Jeff Hughes Shadi Eskaf Austin Thompson. Future of Pricing... · Future of Pricing Jeff Hughes...
Transcript of Jeff Hughes Shadi Eskaf Austin Thompson. Future of Pricing... · Future of Pricing Jeff Hughes...
www.efc.sog.unc.edu
Future of Pricing
Jeff HughesShadi EskafAustin Thompson
https://m.salisburypost.com/2019/02/10/josh-bergeronyears-later-bills-still-an-issue-in-landis/
What not including depreciation looks like
Fair Bluff Causey St. PS
What not including depreciation looks like
Data Source: 2017 NC Water and Wastewater Utility Management Survey (funded by the North Carolina Policy Collaboratory)
What will your future rate adjustment do?
FINANCIAL PERFORMANCE
Picture Source: Charlotte Water http://charlottenc.gov/Water/Pages/Home.aspx
Charlotte Water collected
$379 million in water and wastewater operating revenues in FY2018Highest in North Carolina. Down 6% from FY2017.
Picture Source: Google Maps Streetview
Town of Proctorville collected
$21,211in wastewater operating revenues in FY2018(no wastewater system)Lowest in North Carolina. Up 14% from FY2017. Raised monthly flat fee from $25 to $30 per customer = 20% increase.
Picture Source: Indio Water Authority http://www.indiowater.org/index.aspx?page=587
NC local government utilities collected
more than $3.04 billionin water and wastewater operating revenues in FY2017Preliminary projections show that revenues may have exceeded $3.1 billion in FY2018 (incomplete data)
The largest 10 utilities collected
43% of all of the water and wastewater
operating revenues in FY2017
NC local government utilities had
more than $2.43 billionin water and wastewater operating expenses in FY2017
Yet: ~22% of local government utilities had lower operating revenues than O&M expenditures plus debt service in FY2017
THE STATE OF RATES IN NC IN 2019
Your sneak peak into…
PRELIMINARY RESULTSFinal results may be published in the forthcoming 2019 NCLM/EFC North Carolina Water & Wastewater Rates Survey Report
NC Water and Wastewater Rates Survey
• Joint annual surveys since 2005 • 2019 survey: 495 utilities included (95%) • Rates Dashboard coming very soon!• Tables and summary report to be distributed in
coming weeks at http://www.efc.sog.unc.edu and http://www.nclm.org
• Resources for utilities provided and funded by the Division of Water Infrastructure of the NC Department of Environmental Quality
Half of the utilities charge residential (inside) customers more than
$65.45 for combined water and wastewater per month
$29.16 for water $36.52 for wastewater
For “inside” residential customers using 4,000 gallons/month
Picture Source: Wikimedia Commons https://commons.wikimedia.org/wiki/File:Raleigh_city_limits_sign.jpg
82% of NC’s municipalities charge different rates outside city limits
Half of the municipalities charge1.77x higher for water and1.91x higher for wastewaterthan they do for inside customers
For residential customers using 4,000 gallons/month
The Average North Carolinian pays…
$58.94/monthfor 4,000 gallons of water and wastewater, combined.
Accounting for service populations and inside/outside rates.
Water rates in 42% of rate structures and
Wastewater rates in 45% of rate structures were
raised last year
Out of 479 water & 396 wastewater rate structures since last year
Half of the rate increases were greater than
4.6% for water and 5.0% for wastewaterAt 5,000 gallons/month
Monthly water base charge Min non-zero: $3.25 (Cary)Median: $16.55Max: $50.00 (Martin County)Unique section in one utility charges more
Monthly wastewater base charge Min non-zero: $2.00 (Laurel Park, Spring Hope)Median: $18.00Max: $69.50 (Lake Lure)Currituck County charges $100.00 in Moyock Commons
Highest volumetric rate per 1,000 gallons at 4,000 gallons/month
$13.60/1000 gallons Water (Saratoga)$25.00/1000 gallons Wastewater (Walstonburg)Yadkin County charges $19.50/1000 gallons for water in its Jonesville service area (Jonesville outside rates)
Median percentage of customer bill due to base charge at 4,000
55% Water51% Wastewater
2019 by the Numbers - Inside Rates
THE FUTURE OF RATES
Before we start…
• A little about me:– Project Director at the Environmental Finance
Center• Analysis, Technical Assistance, and Education
– Background• Biology• Environmental Economics and Policy
Why look at trends?
Why look at trends? (cont.)
THE ANALYSIS
What Data is included in this analysis?
• Utility-Level Rates Data from 2007-2018• EPA SDWIS data from 2009-2018• US Census Bureau American Community Surveys
Data from 2010-2017• Bureau of Labor Statistics Consumer Price Index
for the South Region from 2007-2018
All together, the analysis represents approximately 200-250 utilities. Each graph represents data from
utilities for which we have data in every year.
TRENDS IN RATE STRUCTURES
Trends in Residential Rate Structures, 2007 & 2017
Data analyzed by the Environmental Finance Center at the University of North Carolina, Chapel Hill.Data Sources: NC League of Municipalities and Environmental Finance Center's annual water & wastewater rates surveys. The cohort of utilities is consistent across all years.
58
123
50
88
124
21
0
20
40
60
80
100
120
140
Increasing Block Uniform Decreasing Block
2007: Residential 2017: Residential
51.7% Increase 58.0%
Decline
TRENDS IN PRICING
Median Monthly Water and Wastewater Bills at 4,000 and 15,000 Gallons per Month, 2007-2018
(Nwater=245 & Nwastewater=201)
$17.68
$27.04
$50.19
$78.23
$21.10
$32.86
$61.04
$94.55
$0.00
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
$90.00
$100.00
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Inside Water Rates, 4 Kgal Inside Water Rates, 15 Kgal
Inside Wastewater Rates, 4 Kgal Inside Wastewater Rates, 15 KgalData analyzed by the Environmental Finance Center at the University of North Carolina, Chapel Hill.Data Sources: NC League of Municipalities and Environmental Finance Center's annual water & wastewater rates surveys. The cohort of utilities is consistent across all years.
Median Water and Wastewater Bills at 4,000 Gallons per Month for Large and Small Utilities, 2009-2018
(NLarge=80 & NSmall=146)
$17.00
$19.00
$21.00
$23.00
$25.00
$27.00
$29.00
$31.00
$33.00
$35.00
$37.00
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Median Wastewater Bills at 4 Kgal, Small Utilities (<=10,000 Service Population)
Median Wastewater Bills at 4 Kgal, Large Utilities (>10,000 Service Population)
Median Water Bills at 4 Kgal, Small Utilities (<=10,000 Service Population)
Median Water Bills at 4 Kgal, Large Utilities (>10,000 Service Population)
Small
Data analyzed by the Environmental Finance Center at the University of North Carolina, Chapel Hill.Data Sources: SDWIS and NC League of Municipalities and Environmental Finance Center's annual water & wastewater rates surveys. The cohort of utilities is consistent across all years.
The median bill for small
utilities is higher, both for water
and wastewater at 4 Kgal
Small
Weighted Median Water Bills at 4,000 Gallons per Month, Relative to CPI-South, 2009-2018
(n=226)
Data analyzed by the Environmental Finance Center at the University of North Carolina, Chapel Hill.Data Sources: SDWIS, BLS, and NC League of Municipalities and Environmental Finance Center's annual water & wastewater rates surveys. The cohort of utilities is consistent across all years.SDWIS service population values were linearly interpolated for 2014 and 2015 based on values from 2013 and 2016.
$37.94
$27.54
$39.26
$27.48
$23.06
$26.53
18
22
26
30
34
38
2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029
Weighted Median Inside Water Bills at 4 Kgal
Weighted Median Inside Water Bills at 4 Kgal, Forecasting to 2030 (Full Dataset)
Weighted Median Inside Water Bills at 4 Kgal, Forecasting to 2030 (Last Five Years of Data)
Weighted Median Inside Water Bills at 4Kgal Rising at CPI, Based on Bills in 2009
Weighted Median Inside Water Bills at 4Kgal Rising at CPI, Forecasting to 2030 (Full Dataset)
Inside Water Bills at 4Kgal Rising at CPI, Forecasting to 2030 (Last Five Years of Data)
Weighted Median Wastewater Bills at 4,000 Gallons per Month, Relative to CPI-South, 2009-2018 (n=226)
$48.74
$32.86
$46.64
$32.01
$26.86
$30.91
20
25
30
35
40
45
50
2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029
Weighted Median Inside Wastewater Bills at 4 Kgal
Weighted Median Inside Wastewater Bills at 4 Kgal, Forecasting to 2030 (Based on Full Dataset)
Weighted Median Inside Wastewater Bills at 4 Kgal, Forecasting to 2030 (Based on Last Five Years of Data)
Weighted Median Inside Wastewater Bills at 4Kgal Rising at CPI, Forecasting to 2030 (Last Five Years of Data)
Weighted Median Inside Wastewater Bills at 4Kgal Rising at CPI, Forecasting to 2030 (Full Dataset)
Weighted Median Inside Wastewater Bills at 4Kgal Rising at CPI, Based on Bills in 2009
Data analyzed by the Environmental Finance Center at the University of North Carolina, Chapel Hill.Data Sources: SDWIS, BLS, and NC League of Municipalities and Environmental Finance Center's annual water & wastewater rates surveys. The cohort of utilities is consistent across all years.SDWIS service population values were linearly interpolated for 2014 and 2015 based on values from 2013 and 2016.
Percent of Surveyed Service Population Paying More than $40 for Water or $40 for Wastewater (2018
dollars), 2009-2018 (n=226 Utilities, 5.1-5.9 Million Customers)
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
% of Service Population Paying more than $40 for Wastewater at 4 Kgal (2018 Dollars)
% of Service Population Paying more than $40 for Water at 4 Kgal (2018 Dollars)
Data analyzed by the Environmental Finance Center at the University of North Carolina, Chapel Hill.Data Sources: SDWIS, BLS, and NC League of Municipalities and Environmental Finance Center's annual water & wastewater rates surveys. The cohort of utilities is consistent across all years.SDWIS service population values were linearly interpolated for 2014 and 2015 based on values from 2013 and 2016.
We see a steeper rise
with Wastewater
Bills
TRENDS IN MEDIAN HOUSEHOLD INCOME
North Carolina Median Household Income, 2007-2017, Forecasted to 2030, Relative to CPI-South (in 2017 dollars)
Data analyzed by the Environmental Finance Center at the University of North Carolina, Chapel Hill.Data Sources: US Census Bureau American Community Survey, BLS-CPI, and NC League of Municipalities and Environmental Finance Center's annual water & wastewater rates surveys. The cohort of utilities is consistent across all years.
$46,524.92
$63,691.55
$75,189.74
$60,725.12
$52,940.24
$42,000.00
$47,000.00
$52,000.00
$57,000.00
$62,000.00
$67,000.00
$72,000.00
$77,000.00
2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029
NC MHI
NC MHI Rising at CPI-South, Based on NC MHI in 2007
NC MHI, Forecasted to 2030 (Full Dataset)
NC MHI Rising at CPI, Based on NC MHI in 2007 (Full Dataset)
NC MHI, Forecasted to 2030 (Last Five Years of Data)
NC MHI Rising at CPI, Based on NC MHI in 2007, Forecasted to 2030 (Last Five Years of Data)
Despite falling below CPI
between the recession and 2016, NC MHI has been rising rapidly over the last five years
Percent of Utilities with Bills Greater than 1.5% MHI in 2010 vs. 2017
(Nwater=292 & Nwastewater=245)
Data analyzed by the Environmental Finance Center at the University of North Carolina, Chapel Hill.Data Sources: US Census Bureau American Community Survey and NC League of Municipalities and Environmental Finance Center's annual water & wastewater rates surveys. The cohort of utilities is consistent across all years.
4%
10%
7%
15%
0%
2%
4%
6%
8%
10%
12%
14%
16%
Water Bills at 4Kgal (n=292) Wastewater Bills at 4Kgal (n=245)
Percent of Utilities Charging Greater than 1.5% MHI, 2010
Percent of Utilities Charging Greater than 1.5% MHI, 2017
A greater proportion of NC utilities are charging more than 1.5% MHI in 2017 than
2010.
So, what does this all mean?
Since 2009, in North Carolina, water and wastewater rates have risen faster than inflation.
Based on both the last ten years and last five years of data, rates are expected to continue
rising faster than inflation.
Median Household Income is rising, but only realigned with inflation in 2017.
Looking forward…
• Affordability issues will continue to be a challenge for utilities.
• Although MHI is beginning to rebound post-recession, it is not a good representation of the distribution of income.
• More customers are likely to struggle with rising bills in future years. Customer assistance programs will likely be even more crucial for customers in the lowest income brackets.