City of Prattville Wastewater Department Sewer Cost of Service Study - PowerPoint PPT Presentation

City of Prattville Wastewater Department Sewer Cost of Service Study 12 months ending September, 2014 Presented February 2, 2016 Jim Marshall | Jackson Thornton Utilities Consultants

Typical Objectives of Rate Study 1. Revenue Stability and Sufficiency 2. Fairness and Equity • Fair is related to cross subsidies • Equity is related to Price=Cost 3. Ability to Pay 4. Simplicity (Admin & Cust Understanding) 5. Defendable 2

Overview of Process 1. Determine Revenue Requirements • How much does the system need to operate? 2. Develop Revenue Requirements by Rate Class • How much do I need to recover by rate class? 3. Develop COS Rates and Design Acceptable Rates • How do I best recover the needed revenues? 4. Implement Rate Changes 3

Cash Method Revenue Requirement TOTAL REV. REQ. Operations & Maintenance Expense $ 2,361,938 Plus: Debt Service $ 1,338,845 Plus: Rate Funded Capital $ 942,233 Total Revenue Requirement $ 4,643,016 Less: Other Revenue $ 32,233 Rate Requirement $ 4,610,782 **Debt Service includes $1,200,000 of future debt service. 4

Components of Revenue Requirement Revenue ¡Requirement Rate ¡Funded ¡ Capital 20% Operations ¡& ¡ Maintenance ¡ Expense 51% Debt ¡Service 29% 5

Revenue Requirement Rev. ¡Req. ¡by ¡Rate ¡Class $5,000,000 ¡ $4,500,000 ¡ $4,000,000 ¡ $3,500,000 ¡ $3,000,000 ¡ $2,500,000 ¡ $2,000,000 ¡ $1,500,000 ¡ $1,000,000 ¡ $500,000 ¡ $-­‑ Total Res-­‑I Res-­‑O Com-­‑I Com-­‑O Ind Operations ¡& ¡Maintenance ¡Expense Debt ¡Service Rate ¡Funded ¡Capital 6

Recovery by Class Recovery ¡by ¡Rate ¡Class 140% 120% 100% 84% 79% 78% 77% 76% 80% 72% 60% 40% 20% 0% Total Res-­‑I Res-­‑O Com-­‑I Com-­‑O Ind Total Res-I Res-O Com-I Com-O Ind Total Revenue $ 3,635,024 $ 2,697,358 $ 22,737 $ 867,959 $ 31,054 $ 15,915 7 Over/(Under) Recovery $ (1,007,992) $ (733,949) $ (4,232) $ (253,965) $ (9,543) $ (6,304)

Recommendations – 5 Year Plan ANNUAL RATE ADJUSTMENT ADDITIONAL REVENUE Customer Volumetric Customer Volumetric Total yr 1 $ 1.00 $ 0.25 yr 1 $ 123,279 $ 216,652 $ 339,931 yr 2 $ 1.00 $ 0.20 yr 2 $ 123,279 $ 173,322 $ 296,601 yr 3 $ 1.00 $ 0.15 yr 3 $ 123,279 $ 129,991 $ 253,270 yr 4 $ 1.00 $ 0.10 yr 4 $ 123,279 $ 86,661 $ 209,940 yr 5 $ 1.00 $ 0.05 yr 5 $ 123,279 $ 43,330 $ 166,609 $ 5.00 $ 0.75 $ 616,395 $ 649,957 $ 1,266,352 8

Residential-Inside Rate Curve – Full Implementation Cost of Service Current Rate Proposed Rate Difference $ 13.84 Customer Charge $ 11.00 $ 16.00 $ 5.00 $ 2.99 All Usage $ 2.55 $ 3.30 $ 0.75 Res-Inside Cost Curve $25.00 $20.00 $15.00 $/kGal $10.00 $5.00 $- 1 2 4 5 6 8 10 12 15 20 Usage COS Total $/kGal Current Rate $/kGal Proposed Rate $/kGal 9

Residential Rate Impact – Full Implementation Monthly Current Usage COS Rates Current Rates Proposed Rates Change Daily Change $/kGal Proposed $/kGal 1 $ 16.84 $ 13.55 $ 19.30 $ 5.75 $ 0.19 $ 13.55 $ 19.30 2 $ 19.83 $ 16.10 $ 22.60 $ 6.50 $ 0.22 $ 8.05 $ 11.30 4 $ 25.81 $ 21.20 $ 29.20 $ 8.00 $ 0.27 $ 5.30 $ 7.30 5 $ 28.80 $ 23.75 $ 32.50 $ 8.75 $ 0.29 $ 4.75 $ 6.50 6 $ 31.80 $ 26.30 $ 35.80 $ 9.50 $ 0.32 $ 4.38 $ 5.97 8 $ 37.78 $ 31.40 $ 42.40 $ 11.00 $ 0.37 $ 3.93 $ 5.30 10 $ 43.76 $ 36.50 $ 49.00 $ 12.50 $ 0.42 $ 3.65 $ 4.90 12 $ 49.75 $ 41.60 $ 55.60 $ 14.00 $ 0.47 $ 3.47 $ 4.63 15 $ 58.72 $ 49.25 $ 65.50 $ 16.25 $ 0.54 $ 3.28 $ 4.37 20 $ 73.69 $ 62.00 $ 82.00 $ 20.00 $ 0.67 $ 3.10 $ 4.10 Average Usage 5,396 10