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  • 1. Water Rate Analysis
    Will Norris
    Administrative Intern
    City of The Dalles
    Note to reader: Extra text has been added to the following slides that didn’t exist in the original PowerPoint, as it had a verbal presentation.
    For further information please refer to the 7/25/11 Council Agenda Packet at:
    http://www/newsite/sites/default/files/imported/agendas/city_council/PDFs/Agenda072511.pdf
  • 2. Agenda
    Water Utility Background
    • Water Consumption
    • 3. Previous Forecasts and Actuals
    • 4. Expenditures and Revenues
    Capital Requirements
    • Operations
    • 5. Capital Improvements
    Revenue Predictions
    Future Options
    City of the Dalles - Water Rate Analysis
  • 6. Background
    Capital Requirements
    Revenue Predictions
    Options
    Consumption History
    Metered water data from Utility Billing shows that system-wide water use has changed little in the past ten years
    Possible reasons could include conservation, reaction to higher water prices and more water efficient appliances
    City of the Dalles - Water Rate Analysis
  • 7. Background
    Capital Requirements
    Revenue Predictions
    Options
    Previous Revenue Predictions
    Previous revenue predictions assumed increasing water use and more development.
    Lower than expected water sales has meant that revenue expectations have not been met
    Difference
    $1.3 Million
    City of the Dalles - Water Rate Analysis
  • 8. Background
    Capital Requirements
    Revenue Predictions
    Options
    Water Utility History
    Flat Rates/Lowered Reserves
    Rate Increases/Capital Investments
    City of the Dalles - Water Rate Analysis
  • 9. Background
    Capital Requirements
    Revenue Predictions
    Water Utility Personnel and Materials(2011 Dollars)
    City of the Dalles - Water Rate Analysis
    Options
    Adjusting for inflation, the operating costs within the Water Utility have ,on average, increased 1.6% per year.
    This is as healthcare, energy and metals prices have experienced large increases.
  • 10. Revenue Predictions
    FY 2011/12 Debt Service
    City of the Dalles - Water Rate Analysis
    2007 Water Revenue Bond $561,405
    (Wicks Clear Well, Dam permitting, Lone Pine well)
    FFC 2008 $59,971
    (Public Works Shop Relocation)
    FFC 2009 $32,421
    (West 1st Local Improvement District)
    ARRA Loan $200,892
    (Vista Reservoir)
    Total $854,689
    Options
    Background
    Capital Requirements
    While operating costs have remained stable, implementing the Water Master Plan as well as meeting unexpected regulatory costs has substantially increased the debt of the utility.
  • 11. Required Revenue to meet Expenses
    Background
    Capital Requirements
    Revenue Predictions
    Options
    Meeting current debt service and continuing forward historic price trends will require significant increases in Revenue in order to maintain fund balances.
    City of the Dalles - Water Rate Analysis
  • 12. Capital Projects
    City of the Dalles - Water Rate Analysis
    Background
    Capital Requirements
    Revenue Predictions
    Options
    There are still many projects that need to be completed in the next decade. Only one of which is primarily capacity enhancement.
    The rest are meeting federal regulations or securing the quality and quantity of water the city already uses
  • 13. Background
    Capital Requirements
    Revenue Predictions
    Options
    Revenue Predictions
    Previous revenue predictions created hypothetical scenarios and then calculated what billing would result.
    This analysis instead used a regression equation to model the relationship between rate increases and additional revenue.
    Note: Background graph is not necessarily actual model statistics
    City of the Dalles - Water Rate Analysis
  • 14. Background
    Capital Requirements
    Revenue Predictions
    Options
    Years with flat rate increases saw flat revenue growth. After instituting successive 10% rate increases, each year saw about a $311,000 increase in revenue.
    + 10% rate
    + $311k
    + 0% rate
    + $3k revenue
    City of the Dalles - Water Rate Analysis
  • 15. Background
    Capital Requirements
    Revenue Predictions
    Options
    Using this relationship to model a regression equation, any increment of rate increases can be used to estimate revenue growth.
    City of the Dalles - Water Rate Analysis
  • 16. Background
    Capital Requirements
    Revenue Predictions
    Options
    City of the Dalles - Water Rate Analysis
  • 17. Background
    Capital Requirements
    Revenue Predictions
    Options
    Options
    On-time
    • This is a safe scenario
    • 18. Each capital investment completed as planned
    Delayed
    • Each project is delayed several years to allow the supporting rate base to grow
    Critically Delayed
    • Increases risk of infrastructure failure and emergency maintenance
    Minimum Rate Increases
    Stable Rate Increases
    City of the Dalles - Water Rate Analysis
  • 19. Background
    Capital Requirements
    Revenue Predictions
    Options
    Option #1 On Time
    Least risk and highest upfront cost option
    Eight of the ten projects are bonded in FY 11/12. The last two projects, port pipeline extension and replacing the finished water pipeline are bonded in FY 16/17
    City of the Dalles - Water Rate Analysis
  • 20. Background
    Capital Requirements
    Revenue Predictions
    Options
    Option #2 A Delayed
    Each project delayed several years
    Three bond issues required
    Thompson/19th street project is paid with cash in FY 11/12. The first bonding begins in FY 14/15.
    This plan requires three rounds of bonding.
    City of the Dalles - Water Rate Analysis
  • 21. Background
    Capital Requirements
    Revenue Predictions
    Options
    Option #2 B Delayed
    Rates are spread more evenly
    Fund Balances grow before projects
    Exact same Capital Project timeline at Option #2 A.
    Version B prioritizes stable rate increases, rather than just-in-time rate increases.
    City of the Dalles - Water Rate Analysis
  • 22. Background
    Capital Requirements
    Revenue Predictions
    Options
    Option #3 A Critically Delayed
    Projects pushed to their furthest extreme
    Dog River Permitting will require renewal
    Thompson/19th st. is still paid cash this year. The largest project, Dog River Pipeline and the Finished Water Pipeline are delayed until FY 19/20.
    City of the Dalles - Water Rate Analysis
  • 23. Background
    Capital Requirements
    Revenue Predictions
    Options
    Option #3 B Critically Delayed
    More evenly spacing rate increases leads to a large growth in fund balances
    Version B prioritizes more stable rates. However, with the two larges projects, Dog River pipeline and Finished water pipeline replacements both delayed, major rate increases at the end of the decade are unavoidable.
    City of the Dalles - Water Rate Analysis
  • 24. Discussion
    City of the Dalles - Water Rate Analysis

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