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Water & Wastewater Rate Study 2009-2013 I I I I I I I I ! I I I I I I I' I' I I I ENGINEERING REPORT The City of Salina, Kansas WATER and WASTEWATER RATE STUDY (2009-2013) City Commissioners John K. Vanier II, Mayor Luci Larson, Vice-Mayor Alan E. Jilka Aaron Peck R. Abner Pemey City Manager Jason Gage Director of Utilities Martha Tasker Director of Finance and Administration Rod Franz Address all communication regarding this work to: """11'",,, "" SCHl i" "....' ("\. If' "" $v ........ "~;,, J'. ....-.:,\~EH8~iJ... ~ ~. ~...>;..o ~ -:-7'\ · ~ - . ~. = : 19127 :0; - . 1- · - ; 4Q..... f.I-.23-tJj' .. ~ i ~~ ~. " . .. Ii; :: ~ ~ ... 'I~NS~-a ... ~t(; ~ .,~ ~ .......... ~~ ....' ~"'" ~/ONAL f(..~ \\~.;.' ""'""'1\\\\\ Wilson & Company, Inc., Engineers & Architects P.O. Box 1640 Salina, Kansas 67402-1640 (785) 827-0433 June 2008 WCI File No. 07-200-520-00 1111'150111 & COMPANY (i) !I I I I I I I I I I I I I I II I I II I TABLE OF CONTENTS SECTION 1 - EXECUTIVE SUMMARY 1.1. PROPOSED WASTEWATER RATE SCHEDULE.................................................. 1.1 1.2. PROPOSED WATER RATE STRUCTURE............................................................. 1.3 1.3. PROPOSED WATER RATE SCHEDULE................................................................ 1.6 1.4. EFFECTS ON WATER USERS................................................................................. 1.8 1.5. ESTIMATED WATER AND WASTEWATER MONTHLY BILLS ....................... 1.9 1.6. APPROVED BY CITY COMMISSION .................................................................. 1.10 SECTION 2 - GENERAL 2.1. PURPOSE ................... ........... ....... ....................... ......... ........ ....... ..... ....... ...... ............. 2.1 2.2. SCOPE ................. ....... .................. .................. ....................... ....... ............ ................... 2.1 2.2.1. Wastewater Rate Evaluation ..........................................................................2.1 2.2.2. Water Rate Structure Evaluation ................................................................... 2.1 2.2.3. Water Rate Evaluation.. ............ ......... ..... ........ ......... ...... ........... .......... ........... 2.1 2.2.4. Project Approach.......... ..... .................. .................... ...... ..... ........ ................... 2.2 2.2.5. Historic and Projected Water and Wastewater Expenses and Required Revenue......................................................................................................... 2.2 SECTION 3 - W ASTEW A TER RATE EV ALVA TION 3.1. PROJECTED WASTEWATER EXPENSES ............................................................ 3.1 3.2. REVENUE GENERATED AT CURRENT W ASTEW ATER RATES.................... 3.5 3.3. PROPOSED WASTEWATER RATE SCHEDULE .................................................3.7 3.4. ESTIMATED MONTHLY WASTEWATER CHARGES........................................ 3.9 SECTION 4 - WATER RATE EV ALVA TION 4.1. PROJECTED WATER EXPENSES....................................................,..................... 4.1 4.2. REVENUE GENERATED AT CURRENT WATER RATES ................................. 4.5 4.3. WATER RATE STRUCTURE EV ALUA nON ....................................................... 4.8 4.3.1. Types of Water Rate Structures....................................................................... 4.8 4.3.2. Water Conservation and Rate Structures ......................................................4.11 4.3.3. Water Rate Structure Comparison................................................................. 4.12 4.3.4. Water Rate Structure Recommendation ........................................................ 4.14 4.4. PROPOSED WATER RATE SCHEDULE .;........................................................... 4.17 4.5. EFFECTS ON WATER USERS ..............................................................................4.19 4.6. ESTIMATED MONTHLY WATER CHARGES ................................................... 4.21 APPENDIX A - Resolution No. 08-6523 WIlSON &COMPANY TOC-l weI File No. 07-200-520-00 I I I I I I I I I I I I II 'I I I I I I SECTION 1 - EXECUTIVE SUMMARY This study evaluates existing and future revenue requirements for the City's Water and Wastewater Utilities and makes recommendations for adjustments to the current rate schedules. These adjustments will be required to finance the anticipated operation, maintenance, replacement, and capital improvement costs of the Water and Wastewater Utilities for the next five years (2009-2013). The water and wastewater rates proposed in this study should be reviewed annually and adjusted as necessary to assure adequate revenue is being generated. An evaluation of the water rate structure was also completed as part of this study. Several trial allocations utilizing a targeted annual reserve balance of $3,000,000 (for water and wastewater combined) to establish the proposed water and wastewater rates were reviewed. The trial allocations tested various levels of increases for both the customer charges and the consumption charges. The development of the water and wastewater rates discussed in this review is based on the trial allocations which best match the general goals of the Water and Wastewater Rate review. In general, these goals include: . Generate adequate revenues for the Water and Wastewater Utility . Maintain equitability among user classes . Minimize percent increase in rates . Minimize percent increase in rates to smaller volume, fixed income customers . Strategic use of available reserves in excess of target fund balance . Maintain reserves within the Water and Wastewater Utility at target fund balances established by the City 1.1. PROPOSED W ASTEW A TER RATE SCHEDULE The latest change in the wastewater rates was in October 2007. This wastewater rate will generate an adequate revenue for the remainder of 2008, but will not generate adequate revenue for the period from 2009-2013. It is recommended that the wastewater rate schedule be adjusted as shown in Table 1-1. WIlSON &COMPANY 1.1 WCI File No. 07-200-520-00 II I II I I I I I I I I I I I I I I I I Table 1-1: Proposed Wastewater Rate Schedule Existing 2008 2009 2010 2011 2012 2013 Customer Charae Monthly Customer Charge, $ 3.51 6.31 "6.42 6.57 6.73 6.89 Consumption Charae Unit Cost, $Ieef 2.63 2.88 3.08 3.35 3.64 3.90 In addition to increased expenses, one reason for the increase in wastewater charges from 2008 to 2009 is due to the fact that the number of wastewater accounts didn't increase as much as previously projected. The wastewater volume actually decreased and is projected to continue to decrease. This rate increase stabilizes from 2009 to 2012 with an almost zero increase required in 2013 due to current debt service payoff on past wastewater projects. Even though the total annual revenue required stabilizes in 2013, it is recommended to continue to increase wastewater rates. It is known that additional revenue will be required for proposed nutrient removal improvements at the wastewater treatment plant with debt repayments starting around 2015. Any surplus revenue acquired in 2013 can be utilized to reduce future debt repayments, thus possibly eliminating the need for a substantial wastewater rate increase after 2013. Table 1-2 shows the estimated monthly wastewater charges for customers based on the proposed rate schedule. The table is broken down into different average usages. WIlSON &COMPANY 1.2 weI File No. 07-200-520-00 II I I I I I II I I I I I I I I I I I I Table 1-2: Estimated Monthly Wastewater Charges for Typical Customers Based on Proposed Rate Schedule Approx. Customer Type Number of Average and Usage Customers in Usage" Existing Proposed Proposed Proposed Proposed Proposed Range (cu. ft.) This Range. (cu. ft.) 2008 2009 gQ1Q 2011 2012 ~ Residential !Inside Citvl 0-300 8,465 (39%) 300 $11.40 $14.95 $15.67 $16.61 $17.65 $18.59 301-500 2,864 (13%) 400 $14.03 $17.83 $18.76 $19.96 $21.28 $22.49 501-800 3,736 (17%) 700 $21.92 $26.48 $28.01 $30.00 $32.20 $34.19 801-1,100 2,450 (11 %) 1,000 $29.81 $35.12 $37.27 $40.04 $43.12 $45.89 1,101-1,500 1,n3 (8%) 1,300 $37.70 $43.76 $46.52 $50.08 $54.04 $57.59 1,501-2,000 1,064 (5%) 1,700 $48.22 $55.29 $58.86 $63.47 $68.60 $73.19 >2,000 1,573 (7%) Commercial !Inside Citvl 2,000-5,000 3,500 $95.56 $107.15 $114.39 $123.73 $134.11 $143.39 5,001-10,000 7,500 $200.76 $222.39 $237.78 $257.62 $279.69 $299.39 10,001-50,000 30,000 $792.51 $870.64 $931.88 $1,010.n $1,098.58 $1,176.89 50,001-100,000 75,000 $1,976.01 $2,167.13 $2,320.07 $2,517.07 $2,736.36 $2,931.89 Laroe Users Inside City 100,000 $2,633.51 $2,887.40 $3,091.29 $3,353.91 $3,646.24 $3,906.89 Inside City 600,000 $15,783.51 $17,292.84 $18,515.63 $20,090.59 $21,843.78 $23,406.89 Outside City 100,000 $3,294.52 $3,613.98 $3,868.92 $4,197.31 $4,562.84 " $4,888.78 Outside City 600,000 $19,732.02 $21,620.79 $23,149.35 $25,118.16 $27,309.n $29,263.78 · Based on July 2006 usage .. Residential usage is based on the average monthly metered water consumption for January, February, and March. Commercial and Large User usage is based on monthly metered water consumption. 1.2. PROPOSED WATER RATE STRUCTURE The current decreasing block water rate structure has been in place since at least 1987, if not prior to then. This current water rate structure typically does not aid in water conservation which is the direction the City and state is moving towards. Relevant factors to be considered in selecting the appropriate rate structure include: . Financial stability (does the rate structure yield required revenue in a stable and predictable manner?) . Social equity (is the rate structure fair and equitable within its customer class?) . Environmentally sound (does the rate structure reflect the scarcity of water and discourage wasteful use?) . Administratively manageable (can the utility explain the rate structure to its citizens and administer the program?) WIlSON &COMPANY 1.3 weI File No. 07-200-520-00 I I I I I I I I I I I I I I I I I I I However, although one rate structure may meet one factor, it may not meet another. Thus, one must balance different factors in developing the appropriate rate structure for their community. Municipal water rates may be variously structured. The most common rate structures include: flat rate, decreasing block rate, uniform rate, seasonal rate, increasing block rate and excess use rate. A flat tate structure is where a customer is charged a flat fee each month regardless of the amount of water consumed. A decreasing block rate structure is where the unit price for water decreases as the volume consumed increases. A uniform rate structure is where the unit price for water is constant regardless of the amount of water consumed. A seasonal rate structure is where the unit price for water is set to vary from season to season. An increasing block rate structure is where the unit price for water increases as the volume consumed increases. An excess use rate structure is where the unit price for water increases after a specified volume consumed is exceeded. Financially Socially Environmentally Administratively Type of Rate Structure Stable Equitable Sound Manageable Flat Rate +++ - - - - - - +++ Decreasing Block Rate ++ - - - - - - Uniform Rate + + " ++ - - Seasonal Rate - + + + Increasing Block Rate - - - - +++ - - Excess Use Rate - +++ +++ - -- + means the rate structure scores positive in this criterion - means the rate structure scores negative in this criterion Based on the information given about rate structure types and how they meet the relevant factors, it is recommended that the City of Salina change to an excess use water rate structure. The two negatives regarding this type of rate structure are the administrative manageability and that it can create a substantial economic impact on some high volume industrial users. The effect on administrative manageability should be minimal due to the fact that the City of Salina currently utilizes the average winter consumption concept for means of wastewater utility WlISOIII &COMPANY 1.4 weI File No. 07-200-520-00 I I I I I I I I I I I I I I I I I I I billing. Therefore individual average winter consumption is already calculated for all customers, which in turn shouldn't create much more additional billing work. The excess use water rate structure does create a substantial economic impact on a few (3-4) high volume industrial users which have higher water consumption due to periods of increased production and not outdoor water use. The excess use water rate structure is meant to decrease wasteful outdoor water use by creating a financial impact for those who don't conserve water per year. Therefore the excess use water rate structure, which is based on average winter consumption, would need to be modified for those high volume industrial users which have higher water consumption in the summer months due to increased production. It is recommended that this modification be made for any user that uses more than 3,000,000 cubic feet of water. This volume has been chosen because it is a substantial amount of water which is most likely utilized for production and not outdoor water use. It is proposed that these high volume users be charged the same block rate as all other users but not be subjected to an excess use block rate. Because of this it is also proposed that these users submit a current water conservation plan to the Director of Utilities for review and approval. It is recommended that the current water rate structure be adjusted to an excess use rate structure as shown in Table 1-2. There shall be a minimum monthly customer charge and all water use exceeding 120% of the customer's winter average consumption shall be billed at 200% of the unit block rate. The 120% of Average Winter Consumption was recommended for several reasons. First of all, for simplicity and equality reasons, it needs to be the same percentage for all types of users, including residential, commercial, and industrial. Second of all the percentage needs to allow for some fluctuation in usage as fluctuations in water usage are typical for all types of users. According to the 2005 and 2006 average and peak water usage for all customers, anything below the 120% of the Average Winter Consumption line doesn't allow for much fluctuation in usage. Also, anything above the 120% of the Average Winter Consumption line hinders from trying to cut back the peaks that are currently being seen in the summer months of May through WIlSON &COMPANY 1.5 weI File No. 07-200-520-00 Ii I I I I I I I I I I I I I I I I I I September which works against the ultimate goal of the excess water rate structure which is water conservation. It is recommended that the unit block rate for all usage exceeding 120% of Average Winter Consumption be 200% of the unit block rate. The 200% increase in the unit block rate should provide enough of an incentive price signal to users to wisely use water which is the rationale behind water conservation rate types. Also, this proposed 200% increase is in line with the other area utilities that utilize the excess use rate structure. 1.3. PROPOSED WATER RATE SCHEDULE The latest change in water rates was in October 2007. This current water rate will generate adequate revenue for the remainder of 2008, but will not generate adequate revenue for the period from 2009-2013. It is recommended that the water rate schedule be adjusted as shown in Table 1-3. Table 1-3: Proposed Water Rate Structure and Schedule . Average Winter Consumption equals the average usage from January through March .. If any user of water shall use more than three million cubic feet (3,000,000 CF) of water in any year, then they shall be charged the 0 - 120% block rate for all consumption. The user must have a current water conservation plan in place and submit a copy of the water conservation plan to the Director of Utiltles for review and approval. WIlSON &COMPANY 1.6 WCI File No. 07-200-520-00 I I I I 'I I II I I II I I I I I I I I I In addition to increased expenses, one reason why there is a rate increase for the customer charge from 2008 to 2009 is due to the fact that the number of water accounts (and therefore the amount of billed water volume) didn't increase as much as previously projected. A second reason is due to the fact that the water rate structure changed from a decreasing block rate type to the excess use rate type. Table 1-4 shows the estimated monthly water charges for customers based on the proposed rate schedule. The table is broken down into different average usages. Table 1-4: Estimated Monthly Water Charges for Typical Customers Based on Proposed Rate Schedule Approx. Customer Type Number of Average and Usage Customers in Usage.. Meter Existing Proposed Proposed Proposed Proposed Proposed Range (cu. ft.) This Range. (cu. ft.) Size 2008 2009 2010 2011 2012 2013 Residential {Inside CiM 0-300 8,465 (39%) 300 5/8" $11.37 $11.45 $12.17 $13.07 $14.06 $15.28 301-500 2,864 (13%) 400 5/8" $13.91 $13.79 $14.72 $15.89 $17.18 $18.77 501-800 3,736 (17%) 700 518" $21.53 $20.80 $22.38 $24.35 $26.54 $29.24 801-1,100 2,450 (11%) 1,000 5/8" $29.15 $27.80 $30.04 $32.82 $35.89 $39.72 1,101-1,500 1,773 (8%) 1,300 518" $36.77 $34.81 $37.70 $41.28 $45.25 $50.19 1 ,501-2,000 1,064 (5%) 1,700 5/8" $46.93 $44.16 $47.91 $52.56 $57.73 $64.15 >2,000 1,573 (7%) Commercial (Inside CiM 2,000-5,000 3,500 5/8" $89.20 $86.21 $93.87 $103.35 $113.88 $126.99 5,001-10,000 7,500 2" $198.16 $199.27 $215.89 $236.52 $259.41 $287.85 10,001-50,000 30,000 2" $669.91 $724.92 $790.34 $871.30 $961.25 $1,073.35 50,001-100,000 75,000 4" $1,657.44 $1,842.59 $2,006.57 $2,209.63 $2,435.17 $2,716.12 Laroe Users Inside City 100,000 4" $2,174.94 $2,426.65 $2,644.84 $2,914.95 $3,214.99 $3,588.90 Inside City 600,000 6" $12,590.27 $14,185.11 $15,488.80 $17,101.38 $18,893.28 $21,128.07 Outside City 100,000 4" $2,775.93 $3,101.13 $3,374.87 $3,713.95 $4,090.52 $4,559.47 Outside City 600,000 6" $15,844.09 $17,857.25 $19,488.71 $21,507.14 $23,749.82 $26,546.21 * Based on July 2006 usage ** Assumes all usage is in the 0 - 120% of Average Winter Consumption WIlSON &COMPANY 1.7 WCI File No. 07-200-520-00 I I I I I I I I I I I I I I I I I I I 1.4. EFFECTS ON WATER USERS The new proposed excess use water rate structure is significantly different than the existing decreasing block rate and therefore the new rate structure will have a financial effect on water users. The following tables show the annual cost difference that users will see based on existing 2008 water rates versus the proposed 2009 water rates. "These tables are based on actual 2006 water usage. FOR RESIDENTIAL METERS (Based on 2006 Usage and not including meter charges) Annual Cost Difference from 2008 to 2009 Rates s $0.00 $0.00 - $20.00 $20.00 - $50.00 $50.00 - $100.00 $100.00 - $150.00 $150.00 - $200.00 $200.00 - $300.00 $300.00 - $400.00 $400.00 - $500.00 $500.00 - $600.00 $600.00 - $700.00 $700.00 - $800.00 $800.00 - $900.00 $900.00 - $1,000.00 > $1,000.00 TOTAL No. of Meters 8,866 5,992 2,998 2,076 810 428 362 159 99 49 20 16 12 8 30 21,925 % of Meter: 40.44% 27.33% 13.67% 9.47% 3.69% 1.95% 1.65% 0.73% 0.45% 0.22% 0.09% 0.07% 0.05% 0.04% 0.14% FOR COMMERCIAL METERS (Based on 2006 Usage and not including meter charges) Annual Cost Difference from 2008 to 2009 Rates s $0.00 $0.00 - $20.00 $20.00 - $50.00 $50.00 - $100.00 $100.00 - $150.00 $150.00 - $200.00 $200.00 - $300.00 $300.00 - $400.00 $400.00 - $500.00 $500.00 - $600.00 $600.00 - $700.00 $700.00 - $800.00 $800.00 - $900.00 $900.00 - $1,000.00 > $1,000.00 TOTAL No. of Meters 554 543 177 97 51 37 39 36 15 16 12 13 6 6 52 1,654 % of Meter: 33.49% 32.83% 10.70% 5.86% 3.08% 2.24% 2.36% 2.18% 0.91% 0.97% 0.73% 0.79% 0.36% 0.36% 3.14% WIlSON &COMPANY 1.8 weI File No. 07-200-520-00 ~ I I I II I I I I I II I I II II I I I I I I FOR INDUSTRIAL METERS (Based on 2006 Usage and not including meter charges) Annual Cost Difference from 2008 to 2009 Rates s $0.00 $0.00 - $100.00 $100.00 - $500.00 $500.00 - $1,000.00 $1,000.00 - $2,000.00 No. of Meters 11 8 6 3 5 * This does not include any high user over 3,000,000 cf annually which will get the block rate without an excess use charge 1.5. ESTIMATED WATER AND W ASTEW A TER MONTHLY BILLS Table 1-5 shows the estimated monthly water and wastewater charges combined for customers based on the proposed rate schedules. The table is broken down into different average usages. Table 1-5: Combined Monthly Water and Wastewater Charges for Typical Customers Based on Proposed Rate Schedules Approx. Customer Type Number of Average and Usage Customers in Usage.. Meter Existing Proposed Proposed Proposed Proposed Proposed Range (cu. ft.) This Range. (cu. ft.) Size 2008 2009 2010 2Q11 2012 2013 Residential {Inside CiM 0-300 8,465 (39%) 300 5/8" $22.n $26.40 $27.84 $29.68 $31.70 $33.87 301-500 2,864 (13%) 400 5/8" $27.94 $31.62 $33.48 $35.85 $38.46 $41.26 501-800 3,736 (17%) 700 5/8" $43.45 $47.27 $50.39 $54.35 $58.74 $63.43 801-1,100 2,450 (11%) 1,000 5/8" $58.96 $62.93 $67.30 $72.86 $79.02 $85.61 1,101-1,500 1,n3 (8%) 1,300 5/8" $74.47 $78.58 $84.22 $91.36 $99.29 $107.78 1,501-2,000 1,064 (5%) 1,700 5/8" $95.15 $99.45 $106.n $116.04 $126.33 $137.34 >2,000 1,573 (7%) Commercial {Inside CiM 2,000-5,000 3,500 5/8" $184.76 $193.36 $208.25 $227.07 $247.99 $270.38 5,001-10,000 7,500 2" $398.92 $421.67 $453.68 $494.14 $539.10 $587.24 10,001-50,000 30,000 2" $1,462.42 $1,595.56 $1,722.22 $1,882.07 $2,059.83 $2,250.24 50,001-100,000 75,000 4" $3,633.45 $4,009.72 $4,326.64 $4,726.71 $5,171.53 $5,648.01 Larae Users Inside City 100,000 4" $4,808.45 $5,314.04 $5,736.13 $6,268.85 $6,861.22 $7,495.79 Inside City 600,000 6" $28,373.78 $31,477.95 $34,004.43 $37,191.97 $40,737.07 $44,534.96 Outside City 100,000 4" $6,070.45 $6,715.11 $7,243.79 $7,911.26 $8,653.36 $9,448.25 Outside City 600,000 6" $35,576.11 $39,478.04 $42,638.05 $46,625.30 $51,059.59 $55,809.99 * Based on July 2006 usage ** Residential wastewater usage is based on the average monthly metered water consumption for January, February, and March. Commercial and Large User usage is based on monthly metered water consumption. ** Assumes all water usage is in the 0 - 120% of Average Winter Consumption WIlSON &COMPANY 1.9 WCI File No. 07-200-520-00 I I I I I I I I I I I I I I I I I I I 1.6. APPROVED BY CITY COMMISSION The above recommendations were presented to the City Commission during a study session on April 28, 2008. Based on comments received from the City Commission, the following revisions were made to the recommended water and rates: . To accommodate low water consumption customers a minimum winter quarter average (MWQA) of 800 cubic feet was established along with an excess use baseline. This excess use baseline shall be equal to the greater of (1) 120% of the established minimum winter quarter average or (2) 120% ofthe customer's winter quarter average. All customers exceeding the excess use baseline shall be charged the excess use rates that were recommended. . To accommodate customers that are gone during the winter months where no water consumption data exists for the calculation of a winter quarter average, the Director of Utilities or designated representative shall determine the most appropriate method of establishing the winter quarter average. Utilizing the excess use baseline will provide customers that are gone during the winter months with a winter quarter average that is similar to the citywide average. . The excess use rate of $4.68 per 100 cubic feet proposed for 2009 will be implemented in July 2008 with the current declining rate structure. The water rates for the years of 2009-2013 will be based on the excess use rate structure. Refer to Appendix A for the resolution that was adopted by the City Commission that establishes water and wastewater rates for the years of 2009-2013. WlISOIV &COMPANY 00 1.10 weI File No. 07-200-520- I I I I I I I I I I I I I I I I I I I SECTION 2 - GENERAL 2.1. PURPOSE This water and wastewater rate study has been prepared for the City of Salina's Utilities Department to evaluate the revenue requirements of both the Water and Wastewater Utilities. This report will make recommendations for rate adjustments that will be required to finance anticipated administration, customer services, debt retirement, operational, maintenance and capital improvement costs during the next five years (2009-2013). An evaluation ofthe current water rate structure will also be completed and a recommendation of a proposed water rate structure will be made. 2.2. SCOPE 2.2.1. Wastewater Rate Evaluation The wastewater rate evaluation included a review of current Wastewater Utility revenues and expenditures and the development of anticipated revenue requirements for the 5-year period from 2009 through 2013. A schedule of proposed wastewater rates consisting of a customer charge for administrative costs and customer services and a consumption charge for wastewater flows was developed which will provide the revenue to meet the projected revenue requirements throughout the study period. 2.2.2. Water Rate Structure Evaluation The current decreasing block rate structure, which provides for a decreasing unit cost of water with increasing usage, was developed in 1987, if not prior to then, and will be evaluated for it's sensibleness in today's water conservation approach within the state of Kansas. 2.2.3. Water Rate Evaluation The water rate evaluation included a review of current Water Utility revenues and expenditures and the development of anticipated revenue requirements for the 5-year WIlSON &COMPANY 2.1 weI File No. 07-200-520-00 II I I I I I I I I I I I I I I I I I I period from 2009 through 2013. A schedule of proposed water rates consisting of a customer charge for administrative costs and customer services and a consumption charge for water use was developed which will provide the revenue to meet the projected revenue requirements throughout the study period. 2.2.4. Project Approach Several trial allocations utilizing a targeted annual reserve balance of $3,000,000 (for water and wastewater combined) to establish the proposed water and wastewater rates were reviewed. The trial allocations tested various levels of increases for both the customer charges and the consumption charges. The development of the water and wastewater rates discussed in this review is based on the trial allocations which best match the general goals of the Water and Wastewater Rate review. In general, these goals include: . Generate adequate revenues for the Water and Wastewater Utility . Maintain equitability among user classes . Minimize percent increase in rates . Minimize percent increase in rates to smaller volume, fixed income customers . Strategic use of available reserves in excess of target fund balance . Maintain reserves within the Water and Wastewater Utility at target fund balances established by the City 2.2.5. IDstoric and Projected Water and Wastewater Expenses and Required Revenue Table 2-1 is a summary of historic revenue and expenditures in the Water and Wastewater Utilities for the years 2004 through 2008. The years 2004 through 2006 are based on actual figures from the audits and years 2007 and 2008 are estimated based on current budgets. The 5-year historic review provides a glance at the trends that have occurred in the utilities to assist in making projections of expenditures and revenue needs for future years. Line items should be self-explanatory and miscellaneous revenue WIlSON &COMPANY 2.2 WCI File No. 07-200-520-00 I I I I II I I I I I I I I I I I I I I includes revenue from sources other than charges for water or wastewater services, primarily interest on reserve accounts. Table 2-1: Historic Water and Wastewater Expenses and Revenue 2004 2005 2006 2007 2008 Actual Actual Actual Actual Estimated Cash Balance 1/1 $ 6,454,722 $ 6.089,126 $ 5,358.091 $ 4,902,175 $ 6,384,567 Water Expenditures $ 6,822,740 $ 7,302,198 $ 7,407,816 $ 7,130,213 $ 9,036,317 Wastewater Expenditures $ 5,985,523 $ 6,319,060 $ 6,369,585 $ 6,295.215 $ 7,947,591 Total Expenditures $ 12.808,263 $ 13,621,258 $ 13,777,401 $ 13,425,428 $ 16,983,908 Miscellaneous Revenue $ 405,419 $ 431,768 $ 600,773 $ 639,937 $ 606,000 Water Charges $ 6,646,327 $ 6,923,593 $ 7,061,099 $ 7,461,552 $ 8,026,250 Wastewater Charges $ 5,341,225 $ 5,487,145 $ 5,574,245 $ 6,281,534 $ 6,740,000 Total Revenues $ 12,392,971 $ 12,842,506 $ 13,236,117 $ 14,383,023 $ 15,372,250 Cash Balance 12/31* $ 6,089,126 $ 5,358,091 $ 4,902,175 $ 6,384,567 $ 4,165,833 Balance Goal $ 3,000,000 $ 3,000,000 $ 3,000,000 $ 3,000,000 $ 3,000,000 *Cash Balances do not calculate exactly due to unencumbered cash from previous years Annual revenues are derived primarily from the charges for water and wastewater services. Total revenues generated from all sources have increased by approximately 24.0 percent over the 5-year historic period. Annual expenditures for the Water and Wastewater Utilities are for administration, customer services, and operations and maintenance, including debt service for the " facilities required to serve the utility customers. These facilities include the water distribution system, water supply and treatment facilities, wastewater collection system, and wastewater treatment facilities. Expenditures for administration services and customer accounting services have been and will continue to be split equally (50% and 50%) between the Water and Wastewater Utilities budgets. Total expenditures for all services and facilities have increased by approximately 32.6 percent during the 5-year historic period. WIlSON &COMPANY 2.3 weI File No. 07-200-520-00 I. I I I I I I I I I I I I I I I I I I Annual fluctuations of both revenue generated and expenditures occur due to monthly and annual precipitation patterns, total usage amounts and unexpected needs for extensions, improvements and maintenance of the utilities. The Water and Wastewater Utilities maintain a reserve balance that may be used annually to supplemenUower than expected revenues from charges for services that could occur in a wet year when water consumption and sales may be diminished. The reserve balance may also be used if unforeseen extensions, improvements or maintenance of water or wastewater facilities are required. The reserve balance is also available to minimize the revenue required from charges for services and to level out the fluctuation in rate increases from year to year. The reserve balance has constantly decreased during the 5-year historic period and by the end of year 2008 is estimated to be slightly below the target reserve balance that the City has set of $3,000,000 annually (for water and wastewater combined). Table 2-2 is a projection of the total expenses and the projected revenue (projected required revenue based on projected total expenses) of the Water and Wastewater Utilities for the 5-year study period 2009 through 2013. Table 2-2: Projected Water and Wastewater Expenses and Required Revenue 2009 2010 2011 2012 2013 Proiected Proiected Proiected Proiected Projected Cash Balance 1/1 $ 4,165,833 $ 3,000,000 $ 3,000,000 $ 3,000,000 $ 3,000,000 Water Expenditures $ 8,136,060 $ 8,579,578 $ 9,120,393 $ 9,703,907 $ 10,432,128 Wastewater Expenditures $ 7,470,754 $ 7,806,211 $ 8,233,062 $ 8,700,091 $ 8,446,378 Total Expenditures $ 15,606,814 $ 16,385,789 $ 17,353,455 $ 18,403,998 $ 18,878,506 Miscellaneous Revenue $ 606,000 $ 606,000 $ 606,000 $ 606,000 $ 606,000 Water Charges $ 7,250,143 $ 8,276,578 $ 8,817,393 $ 9,400,907 $ 10,129,128 Wastewater Charges $ 6,584,838 $ 7,503,211 $ 7,930,062 $ 8,397,091 $ 8,143,378 Total Revenue Required $ 14,440,981 $ 16,385,789 $ 17,353,455 $ 18,403,998 $ 18,878,506 Cash Balance 12/31 $ 3,000,000 $ 3,000,000 $ 3,000,000 $ 3,000,000 $ 3,000,000 Balance Goal $ 3,000,000 $ 3,000,000 $ 3,000,000 $ 3,000,000 $ 3,000,000 WIlSON &COMPANY 2.4 WCI File No. 07-200-520-00. I-~~ I I I I I I I I I I I I I I I I I I I Total expenditures for the Water Utility for the 5-year period are projected to increase approximately 28.2 percent. Total expenditures for the Wastewater Utility for the 5-year period are projected to increase approximately 13.1 percent. The main reason for the smaller increase for the Wastewater Utility is due to payoff of some current debt services on wastewater projects. In order to keep a reserve balance at the target of $3,000,000 annually (for water and wastewater combined), a total projected required revenue of water and wastewater charges was determined. Water Charges for the Water Utility for the 5-year period are projected to increase approximately 39.7 percent. Wastewater Charges for the Wastewater Utility for the 5-year period are projected to increase approximately 23.7 percent. WIlSON &COMPANY 2.5 weI File No. 07-200-520-00 I, I I I I I I I I I I' I 'I I I I I I I SECTION 3 - W ASTEW A TER RATE EV ALVA TION 3.1. PROJECTED W ASTEW A TER EXPENSES Detailed projections of expenses for the Water and Wastewater Utility are shown in Table 3-1. Projected expenses are based on information provided by the City which were developed based on historical Water and Wastewater Utility expenses from 2004-2008. Brief descriptions of the line items included are shown below. 1. Administration Costs: Includes administrative and general costs which are equally allocated to the Water and Wastewater Utilities (50% Water/50% Wastewater). 2. Customer Accounting Costs: Includes customer accounting and collection costs equally allocated to the Water and Wastewater Utilities (50% Water/50% Wastewater). 3. Capital Outlay Costs: Includes expenses for materials or services to add or expand buildings, vehicles and equipment, and computers and technology, with the expectation that they will benefit the City over a long period of time (more than one year). These costs are equally allocated to the Water and Wastewater Utilities (50% Water/50% Wastewater). 4. Water Distribution Costs: Includes personal services and benefits, supplies, services, capital outlay expenses and operation and maintenance expenses associated with the operation of the City's water distribution system. 5. Water Treatment Costs: Includes personal services and benefits, supplies, services, capital outlay expenses and operation and maintenance expenses associated with the operation of the City's water treatment facilities. 6. Wastewater Collection Costs: Includes personal services and benefits, supplies, services, capital outlay expenses and operation and maintenance expenses associated with the operation of the City's wastewater collection system. 7. Wastewater Treatment Costs: Includes personal services and benefits, supplies, services, capital outlay expenses and operation and maintenance expenses associated with the operation of the City's wastewater treatment facilities. 8. Debt Services and Capital Reserve Transfers: Includes the following current debt services 2005-A GO Bond (Water), 2002-A GO Bond (Wastewater), 2002-A Revenue Bond (Wastewater), 2001-A GO Bond (Water), 1998-B Refunding Bond (80% Water and 20% Wastewater), Kansas Public Water Supply Loan Fund (KPWSLF) 2153 (Water), and KPWSLF 2259 (Water). Includes future debt services for the following projects: wastewater pump rehabilitation, MarkleylMagnolia water & wastewater systems, East Salina water & wastewater systems, manhole & pump station reconstruction, miscellaneous waterline projects, and wastewater treatment plant improvements. Also includes transfer of funds to Environmental Protection Agency (EP A) reserve and a capital project reserve. WIlSON &COMPANY 3.1 WCI File No. 07-200-520-00 - .. - - - - .. - .. .- - .. .. .. .. ..~ - .. - Table 3-1: Projected Water and Annual Annual Wastewater Expenses % % change change 2004 2005 2006 2007 2008 2004- 2009- 2009 2010 2011 2012 2013 (Actual) (Actual) (Actual) (Actual) (Estlmatedl 2008 2013 (Prolected) (ProJected) (PrOlected) (Prolectedl (ProJected) 1. Administration (50% Wsterl50% Wastewater) Personal Services $214,257 $287,454 $277,682 $235,637 $359,749 17% 4% $374,139 $389,105 $404,669 $420,855 $437,690 Benefits $43,874 $120,490 $73,290 $64,748 $85,700 39% 6% $90,842 $96,293 $102,070 $108,194 $114,686 Supplies $4,132 $2,097 $3,893 $6,375 $4,450 17% 3% $4,584 $4,721 $4,863 $5,009 $5,159 Services $164,558 $94,282 $75,968 $91,788 $132,900 1% 5% $139,545 $146,522 $153,848 $161,541 $169,618 Capital Outlay $220 $0 $0 $0 $0 $0 Debt Services $0 $0 $0 $0 $0 Internal Services and Transfers $1,782,843 $1,511,193 $1,586,851 $1,604,528 $1,571,980 -3% 3% $1,619,139 $1,667,714 $1,717,745 $1,769,277 $1,822,356 Total $2,209,664 $2,015,516 $2,017,904 $2,003,076 $2,154,779 0% 3% $2,228,249 $2,304,354 $2,383,195 $2,464,876 $2,549,508 2. Customer Accounting (50% Waterl50% Wastewster) Personal Services $331,925 $337,021 $353,689 $365,815 $419,980 6% 4% $436,779 $454,250 $472,420 $491,317 $510,970 Benefits $111,258 $102,830 $123,959 $121,541 $141,783 7% 6% $150,290 $159,307 $168,866 $178,998 $189,738 Supplies $105,347 $85,630 $108,785 $105,238 $104,000 1% 3% $107,120 $110,334 $113,644 $117,053 $120,565 Services $76,965 $79,877 $170,428 $62,727 $148,850 48% 0% $148,850 $148,850 $148,850 $148,850 $148,850 Capital Outlay $3,102 $4,877 $11,377 $92,331 $23,000 207% 0% $23,000 $23,000 $23,000 $23,000 $23,000 Debt Services $0 $0 $0 $0 $0 Internal Services and Transfers, Other $694,623 $834,426 $820,118 $821,185 $788,802 4% 0% $788,802 $788,802 $788,802 $788,802 $788,802 Total $1,323,220 $1,444,661 $1,588,356 $1,568,837 $1,626,415 5% 2% $1,654,841 $1,684,543 $1,715,582 $1,748,020 $1,781,924 3. Capital Outlay (50% Waterl50% Wastewater) Services (Planning) $54,951 $120,385 $25,500 $50,000 $50,000 $50,000 $50,000 $50,000 Vehicles and Equipment $75,513 $494,525 $271,535 $339,448 $918,000 $400,000 $400,000 $400,000 $400,000 $400,000 Buildings $58,461 $13,376 $119,608 $6,749 $276,000 $60,000 $60,000 $60,000 $60,000 $60,000 System Enhancements $496,710 $1,378,978 $749,295 $169,813 $2,216,600 $1,200,000 $1,300,000 $1,500,000 $1,700,000 $1,900,000 Computers and Technology $2,816 $7,433 $75,575 $45,257 $65,000 $52,000 $52,000 $52,000 $52,000 $52,000 Total $688,451 $2,014,697 $1,216,013 $586,767 $3,475,600 $1,762,000 $1,862,000 $2,062,000 $2,262,000 $2,462,000 4. Water Distribution (100% Water) Personal Services $485,631 $508,911 $497,914 $495,487 $576,040 5% 4% $599,082 $623,045 $647,967 $673,885 $700,841 Benefits $163,987 $173,672 $176,592 $173,030 $201,446 5% 6% $213,533 $226,345 $239,925 $254,321 $269,580 Supplies $408,492 $485,682 $485,453 $369,126 $477,450 6% 3% $491,774 $506,527 $521,723 $537,374 $553,495 Services $59,625 $34,339 $28,536 $31,019 $71,450 20% 6% $75,737 $80,281 $85,098 $90,204 $95,616 Capital Outlay $6,138 $9,000 0% $9,000 $9,000 $9,000 $9,000 $9,000 Debt Services $0 $0 $0 $0 $0 Internal Services and Transfers $52,822 $57,068 $62,993 $64,558 $71,339 8% 5% $74,906 $78,651 $82,584 $86.713 $91,049 Total $1,170,557 $1,259,672 $1,251,488 $1,139,356 $1,406,725 5% 4% $1,464,031 $1,523,849 $1,586,296 $1,651.497 $1,719,581 5. Water Treatment (100% Water) Personal Services $625,535 $624,252 $643,700 $665,259 $724,050 4% 4% $753,012 $783,132 $814,458 $847,036 $880,918 Benefits $191,777 $195,702 $208,179 . $218,417 $256,354 8% 6% $271,735 $288,039 $305,322 $323,641 $343,059 Supplies $963,182 $1,016,630 $1,239,136 $1,336,250 $1,391,415 10"'{' 7% $1,488,814 $1,593,031 $1,704,543 $1,823,861 $1,951,532 Services $378,792 $382,612 $424,359 $401,702 $499,040 8% 7% $533,973 $571,351 $611,345 $654,140 $699,929 Capital Outlay $790 $6,501 $3,823 $0 $4,450 0% $4,450 $4,450 $4,450 $4,450 $4,450 Debt Services $0 $0 $0 $0 $0 Internal Services and Transfers $4,181 $6,757 $3,914 $37,343 $7,400 198% 5% $7,770 $8,159 $8,566 $8,995 $9,444 Total $2,164,257 $2,232,454 $2,523,111 $2,658,971 $2,882,709 7% 6% $3,059,754 $3,248,162 $3,448,685 $3,662,123 $3,889,332 - .. - - - .. .. .. .. .. - .. '.. .. .. .. - ... _! Table 3-1: Projected Water and Annual Annual Wastewater Expenses % % change change 2004 2005 2006 2007 2008 2004- 2009- 2009 2010 2011 2012 2013 (Actuall (Actuall (Actuall {Actuall (Estimated) 2008 m! (Prolected) (ProJected) (ProJected) (ProJected) (ProJecteell 6. Wastewater Collection (100% Wastewater) Personal Services $299,228 $333,400 4% $346,736 $360,605 $375,030 $390,031 $405,632 Benefits $113,595 $121,870 6% $129,182 $136,933 $145,149 $153,858 $163,090 Supplies $584,662 $554,947 3% $571,595 $588,743 $606,406 $624,598 $643,336 Services $143,n3 $153,250 5% $160,913 $168,958 $ln,406 $186,276 $195,590 Capital Outlay $12,008 $18,300 0% $18,300 $18,300 $18,300 $18,300 $18,300 Debt Services $0 $0 $0 $0 $0 Internal Services and Transfers $73,540 $67,971 3% $70,010 $72,110 $74,274 $76,502 $78,797 Total $0 $0 $0 $1,226,806 $1,249,738 4% $1,296,736 $1,345,650 $1,396,564 $1,449,565 $1,504,744 7. Wastewater Treatment (100% Wastewater) Personal Services $955,195 $912,027 $960,086 $729,245 $809,720 -3% 4% $842,109 $875,793 $910,825 $947,258 $985,148 Benefits $314,868 $297,259 $327,378 $250,867 $289,540 -1% 6% $306,912 $325,327 $344,847 $365,538 $387,470 Supplies $582,524 $567,848 $725,726 $283,789 $292,270 -8% 3% $301,038 $310,069 $319,371 $328,952 $338,821 Services $504,558 $517,963 $565,542 $402,697 $473,200 0% 5% $496,860 $521,703 $547,788 $575,178 $603,936 Capital Outlay $20,441 $32,292 $31,097 $5,276 $12,500 27% 0% $12,500 $12,500 $12,500 $12,500 $12,500 Debt Services $0 $0 $0 $0 $0 Internal Services and Transfers $84,125 $153,649 $94,696 $32,012 $44,596 4% 3% $45,934 $47,312 $48,731 $50,193 $51,699 Total $2,461,711 $2,481,038 $2,704,525 $1,703,886 $1,921,826 -4% 4% $2,005,353 $2,092,704 $2,184,062 $2,279,619 $2,379,574 8. Debt Services and Capital Reserve Transfers Transfer to EPA Reserve $60,302 $60,302 $60,302 $60,302 $60,302 $60,302 Transfer to Capital Project Reserve $0 $0 $0 $249,999 $549,115 $1,100,000 Current Debt Services: 2005-A GO (Water) $35,764 $34,684 $33,819 $32,916 $32,004 $31,052 2002-A GO (Wastewater) $219,730 $228,100 $225,514 $227,534 $229,034 $229,900 2002-A Revenue (Wastewater) $823,500 $826,300 $831,450 $834,070 $844,424 $0 2001 A GO (Water) $26,144 $25,313 $24,843 $23,652 $22,821 $21,990 1998-B (80% Water) $522,000 KPWSLF 2153 (Water) $269,722 $269,722 $269,722 $269,722 $269,722 $269,722 KPWSLF 2259 (Water) $369,256 $369,256 $369,256 $369,256 $369,256 $369,256 Future Debt Services Issues: WW Pump Station Rehabilitation ($2M) First Pay 2009 $174,369 $174,369 $174,369 $174,369 $174,369 Markley/Magnolia Water & Sewer Systems ($2.1 M) First Pay 2010 (50% Water/50% Wastewater) $187,447 $187,447 $187,447 $187,447 East Salina Water & Sewer Systems ($3.1 M) First pay 2014 (50% Water/50% Wastewater) $0 Manhole & Pump Station Reconstruction ($1.0M) First pay 2009 (Wastewater) $87,200 $87,200 $87,200 $87.200 $87,200 Misc. Waterline Projects (North St- $270k, Hein Ave $300k, Airport $125k) First pay 2009 (Water) $60,604 $60,604 $60,604 $60,604 $60,604 WW Plant Enhancements ($12M) First pay 2015 ($1,046,215 Annually) Water Debt $1,3n,258 $1,072,635 $1,222,080 $1,252,546 $1,118,486 $759,579 $851,968 $849,874 $848,131 $846,348 Wastewater Debt $1,413,145 $1,100,585 $1,253,924 $1,285,183 $1,147,630 $1,315,969 $1,412,257 $1,416,897 $1,428,751 $585,193 -.. - - .. - .. .. - .. - - '.. .. .. .. .. .. - l - Table 3-1: Projected Water and Wastewater Expenses 2004 (Actual) Total P&I $2,790,403 Total Reserves (50% Water/5O% Wastewater) Total P& I plus Reserves $2,790,403 2005 2006 (Actual) (Actual) $2,173,220 $2,476,004 2007 2008 (Actual) (EstJmated) $2,537,729 $2,266,116 $60,302 $2,173,220 $2,476,004 $2,537,729 $2,326,418 Annual % change 2004- 2008 Total Water Expense Total Wastewater Expense Total Fund Expense $6,822,740 $7,302,198 $7,407,816 $7,130,213 $9,066,468 $5,985,523 $6,319,060 $6,369,585 $6,295,215 $7,977,742 $12,808,263 $13,621,258 $13,777,401 $13,425,428 $17,044,210 Annual % change 2009- 2013 2009 (Projected) $2,075,548 $60,302 $2,135,850 2010 (Projected) $2,264,224 $60,302 $2,324,526 2011 (ProJected) $2,266,770 $310,301 $2,577,071 2012 2013 (Prolected) (Prolected) $2,276,881 $1,431,540 $609,417 $1,160,302 $2,886,298 $2,591,842 $8,136,060 $8,579,578 $9,120,393 $9,703,907 $10,432,128 $7,470,754 $7,806,211 $8,233,062 $8,700,091 $8,446,378 $15,606,814 $16,385,789 $17,353,455 $18,403,998 $18,878,506 II I I I I I I I I I I I I I I .1 II I' I L____ As shown previously in Table 2-2, total projected required revenues, which are based on the projected total expenses and maintaining a balance goal of $3,000,000 annually (for water and wastewater combined), for the Wastewater Utility are shown in Table 3-2. Table 3-2: Total Projected Required Revenue for the Wastewater Utility 2009 2010 2011 2012 Total $6,584,838 $7,503,211 $7,930,062 $8,397,091 2013 $8,143,378 3.2. REVENUE GENERA TED AT CURRENT W ASTEW A TER RATES The current system of wastewater charges divides the costs of collecting and treating wastewater equitably among all users by means of a minimum monthly customer charge plus a consumption charge. The following is the current wastewater rates which became effective on 10/1/2007: Customer Charge (0 CF) = $3.51 Consumption Charge $2.63 per ccf The minimum monthly customer charge allocates all administrative costs (i.e. administration, and customer accounting costs which 50% is allocated to the Wastewater Utility and 50% is allocated to the Water Utility) equally among all users regardless of the user's wastewater flow volume. For this review the administrative and customer costs for theWastewater Utility is projected to remain at 50 percent of total (Water and Wastewater) administrative and customer costs. Adjustments to the existing minimum monthly customer charge are required to cover increased administrative costs. The minimum monthly customer charge is calculated as follows: C . Ch $ Annual Admin. Costs ustomer arge, = . (No. of Accounts)(12 months) The consumption charge in dollars per hundred cubic feet ($/ccf) allocates all operation, maintenance and replacement costs for wastewater collection and wastewater treatment (i.e., O&M costs, capital improvements, debt service, and capital reserve transfers) proportionally to WIlSON &COMPANY 3.5 WCI File No. 07-200-520-00 all users based on theuser's volume of wastewater flow. For a residential user, the consumption charge is based on the average monthly metered water consumption for the winter months of January, February and March. Commercial and industrial charges are based on actual monthly metered water consumption. The unit consumption charge is calculated as follows: C . Ch ($ / f) Annual 0 & M, Capital Improvement, and Debt Service Costs onsumptlon arge, cc = Annual Wastewater Volume Historical and projected number of wastewater accounts and billed wastewater volume are given in Table 3-3. It was assumed that the number of wastewater accounts would increase by 0.44% each year which is the calculated average from actual 2002 - 2006 data. It was assumed that the billed wastewater volume would decrease by the 1.93% each year which is the calculated average from actual 2002 - 2006 data. Table 3-3: Historical and Projected Number of Wastewater Accounts and Billed Volume Actual Actual Actual Actual Actual Actual 2002 2003 2004 2005 2006 2007 Number of Accounts 18,931 19,039 19,145 19,224 19,265 19,348 % Increase 0.57% 0.56% 0.41% 0.21% 0.43% Average = 0.44% Total Billed Wastewater Volume, 1000 ccf 2,271.27 2,223.45 2,217.12 2,138.42 2,100.35 2,059.81 % Increase -2.11% -0.28% -3.55% -1.78% Average = -1.93% Projected Projected Projected Projected Projected Projected 2008 2009 2010 2011 2012 2013 Number of Accounts 19,433 19,519 19,605 19,691 19,777 19,864 Total Billed Wastewater Volume, 1000 ccf 2,020.06 1,981.07 1,942.84 1,905.34 1,868.57 1,832.50 The projected revenue requirements shown in Table 3-2 were compared to the revenue to be generated at the current rates with the projected number of wastewater accounts and billed wastewater volume. As shown in Table 3-4 the revenue generated at current rates will fall short of the projected revenue required and there will be a revenue deficit for 2009 - 2013. Therefore the current rates need to be increased in order to meet the projected revenue requirements. WIlSON &COMPANY 3.6 weI File No. 07-200-520-00 I I I I I I I I I I I I I I I I I I I 3.3. PROPOSED W ASTEW A TER RATE SCHEDULE Utilizing the projected revenue requirements and the projected number of wastewater accounts and billed wastewater volume, Table 3-5 shows the proposed customer charge and consumption WIlSON &COMPANY 3.7 WCI File No. 07-200-520-00 I I I I I I I I I I. I I I I I " II I :1 I 'I I L_~ charge for 2009 through 2013. This proposed wastewater rate schedule would meet the projected revenue requirements and still allow for the $3,000,000 (for water and wastewater combined) carry over for each year. Table 3-5: Revenue Generated at Proposed Wastewater Rates Projected Projected Projected Projected Projected 2009 2010 2011 2012 2013 Customer Charae Number of Accounts 19,519 19,605 19,691 19,777 19,864 Monthly Customer Charge, $ 6.31 6.42 6.57 6.73 6.89 Projected Annual Revenue, $ 1,478,004 1,509,820 1,552,252 1,596,428 1,642,427 Current Year Balance Shortfall, $ 8,945 0 0 0 0 Miscellaneous Revenue, $ (151,500) ( 151,500) (151,500) (151,500) (151,500) Administration (50% intemal services & transfers), $ 709,340 735,249 762,161 790,119 819,165 Customer Accounting (50"10 intemal services & transfers), $ 630,220 645,071 660,590 676,809 693,762 Capital Outlay (less system enhancements), $ 281.000 281.000 281.000 281.000 281.000 Annual Revenue Required, $ 1,478,004 1,509,820 1,552,252 1,596,428 1,642,427 Surplus/(Deficit), $ 0 0 0 0 0 Consumotion Charae Total BilledWastewater Vol, 1000 ccf 1,981.07 1,942.84 1,905.34 1,868.57 1,832.50 Unit Cost, $/ccf 2.88 3.08 3.35 3.64 3.90 Projected Annual Revenue, $ 5,707,639 5,993,391 6,377,810 6,800,662 7,146,760 Current Year Balance Shortfall, $ 8,945 0 0 0 0 Miscellaneous Revenue, $ (151,500) (151,500) (151,500) (151,500) (151,500) Internal Services and Transfers 5O"Io(Admin. & Cus!. Acct.), $ 601,985 614,129 626,637 639,520 652,789 Debt Service and Capital Reserve Transfers, $ 1,346,120 1,442,408 1,572,047 1,733,459 1,165,344 Capital Outlay (system enhancements), $ 600,000 650,000 750,000 850,000 950,000 Wastewater Treatment, $ 2,005,353 2,092,704 2,184,062 2,279,619 2,379,574 Wastewater Collection, $ 1.296.736 1.345.650 1.396.564 1.449.565 1.504.744 Annual Revenue Required, $ 5,707,639 5,993,391 6,377,810 6,800,662 6,500,952 Surplus/(Deficit), $ 0 0 0 0 645,808 Total Annual Revenue Customer Charge, $ 1,478,004 1 ,509,820 1,552,252 1,596,428 1,642,427 Consumption Charge, $ 5.707.639 5.993.391 6.377.810 6.800.662 7.146.760 Total Revenue, $ 7,185,643 7,503,211 7,930,062 8,397,091 8,789,186 Total Annual Revenue Required, $ 7,185,643 7,503,211 7,930,062 8,397,091 8,143,378 Total Surplus/(Deficit), $ 0 0 0 0 645,808 WIlSON &COMPANY 3.8 WCI File No. 07-200-520-00 I I I I I I I I I I I I I 'I I I , I I I I _u_~___ As shown in Table 3-5, even though the total annual revenue required decreases in 2013, it is recommended to not decrease wastewater rates. It is known that additional revenue will be required for proposed nutrient removal improvements at the wastewater treatment plant with debt repayments starting around 2015. Any surplus revenue acquired in 2013 can be utilized to reduce future debt repayments. 3.4. ESTIMA TED MONTHLY W ASTEW A TER CHARGES Estimated total monthly wastewater charges resulting from the proposed rates are shown in Table 3-6 for typical customers and selected usage ranges. Table 3-7 shows the percent increase from the previous year for the same customers. In addition to increased expenses, one reason for the increase in wastewater charges from 2008 to 2009 is due to the fact that the number of wastewater accounts (and therefore the amount of billed wastewater volume) didn't increase as much as previously projected. The wastewater volume actually decreased and is projected to continue to decrease. This percentage increase stabilizes from 2009 to 2012 with an almost zero percentage increase in 2013 due to current debt service payoff on past wastewater projects. WIlSON &COMPANY 3.9 WCI File No. 07-200-520-00 I I I I I I I I I I I I I I I I I I I ~ Table 3-6: Estimated Monthly Wastewater Chargesfor Typical Customers Based on Proposed Rate Schedule Approx. Customer Type Number of Average and Usage Customers in Usage** Existing Proposed Proposed Proposed Proposed Proposed Range (cu. ft.) This Range* (cu. ft.) 2008 2009 2010 2011 2012 2013 Residential (Inside City) 0-300 8,465 (39%) 300 $11.40 $14.95 $15.67 $16.61 $17.65 $18.59 301-500 2,864 (13%) 400 $14.03 $17.83 $18.76 $19.96 $21.28 $22.49 501-800 3,736 (17%) 700 $21.92 $26.48 $28.01 $30.00 $32.20 $34.19 801-1,100 2,450 (11%) 1,000 $29.81 $35.12 $37.27 $40.04 $43.12 $45.89 1,101-1,500 1,773 (8%) 1,300 $37.70 $43.76 $46.52 $50.08 $54.04 $57.59 1,501-2,000 1,064 (5%) 1,700 $48.22 $55.29 $58.86 $63.47 $68.60 $73.19 >2,000 1,573 (7%) Commercial (Inside City) 2,000-5,000 3,500 $95.56 $107.15 $114.39 $123.73 $134,11 $143.39 5,001-10,000 7,500 $200.76 $222.39 $237.78 $257.62 $279.69 $299.39 10,001-50,000 30,000 $792.51 $870.64 $931.88 $1,010.77 $1,098.58 $1,176.89 50,001-100,000 75,000 $1,976.01 $2,167.13 $2,320.07 $2,517.07 $2,736.36 $2,931.89 Laroe Users Inside City 100,000 $2,633.51 $2,887.40 $3,091.29 $3,353.91 $3,646.24 $3,906.89 Inside City 600,000 $15,783.51 $17,292.84 $18,515.63 $20,090.59 $21,843.78 $23,406.89 Outside City 100,000 $3,294.52 $3,613.98 $3,868.92 $4,197.31 $4,562.84 $4,888.78 Outside City 600,000 $19,732.02 $21,620.79 $23,149.35 $25,118.16 $27,309.77 $29,263.78 * Based on July 2006 usage ** Residential Usage is based on the average monthly metered water consumption for January, February, and March. Commercial and Large User usage is based on monthly metered water consumption. WIlSON &COMPANY 3.10 weI File No. 07-200-520-00 I I I I I I I I I I I I I I I I I I I Table 3-7: Monthly Wastewater Charge Percent Increasesfor Typical Customers Based on Proposed Rate Schedule Approx. Customer Type Number of Average and Usage Customers in Usage" Proposed Proposed Proposed Proposed Proposed Range (cu. ft.) This Range* (cu. ft.) 2009 2010 2011 2012 2013 Residential (Inside City) 0-300 8,465 (39%) 300 31.17% 4.81 % 5.99% 6.22% 5.36% 301-500 2,864 (13%) 400 27.12% 5.17% 6.40% 6.64% 5.66% 501-800 3,736 (17%) 700 20.79% 5.79% 7.10% 7.34% 6.17% 801-1,100 2,450 (11 %) 1,000 17.82% 6.11% 7.45% 7.69% 6.42% 1,101-1,500 1,773 (8%) 1,300 16.09% 6.30% 7.66% 7.90% 6.57% 1,501-2,000 1,064 (5%) 1,700 14.66% 6.46% 7.84% 8.07% 6.69% >2,000 1,573 (7%) Commercial {Inside Citvl 2,000-5,000 3,500 12.13% 6.76% 8.16% 8.39% 6.92% 5,001-10,000 7,500 10.77% 6.92% 8.34% 8.57% 7.04% 10,001-50,000 30,000 9.86% 7.03% 8.47% 8.69% 7.13% 50,001-100,000 75,000 9.67% 7.06% 8.49% 8.71 % 7.15% Laroe Users Inside City 100,000 9.64% 7.06% 8.50% 8.72% 7.15% Inside City 600,000 9.56% 7.07% 8.51 % 8.73% 7.16% Outside City 100,000 9.70% 7.05% 8.49% 8.71% 7.14% Outside City 600,000 9.57% 7.07% 8.50% 8.73% 7.15% * Based on July 2006 usage ** Residential usage is based on the average monthly metered water consumption for January, February, and March. Commercial and Large User usage is based on monthly metered water consumption. WIlSON &COMPANY 3.11 WCI File No. 07-200-520-00 I I I I I I I I I I I I I I I I I I I SECTION 4 - WATER RATE EV ALUA TION 4.1. PROJECTED WATER EXPENSES Detailed projections of expenses for the Water and Wastewater Utility are shown in Table 4-1 (this is the same as Table 3-1). Projected expenses are based on information provided by the City which were developed based on historical Water and Wastewater Utility expenses from 2004- 2008. Brief descriptions of the line items included are shown below. 1. Administration Costs: Includes administrative and general costs which are equally allocated to the Water and Wastewater Utilities (50% Water/50% Wastewater). 2. Customer Accounting Costs: Includes customer accounting and collection costs equally allocated to the Water and Wastewater Utilities (50% Water/50% Wastewater). 3. Capital Outlay Costs: Includes expenses for materials or services to add or expand buildings, vehicles and equipment, and computers and technology, with the expectation that they will benefit the City over a long period of time (more than one year). These costs are equally allocated to the Water and Wastewater Utilities (50% Water/50% Wastewater). 4. Water Distribution Costs: Includes personal services and benefits, supplies, services, capital outlay expenses and operation and maintenance expenses associated with the operation of the City's water distribution system. 5. Water Treatment Costs: Includes personal services and benefits, supplies, services, capital outlay expenses and operation and maintenance expenses associated with the operation of the City's water treatment facilities. 6. Wastewater Collection Costs: Includes personal services and benefits, supplies, services, capital outlay expenses and operation and maintenance expenses associated with the operation of the City's wastewater collection system. 7. Wastewater Treatment Costs: Includes personal services and benefits, supplies, services, capital outlay expenses and operation and maintenance expenses associated with the operation of the City's wastewater treatment facilities. 8. Debt Services and Capital Reserve Transfers: Includes the following current debt services 2005-A GO Bond (Water), 2002-A GO Bond (Wastewater), 2002-A Revenue Bond (Wastewater), 200l-A GO Bond (Water), 1998-B Refunding Bond (80% Water and 20% Wastewater), Kansas Public Water Supply Loan Fund (KPWSLF) 2153 (Water), and KPWSLF 2259 (Water). Includes future debt services for the following projects: wastewater pump rehabilitation, MarkleylMagnolia water & wastewater systems, East Salina water & wastewater systems, manhole & pump station reconstruction, miscellaneous waterline projects, and wastewater treatment plant improvements. Also includes transfer of funds to Environmental Protection Agency (EP A) reserve and a capital project reserve. 1IIIIISON &COMPANY 4.1 weI File No. 07-200-520-00 --.--- - - - - - - .. - - - - - - - - .. - - - Table 4-1: Projected Water and Annual Annual Wastewater Expenses ok % change change 2004 2005 2006 2007 2008 2004- 2009- 2009 2010 2011 2012 2013 (Actual) (Actual) (Actual) (Actual) (EstJmated) ~ 2QJA (ProJected) (ProJected) (ProJected) (ProJected) (ProJected) 1. Administration (50% WaterlSO% Wastewater) Personal Services $214,257 $287,454 $2n,682 $235,637 $359,749 17% 4% $374,139 $389,105 $404,669 $420,855 $437,690 Benefits $43,874 $120,490 $73,290 $64,748 $85,700 39% 6% $90,842 $96,293 $102,070 $108,194 $114,686 Supplies $4,132 $2,097 $3,893 $6,375 $4,450 17% 3% $4,584 $4,721 $4,863 $5,009 $5,159 Services $164,558 $94,282 $75,968 $91,788 $132,900 1% 5% $139,545 $146,522 $153,848 $161,541 $169,618 Capital Outlay $220 $0 $0 $0 $0 $0 Debt Services $0 $0 $0 $0 $0 Internal Services and Transfers $1,782,843 $1,511,193 $1,586,851 $1,604,528 $1,571,980 -3% 3% $1,619,139 $1,667,714 $1,717,745 $1,769,2n $1,822,356 Total $2,209,664 $2,015,516 $2,017,904 $2,003,076 $2,154,n9 0% 3% $2,228,249 $2,304,354 $2,383,195 $2,464,876 $2,549,508 2. Customer Accounting (50% WaterlSO% Wastewater) Personal Services $331,925 $337,021 $353,689 $365,815 $419,980 6% 4% $436,n9 $454,250 $472,420 $491,317 $510,970 Benefits $111,258 $102,830 $123,959 $121,541 $141,783 7% 6% $150,290 $159,307 $168,866 $178,998 $189,738 Supplies $105,347 $85,630 $108,785 $105,238 $104,000 1% 3% $107,120 $110,334 $113,644 $117,053 $120,565 Services $76,965 $79,8n $170,428 $62,727 $148,850 48% 0% $148,850 $148,850 $148,850 $148,850 $148,850 Capital Outlay $3,102 $4,8n $",3n $92,331 $23,000 207% 0% $23,000 $23,000 $23,000 $23,000 $23,000 Debt Services $0 $0 $0 . $0 $0 Internal Services and Transfers, Other $694,623 $634,426 $820,118 $821,185 $788,802 4% 0% $788,802 $788,802 $788,802 $788,802 $788,802 Total $1,323,220 $1,444,661 $1,588,356 $1,568,837 $1,626,415 5% 2% $1,654,841 $1,684,543 $1,715,582 $1,748,020 $1,781,924 3. Capital Outlay (50% WaterlSO% Wastewater) Services (Planning) $54,951 $120,385 $25,500 $50,000 $50,000 $50,000 $50,000 $50,000 Vehicles and Equipment $75,513 $494,525 $271,535 $339,448 $918,000 $400,000 $400,000 $400,000 $400,000 $400,000 Buildings $58,461 $13,376 $119,608 $6,749 $276,000 $60,000 $60,000 $60,000 $60,000 $60,000 System Enhancements $496,710 $1,378,978 $749,295 $169,813 $2,216,600 $1,200,000 $1,300,000 $1,500,000 $1,700,000 $1,900,000 Computers and Technology $2,816 $7,433 $75,575 $45,257 $65,000 $52,000 $52,000 $52,000 $52,000 $52,000 Total $688,451 $2,014,697 $1,218,013 $588,767 $3,475,600 $1,762,000 $1,862,000 $2,062,000 $2,282,000 $2,462,000 4. Water Distribution (100% Water) Personal Services $485,631 $508,911 $497,914 $495,487 $578,040 5% 4% $599,082 $823,045 $647,967 $673,885 $700,841 Benefits $163,987 $173,672 $176,592 $173,030 $201,446 5% 6% $213,533 $226,345 $239,925 $254,321 $269,580 Supplies $408,492 $485,682 $485,453 $369,126 $4n,45O 6% 3% $491,n4 $506,527 $521,723 $537,374 $553,495 Services $59,625 $34,339 $28,536 $31,019 $71,450 20% 6% $75,737 $80,281 $85,098 $90,204 $95,616 Capital Outlay $6,138 $9,000 0% $9,000 $9,000 $9,000 $9,000 $9,000 Debt Services $0 $0 $0 $0 $0 Internal Services and Transfers $52,822 $57,068 $62,993 $64,556 $71,339 8% 5% $74,906 $78,651 $82,584 $86,713 $91,049 Total $1,170,557 $1,259,672 $1,251,488 $1,139,356 $1,408,725 5% 4% $1,464,031 $1,523,849 $1,586,296 $1,651,497 $1,719,581 5. Water Treatment (100% Water) Personal Services $625,535 $624,252 $643,700 $665,259 $724,050 4% 4% $753,012 $783,132 $814,458 $847,036 $880,918 Benefits $191,777 $195,702 $208,179 $218,417 $256,354 8% 6% $271,735 $288,039 $305,322 $323,641 $343,059 Supplies $963,182 $1,016,630 $1,239,136 $1,336,250 $1,391,415 10% 7% $1,488,814 $1,593,031 $1,704,543 $1,823,861 $1,951,532 Services $378,792 $382,612 $424,359 $401,702 $499,040 8% 7% $533,973 $571,351 $611,345 $654,140 $699,929 Capital Outlay $790 $6,501 $3,823 $0 $4,450 0% $4,450 $4,450 $4,450 $4,450 $4,450 Debt Services $0 $0 $0 $0 $0 Internal Services and Transfers $4,181 $6,757 $3,914 $37,343 $7,400 198% 5% $7,nO $8,159 $8,566 $8,995 $9,444 Total $2,164,257 $2,232,454 $2,523,111 $2,658,971 $2,882,709 7% 6% $3,059,754 $3,248,162 $3,448,685 $3,662,123 $3,889,332 ------------------- Table 4-1: Projected Water and Wastewater Expenses 2004 (Actual) Total P&I $2,790,403 Total Reserves (50"~ Water/500/0 Wastewater) Total P& I plus Reserves $2,790,403 2005 2006 (Actual) (Actual) $2,173,220 $2,476,004 2007 2008 (Actual) (estimated) $2,537,729 $2,266,116 $60,302 $2,173,220 $2,476,004 $2,537,729 $2,326,418 Annual % change 2004- ~ Total Water Expense Total Wastewater Expense Total Fund Expense $6,822,740 $7,302,198 $7,407,816 $7,130,213 $9,066,468 $5,985,523 $6,319,060 $6,369,585 $6,295,215 $7,9n,742 $12,808,263 $13,621,258 $13,7n,401 $13,425,428 $17,044,210 Annual % change 2009- 2013 2009 (Prolected) $2,075,548 $60,302 $2,135,850 2010 (Prolected) $2,264,224 $60,302 $2,324,526 2011 (Prolectedl $2,266, no $310,301 $2,5n,071 2012 2013 (Prolected) (Prolected) $2,276,881 $1,431,540 $609,417 $1,160,302 $2,886,298 $2,591,842 $8,136,060 $8,579,578 $9,120,393 $9,703,907 $10,432,128 $7,470,754 $7,806,211 $8,233,062 $8,700,091 $8,446,378 $15,606,814 $16,385,789 $17,353,455 $18,403,998 $18,878,506 I I I I I I il I. I I I I I I I I , I I I As shown previously in Table 2-2, total projected required revenues, which are based on the projected total expenses and maintaining a balance goal of $3,000,000 annually (for water and wastewater combined), for the Water Utility are shown in Table 4-2. Table 4-2: Total Projected Required Revenue for the Water Utility Total 2009 $7,250,143 2010 $8,276,578 2011 $8,817,393 2012 $9,400,907 2013 $10,129,128 4.2. REVENUE GENERA TED AT CURRENT WATER RATES The current system of water charges divides the costs of supplying and treating water equitably among all users by means of a minimum monthly customer charge plus a consumption charge. The following is the current water rates which became effective on 10/1/2007: Customer Charge (0 CF) for 5/8" Meter = $3.75 Consumption Charge: First 2,000 CF = $2.54 per 100 CF Next 8,000 CF = $2.31 per 100 CF All over 10,000 CF = $2.07 per 100 CF The minimum monthly customer charge allocates all administrative costs (i.e. administration, and customer accounting costs which 50% is allocated to the Wastewater Utility and 50% is allocated to the Water Utility) among all users based on the size of water meter installed. For this review the administrative and customer costs for the Water Utility is projected to remain at 50 percent of total (Water and Wastewater) administrative and customer costs. Adjustments to the existing minimum monthly customer charge are required to cover increased administrative costs. The minimum monthly customer charge is calculated as follows: C Ch $ Annual Admin. Costs ustomer arge, = (No. of Accounts)(12 months) WIlSON &COMPANY 4.5 WCI File No. 07-200-520-00 I I I I I I I I I I I I :1 I I I : I I I :1 I The consumption charge in dollars per hundred cubic feet ($/cct) allocates all operation, maintenance and replacement costs for water distribution and water treatment (i.e., O&M costs, capital improvements, debt service, and capital reserve transfers) proportionally to all users based on the user's consumption of water. Historical and projected number of water accounts and billed water volume are given in Table 4- 3. It was assumed that the number of water accounts would increase by 0.60% each year which is the calculated average from actual 2002 - 2006 data. It was assumed that the billed water volume would decrease by the 2.84% each year which is the calculated average from actual 2002 - 2006 data. Table 4 -3: Historical and Projected Number of Water Accounts and Billed Water Volume Actual Actual Actual Actual Actual Actual 2002 2003 2004 2005 2006 2007 Number ot Accounts 19,305 19,368 19,532 19,730 19,789 19,968 % Increase 0.33% 0.85% 1.01% 0.30% 0.90% Average = 0.68% Total Billed Water Volume, 1000 cct 3,045.18 2,810.06 2,688.32 2,792.16 2,703.79 2,627.00 % Increase -7.72% -4.33% 3.86% -3.17% Average = -2.84% Projected Projected Projected Projected Projected Projected 2008 2009 2010 2011 2012 2013 Number ot Accounts 20,104 20,240 20,378 20,517 20,656 20,797 Total Billed Water Volume, 1000 cct 2,552.39 2,479.90 2,409.47 2,341.04 2,274.56 2,209.96 The projected revenue requirements shown in Table 4-2 were compared to the revenue to be generated at the current rates with the projected number of water accounts and billed water volume. As shown in Table 4-4 the revenue generated at current rates will fall short of the projected revenue required and there will be arevenue deficit for 2009 - 2013. For simplicity it will be assumed that all water accounts are the smallest 5/8" meter with all billed water volume at the block rate for the first 2,000 cubic feet. Therefore the current rates need to be increased in order to meet the projected revenue requirements. WIlSON &COMPANY 4.6 WCI File No. 07-200-520-00 u___ I r----- I I I I I I I I I I I I I I I I I I I 4.3. WATER RATE STRUCTURE EV ALUA TION Before determining the proposed water rates necessary to meet the projected revenue requirements, it is necessary to evaluate the current water rate structure. Relevant factors to be considered in selecting the appropriate rate structure include: . Financial stability (does the rate structure yield required revenue in a stable and predictable manner?) . Social equity (is the rate structure fair and equitable within its customer class?) . Environmentally sound (does the rate structure reflect the scarcity of water and discourage wasteful use?) . Administratively manageable (can the utility explain the rate structure to its citizens and administer the program?) However, although one rate structure may meet one factor, it may not meet another. Thus, one must balance different factors in developing the appropriate rate structure for their community. Municipal water rates may be variously structured. The most common rate structures include: flat rate, decreasing block rate, uniform rate, seasonal rate, increasing block rate and excess use rate. 4.3.1. Types of Water Rate Structures Flat Rate A flat rate structure is where a customer is charged a flat fee each month regardless of the amount of water consumed. This rate structure is predominantly used where individual meters do not exist. This type of rate structure is rarely used today as most all municipalities meter individual water consumption. Decreasing Block Rate A decreasing block rate structure is where the unit price for water decreases as the volume consumed increases. The structure consists of a series of "price blocks," which are set quantities of water sold at a given unit t I Unit Price 1 . Consumption Volume -+ WIlSON &COMPANY 4.8 WCI File No. 07-200-520-00 1 , I I I I I I I I I I I I I I I I I I price. The unit prices for each block decreases as the block quantity increases. This type of rate structure requires adequate customer class consumption records but once it's implemented it is administratively manageable and does provide stable revenue. The decreasing block rate structure is not socially equitable as it subsidizes large families and penalizes small families. It also conflicts with water conservation goals. The City of Salina is currently utilizing this type of rate structure. Uniform Rate A uniform rate structure is where the unit price for water is constant regardless of the amount of water consumed. This type of rate structure is very easy to implement as customers can easily understand it and is very simple to manage administratively. The uniform Consumption Volume-+ rate structure does provide stable revenue but does not encourage water conservation. t Unit Price Seasonal Rate A seasonal rate structure is where the unit price for water is set to vary from season to season. Summer water rates are typically higher than winter rates in order to reflect the fact that water is more valuable, and costs more to provide, in the summer. This type of rate structure is very applicable in communities where there is known to be large seasonal demands (i.e. high peak summer demands from irrigating, filling of swimming pools, etc.). The seasonal rate structure is very conservation- oriented but can be difficult to implement at first until the customers become use to the seasonal rates. Because this type of rate structure promotes water conservation, it can result in revenue instability. This type of rate structure neither penalizes nor subsidizes families based on their sizes. t Summer Rate Unit Price Winter Rate Consumption Volume -+ WIlSON &COMPANY 4.9 weI File No. 07-200-520-00 II I I I I I I I I I I I 'I I I I I I ,I L Increasing: Block Rate An increasing block rate structure is where the unit price for water increases as the volume consumed increases. This structure consists of a series of price blocks, where the unit prices for each block increase as the block volumes increase. Those who use low or average volumes of water will be charged a modest unit price; those using excessive volumes will pay higher unit prices. This increasing block rate structure is conservation-oriented and sends out a strong price signal but it is not generally applicable to large industrial customers that have consistent high use for production purposes and not irrigation purposes. Because customers will likely start to conserve water, this type of rate structure can result in revenue instability which may require some sort of Rate Stabilization Reserve Fund. The increasing block rate structure can be difficult to implement because it penalizes large families and subsidizes small families. t Unit Price Consumption Volume --+- Excess Use Rate An excess use rate structure is where the unit price for water increases after a specified volume consumed is exceeded. Typically this specified volume consumed is based on each individual customer's winter average usage and not a set range of volume like the block rate structures. Basically any usage above the previous winter average usage, which would not include typical summer peak uses such as irrigation, would be charged at a higher rate. This type of structure is therefore very fair and socially equitable as it does not subsidize or penalize customers based on family size. This type of structure only penalizes those that use more waterin the summer months which is most likely used for irrigation, filling of swimming pools, etc. Therefore the excess use rate is very conservation-oriented and in turn can result in revenue instability. The excess use rate is also the most difficult structure type to administratively manage as it requires detailed consumption data to be referenced. This rate structure also may be difficult to implement as it may be hard for customers to understand. The excess use rate may create a substantial economic impact on high volume industrial users which have increased product production during the spring, summer, and fall months. WIlSON &COMPANY 4.10 weI File No. 07-200-520-00 Table 4 -5: Summary of Types of Water Rate Structures Financially Socially Environmentally Administratively Type of Rate Structure Stable Equitable Sound Manageable Flat Rate +++ - -- - - - +++ Decreasing Block Rate ++ - - - - - - Uniform Rate + + - - ++ Seasonal Rate - + + + Increasing Block Rate - - - - +++ - - Excess Use Rate - +++ +++ - -- + means the rate suucture scores positive in this criterion - means the rate suucture scores negative in this criterion 4.3.2. Water Conservation and Rate Structures In the summer of 2006, central and western Kansas experienced extreme drought conditions which decreased the City's water supplies from both surface water and groundwater. These quickly declining water supplies prompted the City of Salina to enforce water watches and water warnings to customers to promote water conservation. With these types of drought conditions occurring not only in Kansas but across the country, conservation structured water rates are becoming increasingly prevalent across the state and the country. Conservation-oriented rates are rates that provide an incentive price signal to wisely use water. Conservation rates should be adopted to promote efficient use of a limited resource and to recognize that future sources of water are more expensive than past sources of water. The increasing block rate structure most effectively encourages efficient water use. An increasing block rate structure is set up to charge higher unit prices to customers who use more water and charge lower unit prices to customers who use less. In other words, the unit prices reflect the strain or demand a customer places on the water supply system. This design is fundamentally fair; customers are charged on the basis of the costs they impose on the utility. Because high-volume users expedite the need for infrastructure upgrades and new supply procurement, these high-volume customers are more expensive for the utility to maintain. It would be unfair to pass the costs generated by these relatively few customers on to those who WIlSON &COMPANY 4.11 WCI File No. 07-200-520-00 I I I I I I I I I I I I I I I I I I I The seasonal rate structure also provides a conservation price signal when moving from winter to summer. This design charges a higher unit rate in the summer, when outdoor and other discretionary water uses are the highest. Most often, this design applies to a uniform rate structure that varies in price from season to season. Thus, on a day-to-day basis within a particular season, the seasonal rate structure does not provide a price incentive for conservation because the unit price is constant regardless of the amount of water consumption each month. An exception to this rule occurs when the seasonal rate changes incorporate increasing block rates(i.e. uniform winter rate and increasing block summer rates). The excess rate structure definitely provides a price incentive for water conservation. This design charges a higher unit rate for all use that exceeds a winter average, which is usually calculated during the months of January through March. As opposed to the seasonal rate structure the excess rate structure does provide a price incentive for conservation throughout a majority of the year and on a day-to-day basis rather than just during the summer season, The uniform rate structure and the decreasing block rate structure provide no price incentive for water conservation. Although a customer's overall bill will increase as water consumption increases in both of these rate structures, the unit price for water remains constant or decreases, respectively. Thus, the consumer has little or no incentive to conserve and, in the case of the decreasing block rate structure, the consumer actually has a price incentive to use more water. This can encourage wasteful water use. 4.3.3. Water Rate Structure Comparison The City of Salina's current decreasing block rate structure for water rates has been in place since at least 1987, if not prior to then. This type of water rate structure was widely used back then by many municipalities because it was designed to recover the cost of serving different classes of customers while maintaining equity between the customer classes. Table 4-6 shows current water rate structures for area utilities within the state of Kansas. WIlSON &COMPANY 4.12 weI File No. 07-200-520-00 r----- I I I I I I I I I I I I I I I I I I I Table 4 -6: Water Rate Structures for Area Utilities (as of July 2007) Water Rate . Utility Population Structure Current Rate Details (monthy) Abilene 6,456 Seasonal Residential Inside City o - 2,250 gals $12.75 2,251 - 7,500 gals 0.3267289 per 100 gals 7,501 -15,000 gals 0.3600481 per 100 gals 15,001 - 30,000 gals 0.7867192 per 100 gals 30,001 - 52,500 gals 0.8533715 per 100 gals 52,501 - 225,000 gals 0.5333366 per 100 gals 225,001 - 9,999,999 gals 0.4000000 per 100 gals Conservation Rates (for July, Aug, Sept Only) = Rates Doubled for Residentail only for anything over 15,000 gals Hays 19.915 Excess Use Minimum Meter Charge with 100 CF $9.18 $1.60 per 100 CF through Average Winter Use All usage exceeding Average Winter Use billed an additional $1.60 per 100 CF Hutchinson 40.783 Decreasing Block Minimum Meter Charge $8.12 0- 500 hundred cubic feet $1.64 per 100 CF 501 - 5,000 hundred cubic feet $1.48 per 100 CF Above 5,000 hundred cubic feet $1.34 per 100 CF Water One --- Excess Use Block I (up to 125% Average Winter Consumption) (Johnson County $2.81 per 1,000 gals Water District No.1) Block II (all water used in excess of 125% Average Winter Consumption) $3.73 per 1,000 gals Junction City 17.667 Increasing Block Minimum Meter Charge with 200 CF $9.50 200 CF to 1,000 CF $1.15 per 100 CF Over 1,000 CF $1.45 per 100 CF Lawrence 82.120 Uniform Minimum Monthly Meter Charge $2.65 Plus $2.92 per 1,000 gals Manhattan 44.733 Decreasing Block Minimum Monthly Charge with 200 CF $7.02 Next 1,800 CF $2.05 per 100 CF Next 38,000 CF $1.38 per 100CF Allover 40,000 CF $1.12 per 100 CF McPherson 13,731 Increasing Block Minimum Monthly Meter Charge $8.00 o to 2,600 CF $1.20 per 100 CF 2,700 to 5,200 CF $1.40 per 100 CF 5,300 to 7,800 CF $1.60 per 100CF Over 7,800 CF $1.95 per 100 CF Newton 17.977 Uniform Minimum Monthly Charge with 300 CF $10.50 Over 300 CF $3.35 per 100 CF Olathe 105,274 Increasing Block Minimum Monthly Charge $3.35 Less than 1,000 CF $2.25 per 100 CF 1,001 to 2,500CF $2.85 per 100 CF 2,501 to 5,000 CF $3.70 per 100 CF Greater than 5,000 CF $4.50 per 100 CF Topeka 122.008 Uniform First 1,500 gals $8.82 Each 1,000 gals after that: Single Family $3.18 per 1,000 gals Muhifamily $2.59 per 1,000 gals Commercial $2.35 per 1,000 gals Industrial $2.00 per 1,000 gals Wichita 354.617 Excess Use Minimum Monthly Meter Charge $5.75 $0.81 per 1,000 gals (0-110% of Average Winter Consumption) $2.90 per 1,000 gals (the next 200% of Average Winter Consumption) $4.36 per 1,000 gals (in excess of 310% of Average Winter Consumption) WIlSON &COMPANY 4.13 WCI File No. 07-200-520-00 r- I I I I I I I I I I I I I I I I I I I 4.3.4. Water Rate Structure Recommendation Based on the information given about rate structure types and how they meet the relevant factors, it is recommended that the City of Salina change to an excess use water rate structure. The two negatives regarding this type of rate structure are the administrative manageability and that it can create a substantial economic impact on some high volume industrial users. The effect on administrative manageability should be minimal due to the fact that the City of. Salina currently utilizes the average winter consumption concept for means of wastewater utility billing. Therefore individual average winter consumption is already calculated for all customers, which in turn shouldn't create much more additional billing work. The excess use water rate structure does create a substantial economic impact on the high volume industrial users which have higher water consumption in the summer months than the winter months due to increased production and not outdoor water use. The excess use water rate structure is meant to decrease wasteful outdoor water use by creating a financial impact for those who don't conserve water. Therefore the excess use water rate structure, which is based on average winter consumption, would need to be modified for those high volume industrial users which have higher water consumption in the summer months due to increased production. It is recommended that this modification be made for any user that uses more than 3,000,000 cubic feet of water. This volume has been chosen because it is a substantial amount of water which is most likely utilized for production and not outdoor water use. It is proposed that these high volume users be charged the same block rate as all other users but not be subjected to an excess use block rate. Because of this it is also proposed that these users submit a current water conservation plan to the Director of Utilities for review and approval. It is recommended that the City enact the following proposed water rate structure: . Minimum Monthly Customer Charge $X.XX . $X.XX per 100 CF through 120% of Average Winter Consumption . $X.XX per 100 CF for all usage exceeding 120% of Average Winter Consumption . Minimum monthly customer charge for meters outside city shall remain at double the inside city rate. WIlSON &COMPANY 4.14 WCI File No. 07-200-520-00 I. I I I I I I I I I I I I I I I I I I . Unit rates for consumption by meters outside city shall remain at 125% of the inside city rate. . All irrigation meters shall be billed at the excess use unit rate *** If any user of water shall use more than three million cubic feet (3,000,000 CF) of water in any year, then they shall be charged the 0-120% block rate for all consumption. The user must have a current water conservation plan in place and submit a copy of the water conservation plan to the Director of Utilities for review and approval. The 120% of Average Winter Consumption was recommended for several reasons. First of all, for simplicity and equality reasons, it needs to be the same percentage for all types of users, including residential, commercial, and industrial. Second of all the percentage needs to allow for some fluctuation in usage as fluctuations in water usage are typical for all types of users. According to the 2005 and 2006 average and peak water usage for all customers (see Graphs 4-1 and 4-2), anything below the 120% of the Average Winter Consumption line doesn't allow for much fluctuation in usage. Also, anything above the 120% of the Average Winter Consumption line hinders from trying to cut back the peaks that are currently being seen in the summer months of May through September which works against the ultimate goal of the excess water rate structure which is water conservation. As shown on the graphs, the 120% of Average Winter Consumption line would also help hit those users that aren't conserving water in the spring and fall months of April and October which should be higher moisture months in which irrigation isn't necessary. WIlSON &COMPANY 4.15 WCI File No. 07-200-520-00 II I I I I I I I I I I I I I I I I I I Graph 4 -1: Average Water Use for 2005 and 2006 2005 and 2006 Average Water Use. 10,000,000 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 o 120% of Average Winter Consumption ... CD .c .s C;) o "- CD .c E CD > o Z "- CD .c E CD C;) <D C 112005 Averaoe .2006 Averaae Graph 4 -2: Peak Water Use for 2005 and 2006 2005 and 2006 Peak Water Use 14,000,000 12,000,000 10,000,000 120% of Average Winter Consumption I . 2005 Peak [] 2006 Peak I :D .c E 8 cu Q WIlSON &COMPANY 4.16 weI File No. 07-200-520-00 I I I I I I I I I I I I I I I I I I I L It is recommended that the unit block rate for all usage exceeding 120% of Average Winter Consumption be 200% of the unit block rate through 120% of Average Winter Consumption. The 200% increase in the unit block rate should provide enough of an incentive price signal to users to wisely use water which is the rationale behind water conservation rate types. Also, based on Table 4-6 this proposed 200% increase is in line with the other area utilities that utilize the excess use rate structure. (Hays = 200%, Water One = 133%, Wichita = 350%) Several iterations were completed utilizing 150% and 300% of the unit block rate through 120% of Average Winter Consumption. It was found that utilizing the recommended 200% of the unit block rate through 120% of Average Winter Consumption is the most equitable for all users. 4.4. PROPOSED WATER RATE SCHEDULE Utilizing the recommended excess use rate structure, the projected revenue requirements and the projected number of water accounts and billed water volume. Table 4-7 shows the proposed customer charge and consumption charge for 2009 through 2013. This proposed water rate schedule would meet the projected revenue requirements and still allow for the $3,000,000 (for water and wastewater combined) carryover for each year. The proposed water rate schedule would still be an excess use rate schedule but for simplicity it will be assumed that all water accounts are the smallest 5/8" meter with 90% of all billed water volume at the 0 - 120 % of Average Winter Consumption block rate and 10% of all billed water volume at the over 120% Average Winter Consumption block rate. The 90% and 10% split is based on 2005 and 2006 usage shown on Graphs 4-1 and 4-2. Assuming this should allow for a conservative projected revenue since there may be some revenue instability from water users conserving water. With the possible revenue instability in mind, it is necessary for the City to re-evaluate the proposed water consumption charge annually, especially after the first year of the new excess use rate. WIlSON &COMPANY 4.17 weI File No. 07-200-520-00 I I I I I I I I I I I I I I I I I I I Table 4 -7: Revenue Generated at Proposed Water Rates Projected Projected Projected Projected Projected 2009 2010 2011 2012 2013 Customer Charae Number of Accounts 20,240 20,378 20,517 20,656 20,797 Monthly Customer Charge, $ 4.44 4.51 4.60 4.70 4.80 Projected Annual Revenue*, $ 1,478,004 1,509,820 1,552,252 1 ,596,428 1,642,427 Current Year Balance Shortfall, $ 8,945 0 0 0 0 Miscellaneous Revenue, $ (151,500) (151,500) (151,500) (151,500) (151,500) Administration (50% Internal services & translalS), $ 709,340 735,249 762,161 790,119 819,165 Customer Accounting (50% Internal services & translelS), $ 630,220 645,071 660,590 676,809 693,762 Capital Outlay (less system enhancements), $ 281.000 281 .000 281.000 281.000 281.000 Annual Revenue-Required, $ 1,478,004 t,509,820 1,552,252 1,596,428 1,642,427 Surplus/(Deficit), $ 0 0 0 0 0 Consumotion Charae Total Billed Water Vol, 1000 ccf 2,479.90 2,409.47 2,341.04 2,274.56 2,209.96 Unit Cost through 120% AWC**, $/oof 2.34 2.55 2.82 3.12 3.49 Unit Cost over 120% AWC**, $/ccf 4.67 5.11 5.64 6.24 6.98 Projected Annual Revenue***, $ 6,372,945 6,766,758 7,265,142 7,804,479 8,486,702 Current Year Balance Shortfall, $ 8,945 0 0 0 0 Miscellaneous Revenue, $ (151,500) (151,500) (151,500) (151,500) (151,500) Internal Services and Transfers 50% (Admln.&CusI.AccI.), $ 601,985 614,129 626,637 639,520 652,789 Debt Service and Capital Reserve Transfers, $ 789,730 882,119 1,005,024 1,152,839 1,426,499 Capital Outlay (system enhsncements), $ 600,000 650,000 750,000 850,000 950,000 Water Treatment, $ 3,059,754 3,248,162 3,448,685 3,662,123 3,889,332 Water Distribution, $ 1.464.031 1.523.849 1.586.296 1.65t.497 1.719.581 Annual Revenue Required, $ 6,372,945 6,766,758 7,265,142 7,804,479 8,486,702 Surplus/(Deficit), $ 0 0 0 0 0 Total Annual Revenue Customer Charge, $ 1,478,004 1,509,820 1,552,252 1 ,596,428 1 ,642,427 Consumption Charge, $ 6.372.945 6.766.758 7.265.142 7.804.479 8.486.702 Total Revenue, $ 7,850,949 8,276,578 8,817,393 9,400,907 10,129,128 Total Annual Revenue Required, $ 7,850,949 8,276,578 8,817,393 9,400,907 10,129,128 Surplus/(Deficit), $ 0 0 0 0 0 * Assumes 73% of projected annual revenue from customer charge comes from 5/8" meters ** A WC = Average Winter Consumption = average usage from January through March *** Assumes 90% of all usage is in the 0 - 120% of Average Winter Consumption and 10% of all usage is over the 120% of Average Winter Consumption WIlSON &COMPANY 4.18 WCI File No. 07-200-520-00 II I I I I I I I I I I I I I I I I I I Table 4-8 shows the current and proposed customer charge for each meter size for 2009 through 2013. The customer charge for each meter size is increased based on the percent increase of the proposed customer charge shown in Table 4-7 (for the 5/8" meter). Table 4-8: Proposed Customer Charge (0 CF) by Meter Size Existing Proposed Proposed Proposed Proposed Proposed Meter Size 2008 2009 2010 2011 2012 2013 5/8" Meter $3.75 $4.44 $4.51 $4.60 $4.70 $4.80 3/4" Meter $5.97 $7.07 $7.18 $7.33 $7.48 $7.65 1" Meter $8.10 $9.60 $9.74 $9.94 $10.16 $10.38 1-1/2" Meter $12.57 $14.89 $15.11 $15.43 $15.76 $16.10 2" Meter $20.31 $24.06 $24.41 $24.93 $25.46 $26.02 3" Meter $53.31 $63.15 $64.07 $65.43 $66.84 $68.30 4" Meter $76.34 $90.43 $91.75 $93.70 $95.71 $97.80 6" Meter $141.67 $167.82 $170.27 $173.88 $177.62 $181.50 8" Meter & Above $298.11 $353.14 $358.30 $365.88 $373.75 $381.93 Percent Increase 18.46% 1.46% 2.12% 2.15% 2.19% 4.5. EFFECTS ON WATER USERS The new proposed excess use water rate structure is significantly different than the existing decreasing block rate and therefore the new rate structure will have a financial effect on water users. The following tables show the annual cost difference that users will see based on existing 2008 water rates versus the proposed 2009 water rates. These tables are based on actual 2006 water usage. As shown, approximately 80% of the total residential meters would see an annual cost increase of $50.00 or less, approximately 77% of the total commercial meters would see an annual cost increase of $50.00 or less, and 19 of the 33 industrial meters would see an annual cost increase of $100.00 or less. WIlSON &COMPANY 4.19 weI File No. 07-200-520-00 I I I I I I I I I I I I I I I I I I I I FOR RESIDENTIAL METERS (Based on 2006 Usage and not Including meter charges) Annual Cost Difference from 2008 to 2009 Rates :S $0.00 $0.00 - $20.00 $20.00 - $50.00 $50.00 - $100.00 $100.00 - $150.00 $150.00 - $200.00 $200.00 - $300.00 $300.00 - $400.00 $400.00 - $500.00 $500.00 - $600.00 $600.00 - $700.00 $700.00 - $800.00 $800.00 - $900.00 $900.00 - $1,000.00 > $1,000.00 TOTAL No. of Meters 8,866 5,992 2,998 2,076 810 428 362 159 99 49 20 16 12 8 30 21 ,925 FOR COMMERCIAL METERS (Based on 2006 Usage and not Including meter charges) Annual Cost Difference from 2008 to 2009 Rates :S $0.00 $0.00 - $20.00 $20.00 - $50.00 $50.00 - $100.00 $100.00 - $150.00 $150.00 - $200.00 $200.00 - $300.00 $300.00 - $400.00 $400.00 - $500.00 $500.00 - $600.00 $600.00 - $700.00 $700.00 - $800.00 $800.00 - $900.00 $900.00 - $1,000.00 > $1,000.00 TOTAL FOR INDUSTRIAL METERS (Based on 2006 Usage and not Including meter charges) Annual Cost Difference from 2008 to 2009 Rates :S $0.00 $0.00 - $100.00 $100.00 - $500.00 $500.00 - $1,000.00 $1,000.00 - $2,000.00 No. of Meters 11 8 6 3 5 % of Meter: 40.44% 27.33% 13.67% 9.47% 3.69% 1.95% 1.65% 0.73% 0.45% 0.22% -0.09% 0.07% 0.05% 0.04% 0.14% % of Meter. 33.49% 32.83% 10.70% 5.86% 3.08% 2.24% 2.36% 2.18% 0.91% 0.97% 0.73% 0.79% 0.36% 0.36% 3.14% * This does not include any high user over 3,000,000 cf annually which will get the block rate without an excess use charge WIlSON &COMPANY 4.20 weI File No. 07-200-520-00 I I I I I I I I I I I I I I I I I I I 4.6. ESTIMA TED MONTHLY WATER CHARGES Estimated total monthly water charges resulting from the proposed rates are shown in Table 4-10 for typical customers and selected usage ranges. Table 4-11 shows the percent increase from the previous year for the same customers. In addition to increased expenses, one reason why there is a rate increase for the customer charge from 2008 to 2009 is due to the fact that the number of water accounts (and therefore the amount of billed water volume) didn't increase as much as previously projected. A second reason is due to the fact that the water rate structure changed from a decreasing block rate type to the excess use rate type. This percentage increase stabilizes from 2009 to 2013. Table 4 -10: Estimated Monthly Water Chargesfor Typical Customers Based on Proposed Rate Schedule Approx. Customer Type Number of Average and Usage Customers in Usage'. Meter Existing Proposed Proposed Proposed Proposed Proposed Range (cu. ft.) This Range. (cu. ft.) Size 2008 2QQ2 2010 2.Qll gQ!g 2013 Residential (Inside CiM 0-300 8,465 (39%) 300 5/8' $11.37 $11.45 $12.17 $13.07 $14.06 $15.28 301-500 2,864 (13%) 400 5/8" $13.91 $13.79 $14.72 $15.89 $17.18 $18.n 501-800 3,736 (17%) 700 5/8" $21.53 $20.80 $22.38 $24.35 $26.54 $29.24 801-1,100 2,450 (11%) 1,000 5/8" $29.15 $27.80 $30.04 $32.82 $35.89 $39.72 1,101-1,500 1,n3 (8%) 1,300 5/8" $36.n $34.81 $37.70 $41.28 $45.25 $50.19 1,501-2,000 1,064 (5%) 1,700 5/8" $46.93 $44.16 $47.91 $52.56 $57.73 $64.15 >2,000 1,573 (7%) Commercial (Inside CiM 2,000-5,000 3,500 5/8" $89.20 $86.21 $93.87 $103.35 $113.88 $126.99 5,001-10,000 7,500 2" $198.16 $199.27 $215.89 $236.52 $259.41 $287.85 10,001-50,000 30,000 2" $669.91 $724.92 $790.34 $871.30 $961.25 $1,073.35 50,001-100,000 75,000 4" $1,657.44 $1,842.59 $2,006.57 $2,209.63 $2,435.17 $2,716.12 Laroe Users Inside City 100,000 4" $2,174.94 $2,426.65 $2,644.84 $2,914.95 $3,214.99 $3,588.90 Inside City 600,000 6" $12,590.27 $14,185.11 $15,488.80 $17,101.38 $18,893.28 $21,128.07 Outside City 100,000 4" $2,775.93 $3,101.13 $3,374.87 $3,713.95 $4,090.52 $4,559.47 Outside City 600,000 6" $15,844.09 $17,857.25 $19,488.71 $21,507.14 $23,749.82 $26,546.21 * Based on July 2006 usage ** Assumes all usage is in the 0 - 120% of Average Winter Consumption WIlSON &COMPANY 4.21 weI File No. 07-200-520-00 I II I I I I I I I I I I ! I I I I I I I Lu Table 4 -11: Monthly Water Charge Percent Increasesfor Typical Customers Based on Proposed Rate Schedule Approx. Customer Type Number of Average and Usage Customers in Usage** Meter Proposed Proposed Proposed Proposed Proposed Range (cu. ft.) This Range* (cu. ft.) Size 2009 2010 2011 2012 2013 Residential (Inside City) 0-300 8,465 (39%) 300 5/8n 0.71% 6.25% 7.40% 7.60% 8.67% 301-500 2,864 (13%) 400 5/8n -0.88% 6.76% 7.94% 8.13% 9.26% 501-800 3,736 (17%) 700 5/8" -3.41 % 7.61% 8.81% 8.97% 10.20% 801-1,100 2,450 (11%) 1,000 5/8n -4.62% 8.03% 9.24% 9.38% 10.65% 1,101-1,500 1,773 (8%) 1,300 5/8n -5.32% 8.29% 9.50% 9.63% 10.91 % 1,501-2,000 1,064 (5%) 1,700 5/8n -5.91 % 8.50% 9.71% 9.83% 11.13% >2,000 1,573 (7%) Commercial (Inside City) 2,000-5,000 3,500 5/8n -3.35% 8.88% 10.10% 10.19% 11.52% 5,001-10,000 7,500 2" 0.56% 8.34% 9.56% 9.68% 10.96% 10,001-50,000 30,000 2n 8.21% 9.02% 10.24% 1 0.320~ 11.66% 50,001-100,000 75,000 4n 11.17% 8.90% 10.12% 10.21% 11.54% Laroe Users Inside City 100,000 4" 11.57% 8.99% 10.21 % 10.29% 11.63% Inside City 600,000 6n 12.67% 9.19% 10.41% 10.48% 11.83% Outside City 100,000 4n 11.72% 8.83% 10.05% 10.14% 11.46% Outside City 600,000 6n 12.71% 9.14% 10.36% 10.43% 11.77% * Based on July 2006 usage ** Assumes all usage is in the 0 -120% of Average Winter Consumption WIlSON &COMPANY 4.22 weI File No. 07-200-520-00 APPENDIX A Resolution No. 08-6523 WlISOItI &COMPANY Appendix A WCI File No. 07-200-520-00 I. I f RESOLUTION NUMBER 08-6523 A RESOLUTION ESTABLISHING WATER AND WASTEWATER RATES IN THE COMPREHENSIVE FEE SCHEDULE OF THE CITY OF SALINA, KANSAS. ' WHEREAS, the City of Salina provides many specific services for the Citizens of Salina; I and WHEREAS, specific individuals benefit from said services; and I . WHEREAS, it is appropriate public policy to require specific individuals benefiting from specific services to pay all or a portion of the cost of such services; and I WHEREAS, Salina Code Section 2-2 provides that the Board of Commissioners shall determine, by resolution, all license fees, permit fees and other user related fees or chargers established by ordinances of the City; SO NOW, THEREFORE BE IT RESOLVED by the Governing Body of the City of Salina, Kansas: I Section 1. That the following Utilities fees of. Article XI of the City of Salina Comprehensive Fee Schedule are hereby amended to read as follows: I Effective Julv 1. 2008 WASTEWATER Inside City Limits Customer Charge (0 C.F.) Consumption Charge per 100 C.F. Per Month $3.51 $2.63 I ,~~ I I WATER Inside City Limits Customer Charge (0 C.F.) 5/8" Meter %" Metter 1 " Meter 1 W' Meter 2" Meter 3" Meter 4" Meter 6" Meter 8" Meter & Above $3.75 $5.97 $8.10 $12.57 $20.31 $53.31 $76.34 $141.67 $298.11 I Consumption Charge per 100 C.F. First 2,000 C.F. Next 8,000 C.F. All over 10,000 C.F. $2.54 $2.31 $2.07 I I Excess Use Charge Metered Consumption Above Excess Use Baseline Metered Consumption All Irrigation Meters $4.68 $4.68 I Aptutment Rate: When three or more units are placed on a master meter, usage is charged at the JlTst 2,000 cubic feet rate for all consumption. I RATE OUTSIDE CITY: Customer Charge Consumption Charge Double Inside Rate 125% Inside Rate I I I I f I Effective November 1. 2008 WASTEWATER Year 2009 Year 2010 Year 2011 Year 2012 Year 2013 Effective Effective Effective Effective Effective Inside City Limits 11-1-2008 11-1-2009 11-1-2010 11-1-2011 11-1-2012 Customer Charge (0 C.F.) $6.31 $6.42 $6.57 $6.73 $6.89 Consumption Charge per 100 C.F. $2.88 $3.08 $3.35 $3.64 $3.90 WATER Inside City Limits Customer Charge (0 C.F.) 5/8" Meter $4.44 $4.51 $4.60 $4.70 $4.80 %" Meter $7.07 $7.18 $7.33 $7.48 $7.65 1 " Meter $9.60 $9.74 $9.94 $10.16 $10.38 I Yz" Meter $14.89 $15.11 $15.43 $15.76 $16.10 2" Meter $24.06 $24.41 $24.93 $25.46 $26.02 3" Meter $63.15 $64.07 $65.43 $66.84 $68.30 4" Meter $90.43 $91.75 $93.70 $95.71 $9~.80 6" Meter $167.82 $170.27 $173.88 $177.62 $181.50 8" Meter and above $353.14 $358.30 $365.88 $373.75 $381.93 Consumption Charge per 100 C.F. Unit Block Rate Metered Consumption Through Excess Use Baseline $2.34 $2.55 $2.82 $3.12 $3.49 Excess Use Charge Metered Consumption Above Excess Use Baseline $4.68 $5.10 $5.64 $6.24 $6.98 Metered Consumption All Irrigation Meters $4.68 $5.10 $5.64 $6.24 $6.98 RATE OUTSIDE CITY: Customer Charge Double Inside Rate Consumption Charge 125% Inside Rate I 1 I I I ~... I 1 Winter Quarter Average (WQA) shall be defined by adding the metered water consumption on bills rendered during the months of January. February and March and then dividing this sum by the number of billings (three). Each customer's WQA shall be recalculated in April of each year. This WQA shall be utilized for the following months of May through April. I Minimum Winter Quarter Average (MWQA) sllDll be defined as 800 cubic feet. I I In those instances where no water consumption data exists for the calculation of a WQA for a customer. the Director of Utilities or designated representative shall determine the most appropriate method of establishing the WQA. . Excess Use Baseline shall equal the greater of 120% of the WQA or J 20% of the MWQA. Excess Use Charge shall apply to: (I) all irrigation meters (2) any use in excess of the excess use baseline. I A customer with metered water consumption greater lhan three million cubicfeet (3.000,000 cf) per year sllDll be charged at the Tier r rale for all consumption. This customer must have a Water Conservation Plan and the plan mUSI be approved by the Director of Utilities. I Section 2. That this Resolution shall be in full force and in effect after its adoption. Adopted by the Board of Commissioners and signed by the Mayor this 91h day of June, 2008. I John K. Vanier IT Mayor [SEAL] ATIEST: I Lieu Ann Elsey, CMC, City Clerk