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Water Talks - Water Rates: What do they pay for?
Water Talks - Water Rates: What do they pay for?
Water Talks - Water Rates: What do they pay for?
Water Talks - Water Rates: What do they pay for?
Water Talks - Water Rates: What do they pay for?
Water Talks - Water Rates: What do they pay for?
Water Talks - Water Rates: What do they pay for?
Water Talks - Water Rates: What do they pay for?
Water Talks - Water Rates: What do they pay for?
Water Talks - Water Rates: What do they pay for?
Water Talks - Water Rates: What do they pay for?
Water Talks - Water Rates: What do they pay for?
Water Talks - Water Rates: What do they pay for?
Water Talks - Water Rates: What do they pay for?
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Water Talks - Water Rates: What do they pay for?

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Director of Finance Tracy McCraner provides an overview of the Water Authority's rates. She reviews what makes up rates, why they are increasing, what the rate drivers are and what the future may hold …

Director of Finance Tracy McCraner provides an overview of the Water Authority's rates. She reviews what makes up rates, why they are increasing, what the rate drivers are and what the future may hold for the San Diego region. From the September Water Talks: Water Rates: Funding a Reliable Future

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  • 1. Finance Director/Treasurer, Tracy McCraner September 18, 2012 1
  • 2.  What do we spend our money on How do we manage costs/fiscal responsibility Key Rate and Charge Drivers Summary 2
  • 3. Water purchases & treatment $700,474 49% CIP Expenditures $321,129 23% Debt service $280,394 20% Operating departments $87,715 6% Hodges operations $6,052 <1% Equipment replacement $1,220 <1% Other expenditures $20,449 1% $1,417,434 100% Three categories account for 92% of the total budget:Water Purchases CIP Debt Serviceand Treatment 49% 23% 20% 3
  • 4.  Water Authority’s Two-Year Budget for Fiscal Years 2012 and 2013 reflects a number of cost reduction and rate mitigation strategies in light of the “new normal – decrease of 16% from previous two-year budget ◦ Significant staffing reductions  31.33 positions (FTEs) or 16.4% eliminated in the Budget  Shift from building to managing existing assets ◦ Two-year no net cost MOUs ◦ Increased PERS employee cost sharing Strong Fiscal Policies: Debt/Reserves/Investment Rate Relief approved by the Board by lowering debt coverage level for FY 2013 4
  • 5.  Increasing cost of water from suppliers Significant investment in capital improvements and planned debt service Reduced water sales volumes 5
  • 6. Projected CY 2013 M&I Cost of Water Purchases/QSA Exchange 39% 61% QSA Transportation Costs with MWD 29% CY 2013 Water Sales Canal Water MWD Supply Purchases* Costs <1% 52% IID Water Purchases* 19% Total Cost = $285M MWD represents 81% of the Water Authority’s cost of water purchased and/or transported * Excludes the debt service for capital projects and recovery of settlement expenditures. 6
  • 7. 7
  • 8. $200 Senior Lien Debt $180 Service Increase - $21M $160 Millions ($) $140 $120 $100 $80 $60 2012 2013 2014 2015 20162011 Projected Debt Service $114 $138 $144 $148 $1532012 Projected Debt Service $114 $135 $141 $145 $151 Fiscal Year * Excludes CP program fees and trustee services 8
  • 9. 700 600 36% 500 Reduction1,000 acre feet 400 300 200 100 0 2006 2007 2008 2009 2010 2011 2012 prelim Fiscal Year  Water sales in FY 2011 were 36% lower than in FY 2006  Water sales are projected to be relatively flat 9
  • 10. Untreated Water Treated Water Rate $88/AF Increase $111/AF Increase 26% 31% 48% 48%12% 10% 11% 14% MWD Costs Increase in IID Supplies Increase in IID Water Rate Primarily Debt Service and Other Factors 10
  • 11. Wholesale Monthly Cost of Water to Households Estimated CY 2013 Wholesale Costs per  Cost of water purchases is 63% Household * of the wholesale cost of water  The remaining 37% or $19.22/month is for the Water MWD Costs $27.93 63% is the Authority to: Cost of Water ◦ Deliver water and maintain the system IID/QSA $5.30 Costs ◦ Rapidly diversify the region’s water Water Authority $4.52 suppliesOperating Costs 37% is Water ◦ Provide in-region emergency water Water Authority Capital Costs $14.70 Authority storage Costs ◦ Develop in-region water storage capacity TOTAL: $52.45/month * Based upon 0.5 AF of consumption a year 11
  • 12.  5 Retail Agency Average Composite Cost (CY 2012) o Fixed Charge: $19.83 monthly o Commodity Charge: $51.40 o Composite Monthly Residential Bill: $71.23 Proposed Rates Percent Retail Wholesale Monthly Retail Cost Impact Charges Untreated $3.03 4.2% Treated $3.82 5.4% Actual rate impact will vary by member agency Notes: 1. Analysis based on retail rates for the City of Carlsbad, Helix Water District, the City of San Diego, Sweetwater Authority, and Otay Water District. 2. Tier 1 and Tier 2 pricing blocks vary by member agency. 3. Historic total water demand used to calculate member agency specific weighting factors. 4. Individual member agency commodity charge calculated using its average single family residential water use (hcf). 5. Composite commodity charge is the sum of the individual member agencys commodity charge times its weighting factor. 12
  • 13.  Key rate and charge drivers for CY 2013 ◦ 8.5% increase in MWD costs ◦ $21 million (18%) increase in senior lien debt service – significant planned capital investment in our facilities and infrastructure ◦ Increasing IID deliveries and scheduled IID cost increase ◦ Persistent low water sales environment MWD rate and charge volatility mitigation ◦ Succeeded in limiting MWD’s average rate increase to 5% ◦ Coverage level reduced to 1.35x in FY 2013; target of 1.5X will be achieved in FY2014 Overall rate and charge increase will vary by member agency depending upon the fixed charge allocations 13
  • 14. Any Questions please contact: Tracy McCraner Finance Director/Treasurer tmccraner@sdcwa.org 858-522-6671 14

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