Financial Impact of Drought March 5, 2008 Updated 3/17/08.
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Transcript of Financial Impact of Drought March 5, 2008 Updated 3/17/08.
![Page 1: Financial Impact of Drought March 5, 2008 Updated 3/17/08.](https://reader036.fdocuments.us/reader036/viewer/2022062517/56649eef5503460f94bff828/html5/thumbnails/1.jpg)
Financial Impactof Drought
March 5, 2008
Updated 3/17/08
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Drought Impacts
• Current Year Budget• Future Years’ Budget• Rate Adjustments
Budget Review
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Consumption
Budget Review
Average
2008
MGD
80
90
100
110
120
130
140
150
160
July
Augus
t
Septe
mbe
r
Octobe
r
Novem
ber
Decem
ber
Janu
ary
Febru
ary
Mar
chApr
ilM
ayJu
ne
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Water Revenues
Budget Review
Percentage of Total Annual Revenue
Average
2008
(In thousands)
Cumulative
2,565 285Expected Loss of $(7,500)
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%
11.00%
12.00%
13.00%
14.00%
July Aug Sept Oct Nov Dec Jan Feb March April May June
2,850
1,753 (158) (3,237) (755) (1,001) (1,101)
4,603 4,445 1,208 453 (548) (1,649)
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Wastewater Revenues
Budget Review
Percentage of Total Annual Revenue
Average
2008
(In thousands)
Cumulative
6.00%
6.50%
7.00%
7.50%
8.00%
8.50%
9.00%
9.50%
10.00%
10.50%
11.00%
July Aug Sept Oct Nov Dec Jan Feb March April May June
824 797 (2,761) 700 (578) (850) Expected Loss $(4,300)
3,850 4,647 1,886 2,586 2,008 1,158
2,386 640
3,026
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Water Rates
* Sewer - $3.22
Budget Review
Tiers 2008
* Commercial - $1.73
$1.89
$1.33
$2.18
$4.31> 22
12 - 22
0 - 11
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Tap & Capacity
Budget Review
$ (7.1) M $ 20.3 M $ 27.4 M
ShortfallActualBudget
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FY 2008 Projected
Budget Review
$ 252.4 M $ 254.8 MTotal Expenditures
28.9 M 28.9 MPay Go Contribution
129.0 M 129.7 MDebt Service
94.5 M 96.2 MOperating
$ 226.5 M $ 244.8 M Revenues
ActualBudget
$ (15.9) M $ ---
10 M 10 M Fund Balance
Total Revenues $ 236.5 M $ 254.8 M
Decrease to Fund Balance
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Rate Issues
• FY 08 Bond Covenants• Mandatory Restrictions
– 1 or 2 watering seasons
• Long Term Consumption Habits• Effect Of Housing Starts
Budget Review
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Bond Covenants
Budget Review
Test 1 (greater than 1 times debt service, can use fund balance)
0.94 $(13 M) 1.03
35.4% 40 .3%35% Fund Balance ActualBudget
Test 2 (greater than 1 times debt service)
0.97 $(6 M) 1.06
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Projected 09 Water RevenuesPercentage of Total Annual Revenue
Full Year Shortfall of $18 Million
Average
2009
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%
11.00%
12.00%
July Aug Sept Oct Nov Dec Jan Feb March April May June
Budget Review
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Projected 09 Wastewater Revenues
Budget Review
Full Year Shortfall of $12 Million
Average
2009
Percentage of Total Annual Revenue
6.00%
6.50%
7.00%
7.50%
8.00%
8.50%
9.00%
9.50%
10.00%
July Aug Sept Oct Nov Dec Jan Feb March April May June
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Adjustments
• Revenue Requirement – 23%• Delay Capital• Operating Savings• Reduce Pay Go
Budget Review
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Rate Increase
• Model Increase FY2009 - 6.05%• Drought Impact – 9.87%• Implement May 1, 2008
Budget Review
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Why Additional Rates?
• Fixed vs. Variable Expenses• Operations Impacts• Rates Driven by Capital
Budget Review
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Fixed vs. Variable
Budget Review
$ 255 Million Total Budget
Debt Service$159M
CustomerService $6M
Water Plants $13M
Sewer Plants$31M
Variable$4.9M
1% Reduction in Usage =$1.9M Reduction in Revenue
Fixed$8.1M
1% Reduction =$49K
City$14M
Overhead$22M
Dept. Admin$8M
Plants$44M
Lines$24M
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Employees by Division
Budget Review
Field Operations
Plants
Customer Service
Laboratory
Engineering
Other
25%
4%5%
14%
15%
37%
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Employees Per Thousand Accounts
Budget Review
2.08
2.02
1.881.91
1.83
1.77
1.60
1.65
1.70
1.75
1.80
1.85
1.90
1.95
2.00
2.05
2.10
2.15
2002 2003 2004 2005 2006 2007
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Cost of Enforcement to Date
• Total Cost - $358 k
• Out of Pocket - $156 k• Fines - $237 k
• Employees Involved - 126
Budget Review
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McDowell Creek WWTP
McAlpine Lift Station
Budget Review
Capital SpendingCompleted Projects
• McDowell Plant Expansion • Southwest Water Main Phase 1 • McAlpine Lift Station
Projects Under Way• WW Treatment Plant Expansion• Briar Creek Phase 1• Southwest Water Main 2 &3
Five Year CIP Projects• Long Creek WWTP• Northeast Water Main• Annexation
Sugar Creek WWTP
Irwin Creek WWTP
$ 76 M$ 40 M$ 32 M
$ 132 M$ 51 M$ 26 M
$ 197 M$ 117 M$ 90 M
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Short Term Pain - Long Term Gain
Reduced Consumption = Reduced Water Capital
• Reduction in Size• Delay Projects• Extends Life of Current Interbasin Transfers• Extends Life of Current Federal Energy
Regulatory Commission Authorization
Budget Review
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Work & Asset Management
• Reduce Capital• Repair vs. Replace• Life Cycle Cost• Risk Assessment• Pilot - $9M Reduction
Budget Review
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Tier Adjustment
Budget Review
Current
0-11 $1.33
12-22 $2.18
+22 $4.31
5-8 $1.59
9-16 $2.61
+16 $5.16
Projected
0-4 $1.38
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Impact
Budget Review
$13.1912 ccf
$6.368 ccf
$2.764 ccf
Monthly IncreaseUsage
* 1 ccf = 748 gallons
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Conservation Impact
Budget Review
$72.2412 ccf
$46.368 ccf
$35.466 ccf
ProjectedUsage
15 ccf
10 ccf
8 ccf
Usage
* 1 ccf = 748 gallons
$75.25
$49.10
$40.00
Current
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Other Rate Adjustments
Budget Review
Irrigation
Commercial
Sewer Cap
Begins Tier 1
$4.95 per ccf
18 ccf
Existing
Begins Tier 3
* $5.80 per ccf
24 ccf
Proposed
* Water rate - $1.94 per ccfSewer rate - $3.86 per ccf
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Model
Budget Review
20132012201120102009
42%42%42%41%43%
40%42%43%40%41%
40%40%42%41%41%ProjectedFund Balance
1.30 1.20 1.23 1.15 1.18 1.33 1.24 1.26
1.16
1.16
Coverage
1.38 1.27 1.32 1.19 1.22 ProjectedDebt Service
$48 M $25 M $29 M $17 M $16 M $57 M $34 M $29 M $17 M $16 M
$60 M $39 M $42 M $21 M $24 M ProjectedPay Go
6.83%6.62%6.58%7.39%17.84%
6.42%7.56%7.52%9.97%15.92%
Alternative
Recommendation
6.50%6.50%6.50%6.74%6.05%ProjectedRates
Alternative
Recommendation
Alternative
Recommendation
Alternative
Recommendation
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NC & SC Survey Summary of Combined Water and Sanitary Sewer
(10 CCF Usage) 2008 Rates
Budget Review
$59.30$53.45 $57.16 $58.09 $62.37
$75.78$78.86 $79.83 $79.94 $80.93 $81.26 $82.48 $83.75 $85.45
$91.69 $91.73
$106.84
$125.75
$49.10
$0
$20
$40
$60
$80
$100
$120
$140
Charlo
tte
Union C
ountyRal
eigh
Win
ston-S
alem M
onroe
Hicko
ry
Chapel
Hill Car
y
Rock H
ill
Ashev
ille
Durham
Linco
ln C
ounty
Concord
Green
sboro
Gasto
nia
Kannap
olis
Charle
ston
Moore
svill
e
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Budget Review
National Survey Summary of Combined Water and Sanitary Sewer
(10 CCF Usage) 2008 Rates
$49.10$59.3
048.7556.50 59.26 60.97 61.21 63.60
75.68 75.93 80.41 85.66
128.63
148.11
$0
$20
$40
$60
$80
$100
$120
$140
$160
India
napolis
Charlo
tte
Orlando, F
L
Phoenix
Fort W
orth
Philadel
phia
Mobile
, AL
Austin
Richm
ond, VA
Louisvi
lle
Cinci
nnati
Seattl
e
Atlanta
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Budget Review
Survey of Drought Stricken Jurisdictions Summary of Combined Water and Sanitary Sewer
(10 CCF Usage) 2008 Rates
$44.17$49.10
$57.16 $58.09 $59.88 $63.55$74.12 $75.95 $79.83 $79.94
$85.45 $89.32
$125.36
$148.11
$0
$20
$40
$60
$80
$100
$120
$140
$160
Colum
bus, G
A
Charlo
tte
Ralei
gh
Win
ston S
alem
Cobb County
, GA
Augusta,
GA
Mar
ietta
, GA
Gwinnet
t, GA
Cary
Rock H
ill
Green
sboro
Chap
el H
ill
Birmin
gham, A
L
Atlanta
$59.30
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Budget Review
Next Steps
• Stakeholder Information - March 6th
• Council Agenda - March 24th
• Customer Information - April• New Rate - May 1st
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Budget Review
Conclusion
The Value of Water Is Changing• Water is not an unlimited, cheap commodity that can be
wasted.• It is rather a valuable, limited resource that sustains life
and provides for a growing economy.• The demand for clean drinking water & a clean,
sustainable environment goes on – even during a drought.