07/19/2022 - Work Study - Add'l Doc Provided - Water Rate Study Presenation7/19/2022
City of Port Orchard
Water Rate Study
Presented by: Katylsaksen
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
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State of the F
Water Industry 22
EXECUTIVE SUMMARY
American wafer Works
Association
Infrastructure &
financing top challenges
Water availability, workforce also concerns
Survey participants ranked the water sector's three most
pressing challenges as:
No.
j
Renewal and replacement of aging water
and wastewater infrastructure
No.
2
Financing for capital improvements
No.
Long-term drinking water supply
availability
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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
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6% KKA
6% KI&A
Ira
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5
Water Revenue
Water Revenue
Inspection, Rents &Leases
Re Planning
&
Planning Svcs II 1%
1%
Water Sales
98%
• 98% of water revenue is from water sales
— 75% Residential
— 21%Commercial
— 4% Irrigation
• 1% from inspection, reviews & planning svcs
• 1% from rents & leases
• $3.7 Million, base year 2022
Water Sales
Irrigation
4%
Commercial
.%
P75%
dential
Six -Year Water Expense
Includes Rate -Funded CIP and Debt
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
Water Program Outlook
2023 2024 2025 2026 2027 2028
■ New Debt for CIP by Rates
■ W CIP Funded by Rates
■ Existing Water Debt
■ W Operating Expenses
r
• 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 KI& q
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Water Capital Program (CIP)
2A
Well 13 Development&Treatment
3
Well 11 Development, Treatment & Booster Pump Station
390 Zone Storage
Colors indicate
5
6
Telemetry Upgrades
funding
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390 to 580 Zone Booster Station (Old Clifton)
source:
580 to 390 Zone Transmission Main (580/390 PRV to Old
8
CliftonTank)
Borrow (repay
9
30
Well 12 Development, Treatment & Booster Pump Station
MelcherPump Station Upgrade
with rate/CFC)/
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PRV Improvements per Hydraulic Model
12
390to580Zone Booster Station (Glenwood1st Uft)
— Developer/CFC/
13
390 to 580 Zone Booster Station (Glenwood end Lift)
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390to580Zone TransmissionMain (to Glenwood PS)
— Rates/Reserves
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580 to 660 Zone Booster Station
16
17
660Zone torage
We117 Treaatment/Pump Station Upgrades
CIP (2022-2029)
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Combined Main Replacements per Hydraulic Model
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Annual Main Replacement Program (Upsim 1"-4" main to 6"-8")
$48.4 Million
19A
Bay Street W Main Replacement _
20
Annual Valve Replacement Program
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Annual Hydrant Replacement Program
390 Zone Low Pressure Booster Pumps for Existing Water Services
23
lie. Sedgwick)
24
Black lack Creek Crossing at Kendall St.
lWell 10 Rehab, Activation, and Water Main
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Six -Year Water Outlook
$2.00/Month Increase Each Year on Base Rate
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
Increase per 2-Month Base Rate $4.00 $4.00 $4.00
Increase per Month $2.00 $2.00 $2.00
$97.50
$4.00
$2.00
$101.50
$4.00
$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
• Water usage rates and larger meter sizes to also be adjusted.
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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
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Residential Rate Structure
Consolidate base rates with less water included
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 10OOg
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 1000q
same tier
30,001-50,000 gal
per 1000g
$4.561
same tier
50,001+ gal
per 1000
$4.911
same tier
• One Base rate — includes 3,000 gallons per unit, eliminates typical higher base
• Usage rates - increased to balance reduced base revenue
• Customersbills—
adjust to vary between 3,001-5,000 gallons
higher usage will pay more
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Comparable 2022 Water Bills
Single Family
Residence
2-Month Water
a 7,000 gallons
# of Res.
Tiers
Included in
Base?
Per 1,000 gallons
Range - Low
Per 1,000 gallons
Range - High
Port Orchard
$88.80
6
5,000 gal.
$0.00
$4.60
Kitsa 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
• Typical residence with %" 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.
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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
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Non -Residential Base by Meter Size
Include 3,000 gallons per meter
CURRENT RATE STRUCTURE I IF USE AWWA FACTORS
b) Multiple Connections/Larger Meters (base+diff)/$81.50 Industry Standard
TnTAI 7077 motor fnrtnr< AWWA F—Mrc
3/4" Meter, 0-5,000 gal
Base
$81.50
1.00
1.00
1" Meter, 0-5,000 gal
Base+Dill.
$87.50
1.07
1.67
1-1/2" Meter, 0-5,000 gal
Base+Dill.
$105.50
1.29
3.33
2" Meter, 0-5,000 gal
Base+Dill.
$123.50
1.52
5.33
3" Meter, 0-5,000 gal
Base+Dill.
$159.50
1.96
10.00
4" Meter, 0-5,000 gal
Base+Dill.
$231.50
2.84
16.67
6" Meter, 0-5,000 gal
Base+Dill.
$357.50
4.39
33.33
• 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
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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 v KI&A
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7/19/2022
Sustainable Utilities
It is up to us to protect the ratepayers'
investment for future generations
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