council rate presentation afw

8/14/2019 Council Rate Presentation AFW

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CITYOF RALEIGH

Preliminary RecommendationsConservation Rate Structure

City Council Presentation

February 3, 2009


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2

Implementation of

Conservation Rates Initial Issues to ConsiderWho uses the water?

How is the water being used?

Where are the greatest opportunities for conservation?

What mechanisms are available to achieveconservation?

Pricing

Education and Awareness

Start by evaluating customer usage patterns


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3

System-Wide FY 2008

Consumption

85.3%

4.6%

0.5% 2.0%

1.7%

0.9%4.9%

Raleigh Garner Rolesville Wendell Wake Forest Zebulon Knightdale


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4

FY 2008 Calculated

Water User Charge Revenue

75.0%

0.8%2.1% 6.4%

4.3%

8.3%

3.2%

Raleigh Garner Rolesville Wendell Wake Forest Zebulon Knightdale


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5

Merged UtilitiesMonthly Bill Comparison

Residential Customer: 5/8 Meter, 6 ccf

Monthly Bill Comparison (6 ccf)

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

Raleigh

Current

Garner Wake Forest Knightdale Wendell Rolesville Zebulon

Water Sewer


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6

Raleigh / GarnerFY 2008 Consumption

19.7%

0.7%

3.3%

5.8%

1.1%

6.5%

62.9%

Commercial City Owned Industrial Intermunicipal Institutional Residential Irrigation


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Key Observations Raleigh / Garner represents 90% of total system

usage

Biggest opportunity for conservation measures is

Raleigh / Garner Residential class 63% of consumption 65% of consumption including irrigation

Merged Utilities will continue to have similar price

differential to recover merger costs 10.1% consumption 16.7% revenues


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Proposed Rate Structure

PLUS

Current Rate Structure

PLUS

Current & Proposed Rate

StructureBimonthly Service

ChargeCharges Vary By Meter Size

Monthly Service

ChargeCharges Vary By Meter Size

Uniform

Volume Charge

3 Tiered

Residential

Volume Charge

Uniform or

2 Tiered

Non-Residential

Volume Charge

All irrigation usage (residential &

non-residential) will be charged at

Tier 3 residential rate


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Residential Water Rate

Structure The recommended water rate structure will have thefollowing three tiers:

9%+10Tier 3

31%104Tier 2

60%40Tier 1

% UsageMax (ccf)Min (ccf)

Why choose 3 Tiers: Provides the flexibility to adjust and enhance conservation opportunities

Low-volume users are protected Provides adequate pricing incentives to use less water

Note: All irrigation usage will be billed at Tier 3 rates, which is notreflected in the percentage above

Note: 1 ccf = 748 gal 4 ccf 3,000 gal 10 ccf 7,500 gal Average Usage 6 ccf/month


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Revenue Neutral Rate

ScenarioCurrent FY 2009 Uniform Rates Equivalent FY 2009 Tiered Rates

Residential

$ 1.96 per ccf

Non-Residential

$ 1.96 per ccf

Non-Residential

$ 1.96 per ccf

Residential

Tier 1: 0 4 ccf $ 1.57 per ccf (-20%)

Tier 2: 4 10 ccf $ 2.74 per ccf (+40%)Tier 3: 10 + ccf $ 3.92 per ccf (+100%)

Tiered rates set so that the average user (6 ccf / month) will have an average cost

equal to the average rate of $1.96 per ccf. Example only does not represent

actual rate recommendations.


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Non-Residential Water Rate

Structure Initial Recommendation: Maintain uniformvolumetric rate structure Set to the average unit rate of the system ($1.96) Price falls between the Tier 1 and Tier 2 residential rate Provides more equitable cost recovery

Optional Non-Residential 2-Tier Rate Structure 2nd Tier set to target largest water users

Moderate price differential to fund other conservation initiatives &

programs Modeling capability is in place Can be implemented as part of future adjustments to the

rate structure


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Sewer Rate Structure

Bimonthly Service

Charge

Uniform

Volume Charge

Current Rate Structure

PLUS

Proposed Rate Structure

PLUS

Monthly Service

Charge

Uniform

Volume Charge

There is no cost justification for a tiered rate for wastewater service Focus will be on revenue sufficiency Reinforces water conservation rates lower usage = lower cost Does not address rates for reuse water


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Proposed Rate Structure The cost of water increases as usage increases

Targets elective usage to reinforce conservation

Limited demand impact depends on price elasticity A 10% increase in cost leads to a 1.5% to 3.0% decrease in

usage Allocation of total usage to rate tiers:

Total

Residential:

Non-Residential

Raleigh / Garner FY 2008 Total Usage

100 %

11.4 %Tier 3

19.9 %Tier 2

37.5 %Tier 1

31.3 %


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Regional Comparison of

Water Costsfor Residential Customers

6 ccf Monthly

$-

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

Raleigh Raleigh

Tiered

Durham Cary OWASA

Base Charge Volume Charge

$15.65 $15.65 $15.96 $17.79

$26.24

15 ccf Monthly

$-

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

Raleigh Durham Raleigh

Tiered

Cary OWASA

Base Charge Volume Charge

$33.29 $37.98

$46.21 $47.88

$68.15


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Next Steps Integrate Council input and finalize conservation rate

structureNeed final Council approval of rate structure by early March

Develop updated utility financial forecast Integrate final rate structure into the Model

Integrate 10-year capital investment plan

Develop recommended 5-year plan of rate adjustments

Develop specific rate recommendations for FY 2010 Presentation to Council in March

Rate structure implemented with new ERP system atthe end of Nov. 2009


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Questions and

Discussion

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