Water and Wastewater Rates in Alabama Webinar on June 22, 2017 http://efc.sog.unc.edu @EFCatUNC Bellingrath Gardens
How you pay for it matters 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 • Shadi Eskaf Senior Project Director Environmental Finance Center The University of North Carolina at Chapel Hill 919-962-2785 Eskaf@sog.unc.edu
Alabama Department of Environmental Management 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 Alabama is blessed with a wealth affordable, please visit and variety of natural resources http://adem.alabama.gov/programs/water/srf.cnt which provide significant social, or contact: economic, and environmental benefits and opportunities for the James Dailey citizens of Alabama. Our mission at SRF Section ADEM is to assure for all citizens of Alabama Department of Environmental Management the State a safe, healthful, and PO Box 301463 productive environment. Montgomery, AL 36130-1463 (334) 271-7913 www.adem.state.al.us jwd@adem.alabama.gov
The 2016 ADEM Water and Wastewater Rates Survey • 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
Supplemental Data • Audited financial statements of local governments • Water system data from SDWIS • Census Place socioeconomic data from Census Bureau • SEC football ticket prices
Utilities that Participated 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 the state
Webpage of all Resources on AL Rates http://efc.sog.unc.edu/project/alabama-water-and-wastewater-rates-and-rate- structures or http://www.adem.state.al.us/programs/water/srf.cnt or 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 Priced Nearly 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/month Median 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 structures include 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 Structured Water: Wastewater: Most are on uniform rates. Majority are on uniform rates. Large number have caps or Large systems favor increasing blocks. non-volumetric fixed charges (“Other”). Many small systems favor decreasing block. Adapted from 2016 Water and Wastewater Rate Structures and Rates in Alabama report.
How Block Rates are Structured Half 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 Priced Water 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: Wastewater: Generally higher than wastewater. Generally lower than water. Median at 5,000 gallons = $25.60/month Median at 5,000 gallons = $32.80/month Ranges $21-$49 Ranges $15-$41 Adapted from 2016 Water and Wastewater Rate Structures and Rates in Alabama report.
How Often Do Rates Change? 66% of rate structures had changed within the last 2.5 years. As of April 2016 Excerpt from 2016 Water and Wastewater Rate Structures and Rates in Alabama report.
Are Rates Sufficient? 30% of utilities had less operating revenues than operating expenses in FY2014 or FY2015 Utilities with high rates but still not recovering costs Adapted from 2016 Water and Wastewater Rate Structures and Rates in Alabama report.
Are Rates Affordable? 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. Adapted from 2016 Water and Wastewater Rate Structures and Rates in Alabama report.
Comparing Rates – the Old Way Source: NC Triangle J Council of Government
AL Water and Wastewater Rates Dashboard • 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
Compare Your Rates to Rates of Utilities that have Similar … $ Size Rate Structure Location $ 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.
Subscribe to Keep Up-to-Date with the Environmental Finance Blog 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! •
Small water systems www.EFCNetwork.org Sign up for free in-depth Collection of resources Workshops, (multi-day or multi-hour) for small water systems webinars, direct assistance (tools, guides) and recordings Free, thanks to a cooperative agreement with the U.S. E.P.A.
Shadi Eskaf 919-962-2785 eskaf@sog.unc.edu Thank you. Acknowledgement: ADEM. http://efc.sog.unc.edu @EFCatUNC
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