20190208Suez 1-20 to City of Eagle.pdf

Michael C. Creamer (ISB No. 4030)
Preston N. Cartsr (ISB No. 8462)
Givens Pursley LLP
601 W. Bannock St.
Boise,lD 83702
Telephone: [phone]
Facsimile: [phone]
mcc@. gi venspursle)r. com
prestoncarter@ si venspurlsey. com
Attorneysfor SUEZ Water ldaho Ine.
[3Gr74l r1s2518l 3
IN TI{E MATTER OF THE JOINT
APPLICATION OF SUEZ WATER
IDAHO AND EAGLE WATER
COMPA}.IY FOR THE ACQUISITION
OF EAGLE WATER COMPA}IY
TEC:iVED
lil:t fi:B -8 Pi{ 5: C0
slff'JLl
BEFORE THE IDAIIO PUBLIC UTILITIES COMMISSION
Case Nos. SU7-W-1&O2
EAG-W-1t-01
Ftnsr PRoDUCTToN REeTJESToT SUEZ
WATER IDAEo INc. To TEE CTTy oT
Elcr,p
SLJEZ Water Idaho Inc. ("SUEZ") requests that the City of Eagle ("City'') provide the
following documents and infomration by March 1,2019. This Production Request is continuing
and the City is requested to provide additional documents that it or any percon acting on its
behalf may later obtain that will augment the documents produced. Please answ€r each question,
provide the documentation requested, and provide supporting workpapers (if applicable).
Responses must include the name and phone number of the person preparing the document, the
name, location, and phone number of the record holder, as well as the name of the person who
will sponsor the answer at a hearing if necded. IDAPA 31.01.01.228.
Request No. l: At a January 22,2019 regular meeting of the Eagle City Council, City
Councilwoman Miranda Gold stated that "[t]he City's position through intervening with the PUC
has been that we want to ptrchase, the City wants to purchase the system." Please describe what
FIRST PRODUCTION REQUESTS OF SUEZ TO THE CITY OF EAGLE . I
means or mechanism the City would use to finance the purchase of the Eagle Water Company
system.
Request No. 2. At a January 22, 201.9 regular meeting of the Eagle City Council, City
Councilman Sean Bastian stated that
When the City of Eagle becomes an owner [of Eagle Water Company] the rates
will go up some. And what we could do is somehow divide the rates between
what we have in the City of Eagle and Eagle Water Cornpany and somehow the
current rates in the City of Eagle could go down and the existing rates in the Eagle
Water Company could go up and there would be a kind of averaging of the costs.
That's probably what's likely to happen if we were able to purchase Eagle Water
Company.
With reference to the statement of Councilman Bastian quoted above, please describe in detail
the rates, charges, and/or fees would that current customers of Eagle Water Company would pay
to the City for water service if the City were to acquire Eagle Water Company. Please provide
any and all relevant analyses, sfudies, or other documents supporting your answer.
Request No. 3: With reference to the statement of Councilman Bastian quoted in
Request No. 2 above, please describe in detail the rates, charges, and/or fees that current
customers of the City of Eagle would pay for water service if the City were to acquire Eagle
Water Company. Please provide any and all relevant analyses, studies, or other documents
supporting your answer.
Request No. 4: Please describe in detail any capital investments, upgrades, or other
changes that the City has identified would need to be made to Eagle Water Company's system
and estimated costs to implement if the City were to acquire it. Please provide any and all
relevant analyses, studies, or other documents the City has developed or obtained in connection
with any efforts at any time to acquire Eagle Water Company or its assets.
FrRsr PRoDUcrroN IUQUESTS oF SUEZ ro rHE CnY oF EAGLE - 2
Request No. 5: Please describe in detail the options available to the City to finance any
capital investments, upgrades or other changes identified in response to Request No. 4 above and
who would pay for such financing?
Request No. 6: Does the City intend to change the currently authorized place of use of
any water right currently owned by Eagle Water Company if the City were to acquire Eagle
Water Company? Please describe any such actions in detail, and provide any relevant supporting
documents.
Request No.7: Please describe, in detail, how the City of Eagle would resolve Eagle
Water Company's current peak hour demand shortfall under the Company's existing water right
portfolio identified atpage 5 of the Direct Testimony of SUEZ wihress Cathy Cooper if the City
were to acquire Eagle Water Company.
Request No. 8. Please describe any discussions or meetings the City has had with any
third party, including staff of the Public Utilities Commission, regarding the City's possible
acquisition of Eagle Water Company, or any discussions or meetings concerning any
arranganent under which Eagle Water Company would provide water or other services to the
City of Eagle. Please include the dates, times and locations where such discussions or meetings
occurred and the names of all persons who were in attendance.
Request No. 9: Please provide any document the City of Eagle or its Councilmembers,
Mayor, or other officers have made, drafted, or released regarding any proposed or potential
acquisition of Eagle Water Company by the City of Eagle.
Request No. 10: Please provide any documents (including communications) the City of
Eagle or its Councilmembers, Mayor, or other officers have created, drafted, or provided among
FIRST PRoDUCTION REQUESTS OF SUEZ TO THE CITY OF EACLE - 3
themselves or to the public regarding the proposed acquisition of Eagle Water Company by
SUEZ or the by the City.
Request No. 11: Please describe all programs the City has to assist those of its water
customers who have low or fixed incomes in paying their water bills.
Request No. 12: Please describe all water-conservation programs the City has with
respect to its provision of water service to the City's water customers.
Request No. 13: Please state whether the City currently uses chlorine or other chemicals
to treat the drinking water it provides to the City's water customers and whether the City would
disinfect drinking water it provides to its water customers if it acquired the Eagle Water
Company system.
Request No, 14: Please confirm that the document attached as Exhibit No. I (entitled
"Water Rate Study Report") is a documents developed, obtained or created at the request of, or
funded by, the City of Eagle.
Request No. 15: Has the City of Eagle adopted or implemented any of the changes
recommended in the Water Rate Study Report attached as Exhibit l? [f so, please provide the
relevant document adopting or implementing the change or changes.
Request No. 16: Please describe any loan(s) or other obligation(s) the City of Eagle has
incurred or assumed to fund any part of its water system. For each, please describe the principal
amount of the loan(s) or obligation(s), the current principal balance(s), the term of the
loan(s)/obligation(s), the applicable interest rate(s), all other material commercial terms, and
when the loan(s) or obligation(s) are expected to be paid off.
FrRsr PRoDUCTToN REeUESTS oF SUEZ ro rHE Crry oF EAGLE - 4
Request No. 17. With reference to any loan or other obligation identified in your
response to Request No. l6 above, please state how the funds to satisff the repayment are
collected by the City.
Request No. 18: If the City of Eagle acquires Eagle Water Company, will the current
customers of Eagle Water Company be required to pay for any part of the City of Eagle's current
outstanding loans or obligations identified in your reponse to Request No. 16 above?
Request No. 19: During his February 7 ,2019 "State of the City'' address to the Eagle
Chanrber of Commerce, the City's Mayor asserted that the average monthly bill for customers
that take water from the City was $31.50; that the average monthly bill for customers that take
water from SUEZ was $42.34; and that the average monthly bill for customers that take water
from Eagle Water Company was $7.84 + consumption. Please describe, in detail, the factual
bases for each of these assertions. Please provide any and all relevant analyses, studies,
spreadsheets, work papers or other docume,lrts related to your answef,.
Request No. 20: Please identifi each person or entity that the City intends to call as a
witness in any technical hearing in this matter. For each, please state the subject matter of their
testimony and provide any docume,nts they considered or relied upon in formrng their testimony.
DATED this 8th day of February,2Ol9.
SUEZ Water Idaho Inc,
By:
C. Crcamer
Preston N. Carter
Givens Pursley LLP
Anorneysfor SUEZ Water ldaho Inc.
FIRST PRoDUcTIoN REQUESTS OF SUEZ TO THE CTTY OF EAGI.E - 5
CERTIFICATE OF SERVICE
I IIEREBY CERTIFY that on the 8th day of February 2019, atue and conect copy of the
foregoing document was served on the following in the marner indicated:
N.L. Bangle
188 W. State Street
Eagle,ID 83616
Petitioner
Stan Ridgeway, Mayor
City of Eagle
660 E. Civil Lane
Eagle, tD 83616
Intentenor City of Eagle
Cherese D. Mclain
MSBT [aw, Chtd.
7699W. Riverside Drive
Boise,Idaho 83714
Attorneysfor Intenrenor City of Eagle
Diane M. Hanian
Commission Secretary
Idaho Public Utilities Commission
472 West Washington Street
Boise, Idaho 83702
IPUC
Brandon Karpen
Sean Costello
Deputy Attomeys General
Idaho Public Utilities Commission
47 2 W est Washington Street
Boise, tdaho 83702
Attorneysfor IPUC
Molly O'Leary
BizCounselor at Law
1775W. State St. #150
Boiso, tD 83702
Counselfor Eagle Water Company
Robert DeShazo
Eagle Water Company, [nc.
188 W. State Street
Eagle,Idatro 83616
Petitioner
[ ] bv U.S. Mail
[ ] by Personal Delivery (Original & 3 copies)
[ ] bV Facsimile
[X] bV E-Mail secretary(g)puc.idaho.qov
diane.hanian@puc. idaho. sov
t I bvU.S. Mail
t I byPersonal Delivery
[ ] bV Facsimile
[X] bV E-Mail brandon.karpen(a)puc.idaho. gov
sean.costello@nuc. idaho. eov
t I by U.S. Mail
t I bV Personal Delivery
[ ] bV Facsimile
[X] bV E-Mail molly(@bizcounseloratlaw.com
lxl bv U.S. Mail
[ ] bV Personal Delivery
t I bV Facsimile
[ ] bv E-Mail
t I bvU.S. Mail
[ ] bV Personal Delivery
[ ] bV Facsimile
[X] bV E-Mail nbanele(a)h2o-sol utionsl lc. net
[ ] bvU.S. Mail
t I bV Personal Delivery
t I byFacsimile
[X] bV E-Mail sridgeway(dcityofeaele.orq
sbergmann(g)cityofeaele.org
[ ] bvU.S. Mail
t ] bV Personal Delivery
t I bV Facsimile
[X] bV E-Mail cdm(a)msbtlaw.com
FrRsr PRoDUcrroN I(EeuEsrs oF SUEZ To rHE Crry or Encl.e - 6
Norman M. Semanko
Parsons Behle & Latimer
800 West Main Strea, Suite 1300
Boise,Idaho 83702
Attomeysfor Intertenor fuSle Water
Customer Group
Abigail R. Germaine
Deputy City Attorney
Boise City Attorney's Office
150N. Capitol Blvd.
P.O. Box 500
Boise, Idaho 83701-0500
Attomeysfor Intentenor, City of Boise
James M. Piotrowski
PIOTROWSKI DURAND, PLLC
P.O. Box 2864
1020 W. Main Street, Suite 440
Boise,ID 83701
Attorneys for Intervenor Citizens AUied for
Intugrtg and Accountability
Brad M. Purdy
Attomey at Law
2019 N. 17ft Street
Boise, ID 83702
Attorney for Community Action Partnership
Association of ldaho
[ ] bvu.s. Mail
[ ] bV Personal Delivery
t I bV Facsimile
[X] by E-Mail NSemanko(a).Barsonsbehle.com
[e-mail]
t I bvU.s. Mail
[ ] bV Personal Delivery
[ ] bV Facsimile
txl by E-Mail aeermaindDcitvofboise.ore
[ ] bvU.s. Mail
[ ] bV Personal Delivery
t I byFacsimile
[X]bV E-Mail James(4)idunionlaw,com
t I bvU.S. MaiI
[ ] bV Personal Delivery
[ ] bV Facsimile
[X] bV E-Mail bmpurdy(a)hotmail.com
C. Creamer
Fn.sT PRoDUcTIoN IGQUESTS OF SUEZ TO THE CTTY OF EAGLE . 7
t0ffi
32 N taln Streot . PO Box 235 .
Payerie, lD 8366'l
:ir
"ei
,
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WATER RATE STUDY
REPORT
City of Eagle, Idaho
December 2OL7
WATER RATE STUDY REPORT
December 2017
Prepared for:
City of Eagle
Eagle, ldaho
Prepared By:
HECOENGTNEEttS
HOU. DAV !rlo$,ttt|r,o co.
tl N lrln Sh..l o PO Bor 236 .
P.ydtc,lD E38Cl
EG 16-0058A
-b-17
L
u
1. INTRODUCTION
The City of Eagle owns and operates a rapidly growing water system with continued rising
operating costs. Water revenues are periodically reviewed against operating costs. Adjusting for
inflation costs, water rates have slightly increased over the last four years. The current rates do
not employ a rate setting methodology to adequately fund reserves or rising operating costs for
the water utility. Based on information obtained from recent financial audits, it has been
determined that the water system is inadequately funded when the requirements for funding
depreciation are included. ln addition, the financial balancing of the water system is heavily
dependent upon fees collected from new connections to the water system, some of which are
restricted funds. Funding of the water system that is dependent upon the number of new
connections is risky given potential volatility of the development market.
To prepare a lirnited water rate review, a program developed by the USDA - Rural Development
for small system water rate structures was utilized to perform a slngle model analysis. The
following goals were established for this limited analysis:
Prepare a water rate analysis based on current actual budgeted expenditures and
revenue.. Prepare a water rate that includes consideration for funding system depreciation.. Recommend a water rate implementation schedule.
. Full financial analysis of historic or 5- to 10-year projection of revenues and expenses.. Analysis or recommendations on specific budget line items.. Review of a target value for an operating fund balance.. Review of a target value for set aside funds for capital improvement reserve account.. A review of hookup fees or other related water system fees.
1.1 Current Water Rates
The City of Eagle has implemented small water rate increases over the last four years to adjust
for rising costs. The water rates adopted by Council through Resolution L7-23 are presented in
the table below.
HECO ENGINEERS
a
With the limited scope of this analysis, this rate study does not include:
Page l1 o
Base Monthly Fee
Slrterr Enhrnoement Fee
Water Safety Fee
Conrumptlon Rate
per 100 cublcfeet
Ss.so
s10.93
S0,34
Sr.es
1,8 ERU
1,8 ERU
$o.eq
Sr.ss
4.0 ERU
4,0 ERU
s0.34
s1.3s
7.1 ERU
7.1ERU
So.a+
S1.3s
15.0 ERU
16.0 ERU
So.a+
s1.3s
28.4 ERU
28.4 ERU
5o.sa
s1.3s
54.2 ERU
64.2 ERU
So.s+
S1.3s
Note: ERU = Equivalent Residential Unit; A )4* meter is considered 7.0 ERU
The water rates are separated into the above categories to correctly allocate the collected
revenue to the corresponding costs. The categories are generally described below:
Bose Monthly Fee - Fee charged based on meter size to cover the fixed costs of operation
and maintenance of the water system facilities each month regardless of the amount of
water consumed by users. Even if no water is used, the City still incurs costs associated
with the infrastructure and maintaining the facilities.
System Enhoncement Fee - Fee charged based on meter size to cover the costs associated
with the current City loan with the Department of Environmental Quality (current water
system indebtedness).
Woter Sofety Fee - Fee charged for each meter within the system to cover the charges
imposed by the Department of Environmental Quality for the water system.
Consumption Rate - Fee charged for the volume of water consumed by each user to cover
the costs that may vary depending upon the actual usage. The consumption rate is for
every 100 cubic feet of water used.
a
I
I
!
1.2 Historic Water Rates
Until recently, the City has not historically raised rates on a consistent basis with only minimal
rate increases over extended periods of time. Over the last four years, the City has adjusted the
rates to only account for inflationary costs rather than a review of total operating and
depreciation costs. Over the 13-year period from 2004 to 2017, the City's base monthly rate has
only increased from Sg.SO to SS.SO lO.9o/o annual rate). Below are the historical rates charged by
the City since 1992.
HECO ENGINEERS IDPage l2
Fee t"t%"3"4"6"
Meter Size
2"
1992
1997
2(xl0
2005
2008
2013
2014
2015
2016
2017
s6.86
S0.86
$s.so
s8.s0
Se.so
s8.88
Sg.os
ss.23
$s.+r
Sg.eo
So.ez
$o.zz
s1.10
s1.19
s1.1s
s1.24
s1.26
s1.2e
Sr.az
Sr.ss
MonthlyYearBase Rate
Consumptive
Rate
$12.00
$ro.oo
98.00
5s.m
$4.00
$2.00
9o.m 1990 1995 2000 2005 2010 2015
-Base
Rate
-(sn5s3nptive
Rate
Historical Rates
2020
2. EXISTING USERS
2.t Number of Meters by Size
City billing records indicate that the City is currently serving 2,080 metered customers (July 2017).
A breakdown of meters by size is summarized in the following table.
2.2 Equivalent Residential Units
Equivalent Residential Units (ERUs) are calculated based on the meter size. As already established
in the City's existing water rates, a/t" meter is used as a baseline slze and is considered one ERU.
As the meter sizes increase, the number of ERUs each meter represents increases by the
HECO ENGINEERS
74D
l"
lrA"
20
It
4"
LLTO
189
0
7
1
1
0
0
5
0
0
t877
189
0
t2
1
1
707
Totals 1368 7L2 20E0
Meter Size Western Water System Total
Page l3 IE
Eastern Water System
w
t'
lrA',
z',
t"
ry
L877
189
0
t2
L
1
1.0
1.8
4.0
7.L
16.0
28.4
L877.O
340.2
0.0
85.2
15.0
28.4
Total 23tl6.E
Meter Size fl of Meters ERU Multiplier ERUs
established multiplier. The following table summarizes the current number of ERUs being served
by the City. The total ERUs currently (July 2017) belng served by the City is 2346.8.
2,3 Average Monthly Usage
Since the amount of revenue from water users is generated from the number of meters and the
amount of usage, an estimate of the average monthly usage per ERU is necessary to predict the
amount of revenue expected. For this water rate study, the average use of 252 gallons per day
per ERU was used as established in the City's Master Plan Update, September 2015. Based on
this average use, it is estimated that the average monthly volume usage for each ERU is 7,665
gallons {'L022 cubic feet). This value forms the basis for predicting the revenue that will be
generated for the City, specifically from the consumptive rate structure.
3. REQUIRED REVENUES
3.1 City Budget
Ordinance 782, the Annual Appropriation Ordinance, passed on August 22,2017, established the
amount appropriated for the Water Fund at 51,773,581. The revenue raised for this
appropriation is derived from various revenue streams including water rates and fees collected
from new development. The appropriated amounts are divided into the categories listed below.
HECO ENGINEERS
Page l4 le
Reserve Funds
Restricted Funds
Personnel
Administration
CapitalOutlay
S164,ooo
S492,359
S388,697
s602,725
S125,800
Water Fund Total 51,773,58t
Water Fund Amount
$388,697
r RESERVE FUNDS - RTSTRICTED FUNDS T PEBSONNET
ADMINISTRATION r CAPITAT OUTIAY
s125,80O s154,000
s492,3s9$soz,tzs
3.2 Restricted Funds
Restricted funds account for the fees collected from new development and are kept separate
from the other revenues for the water department. The restricted funds include the STL (Storage
and Trunk Line) Fees, the WCE (Water Construction Equivalency) Fees, and Hook-up Fees. These
fees are to be used for items not related to repairs and capital replacement, such as wel!
developrnent and construction, trunk line construction, pressure reducing/boosting stataons, and
storage reservoir design and construction.
3.3 Personnel and Administration
The water appropriation has two categories for personne! and administration. Personnel costs
account for Water Department staff salaries and benefits. Administration costs account for
operations and maintenance costs including power, chemicals, vehicles, fuel, office supplies and
equipment, building costs, water piping repairs and pump repair and maintenance. For the rate
study analysis, personnel and administration costs are separated into fixed and variable costs.
Fixed costs are the costs the City will incur on an annua! basis regardless of the volume of water
consumed. Variable costs are expenses that may fluctuate based on the amount of water
consumed by the water users. lt is necessary to itemize the costs into fixed and variable
categories to ensure that adequate revenues are generated from the established base rate and
the consumptive rate. A detailed breakdown of the personnel and administration costs is
included in Appendix A.
HECO ENGINEERS oPage l5
/
L.
3.4 CapitalOutlay and Reserve Funds
The Capital Outlay and Reserve Fund categories in the City's water appropriation essentially are
functioning as a mechanism to fund a poftion of the depreciation of the City's water system
assets. Reserve funds are annually being accumulated in anticipation of and preparation for the
costs associated with aging and wear of the City water system facilities. Capital outlay funds are
the anticipated funds needed to replace equipment, meters and otherfacility components. When
combined, the total budgeted amount for asset depreciation is 5289,800.
The assets of the City's water system can be separated into short-term and long-term assets.
Short-term assets are those with an estimated life expectanry of 15 years or less. Long-term
assets are those that have a life expectancy that can reasonably be greater than 15 years. Both
short-term and long-term assets were identified, grouped and assigned a remaining life. Annual
replacement cost for each asset was estimated by dividing the full replacement cost by the
expected remaining life. For example, for disinfection equipment at a well with a replacement
cost of 55,000 and a life expectancy of 10 years, the City needs to set aside 5500 annually. Absent
specific information on the condition of buried assets, this method was employed for the model
as the simplest means of arriving at a value for the rate analysis to fund depreciation of assets. lt
should be noted that an exhaustive identification of the assets was not performed for this water
rate study. lt is understood that water systems typically cannot fully fund tOO% of depreciatlon.
The analysis for this study was completed to provide a general representation of the City's asset
depreciation funding level.
3.5 Adjusted Budget for Rate Study
To complete the rate analysis, the appropriated budget was adjusted to account for funds that
won't be collected through the rate structure. This ensures that rate payers are not paying for
budgeted funds that are collected from new development. The adjustrnents shown in the
following table were made to determine the funds that need to be collected through the water
rates. The adjusted budget for this rate study is 51,210,822.
HECO ENGINEERS
Page l5 o
By identifying the short-term and long-term assets of the City's water system, the projected
annual replacement cost was estimated to be S+8+,2t2. When compared to the City's current
combined appropriation for Capital Outlay and Reserves Funds of 5289,900, the City's funding
level of asset depreciation is estimated to be approximately 50%. The short-term and long-term
assets identified for this study are shown in Appendix B.
Remove Restrlcted Funds - Funds are collected through STL and WCE Fees from new
development
Remove New Meter lnstalls from Administration Budget - Funds are collected from
separate hookup fees
Remove Water Safety Fee - Funds are collected separately from the water rates to pay
the fees charged by the Department of Environmental Quality
AdJusted Budget
-S+9z,gsg
-S62,100
-S8,3oo
51,21o,822
Total Budget S1,773,581
4. RATE ANALYSIS
4.1 Revenue from Current Rates
Under the City's current water rate structure, the revenue from the existing users is estimated to
be 5966,203. When compared to the required adjusted budget amount of $1,210,822, there is a
shortfall of 524r',,L19. This shortfall is expected given the audito/s previous findings that the
current rate structure is not adequately funding the water system when revenue from new
development is excluded from the budget. The rate structure must be modified to collect the
necessary revenue to adequately fund the water system as currently budgeted.
4,2 Recommended Change to Current Rates
Based on implementing a rate change that would adequately fund the water system, a rate
increase is necessary to account for the 5244,119 revenue shortfall. For the analysis, both the
base rate and the consumptive rate were evaluated in determining how the rates ar€ funding
both the fixed and variable costs. For this analysis, it was determined that the current
consumptive rate of 51.35 per 100 cubic feet is adequately funding the variable cost component
of the water system at the present time. With that determination, the proposed consumptive
rate is maintained at the current rate and the revenue shortfall must then be generated from an
increase in the monthly base rate.
For comparative and illustrative purposes, the following table presents three categories of users
based on consumption and their respective expected tota! monthly bill with the recommended
rate increase. lt should be noted that the total monthly bills shown for this comparative
HECO ENGINEERS
Page l7 IE
Wath the estimated shortfall and the number of current users in the City water system, the
monthly base rate will need to be increased by SA.ZS per ERU. This increase will generate the
necessary revenue to fully fund the City's current Annual Water Appropriation Ordinance. The
analysis output from the rate model is shown in Appendix C.
Low User (300 sf2250 eall
Base Rate
Consumptive Rate
System Enhancement Fee
Water Safety Fee
Total Monthly Bill
Monthly lncrease
Average User (1022 dl766i eall
Base Rate
Consumptive Rate
System Enhancement Fee
Water Safety Fee
Total Monthly Bill
Monthly lncrease
Hlgh User (2005 cflr5000 ga[
Base Rate
Consumptive Rate
System Enhancement Fee
Water Safety Fee
Total Monthly Bill
Monthly lncrease
Sg.eo
S+.os
S1o.s3
s0.34
izq.gz
s18.33
Sa.os
$10.93
s0.34
s33.5s
s8.73
Sg.so
s13.80
$10.s3
s0.34
Ss+.sz
Srs.aa
s13.80
S10.93
s0.34
S43.40
58.73
se.5o
s27.00
Sro.gr
s0.34
iqt.at
Srg.es
527.oo
5ro.gs
s0.34
Ss6.60
58.zs
User Existing Rate New Rate
illustration are based on a %-inch meter and do not reflect total monthly amounts for users with
larger meters.
4.3 lmplementation
The rate increase can be done in one year or implemented over a multi-year period to allow for
customers to plan for increased costs. lf a rate increase is implemented over a multi-year period,
the inflationary increase in costs should also be considered over that same time. For example, if
a rate increase is implemented over a two-year period and the 58.73 increase necessary for the
current budget is simply divided by two to determine the monthly increase for each
implementation year, the City will not be accounting for any inflationary costs realized over that
same two-year period and will begin to again fall behind in needed revenue. To account for the
inflationary costs for a rate increase irnplemented over a multi-year period, a 2% cost increase
for each subsequent year is recommended and presented as the target base rate in the following
table.
HECO ENGINEERS
Page l8 o
1-Year
2-Year
3-Year
4-Year
s18.33
Srs.zo
Su.oz
Srg.+s
Sa.zs
$4.ss
Sg.rs
s2.45
lmplementation
Period
Target Base Rate
(per ERU)
Annual lncrease to
Monthly Ease Rate
(per ERU)
Another consideration for any rate increase implemented over a multi-year period and is not
reflected in the above target base rate is the further aging of the City's assets. Any delays in a
rate increase implementation will not account for the increased annual replacement cost in the
CiSs assets and will reduce the asset depreciation funding leve! presented earlier in this report.
For example, an asset with an expected life of 15 years will only have an expected life of 12 years
at the end of a 3-year implementation period. The annual replacement cost will be higher for
that specific asset given that the expected life has reduced by 3 years and the full 3-year
depreciation cost has not been collected through the rates.
It is recommended that the consumptive rate be increased by 2Yo each year, unless determined
otherwise, to also account for the expected inflationary costs associated with the water system
variable costs.
5. SUMMARY
Based on the rate analysis completed for this study, the following is a summary for the City's
consideration:
1. The City's current monthly base rate is inadequate to generate the required revenue to
meet the City's current water budget and an increase is necessary. The needed increase
is SA.ZS per ERU per month.
2. The City's consumptive rate is adequate to cover the costs associated with the volumetric
consumption of water. No increase outside inflationary increases are needed for the
consumptive rate.
3. The System Development Charge (510.93 per ERU) is to be maintained to make the
obligated loan payments to DEQ.
4. The Water Safety Fee (S0.S+ per meter) is to be maintained to make the required fee
payments to DEQ.
HECO ENGINEERS
Page l9 IE
5. lf a multi-year increase is irnplemented, the following tables present the recommended
base monthly fee for the given implementation period chosen by the City. lt is
recommended that the dates of subsequent increases coincide with the City's fiscal
budget year.
Option 1 - One lncrease (Base Monthly Fee)
Option 2 -Two lncreases (Base Monthly Feel
Option 3 - Three lncreases (Base Monthly Fee)
Optlon 4 - Four lncreases (Base Monthly Fee)
HECO ENGINEERS
January 1,2018 STE.SS 1.8 ERU 4.0 ERU 7.1ERU 15.0 ERU 28.4 ERU 54.2 ERU
January 1,2018
October 1,2018
S14.1s
Sre.zo
1.8 ERU
1.8 ERU
4.0 ERU
4.0 ERU
7.1ERU
7.1ERU
16.0 ERU
16.0 ERU
28.4 ERU
28.4 ERU
54.2 ERU
64.2 ERU
January L,2018
October 1,2018
october l,2ot9
5L2.76
$rs.gr
Srg.oz
1.8 ERU
1.8 ERU
1.8 ERU
4.0 ERU
4.0 ERU
4.0 ERU
7.1 ERU
7.1ERU
7.1ERU
16.0 ERU
16.0 ERU
16.0 ERU
28.4 ERU
28.4 ERU
28.4 ERU
64.2 ERU
64.2 ERU
54.2 ERU
January 1,2018
october L 2018
October l,20l9
October 1,2020
Srz.oz
$r+.sg
S10.99
sle.4s
1.8 ERU
1.8 ERU
1.8 ERU
1.8 ERU
4.0 ERU
4.0 ERU
4.0 ERU
4.0 ERU
7.1ERU
7.1ERU
7.1 ERU
7.1 ERU
15.0 ERU
16.0 ERU
15.0 ERU
15.0 ERU
28.4 ERU
28.4 ERU
28.4 ERU
28.4 ERU
64.2 ERU
64.2 ERU
64.2 ERU
64.2 ERU
Pase 110 G
Meter Size
2"lmplementation Date t%"1 3"4"
Meter Size
2"lmplementation Date 4"6"L" I y,"
lmplementation Date t Yt"
Meter Sire
Yo"t"2"4"6"t"
Meter Size
2"lmplementation Date I Y2"7"3"4"6"
APPENDICES
Appendix A - Perconnel and Administration Costs
Appendix B - Assets
Appendix C - Rate Analysis
HECO ENGINEERS
Appendices o
BUDGET
ITEM
Amounl
Varlable
Amount
Flxed
TOTAL TOTAL
Combined
Expenses
PERSONNEL:
Salaries - Full Time
Part Time
On-CallTime
Overtime
FICA
PERSI
HRA Admin Fee
HRA Billing Pre. Reimb.
lnsurance
Work Comp.
$263,197
$0
$o
$o
$20,930
$31,39s
$120
$4,04e
$49,920
$8,686
$0
$o
$5,900
$4,500
$o
$o
$0
$o
$o
$o
$263,1 97
$o
$5,soo
$4,500
$20,930
$31,39s
$120
$4,04e
$49,920
$8,686
OPERATIONS, MAINTENANCE
Meter Sets (New Customers)
Office Supplies
TelecomiSCADA
Adver/ Publications
TravellMeetings
Dues/Subscriptions
Maint EquiplSoftware Support
Tools, Equipment
Misc. Reserve
Poslage
Liability lnsurance
Pub Drk Water Fees
PermitslFees
Water Repair/Maintenance (lines, meters)
Water Repair/Maintenance (pumps, wells)
Chemicals and Equipment
Power
Uniforms/Laundry
Testing (Weekly, Monthly, Annual )
Fuel, Lubricants
Vehicle Repair/Maint
Vehicle Detailing
CONTRACTS, AGREEMENTS
Engineering Services
Legal Services
Misc Legal Services
Contract Repair
Dig Line
Auditor Services
Billing Services
Shop Lease
Shop Utilities
Room and Board City Hall
DEQ/SRL Payment
See Note 7
$o
$o
$o
$0
$o
$o
$0
$o
$0
So
See Note 2
see Note 3
$1,200
$17,800
$2,000
$8,000
$2,e00
$7,500
$6,000
$o
$1,000
$4,100
$o
$15,000
$30,000
$6,500
$38,s00
$0
$o
$15 000
$e,000
$1,602
$1,500
$o
$o
$o
$o
$2,000
$9,000
$o
$o
$o
$o
$o
$0
$1,440
$1,s00
$18,900
$10,500
$3,500
$12,803
$25,ooo
$25,000
$18,080
$25,000
$o
$0
$o
$o
$0
$o
$388,697
$25,000
$25,000
$18,080
$25,000
$1,440
$1,500
$18,900
$10,500
$3,500
$12,803
$1,200
$17,800
$2,000
$8,000
$2,900
$7,s00
$6,000
$o
$1,000
$4,100
$1,s00
$15,000
$30,000
$6,s00
$38,s00
$2,000
$e,000
$1s,000
$e,ooo
$1,602
Total VarlFix Expenses $219,082 $489,940 $709,022
TOTAL With DEQ/SRL
Total Expenses $709,022 $921,022
Appendix A - Personnel and Administration Costs
1, Meter Sets (New Customers) Excluded - Funds are collected from separate hookup fees.
2. Public Drinking Water Fees Excluded - Funds are collected separately to pay fees charged by DEQ
3. DEQ/SRL Payment amount is included as a separate entry in Rate Analysis Sheet
Appendix B - Assets
Short Llved System
Assets - Description
Quantity Estimated Life Estlmated
Replacement Cost
Annual
Replacement Gost5, 10, 15 years
Meters - Eastem
Meters - Westem
Large Meterc - Eastem
Large Meterc - Western
WellNo.l
Disinfection Equip
Control Hardware, Software
HVAC, Misc Elect
Pumps Rebuild/Replacement
Well No.3
Disinfection Equip
Control Hardware, Software
HVAC, Misc Elect
Pumps Rebuild/Replacement
WellNo.4
Disinfection Equip
Control Hardware, Software
HVAC, Misc Elect
Pumps Rebuild/Replacement
I,Uell No.5
Disinfection Equip
Control Hardware, Software
HVAC, Misc Elect
Pumps Rebuild/Replacement
Service Truck, 2013
Service Truck, 2015
Service Truck,2016
Motorized Equip, Misc
Cla-ValPRV's
SCADA System
1359
707I
5
1
1
1
1
1
1
1
1
1
1
,|
1
1
1
I
1
1
1
1
1
6
1
10
15
10
15
10
15
15
10
10
15
15
10
10
15
't5
10
10
15
15
10
6II
10
15
'10
$441,675
$229,775
$10,800
$6,000
$5,000
$5,ooo
$s,ooo
$4s,000
$5,ooo
$5,ooo
$s,ooo
$45,000
$5,000
$5,000
$5.000
$45,000
$5,000
$s,000
$5,000
$4s,000
$32,000
$25,000
$30,000
$8,000
$27,000
$75,000
$44,168
$15,318
$1,080
$400
$s00
$333
$3ss
$4,s00
$soo
$333
$3s3
$4,500
$soo
$333
$333
$4.s00
$s00
$333
$333
$4,s00
$5,333
$3,125
$3,333
$800
$1,800
$7,500
Total - Short Term Assets 11 $1,125,250 $105.524
Page 1
Appendix B - Assets
Life Cost Cost
No.5
No. 3 Generator Set
No.4 Generator Set
No. 5 Generator Set
1MG Reservoir
Westem
ell No. 1
No.3
ell No.4
4 inch
6 inch
8 inch
10 inch
12 inch
16 inch
20 inch
4 inch
6 inch
8 inch
12 inch
16 inch
House No. 1
House No.3
House No.4
House No. 5
79
1
1
1
't
1
'1
1
1
1
1
1
1
5,912
20,769
39,040
27,286
13,530
68
1,330
261
2,771
48,087
12,3M
7,218
1 50
35
40
40
40
20
35
35
35
30
30
30
60
50
50
50
50
50
65
65
65
65
65
65
65
$626,500
$5oo,ooo
$500,000
$5oo,ooo
$500,000
$200,000
$200,000
$200,000
$200,000
$ao,o00
$70,000
$70,000
$1,650,000
$384,280
$1,349,985
$2,537,600
$2,046,450
$1,217,70A
$8,160
$199,500
$16,e6s
$180,115
$3,125,655
$1,107,360
$866,160
$12,530
$14,286
$12,500
$12,500
$12,500
$10,000
$5,7'14
$5,714
$5,714
$2,667
$2,333
$2,333
$27,500
$7,696
$27,000
$50,752
$40,929
$24,354
$126
$3,069
$o
$261
$2,771
$48,087
$17,036
$13,326
$0
$o@
I @T
Proposed Changes to System
Components - Description
Estimated
Remaining Life
Estimated
Replacement Cost
Annual
Replacement Cost
$0
$o
$0
$0
$o
$0
$0
$o
Total Proposed system 41 $20,056,680 $484,212I
Page2
Long Term System
Assets - Description
Quantity Annual
170
50 $16,931,430 $378,688
Appendix C - Rate Analysis
CURRENT
TOTAL
PROPOSED PROPOSED
CHANGE TOTAL
Proposed Monthly Base Rate (zero (0) gallons)$20.53 $8.73 $29.26
Proposed Rate per '1,000 gallons
Cost Per 100 Cubic Feet
$1.80
$1.3s
($o.oo)
$0.00
$1.80
$1.3s
Monthly Rate : 2250 Gallons 1300 Cubic Feet
Monthly Rate : 3000 Gallons 1401 Cubic Feet
Monthly Rate : 5000 Gallons 1668 Cubic Feet
Monthly Rate : 8000 Gallons / 1070 Cubic Feet
Monthly Rate : 10,000 Gallons / 1337 Cubic Feet
Monthly Rate : 12,000 Gallons / 1604 Cubic Feet
Monthly Rate : "15,000 Gallons / 2005 Cubic Feet
Monthly Rate : 20,000 Gallons / 2674 Cubic Feet
Monthly Rate : 40,000 Gallons / 5348 Cubic Feet
Monthly Rate : 100,000 Gallons / 13,369 Cubic Feet
$24.58
$25.93
$29.s3
$34.93
$38.s3
w2.13
$47.s3
$56.s3
$e2.s3
$200.53
$8.2s
$8.73
$8.73
$8.73
$8.73
$8.73
$8.73
$8.73
$8.73
$8.73
$33.31
$34.66
$38.26
$43.66
$47.26
$s0.86
$56.26
$65.26
$101.26
$209.26
Total Cash Requirement
Cunent Revenue
$1,210,822
$966,703
$0 $1,210,822
$245,8s1 $1,212,554
($244,11e) $245,851 $1,732
Average Monthly Use / Customer - EDU (Gallons)
Average Monthly Use / Cuslomer - (Cubic Feet)
7,665
1,022
0
0
7,665
1,022
Average Monthly Use - Minus Large User (Gallons)
Average Monthly Use - Minus Large User (Cubic Ft)
7,665
1,022
0
0
7,665
1,022
Mo4!!rly F!a! Rate Fee / Average Bill $34.33 $8,73 $43.06
Monthly Flat Rate Fee/Average Bill -Minus Large User $34.33 $8.73 $43.06
Nofes.'
1. Proposed Monthly Base Rates shown include the $,l0.93 System Enhancement Fee, but do not
include the $0.34 Water Safety Fee.
2, Adjustment Reserves/Capital Cost amount is to account for addltional revenue from maintaining
the consumptive rate.
Payment to Bond/Loan(s) Reserve Account
Reserves/Capital Cost Funded by Rates
Fixed Expenses - From Budget Sheet
Gallons Sold ( in 1,000's)
ual Gallons Pumped (ln 1,000's)
Number - Active Base Customers (EDUs)
System lncome (Tankage Sales, etc.)
Operating Expenses - From Budget Sheet
Reserves/Capital Costs
Reserves/Capital Cost
lncome
Variable
$0
!,ir :: l;
$184.276
$489.940
215,859
0
2,y7
$1,212.554
$0
$219,082
$105,524
$0
I@-nfITWil-IrrmI
--I
E@--
I
Excess (Shortage) of Revenue
11xmo