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Water and Wastewater Rate Proposal 2013-2016

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Chelan PUD commissioners heard a recommendation on March 18, 2013, for changes to PUD water and sewer rates that will continue the move to sustainable, stable finances for those utility services.

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Water and Wastewater Rate Proposal 2013-2016

  1. 1. Water and Wastewater Systems Water Wastewater Rate Proposal 2013 through 2016March 18, 2013
  2. 2. Water and Wastewater Rate ProposalPurpose today:• Share information and staff recommendation• Seek confirmation from Board on next stepsCovering today:• Staff recommendation on rate adjustment• Review of the rate-setting timeline• Meeting dates and next steps 2
  3. 3. Strategic Planning Rate recommendation supports District financial policies, guiding principles and customer priorities• Keeps water and wastewater systems on track to close financial gaps• Meets customer priorities; modest, predictable increases over time• Aligns with the cost of service• Full implementation of postage stamp rates• Multi-year rate increase supports long-term planning 3
  4. 4. Top Utility System Issues Nationwide 0 1 2 3 4 5Source Black & Veatch June 13, 2012 5
  5. 5. Water and Wastewater National trends for utility rates: 2010, 50 largest US cities average annual increase intypical residential water bills was approximately 5.3 percentfrom 2001 through 2009, while the increase in typicalresidential sewer bills was approximately 5.5 percent. Source: Black and Veatch 6
  6. 6. Water/Wastewater Rate History 2.0 1.8 Average annual increase = 5.31%Cumulative increase 1.6 1.4 1.2 1.0 1998 2000 2002 2004 2006 2008 2010 2012 2014 Year 7
  7. 7. Chelan County PUD Water/Wastewater System Overview Wastewater System (500 Connections) Chelan Ridge Water System (5,600 Connections)Lk Wenatchee WW Ollala CanyonPeshastin WW WenatcheeDryden Water Dryden WW
  8. 8. Residential Water Rate Comparison 2012 Monthly rate for 7,500 gallons $60 $50 $40 $30 $20 $10 $0
  9. 9. Residential Wastewater Rate Comparison 2012 basic monthly rate $80 $70 $60 $50 $40 $30 $20 $10 $0 Wenatchee Entiat Leavenworth Chelan PUD Cashmere
  10. 10. FactorsAffecting PUDCost of Service Peshastin wastewater treatment facility • Aging infrastructure • Highly regulated small rural systems • Multiple systems serving a relatively low number of connections • Reliable service provided 24 hours per day/7 days per week 11
  11. 11. Water Business Plan Reduced capital spending projected Staff reductions (2003 = 15 FTEs now 2013 = 9 FTEs) - Workforce planning to evaluate sustainability Increased operational efficiency through revised staff assignments Capacity available to meet the demands of future growth 12
  12. 12. Wastewater Business Plan Shared cost allocation reductions incorporated into forecasts – Approximately $14/month per connection which offsets cost increases Increased regulatory requirements Seek grants to reduce future debt service requirements 13
  13. 13. Rate Committee RecommendationYearly increase for 2013-2016 (reviewed annually)• Water 5% per year 2013 thru 2016 – 4.6% residential; 6% commercial to align with cost of service – Moves Dryden to the postage stamp rates by 2014 – Squilchuck $6.55 per month debt service is ending• Wastewater 15% per year 2013 thru 2016 – 15% average increase across rate classes – Align base and volume charges with cost of service 14
  14. 14. Forecasted Financial Indicators - Water (Includes recommended 5% rate increase) Rate of Return (min) Debt Leverage Ratio (max) 1.4% 70.0% 1.2% 60.0% 1.0% 50.0% 0.8% 40.0% 0.6% 30.0% 0.4% 0.2% 20.0% 0.0% 10.0%-0.2% 0.0% 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Debt Coverage Ratio (min) Unrestricted Liquidity (000s) 1.40 4,000 1.20 3,500 1.00 3,000 2,500 0.80 2,000 0.60 1,500 0.40 1,000 0.20 500 0.00 0 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Actual Target 15 Actual Target
  15. 15. Forecasted Financial Indicators - Wastewater (Includes recommended 15% rate increase) Rate of Return (min) Debt Leverage Ratio (max)0.0% 70.0%-1.0% 60.0% 50.0%-2.0% 40.0%-3.0% 30.0%-4.0% 20.0%-5.0% 10.0%-6.0% 0.0% 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Debt Coverage Ratio (min) Unrestricted Liquidity (000s) 4.00 1,200 3.00 1,000 2.00 1.00 800 0.00 600-1.00 400-2.00-3.00 200-4.00 0 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Actual Target Actual Target 16
  16. 16. Residential Rate ProposalWenatchee, Dryden, Ollala & Chelan Ridge 2013 2016 (Water Systems) Current Proposed Proposed Basic Monthly Charge (5/8") $28.25 $29.75 $36.00 First 3,000 gallons per month $2.30 $2.40 $2.65 3,001 to 10,000 gallons per month $3.15 $3.25 $3.50 Over 10,000 Gallons per month $4.00 $4.10 $4.40 Lake Wenatchee, Dryden & Peshastin 2013 2016 (Wastewater Systems) Current Proposed Proposed Basic Monthly Charge $61.80 $71.00 $107.70 17
  17. 17. Commercial Rate Proposal 2013 2016 Wenatchee, Dryden & Chelan Ridge Water Systems Current Proposed Proposed Basic Monthly Charge (5/8") $47.50 $52.00 $67.00 Charge per 1,000 Gallons per month $2.86 $3.00 $3.45 2013 2016 Lake Wenatchee Wastewater System Current Proposed ProposedMedium General Service Basic Monthly Charge (up to 20,000) $361.75 $415.00 $625.00 Charge per 1,000 Gallons per month (over 20,000) $17.25 $19.75 $30.00 2013 2016 Peshastin Wastewater System Current Proposed Proposed Commercial 1 $129.10 $150.00 $225.00 Charge per 1,000 Gallons per month $2.35 $2.70 $4.15 Commercial 2 per unit $93.50 $108.00 $164.00 18
  18. 18. Examples ofWater Rate ImpactsCategory Current 2013 2014 2015 20165/8” meter (3,000 gals) $35.15 $36.95 $39.50 $41.65 $43.95 Average monthly residential bill5/8” meter (7,500 gals) $49.53 $51.58 $54.58 $56.95 $59.705/8” meter (25,000 gals) $109.33 $113.08 $117.58 $121.45 $125.70Senior/Disabled - Low ($8.00) ($8.50) ($9.00) ($9.50) ($10.00)Income Discount 19
  19. 19. Future Considerations• System growth projections – Lower than projected growth resulting in lower revenue • Rate review to meet financial targets – Higher than projected resulting in increased revenue • Rate review to meet financial targets• Unforeseen regulations or expenses – Capital improvements • Potential revenue impacts dependent upon financing package (i.e. loan terms, grant funding) – Operation and Maintenance • Will have a direct impact on delivery costs and rates 20
  20. 20. Timeline • Water and wastewater financial policies approved • Recommended multi-year (2013-2016) rate June 2012 increases to close the operating gaps • 6% per year for water and 15% per year for wastewater • 2012 District budget approvedDecember 2012 • Included 6% water and 15% wastewater placeholders for rate increases • Staff recommendationMarch 2013 (today) • Set information meetings and public hearing dates April 2013 • Hold public information meetings Proposed dates April 16 & April 24 May/June 2013 • Rate hearing – May 6 (proposed) • Rates effective - June 1 (If approved) 21
  21. 21. 39 Years of Public Service Water Wastewater 22

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