City of Petersburg Water and Wastewater Rates Public Hearing March 6, 2007

Agenda Current Environment Background Information Consumption Expense Background Information Billing Existing Rates Projected Revenues and Expenses Proposed Rates Impact on Customers Comparison to Other Utilities Summary

Current Environment Declining consumption and increasing costs Cost to purchase water from ARWA Wastewater treatment costs (SCWWA) Future Wastewater Costs Capital cost Operating cost

Current Environment Declining consumption Water sales peaked in 1980 Steady decline since 1990 Petersburg’s expenses are increasing ARWA and SCWWA High flows to SCWWA in wet weather City’s cost to maintain infrastructure is high

Average Daily Water Purchases City of Petersburg Average Daily Water Purchases FY 1990 – FY 2006 When this is printed – it has to be either in color or “pure black and white” - there is a text box on this page that prints incorrectly in “greyscale”

Petersburg’s Wholesale Cost Water Cost to purchase water from AWRA is adjusted annually ($ / 1,000 gallons) FY00 - $.570 FY01 - $.565 FY02 - $.563 FY03 - $.578 FY04 - $.574 FY05 - $.635 FY06 - $.651 FY07 - $.737 Cost to purchase water is 51% of water operating budget

City’s Cost to Purchase Water

SCWWA Costs Wastewater treatment cost is based on % of City’s flow to the treatment plant, is adjusted annually Cost is adjusted annually based on City’s percentage of total flows Costs increase during wet years (I/I) Cost of treatment represents about 48% of wastewater operating budget Remainder of costs are associated with infrastructure maintenance and operation % O&M $ FY 2003 56.86% $1,756,071 FY 2004 52.50% $1,830,530 FY 2005 54.04% $1,927,811 FY 2006 51.58% $1,898,230

Billing Most customers are billed bi-monthly Water use is measured in cubic foot units Meters are read to the nearest 100 cubic feet (ccf) Each ccf = 748 gallons Average single-family household in Petersburg 12-14 ccf or 9,000 – 10,500 gallons in a 2-month cycle Sewer bill is based upon water usage; currently the sewer bill is 1.2 times the water bill

Bi-Monthly Charges Based on Current Rates (Residential) Consumption Water ($ per ccf) Sewer Up to 6 CCF $ 2.237 $ 2.684 7 – 40 CCF $ 1.693 $ 2.032 41 – 200 CCF $ 1.110 $ 1.332 201 – 400 CCF $ 0.941 $ 1.129 401 – 1,000 CCF $ 0.752 $ 0.902 > 1,000 CCF $ 0.718 $ 0.862 “Minimum” for residential customers is 6 ccf. Minimum bi-monthly bill is $13.42 for water and $16.10 for sewer.

How to Calculate a Residential Bill Bi-Monthly Consumption 1400 cf (or 700 cf per month) Water Bill: 300 cf = $ 6.71 4 X 1.693 (for 400 cf) = $ 6.77 Water Bill for One Month (700 cf) = $ 13.48 Multiply by 2 (for 2 Months) = $ 26.96 Sewer Bill: Water Bill X 1.2 = $ 32.35 Total Water and Sewer: = $ 59.31 Plus Tax = 5.39 Total Water and Sewer Charges = $ 64.70

The cost was calculated as follows: $ spent to buy water from ARWA – less the dollars spent on the volume of water that was sold to Fort Lee = $ spent to purchase water for the customers = $1,148,173 $1,148,173 / 1742539 ccf water billed = $.65891 / ccf Remember ARWA is selling at .737 per gallon .737 x .747 converts the $ per gallon to the $ per ccf or .550539 So … after we subtract out all the lost water – the water sold to the customers is costing $.65891 – which is more the cost of purchasing the water - $.550539

Bi-Monthly Distribution by Category (FY06) WATER Consumption # of Bills Revenues Consumption (ccf) % of Customers % of Revenue % of Consumption Up to 10 CCF 33,463 $ 572,222 181,094 53.00% 18.49% 8.72% 11 to 20 CCF 18,337 $ 521,978 267,510 29.04% 16.86% 12.88% 21 to 50 CCF 8,077 $ 438,374 235,086 12.79% 14.16% 11.32% 51 to 1,000 CCF 3,088 $ 773,507 486,263 4.89% 24.99% 23.42% Over 1,000 CCF 177 $ 789,482 906,684 0.28% 25.50% 43.66% Total 63,142 $ 3,095,562 2,076,637 100.00% SEWER 33,222 $ 621,692 180,175 21.31% 10.99% 18,281 $ 569,579 266,689 29.16% 19.53% 16.26% 8,026 $ 476,307 233,429 12.80% 16.33% 14.23% 3,014 $ 805,375 464,544 4.81% 27.61% 28.32% 139 $ 443,831 495,300 0.22% 15.22% 30.20% 62,682 $ 2,916,784 1,640,137

Criteria for Setting Rates Stable and sufficient revenue Fair and equitable Cost-based Easier to understand and administer Easier to explain Adequate to cover expenses both now and in the future

Goals Charges for Water Service = Projected Water Expenses Charges for Sewer Service = Projected Sewer Expenses Simplify Rate Structure by reducing number of tiers Rates that are greater than or equal to cost of services

Projected Revenues and Expenses - Water FY07 (Budget) FY08 (Projected) FY09 FY10 FY11 FY12 Operating Revenues $3,244,783 $3,332,967 $3,370,872 $3,408,777 $3,446,682 $3,484,587 Projected Expenses $2,556,250 $2,751,354 $2,925,824 $3,065,602 $3,160,423 $3,315,276 Net Income/(Deficit) $688,533 $581,614 $445,049 $343,175 $286,260 $169,312 % Increase Needed -19% -14% -11% -9% -5%

Projected Revenues and Expenses - Sewer FY07 (Budget) FY08 (Projected) FY09 FY10 FY11 FY12 Operating Revenues $3,418,405 $3,514,608 $3,560,088 $3,605,568 $3,651,048 $3,696,528 Projected Expenses $4,500,761 $4,834,351 $5,267,519 $5,486,246 $5,332,452 $5,579,119 Net Income/(Deficit) ($1,082,356) ($1,319,743) ($1,707,431) ($1,880,678) ($1,681,404) ($1,882,591) % Increase Needed 41% 52% 56% 50% 55%

Proposed Rate Structure 2 Components: Capacity Fee Based on cost of construction and maintenance of water and sewer infrastructure Fixed fee Based on meter size Commodity Charges Based on metered use, covers cost of water purchased and treatment of wastewater plus operations expenses, including overhead Only 3 “tiers” Capacity Fee plus the Commodity Charge Exceeds Total Costs

Proposed Rates and Fees Bi-Monthly Capacity Fees Meter Size Water Fee Sewer Fee Total All SF Residential and 5/8“ Non-residential $ 9.00 $ 17.10 $26.10 1" $ 22.50 $ 42.75 $65.25 1.5" $ 39.40 $ 74.85 $114.25 2" $ 72.00 $ 136.80 $208.80 3" $ 144.00 $ 273.60 $417.60 4" $ 225.00 $ 427.50 $652.50 6" $ 450.00 $ 855.00 $1,305.00 8" $ 900.00 $ 1,710.00 $2,610.00 10" $ 1,395.00 $ 2,650.50 $4,045.50 12" $ 1,800.00 $ 3,420.00 $5,220.00 Bi-Monthly Commodity Charges Consumption Water ($/CCF) Sewer ($/CCF) Up to 6 CCF $ 0.300 $ 0.570 $0.870 7-250 CCF $ 1.29 $ 2.451 $3.741 Over 250 CCF $ 0.825 $ 1.5675 $2.3925

Impacts Combined Bi-Monthly Bill Bi-Monthly Residential Total Rates Consumption (CCF) Current Rates (FY07) Recommended* Difference % Difference $ 29.52 $ 26.10 $ (3.42) -11.59% 1 $ 26.97 $ (2.55) -8.64% 2 $ 27.84 $ (1.68) -5.69% 3 $ 28.71 $ (0.81) -2.74% 4 $ 29.58 $ 0.06 0.20% 5 $ 30.45 $ 0.93 3.15% 6 $ 31.32 $ 1.80 6.10% 7 $ 33.24 $ 35.06 $ 1.82 5.47% 8 $ 36.97 $ 38.80 $ 1.83 4.96% 9 $ 40.69 $ 42.54 $ 1.85 4.55% 10 $ 44.42 $ 46.28 $ 1.87 4.21% 11 $ 48.14 $ 50.03 $ 1.89 3.92% 12 $ 51.86 $ 53.77 $ 1.90 3.67% 13 $ 55.59 $ 57.51 $ 1.92 3.45% 14 $ 59.31 $ 61.25 $ 1.94 3.26% 15 $ 63.04 $ 64.99 $ 1.95 3.10% 16 $ 66.76 $ 68.73 $ 1.97 2.95% 17 $ 70.48 $ 72.47 $ 1.99 2.82% 18 $ 74.21 $ 76.21 $ 2.00 2.70% 19 $ 77.93 $ 79.95 $ 2.02 2.59% 20 $ 81.66 $ 83.69 $ 2.04 2.50% Impacts Combined Bi-Monthly Bill

Impacts Most residential customers – increase of 5-6% or less in combined water and sewer bill Water rates may need to increase again in FY10 Sewer rates may need to increase in FY09 and FY10 – approximately 8% - 10% Large consumers – increases are higher – some are 50% - 60% increases, depending on consumption and size of water meter

Comparison to Neighbors Proposed rates are reasonable when compared to neighbors and to average residential rates across the state Rates for large consumers are reasonable

Summary Increasing cost to purchase water and wastewater treatment Existing rates will cover future costs Change in philosophy Changing the structure = better allocation of cost to the consumer Simplified rate structure Capacity charge Commodity charge (3 tiers)

Bi-Monthly Residential Water Rates Impacts Water Bi-Monthly Residential Water Rates Consumption (CCF) Current Rates (FY07) Recommended Difference % Difference $ 13.42 $ 9.00 $ (4.42) -32.94% 1 $ 9.30 $ (4.12) -30.70% 2 $ 9.60 $ (3.82) -28.46% 3 $ 9.90 $ (3.52) -26.23% 4 $ 10.20 $ (3.22) -23.99% 5 $ 10.50 $ (2.92) -21.76% 6 $ 10.80 $ (2.62) -19.52% 7 $ 15.11 $ 12.09 $ (3.02) -20.00% 8 $ 16.81 $ 13.38 $ (3.43) -20.39% 9 $ 18.50 $ 14.67 $ (3.83) -20.70% 10 $ 20.19 $ 15.96 $ (4.23) -20.96% 11 $ 21.89 $ 17.25 $ (4.64) -21.18% 12 $ 23.58 $ 18.54 $ (5.04) -21.37% 13 $ 25.27 $ 19.83 $ (5.44) -21.53% 14 $ 26.96 $ 21.12 $ (5.84) -21.67% 15 $ 28.66 $ 22.41 $ (6.25) -21.80% 16 $ 30.35 $ 23.70 $ (6.65) -21.91% 17 $ 32.04 $ 24.99 $ (7.05) -22.01% 18 $ 33.74 $ 26.28 $ (7.46) -22.10% 19 $ 35.43 $ 27.57 $ (7.86) -22.18% 20 $ 37.12 $ 28.86 $ (8.26) -22.26%

Bi-Monthly Residential Sewer Rates Impacts Sewer Bi-Monthly Residential Sewer Rates Consumption (CCF) Current Rates (FY07) Recommended* Difference % Difference $ 16.10 $ 17.10 $ 1.00 6.21% 1 $ 17.67 $ 1.57 9.75% 2 $ 18.24 $ 2.14 13.29% 3 $ 18.81 $ 2.71 16.83% 4 $ 19.38 $ 3.28 20.37% 5 $ 19.95 $ 3.85 23.91% 6 $ 20.52 $ 4.42 27.45% 7 $ 18.13 $ 22.97 $ 4.84 26.69% 8 $ 20.16 $ 25.42 $ 5.26 26.09% 9 $ 22.19 $ 27.87 $ 5.68 25.59% 10 $ 24.22 $ 30.32 $ 6.10 25.18% 11 $ 26.26 $ 32.78 $ 6.52 24.83% 12 $ 28.29 $ 35.23 $ 6.94 24.54% 13 $ 30.32 $ 37.68 $ 7.36 24.28% 14 $ 32.35 $ 40.13 $ 7.78 24.05% 15 $ 34.38 $ 42.58 $ 8.20 23.85% 16 $ 36.41 $ 45.03 $ 8.62 23.67% 17 $ 38.44 $ 47.48 $ 9.04 23.52% 18 $ 40.47 $ 49.93 $ 9.46 23.37% 19 $ 42.50 $ 52.38 $ 9.88 23.25% 20 $ 44.53 $ 54.83 $ 10.30 23.13%

Comparison of Bi-Monthly Bills Various Meter Sizes and Levels of Consumption Commercial and Industrial Customers   Existing Petersburg, Proposed Meter Size Consumption (CCF - Bi-monthly) Water Sewer Total $ increase % 1" 50 $ 82.08 $ 98.50 $ 180.58 $ 81.06 $ 154.01 $ 235.07 $ 54.50 30% 100 $ 100.00 $ 120.00 $ 220.00 $ 145.56 $ 276.56 $ 422.12 $ 202.12 92% 500 $ 500.00 $ 600.00 $ 1,100.00 $ 545.31 $ 683.40 $ 1,228.71 $ 128.71 12% 1.5" $ 97.94 $ 186.07 $ 284.01 $ 103.44 57% $ 139.80 $ 167.76 $ 307.56 $ 162.44 $ 308.62 $ 471.06 $ 163.50 53% $ 720.00 $ 1,320.00 $ 562.19 $ 1,224.90 $ 1,787.09 $ 467.09 35% 2" $ 130.56 $ 248.06 $ 378.62 $ 198.05 110% $ 137.58 $ 165.10 $ 302.68 $ 195.06 $ 370.61 $ 565.67 $ 263.00 87% $ 530.88 $ 637.06 $ 1,167.94 $ 594.81 $ 1,178.54 $ 1,773.35 $ 605.42 52% 3" 698 $ 788.68 $ 946.42 $ 1,735.10 $ 830.16 $ 1,577.30 $ 2,407.46 $ 672.37 39% 824 $ 793.42 $ 952.10 $ 1,745.52 $ 934.11 $ 1,774.81 $ 2,708.92 $ 963.40 55% 4" 6,006 $ 4,554.08 $ 5,464.90 $ 10,018.98 $ 5,290.26 $ 10,051.49 $ 15,341.75 $ 5,322.78 19,000 $ 13,883.78 $ 16,660.54 $ 30,544.32 $ 16,010.31 $ 30,419.59 $ 46,429.90 $ 15,885.58 21,960 $ 16,009.06 $ 19,210.87 $ 35,219.93 $ 18,452.31 $ 35,059.39 $ 53,511.70 $ 18,291.77 25,240 $ 18,364.10 $ 22,036.92 $ 40,401.02 $ 21,158.31 $ 40,200.79 $ 61,359.10 $ 20,958.08 6" 266 $ 850.58 $ 1,020.70 $ 1,871.28 $ 779.76 $ 1,481.54 $ 2,261.30 $ 390.03 21% 5,106 $ 3,907.88 $ 4,689.46 $ 8,597.34 $ 4,772.76 $ 9,068.24 $ 13,841.00 $ 5,243.67 61% 6,446 $ 4,870.00 $ 5,844.00 $ 10,714.00 $ 5,878.26 $ 11,168.69 $ 17,046.95 $ 6,332.95 59% 7,472 $ 5,652.62 $ 6,783.14 $ 12,435.76 $ 6,724.71 $ 12,776.95 $ 19,501.66 $ 7,065.90 9,724 $ 7,223.62 $ 8,668.34 $ 15,891.96 $ 8,582.61 $ 16,306.96 $ 24,889.57 $ 8,997.61