1. City of McCall Water Rate Study – Draft Rate Recommendations
June 2018

2. Agenda Summary of what we discussed last meeting
Updated Revenue Needs Analysis
Draft Rate Recommendations

3. Total Net Increase in Annual Budget
Source of Difference
Net Annual Change in Revenue Needs
Inflation (3.0% per year)
+$94,000
Impact of Sewer Annexation
+$406,000
Net System Capital Investment
+$538,000
Total
+$1,038,000

4. Projected Revenue and Expenditures

5. Audit of Water Account Billings
Calibrated model based on historic billing practices. Model results within 0.2% of actuals.
Water account billings were reviewed and corrected
89 ERUs were added to the revenue stream
Results in a projected revenue increase of approximately $40,000 annually.

6. Options for Increased Revenues
Capitalization Charges
About 7% of total revenue
Highly variable, directly dependent on system growth rate
Rates
About 91% of total revenue
Increases unpopular with residents, but best stable source of revenue that can be quickly implemented
Misc. Non-Rate Revenues
About 2% of total revenue
Changes have nominal impact on total revenue

7. Capitalization Charge
Buy-in
What should you charge for each new equivalent connection to the water system?
Current charge: $3,750
Future Charge per State of Idaho Required methodology (Loomis Formula)
Capitalization Charge Components per ERU
Distribution System
$4,530
Water Treatment Plant
$669
Storage Tanks
$396
Pump Stations
$110
Total Capitalization Charge
$5,705

8. Capitalization Charge
Comparison chart

9. Potential Rate Increase Approaches
One time large increase vs. smaller gradual increases
Bonding for New Tank vs. Pay as You Go
Four options for discussion –
Option 1 – Large initial increase, no bonding
Option 2 – Gradual increase, no bonding
Option 3 – Large initial increase, bond as necessary to minimize rate increase
Option 4 – Gradual increase, bond as necessary to minimize rate increase

10. Potential Rate Increase Approaches
One time large increase vs. smaller gradual increases
Bonding for New Tank vs. Pay as You Go
Four options for discussion –
Option 1 – Large initial increase, no bonding
Option 2 – Gradual increase (5 year implementation), no bonding
Option 3 – Large initial increase, bond as necessary to minimize rate increase
Option 4 – Gradual increase, bond as necessary to minimize rate increase
New Option 3 – Three year implementation plan

11. Option 1 – Large Initial 47% increase 2019, 2.5%/year thereafter
Roland to Update
47% increase 2019, 2.5%/year thereafter

12. Option 2 – Gradual (5 Year Implementation)
Roland to Update
10% increase per year through 2023, 2.5%/year thereafter

13. Option 3 – Three Year Implementation
Roland to Update
16% increase through 2021, 2.5%/year thereafter

14. Summary of Options Option 1 Option 2 Option 3 Annual Increase 2019
46.9%
10.1%
15.6%
2020
2.5%
2021
2022
2023
2024
Other Impacts
Deferred Projects
None
$840,000
Available 20 years*
$2.1 million $0
$1.1 million
* Current cash reserve = $1.85 million

15. Draft Rate Recommendations

16. Current Rate Structure
30,000
Monthly Use (gallons)
20,000
$0.71
/kgal
$0.71
/kgal
$0.71
/kgal
10,000
$0.00
Base Rate =
(Per ERU)
$33.70
$37.70
$68.32
$50.55
Class A
Private
Residences
Out-
Of-
Town
Class B
Commercial
/Industrial
Class C
Unmetered
Accounts

17. Overall Rate Structure Options
Uniform
Seasonal
Increasing Block

18. Rate Comparison – Uniform Structure (All results for Option 1 – 2018, Class A)
30,000
Monthly Use (gallons/ERU)
20,000
$0.71
/kgal
$1.71
/kgal
141%
10,000
Roland to complete
Base Rate =
$33.70
$46.06
37%
Typical
Year-Round
Resident
Monthly Bill =
$40.45
$62.31
54%
Existing
Proposed
% Increase

19. Rate Comparison – Seasonal Structure (All results for Option 1 – 2018, Class A)
Winter
Summer
30,000
$1.84
/kgal
159%
Monthly Use (gallons/ERU)
20,000
$0.71
/kgal
$1.33
/kgal
87%
10,000
Roland to complete
Base Rate =
$33.70
$46.06
37%
Typical
Year-Round
Resident
Monthly Bill =
$40.45
$62.27
54%
Existing
Proposed
% Increase

20. Proposed Blocks Block 1: 0-5,000 gallons/month/ERU
Block 3: Over 20,000 gallons/month/ERU
Water use from all
accounts in each block:
Blocks applied on a per ERU basis. (e.g. An account with 2 ERUs will pay Block 1 rates for water use up to 10,000 gallons and Block 2 rates from 10,000 to 40,000 gallons.

21. Block Rates and Monthly Water Use

22. Block Rates and Monthly Water Use

23. Rate Comparison – Block Structure (All results for Option 1 – 2018, Class A)
30,000
$2.27
/kgal
220%
Monthly Use (gallons/ERU)
20,000
$0.71
/kgal
$1.81
/kgal
155%
10,000
90%
$1.35/kgal
Roland to complete
Base Rate =
$33.70
$46.06
37%
Typical
Year-Round
Resident
Monthly Bill =
$40.45
$60.96
51%
Existing
Proposed
% Increase

24. Draft Recommended Rates – Option 1
Monthly Base Rates ($/ERU)
First ERU per Account
Customer Class
Existing
2019
2020
2021
2022
2023
2024
Class A - Private Residence $ $ $ $ $ $ $
Class B – Industrial/Commercial $
Class C - Unmetered $ $ $ $ $ $ $
Residential Out-of-Town $ $ $ $ $ $ $
Each Additional ERU $ $ $ $ $ $
Class B - Indust Commercial $ $ $ $ $ $ $ $ $ $ $ $
Volume Rates ($/kgal)
All Customers
Uniform Rate Option
Uniform Rate $ $ $ $ $ $ $
Seasonal Rate Option
Winter Rate - $ $ $ $ $ $
Summer Rate $ $ $
Block Rate Option
Block 1 $ $ $ $ $ $
Block 2 $ $ $ $ $ $
Block 3 $ $ $ $ $ $
Roland to clean up and format

25. Draft Recommended Rates – Option 2
Monthly Base Rates ($/ERU)
First ERU per Account
Customer Class
Existing
2019
2020
2021
2022
2023
2024
Class A - Private Residence $ $ $ $ $ $ $
Class B – Industrial/Commercial $
Class C - Unmetered $ $ $ $ $ $ $
Residential Out-of-Town $ $ $ $ $ $ $
Each Additional ERU $ $ $ $ $ $
Class B - Indust Commercial $ $ $ $ $ $ $ $ $ $ $ $
Volume Rates ($/kgal)
All Customers
Uniform Rate Option
Uniform Rate $ $ $ $ $ $ $
Seasonal Rate Option
Winter Rate - $ $ $ $ $
Summer Rate $ $ $ $ $ $
Block Rate Option
Block 1 $ $ $ $ $ $
Block 2 $ $ $ $ $ $
Block 3 $ $ $ $ $ $
Roland to clean up and format

26. Draft Recommended Rates – Option 3
Monthly Base Rates ($/ERU)
First ERU per Account
Customer Class
Existing
2019
2020
2021
2022
2023
2024
Class A - Private Residence $ $ $ $ $ $ $
Class B – Industrial/Commercial $
Class C - Unmetered $ $ $ $ $ $ $
Residential Out-of-Town $ $ $ $ $ $ $
Each Additional ERU $ $ $ $ $ $
Class B - Indust Commercial $ $ $ $ $ $ $ $ $ $ $ $
Volume Rates ($/kgal)
All Customers
Uniform Rate Option
Uniform Rate $ $ $ $ $ $ $
Seasonal Rate Option
Winter Rate - $ $ $ $ $
Summer Rate $ $ $ $
Block Rate Option
Block 1 $ $ $ $ $ $
Block 2 $ $ $ $ $ $
Block 3 $ $ $ $ $ $
Roland to clean up and format

27. Impact of Potential Rate Options
Option 1 – Large Initial
Existing
2019
2020
2021
2022
2023
2024
Typical Year-Round Resident Monthly Bill (Uniform Rate) $ $ $ $ $ $ $
Typical Year-Round Resident Monthly Bill (Seasonal Rate) - $ $ $ $ $
Typical Year Round Resident Monthly Bill (Block Rate) $ $ $ $ $ $
Option 2 – 5-year Transition
Existing
2019
2020
2021
2022
2023
2024
Typical Year-Round Resident Monthly Bill (Uniform Rate) $ $ $ $ $ $ $
Typical Year-Round Resident Monthly Bill (Seasonal Rate) - $ $ $ $ $ $
Typical Year-Round Resident Monthly Bill (Block Rate) $ $ $ $ $ $
Roland to format and add other options – See calcs on recommended rates sheet.
Option 3 – 3-year Transition
Existing
2019
2020
2021
2022
2023
2024
Typical Year-Round Resident Monthly Bill (Uniform Rate) $ $ $ $ $ $ $
Typical Year-Round Resident Monthly Bill (Seasonal Rate) - $ $ $ $ $
Typical Year-Round Resident Monthly Bill (Block Rate) $ $ $ $ $ $

28. Impact of Potential Rate Options
Percent Increase in Annual Bill
Typical Residence
All Types of Accounts
Less than 47%
73%
67% %
17%
18% % 8% 9% % 2% 3%
More than 100% (doubled)
0.5%
2.5%
Maximum Increase
155%
Minimum Increase
37%
Average Increase
47%
Roland to format and add other options – See calcs on recommended rates sheet.

29. Impact of Potential Rate Options
Most water users (67%) will see increases less than 47% over their existing bill
Nobody will see 200 – 300% billing increases. Highest observed increase is 155%
Very few customers (2.5% or 83 customers) will see greater than 100% increase.
Top 7 accounts most impacted by the proposed changes are listed below:
Account No.
% increase
Name
Service Address
155%
Lardo Properties LLC
411 Colorado St # 3
153%
Wilkinson, R. Michael & Sandra
269 Morgan Dr
152%
Allen-Nokes Inc.
200 W Forest St
148%
Pacific Western Bank-Rivers Crossing
256 Morgan Dr
138%
McNabb, Janice
310 W Forest St
135%
Rogers, Terry & Connie
1130 Heavens Gate Ct
128%
Klang, Charles R.
234 Rio Vista Blvd
Roland to format and add other options – See calcs on recommended rates sheet.

30. Comparison to Other Water Providers
Roland to create some useful comparison figures

31. Needed Decisions Which overall rate increase option (1, 2 or 3)?
Which rate structure approach (uniform, seasonal, or block)?
Minor rate approach decisions:
Okay with elimination of commercial class?
Reduced charge for additional ERUs?
Any other needed changes to recommended rates?

32. Schedule for Completion
July 19th – Final Report and Public Workshop
August 9th – Formal Adoption

33. Rate Comparison Typical Resident - 2019
30,000
$1.85
/kgal
+$1.14/kgal
Monthly Use (gallons/ERU)
20,000
$0.71
/kgal
$1.48
/kgal
+$0.77/kgal
10,000
+$0.40/kgal
$1.11/kgal
Roland to complete
Base Rate =
$33.70
$35.92
+$2.22
Typical
Year-Round
Resident
Monthly Bill =
$40.45
$48.13
+$7.68
Existing
Proposed
Change