ipswich water and wastewater presentation

Ipswich Water & Wastewater

Department

Water Base Rate Increase

Water Residential Seasonal Rate Adjustments

Wastewater Rate Increase

February 1 & 16

2016

1

WaterBase RateIncrease

2

Base Rate Increase

• Proposed base rate increase: 4%.

• Rate of $8.01 increases to $8.33 per

100 cubic feet of water.

-OR-

$0.011 per gallon

• Typical family of 4 will pay $30 more per year.

5’

5’

4’

3

Why Increase Is Needed

• FY17 Budget increases 7% - debt service, capital

• Current rates do not support budget

• Without increase, surplus depleted

• Debt service increases 51% in FY17

4

Future Rate Increases

• Increase debt service for approved projects• Jeffreys Neck Road Water Main

• WTP Improvements

• Linebrook Road Water Main

• Town Hill Tank Painting

• Potential projects• Manganese Treatment at Browns & Fellows

• Execution of capital improvements identified in master plan to be completed in FY18

• Support budget and stabilize surplus

5


FY17 FY18 FY19 FY20 FY21

Rate Increase 4% 4% 4% 5% 0%

Surplus/(O&M+Capital) 11% 7% 10% 10% 11%

Surplus Ending Balance $288,360 192,486 271,706 263,538 282,661

$0

$50,000

$100,000

$150,000

$200,000

$250,000

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$350,000

$400,000

0%

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6

Rate Comparison

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

Based on 12,000 cubic feet annual usageBased on 12,000 cubic feet annual usage

7

Recommendation

• Adjust Water Base Rate of $8.01 per 100 cubic feet to $8.33 per 100 cubic feet.

• Proposed Base Rate effective May 1, 2016.

8

2016Residential Seasonal Rate

Adjustment

9

Background

10

• 1990’s demand exceeds DEP allowable withdrawal limits

• DEP issues administrative consent order (ACO)• Requires rate structure to encourage conservation

• Water Commissioners adopt seasonal residential rate structure in 2003

Seasonal Rate Goals• Manage summer water consumption - Reduce summer peak

created by residential customers

• Revenue neutral

• Responsive to families and their budgets

Rate Structure Description

• Residential customer rates adjusted twice a year in May and October.• Multi-family properties included

• Summer rate set at 1.5 times the base rate

• Winter rate adjusted based on revenues generated in summer so program remains revenue neutral.

11

Customer Use Comparison

Flat Use Customer Summer Peak Customer

Usage5 Month Sum/7 Month Winter Rate

Base Rate

JAN 352 $13.52 $22.42

FEB 227 $8.72 $14.46

MAR 298 $11.44 $18.98

APR 284 $10.91 $18.09

MAY 301 $28.78 $19.17

JUN 298 $28.49 $18.98

JUL 249 $23.80 $15.86

AUG 327 $31.26 $20.83

SEP 210 $20.08 $13.38

OCT 193 $7.60 $13.53

NOV 217 $8.55 $15.21

DEC 261 $10.28 $18.30

TOTAL $203.43 $209.22

SAVINGS $5.79

Usage5 Month Sum/7 Month Winter Rate Base Rate

JAN 548 $21.04 $34.91

FEB 358 $13.75 $22.80

MAR 446 $17.13 $28.41

APR 376 $14.44 $23.95

MAY 475 $45.41 $30.26

JUN 4204 $401.90 $267.79

JUL 6404 $612.22 $407.93

AUG 5723 $547.12 $364.56

SEP 1397 $133.55 $88.99

OCT 400 $15.76 $28.04

NOV 488 $19.23 $34.21

DEC 475 $18.72 $33.30

TOTAL $1,860.26 $1,365.15

ADDED COST $495.11 12

Program Success

Average Annual Pumping Reduction with Seasonal Rate is 15%

Average Peak Month Reduction with Seasonal Rate 22%13

Recommendation

• Adjust Water Residential Winter Rate of $4.72 per 100 cubic feet to a Residential Summer Rate of $12.50 per 100 cubic feet.

• Residential Summer Rate effective May 1, 2016 through September 30, 2016.

14

WastewaterRate Increase

15

Rate Increase

• Proposed rate increase: 12%

• Rate of $7.06 increases to $7.91 per 100 cubic feet of water

• Typical family of 4 will pay $81 more per year.

16

Why Increase Is Needed

• FY17 Budget increases 13% - Debt service, capital, utilities shared expenses, benefits

• Current rates do not support budget

• Without increase, surplus depleted

• Debt service to increase 15% in FY17

17






$0

$50,000

$100,000

$150,000

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$250,000

$300,000

$350,000

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$500,000

-2%

3%

8%

13%

18%

23%

28%

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WASTEWATER

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Rate Comparison

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

Based on 12,000 cubic feet annual usage

19

Recommendation

• Adjust Wastewater Rate of $7.06 per 100 cubic feet to $7.91 per 100 cubic feet.

• Rate increase effective May 1, 2016.

20

Water Base Rate Increase

Effective May 1, 2016

$8.01 $8.33 per 100 ft3

Water Residential Summer Rate


$4.72 $12.50 per 100 ft3

Wastewater Rate Increase


$7.06 $7.91 per 100 ft3

21

Final Recommendations

FY17Water & Wastewater

Budget DiscussionFebruary 1, 2016

1

Proposed FY17 Water Budget





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$400,000

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Projections FY17 FY18 FY19 FY20 FY21

O&M+Capital $2,698,524 $2,697,780 $2,619,113 $2,592,587 $2,648,264

Long Term Debt $726,245 734,618 767,652 1,049,865 966,897

Total Budget $3,424,769 $3,432,397 $3,386,765 $3,642,451 $3,615,161


April 2015 Projected Rate Increase 13% 5% 5% 4%

Surplus Use $212,727 $95,874 -$79,219 $8,167 -$19,123


Surplus/(O&M+Capital) 11% 7% 10% 10% 11%BOS target surplus balance = $250k by FY20, not to fall below $100k in any year

2


3

• Changes from April 2015 projections• Smaller rate increases

• Surplus higher than projected (+$154k)

• Wastewater portion of Utilities shared services reevaluated – Water portion reduced (-$33k)

• Bottom line less than projected (-177k)


Salaries & Expenses:

Long Term Debt:

Capital:

Total:

$2,308,524

$726,245

$390,000

$3,424,769

• 7% Increase from FY16 – contractual obligations, debt service, capital

• Meter replacement program funding increased. Completion of conversion to new system estimated FY18

• Dump truck replacement

• Water system master plan (funded over 2 years)

-8%

+51%

+81%

4


• Current Reserve Balance = $501,087 (16% of total budget)

• Current Water Rate = $8.01/100 cubic feet

• Rate increases and reserve use are required to support this and future budgets

• 4% rate increase and $212,727 surplus use for FY17

• Proposed Water Rate = $8.33/100 cubic feet

• Water Subcommittee voted unanimously to support budget

5






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Notes: 1. Target surplus of $250,000 by FY20, not to fall below $100,000 in any year

2. Assumes entire budget is spent each year, including $50,000 Extraordinary & Unforeseen

6

Proposed FY17 Wastewater Budget





$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

$500,000

-2%

3%

8%

13%

18%

23%

28%

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Projections FY17 FY18 FY19 FY20 FY21

O&M+Capital $1,681,250 $1,749,788 $1,724,631 $1,760,820 $1,658,395

Long Term Debt $702,854 689,958 674,039 571,593 559,076

Total Budget $2,384,104 $2,439,746 $2,398,670 $2,332,413 $2,217,471


April 2015 Projected Rate Increase 12% 9% 2% 1%

Surplus Use $311,614 $174,357 -$28,754 -$95,011 -$209,953



BOS target surplus balance = $200k by FY20, not to fall below $100k in any year

7


8

• Changes from April 2015 projections• December budget draft more consistent with April projections

• Septage revenue exceeds projections – improves surplus position (+$259k)

• Subcommittee discussed expanding budget due to favorable surplus position

• Wastewater portion of Utilities shared services reevaluated (+$23k)

• Benefit costs increased (+$60k)

• Meter upgrade funds increased in FY18 (to achieve completion in FY18)

• Rapid surplus increase FY20 to FY21• Potential large capital projects are not included

• FY19 funds evaluation of Ipswich River crossing

• FY20 funds evaluation of aeration blowers

• Evaluations likely to identify needed upgrades in FY21


Salaries & Expenses:

Long Term Debt:

Capital:

Total:

+9%

+15%

+44%

• 13% Increase from FY16 – contractual obligations, debt service, capital

• Wastewater portion of Utilities shared services reevaluated. 15% allocated to wastewater (office salaries, town hall salaries, billing, metering support, IT)

• Dump truck replacement

$1,451,250

$702,854

$230,000

$2,384,104

9


• Current Reserve Balance = $600,920 (29% of FY16 budget)

• Current Wastewater Rate = $7.06/100 cubic feet

• Rate increases and reserve use are required to support this and future budgets

• 12% rate increase and $311,614 surplus use for FY17

• Proposed Wastewater Rate = $7.91/100 cubic feet

• Wastewater Subcommittee voted unanimously to support budget

10

Notes: 1. Target surplus balance of $200,000 by FY20, not to fall below $100,000 in any year.

2. Assumes entire budget is spent each year, including $50,000 Extraordinary & Unforeseen





$0

$50,000

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11

ipswich water and wastewater presentation

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