public enterprise revenue and rate trends

www.efc.unc.edu

Public Enterprise Revenue and Rate Trends

Jeff HughesEnvironmental Finance Center School of GovernmentUniversity of North Carolinajhughes@sog.unc.edu919 843 4956www.efc.unc.edu

Presentation

The Enterprises• Water• Wastewater• Stormwater• Electricity• A dash of trash…

The Outline• State of rates• State of revenues• Notable trends

State of Rates

• Water and Wastewaterhttp://efc.unc.edu/RatesDashboards/nc.html

• Stormwaterhttp://efc.unc.edu/tools.htm#nc_stormwater_dashboard

• Electricity http://efc.unc.edu/projects/NCElectricityRatesDashboard.htm

Trends

• Revenue increases• Attention to fixed vs. variable revenue• Decreasing sales• Rate increases• More attention on role of municipal utilities

1998 (n=498)

1999 (n=496)

2000 (n=498)

2001 (n=500)

2002 (n=501)

2003 (n=504)

2004 (n=0)

2005 (n=0)

2006 (n=498)

2007 (n=485)

2008 (n=478)

2009 (n=501)

2010 (n=491)

$0

$500,000,000

$1,000,000,000

$1,500,000,000

$2,000,000,000

$2,500,000,000Total Operating Revenues

Linear (Total Operating Revenues)

Total Operating Expendi-tures

Linear (Total Operating Expenditures)

Fiscal Year (FY)

$ (M

illio

ns)

Data analyzed by the Environmental Finance Center at the University of North Carolina.Data source: NC Department of State Treasurer-Local Government Commission

4.04.55.0

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004

Bill

ed W

ater

(MG

D)Trends

The challenge of driving revenue increases through rate increases:

HH rate versus revenues increases (2004 to 2010)

0% 25% 50% 75% 100% 125% 150%

-50%

-25%

0%

25%

50%

75%

100%

125%

150%

% Water Bill Increase for 10 ccf/month (from 2004 to 2010; wintertime rates)% W

ater

Rev

enue

Incr

ease

(fro

m 2

004

to 2

010)

Preliminary ResultsData analysis by the Environmental Finance Center at the University of North Carolina.Data sources: 2010 and 2004 RFC/AWWA Water and Wastewater Rates Survey Data for 82 Utilities

Fixed versus variable

Data analyzed by the Environmental Finance Center at the University of North Carolina. Data source: Each utility’s customer billing records, project funded by NC Urban Water Consortium

Charlotte-Mecklenburg Utilities Water and Sewer Revenues Fixed versus variable

2009 2010 2011 2012*0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

VariableFixed

Data sources: Mickey Hicks, CFO, Charlotte-Mecklenburg Utilities

Annual Rate Increases

Outside service getting more attention

Do prices reflect the true cost of water?