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http://efc.sog.unc.edu @EFCatUNC Water and Wastewater Rates in Alabama Webinar on June 22, 2017 Bellingrath Gardens
http://efc.sog.unc.edu@EFCatUNC
Water and Wastewater Rates in Alabama
Webinar on June 22, 2017
Bellingrath Gardens
Dedicated to enhancing the ability of governments and other organizations to provide environmental programs and services in fair, effective, and financially sustainable ways through:• Applied Research • Teaching and Outreach• Program Design and Evaluation
How you pay for it matters
Shadi EskafSenior Project DirectorEnvironmental Finance CenterThe University of North Carolina at Chapel Hill919-962-2785 [email protected]
Alabama Department of Environmental Management
Alabama is blessed with a wealth and variety of natural resources which provide significant social, economic, and environmental benefits and opportunities for the citizens of Alabama. Our mission at ADEM is to assure for all citizens of the State a safe, healthful, and productive environment.
www.adem.state.al.us
Funding for this project was provided by the Alabama Department of Environmental Management’s State Revolving Fund (SRF) program. For more information about how the SRF can help your utility save money and keep rates affordable, please visit http://adem.alabama.gov/programs/water/srf.cntor contact:
James DaileySRF SectionAlabama Department of Environmental ManagementPO Box 301463Montgomery, AL 36130-1463(334) [email protected]
• EFC collected utilities’ rate sheets in mid-2016• Water, wastewater and residential irrigation rates • Rates for residential, commercial, and industrial
customer classes• Inside and outside differentials• Base charges and volumetric rates• Calculated how much utilities charge customers for
various consumption points
The 2016 ADEM Water and Wastewater Rates Survey
• Audited financial statements of local governments• Water system data from SDWIS• Census Place socioeconomic data from Census
Bureau• SEC football ticket prices
Supplemental Data
448 utilities serving 5.06 million people– 197 municipalities– 121 not-for-profits– 110 Authorities– 15 County utilities– 5 others, including for-profits
Serve 90% of people served by community water systems in thestate
Utilities that Participated
Webpage of all Resources on AL Rateshttp://efc.sog.unc.edu/project/alabama-water-and-wastewater-rates-and-rate-structures or http://www.adem.state.al.us/programs/water/srf.cntor do an internet search for “Alabama water rates ADEM EFC”
Report and Tables of Rates
Rates and Rate Structures in 2016
All rates reported were current in April 2016. Some utilities may have raised rates since then.
Most data are adapted from the 2016 Water and Wastewater Rate Structures and Rates in Alabama report
Customer Classes• 43% of water rate structures and 52% of
wastewater rate structures have unique rates for commercial/non-residential customers
• Smaller fraction have unique industrial rates• Only 3% of rate structures have unique rates
for residential irrigation• Only 15% of rate structures (25% of
municipalities) have unique rates for outside customers
Next few slides focus on residential rates for inside customers
Adapted from 2016 Water and Wastewater Rate Structures and Rates in Alabama report.
How Base Charges are PricedNearly all rate structures include a non-zero base charge.Water base charges are slightly higher than wastewater base charges.Median water base charge = $18.38/monthMedian wastewater base charge = $15.00/month
Adapted from 2016 Water and Wastewater Rate Structures and Rates in Alabama report.
How Much Usage is Included in the Base Charge?
93% of water rate structures and 67% of wastewater rate structuresinclude a consumption allowance with the base charge.Most are at or near 2,000 gallons/month.
Adapted from 2016 Water and Wastewater Rate Structures and Rates in Alabama report.
How Volumetric Rates are StructuredWater: Most are on uniform rates. Large systems favor increasing blocks. Many small systems favor decreasing block.
Wastewater: Majority are on uniform rates. Large number have caps ornon-volumetric fixed charges (“Other”).
Adapted from 2016 Water and Wastewater Rate Structures and Rates in Alabama report.
How Block Rates are StructuredHalf of the water rate structures have block rates; only 18% of wastewater. Most block rates end the first block between 4,000 – 6,000 gallons/month.
Adapted from 2016 Water and Wastewater Rate Structures and Rates in Alabama report.
How Volumetric Rates are PricedWater volumetric rates are priced higher than wastewater volumetric rates.At 5,000 gallons/month water use, median water rate = $4.75/1,000 gallons, median wastewater rate = $3.25/1,000 gallons.
Adapted from 2016 Water and Wastewater Rate Structures and Rates in Alabama report.
How Much Do Customers Pay?Water: Generally higher than wastewater.Median at 5,000 gallons = $32.80/monthRanges $21-$49
Wastewater: Generally lower than water.Median at 5,000 gallons = $25.60/monthRanges $15-$41
Adapted from 2016 Water and Wastewater Rate Structures and Rates in Alabama report.
How Often Do Rates Change?
Excerpt from 2016 Water and Wastewater Rate Structures and Rates in Alabama report.
66% of rate structures had changed within the last 2.5 years.
As of April 2016
Are Rates Sufficient?
Adapted from 2016 Water and Wastewater Rate Structures and Rates in Alabama report.
30% of utilities had less operating revenues than operating expenses in FY2014 or FY2015
Utilities with high rates but still not recovering costs
Are Rates Affordable?
Adapted from 2016 Water and Wastewater Rate Structures and Rates in Alabama report.
Half of the utilities’ water rates at 5,000 gallons/month is equivalent to more than 1.14% of the community’s median household income.For wastewater, the median is 0.88% MHI.
Comparing Rates – the Old Way
Source: NC Triangle J Council of Government
• Available at http://efc.sog.unc.edu• Free; open to the public• Compares rates across utilities• Assesses recent financial performance• Evaluates affordability• Measures strength of conservation
price signal
AL Water and Wastewater Rates Dashboard
Compare Your Rates to Rates of Utilities that have Similar …
LocationSize Rate Structure
$
Demographics Source Financials
$
Demonstrate the AL Rates Dashboard
Go to: efc.sog.unc.edu and search for “Alabama Rates Dashboard”
Or google search “AL water and wastewater rates dashboard EFC”
Click here for a direct link
Next Webinar:Tuesday, June 27, 2017
Designing Appropriate Rate Structures for Water and Wastewater Utilities in AL
How you charge your customers can be as important as how much you charge them.
Different rate structure designs affect revenue generation and can either help or hinder varying objectives of the utility. Several designs of rate structures can be used to produce the same level of revenue for a water system, but each rate structure promotes fairness, affordability, conservation, business incentives, and other objectives at varying degrees.
This webinar will describe different elements of water and wastewater rate structures and when it is appropriate to favor certain elements or rate structure designs over others based on the unique characteristics and objectives of the utility. Elements of rate structures include customer classifications, base charges, consumption allowances, volumetric rates, etc. Examples will be discussed and participants will have opportunities to ask questions.
http://efc.web.unc.edu
Blog posts include topics on:• Declining demands • Increasing rates • Financial performance indicators• Conservation pricing• Debt• What’s wrong with %MHI• Affordability• Financial strategies• Communication strategies• Inflation for cost of capital• And much more!
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