City of Las Vegas, NM Utility Rate Study Findings City Council Work Session

Pathways to Lasting Solutions

City of Las Vegas, NMUtility Rate Study Findings

City Council Work Session

July 11, 2012


Rate Study Overview

Data Budget Inflation CIP Growth Monthly Bills

Cost of Service Customer

classes Service

characteristics

Financial Plan 5-year

forecast Capital

funding plan Revenue

requirements

Structure Proposed

rates

Rate Design

Rate revenue needed to

meet revenue requirements

Cost to serve each

customer class

Customer monthly bills


WATER UTILITY RATE STUDY FINDINGS


5-Year Water CIP

Description Current CostMajor Capital $40.3 million Raw water storage

Raw water conveyance

Groundwater production

Groundwater quality

Routine Capital $5.4 million System repair & rehab

Equipment replacement

TOTAL $45.7 million


Water Revenue Requirements

Revenue Requirement 2013 2014 2015 2016

O&M $ 2,636,800 $ 2,897,600 $ 2,959,900 $ 3,024,200

Franchise Fee 133,300 132,900 132,600 132,300

Debt Service

Existing 406,700 403,000 403,300 41,100

Proposed 750,200 1,352,500 2,315,500 2,962,700

Transfers 750,000 1,000,000 1,150,000 1,250,000

TOTAL $ 4,677,000 $ 5,786,000 $ 6,961,300 $ 7,410,300


Water Financial Plan (No Rate Increases)

Item 2013 2014 2015 2016Water Sales Revenue From Existing Rates Additional from Proposed Rates TotalGRT ProceedsOther RevenueTotal Revenue

$ 3,228,400 0

$ 3,228,400670,000

211,100$ 4,109,500

$ 3,220,500 0

$ 3,220,500670,000

206,300$ 4,096,800

$ 3,212,500 0

$ 3,212,500670,000

206,300$ 4,088,800

$ 3,204,800 0

$ 3,204,800670,000

206,300$4,081,100

Revenue Requirements $ 4,677,000 $ 5,786,000 $ 6,961,300 $ 7,410,300

Surplus (Deficit) ($ 567,500) ($ 1,689,200) ($ 2,872,500) ($ 3,329,200)

Beginning Cash Reserves 1,241,400 673,900 ($ 1,015,300) ($ 3,887,800)

Ending Cash Reserves $ 673,900 ($ 1,015,300) ($ 3,887,800) ($ 7,217,000)

Target Reserves (90 days O&M) 650,000 715,000 730,000 746,000

Debt Service Coverage 60% 24% 13% 9%


Water Financial Plan (No Rate Increases)


Water Financial Plan - Scenario 1 (One Large Increase in 2013, Small increases in 2015 and 2016)


$ 3,228,4001,872,500

$ 5,100,900670,000

215,700$ 5,986,600

$ 3,220,5002,801,800

$ 6,022,300670,000

221,500$ 6,913,800

$ 3,212,5003,215,400

$ 6,427,900670,000

225,000$ 7,322,900

$ 3,204,8003,656,500

$ 6,831,300670,000

226,500$7,757,800

Revenue Requirements 4,722,600 5,832,900 7,009,300 7,459,500

Surplus (Deficit) $ 1,264,000 $ 1,080,900 $ 313,600 298,300

Beginning Cash Reserves 1,241,400 2,505,400 3,586,400 3,900,000

Ending Cash Reserves $ 2,505,400 $ 3,586,300 $ 3,900.000 $ 4,198,300




Water Financial Plan - Scenario 1 (One Large Increase in 2013, Small increases in 2015 and 2016)


Water Financial Plan - Scenario 2 (Recommended)(Annual Increases in 2013, 2014, and 2015)


$ 3,228,400559,600

$ 3,788,000670,000

212,400$ 4,670,400

$ 3,220,5001,892,300

$ 5,112,800670,000

212,700$ 5,995,500

$ 3,212,5003,213,800

$ 6,426,300670,000

213,800$ 7,310,100

$ 3,204,8003,654,700

$ 6,859,500670,000

215,300$7,744,800


Surplus (Deficit) ($ 52,100) $ 162,600 $ 300,700 $ 285,300


Ending Cash Reserves $ 1,189,300 $ 1,351,900 $ 1,652,600 $ 1,937,900




Water Financial Plan - Scenario 2 (Recommended)

(Annual Increases in 2013, 2014, and 2015)


Rate Design

Adequate – meets annual revenue and debt covenant requirements

Equitable – transitions toward cost of service rates

Understandable structure to customers Policy compliant

Inside/outside City rate differential Cost of service


Residential Monthly Water Rates

Existing Rates

Recommended Rates

2013 2014 2015

Base Charges (per month)Meter Size

(in.)No. of Accts.

5/8 5,660 $15.26 $15.00 $16.80 $18.60

1 60 31.44 31.50 31.50 31.50

Volume Charges (per gallons)

gallons Percent of Total Usage

First 2,000 40.0% $0.00000 $0.00102 $0.00172 $0.00287

Next 4,000 41.7% 0.00202 0.00230 0.00387 0.00646

Next 4,000 11.0% 0.00224 0.00518 0.00871 0.01454

Next 5,000 3.9% 0.00246 0.01295 0.02178 0.03635

Next 5,000 1.5% 0.00269 0.01295 0.02178 0.03635

Next 30,000 1.4% 0.00337 0.01295 0.02178 0.03635

Over 50,000 0.0% 0.00449 0.01295 0.02178 0.03635

13


Sample Residential Water Bill – 2013 RatesRecommended Water RatesMonthly Usage: 3,256 gallons

• Base Charge: $15.00/bill

$15.00

• 2,000 gallons x $.00102 per gallon

$2.04 • 1,256 gallons x $.00230 per gallon

$2.89

• Total Bill

$19.93


Sample Residential Water Bill – 2013 RatesRecommended Water RatesMonthly Usage: 11,712 gallons

• Base Charge: $15.00/bill

$15.00



$9.20



$22.17

• Total Bill

$69.13


Residential Monthly Bill

Usage(gallons)

% of Bills

Existing Rates

Recommended Rates

2013 2014 2015

0 9% $15.26 $15.00 $16.80 $18.60

1,000 8% 15.26 16.02 18.52 21.47

2,000 13% 15.26 17.04 20.24 24.34

3,000 15% 17.28 19.34 24.11 30.80

4,000 14% 19.30 21.64 27.98 37.26

5,000 12% 21.32 23.94 31.85 43.72

6,000 9% 23.34 26.24 35.72 50.18

7,000 6% 25.58 31.42 44.43 64.72

8,000 4% 27.82 36.50 53.14 79.26

9,000 3% 30.06 41.78 61.95 93.80

10,000 2% 32.30 46.96 70.56 108.34

16


Commercial Monthly Water Base Charges(Annual Increases in 2013, 2014 and 2015)

Meter Size

No. of Accts

Existing Rates

Recommended Rates

2013 2014 2015

5/8 520 $33.68 $33.70 $33.70 $33.70

1 85 168.39 170.00 170.00 170.00

1 1/2 1 246.00 246.00 246.00

2 140 336.76 340.00 340.00 340.00

3 1 450.00 450.00 450.00

4 20 505.15 510.00 510.00 510.00

6 2 673.53 830.00 1,120.00 1,540.00

17


Commercial Water Volume Charges – 5/8-inch (Annual Increases in 2013, 2014 and 2015)

MonthlyUsage

(gallons)

Percent of Total

Existing Rates

(per gallon)

Recommended Rates (per gallon)

2013 2014 2015

First 2,000 19.5% $0.00000

Next 4,000 22.9% $0.00202

Next 4,000 13.7% $0.00224

Next 5,000 10.4% $0.00246

Next 5,000 7.3% $0.00269

Next 30,000 19.0% $0.00337

Over 50,000 7.2% $0.00449

Weighted $0.00219

Winter (November thru April) $0.00319 $0.00536 $0.00797

Summer (May thru October) $0.00399 $0.00670 $0.00997

Weighted $0.00361 $0.00606 $0.00756

18


Commercial Water Volume Charges – 1-inch (Annual Increases in 2013, 2014 and 2015)

MonthlyUsage

(gallons)

Percent of Total

Existing Rates

(per gallon)


2013 2014 2015

First 10,000 32.5% $0.00000

Next 90,000 61.6% $0.00246

Over 100,000 5.9% $0.00449

Weighted $0.00178



Weighted $0.00361 $0.00606 $0.00756

19


Commercial Water Volume Charges – 2-inch (Annual Increases in 2013, 2014 and 2015)

MonthlyUsage

(gallons)

Percent of Total

Existing Rates

(per gallon)


2013 2014 2015

First 10,000 12.7% $0.00000

Next 90,000 52.0% $0.00246

Next 900,000 35.3% $0.00269

Over 1,000,000 0.0% $0.00449

Weighted $0.00223



Weighted $0.00361 $0.00606 $0.00756

20


Commercial Water Volume Charges – 3, 4, & 6-inch (Annual Increases in 2013, 2014 and 2015)

MonthlyUsage

(gallons)

Percent of Total

Existing Rates

(per gallon)


2013 2014 2015

First 10,000 9.5% $0.00000

Next 90,000 50.4% $0.00246

Next 900,000 39.2% $0.00269

Over 1,000,000 0.9% $0.00292

Weighted $0.00232



Weighted $0.00361 $0.00606 $0.00756

21


Monthly Fire Line Charges

LineSize

(inches)

No. of Accts

Existing Rates

Recommended Rates

2013 2014 2015

1 0 $157.65 $142.00 $127.00 $112.00

2 0 315.30 285.00 254.00 223.00

3 11 315.30 286.00 256.00 226.00

4 17 472.95 429.00 385.00 341.00

6 9 630.60 575.00 519.00 464.00

8 3 788.25 727.00 667.00 604.00

22


WASTEWATER UTILITY RATE STUDY FINDINGS


Wastewater Revenue Requirements

Revenue Requirement 2013 2014 2015 2016

O&M $ 1,685,900 $ 1,807,900 $ 1,843,900 $ 1,881,000

PILOT 50,800 60,000 63,600 67,400

Debt Service

Existing 923,100 923,100 923,100 923,100

Proposed 0 0 0 0

Transfers 424,100 424,100 406,900 495,000

TOTAL $ 3,083,900 $ 3,215,100 $ 3,237,500 $ 3,366,500


Wastewater Financial Plan (No Rate Increases)

Item 2013 2014 2015 2016Wastewater Service Revenue From Existing Rates Additional from Proposed Rates TotalOther RevenueTotal Revenue

$ 2,177,000 0$ 2,177,000

152,100$ 2,329,100

$ 2,161,500 0$ 2,161,500

148,000$ 2,309,500

$ 2,146,400 0$ 2,146,400

147,200$ 2,293,600

$ 2,131,200 0$ 2,131,200

147,200$2,278,400


Surplus (Deficit) ($ 750,400) ($ 875,600) ($ 908,400) ($ 1,046,800)

Beginning Cash Reserves 1,350,500 600,100 (275,600) (1,184,000)

Ending Cash Reserves $ 600,100 ($ 275,600) ($ 1,184,000) ($ 2,230,800)




Wastewater Financial Plan (No Rate Increases)


Wastewater Financial Plan (Annual Increases in 2013, 2014, 2015, and 2016)

Item 2013 2014 2015 2016Wastewater Service Revenue From Existing Rates Additional from Proposed Rates TotalOther RevenueTotal Revenue

$ 2,177,000 217,700$ 2,394,700

152,600$ 2,547,300

$ 2,161,500 697,100$ 2,858,600

150,800$ 3,009,400

$ 2,146,400 890,900$ 3,037,300

150,100$ 3,187,400

$ 2,131,200 1,095,700

$ 3,226,900 150,000$3,376,900


Surplus (Deficit) ($ 536,600) ($ 205,700) ($ 50,100) $ 10,400

Beginning Cash Reserves 1,350,500 813,900 608,200 558,100

Ending Cash Reserves $ 813,900 $ 608,200 $ 558,100 $ 568,500




Wastewater Financial Plan (Annual Increases in 2013, 2014, 2015, and 2016)


Wastewater Base Charges

Meter Size

No. of Accts

Existing Rates

Recommended Rates

2013 2014 2015

Residential5/8 4,388 $4.92 $7.50 $10.50 $12.10

1 44 4.92 12.30 20.70 25.20

Commercial5/8 460 12.01 12.60 13.10 13.401 65 21.32 23.90 26.80 28.402 109 85.28 86.60 88.20 89.00

4 18 341.11 341.11 341.11 341.116 1 767.58 767.58 767.58 767.58

29


Monthly Wastewater Volume Charges

Customer Class

Existing Rates

(per gallon)


2013 2014 2015

Residential $0.00469 $0.00512 $0.00561 $0.00587

Commercial $0.00403 0.00465 0.00536 0.00575

30


Residential Wastewater Monthly Bills

Usage(gallons)

Existing Rates

Recommended Rates

2013 2014 2015

0 $ 4.92 $ 7.50 $ 10.50 $ 12.10

1,000 9.61 12.62 16.11 17.97

2,000 14.30 17.74 21.72 23.84

3,000 18.99 22.86 27.33 29.71

4,000 23.68 27.98 32.94 35.58

5,000 28.37 33.10 38.55 41.45

6,000 33.06 38.22 44.16 47.32

7,000 37.75 43.34 49.77 53.19

8,000 42.44 48.46 55.38 59.06

9,000 47.13 53.58 60.99 64.93

10,000 51.82 58.70 66.60 70.80

31


GAS UTILITY RATE STUDY FINDINGS


Gas Financial Plan (No Rate Increases)

Item 2013 2014 2015 2016Gas Service Revenue From Existing Rates Additional from Proposed Rates TotalCost of Gas Rate RevenueOther RevenueTotal Revenue

$ 2,947,700 0$ 2,947,700

3,150,000 151,300

$ 6,249,000

$ 2,947,700 0$ 2,947,7003,150,000

153,200$ 6,250,900

$ 2,947,700 0$ 2,947,7003,150,000

155,000$ 6,252,700

$ 2,947,700 0$ 2,947,7003,150,000

156,800$6,254,500


Surplus (Deficit) $ 383,400 $ 355,400 $ 378,000 $ 319,700


Ending Cash Reserves $ 2,958,800 $ 3,314,200 $ 3,692,200 $ 4,011,800


Debt Service Coverage N/A N/A N/A N/A


Gas Financial Plan (No Rate Increases)

City of Las Vegas, NM Utility Rate Study Findings City Council Work Session

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