t SAN ANT AN ANTONIO W ONIO WATER TER SYS SYSTEM TEM Rate Advisory Committee – Meeting #5 December 10, 2019 1
Ra Rate Adv e Adviso isory y Co Commi mmitt ttee ee (R (RAC) C) Me Meetin ting #5 A g #5 Age gend nda 1. Call to Order – Chairperson 2. Dinner & Deliberation 30 minutes 3. Citizens to be Heard (3 minutes per person) 10 minutes 4. Mission Statement and Ground Rules 3 minutes 5. Meeting Objectives 5 minutes 6. Pricing Objectives Ranking 30 minutes 7. Revenue Requirements 25 minutes 8. Customer Classes and Characteristics 40 minutes 9. Status of Follow-up Items 5 minutes 10. Closing Comments 2 minutes 11. Adjournment – Chairperson 2
Citizens t Citiz ens to be Hea o be Heard 3
Call to Or Call t o Order der 4
Mis Missio sion n St Stat atem emen ent The mission of the Rate Advisory Committee is to assemble a diversity of perspectives that represent our community to evaluate and advise on the water, sewer and recycled water rate structures 5
Gr Grou ound nd R Rul ules es 1. Take your own breaks. 2. Silence or turn off cell phones. 3. One conversation at a time. No side conversations. 4. One person talks at a time. No interruptions. 5. Everyone participates. Everyone’s input matters and is valuable. 6. Be respectful of the ideas of others. Good listening requires concentration and attention. 7. Tangent topic or questions? Put it in the “Parking Lot.” 8. We share responsibility for making the discussion constructive. 9. It’s OK to agree to disagree. 6
Me Meetin ting #4 Minu g #4 Minutes es • Provided in Member Binder • Includes Matrix of Parking Lot Questions 7
Me Meetin ting #5 Obje g #5 Objecti ctives ves 1. Discuss Results of Pricing Objectives Exercise 2. Discuss Revenue Requirements 3. Begin Discussion of Cost of Service Process Identify appropriate customer classes for cost of service 8
Prici Pricing Objecti ng Objectives ves Resu esults lts 9
Res esul ults ts Classification Objective Score 74 Affordability Essential 59 Conservation Minimize Customer Impacts/Rate Stability 50 Very Cost of Service Based Allocations 49 Important Revenue Stability 48 41 Simple to Understand Important 40 Equity 38 Drought Management 29 Practicality of Implementation Least Important Economic Development 23 10
Revenue R venue Requi equirements rements 11
Ra Rate Stud e Study Pr y Proce ocess ss 12
December 10, 2019 Page 13 Rates and Charges Waterfall – SAWS’ Founding Ordinance Generate Gross Revenues sufficient to pay: • Operations & Maintenance 1 • Debt Service & Reserve Fund Requirements 2 • Transfer to the City 3 • Any Surplus Transferred to R&R (provides debt coverage and cash for funding future capital program) 4 2020 Revenue Requirements
December 10, 2019 Page 14 2020 Budgeted Sources & Uses of Funds (in millions) Sources of Funds 2020 Budget Operating Revenues $ 807.1 Non-operating Revenues 22.0 Capital Recovery Fees (Impact Fees) 100.1 T otal Sources of Funds $ 929.2 Uses of Funds 2020 Budget Operations and Maintenance $ 436.0 Debt Service & Expenses 235.9 Transfer to COSA 31.7 Available for R&R – Restricted Funds 108.1 Available for R&R – Unrestricted Funds 117.5 T otal Uses of Funds $ 929.2 2020 Revenue Requirements
December 10, 2019 Page 15 2020 Budgeted Debt Coverage Calculation SAWS Internal Target of 1.75X --- Other Similarly Rated Credits > 2.0X Debt Coverage Calculation $ Millions Total Sources of Funds $ 929.2 Less Revenues from: Capital Recovery Fees 100.1 CPS Energy Contract 3.2 Interest on Project Funds 3.0 Gross Revenues as Defined by Ordinance No. 75686 $ 822.9 Less: Operations & Maintenance 436.0 Pledged Revenues as Defined by Ordinance No. 75686 $ 386.9 Bonded Debt Service $ 225.3 Total Bonded Debt Coverage Ratio 1.72 X 2020 Revenue Requirements
December 10, 2019 Page 16 2020 Sources & Uses by Core Business (in thousands) Sources of Funds Water Supply Water Delivery Wastewater Chilled Water T otal T otal Operating Revenues $ 295,991 $ 226,289 $ 274,385 $ 10,415 $ 807,080 Non-Operating Revenues 6,637 6,583 8,815 - 22,035 Capital Recovery Fees 38,363 30,100 31,612 - 100,075 T otal $ 340,991 $ 262,972 $ 314,812 $ 10,415 $ 929,190 Uses of Funds Water Supply Water Delivery Wastewater Chilled Water T otal Operations and Maintenance $ 208,556 $ 94,372 $ 125,618 $ 7,436 $ 435,982 Debt Service and Expenses 43,674 81,562 107,367 3,298 235,901 Transfer to City of San Antonio 10,762 9,256 11,247 417 31,682 R&R - Restricted 44,048 31,084 32,951 - 108,083 R&R - Unrestricted 33,951 46,698 37,629 (736) 117,542 T otal $ 340,991 $ 262,972 $ 314,812 $ 10,415 $ 929,190 2020 Revenue Requirements
December 10, 2019 Page 17 Chilled Water Business Unit Not Part of this Rates Advisory Process • Chilled Water – Provides cooling services to various downtown hotels, Convention Center, Alamodome and Port San Antonio tenants • RAC Bylaws – The RAC will provide input to the Board of Trustees on a comprehensive study of SAWS rates and fees. – The purpose of the Rate Design Study is to provide SAWS with recommendations regarding the rate structures for water, wastewater and recycled water services. 2020 Revenue Requirements
December 10, 2019 Page 18 2020 Net Revenues From Rates by Core Business ($ in thousands) Sources of Funds Water Supply Water Delivery Wastewater Total Operating Revenues 295,991 226,289 274,385 Non-Operating Revenues 6,637 6,583 8,815 Capital Recovery Fees 38,363 30,100 31,612 Total Sources of Funds 340,991 262,972 314,812 Non-Rate Revenues Water Supply Water Delivery Wastewater Recovery of EAA Fee 23,616 - - Recovery of TCEQ Fee - 1,822 538 Rate Implementation Timing Adjustment (3,330) - - Special Service Fees and Other Customer Penalties 3,161 12,265 7,082 Stormwater Revenues 5,204 - - Reduction for Bill Adjustments & Uncollectible Accounts (3,987) (3,881) (3,333) Reduction for Affordability Discount Program (1,795) (1,440) (3,308) Intercompany Revenue Reallocation 5,630 (5,630) - CPS Contract 3,223 - - Interest Earned 6,000 6,000 8,000 Build America Bond Subsidy 637 583 815 Capital Recovery Fees 38,363 30,100 31,612 Total Non-Rate Revenues 76,722 39,819 41,406 Net Revenues From Rates 264,269 223,153 273,406 2020 Revenue Requirements
December 10, 2019 Page 19 2020 Capital Improvement Program By Core Business TOTAL Wastewater $608.9M $413 Million Water Delivery $95 Million $6M Acquisition $27M Design Water Resources $547M Construction $100 Million $29M Overhead 78% Replacement Chilled Water $1 Million 22% Growth 2020 Revenue Requirements
December 10, 2019 Page 20 2020 Capital Improvement Program Funding 2020 Revenue Requirements
December 10, 2019 Page 21 Texas Residential Water Rate Structure Comparison SAWS Rate Structure Has Highest Fixed Charge but Relatively Low Volumetric Rates for Low Usage Texas’ 5 Largest Cities Residential Water Rates 0 – 7,000 Gallons $60.00 $50.00 $40.00 $30.00 $20.00 $10.00 $- - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 Austin Dallas Fort Worth Houston San Antonio 2020 Revenue Requirements
December 10, 2019 Page 22 Texas Residential Water Rate Structure Comparison SAWS Rate Structure Has Highest Fixed Charge but Relatively Low Volumetric Rates for Low Usage UPDATE Texas’ 5 Largest Cities Residential Water Rates 5,000 – 50,000 Gallons $700.00 $600.00 $500.00 $400.00 $300.00 $200.00 $100.00 $- 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 Austin Dallas Fort Worth Houston San Antonio 2020 Revenue Requirements
December 10, 2019 Page 23 T exas Residential Wastewater Rate Structure Comparison SAWS Rate Structure Has Highest Fixed Charge but Relatively Low Volumetric Rates Texas’ 5 Largest Cities Residential Wastewater Rates 0 – 7,000 Gallons $80.00 $70.00 $60.00 $50.00 $40.00 $30.00 $20.00 $10.00 $- - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 Austin Dallas Fort Worth Houston San Antonio 2020 Revenue Requirements
December 10, 2019 Page 24 T exas Residential Water & WW Rate Structure Comparison SAWS Combined Residential Rates are Comparable to Other T exas Cities at Volumes Between 1,000 – 7,000 Gallons Texas’ 5 Largest Cities Residential Combined Water & WW Rates 0 – 7,000 Gallons $140.00 $120.00 $100.00 $80.00 $60.00 $40.00 $20.00 $- - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 Austin Dallas Fort Worth Houston San Antonio 2020 Revenue Requirements
December 10, 2019 Page 25 Cus Customer Classes and omer Classes and Char Charact acteris eristics tics 2020 Revenue Requirements 25
Ra Rate Stud e Study Pr y Proce ocess ss 26
Co Cost of t of Se Servi vice Pr ce Proce ocess ss • Determines the amount of revenue to be recovered from each customer class based on the costs they impose on the utility • Follow cost allocation principles as adopted by the American Water Works Association (AWWA) and Water Environment Federation (WEF) 27
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