Waster & Wastewater Rate Analysis and Proposed Increase ... · o Replacement – Lift Station A o...

Waster & Wastewater Rate Analysis and Proposed Increase - of 18

Water & Wastewater Rate Increase April 17, 2017

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Phase II (planned) o Replacement – Lift Station A o Replacement – Force Main A o WTP – Filter backwash handling

Phase III (planned)

o Bio-solids handling SCHEDULE/TIME IMPLICATIONS Phases III and IV are scheduled in the following years:

Phase III – 2019 Phase IV – 2026

BUDGET IMPLICATIONS See attachment – Water and Wastewater Rate Study RECOMMENDATION Staff recommends the rate increases to provide necessary funding for the City’s water and wastewater utilities. Recommended Scenario:

Cumulative Increase FY 17-22: 29% FY17-27: 53%

Bond Issuances (2) Total: $57.8M

Average Monthly Bill FY 2021: 5 kGal: $60.58 15 kGal: $115.05

STAFF REFERENCE David H. Willett, MBA, PE – Director of Public Works [email protected] 303.450.8783 Jason Loveland – Director of Finance [email protected] 303.450.8817 Raymond Reling – Utilities Manager [email protected] 303.450.4049 ATTACHMENTS Water and Wastewater Rate Study


The City of Northglenn, Colorado

April 17, 2017

Utility Rate Study


Operating Cost

+/- ∆ in Fund Balance

Debt Service

Cash Funded Projects“Revenue Requirement”

=

Rate Study Balances Cost and Revenues

(less) Other revenue


What Makes up Your Revenue Requirement?

The Revenue Requirement increases during the study period are primarily due to projected capital costs

Combined Water and Wastewater Enterprise

$8.9 $9.3 $9.6 $9.9 $10.2 $10.5 $10.8 $11.1 $11.5 $11.8 $12.2

$2.8 $3.1 $3.4 $3.7 $4.0 $4.4 $4.5 $4.6 $4.7 $4.9 $5.0

$0.0

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

$14.0

$16.0

$18.0

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Milli

ons

Operating & Maintenance Capital & Related Debt Costs


Relying on Existing Rates Will Not WorkRevenue Required vs. Revenue at Existing Rates

We are unable to meet the projected costs without making adjustments to the water and sewer rates

$11.4

$12.4$13.0

$13.6$14.2

$14.9$15.3

$15.7$16.2

$16.7$17.2

$6.0

$8.0

$10.0

$12.0

$14.0

$16.0

$18.0

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Milli

ons

Revenue Requirement Current Revenues


$41.18

$44.90

$45.64

$46.54

$49.52

$49.54

$53.06

$60.95

$63.85

$69.49

$70.98

$105.39

Broomfield

Westminster

Louisville

Arvada

Northglenn

Federal Heights

Thornton

Aurora

Commerce City

Superior

Brighton

Erie

How You Currently Compare with Other Area Utilities – Residential User at 5 kGals

Your existing utility rates are relatively low for the area and are actually below the average

Benchmark of Utility Bills for Neighboring Areas – FY 2017


$72.18

$83.94

$94.20

$97.92

$98.74

$107.23

$110.30

$115.35

$115.54

$122.38

$123.53

$156.99

Broomfield

Arvada

Westminster

Northglenn

Louisville

Superior

Commerce City

Aurora

Federal Heights

Brighton

Thornton

Erie

How You Currently Compare with Other Area Utilities – Residential User at 15 kGals

Your existing utility rates are relatively low for the area and are actually below the average



Major Capital Investment is Driving the Need for Revenue

Total Project Needs2017-2027

Water($9.9M)

Wastewater($73.7M)

$83.6M

WASTEWATERHeadworks & Clarifier ($7.4M)Decommission S. Lagoon ($1.4M)Lift Station A & Forcemain ($29M)Bio-solids Handling ($29M)

WATERFilter Backwash Handling ($3.0M)

Major Projects Include…


Are There Any Alternatives?

Projects 100% Cash Funded: No rate increases; run out of

cash by 2020

A 250% rate increase by 2020 to meet project needs

Projects 100% Debt Funded: No rate increases; borrow $100

million over 9 years with over 50% of utilities revenue used for debt service payments

Significantly higher rate increases than recommended are needed to maintain debt service coverage

Blended use of the two funding methods above will result in the lowest possible rate increases


These Projects Deliver Key Benefits

The City of Northglenn strives to provide quality, uninterrupted service to its customers

Decommission Southern Lagoon

Lift Station A Forcemain Replacement Bio-Solids Handling

Filter Backwash Handling

*If these projects are not completed, the City risks higher fees and project costs in a smaller time frame

Regulatory / Operating Efficiencies


Completion will Involve New Borrowing and Higher Rates

Revenue Required vs. Current Rates

Funding only from cash (or rates) is not feasible; the best scenario for ratepayers is one that includes debt and measured rate increases

$11.4

$12.4$13.0

$13.6$14.2

$14.9$15.3

$15.7 $16.2$16.7

$17.2

$9.0

$10.0

$11.0

$12.0

$13.0

$14.0

$15.0

$16.0

$17.0

$18.0

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Milli

ons

Revenue Requirement Current Revenues


Borrowing Levels to Fund the Plan*

2019 2026

$32.7M $25.0M $57.7MTotal

The majority of borrowing is for wastewater projects; it represents 58% of the capital funds for the 10-year CIP – the rest of the funds come from cash reserves

*all debt is assumed at 30-yr term at 4-5% interest


Recommended Rate Adjustments

3.1%

5.2% 5.2% 5.3% 5.4% 5.3%

3.3% 3.4% 3.4% 3.4% 3.4%

6.6% 6.7% 6.8%

5.3% 5.3%

3.5% 3.6% 3.6% 3.6% 3.6%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Perc

enta

ge In

crea

se

Recommended Scenario Scenario 2

Overall Rate Increases

For the Recommended Scenario, which includes a mid-year increase in FY 2017, the average increase to customers’

combined bill is about 4.2%, per year through 2027


Comparing the Recommended Plan to the Area– Residential User at 5 kGals

Even with the magnitude of the proposed increases, the typical residential bills should be at or just above the median in the area


$46.35

$50.54

$51.44

$55.10

$55.76

$59.65

$60.58

$63.36

$71.86

$77.70

$83.78

$112.04

Broomfield

Westminster

Arvada

Louisville

Federal Heights

Thornton

Northglenn

Aurora

Commerce City

Superior

Brighton

Erie


Comparing the Recommended Plan to the Area– Residential User at 15 kGals

A high user, in this scenario, still is projected to pay 13-20% less as compared to Federal Heights and Thornton


$81.24

$91.93

$106.02

$114.86

$115.05

$116.39

$121.08

$124.14

$130.04

$138.83

$146.21

$170.68

Broomfield

Arvada

Westminster

Louisville

Northglenn

Superior

Aurora

Commerce City

Federal Heights

Thornton

Brighton

Erie


Scenario Key Indicators

Recommended Scenario: Cumulative Increase:

FY 17-22: 29% FY17-27: 53%

Bond Issuances: 2 Total: $57.8M


Scenario 2: Cumulative Increase:

FY 17-22: 35% FY17-27: 61%

Bond Issuances: 2 Total: $59.3M



Thank You


Waster & Wastewater Rate Analysis and Proposed Increase ... · o Replacement – Lift Station A o...

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