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Home My WebLink About07/19/2022 - Work Study - Add'l Doc Provided - Water Rate Study Presenation7/19/2022 1 City of Port Orchard Water Rate Study Presented by: Katy Isaksen Katy Isaksen & Associates ‐Utility Financial Planning Water Rate Study Summary Finance Committee & Council Work Study, July 19, 2022 Water Rate Study Summary •Water Financial Outlook •Water Capital Improvements Program •Rate Structure Adjustments for Conservation •Next Steps –Utilities Committee, July 12 –Finance Comm./Council Work Study, July 19 –Water Rate Ordinance, First Reading, TBD –Second Reading/Adoption, TBD 1 2 7/19/2022 2 Rate Study Goals •Meet Water Utility obligations –operations, debt, capital and reserves •Fund recommended capital improvements (CIP) in adopted Comp Plan •Promote conservation of water •Increase equity among customers by adjusting rate structure 3 4 7/19/2022 3 Water Revenue •98% of water revenue is from water sales –75% Residential –21% Commercial –4% Irrigation •1% from inspection, reviews & planning svcs •1% from rents & leases Water Sales 98% Inspection, Reviews & Planning Svcs 1% Rents & Leases 1% Water Revenue Residential 75% Commercial 21% Irrigation 4% Water Sales •$3.7 Million, base year 2022 Six‐Year Water Expense Includes Rate‐Funded CIP and Debt •Base year is 2022 budget with known adjustments –potential additional 3% utility tax (from 5% to 8%) •Assumes CFC’s will pay growth share of debt for CIP ‐ 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 2023 2024 2025 2026 2027 2028 Water Program Outlook New Debt for CIP by Rates W CIP Funded by Rates Existing Water Debt W Operating Expenses 5 6 7/19/2022 4 Water Capital Program (CIP) •Colors indicate funding source: –Borrow (repay with rate/CFC), –Developer/CFC, –Rates/Reserves •CIP (2022‐2029) = $48.4 Million CIP No. Project 2A Well 13 Development & Treatment 3 Well 11 Development, Treatment & Booster Pump Station 5 390 Zone Storage 6 Telemetry Upgrades 7 390 to 580 Zone Booster Station (Old Clifton) 8 580 to 390 Zone Transmission Main (580/390 PRV to Old CliftonTank) 9 Well 12 Development, Treatment & Booster Pump Station 10 Melcher Pump Station Upgrade 11 PRV Improvements per Hydraulic Model 12 390 to 580 Zone Booster Station (Glenwood 1st Lift) 13 390 to 580 Zone Booster Station (Glenwood 2nd Lift) 14 390 to 580 Zone Transmission Main (to Glenwood PS) 15 580 to 660 Zone Booster Station 16 660 Zone Storage 17 Well 7 Treatment/Pump Station Upgrades 18 Combined Main Replacements per Hydraulic Model 19 Annual Main Replacement Program (Upsize 1"‐4" main to 6"‐8") 19A Bay Street W Main Replacement 20 Annual Valve Replacement Program 21 Annual Hydrant Replacement Program 23 390 Zone Low Pressure Booster Pumps for Existing Water Services (ie. Sedgwick) 24 Black Jack Creek Crossing at Kendall St. 25 Well 10 Rehab, Activation, and Water Main Six‐Year Water Outlook $2.00/Month Increase Each Year on Base Rate •Water usage rates and larger meter sizes to also be adjusted. WATER UTILITY OUTLOOK 2022 2023 2024 2025 2026 2027 SCEN A: $2/Month Increase each year, uses Reserves & New Debt for Rate‐Funded CIP ‐ With Potential Utility Tax Increase of 3% (from 5% to 8%) 2‐Month Base Rate ‐ 3/4" Meter $81.50 $85.50 $89.50 $93.50 $97.50 $101.50 Increase per 2‐Month Base Rate $4.00 $4.00 $4.00 $4.00 $4.00 Increase per Month $2.00 $2.00 $2.00 $2.00 $2.00 Water Operating Fund Balance Meets Policy, includes Cash Flow Reserve of 3 months operating expense WITHOUT POTENTIAL ADDITIONAL UTILITY TAX If there is no change to the Utility Tax, the difference is $0.50/Month 7 8 7/19/2022 5 Rates to Promote Conservation Strengthen Message with Adjustments Adjustments to rate structure could improve: •Move closer toward true conservation rates •Increase equity among customers –Those that use more pay more •Allow customer bills to reflect their efforts •Give points toward Foster Residential Rate Structure Consolidate base rates with less water included •One Base rate –includes 3,000 gallons per unit, eliminates typical higher base •Usage rates -increased to balance reduced base revenue •Customers bills – •adjust to vary between 3,001-5,000 gallons •higher usage will pay more Water Rates - Bimonthly 2022 2023 Rate Structure Change Residential 3/4" Meter, 0-3,000 gal Base $53.50 adjust to meet target 3/4" Meter, 3,001-5,000 gal Base $81.50 eliminated 3,001-5,000 gal per 1000g new 5,001-10,000 gal per 1000g $3.86 same tier 10,001-20,000 gal per 1000g $4.03 same tier 20,001-30,000 gal per 1000g $4.21 same tier 30,001-50,000 gal per 1000g $4.56 same tier 50,001+ gal per 1000g $4.91 same tier 9 10 7/19/2022 6 Comparable 2022 Water Bills •Typical residence with ¾” meter uses 7,000 gallons per bimonthly bill. •Each system is unique, with different sources, contracts & customers. •All water systems must set rates to be self-sufficient. Single Family Residence 2-Month Water 7,000 allons # of Res. Tiers Included in Base? Per 1,000 gallons Ran e - Low Per 1,000 gallons Ran e - Hi h Port Orchard $88.80 6 5,000 gal. $0.00 $4.60 Kitsap PUD $70.73 4 n/a $1.92 $10.59 Gig Harbor $65.20 1 n/a $3.54 $3.54 West Sound UD $60.19 3 n/a $3.10 $4.15 Poulsbo $54.80 2 in summer n/a $3.18 $4.96 Bremerton $53.29 1 n/a $3.40 $3.40 Bainbridge Island $40.92 4 n/a $1.73 $5.36 Larger Meter Sizes Base Rate by Meter Size •Multi‐family Residential –base rate per unit + meter differential, include 3,000 gallons per unit –Under residential •Non‐residential (commercial, government, irrigation & other non‐residential) – base rate by meter size, include 3,000 gallons per meter –Base rates using AWWA industry standard meter equivalencies by meter size •Water usage rates same as residential 11 12 7/19/2022 7 Non‐Residential Base by Meter Size Include 3,000 gallons per meter •Apply AWWA industry standard meter differentials to base rates by meter size •Remove rates per commercial unit •Pay for all water usage above 3,000 gallons (reduced from 5,000 g) •Multi‐family remains as residential per dwelling unit CURRENT RATE STRUCTURE IF USE AWWA FACTORS b) Multiple Connections/Larger Meters (base+diff)/$81.50 Industry Standard TOTAL 2022 meter factors AWWA factors 3/4" Meter, 0‐5,000 gal Base $81.50 1.00 1.00 1" Meter, 0‐5,000 gal Base+Diff. $87.50 1.07 1.67 1‐1/2" Meter, 0‐5,000 gal Base+Diff. $105.50 1.29 3.33 2" Meter, 0‐5,000 gal Base+Diff. $123.50 1.52 5.33 3" Meter, 0‐5,000 gal Base+Diff. $159.50 1.96 10.00 4" Meter, 0‐5,000 gal Base+Diff. $231.50 2.84 16.67 6" Meter, 0‐5,000 gal Base+Diff. $357.50 4.39 33.33 Next Steps •Council input: –Stay with current rate structure, OR –Make adjustments toward conservation •Move through adoption of water rates –Utilities Committee, July 12 –Finance Comm./Council Work Study, July 19 –Water Rate Ordinance, First Reading, TBD –Second Reading/Adoption, TBD 13 14 7/19/2022 8 Sustainable Utilities It is up to us to protect the ratepayers’ investment for future generations 15