memo. - Houston

memo. Capital Projects | Customer Account Services | Houston Permitting Center | Houston Water | Transportation & Drainage Operations

Date: March 22, 2021

To: Mayor Sylvester Turner City Council Members

From: Carol Ellinger Haddock, P.E., Director, Houston Public Works

Subject: Executive Summary 2021 Water and Wastewater Cost of Service Rate Study

Houston Public Works (HPW) is pleased to present the attached Executive Summary of the March 2021 Water and Wastewater Cost of Service Rate Study (Study) for your review and consideration. On March 24, 2021, City Council will be asked to call a public hearing on April 28, 2021 regarding proposed amendments to the City of Houston’s water and wastewater rates. These rates, for water and sewer (wastewater) utility service, have not been amended since 2010, and are no longer sufficient to meet the financial, regulatory, legal, and service goals of the Combined Utility System (“System”). To determine appropriate rates to address the System’s requirements, the City retained Carollo Engineers, Inc. in 2019 to do a cost of service study for both water and wastewater rates and impact fees. Carollo has supported the City’s efforts in determining annual revenue requirements, allocating costs among customer types, and designing just and reasonable rates which are affordable, equitable and not unreasonably discriminatory. Houston Public Works would like to present the results of the Study to the City Council and to the public, to explain the System’s needs, to review the rate setting process, and to present recommended water and wastewater rates to the public in advance of receiving input at the public hearing. To that end, HPW will provide the Executive Summary of the Report to the City Council and the public through this Executive Summary today, and to present the full Study on April 9, 2021. Rates and impact fees are the sources of revenue for the System. While impact fees are charged to new development only, water and sewer rates are charged to every water and sewer customer. Also unlike impact fees, no specific public participation is prescribed by Texas law. But, where increased rates will be recommended based on the Study, increasing transparency and public participation promotes trust between the City and its utility customers that rate increases are necessary and appropriate. For example, information regarding the revenue requirement will improve understanding of the System’s annual needs for capital expenditures, operations and maintenance, debt payments and reserves, and will show that the annual revenue requirements are not padded or excessive. Additionally, the grouping of customers in customer types with common usage patterns, such as single family residential, multi-family, and industrial and commercial, allows the allocation of costs to meet those shared needs. Finally, everyone can be confident that the proposed rate design is affordable, equitable, and supports the judicious use of resources. HPW looks forward to working with Council and the public to set water and wastewater rates which will serve the utility for years to come. Questions may be forwarded to Houston Public Works through Deputy Director Samir Solanki, CPA, MBA, CFO.

TBPE No. F‐

City of Houston

WATER AND WASTEWATER COST OF SERVICE RATE STUDY

UPDATED DRAFT | April

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WATER AND WASTEWATER COST OF SERVICE RATE STUDY | CITY OF HOUSTON

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Contents

EXECUTIVE SUMMARY 1

ES. Introduction

ES. Resilient Houston

ES. Background and System Overview

ES. Cost of Service Approach

ES. . Assumptions

ES. . Customer Demand Analyses

ES. Revenue Requirements Analysis

ES. . Water System

ES . Wastewater System

ES . Combined Utility System

ES Cost of Service Analysis

ES . Water System


ES Rate Design

ES . Water System


ES . Customer Bill Impacts

ES Recommendations

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Abbreviations

AWWA American Water Works Association

BOD biochemical oxygen demand

Carollo Carollo Engineers, Inc.

CAS Customer Account Services

CIP Capital Improvement Plan

City City of Houston

CUS Combined Utility System

DSCR debt service coverage ratio

DWO Drinking Water Operations

EBS emergency backup service

FYE fiscal year ending

G&A General & Administrative

GRP Groundwater Production Plan

HPC Houston Permitting Center

MEU meter equivalent unit

MFR multifamily residential

O&M operations and maintenance

PAYGO Pay As You Go

PPI Producer Price Index

SFR single A residential

TCEQ Texas Commission on Environmental Quality

TSS total suspended solids

WEF Water Environment Federation

WPP water production plant

WWO Wastewater Operations

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EXECUTIVE SUMMARY

ES.1 Introduction

The City of Houston, Texas (City), provides water and wastewater service to nearly , customer

accounts through its water and wastewater utility, the Combined Utility System (CUS) or “Houston Water,”

as it is called throughout this report. Houston Water is financially self‐sufficient, with funding for operating

and capital requirements derived primarily from user charge revenues, impact fees, and other miscellaneous

charges. This executive summary documents the results of the cost of service rate study and recommends

water and wastewater rates that are appropriate to meet Houston Water’s funding needs and achieve pricing

objectives.

Following a competitive proposal process, the City hired Carollo Engineers (Carollo) to complete a

comprehensive study to update water and wastewater rates and impact fees, as well as miscellaneous fees

charged by Customer Account Services (CAS) and the Houston Permitting Center (HPC), to support the utility.

The findings and recommendations of the impact fee update and the miscellaneous fees update are

summarized in separate reports.

The objectives of the cost of service rate study were to:

Fund water and wastewater revenue requirements through fiscal year ending (FYE) ,

Determine cost of service by customer type, and

Develop fair and equitable water and wastewater rates.

ES.2 Resilient Houston

Resilient Houston provides a framework for action that works to protect Houston against future disasters and

to build a more resilient City. Part of this strategy is to protect the integrity of the City’s Water and Wastewater

system through unforeseen disasters. Hurricane Harvey and Winter Storm Uri are examples that tested the

limits of the System’s capabilities. Through these events we have learned that disasters come in all shapes

and forms and that the System needs to be ready in various circumstances. In order to align with the strategy

and goals of Resilient Houston, Houston Water has taken into consideration what it would take to get us there.

This means proactively responding to the needs of the aging water and wastewater infrastructure, increasing

backups that support drinking water and wastewater plants, and identifying the vulnerabilities in the entire

system and strengthening them. In order to respond to these needs Houston Water has built into this Rate

Study the costs that are required to take steps towards a more Resilient Houston Water

ES.3 Background and System Overview

Houston Water’s mission is to protect public health, protect the environment, and provide superior customer

service. The utility serves approximately . million customers across a service area of more than square

miles and an additional . million contract and wholesale customers outside the city limits. Houston Water

must generate sufficient revenues to fully fund revenue requirements, maintain appropriate cash balances,

and meet all requirements of the Master Ordinance, including adequate debt service coverage. Ordinance No.

‐ , Houston Water’s “Master Ordinance,” provides for the issuance of Houston Water revenue

obligations and contains restrictions and covenants regarding the issuance of Houston Water debt, to be

issued pursuant to supplemental ordinances. The City completes a cost of service rate study at least every five

years to update water and wastewater rates to continue to meet its financial goals.

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Houston Water’s Drinking Water Operations (DWO) Branch operates and maintains three water purification

plants and groundwater plants, in addition to an extensive transmission and distribution system. The

Wastewater Operations (WWO) Branch operates and maintains wastewater treatment plants and the

collection system, including lift stations and , miles of sewer lines.

ES.4 Cost of Service Approach

The cost of service rate study provides a rational basis

for distributing the costs of the City’s water and

wastewater systems to each customer type, including

wholesale and contract customers, in proportion to the

demands they place on the systems. Figure ES.

provides an overview of the study process and the

questions answered at each step.

The revenue requirements analysis prepared a

financial plan for each system to determine the

revenue increases needed for each to support itself

while also considering key metrics of the combined

utility system. A detailed cost allocation was

developed for both the water and wastewater systems

based on the unique attributes of each system to

determine the portion of total revenue requirements

that should be recovered from each customer type.

Finally, recommendations were made to improve the

equity and ease of understanding of the existing rate

structure and rates were calculated to recover

sufficient revenue from each customer type.

The rates presented within this report adhere to cost of service principles, as well as industry standards set by

the American Water Works Association (AWWA) and the Water Environment Federation (WEF). The City

should continue to perform a cost of service study at least every five years so that revenues from rates

adequately fund utility operations, maintenance, and ongoing capital needs, and equitably recover costs from

system users.

ES.4.1 Assumptions

The study incorporated the key assumptions below into the analysis. Changes in these assumptions could

have a material effect on study findings and recommendations.

An automatic adjustment of . percent was implemented on April , .

With the exception of the initial adjustment recommended in this report, which will go into effect on

July , , all recommended adjustments will be implemented on April of each year.

Houston Water will use commercial paper to finance capital projects. Commercial paper debt is

converted to first lien bonds, which are assumed to have a ‐year term and percent interest rate.

The target debt service coverage ratio (DSCR) is . x for first lien and junior lien combined. DSCR is

evaluated for the combined water and wastewater utility. However, because the wastewater utility’s

projected FYE DSCR is well below the . x target, the analysis allows the wastewater DSCR to

transition to the full target in the first two years as long as the wastewater DSCR is at least . x and

the combined utility DSCR is at least . x.

Figure ES. Cost of Service Rate Study Process

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The target for Pay‐As‐You‐Go (PAYGO) or cash funding of capital projects is . percent of the

annual Capital Improvement Plan (CIP) up to a maximum of million for the combined utility.

Annual interest earnings on cash balances is . percent.

The number of accounts increases by . percent per year.

The minimum cash balance is days of operating and maintenance (O&M) expense. This is

calculated by dividing the ending cash balance by the annual O&M expenses.

Costs are projected to increase at the general annual inflation rate of . percent.

The analysis includes a bad debt allowance of . percent.

Water and wastewater impact fees will increase to . percent and . percent, respectively, of the

fees as calculated in the impact fee update, effective on July , . Subsequent increases equal

to the regional Producer Price Index (PPI) will take effect on July of each year. An additional

. percent will be added to the PPI increase for the water impact fee in and so that the

ratio of the adopted fee to the calculated fee is the same for water and wastewater.

ES.4.2 Customer Demand Analyses

Carollo analyzed FYE customer billing data to understand how different types of customers use the

water and wastewater systems. This analysis drives the allocation of costs to improve equity among

customers. Figure ES. illustrates the findings of this analysis for single family residential, multifamily

residential, and commercial customers, although the full analysis included all retail and wholesale

customers.

Figure ES. Bill Frequency and Usage Analysis

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ES.5 Revenue Requirements Analysis

The purpose of the Revenue Requirements Analysis is to determine the adequate and appropriate funding for

the Utility. Revenue requirements are the summation of expenses or costs for providing safe drinking water

and handling wastewater to return clean water to the environment. They are determined on an annual basis,

and they include:

Operations & Maintenance – salaries and benefits, chemicals, power, vehicles, equipment, supplies,

etc. Some costs vary by the volume of treatment such as chemicals and power, but other costs are

fixed and independent of volume such as salaries and vehicles.

Capital Improvements – design and construction of new and replacement infrastructure, including

labor for Houston Water employees and fees for consultants and contractors that perform this work.

Financing – debt service payments, bond issuance costs, commercial paper fees, etc.

In addition to expenses, most debt instruments (bonds and loans) require the utility to keep a certain amount

of cash in reserve dependent upon the amount of the debt. This cash reserve is restricted and cannot be used

to pay for the Utility’s expenses.

ES.5.1 Water System

The study analyzed the revenue requirements to test the fiscal health of the water system, evaluate the

adequacy of current rates and charges, and set the basis for the five‐year rate plan. The revenue requirement

analysis covers the study period FYE through FYE with the primary focus for rate setting given to

the five years, FYE through FYE , of the study period as Houston Water has approved an automatic

rate increase of . percent planned for FYE . Carollo recommends Houston Water increase water rate

revenue according to the following schedule:

July , . percent April , . percent

April , . percent April , . percent


ES.5.2 Wastewater System

The study analyzed the revenue requirements to test the fiscal health of the wastewater system, evaluate the

adequacy of current rates and charges, and set the basis for the five‐year rate plan. Like for water, the

wastewater revenue requirement analysis covers the study period FYE through FYE with the

primary focus for rate setting given to the five years, FYE through FYE , of the study period as

Houston Water approved an automatic rate increase of . percent planned for FYE . Carollo

recommends Houston Water increase wastewater rate revenue according to the following schedule:




These recommended increases for both water and wastewater are necessary to fund operational and capital

needs, as well as to meet debt service obligations associated with the CIP.

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Table ES. summarizes key elements of the revenue requirements for the water and wastewater systems,

including recommended revenue increases.

Table ES. Revenue Requirements for Water and Wastewater Systems ( millions) ( )

Description FYE FYE FYE FYE FYE FYE

Month of Increase April July April April April April April

Water System:

Recommended Revenue Increase

. % . % . % . % . % . % . %

Water Sales with Increase ( )

. . . . . . .

Impact Fee Revenue . . . . . .

O&M Expenses . . . . . .

Capital Improvements . . . . . .

Annualized Revenue Requirement ( )

. . . . . . .

Wastewater System:


. % . % . % . % . % . % . %

Wastewater Sales with Increase ( )

. . . . . . .

Impact Fee Revenue . . . . .

O&M Expenses . . . . .

Capital Improvements . . . . .


. . . . . . .

Notes: ( ) Values are in million dollars, unless otherwise noted, and are rounded. ( ) Projected annual rate revenue, including recommended revenue increase and all previous recommended revenue increases. ( ) Annualized revenue requirement represents the projected revenue if the recommended increase, as well as all previous recommended

increases, is in effect for the full ‐month period.

ES.5.3 Combined Utility System

Although the study analyzed the water and wastewater systems separately, Houston Water’s financial

performance is measured as a combined utility. The two primary indicators of the utility’s financial health are

the DSCR and the number of days of O&M expenses that can be supported by the cash balance.

Many water and wastewater utilities use revenue bonds to fund a portion of their capital expenses. The DSCR

test measures the ability of a utility to meet both legal and target revenue obligations associated with debt.

To ensure that Houston Water retains financial flexibility for contingencies, it targets higher standards than

the Master Ordinance minimum DSCR requirements of . x for first lien debt and . x for total debt. The

utility’s target DSCR for first lien and junior lien combined is . x, and the target DSCR for total debt is . x.

Carollo recommends Houston Water continue to target . x DSCR for first lien and junior lien but not drop

below . x.

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The utility’s cash balance indicates its ability to financially sustain operations during unforeseen circumstances

that may restrict its revenues. This is especially important for a utility like Houston Water that is prone to

extreme weather events. Houston Water’s minimum cash balance is equal to days of O&M expenses.

Table ES. summarizes the revenue requirements for the combined system, including cash and DSCR.

Table ES. Combined Utility System Revenue Requirements ( millions) ( )

Description FYE ( ) FYE ( ) FYE FYE FYE FYE

Expenses:


Jr./ st Debt Service . . . . . .

Other Debt Service . . . . . .

Cash‐funded CIP . . . . . .

Total Expenses , . , . , . , . , . , .

Plus: Required Debt Coverage ( )

. . . . . .

Plus: Required Cash ( ) . . . . . .

Required Revenue + Cash , . , . , . , . , . , .

Less: Cash Balance ( . ) ( . ) ( . ) ( . ) ( . ) ( . )

Less: Impact Fee Revenue ( . ) ( . ) ( . ) ( . ) ( . ) ( . )

Less: Other Non‐Rate Revenue

( . ) ( . ) ( . ) ( . ) ( . ) ( . )

Less: Rate Revenue (pre‐increase)

( , . ) ( , . ) ( , . ) ( , . ) ( , . ) ( , . )

Rate Revenue (Surplus)/Deficit

( . ) . ( . ) ( . ) . .

Recommended Increase ( ) ‐‐‐ . % . % . % . % . %

Additional Revenue . . . . . .

First/Junior Lien DSCR . x . x . x . x . x . x

Cash (Days O&M)


, . , . , . , . , . , .

Notes: ( ) Values are in million dollars, unless otherwise indicated, and are rounded. ( ) FYE values are based on FYE budget. ( ) FYE through FYE values are projected based on FYE budget. ( ) Debt service coverage is a revenue requirement, but not a cash expense. This revenue may be used to pay for cash‐funded CIP or debt

service payments (not junior or first lien since the coverage shown is to cover these bonds). As such, the required debt coverage shown may be reduced from the full % of the junior/first debt service payment to avoid double‐counting revenue requirements.

( ) Required cash is equal to days of O&M expenses. ( ) Recommended increase shown for FYE includes the July , , and the April , , increases, as shown in Table ES. . ( ) Annualized revenue requirement represents the projected revenue if the recommended increase, as well as all previous recommended


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Figure ES. shows the year‐end cash balance from FYE . Year‐end balances for FYE through FYE

are projected with and without the recommended revenue increases.

Figure ES. Projected Cash Balance (Days of O&M)

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Figure ES. shows the DSCR from FYE . DSCRs for FYE through FYE are projected with and

without the recommended revenue increases.

Figure ES. Projected Debt Service Coverage Ratio

ES.6 Cost of Service Analysis

The cost of service analysis serves as a rational basis for distributing the full costs of Houston Water’s services

to each customer type in proportion to the demands placed on the system. The analysis is typically completed

in three steps:

. Allocate costs to functional categories (e.g., water production, pumping, collection system).

. Allocate functionalized costs to rate components:

a. Water – base, extra capacity, customer.

b. Wastewater – flow, loadings, customer.

. Allocate costs to customer types using rate component unit costs.

The study followed this approach to develop a detailed cost allocation that serves as the basis for the proposed

rate adjustments. This analysis yields an appropriate method for allocating costs, which could be sustained

unless substantial changes in cost drivers or customer consumption patterns occur.

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ES.6.1 Water System

The cost of service analysis is consistent with the AWWA M Manual Principles of Water Rates, Fees and

Charges, Seventh Edition, standard methods to allocate the revenue requirements among the various

customer types based on their usage characteristics. Table ES. summarizes the results of the water cost of

service analysis.

Table ES. Water System Cost of Service Results ( millions) ( )

Customer Type FYE FYE FYE FYE FYE

Month of Increase July April April April April April

Retail:

Single Family Residential . . . . . .

Multifamily Residential . . . . . .

Commercial/Industrial . . . . . .

Irrigation . . . . . .

Transient . . . . . .

Resale . . . . . .

Emergency Backup . . . . . .

Metered Fire . . . . . .

Unmetered Fire . . . . . .

Wholesale:

Contract Treated with Airgap

. . . . . .

Contract Treated without Airgap

. . . . . .

GRP Participants . . . . . .

Contract Water – Untreated

. . . . . .

Contract Treated – SEWPP Co‐participants

. . . . . .

Contract Treated – EWPP Water Authorities

. . . . . .

Contract Treated – NEWPP Water Authorities

. . . . . .

Total Revenue Requirements

. . . . . .

Note: ( ) Values are in million dollars and are rounded.


The cost‐of‐service analysis is consistent with the WEF Manual of Practice No. , Financing and Charges for

Wastewater Systems, standard methods to allocate the revenue requirements among the various customer

types based on their wastewater contributions. The results of the wastewater cost of service analysis are

summarized in Table ES. .

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Table ES. Wastewater System Cost of Service Results ( millions) ( )



Retail:



Commercial . . . . . .

Industrial Surcharge . . . . . .

Sewer Only (Unmetered) . . . . . .

Wholesale:

Capital without Collection System

. . . . . .

No Capital with Collection System

. . . . . .

Connection‐based . . . . . .


. . . . . .


ES.7 Rate Design

Carollo worked with Houston Water staff to analyze various adjustments with the goals of simplifying the

water and wastewater rate structures and improving equity and understanding among customers. The

allocated revenue requirements serve as the basis for the rate design, although some accommodations were

made to improve affordability, especially as the proposed rates transition toward cost‐of‐service. Existing

rates shown are FYE rates, which went into effect on April , .

ES.7.1 Water System

The water rate design analysis determines rates required to achieve cost recovery, proportionately for each

customer. Houston Water’s existing rate structure consists of two components: a volumetric rate (variable)

and a monthly meter charge (fixed). The volumetric component is assessed based on metered water usage

per , gallons (kgal) and, by design, is intended to recover the cost incurred for delivering each unit of

water. The monthly meter charge is intended to recognize that the utility incurs fixed costs to provide the

availability of water service, which must be recovered independent of monthly water demands and

consumption.

ES.7.1.1 Monthly Meter Charge

By design, the monthly meter charge includes a customer component and a capacity component based on

meter size. The customer component recovers expenses associated with billing, collection, and customer

service. This component is the same for all customers regardless of meter size. The capacity component

captures maintenance costs related to meters and services, as well as a portion of the water system capital

costs. This component varies based on meter size to reflect the difference in potential demand that can be

placed on the system by different sized meters. The capacity charge is then added to the customer unit cost

to calculate the total monthly meter charge.

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In addition to the monthly meter charge, the study recommends a second fixed monthly charge, which would

be assessed per connection, to equitably recover the annual fee paid to the Texas Commission on

Environmental Quality (TCEQ).

Residential, Commercial, Industrial, Irrigation, and Emergency Backup Customers

Table ES. shows the existing monthly meter charges, which vary by customer type and meter size.

Table ES. Existing Water Monthly Meter Charges by Customer Type

Meter Size SFR MFR Com/Ind Irrigation Emergency

/ ” . . . . .

/ ” . . . . .

” . . . . .

½” . . . . .

” . . . . .

” . . . . .

” ‐‐‐ . . . .

” ‐‐‐ . . , . .

” ‐‐‐ . . , . .

” ‐‐‐ . . , . .

Notes: ( ) SFR is Single Family Residential ( ) MFR is Multifamily Residential

Table ES. summarizes the proposed monthly meter charges for the study period, which vary by meter size.

Carollo recommends charging the same monthly meter charge for single family and multifamily residential,

commercial/industrial, irrigation, and emergency backup rather than varying them by customer type.

Table ES. Proposed Water Monthly Meter Charges

Meter Size FYE FYE FYE FYE FYE


/ ” . . . . . .

/ ” . . . . . .

” . . . . . .

½” . . . . . .

” . . . . . .

” . . . . . .

” . . . . . .

” . . . . . .

” . . . . . .

” . . . . . .

” . . . . . .

TCEQ Fee per connection . . . . . .

Note: ( ) Monthly meter charges shown are proposed for single family residential, multifamily residential, commercial/industrial, irrigation, and

emergency backup customers.

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Transient, Resale, and Fire Customers. Houston Water has several other customer types receiving water

service, and these customers are charged different monthly meter charges based on customer type and meter

size. Table ES. shows existing and proposed monthly meter charges for these other customer types.

Table ES. Existing and Proposed Water Monthly Meter Charges – Transient, Resale, and Fire Customers

Meter Size Existing FYE FYE FYE FYE FYE


Transient:

” . . . . . . .

” . . . . . . .

” . . . . . . .

Resale:

/ ” and / " . . . . . . .

” . . . . . . .

½” . . . . . . .

” . . . . . . .

” . . . . . . .

” . . . . . . .

” . . . . . . .

” , . , . , . , . , . , . , .

Metered Fire:

/ ” . . . . . . .

/ ” . . . . . . .

” . . . . . . .

½” . . . . . . .

” . . . . . . .

” . . . . . . .

” . . . . . . .

” . . . . . . .

” . . . . . . .

” . . . . . . .

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Unmetered Fire ( ):

/ ” and / " . . . . . . .

” . . . . . . .

½” . . . . . . .

” . . . . . . .

” . . . . . . .

” . . . . . . .

” . . . . . . .

” . . . . . . .

” . . . . . . .

” . . . . . . .

Note: ( ) Monthly meter charges for unmetered fire customers are based on the size of the service line.

ES.7.1.2 Volume Rates

Variable volume rates include a base component, which represents the cost to meet the average day demand;

a maximum day component, which represents the incremental cost to meet the maximum day demand; and

a maximum hour component, which represents the incremental cost to meet the maximum hour demand.

These costs are allocated to the different customer types based on the demands they place on the water

system. The three allocated components are then summed and divided by the projected usage to calculate

the average rate per , gallons for each customer type.

Single Family Residential Customers. The existing single‐family residential rate structure is made up of rates

that vary for each incremental , gallons for the first , gallons, increasing and decreasing as a

customer uses more water. This results in large bill increases at specific usage intervals. Transitioning to a

water conservation rate structure with rates for usage blocks that increase as a customer uses more water was

a key focus of this study.

Table ES. shows existing and proposed single family residential water volume rates for the study period.

Table ES. Existing and Proposed Single Family Residential Water Volume Rates

Rate Block Existing FYE FYE FYE FYE FYE


Customers with usage up to , gallons per month:

First kgal .

. . . . . . Next kgal .

Next kgal .

* Single family residential customers who use , gallons or less per month receive a conservation credit.

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Customers with usage in excess of , gallons per month:

First kgal .

. . . . . .

Next kgal .

Next kgal .

Next kgal .

Next kgal .

Next kgal .

Next kgal . . . . . . .

Next kgal . . . . . . .

Over kgal . . . . . . .

To calculate the monthly water bill, customers add the appropriate monthly meter charge from Table ES.

(existing charges) or Table ES. (proposed charges) and add the volume rate for each incremental , ‐gallon unit from Table ES. . Table ES. shows existing and proposed monthly water bills for single family

residential customers with usage up to , gallons in one month.

Table ES. Existing and Proposed Single Family Residential Bills – Water Only

Billed Usage Existing FYE FYE FYE FYE FYE


Meter Charge only . . . . . . .

, gallons . . . . . . .

, gallons . . . . . . .

, gallons . . . . . . .

, gallons . . . . . . .

, gallons . . . . . . .

, gallons . . . . . . .

Figure ES. illustrates the existing and proposed single family residential water rates and bills for the first

, gallons in , ‐gallon increments.

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Figure ES. Existing and Proposed Single Family Residential Water Rates and Bills

Other Retail Customer Types. With the exception of irrigation customers, all other retail customer types pay a

uniform rate per , gallons for all usage, which varies by customer type. Irrigation customers pay a reduced

rate for a “defined quantity” of water that is set based on their meter size; all usage in excess of that amount

is assessed a higher rate. Carollo recommends Houston Water continue to charge uniform rates for all retail

customer types other than single family residential, including irrigation.

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Table ES. shows existing and proposed volume rates for all retail customer types except single family

residential.

Table ES. Existing and Proposed Retail Water Volume Rates

Customer Type

Rate Block

Existing FYE FYE FYE FYE FYE


Multifamily Residential

All Usage . . . . . . .

Commercial/ Industrial

All Usage . . . . . . .

Irrigation ( )

Block . ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐

Block . ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐

All Usage ‐‐‐ . . . . . .

Transient All Usage . . . . . . .

Resale All Usage . . . . . . .

Emergency Backup

All Usage . . . . . . .

Metered Fire All Usage . . . . . . .

Note: ( ) Irrigation customers with meters larger than inch receive a “defined quantity” of water at a reduced Block rate. The defined quantity

is based on the meter size. Irrigation customers with ‐inch or smaller meters do not receive any water at the reduced Block rate.

The study recommends maintaining the wholesale and contract customers’ rate structures. Contract Treated

Water customers pay a uniform rate for all usage and an excess surcharge for all usage above their contract

minimum volume. Groundwater Reduction Plan (GRP) customers’ rate is based on the Contract Treated Water

– No Airgap rate although it is reduced based on the required groundwater reduction for each Area. Areas

and pay percent of the Contract Treated rate, and Area currently pays percent, but that increases to

percent in FYE . These rates, as well as the Contract Untreated rate, are shown in Table ES. .

Table ES. Existing and Proposed Wholesale Water Volume Rates

Customer Type

Rate Block



Contract w/Airgap

Minimum . . . . . . .

Excess . . . . . . .

Contract w/o Airgap

Minimum . . . . . . .

Excess . . . . . . .

GRP Areas &

All Usage . . . . . . .

GRP Area All Usage . . . . . . .

Contract Untreated

All Usage . . . . . . .

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The wastewater rate design analysis determines rates required to achieve cost recovery, proportionately for

each customer. Like the water rates, Houston Water’s existing wastewater rate structure consists of two

components: a volumetric rate (variable) and a monthly service charge (fixed). The volumetric component is

assessed based on metered water usage per , gallons and, by design, is intended to recover the cost

incurred for collecting and treating each unit of wastewater. The monthly service charge is intended to

recognize that the utility incurs fixed costs to provide the availability of wastewater service, which must be

recovered independent of monthly wastewater flow.



water meter size. The customer component recovers expenses associated with billing, collection, and

customer service. This component is the same for all customers regardless of meter size. The capacity

component captures a portion of the wastewater system capital costs. This component varies based on water

meter size to reflect the difference in potential flow that can be discharged to the system by customers with

different sized water meters. The capacity charge is then added to the customer unit cost to calculate the total

monthly meter charge.

Residential, Commercial, and Industrial Customers. Table ES. shows the existing monthly meter charges by

customer type and water meter size.

Table ES. Existing Wastewater Monthly Meter Charges by Customer Type

Meter Size SFR MFR) Commercial Industrial

/ ” . . . .

/ ” . . . .

” . . . .

½” . . . .

” . . . .

” . . . .

” ‐‐‐ . . .

” ‐‐‐ . . .

” ‐‐‐ . . .

” ‐‐‐ . . .

Notes: ( ) SFR is Single Family Residential. ( ) MFR is Multifamily Residential. ( ) Monthly meter charges for industrial customers in this table are for all industrial customers, including those who pay surcharges.

Table ES. summarizes the proposed monthly meter charges for the study period, by water meter size, for

single family residential, multifamily residential, commercial, and industrial (with and without surcharges)

customers.

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Table ES. Proposed Wastewater Monthly Meter Charges



/ ” . . . . . .

/ ” . . . . . .

” . . . . . .

½” . . . . . .

” . . . . . .

” . . . . . .

” . . . . . .

” . . . . . .

” . . . . . .

” . . . . . .

” . . . . . .

” . . , . , . , . , . Note: ( ) Monthly meter charges shown are proposed for single family residential, multifamily residential, commercial, and industrial customers,

including those who pay surcharges.

Industrial Surcharge and Sewer Only (Unmetered) Customers. Houston Water manages an Industrial

Wastewater Program for permitted industrial customers who discharge high‐strength wastewater into the

system. These customers are sampled regularly and pay surcharges based on the loadings concentrations of

their sampled wastewater. As part of the cost of service rate study, Carollo worked with Houston Water staff

to identify and isolate the cost of this program and allocate it to the industrial surcharge customers. The study

recommends implementation of an Industrial Program Charge, which would be added to the industrial

surcharge customers’ bills, in addition to the monthly service charge, to pay for the cost of the program. The

recommended charges in Table ES. show a phase‐in of this charge over the ‐year study period. Table ES.

also shows proposed monthly program charges for sewer only customers, which are based on customer type.

Table ES. Existing and Proposed Wastewater Monthly Service Charges – Industrial Customers with Surcharges

and Sewer Only Customers



Industrial with Surcharge:

Industrial Program ‐‐‐ . . . . , . , .

Sewer Only:

Single Family Res. . . . . . . .

Duplex . . . . . . .

Multifamily Res. . . . . . . .

Commercial . . . . . . .

Industrial . . . . . . . Note: ( ) Charges shown for sewer only customers are monthly, but sewer only customers are billed and will continue to be billed bimonthly. The

existing multifamily charge is per unit for multifamily accounts with or more units. The existing commercial and industrial charges are per unit as defined in § ‐ .

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Variable volume rates include a flow component, which represents the cost to collect and treat wastewater

flow; a biochemical oxygen demand (BOD) component, which represents the cost to treat BOD; a total

suspended solids (TSS) component, which represents the cost to treat TSS; and an ammonia component,

which represents the cost to treat ammonia. These costs are allocated to the different customer types based

on their contributed flows and assumed loadings (BOD, TSS, and ammonia). The allocated components are

then summed and divided by the projected flow to calculate the average rate per , gallons for each

customer type. The billable volume for each customer is equal to the metered water usage, with the exception

of unmetered sewer only customers and those customers with effluent meters.

Single Family Residential Customers. Similar to the existing single family residential water rate structure, the

existing single family residential wastewater rate structure is made up of rates that vary for each incremental

, gallons for the first , gallons, increasing and decreasing as a customer’s billable volume goes up.

This results in large bill increases at specific usage intervals. Carollo recommends simplifying this structure to

two blocks with a reduced rate per , gallons for the first , gallons and a higher rate per , gallons

for all usage in excess of , gallons per month.

Table ES. shows the existing and proposed single family residential wastewater volume rates for the study

period.

Table ES. Existing and Proposed Single Family Residential Wastewater Volume Rates



First kgal .

. . . . . . Next kgal .

Next kgal .

Next kgal .

. . . . . . Next kgal .

Over kgal .

To calculate the monthly wastewater bill, customers add the appropriate monthly meter charge from

Table ES. (existing charges) or Table ES. (proposed charges) and add the volume rate for each

incremental , ‐gallon unit from Table ES. . Table ES. shows existing and proposed monthly

wastewater bills for single family residential customers with usage up to , gallons in one month.

Table ES. Existing and Proposed Single Family Residential Bills – Wastewater Only

Billable Volume Existing FYE FYE FYE FYE FYE



, gallons . . . . . . .

, gallons . . . . . . .

, gallons . . . . . . .

, gallons . . . . . . .

, gallons . . . . . . .

, gallons . . . . . . .

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Figure ES. illustrates the existing and proposed single family residential wastewater rates and bills for the

first , gallons in , ‐gallon increments.

Figure ES. Existing and Proposed Single Family Residential Wastewater Rates and Bills

Other Retail Customer Types. With the exception of industrial customers who do not pay surcharges, all other

retail customer types pay a uniform rate per , gallons for all billable volume, which varies by customer

type. Non‐surcharge industrial customers pay a reduced rate for the first , gallons; all usage in excess of

, gallons is assessed a higher rate. Carollo recommends Houston Water continue to charge uniform rates

for all retail customer types other than single family residential, including all industrial customers. Table ES.

shows existing and proposed volume rates for all retail customer types except single family residential.

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Table ES. Existing and Proposed Retail Wastewater Volume Rates

Customer Type

Rate Block




All Flow . . . . . . .

Commercial All Flow . . . . . . .

Industrial (no surcharge)

First kgal

. ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐

Over kgal

. ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐

All Usage ‐‐‐ . . . . . .

Industrial with Surcharge

All Flow . . . . . . .

BOD ( ) . . . . . . .

TSS ( ) . . . . . . .

Ammonia ‐‐‐ . . . . . .

Note: ( ) BOD, TSS, and ammonia surcharges are assessed per pound.

Carollo recommends maintaining the existing wholesale and contract customers’ rate structures. There are

currently three types of contract wastewater customers:

. Customers who have contributed capital and discharge directly to the wastewater treatment plant

(billed per , gallons). These customers pay a reduced rate that does not include capital costs or

costs related to collecting wastewater and conveying it to the treatment plant.

. Customers who have not contributed capital and discharge into the collection system. These

customers pay the full cost of collecting and treating wastewater based on how they are billed:

a. Billed per , gallons,

b. Billed per connection.

In addition to these existing contract rates, Houston Water requested a fourth rate for contract customers

who have contributed capital and discharge into the collection system. This rate does not include capital costs.

Existing and proposed contract wastewater rates are shown in Table ES. .

Table ES. Existing and Proposed Wholesale Wastewater Volume Rates

Customer Type Rate Block



Capital w/o Collection System

All Flow

. . . . . . .

Capital with Collection System

All Flow

‐‐‐ . . . . . .

No Capital w/Collection System

All Flow

. . . . . . .

Connection‐based

All Connections

. / . . . . . . .

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ES.7.3 Customer Bill Impacts

Figure ES. illustrates the impact of the recommended rates on the combined water and wastewater bill for

single family residential customers with a / ‐inch meter across various usage levels. The

incremental percentage of single family residential bills is shown between usage levels. The estimated per

capita usage at each level is shown at the far right of each line. This estimate assumes . people per account.

Figure ES. Single Family Residential Monthly Combined Bill Impact

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multifamily residential customers with varied meter sizes and usage levels. The incremental percentage of

multifamily residential bills is shown between usage levels.

Figure ES. Multifamily Residential Monthly Combined Bill Impact

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commercial and industrial customers with varied meter sizes and usage levels. The incremental percentage of

commercial and industrial bills is shown between usage levels.

Figure ES. Commercial/Industrial Monthly Combined Bill Impact

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Figure ES. illustrates the percentage of single family residential customers with varying levels of monthly

bill adjustments for the proposed rate schedule effective July , .

Figure ES. Distribution of July Monthly Combined Bill Impacts for Single Family Residential Customers

ES.8 Recommendations

Carollo recommends implementation of the water and wastewater rates as proposed in this Executive

Summary and described below:

Water sales revenue increases by . percent on July , , by . percent on April , , and

April , , and by . percent on April , , April , , and April , .

Wastewater user charge revenue increases by . percent on July , , by . percent on April

, , and by . percent on April , , April , , April , , and April , .

Water monthly service charge based on meter size and uniform for single family residential, multifamily

residential, commercial/industrial, and irrigation customers. Other customer types pay monthly service

charges based on meter size that differ based on the customer type and service provided.

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For single family residential customers, Carollo recommends a four‐tier inclining block water rate structure

with a conservation credit for customers who use , gallons or less in a month:

Block – First , gallons;

Block – Next , gallons;

Block – Next , gallons; and

Block – Over , gallons.

Figure ES. compares the existing and proposed volume water rate structures for single family residential

customers.

Figure ES. Existing and Proposed Single Family Residential Volume Water Rate Structures

For wastewater, Carollo recommends simplifying the single family residential rate structure to two tiers:

Block – First , gallons; and


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customers.

Figure ES. Existing and Proposed Single Family Residential Volume Wastewater Rate Structures

Carollo recommends a uniform rate per , gallons for both water and wastewater for multifamily

residential and nonresidential customers.

Finally, Carollo recommends Houston Water update this cost of service rate study within five years to maintain

revenue sufficiency and equity among customers.


Date: April 14, 2021

To: Mayor Sylvester Turner

City Council Members

From: Houston Public Works Director Carol Ellinger Haddock, P.E.

Subject: 2021 WATER & WASTEWATER COST OF SERVICE RATE STUDY

Houston Public Works (HPW) presents the attached 2021 Water & Wastewater Cost of Service Rate Study

(“Study”) for your review and consideration.

INTRODUCTION AND BACKGROUND

HPW transmitted the Executive Summary of the Study to you on March 22, 2021. At the time, we noted that the

Study began in 2019 with the engagement of Carollo Engineers, Inc. to support the City’s efforts to determine

cost of service and to set water and wastewater (sewer) rates for the Combined Utility System (“System”). City

Council adopted the timeline for City Council consideration and adoption of Water and Wastewater rates by

Ordinance on March 24, 2021. This adoption schedule, concurrent with the schedule for the consideration and

adoption of Water and Wastewater Impact fees, continues with the following steps:

Transmittal of the Study to City Council and posting of the Study with the City Secretary’s office on April

14, 2021

Presentation to the City Council Budget and Fiscal Affairs Committee on April 27, 2021

City Council Public Hearing on April 28, 2021

This schedule will allow final City Council action approving and implementing water and wastewater rates by

July 1, 2021. This date coincides with the state deadline for the Water and Wastewater Impact Fees Update

and the beginning of the fiscal year. Moreover, this rate setting has increased importance because the City has

not increased water and wastewater rates since 2010, beyond the automatic increases associated with

population growth and the indices referenced in the Master [Bond] Ordinance, in accordance with Ordinance No.

2010-305. The very modest increases have not kept pace with the increasing costs of the Combined Utility

System (System). f

The Study was conducted in accordance with the standard industry practices of the Water Environment

Federation and the Principles of Water Rates, Fees and Charges- Manual of Water Supply Practices M1, of the

American Water Works Association. The Study, which concludes with water and wastewater utility rates

recommended by HPW, is the product of focused and sustained efforts by HPW and its consultant. Rate setting

involves detailed analyses in the following steps: Determination of the System’s annual revenue requirement;

allocation of costs among customer types; and rate design. These processes must be performed in a manner

of 3


consistent with applicable law, which prohibits rates that are unjust, unreasonable, and unduly discriminatory.

At the same time, the City must comply with its obligations to the System’s bondholders, which require that the

City operate the CUS in a prudent and lawful manner, and in keeping with specific financial guidelines. Finally,

in considering the City’s overall policy and financial goals, HPW recommends further efforts to increase System

resilience.

As stated in our March 26, 2021 memo transmitting the Executive Summary, rates and impact fees are the

primary sources of revenue for the System. While impact fees are charged to new development only; water and

wastewater rates are charged to every water and sewer customer. Unlike impact fees, no specific public

participation for water and wastewater rate setting is prescribed by Texas law. Because HPW is recommending

increased rates to address the increased cost of service, the City is providing for increased transparency and

public participation to promote trust between the City and its utility customers. Through increased transparency

in the rate setting process, HPW hopes to garner public support and confidence that the rate increases are fair,

necessary, and appropriate.

DETERMINING THE ANNUAL REVENUE REQUIREMENT

Revenue requirements are the summation of expenses or costs for providing safe drinking water and handling

wastewater to return appropriately treated water to the environment. The revenue requirement is made up of

Capital Costs, all Operations and Maintenance Costs, including personnel, chemicals, and energy, required debt

service payments, and financial requirements for debt service coverage ratio and cash reserves. The Study

recommends an annual revenue requirement of approximately $730 million for water and approximately $749

million for wastewater for Fiscal Year 2022. In addition to a growing population in the System service area, the

main drivers of the increased costs are associated with aging infrastructure, increasing commodity costs,

increasing regulatory compliance costs, and debt service related costs such as the debt service coverage ratio.

These revenue requirement increases are beyond the City’s control.

ALLOCATING COSTS AMONG CUSTOMER TYPES

Once the annual costs are identified and determined through the revenue requirements analysis, the next step

is to allocate those costs among the different customer types. Customers are grouped according to the similar

characteristics which group members share, so that the System can be designed to meet these customer

demands. Designation of customer types must also conform to standard industry practices. The main customer

types of the System are: Single Family Residential, Multifamily Residential, and Commercial/Industrial. Single

family residential customers are the largest customer type, comprising approximately 87% of System customers.

They share common usage patterns, such as peak hours and peak summer months, so the System must be

designed so that facilities and capacity are available to meet the single family residential needs. Multifamily

residential customers also share similar usage patterns which differ from the single family residential, most

notably in the lack of summer months peaking. Commercial/Industrial customers share different water demands

and peaking patterns, including, for example, the ability to use untreated versus potable water. Some industrial

customers are subject to an industrial waste surcharge which is based on the need for higher treatment

associated with increased concentrations of chemical pollutants discharged by this customer type. Other

of 3


specialized customer types include: Government, Emergency Backup, Extra Container, Resale, Transient,

Irrigation, and Metered and Unmetered Fire (flow). Finally, there are contract customers and wholesale

customers, some of which have specialized demand configurations and specified costs defined by their water

supply contracts.

RATE DESIGN

After determining the revenue requirements and the costs of service for each customer type, the City must design

the rates to recover the costs of providing treated water and wastewater treatment for all customer types. In this

step, the City provides the means to recover the System costs which achieve the City’s goals of legal and

regulatory compliance, while also being affordable, equitable, and promoting resilience and judicious use of

resources through water conservation. Ideally, each customer type should pay the total of its calculated cost of

service. Competing goals of recovering full cost of service and affordability challenge the City to design a rate

structure that addresses all policy goals. HPW is recommending a series of rate increases over the study period

of 5 fiscal years ending in FY 2026. HPW recommends implementing the water and sewer rates as proposed

and set forth in the Study accomplishes the City’s goals. The main features of the recommended rates are:

The rates will recover all costs necessary to provide safe drinking water and environmentally sound

wastewater treatment.

Customer types are grouped appropriately among customers sharing similar usage profiles and System

demands, so that rates reflect the distinct needs of each customer type.

The rates promote water conservation by providing a water conservation credit for all single family

customers who use 3,000 gallons of water per month or less.

The rates promote resiliency in planning for the costs of redundancy, replacement, and disaster

preparation.

HPW looks forward to working with City Council and the public to set water and wastewater rates which will serve

the Combined Utility System for years to come.

Questions may be forwarded to Houston Public Works through Deputy Director Samir Solanki, CPA, MBA.

TBPE No. F‐

City of Houston

WATER AND WASTEWATER COST OF SERVICE RATE STUDY

DRAFT | April

10375 RICHMOND AVENUE, SUITE 1625 • HOUSTON, TEXAS 77042 • P. 281.872.4512 •F. 281.872.4505

City of Houston Combined Utility System Water and Wastewater Rate Study

WATER AND WASTEWATER

COST OF SERVICE RATE STUDY

DRAFT | April


DRAFT | APRIL | i

Contents

EXECUTIVE SUMMARY 1

ES. Introduction

ES. Resilient Houston

ES. Background and System Overview

ES. Cost of Service Approach

ES. . Assumptions

ES. . Customer Demand Analyses

ES. Revenue Requirements Analysis

ES. . Water System


ES . Combined Utility System

ES Cost of Service Analysis

ES . Water System


ES Rate Design

ES . Water System


ES . Customer Bill Impacts

ES Recommendations

Chapter 1 - REVENUE REQUIREMENT ANALYSIS 28

. Overview

. . Revenue Requirement Purpose and Components

. . Revenue Requirement Tests

. Water System

. . Expenses

. . Revenues

. . Cash Balance

. . Revenue Requirement Tests before Revenue Increases

. . Recommended Revenue Increases

. Wastewater System


DRAFT | APRIL | ii

. . Expenses

. . Revenues

. . Cash Balance


. . Recommended Revenue Increases

. Combined Utility System


. . Revenue Requirement Tests with Revenue Increases

Chapter 2 - COST OF SERVICE ANALYSIS 48

. Cost of Service Approach

. Water System

. . Functional Cost Allocation

. . Allocation to Customer Types

. Wastewater System

. . Functional Cost Allocation

. . Allocation to Customer Types

Chapter 3 - RATE DESIGN 76

. Introduction

. Water System

. . Existing User Charges

. . Proposed User Charges

. Wastewater System

. . Existing User Charges

. . Proposed User Charges

. . Customer Bill Impacts

Chapter 4 - RECOMMENDATIONS 99


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Appendices

Appendix A WATER FYE BUDGET AND FYE ‐ PROJECTIONS

Appendix B WASTEWATER FYE BUDGET AND FYE ‐ PROJECTIONS

Appendix C WATER REVENUE REQUIREMENTS

Appendix D WASTEWATER REVENUE REQUIREMENTS

Appendix E COMBINED UTILITY SYSTEM REVENUE REQUIREMENTS

Appendix F CUSTOMER PROFILE AND DEMAND ANALYSIS

Appendix G WATER COST OF SERVICE ANALYSIS

Appendix H WASTEWATER COST OF SERVICE ANALYSIS

Appendix I WATER RATE DESIGN

Appendix J WASTEWATER RATE DESIGN

Tables







Table ES. Existing and Proposed Water Monthly Meter Charges –

Transient, Resale, and Fire Customers







Table ES. Existing and Proposed Wastewater Monthly Service Charges –

Industrial Customers with Surcharges and Sewer Only Customers





DRAFT | APRIL | iv


Table . Water O&M Budget Projections ( millions) ( )

Table . Water Annual Debt Service ( millions) ( )

Table . Water Capital Improvement Plan Summary ( millions) ( )

Table . Water Capital Improvement Plan Funding ( millions) ( )

Table . Proposed Water Impact Fees

Table . Projected Annual Water Revenue Before Revenue Increases ( millions) ( )

Table . Projected Water Cash Balance Before Revenue Increases ( millions) ( )

Table . Water Debt Service Coverage Test Before Revenue Increases ( millions) ( )

Table . Water Cash Balance Test Before Revenue Increases ( millions) ( )

Table . Projected Water Revenue Requirements ( millions) ( )

Table . Wastewater O&M Budget Projections ( millions) ( )

Table . Wastewater Annual Debt Service ( millions) ( )

Table . Wastewater Capital Improvement Plan Summary ( millions) ( )

Table . Wastewater Capital Improvement Plan Funding ( millions) ( )

Table . Proposed Wastewater Impact Fees ( millions)

Table . Projected Annual Wastewater Revenue Before Revenue Increases

( millions) ( )

Table . Projected Wastewater Cash Balance Before Revenue Increases

( millions) ( )

Table . Wastewater Debt Service Coverage Test Before Revenue Increases

( millions) ( )

Table . Wastewater Cash Balance Test Before Revenue Increases ( millions) ( )

Table . Projected Wastewater Revenue Requirements ( millions) ( )

Table . Combined Utility System Debt Service Coverage Test Before

Revenue Increases ( millions) ( )

Table . Combined Utility System Cash Balance Test Before Revenue

Increases ( millions) ( )

Table . Combined Utility System Debt Service Coverage Test with Revenue


Table . Combined Utility System Cash Balance Test with Revenue


Table . Allocation of Water System Assets to Cost Components ( millions) ( )

Table . Functional Allocation of Water O&M Budget ( millions) ( )

Table . Allocation of Water O&M Budget to Cost Components ( millions) ( )


DRAFT | APRIL | v

Table . Allocation of Water Revenue Requirements to Cost Components ( millions) ( )

Table . Allocation of FYE Water Revenue Requirements to Cost Components

( millions) ( )

Table . Water Units of Service by Customer Type (FYE )

Table . Development of Water Unit Costs (FYE ) ( millions) ( )

Table . Water FYE Revenue Requirement Allocation by Customer Type (%)

Table . Water FYE Revenue Requirement Allocation by Customer Type

( millions) ( )

Table . Allocation of Wastewater System Assets to Cost Components ( millions) ( )

Table . Functional Allocation of Wastewater O&M Budget ( millions) ( )

Table . Allocation of Wastewater O&M Budget to Cost Components ( millions) ( )

Table . Allocation of Wastewater Revenue Requirements to Cost Components

( millions) ( )

Table . Allocation of FYE Wastewater Revenue Requirements to Cost Components

( millions) ( )

Table . Wastewater Units of Service by Customer Type (FYE )

Table . Development of Wastewater Unit Costs (FYE ) ( millions) ( )

Table . Wastewater FYE Revenue Requirement Allocation by Customer Type (%)

Table . Wastewater FYE Revenue Requirement Allocation by Customer

Type ( ) ( millions) ( )

Table . Development of Water Monthly Meter Charge (FYE )

Table . Existing and Proposed Water Monthly Meter Charges ( )

Table . Existing and Proposed Water Monthly Meter Charges –

Transient, Resale, Metered Fire, and Unmetered Fire Customers

Table . Proposed Monthly TCEQ Fee per Connection

Table . FYE Single Family Residential Water Cost‐of‐Service

Volume Rate Calculation

Table . Existing and Proposed Single Family Residential Water Volume Rates

Table . Existing and Proposed Single Family Residential Bills – Water Only

Table . FYE Multifamily Residential Water Cost‐of‐Service


Table . Existing and Proposed Retail Water Volume Rates

Table . Existing and Proposed Wholesale Water Volume Rates

Table . Development of Wastewater Monthly Meter Charge (FYE )

Table . Existing and Proposed Wastewater Monthly Meter Charges


DRAFT | APRIL | vi

Table . Existing and Proposed Wastewater Monthly Service Charges –

Industrial Customers with Surcharges and Sewer Only Customers

Table . FYE Single Family Residential Wastewater Cost‐of‐Service


Table . Existing and Proposed Single Family Residential Wastewater Volume Rates

Table . Existing and Proposed Single Family Residential Bills – Wastewater Only

Table . FYE Multifamily Residential Wastewater Cost‐of‐Service


Table . Existing and Proposed Retail Wastewater Volume Rates

Table . Existing and Proposed Wholesale Wastewater Volume Rates

Table F. Water System Retail Accounts by Meter Size F‐

Table F. Water System Retail Meter Equivalents F‐

Table F. Wastewater System Retail Accounts by Meter Size F‐

Table F. Wastewater System Retail Meter Equivalents F‐

Figures










Figure ES. Distribution of July Monthly Combined Bill Impacts for Single Family

Residential Customers

Figure ES. Existing and Proposed Single Family Residential Volume

Water Rate Structures

Figure ES. Existing and Proposed Single Family Residential Volume

Wastewater Rate Structures

Figure . Projected Debt Service Coverage Ratio

Figure . Projected Cash Balance (Days of O&M)

Figure . Three‐step Cost Allocation Approach

Figure . Existing and Proposed Single Family Residential Water Rates and Bills


DRAFT | APRIL | vii

Figure . Existing and Proposed Single Family Residential Wastewater Rates and Bills

Figure . Single Family Residential Monthly Combined Bill Impact

Figure . Multifamily Residential Monthly Combined Bill Impact

Figure . Commercial/Industrial Monthly Combined Bill Impact

Figure . Distribution of July Monthly Combined Bill Impacts for Single Family

Residential Customers

Figure . Existing and Proposed Single Family Residential Volume

Water Rate Structures

Figure . Existing and Proposed Single Family Residential Volume

Wastewater Rate Structures

Figure F. Bill Frequency and Usage Analysis F‐


DRAFT | APRIL | viii

Abbreviations

AWWA American Water Works Association

BOD biochemical oxygen demand

Carollo Carollo Engineers, Inc.

CAS Customer Account Services

CIP Capital Improvement Plan

City City of Houston

CUS Combined Utility System

DSCR debt service coverage ratio

DWO Drinking Water Operations

EBS emergency backup service

FYE fiscal year ending

G&A General & Administrative

GRP Groundwater Production Plan

HPC Houston Permitting Center

MEU meter equivalent unit

MFR multifamily residential

O&M operations and maintenance

PAYGO Pay As You Go

PPI Producer Price Index

SFR single A residential

TCEQ Texas Commission on Environmental Quality

TSS total suspended solids

WEF Water Environment Federation

WPP water production plant

WWO Wastewater Operations


DRAFT | APRIL |

EXECUTIVE SUMMARY

ES.1 Introduction

The City of Houston, Texas (City), provides water and wastewater service to nearly , customer

accounts through its water and wastewater utility, the Combined Utility System (CUS) or “Houston Water,”

as it is called throughout this report. Houston Water is financially self‐sufficient, with funding for operating

and capital requirements derived primarily from user charge revenues, impact fees, and other miscellaneous

charges. This executive summary documents the results of the cost of service rate study and recommends

water and wastewater rates that are appropriate to meet Houston Water’s funding needs and achieve pricing

objectives.

Following a competitive proposal process, the City hired Carollo Engineers (Carollo) to complete a

comprehensive study to update water and wastewater rates and impact fees, as well as miscellaneous fees

charged by Customer Account Services (CAS) and the Houston Permitting Center (HPC), to support the utility.

The findings and recommendations of the impact fee update and the miscellaneous fees update are

summarized in separate reports.

The objectives of the cost of service rate study were to:

Fund water and wastewater revenue requirements through fiscal year ending (FYE) ,

Determine cost of service by customer type, and

Develop fair and equitable water and wastewater rates.

ES.2 Resilient Houston

Resilient Houston provides a framework for action that works to protect Houston against future disasters and

to build a more resilient City. Part of this strategy is to protect the integrity of the City’s Water and Wastewater

system through unforeseen disasters. Hurricane Harvey and Winter Storm Uri are examples that tested the

limits of the System’s capabilities. Through these events we have learned that disasters come in all shapes

and forms and that the System needs to be ready in various circumstances. In order to align with the strategy

and goals of Resilient Houston, Houston Water has taken into consideration what it would take to get us there.

This means proactively responding to the needs of the aging water and wastewater infrastructure, increasing

backups that support drinking water and wastewater plants, and identifying the vulnerabilities in the entire

system and strengthening them. In order to respond to these needs Houston Water has built into this Rate

Study the costs that are required to take steps towards a more Resilient Houston Water

ES.3 Background and System Overview

Houston Water’s mission is to protect public health, protect the environment, and provide superior customer

service. The utility serves approximately . million customers across a service area of more than square

miles and an additional . million contract and wholesale customers outside the city limits. Houston Water

must generate sufficient revenues to fully fund revenue requirements, maintain appropriate cash balances,

and meet all requirements of the Master Ordinance, including adequate debt service coverage. Ordinance No.

‐ , Houston Water’s “Master Ordinance,” provides for the issuance of Houston Water revenue

obligations and contains restrictions and covenants regarding the issuance of Houston Water debt, to be

issued pursuant to supplemental ordinances. The City completes a cost of service rate study at least every five

years to update water and wastewater rates to continue to meet its financial goals.


DRAFT | APRIL |

Houston Water’s Drinking Water Operations (DWO) Branch operates and maintains three water purification

plants and groundwater plants, in addition to an extensive transmission and distribution system. The

Wastewater Operations (WWO) Branch operates and maintains wastewater treatment plants and the

collection system, including lift stations and , miles of sewer lines.

ES.4 Cost of Service Approach

The cost of service rate study provides a rational basis

for distributing the costs of the City’s water and

wastewater systems to each customer type, including

wholesale and contract customers, in proportion to the

demands they place on the systems. Figure ES.

provides an overview of the study process and the

questions answered at each step.

The revenue requirements analysis prepared a

financial plan for each system to determine the

revenue increases needed for each to support itself

while also considering key metrics of the combined

utility system. A detailed cost allocation was

developed for both the water and wastewater systems

based on the unique attributes of each system to

determine the portion of total revenue requirements

that should be recovered from each customer type.

Finally, recommendations were made to improve the

equity and ease of understanding of the existing rate

structure and rates were calculated to recover

sufficient revenue from each customer type.

The rates presented within this report adhere to cost of service principles, as well as industry standards set by

the American Water Works Association (AWWA) and the Water Environment Federation (WEF). The City

should continue to perform a cost of service study at least every five years so that revenues from rates

adequately fund utility operations, maintenance, and ongoing capital needs, and equitably recover costs from

system users.

ES.4.1 Assumptions

The study incorporated the key assumptions below into the analysis. Changes in these assumptions could

have a material effect on study findings and recommendations.

An automatic adjustment of . percent was implemented on April , .

With the exception of the initial adjustment recommended in this report, which will go into effect on

July , , all recommended adjustments will be implemented on April of each year.

Houston Water will use commercial paper to finance capital projects. Commercial paper debt is

converted to first lien bonds, which are assumed to have a ‐year term and percent interest rate.

The target debt service coverage ratio (DSCR) is . x for first lien and junior lien combined. DSCR is

evaluated for the combined water and wastewater utility. However, because the wastewater utility’s

projected FYE DSCR is well below the . x target, the analysis allows the wastewater DSCR to

transition to the full target in the first two years as long as the wastewater DSCR is at least . x and

the combined utility DSCR is at least . x.



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The target for Pay‐As‐You‐Go (PAYGO) or cash funding of capital projects is . percent of the

annual Capital Improvement Plan (CIP) up to a maximum of million for the combined utility.

Annual interest earnings on cash balances is . percent.

The number of accounts increases by . percent per year.

The minimum cash balance is days of operating and maintenance (O&M) expense. This is

calculated by dividing the ending cash balance by the annual O&M expenses.

Costs are projected to increase at the general annual inflation rate of . percent.

The analysis includes a bad debt allowance of . percent.

Water and wastewater impact fees will increase to . percent and . percent, respectively, of the

fees as calculated in the impact fee update, effective on July , . Subsequent increases equal

to the regional Producer Price Index (PPI) will take effect on July of each year. An additional

. percent will be added to the PPI increase for the water impact fee in and so that the

ratio of the adopted fee to the calculated fee is the same for water and wastewater.

ES.4.2 Customer Demand Analyses



customers. Figure ES. illustrates the findings of this analysis for single family residential, multifamily

residential, and commercial customers, although the full analysis included all retail and wholesale customers.

Additional detail from the customer demand analysis is provided in Appendix F.



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ES.5 Revenue Requirements Analysis




and they include:





labor for Houston Water employees and fees for consultants and contractors that perform this work.




to pay for the Utility’s expenses.

ES.5.1 Water System

The study analyzed the revenue requirements to test the fiscal health of the water system, evaluate the

adequacy of current rates and charges, and set the basis for the five‐year rate plan. The revenue requirement

analysis covers the study period FYE through FYE with the primary focus for rate setting given to

the five years, FYE through FYE , of the study period as Houston Water has approved an automatic

rate increase of . percent planned for FYE . Carollo recommends Houston Water increase water rate

revenue according to the following schedule:





The study analyzed the revenue requirements to test the fiscal health of the wastewater system, evaluate the

adequacy of current rates and charges, and set the basis for the five‐year rate plan. Like for water, the

wastewater revenue requirement analysis covers the study period FYE through FYE with the

primary focus for rate setting given to the five years, FYE through FYE , of the study period as

Houston Water approved an automatic rate increase of . percent planned for FYE . Carollo

recommends Houston Water increase wastewater rate revenue according to the following schedule:




These recommended increases for both water and wastewater are necessary to fund operational and capital

needs, as well as to meet debt service obligations associated with the CIP.


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Table ES. summarizes key elements of the revenue requirements for the water and wastewater systems,

including recommended revenue increases.



Month of Increase April July April April April April April

Water System:


. % . % . % . % . % . % . %

Water Sales with Increase ( )

. . . . . . .

Impact Fee Revenue . . . . . .


Capital Improvements . . . . . .


. . . . . . .

Wastewater System:


. % . % . % . % . % . % . %

Wastewater Sales with Increase ( )

. . . . . . .

Impact Fee Revenue . . . . .

O&M Expenses . . . . .

Capital Improvements . . . . .


. . . . . . .

Notes: ( ) Values are in million dollars, unless otherwise noted, and are rounded. ( ) Projected annual rate revenue, including recommended revenue increase and all previous recommended revenue increases. ( ) Annualized revenue requirement represents the projected revenue if the recommended increase, as well as all previous recommended


ES.5.3 Combined Utility System

Although the study analyzed the water and wastewater systems separately, Houston Water’s financial

performance is measured as a combined utility. The two primary indicators of the utility’s financial health are

the DSCR and the number of days of O&M expenses that can be supported by the cash balance.

Many water and wastewater utilities use revenue bonds to fund a portion of their capital expenses. The DSCR

test measures the ability of a utility to meet both legal and target revenue obligations associated with debt.

To ensure that Houston Water retains financial flexibility for contingencies, it targets higher standards than

the Master Ordinance minimum DSCR requirements of . x for first lien debt and . x for total debt. The

utility’s target DSCR for first lien and junior lien combined is . x, and the target DSCR for total debt is . x.

Carollo recommends Houston Water continue to target . x DSCR for first lien and junior lien but not drop

below . x.


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that may restrict its revenues. This is especially important for a utility like Houston Water that is prone to

extreme weather events. Houston Water’s minimum cash balance is equal to days of O&M expenses.

Table ES. summarizes the revenue requirements for the combined system, including cash and DSCR.


Description FYE ( ) FYE ( ) FYE FYE FYE FYE

Expenses:


Jr./ st Debt Service . . . . . .

Other Debt Service . . . . . .

Cash‐funded CIP . . . . . .

Total Expenses , . , . , . , . , . , .

Plus: Required Debt Coverage ( )

. . . . . .

Plus: Required Cash ( ) . . . . . .

Required Revenue + Cash , . , . , . , . , . , .

Less: Cash Balance ( . ) ( . ) ( . ) ( . ) ( . ) ( . )

Less: Impact Fee Revenue ( . ) ( . ) ( . ) ( . ) ( . ) ( . )

Less: Other Non‐Rate Revenue

( . ) ( . ) ( . ) ( . ) ( . ) ( . )

Less: Rate Revenue (pre‐increase)

( , . ) ( , . ) ( , . ) ( , . ) ( , . ) ( , . )

Rate Revenue (Surplus)/Deficit

( . ) . ( . ) ( . ) . .

Recommended Increase ( ) ‐‐‐ . % . % . % . % . %

Additional Revenue . . . . . .

First/Junior Lien DSCR . x . x . x . x . x . x

Cash (Days O&M)


, . , . , . , . , . , .

Notes: ( ) Values are in million dollars, unless otherwise indicated, and are rounded. ( ) FYE values are based on FYE budget. ( ) FYE through FYE values are projected based on FYE budget. ( ) Debt service coverage is a revenue requirement, but not a cash expense. This revenue may be used to pay for cash‐funded CIP or debt

service payments (not junior or first lien since the coverage shown is to cover these bonds). As such, the required debt coverage shown may be reduced from the full % of the junior/first debt service payment to avoid double‐counting revenue requirements.

( ) Required cash is equal to days of O&M expenses. ( ) Recommended increase shown for FYE includes the July , , and the April , , increases, as shown in Table ES. . ( ) Annualized revenue requirement represents the projected revenue if the recommended increase, as well as all previous recommended



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Figure ES. shows the year‐end cash balance from FYE . Year‐end balances for FYE through FYE

are projected with and without the recommended revenue increases.



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Figure ES. shows the DSCR from FYE . DSCRs for FYE through FYE are projected with and

without the recommended revenue increases.


ES.6 Cost of Service Analysis

The cost of service analysis serves as a rational basis for distributing the full costs of Houston Water’s services

to each customer type in proportion to the demands placed on the system. The analysis is typically completed

in three steps:

. Allocate costs to functional categories (e.g., water production, pumping, collection system).

. Allocate functionalized costs to rate components:

a. Water – base, extra capacity, customer.

b. Wastewater – flow, loadings, customer.

. Allocate costs to customer types using rate component unit costs.

The study followed this approach to develop a detailed cost allocation that serves as the basis for the proposed

rate adjustments. This analysis yields an appropriate method for allocating costs, which could be sustained

unless substantial changes in cost drivers or customer consumption patterns occur.


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ES.6.1 Water System

The cost of service analysis is consistent with the AWWA M Manual Principles of Water Rates, Fees and

Charges, Seventh Edition, standard methods to allocate the revenue requirements among the various

customer types based on their usage characteristics. Table ES. summarizes the results of the water cost of

service analysis.




Retail:



Commercial/Industrial . . . . . .

Irrigation . . . . . .

Transient . . . . . .

Resale . . . . . .

Emergency Backup . . . . . .

Metered Fire . . . . . .

Unmetered Fire . . . . . .

Wholesale:

Contract Treated with Airgap

. . . . . .

Contract Treated without Airgap

. . . . . .

GRP Participants . . . . . .

Contract Water – Untreated

. . . . . .

Contract Treated – SEWPP Co‐participants

. . . . . .

Contract Treated – EWPP Water Authorities

. . . . . .

Contract Treated – NEWPP Water Authorities

. . . . . .


. . . . . .



The cost‐of‐service analysis is consistent with the WEF Manual of Practice No. , Financing and Charges for

Wastewater Systems, standard methods to allocate the revenue requirements among the various customer

types based on their wastewater contributions. The results of the wastewater cost of service analysis are

summarized in Table ES. .


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Retail:



Commercial . . . . . .

Industrial Surcharge . . . . . .

Sewer Only (Unmetered) . . . . . .

Wholesale:

Capital without Collection System

. . . . . .

No Capital with Collection System

. . . . . .

Connection‐based . . . . . .


. . . . . .


ES.7 Rate Design

Carollo worked with Houston Water staff to analyze various adjustments with the goals of simplifying the

water and wastewater rate structures and improving equity and understanding among customers. The

allocated revenue requirements serve as the basis for the rate design, although some accommodations were

made to improve affordability, especially as the proposed rates transition toward cost‐of‐service. Existing

rates shown are FYE rates, which went into effect on April , .

ES.7.1 Water System

The water rate design analysis determines rates required to achieve cost recovery, proportionately for each

customer. Houston Water’s existing rate structure consists of two components: a volumetric rate (variable)

and a monthly meter charge (fixed). The volumetric component is assessed based on metered water usage

per , gallons (kgal) and, by design, is intended to recover the cost incurred for delivering each unit of

water. The monthly meter charge is intended to recognize that the utility incurs fixed costs to provide the

availability of water service, which must be recovered independent of monthly water demands and

consumption.



meter size. The customer component recovers expenses associated with billing, collection, and customer

service. This component is the same for all customers regardless of meter size. The capacity component

captures maintenance costs related to meters and services, as well as a portion of the water system capital

costs. This component varies based on meter size to reflect the difference in potential demand that can be

placed on the system by different sized meters. The capacity charge is then added to the customer unit cost

to calculate the total monthly meter charge.


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In addition to the monthly meter charge, the study recommends a second fixed monthly charge, which would

be assessed per connection, to equitably recover the annual fee paid to the Texas Commission on

Environmental Quality (TCEQ).

Residential, Commercial, Industrial, Irrigation, and Emergency Backup Customers

Table ES. shows the existing monthly meter charges, which vary by customer type and meter size.


Meter Size SFR MFR Com/Ind Irrigation Emergency

/ ” . . . . .

/ ” . . . . .

” . . . . .

½” . . . . .

” . . . . .

” . . . . .

” ‐‐‐ . . . .

” ‐‐‐ . . , . .

” ‐‐‐ . . , . .

” ‐‐‐ . . , . .

Notes: ( ) SFR is Single Family Residential ( ) MFR is Multifamily Residential

Table ES. summarizes the proposed monthly meter charges for the study period, which vary by meter size.

Carollo recommends charging the same monthly meter charge for single family and multifamily residential,

commercial/industrial, irrigation, and emergency backup rather than varying them by customer type.




/ ” . . . . . .

/ ” . . . . . .

” . . . . . .

½” . . . . . .

” . . . . . .

” . . . . . .

” . . . . . .

” . . . . . .

” . . . . . .

” . . . . . .

” . . . . . .

TCEQ Fee per connection . . . . . .

Note: ( ) Monthly meter charges shown are proposed for single family residential, multifamily residential, commercial/industrial, irrigation, and

emergency backup customers.


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Transient, Resale, and Fire Customers. Houston Water has several other customer types receiving water

service, and these customers are charged different monthly meter charges based on customer type and meter

size. Table ES. shows existing and proposed monthly meter charges for these other customer types.

Table ES. Existing and Proposed Water Monthly Meter Charges – Transient, Resale, and Fire Customers



Transient:

” . . . . . . .

” . . . . . . .

” . . . . . . .

Resale:

/ ” and / " . . . . . . .

” . . . . . . .

½” . . . . . . .

” . . . . . . .

” . . . . . . .

” . . . . . . .

” . . . . . . .

” , . , . , . , . , . , . , .

Metered Fire:

/ ” . . . . . . .

/ ” . . . . . . .

” . . . . . . .

½” . . . . . . .

” . . . . . . .

” . . . . . . .

” . . . . . . .

” . . . . . . .

” . . . . . . .

” . . . . . . .


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Unmetered Fire ( ):

/ ” and / " . . . . . . .

” . . . . . . .

½” . . . . . . .

” . . . . . . .

” . . . . . . .

” . . . . . . .

” . . . . . . .

” . . . . . . .

” . . . . . . .

” . . . . . . .









Single Family Residential Customers. The existing single‐family residential rate structure is made up of rates

that vary for each incremental , gallons for the first , gallons, increasing and decreasing as a

customer uses more water. This results in large bill increases at specific usage intervals. Transitioning to a

water conservation rate structure with rates for usage blocks that increase as a customer uses more water was

a key focus of this study.

Table ES. shows existing and proposed single family residential water volume rates for the study period.





First kgal .

. . . . . . Next kgal .

Next kgal .



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First kgal .

. . . . . .

Next kgal .

Next kgal .

Next kgal .

Next kgal .

Next kgal .

Next kgal . . . . . . .

Next kgal . . . . . . .

Over kgal . . . . . . .

To calculate the monthly water bill, customers add the appropriate monthly meter charge from Table ES.

(existing charges) or Table ES. (proposed charges) and add the volume rate for each incremental , ‐gallon unit from Table ES. . Table ES. shows existing and proposed monthly water bills for single family

residential customers with usage up to , gallons in one month.





, gallons . . . . . . .

, gallons . . . . . . .

, gallons . . . . . . .

, gallons . . . . . . .

, gallons . . . . . . .

, gallons . . . . . . .

Figure ES. illustrates the existing and proposed single family residential water rates and bills for the first



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Table ES. shows existing and proposed volume rates for all retail customer types except single family

residential.


Customer Type

Rate Block




All Usage . . . . . . .


All Usage . . . . . . .

Irrigation ( )

Block . ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐

Block . ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐

All Usage ‐‐‐ . . . . . .



Emergency Backup

All Usage . . . . . . .




The study recommends maintaining the wholesale and contract customers’ rate structures. Contract Treated

Water customers pay a uniform rate for all usage and an excess surcharge for all usage above their contract

minimum volume. Groundwater Reduction Plan (GRP) customers’ rate is based on the Contract Treated Water

– No Airgap rate although it is reduced based on the required groundwater reduction for each Area. Areas

and pay percent of the Contract Treated rate, and Area currently pays percent, but that increases to

percent in FYE . These rates, as well as the Contract Untreated rate, are shown in Table ES. .


Customer Type

Rate Block



Contract w/Airgap

Minimum . . . . . . .

Excess . . . . . . .

Contract w/o Airgap

Minimum . . . . . . .

Excess . . . . . . .

GRP Areas &

All Usage . . . . . . .


Contract Untreated

All Usage . . . . . . .


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The wastewater rate design analysis determines rates required to achieve cost recovery, proportionately for

each customer. Like the water rates, Houston Water’s existing wastewater rate structure consists of two

components: a volumetric rate (variable) and a monthly service charge (fixed). The volumetric component is




recovered independent of monthly wastewater flow.









Residential, Commercial, and Industrial Customers. Table ES. shows the existing monthly meter charges by

customer type and water meter size.


Meter Size SFR MFR) Commercial Industrial

/ ” . . . .

/ ” . . . .

” . . . .

½” . . . .

” . . . .

” . . . .

” ‐‐‐ . . .

” ‐‐‐ . . .

” ‐‐‐ . . .

” ‐‐‐ . . .


Table ES. summarizes the proposed monthly meter charges for the study period, by water meter size, for

single family residential, multifamily residential, commercial, and industrial (with and without surcharges)

customers.


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/ ” . . . . . .

/ ” . . . . . .

” . . . . . .

½” . . . . . .

” . . . . . .

” . . . . . .

” . . . . . .

” . . . . . .

” . . . . . .

” . . . . . .

” . . . . . .

” . . , . , . , . , . Note: ( ) Monthly meter charges shown are proposed for single family residential, multifamily residential, commercial, and industrial customers,

including those who pay surcharges.





to identify and isolate the cost of this program and allocate it to the industrial surcharge customers. The study



recommended charges in Table ES. show a phase‐in of this charge over the ‐year study period. Table ES.

also shows proposed monthly program charges for sewer only customers, which are based on customer type.

Table ES. Existing and Proposed Wastewater Monthly Service Charges – Industrial Customers with Surcharges






Sewer Only:


Duplex . . . . . . .



Industrial . . . . . . . Note: ( ) Charges shown for sewer only customers are monthly, but sewer only customers are billed and will continue to be billed bimonthly. The



DRAFT | APRIL |



flow; a biochemical oxygen demand (BOD) component, which represents the cost to treat BOD; a total

suspended solids (TSS) component, which represents the cost to treat TSS; and an ammonia component,

which represents the cost to treat ammonia. These costs are allocated to the different customer types based

on their contributed flows and assumed loadings (BOD, TSS, and ammonia). The allocated components are

then summed and divided by the projected flow to calculate the average rate per , gallons for each

customer type. The billable volume for each customer is equal to the metered water usage, with the exception

of unmetered sewer only customers and those customers with effluent meters.

Single Family Residential Customers. Similar to the existing single family residential water rate structure, the

existing single family residential wastewater rate structure is made up of rates that vary for each incremental

, gallons for the first , gallons, increasing and decreasing as a customer’s billable volume goes up.

This results in large bill increases at specific usage intervals. Carollo recommends simplifying this structure to

two blocks with a reduced rate per , gallons for the first , gallons and a higher rate per , gallons

for all usage in excess of , gallons per month.

Table ES. shows the existing and proposed single family residential wastewater volume rates for the study

period.




First kgal .

. . . . . . Next kgal .

Next kgal .

Next kgal .

. . . . . . Next kgal .

Over kgal .


Table ES. (existing charges) or Table ES. (proposed charges) and add the volume rate for each

incremental , ‐gallon unit from Table ES. . Table ES. shows existing and proposed monthly

wastewater bills for single family residential customers with usage up to , gallons in one month.





, gallons . . . . . . .

, gallons . . . . . . .

, gallons . . . . . . .

, gallons . . . . . . .

, gallons . . . . . . .

, gallons . . . . . . .


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Figure ES. illustrates the existing and proposed single family residential wastewater rates and bills for the

first , gallons in , ‐gallon increments.






for all retail customer types other than single family residential, including all industrial customers. Table ES.

shows existing and proposed volume rates for all retail customer types except single family residential.


DRAFT | APRIL |


Customer Type

Rate Block




All Flow . . . . . . .



First kgal

. ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐

Over kgal

. ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐

All Usage ‐‐‐ . . . . . .


All Flow . . . . . . .

BOD ( ) . . . . . . .

TSS ( ) . . . . . . .

Ammonia ‐‐‐ . . . . . .













Existing and proposed contract wastewater rates are shown in Table ES. .


Customer Type Rate Block




All Flow

. . . . . . .


All Flow

‐‐‐ . . . . . .

No Capital w/Collection System

All Flow

. . . . . . .

Connection‐based

All Connections

. / . . . . . . .


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ES.7.3 Customer Bill Impacts



incremental percentage of single family residential bills is shown between usage levels. The estimated per




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Figure ES. illustrates the percentage of single family residential customers with varying levels of monthly

bill adjustments for the proposed rate schedule effective July , .

Figure ES. Distribution of July Monthly Combined Bill Impacts for Single Family Residential Customers

ES.8 Recommendations

Carollo recommends implementation of the water and wastewater rates as proposed in this Executive

Summary and described below:









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customers.

Figure ES. Existing and Proposed Single Family Residential Volume Water Rate Structures

For wastewater, Carollo recommends simplifying the single family residential rate structure to two tiers:




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customers.

Figure ES. Existing and Proposed Single Family Residential Volume Wastewater Rate Structures






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Chapter 1

REVENUE REQUIREMENT ANALYSIS

1.1 Overview

The study analyzed the revenue requirements to test the fiscal health of the water and wastewater system,

evaluate the adequacy of current rates and charges, and set the basis for the five‐year rate plan. The adequacy

of the existing rate structure can be measured by comparing revenue requirement projections against revenue

projections under existing rates. If revenue projections under existing rates do not meet forecasted

requirements, rates need to be adjusted.

The revenue requirement analysis covers the study period FYE through FYE . However, the primary

focus of this report is the five‐year rate setting period, FYE through FYE . Houston Water approved

an automatic rate increase of . percent, which became effective on April , .

1.1.1 Revenue Requirement Purpose and Components




and they include:





labor for Houston Water employees and fees for consultants and contractors that perform this work




to pay for the Utility’s expenses. Houston Water also maintains unrestricted cash, which can be used to pay

for expenses in the event of unforeseen circumstances that result in insufficient revenues or unplanned

expenses.

1.1.2 Revenue Requirement Tests

The revenue requirement analysis uses two tests to evaluate Houston water’s fiscal health and measure the

adequacy of current rates. If revenues are not sufficient to satisfy both tests, the greater deficiency (shortfall)

drives the planned revenue increase.


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1.1.2.1 Debt Service Coverage Test

Many water and wastewater utilities use debt, such as revenue bonds, to fund a portion of their capital

expenses. Debt financing typically comes with a coverage requirement, which refers to the collection of

revenues to meet all operating expenses and debt service obligations. An additional multiple of that debt

service. Debt service coverage is dictated by the utility’s bond covenants and establishes a threshold above

basic debt service that the agency must collect in revenues. The debt service coverage test measures the

ability of a utility to meet both legal and target revenue obligations associated with debt.

To ensure that Houston Water retains financial flexibility for contingencies, the City targets higher standards

than the Master Ordinance minimum DSCR requirements of . x for first lien debt and . x for total debt.

The Utility’s target DSCR for first lien and junior lien combined is . x, and the target DSCR for total debt is

. x. This means Houston Water strives to generate revenue sufficient to pay all of its operating expenses

and debt service on first and junior liens, plus an amount equal to percent of first and junior lien debt

service. When all other debt service is factored into this formula, the net revenue should be equal to at least

percent of the total debt service payment. Carollo recommends Houston Water continue to target . x

DSCR for first lien and junior lien but not drop below . x.

1.1.2.2 Cash Balance Test


that may restrict its revenues and/or require unplanned expenses. This is especially important for a utility like

Houston Water that is vulnerable to extreme weather events. Houston Water’s minimum cash balance is equal

to days of O&M expenses.

The cash balance test determines if the cash flow generated from projected revenues is sufficient to fully fund

all revenue requirements, including maintaining the ending cash balance of at least days of O&M

expenses. Since O&M expenses are projected to increase each year, the minimum cash balance must also

increase to maintain a balance of at least days, which is factored into the revenue requirements.

1.2 Water System

1.2.1 Expenses

Houston Water’s total revenue requirements are comprised of operating expenses and capital expenses,

which are described in detail in this section. For FYE , total revenue requirements are percent

operating and percent capital. By FYE , that split has shifted to percent operating and percent

capital.

1.2.1.1 Operating Expenses

Houston Water’s FYE O&M budget for the water system is organized into cost centers under three

categories – ( ) Drinking Water Operations, ( ) Operation Services General and Administrative (G&A), and ( )

Other O&M. Drinking Water Operations is approximately percent of the total O&M budget, while

Operation Services and Other O&M make up percent and percent, respectively. The study projects O&M

expenses for the five‐year study period using the FYE budget and escalating each line item at an annual

inflation rate of . percent. The exception to this is Cost Center for the Northeast WPP Expansion. The

O&M expenses for this cost center are projected based on engineering cost estimates provided by Carollo to

Houston Water in a technical memorandum dated July , . Table . summarizes the O&M budget

projections by cost center.


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Table . Water O&M Budget Projections ( millions) ( )

Description FYE

FYE

FYE

FYE

FYE

FYE

Drinking Water Operations:

– DWO Executive Support G&A . . . . . .

– DWO Regulatory / Compliance . . . . . .

– DWO Ground Water Operations . . . . . .

– DWO East WPP . . . . . .

– DWO Technical Services G&A . . . . . .

– DWO NEWPP Expansion . . . . . .

– DWO Southeast WPP . . . . . .

– DWO Northeast WPP . . . . . .

– DWO System Maint – North . . . . . .

– DWO System Maint – South . . . . . .

River Authority Contributed Debt Service . . . . . .

Total Drinking Water Operations . . . . . .

Operation Services (G&A):

– OPS Fin / Support Op Svcs G&A . . . . . .

– Houston Water Planning . . . . . .

– OPS Maint Op Svcs – Restoration . . . . . .

– OPS Maint Op Svcs‐COS/DIS . . . . . .

– HW GIS Services . . . . . .

– OPS Executive Support . . . . . .

– OPS Support Services . . . . . .

– HW Infrastructure Planning . . . . . .

– HW Utility Analysis . . . . . .

Total Operation Services (G&A) . . . . . .

Other O&M:

‐ – Director's Office . . . . . .

– Information Technology . . . . . .

‐ – Management Support . . . . . .

/ – Houston Water – Planning . . . . . .

/ / / – Fin Mgmt Svcs Support . . . . . .

‐ , – CAS Cust Acct Svcs . . . . . .

Deductions ( . ) ( . ) ( . ) ( . ) ( . ) ( . )

Total Other O&M . . . . . .

TOTAL O&M EXPENSES . . . . . .

Notes: ( ) Values are in million dollars and are rounded.


DRAFT | APRIL |

1.2.1.2 Capital Expenses

Capital expenses include debt service payments, bad debt expense, and cash‐funded CIP (PAYGO).

Annual Debt Service. Debt service during the study period consists of annual payments on outstanding and

proposed debt obligations and represents about percent of total revenue requirements in FYE ,

increasing to percent by FYE . Table . summarizes the existing and future annual debt service

payments by type for FYE through FYE .

Table . Water Annual Debt Service ( millions) ( )


Existing Debt Service:

Junior Lien . . . . . .

First Lien . . . . . .

Subordinate Lien . . . . . .

Commercial Paper . . . . . .

Existing Debt Service . . . . . .

Future Debt Service:

First Lien – NEWPP . . . . . .

First Lien – Other . . . . . .

Future Debt Service . . . . . .

DEBT SERVICE ( ) . . . . . .

Note: ( ) Values are in million dollars and are rounded. ( ) For the purposes of this table, debt service calculations do not include pension obligations, discretionary debt service, and other

obligations.

From Section . . . Houston Water’s target debt service coverage ratio is . times the annual debt service

payment for junior and first liens and . times the total annual debt service payment. This means there must

be . in net revenue (revenue less operating expenses) available for every . of junior and first lien debt

service outstanding and . in net revenue available for every . of total debt service outstanding for the

year in which coverage is being measured.

Capital Improvement Plan. Houston Water’s CIP for the five‐year period FYE through FYE totals .

billion for the water system. Of this, . billion ( percent) is planned for annual infrastructure investment

from the Needs Assessment, million ( percent) is planned for the Northeast WPP Expansion, and

the remaining is allocated to various other water capital improvements. Table . summarizes Houston

Water’s CIP for the water system for the period FYE through FYE .


DRAFT | APRIL |

Table . Water Capital Improvement Plan Summary ( millions) ( )


Active CIP – NEWPP . . . . . .

Active CIP – Other ( ) . . . . . .

Incremental CIP – NEWPP . . . . . .

Incremental CIP – Drinking Water . . . . . .

Incremental CIP – Customer Account Svcs . . . . . .

Annual Infrastructure Investment Needs . . . . . .

Total Water CIP . . . . . .

Notes: ( ) Values are in million dollars and are rounded. ( ) Active CIP projects that were included as recommendations from the Needs Assessment have been removed and included with

Annual Infrastructure Investment Needs.

The CIP funding plan is outlined in Table . . Houston Water uses a mix of financing to pay for capital projects,

including commercial paper, revenue bonds, and cash. The annual debt service payments and PAYGO are

funded from rate revenue, impact fee revenue, and unrestricted cash. Houston Water has historically set

PAYGO at million per year, or approximately percent of the annual CIP, for the combined water and

wastewater utility. For this study, PAYGO is assumed to be percent of the CIP up to million per year.

Carollo recommends this cap based on discussions with Houston Water staff and analysis of PAYGO amounts

to minimize the required revenue increases.

Table . Water Capital Improvement Plan Funding ( millions) ( )


Construction Fund . . . . . .

PAYGO (Cash) . . . . . .

Debt – Commercial Paper . . . . . .

Debt – First Lien ( ) . . . . . .

Total Water CIP . . . . . .

Notes: ( ) Values are in million dollars and are rounded. ( ) NEWPP construction cost will be financed entirely with FYE debt, including . million in FYE .

The FYE budgeted expenses and projected expenses for the water system for FYE through FYE

are included in Appendix A.

1.2.2 Revenues

Operating revenues for Houston Water’s water system are primarily derived from rates and charges for

treated and untreated water service, which are the focus of this report. Other operating revenues include

penalties and fees for miscellaneous services, which were updated as part of this study in a separate report.

Non‐operating revenues include impact fees, sales of assets, facility rental fees, and permitting fees. Impact

fee revenue is estimated based on the proposed impact fee implementation schedule, shown in Table .

Interest income on investments is based on projected . percent interest earned on the cash balance.


DRAFT | APRIL |

Table . Proposed Water Impact Fees


Percent of Calculated Impact Fee ( ) . % . % . % . % . % . %

Water Impact Fee . , . , . , . , . , .

Notes: ( ) FYE impact fee is based on calculated impact fee of , . . FYE through FYE impact fees are based on

calculated impact fee of , . .

Table . summarizes projected annual water revenue for the study period before proposed revenue increases

(rate adjustments).

Table . Projected Annual Water Revenue Before Revenue Increases ( millions) ( )


Operating Revenue:

Water Sales ( ) . . . . . .

Water Service Penalties . . . . . .

Other Non‐rate Operating Revenue . . . . . .

Total Operating Revenue . . . . . .

Non‐operating Revenue:

Impact Fee Revenue ( ) . . . . . .

Non‐rate Non‐operating Revenue . . . . . .

Interest . . . . . .

Total Non‐operating Revenue . . . . . .

TOTAL REVENUE . . . . . .

Notes: ( ) Values are in million dollars and are rounded. ( ) Water sales revenue shown is projected using existing rates effective April , . ( ) Impact fee revenue shown is projected using recommended impact fee implementation schedule from Table . .

The FYE budgeted revenues and projected revenues for the water system for FYE through FYE

are included in Appendix A.

1.2.3 Cash Balance

The cash balance represents the funds available for daily operations of the combined utility system. Houston

Water maintains a minimum cash balance of at least days of O&M expenses or approximately million

for the water system by FYE . Total cash available, including cash reserve requirements, at the beginning

of FYE totals an estimated . billion, with percent allocated to the water system for the purpose of

this analysis. Table . shows projected total cash without proposed revenue increases for the water system

for the period FYE through FYE .


DRAFT | APRIL |

Table . Projected Water Cash Balance Before Revenue Increases ( millions) ( )


Beginning Cash Balance (July ) . . . . ( . ) ( . )

Additions:

Total Revenues . . . . . .

Deductions:

Operations and Maintenance . . . . . .

Stormwater Fund O&M . . . . . .

Stormwater Fund Debt Service . . . . . .

TRA/Lake Livingston Dam Debt . . . . . .

Luce Bayou Debt . . . . . .

NEWPP Debt . . . . . .

Debt Service . . . . . .


Bad Debt . . . . . .

Capital Rollovers . . . . . .

PAYGO . . . . . .

Ending Cash Balance (June ) . . . ( . ) ( . ) ( . )

Target Cash Balance . . . . . .

Cash Surplus / (Deficit) . . ( . ) ( . ) ( . ) ( . )


1.2.4 Revenue Requirement Tests before Revenue Increases


Without revenue increases, the water system is not projected to meet its target debt service coverage ratios

in any year of the study period FYE through FYE . The debt service coverage test requires that

Houston Water revenues exceed operating expenses, junior and first lien debt service, and an additional

percent of annual debt service for junior and first liens. Revenues must also exceed operating expenses,

total debt service, and an additional percent of total annual debt service. This analysis focused on coverage

for junior and first liens because it was determined that the target coverage for total debt is met if the coverage

for junior and first liens is at least . x. The results of the debt service coverage test are summarized in

Table . .


DRAFT | APRIL |

Table . Water Debt Service Coverage Test Before Revenue Increases ( millions) ( )


Allowable Revenues ( ) (a) . . . . . .

Adjustments ( ) (b) . . . . . .

Operating Expenses (c) . . . . . .

Debt Service ( ) (d) . . . . . .

Debt Service Coverage ( ) (e) . . . . . .

Total Coverage Expenses (f = c + d + e) . . . . . .

Bond Coverage Surplus / (Deficit) (a + b – f)

. ( . ) ( . ) ( . ) ( . ) ( . )

Notes: ( ) Values are in million dollars and are rounded. ( ) Allowable revenues include operating and non‐operating revenues, including impact fee revenue, less bad debt. ( ) Adjustments add total capital equipment ( ), total service ( ), PIB debt service, Wallisville and Allen's Creek debt service, pension

debt service, and CWA debt service, less a deduction of allocated recovery. ( ) Debt service payment includes junior and first liens. ( ) Debt service coverage is calculated as . times debt service, which is what is needed to achieve . x DSCR.


The cash balance test also shows that revenue increases are needed. Beginning in FYE , the ending cash

balance for the water system drops below the target minimum of days of O&M expenses. The results of

the cash balance test are summarized in Table . .

Table . Water Cash Balance Test Before Revenue Increases ( millions) ( )


Ending Cash Balance (June ) ( ) (a) . . . ( . ) ( . ) ( . )

Annual O&M Expense ( ) (b) . . . . . .

Target Cash Balance ( ) (c = b * / ) . . . . . .

Above / (Below) Target (a – c) . . ( . ) ( . ) ( . ) ( . )

Notes: ( ) Values are in million dollars and are rounded. ( ) From Table . . ( ) From Table . . ( ) Calculated as days of annual O&M expense.

1.2.5 Recommended Revenue Increases

The debt service coverage test and cash balance test both show that revenue increases are necessary to meet

target coverage and minimum cash balance for the study period. As a result, Carollo recommends Houston

Water increase water rate revenue according to the following schedule:




Table . provides the projected water revenue requirements, which will be allocated to the customer types

in Chapter and used to design rates in Chapter . The water revenue requirements are presented in detail in

Appendix C.


DRAFT | APRIL |

Table . Projected Water Revenue Requirements ( millions) ( )

Description FYE FYE FYE FYE FYE

Operating Costs ( ) . . . . .

Capital Costs ( ) . . . . .

Total Revenue Requirement . . . . .

Revenue Requirement Adjustments:

Water Service Penalties ( ) ( . ) ( . ) ( . ) ( . ) ( . )

Other Water Operating Revenue (Non‐rate) ( ) ( . ) ( . ) ( . ) ( . ) ( . )

Impact Fee Revenue ( ) ( . ) ( . ) ( . ) ( . ) ( . )

Non‐operating Water Revenue (Non‐rate) ( ) ( . ) ( . ) ( . ) ( . ) ( . )

Interest ( . ) ( . ) ( . ) ( . ) ( . )

Additions / (Subtractions) from Cash Balance . . . . .

Rate Revenue Requirement . . . . .

Pre‐Increase Rate Revenues . . . . .

July Revenue Adjustment (full year) . . . . .

JULY REVENUE ADJUSTMENT . % . % . % . % . %

April Revenue Adjustment (full year) . . . . .

APRIL REVENUE ADJUSTMENT . % . % . % . % . %

Notes: ( ) Values are in million dollars and are rounded. ( ) From Table . . ( ) Includes debt service from Table . , bad debt from Table . , and PAYGO from Table . . ( ) From Table . .

1.3 Wastewater System

1.3.1 Expenses

Houston Water’s total revenue requirements are comprised of operating expenses and capital expenses. For

FYE , total revenue requirements are percent operating and percent capital. By FYE , that split

has shifted to percent operating and percent capital.

1.3.1.1 Operating Expenses

Houston Water’s FYE O&M budget for the wastewater system is organized into cost centers under three

categories – ( ) Wastewater Operations, ( ) Operation Services (G&A), and ( ) Other O&M. Wastewater

Operations is approximately percent of the total O&M budget, while Operation Services and Other O&M

make up percent and percent, respectively. Carollo projected O&M expenses for the five‐year study

period using the FYE budget and escalating each line item at an annual inflation rate of . percent.

Table . summarizes the O&M budget projections by cost center.


DRAFT | APRIL |

Table . Wastewater O&M Budget Projections ( millions) ( )


Wastewater Operations:

– WWO Executive Support G&A . . . . . .

– WWO Coll System Analysis . . . . . .

– WWO Collection System Repairs . . . . . .

– WWO Regulatory / Compliance . . . . . .

– WWO Technical Services G&A . . . . . .

– WWO Plant Operations . . . . . .

– WWO Electrical & Automation . . . . . .

– WWO Construction Mgmt . . . . . .

– WWO Contract Management . . . . . .

– WWO Mechanical Management . . . . . .

– WWO Maint Operation Svcs . . . . . .

– WWO EPA Compliance . . . . . .

Total Wastewater Operations . . . . . .


– OPS Fin / Support Op Svcs G&A . . . . . .

– Houston Water Planning . . . . . .

– OPS Maint Op Svcs – Restoration . . . . . .

– OPS Maint Op Svcs‐COS/DIS . . . . . .

– HW GIS Services . . . . . .

– OPS Executive Support . . . . . .

– OPS Support Services . . . . . .


– HW Utility Analysis . . . . . .

Total Operation Services (G&A) . . . . . .

Other O&M:

‐ – Director's Office . . . . . .

– Information Technology . . . . . .

‐ – Management Support . . . . . .

/ – Houston Water – Planning . . . . . .

/ / / – Fin Mgmt Svcs Support . . . . . .

‐ , – CAS Cust Acct Svcs . . . . . .

Deductions ( . ) ( . ) ( . ) ( . ) ( . ) ( . )

Total Other O&M . . . . . .

TOTAL O&M EXPENSES . . . . . .



DRAFT | APRIL |

1.3.1.2 Capital Expenses

Capital expenses include debt service payments, bad debt expense, and cash‐funded CIP (PAYGO).

Annual Debt Service. Debt service during the study period consists of annual payments on outstanding and

proposed debt obligations and represents about percent of total revenue requirements in FYE ,

increasing to percent by FYE . Table . summarizes the existing and future annual debt service

payments by type for FYE through FYE .

Table . Wastewater Annual Debt Service ( millions) ( )


Existing Debt Service:

Junior Lien . . . . . .

First Lien . . . . . .


Existing Debt Service . . . . . .

Future Debt Service:

First Lien – Other . . . . . .

Future Debt Service . . . . . .

DEBT SERVICE ( ) . . . . . .

Notes: ( ) Values are in million dollars and are rounded. ( ) For the purposes of this table, debt service calculations do not include pension obligations, discretionary debt service, and other

obligations.

From Section . . . Houston Water’s target debt service coverage ratio is . times the annual debt service

payment for junior and first liens and . times the total annual debt service payment. This means there must

be . in net revenue (revenue less operating expenses) available for every . of junior and first lien debt

service outstanding and . in net revenue available for every . of total debt service outstanding for the

year in which coverage is being measured.

Capital Improvement Plan. Houston Water’s CIP for the five‐year period FYE through FYE totals .

billion for the wastewater system. Of this, . billion ( percent) is planned for annual infrastructure

investment from the Needs Assessment, and the remaining is allocated to various other wastewater

capital improvements. The Needs Assessment includes capital projects required for Houston Water to comply

with the Environmental Protection Agency (EPA) Consent Decree. The Court signed an Order on March ,

, approving the Consent Decree as lodged on August , .

Table . summarizes Houston Water’s CIP for the wastewater system for the period FYE through FYE

.


DRAFT | APRIL |

Table . Wastewater Capital Improvement Plan Summary ( millions) ( )


Active CIP ( ) . . . . . .

Incremental CIP . . . . . .

Annual Infrastructure Investment Needs . . . . . .

Total Wastewater CIP . . . . . .

Notes: ( ) Values are in million dollars and are rounded. ( ) Active CIP projects that were included as recommendations from the Needs Assessment have been removed and included with

Annual Infrastructure Investment Needs.

The CIP funding plan is outlined in Table . . Houston Water uses a mix of financing to pay for capital

projects, including commercial paper, revenue bonds, and cash. The annual debt service payments and

PAYGO are funded from rate revenue, impact fee revenue, and cash. Houston Water has historically set

PAYGO at million per year for the combined water and wastewater utility. For this study, PAYGO is

increased to percent of the CIP up to million per year. Carollo recommends this cap based on

discussions with Houston Water staff and analysis of PAYGO amounts to minimize the required revenue

increases.

Table . Wastewater Capital Improvement Plan Funding ( millions) ( )


Construction Fund . . . . . .

PAYGO (Cash) . . . . . .

Debt – Commercial Paper . . . . . .

Debt – First Lien . . . . . .

Total Wastewater CIP . . . . . .


The FYE budgeted expenses and projected expenses for the wastewater system for FYE through

FYE are included in Appendix B.

1.3.2 Revenues

Operating revenues for Houston Water’s wastewater system are primarily derived from rates and charges for

wastewater service, which are the focus of this report. Other operating revenues include penalties and fees

for miscellaneous services, which were updated as part of this study in a separate report.

Non‐operating revenues include impact fees, sales of assets, facility rental fees, and permitting fees. Impact

fee revenue is estimated based on the proposed impact fee implementation schedule, shown in Table . .

Interest income on investments is based on projected . percent interest earned on the cash balance.

Table . Proposed Wastewater Impact Fees ( millions)


Percent of Calculated Impact Fee ( ) . % . % . % . % . % . %

Wastewater Impact Fee , . , . , . , . , . , .

Notes: ( ) FYE impact fee is based on calculated impact fee of , . . FYE through FYE impact fees are based on

calculated impact fee of , . .


DRAFT | APRIL |

Table . summarizes projected annual wastewater revenue for the study period before proposed revenue

increases (rate adjustments).

Table . Projected Annual Wastewater Revenue Before Revenue Increases ( millions) ( )


Operating Revenue:

Wastewater User Charges ( ) . . . . . .

Sewer Service Penalties . . . . . .

Other Non‐rate Operating Revenue . . . . . .

Total Operating Revenue . . . . . .

Non‐operating Revenue:

Impact Fee Revenue ( ) . . . . . .

Non‐rate Non‐operating Revenue . . . . . .

Interest . . . . . .

Total Non‐operating Revenue . . . . . .

TOTAL REVENUE . . . . . .

Notes: ( ) Values are in million dollars and are rounded. ( ) Wastewater user charge revenue shown is projected using existing rates effective April , . ( ) Impact fee revenue shown is projected using recommended impact fee implementation schedule from Table . .

The FYE budgeted revenues and projected revenues for the wastewater system for FYE through

FYE are included in Appendix B.

1.3.3 Cash Balance

The cash balance represents the funds available for daily operations of the combined utility system. Houston

Water maintains a minimum cash balance of at least days of O&M expenses or approximately million

for the wastewater system by FYE . Total cash available at the beginning of FYE totals an estimated

. billion, with percent allocated to the wastewater system for the purpose of this analysis. Table .

shows the projection of cash balances for the wastewater system for the period FYE through FYE .


DRAFT | APRIL |

Table . Projected Wastewater Cash Balance Before Revenue Increases ( millions) ( )


Beginning Cash Balance (July ) . . . ( . ) ( . ) ( . )

Additions:

Total Revenues . . . . . .

Deductions:

Operations and Maintenance . . . . . .

Stormwater Fund O&M . . . . . .

Stormwater Fund Debt Service . . . . . .

Debt Service . . . . . .


Bad Debt . . . . . .

Capital Rollovers . . . . . .

PAYGO . . . . . .

Ending Cash Balance (June ) . . ( . ) ( . ) ( . ) ( , . )

Target Cash Balance . . . . . .

Cash Surplus / (Deficit) . ( . ) ( . ) ( . ) ( . ) ( , . )




Without revenue increases, the wastewater system is not projected to meet its target debt service coverage

ratios in any year of the study period FYE through FYE . The debt service coverage test requires that

Houston Water revenues exceed operating expenses, junior and first lien debt service, and an additional

percent of annual debt service for junior and first liens. Revenues must also exceed operating expenses,

total debt service, and an additional percent of total annual debt service. This analysis focused on coverage

for junior and first liens because it was determined that the target coverage for total debt is met if the coverage

for junior and first liens is at least . x. The results of the debt service coverage test are summarized in

Table . .


DRAFT | APRIL |

Table . Wastewater Debt Service Coverage Test Before Revenue Increases ( millions) ( )


Allowable Revenues ( ) (a) . . . . . .

Adjustments ( ) (b) . . . . . .


Debt Service ( ) (d) . . . . . .


Total Coverage Expenses (f = c + d + e) . . . . . , .


( . ) ( . ) ( . ) ( . ) ( . ) ( . )

Notes: ( ) Values are in million dollars and are rounded. ( ) Allowable revenues include operating and non‐operating revenues, including impact fee revenue, less bad debt. ( ) Adjustments add total capital equipment ( ), total service ( ), pension debt service, and EPA consent decree expenses reimbursed

by Fund , less a deduction of allocated recovery. ( ) Debt service payment includes junior and first liens. ( ) Debt service coverage is calculated as . times debt service, which is what is needed to achieve . x DSCR.


The cash balance test also shows that revenue increases are needed. In all years of the five‐year study period,

the ending cash balance for the wastewater system drops below the target minimum of days of O&M

expenses. The results of the cash balance test are summarized in Table . .

Table . Wastewater Cash Balance Test Before Revenue Increases ( millions) ( )


Ending Cash Balance (June ) ( ) (a) . . ( . ) ( . ) ( . ) ( , . )



Above / (Below) Target (a – c) . ( . ) ( . ) ( . ) ( . ) ( , . )

Notes: ( ) Values are in million dollars and are rounded. ( ) From Table . . ( ) From Table . . ( ) Calculated as days of annual O&M expense.

1.3.5 Recommended Revenue Increases

The debt service coverage test and cash balance test both show that revenue increases are necessary to meet

target coverage and minimum cash balance for the study period. As a result, Carollo recommends Houston

Water increase wastewater rate revenue according to the following schedule:





DRAFT | APRIL |

Table . provides the projected wastewater revenue requirements, which will be allocated to the customer types in Chapter and used to design rates in Chapter . The wastewater revenue requirements are presented in detail in Appendix D.

Table . Projected Wastewater Revenue Requirements ( millions) ( )


Operating Costs ( ) . . . . .

Capital Costs ( ) . . . . .

Total Revenue Requirement . . . . .

Revenue Requirement Adjustments:

Sewer Service Penalties ( ) ( . ) ( . ) ( . ) ( . ) ( . )

Other Wastewater Op Revenue (Non‐rate) ( ) ( . ) ( . ) ( . ) ( . ) ( . )

Impact Fee Revenue ( ) ( . ) ( . ) ( . ) ( . ) ( . )

Non‐op Wastewater Revenue (Non‐rate) ( ) ( . ) ( . ) ( . ) ( . ) ( . )

Interest ( . ) ( . ) ( . ) ( . ) ( . )

Additions / (Subtractions) from Cash Balance . . . . .

Rate Revenue Requirement . . . . .

Pre‐Increase Rate Revenues . . . . .

July Revenue Adjustment (full year) . . . . .

JULY REVENUE ADJUSTMENT . % . % . % . % . %

April Revenue Adjustment (full year) . . . . .

APRIL REVENUE ADJUSTMENT . % . % . % . % . %

Notes: ( ) Values are in million dollars and are rounded. ( ) From Table . . ( ) Includes debt service from Table . , bad debt from Table . , and PAYGO from Table . . ( ) From Table . .

1.4 Combined Utility System

Although the study analyzed the water and wastewater systems separately, Houston Water’s financial performance is measured as a combined utility. The two primary indicators of the utility’s financial health are the DSCR and the number of days of O&M expenses that can be supported by the cash balance. The revenue requirements for the combined utility system are presented in detail in Appendix E.



As with the separate water and wastewater utilities, the combined utility system is not projected to meet the target debt service coverage ratios in any year of the study period FYE through FYE without revenue increases. The results of the debt service coverage test for the combined utility are summarized in Table . .


DRAFT | APRIL |

Table . Combined Utility System Debt Service Coverage Test Before Revenue Increases ( millions) ( )


Allowable Revenues ( ) (a) , . , . , . , . , . , .

Adjustments ( ) (b) . . . . . .


Debt Service ( ) (d) . . . . . .


Total Coverage Expenses (f = c + d + e) , . , . , . , . , . , .


( . ) ( . ) ( . ) ( . ) ( . ) ( . )

Debt Service Coverage Ratio [(a + b – c) / d]

. x . x . x . x . x . x


debt service, CWA debt service, and EPA consent decree expenses reimbursed by Fund , less a deduction of allocated recovery. ( ) Debt service payment includes junior and first liens. ( ) Debt service coverage is calculated as . times debt service, which is what is needed to achieve . x DSCR.


The cash balance test also shows that revenue increases are needed. In FYE , the ending cash balance for

the combined utility system drops below the target minimum of days of O&M expenses, and beginning in

FYE , the projected ending cash balance is negative. The results of the cash balance test are summarized

in Table . .

Table . Combined Utility System Cash Balance Test Before Revenue Increases ( millions) ( )


Ending Cash Balance (June ) ( ) (a) . . . ( . ) ( , . ) ( , . )



Above / (Below) Target (a – c) . . ( . ) ( . ) ( , . ) ( , . )

Ending Days of O&M (a * / b) ( ) ( ) ( )

Notes: ( ) Values are in million dollars and are rounded. ( ) From Table . and Table . . ( ) From Table . . ( ) Calculated as days of annual O&M expense.


DRAFT | APRIL |

1.4.2 Revenue Requirement Tests with Revenue Increases


With the revenue increases recommended in Section . . and Section . . the combined utility system

exceeds the minimum DSCR in all years and achieves the target DSCR in three of the five years. The results of

the debt service coverage test with revenues adjusted to include the recommended revenue increases are

shown in Table . .

Table . Combined Utility System Debt Service Coverage Test with Revenue Increases ( millions) ( )


Allowable Revenues ( ) (a) , . , . , . , . , . , .

Adjustments ( ) (b) . . . . . .


Debt Service ( ) (d) . . . . . .


Total Coverage Expenses (f = c + d + e) , . , . , . , . , . , .


( . ) . . . . ( . )

Debt Service Coverage Ratio [(a + b – c) / d]

. x . x . x . x . x . x


debt service, CWA debt service, and EPA consent decree expenses reimbursed by Fund , less a deduction of allocated recovery. ( ) Debt service payment includes junior and first liens. ( ) Debt service coverage is calculated as . times debt service, which is what is needed to achieve . x DSCR.

Figure . shows the DSCR from FYE . DSCRs for FYE through FYE are projected with and

without the recommended revenue increases, as shown in Table . and Table . .


DRAFT | APRIL |

Figure . Projected Debt Service Coverage Ratio


With the revenue increases recommended in Section . . and Section . . the combined utility system

meets or exceeds the target cash balance in all five years. The results of the cash balance test with revenues

adjusted to include the recommended revenue increases are shown in Table . .

Table . Combined Utility System Cash Balance Test with Revenue Increases ( millions) ( )


Ending Cash Balance (June ) (a) . . . . . .



Above / (Below) Target (a – c) . . . . . .

Ending Days of O&M (a * / b)

Notes: ( ) Values are in million dollars and are rounded. ( ) From Table . . ( ) Calculated as days of annual O&M expense.


DRAFT | APRIL |

Figure . shows the year‐end cash balance from FYE . Year‐end balances for FYE through FYE

are projected with and without the recommended revenue increases, as shown in Table . and Table . .

Figure . Projected Cash Balance (Days of O&M)


DRAFT | APRIL |

Chapter 2

COST OF SERVICE ANALYSIS

2.1 Cost of Service Approach

The cost of service analysis employs a tailored allocation of costs with a three‐step approach, shown in

Figure . . Based on the revenue requirement analysis outlined in Chapter , the functional allocation

designates each budget item to a set of functional categories specific to Houston Water, which are then

translated into the appropriate cost components based on the operation and/or design of each function. The

functional categories and their associated costs are allocated to the customer types based on each customer

type’s unique account, meter, and water demand or wastewater discharge characteristics. A customer type

consists of users that commonly create or share responsibility for certain costs incurred by the utility, which is

determined by customer data to combine similar groups of customers.

Figure . Three‐step Cost Allocation Approach

The study evaluated the existing customer types for Houston Water and determined them to be appropriate

based upon customer demand and discharge characteristics. Details of the customer account and demand

analysis are provided in Appendix F. The rate design process establishes a rate structure that proportionately

recovers costs from customer types and customers within each customer type. The final rate structure and

rate recommendations are designed to ( ) fund the utility’s projected costs of providing service, ( ) consider

affordability of customers’ bills, and ( ) provide a reasonable balance of revenue stability while encouraging

conservation. The rate design will be further detailed in the next chapter of this report.


DRAFT | APRIL |

2.2 Water System

The water system cost of service analysis is consistent with the AWWA M Manual Principles of Water Rates,

Fees and Charges, Seventh Edition, standard methods to allocate the revenue requirements among the various

customer types based on their usage characteristics.

The M Manual outlines the most widely used method for allocation of functionalized costs to cost

components, the Base‐Extra Capacity Method. The Base‐Extra Capacity Method allocates costs among: ( ) a

base category to provide baseline water service or average day demand; ( ) an extra capacity category to

provide peak demand service, often split into maximum day and maximum hour components; ( ) a customer

category to provide services that do not vary with water usage, such as customer service and billing; and ( )

direct fire protection.

The Base‐Extra Capacity Method recognizes that cost of service “depends not only on the total volume of

water used, but also on the rate of use, or peak demand requirements.” Costs incurred by Houston Water are

not incurred uniformly, or simply based on the total volume of water used. The cost of service changes based

on when water is used. This methodology accounts for this by including an extra capacity category to recover

costs associated with capacity that is not used consistently and that impacts operating costs and capital asset

related costs to accommodate peak flows.

The following sections discuss how costs are allocated to the system’s functions, cost components, and

customer types using the Base‐Extra Capacity Method.

2.2.1 Functional Cost Allocation

2.2.1.1 Functional Cost Categories

The functional cost allocation assigns the revenue requirement for the test year by major function. The study

developed a list of functions specific to the water system. Each functional component is allocated to specific

cost components, which can easily be assigned to rates. The water functional components used for Houston

Water are:

Supply – Untreated: Costs associated with raw

and/or recycled water to be used for non‐potable

purposes.

Supply – Treated: Costs associated with raw

water to be treated and sold as potable drinking

water.

Pumping: Costs associated with pumping treated

water.

Transmission: Costs associated with conveyance

of treated water through large‐diameter

transmission mains.

Production – EWPP: Costs associated with

production of treated water at the East WPP.

Production – NEWPP: Costs associated with

production of treated water at the Northeast WPP.

Production – NEWPP Expansion: Costs

associated with production of treated water at the

Northeast WPP Expansion.

Production – SEWPP: Costs associated with

production of treated water at the Southeast

WPP.

Production – Other: Costs associated with

production of treated water from groundwater

wells.

Storage: Costs associated with storage of treated

water to provide adequate system pressure and

meet maximum hour demands.

Distribution System: Costs associated with

delivering treated water to customers through

small‐diameter distribution lines.


DRAFT | APRIL |

Meters: Costs associated with water meters,

including meter reading, routine maintenance,

and regular replacement.

Fire Protection: Infrastructure and costs

associated with providing fire protection services

throughout the system.

Customer Billing: Costs associated with

calculating, preparing, and sending a customer’s

bill, as well as costs associated with customer

service.

Administration: Costs associated with

management and administration of the utility.

Water Authority Overhead – EWPP: Overhead

costs related to providing service to the water

authorities receiving treated water from the East

WPP.

Water Authority Overhead – NEWPP: Overhead

costs related to providing service to the water

authorities receiving treated water from the

Northeast WPP.

Co‐participant Overhead – SEWPP: Overhead

costs related to providing service to the Southeast

WPP co‐participants.

TCEQ Fees: Annual fees charged to Houston

Water by the Texas Commission on Environmental

Quality (TCEQ) based on the number of water

system connections.

General: Costs associated with other treatment

and administrative services that do not fit any of

the other categories. Examples include GIS

services, IT, finance, electrical and mechanical

equipment, lands not associated with a specific

asset, etc.

Houston Water’s budget was analyzed line by line. Details of how the O&M, debt service, and other expenses

were distributed among functional categories are shown in the following sections.

2.2.1.2 Cost Components

Houston Water’s cost components are used to allocate costs between the monthly meter charges and the

volumetric rates. The volumetric components include raw water, base, and extra capacity (maximum day and

maximum hour). The customer‐related cost components (meter charges, fire protection, billing and

collecting, and TCEQ fees) are the basis of the monthly meter charges and monthly TCEQ fees. Finally, there

are cost components to allocate costs directly to the East WPP water authorities, the Northeast WPP water

authorities, and the Southeast WPP co‐participants through their volumetric O&M rates and overhead rates.

The following describes each of the water cost components for Houston Water:

Raw Water: Operating costs associated with

delivering raw or recycled water to Contract –

Untreated customers.

Base: Operating and capital costs incurred by the

water system to provide a basic level of service to

each customer. These costs include treatment,

distribution, pumping, and storage, up to a level

that meets the water system’s baseline (average

day) demands throughout the year.

Extra Capacity: Costs incurred to meet maximum

day and maximum hour demands for water in

excess of base demand. This cost includes capital

costs related to oversizing the system to meet

excess demand.

System peaking factors are used to determine the

appropriate allocations to the Extra Capacity cost

components. For this study, the maximum day

peaking factor is . , and the maximum hour

peaking factor is . . This means that the

maximum day demand is assumed to be . times

the average day demand, and the maximum hour

demand is assumed to be . times the average

day demand (or . times the maximum day

demand).

Meter Charges: Costs associated with customer

meters and the associated capacity that is required

to meet the demand put on the system by each

meter. These costs are included in the monthly

meter charge based on the meter’s hydraulic

capacity.


DRAFT | APRIL |

Billing and Collecting: Costs related to

operational support activities including

accounting, billing, and customer service. These

costs are common to all customers and are

reasonably uniform across the different customer

types.

Fire Protection: Costs associated with providing

direct fire protection services. A portion of the

distribution system costs are included as the

system must have sufficient hydraulic capacity to

support the pressures and flow demands for fire

protection service.

TCEQ Fees: Annual fees charged to Houston

Water by the Texas Commission on Environmental

Quality (TCEQ) based on the number of water

system connections.

EWPP Water Authorities: Costs directly

attributable to the water authorities receiving

treated water from the East WPP.

NEWPP Water Authorities: Costs directly

attributable to the water authorities receiving

treated water from the Northeast WPP.

SEWPP Co‐participants: Costs directly

attributable to the SEWPP co‐participants.

Carollo reviewed the existing fixed assets for the water system and allocated each to the appropriate

functional category based on direction from Houston Water staff. In addition, each of the individual operating

budget line items was reviewed and its corresponding costs allocated based on the service provided. The

functionalized assets and O&M are then allocated to the appropriate cost components according to the

Base‐Extra Capacity methodology. This functional allocation process provides a reasonable, appropriate basis

for proportionately distributing costs to customer types based on their usage patterns and is grounded in cost

of service principles and standards.

Fixed Asset Allocation. Carollo reviewed the fixed asset registry provided by Houston Water staff, which

allocated each asset to a specific functional category. The study then allocated the functionalized assets to

cost components. The overall results of this allocation are used as a proxy to allocate capital‐related costs.

This minimizes large shifts in the allocation of capital costs, which can vary significantly from year to year.

Table . summarizes the allocation of the functionalized assets to the cost components to determine the

allocation factors applied to the capital related costs.


DRAFT | APRIL |

Table . Allocation of Water System Assets to Cost Components ( millions) ( )

Description Value ( )

Percent Allocation (%)

Retail and Contract – No Capital Retail Only

Meter General Base Max Day Max Hr Base Max Day Max Hr Fire

Plants & Structures . .

Electrical, Mechanical, Controls . .

Source of Supply – Wells . .

Pump Stations ( ) . . . .

Distribution Mains ( ) , . . . . .

Transmission Mains ( ) , . . .

Land & Site . .

Meters & Services . .

SCADA System ( ) . . .

Pumps ( ) . . . .

Fuel Tanks . .

Chemical Tanks ( ) . . .

Ground Storage Tanks ( ) . . . .

Elevated Storage Tank ( ) . . . .

Subtotal Allocation ( ) , . , . . . . . . . . .

Subtotal Allocation (%) . % . % . % . % . % . % . % . % . %

Reallocation of General . . . . . . . . ( . )

Total Allocated Assets ( ) , . , . . . , . . . . .

Total Allocated Assets (%) . % . % . % . % . % . % . % . %

Notes: ( ) Values are in million dollars and are rounded. ( ) Assets associated with pumping and storage are allocated among Base, Maximum Day Extra Capacity, and Maximum Hour Extra Capacity based on the system maximum day and maximum

hour peaking factors. ( ) Assets associated with the distribution system are partially allocated to Fire Protection ( % based on discussions with Houston Water staff). The remaining % is allocated among Base,

Maximum Day Extra Capacity, and Maximum Hour Extra Capacity based on the system maximum day and maximum hour peaking factors. ( ) Assets associated with the transmission mains, SCADA system, and chemical tanks are allocated between Base and Maximum Day Extra Capacity based on the system maximum day peaking

factor.


DRAFT | APRIL |

O&M Allocation. Similar to the fixed assets, the study allocated the water system operating expenses to

functional categories and then to cost components. The allocation percentages used to functionalize the

operating budget are estimates based on discussions with Houston Water staff. To avoid large shifts in

allocations during the five‐year rate‐setting period, the projected budgets for FYE through FYE

were averaged, and this average budget was allocated to develop the revenue requirement allocation. Then

the revenue requirement allocation was applied to each of the five test years to develop rates.

Table . provides the allocation of the five‐year average O&M budget to functional categories.

Table . summarizes the allocation of the functionalized average O&M expenses to the cost components.

Offsetting Revenue. Water service penalties, impact fee revenue, interest and other non‐rate revenue are used

to offset the revenue requirements and reduce the required increase in rate revenue. These offsetting

revenues are allocated to the general category and reallocated to the cost components based on the direct

allocation of the total revenue requirements. The exception to this is a partial allocation of other operating

revenue to Meter Charges and Billing and Collecting to directly allocate revenue from miscellaneous customer

fees to these categories where the related costs are allocated.

2.2.1.3 Revenue Requirements Allocation

To obtain an overall percentage allocation, operating expenses, capital expenses, and offsetting revenues are

weighted based on their projected expenditures for the five‐year average, as shown in Table . . Once the

overall percentage allocation to each functional category has been defined, those percentages are applied to

the test year revenue requirement in order to determine the total revenue requirement for each cost

component, as shown in Table . .


DRAFT | APRIL |

Table . Functional Allocation of Water O&M Budget ( millions) ( )

Description ‐yr Avg

( )


Su

pp

ly –

Un

trea

ted

Su

pp

ly –

Tre

ated

Pu

mp

ing

Tra

nsm

issi

on

Pro

du

ctio

n –

EW

PP

Pro

du

ctio

n –

NE

WP

P

Pro

du

ctio

n –

NE

WP

P

Exp

ansi

on

Pro

du

ctio

n –

SE

WP

P

Pro

du

ctio

n –

Oth

er

Sto

rag

e

Dis

trib

uti

on

Met

ers

Fir

e P

rote

ctio

n

Cu

sto

mer

Bill

ing

Ad

min

istr

atio

n

WA

OH

– E

WP

P

WA

OH

–

NE

WP

P

Co‐p

art

OH

SE

WP

P

TC

EQ

Fee

s

Gen

eral

Drinking Water Operations:

– DWO Executive Support G&A . . . . .

DWO Water Maintenance . . . . . . .

– DWO Regulatory and Compliance . . . . .

TCEQ Fee . .

– DWO Ground Water Operations . . . .

– DWO East WPP . .

– DWO Technical Services G&A . . . . . .

Cust. Complaints / Water System Maint. . . . . . . . . .

Source Water Protection . . . . . . . . .

– DWO Water Maintenance . .

PIB DS . .

– DWO Southeast WPP . .

– DWO Northeast WPP . .

– DWO System Maint. – North . . .

– DWO System Maint. – South . . .

River Authority Contributed Debt Service . . .

CWA O&M (CWA Trinity River and TRA) . . . .

CWA Debt Svc ( A‐H & Ref) . . . .

CWA Debt Service ( " line) . . .


– OPS Fin & Supp Op Svcs G&A . .

(HWP) – HW Planning . . . . . . . . .

– OPS Maint Op Svcs – Restoration . .

– OPS Maint Op Svcs – COS/DIS . . .

– HW GIS Services . . . . . . .

– OPS Executive Support . . . . .

– OPS Support Services . .


– HW Utility Analysis . . . . . . . . .


DRAFT | APRIL |

Description ‐yr Avg

( )


Su

pp

ly –

Un

trea

ted

Su

pp

ly –

Tre

ated

Pu

mp

ing

Tra

nsm

issi

on

Pro

du

ctio

n –

EW

PP

Pro

du

ctio

n –

NE

WP

P

Pro

du

ctio

n –

NE

WP

P

Exp

ansi

on

Pro

du

ctio

n –

SE

WP

P

Pro

du

ctio

n –

Oth

er

Sto

rag

e

Dis

trib

uti

on

Met

ers

Fir

e P

rote

ctio

n

Cu

sto

mer

Bill

ing

Ad

min

istr

atio

n

WA

OH

– E

WP

P

WA

OH

–

NE

WP

P

Co‐p

art

OH

SE

WP

P

TC

EQ

Fee

s

Gen

eral

Other O&M:

‐ – Director's Office . . . . .

– Information Technology . . . . .

‐ – Management Support . . . . .

& – Houston Water – Planning

. . . . . . . . .

, , , – Fin Mgmt Svcs Support . . . . .

Property and Terrorism Insurance . . . . .

Security . . . . .

‐ , – CAS Cust Acct Services . . . . . .

Deductions ( . ) .

Subtotal Allocation ( ) . . . . . . . . . . . . . . . . . . . . .

Subtotal Allocation (%) . % . % . % . % . % . % . % . % . % . % . % . % . % . % . % . % . % . % . % . %

Reallocation of General ( ) . . . . . . . . . . . ( . )

Total Allocated Assets ( ) . . . . . . . . . . . . . . . . . . . .

Total Allocated Assets (%) . % . % . % . % . % . % . % . % . % . % . % . % . % . % . % . % . % . % . %

Notes: ( ) Allocations are developed using an average of O&M costs for the ‐year period FYE through FYE . Costs are in millions of dollars and are rounded. ( ) General category is reallocated to other functional categories based on direct allocation of O&M budget. General is not reallocated to WPP‐specific categories to avoid double allocation to water authorities and co‐participants. General is also not reallocated to TCEQ fees because that category only includes the fees charged

by TCEQ to the City.


DRAFT | APRIL |

Table . Allocation of Water O&M Budget to Cost Components ( millions) ( )

Description ‐yr Avg ( )


Raw Water


Meter Billing EWPP WAs

NEWPP WAs

SEWPP CPs

TCEQ Fees General Base Max Day Max Hr Base Max Day Max Hr Fire

Source of Supply – Untreated . .

Source of Supply – Treated . .

Pumping ( ) . . . .

Transmission ( ) . . .

Production – EWPP ( ) . . . .

Production – NEWPP ( ) . . . .

Production – NEWPP Expansion ( ) . . . .

Production – SEWPP ( ) . . . .

Production – Other ( ) . . .

Storage ( ) . . . .

Distribution ( ) . . . . .

Meters . .

Fire Protection . .

Customer Billing . .

Admin . .

WA OH – EWPP . .

WA OH – NEWPP . .

Co‐part OH – SEWPP . .

TCEQ Fees . .

Total Allocation ( ) . . . . . . . . . . . . . . . .

Total Allocation (%) . % . % . % . % . % . % . % . % . % . % . % . % . % . % . %

Notes: ( ) Allocations are developed using an average of O&M costs for the ‐year period FYE through FYE . Costs are in millions of dollars and are rounded. ( ) Costs associated with pumping and storage are allocated among Base, Maximum Day Extra Capacity, and Maximum Hour Extra Capacity based on the system maximum day and maximum hour peaking factors. ( ) Costs associated with the transmission mains and production (other) are allocated between Base and Maximum Day Extra Capacity based on the system maximum day peaking factor. ( ) Costs associated with the production at the WPPs are allocated directly to the water authorities or co‐participants based on their sales as a percentage of production. The remainder is allocated between Base and Maximum Day Extra Capacity based on the system maximum day peaking factor. ( ) Costs associated with the distribution system are partially allocated to Fire Protection ( % based on discussions with Houston Water staff). The remaining % is allocated among Base, Maximum Day Extra Capacity, and Maximum Hour Extra Capacity based on the system maximum day and maximum hour peaking factors.


DRAFT | APRIL |

Table . Allocation of Water Revenue Requirements to Cost Components ( millions) ( )

Description ‐yr Avg ( ) Raw

Water



NEWPP WAs

SEWPP CPs

TCEQ Fees General Base Max Day Max Hr Base Max Day Max Hr Fire

Operating Costs ( ) . . . . . . . . . . . . . . . .

Capital Costs:

Debt Service ( ) . . . . . . . . . . . . . . . .

TRA/Lake Livingston Debt ( ) . . . . . . . . . . . . . . . .

Bad Debt ( ) . . . . . . . . . . . . . . . .

Rate‐funded Capital (PAYGO) ( ) . . . . . . . . . . . . . . . .

Water Service Penalties ( ) ( . ) . . . . . . . . . . . . . . ( . )

Other Water Operating Revenue (Non‐rate) ( ) ( . ) . . . . . . . . ( . ) ( . ) . . . . ( . )

Impact Fee Revenue ( ) ( . ) . . . . . . . . . . . . . . ( . )

Non‐operating Water Revenue (Non‐rate) ( ) ( . ) . . . . . . . . . . . . . . ( . )

Interest ( ) ( . ) . . . . . . . . . . . . . . ( . )

Additions / (Subtractions) from Cash Balance ( ) . . . . . . . . . . . . . . . .

Subtotal Allocation ( ) . . . . . . . . . . . . . . . .

Subtotal Allocation (%) . % . % . % . % . % . % . % . % . % . % . % . % . % . % . % . %

Reallocation of "General" ( ) . . . . . . . . . . ( . )

Total Allocated Revenue Requirement ( ) . . . . . . . . . . . . . . . .

Total Allocated Revenue Requirement (%) . % . % . % . % . % . % . % . % . % . % . % . % . % . % . %

Notes: ( ) Values are in millions of dollars and are rounded. ( ) Allocations are developed using an average of revenue requirements for the ‐year period FYE through FYE . ( ) From Table . . ( ) Allocated using asset allocation percentages developed in Table . . ( ) Allocated based on functional allocation of CWA O&M. ( ) Allocated to General category to be reallocated based on direct allocations. ( ) Partially allocated to Meter Charges ( %) and Billing & Collecting ( %) to align revenue from fees related to these categories. Remainder is allocated to General category to be reallocated based on direct allocations. ( ) General category is reallocated to other cost components based on direct allocation of revenue requirements. General is not reallocated to water authorities and co‐participants to avoid double allocation to these customer types. General is also not reallocated to TCEQ fees because that category only includes the fees

charged by TCEQ to the City.


DRAFT | APRIL |

Table . Allocation of FYE Water Revenue Requirements to Cost Components ( millions) ( )

Description FYE ( ) Raw Water


Meter Billing EWPP WAs NEWPP

WAs SEWPP CPs TCEQ Fees Base Max Day Max Hr Base Max Day Max Hr Fire

Operating Costs . . . . . . . . . . . . . . .

Capital Costs:

Debt Service . . . . . . . . . . . . . . .

TRA/Lake Livingston Debt . . . . . . . . . . . . . . .

Bad Debt . . . . . . . . . . . . . . .

Rate‐funded Capital (PAYGO) . . . . . . . . . . . . . . .

Water Service Penalties ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) . . . .

Other Water Operating Revenue (Non‐rate) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) . . . .

Impact Fee Revenue ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) . . . .

Non‐operating Water Revenue (Non‐rate) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) . . . .

Interest ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) . . . .

Additions / (Subtractions) from Cash Balance ( ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) . . . .

Total Allocated Revenue Requirement ( ) . . . . . . . . . . . . . . .

Total Allocated Revenue Requirement (%) . % . % . % . % . % . % . % . % . % . % . % . % . % . % . %

Notes: ( ) Values are in millions of dollars and are rounded. ( ) Test year revenue requirements from Table . (FYE shown in this table) are allocated based on allocation of ‐year average revenue requirements from Table . . ( ) Additions/(subtractions) shown in this table is based on revenue requirements for July , , revenue increase and does not match what is shown in Table . , which includes the April , , revenue increase.


DRAFT | APRIL |

2.2.2 Allocation to Customer Types

2.2.2.1 Unit Costs

The unit costs of service are developed by dividing the total annual costs allocated to each of the cost

components by the total annual service units of the respective component. The total annual costs allocated

to each cost component are determined by applying the allocations from Table . , as shown in Table . .

Units of Service. Based on functional category, the units of service are water consumed, incremental demand

(max day and max hour extra capacity), meter equivalents, annual bills, and connections.

The following describes the quantifiable analysis of the units of service:

Raw Water: Allocated by total annual sales of

untreated water in , gallons.

Base Costs: Allocated by total annual treated

water sales volume or annual water consumption

in , gallons.

Extra Capacity Costs: Allocated based on each

customer type’s extra capacity demand developed

from the incremental amounts between max day

demand and average day demand and between

max hour demand and max day demand. Extra

capacity units are based on the incremental

capacity, in , gallons per day, needed to serve

demands in excess of the baseline or average day

demand.

Meter Equivalents: The meter equivalents are

derived based on the meter’s hydraulic capacity.

Larger meters are assigned more meter

equivalents than smaller meters.

Billing and Collecting: For the fixed charge, the

billing and collecting component unit cost is based

on the number of bills.

TCEQ Fees: TCEQ fees are charged to the City

based on the number of connections to the water

system. As such, these costs are allocated directly

to the customers based on the number of

connections, which may or may not be equal to the

number of meters.

For the meter charges and fire protection cost components, equivalent meters are used, as opposed to

accounts or bills, to recognize the fact that larger meters have a higher water flow potential and utilize greater

system capacity. The meter charges portion of the monthly meter charge also accounts for meter size, as it is

more expensive to install, maintain, and replace larger meters. Meter equivalents are derived based on the

hydraulic capacity (gallons per minute) respective to the size of the meter. Meter equivalents are set relative

to the hydraulic flow of a / inch meter.

Unit Cost Development. In order to allocate the cost of service to various customer types, unit costs of service

are developed for each cost component. As shown in Table . , the total rate revenue requirements are

allocated to each cost component for the test year. The total cost for each functional category is then divided

by the total number of associated units of service to determine appropriate unit costs for the water system.

The units of service for each customer type are shown in Table . .

Table . shows the calculation of the unit costs for each cost component, which are then applied to the units

of service for each customer type from Table . to derive customer type allocations for each test year of the

five year rate period. Projections are based on FYE customer usage characteristics and account growth

assumptions. As such, costs are allocated to each customer type based on their respective base usage and

peaking factors to reflect their proportionate use of the overall system.


DRAFT | APRIL |

Table . Water Units of Service by Customer Type (FYE )

Customer Type Raw Water



WAs SEWPP CPs TCEQ Fees Base Max Day ( ) Max Hr ( ) Base Max Day ( ) Max Hr ( ) Fire

Units kgal kgal kgal/day kgal/day kgal kgal/day kgal/day MEU MEU Bills kgal kgal kgal conn

Retail:

Single Family Residential , , , , , , , , , , , , ,

Multifamily Residential , , , , , , , , , , , ,

Commercial / Industrial ( ) , , , , , , , , , , , ,

Irrigation , , , , , , , , , , ,

Transient , , , , , , , , ,

Resale , ,

Emergency Backup , ,

Metered Fire , , , , ,

Unmetered Fire , , ,

Wholesale:

Contract Treated w/Airgap , , ,

Contract Treated w/o Airgap , , , ,

GRP Participants , , , , ,

Contract Untreated , , ,

Contract Treated – SEWPP Co‐participants , ,

Contract Treated – EWPP Water Authorities , ,

Contract Treated – NEWPP Water Authorities , ,

Total , , , , , , , , , , , , , , , , , , , , , ,

Notes: ( ) Commercial/industrial customer type includes extra container and government customers. ( ) Maximum day extra capacity is calculated for each customer type. It is the difference between the maximum day demand and the average day demand. ( ) Maximum hour extra capacity is calculated for each customer type. It is the difference between the maximum hour demand and the maximum day demand.

Table . Development of Water Unit Costs (FYE ) ( millions) ( )

Description Raw Water



WAs SEWPP CPs TCEQ Fees Base Max Day ( ) Max Hr ( ) Base Max Day ( ) Max Hr ( ) Fire

Allocated Revenue Requirements ( ) . . . . . . . . . . . . . .

Total Units ( ) , , , , , , , , , , , , , , , , , , , , , ,

Unit Cost . . . . . . . . . . . . . .

Units kgal kgal kgal/day kgal/day kgal kgal/day kgal/day MEU MEU Bills kgal kgal kgal conn

Notes: ( ) From Table . . Values are in millions of dollars and are rounded. ( ) From Table . .


DRAFT | APRIL |

Customer Allocation. Carollo analyzed customer billing data to determine the number of bills by meter size and

customer type, as well as the usage characteristics of each customer type. The details of this analysis are

provided in Appendix F. Table . details the results of the cost allocation by customer type based on FYE

consumption data.

Based on these unit allocations, Table . details the FYE cost of service for each customer type and cost

component, which are then summed to determine the total revenue requirement by customer type. Detailed

water cost of service allocations by customer type are provided for FYE through FYE in Appendix F.

The rate design analysis determines how the costs are recovered from each customer type through specified

water rates. The focus of this process is to achieve cost recovery and substantiate that customers are paying

their fair and proportionate share of system costs. Houston Water’s existing rate structure consists of two

components: a volumetric rate (variable) and a monthly meter charge (fixed). The volumetric component is


incurred for delivering each unit of water. The monthly meter charge is intended to recognize that the utility

incurs fixed costs to provide the availability of water service, which must be recovered independent of monthly

water demands and consumption. These two rate components serve as a basis for the following rate design

chapter.


DRAFT | APRIL |

Table . Water FYE Revenue Requirement Allocation by Customer Type (%)

Customer Type Raw Water



WAs SEWPP CPs TCEQ Fees Base Max Day Max Hr Base Max Day Max Hr Fire

Retail:

Single Family Residential . % . % . % . % . % . % . % . % . % . % . % . % . % . %

Multifamily Residential . % . % . % . % . % . % . % . % . % . % . % . % . % . %

Commercial / Industrial ( ) . % . % . % . % . % . % . % . % . % . % . % . % . % . %

Irrigation . % . % . % . % . % . % . % . % . % . % . % . % . % . %

Transient . % . % . % . % . % . % . % . % . % . % . % . % . % . %

Resale . % . % . % . % . % . % . % . % . % . % . % . % . % . %

Emergency Backup . % . % . % . % . % . % . % . % . % . % . % . % . % . %

Metered Fire . % . % . % . % . % . % . % . % . % . % . % . % . % . %

Unmetered Fire . % . % . % . % . % . % . % . % . % . % . % . % . % . %

Wholesale:

Contract Treated w/Airgap . % . % . % . % . % . % . % . % . % . % . % . % . % . %

Contract Treated w/o Airgap . % . % . % . % . % . % . % . % . % . % . % . % . % . %

GRP Participants . % . % . % . % . % . % . % . % . % . % . % . % . % . %

Contract Untreated . % . % . % . % . % . % . % . % . % . % . % . % . % . %

Contract Treated – SEWPP Co‐participants . % . % . % . % . % . % . % . % . % . % . % . % . % . %

Contract Treated – EWPP Water Authorities . % . % . % . % . % . % . % . % . % . % . % . % . % . %

Contract Treated – NEWPP Water Authorities . % . % . % . % . % . % . % . % . % . % . % . % . % . %

Total . % . % . % . % . % . % . % . % . % . % . % . % . % . %

Note: ( ) Commercial/industrial customer type includes extra container and government customers.


DRAFT | APRIL |

Table . Water FYE Revenue Requirement Allocation by Customer Type ( millions) ( )

Customer Type FYE Raw Water



NEWPP WAs

SEWPP CPs TCEQ Fees Base Max Day Max Hr Base Max Day Max Hr Fire

Retail:

Single Family Residential . . . . . . . . . . . . . . .

Multifamily Residential . . . . . . . . . . . . . . .

Commercial / Industrial ( ) . . . . . . . . . . . . . . .

Irrigation . . . . . . . . . . . . . . .

Transient . . . . . . . . . . . . . . .

Resale . . . . . . . . . . . . . . .

Emergency Backup . . . . . . . . . . . . . . .

Metered Fire . . . . . . . . . . . . . . .

Unmetered Fire . . . . . . . . . . . . . . .

Wholesale:

Contract Treated w/Airgap . . . . . . . . . . . . . . .

Contract Treated w/o Airgap . . . . . . . . . . . . . . .

GRP Participants . . . . . . . . . . . . . . .

Contract Untreated . . . . . . . . . . . . . . .

Contract Treated – SEWPP Co‐participants . . . . . . . . . . . . . . .

Contract Treated – EWPP Water Authorities . . . . . . . . . . . . . . .

Contract Treated – NEWPP Water Authorities . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . .

Notes: ( ) Values are in millions of dollars and are rounded. ( ) Commercial/industrial customer type includes extra container and government customers.


DRAFT | APRIL |


The wastewater system cost of service analysis is consistent with the Water Environment Federation (WEF)

Manual of Practice (MOP) : Financing and Charges for Wastewater Systems, Fourth Edition, standard methods

to allocate the revenue requirements among the various customer types based on their discharge

characteristics. The following sections discuss how costs are allocated to the system’s functions, cost

components, and customer types using the methodology outlined in MOP .

2.3.1 Functional Cost Allocation

2.3.1.1 Functional Cost Categories

The functional cost allocation assigns the revenue requirement for the test year by major function. The study

developed a list of functions specific to the wastewater system. Each functional component is allocated to

specific cost components, which can easily be assigned to rates. The wastewater functional components used

for Houston Water are:

Influent Pumping/Headworks: Costs associated

with pumps used to move the wastewater from an

influent wet well to the headworks facility.

Aeration: Costs associated with adding air to the

wastewater to remove contaminants.

Clarifiers: Costs associated with the tanks used to

remove suspended solids from the wastewater.

Chlorination/Dechlorination: Costs associated

with the introduction of chlorine as a disinfectant

and its subsequent removal.

Solids Thickening/Digestion: Costs associated

with increasing the solids concentration and

producing energy from methane gas.

Biosolids Handling: Costs associated with

separating, treating, and disposing of biosolids.

Effluent Discharge: Costs associated with

managing and controlling treated wastewater

outflow.

Industrial Wastewater Program: Costs

associated with managing the program that issues

and oversees wastewater permits for industrial

customers.

Pump/Lift Stations: Costs associated with

pumping wastewater within the system.

Collection System: Costs associated with

collection system infrastructure that carries all

wastewater generated by customers to the

treatment plant.

Customer Billing: All costs associated with

producing customer bills, including billing system

software, postage, credit card processing fees, etc.

Administration: Costs associated with

management and administration of the utility.

General: Costs associated with other treatment

and administrative services that do not fit any of

the other categories. Examples include GIS

services, IT, finance, electrical and mechanical

equipment, lands not associated with a specific

asset, etc.


DRAFT | APRIL |

Houston Water’s budget was analyzed line by line. Details of how the O&M, debt service, and other expenses

were distributed among functional categories are shown in the following sections.

2.3.1.2 Cost Components

Houston Water’s cost components are used to allocate costs between the monthly meter charges and the

volumetric rates. The volumetric components include flow and strength – biochemical oxygen demand (BOD),

total suspended solids (TSS), and ammonia. The capacity and customer cost components are the basis of the

monthly meter charges. Finally, the industrial wastewater program cost component allocates the costs of the

program directly to the industrial customers who participate in the program and pay surcharges.

The following describes each of the wastewater cost components for Houston Water:

Flow: Operating and capital costs incurred by the

wastewater system to handle the quantity of flows

discharged to or collected by the system.

Capacity: Capital costs associated with hydraulic

capacity within the wastewater treatment plants.

Biochemical Oxygen Demand (BOD): During

treatment, microbial organisms consume

dissolved oxygen while oxidizing the organic

matter present in wastewater. BOD measures the

quantity of oxygen required for that process.

Expenses include costs incurred to remove and

dispose of organic compounds.

Total Suspended Solids (TSS): TSS measures the

quantity of suspended solids or non‐filterable

residue in the wastewater. Costs include those

associated with removing and disposing of small

particles in the wastewater.

Ammonia: Cost for removing and disposing of

ammonia from the wastewater.

Industrial Wastewater Program: Costs

associated with managing the program that issues

and oversees wastewater permits for industrial

customers.

Customer: Costs that relate to operational

support activities including accounting, billing,

customer service, administrative, and technical

support. These are common to all customers.

Carollo reviewed the existing fixed assets for the wastewater system and allocated each to the appropriate

functional category based on direction from Houston Water staff. In addition, each of the individual operating

budget line items was reviewed and its corresponding costs allocated based on the service provided. The

functionalized assets and O&M are then allocated to the appropriate cost components according to the MOP

methodology. This functional allocation process provides a reasonable, appropriate basis for

proportionately distributing costs to customer types based on their usage patterns and is grounded in cost of

service principles and standards.

Fixed Asset Allocation. Carollo reviewed the fixed asset registry provided by Houston Water staff, which

allocated each asset to a specific functional category. The study then allocated the functionalized assets to

cost components. The overall results of this allocation are used as a proxy to allocate capital‐related costs.

This minimizes large shifts in the allocation of capital costs, which can vary significantly from year to year.

Table . summarizes the allocation of the functionalized assets to the cost components to determine the

allocation factors applied to the capital related costs.


DRAFT | APRIL |

Table . Allocation of Wastewater System Assets to Cost Components ( millions) ( )

Description Value ( )


Flo

w –

Ret

ail

Flo

w –

Ret

ai +

Cat

Y

Wh

ole

sale

Cap

acit

y

BO

D

TS

S

Am

mo

nia

Gen

eral

Plants & Structures , . . . .

Elec, Mech, Controls . .

Supply – Wells . .

Lift and Pump Stations . .

Interceptors , . .

Local Collector Mains , . .

Land & Site . .

SCADA System . .

Fuel Tanks . .

Chemical Tanks . .

Subtotal Allocation ( ) , . , . , . . . . . .

Subtotal Allocation (%) . % . % . % . % . % . % . %

Reallocation of General . . . . . . ( . )

Total Allocation ( ) , . , . , . . . . .

Total Allocation (%) . % . % . % . % . % . %


O&M Allocation. Similar to the fixed assets, the study allocated the wastewater system operating expenses to

functional categories and then to cost components. The allocation percentages used to functionalize the

operating budget are estimates based on discussions with Houston Water staff. To avoid large shifts in

allocations during the five‐year rate‐setting period, the projected budgets for FYE through FYE

were averaged, and this average budget was allocated to develop the revenue requirement allocation. Then

the revenue requirement allocation was applied to each of the five test years to develop rates.

Table . , on the following page, provides the allocation of the five‐year average O&M budget to functional

categories.

Table . summarizes the allocation of the functionalized average O&M expenses to the cost components


DRAFT | APRIL |

Table . Functional Allocation of Wastewater O&M Budget ( millions) ( )



Influent Pumping & Headworks Aeration Clarifiers

Chlor / Dechlor

Solids Thickening /

Digestion Biosolids Handling

Effluent Discharge

Industrial WW

Program Lift

Stations Collection

System Customer

Billing Administra

tion

Treatment Collection

General General

Wastewater Operations:

– WWO Executive Support G&A . .

– WWO Collection System Analysis . .

– WWO Collection System Repairs . .

– WWO Regulatory and Compliance . . .

– WWO Technical Services G&A . .

– WWO Plant Operations . . . . . . . .

– WWO Electrical & Automation . . . . . . . .

– WWO Construction Management . . . . . .

– WWO Contract Management . . . . . .

– WWO Mechanical Management . . . . . . .

– WWO Maint Operation Services . . . .

– WWO EPA Compliance . .


– OPS Fin & Supp Op Svcs G&A . .

(HWP) – HW Planning . . . .

– OPS Maint Op Svcs – Restoration . .

– OPS Maint Op Svcs – COS/DIS . .

– HW GIS Services . . . . . . .

– OPS Executive Support . .

– OPS Support Services . .

– HW Infrastructure Planning . . . .

– HW Utility Analysis . . . .

Other O&M:

‐ – Director's Office . .

– Information Technology . .

‐ – Management Support . .

& – Houston Water – Planning . .

, , , – Fin Mgmt Svcs Support . .

‐ , – CAS Cust Acct Services . .

Deductions ( . ) .

Subtotal Allocation ( ) . . . . . . . . . . . . . . .

Subtotal Allocation (%) . % . % . % . % . % . % . % . % . % . % . % . % . % . %

Reallocation of General ( ) . . . . . . . . . . . . . ( . )

Total Allocated Assets ( ) . . . . . . . . . . . . . .

Total Allocated Assets (%) . % . % . % . % . % . % . % . % . % . % . % . % . % Notes: ( ) Allocations are developed using an average of O&M costs for the ‐year period FYE through FYE . Costs are in millions of dollars and are rounded.

( ) General category is reallocated to other functional categories based on direct allocation of O&M budget.


DRAFT | APRIL |

Table . Allocation of Wastewater O&M Budget to Cost Components ( millions) ( )



Flow – Retail Flow – Retail +

Cat. Y Whsl Flow – All BOD TSS Ammonia Industrial WW

Program. Customer General

Influent Pumping & Headworks . .

Aeration . . .

Clarifiers . .

Chlorination / Dechlorination . .

Solids Thickening / Digestion . . .

Biosolids Handling . .

Effluent Discharge . .

Industrial WW Program . .

Lift Stations . .

Collection System ( ) . . . .

Customer Billing . .

Administration . .

Treatment + Collection General . .

Total Allocation ( ) . . . . . . . . . .

Total Allocation (%) . % . % . % . % . % . % . % . % . %

Notes: ( ) Allocations are developed using an average of O&M costs for the ‐year period FYE through FYE . Costs are in millions of dollars and are rounded. ( ) Costs associated with the Collection System are allocated % to Customer to be recovered in the monthly meter charge. The remaining % is allocated between Flow – Retail and Flow – Retail + Category Y Wholesale based on inch‐feet of local collectors and interceptors, respectively.


DRAFT | APRIL |

Offsetting Revenue. Wastewater service penalties, impact fee revenue, interest and other non‐rate revenue

are used to offset the revenue requirements and reduce the required increase in rate revenue. These offsetting

revenues are allocated to the general category and reallocated to the cost components based on the direct

allocation of the total revenue requirements. The exception to this is a partial allocation of other operating

revenue to Customer to directly allocate revenue from miscellaneous customer fees to the Customer cost

component where the related costs are allocated.

2.3.1.3 Revenue Requirements Allocation

To obtain an overall percentage allocation, operating expenses, capital expenses, and offsetting revenues are

weighted based on their projected expenditures for the five‐year average, as shown in Table . . Once the

overall percentage allocation to each functional category has been defined, those percentages are applied to

the test year revenue requirement in order to determine the total revenue requirement for each cost

component, as shown in Table . .


DRAFT | APRIL |

Table . Allocation of Wastewater Revenue Requirements to Cost Components ( millions) ( )


Flow – Retail

Flow – Retail + Cat.

Y Whsl Flow – All Capacity BOD – O&M BOD – Capital TSS – O&M

TSS – Capital

Ammonia – O&M

Ammonia – Capital

Industrial WW Pgm. Customer General

Operating Costs ( ) . . . . . . . . . . . . . .

Capital Costs:

Debt Service ( ) . . . . . . . . . . . . . .

Bad Debt ( ) . . . . . . . . . . . . . .

Rate‐funded Capital (PAYGO) ( ) . . . . . . . . . . . . . .

Water Service Penalties ( ) ( . ) . . . . . . . . . . . . ( . )

Other Water Operating Revenue (Non‐rate) ( ) ( . ) . . . . . . . . . . . ( . ) ( . )

Impact Fee Revenue ( ) ( . ) . . . . . . . . . . . . ( . )

Non‐operating Water Revenue (Non‐rate) ( ) ( . ) . . . . . . . . . . . . ( . )

Interest ( ) ( . ) . . . . . . . . . . . . ( . )

Additions / (Subtractions) from Cash Balance ( ) . . . . . . . . . . . . . .

Subtotal Allocation ( ) . . . . . . . . . . . . . .

Subtotal Allocation (%) . % . % . % . % . % . % . % . % . % . % . % . % . % . %

Reallocation of "General" ( ) . . . . . . . . . . . . ( . )

Total Allocated Revenue Requirement ( ) . . . . . . . . . . . . . .

Total Allocated Revenue Requirement (%) . % . % . % . % . % . % . % . % . % . % . % . % . %

Notes: ( ) Values are in millions of dollars and are rounded. ( ) Allocations are developed using an average of revenue requirements for the ‐year period FYE through FYE . ( ) From Table . . ( ) Allocated using asset allocation percentages developed in Table . . ( ) Allocated to General category to be reallocated based on direct allocations. ( ) Partially allocated to Customer ( %) to align revenue from customer‐related fees. Remainder is allocated to General category to be reallocated based on direct allocations. ( ) General category is reallocated to other cost components based on direct allocation of revenue requirements.


DRAFT | APRIL |

Table . Allocation of FYE Wastewater Revenue Requirements to Cost Components ( millions) ( )

Description FYE ( ) Flow – Retail Flow – Retail + Cat. Y Whsl Flow – All Capacity BOD – O&M

BOD – Capital TSS – O&M TSS – Capital

Ammonia – O&M

Ammonia – Capital

Industrial WW Pgm. Customer

Operating Costs . . . . . . . . . . . . .

Capital Costs:

Debt Service . . . . . . . . . . . . .

Bad Debt . . . . . . . . . . . . .

Rate‐funded Capital (PAYGO) . . . . . . . . . . . . .

Water Service Penalties ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) . ( . ) ( . )

Other Water Operating Revenue (Non‐rate) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) . ( . ) ( . )

Impact Fee Revenue ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) . ( . ) ( . )

Non‐operating Water Revenue (Non‐rate) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) . ( . ) ( . )

Interest ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) . ( . ) ( . )

Additions / (Subtractions) from Cash Balance ( ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) ( . ) . ( . ) ( . )

Total Allocated Revenue Requirement ( ) . . . . . . . . . . . . .

Total Allocated Revenue Requirement (%) . % . % . % . % . % . % . % . % . % . % . % . % . %

Notes: ( ) Values are in millions of dollars and are rounded. ( ) Test year revenue requirements from Table . (FYE shown in this table) are allocated based on allocation of ‐year average revenue requirements from Table . . ( ) Additions/(subtractions) shown in this table is based on revenue requirements for July , , revenue increase and does not match what is shown in Table . , which includes the April , , revenue increase.


DRAFT | APRIL |

2.3.2 Allocation to Customer Types

2.3.2.1 Unit Costs

The unit costs of service are developed by dividing the total annual costs allocated to each of the cost

components by the total annual service units of the respective component. The total annual costs allocated

to each cost component are determined by applying the allocations from Table . , as shown in Table . .

Units of Service. Based on functional category, the units of service are wastewater discharged, loadings (BOD,

TSS, and ammonia), and annual bills.

The following describes the quantifiable analysis of the units of service:

Flow: Allocated based on the water usage for each

customer in , gallons.

Capacity: Allocated based on average daily flow.

BOD: Allocated based on pounds of BOD returned

to the system.

TSS: Allocated based on pounds of TSS returned

to the system.

Ammonia: Allocated based on pounds of

ammonia returned to the system.

Customer: Allocated based on the number of bills.

Industrial Wastewater Program: Allocated to

industrial wastewater customers based on the

number of bills.

Unit Cost Development. In order to allocate the cost of service to various customer types, unit costs of service

are developed for each cost component. As shown in Table . , the total rate revenue requirements are

allocated to each cost component for the test year. The total cost for each functional category is then divided

by the total number of associated units of service to determine appropriate unit costs for the wastewater

system. The units of service for each customer type are shown in Table . .

Table . shows the calculation of the unit costs for each cost component, which are then applied to the units

of service for each customer type from Table . to derive customer type allocations for each test year of the

five year rate period. Projections are based on FYE customer usage characteristics and account growth

assumptions. As such, costs are allocated to each customer type based on their respective base usage and

peaking factors to reflect their proportionate use of the overall system.


DRAFT | APRIL |

Table . Wastewater Units of Service by Customer Type (FYE )

Customer Type Flow – Retail Flow – Retail +

Cat. Y Whsl Flow – All Capacity BOD – O&M BOD – Capital TSS – O&M TSS – Capital Ammonia –

O&M Ammonia –

Capital Industrial WW

Pgm. Customer

Units kgal kgal kgal kgal/day lbs lbs lbs lbs lbs lbs ind. bills bills

Retail:

Single Family Residential , , , , , , , , , , , , , , , , , , , , ,

Multifamily Residential , , , , , , , , , , , , , , , , , , , ,

Commercial / Industrial ( ) , , , , , , , , , , , , , , , , , , , ,

Industrial with Surcharges , , , , , , , , , , , , , , , , , , ,

Sewer Only (Unmetered) , , , , , , , , , ,

Wholesale:

Capital w/o Collection System , , , , , , ,

No Capital w/Collection System , , , , , , , ,

Connection‐based , , , , , , , ,

Total , , , , , , , , , , , , , , , , , , , , , ,

Note: ( ) Commercial/industrial customer type includes industrial customers who do not pay industrial surcharges.

Table . Development of Wastewater Unit Costs (FYE ) ( millions) ( )

Description Flow – Retail Flow – Retail +


O&M Ammonia –


Pgm. Customer

Allocated Revenue Requirements ( ) . . . . . . . . . . . .

Total Units ( ) , , , , , , , , , , , , , , , , , , , , , ,

Unit Cost . . . . . . . . . . , . .

Units kgal kgal kgal kgal/day lbs lbs lbs lbs lbs lbs ind. bills bills

Notes: ( ) From Table . . Values are in millions of dollars and are rounded. ( ) From Table . .


DRAFT | APRIL |

Customer Allocation. Carollo analyzed customer billing data to determine the number of bills by meter size and

customer type, as well as the discharge characteristics of each customer type. Table . details the results of

the cost allocation by customer type based on FYE customer data.

Based on these unit allocations, Table . details the FYE cost of service for each customer type and

cost component, which are then summed to determine the total revenue requirement by customer type.

Detailed water cost of service allocations by customer type are provided for FYE through FYE in

Appendix G.

The rate design analysis determines how the costs are recovered from each customer type through specified

wastewater rates. The focus of this process is to achieve cost recovery and substantiate that customers are

paying their fair and proportionate share of system costs. Houston Water’s existing rate structure consists of

two components: a volumetric rate (variable) and a monthly meter charge (fixed). The volumetric component

is assessed based on metered water usage per , gallons and, by design, is intended to recover the cost



recovered independent of monthly wastewater flows and loadings. These two rate components serve as a

basis for the following rate design chapter.


DRAFT | APRIL |

Table . Wastewater FYE Revenue Requirement Allocation by Customer Type (%)

Customer Type Flow – Retail Flow – Retail +


O&M Ammonia –


Pgm. Customer

Retail:

Single Family Residential . % . % . % . % . % . % . % . % . % . % . % . %

Multifamily Residential . % . % . % . % . % . % . % . % . % . % . % . %

Commercial / Industrial ( ) . % . % . % . % . % . % . % . % . % . % . % . %

Industrial with Surcharges . % . % . % . % . % . % . % . % . % . % . % . %

Sewer Only (Unmetered) . % . % . % . % . % . % . % . % . % . % . % . %

Wholesale:

Capital w/o Collection System . % . % . % . % . % . % . % . % . % . % . % . %

No Capital w/Collection System . % . % . % . % . % . % . % . % . % . % . % . %

Connection‐based . % . % . % . % . % . % . % . % . % . % . % . %

Total . % . % . % . % . % . % . % . % . % . % . % . %

Notes: ( ) Commercial/industrial customer type includes industrial customers who do not pay industrial surcharges.

Table . Wastewater FYE Revenue Requirement Allocation by Customer Type ( ) ( millions) ( )

Customer Type FYE Flow – Retail Flow – Retail + Cat. Y Whsl Flow – All Capacity BOD – O&M

BOD – Capital TSS – O&M TSS – Capital

Ammonia – O&M

Ammonia – Capital

Industrial WW Pgm. Customer

Retail:

Single Family Residential . . . . . . . . . . . . .

Multifamily Residential . . . . . . . . . . . . .

Commercial / Industrial ( ) . . . . . . . . . . . . .

Industrial with Surcharges . . . . . . . . . . . . .

Sewer Only (Unmetered) . . . . . . . . . . . . .

Wholesale:

Capital w/o Collection System . . . . . . . . . . . . .

No Capital w/Collection System . . . . . . . . . . . . .

Connection‐based . . . . . . . . . . . . .

Total . . . . . . . . . . . . .

Notes: ( ) All values are in millions of dollars and are rounded. ( ) Commercial/industrial customer type includes industrial customers who do not pay industrial surcharges.


DRAFT | APRIL |

Chapter 3

RATE DESIGN

3.1 Introduction

Revenue requirements and cost‐of‐service allocations provide the basis for designing water and wastewater

rates. Revenue requirements show the level of revenue to be recovered from rates to fund planned utility

operations and maintenance and capital projects and provide adequate resources to meet target cash levels.

Cost‐of‐service allocations provide the unit costs and ultimately the cost of service for each customer type

that can then be used in the design of user charges or rates for service.

In the development of schedules of rates for service, a basic consideration is to establish equitable charges to

customers commensurate with the cost of providing service. As this is challenging to do for each individual

customer, rates are normally designed to meet average conditions for groups of customers having similar

service requirements.

The cost‐of‐service studies are the result of cost and engineering estimates based to some extent upon

judgment and experience, and detailed results should not be used as exact answers but as guides to the

necessity for rate adjustments. Practical considerations may enter into the final choice of charges, recognizing

such factors as previous rate levels, existing rate structures, the degree of adjustments indicated, and policies

concerning the application of rates. Carollo worked with Houston Water staff to analyze various adjustments

with the goals of simplifying the water and wastewater rate structures and improving equity and

understanding among customers. The proposed rates are intended to transition each customer type toward

its cost of service.

3.2 Water System

3.2.1 Existing User Charges

Houston Water’s existing rate structure has been in effect since April , , and includes monthly meter

charges and volume rates. The existing water rate structure is complex and difficult for customers to

understand, especially the single family residential rate structure, which is not consistent with commonly used

structures. Existing water user charges have the following:

Monthly meter charge (a base charge or fixed amount per retail account) that varies by meter size

and customer type.

Volume rate ( per , gallons) structure with seven tiers for single family residential, two tiers for

irrigation, and uniform rates for all other retail customer types.

Volume rate ( per , gallons) structure with minimum and excess rates for contract – treated

water and contract – untreated water customers and O&M and overhead rates for water authorities

and Southeast WPP co‐participants.

3.2.2 Proposed User Charges

Carollo recommends the following modifications to the existing water rate structure:

Monthly meter charges are proposed to be the same for single family residential, multifamily

residential, commercial / industrial, irrigation, and emergency backup customer types.


DRAFT | APRIL |

A new fixed charge per connection is proposed to recover the annual fee paid to TCEQ by Houston

Water. This charge would appear separately from the monthly meter charge on the customer bill.

A four‐tier inclining block rate structure is proposed for single family residential with a conservation

credit available to customers who use , gallons or less in a month, which would reduce the

volume rate per , gallons for all usage.

A uniform volume rate structure is proposed for irrigation.

For each test year, Carollo calculated cost‐of‐service rates for each customer type. To avoid significant

impacts on customer bills, the study used the cost‐of‐service rates as a target and developed rates that

transition toward cost of service over the five‐year period. This section will present the development of FYE

cost‐of‐service rates and the recommended five‐year rate plan.

3.2.2.1 Monthly Meter Charge

Monthly meter charges are intended to recognize that the utility incurs fixed costs to provide the availability

of water service, which must be recovered independent of monthly water demands and consumption.

Proposed monthly meter charges are the same for most retail customer types but vary for transient, resale,

metered fire, and unmetered fire customers. Wholesale customers do not pay monthly meter charges.

By design, the monthly meter charge includes a customer component, a capacity component based on meter

size, and a fire protection component based on meter size. The customer component recovers expenses

associated with billing, collection, and customer service. This component is the same for all customers

regardless of meter size. The capacity component captures maintenance costs related to meters and services,

as well as a portion of the water system capital costs. The fire protection component captures costs related to

providing and maintaining fire protection infrastructure (e.g., fire hydrants), as well as providing additional

capacity in the system for fire flow requirements. The capacity and fire protection components vary based on

meter size to reflect the difference in potential demand that can be placed on the system by different sized

meters. The capacity charge and fire protection charge are then added to the customer unit cost to calculate

the total monthly meter charge.

Residential, Commercial, Industrial, Irrigation, and Emergency Backup Customers. Table . shows the

development of the cost‐of‐service monthly meter charge by meter size for FYE using unit costs

developed in Table . . This applies to single family residential, multifamily residential, commercial /

industrial, irrigation, and emergency backup customers.


DRAFT | APRIL |

Table . Development of Water Monthly Meter Charge (FYE )

Meter Size MEU

Multiplier ( )

Customer (Billing &

Collecting) Capacity (Meter

Charges) ( )

Fire Protection ( )

Cost‐of‐Service Monthly Meter

Charge ( )

Unit Cost per MEU per bill ( ) . . .

/ ” . . . . .

/ " . . . . .

” . . . . .

½” . . . . .

” . . . . .

” . . . . .

” . . . . .

” . . . . .

” . . . . .

” . . . . .

” . . . . .

Notes: ( ) MEU multipliers are based on the safe maximum operating capacity, in gallons per minute, from the AWWA M Manual. ( ) From Table . . ( ) Unit cost per MEU from Table . is divided by months to get unit cost per MEU per monthly bill. ( ) Values are rounded and may not sum.

Table . shows the existing and proposed water monthly meter charges by meter size for FYE through

FYE . The proposed meter charges differ slightly from those developed in Table . based on Houston

Water pricing objectives intended to minimize the impact to customers and improve customer affordability.

The proposed monthly meter charges apply to all retail customer types except transient, resale, and metered

and unmetered fire.


DRAFT | APRIL |

Table . Existing and Proposed Water Monthly Meter Charges ( )

Meter Size

Existing Proposed

SFR ( ) MFR ( ) Com/Ind Irrigation EBS ( ) FYE FYE FYE FYE FYE


/ ” . . . . . . . . . . .

/ " . . . . . . . . . . .

” . . . . . . . . . . .

½” . . . . . . . . . . .

” . . . . . . . . . . .

” . . . . . . . . . . .

” ‐‐‐ . . . . . . . . . .

” ‐‐‐ . . , . . . . . . . .

” ‐‐‐ . . , . . . . . . . .

” ‐‐‐ . . , . . . . . . . .

” ‐‐‐ . . , . . . . . . . .

Notes: ( ) Monthly meter charges shown are proposed for single family residential, multifamily residential, commercial/industrial, irrigation, and emergency backup customers. ( ) SFR is Single Family Residential. ( ) MFR is Multifamily Residential. ( ) EBS is Emergency Backup Service.


DRAFT | APRIL |

Transient, Resale, Metered Fire, and Unmetered Fire Customers. Houston Water has several other retail

customer types receiving water service that are charged different monthly meter charges than those shown

in Table . .

Transient customers have portable water meters that are typically used for construction sites. These portable

meters cost more than the permanent meters used by other customer types. These accounts also require

quarterly audits performed by Houston Water staff. The proposed monthly meter charges for transient

customers reflect these additional costs.

Resale customers use water inconsistently and/or infrequently, which requires Houston Water to maintain

system capacity for them even when they are not using water. The proposed monthly meter charges for resale

customer reflect the cost incurred by Houston Water to provide this type of “stand‐by” service.

There are two types of fire customers – metered and unmetered. Approximately percent of fire customers

are unmetered, which makes it difficult to determine the true cost to provide service to these customers.

Houston Water wants to encourage these customers to install meters to measure any usage through the fire

line by charging a reduced monthly meter charge for metered fire customers. Unmetered fire customers will

pay higher monthly meter charges because their usage is not measured so the full cost of service must be

recovered from the monthly meter charges.

Table . shows existing and proposed monthly meter charges for transient, resale, and fire customers.

Table . Existing and Proposed Water Monthly Meter Charges – Transient, Resale, Metered Fire, and

Unmetered Fire Customers



Transient:

‐inch . . . . . . .

‐inch . . . . . . .

‐inch . . . . . . .

Resale:

/ ‐inch and / ‐inch . . . . . . .

‐inch . . . . . . .

½‐inch . . . . . . .

‐inch . . . . . . .

‐inch . . . . . . .

‐inch . . . . . . .

‐inch . . . . . . .

‐inch , . , . , . , . , . , . , .


DRAFT | APRIL |



Metered Fire

/ ‐inch . . . . . . .

/ ‐inch . . . . . . .

‐inch . . . . . . .

/ ‐inch . . . . . . .

‐inch . . . . . . .

‐inch . . . . . . .

‐inch . . . . . . .

‐inch . . . . . . .

‐inch . . . . . . .

‐inch . . . . . . .

Unmetered Fire ( ):

/ ‐ and / ‐inch . . . . . . .

‐inch . . . . . . .

/ ‐inch . . . . . . .

‐inch . . . . . . .

‐inch . . . . . . .

‐inch . . . . . . .

‐inch . . . . . . .

‐inch . . . . . . .

‐inch . . . . . . .

‐inch . . . . . . .


3.2.2.2 TCEQ Fee

The study proposes a new monthly fee to collect money from each connection to pay the annual TCEQ fee

charged to Houston Water. This will be a separate line item on the bill and will be a uniform charge per

connection. Every connection will pay the same each month, regardless of customer type or meter size.

However, it should be noted that this fee is assessed per connection, not per meter or per account. While most

accounts have one connection and one meter, there are some accounts with multiple connections and some

meters that serve multiple connections.

The FYE monthly TCEQ fee per connection is calculated by dividing the unit cost from Table . by

months. The monthly TCEQ fee for FYE through FYE is shown in Table . .

Table . Proposed Monthly TCEQ Fee per Connection



Monthly TCEQ Fee . . . . . .


DRAFT | APRIL |

3.2.2.3 Volume Rates







Single Family Residential Customers. Table . shows the calculation of the cost‐of‐service uniform volume rate

that will recover the FYE single family residential revenue requirement less the projected monthly meter

charge revenue from the proposed charges shown in Table . and the projected revenue from the TCEQ fee

shown in Table . . This represents the rate that would be charged for every unit of water sold to single family

residential customers to recover the full cost to provide service to these customers.

Table . FYE Single Family Residential Water Cost‐of‐Service Volume Rate Calculation

Description FYE

Month of Increase July

Single Family Residential Revenue Requirement (a) , ,

Less Projected Monthly Meter Charge Revenue (b) ( , , )

Less Projected TCEQ Fee Revenue (c) ( , , )

Net Single Family Residential Revenue Requirement (d = a – b – c) , ,

Projected Single Family Residential Usage (kgal) (e) , ,

Cost‐of‐Service Uniform Rate ( /kgal) (d / e) .

The uniform cost‐of‐service volume rate provides important information about the true cost to treat and

deliver water to single family residential customers to meet their base and peak demands. However, single

family residential customers are not charged a uniform rate per , gallons. Single family residential is

charged for water service based on a tiered structure so the volume rate varies for each incremental unit of

water. The existing structure is made up of rates that vary for each incremental , gallons for the first ,

gallons, increasing and decreasing as a customer uses more water. This results in large bill increases at specific

usage intervals. Carollo proposes transitioning to a water conservation rate structure with rates for usage

blocks that increase as a customer uses more water. This will simplify the rate structure and make it easier for

customers to understand how their usage affects their bill.

The proposed single family residential rate structure also includes a conservation credit or reduced volume

rate for customers who use , gallons or less in a month. This credit is available to all single family

residential customers every month if their usage does not exceed , gallons. Table . shows the reduced

volume rate for customers with monthly usage up to , gallons after the conservation credit is applied.

Customers who use more than , gallons in a month pay the full Tier volume rate for the first ,

gallons, as shown in Table . .


DRAFT | APRIL |

Table . Existing and Proposed Single Family Residential Water Volume Rates




First kgal .

. . . . . . Next kgal .

Next kgal .



First kgal .

. . . . . .

Next kgal .

Next kgal .

Next kgal .

Next kgal .

Next kgal .

Next kgal . . . . . . .

Next kgal . . . . . . .

Over kgal . . . . . . .

To calculate the monthly water bill, customers add the appropriate monthly meter charge from Table . and

add the volume rate for each incremental , ‐gallon unit from Table . . Table . shows existing and

proposed monthly water bills for single family residential customers with usage up to , gallons in one

month.

Table . Existing and Proposed Single Family Residential Bills – Water Only




, gallons . . . . . . .

, gallons . . . . . . .

, gallons . . . . . . .

, gallons . . . . . . .

, gallons . . . . . . .

, gallons . . . . . . .


DRAFT | APRIL |

Figure . illustrates the existing and proposed single family residential water rates and bills for the first ,

gallons in , ‐gallon increments.

Figure . Existing and Proposed Single Family Residential Water Rates and Bills






Table . shows the calculation of the cost‐of‐service uniform volume rate that will recover the FYE

multifamily residential revenue requirement less the projected monthly meter charge revenue from the

proposed charges shown in Table . and the projected revenue from the TCEQ fee shown in Table . . This

represents the rate that would be charged for every unit of water sold to multifamily residential customers to

recover the full cost to provide service to these customers.


DRAFT | APRIL |

Table . FYE Multifamily Residential Water Cost‐of‐Service Volume Rate Calculation

Description FYE


Multifamily Residential Revenue Requirement (a) , ,


Less Projected TCEQ Fee Revenue (c) ( , , )

Net Multifamily Residential Revenue Requirement (d = a – b – c) , ,

Projected Multifamily Residential Usage (kgal) (e) , ,


Additional detail showing the calculations of the cost‐of‐service rate for each customer class for each year of

the five‐year rate‐setting period are provided in Appendix I.

Table . shows existing and proposed volume rates for all retail customer types except single family

residential.

Table . Existing and Proposed Retail Water Volume Rates

Customer Type Rate Block Existing FYE FYE FYE FYE FYE



All Usage . . . . . . .


All Usage . . . . . . .

Irrigation ( )

Block . ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐

Block . ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐

All Usage ‐‐‐ . . . . . .



Emergency Backup

All Usage . . . . . . .




The study recommends maintaining the existing wholesale and contract customers’ rate structures. Contract

Treated Water customers pay a uniform rate for all usage and an excess surcharge for all usage above their

contract minimum volume. Groundwater Reduction Plan (GRP) customers’ rate is based on the Contract

Treated Water – No Airgap rate although it is reduced based on the required groundwater reduction for each

Area. Areas and pay percent of the Contract Treated rate, and Area currently pays percent, but that

increases to percent in FYE . These rates, as well as the Contract Untreated rate, are shown in

Table . .


DRAFT | APRIL |

Table . Existing and Proposed Wholesale Water Volume Rates



Contract w/Airgap

Minimum . . . . . . .

Excess . . . . . . .

Contract w/o Airgap

Minimum . . . . . . .

Excess . . . . . . .

GRP Areas &

All Usage . . . . . . .


Contract Untreated

All Usage . . . . . . .


3.3.1 Existing User Charges

Houston Water’s existing wastewater user charges have been in effect since April , , and include monthly

meter charges and volume rates. The existing rate structure is complex and difficult for customers to

understand, especially the single family residential rate structure, which is inconsistent with commonly used

structures. Existing wastewater user charges have the following:

Monthly meter charge (a base charge or fixed amount per retail account) that varies by meter size

and customer type.

Volume rate ( per , gallons) structure with six tiers for single family residential, two tiers for

industrial customers who do not pay BOD and TSS surcharges, and uniform rates for all other retail

customer types.

Monthly service charge (fixed charge per bill) for sewer only customers who are not connected to the

water system and therefore do not have metered water usage data for billing. These charges vary by

customer type.

Industrial wastewater surcharges ( per pound of BOD and TSS) assessed to customers in the

industrial wastewater program based on the strength of sampled wastewater.

Volume rate ( per , gallons) structure two types of contract wastewater customers – those who

have contributed capital and discharge wastewater directly to the treatment plant and those who

have not contributed capital and discharge wastewater into the collection system.

Monthly service charge (fixed charge per connection) for contract wastewater customers that do not

provide metered water usage data.

The monthly service charge is intended to recognize that the utility incurs fixed costs to provide the availability

of wastewater service, which must be recovered independent of monthly wastewater flow.


DRAFT | APRIL |

3.3.2 Proposed User Charges

Carollo recommends the following modifications to the existing wastewater rate structure:

Monthly meter charges are proposed to be the same for single family residential, multifamily

residential, commercial, and industrial customer types.

A new industrial program charge is proposed to recover costs associated with Houston Water’s

industrial wastewater program. This charge would appear separately from the monthly meter charge

on the customer bill and will only be charged to industrial customers who are part of the program and

pay surcharges.

A two‐tier inclining block rate structure is proposed for single family residential.

A uniform volume rate structure is proposed for industrial customers who do not pay surcharges.

A new volume rate is proposed for contract wastewater customers who contribute capital and

discharge wastewater to the collection system.

For each test year, Carollo calculated cost‐of‐service rates for each customer type. To avoid significant

impacts on customer bills, the study used the cost‐of‐service rates as a target and developed rates that

transition toward cost of service over the five‐year period. This section will present the development of FYE

cost‐of‐service rates and the recommended five‐year rate plan.

3.3.2.1 Monthly Meter Charge

Monthly meter charges are intended to recognize that the utility incurs fixed costs to provide the availability

of wastewater service, which must be recovered independent of monthly water usage and wastewater

discharge. Proposed monthly meter charges are the same for all retail customer types except unmetered

sewer only customers. Wholesale customers do not pay monthly meter charges.








Residential, Commercial, and Industrial Customers. Table . shows the development of the cost‐of‐service

monthly meter charge by meter size for FYE using unit costs developed in Table . . This applies to single

family residential, multifamily residential, commercial / industrial, irrigation, and emergency backup

customers.


DRAFT | APRIL |

Table . Development of Wastewater Monthly Meter Charge (FYE )

Meter Size MEU Multiplier ( ) Customer Capacity ( )

Cost‐of‐Service Monthly Meter Charge ( )

Unit Cost per MEU per bill ( ) . .

/ ” . . . .

/ " . . . .

” . . . .

½” . . . .

” . . . .

” . . . .

” . . . .

” . . . .

” . . . .

” . . . .

” . . . .

” . . , . , .

Notes: ( ) MEU multipliers are based on the safe maximum operating capacity, in gallons per minute, from the AWWA M Manual. ( ) From Table . . ( ) Capacity revenue requirement from Table . is divided by projected , MEUs and by months to get unit cost per MEU per

monthly bill. ( ) Values are rounded and may not sum.

Table . shows the existing and proposed wastewater monthly meter charges by meter size for FYE

through FYE . The proposed meter charges differ from those developed in Table . based on Houston

Water pricing objectives intended to minimize the impact to customers and improve customer affordability.

The proposed monthly meter charges apply to all retail customer types except unmetered sewer only

customers.


DRAFT | APRIL |

Table . Existing and Proposed Wastewater Monthly Meter Charges

Meter Size

Existing Proposed

SFR ( ) MFR ( ) Commercial Industrial ( ) FYE FYE FYE FYE FYE


/ ” . . . . . . . . . .

/ " . . . . . . . . . .

” . . . . . . . . . .

½” . . . . . . . . . .

” . . . . . . . . . .

” . . . . . . . . . .

” ‐‐‐ . . . . . . . . .

” ‐‐‐ . . . . . . . . .

” ‐‐‐ . . . . . . . . .

” ‐‐‐ . . . . . . . . .

” ‐‐‐ . . . . . . . . .

” ‐‐‐ . . . . . , . , . , . , .



DRAFT | APRIL |





to identify and isolate the cost of this program and allocate it to the industrial surcharge customers. Carollo



recommended charges in Table . show a phase‐in of this charge over the ‐year study period. Table .

also shows proposed monthly service charges for sewer only customers, which are based on customer type.

Table . Existing and Proposed Wastewater Monthly Service Charges – Industrial Customers with Surcharges


Customer Type Existing FYE FYE FYE FYE FYE




Sewer Only:


Duplex . . . . . . .



Industrial . . . . . . .

Note: ( ) Charges shown for sewer only customers are monthly, but sewer only customers are billed and will continue to be billed bimonthly. The


3.3.2.2 Volume Rates


flow; a BOD component, which represents the cost to treat BOD; a TSS component, which represents the cost

to treat TSS; and an ammonia component, which represents the cost to treat ammonia. These costs are

allocated to the different customer types based on their contributed flows and assumed loadings (BOD, TSS,

and ammonia). The allocated components are then summed and divided by the projected flow to calculate

the average rate per , gallons for each customer type. The billable volume for each customer is equal to

the metered water usage, except for unmetered sewer only customers and those customers with effluent

meters.

Single Family Residential Customers. Table . shows the calculation of the cost‐of‐service uniform volume

rate that will recover the FYE single family residential revenue requirement less the projected monthly

meter charge revenue from the proposed charges shown in Table . . This represents the rate that would be

charged for every billable unit of single family residential wastewater to recover the full cost to provide service

to these customers.


DRAFT | APRIL |

Table . FYE Single Family Residential Wastewater Cost‐of‐Service Volume Rate Calculation

Description FYE


Single Family Residential Revenue Requirement (a) , ,


Net Single Family Residential Revenue Requirement (c = a – b) , ,

Projected Single Family Residential Usage (kgal) (d) , ,

Cost‐of‐Service Uniform Rate ( /kgal) (c / d) .

The uniform cost‐of‐service volume rate provides important information about the true cost to collect, treat,

and discharge wastewater from single family residential customers. However, single family residential

customers are not charged a uniform rate per , gallons. Similar to water, the single family residential

wastewater rate structure is made up of rates that vary for each incremental , gallons for the first ,

gallons, increasing and decreasing as a customer’s billable volume goes up. This results in large bill increases

at specific usage intervals. Carollo recommends simplifying this structure to two blocks with a reduced rate

per , gallons for the first , gallons and a higher rate per , gallons for all usage in excess of ,

gallons per month.

Table . shows the existing and proposed single family residential wastewater volume rates for the study

period.

Table . Existing and Proposed Single Family Residential Wastewater Volume Rates



First kgal .

. . . . . . Next kgal .

Next kgal .

Next kgal .

. . . . . . Next kgal .

Over kgal .


Table . and add the volume rate for each incremental , ‐gallon unit from Table . . Table . shows

existing and proposed monthly wastewater bills for single family residential customers with usage up to ,

gallons in one month.


DRAFT | APRIL |

Table . Existing and Proposed Single Family Residential Bills – Wastewater Only




, gallons . . . . . . .

, gallons . . . . . . .

, gallons . . . . . . .

, gallons . . . . . . .

, gallons . . . . . . .

, gallons . . . . . . .

Figure . illustrates the existing and proposed single family residential wastewater rates and bills for the first


Figure . Existing and Proposed Single Family Residential Wastewater Rates and Bills





for all retail customer types other than single family residential, including all industrial customers.


DRAFT | APRIL |

Table . shows the calculation of the cost‐of‐service uniform volume rate that will recover the FYE

multifamily residential revenue requirement less the projected monthly meter charge revenue from the

proposed charges shown in Table . . This represents the rate that would be charged for every unit of

wastewater discharged from multifamily residential customers to recover the full cost to provide service to

these customers.

Table . FYE Multifamily Residential Wastewater Cost‐of‐Service Volume Rate Calculation

Description FYE


Multifamily Residential Revenue Requirement (a) , ,


Net Multifamily Residential Revenue Requirement (d = a – b – c) , ,

Projected Multifamily Residential Usage (kgal) (e) , ,


Additional detail showing the calculations of the cost‐of‐service rate for each customer class for each year of

the five‐year rate‐setting period are provided in Appendix J.

Table . shows existing and proposed volume rates for all retail customer types except single family

residential.

Table . Existing and Proposed Retail Wastewater Volume Rates




All Flow . . . . . . .



First kgal . ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐

Over kgal . ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐

All Usage ‐‐‐ . . . . . .


All Flow . . . . . . .

BOD ( ) . . . . . . .

TSS ( ) . . . . . . .

Ammonia ( ) ‐‐‐ . . . . . .



DRAFT | APRIL |












Existing and proposed contract wastewater rates are shown in Table . .

Table . Existing and Proposed Wholesale Wastewater Volume Rates




All Flow . . . . . . .


All Flow ‐‐‐ . . . . . .

No Capital w/Collection System All Flow . . . . . . .

Connection‐based All Connections

. / .

. . . . . .

3.3.3 Customer Bill Impacts

Figure . illustrates the impact of the recommended rates on the combined water and wastewater bill for


incremental percentage of single‐family residential bills is shown between usage levels. The estimated per



DRAFT | APRIL |

Figure . Single Family Residential Monthly Combined Bill Impact


DRAFT | APRIL |




Figure . Multifamily Residential Monthly Combined Bill Impact


DRAFT | APRIL |




Figure . Commercial/Industrial Monthly Combined Bill Impact


DRAFT | APRIL |

Figure . illustrates the percentage of single family residential customers with varying levels of monthly bill

adjustments for the proposed rate schedule effective July , .

Figure . Distribution of July Monthly Combined Bill Impacts for Single Family Residential Customers


DRAFT | APRIL |

Chapter 4

RECOMMENDATIONS

Carollo recommends implementation of the water and wastewater rates as proposed in this rate study report

and described below:














Figure . compares the existing and proposed volume water rate structures for single family residential

customers.


DRAFT | APRIL |

Figure . Existing and Proposed Single Family Residential Volume Water Rate Structures

For wastewater, Carollo recommends simplifying the single‐family residential rate structure to two tiers:




DRAFT | APRIL |

Figure . compares the existing and proposed volume water rate structures for single family residential

customers.

Figure . Existing and Proposed Single Family Residential Volume Wastewater Rate Structures






DRAFT | APRIL

Appendix A

WATER FYE BUDGET AND FYE ‐

PROJECTIONS

6. 25%/35% of Maximum Impact Fee 25.0% 25.6% 31.5% 32.3% 38.6%

790.55$ 1,618.11$ 1,658.56$ 2,040.03$ 2,091.03$ 2,500.52$

Houston Combined Utility System 6,472.42$

Water Operations & MaintenanceCurrent Budget Forecasted ‐‐‐‐‐>

Line

No. Cost Center 5‐Year Average FYE 2021 FYE 2022 FYE 2023 FYE 2024 FYE 2025 FYE 2026

1 REVENUES Water

2 Operating3 Water Revenues4 Metered Customers 592,117,520$

5 456125 Fire Sprinkler Fees 6,605,367$

6 Water Sales ‐‐Revenue Sheet‐‐ 782,561,545$ 598,722,887$ 608,919,138$ 731,554,234$ 806,319,077$ 856,407,618$ 909,607,659$

7 455020 Water Service Penalties Inf + Growth 5,944,165$ 5,500,000$ 5,643,000$ 5,789,718$ 5,940,251$ 6,094,697$ 6,253,159$

8 455040 Utility Service Penalties Inf + Growth ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

9 Water Revenues Subtotal 788,505,710$ 1,202,945,774$ 614,562,138$ 737,343,952$ 812,259,328$ 862,502,315$ 915,860,819$

10 Other Water Operating Revenue (Non rate)11 431020 Contributions from Others Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

12 455010 Sewer Service Penalties Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

13 455040 Utility Service Penalties Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

14 425030 Indirect Cost Recovery Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

15 426270 Utility District Appl Review Inflation 33,432$ 31,119$ 31,865$ 32,630$ 33,413$ 34,215$ 35,036$

16 426330 Miscellaneous Copies Fees Inflation 6,402$ 5,959$ 6,102$ 6,248$ 6,398$ 6,552$ 6,709$

17 456110 Storm Water Quality Management Pe Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

18 456115 Industrial Waste Discharge Permits Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

19 456125 Fire Sprinkler Fees Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

20 456130 Water Meter Rental Fees Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

21 456135 Delinquent Reconnection Fees Inflation 215,691$ 200,765$ 205,584$ 210,518$ 215,570$ 220,744$ 226,042$

22 456140 Tap Installation Fees Inflation 1,078$ 1,004$ 1,028$ 1,053$ 1,078$ 1,104$ 1,130$

23 456145 Meter Installation Fees Inflation 539,228$ 501,913$ 513,959$ 526,294$ 538,925$ 551,859$ 565,104$

24 456150 Engineering Inspection Fees Inflation 269,614$ 250,957$ 256,980$ 263,147$ 269,463$ 275,930$ 282,552$

25 456155 Meter Testing Fees Inflation 1,078$ 1,004$ 1,028$ 1,053$ 1,078$ 1,104$ 1,130$

26 456160 Transient Meter Relocation Fee Inflation 13,966$ 13,000$ 13,312$ 13,631$ 13,959$ 14,294$ 14,637$

27 456165 New Customer Fees Inflation 134,807$ 125,478$ 128,490$ 131,574$ 134,731$ 137,965$ 141,276$

28 456170 Account Record Fees Inflation 539$ 502$ 514$ 526$ 539$ 552$ 565$

29 456175 Disposal Fees Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

30 456180 Fertilizers Sales Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

31 456185 Contract Revenues: River Authorities Inflation 2,148,692$ 2,000,000$ 2,048,000$ 2,097,152$ 2,147,484$ 2,199,023$ 2,251,800$

32 456195 Water Connection Violation Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

33 456205 Failure to Connect Sewer Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

34 456210 Missed Appointment Inflation 8,088$ 7,529$ 7,709$ 7,894$ 8,084$ 8,278$ 8,477$

35 456220 Tenant Notice Inflation 5,392$ 5,019$ 5,140$ 5,263$ 5,389$ 5,519$ 5,651$

36 456225 Failure to Apply Inflation 26,961$ 25,096$ 25,698$ 26,315$ 26,946$ 27,593$ 28,255$

37 456230 Illegal Turn on Water Inflation 539$ 502$ 514$ 526$ 539$ 552$ 565$


790.55$ 1,618.11$ 1,658.56$ 2,040.03$ 2,091.03$ 2,500.52$



Line


38 456235 Lock Devise Damage Inflation 54$ 50$ 51$ 53$ 54$ 55$ 57$

39 456240 Submeter Application Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

40 456245 Evap Cr. Process Fee Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

41 456250 Sewage Disposal Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

42 456255 Misc Operating Revenue Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

43 456260 Oper Recov & Refunds Inflation 2,696$ 2,510$ 2,570$ 2,631$ 2,695$ 2,759$ 2,826$

44 456265 MSD Application Fee Inflation 26,961$ 25,096$ 25,698$ 26,315$ 26,946$ 27,593$ 28,255$

45 Other Water Operating Revenue (Non rate) Subtotal 3,435,222$ 3,197,501$ 3,274,241$ 3,352,823$ 3,433,290$ 3,515,689$ 3,600,066$

46 Impact Fee Revenue47 Water Allocation Growth 25,065,577$ 9,935,341$ 20,376,481$ 20,927,631$ 25,792,483$ 26,490,160$ 31,741,129$

48 Other Non Operating Water Revenue (Non rate)49 421280 Other Licenses & Permits Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

50 421630 Admin Fee‐Lic/Prmts Inflation 269,614$ 250,957$ 256,980$ 263,147$ 269,463$ 275,930$ 282,552$

51 421530 Special Event Permits Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

52 434205 Sale Of Scrap Metal Inflation 40,442$ 37,643$ 38,547$ 39,472$ 40,419$ 41,389$ 42,383$

53 434225 Sale of Non‐Capital Equipment and M Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

54 434235 Sale of Other Assets Inflation 26,961$ 25,096$ 25,698$ 26,315$ 26,946$ 27,593$ 28,255$

55 434240 Sale of Land/Street Inflation 1,078,457$ 1,003,826$ 1,027,918$ 1,052,588$ 1,077,850$ 1,103,719$ 1,130,208$

56 434245 Sale Cap‐Vehicles Inflation 107,846$ 100,383$ 102,792$ 105,259$ 107,785$ 110,372$ 113,021$

57 424110 Other Interfund Services Inflation 312,968$ 291,310$ 298,302$ 305,461$ 312,792$ 320,299$ 327,986$

58 424120 Intfd Vehicle Fuel Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

59 424170 Intfd Vehicle Repair Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

60 424510 Prior Yr Revenue Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

61 426090 Demolition Fees Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

62 426320 City Map & Related Items Inflation 54$ 50$ 51$ 53$ 54$ 55$ 57$

63 426370 Training Services Inflation 53,923$ 50,191$ 51,396$ 52,629$ 53,893$ 55,186$ 56,510$

64 426420 Bldg Space Rental Fee Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

65 426430 Facility Rental Fees Inflation 1,267,834$ 1,180,098$ 1,208,420$ 1,237,423$ 1,267,121$ 1,297,532$ 1,328,672$

66 428030 Release Of Liens Inflation 647$ 602$ 617$ 632$ 647$ 662$ 678$

67 428060 Other Interest Income Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

68 428080 Returned Check Charges Inflation 26,961$ 25,096$ 25,698$ 26,315$ 26,946$ 27,593$ 28,255$

69 428090 Misc Fines & Forfeit Inflation 539$ 502$ 514$ 526$ 539$ 552$ 565$

70 429095 Medicare Part D Distribution Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

71 434305 Judgments & Claims Inflation 539$ 502$ 514$ 526$ 539$ 552$ 565$

72 434335 Recoveries Damage Infrastructure Inflation 8,088$ 7,529$ 7,709$ 7,894$ 8,084$ 8,278$ 8,477$

73 434340 Cashier Overage Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

74 434345 Adjustments to Allowances Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

75 434505 Prior Yr Exp Recovery Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

76 434510 Prior Year Revenue Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

77 445050 Cell Tower Revenue Inflation 16,716$ 15,559$ 15,933$ 16,315$ 16,707$ 17,108$ 17,518$


790.55$ 1,618.11$ 1,658.56$ 2,040.03$ 2,091.03$ 2,500.52$



Line


78 452020 Recoveries & Refunds Inflation 107,846$ 100,383$ 102,792$ 105,259$ 107,785$ 110,372$ 113,021$

79 452030 Miscellaneous Revenues Inflation 64,707$ 60,230$ 61,675$ 63,155$ 64,671$ 66,223$ 67,812$

80 456105 Oil and Gas Well Permits Inflation 2,696$ 2,510$ 2,570$ 2,631$ 2,695$ 2,759$ 2,826$

81 456120 Development Permits Inflation 215,691$ 200,765$ 205,584$ 210,518$ 215,570$ 220,744$ 226,042$

82 456185 Contract Revenues from Water Autho Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

83 456235 Lock Device Damage/Repair Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

84 457020 Intfd Comm Equip Repair Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

85 457040 Intfd Fleet Maintenance Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

86 457080 Intfd Employee Training Materials Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

87 490040 Transfer from Water and Sewer Fund Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

88 425120 PWE Allocated Cost Recovery Inflation 3,310,700$ 3,081,596$ 3,155,554$ 3,231,288$ 3,308,839$ 3,388,251$ 3,469,569$

89 Other Non Operating Water Revenue (Non rate) Su 6,913,230$ 6,434,827$ 6,589,263$ 6,747,406$ 6,909,343$ 7,075,168$ 7,244,972$

90 Interest91 432010 Interest on Investment 4,349,463$ 5,665,595$ 5,181,017$ 4,595,649$ 4,204,280$ 4,047,352$ 3,719,019$

92 Interest Subtotal 4,349,463$ 5,665,595$ 5,181,017$ 4,595,649$ 4,204,280$ 4,047,352$ 3,719,019$

93 TOTAL WATER REVENUE 828,269,203$ 1,228,179,039$ 649,983,140$ 772,967,460$ 852,598,724$ 903,630,684$ 962,166,005$


790.55$ 1,618.11$ 1,658.56$ 2,040.03$ 2,091.03$ 2,500.52$



Line


1 EXPENSES Drinking Water Operations 5‐Year Average FYE 2021 FYE 2022 FYE 2023 FYE 2024 FYE 2025 FYE 2026

2 40011 DWO Executive Support G&A3 40011 Personnel Inflation 1,696,384$ 1,578,992$ 1,616,888$ 1,655,693$ 1,695,430$ 1,736,120$ 1,777,787$

4 40011 Supplies Inflation 24,603$ 22,900$ 23,450$ 24,012$ 24,589$ 25,179$ 25,783$

5 40011 Other Services and Charges Inflation 1,124,625$ 1,046,800$ 1,071,923$ 1,097,649$ 1,123,993$ 1,150,969$ 1,178,592$

6 DWO Water Maintenance Inflation 11,737,229$ 10,925,000$ 11,187,200$ 11,455,693$ 11,730,629$ 12,012,165$ 12,300,456$

7 40011 Salary Recovery Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

8 40011 Pension DS Inflation 2,889,526$ 2,829,817$ 2,849,069$ 2,868,126$ 2,888,732$ 2,910,436$ 2,931,269$

9 40011 Non‐Capital Equipment Inflation 1,612$ 1,500$ 1,536$ 1,573$ 1,611$ 1,649$ 1,689$

10 40011 Capital Equipment Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

11 40011 Subtotal 17,473,978$ 16,405,009$ 16,750,065$ 17,102,747$ 17,464,984$ 17,836,517$ 18,215,577$

12 40012 DWO Regulatory and Compliance13 40012 Personnel Inflation 4,138,390$ 3,852,009$ 3,944,457$ 4,039,124$ 4,136,063$ 4,235,329$ 4,336,977$



16 TCEQ Fee Inflation 2,702,732$ 2,515,700$ 2,576,077$ 2,637,903$ 2,701,212$ 2,766,041$ 2,832,426$

17 40012 Salary Recovery Inflation 12,355$ 11,500$ 11,776$ 12,059$ 12,348$ 12,644$ 12,948$



20 40012 Subtotal 8,588,545$ 7,994,209$ 8,186,070$ 8,382,536$ 8,583,717$ 8,789,726$ 9,000,679$

21 40013 DWO Ground Water Operations22 40013 Personnel Inflation 8,723,548$ 8,119,869$ 8,314,746$ 8,514,300$ 8,718,643$ 8,927,890$ 9,142,160$

23 40013 Supplies Inflation 1,876,023$ 1,746,200$ 1,788,109$ 1,831,023$ 1,874,968$ 1,919,967$ 1,966,046$




27 40013 Capital Equipment Inflation 40,641$ 37,828$ 38,736$ 39,666$ 40,618$ 41,593$ 42,591$

28 40013 Subtotal 25,425,108$ 23,665,663$ 24,233,639$ 24,815,247$ 25,410,813$ 26,020,672$ 26,645,168$

29 40014 DWO East Water Purification Plant30 40014 Personnel Inflation 7,689,342$ 7,157,231$ 7,329,005$ 7,504,901$ 7,685,018$ 7,869,459$ 8,058,326$






36 40014 Subtotal 30,783,443$ 28,653,196$ 29,340,873$ 30,045,053$ 30,766,135$ 31,504,522$ 32,260,630$


790.55$ 1,618.11$ 1,658.56$ 2,040.03$ 2,091.03$ 2,500.52$



Line


37 40015 DWO Technical Services G&A38 55% 40015 Personnel Inflation 2,862,699$ 2,664,597$ 2,728,548$ 2,794,033$ 2,861,090$ 2,929,756$ 3,000,070$

39 36% Cust. Complaints and Water System Inflation 1,858,357$ 1,729,757$ 1,771,271$ 1,813,781$ 1,857,312$ 1,901,888$ 1,947,533$

40 10% Source Water Protection Inflation 510,169$ 474,865$ 486,262$ 497,932$ 509,882$ 522,119$ 534,650$

41 30% 40015 Supplies Inflation 64,622$ 60,150$ 61,594$ 63,072$ 64,586$ 66,136$ 67,723$

42 67% Cust. Complaints and Water System Inflation 143,801$ 133,850$ 137,062$ 140,352$ 143,720$ 147,170$ 150,702$

43 3% Source Water Protection Inflation 6,661$ 6,200$ 6,349$ 6,501$ 6,657$ 6,817$ 6,981$

44 63% 40015 Other Services and Charges Inflation 3,024,257$ 2,814,975$ 2,882,534$ 2,951,715$ 3,022,556$ 3,095,098$ 3,169,380$


46 35% Source Water Protection Inflation 1,681,471$ 1,565,111$ 1,602,674$ 1,641,138$ 1,680,525$ 1,720,858$ 1,762,158$


48 6% 40015 Non‐Capital Equipment Inflation 12,355$ 11,500$ 11,776$ 12,059$ 12,348$ 12,644$ 12,948$


50 0% Source Water Protection Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$


52 40015 Subtotal 10,574,377$ 9,842,619$ 10,078,842$ 10,320,734$ 10,568,432$ 10,822,074$ 11,081,804$

53 40016 DWO NEWPP Expansion54 40016 Personnel Inflation 2,996,116$ 1,260,600$ 1,578,532$ 1,616,417$ 2,281,584$ 3,116,918$ 6,387,128$

55 40016 Supplies Inflation 6,775,562$ ‐$ 43,200$ 2,004,692$ 6,161,965$ 8,417,984$ 17,249,968$

56 40016 Other Services and Charges Inflation 4,758,888$ 172,100$ 190,900$ 1,398,504$ 4,298,681$ 5,872,514$ 12,033,841$

57 40016 PIB DS 2,541,291$ 5,049,600$ 3,805,697$ 3,805,542$ 2,548,047$ 2,547,168$ ‐$

58 40016 Non‐Capital Equipment Inflation 93,130$ ‐$ 47,100$ 48,230$ 71,691$ 97,938$ 200,693$

59 40016 Capital Equipment Inflation 490,068$ ‐$ ‐$ 145,182$ 446,256$ 609,640$ 1,249,262$

60 40016 Subtotal 17,655,055$ 6,482,300$ 5,665,429$ 9,018,567$ 15,808,224$ 20,662,163$ 37,120,892$

61 40017 DWO Southeast Water Purification Plant62 40017 Personnel Inflation 3,607,389$ 3,357,754$ 3,438,340$ 3,520,860$ 3,605,361$ 3,691,890$ 3,780,495$






68 40017 Subtotal 12,789,629$ 11,904,573$ 12,190,283$ 12,482,849$ 12,782,438$ 13,089,216$ 13,403,357$

69 40018 DWO Northeast Water Purification Plant70 40018 Personnel Inflation 3,835,009$ 3,569,622$ 3,655,293$ 3,743,020$ 3,832,852$ 3,924,841$ 4,019,037$





790.55$ 1,618.11$ 1,658.56$ 2,040.03$ 2,091.03$ 2,500.52$



Line




76 40018 Subtotal 16,781,166$ 15,619,892$ 15,994,769$ 16,378,644$ 16,771,731$ 17,174,253$ 17,586,435$

77 40019 DWO System Maintenance ‐ North78 40019 Personnel Inflation 13,882,019$ 12,921,369$ 13,231,482$ 13,549,037$ 13,874,214$ 14,207,195$ 14,548,168$





83 40019 Capital Equipment Inflation 1,819,327$ 1,693,428$ 1,734,070$ 1,775,688$ 1,818,304$ 1,861,944$ 1,906,630$

84 40019 Subtotal 20,157,626$ 18,762,697$ 19,213,002$ 19,674,114$ 20,146,292$ 20,629,804$ 21,124,919$

85 40020 DWO System Maintenance ‐ South86 40020 Personnel Inflation 11,809,689$ 10,992,446$ 11,256,265$ 11,526,415$ 11,803,049$ 12,086,322$ 12,376,394$






92 40020 Subtotal 19,966,183$ 18,584,502$ 19,030,530$ 19,487,263$ 19,954,957$ 20,433,876$ 20,924,289$

93 River Authority Contributed Debt Service94 RACDS Personnel Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

95 RACDS Supplies Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

96 RACDS River Authority Contracts Inflation 14,360,569$ 13,366,802$ 13,687,605$ 14,016,108$ 14,352,494$ 14,696,954$ 15,049,681$

97 CWA O&M Trinity River Inflation 23,220,525$ 21,613,640$ 22,132,368$ 22,663,545$ 23,207,470$ 23,764,449$ 24,334,796$

98 TRA O&M Inflation 5,097,188$ 4,744,458$ 4,858,325$ 4,974,924$ 5,094,323$ 5,216,586$ 5,341,784$

99 RACDS CWA Debt Service (1993A‐H & 2004 R Inflation 2,627,957$ 2,446,100$ 2,504,806$ 2,564,922$ 2,626,480$ 2,689,515$ 2,754,064$

100 RACDS CWA Debt Service (96" line) Inflation 4,246,459$ 3,952,600$ 4,047,462$ 4,144,601$ 4,244,072$ 4,345,930$ 4,450,232$

101 RACDS DS for Wallisville and Allens' Creek 1,857,558$ 1,912,097$ 1,912,097$ 1,843,880$ 1,843,646$ 1,841,391$ 1,846,774$

102 RACDS Salary Recovery Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

103 RACDS Non‐Capital Equipment Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

104 RACDS Capital Equipment Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

105 RACDS Subtotal 51,410,257$ 48,035,697$ 49,142,663$ 50,207,980$ 51,368,485$ 52,554,826$ 53,777,331$

106 DWO Total 231,605,367$ 205,950,356$ 209,826,165$ 217,915,733$ 229,626,206$ 239,517,648$ 261,141,082$

107 Water Allocation of G&A 50.2% 50.2%


790.55$ 1,618.11$ 1,658.56$ 2,040.03$ 2,091.03$ 2,500.52$



Line


108 EXPENSES Operation Services ‐ Houston Water G&A

109 40021 OPS Financial & Support Operation Services G&A110 40021 Personnel Inflation 1,359,369$ 1,265,299$ 1,295,666$ 1,326,762$ 1,358,604$ 1,391,211$ 1,424,600$






116 40021 Subtotal 3,064,570$ 2,852,499$ 2,920,959$ 2,991,062$ 3,062,847$ 3,136,356$ 3,211,628$

117 40022 HW Planning118 40022 Personnel Inflation 925,243$ 861,215$ 881,884$ 903,050$ 924,723$ 946,916$ 969,642$


120 40022 Other Services and Charges Inflation 773,739$ 720,195$ 737,480$ 755,179$ 773,304$ 791,863$ 810,868$




124 40022 Subtotal 1,744,978$ 1,624,223$ 1,663,205$ 1,703,122$ 1,743,997$ 1,785,853$ 1,828,713$

125 40023 OPS Maintenance Operation Services ‐ Restoration 126 40023 Personnel Inflation 3,621,061$ 3,370,480$ 3,451,371$ 3,534,204$ 3,619,025$ 3,705,882$ 3,794,823$






132 40023 Capital Equipment‐CP Capital Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

133 40023 Subtotal 6,440,955$ 5,995,234$ 6,139,120$ 6,286,459$ 6,437,334$ 6,591,830$ 6,750,034$

134 40024 OPS Maintenance Operation Services‐COS/DIS 135 40024 Personnel Inflation 1,272,290$ 1,184,246$ 1,212,668$ 1,241,772$ 1,271,574$ 1,302,092$ 1,333,342$






141 40024 Subtotal 1,473,584$ 1,371,610$ 1,404,529$ 1,438,237$ 1,472,755$ 1,508,101$ 1,544,296$


790.55$ 1,618.11$ 1,658.56$ 2,040.03$ 2,091.03$ 2,500.52$



Line


142 40025 HW GIS Services 143 40025 Personnel Inflation 1,195,913$ 1,113,154$ 1,139,870$ 1,167,227$ 1,195,241$ 1,223,926$ 1,253,301$






149 40025 Subtotal 1,788,309$ 1,664,556$ 1,704,506$ 1,745,414$ 1,787,304$ 1,830,199$ 1,874,124$

150 40026 OPS Executive Support151 40026 Personnel Inflation 238,133$ 221,654$ 226,974$ 232,421$ 237,999$ 243,711$ 249,560$




155 40026 Non‐Capital Equipment Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$


157 40026 Subtotal 1,419,151$ 1,320,944$ 1,352,647$ 1,385,110$ 1,418,353$ 1,452,393$ 1,487,251$

158 40027 OPS Support Services159 40027 Personnel Inflation 618,587$ 575,780$ 589,598$ 603,749$ 618,239$ 633,076$ 648,270$






165 40027 Subtotal 1,195,075$ 1,112,375$ 1,139,072$ 1,166,410$ 1,194,404$ 1,223,069$ 1,252,423$

166 40028 HW Infrastructure Planning167 40028 Personnel Inflation 1,041,594$ 969,514$ 992,783$ 1,016,610$ 1,041,008$ 1,065,992$ 1,091,576$






173 40028 Subtotal 1,154,940$ 1,075,017$ 1,100,817$ 1,127,237$ 1,154,290$ 1,181,993$ 1,210,361$

174 40029 HW Utility Analysis175 40029 Personnel Inflation 2,822,731$ 2,627,395$ 2,690,453$ 2,755,024$ 2,821,144$ 2,888,852$ 2,958,184$





790.55$ 1,618.11$ 1,658.56$ 2,040.03$ 2,091.03$ 2,500.52$



Line




181 40029 Subtotal 3,150,366$ 2,932,358$ 3,002,734$ 3,074,800$ 3,148,595$ 3,224,161$ 3,301,541$

182 OPS Subtotal 21,431,928$ 19,948,817$ 20,427,588$ 20,917,850$ 21,419,878$ 21,933,955$ 22,460,370$

19,948,816$

183 Houston Water Division 253,037,295$ 225,899,173$ 230,253,753$ 238,833,583$ 251,046,084$ 261,451,604$ 283,601,452$

184 Check: W&WW CC w/EPA

185 EXPENSES Other O&M

186 30001‐30009 Director's Office187 30001‐30009 Personnel Inflation 3,878,596$ 3,610,193$ 3,696,837$ 3,785,562$ 3,876,415$ 3,969,449$ 4,064,716$

188 30001‐30009 Supplies Inflation 26,206$ 24,393$ 24,978$ 25,578$ 26,192$ 26,820$ 27,464$

189 30001‐30009 Other Services and Charges Inflation 256,673$ 238,911$ 244,645$ 250,516$ 256,528$ 262,685$ 268,989$

190 30001‐30009 Indirect Cost Recovery Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

191 30001‐30009 Non‐Capital Equipment Inflation 11,378$ 10,590$ 10,845$ 11,105$ 11,371$ 11,644$ 11,924$

192 30001‐30009 Capital Equipment Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

193 30001‐30009 Subtotal 4,172,853$ 3,884,087$ 3,977,305$ 4,072,760$ 4,170,506$ 4,270,599$ 4,373,093$

194 80001 Information Technology195 80001 Personnel Inflation 4,489,862$ 4,179,159$ 4,279,459$ 4,382,166$ 4,487,338$ 4,595,034$ 4,705,315$






201 80001 Subtotal 10,583,034$ 9,850,677$ 10,087,093$ 10,329,183$ 10,577,084$ 10,830,934$ 11,090,876$

202 90001‐90011 Management Support203 90001‐90011 Personnel Inflation 1,873,906$ 1,744,229$ 1,786,091$ 1,828,957$ 1,872,852$ 1,917,801$ 1,963,828$


205 90001‐90011 Other Services and Charges Inflation 4,935,122$ 4,593,606$ 4,703,853$ 4,816,745$ 4,932,347$ 5,050,724$ 5,171,941$

206 90001‐90011 Salary Recovery Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$


208 90001‐90011 Capital Equipment Inflation 206,794$ 192,484$ 197,103$ 201,834$ 206,678$ 211,638$ 216,717$

209 90001‐90011 Subtotal 7,256,318$ 6,754,173$ 6,916,273$ 7,082,263$ 7,252,238$ 7,426,291$ 7,604,522$

210 60005 & 60008 Houston Water ‐ Planning


790.55$ 1,618.11$ 1,658.56$ 2,040.03$ 2,091.03$ 2,500.52$



Line


211 60005 & 60008 Personnel Inflation 121,394$ 112,993$ 115,705$ 118,482$ 121,326$ 124,237$ 127,219$

212 60005 & 60008 Supplies Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

213 60005 & 60008 Other Services and Charges Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

214 60005 & 60008 Indirect Cost Recovery Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

215 60005 & 60008 Non‐Capital Equipment Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

216 60005 & 60008 Capital Equipment Inflation 161,768$ 150,574$ 154,188$ 157,888$ 161,678$ 165,558$ 169,531$

217 60005 & 60008 Subtotal 283,162$ 263,567$ 269,893$ 276,370$ 283,003$ 289,795$ 296,750$

218

50002,50005,5

0006,50030 Financial Mangt Services Support219 50002,50005,500 Personnel Inflation 6,812,915$ 6,341,454$ 6,493,649$ 6,649,496$ 6,809,084$ 6,972,502$ 7,139,842$

220 50002,50005,500 Supplies Inflation 453,275$ 421,908$ 432,034$ 442,403$ 453,020$ 463,893$ 475,026$

221 50002,50005,500 Other Services and Charges Inflation 5,769,797$ 5,370,521$ 5,499,413$ 5,631,399$ 5,766,553$ 5,904,950$ 6,046,669$

222 50002,50005,500 Indirect Cost Recovery Payment Inflation 5,124,071$ 4,769,480$ 4,883,947$ 5,001,162$ 5,121,190$ 5,244,098$ 5,369,957$

223 50002,50005,500 Other Indirect Costs Inflation 131,636$ 122,526$ 125,467$ 128,478$ 131,562$ 134,719$ 137,952$

224 Property and Terrorism Insurance Inflation 4,005,698$ 3,728,499$ 3,817,983$ 3,909,615$ 4,003,446$ 4,099,528$ 4,197,917$

225 Security Inflation 1,984,040$ 1,846,742$ 1,891,064$ 1,936,450$ 1,982,925$ 2,030,515$ 2,079,247$

226 50002,50005,500 Pension DS Inflation 1,243,107$ 1,217,419$ 1,225,701$ 1,233,900$ 1,242,765$ 1,252,102$ 1,261,065$

227 50002,50005,500 Non‐Capital Equipment Inflation 38,339$ 35,686$ 36,542$ 37,420$ 38,318$ 39,237$ 40,179$

228 50002,50005,500 Capital Equipment Inflation 256,888$ 239,111$ 244,850$ 250,726$ 256,744$ 262,906$ 269,216$

229 50002,50005,500 Subtotal 25,819,765$ 24,093,347$ 24,650,651$ 25,221,049$ 25,805,605$ 26,404,451$ 27,017,070$

230

100007‐15,

100025 CAS ‐ Customer Account Services231 100007‐15, 100025 Personnel Inflation 16,513,151$ 15,370,424$ 15,739,314$ 16,117,058$ 16,503,867$ 16,899,960$ 17,305,559$

232 100007‐15, 100025 Supplies Inflation 1,831,812$ 1,705,049$ 1,745,970$ 1,787,874$ 1,830,782$ 1,874,721$ 1,919,715$

233 100007‐15, 100025 Other Services and Charges Inflation 5,076,403$ 4,725,111$ 4,838,513$ 4,954,637$ 5,073,549$ 5,195,314$ 5,320,001$

234 100007‐15, 100025 Salary Recovery Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

235 100007‐15, 100025 Non‐Capital Equipment Inflation 99,272$ 92,402$ 94,620$ 96,891$ 99,216$ 101,597$ 104,036$

236 100007‐15, 100025 Capital Equipment Inflation 3,097,759$ 2,883,390$ 2,952,592$ 3,023,454$ 3,096,017$ 3,170,321$ 3,246,409$

237 100007‐15, 100025 Subtotal 26,618,397$ 24,776,376$ 25,371,009$ 25,979,913$ 26,603,431$ 27,241,914$ 27,895,720$

238 Deductions Deductions239 Deductions HPW Allocated Recovery Inflation (3,310,700)$ (3,081,596)$ (3,155,554)$ (3,231,288)$ (3,308,839)$ (3,388,251)$ (3,469,569)$

240 Deductions 611 Walker Facility Rental Fees Inflation (1,267,834)$ (1,180,098)$ (1,208,420)$ (1,237,423)$ (1,267,121)$ (1,297,532)$ (1,328,672)$

241 Deductions Subtotal (4,578,533)$ (4,261,694)$ (4,363,975)$ (4,468,710)$ (4,575,959)$ (4,685,782)$ (4,798,241)$


790.55$ 1,618.11$ 1,658.56$ 2,040.03$ 2,091.03$ 2,500.52$



Line


242 Other Subtotal 70,154,996$ 65,360,532$ 66,908,249$ 68,492,829$ 70,115,909$ 71,778,201$ 73,479,790$

243 TOTAL O&M, CAPITAL, EXPENSES 323,192,291$ 291,259,705$ 297,162,002$ 307,326,412$ 321,161,993$ 333,229,805$ 357,081,242$


DRAFT | APRIL

Appendix B

WASTEWATER FYE BUDGET AND FYE ‐

PROJECTIONS


1,199.11$ 1,621.63$ 1,662.17$ 1,703.73$ 1,746.32$ 1,789.98$


Wastewater Operations & MaintenanceProposed Budget Forecasted ‐‐‐‐‐>

Line


1 REVENUES Wastewater

2 Operating3 Wastewater Revenues4 Wastewater system user charges ‐‐Revenue Sheet‐‐ 763,527,440$ 515,679,089$ 524,461,104$ 750,428,317$ 797,044,924$ 846,557,355$ 899,145,498$

5 455010 Sewer Service Penalties Inf + Growth 5,944,165$ 5,500,000$ 5,643,000$ 5,789,718$ 5,940,251$ 6,094,697$ 6,253,159$ 6 Wastewater Revenues Subtotal 769,471,605$ 521,179,089$ 530,104,104$ 756,218,035$ 802,985,175$ 852,652,052$ 905,398,657$

7 Impact Fee Revenue8 Wastewater Allocation Growth 21,548,289$ 15,064,659$ 20,413,608$ 20,965,787$ 21,532,984$ 22,115,410$ 22,713,657$

9 Other Wastewater Revenue (Non rate)10 431020 Contributions from Others Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

11 455040 Utility Service Penalties Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$


13 426270 Utility District Appl Review Inflation 33,177$ 30,881$ 31,623$ 32,381$ 33,159$ 33,954$ 34,769$

14 426330 Miscellaneous Copies Fees Inflation 6,353$ 5,913$ 6,055$ 6,201$ 6,349$ 6,502$ 6,658$

15 456110 Storm Water Quality Management Permit Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

16 456115 Industrial Waste Discharge Permits Inflation 7,735$ 7,200$ 7,373$ 7,550$ 7,731$ 7,916$ 8,106$

17 456125 Fire Sprinkler Fees Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

18 456130 Water Meter Rental Fees Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

19 456135 Delinquent Reconnection Fees Inflation 214,047$ 199,235$ 204,016$ 208,913$ 213,927$ 219,061$ 224,318$

20 456140 Tap Installation Fees Inflation 1,070$ 996$ 1,020$ 1,045$ 1,070$ 1,095$ 1,122$

21 456145 Meter Installation Fees Inflation 535,118$ 498,087$ 510,041$ 522,282$ 534,817$ 547,652$ 560,796$

22 456150 Engineering Inspection Fees Inflation 267,559$ 249,043$ 255,020$ 261,141$ 267,408$ 273,826$ 280,398$

23 456155 Meter Testing Fees Inflation 1,070$ 996$ 1,020$ 1,045$ 1,070$ 1,095$ 1,122$

24 456160 Transient Meter Relocation Fee Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

25 456165 New Customer Fees Inflation 133,779$ 124,522$ 127,510$ 130,570$ 133,704$ 136,913$ 140,199$

26 456170 Account Record Fees Inflation 535$ 498$ 510$ 522$ 535$ 548$ 561$

27 456175 Disposal Fees Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

28 456180 Fertilizers Sales Inflation 161,152$ 150,000$ 153,600$ 157,286$ 161,061$ 164,927$ 168,885$

29 456185 Contract Revenues: River Authorities Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

30 456195 Water Connection Violation Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

31 456205 Failure to Connect Sewer Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

32 456210 Missed Appointment Inflation 8,027$ 7,471$ 7,651$ 7,834$ 8,022$ 8,215$ 8,412$

33 456220 Tenant Notice Inflation 5,351$ 4,981$ 5,100$ 5,223$ 5,348$ 5,477$ 5,608$

34 456225 Failure to Apply Inflation 26,756$ 24,904$ 25,502$ 26,114$ 26,741$ 27,383$ 28,040$

35 456230 Illegal Turn on Water Inflation 535$ 498$ 510$ 522$ 535$ 548$ 561$

36 456235 Lock Devise Damage Inflation 54$ 50$ 51$ 52$ 53$ 55$ 56$

37 456240 Submeter Application Inflation 16,115$ 15,000$ 15,360$ 15,729$ 16,106$ 16,493$ 16,888$

38 456245 Evap Cr. Process Fee Inflation 214,869$ 200,000$ 204,800$ 209,715$ 214,748$ 219,902$ 225,180$

39 456250 Sewage Disposal Inflation 10,743$ 10,000$ 10,240$ 10,486$ 10,737$ 10,995$ 11,259$

40 456255 Misc Operating Revenue Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

41 456260 Oper Recov & Refunds Inflation 2,676$ 2,490$ 2,550$ 2,611$ 2,674$ 2,738$ 2,804$


1,199.11$ 1,621.63$ 1,662.17$ 1,703.73$ 1,746.32$ 1,789.98$



Line


42 456265 MSD Application Fee Inflation 26,756$ 24,904$ 25,502$ 26,114$ 26,741$ 27,383$ 28,040$

43 Other Wastewater Revenue (Non rate) Subtotal 1,673,478$ 1,557,671$ 1,595,055$ 1,633,337$ 1,672,537$ 1,712,677$ 1,753,782$

44 Other Wastewater Revenues (Non rate)45 421280 Other Licenses & Permits Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

421630 Admin Fee‐Lic/Prmts Inflation 267,559$ 249,043$ 255,020$ 261,141$ 267,408$ 273,826$ 280,398$

46 421530 Special Event Permits Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

47 434205 Sale Of Scrap Metal Inflation 40,134$ 37,357$ 38,253$ 39,171$ 40,111$ 41,074$ 42,060$

47 434225 Sale of Non‐Capital Equipment and Merchandise Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

48 434235 Sale of Other Assets Inflation 26,756$ 24,904$ 25,502$ 26,114$ 26,741$ 27,383$ 28,040$

49 434240 Sale of Land/Street Inflation 1,070,235$ 996,174$ 1,020,082$ 1,044,564$ 1,069,633$ 1,095,305$ 1,121,592$

50 434245 Sale Cap‐Vehicles Inflation 107,024$ 99,617$ 102,008$ 104,456$ 106,963$ 109,530$ 112,159$

51 424110 Other Interfund Services Inflation 310,582$ 289,090$ 296,028$ 303,132$ 310,408$ 317,857$ 325,486$

52 424120 Intfd Vehicle Fuel Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

53 424170 Intfd Vehicle Repair Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

54 424510 Prior Yr Revenue Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

55 426090 Demolition Fees Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

56 426320 City Map & Related Items Inflation 54$ 50$ 51$ 52$ 53$ 55$ 56$

57 426370 Training Services Inflation 53,512$ 49,809$ 51,004$ 52,228$ 53,482$ 54,765$ 56,080$

58 426420 Bldg Space Rental Fee Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

59 426430 Facility Rental Fees Inflation 1,258,168$ 1,171,102$ 1,199,208$ 1,227,989$ 1,257,461$ 1,287,640$ 1,318,543$

60 428030 Release Of Liens Inflation 642$ 598$ 612$ 627$ 642$ 657$ 673$

61 428060 Other Interest Income Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

62 428080 Returned Check Charges Inflation 26,756$ 24,904$ 25,502$ 26,114$ 26,741$ 27,383$ 28,040$

63 428090 Misc Fines & Forfeit Inflation 535$ 498$ 510$ 522$ 535$ 548$ 561$

64 429095 Medicare Part D Distribution Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

65 434305 Judgments & Claims Inflation 535$ 498$ 510$ 522$ 535$ 548$ 561$

66 434335 Recoveries Damage Infrastructure Inflation 8,027$ 7,471$ 7,651$ 7,834$ 8,022$ 8,215$ 8,412$

67 434340 Cashier Overage Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

68 434345 Adjustments to Allowances Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

69 434505 Prior Yr Exp Recovery Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

70 434510 Prior Year Revenue Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

71 445050 Cell Tower Revenue Inflation 16,589$ 15,441$ 15,811$ 16,191$ 16,579$ 16,977$ 17,385$

72 452020 Recoveries & Refunds Inflation 107,024$ 99,617$ 102,008$ 104,456$ 106,963$ 109,530$ 112,159$

73 452030 Miscellaneous Revenues Inflation 64,214$ 59,770$ 61,205$ 62,674$ 64,178$ 65,718$ 67,296$

74 456105 Oil and Gas Well Permits Inflation 2,676$ 2,490$ 2,550$ 2,611$ 2,674$ 2,738$ 2,804$

75 456120 Development Permits Inflation 214,047$ 199,235$ 204,016$ 208,913$ 213,927$ 219,061$ 224,318$

76 456185 Contract Revenues from Water Authorities Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

77 456235 Lock Device Damage/Repair Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

78 457020 Intfd Comm Equip Repair Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

79 457040 Intfd Fleet Maintenance Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

80 457080 Intfd Employee Training Materials Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

81 490040 Transfer from Water and Sewer Fund Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

82 425120 PWE Allocated Cost Recovery Inflation 3,285,461$ 3,058,104$ 3,131,499$ 3,206,654$ 3,283,614$ 3,362,421$ 3,443,119$


1,199.11$ 1,621.63$ 1,662.17$ 1,703.73$ 1,746.32$ 1,789.98$



Line


83 Other Wastewater Revenues (Non rate) Subtotal 6,860,528$ 6,385,773$ 6,539,031$ 6,695,968$ 6,856,671$ 7,021,231$ 7,189,741$

84 Interest85 432010 Interest on Investment 3,093,461$ 5,622,405$ 4,138,724$ 3,341,570$ 2,989,873$ 2,612,451$ 2,384,688$

86 Interest Subtotal 3,093,461$ 5,622,405$ 4,138,724$ 3,341,570$ 2,989,873$ 2,612,451$ 2,384,688$

87 TOTAL WASTEWATER REVENUE 802,647,361$ 549,809,596$ 562,790,523$ 788,854,696$ 836,037,240$ 886,113,822$ 939,440,525$


1,199.11$ 1,621.63$ 1,662.17$ 1,703.73$ 1,746.32$ 1,789.98$



Line


1 EXPENSES Wastewater Operations

2 40001 WWO Executive Support G&A3 40001 Personnel Inflation 2,294,587$ 2,135,799$ 2,187,058$ 2,239,548$ 2,293,297$ 2,348,336$ 2,404,696$




7 40001 Pension DS 2,889,526$ 2,829,817$ 2,849,069$ 2,868,126$ 2,888,732$ 2,910,436$ 2,931,269$



10 40001 Subtotal 6,584,093$ 6,268,716$ 6,370,501$ 6,474,073$ 6,581,222$ 6,691,545$ 6,803,126$

11 40002 WWO Collection System Analysis12 40002 Personnel Inflation 3,271,075$ 3,044,713$ 3,117,786$ 3,192,613$ 3,269,236$ 3,347,697$ 3,428,042$






18 40002 Subtotal 4,625,825$ 4,305,713$ 4,409,050$ 4,514,867$ 4,623,224$ 4,734,182$ 4,847,802$

19 40003 WWO Collection System Repairs20 40003 Personnel Inflation 11,425,123$ 10,634,492$ 10,889,720$ 11,151,073$ 11,418,699$ 11,692,748$ 11,973,374$






26 40003 Subtotal 15,305,552$ 14,246,392$ 14,588,305$ 14,938,425$ 15,296,947$ 15,664,074$ 16,040,011$

27 40004 WWO Regulatory and Compliance28 40004 Personnel Inflation 6,223,749$ 5,793,059$ 5,932,092$ 6,074,463$ 6,220,250$ 6,369,536$ 6,522,405$






34 40004 Subtotal 10,747,678$ 10,003,927$ 10,244,021$ 10,489,878$ 10,741,635$ 10,999,434$ 11,263,420$

35 40005 WWO Technical Services G&A36 40005 Personnel Inflation 2,229,551$ 2,075,264$ 2,125,070$ 2,176,072$ 2,228,298$ 2,281,777$ 2,336,540$






1,199.11$ 1,621.63$ 1,662.17$ 1,703.73$ 1,746.32$ 1,789.98$



Line



42 40005 Subtotal 18,320,029$ 17,052,264$ 17,461,518$ 17,880,595$ 18,309,729$ 18,749,163$ 19,199,142$

43 40006 WWO Plant Operations44 40006 Personnel Inflation 17,260,181$ 16,065,758$ 16,451,336$ 16,846,168$ 17,250,476$ 17,664,488$ 18,088,435$






50 40006 Subtotal 57,640,991$ 53,652,173$ 54,939,826$ 56,258,381$ 57,608,582$ 58,991,188$ 60,406,977$

51 40007 WWO Electrical & Automation52 40007 Personnel Inflation 7,286,804$ 6,782,549$ 6,945,330$ 7,112,018$ 7,282,707$ 7,457,491$ 7,636,471$






58 40007 Subtotal 10,616,896$ 9,882,196$ 10,119,369$ 10,362,234$ 10,610,927$ 10,865,589$ 11,126,364$

59 40008 WWO Construction Management60 40008 Personnel Inflation 5,365,706$ 4,994,393$ 5,114,258$ 5,237,001$ 5,362,689$ 5,491,393$ 5,623,187$






66 40008 Subtotal 5,567,897$ 5,182,593$ 5,306,975$ 5,434,343$ 5,564,767$ 5,698,321$ 5,835,081$

67 40009 WWO Contract Management68 40009 Personnel Inflation 1,293,293$ 1,203,796$ 1,232,687$ 1,262,272$ 1,292,566$ 1,323,588$ 1,355,354$






74 40009 Subtotal 27,950,285$ 26,016,096$ 26,640,482$ 27,279,854$ 27,934,570$ 28,605,000$ 29,291,520$

75 40010 WWO Mechanical Management76 40010 Personnel Inflation 14,125,191$ 13,147,713$ 13,463,258$ 13,786,376$ 14,117,249$ 14,456,063$ 14,803,009$






1,199.11$ 1,621.63$ 1,662.17$ 1,703.73$ 1,746.32$ 1,789.98$



Line



82 40010 Subtotal 22,608,334$ 21,043,813$ 21,548,865$ 22,066,037$ 22,595,622$ 23,137,917$ 23,693,227$

83 OLD WWO Maintenance Operation Services ‐ old COS/Investigation CC G&A84 OLD Personnel Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

85 OLD Supplies Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

86 OLD Other Services and Charges Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

87 OLD Salary Recovery Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

88 OLD Non‐Capital Equipment Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

89 OLD Capital Equipment Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

90 OLD Subtotal ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

91 40031 WWO EPA Compliance92 40031 EPA Compliance Inflation 36,527,756$ 33,999,997$ 34,815,997$ 35,651,581$ 36,507,219$ 37,383,392$ 38,280,593$

93 40031 EPA Compliance ‐ Capital Equipment Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

94 40031 Subtotal 36,527,756$ 33,999,997$ 34,815,997$ 35,651,581$ 36,507,219$ 37,383,392$ 38,280,593$

95 WWO Total Operating Expenses 216,495,338$ 201,653,880$ 206,444,910$ 211,350,267$ 216,374,445$ 221,519,805$ 226,787,264$

96 Wastewater Allocation of G&A 49.8% 49.8%

97 EXPENSES Operation Services ‐ Houston Water G&A

98 40021 OPS Financial & Support Operation Services G&A99 40021 Personnel Inflation 1,349,006$ 1,255,653$ 1,285,789$ 1,316,648$ 1,348,247$ 1,380,605$ 1,413,740$ 100 40021 Supplies Inflation 28,147$ 26,199$ 26,828$ 27,472$ 28,131$ 28,807$ 29,498$





105 40021 Subtotal 3,041,208$ 2,830,753$ 2,898,691$ 2,968,260$ 3,039,498$ 3,112,446$ 3,187,145$

106 40022 HW Planning107 40022 Personnel Inflation 918,190$ 854,650$ 875,161$ 896,165$ 917,673$ 939,697$ 962,250$






113 40022 Subtotal 1,731,675$ 1,611,842$ 1,650,526$ 1,690,138$ 1,730,702$ 1,772,238$ 1,814,772$

114 40023 OPS Maintenance Operation Services ‐ Restoration 115 40023 Personnel Inflation 3,593,456$ 3,344,785$ 3,425,060$ 3,507,262$ 3,591,436$ 3,677,630$ 3,765,894$



1,199.11$ 1,621.63$ 1,662.17$ 1,703.73$ 1,746.32$ 1,789.98$



Line






121 40023 Capital Equipment‐CP Capital Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

122 40023 Subtotal 6,391,854$ 5,949,531$ 6,092,319$ 6,238,535$ 6,388,260$ 6,541,578$ 6,698,576$

123 40024 OPS Maintenance Operation Services‐COS/DIS 124 40024 Personnel Inflation 1,262,591$ 1,175,218$ 1,203,423$ 1,232,305$ 1,261,881$ 1,292,166$ 1,323,178$






130 40024 Subtotal 1,462,350$ 1,361,154$ 1,393,822$ 1,427,273$ 1,461,528$ 1,496,605$ 1,532,523$

131 40025 HW GIS Services 132 40025 Personnel Inflation 1,186,796$ 1,104,669$ 1,131,181$ 1,158,329$ 1,186,129$ 1,214,596$ 1,243,746$






138 40025 Subtotal 1,774,676$ 1,651,867$ 1,691,512$ 1,732,108$ 1,773,678$ 1,816,247$ 1,859,837$

139 40026 OPS Executive Support140 40026 Personnel Inflation 236,318$ 219,964$ 225,243$ 230,649$ 236,185$ 241,853$ 247,658$






146 40026 Subtotal 1,408,332$ 1,310,874$ 1,342,335$ 1,374,551$ 1,407,540$ 1,441,321$ 1,475,913$

147 40027 OPS Support Services148 40027 Personnel Inflation 613,871$ 571,390$ 585,104$ 599,146$ 613,526$ 628,250$ 643,328$






154 40027 Subtotal 1,185,965$ 1,103,895$ 1,130,388$ 1,157,518$ 1,185,298$ 1,213,745$ 1,242,875$

155 40028 HW Infrastructure Planning156 40028 Personnel Inflation 1,033,653$ 962,124$ 985,215$ 1,008,860$ 1,033,072$ 1,057,866$ 1,083,255$


1,199.11$ 1,621.63$ 1,662.17$ 1,703.73$ 1,746.32$ 1,789.98$



Line







162 40028 Subtotal 1,146,135$ 1,066,821$ 1,092,425$ 1,118,643$ 1,145,491$ 1,172,983$ 1,201,134$

163 40029 HW Utility Analysis164 40029 Personnel Inflation 2,801,213$ 2,607,366$ 2,669,943$ 2,734,021$ 2,799,638$ 2,866,829$ 2,935,633$






170 40029 Subtotal 3,126,350$ 2,910,003$ 2,979,843$ 3,051,360$ 3,124,592$ 3,199,583$ 3,276,373$

171 OPS Subtotal 21,268,546$ 19,796,740$ 20,271,862$ 20,758,386$ 21,256,588$ 21,766,746$ 22,289,148$

19,796,740$

172 Houston Water Division 237,763,884$ 221,450,620$ 226,716,771$ 232,108,653$ 237,631,032$ 243,286,551$ 249,076,412$

173 Check: W&WW CC w/EPA

174 EXPENSES Other O&M

175 30001‐30009 Director's Office176 30001‐30009 Personnel Inflation 3,849,028$ 3,582,671$ 3,668,655$ 3,756,703$ 3,846,864$ 3,939,189$ 4,033,729$


178 30001‐30009 Other Services and Charges Inflation 254,716$ 237,089$ 242,779$ 248,606$ 254,573$ 260,683$ 266,939$

179 30001‐30009 Indirect Cost Recovery Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$


181 30001‐30009 Capital Equipment Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

182 30001‐30009 Subtotal 4,141,042$ 3,854,477$ 3,946,985$ 4,041,712$ 4,138,713$ 4,238,042$ 4,339,756$

183 80001 Information Technology184 80001 Personnel Inflation 4,455,635$ 4,147,300$ 4,246,835$ 4,348,759$ 4,453,129$ 4,560,005$ 4,669,445$






190 80001 Subtotal 10,502,356$ 9,775,582$ 10,010,196$ 10,250,441$ 10,496,451$ 10,748,366$ 11,006,327$

191 90001‐90011 Management Support192 90001‐90011 Personnel Inflation 1,859,620$ 1,730,933$ 1,772,475$ 1,815,014$ 1,858,575$ 1,903,181$ 1,948,857$


194 90001‐90011 Other Services and Charges Inflation 4,897,500$ 4,558,588$ 4,667,994$ 4,780,026$ 4,894,746$ 5,012,220$ 5,132,514$


1,199.11$ 1,621.63$ 1,662.17$ 1,703.73$ 1,746.32$ 1,789.98$



Line


195 90001‐90011 Salary Recovery Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$


197 90001‐90011 Capital Equipment Inflation 205,218$ 191,016$ 195,601$ 200,295$ 205,102$ 210,025$ 215,065$

198 90001‐90011 Subtotal 7,201,000$ 6,702,684$ 6,863,548$ 7,028,273$ 7,196,952$ 7,369,679$ 7,546,551$

199 60005 & 60008 Houston Water ‐ Planning200 60005 & 60008 Personnel Inflation 120,468$ 112,132$ 114,823$ 117,579$ 120,401$ 123,290$ 126,249$

201 60005 & 60008 Supplies Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

202 60005 & 60008 Other Services and Charges Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

203 60005 & 60008 Indirect Cost Recovery Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

204 60005 & 60008 Non‐Capital Equipment Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

205 60005 & 60008 Capital Equipment Inflation 160,535$ 149,426$ 153,012$ 156,685$ 160,445$ 164,296$ 168,239$

206 60005 & 60008 Subtotal 281,004$ 261,558$ 267,835$ 274,263$ 280,846$ 287,586$ 294,488$

207

50002,50005,5

0006,50030 Financial Mangt Services Support208 50002,50005,500 Personnel Inflation 6,760,978$ 6,293,111$ 6,444,146$ 6,598,805$ 6,757,177$ 6,919,349$ 7,085,413$

209 50002,50005,500 Supplies Inflation 449,820$ 418,692$ 428,740$ 439,030$ 449,567$ 460,357$ 471,405$

210 50002,50005,500 Other Services and Charges Inflation 5,725,812$ 5,329,579$ 5,457,489$ 5,588,469$ 5,722,592$ 5,859,935$ 6,000,573$

211 50002,50005,500 Indirect Cost Recovery Payment Inflation 5,085,008$ 4,733,120$ 4,846,715$ 4,963,036$ 5,082,149$ 5,204,121$ 5,329,020$

212 50002,50005,500 Other Indirect Costs Inflation 6,074,708$ 5,654,332$ 5,790,036$ 5,928,997$ 6,071,293$ 6,217,004$ 6,366,212$

213 50002,50005,500 Pension DS 1,233,630$ 1,208,138$ 1,216,357$ 1,224,494$ 1,233,291$ 1,242,557$ 1,251,452$

214 50002,50005,500 Non‐Capital Equipment Inflation 38,047$ 35,414$ 36,264$ 37,134$ 38,025$ 38,938$ 39,873$

215 50002,50005,500 Capital Equipment Inflation 254,930$ 237,289$ 242,984$ 248,815$ 254,787$ 260,902$ 267,163$

216 50002,50005,500 Subtotal 25,622,933$ 23,909,675$ 24,462,732$ 25,028,781$ 25,608,881$ 26,203,161$ 26,811,110$

217

100007‐15,

100025 CAS ‐ Customer Account Services218 100007‐15, 100025 Personnel Inflation 16,387,266$ 15,253,250$ 15,619,328$ 15,994,192$ 16,378,053$ 16,771,126$ 17,173,633$

219 100007‐15, 100025 Supplies Inflation 1,817,848$ 1,692,051$ 1,732,660$ 1,774,244$ 1,816,826$ 1,860,430$ 1,905,080$

220 100007‐15, 100025 Other Services and Charges Inflation 5,037,704$ 4,689,089$ 4,801,628$ 4,916,867$ 5,034,872$ 5,155,708$ 5,279,445$

221 100007‐15, 100025 Salary Recovery Inflation ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

222 100007‐15, 100025 Non‐Capital Equipment Inflation 98,515$ 91,698$ 93,899$ 96,152$ 98,460$ 100,823$ 103,243$

223 100007‐15, 100025 Capital Equipment Inflation 3,074,143$ 2,861,410$ 2,930,083$ 3,000,405$ 3,072,415$ 3,146,153$ 3,221,661$

224 100007‐15, 100025 Subtotal 26,415,477$ 24,587,498$ 25,177,598$ 25,781,860$ 26,400,625$ 27,034,240$ 27,683,062$

225 Deductions Deductions226 Deductions HPW Allocated Recovery Inflation (3,285,461)$ (3,058,104)$ (3,131,499)$ (3,206,654)$ (3,283,614)$ (3,362,421)$ (3,443,119)$

227 Deductions 611 Walker Facility Rental Fees Inflation (1,258,168)$ (1,171,102)$ (1,199,208)$ (1,227,989)$ (1,257,461)$ (1,287,640)$ (1,318,543)$

228 Deductions Subtotal (4,543,630)$ (4,229,206)$ (4,330,707)$ (4,434,644)$ (4,541,075)$ (4,650,061)$ (4,761,663)$

229 Other Subtotal 69,620,182$ 64,862,268$ 66,398,187$ 67,970,687$ 69,581,393$ 71,231,013$ 72,919,631$


1,199.11$ 1,621.63$ 1,662.17$ 1,703.73$ 1,746.32$ 1,789.98$



Line


230 TOTAL O&M, CAPITAL, EXPENSES 307,384,066$ 286,312,888$ 293,114,958$ 300,079,340$ 307,212,425$ 314,517,564$ 321,996,042$


DRAFT | APRIL

Appendix C

WATER REVENUE REQUIREMENTS

Houston Combined Utility System

Water Revenue Requirements

Line

No. FYE 2021 FYE 2022 FYE 2023 FYE 2024 FYE 2025 FYE 2026

1 Water Revenue Requirements50% 50% 50% 50% 50% 50%

2 CUS Fund Balance

3 Beginning Fund Balance 1,010,798,945$ 931,974,135$ 793,721,882$ 719,415,340$ 665,980,306$ 610,370,701$

4 Ending Fund Balance 931,974,135$ 793,721,882$ 719,415,340$ 665,980,306$ 610,370,701$ 563,843,889$

5 CUS Fund Balance Applied to Water 518,101,685$ 459,564,926$ 420,428,014$ 404,735,170$ 371,901,945$ 328,808,816$

6 Cash Flow / Reserves Test

7 Revenues8 Operating

9 Water Sales 598,722,887$ 608,919,138$ 731,554,234$ 806,319,077$ 856,407,618$ 909,607,659$

10 Water Service Penalties 5,500,000$ 5,643,000$ 5,789,718$ 5,940,251$ 6,094,697$ 6,253,159$ 11 Other Water Operating Revenue (Non rate) 1,333,971$ 1,365,986$ 1,398,770$ 1,432,341$ 1,466,717$ 1,501,918$

12 Total Operating Revenues 605,556,858$ 615,928,124$ 738,742,722$ 813,691,668$ 863,969,032$ 917,362,737$

13 Non Operating

14 Impact Fee Revenue 9,935,341$ 20,376,481$ 20,927,631$ 25,792,483$ 26,490,160$ 31,741,129$

15 Operating transfer from General Purpose Fund ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

16 Non Operating Water Revenue (Non rate) 8,298,357$ 8,497,518$ 8,701,458$ 8,910,293$ 9,124,140$ 9,343,120$

17 Interest 5,665,595$ 5,181,017$ 4,595,649$ 4,204,280$ 4,047,352$ 3,719,019$

18 Total Non‐Operating Revenues 23,899,293$ 34,055,016$ 34,224,738$ 38,907,056$ 39,661,652$ 44,803,268$

19 Total Water Revenues 629,456,152$ 649,983,140$ 772,967,460$ 852,598,724$ 903,630,684$ 962,166,005$

20 Expenses21 Operating

22 EXPENSES Drinking Water Operations 157,914,660$ 160,683,502$ 167,707,754$ 178,257,721$ 186,962,823$ 207,363,751$

23 River Authority Contributed Debt Service 48,035,697$ 49,142,663$ 50,207,980$ 51,368,485$ 52,554,826$ 53,777,331$

24 EXPENSES Operation Services ‐ Houston Water G&A 19,948,817$ 20,427,588$ 20,917,850$ 21,419,878$ 21,933,955$ 22,460,370$

25 EXPENSES Other O&M 65,360,532$ 66,908,249$ 68,492,829$ 70,115,909$ 71,778,201$ 73,479,790$

26 Total Operating Expenses 291,259,705$ 297,162,002$ 307,326,412$ 321,161,993$ 333,229,805$ 357,081,242$

27 Non‐Operating Expenses

28 Junior Bonds 9,902,764$ 6,841,990$ 7,666,299$ 8,400,001$ 7,951,382$ 8,024,310$

29 First Lien 217,849,867$ 229,957,965$ 229,548,705$ 228,811,982$ 229,153,919$ 226,785,989$

30 Future First Lien Debt Service 12,996,403$ 45,358,373$ 80,932,947$ 110,114,881$ 143,421,785$ 181,832,374$



Line


31 Future First Lien Debt Service ‐ NEWPP ‐$ ‐$ 13,271,200$ 22,848,511$ 22,848,511$ 22,848,511$

32 TRA/Lake Livingston Dam 1,813,585$ 1,813,585$ 1,813,585$ 1,813,585$ 1,813,585$ 1,813,585$

33 Subordinate Lien 22,817,930$ 24,224,844$ 24,209,476$ 24,199,938$ 24,185,621$ 24,180,953$

34 Luce Bayou 4,278,954$ 4,829,498$ 5,527,270$ 6,273,797$ 7,316,090$ 8,365,596$

35 Commercial Paper Debt Service 4,003,795$ 4,722,160$ 6,004,806$ 4,334,928$ 5,671,235$ 6,282,795$

36 Commercial Paper Fees 1,750,000$ 2,100,000$ 2,100,000$ 2,450,000$ 2,450,000$ 2,450,000$

37 Bad Debt 11,974,458$ 12,178,383$ 14,631,085$ 16,126,382$ 17,128,152$ 18,192,153$

38 Cash Funded CIP ‐$ 110,794,138$ 97,478,227$ 93,786,276$ 114,097,796$ 121,026,899$

39 Total Non‐Operating Expenses 287,387,755$ 442,820,933$ 483,183,600$ 519,160,279$ 576,038,075$ 621,803,165$

40 Total Expenses 578,647,460$ 739,982,936$ 790,510,012$ 840,322,272$ 909,267,880$ 978,884,407$

41 Total Expenditures for Cash Flow Test 578,647,460$ 739,982,936$ 790,510,012$ 840,322,272$ 909,267,880$ 978,884,407$

42 Cash Flow Surplus (Deficit) 50,808,692$ (89,999,795)$ (17,542,552)$ 12,276,452$ (5,637,196)$ (16,718,403)$

43 Cash Flow Surplus (Deficit) with Reserves 277,286,643$ (39,488,279)$ 77,342,314$ 74,654,177$ 20,205,419$ (27,831,080)$

44 Debt Coverage Test

45 Junior Lien46 Gross Revenues 619,520,811$ 629,606,659$ 752,039,830$ 826,806,242$ 877,140,524$ 930,424,876$

47 Less: O&M (291,259,705)$ (297,162,002)$ (307,326,412)$ (321,161,993)$ (333,229,805)$ (357,081,242)$

46 Less: Bad Debt (11,974,458)$ (12,178,383)$ (14,631,085)$ (16,126,382)$ (17,128,152)$ (18,192,153)$

48 Plus: Total Capital Equipment included (8305) 10,318,158$ 10,565,794$ 10,819,373$ 11,079,038$ 11,344,934$ 11,617,213$

49 Plus: Total Service in 8305 1,421,518$ 1,455,635$ 1,490,570$ 1,526,344$ 1,562,976$ 1,600,487$

50 Plus: PIB Debt 5,049,600$ 3,805,697$ 3,805,542$ 2,548,047$ 2,547,168$ ‐$

51 Plus: Wallisville & Allens' Creek DS 1,912,097$ 1,912,097$ 1,843,880$ 1,843,646$ 1,841,391$ 1,846,774$

52 Plus: Pension DS 4,047,235$ 4,074,770$ 4,102,026$ 4,131,497$ 4,162,538$ 4,192,335$

51 Plus: CWA Debt Service 6,398,700$ 6,552,269$ 6,709,523$ 6,870,552$ 7,035,445$ 7,204,296$

52 Less: Deduction of Allocated recovery (4,261,694)$ (4,363,975)$ (4,468,710)$ (4,575,959)$ (4,685,782)$ (4,798,241)$

53 Net Revenue Available for Junior Lien 341,172,262$ 344,268,560$ 454,384,536$ 512,941,032$ 550,591,237$ 576,814,344$

54 Junior Lien Debt Service 9,902,764$ 6,841,990$ 7,666,299$ 8,400,001$ 7,951,382$ 8,024,310$

55 Junior Lien Coverage Ratio 34.45x 50.32x 59.27x 61.06x 69.24x 71.88x

56 Junior Lien Coverage Surplus / (Deficit) 327,308,393$ 334,689,774$ 443,651,717$ 501,181,030$ 539,459,302$ 565,580,309$

57 First Lien58 Net Revenues Available 341,172,262$ 344,268,560$ 454,384,536$ 512,941,032$ 550,591,237$ 576,814,344$



Line


59 Less: Junior Lien Debt Service (9,902,764)$ (6,841,990)$ (7,666,299)$ (8,400,001)$ (7,951,382)$ (8,024,310)$

60 Plus: Restricted Revenues 9,935,341$ 20,376,481$ 20,927,631$ 25,792,483$ 26,490,160$ 31,741,129$

61 Net Revenue Available for First Lien 341,204,839$ 357,803,052$ 467,645,867$ 530,333,514$ 569,130,015$ 600,531,162$

62 First Lien Debt Service 230,846,270$ 275,316,338$ 323,752,853$ 361,775,374$ 395,424,215$ 431,466,873$

63 First Lien Coverage 1.48x 1.30x 1.44x 1.47x 1.44x 1.39x

64 First Lien Coverage Surplus / (Deficit) 18,020,061$ (27,639,822)$ 14,391,873$ 23,847,990$ 15,536,114$ (3,522,460)$

65 Second Lien66 Net Revenues Available 341,204,839$ 357,803,052$ 467,645,867$ 530,333,514$ 569,130,015$ 600,531,162$

67 Less: First Lien Debt Service (230,846,270)$ (275,316,338)$ (323,752,853)$ (361,775,374)$ (395,424,215)$ (431,466,873)$

68 Plus: Restricted Revenues

69 Revenues Available for Second Lien 110,358,569$ 82,486,713$ 143,893,014$ 168,558,139$ 173,705,800$ 169,064,289$

70 Second Lien Debt Service ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

71 Second Lien Coverage NA NA NA NA NA NA

72 Second Lien Coverage Surplus / (Deficit) 110,358,569$ 82,486,713$ 143,893,014$ 168,558,139$ 173,705,800$ 169,064,289$

73 Total Debt Coverage74 Net Revenues Available 341,172,262$ 344,268,560$ 454,384,536$ 512,941,032$ 550,591,237$ 576,814,344$


76 Revenues Available for Total Debt Coverage 351,107,603$ 364,645,041$ 475,312,167$ 538,733,515$ 577,081,397$ 608,555,473$



79 First Lien Debt Service ‐ NEWPP ‐$ ‐$ 13,271,200$ 22,848,511$ 22,848,511$ 22,848,511$

80 Third Lien Debt Service 5,753,795$ 6,822,160$ 8,104,806$ 6,784,928$ 8,121,235$ 8,732,795$

81 Subordinate Lien Debt Service 29,008,980$ 30,966,438$ 31,580,626$ 32,317,381$ 33,343,102$ 34,393,324$

82 Other Debt Service Payments 13,165,296$ 11,921,708$ 11,918,845$ 10,470,616$ 10,647,987$ 8,342,042$

83 Total Debt Service 288,677,104$ 331,868,633$ 383,023,429$ 419,748,300$ 455,487,921$ 490,959,344$

84 Junior + First + Second Coverage Ratio (1.4x) 1.46x 1.29x 1.43x 1.46x 1.43x 1.38x

85 Second Lien Coverage Surplus / (Deficit) 14,058,956$ (30,376,618)$ 11,325,354$ 20,487,989$ 12,355,561$ (6,732,184)$

86 Junior + First Coverage Ratio (1.4x) 1.46x 1.29x 1.43x 1.46x 1.43x 1.38x

87 First Lien Coverage Surplus / (Deficit) 14,058,956$ (30,376,618)$ 29,905,034$ 52,475,904$ 44,343,476$ 25,255,731$



Line


88 Revenue Requirement Calculation

89 Surplus (Shortfall) ‐ Pre Increase 14,058,956$ (39,488,279)$ 11,325,354$ 20,487,989$ 12,355,561$ (27,831,080)$

Surplus Need Cash Flow Surplus Surplus Surplus Need Cash Flow

90 Month of Revenue Adjustment 1 April July April April April April

91 Rate Revenue before Increase 1 598,722,887$ 608,919,138$ 731,554,234$ 806,319,077$ 856,407,618$ 909,607,659$

92 Calculated Revenue Increase 0.0% 7.0% 0.0% 0.0% 0.0% 12.0%

93 Revenue Increase 1 Override 1.5% 9.0% 10.0% 6.0% 6.0% 6.0%

94 Utilized Revenue Increase 1 1.5% 9.0% 10.0% 6.0% 6.0% 6.0%

95 Resulting Cash Flows following Revenue Adjustment 1

96 Revenues before rate adjustment 1 598,722,887$ 608,919,138$ 731,554,234$ 806,319,077$ 856,407,618$ 909,607,659$

97 Revenues from revenue adjustment 1 8,980,843$ 54,802,722$ 73,155,423$ 48,379,145$ 51,384,457$ 54,576,460$

98 Less: Revenue Increase Delay (6,670,072)$ ‐$ (54,332,533)$ (35,931,191)$ (38,163,236)$ (40,533,937)$

99 Other revenues 30,733,265$ 41,064,002$ 41,413,226$ 46,279,647$ 47,223,066$ 52,558,345$

100 Less Expenditures (from Cash Flow) (578,647,460)$ (739,982,936)$ (790,510,012)$ (840,322,272)$ (909,267,880)$ (978,884,407)$

101 Cash Flow 53,119,463$ (35,197,073)$ 1,280,338$ 24,724,406$ 7,584,025$ (2,675,879)$


103 Month of COS Revenue Adjustment April





108 Cumulative Increase 1.5% 21.7% 33.9% 41.9% 50.4% 59.4%


110 Revenues before revenue adjustment 2 601,033,658$ 663,721,860$ 750,377,125$ 818,767,031$ 869,628,839$ 923,650,182$

111 Revenues from revenue adjustment 2 ‐$ 66,372,186$ ‐$ ‐$ ‐$ ‐$



Line


112 Less: Revenue Increase Delay ‐$ (49,294,623)$ ‐$ ‐$ ‐$ ‐$

113 Other revenues 30,733,265$ 41,064,002$ 41,413,226$ 46,279,647$ 47,223,066$ 52,558,345$


115 Cash Flow 53,119,463$ (18,119,510)$ 1,280,338$ 24,724,406$ 7,584,025$ (2,675,879)$

116 Total Coverage Ratio 1.22x 1.32x 1.29x 1.31x 1.30x 1.27x


118 Second Lien Coverage 1.468x 1.547x 1.491x 1.489x 1.463x 1.417x

119 Annualized Rate Revenue Requirements for Adjustment 1 607,703,730$ 663,721,860$ 804,709,658$ 854,698,222$ 907,792,075$ 964,184,119$



DRAFT | APRIL

Appendix D

WASTEWATER REVENUE REQUIREMENTS


Wastewater Revenue Requirements

Line


1 Wastewater Revenue Requirements50% 50% 50% 50% 50% 50%

2 CUS Fund Balances

3 Beginning Fund Balance 1,010,798,945$ 931,974,135$ 793,721,882$ 719,415,340$ 665,980,306$ 610,370,701$

4 Ending Fund Balance 931,974,135$ 793,721,882$ 719,415,340$ 665,980,306$ 610,370,701$ 563,843,889$

5 CUS Fund Balance Applied to Wastewater 413,872,450$ 334,156,956$ 298,987,326$ 261,245,136$ 238,468,756$ 235,035,073$

6 Cash Flow Test


9 Wastewater system user charges 515,679,089$ 524,461,104$ 750,428,317$ 797,044,924$ 846,557,355$ 899,145,498$

10 Sewer Service Penalties 5,500,000$ 5,643,000$ 5,789,718$ 5,940,251$ 6,094,697$ 6,253,159$

11 Other Wastewater Revenue (Non rate) 1,468,101$ 1,503,335$ 1,539,415$ 1,576,361$ 1,614,194$ 1,652,935$

12 Total Operating Revenues 522,647,190$ 531,607,439$ 757,757,451$ 804,561,536$ 854,266,246$ 907,051,592$

13 Non Operating



16 Non‐Operating Other Wastewater Revenues (Non rate) 6,475,343$ 6,630,751$ 6,789,889$ 6,952,846$ 7,119,715$ 7,290,588$

17 Interest 5,622,405$ 4,138,724$ 3,341,570$ 2,989,873$ 2,612,451$ 2,384,688$


19 Total Revenues 549,809,596$ 562,790,523$ 788,854,696$ 836,037,240$ 886,113,822$ 939,440,525$


22 Wastewater Operations 201,653,880$ 206,444,910$ 211,350,267$ 216,374,445$ 221,519,805$ 226,787,264$

23 Operation Services ‐ Houston Water G&A 19,796,740$ 20,271,862$ 20,758,386$ 21,256,588$ 21,766,746$ 22,289,148$

24 Other O&M 64,862,268$ 66,398,187$ 67,970,687$ 69,581,393$ 71,231,013$ 72,919,631$

25 Additional Consent Decree O&M ‐$ ‐$ ‐$ ‐$ ‐$ ‐$


27 Non‐Operating

28 Junior Bonds 12,502,236$ 8,638,010$ 9,678,701$ 10,604,999$ 10,038,618$ 10,130,690$



Line


29 First Lien 277,325,050$ 292,611,520$ 292,094,830$ 291,164,717$ 291,596,412$ 288,606,901$



32 Subordinate Lien ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

33 Commercial Paper Debt Service 3,496,205$ 3,715,340$ 3,370,194$ 5,977,572$ 5,578,765$ 4,967,205$


35 Bad Debt 10,313,582$ 10,489,222$ 15,008,566$ 15,940,898$ 16,931,147$ 17,982,910$

36 Cash Funded CIP ‐$ 89,205,862$ 102,521,773$ 106,213,724$ 85,902,204$ 78,973,101$

37 Total Non‐Operating Expenses 316,596,745$ 444,633,226$ 495,112,848$ 538,454,535$ 567,024,540$ 594,341,924$

38 Total Expenses 602,909,633$ 737,748,184$ 795,192,189$ 845,666,960$ 881,542,104$ 916,337,966$

39 Total Expenditures for Cash Flow Test 602,909,633$ 737,748,184$ 795,192,189$ 845,666,960$ 881,542,104$ 916,337,966$

40 Cash Flow Surplus (Deficit) (53,100,036)$ (174,957,661)$ (6,337,492)$ (9,629,720)$ 4,571,718$ 23,102,559$

41 Cash Flow Surplus (Deficit) with Reserves 173,377,915$ (124,446,144)$ 88,547,374$ 52,748,005$ 30,414,333$ 11,989,881$


43 Junior Lien44 Gross Revenues 534,744,937$ 542,376,915$ 767,888,909$ 814,504,256$ 863,998,412$ 916,726,867$

45 Less: O&M (286,312,888)$ (293,114,958)$ (300,079,340)$ (307,212,425)$ (314,517,564)$ (321,996,042)$

45 Less: Bad Debt (10,313,582)$ (10,489,222)$ (15,008,566)$ (15,940,898)$ (16,931,147)$ (17,982,910)$

46 Plus: Total Capital Equipment included (8305) 10,239,499$ 10,485,247$ 10,736,893$ 10,994,579$ 11,258,448$ 11,528,651$

47 Plus: Total Service in 8305 1,410,682$ 1,444,538$ 1,479,207$ 1,514,708$ 1,551,061$ 1,588,286$

48 Plus: PIB Debt ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

49 Plus: Wallisville & Allens' Creek DS ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

50 Plus: Pension DS 4,037,955$ 4,065,426$ 4,092,620$ 4,122,023$ 4,152,993$ 4,182,721$

49 Plus: CWA Debt Service ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

50 Less: Deduction of Allocated recovery (4,229,206)$ (4,330,707)$ (4,434,644)$ (4,541,075)$ (4,650,061)$ (4,761,663)$

51 Plus: EPA Consent Decree Reimbursed by Fund 8305 33,999,997$ 34,815,997$ 35,651,581$ 36,507,219$ 37,383,392$ 38,280,593$




55 Junior Lien Coverage Surplus / (Deficit) 266,074,263$ 273,160,022$ 486,776,479$ 525,101,387$ 568,191,469$ 613,383,539$



Line


56 First Lien57 Net Revenue Available 283,577,394$ 285,253,236$ 500,326,660$ 539,948,386$ 582,245,534$ 627,566,505$


59 Plus: Restricted Revenue 15,064,659$ 20,413,608$ 20,965,787$ 21,532,984$ 22,115,410$ 22,713,657$




63 First Lien Coverage Surplus / (Deficit) (117,808,792)$ (165,649,873)$ 4,206,686$ (5,297,905)$ (30,251,002)$ (31,623,753)$

64 Total Debt Coverage65 Net Revenue Available 283,577,394$ 285,253,236$ 500,326,660$ 539,948,386$ 582,245,534$ 627,566,505$

66 Plus: Restricted Revenue 15,064,659$ 20,413,608$ 20,965,787$ 21,532,984$ 22,115,410$ 22,713,657$

67 Net Revenue Available 298,642,053$ 305,666,845$ 521,292,446$ 561,481,370$ 604,360,944$ 650,280,162$





72 Subordinate Lien Debt Service ‐$ ‐$ ‐$ ‐$ ‐$ ‐$




76 Second Lien Coverage Surplus / (Deficit) (122,809,687)$ (169,105,077)$ 335,206$ (9,539,905)$ (34,266,449)$ (35,676,029)$


78 First Lien Coverage Surplus / (Deficit) (122,809,687)$ (169,105,077)$ 335,206$ (9,539,905)$ (34,266,449)$ (35,676,029)$

79 Revenue Requirement Calculation

80 Surplus (Shortfall) ‐ Pre Increase (122,809,687)$ (169,105,077)$ 335,206$ (9,539,905)$ (34,266,449)$ (35,676,029)$

Need Additional

Coverage

Need Additional

CoverageSurplus

Need Additional

Coverage

Need Additional

Coverage

Need Additional

Coverage

81 Month of Revenue Adjustment 1 April July April April April April



Line










90 Other revenues 34,130,507$ 38,329,419$ 38,426,379$ 38,992,316$ 39,556,467$ 40,295,027$


92 Cash Flow (51,109,773)$ (70,065,440)$ 5,247,620$ 2,675,060$ 17,640,870$ 36,983,567$


94 Month of Revenue Adjustment 2 April





99 Cumulative Increase 1.5% 44.9% 53.6% 62.9% 72.6% 83.0%





104 Other revenues 34,130,507$ 38,329,419$ 38,426,379$ 38,992,316$ 39,556,467$ 40,295,027$


106 Cash Flow (51,109,773)$ (39,298,244)$ 5,247,620$ 2,675,060$ 17,640,870$ 36,983,567$



108 Second Lien Coverage 0.999x 1.301x 1.432x 1.407x 1.354x 1.356x



Line





DRAFT | APRIL

Appendix E

COMBINED UTILITY SYSTEM REVENUE

REQUIREMENTS


Combined Revenue Requirements

Line No. FYE 2021 FYE 2022 FYE 2023 FYE 2024 FYE 2025 FYE 2026

1 Combined Revenue Requirements50% 50% 50% 50% 50% 50%

2 CUS Fund Balance

3 Beginning Fund Balance $1,010,798,945 $931,974,135 $793,721,882 $719,415,340 $665,980,306 $610,370,701

4 Planned Fund Balance $931,974,135 $793,721,882 $719,415,340 $665,980,306 $610,370,701 $563,843,889

5 CUS Fund Balance Applied to Water 518,101,685$ 459,564,926$ 420,428,014$ 404,735,170$ 371,901,945$ 328,808,816$

6 CUS Fund Balance Applied to Wastewater 413,872,450$ 334,156,956$ 298,987,326$ 261,245,136$ 238,468,756$ 235,035,073$

7 Cash Flow Test


10 Water Sales 598,722,887$ 608,919,138$ 731,554,234$ 806,319,077$ 856,407,618$ 909,607,659$

11 Sewer system user charges 515,679,089$ 524,461,104$ 750,428,317$ 797,044,924$ 846,557,355$ 899,145,498$

12 Penalties 11,000,000$ 11,286,000$ 11,579,436$ 11,880,501$ 12,189,394$ 12,506,319$ 13 Other Water Operating Revenue (Non rate) 2,802,072$ 2,869,322$ 2,938,185$ 3,008,702$ 3,080,911$ 3,154,853$

14 Total Operating Revenues 1,128,204,048$ 1,147,535,563$ 1,496,500,173$ 1,618,253,205$ 1,718,235,278$ 1,824,414,328$

15 Non‐Operating



18 Non Operating Water Revenue (Non rate) 14,773,700$ 15,128,269$ 15,491,347$ 15,863,140$ 16,243,855$ 16,633,707$

19 Interest 11,288,000$ 9,319,741$ 7,937,219$ 7,194,153$ 6,659,803$ 6,103,707$


21 Total Revenues 1,179,265,748$ 1,212,773,663$ 1,561,822,156$ 1,688,635,964$ 1,789,744,506$ 1,901,606,529$

22 Debt Coverage Revenues 1,154,265,748$ 1,171,983,574$ 1,519,928,739$ 1,641,310,498$ 1,741,138,936$ 1,847,151,743$


25 EXPENSES Drinking Water Operations 157,914,660$ 160,683,502$ 167,707,754$ 178,257,721$ 186,962,823$ 207,363,751$

26 River Authority Contributed Debt Service 48,035,697$ 49,142,663$ 50,207,980$ 51,368,485$ 52,554,826$ 53,777,331$

27 EXPENSES Wastewater Operations 201,653,880$ 206,444,910$ 211,350,267$ 216,374,445$ 221,519,805$ 226,787,264$

28 EXPENSES Operation Services ‐ G&A 39,745,557$ 40,699,450$ 41,676,236$ 42,676,466$ 43,700,701$ 44,749,518$

29 EXPENSES Other O&M 130,222,800$ 133,306,436$ 136,463,516$ 139,697,301$ 143,009,214$ 146,399,421$

30 Additional Consent Decree O&M ‐$ ‐$ ‐$ ‐$ ‐$ ‐$





32 Non‐Operating

33 Junior Bonds 22,405,000$ 15,480,000$ 17,345,000$ 19,005,000$ 17,990,000$ 18,155,000$

34 First Lien 495,174,917$ 522,569,484$ 521,643,535$ 519,976,699$ 520,750,330$ 515,392,890$


36 Future First Lien Debt Service ‐ NEWPP ‐$ ‐$ 13,271,200$ 22,848,511$ 22,848,511$ 22,848,511$

37 TRA/Lake Livingston Dam 1,813,585$ 1,813,585$ 1,813,585$ 1,813,585$ 1,813,585$ 1,813,585$

38 Subordinate Lien 22,817,930$ 24,224,844$ 24,209,476$ 24,199,938$ 24,185,621$ 24,180,953$

39 Luce Bayou 4,278,954$ 4,829,498$ 5,527,270$ 6,273,797$ 7,316,090$ 8,365,596$

40 Commercial Paper Interest 7,500,000$ 8,437,500$ 9,375,000$ 10,312,500$ 11,250,000$ 11,250,000$


42 Bad Debt 22,288,040$ 22,667,605$ 29,639,651$ 32,067,280$ 34,059,299$ 36,175,063$

43 Cash Funded CIP ‐$ 200,000,000$ 200,000,000$ 200,000,000$ 200,000,000$ 200,000,000$

44 Total Non‐Operating Expenses 603,984,499$ 887,454,159$ 978,296,449$ 1,057,614,814$ 1,143,062,615$ 1,216,145,088$

45 Total Expenses 1,181,557,092$ 1,477,731,120$ 1,585,702,201$ 1,685,989,232$ 1,790,809,985$ 1,895,222,373$

577,572,593$ 590,276,960$ 607,405,753$ 628,374,418$ 647,747,369$ 679,077,285$

46 Total Expenditures for Cash Flow Test 1,181,557,092$ 1,477,731,120$ 1,585,702,201$ 1,685,989,232$ 1,790,809,985$ 1,895,222,373$

47 Cash Flow Surplus (Deficit) (2,291,344)$ (264,957,456)$ (23,880,045)$ 2,646,733$ (1,065,478)$ 6,384,156$

48 Cash Flow Surplus (Deficit) with Reserves 450,664,557$ (163,934,423)$ 165,889,688$ 127,402,181$ 50,619,752$ (15,841,200)$


50 Junior Lien51 Gross Revenues 1,154,265,748$ 1,171,983,574$ 1,519,928,739$ 1,641,310,498$ 1,741,138,936$ 1,847,151,743$

52 Less: O&M (577,572,593) (590,276,960) (607,405,753) (628,374,418) (647,747,369) (679,077,285)

52 Less: Bad Debt (22,288,040) (22,667,605) (29,639,651) (32,067,280) (34,059,299) (36,175,063)

53 Plus: Total Capital Equipment included (8305) 20,557,657 21,051,041 21,556,266 22,073,616 22,603,383 23,145,864

54 Plus: Total Service in 8305 2,832,200 2,900,173 2,969,777 3,041,052 3,114,037 3,188,774

55 Plus: PIB Debt 5,049,600 3,805,697 3,805,542 2,548,047 2,547,168 0

56 Plus: Wallisville & Allens' Creek DS 1,912,097 1,912,097 1,843,880 1,843,646 1,841,391 1,846,774

57 Plus: Pension DS 8,085,190 8,140,196 8,194,646 8,253,521 8,315,531 8,375,056

57 Plus: CWA Debt Service 6,398,700 6,552,269 6,709,523 6,870,552 7,035,445 7,204,296

58 Less: Deduction of Allocated recovery (8,490,900) (8,694,682) (8,903,354) (9,117,034) (9,335,843) (9,559,904)

59 Plus: EPA Consent Decree Reimbursed by Fund 830 33,999,997 34,815,997 35,651,581 36,507,219 37,383,392 38,280,593

60 Revenues Available for Junior Lien 624,749,656$ 629,521,796$ 954,711,196$ 1,052,889,418$ 1,132,836,771$ 1,204,380,848$






63 Junior Lien Coverage Surplus / (Deficit) 593,382,656$ 607,849,796$ 930,428,196$ 1,026,282,418$ 1,107,650,771$ 1,178,963,848$

64 First Lien65 Net Revenues Available 624,749,656$ 629,521,796$ 954,711,196$ 1,052,889,418$ 1,132,836,771$ 1,204,380,848$






71 First Lien Coverage Surplus / (Deficit) (131,155,731)$ (214,961,695)$ (5,684,441)$ (8,056,916)$ (39,900,888)$ (60,563,213)$

72 Second Lien73 Net Revenues Available 627,344,656$ 654,831,886$ 979,259,613$ 1,081,209,884$ 1,163,452,341$ 1,240,680,635$

74 Less: First Lien Debt Service (519,380,991)$ (605,801,129)$ (686,186,467)$ (759,042,714)$ (841,548,021)$ (911,304,891)$

75 Plus: Restricted Revenues

76 Revenues Available for Second Lien 107,963,665$ 49,030,757$ 293,073,146$ 322,167,170$ 321,904,321$ 329,375,743$


78 Second Lien Coverage NA NA NA NA NA NA

79 Second Lien Coverage Surplus / (Deficit) 107,963,665$ 49,030,757$ 293,073,146$ 322,167,170$ 321,904,321$ 329,375,743$

80 Total Debt Coverage81 Net Revenues Available 624,749,656$ 629,521,796$ 954,711,196$ 1,052,889,418$ 1,132,836,771$ 1,204,380,848$







88 Subordinate Lien Debt Service 29,008,980$ 30,966,438$ 31,580,626$ 32,317,381$ 33,343,102$ 34,393,324$







92 Total Coverage Surplus / (Deficit) (194,556,691)$ (288,580,014)$ (79,602,325)$ (81,344,209)$ (117,449,559)$ (136,526,584)$

93 Resulting Cash Flows After Revenue Adjustment 1

94 Revenues before rate adjustment 1 1,114,401,976$ 1,133,380,242$ 1,481,982,552$ 1,603,364,001$ 1,702,964,973$ 1,808,753,157$



97 Other revenues 64,863,772$ 79,393,422$ 79,839,605$ 85,271,963$ 86,779,533$ 92,853,372$

98 Less Expenditures (from Cash Flow) (1,181,557,092)$ (1,477,731,120)$ (1,585,702,201)$ (1,685,989,232)$ (1,790,809,985)$ (1,895,222,373)$

99 Cash Flow 2,009,690$ (105,262,513)$ 6,527,958$ 27,399,466$ 25,224,895$ 34,307,688$

100 Resulting Cash Flows After Revenue Adjustment 2

101 Revenues before rate adjustment 2 1,118,703,010$ 1,293,075,185$ 1,512,390,554$ 1,628,116,735$ 1,729,255,346$ 1,836,676,688$



104 Other revenues 64,863,772$ 79,393,422$ 79,839,605$ 85,271,963$ 86,779,533$ 92,853,372$

105 Less Expenditures (from Cash Flow) (1,181,557,092)$ (1,477,731,120)$ (1,585,702,201)$ (1,685,989,232)$ (1,790,809,985)$ (1,895,222,373)$

106 Cash Flow 2,009,690$ (57,417,754)$ 6,527,958$ 27,399,466$ 25,224,895$ 34,307,688$


108 Second Lien Coverage Surplus / (Deficit) (104,449,697)$ 8,058,008$ 42,068,562$ 35,700,818$ 4,379,486$ (14,484,682)$


110 First Lien Coverage Surplus / (Deficit) (104,449,697)$ 8,058,008$ 42,068,562$ 35,700,818$ 4,379,486$ (14,484,682)$

111 Total Coverage Ratio (1.2x) 1.08x 1.28x 1.34x 1.33x 1.30x 1.29x

112 Total Coverage Surplus / (Deficit) (190,255,657)$ (81,040,311)$ (49,194,322)$ (56,591,475)$ (91,159,185)$ (108,603,052)$

113 Annualized Rate Revenue Requirements for Adjustment 1 1,131,118,006$ 1,293,075,185$ 1,600,163,674$ 1,699,565,841$ 1,805,142,871$ 1,917,278,347$

114 Annualized Rate Revenue Requirements for Adjustment 2 1,131,118,006$ 1,479,024,503$ 1,600,163,674$ 1,699,565,841$ 1,805,142,871$ 1,917,278,347$


DRAFT | APRIL

Appendix F

CUSTOMER PROFILE AND DEMAND ANALYSIS


DRAFT | APRIL | F‐



customers.

F.1. Customer Accounts and Growth

F.1.1. Water System Customer Accounts

Houston Water’s customer base is made up of distinctly different customer types with varied usage

characteristics. Carollo analyzed each customer group’s meter counts by size to equitably distribute customer

and capacity costs based on this information.

Table F. summarizes the number of retail water accounts by meter size and customer type. Single family

residential is the largest customer type with approximately percent of retail water accounts.

Commercial/industrial is the next largest with approximately percent of retail water accounts. The remaining

accounts are distributed among all other customer types such as multifamily residential, irrigation, transient,

resale, emergency backup service, and fire customers.

Table F. Water System Retail Accounts by Meter Size

Meter Size

SFR MFR COM/IND IRRIG TRANS RESALE EMERG MTR FIRE

UNMTR FIRE( )

/ ” , , , , ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐

/ " , , ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐

” , , , ‐‐‐ ‐‐‐ ‐‐‐

½” , , , ‐‐‐ ‐‐‐ ‐‐‐

” , , ‐‐‐ ‐‐‐

” ‐‐‐ ‐‐‐ ‐‐‐

” ‐‐‐ ‐‐‐ ‐‐‐

” ‐‐‐ ‐‐‐ ‐‐‐ ,

” ‐‐‐ ‐‐‐ ‐‐‐ ,

” ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐

” ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐

Total , , , , ,

Note: ( ) Meter sizes shown for unmetered fire accounts are based on service line size.

To reflect the impact of larger meters on the system, the meters are scaled based on the hydraulic capacity of

the meter. Larger meters have the potential to demand more capacity, or rather, exert a greater

instantaneous demand on the system. The potential capacity demand is proportional to the potential flow

through each meter size as established by AWWA hydraulic capacity ratios. These ratios, provided in

Table F. , are known as meter equivalent units (MEU). Table F. also provides the number of meter

equivalents for each retail customer type, which are calculated by multiplying the number of meters from

Table F. by the appropriate MEU.



Table F. Water System Retail Meter Equivalents

Meter Size

MEU SFR MFR COM/IND IRRIG TRANS RESALE EMERG MTR FIRE

UNMTR FIRE( )

/ ” . , , , , ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐

/ " . , , ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐

” . , , , , ‐‐‐ ‐‐‐ ‐‐‐

½” . , , , , ‐‐‐ ‐‐‐ ‐‐‐

” . , , , , , ‐‐‐ ‐‐‐

” . , , ‐‐‐ ‐‐‐ ‐‐‐

” . ‐‐‐ , , ‐‐‐ ‐‐‐ ,

” . ‐‐‐ , , ‐‐‐ ‐‐‐ , ,

” . ‐‐‐ , ‐‐‐ ‐‐‐ , ,

” . ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ,

” . ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ,

Total ‐‐‐ , , , , , , ,

Note: ( ) Meter sizes shown for unmetered fire accounts are based on service line size.

By considering meter size to determine meter equivalents, costs that are higher for customers with larger

meters can be shifted away from customer types with mostly small meters to customer types with many large

meters. A comparison of Table F. and Table F. shows a shift away from single family residential ( percent

of retail accounts but only percent of retail MEUs) to other customer types like unmetered fire ( percent

of retail accounts but percent of retail MEUs).

F. . . Wastewater System Customer Accounts

For wastewater, Carollo used number of accounts and each customer’s water meter size to equitably

distribute customer and capacity costs.

Table F. summarizes the number of retail wastewater accounts by water meter size and customer type.

Single family residential is the largest customer type with approximately percent of retail wastewater

accounts. Commercial/industrial (without surcharges) is the next largest with approximately percent of retail

wastewater accounts. The remaining accounts are distributed among multifamily residential and industrial

surcharge customers.



Table F. Wastewater System Retail Accounts by Meter Size

Meter Size( ) SFR MFR COM/IND IND w/SURCH

/ ” , , ,

/ " ‐‐‐ ‐‐‐

” , , ,

½” , ,

” , , ,

”

” ‐‐‐

” ‐‐‐

” ‐‐‐

” ‐‐‐

” ‐‐‐ ‐‐‐ ‐‐‐

” ‐‐‐ ‐‐‐ ‐‐‐

Total , , ,

Note: ( ) Water meter sizes are shown for customers without effluent meters.

Table F. provides the number of meter equivalents for each retail customer type, which are calculated by

multiplying the number of meters from Table F. by the appropriate MEU.

Table F. Wastewater System Retail Meter Equivalents

Meter Size( ) MEU SFR MFR COM/IND IND w/SURCH

/ ” . , , ,

/ " . ‐‐‐ ‐‐‐

” . , , ,

½” . , , ,

” . , , ,

” . , ,

” . ‐‐‐ , ,

” . ‐‐‐ , ,

” . ‐‐‐ , ,

” . ‐‐‐ ,

” . ‐‐‐ ‐‐‐ ‐‐‐

” . ‐‐‐ ‐‐‐ ‐‐‐

Total ‐‐‐ , , , ,

Notes: ( ) Water meter sizes are shown for customers without effluent meters.



By considering meter size to determine meter equivalents, costs that are higher for customers with larger

meters can be shifted away from customer types with mostly small meters to customer types with many large

meters. A comparison of Table F. and Table F. shows a shift away from single family residential ( percent

of retail accounts but only percent of retail MEUs) to other customer types like commercial / industrial

without surcharges ( percent of retail accounts but percent of retail MEUs).

F. . . Forecasted Customer Account Growth

Based on discussions with Houston Water staff, Carollo used an annual growth rate of . percent to project

the number of customer accounts and MEUs in each year of the study period. It is assumed that all customer

types and meter sizes grow at this rate so the distribution of accounts among customer types and meter sizes

does not change.

F. . Customer Demands

Retail water customers account for approximately percent of treated water demand. The remaining

percent of treated water is purchased by contract and wholesale customers, including Southeast Water

Purification Plant (WPP) co‐participants and Northeast WPP and East WPP Water Authorities.

Figure F. illustrates the findings of this analysis for single family residential, multifamily residential, and

commercial customers, although the full analysis included all retail and wholesale customers.

Figure F. Bill Frequency and Usage Analysis


DRAFT | APRIL

Appendix G

WATER COST OF SERVICE ANALYSIS


Water Cost Allocation

Line

No. Raw Water Base Max Day Max Hour Base Max Day Max Hour Fire

Meter

Charges

Billing &

Collecting

EWPP

WAs

NEWPP

WAs

SEWPP

Co‐parts TCEQ Fees Recycled General Total

Common to AllCommon to Retail & Contract Customers

Not Contributing CapitalCommon to Retail

Allocation of Functionalized Assets to Rate ComponentsAllocation Basis

1 Plants & Structures General 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 454,668$

2 Electrical, Mechanical, Controls General 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 380,735$

3 Source of Supply ‐ Wells Source of Supply ‐ Treated 0.0% 100.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 139,157$

4 Lifts and Pump Stations Storage 0.0% 49.2% 17.5% 33.3% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 216,801$

Water and Wastewater Lines

5 Distribution Distribution 0.0% 0.0% 0.0% 0.0% 46.7% 16.6% 31.7% 5.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 1,786,781$

6 Transmission Transmission 0.0% 73.8% 26.2% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 1,417,065$

7 Land & Site General 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 35,049$

8 Meters & Water Supply Line to the Meter Meters 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 74,131$

9 SCADA System Production ‐ Other 0.0% 73.8% 26.2% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 29,334$

10 Pumps Pumping 0.0% 49.2% 17.5% 33.3% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 3,004$

11 Fuel Tanks General 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 1,108$

12 Chemical Tanks Production ‐ Other 0.0% 73.8% 26.2% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 15,097$

13 Ground Storage Tanks Storage 0.0% 49.2% 17.5% 33.3% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 166,420$

14 Elevated Storage Tank Storage 0.0% 49.2% 17.5% 33.3% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 35,724$

15 Asset Allocation Subtotal ‐$ 1,424,535$ 457,417$ 140,649$ 834,619$ 297,009$ 565,814$ 89,339$ 74,131$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ 871,560$ 4,755,073$

16 0% 30% 10% 3% 18% 6% 12% 2% 2% 0% 0% 0% 0% 0% 0% 18%

17 Reallocation as "As All Others" 0% 7% 2% 1% 4% 1% 3% 0% 0% 0% 0% 0% 0% 0% 0%

18 Total ($) Allocation ‐$ 1,744,237$ 560,073$ 172,215$ 1,021,929$ 363,666$ 692,797$ 109,389$ 90,768$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ 4,755,073$

19 Total (%) Allocation 0% 37% 12% 4% 21% 8% 15% 2% 2% 0% 0% 0% 0% 0% 0%


Water Functionalization of Costs

Line

No. Cost Center

Source of

Supply ‐

Untreated

Source of

Supply ‐

Treated Pumping Transmission

Production ‐

EWPP

Production ‐

NEWPP

Production ‐

NEWPP

Expansion

Production ‐

SEWPP

Production ‐

Other Storage Distribution Meters

Fire

Protection

Customer

Billing Admin

WA OH ‐

EWPP

WA OH ‐

NEWPP

Co‐part OH

SEWPP TCEQ Fees General

1 Functional Allocation of O&M Cost Centers (%)2 Drinking Water Operations

3 40011 DWO Executive Support G&A 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 92% 2.0% 3.1% 3.3% 0% 0%

4 DWO Water Maintenance 0% 0% 6% 0% 52% 10% 0% 22% 6% 3% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%

5 40012 DWO Regulatory and Compliance 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 81% 4.6% 7.4% 6.9% 0% 0%

6 TCEQ Fee 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 100% 0%

7 40013 DWO Ground Water Operations 0% 0% 40% 0% 0% 0% 0% 0% 40% 20% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%

8 40014 DWO East Water Purification Plant 0% 0% 0% 0% 100% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%

9 40015 DWO Technical Services G&A 4% 6% 0% 35% 0% 0% 0% 0% 5% 0% 50% 0% 0% 0% 0% 0% 0% 0% 0% 0%

10 Cust. Complaints and Water System Maint. 4% 5% 0% 32% 0% 0% 0% 0% 5% 0% 45% 0% 0% 0% 0% 3.3% 2.3% 4.3% 0% 0%

11 Source Water Protection 4% 5% 0% 32% 0% 0% 0% 0% 5% 0% 45% 0% 0% 0% 0% 3.3% 2.3% 4.3% 0% 0%

12 40016 DWO NEWPP Expansion 0% 0% 0% 0% 0% 0% 100% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%

13 PIB DS 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 100%

14 40017 DWO Southeast Water Purification Plant 0% 0% 0% 0% 0% 0% 0% 100% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%

15 40018 DWO Northeast Water Purification Plant 0% 0% 0% 0% 0% 100% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%

16 40019 DWO System Maintenance ‐ North 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 95% 0% 5% 0% 0% 0% 0% 0% 0% 0%

17 40020 DWO System Maintenance ‐ South 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 95% 0% 5% 0% 0% 0% 0% 0% 0% 0%

18 RACDS River Authority Contributed Debt Service 40% 60% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%

19 CWA O&M (CWA Trinity River and TRA) 35% 0% 0% 0% 47% 0% 0% 19% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%

20 CWA Debt Service (1993A‐H & 2004 Ref to 2014) 35% 0% 0% 0% 47% 0% 0% 19% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%

21 CWA Debt Service (96" line) 19% 0% 0% 0% 0% 0% 0% 81% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%

22 Operation Services ‐ Houston Water G&A

23 40021 OPS Financial & Support Operation Services G&A 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 100% 0% 0% 0% 0% 0%

24 40022 HW Planning 2% 3% 5% 15% 0% 0% 0% 0% 5% 5% 15% 0% 0% 0% 50% 0% 0% 0% 0% 0%

25 40023 OPS Maintenance Operation Services ‐ Restoration 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 100% 0% 0% 0% 0% 0% 0% 0% 0% 0%

26 40024 OPS Maintenance Operation Services‐COS/DIS 0% 0% 0% 10% 0% 0% 0% 0% 0% 0% 90% 0% 0% 0% 0% 0% 0% 0% 0% 0%

27 40025 HW GIS Services 0% 0% 0% 15% 0% 0% 0% 0% 0% 0% 45% 10% 25% 0% 2% 0% 0% 0% 0% 3%

28 40026 OPS Executive Support 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 92% 2.0% 3.1% 3.3% 0% 0%

29 40027 OPS Support Services 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 100% 0% 0% 0% 0% 0%

30 40028 HW Infrastructure Planning 0% 0% 10% 30% 0% 0% 0% 0% 0% 10% 30% 0% 0% 0% 20% 0% 0% 0% 0% 0%

31 40029 HW Utility Analysis 2% 3% 5% 15% 0% 0% 0% 0% 5% 5% 15% 0% 0% 0% 50% 0% 0% 0% 0% 0%

32 Other O&M

33 30001‐30009 Director's Office 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2.0% 3.1% 3.3% 0% 92%

34 80001 Information Technology 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2.0% 3.1% 3.3% 0% 92%

35 90001‐90011 Management Support 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2.0% 3.1% 3.3% 0% 92%

36 60005 & 60008 Houston Water ‐ Planning 2% 3% 5% 15% 0% 0% 0% 0% 5% 5% 15% 0% 0% 0% 50% 0% 0% 0% 0% 0%

37 0005,50006,50030 Financial Mangt Services Support 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0.1% 0.1% 0.3% 0% 100%

38 Property and Terrorism Insurance 0% 0% 0% 0% 17% 5% 0% 8% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 70%

39 Security 0% 0% 0% 0% 24% 24% 0% 24% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 28%

40 100007‐15, 100025 CAS ‐ Customer Account Services 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 49.5% 0% 50.0% 0% 0.1% 0.1% 0.3% 0% 0%

41 Deductions 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 100%


Water Cost Allocation

Line

No. Raw Water Base Max Day Max Hour Base Max Day Max Hour Fire

Meter

Charges

Billing &

Collecting

EWPP

WAs

NEWPP

WAs

SEWPP

Co‐parts TCEQ Fees General Total FYE 2022

Allocation of Functionalized O&M to Rate Components1 Source of Supply ‐ Untreated 100% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 22,289$

2 Source of Supply ‐ Treated 0% 100% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 12,707$

3 Pumping 0% 49% 17% 33% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 13,587$ 4 Transmission 0% 74% 26% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 6,114$

5 Production ‐ EWPP 0% 61% 22% 0% 0% 0% 0% 0% 0% 0% 17% 0% 0% 0% 0% 50,027$

6 Production ‐ NEWPP 0% 34% 12% 0% 0% 0% 0% 0% 0% 0% 0% 54% 0% 0% 0% 17,743$

7 Production ‐ NEWPP Expansion 0% 10% 4% 0% 0% 0% 0% 0% 0% 0% 0% 86% 0% 0% 0% 1,860$

8 Production ‐ SEWPP 0% 32% 11% 0% 0% 0% 0% 0% 0% 0% 0% 0% 56% 0% 0% 24,242$

9 Production ‐ Other 0% 74% 26% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 14,057$

10 Storage 0% 49% 17% 33% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 7,019$

11 Distribution 0% 0% 0% 0% 47% 17% 32% 5% 0% 0% 0% 0% 0% 0% 0% 63,601$

12 Meters 0% 0% 0% 0% 0% 0% 0% 0% 100% 0% 0% 0% 0% 0% 0% 16,071$

13 Fire Protection 0% 0% 0% 0% 0% 0% 0% 100% 0% 0% 0% 0% 0% 0% 0% 2,951$

14 Customer Billing 0% 0% 0% 0% 0% 0% 0% 0% 0% 100% 0% 0% 0% 0% 0% 16,008$

15 Admin 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 100% 22,277$

16 WA OH ‐ EWPP 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 100% 0% 0% 0% 0% 989$

17 WA OH ‐ NEWPP 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 100% 0% 0% 0% 1,397$

18 Co‐part OH ‐ SEWPP 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 100% 0% 0% 1,647$

19 TCEQ Fees 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 100% 0% 2,576$

20 General 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 100%

Common to AllCommon to Retail & Contract Customers

Not Contributing CapitalCommon to Retail


Water System Customer Allocation ‐ FYE 2022 July Increase

Line

No. Customer Type Raw Water Base Max Day Max Hour Base Max Day Max Hour Fire

Meter

Charges

Billing &

Collecting EWPP WAs NEWPP WAs

SEWPP Co‐

parts TCEQ Fees Total

Development of Unit Costs1 Units of Service kGal kGal kGal / day kGal / day kGal kGal / day kGal / day MEU MEU Bills kGal kGal kGal Connections

2 Single Family Residential ‐ 23,340,203 30,899 47,423 23,340,203 30,899 47,423 503,912 503,912 4,947,559 ‐ ‐ ‐ 410,045

3 Multifamily Residential ‐ 25,815,307 25,140 47,934 25,815,307 25,140 47,934 43,417 43,417 161,408 ‐ ‐ ‐ 573,968

4 CII ‐ Commercial ‐ 21,656,992 25,296 42,315 21,656,992 25,296 42,315 88,790 88,790 407,916 ‐ ‐ ‐ 43,300

5 CII ‐ Emergency Backup ‐ 11,907 643 338 11,907 643 338 694 694 165 ‐ ‐ ‐ 17

6 CII ‐ Extra Container ‐ 791 25 14 791 25 14 4 4 24 ‐ ‐ ‐ ‐

7 CII ‐ Government ‐ 3,746,549 23,425 16,845 3,746,549 23,425 16,845 10,150 10,150 14,488 ‐ ‐ ‐ 4,376

8 CII ‐ Industrial Sewer Surcharge ‐ 686,428 882 1,381 686,428 882 1,381 1,422 1,422 2,015 ‐ ‐ ‐ 269

9 CII ‐ Resale ‐ 8,798 29 26 8,798 29 26 17 17 12 ‐ ‐ ‐ 2

10 CII ‐ Transient ‐ 384,573 2,953 2,003 384,573 2,953 2,003 2,867 2,867 7,708 ‐ ‐ ‐ 643

11 Irrigation ‐ 2,409,002 6,733 6,667 2,409,002 6,733 6,667 13,680 13,680 70,384 ‐ ‐ ‐ 469

12 Metered Fire ‐ 12,976 462 249 12,976 462 249 11,947 11,947 3,368 ‐ ‐ ‐ 32

13 Unmetered Fire ‐ ‐ ‐ ‐ ‐ ‐ ‐ 216,735 216,735 63,161 ‐ ‐ ‐ ‐

14 Sewer Only ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

15 Drainage Only ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

16 GRP Participants ‐ Areas 1 & 2 ‐ 29,350 298 199 ‐ ‐ ‐ ‐ ‐ 85 ‐ ‐ ‐ 16

17 GRP Participants ‐ Area 3 ‐ 2,491,173 14,415 18,583 ‐ ‐ ‐ ‐ ‐ 1,086 ‐ ‐ ‐ 208

18 Contract Treated ‐ SEWPP Co‐participants ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 19,538,357 74

19 Contract Treated ‐ EWPP Water Authorities ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 12,996,195 ‐ ‐ 12

20 Contract Treated ‐ NEWPP Water Authorities ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 9,365,481 ‐ 8

21 Contract Treated with Airgap ‐ 10,470,163 13,973 ‐ ‐ ‐ ‐ ‐ 120 435 ‐ ‐ ‐ 92

22 Contract Treated without Airgap ‐ 1,351,009 1,669 2,685 ‐ ‐ ‐ ‐ 50 181 ‐ ‐ ‐ 38

23 Contract Water ‐ Untreated 78,971,731 ‐ ‐ ‐ ‐ ‐ ‐ ‐ 432 1,569 ‐ ‐ ‐ 5

24 Total 78,971,731 92,415,220 146,843 186,661 78,073,526 116,489 165,194 893,636 894,236 5,681,563 12,996,195 9,365,481 19,538,357 1,033,575

25 Test Year Unit Cost 0.27$ 2.44$ 481.78$ 112.49$ 1.46$ 348.80$ 468.57$ 16.79$ 25.29$ 2.63$ 0.74$ 1.35$ 0.79$ 2.49$

Common to Retail & Contract Customers Not

Contributing CapitalCommon to Retail Common to All


Water System Customer Allocation ‐ FYE 2022 July Increase

Line


Meter

Charges

Billing &


SEWPP Co‐




Allocation of Unit Costs to Customer Types26 Single Family Residential ‐$ 56,865,463$ 14,886,770$ 5,334,477$ 34,133,708$ 10,777,768$ 22,220,687$ 8,461,035$ 12,744,285$ 13,034,800$ ‐$ ‐$ ‐$ 1,021,995$ 179,480,990$

27 Multifamily Residential ‐ 62,895,743 12,112,253 5,391,973 37,753,406 8,769,065 22,460,186 729,005 1,098,051 425,243 ‐ ‐ ‐ 1,430,555 153,065,481$

28 CII ‐ Commercial ‐ 52,764,531 12,187,264 4,759,961 31,672,108 8,823,372 19,827,548 1,490,848 2,245,563 1,074,692 ‐ ‐ ‐ 107,920 134,953,807$

29 CII ‐ Emergency Backup ‐ 29,010 309,921 38,015 17,414 224,377 158,353 11,657 17,558 435 ‐ ‐ ‐ 43 806,782$

30 CII ‐ Extra Container ‐ 1,927 12,183 1,544 1,156 8,820 6,432 73 109 64 ‐ ‐ ‐ ‐ 32,307$

31 CII ‐ Government ‐ 9,127,994 11,285,977 1,894,861 5,479,112 8,170,855 7,893,016 170,420 256,692 38,169 ‐ ‐ ‐ 10,907 44,328,004$

32 CII ‐ Industrial Sewer Surcharge ‐ 1,672,396 424,921 155,380 1,003,862 307,635 647,233 23,878 35,966 5,309 ‐ ‐ ‐ 669 4,277,248$

33 CII ‐ Resale ‐ 21,434 13,801 2,967 12,866 9,991 12,358 282 425 32 ‐ ‐ ‐ 5 74,161$

34 CII ‐ Transient ‐ 936,964 1,422,747 225,354 562,416 1,030,044 938,708 48,140 72,509 20,308 ‐ ‐ ‐ 1,602 5,258,793$

35 Irrigation ‐ 5,869,231 3,243,854 749,904 3,523,028 2,348,495 3,123,714 229,696 345,976 185,432 ‐ ‐ ‐ 1,168 19,620,499$

36 Metered Fire ‐ 31,613 222,647 27,992 18,976 161,193 116,599 200,604 302,156 8,874 ‐ ‐ ‐ 80 1,090,734$

37 Unmetered Fire ‐ ‐ ‐ ‐ ‐ ‐ ‐ 3,639,141 5,481,392 166,405 ‐ ‐ ‐ ‐ 9,286,937$

38 Sewer Only ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐$

39 Drainage Only ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐$

40 GRP Participants ‐ Areas 1 & 2 ‐ 71,507 143,373 22,391 ‐ ‐ ‐ ‐ ‐ 223 ‐ ‐ ‐ 40 237,533$

41 GRP Participants ‐ Area 3 ‐ 6,069,430 6,944,877 2,090,334 ‐ ‐ ‐ ‐ ‐ 2,862 ‐ ‐ ‐ 519 15,108,022$

42 Contract Treated ‐ SEWPP Co‐participants ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 15,531,167 186 15,531,352$

43 Contract Treated ‐ EWPP Water Authorities ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 9,645,248 ‐ ‐ 30 9,645,278$

44 Contract Treated ‐ NEWPP Water Authorities ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 12,647,125 ‐ 20 12,647,145$

45 Contract Treated with Airgap ‐ 25,509,231 6,731,809 ‐ ‐ ‐ ‐ ‐ 3,023 1,145 ‐ ‐ ‐ 228 32,245,436$

46 Contract Treated without Airgap ‐ 3,291,563 804,160 302,061 ‐ ‐ ‐ ‐ 1,259 477 ‐ ‐ ‐ 95 4,399,615$

47 Contract Water ‐ Untreated 21,616,675 ‐ ‐ ‐ ‐ ‐ ‐ ‐ 10,915 4,135 ‐ ‐ ‐ 13 21,631,737$

48 Total 21,616,675$ 225,158,036$ 70,746,557$ 20,997,214$ 114,178,052$ 40,631,616$ 77,404,834$ 15,004,778$ 22,615,879$ 14,968,603$ 9,645,248$ 12,647,125$ 15,531,167$ 2,576,077$ 663,721,860$


Water Cost of Service ComparisonFYE 2022 ‐ July Increase

A

Line

No. Cost of Service

1 Single Family Residential 179,480,990$

2 Multifamily Residential 153,065,481

3 CII ‐ Commercial 134,953,807

4 CII ‐ Emergency Backup 806,782

5 CII ‐ Extra Container 32,307

6 CII ‐ Government 44,328,004

7 CII ‐ Industrial Sewer Surcharge 4,277,248

8 CII ‐ Resale 74,161

9 CII ‐ Transient 5,258,793

10 Irrigation 19,620,499

11 Metered Fire 1,090,734

12 Unmetered Fire 9,286,937

13 GRP Participants ‐ Areas 1 & 2 237,533

14 GRP Participants ‐ Area 3 15,108,022

15 Contract Treated ‐ SEWPP Co‐participants 15,531,352

16 Contract Treated ‐ EWPP Water Authorities 9,645,278

17 Contract Treated ‐ NEWPP Water Authorities 12,647,145

18 Contract Treated with Airgap 32,245,436

19 Contract Treated without Airgap 4,399,615

20 Contract Water ‐ Untreated 21,631,737

21 Total 663,721,860$

Customer Type


Water System Customer Allocation ‐ FYE 2022 April Increase

Line


Meter

Charges

Billing &


SEWPP Co‐





4 CII ‐ Commercial ‐ 21,656,992 25,296 42,315 21,656,992 25,296 42,315 88,790 88,790 407,916 ‐ ‐ ‐ 43,300



7 CII ‐ Government ‐ 3,746,549 23,425 16,845 3,746,549 23,425 16,845 10,150 10,150 14,488 ‐ ‐ ‐ 4,376


9 CII ‐ Resale ‐ 8,798 29 26 8,798 29 26 17 17 12 ‐ ‐ ‐ 2

10 CII ‐ Transient ‐ 384,573 2,953 2,003 384,573 2,953 2,003 2,867 2,867 7,708 ‐ ‐ ‐ 643

11 Irrigation ‐ 2,409,002 6,733 6,667 2,409,002 6,733 6,667 13,680 13,680 70,384 ‐ ‐ ‐ 469

12 Metered Fire ‐ 12,976 462 249 12,976 462 249 11,947 11,947 3,368 ‐ ‐ ‐ 32

13 Unmetered Fire ‐ ‐ ‐ ‐ ‐ ‐ ‐ 216,735 216,735 63,161 ‐ ‐ ‐ ‐

14 Sewer Only ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

15 Drainage Only ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐









24 Total 78,971,731 92,415,220 146,843 186,661 78,073,526 116,489 165,194 893,636 894,236 5,681,563 12,996,195 9,365,481 19,538,357 1,033,575






Line


Meter

Charges

Billing &


SEWPP Co‐






28 CII ‐ Commercial ‐ 58,408,804 13,495,108 5,268,758 35,087,385 9,774,816 21,965,598 1,648,497 2,473,753 1,178,476 ‐ ‐ ‐ 107,920 149,409,115$



31 CII ‐ Government ‐ 10,104,424 12,497,101 2,097,405 6,069,938 9,051,937 8,744,138 188,441 282,777 41,855 ‐ ‐ ‐ 10,907 49,088,923$


33 CII ‐ Resale ‐ 23,727 15,282 3,284 14,253 11,069 13,691 312 468 35 ‐ ‐ ‐ 5 82,125$

34 CII ‐ Transient ‐ 1,037,192 1,575,425 249,442 623,063 1,141,117 1,039,931 53,230 79,878 22,269 ‐ ‐ ‐ 1,602 5,823,149$

35 Irrigation ‐ 6,497,068 3,591,960 830,062 3,902,924 2,601,739 3,460,552 253,985 381,133 203,340 ‐ ‐ ‐ 1,168 21,723,931$

36 Metered Fire ‐ 34,995 246,540 30,984 21,022 178,575 129,172 221,816 332,860 9,731 ‐ ‐ ‐ 80 1,205,775$

37 Unmetered Fire ‐ ‐ ‐ ‐ ‐ ‐ ‐ 4,023,961 6,038,400 182,475 ‐ ‐ ‐ ‐ 10,244,835$

38 Sewer Only ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐$

39 Drainage Only ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐$









48 Total 23,696,476$ 249,243,407$ 78,338,533$ 23,241,629$ 126,490,136$ 45,013,017$ 85,751,577$ 16,591,457$ 24,914,060$ 16,414,139$ 9,645,248$ 12,647,125$ 15,531,167$ 2,576,077$ 730,094,046$


Water Cost of Service ComparisonFYE 2022 ‐ April Increase

A

Line

No. Cost of Service





















21 Total 730,094,046$

Customer Type



Line


Meter

Charges

Billing &


SEWPP Co‐





4 CII ‐ Commercial ‐ 21,700,306 25,347 42,400 21,700,306 25,347 42,400 88,968 88,968 408,732 ‐ ‐ ‐ 43,386



7 CII ‐ Government ‐ 3,754,042 23,472 16,879 3,754,042 23,472 16,879 10,170 10,170 14,517 ‐ ‐ ‐ 4,385


9 CII ‐ Resale ‐ 8,815 29 26 8,815 29 26 17 17 12 ‐ ‐ ‐ 2

10 CII ‐ Transient ‐ 385,342 2,959 2,007 385,342 2,959 2,007 2,873 2,873 7,723 ‐ ‐ ‐ 644

11 Irrigation ‐ 2,413,820 6,746 6,680 2,413,820 6,746 6,680 13,707 13,707 70,524 ‐ ‐ ‐ 470

12 Metered Fire ‐ 13,001 463 249 13,001 463 249 11,971 11,971 3,375 ‐ ‐ ‐ 32

13 Unmetered Fire ‐ ‐ ‐ ‐ ‐ ‐ ‐ 217,169 217,169 63,288 ‐ ‐ ‐ ‐

14 Sewer Only ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

15 Drainage Only ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐









24 Total 79,129,675 95,096,206 147,137 187,035 78,229,673 116,722 165,525 895,423 896,025 5,692,927 13,022,188 14,194,431 19,577,433 1,035,642






Line


Meter

Charges

Billing &


SEWPP Co‐






28 CII ‐ Commercial ‐ 62,794,878 14,919,274 5,823,662 38,931,129 10,845,625 24,371,880 1,813,612 2,675,415 1,247,426 ‐ ‐ ‐ 110,510 163,533,411$



31 CII ‐ Government ‐ 10,863,192 13,815,946 2,318,303 6,734,886 10,043,557 9,702,039 207,315 305,829 44,304 ‐ ‐ ‐ 11,169 54,046,539$


33 CII ‐ Resale ‐ 25,509 16,894 3,630 15,815 12,281 15,190 343 506 37 ‐ ‐ ‐ 5 90,211$

34 CII ‐ Transient ‐ 1,115,078 1,741,683 275,713 691,318 1,266,123 1,153,854 58,562 86,389 23,572 ‐ ‐ ‐ 1,641 6,413,932$

35 Irrigation ‐ 6,984,950 3,971,027 917,484 4,330,481 2,886,753 3,839,647 279,425 412,203 215,236 ‐ ‐ ‐ 1,196 23,838,403$

36 Metered Fire ‐ 37,623 272,558 34,247 23,325 198,137 143,322 244,034 359,995 10,300 ‐ ‐ ‐ 82 1,323,624$

37 Unmetered Fire ‐ ‐ ‐ ‐ ‐ ‐ ‐ 4,427,005 6,530,655 193,151 ‐ ‐ ‐ ‐ 11,150,811$

38 Sewer Only ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐$

39 Drainage Only ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐$









48 Total 25,019,899$ 275,182,971$ 86,605,758$ 25,689,427$ 140,346,844$ 49,944,092$ 95,145,468$ 18,253,274$ 26,945,074$ 17,374,492$ 9,872,287$ 15,794,580$ 15,897,588$ 2,637,903$ 804,709,658$



A

Line

No. Cost of Service





















21 Total 804,709,658$

Customer Type



Line


Meter

Charges

Billing &


SEWPP Co‐





4 CII ‐ Commercial ‐ 21,743,707 25,397 42,485 21,743,707 25,397 42,485 89,146 89,146 409,549 ‐ ‐ ‐ 43,473



7 CII ‐ Government ‐ 3,761,550 23,519 16,912 3,761,550 23,519 16,912 10,190 10,190 14,546 ‐ ‐ ‐ 4,394


9 CII ‐ Resale ‐ 8,833 29 26 8,833 29 26 17 17 12 ‐ ‐ ‐ 2

10 CII ‐ Transient ‐ 386,113 2,965 2,011 386,113 2,965 2,011 2,879 2,879 7,739 ‐ ‐ ‐ 645

11 Irrigation ‐ 2,418,648 6,760 6,693 2,418,648 6,760 6,693 13,735 13,735 70,665 ‐ ‐ ‐ 471

12 Metered Fire ‐ 13,027 464 250 13,027 464 250 11,995 11,995 3,382 ‐ ‐ ‐ 32

13 Unmetered Fire ‐ ‐ ‐ ‐ ‐ ‐ ‐ 217,603 217,603 63,414 ‐ ‐ ‐ ‐

14 Sewer Only ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

15 Drainage Only ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐









24 Total 79,287,934 95,286,398 147,431 187,409 78,386,132 116,955 165,856 897,214 897,817 5,704,312 13,048,232 23,852,331 19,616,588 1,037,713






Line


Meter

Charges

Billing &


SEWPP Co‐






28 CII ‐ Commercial ‐ 66,432,504 15,803,608 6,149,692 41,236,028 11,487,735 25,814,805 1,907,958 2,775,308 1,270,573 ‐ ‐ ‐ 113,162 172,991,374$

29 CII ‐ Emergency Backup ‐ 36,525 401,884 49,115 22,672 292,132 206,170 14,918 21,700 514 ‐ ‐ ‐ 45 1,045,674$


31 CII ‐ Government ‐ 11,492,483 14,634,881 2,448,090 7,133,622 10,638,181 10,276,444 218,100 317,248 45,126 ‐ ‐ ‐ 11,437 57,215,610$


33 CII ‐ Resale ‐ 26,986 17,896 3,833 16,751 13,008 16,090 361 525 38 ‐ ‐ ‐ 5 95,493$

34 CII ‐ Transient ‐ 1,179,673 1,844,920 291,149 732,247 1,341,084 1,222,167 61,608 89,615 24,009 ‐ ‐ ‐ 1,680 6,788,152$

35 Irrigation ‐ 7,389,579 4,206,408 968,848 4,586,865 3,057,662 4,066,972 293,961 427,594 219,230 ‐ ‐ ‐ 1,225 25,218,344$

36 Metered Fire ‐ 39,802 288,714 36,164 24,706 209,868 151,808 256,729 373,437 10,491 ‐ ‐ ‐ 84 1,391,803$

37 Unmetered Fire ‐ ‐ ‐ ‐ ‐ ‐ ‐ 4,657,301 6,774,493 196,735 ‐ ‐ ‐ ‐ 11,628,529$

38 Sewer Only ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐$

39 Drainage Only ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐$







46 Contract Treated without Airgap ‐ 4,144,199 1,042,780 390,251 ‐ ‐ ‐ ‐ 1,557 564 ‐ ‐ ‐ 100 5,579,451$


48 Total 25,457,015$ 291,123,966$ 91,739,280$ 27,127,616$ 148,656,013$ 52,901,008$ 100,778,511$ 19,202,820$ 27,951,136$ 17,696,890$ 10,104,797$ 22,985,114$ 16,272,842$ 2,701,212$ 854,698,222$



A

Line

No. Cost of Service




4 CII ‐ Emergency Backup 1,045,674

















21 Total 854,698,222$

Customer Type



Line


Meter

Charges

Billing &


SEWPP Co‐





4 CII ‐ Commercial ‐ 21,787,194 25,448 42,570 21,787,194 25,448 42,570 89,324 89,324 410,368 ‐ ‐ ‐ 43,560



7 CII ‐ Government ‐ 3,769,073 23,566 16,946 3,769,073 23,566 16,946 10,211 10,211 14,575 ‐ ‐ ‐ 4,402


9 CII ‐ Resale ‐ 8,850 29 27 8,850 29 27 17 17 12 ‐ ‐ ‐ 2

10 CII ‐ Transient ‐ 386,885 2,971 2,015 386,885 2,971 2,015 2,884 2,884 7,754 ‐ ‐ ‐ 647

11 Irrigation ‐ 2,423,485 6,773 6,707 2,423,485 6,773 6,707 13,762 13,762 70,807 ‐ ‐ ‐ 472

12 Metered Fire ‐ 13,054 465 250 13,054 465 250 12,019 12,019 3,388 ‐ ‐ ‐ 32

13 Unmetered Fire ‐ ‐ ‐ ‐ ‐ ‐ ‐ 218,038 218,038 63,541 ‐ ‐ ‐ ‐

14 Sewer Only ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

15 Drainage Only ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐









24 Total 79,446,510 95,476,971 147,726 187,784 78,542,904 117,189 166,188 899,008 899,613 5,715,721 13,074,329 28,681,281 19,655,822 1,039,789






Line


Meter

Charges

Billing &


SEWPP Co‐






28 CII ‐ Commercial ‐ 70,495,864 16,791,625 6,536,767 44,031,651 12,266,554 27,564,937 2,016,577 2,870,597 1,276,136 ‐ ‐ ‐ 115,878 183,966,587$



31 CII ‐ Government ‐ 12,195,423 15,549,831 2,602,178 7,617,250 11,359,403 10,973,142 230,516 328,140 45,323 ‐ ‐ ‐ 11,711 60,912,919$


33 CII ‐ Resale ‐ 28,637 19,014 4,074 17,887 13,890 17,180 382 543 38 ‐ ‐ ‐ 5 101,651$

34 CII ‐ Transient ‐ 1,251,828 1,960,262 309,474 781,890 1,432,003 1,305,025 65,115 92,692 24,114 ‐ ‐ ‐ 1,720 7,224,124$

35 Irrigation ‐ 7,841,565 4,469,386 1,029,830 4,897,834 3,264,959 4,342,695 310,696 442,275 220,190 ‐ ‐ ‐ 1,255 26,820,683$

36 Metered Fire ‐ 42,237 306,764 38,440 26,381 224,096 162,100 271,344 386,258 10,537 ‐ ‐ ‐ 86 1,468,243$

37 Unmetered Fire ‐ ‐ ‐ ‐ ‐ ‐ ‐ 4,922,439 7,007,091 197,596 ‐ ‐ ‐ ‐ 12,127,127$

38 Sewer Only ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐$

39 Drainage Only ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐$









48 Total 25,535,075$ 308,930,632$ 97,474,679$ 28,835,089$ 158,734,243$ 56,487,466$ 107,610,855$ 20,296,030$ 28,910,820$ 17,774,381$ 10,342,900$ 27,436,740$ 16,657,123$ 2,766,041$ 907,792,075$



A

Line

No. Cost of Service





















21 Total 907,792,075$

Customer Type



Line


Meter

Charges

Billing &


SEWPP Co‐





4 CII ‐ Commercial ‐ 21,830,768 25,499 42,655 21,830,768 25,499 42,655 89,502 89,502 411,189 ‐ ‐ ‐ 43,647



7 CII ‐ Government ‐ 3,776,611 23,613 16,980 3,776,611 23,613 16,980 10,231 10,231 14,604 ‐ ‐ ‐ 4,411


9 CII ‐ Resale ‐ 8,868 29 27 8,868 29 27 17 17 12 ‐ ‐ ‐ 2

10 CII ‐ Transient ‐ 387,659 2,977 2,019 387,659 2,977 2,019 2,890 2,890 7,770 ‐ ‐ ‐ 648

11 Irrigation ‐ 2,428,332 6,787 6,720 2,428,332 6,787 6,720 13,790 13,790 70,948 ‐ ‐ ‐ 473

12 Metered Fire ‐ 13,080 466 251 13,080 466 251 12,043 12,043 3,395 ‐ ‐ ‐ 32

13 Unmetered Fire ‐ ‐ ‐ ‐ ‐ ‐ ‐ 218,474 218,474 63,668 ‐ ‐ ‐ ‐

14 Sewer Only ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

15 Drainage Only ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐









24 Total 79,605,403 95,667,925 148,021 188,159 78,699,990 117,423 166,520 900,806 901,412 5,727,153 13,100,477 47,997,081 19,695,133 1,041,868






Line


Meter

Charges

Billing &


SEWPP Co‐





27 Multifamily Residential ‐ 88,277,496 17,563,915 7,738,363 55,050,804 12,786,769 32,750,722 1,025,820 1,434,317 503,017 ‐ ‐ ‐ 1,572,912 218,704,134$

28 CII ‐ Commercial ‐ 74,057,805 17,672,689 6,831,322 46,183,251 12,865,957 28,911,893 2,097,846 2,933,242 1,271,244 ‐ ‐ ‐ 118,659 192,943,909$



31 CII ‐ Government ‐ 12,811,621 16,365,737 2,719,435 7,989,466 11,914,479 11,509,343 239,806 335,301 45,150 ‐ ‐ ‐ 11,992 63,942,330$


33 CII ‐ Resale ‐ 30,084 20,012 4,258 18,761 14,569 18,020 397 555 38 ‐ ‐ ‐ 6 106,699$

34 CII ‐ Transient ‐ 1,315,079 2,063,118 323,420 820,097 1,501,978 1,368,794 67,740 94,715 24,022 ‐ ‐ ‐ 1,762 7,580,723$

35 Irrigation ‐ 8,237,775 4,703,896 1,076,235 5,137,166 3,424,500 4,554,900 323,217 451,927 219,346 ‐ ‐ ‐ 1,285 28,130,248$

36 Metered Fire ‐ 44,371 322,860 40,173 27,670 235,046 170,021 282,279 394,688 10,497 ‐ ‐ ‐ 88 1,527,693$

37 Unmetered Fire ‐ ‐ ‐ ‐ ‐ ‐ ‐ 5,120,817 7,160,007 196,839 ‐ ‐ ‐ ‐ 12,477,663$

38 Sewer Only ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐$

39 Drainage Only ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐$









48 Total 25,416,251$ 324,539,956$ 102,589,215$ 30,134,434$ 166,490,768$ 59,247,718$ 112,869,243$ 21,113,975$ 29,541,740$ 17,706,240$ 10,586,689$ 44,064,885$ 17,050,579$ 2,832,426$ 964,184,119$



A

Line

No. Cost of Service





















21 Total 964,184,119$

Customer Type


DRAFT | APRIL

Appendix H

WASTEWATER COST OF SERVICE ANALYSIS


Wastewater Cost Allocation

Line

No. Flow ‐ Retail

Flow ‐ Retail + Cat.

Y Wholesale Flow ‐ All Capacity BOD ‐ O&M BOD ‐ Capital TSS ‐ O&M TSS ‐ Capital Ammonia ‐ O&M Ammonia ‐ Capital Industrial Customer General

Allocation of Functionalized Assets to Rate ComponentsAllocation Basis

1 Plants & Structures General 0.0% 0.0% 0.0% 40.0% 0.0% 30.0% 0.0% 30.0% 0.0% 0.0% 0.0% 0.0% 0.0% 1,113,643$

2 Electrical, Mechanical, Controls General 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 810,752$

3 Source of Supply ‐ Wells General 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 3,472$

4 Lifts and Pump Stations Lift Stations 0.0% 100.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 220,842$

Wastewater Lines

5 Interceptors Collection System 0.0% 100.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 1,654,900$

6 Local Collectors Collection System 100.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 2,120,338$

7 Land & Site General 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 34,233$

8 Meters & Water Supply Line to the Meter General 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% ‐$

9 SCADA System General 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 25,464$

10 Pumps General 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% ‐$

11 Fuel Tanks General 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 1,072$

12 Chemical Tanks General 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 14,958$

13 Ground Storage Tanks General 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% ‐$

14 Elevated Storage Tank General 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% ‐$

15 Asset Allocation Subtotal 2,120,338$ 1,875,742$ ‐$ 445,457$ ‐$ 334,093$ ‐$ 334,093$ ‐$ ‐$ ‐$ ‐$ 889,952$ 5,999,676$

16 35% 31% 0% 7% 0% 6% 0% 6% 0% 0% 0% 0% 15%

17 Reallocation as "As All Others" 6% 5% 0% 1% 0% 1% 0% 1% 0% 0% 0% 0%

18 Total ($) Allocation 2,489,634$ 2,202,437$ ‐$ 523,042$ ‐$ 392,281$ ‐$ 392,281$ ‐$ ‐$ ‐$ ‐$ 5,999,676$

19 Total (%) Allocation 41.5% 36.7% 0.0% 8.7% 0.0% 6.5% 0.0% 6.5% 0.0% 0.0% 0.0% 0.0%


Wastewater Functionalization of Costs

Line

No. Cost Center

Influent

Pumping &

Headworks Aeration Clarifiers

Chrlor. /

Dechlor.

Solids

Thickening /

Digestion

Biosolids

Handling

Effluent

Discharge Ind. WW Svc. Lift Stations

Collection

System

Customer

Billing Admin

Treatment +

Collection

General General

Functional Allocation of O&M Cost Centers (%)Wastewater Operations

1 40001 WWO Executive Support G&A 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 100% 0% 0%

2 40002 WWO Collection System Analysis 0% 0% 0% 0% 0% 0% 0% 0% 0% 100% 0% 0% 0% 0%

3 40003 WWO Collection System Repairs 0% 0% 0% 0% 0% 0% 0% 0% 0% 100% 0% 0% 0% 0%

4 40004 WWO Regulatory and Compliance 0% 0% 0% 0% 0% 0% 70% 30% 0% 0% 0% 0% 0% 0%

5 40005 WWO Technical Services G&A 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 100% 0%

6 40006 WWO Plant Operations 14% 14% 14% 14% 14% 14% 14% 0% 0% 0% 0% 0% 0% 0%

7 40007 WWO Electrical & Automation 5% 3% 3% 20% 0% 0% 5% 0% 60% 5% 0% 0% 0% 0%

8 40008 WWO Construction Management 1% 1% 1% 0% 0% 0% 0% 0% 2% 95% 0% 0% 0% 0%

9 40009 WWO Contract Management 20% 10% 20% 0% 0% 0% 0% 0% 40% 10% 0% 0% 0% 0%

10 40010 WWO Mechanical Management 10% 10% 10% 0% 10% 10% 0% 0% 50% 0% 0% 0% 0% 0%

11 40031 WWO EPA Compliance 0% 0% 0% 0% 0% 0% 0% 0% 0% 100% 0% 0% 0% 0%

Operation Services ‐ Houston Wastewater G&A

12 40021 OPS Financial & Support Operation Services G&A 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 100% 0% 0%

13 40022 HW Planning 0% 0% 0% 0% 0% 0% 5% 0% 0% 45% 0% 50% 0% 0%

14 40023 OPS Maintenance Operation Services ‐ Restoration 0% 0% 0% 0% 0% 0% 0% 0% 0% 100% 0% 0% 0% 0%

15 40024 OPS Maintenance Operation Services‐COS/DIS 0% 0% 0% 0% 0% 0% 0% 0% 0% 100% 0% 0% 0% 0%

16 40025 HW GIS Services 0% 0% 0% 0% 0% 0% 10% 3% 20% 60% 0% 2% 0% 5%

17 40026 OPS Executive Support 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 100% 0% 0%

18 40027 OPS Support Services 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 100% 0% 0%

19 40028 HW Infrastructure Planning 0% 0% 0% 0% 0% 0% 5% 0% 0% 45% 0% 50% 0% 0%

20 40029 HW Utility Analysis 0% 0% 0% 0% 0% 0% 5% 0% 0% 45% 0% 50% 0% 0%

Other O&M

21 30001‐30009 Director's Office 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 100%

22 80001 Information Technology 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 100%

23 90001‐90011 Management Support 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 100%

24 60005 & 60008 Houston Water ‐ Planning 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 100%

25 0005,50006,50030 Financial Mangt Services Support 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 100%

26 100007‐15, 100025 CAS ‐ Customer Account Services 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 100% 0% 0% 0%

27 Deductions 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 100%


Wastewater Cost Allocation

Line

No. Flow ‐ Retail


Y Wholesale Flow ‐ All Capacity BOD ‐ O&M BOD ‐ Capital TSS ‐ O&M TSS ‐ Capital Ammonia ‐ O&M Ammonia ‐ Capital Industrial Customer General Total FYE 2022

Allocation of Functionalized O&M to Rate Components1 Influent Pumping & Headworks 0% 0% 100% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 18,498$

2 Aeration 0% 0% 0% 0% 50% 0% 0% 0% 50% 0% 0% 0% 0% 15,102$ 3 Clarifiers 0% 0% 0% 0% 0% 0% 100% 0% 0% 0% 0% 0% 0% 18,204$

4 Chrlor. / Dechlor. 0% 0% 100% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 11,492$

5 Solids Thickening / Digestion 0% 0% 0% 0% 5% 0% 95% 0% 0% 0% 0% 0% 0% 11,645$

6 Biosolids Handling 0% 0% 0% 0% 0% 0% 100% 0% 0% 0% 0% 0% 0% 11,645$

7 Effluent Discharge 0% 0% 100% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 18,603$

8 Ind. WW Svc. 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 100% 0% 0% 3,637$

9 Lift Stations 0% 100% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 32,533$

10 Collection System 51% 39% 0% 0% 0% 0% 0% 0% 0% 0% 0% 10% 0% 85,097$

11 Customer Billing 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 100% 0% 29,309$

12 Admin 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 100% 17,023$

13 Treatment + Collection General 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 100% 20,327$

14 General 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 100%


Wastewater System Customer Allocation ‐ FYE 2022 July Increase

Line

No. Flow ‐ Retail


Y Wholesale Flow ‐ All Capacity BOD ‐ O&M BOD ‐ Capital TSS ‐ O&M TSS ‐ Capital Ammonia ‐ O&M Ammonia ‐ Capital Industrial Customer Total

Development of Unit Costs1 Units of Service kGal kGal kGal kGal / day lbs lbs lbs lbs lbs lbs Industrial bills Bills

2 Single Family Residential 22,344,168 22,344,168 22,344,168 61,217 18,222,940 18,222,940 55,316,332 55,316,332 3,175,970 3,175,970 ‐ 4,603,570

3 Multifamily Residential 25,155,956 25,155,956 25,155,956 68,920 22,654,672 22,654,672 68,769,001 68,769,001 3,948,351 3,948,351 ‐ 159,481

4 Commercial 20,573,586 20,573,586 20,573,586 56,366 16,242,722 16,242,722 49,305,316 49,305,316 2,830,850 2,830,850 ‐ 426,605

5 Industrial Surcharge 2,135,783 2,135,783 2,135,783 5,851 16,864,851 16,864,851 7,494,091 7,494,091 541,942 541,942 3,229 3,229

6 Sewer Only 47,581 47,581 47,581 130 44,298 44,298 134,469 134,469 7,721 7,721 ‐ 10,491

7 Capital without Collection System ‐ ‐ 2,922,313 ‐ 2,720,695 ‐ 8,258,758 ‐ 474,174 ‐ ‐ 169

8 No Capital with Collection System ‐ 324,234 324,234 888 301,864 301,864 916,318 916,318 52,610 52,610 ‐ 133

9 Connections‐based Billing ‐ 55,616 55,616 152 51,779 51,779 157,176 157,176 9,024 9,024 ‐ 24

10 Total 70,257,074 70,636,923 73,559,236 193,526 77,103,821 74,383,126 190,351,460 182,092,703 11,040,642 10,566,468 3,229 5,203,703

11 Test Year Unit Cost 2.90$ 2.91$ 0.61$ 177.87$ 0.10$ 0.35$ 0.20$ 0.14$ 0.63$ ‐$ 1,035.56$ 6.55$

Allocation of Unit Costs to Customer Types

12 Single Family Residential 64,688,825$ 65,078,872$ 13,573,689$ 10,888,541$ 1,767,708$ 6,324,738$ 10,932,833$ 7,842,588$ 1,997,521$ ‐$ ‐$ 30,155,320$ 213,250,635$

13 Multifamily Residential 72,829,262 73,268,393 15,281,801 12,258,754 2,197,606 7,862,885 13,591,646 9,749,868 2,483,309 ‐ ‐ 1,044,668 210,568,192

14 Commercial 59,562,797 59,921,937 12,498,092 10,025,719 1,575,618 5,637,453 9,744,804 6,990,363 1,780,458 ‐ ‐ 2,794,445 170,531,686

15 Industrial Surcharge 6,183,326 6,220,609 1,297,450 1,040,789 1,635,967 5,853,379 1,481,148 1,062,490 340,854 ‐ 3,344,146 21,153 28,481,310

16 Sewer Only 137,753 138,583 28,905 23,187 4,297 15,375 26,577 19,065 4,856 ‐ ‐ 68,718 467,315

17 Capital without Collection System ‐ ‐ 1,775,254 ‐ 263,920 ‐ 1,632,278 ‐ 298,231 ‐ ‐ 1,107 3,970,789

18 No Capital with Collection System ‐ 944,352 196,966 158,002 29,282 104,770 181,103 129,913 33,089 ‐ ‐ 870 1,778,347

19 Connections‐based Billing ‐ 161,985 33,786 27,102 5,023 17,971 31,065 22,284 5,676 ‐ ‐ 158 305,050

20 Total 203,401,962$ 205,734,731$ 44,685,944$ 34,422,094$ 7,479,420$ 25,816,571$ 37,621,453$ 25,816,571$ 6,943,993$ ‐$ 3,344,146$ 34,086,439$ 629,353,325$

Customer Type


Wastewater Cost of Service ComparisonFYE 2022 ‐ July Increase

A

Line

No. Cost of Service

1 Single Family Residential $213,250,635


3 Commercial 170,531,686

4 Industrial Surcharge 28,481,310

5 Sewer Only 467,315

6 Capital without Collection System 3,970,789

7 No Capital with Collection System 1,778,347

8 Connection‐based 305,050

9 Total $629,353,325

Customer Type


Wastewater System Customer Allocation ‐ FYE 2022 April Increase

Line

No. Flow ‐ Retail






4 Commercial 20,573,586 20,573,586 20,573,586 56,366 16,242,722 16,242,722 49,305,316 49,305,316 2,830,850 2,830,850 ‐ 426,605


6 Sewer Only 47,581 47,581 47,581 130 44,298 44,298 134,469 134,469 7,721 7,721 ‐ 10,491




10 Total 70,257,074 70,636,923 73,559,236 193,526 77,103,821 74,383,126 190,351,460 182,092,703 11,040,642 10,566,468 3,229 5,203,703





14 Commercial 71,136,011 71,418,751 14,683,345 12,020,834 1,851,109 6,759,305 11,448,652 8,381,444 2,091,766 ‐ ‐ 3,283,043 203,074,261


16 Sewer Only 164,518 165,172 33,959 27,801 5,048 18,434 31,224 22,859 5,705 ‐ ‐ 80,734 555,454


18 No Capital with Collection System ‐ 1,125,538 231,405 189,445 34,402 125,619 212,768 155,765 38,875 ‐ ‐ 1,022 2,114,839


20 Total 242,923,517$ 245,207,654$ 52,499,142$ 41,272,082$ 8,787,173$ 30,954,062$ 44,199,447$ 30,954,062$ 8,158,129$ ‐$ 3,928,860$ 40,046,329$ 748,930,456$

Customer Type


Wastewater Cost of Service ComparisonFYE 2022 ‐ April Increase

A

Line

No. Cost of Service









9 Total $748,930,456

Customer Type



Line

No. Flow ‐ Retail






4 Commercial 20,614,734 20,614,734 20,614,734 56,479 16,275,208 16,275,208 49,403,926 49,403,926 2,836,511 2,836,511 ‐ 427,459


6 Sewer Only 47,676 47,676 47,676 131 44,387 44,387 134,738 134,738 7,736 7,736 ‐ 10,512




10 Total 70,397,588 70,778,197 73,706,355 193,913 77,258,029 74,531,893 190,732,163 182,456,888 11,062,724 10,587,601 3,236 5,214,110





14 Commercial 76,486,193 76,260,955 14,907,334 13,095,420 1,879,347 7,363,543 11,623,297 9,130,691 2,123,675 ‐ ‐ 3,333,121 216,203,576


16 Sewer Only 176,892 176,371 34,477 30,286 5,125 20,082 31,700 24,902 5,792 ‐ ‐ 81,965 587,592




20 Total 261,193,939$ 261,832,775$ 53,299,998$ 44,961,541$ 8,921,218$ 33,721,156$ 44,873,694$ 33,721,156$ 8,282,578$ ‐$ 3,988,793$ 40,657,168$ 795,454,016$

Customer Type



A

Line

No. Cost of Service









9 Total $795,454,016

Customer Type



Line

No. Flow ‐ Retail






4 Commercial 20,655,963 20,655,963 20,655,963 56,592 16,307,758 16,307,758 49,502,734 49,502,734 2,842,184 2,842,184 ‐ 428,314


6 Sewer Only 47,772 47,772 47,772 131 44,476 44,476 135,008 135,008 7,751 7,751 ‐ 10,533




10 Total 70,538,383 70,919,753 73,853,767 194,301 77,412,545 74,680,956 191,113,628 182,821,802 11,084,849 10,608,776 3,242 5,224,538





14 Commercial 82,021,312 81,339,737 15,254,174 14,184,858 1,923,073 7,976,133 11,893,730 9,890,294 2,173,085 ‐ ‐ 3,410,666 230,067,062


16 Sewer Only 189,693 188,117 35,279 32,806 5,245 21,753 32,437 26,974 5,927 ‐ ‐ 83,872 622,102




20 Total 280,095,908$ 279,270,161$ 54,540,096$ 48,701,995$ 9,128,783$ 36,526,496$ 45,917,743$ 36,526,496$ 8,475,284$ ‐$ 4,081,598$ 41,603,061$ 844,867,620$

Customer Type



A

Line

No. Cost of Service









9 Total $844,867,620

Customer Type



Line

No. Flow ‐ Retail






4 Commercial 20,697,275 20,697,275 20,697,275 56,705 16,340,373 16,340,373 49,601,740 49,601,740 2,847,869 2,847,869 ‐ 429,170


6 Sewer Only 47,867 47,867 47,867 131 44,565 44,565 135,278 135,278 7,767 7,767 ‐ 10,554




10 Total 70,679,460 71,061,593 74,001,475 194,689 77,567,370 74,830,318 191,495,855 183,187,445 11,107,019 10,629,994 3,249 5,234,987





14 Commercial 87,479,667 86,550,783 15,933,378 15,193,889 2,008,699 8,543,510 12,423,307 10,593,834 2,269,843 ‐ ‐ 3,562,524 244,559,435


16 Sewer Only 202,317 200,169 36,850 35,139 5,478 23,301 33,882 28,892 6,190 ‐ ‐ 87,606 659,824




20 Total 298,735,732$ 297,161,656$ 56,968,537$ 52,166,381$ 9,535,249$ 39,124,786$ 47,962,267$ 39,124,786$ 8,852,652$ ‐$ 4,263,334$ 43,455,418$ 897,350,796$

Customer Type



A

Line

No. Cost of Service









9 Total $897,350,796

Customer Type



Line

No. Flow ‐ Retail






4 Commercial 20,738,670 20,738,670 20,738,670 56,818 16,373,054 16,373,054 49,700,943 49,700,943 2,853,565 2,853,565 ‐ 430,029


6 Sewer Only 47,963 47,963 47,963 131 44,654 44,654 135,548 135,548 7,782 7,782 ‐ 10,575




10 Total 70,820,819 71,203,716 74,149,478 195,079 77,722,504 74,979,979 191,878,846 183,553,820 11,129,233 10,651,254 3,255 5,245,457





14 Commercial 93,213,812 92,057,970 16,701,539 16,243,321 2,105,540 9,133,605 13,022,245 11,325,544 2,379,274 ‐ ‐ 3,734,272 259,917,122


16 Sewer Only 215,578 212,905 38,626 37,566 5,742 24,910 35,515 30,888 6,489 ‐ ‐ 91,830 700,050




20 Total 318,317,356$ 316,069,919$ 59,715,035$ 55,769,479$ 9,994,951$ 41,827,109$ 50,274,565$ 41,827,109$ 9,279,446$ ‐$ 4,468,873$ 45,550,385$ 953,094,228$

Customer Type



A

Line

No. Cost of Service









9 Total $953,094,228

Customer Type


DRAFT | APRIL

Appendix I

WATER RATE DESIGN


Water Rate Design ‐ Monthly Meter Charge

Line

No. Description

Test Year FYE

2022

July 2021

1 Retail Customer Classes Escalation FYE 2019 FYE 2022

(includes Single Family Residential, Multifamily Residential, Commercial/ Industrial, Irrigation, Emergency Backup)

2 Total Bills Inside City Customer Growth 5,570,468 5,603,958

3 Total MEUs ‐ Capacity Inside City Customer Growth 658,113 662,069

4 Total MEUs ‐ Fire Inside City Customer Growth 658,113 662,069

5 Total Connections ‐ TCEQ Fee Inside City Customer Growth 1,026,274 1,032,444

6 Fixed Revenue to Recover

7 Customer (Billing & Collecting) 14,764,143$

8 Capacity (Meter & Supply) 16,744,201

9 Fire Flow 11,116,612

10 TCEQ Fees 2,573,259

11 Total Fixed Charge Revenue to Recover 45,198,215$

12 Per Bill 2.635$

13 Per MEU per month ‐ Capacity 2.108$

14 Per MEU per month ‐ Fire 1.399$ Proposed

Total Fixed Charge (5/8") 6.15$ 6.25$

15 Per Connection per month ‐ TCEQ Fees 0.21$

16 Meter Size Meter Factor SFR FYE21 Calculated Proposed

17 5/8" 1.00 5.82$ 6.15$ 6.25$

18 3/4" 1.00 5.82$ 6.15 6.25

19 1" 1.70 7.21$ 8.60 8.79

20 1 1/2" 2.70 10.92$ 12.11 12.40

21 2" 3.30 12.86$ 14.21 14.57

22 3" 8.30 12.86$ 31.75 32.65

23 4" 16.70 61.20 63.02

24 6" 40.00 142.91 147.26

25 8" 50.00 177.98 183.41

26 10" 66.70 236.54 243.79

27 12" 93.30 329.82 339.96

28 Account Projection Escalation FYE 2019 FYE 2022

29 5/8" Inside City Customer Growth 360,398 362,565

30 3/4" Inside City Customer Growth 8,626 8,678

31 1" Inside City Customer Growth 91,354 91,903

32 1 1/2" Inside City Customer Growth 19,176 19,291




36 6" Inside City Customer Growth 941 947



39 12" Inside City Customer Growth ‐ ‐


Water Rate Design ‐ Monthly Meter Charge

Line

No. Description

Test Year FYE

2022

July 2021

40 MEU Revenue Calculated Proposed

41 5/8" 26,757,276$ 27,192,354$

42 3/4" 640,426 650,839

43 1" 9,484,412 9,693,952

44 1 1/2" 2,803,410 2,870,543

45 2" 795,626 815,783

46 3" 528,941 543,935

47 4" 769,107 791,979

48 6" 1,623,442 1,672,857

49 8" 468,395 482,685

50 10" 51,400 52,975

51 12" ‐ ‐

52 TCEQ Fee 2,601,759 2,601,759

53 Total MEU Revenue 46,524,193$ 47,369,661$


Water Rate Design ‐ Volume Rates

Line

No. Description Test Year FYE 2022

July 2021

1 Single Family Residential

2 SFR Units of Service Escalation FYE 2019 FYE 2022

3

SFR Customer Usage (kgal)

Forecast

Inside City Customer

Growth 23,200,720 23,340,203

4 SFR Customer Bills Forecast


Growth 4,917,992 4,947,559

5

SFR Customer Connections

Forecast


Growth 407,595 410,045

6 SFR Costs to Recover

7 Customer / Capacity / Fire 34,240,121$

8 TCEQ Fee 1,021,995

9 Base 90,999,170

10 Max Day 25,664,538

11 Max Hour 27,555,164

12 Total SFR Costs to Recover 179,480,990$

13 Calculated SFR Uniform Variable Rate (per 1,000 gal) 6.18$

14 Conservation Credit? Yes

15 SFR Tier Allocation

16 SFR Tier Demand Tier breakpoint Tier % of kGal

17 Tier 1 ‐ Conservation Credit 3 16% 3,767,090

18 Tier 2 6 58% 13,572,521

19 Tier 3 12 15% 3,581,481

20 Tier 4 20 5% 1,217,721

21 Tier 5 5% 1,201,390

22 Tier 4 0% ‐

23 Tier 5 0% ‐

0% ‐



Line


July 2021

24 SFR Volume Rates (per 1,000 gal) FYE 2021 Rates FYE 2022 Rates

25 Tier 1 ‐ Monthly usage less than 3 0.16$ 1.00$

26 Tier 2 6 7.65$ 5.50$

27 Tier 3 12 0.45$ 8.00$

28 Tier 4 20 12.56$ 11.00$

29 Tier 5 5.29$ 15.00$

30 Tier 6 5.29$ 15.00$

31 Tier 7 5.74$ 15.00$

32 Tier 8 9.46$ 15.00$

33 SFR Revenue Check

34 Monthly Fixed Charge 33,815,324$

35 TCEQ Fee 1,033,315

36 Tier 1 ‐ Monthly usage less than 3 3,767,090

37 Tier 2 6 74,648,863

38 Tier 3 12 28,651,850

39 Tier 4 20 13,394,931

40 Tier 5 18,020,857

41 Tier 6 ‐

42 Tier 7 ‐

43 Tier 8 ‐

44 Total SFR Revenue 173,332,230$



Line


July 2021

1 Multifamily Residential

2 MFR Units of Service Escalation FYE 2019 FYE 2022

3

MFR Customer Usage (kgal)

Forecast


Growth 25,661,033 25,815,307

4 MFR Customer Bills Forecast


Growth 160,443 161,408

5

MFR Customer Connections

Forecast


Growth 570,538 573,968

6 MFR Costs to Recover


8 TCEQ Fee 1,430,555

9 Base 100,649,149

10 Max Day 20,881,318

11 Max Hour 27,852,159

12 Total MFR Costs to Recover 153,065,481$

13 MFR Volume Rates (per 1,000 gal) FYE 2021 Rates FYE 2022 Rates

14 Calculated MFR Variable Rate (per 1,000 gal) 5.79$

15 Proposed MFR Variable Rate (per 1,000 gal) 4.65$ 5.45$

16 MFR Revenue Check


18 TCEQ Fee 1,446,400

19 Variable Rate ‐ All Usage 140,693,425

20 Total MFR Revenue 144,326,474$



Line


July 2021

1 Commercial/Industrial

2 (includes Government, Extra Container)

3 Commercial/Industrial Units of Servic Escalation FYE 2019 FYE 2022

4

Commercial/Industrial Customer

Usage (kgal) Forecast


Growth 25,934,839 26,090,759

5


Bills Forecast


Growth 421,906 424,443

6


Connections Forecast


Growth 47,658 47,945

7 Commercial/Industrial Costs to Recover


9 TCEQ Fee 119,497

10 Base 101,723,086

11 Max Day 41,221,026

12 Max Hour 35,185,975

13 Total Commercial/Industrial Costs to Recover 183,591,365$

14 Commercial/Industrial Volume Rates (per 1,000 gal) FYE 2021 Rates FYE 2022 Rates

15 Calculated Com/Ind Variable Rate (per 1,000 gal) 6.83$

16 Proposed Com/Ind Variable Rate (per 1,000 gal) 4.77$ 5.55$

17 Commercial/Industrial Revenue Check


19 TCEQ Fee 120,820

20 All Usage 144,803,715

21 Total Commercial/Industrial Revenue 150,156,474$



Line


July 2021

1 Transient

2 Transient Units of Service Escalation FYE 2019 FYE 2022

3

Transient Customer Usage (kgal)

Forecast


Growth 382,275 384,573

4 Transient Customer Bills Forecast


Growth 7,662 7,708

5 Transient Costs to Recover

6 Customer / Capacity / Fire Flow 140,956$

7 TCEQ Fees 1,602

8 Base 1,499,381

9 Max Day 2,452,791

10 Max Hour 1,164,062

11 Total Transient Costs to Recover 5,258,793$

12 Transient Volume Rates (per 1,000 gal) FYE 2021 Rates FYE 2022 Rates

13 Transient Fixed Charge (1‐inch meter) 20.17$ 95.00$



16 Calculated Transient Variable Rate (per 1,000 gal) 10.00$

17 Proposed Transient Variable Rate (per 1,000 gal) 5.35$ 10.00$

18 Transient Revenue Check

19 Transient Monthly Fixed Charge 1,414,005$

20 All Usage 3,845,732

21 Total Transient Revenue 5,259,738$



Line


July 2021

1 Irrigation

2 Irrigation Units of Service Escalation FYE 2019 FYE 2022

3

Irrigation Customer Usage (kgal)

Forecast


Growth 2,394,606 2,409,002

4 Irrigation Customer Bills Forecast


Growth 69,963 70,384

5

Irrigation Customer Connections

Forecast


Growth 466 469

6 Irrigation Costs to Recover

7 Customer / Capacity / Fire Flow 761,104$

8 TCEQ Fees 1,168

9 Base 9,392,258

10 Max Day 5,592,349

11 Max Hour 3,873,619

12 Total Irrigation Costs to Recover 19,620,499$

13 Irrigation Volume Rates (per 1,000 gal) FYE 2021 Rates FYE 2022 Rates

14 Calculated Irrigation Variable Rate (per 1,000 gal) 7.83$

15 Proposed Irrigation Variable Rate (per 1,000 gal) 8.06$ 10.00$

16 Irrigation Revenue Check

17 Monthly Fixed Charge 755,046$

18 TCEQ Fee 1,181

19 All Usage 24,090,024

20 Total Irrigation Revenue 24,846,251$



Line


July 2021

1 Resale

2 Resale Units of Service Escalation FYE 2019 FYE 2022

3

Resale Customer Usage (kgal)

Forecast


Growth 8,745 8,798

4 Resale Customer Bills Forecast


Growth 12 12

5 Resale Costs to Recover

6 Customer / Capacity / Fire Flow 739$

7 TCEQ Fees 5

8 Base 34,300

9 Max Day 23,792

10 Max Hour 15,325

11 Total Resale Costs to Recover 74,161$

12 Resale Volume Rates (per 1,000 gal) FYE 2021 Rates FYE 2022 Rates

13 Resale Fixed Charge (5/8‐ or 3/4‐inch meter) 22.83$ 24.05$

14 Resale Fixed Charge (1‐inch meter) 26.47$ 39.00$

15 Resale Fixed Charge (1 1/2‐inch meter) 65.31$ 60.40$





20 Resale Fixed Charge (8‐inch meter) 1,078.45$ 1,075.00$

21 Calculated Resale Variable Rate (per 1,000 gal) 7.94$

22 Proposed Resale Variable Rate (per 1,000 gal) 5.73$ 10.00$

23 Resale Revenue Check

24 Resale Monthly Fixed Charge 4,346$

25 All Usage 87,976

26 Total Resale Revenue 92,322$

memo. - Houston

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