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Home My WebLink AboutA002 - FY 2021/22 Water Rate Presentation 3/18/2021 FY 2021-22 -` Water ,at Water Rates z� March 23, 2021 CIT OF Ames WATER SPOLLUTION CONTROL 1 Outline • National & State-wide Trends in Rates i= • Projected Need for Revenue Increase A y • Translating Revenue Needs to Rates • Customer Perspective • Council Direction 1 3/18/2021 National and State Trends Data sources include: I •— • 2018 Cost of Clean Water Index National Association of Clean Water Agencies • 2019 Water and Wastewater Rate Survey American Water Works Association • 2020 Iowa Water and Wastewater Rate Survey City of Ames Water and Pollution Control 3 National Trends 2018 Cost of Clean Water Index NACWA projected National an / in Cost,Based on Approved and Anticipated Rate Increases- NACWA Average annual wastewater bill has doubled nationally in 8% last 15 years 6% • Wastewater utilities expect charges to increase from 3.4% to 3.7%per year for the next 5 years 4% 3.6% 3.5% 3.7% 3.4% 3.6% • Nationally,the average increase in 2018 was 1.6x the rate 2% of inflation (17t'consecutive year that sewer rates nationally 0% have outpaced inflation) 2019 2020 2021 2022 2023 a 2 3/18/2021 National Trends � 2019 Water & Wastewater Rate Survey, T�y American Water Works Association 79% of Drinking Water Utilities nationally have increased rates in the past two years y 77% of Wastewater Utilities nationally have increased ► . rates in the past two years Lowest costs for both water and sewer were in the Midwest :- National Trends 2014 to 2019 Average Annual Increase in Water Rates: 4.8% Average Annual Increase in Sewer Rates: 4.1% Average Annual Increase in CPI: 2.0% Sources: 2014 Water and Wastewater Rate Survev,AWWA/Raftelis Financial Consultants 2019 Water and Wastewater Rate Survev,AWWA/Raftelis Financial Consultants 3 3/18/2021 Recent Rate Adjustments in Ames Water Sewer FY 16/17 �■ -- - Ir FY 17/18 - - FY 18/19 3.5% 3% _ FY 19/20 7% -- FY 20/21 2% 5% Annual Average 2.5% 1.6% Ames Trends vs. National Trends Water National Average Annual Increase: 4.8% Ames Average Annual Increase: 2.5% t Sewer " S1n ' National Average Annual Increase: 4.1% Ames Average Annual Increase: 1.6% Average Annual Increase in CPI: 2.0% National and CPI Data:2014—2019 Ames Data:2016—2020 8 4 3/18/2021 � a Iowa Trends Y MES Percent of Iowa Utilities with a rate increase in past two years: _ • Drinking Water: 76% (22 of 29) � II • More than 5%: 41% (12 of 29) • More than 10%: 21% (6 of 29) }a • Wastewater: 77% (33 of 43) �+ • More than 5%: 58% (25 of 43) • More than 10%: 28% (12 of 43) 2020 Iowa Water&Wastewater Rate Survey,City of Ames,Iowa 9 Ames Trends vs. Iowa Trends 2016-2020 Trends Water Iowa Average Annual Increase: 5.6% Ames Average Annual Increase: 2.6% �,avmes Sewer Water r.e Groundbreaking Iowa Average Annual Increase: 7.3% October 16,2014 Ames Average Annual Increase: 1.6 Average Annual Increase in CPI: 2.0% Iowa,Ames,and CPI Data:2016-2020 5 3/18/2021 Iowa Trends in Water Rates 1999-2020, Cities with population >10,000 with lime softening, 600 cf per month $60 $50 ' ■ $40 ■ ■ $30 ■ ■ ' ■ $20 ' ■ $10 $0 1998 2003 2008 2013 2018 —————————9 Statewide Median Ames Rates **Ames is at the 291h percentile,based on 2020 rates** u Comparing Across Water Demand Thresholds Cities with population >10,000 with lime softening, 2020 $60.00 $900.00 $9,000.00 ' $80.00 $soo.00 $8,000.00 $50.00 • ■ ■ $700.00 $7,000.00 $40.00 $600.00 ■ $6,000.00 ■ $60.00 ■ ■ ■ $500.00 ■ $5,000.00 $30.00 $400.00 $4,000.00 ■ $40.00 ^ • , ♦ $300.00 $3,000.00 $20.00 i ■ ■ ■ $200.00 $2,000.00 ■ $10.00 $20.00 $100.00 $1,000.00 600 cf 1,000 cf 10,000 cf 100,000 cf • Statewide Median ♦ Ames Rates 12 6 3/18/2021 Iowa Trends in Sewer Rates 1999-2020, Cities with population >10,000, 600 cf per month $80 $70 $50 ■ $50 $40 ■ — $30 ■ ■ :' _�� l� $20 $10 • • • • $0 1998 2003 2008 2013 2018 ————————— Statewide Median Ames Rates **Ames is at the 24'percentile,based on 2020 rates** 13 Water Revenue Sources 0011116 FY 20/21 Amended Budget Rate-Derived Revenue, All Other Revenues, $10,728,000 $752,708 Grants&Donations, $41,302 ISU Contract Sales, $1,668,000 Total Revenue Estimate:$13.19 M 14 7 3/18/2021 Water Rate-Derived Revenue FY 19/20 Amended Budget Consumption, Yard Meter Minimum $5,890,000 Charge, $72,000 Multi-unit Charge, $359,000 Minimum Charge, $4,407,000 rr Rate-Derived Revenue Estimate: $10.728 M Current Water Rates ($/cf) Existing Winter All customers;all consumption $0.0243 Summer - - Residential Block 1 (First 1,000 co $0.0243 Block 2(Next 1,500 cf) $0.0428 I -I1— Block 3(Over 2,500 cf) $0.0644 Irrigation&Yard Water '.` Block 1 (First 2,000 ct $0.0350 — ►� Block 2(Next 3,000 cf) $0.0644 Block 3(Over 5,000 cf) $0.1072 /! Non-Residential « All consumption $0.0318 Non-Peaking Industrial All consumption $0.0243 8 3/18/2021 Forces Driving Capital Expenses WaterFund: ...,,.,,... �,..,...�. . _�� • New Source Water Capacity • Resiliency Sewer Fund: • Nutrient Reduction Modifications ..w.u....a.�... ..... .a. _^_ •-- Both Funds: • Infrastructure Renewal/Replacement Sewer Rehab, Water Main Replacement, Treatment Facility Improvements Add a footer 17 Water Fund Rate Model — No Adjustments 25,000 20,000 15,000 10,000 5,000 0- -5,000 19-20 20--21 -10,000 m -15,000 °f -20,000- O -25,000- w` -30,000 -35,000 -40,000-45,000- -50,000 Ending Fund Balance Operating Reserve Percentage Rate Increase 18 9 3/18/2021 Guiding Philosophy on Rates CITY OF AMES WATER TREATMENT PLANT 2017 MAYOR • Rate increases should be done with smaller percentage increases on a more frequent basis, as SER CITY CCUNCIL MEMBERS RI 6 opposed to larger increases on a less frequent basis. CITYMANAIGER \ • Slowly grow the operating reserve in each Fund overtime until it reaches 25% of the Fund's annualMM operating expenses CONTRACTORS RAUTSONCONSMUC ION Water and Sewer Rate Projections Last Current Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year Year 19-20 20-21 21-22 22-23 23-24 24-25 25-26 26-27 27-28 28-29 29-30 30-31 Water Fund 7/o 2/o 6% 29/6 90/ 2/o 9% 90/6 90% Sewer Fund 5% 5% 8% 8% 8% 9% 10 3/18/2021 Water Fund Rate Model 25,000 20,000 N 15000 O 10,000 a ru 5,000 L eee� _% - 9_ 9% ' 0 19-20 20-21 21-22 22-23 23-24 24-25 25-26�26-27 27-28 28-29 29-30 30-31 e�Ending Fund Balance GOperaUng Reserve Percentage Rate Increase 21 Projected Monthly Water and Sewer Bill 600 cubic feet per month $250.00 $225.00 $200.00 $175.00 $150.00 Rate Projections vs. $125.00 • . • ",'Statewide Trends $10000 • ' • $75.00 • • • $50.00 \ $25.00 $- 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Statewide Range ec-mAmes Residential -Statewide Median 22 11 3/18/2021 1 Revised Water Rates s Existing Increase New — Aa Winter All customers;all consumption $0.0243 $0.0015 $0.0257 Summer Residential i Block 1 (First 1,000 cf) $0.0243 $0.0015 $0.0257 , Block 2(Next 1,500 cf) $0.0428 $0.0026 $0.0454 Block 3(Over 2,500 cf) $0.0644 $0.0039 $0.0682 M Irrigation&Yard Water T Block 1 (First 2,000 cf) $0.0350 $0.0021 $0.0371 � V� Block 2(Next 3,000 cf) $0.0644 $0.0039 $0.0682 EP Block 3(Over 5,000 cf) $0.1072 $0.0064 $0.1137 r�,• AOOryryRHEMTO C� r, Non-Residential All consumption $0.0318 $0.0019 $0.0337 Non-Peaking Industrial All consumption $0.0243 $0.0015 $0.0257 / 23 Associated Rates and Fees • r . Water minimum bills, multiple dwelling unit fees, bulk water charge would also adjust by 6% 71 A v,&R, 1T • Meter setting fees would be adjusted based on actual cost recovery 12 3/18/2021 Sample Customer Bill Median Use Residential Electric Storm Water Electric/Water Use Summer Water Summer Sewer Total 600 kWh and 600 cf $81.10 $4.95 $26.98 $29.34 $142.37 Electric ECA -$4.32 -$4.32 Totals $76.78 $4.95 $26.98 $29.34 $138.05 Increase Due to Rate Change $0.00 $0.00 $1.62 $0.00 $1.62 Totals $76.78 $4.95 $28.60 $29.34 $139.67 % Impact on Total Bill 1.17% 25 Recommended Action & Timeline • Adopt on first reading, an ordinance to: • Adjust Water Rates by 6% 0 1 SYeve • New rates effective for bills mailed "fit on or after July 1, 2021 • Timeline • First reading on March 23 • Second reading on April 13 • Third reading and adoption on April 27 13 3/18/2021 e ' � � Ames WATFE �- WATER S POLLUTION CONTROL -L ION Questions • Sample Customer Bill Minimal Use Residential _ Electric Storm Water Electric/Water Use Summer Water Summer Sewer Total 100 kWh and 100 cf $20.45 $4.95 $14.83 $14.54 $54.77 Electric ECA -$0.72 -$0.72 Totals $19.73 $4.95 $14.83 $14.54 $54.05 Increase Due to Rate Change $0.00 $0.00 $0.89 $0.00 $0.89 Totals $19.73 $4.95 $15.72 $14.54 $54.94 % Impact on Total Bill 1.65% 28 14 3/18/2021 qftl Sample Customer Bill Median Use Residential Electric Storm Water Electric/Water Use Summer Water Summer Sewer Total 600 kWh and 600 cf $81.10 $4.95 $26.98 $29.34 $142.37 Electric ECA -$4.32 -$4.32 Totals $76.78 $4.95 $26.98 $29.34 $138.05 Increase Due to Rate Change $0.00 $0.00 $1.62 $0.00 $1.62 Totals $76.78 $4.95 $28.60 $29.34 $139.67 % Impact on Total Bill 1.17% 29 Sample Customer Bill Large Residential -V Electric Storm Water Electric/Water Use Summer Water Summer Sewer Total 1,000 kWh and 1,000 cf $129.62 $4.95 $36.70 $41.18 $212.45 Electric ECA -$7.20 -$7.20 Totals $122.42 $4.95 $36.70 $41.18 $205.25 Increase Due to Rate Change $0.00 $0.00 $2.20 $0.00 $2.20 Totals $122.42 $4.95 $38.90 $41.18 $207.45 % Impact on Total Bill 1.07% H 15 3/18/2021 Sample Customer Bill Small Commercial (GP) Electric Storm Water Electric/Water Use Summer Water Summer Sewer Total 2,000 kWh and 600 cf $254.40 $4.95 $31.48 $29.34 $320.17 Electric ECA -$14.40 -$14.40 Totals $240.00 $4.95 $31.48 $29.34 $305.77 Increase Due to Rate Change $0.00 $0.00 $1.89 $0.00 $1.89 Totals $240.00 $4.95 $33.37 $29.34 $307.66 % Impact on Total Bill 0.62% 31 Sample Customer Bill Small Commercial (GP) Electric Storm Water Electric/Water Use Summer Water Summer Sewer Total 5,000 kWh and 1,000 cf $612.60 $4.95 $44.20 $41.18 $702.93 Electric ECA -$36.00 -$36.00 Totals $576.60 $4.95 $44.20 $41.18 $666.93 Increase Due to Rate Change $0.00 $0.00 $2.65 $0.00 $2.65 Totals $576.60 $4.95 $46.85 $41.18 $669.58 % Impact on Total Bill 0.40% 32 16 3/18/2021 Sample Customer Bill Small Commercial (GP) Electric Storm Water Electric/Water Use Summer Water MSummer Sewer Total 10,000 kWh and 3,000 cf $1,209.60 $9.90 $120.21 $100.38 $1,440.09 Electric ECA -$72.00 -$72.00 Totals $1,137.60 $9.90 $120.21 $100.38 $1,368.09 Increase Due to Rate Change $0.00 $0.00 $7.21 $0.00 $7.21 Totals $1,137.60 $9.90 $127.42 $100.38 $1,375.30 % Impact on Total Bill 0.53% 33 Sample Customer Bill Commercial (LP) _ Electric Storm Water Electric/Water Use Summer Water Summer Sewer Total 20,000 kWh and 5,000 cf $2,181.81 $9.90 $183.81 $159.58 $2,535.10 Electric ECA -$144.00 -$144.00 Totals $2,037.81 $9.90 $183.81 $159.58 $2,391.10 Increase Due to Rate Change $0.00 $0.00 $11.03 $0.00 $11.03 Totals $2,037.81 $9.90 $194.84 $159.58 $2,402.13 % Impact on Total Bill 0.46% 34 17 3/18/2021 Sample Customer Bill Commercial (LP) Electric Storm Water Electric/Water Use Summer Water Summer Sewer Total 60,000 kWh and 15,000 cf $6,221.55 $14.85 $526.62 $455.58 $7,218.60 Electric ECA -$432.00 -$432.00 Totals $5,789.55 $14.85 $526.62 $455.58 $6,786.60 Increase Due to Rate Change $0.00 $0.00 $31.60 $0.00 $31.60 Totals $5,789.55 $14.85 $558.22 $455.58 $6,818.20 % Impact on Total Bill 0.47% 3 Sample Customer Bill Commercial (LP) Electric Storm Water Electric/Water Use Summer Water Summer Sewer Total 100,000 kWh and 20,000 cf $10,284.95 $44.55 $735.25 $603.58 $11,668.33 Electric ECA -$720.00 -$720.00 Totals $9,564.95 $44.55 $735.25 $603.58 $10,948.33 Increase Due to Rate Change $0.00 $0.00 $44.12 $0.00 $44.12 Totals $9,564.95 $44.55 $779.37 $603.58 $10,992.45 % Impact on Total Bill 0.40% 36 18