Water Rate Study 1987
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FUaIPY
SALINA, KANSAS
Water Rate Study
~w;~
Yj'v'ILSON
! COMPANY
ENGINEERS;
ARC H ITECTS t
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I JUNE 1987
I 86-332A
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SALINA, KANSAS
WATER RATE STUDY
ENGINEERING REPORT
* * * * * *
Stephan Ryan, Mayor
Commissioners
Vi Justus
Sydney Soderberg
Bob Frank
Joseph Warner
Rufus L. Nye, City Manager
D. L. Harrison, City Clerk
Greg Bengtson, City Attorney
Dean L. Boyer, Director of Engineering and Utilities
T;'LSON
COMPANY
ENGINEERS
ARC H'TECTS t
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TABLE OF CONTENTS
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SECTION 1 - SUMMARY AND RECOMMENDATIONS
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Purpose
Scope
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Recommendations
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SECTION 2 - WATER REQUIREMENTS
Population
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Water Consumption
Water Use Characteristics
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Table 2-1 - Historical Water Requirements
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Table 2-2 - Projected Water Use Characteristics
for 1988
Table 2-3 - Customer Demand Characteristics for 1988
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SECTION 3 - REVENUE REQUIREMENTS
General
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Review of Revenues and Expenditures
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Table 3-1 - Water Utility Revenues and Expenditures
for Years 1981 through 1986
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Table 3-2 - Projected Water Utility Revenue
Requirements for Years 1987 to 1991
Projected Revenue Requirements
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SECTION 4 - ALLOCATION OF COSTS
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General
Allocation of Costs to Cost Functions
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Table 4-1 - Allocation of Costs to Cost Function
Unit Costs of Service
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Table 4-2 - Unit Cost of Service, 1988
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Allocation of Costs to Customer Classes
Table 4-3 - Allocation of Costs to Customer Classes
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Page No.
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Page No.
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SECTION 5 - DEVELOPMENT OF RATE SCHEDULE
5-1
General
5-1
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Forms of Rate Schedules
5-1
Development of Stepped Rate Schedule
5-2
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Table 5-1 - Minimum Usage Blocks
5-2
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Table 5-2 - Subsequent Usage Block Costs
5-3
Present and Proposed Water Rate Schedules
5-4
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Table 5-3 - Present Water Rate Schedule
5-5
Table 5-4 - 1988 Proposed Rate Schedule
5-6
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Table 5-5 - 1989 Proposed Rate Schedule
5-7
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Table 5-6 - 1990 Proposed Rate Schedule
5-8
Table 5-7 - 1991 Proposed Rate Schedule
5-9
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Table 5-8 - 1992 Proposed Rate Schedule
5-10
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Table 5-9 - Present Water Rate vs. Proposed
Water Rates
5-11
Billing Procedure Changes
5-11
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(B)
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SECTION 1 - SUMMARY AND RECOMMENDATIONS
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PURPOSE
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The Water Rate Study has been prepared to review existing water rates and
then, based upon that historical review and projected future operation
requirements, to recommend a new water rate structure that will ensure a
continued "self-sustaining" operation of the City of Salina Water Utility.
The recommended new water rate structure is designed to provide the Salina
Water Utility with sufficient revenue from its operation to enable the uti-
lity to:
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1.
Provide adequate service to its customers,
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2. Maintain the water system and water treatment facilities,
3. Earn a reasonable return for replacement and extension of the
water system.
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4. Maintain a financial status as required to borrow money at reaso-
nable interest rates for expansion and replacement of water system
facilities.
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This revenue is to be developed from the rates assessed for water sold and
the services rendered by the utility to its customers.
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SCOPE
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The review includes: a summary of the water utility expenditures and reve-
nues since 1981; a summary of population, pumped and metered water consump-
tion since 1981; projections of previously mentioned parameters and
proposed changes in operating and accounting procedures through the year
1992. Also included are recommendations for changes in the water rate
structure as required to produce adequate revenue for operating costs,
capital costs, proposed bond issues and debt service.
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Previous capital improvements for which debt service has been issued are
discussed in earlier engineering reports and therefore, are not discussed in
further detail. 1,2,3
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The year 1984 is considered representative of normal operating conditions.
Projections and calculations are based on the water usage and revenue for
that year.
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1 Wilson & Company, Salina, Kansas, Water Distribution Study, (1972)
2 Wilson & Company, Salina, Kansas, Water Study 1968-2010, (1968 )
3 Wilson & Company, Salina, Kansas, Water System Study (1984 )
1-1
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RECOMMENDATIONS
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Based on this study of water rates, the following recommendations are made
to the City of Salina Water Utility:
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1.
Adopt the proposed water rate schedules shown in Tables 5-4
through 5-8.
2.
Continue the account for depreciation expenses and consider
including revenue requirements for the account in future rate
schedules.
3.
Continue financing minor capital improvements through operating
revenues produced from water rates. Annual expenditures projected
for minor capital improvements are shown in Table 3-2.
4.
Establish a policy for billing a customer (who is provided water
service through meters connected in parallel) for the minimum
charge applicable for an equivalent size of meter. This is
discussed in Section 5 under Billing Procedure Changes.
5.
Review the water utility's revenues and expenditures annually to
determine if the water rate schedule is providing adequate reve-
nues.
6.
Consider a change from monthly billing to bimonthly billing.
Bimonthly billing is discussed in Section 5 under Billing
Procedure Changes.
7.
Continue the policy for charging a fee equal to the actual cost
for tapping a water main.
8.
Continue the policy of charging for water service on a basis that
reflects actual costs to the City.
1-2
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SECTION 2 - WATER REQUIREMENTS
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POPULATION
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Historical and projected population are summarized in Table 2-1 for the
years 1981 to 1992, respectively. A steady increase in population has
occurred in the City since 1972, from 36,609 to 44,289 in 1985. This trend
should continue. A population of 46,400 is projected for 1989 and 47,900
for 1992. This population projection is based on current information
available from the City, previous studies, and the population trend pro-
jected to exist during the study period of this water rate study as
developed by Wilson & Company.
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WATER CONSUMPTION
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Historical and projected water consumption are summarized in Table 2-1 for
the years 1981 to 1986 and 1987 to 1992 respectively. Water consumption in
Salina has been relatively constant since 1981, ranging from 116 gallons
per capita per day (gpcd) in 1981 to 132 gallons per capita per day in
1983. Annual metered consumption has increased from 237.60 million cubic
feet (mcf) in 1981 to 277.20 million cubic feet in 1983. This increasing
trend in total metered consumption is expected to continue, although the
gallons per capita per day consumption is expected to remain relatively
constant. For use in this Study, a constant water consumption of 124
gallons per capita per day will be utilized through 1992. Total metered
water consumption is projected to be 280.78 and 289.90 million cubic feet
per year (mcfy), respectively, for 1989 and 1992. These projections are
conservative to ensure development of sufficient revenue in abnormal years.
Specifically, if an unusually high precipitation year occurs, the quantity
of water normally sold will decrease and, therefore, the revenue collected
will decrease. However, during this same year the City's cost of
operating, maintaining, extending the water system and retiring debt will
decrease little, if any.
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WATER USE CHARACTERISTICS
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There are three principal types of water users in Salina: residential,
commercial, and industrial. These water users have been divided into
customer classes that typically have similar water use characteristics,
primarily similar demand characteristics. The division of residential,
commercial, and industrial water users into customer classes having similar
water use characteristics a means of determining the cost of providing ser-
vice to each customer class and the applicable rate schedule to recover
these costs from that particular class of customers.
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Water users have been divided into three customer classes: residential,
multi-family residential, and commercial. Based on the number of customers
and annual water usage, the residential customer class is the largest class
of users. The residential class consists of residential meters inside and
outside the City Limits, residential yard meters, yard meters, multi-unit
yard meters, and commercial yard meters.
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2-1
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The commercial customer class, consisting of commercial meters inside and
outside City Limits, combined meters and industrial meters, is the second
largest class of users. The multi-family customer class, when compared to
the other classes, has the lowest annual water usage and users and consists
of multi-family meters and commercial multi-family meters. These meter
designations (i.e., yard meters) are currently used by the City to
designate the type of water user.
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2-2
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Water Metered (MCFY)
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Population
Water Pumped (MCFY)
Percent of Water
Metered
Per Capita Metered
Water Consumption
(GPCD)
Population
Water Pumped
(MCFY)
Percent of
Water Metered
Water Metered
(MCFY)
Per Capita
Metered Water
Consumption
(GPCD)
TABLE 2-1
HISTORICAL WATER REQUIREMENTS
1981 1982 1983 1984 1985 1986
41 843 42,522 42.787 43,865 44,289 44,900
303.20 275.95 320.33 307.68 323.45 341.20
78% 94% 87% 84% 78% 83%
237.60 258.15 277 . 20 258.95 252 . 54 282.83
116 124 132 121 117 129
Projected Water Requirements
1987 1988 1989 1990 1991 1992
45 400 45.900 46.400 46,900 47,400 47.900
327 330.63 334.24 337.83 340.85 345.12
84% 84% 84% 84% 84% 84%
274.71 277.73 280.76 283.78 286.81 289.90
124 124 124 124 124 124
2-3
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Table 2-2 presents the projected water use characteristics for 1988. The
percent of totals for number of customers and annual water usage used to
project characteristics for 1988 were developed from 1984 water use charac-
teristics.
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TABLE 2-2
PROJECTED WATER USE CHARACTERISTICS FOR 1988
Number Percent Annual Percent
of of Total Water Usage of Total
Customers No. Customers (mcfy) Water Use
Residential 13,793 84.1% 152.75 55%
Multi-Family 555 3.4% 11.11 4%
Commercial 2,020 12.5% 113.87 41%
TOTAL 16,380 100.0% 277.73 100%
Note: mcfy == million cubic feet per year
number of customers == no. of bills
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For each class of customers, the annual water use, demand characteristics,
number of bills rendered, and meters used and serviced annually are factors
that provide a measure of customer class responsibility. Table 2-3 pre-
sents the customer demand characteristics for the customer classes.
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2-4
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TABLE 2-3
CUSTOMER DEMAND CHARACTERISTICS FOR 1988
ANNUAL
USAGE
(mcf y )
AVERAGE
DAILY USAGE
(mcfd)
(l)DEMAND
FACTOR
(ratio)
TOTAL
DEMAND
(mcfd)
EXTRA
DEMAND
(mcfd)
PERCENT
EXTRA
DEMAND
Maximum Day Characteristics:
Residential 152.75 0.42 3.25 1.36 0.94 71%
Multi-Family 11.11 0.03 2.60 0.08 0.05 4%
Commercial 113.87 0.31 2.10 0.65 0.34 25%
TOTAL 277.73 0.76 2.09 1.33* 100%
Maximum Hour Characteristics:
Residential 152.75 0.42 5.00 2.10 1.68 68%
Mul ti-Family 11.11 0.03 4.25 0.13 0.10 4%
Commercial 113.87 0.31 3.25 1.01 0.70 28%
TOTAL 277.73 0.76 3.24 2.48** 100%
*1.33 mcfd x 365 days/year = 485.45 mcfy
** 2.48 mcfd x 365 days/year = 905.20 mcfy
(1 )Modified from the 1972 Water Distribution Study
NOTE: mcfy = million cubic feet per year
mcfd = million cubic feet per day
2-5
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SECTION 3 - REVENUE REQUIREMENTS
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GENERAL
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The Revenue requirements of a publicly-owned water utility are not
generally based on a rate of return, but on cash or budget requirements.
The City of Salina Water Utility is typical in this respect. The Salina
Water Utility is not operated for a profit, but attempts to recover suf-
ficient revenue to cover total operating costs and capital costs.
Operating costs include both direct costs of operating the system and costs
in maintaining system facilities. Capital costs include annual costs
incurred with investment in system facilities: replacement, extensions,
and improvements of facilities. Major capital investments are normally
financed through debt service: serial bonds whose retirement (payment of
principal, interest and stipulated reserves) is provided for annually.
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In order to project future revenue requirements (the sum of operating costs
and capital costs) past revenues and expenditures must be reviewed and ana-
lyses for trends.
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REVIEW OF REVENUES AND EXPENDITURES
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Revenues and expenditures of the Salina Water Utility have been reviewed to
evaluate the financial results of the operations of the utility for the
years 1981 through 1986. Table 3-1 presents a summary of major revenue and
expenditure accounts for each fiscal year from 1981 through 1986.
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Revenue accounts show the revenues the utility derives from furnishing
water services and from services incidental thereto. Revenue accounts of
the Salina Water Utility include the following:
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"Revenue from Sale of Water" account includes revenues developed from
water sold to customers as determined from the rate schedule and metered
quantity of water.
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"Tapping and Frontage Footage" account includes revenues from
assessments for use of water mains by properties that were not using water
on September 13, 1954, and have not subsequently been in a benefit
district. A flat fee is charges for tapping a water main based upon each
installation. If a person desires service to a property, the City makes a
tap, runs the service line and installs a curb cock to the property. The
cost of material, labor and equipment usage is charged to the property
owner.
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"Interest on Investments" account includes revenues from interest
earned on investment of moneys held in any account which are not imme-
diately needed for the purposes of that account. For example, the moneys
held in the "Combined Water and Sewage Depreciation and Emergency
Replacement Account", "Combined Water and Sewage System Extension and Bond
Retirement Account", and "reserve Account for Revenue Bonds" may be
invested when these moneys are not immediately needed. The latter accounts
appear on the "Balance Sheet" as "Liabilities".
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3-1
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I TABLE 3-1
I WATER UITLI'IY REVENUES AND EXPENDITURES
FOR YEARS 1981 'J:HR()lQI 1986
1981* 1982* 1983* 1984* 1985 1986
I REVENUES
Revenue frem sale
I of water $2,158,627 $2,413,157 $2,870,708 $2,851,556 $2,812,450 $2,927,062
Tapping and front
footage 16,042 5,694 11,807 21,065 20,280 17,619
Meter and service
I line 27,441 13,%5 15,093
Miscellaneous IncOlre 4,231 5,056 3,093 28,960 78,446 33,984
Interest on Invest-
I ments 107,366 123,031 118,284 111,152 94,872 48,607
Fire Hydrant 1,958
'IDTAL REVENUES $2,288,224 $2,546,938 $3,003,892 $3,040,174 $3,020,013 $3,042,365
I EXPENDITURES
I OPERATIN:; OOSTS
Water Supply
Expenses $ 57,037 $ 63 ,351 $ 73,318 $ 84,774 $ 93,024 $ 99,553
I Softening and treat-
ment expenses 597,135 714,173 716,789 725,203 842,735 857,165
Punping expenses 142,966 153,202 166,219 206,749 175,286 191,124
I Distribution expenses 196,120 236,475 252,297 343,330 342,237 408,703
Custcmer's accolUlting
and collection 124,399 131 , 761 137,393 148,794 152, 735 160,055
I Adm. and general
expenses 303,811 349,587 381 ,305 410,899 428,100 518,722
'IDTAL 0PERATm:;
I oosrs $1,448,854 $1,648,549 $1,727,321 $1,919,749 $2,034,117 $2,235,322
CAPITAL <DSTS
I Bond & interest
expense $ 147,929 $ 250,596 $ 251,435 $ 238,738 $ 648,927 449,437
Minor capital
I improvements 148,580 157 ,160 344, ISO 201,970 370 , 702 276,056
'IDTAL CAPITAL
I <DSTS $ 296,509 $ 407,756 $ 595,585 $ 440,708 $1,019,629 725,493
Total Expenditures $1,745,363 $2,056,305 $2,322,906 $2,360,457 $3,053,746 2,960,815
I Inccme (or
Net Loss) 542,861 490,633 680 , 986 679,717 (33,733) 81,550
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I Depreciation 608,880 580,973 572,091 609,964 597,084 583,324
'IDTAL NET nnME
I (CR NET LOSS) $ (66,019) $ ( 90,340) $ 108,895 $ 69,753 $ (630,817) $ (SOl, 774)
*Water Rates Increase Effective Jaruary 1 of that year.
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"Fire Hydrant" account includes revenues from the resale of fire
hydrants to contractors for installation in extension projects.
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"Gain on Advance Refunding" account includes revenues or gain resulting
from redemption of a bond issue before maturity by a new bond issue at con-
ditions more favorable (i.e., lower interest rates) to the issuer (City).
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Expenditures consist of operating costs and capital costs accounts.
Operating costs accounts show the expenses for depreciation, taxes, opera-
tion and maintenance applicable to furnishing water utility service.
However, the Salina Water Utility does not presently record any expenses
for depreciation. Operating costs accounts of the Salina Water Utility
include the following:
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"Water Supply Expenses" consist of utilities, well house, signals and
maintenance costs incurred in the operation of the supply wells and river
intake.
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"Softening and Treatment Expenses" consist of supervision, labor,
supplies, chemicals, utilities, and maintenance costs incurred in the
operation of the water treatment plant.
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"Pumping Expenses" consist of supervl.sl.on, labor, utilities, supplies,
and maintenance costs incurred in the operation of the water distribution
pumping stations.
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"Distribution Expenses" consist of supervl.sl.on, labor, vehicle, equip-
ment, tapping supplies; meter maintenance, salaries and supplies; main-
tenance of distribution mains, elevated tanks, and hydrants; miscellaneous
materials and labor.
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"Customer's Accounting and Collection Expenses" and "Administrative and
General Expenses" are both combined accounts for the water, sewer and sani-
tation utilities. Fifty percent (50%) of this expense is considered to be
the water utility's share and is shown in the tables.
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3-3
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TABLE 3-2
PROJECTED WATER UTILITY REVENUE REQUIREMENTS
FOR YEARS 1987 TO 1991
1987
1988
1989
1990
1991
1992
OPERATING COSTS
Water Supply Expenses $ 107,100 $ 11 7 , 800 $ 129,600 $ 142,600 $ 156,900 $ 172,600
Softening & Treatment Expenses 919,200 983,500 1,052,300 1,125,900 1,204,700 1,289,000
Pumping Expenses 224 , 700 233,700 243,100 252,800 262,900 273,400
Distribution Expenses 452,900 502,600 557,900 619,200 687,300 762,900
Customer's Accounting & Collection
Expenses 170,300 180,500 191,300 202,800 215,000 227,900
Administrative & General Expenses 562,100 595,800 631,500 669,400 709,600 752,200
TOTAL OPERATING COSTS $2,436,300 $2,613,900 $2,805,700 $3,012,700 $3,236,400 $3,478,000
w CAPITAL COSTS
I Existing Bond and Interest Expense $ 380,000 $ 391,500 $ 392,000 $ 395,100 $ 285,300 $ 373,300
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Minor Capital Improvements 250,000 250,000 250,000 250,000 250,000 250,000
1987 Proposed Bond & Interest Expense 212,000 212,000 212,000 322,000 219,000
1988 Proposed Bond & Interest Expense 204,000 204,000 204,000 204,000
1989 Proposed Bond & Interest Expense 440,000 440,000 440,000
TOTAL CAPITAL COSTS $ 630,000 $ 853,500 $1,058,000 $1,501,100 $1,501,300 $1,486,300
SUB-TOTAL REVENUE REQUIREMENTS $3,066,300 $3,467,400 $3,863,700 $4,513 , 700 $4,737,700 $4,964,300
*DEPRECIATION: 200,000 200,000 200,000 200,000 200,000 200,000
TOTAL REVENUE REQUIREMENTS $3,266,300 $3,667,400 $4,063,700 $4,713,700 $4,937,700 $5,164.300
*This is used for audit purposes only. It is not included as a revenue requirement for
development of this rate study.
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"Minor Capital Improvements" account includes the costs for
constructing improvements and extensions to the water distribution system
and water treatment plant to the extent that such costs can be provided
directly from the revenues.
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"Bond and Interest Expense" is a combined water and sewer account. The
water utility share and sewer utility share of the 1984 bond and interest
expense are 89.5 percent and 10.5 percent, respectively. The proposed
1987, 1988 and 1989 bonds are sole responsibility of the water utility.
The principal and interest payments are based upon an interest rate of
8.00% for 20 years. This account includes expenses for bond principal
payment, bond interest payments, issuance costs and interest expense.
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Water utility revenues increased an average of 6.0 percent (compounded
annual interest) per year from 1981 to 1986 and averaged $150,828 (Table
3-1). Expenditures averaged $2,416,599 from 1981 to 1986 and fluctuated
with an increasing trend of 11.0 percent (compounded annual interest) per
year apparent. Operating costs steadily increased 8.9 rate percent
(compounded annual interest) per year from 1981 to 1986 and averaged
$1,755,718. Capital costs increased substantially in 1984 due to the
refunding of existing bonds. From 1981 to 1986 capital costs averaged
$580,947. The water utility experienced net losses from its operations for
the year 1985. Net income (including net losses) for the period from 1981
to 1986 averaged $407,200 excluding depreciation.
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Cost accounting for depreciation as an annual expense for replacement of
facilities should be reinitiated as was begun in 1981. Depreciation is the
loss of value of water system facilities, not restored by current main-
tenance, which is due to all the factors causing ultimate retirement of
those facilities. These factors include wear and tear, decay, inadequacy
and obsolescence. Depreciation cost accounting is usually based on an
annual percentage of the investment in facilities adequate to return the
original investment to the utility during the useful life of those facili-
ties.
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The annual percentage or rate of depreciation varies with expected service
like of each type of facilities (i.e., pumps, mains, elevated storage
tanks, etc). This results in different depreciation rates being applied to
different types of water system facilities.
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Continued implementation of a cost accounting system for depreciation and
inclusion of revenue for depreciation through the rate structure will
ensure:
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1. Funds are available to replace facilities as they are ultimately
retired.
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2. These funds are recovered annually and equitably through an ade-
quate rate structure.
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3. Minimal water rate increases due to costs for periodic and someti-
mes unpredictable replacement of system facilities.
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An intensive study of the investments in different types of water system
facilities and the applicable depreciation rates for each type of facili-
ties is required to realistically establish a cost accounting system for
depreciation. A study of this magnitude is beyond the scope of this
report.
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PROJECTED REVENUE REQUIREMENTS
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Development of revenue requirements is the first step in the rate design
process. Future revenue requirements are equal to the utility's projected
cost of providing service which is the total of projected operating costs
and capital costs. Projected water utility expenditures and revenue
requirements for years 1987 through 1992 are shown in Table 3-2.
Expenditures, operating costs and capital costs, are projected based on a
review of historical revenues and expenditures and estimates of anticipated
future expenses due to changes in operation or the addition of new system
facilities.
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The total revenue requirements developed in Table 3-2 are to be developed
from the sale of water and do not include any revenues from other income
sources. Other income sources include the "Tapping and Front Footage",
"Miscellaneous Income", "Interest on Investments", "Fire Hydrant", and
"Gain on Advance Refunding" accounts shown in Table 3-1. These accounts
are not included in the projected revenue requirements because their reve-
nues fluctuate widely each year and therefore they are not a dependable
source of revenue. Any revenue developed from these accounts would lower
the total revenue requirements shown in Table 3-2.
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Water utility operating costs are projected to increase 7.3 percent per
year from 1987 to 1992. From 1981 to 1986 operating costs increased an
average of 8.9 percent per year. The largest anticipated increases in
operating costs will be in energy related accounts (i.e., utility costs for
operating supply wells, followed by maintenance and supplies, and then
supervision and salaries). Energy related accounts are projected to
increase between 15 to 25 percent annually. Supervision and salaries
(operating) costs are projected to increase 7 percent annually.
Maintenance, supplies and other operating expense accounts are projected to
increase between 10 to 15 percent annually.
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Water utility capital costs, are projected to increase significantly
from 1987 through 1992. Projected bond and interest expenses are based on
the schedule of debt service requirements for 1984 series water and sewer
revenue bonds and proposed 1987, 1988 and 1989 series water revenue bonds.
Minor capital improvements are projected to remain a constant $250,000 per
year.
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The proposed bonds include the following improvements:
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3-6
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1987 Bond Issue
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Project includes replacing all control valves, filter control equipment,
backwash pump and control system, replacing the filter media in the north
eight filters, replacing all backwash troughs, the addition of a surface
wash system in all sixteen filters, piping modification and related appur-
tenant modifications and replacement. Also included is the design for a
new river intake structure and accompanying pipeline.
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Filter Plant Improvements Construction
River Supply Intake & Supply Main, Design
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Total
$2,400,000
250,000
$2,650,000
1988 Bond Issue
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Project includes construction of a new river intake structure equipped with
two 10 MGD pumps, construction of a 24-inch pipeline from the intake struc-
ture to the treatment plant, removal of existing intake structure and pump
station, replace equipment and appurtenances in the existing flash mix
basin, installation of new clarifier mechanisms in existing presedimen-
tation basin, replace weirs and troughs and other appurtenant items. Also
included is the design of additional new treatment units and appurtenances
to increase daily production capacity to 20 MGD at the existing plant.
I
I
I
River Supply Construction
Plant Improvement & Expansion to 20 MGD, Design
$2,050,000
500,000
Total
$2,550,000
I
1989 Bond Issue
I
Construction of new treatment units and appurtenances to increase daily
production capacity to 20 MGD at the existing plant, installation of a new
high service pumping station over an existing treated water reservoir,
construction of a new office, laboratory and system control center.
I
Plant Improvement & Expansion to 20 MGD
$5,500,000
I
Total $5,500,000
In Table 3-2 the revenue requirements and expenditures for the year 1988
are used in later sections of the report to show the method used for allo-
cations of costs and development of a rate schedule.
I
I
I
I
3-7
I
I
I
SECTION 4 - ALLOCATIONS OF COSTS
I
GENERAL
I
Total revenue requirements of a water utility are equal to the costs of
providing service (operating and capital costs). In providing service, the
water utility is required to supply water in amounts and at delivery rates
desired by the customer. The water utility incurs costs in relationship to
these operating requirements and the necessary investments in system faci-
lities required to meet customer needs. Since these needs or requirements
for total volume of supply and peak rates of use vary among customers, so
does the cost to the utility of providing service to respective customers
or classes of customers.
I
I
To assure equity in charges to different classes of customers, the actual
cost of providing service to each class must be recovered from that class.
Cost allocation procedures must recognize the specific service requirements
of each class of customers for total volume of water used, peak rates of
use, and billing related services. For example, a customer having a high
demand factor (i.e., a high peak rate of use as compared with their average
rate of use) requires larger capacity pumps, pipes and certain other system
facilities than a customer who has a comparable total consumption, but uses
water continuously at a uniform rate.
I
I
I
The revenue requirements discussed in the previous section are stated in
terms of capital costs and operating costs. The method used in preparing
the proposed water rate structure is referred to as the "Base Extra
Capacity" method. All costs of service are separated into three functions:
base cost, extra capacity cost, and customer cost.
I
I
Base costs are costs that tend to vary with the quantity of water used plus
those operating and capital costs associated with service to customers
under average load conditions. Base costs do not include the elements
necessary to meet water use variations and resulting peaks in demand. The
elements necessary to meet water use variations are extra capacity costs.
I
I
Extra capacity costs include capital and operating costs for additional
plant and system capacity beyond that required for average rate of use.
Extra capacity costs are subdivided into costs necessary to meet maximum
day and maximum hour demands.
I
Customer costs are costs associated with serving customers irrespective of
the amount of water used or maximum demand. These customer costs are sub-
divided into costs associated with providing water meters and billing ser-
vices.
I
ALLOCATION OF COSTS TO COST FUNCTIONS
I
Costs of service, consisting of operating costs and capital costs, are
allocated to the three cost functions: base cost, extra capacity cost, and
customer costs. Table 4-1 presents the allocation of operating and capital
costs to the cost functions. Expenses that tend to vary with water usage
(i.e., power and chemical costs) are allocated to base cost.
I
I
4-1
I
- _...._~.."'.~-'----"-~
I
TABLE 4-1 -
I
ACCOUNT
1988
Projected
Ex ense
OPERA TI NG COSTS:
I
WATER SUPPLY
EXPENSES
Utilities $ 82,500 $ 82,500
Maintenance &
Signals 35,300 14,800 $ 20,500
Subtotal $ 117 800 $ 97 300 $ 20 500
I
SOFTENING AND TREATMENT EXPENSES,
I
Salaries $ 236,100 $ 10 I , 500 $134,600
Utilities, Supplies
& Chemicals 718,000 718,000
Maintenance 29,400 12,600 16,800
Subtotal $ 983 500 832 100 151 400
PUMPING EXPENSES.
I
Salaries $ 126,300 $ 34,100 $ 46,100 $ 46,100
Utilities & Supplies 100,500 100,500
Maintenance 6,900 1,900 5,000
Subtotal $ 233 700 136 500 51. 100 46 100
DISTRIBUTION EXPENSES'
I
Salaries $ 301,700 $ 81,500 $110,100 $110,100
Vehicles & Equipment
Expenses 40,200 24,500 9,700 1,600 $ 2,000 $2,400
Tapping Supplies 10,000 10 ,000
Meter Maintenance
Salaries &
Supplies 10 ,000 10,000
Maintenance, Dis-
tribution Mains 50, laD 13,600 36,500
Maintenance,
Storage Tanks 3,500 900 1,300 1,300
Maintenance,
Service Lines 75,400 55,000 20 ,400
Maintenance,
Hydrants 10,100 6,200 2,400 400 500 600
Miscellaneous
Repairs Labor 1,600 400 1,200
Subtotal $ 502 600 $182.100 $123 500 151 100 $ 42 900 $3 000
I
I
I
CUSTOMER'S ACCOUNTING AND COLLECTION EXPENSES'
I
Office Salaries $ 59,800 $59,800
Maintenance, Office
Equipment 1,800 1,800
Collection Stations
& Postage 18,000 18,000
Miscellaneous
Supplies &
Expenses 10,900 10 , 900
Lease EDPT 32,500 32 , 500
Meter Reader
Salaries 57,500 $ 57,500
Subtotal $ 180 500 $ 57 500 123 000
I
I
ADMINISTRATIVE AND GENERAL EXPENSES'
I
Salaries $ 53,500 $ 33,200 $ 9,100 $ 5,400 $ 2,600 $ 3,200
Social Security &
Employees
Retirement 119 , 200 73,900 20 , 300 11,900 5,900 7,200
Insurance 137,000 84,900 23,300 13 , 700 6,900 8,200
Taxes 119 , 200 73,900 20,300 11 ,900 5,900 7,200
Building Expenses 23,800 14,800 4,100 2,300 1,200 1,400
Services Performed
by Others 35,800 22,200 6,000 3,600 1,800 2,200
Misce llaneous
Supplies &
Expenses 107,300 66,500 18,200 10,700 5,500 6,400
Subtotal $ 595 800 $369 400 $101 300 $59 500 $ 29 800 35.800
TOTAL Allocation of
Ooeratina Costs $2 613 900 $1 617 400 $447 800 $256 700 $130 200 $161.80(
I
I
CAP IT AL COSTS'
I
Minor Capital
Improvements $ 250 , 000 $ 78,300 $ 50,300 $108,800 $ 9,800 $ 2,800
Exist ing Bond &
Interest Expense 391.500 122,500 78, 700 170,400 IS ,lOa 4,800
1987 Proposed Bond
& Interest Expense 212,000 II 2 , 300 99, 700 - - -
1988 Proposed Bond
& Interest Expense - - - - - -
Total Allocation of
Capital Costs 853,500 313,100 228,700 279,200 24,900 7,600
Total Allocation of
Revenue Require-
ments 3,467,400 1,930,500 676,500 535,900 155,100 169,400
Depreciation 200,000 62,600 40,200 87,000 7,800 2,400
TOTAL
$3,667,400 $1,993,100 $716,700
$622,900
$162,900 $171,800
I
I
4-2
I
I
Exp~nses associated with facilities are allocated on the design capacity
requirement of each facility. Expenses incurred for facilities designed to
meet maximum day demand requirements are allocated on the basis of the
maximum day to average day ratio of 2.3. Thus, 43 percent of these expen-
ses are allocated to base cost and 57 percent to maximum day extra capacity
costs. Expenses related to facilities designed to meet maximum hour demand
requirements are allocated on the basis of the maximum hour to average day
ratio of 3.7. This allocates 27 percent of these expenses to base cost and
73 percent to maximum hour extra capacity cost. These rates are also used
to allocate the existing and proposed bonds.
I
I
I
I
Expenses related to facilities designed to meet both maximum day and maxi-
mum hour demands are allocated 27 percent to base cost, 35 percent to maxi-
mum day extra capacity cost, and 38 percent to maximum hour extra capacity
cost.
I
Customer costs associated with providing, maintaining, and reading meters
are allocated to meter customer costs. Similarly, costs associated with
billing are allocated to billing customer costs.
I
General and administrative expenses and all other operating costs (not
allocated as discussed above) are allocated on the basis or in the propor-
tions of all the other operating costs. For these expenses, 62 percent are
allocated to base cost, 17 percent to maximum day and 10 percent to maximum
hour extra capacity costs, and 5 percent to meter and 6 percent to billing
customer costs.
I
I
The capital costs in Table 4-1 are allocated to the cost functions (base
cost, extra capacity costs, and customer costs) in the proportions
resulting from the allocation of the investment in all existing facilities
to the cost functions. These proportions or percentage distributions of
capital costs for existing facilities allocated to the cost functions are
developed in Table 6 - Allocation of Capital Costs of the Water
Distribution Study 1 Thus, capital costs are allocated 3~ercent to
base cost, 20.1 percent to maximum day and 43.5 percent to maximum hour
extra capacity costs, and 3.9 percent to meter and 1.2 percent to billing
customer costs.
I
I
I
Allocation of revenue requirements to cost functions for the year
1988 is the sum of the allocation of operating costs and allocation of
capital costs as shown in Table 4-1.
I
UNIT COSTS OF SERVICE
I
Table 4-2 presents a summary of total costs of service by cost functions
and the resulting unit costs of service. The unit cost of service for base
cost is the minimum unit cost of service, after recovery of customer costs,
applicable only if a perfect load factor use could be achieved (perfect
load factor is use of water at a continuous, equal rate year around). Unit
base cost provides a measure of the lowest potential charge in a schedule
of rates for firm service, an important guide in preventing possible
I
I
1
Wilson & Company, Salina, Kansas, Water Distribution Study, (1972)
I
4-3
I
I
I
establishment of charges that could result in the sale of water by the uti-
lity at below cost. This unit base cost per 100 cubic feet is $0.70.
I
TABLE 4-2
UNIT COST OF SERVICE
1988
I
I
Operating Capital Depreciation Unit Cost
Costs Costs Costs Total Uni ts of Service
Base Costs $1,617,400 $ 313,100 $ $1,930,500 277 . 73 $ 0.70 ccf
mcfy
Extra Capacity Costs:
I
I
Maximum Day
447,800
228,700
676,500
485.45
mcfy
0.14 ccf
I
Maximum Hour
256,700
279,200
535,900
905.20
mcfy
0.06 ccf
I
Customer Costs:
Meters
130,200
24,900
155,100
16380 mtr./ 0.79/
mo. mtr./mo.
I
Billing
161,800
$2,613,900 $
7,600
169,400
$3,467,400
16380 mtr./ 0.86/
mo. mtr./mo.
I
TOTALS
853,500
$
Note:
ccf =
mcfy =
mtr. =
100 cubic feet
million cubic feet per year
meter
I
ALLOCATION OF COSTS TO CUSTOMER CLASSES
I
Prior sections have allocated both capital and operating costs of service
to cost functions. Cost functions are distributed to each customer class
in proportion to the cost responsibility each respective class contributes
to the total cost of the customer classes served by the system.
I
I
For each class of customers, annual water use, demand characteristics,
number of bills rendered and meters used and serviced annually are factors
that provide a measure of customer class responsibility. These water use
characteristics and customer classes are discussed in Section 2 - Water
Requirements.
I
Table 4-3 presents the allocation of the total costs of service incurred by
the water utility to the customer classes in proportion to the cost respon-
sibility of each class.
I
I
4-4
I
-------------------
1988
TABLE 4-3
ALLOCATION OF COSTS TO CUSTOMER CLASSES
.p-
I
V1
Extra CaJ:acitv Customer
Customer Base Maximum Day Maxmimum Hour Meter Billing Total*
Class Percent Costs $ Percent Costs$ Percent Costs$ Percent Costs$ Percent Costs$ Costs
Residen- 55% 1,061,800 71% 480,300 68% 364,400 84.1% 130,400 84.1% 142,100 $2,179,000
tial
Multi-
Family 4% 77 , 200 4% 27,100 4% 21,400 12.4% 19,300 12.4% 21,000 $ 166,000
Commercial 41% 791,500 25% 169,100 28% 150,100 3.5% 5,400 3.5% 6,300 $1,122,400
TOTAL 100% 1,930,500 100% 676,50( 100% 535,900 100% 155,100 100% 169,400 $3,467,400
*Does not include depreciation
I
I
SECTION 5 - DEVELOPMENT OF RATE SCHEDULE
I
GENERAL
I
Water rate schedules should be designed to recover the cost of serving dif-
ferent classes of customers while maintaining equity between the customer
classes. Proper rate development concepts do not take quantity discount
into consideration or advocate lower rates simply for water sold in larger
quantities.
I
Rate design should recognize cost of supplying the amount of water used,
rate of use and costs involved in maintaining the customers account. Rate
design should also recognize that different classes of customers have
characteristic and measurable demand requirements on system facilities.
I
FORMS OF RATE SCHEDULES
I
Stepped rate schedules are based on the assumption that different customer
classes have identifiable water use characteristics. Water usage blocks
are developed so that the price of water reflects the true cost of service
to a customer. Blocks are sized to encompass the majority of water use by
anyone customer class. With stepped rates, the unit cost of water tends
to decrease with increasing water consumption.
I
I
With inverted rate schedules, the blocks are designed so that the unit cost
of water increases with increasing consumption. Such rates are generally
attractive when water rationing is desirable. Inverted rates attempt to
decrease water consumption through the pricing structure. This type of
rate may have merit in temporarily solving an immediate problem; however,
in most water utility situations the shortage of water is generally the
result of inadequate facilities rather than an actual lack of water.
Shortage of water may occur in supply, treatment, transmission or distribu-
tion because of inadequate or no action to expanded facilities (i.e.,
because such improvements would increase the cost of water).
I
I
I
Flat rate schedules usually have a minimum charge to recover the customer
related expenses followed by a constant unit cost of water thereafter.
This rate is most applicable when most users have the same water use
characteristics. Flat rates are somewhat of a compromise between the
stepped rate structure and inverted rate structure.
I
I
There are other types of rates that are variations or modifications of the
three discussed. The stepped rate approach to pricing of water best fits
the needs of the Salina Water Utility. The water rate schedule developed
in this report utilizes stepped rates.
I
I
I
I
5-1
I
I
I
DEVELOPMENT OF STEPPED RATE SCHEDULE
I
Minimum Usage Blocks
I
Minimum usage blocks are established to recover customer costs, base cost
and extra capacity costs incurred for providing service to the smallest
users. Table 5-1 indicates the minimum monthly cost that a customer with a
specific size of meter would be charged. For example, a customer having a
2-inch water meter and using 2,400 cubic feet or less in a given month
would be billed $37.39 for the minimum usage block.
I
TABLE 5-1
MINIMUM USAGE BLOCKS
Meter Minimum Usage
Size Usage Block Base Extra Cap. Costs Customer Costs Block Cost
(in. ) (d) Cost Max. Day Max. Hour Meter Billing (Total Cost
5/8" 300 $ 2.10 $ 0.95 $ 0.72 $ 0.79 $ 0.86 $ 5.42
3/4" 600 4.20 1.89 1.44 1.58 0.86 9.97
I" 900 6.30 2.84 2.16 2.37 0.86 14.53
1-1/2" 1,500 10.50 4.73 3.60 3.95 0.86 23 . 64
2" 2,400 16.80 7.56 5.76 6.32 0.86 37.30
3" 4,800 33.60 15.12 11 .52 11 .85 0.86 72.95
4" 8,400 58.80 26.46 20 . 16 19.75 0.86 126.03
6" 14,400 100.80 45.36 34.56 31. 60 0.86 213 .18
8" 25,200 176.40 79.38 50.48 67.15 0.86 374.19
I
I
I
I
I
I
Maximum day and maximum hour extra capacity costs are computed in Table 5-1
using an extra demand factor of 2.25 and 4.0, respectively. Minimum usage
block and meter customer costs for a particular meter size are based on a
ratio of the capacity of that size meter to the capacity of a 5/8-inch
meter.
I
Subsequent Usage Blocks
I
The usage blocks that control the charges for the rate schedules are
designed on the basis of water usage information of the respective customer
classes, derived from meter book and billing information from the City.
Subsequent usage blocks should include sufficient numbers of users and suf-
ficient volumes of usage to recover the costs attributable to that usage
block. Plate 5-1 shows curves that express the various levels of monthly
use per customer in a class as a percentage of the total water use by that
class.
I
I
I
I
5-2
I
I
-------------------
PLATE 5-1
\~ATER USE CHARACTERISTICS BY CUSTOMER CLASS
100
(])
bO 90
cu
rJJ
;::>
'0 80
(])
.--i
.--i
OM 70
j:Q
(])
:> 60
OM
..,
CU
.--i
;j 50
~
U
.--i 40
cu
..,
0
E-< 30
......
0
.., 20
!:::
(])
U
I-<
(]) 10
p.,
0
1,....00-100- ....10- !""" ~ I,...-
...... ....
" ...... ~ ./
..,.
~R V ", V
/ si lie t _< /
..,.,.
/ kL'Ml lti- Far illY ",,~Ins de ( onu e c ~a b-
/
,,~ / ~~
~
Hi limu n U a5e n ~ ~. t / ~ e [} V Third
\" a ..u::~ , U ~~ -1) rJl a", Plock / U a e IE " ge Ble k ~
~ " V /
/ /
/
/ V ~/ /
V ~ .;" I....-~ V
J .J /
/ /v ~ / / r- Ot ts dl
/ ~ Comr er i 1
~ Ii"'" ..... ~....
~ ~ ... 10- ...... ~
...... ~
100
1,000
10 , 000
10n,000
1,f)OO,OOO
Monthly Water Use Per Customer (Cubic Feet)
Salina, Kansas
Hater Rate Study
HCEA File: 86-332A
I
I
The first usage block, subsequent to the m1n1mum usage block, in the pro-
posed rate schedule allows a maximum usage of 2,000 cubic feet per month
per customer. In Plate 5-1 the curve for the residential class shows 85
percent of the total water usage of the residential customer class occurs
in the first usage block. Similarly, the curves for the multi-family class
and commercial class indicate that 48 percent of the multi-family class and
only 15 percent of the inside commercial class use occurs in the (2,000
cubic feet or less monthly usage) first usage block. Essentially, no out-
side commercial class water use occurs in the first usage block.
I
I
I
The second usage block, subsequent to the first block, in the proposed rate
schedule allows 10,000 total cubic feet per month per customer. This
includes 74 percent of the water used by the multi-family class, the
remaining usage of the residential class, and 35 percent of the usage in
the commercial class.
I
I
The final (third) usage block, subsequent to the second block, in the pro-
posed rate schedule accounts for all monthly usage over 10,000 cubic feet
per customer which primarily applies to the outside commercial. The
final usage block also includes the remaining usage of the inside commer-
cial class and the multi-family.
I
I
Table 5-2 shows the unit costs of service for each customer class that
should be recovered from the subsequent usage blocks. Since the first
usage block consists of primarily residential users, it is assigned the
unit cost of service for the residential customer class $1.26 per 100 cubic
feet. Similarly, subsequent usage blocks are assigned unit costs of ser-
vice. The second usage block, primarily inside commercial and multi-
family, is assigned $1.12 per 100 cubic feet. The final usage block,
primarily outside commercial, is assigned $0.99 per 100 cubic feet.
I
I
TABLE 5-2
I
SUBSEQUENT USAGE BLOCK COSTS
Customer Class
Unit Costs
Base
Cost
of Service ($ per 100 cf)
Extra Capacity Costs
Max. Day Max. Hour
Total
I
I
Residential
Inside Commercial
& Multi-Family
Outside Commercial
$ 0.70
$ 0.32
$ 0.24
$ 1.26
I
0.70
0.70
0.22
0.15
0.20
0.14
1.12
0.99
I
Applying the unit costs of service to subsequent usage blocks in the manner
just described will normally recover too much or not enough revenue.
Therefore, several trials using different unit costs are required to deter-
mine the rate most nearly matching the usage characteristics of the respec-
tive customer classes. The final proposed rates selected for each usage
block vary from the actual unit costs derived in Table 5-2 due to the
I
I
5-3
I
I
I
compromises inherent in developing the usage blocks and respective unit
costs for each usage block.
PRESENT AND PROPOSED WATER RATE SCHEDULES
I
The present water rate schedule that was implemented in January of 1987 is
shown in Table 5-3. It will not generate the revenue required to ensure a
continued "self-sustaining" operation of the Salina Water Utility for the
year 1987 or the projected revenue requirements for 1988.
I
I
The proposed water rate schedules for the years 1988-1992 are shown in the
following tables. They have been designed to generate from each customer
class revenue sufficient to meet each customer classes' cost responsibility
and therefore, to provide sufficient revenues to meet the revenue require-
ments.
I
I
Table 5-9 shows a comparison of the revenue generated from the present rate
schedule and revenue generated from the proposed rate schedules. The per-
cent increase in revenue generated from the proposed rate schedule is an
indication of the percent increase in a water bill that typically can be
expected for a customer in one of the customer classes when the succeeding
year's proposed rate schedule is implemented.
I
I
I
I
I
I
I
I
I
I
I
I
5-4
I
I
TABLE 5-3
SALINA, KANSAS
PRESENT WATER RATE SCHEDULE
I
I
I
RATES INSIDE CITY
I
I
First 2,000 cubic feet @ $0.98 per 100 cubic feet
Next 4,000 cubic feet @ $0.89 per 100 cubic feet
Next 14,000 cubic feet @ $0.81 per 100 cubic feet
Allover 20,000 cubic feet @ $0.70 per 100 cubic feet
MONTHLY MINIMUM CHARGES
Size of Meter
Minimum Charge
Cubic Feet Allowed
I
I
5/8"
3/4"
I"
1-1/2"
2"
3"
4"
6"
8"
$ 5.04
8.50
12.70
21.42
34.34
66.57
112.77
200.86
355.84
300
600
900
1,500
2,400
4,800
8,400
14,400
25, 200
I
I
I
RATES OUTSIDE CITY
Water consumed in excess of minimum is charged at 125 percent of
the rates inside city.
I
I
Minimum charge is two (2) times minimum charge for water consumed
inside city.
Rural Water District's minimum charge is 125 percent of inside
city minimum.
I
Bulk sales $10.00 m1n1mum charge plus $3.78 per 1,000 gallons
(or 134 cubic feet).
I
I
I
5-5
I
I
I
TABLE 5-4
SALINA, KANSAS
1988 PROPOSED RATE SCHEDULE
I
I
RATES INSIDE CITY
I
First 2,000 cubic feet @ $1.15 per 100 cubic feet
Next 8,000 cubic feet @ $1.05 per 100 cubic feet
Allover 10,000 cubic feet @ $0.95 per 100 cubic feet
I
MONTHLY MINIMUM CHARGES
I
Size of Meter
Minimum Charge
Cubic Feet Allowed
I
5/8"
3/4"
1"
1-1/2"
2"
3"
4"
6"
8"
$ 5 . 25
9.75
14.25
23.50
37.25
72.80
126.00
213 .10
374.00
300
600
900
1,500
2,400
4,800
8,400
14,400
25,200
I
I
I
RATES OUTSIDE CITY
I
Water consumed in excess of minimum is charged at 125 percent of
the rates inside city.
I
Minimum charge is two (2) times minimum charge for water consumed
inside city.
Rural Water District's minimum charge is 125 percent of inside
city minimum.
I
Bulk sales $10.00 m1n1mum charge plus $4.46 per 1,000 gallons
(or 134 cubic feet).
I
I
I
I
5-6
I
I
I
TABLE 5-5
SALINA, KANSAS
1989 PROPOSED RATE SCHEDULE
I
I
RATES INSIDE CITY
I
First 2,000 cubic feet @ $1.25 per 100 cubic feet
Next 8,000 cubic feet @ $1.15 per 100 cubic feet
Allover 10,000 cubic feet @ $1.05 per 100 cubic feet
I
I
MONTHLY MINIMUM CHARGES
Size of Meter
Minimum Charge
Cubic Feet Allowed
I
5/8"
3/4"
1"
1-1/2"
2"
3"
4"
6"
8"
$ 5.90
10.80
15.80
25.80
40.80
80.10
138.50
234.50
422.25
300
600
900
1,500
2,400
4,800
8,400
14,400
25 , 200
I
I
I
RATES OUTSIDE CITY
I
Water consumed in excess of minimum is charged at 125 percent of
the rates inside city.
I
Minimum charge is two (2) times minimum charge for water consumed
inside city.
I
Rural Water District's minimum charge is 125 percent of inside
city minimum.
I
Bulk sales $10.00 m1n1mum charge plus $4.95 per 1,000 gallons
(or 134 cubic feet).
I
I
I
5-7
I
I
I
TABLE 5-6
SALINA, KANSAS
1990 PROPOSED RATE SCHEDULE
I
I
~~TES INSIDE CITY
I
I
First 2,000 cubic feet @ $1.50 per 100 cubic feet
Next 10,000 cubic feet @ $1.35 per 100 cubic feet
Allover 10,000 cubic feet @ $1.20 per 100 cubic feet
I
MONTHLY MINIMUM CHARGES
Size of Meter
Minimum Charge
Cubic Feet Allowed
I
5/8"
3/4"
1"
1-1/2"
2"
3"
4"
6"
8"
$ 6.50
12.20
17.85
29 . 25
46.30
90.80
157.15
266.40
478.85
300
600
900
1,500
2,400
4,800
8,400
14,400
25,200
I
I
I
RATES OUTSIDE CITY
I
Water consumed in excess of minimum is charged at 125 percent of
the rates inside city.
I
Minimum charge is two (2) times minimum charge for water consumed
inside city.
I
Rural Water District's minimum charge is 125 percent of inside
city minimum.
I
Bulk sales $10.00 m1n1mum charge plus $5.79 per 1,000 gallons
(or 134 cubic feet).
I
I
I
5-8
I
I
I
I
TABLE 5-7
SALINA, KANSAS
1991 PROPOSED RATE SCHEDULE
I
RATES INSIDE CITY
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First 2,000 cubic feet @ $1.57 per 100 cubic feet
Next 10,000 cubic feet @ $1.42 per 100 cubic feet
Allover 10,000 cubic feet @ $1.30 per 100 cubic feet
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MONTHLY MINIMUM CHARGES
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Size of Meter
Minimum Charge
Cubic Feet Allowed
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5/8"
3/4"
I"
1-1/2"
2"
3"
4"
6"
8"
$ 6.80
12.80
18.80
30.80
48.75
95.70
165.70
281. 00
504.50
300
600
900
1,500
2,400
4,800
8,400
14,400
25 , 200
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RATES OUTSIDE CITY
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Water consumed in excess of minimum is charged at 125 percent of
the rates inside city.
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Minimum charge is two (2) times minimum charge for water consumed
inside city.
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Rural Water District's minimum charge is 125 percent of inside
city minimum.
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Bulk sales $10.00 m1n1mum charge plus $6.05 per 1,000 gallons
(or 134 cubic feet).
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5-9
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TABLE 5-8
SALINA, KANSAS
1992 PROPOSED RATE SCHEDULE
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RATES INSIDE CITY
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First 2,000 cubic feet @ $1.60 per 100 cubic feet
Next 10,000 cubic feet @ $1.45 per 100 cubic feet
Allover 10,000 cubic feet @ $1.30 per 100 cubic feet
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MONTHLY MINIMUM CHARGES
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Size of Meter
Minimum Charge
Cubic Feet Allowed
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5/8"
3/4"
1"
1-1/2"
2"
3"
4"
6"
8"
$ 7.10
13 . 20
19.30
31.60
50.05
98.25
170.00
288.10
518.05
300
600
900
1,500
2,400
4,800
8,400
14,400
25,200
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RATES OUTSIDE CITY
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Water consumed in excess of minimum is charged at 125 percent of
the rates inside city.
Minimum charge is two (2) times minimum charge for water consumed
ins ide city.
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Rural Water District's minimum charge is 125 percent of inside
city minimum.
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Bulk sales $10.00 m1n1mum charge plus $6.35 per 1,000 gallons
(or 134 cubic feet).
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5-10
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TABLE 5-9
SALINA, KANSAS
PRESENT 1987 WATER RATE VS. PROPOSED WATER RATES
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RATES REVENUE REQUIREMENT ANNUAL INCREASE
Existing 1987 Rates $3,066,300
Proposed 1988 Rates $3,467,400 13%
Proposed 1989 Rates $3,863,700 11%
Proposed 1990 Rates $4,513 , 700 17%
Proposed 1991 Rates $4,737,700 5%
Proposed 1992 Rates $4,964,300 5%
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BILLING PROCEDURE CHANGES
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Minimum Charge
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In several instances the City provides water service to a large volume user
through more than one water meter rather than one larger capacity meter.
Where more than one meter is installed these meters are connected in
parallel to measure a wide range of flows more accurately than is possible
with a larger meter having the same total capacity. A customer having
meters connected in parallel is billed the minimum charge applicable for
only one meter of the size installed. However, to ensure equitability
among all users this customer should be billed the minimum charge .appli-
cable for an equivalent size of meter (a larger sized meter having the same
total capacity as smaller sized meters connected in parallel). For
example, a customer served by three I-inch meters connected in parallel
should be billed the minimum charge for a 2-inch (equivalent capacity and
size) meter.
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The City presently bills Multi-Family customers a minimum charge for 1
meter. However, to ensure equitability among all users, uses should be
billed a minimum charge equivalent to the number of units. For example, a
multi-family customer having 10 units is serviced from one two-inch meter.
The customer should ~e billed a minimum charge for 10-5/8" meters. The
multi-family customers could then be put on the stepped rates rather than a
flat rate.
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5-11