research
• Teaching and Outreach
• Program Design and Evaluation

How you pay for it matters Shadi Eskaf Senior Project Director Environmental Finance Center The University of North Carolina at Chapel Hill 919-962-2785

Eskaf@sog.unc.edu

Alabama Department of Environmental Management

Alabama is blessed with a wealth and variety of natural resources which provide significant social, economic, and environmental benefits and opportunities for the citizens of Alabama. Our mission at ADEM is to assure for all citizens of the State a safe, healthful, and productive environment. www.adem.state.al.us Funding for this project was provided by the Alabama Department of Environmental Management’s State Revolving Fund (SRF)

• program. For more information about how the SRF

can help your utility save money and keep rates affordable, please visit http://adem.alabama.gov/programs/water/srf.cnt

• r contact:

James Dailey SRF Section Alabama Department of Environmental Management PO Box 301463 Montgomery, AL 36130-1463 (334) 271-7913 jwd@adem.alabama.gov

• EFC collected utilities’ rate sheets in mid-2016
• Water, wastewater and residential irrigation rates
• Rates for residential, commercial, and industrial

customer classes

• Inside and outside differentials
• Base charges and volumetric rates
• Calculated how much utilities charge customers for

various consumption points

The 2016 ADEM Water and Wastewater Rates Survey

• Audited financial statements of local governments
• Water system data from SDWIS
• Census Place socioeconomic data from Census

Bureau

• SEC football ticket prices

Supplemental Data

448 utilities serving 5.06 million people

– 197 municipalities – 121 not-for-profits – 110 Authorities – 15 County utilities – 5 others, including for-profits

Serve 90% of people served by community water systems in the state

Utilities that Participated

Webpage of all Resources on AL Rates

http://efc.sog.unc.edu/project/alabama-water-and-wastewater-rates-and-rate- structures

• r http://www.adem.state.al.us/programs/water/srf.cnt
• r do an internet search for “Alabama water rates ADEM EFC”

Report and Tables of Rates

Rates and Rate Structures in 2016

All rates reported were current in April 2016. Some utilities may have raised rates since then.

Most data are adapted from the 2016 Water and Wastewater Rate Structures and Rates in Alabama report

Customer Classes

• 43% of water rate structures and 52% of

wastewater rate structures have unique rates for commercial/non-residential customers

• Smaller fraction have unique industrial rates
• Only 3% of rate structures have unique rates

for residential irrigation

• Only 15% of rate structures (25% of

municipalities) have unique rates for outside customers

Next few slides focus on residential rates for inside customers

Adapted from 2016 Water and Wastewater Rate Structures and Rates in Alabama report.

How Base Charges are Priced

Nearly all rate structures include a non-zero base charge. Water base charges are slightly higher than wastewater base charges. Median water base charge = $18.38/month Median wastewater base charge = $15.00/month

Adapted from 2016 Water and Wastewater Rate Structures and Rates in Alabama report.

How Much Usage is Included in the Base Charge?

93% of water rate structures and 67% of wastewater rate structures include a consumption allowance with the base charge. Most are at or near 2,000 gallons/month.

Adapted from 2016 Water and Wastewater Rate Structures and Rates in Alabama report.

How Volumetric Rates are Structured

Water:

Most are on uniform rates. Large systems favor increasing blocks. Many small systems favor decreasing block.

Wastewater:

Majority are on uniform rates. Large number have caps or non-volumetric fixed charges (“Other”).

Adapted from 2016 Water and Wastewater Rate Structures and Rates in Alabama report.

How Block Rates are Structured

Half of the water rate structures have block rates; only 18% of wastewater. Most block rates end the first block between 4,000 – 6,000 gallons/month.

Adapted from 2016 Water and Wastewater Rate Structures and Rates in Alabama report.

How Volumetric Rates are Priced

Water volumetric rates are priced higher than wastewater volumetric rates. At 5,000 gallons/month water use, median water rate = $4.75/1,000 gallons, median wastewater rate = $3.25/1,000 gallons.

Adapted from 2016 Water and Wastewater Rate Structures and Rates in Alabama report.

How Much Do Customers Pay?

Water:

Generally higher than wastewater. Median at 5,000 gallons = $32.80/month Ranges $21-$49

Wastewater:

Generally lower than water. Median at 5,000 gallons = $25.60/month Ranges $15-$41

Adapted from 2016 Water and Wastewater Rate Structures and Rates in Alabama report.

How Often Do Rates Change?

Excerpt from 2016 Water and Wastewater Rate Structures and Rates in Alabama report.

66% of rate structures had changed within the last 2.5 years.

As of April 2016

Are Rates Sufficient?

Adapted from 2016 Water and Wastewater Rate Structures and Rates in Alabama report.

30% of utilities had less operating revenues than operating expenses in FY2014 or FY2015

Utilities with high rates but still not recovering costs

Are Rates Affordable?

Adapted from 2016 Water and Wastewater Rate Structures and Rates in Alabama report.

Half of the utilities’ water rates at 5,000 gallons/month is equivalent to more than 1.14% of the community’s median household income. For wastewater, the median is 0.88% MHI.

Comparing Rates – the Old Way

Source: NC Triangle J Council of Government

• Available at http://efc.sog.unc.edu
• Free; open to the public
• Compares rates across utilities
• Assesses recent financial performance
• Evaluates affordability
• Measures strength of conservation

price signal

AL Water and Wastewater Rates Dashboard

Compare Your Rates to Rates of Utilities that have Similar …

Location Size Rate Structure

$

Demographics Source Financials

$

Demonstrate the AL Rates Dashboard

Go to: efc.sog.unc.edu and search for “Alabama Rates Dashboard”

Or google search “AL water and wastewater rates dashboard EFC” Click here for a direct link

Next Webinar: Tuesday, June 27, 2017

Designing Appropriate Rate Structures for Water and Wastewater Utilities in AL How you charge your customers can be as important as how much you charge them. Different rate structure designs affect revenue generation and can either help or hinder varying objectives of the utility. Several designs of rate structures can be used to produce the same level of revenue for a water system, but each rate structure promotes fairness, affordability, conservation, business incentives, and other

• bjectives at varying degrees.

This webinar will describe different elements of water and wastewater rate structures and when it is appropriate to favor certain elements or rate structure designs over

• thers based on the unique characteristics and objectives of the utility. Elements of

rate structures include customer classifications, base charges, consumption allowances, volumetric rates, etc. Examples will be discussed and participants will have opportunities to ask questions.

http://efc.web.unc.edu

Blog posts include topics on:

• Declining demands
• Increasing rates
• Financial performance indicators
• Conservation pricing
• Debt
• What’s wrong with %MHI
• Affordability
• Financial strategies
• Communication strategies
• Inflation for cost of capital
• And much more!

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Small water systems

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Sign up for free in-depth (multi-day or multi-hour) direct assistance Collection of resources for small water systems (tools, guides) Workshops, webinars, and recordings Free, thanks to a cooperative agreement with the U.S. E.P.A.

http://efc.sog.unc.edu

@EFCatUNC

Thank you. Acknowledgement: ADEM. Shadi Eskaf 919-962-2785 eskaf@sog.unc.edu