Water and Wastewater Revenue Overview: Rates and · PDF file · 2007-01-30Water and...

transcript

Water and WastewaterRevenue Overview:

Rates and FeesPresentation to State Water Infrastructure Commission

August 22,2006Jeff Hughes

jhughes@sog.unc.edu

Environmental Finance CenterUniversity of North Carolina at Chapel Hill

919 843-4956www.efc.unc.edu

Presentation Topics

Revenue and rate setting framework

Rate structures

What utilities charge

Household impacts

Material focuses on centralized drinking water and sewerutilities and does not cover septic system and stormwaterservice revenues.

Data Sources

Audited financial statements (LGC)

Annual Financial Information Reports (LGC)

Rates (NCLM/EFC Rate Inventory and ModelingEffort)

Connection Charges (EFC Inventory)

Rate setting practices (NCLM/EFC PracticesSurvey

Water 2030 (Rural Center)

Demographic (US Census)

Study Partners/Supporters

NC League of Municipalities

Water Resources Research Institute

Urban Water Consortium

NC Rural Center (Water 2030 Initiative)

NC Local Government Commission

Utilities throughout North Carolina

Rate Setting in North Carolina(Government and Non-Profit Utilities)

Few rules or regulatory restrictions

Self-approved (primarily elected boards)

Wide variation in rates and rate structures

Over 75% of rate studies done in house

Over 80% review annually

50% raised their rates last year

(7.2% water, 8.2% sewer)

Source: EFC & NCLM 2005 Rate Practices Survey

Primary Concern Considered WhenDesigning Rates (n=277)

Financial Stability or Cost Recovery---79%

Affordability---18%

Other (including conservation)--- 3%

Source: EFC & NCLM 2005 Rate Practices Survey

333*1260261Total

140140Not-for-profit

8341Sanitary District

4112Metropolitan District or

Authority

3212110County/District

275720248Municipality

TotalSewerOnly

WaterOnly

ServingWater &

InstitutionalArrangement

Rate Schedules Analyzed

* Plus 11 unique rate schedules from included utilities for semi-autonomouscounty districts or specific groups of residential customers.

Source: FY05-06 Rate Schedules

0 1 2 3 4 5 6 7 8 9 10 11 12

Monthly Consumption (in 1,000 gallons)

Median of 358 WaterSystems, FY04-05

Utility A

Utility B

Utility CA

Comparison of Customer Bills Over DifferentConsumption Levels (3 Utilities)

0 - 999 1,000 -

2,500 -

5,000 -

10,000 -

24,999

25,000+

Number of Accounts

Median Water Base Charge Median Sew er Base Charge

Median Base Charge Based onNumber of Accounts

25%$ 9.0075%$ 4.623215,000+

60%$ 14.4140%$ 5.19257,500 -14,999

73%$ 10.5025%$ 7.17643,000 - 7,499

82%$ 12.0018%$ 8.30881,000 - 2,999

80%$ 11.0020%$ 11.5049500 – 999

77%$ 12.0022%$ 11.0074< 500

Percent ofUtilities

MedianCharge

Percent ofUtilities

MedianCharge

Number ofRate Structures

Number ofWater

Accounts

Fixed Base Charges for Water Service

Fixed Charge Does NotInclude any Consumption

Fixed Charge IncludesSome Consumption

Water Rate Block Structures

Uniform

Decreasing

Increasing

Uniform69%

DecreasingBlock

Other2%Increasing

Block16%

Over Full Consumption Range Applicable up to 15,000 gpm

Residential Sewer Rate Structures

Decreasing

Increasing Block

Uniform

Rates Do Not Always Meet Costs…

1.50$34.08

0.76$33.88

1.02$32.98

0.88$32.30

1.02$32.10

0.99$32.07

Operating Revenues / Expenses RatioMonthly Bill

Comparison of Operating Margins for Seven Utilities with MonthlyCombined Water and Sewer Bills Between $32.07 - $34.08/month

Sources: NC LGC FY04-05 financial data; FY05-06 Rate Schedules.

Monthly Residential Water Bills by Consumption

(N = 332)

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Consumption (1,000 gallons per month)

illing

90th Percentile Median 10th Percentile

$22.96

Monthly Residential Sewer Bills by Consumption

(N = 275)

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

90th Percentile Median 10th Percentile

$27.12

Median Combined Water and Sewer Billings for Rate

Structures with Different Inside/Outside Rates

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Billin

Outside Inside

Rates by Number of Accounts

$27.68 ( 9)$17.85 (14)1.1825,000+

$29.04 (16)$23.95 (25)1.1810,000 - 24,999

$26.21 (17)$19.76 (26)1.115,000 - 9,999

$26.80 (31)$22.00 (41)1.162,500 - 4,999

$27.26 (46)$23.80 (53)1.011,000 - 2,499

$27.05 (61)$23.35 (58)0.900 – 999

Median SewerBill for 6,000

Gallons(# of Utilities)

Median WaterBill for 6,000

Gallons(# of Utilities)

MedianUtility’s

Water and/orSewer

OperatingRatio

Size of Systemby Number of

Water orSewer

Accounts

Sources: NC LGC FY04-05 financial data; EFC & NCLM 2005 Rate PracticesSurvey; FY05-06 Rate Schedules. Samples limited to utilities with data onoperating ratio and number of accounts.

Water Rates by System Capacity

$18.12 (30)1.142,301+

$19.51 (44)1.08601 - 2,300

$23.63 (69)1.08181 - 600

$23.45 (74)1.0161 - 180

$25.50 (42)0.8831 - 60

$22.64 (31)0.86<= 30

Median WaterBill for 6,000

Gallons(# of Systems)

Median Utility’sWater and/or

Sewer OperatingRatio

Size of System byQuantity of Water

Sold per Year (MGY)

Sources: NC LGC FY04-05 financial data; Rural Development Center Water2030 data; FY05-06 Rate Schedules. Samples limited to utilities with data onoperating ratio and quantity of water sold.

Sewer Rates by System Capacity

$24.96 (26)1.142,001+

$26.05 (37)1.11601 - 2,000

$27.39 (58)1.06151 - 600

$26.45 (72)0.9351 – 150

$30.00 (34)0.8816 – 50

$29.85 (24)1.02<= 15

Median SewerBill for 6,000

Gallons(# of Systems)

Median Utility’sWater and/or

Sewer OperatingRatio

Size of System byQuantity of

Wastewater Treatedper Year (MGY)

Sources: NC LGC FY04-05 financial data; Rural Development Center Water2030 data; FY05-06 Rate Schedules. Samples limited to utilities with data onoperating ratio and quantity of wastewater treated.

Source: FY05-06 Rate Schedules; Census 2000.

Comparison of Median HH Income with Combined Water

and Sewer Bill as % MHI (Inside Rates)

$10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000

Median Household Income, 1999

HI N = 252 systems

Source: Rural Development Center Water 2030 data; FY05-06 RateSchedules; Census 2000.

Annual Combined Water & Sewer Bills and Utility Operating Revenue

(6,000 gal, inside rates)

$1,000

$1,200

$0 $1 $2 $3 $4 $5 $6 $7 $8 $9 $10

Millions

Operating Revenue

N = 250 systems

Sources: NC LGC FY04-05 financial data; FY04-05 Rate Schedules.

Water and Wastewater Revenue Overview: Rates and · PDF file · 2007-01-30Water and...

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