052011 DEP Water Rate Proposal


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Details of this year's water rate proposal.

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  • Four core functions: provide effective and responsive customer service run a safe and high performing water utility make cost-effective capital investments achieve a sustainable quality of life for all city residents. 6000 employees$11 billion capital budgetWe’ve spent the past 13 months creating a strategic plan which will serve as DEP’s roadmap for the next 3 yearsHere are the highlights
  • DEP uses the monies generated by water and sewer rates to run the water and sewer system, and to make capital investments necessary to continue to provide clean drinking water and harbor waters over the long term For 2011 Forecast:Debt Service: 47%, or $1.4B- Achieved Debt Service savings of ~$89M in FY 2011 because of lower interest rates than projected, particularly on variable rate debt- Are defeasing $260M of debt; money from strong revenue collections and budget savings O&M: 34%, or $1.0B- Includes $75M expense reduction- and difference in forecast from plan includes $88M O&M surplus funds from labor settlement and other savings- In coming year, plan to issue RFP to retain consultant to review O&M expenses and find additional efficiencies(O&M Forecast is net of $88M carryforward from FY 2010) Year-end Cash Balance: 10%, or $295MThe Year-end Cash Balance only accrues in the last month of the year if collections and expenses have been on plan. Then, at the beginning of the next year, the money is spent to pay expenses (debt service), and thereby mitigate the rate increase.This year, people used 10% more water during the summer than in the prior year, which resulted in more revenue than planned, and we’ll use cash balance to pay the first expenses that arise next year, which is helping keep the rate down.Last year, at the end of March, our revenue collections were 5.6% behind Plan and we would have been in the hole if we hadn’t had Debt Service & O&M savings Water Finance Authority & Water Board Expenses: 1%, or $43M83% (or $36M) of this is Authority expenses, which include variable rate debt service remarketing and liquidity chargesThe remainder includes consultants retained through the Water Board, such as the financial advisor on public-private partnershipsAlso have been streamlining operations of Water Board staff, with an increased emphasis on analyzing data, transferred staff to ACCO, negotiated ~$60K of savings in lockbox contract Rental Payment to the City: 7%, or $202M- Rental payment is equal to 15% of annual debt service- Because of DS savings in FY 2011, the FY11 estimate has decreased from $220M to $202M Indirect Expenses: $19M estimate; Judgments & Claims: $8M estimate - Both are set-asides for such expenses as they arise
  • In many cases, these are necessary investments for the long-term protection of the City’s water supply But building them all at once has driven-up debt service costs substantially in recent years We are actively working with regulatory partners to address future compliance issues with sustainable investments made over a reasonable time period that balances competing system needs
  • 4. Develop a leak notification system for customers who want to know when their water use deviates from normal consumption patterns.Using new real-time consumption data available through AMR online, DEP will launch a voluntary notification program by January 2011 to alert property owners when their water consumption appears to deviate from normal usage. Spikes in water use can indicate a leak that could substantially increase a homeowner’s water bills if not quickly addressed. We will also develop a smart phone application that will allow customers to track their water use and respond to potential leaks and consumption spikes on the go.6. Continue and expand programs for customers in financial distress.DEP currently runs two programs that provide support and assistance for customers in financial distress: the Safety Net Referral Program (SNRP) uses an existing network of City agency and not-for-profit programs to help customers with financial counseling, low-cost loans, and legal services. The Water Debt Assistance Program (WDAP) provides temporary water debt relief for qualified property owners who are at risk of mortgage foreclosure. In addition to these programs, we will continue to offer payment plans for customers who may have difficulty paying their entire bill at once. We will also undertake an aggressive communications campaign to make sure customers know about these programs and any exclusions they may be qualified to receive, such as the Senior Citizens Homeowner’s Exemption (SCHE) and the Disabled Homeowner’s Exemption (DHE).
  • 052011 DEP Water Rate Proposal

    1. 1. REBNYReal Estate Board of New York570 Lexington Avenue May 3, 2011 <br />
    2. 2. DEP Water Supply System<br />2<br />
    3. 3. DEP Waste Water Treatment System<br />3<br />
    4. 4. DEP’s Mission<br />DEP must supply, deliver, and treat the water 9 million New Yorkers need every day; protect and improve the waters that surround us, the air we breathe, and New Yorker’s overall quality of life.<br /><ul><li>100 Strategies and Initiatives to achieve this mission in 4 core areas:
    5. 5. Serving 9 million customers
    6. 6. Operating the safest, highest-performing water utility at the lowest possible cost
    7. 7. Building capital projects on time and on budget
    8. 8. Delivering clean waters, clean air, and a sustainable quality of life for all New Yorkers</li></ul>4<br />
    9. 9. 3<br />FY 2012 Rate Proposal Summary<br /><ul><li>Proposing 7.5% rate increase; 35% lower than March 2010 projection
    10. 10. Offering 2% discount for enrolling in paperless billing and direct debit
    11. 11. Create a My DEP Account and register online at www.nyc.gov/dep
    12. 12. Net increase for customers who take advantage of discount is 5.4%</li></li></ul><li>6<br />Capital Outlook<br /><ul><li>$14.9B (72%) of capital commitments for FY 2002 to 2010 were driven by mandates
    13. 13. DEP is working with state and federal regulators to eliminate, reduce and defer future mandates</li></ul>Capital Outlook FYs 2007—2015 <br />($ in billions)<br />
    14. 14. 7<br />Capital Expenditures & Debt Service Impact<br /><ul><li>There is a time lag between Commitments and Expenditures; debt is issued as Expenditures are incurred
    15. 15. From $22.5B of Commitments made from FY 2002 to 2011, Expenditures have totaled $19.4B and net debt issuance is projected to total $16.6B in the same period
    16. 16. Annual Net Debt Service increased by 134% between FY 2002 and FY 2011 and is projected to increase by $193 million or 17% in 2012
    17. 17. In future years, even though annual Commitments and Expenditures decrease, Annual Net Debt Service continues to rise</li></li></ul><li>FY 2011 Budget (Projected)<br />8<br />FY 2011 Budget<br />* Debt Service is net of prior year-end cash balances and includes $260 million of cash defeasance of bonds in FY 2011<br />
    18. 18. Legal Mandates Cost Average Homeowner $169<br /><ul><li>The annual cost for commercial and industrial customers is $2,108 and $210,831 respectively</li></ul>*Debt Service Impact is net of any carryover for the years in question<br />9<br />
    19. 19. Critical System Investments<br />10<br /><ul><li>The annual cost for commercial and industrial customers is $1,081 and $108,141 respectively</li></ul>*Debt Service Impact is net of any carryover for the years in question<br />
    20. 20. Customer Service <br /><ul><li>Develop a leak notification system for customers who want to know when their water use deviates from normal consumption patterns
    21. 21. Continue programs such as WDAP for customers in financial distress
    22. 22. Increase online permitting for businesses, engineers, and contractors
    23. 23. Consolidate permitting functions to simplify customer interactions with DEP</li></ul>11<br />
    24. 24. 12<br />Customer Initiatives: My DEP Account<br /><ul><li>My DEP Account is your one stop shop for all the information you need to know about your water and sewer account
    25. 25. From My DEP Account, you can:
    26. 26. See your water use
    27. 27. Pay your bill
    28. 28. Get a 2% discount by signing up for direct debit
    29. 29. Sign up for paperless billing
    30. 30. And just added: leak notification email alerts
    31. 31. Go to www.nyc.gov/dep and click on the blue My DEP Account button to sign up
    32. 32. Even if you don’t have a wireless water meter and can’t see your water use just yet, you can still register to pay your bill online </li></li></ul><li>13<br />Customer Initiatives: My DEP Account<br />My DEP Account gives you access to all the tools you need to effectively manage your account<br />
    33. 33. 14<br />Customer Initiatives: Wireless Meter Reading<br /><ul><li>By registering at My DEP Account, you can see your water use daily, weekly, or monthly </li></li></ul><li>15<br />Customer Initiatives: Paperless Billing<br /><ul><li>DEP is now offering its customers the opportunity to receive their quarterly bills electronically instead of by mail
    34. 34. If you sign up, you will no longer receive a paper bill in the mail. Instead, you’ll receive an email when your next bill is due.
    35. 35. Then, you can login to My DEP Account to view your bill and pay online. You can even print the bill if you want a copyforyour records.
    36. 36. Going paperless saves paper and money. It’s the environmentally friendly way to receive your water bill.</li></li></ul><li>16<br />Customer Initiatives: Direct Debit Discount<br /><ul><li>Did you know that you can get a 2% discount on you water bill?
    37. 37. To take advantage of this offer, customers should first register at My DEP Account and create an online payment profile
    38. 38. To receive the 2% discount, you must set up your account to automatically pay your bill in full within 5 days of the bill being issued
    39. 39. The 2% discount will appear as a credit on your NEXT bill. It will not appear on the first bill you receive after registering for the discount
    40. 40. This discount is currently available for all bills issued through June 30, 2011</li></li></ul><li>17<br />Leak Notification<br /><ul><li>DEP recently introduced leak notification
    41. 41. Available for 1-3 family homes with wireless meter reading devices installed
    42. 42. Customers sign up online to receive email notifications when their water use increases significantly over a period of several days
    43. 43. Enables customers to respond quickly to potential leaks and fix them before they become a serious billing problem</li></li></ul><li>Water Conservation Seminars<br /><ul><li>DEP runs a series of three-hour seminars on water conservation, water/sewer billing and the transition to metered billing. The classes are free.
    44. 44. The seminars cover:</li></ul>Basics of water/sewer billing (flat-rate and metered billing) <br />Transition to metered billing <br />How to measure and account for water/sewer costs <br />Toilets, showers, boilers, hot water heaters and other equipment <br />Managing and account for water use <br /><ul><li>Please see the attached presentation for a comprehensive outline of the subjects covered in the seminar
    45. 45. DEP would be happy to schedule a couple of water conservation seminars for REBNY and its members</li></li></ul><li>Enforcement<br /><ul><li>On March 16, 2011 Mayor Bloomberg signed Local Law Intro-26-A which reauthorizes and extends to 2014 the authority to sell liens based on delinquent property taxes or delinquent water and sewer charges
    46. 46. Currently, for single-family properties, DEP’s only enforcement tool are water shut-offs. Which are costly and are a serious drain on our resources.
    47. 47. DEP estimates that it could collect $28.5M in 2011 had the lien sale reauthorization included a provision for single-family homes
    48. 48. DEP recently sent out an RFP to enhance enforcement efforts among single-family homeowners who are delinquent </li></ul>19<br />
    49. 49. 16<br />FY 2012 Rate Proposal Summary<br /><ul><li>Proposing 7.5% rate increase; 35% lower than March 2010 projection
    50. 50. Offering 2% discount for enrolling in paperless billing and direct debit
    51. 51. Create a My DEP Account and register online at www.nyc.gov/dep
    52. 52. Net increase for customers who take advantage of discount is 5.4%</li></li></ul><li>2<br />FY 2011 Highlights<br /><ul><li>Developed and launched 100-point Strategic Plan
    53. 53. Implemented major Customer Service initiatives, including Wireless Meter Reading Online and Leak Notification
    54. 54. Achieved 8% expense reduction of $75M
    55. 55. Reprioritized entire 10-year capital plan to focus on greatest needs, asset management, and state-of-good repair
    56. 56. Unveiled design and timeline to repair leaks in the Delaware Aqueduct
    57. 57. Proposed landmark Green Infrastructure Plan to address combined sewer overflows (CSOs)
    58. 58. Strongly advocated for regulatory reform at the State and Federal levels</li></li></ul><li>Next Steps<br /><ul><li>Schedule water conservation seminars for building managers
    59. 59. Build an online component to reach a larger audience
    60. 60. Create a downloadable conservation package that allows building managers to inform their tenants about the importance of conservation</li></ul>22<br />