fy2014-15 budget review mayor dwight c. jones byron c. marshall, cao
TRANSCRIPT
FY2014-15 BUDGET REVIEW
Mayor Dwight C. Jones Byron C. Marshall, CAO
Overview– Rate Setting Process– Pricing Objectives– Purpose of a Cost of Service Analysis
Water and Wastewater Rate Recommendations Gas Rate Recommendations Stormwater Rate No Change FY14 Affordability Program
Cost of Service Agenda
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Step 1 – Identify Financial & Pricing Objectives
Step 2 Identify Revenue Requirements & Demand Projections
Step 3 – Allocate Costs
Step 4 – Design Rate Structure
Step 5 – Assess Effectiveness of Addressing Pricing Objectives
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Rate Setting Process
Top Pricing Objectives
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1. Affordability
2. Cost of Service Based Allocations
3. Revenue Stability
Customer Service
Account
Residential Commercial IndustrialState & Federal
MunicipalFire
Protection
Cost Categories
Volumetric Charge Base Charge
EquivalentMeters
Admin. / General
Functional Categories
BaseExtra Cap. -Max Day
Extra Cap. -Max Hour
Admin. / General
MeterFire
Protection
Storage MeterTransmissionDistribution PumpingSource of
Supply
Customer Service
Readiness to Serve
Operating Expenses
Depreciation PILOT Return
Water Revenue Requirements
Cost of Service Analysis
Cost of service concept Allocate costs to
functional and cost components (e.g. buckets)
Classes of customers Units of service
Fixed Charges Variable Charges
Process that aligns rates and charges with pricing objectives
Rate Design
Water and Wastewater Rate Recommendations
Recommended Water RatesExisting COS $ Change
Monthly Service Charge 5/8" 19.68$ 11.56$ (8.12)$ 3/4" 29.53 15.68 (13.85) 1" 49.21 23.92 (25.29) 1.5" 98.41 44.50 (53.91) 2" 157.46 69.21 (88.25) 3" 295.24 135.09 (160.15) 4" 492.06 209.20 (282.86) 6" 984.12 415.08 (569.04) 8" 1,574.59 662.12 (912.47) 10" 2,263.47 950.35 (1,313.12)
Volumetric Charges (Ccf)Residential 1.63$ 3.21$ 1.58$ Commercial 2.26 3.21 0.95 Industrial 2.96 3.21 0.25 State & Federal 3.05 3.21 0.16 Municipal 1.90 3.21 1.31
Recommended Wastewater RatesExisting COS $ Change
Monthly Service Charge 5/8" 29.72$ 14.55$ (15.17)$ 3/4" 44.58 19.41 (25.17) 1" 74.30 29.13 (45.17) 1.5" 148.60 53.43 (95.17) 2" 237.75 82.59 (155.16) 3" 445.79 160.34 (285.45) 4" 742.98 247.82 (495.16) 6" 1,485.97 490.82 (995.15) 8" 2,377.54 782.41 (1,595.13) 10" 3,417.72 1,122.60 (2,295.12)
Volumetric Charges (Ccf)Residential 2.59$ 5.82$ 3.23$ Commercial 4.27 5.82 1.55 Industrial 4.96 5.82 0.86 State & Federal 4.75 5.82 1.07 Municipal 3.40 5.82 2.42
Residential Customer Impacts
Usage (ccf) Existing Proposed Change ($)
Low Volume 2 $57.83 $44.17 -$13.67
Mid-Level Volume 6 $74.70 $80.27 $5.58
High Volume 15 $112.64 $161.51 $48.87
*Non-residential impacts will vary based on meter size and levels of consumption.
Water and Wastewater Monthly Combined BillService Cost Existing Proposed Change ($)
All Customers Base Charge $49.40 $26.11 -$23.29
Impact of Recommended Rates
More Than 50% of Residential Customers Will See Their Bill Decrease
Promotes Resource Conservation and Provides Customer with More Control Over Bill
Balances Key Pricing Objectives of Affordability and Revenue Stability
Consistent with Cost of Service Principles
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Gas Rate Recommendations
Recommended Gas RatesRate Class Block Break Current Rate Proposed Rate % Change
(A) (B) (C ) (D) (E )
Residential - Rate RS
Customer Charge 11.05$ 11.36$ 2.80%
Distribution ChargeBlock 1 500 0.4700$ 0.4830$ 2.77%Block 2 0.4590$ 0.4830$ 5.23%
General Service Small - Rate GS
Customer Charge 13.43$ 13.43$ 0.00%
Distribution ChargeBlock 1 500 0.4370$ 0.43700$ 0.00%Block 2 0.3930$ 0.43700$ 11.20%
Firm, Non-Residential Large Volume Gas Sales Service - Rate LVS
Customer Charge 564.00$ 564.00$ 0.00%Demand charge (Mcf) 11.51$ 11.51$ 0.00%Transportation Charge
Block 1 15,000 0.1570$ 0.15700$ 0.00%Block 2 115,000 0.0800$ 0.08200$ 2.50%Block 3 0.0570$ 0.05800$ 1.75%
Recommended Gas RatesRate Class Block Break Current Rate Proposed Rate % Change
(A) (B) (C ) (D) (E )
Large Volume, High Load Factor Firm, Gas Sales Service - Rate LVS 2
Customer Charge 564.00$ 564.00$ 0.00%Demand charge (Mcf) 11.51$ 11.51$ 0.00%Transportation Charge
Block 1 - 0.0540$ 0.05500$ 1.85%
Municipal Gas Service - Rate MGS
Distribution Charge Block 1 - 0.4050$ 0.40500$ 0.00%
Transportation Service - Rate TS
Customer Charge 620.00$ 620.00$ 0.00%
Transportation Charge Block 1 15,000 0.1570$ 0.15700$ 0.00%Block 2 115,000 0.0800$ 0.08200$ 2.50%Block 3 0.0570$ 0.05800$ 1.75%
Residential Customer Impacts Current Rate Structure Proposed Rate Structure Richmond RS Richmond RS_New
Peak Off Peak Peak Off PeakCustomer Charge $11.05 $11.05 Customer Charge $11.36 $11.36Energy Chrg Max CCF $/CCF Energy Chrg Max CCF $/CCF
Block Peak Off Peak Peak Off Peak Block Peak Off Peak Peak Off Peak1 500 500 $ 0.47000 0.47000$ 1 500 500 0.48300$ 0.48300$ 2 - - $ 0.45900 0.45900$ 2 - - 0.48300$ 0.48300$ 3 - - -$ -$ 3 - - -$ -$ 4 - - -$ -$ 4 - - -$ -$ 5 - - -$ -$ 5 - - -$ -$
Average Cumul.Percentile Annual Current New $ % #
CCF Bill Bill Change Change Customers5% 35 149$ 153$ 4$ 2.800% 4,548 7% 69 165$ 170$ 5$ 2.800% 6,776 9% 111 185$ 190$ 5$ 2.800% 9,017
20% 283 266$ 273$ 7$ 2.800% 20,260 29% 394 318$ 327$ 9$ 2.800% 29,237 40% 519 377$ 387$ 11$ 2.800% 40,508 49% 611 420$ 432$ 12$ 2.800% 49,447 60% 727 474$ 488$ 13$ 2.800% 60,628 69% 827 521$ 536$ 15$ 2.800% 69,659 80% 979 593$ 609$ 17$ 2.800% 80,847 89% 1,157 677$ 695$ 19$ 2.800% 89,805 98% 1,596 883$ 908$ 25$ 2.800% 98,772 100% 16,989 7,997$ 8,345$ 348$ 4.354% 101,014
Annual Bill
Customer Assistance Program (CAP)
Existing Program– Provides assistance to qualifying gas customers and
funded fully through voluntary contributions and DPU fundraising
Objective– To develop a more aggressive CAP that could provide
assistance with water and wastewater bills to qualifying customers
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Proposed Structure
“Piggy Back” on Existing Virginia Department of Social Services’ Energy Assistance Program for Richmond
Establish Agreement with Richmond Department of Social Services
Simple Program Structure Initially DPU is working with the City Attorney's Office and other
City departments on the program specifics and implementation details to ensure that we will have the best program possible for Council to consider
Explore More Tailored Structure Once Database is Established
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Budget Overview Continues
New Services/Programs Proposed
Current Services/Programs Not Funded
Mandated Services/Programs
Impact on Service Delivery
Focus Area Results Aligned with Council’s Priorities
Major Budget Changes/Reasons for Changes
Budget Challenges / Issues
Major CIP Projects (if applicable)
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DPU Current Services/Programs Not Funded
None
DPU Mandated Services/Programs – Gas
Compliance with all Federal regulations associated with Natural Gas
Provide natural gas service to customers in the City of Richmond, all of Henrico County, and parts of Chesterfield and Hanover Counties.
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DPU Mandated Services/Programs – Water
Compliance with all State regulations associated with purification, storage and delivery of potable water
Provide potable water service to customers in the City of Richmond on a retail basis
Provide potable water service to the Counties of Chesterfield, Hanover, and Henrico on a wholesale basis
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DPU Mandated Services/Programs – Wastewater
Compliance with all State regulations associated with collections and treatment of wastewater
Compliance with all State regulations associated with CSO collection systems
Provide wastewater service to customers in the City of Richmond on a retail basis
Provide wastewater service to Goochland County on a wholesale basis
Provide wastewater service to customers in Chesterfield and Henrico Counties on a direct billing reciprocal basis
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DPU Mandated Services/Programs – Stormwater
Compliance with all Federal and State regulations associated with stormwater collections
Compliance with all Federal and State regulations associated with Clean Water
Compliance with all Federal and State regulations associated with flood protection
Continuation of current Stormwater programs
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DPU Mandated Services/Programs – Electric
Compliance with all Federal and State regulations associated with Streetlight installation and maintenance
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DPU Mandated Services/Programs – Customer Service
Compliance with all Federal and State regulations associated with Natural Gas and Water
Compliance with all Federal and State regulations associated with credit & collections, credit reporting, billing, and customer confidentiality
Compliance with all Federal and State regulations associated with banking and electronic payment processing
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Impact on Service Delivery
There should be no impact on service delivery Review – customer behavior if the proposed water
and wastewater rate changes are adopted
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Focus Area Results Aligned with Council’s Priorities
Neighborhood Vitality– Neighborhoods are safe, clean, and well maintained
Water utility for sanitation Wastewater utility for sanitation and floodwall , levee Stormwater utility for pollution prevention and drainage Natural gas utility for pollution prevention Electric (streetlight) utility for safety
Economic and Business Opportunities - Richmond is a city of choice for successful businesses – Richmond’s regulatory environment is streamlined
Process improvements in the Call Center, Water Resources, Energy Management, Developmental Services, Wastewater and Natural Gas for permits issued for services and regulatory permits
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Major Budget Changes/Reasons for Changes
Increased salary & benefit costs ($1.6M) – 2% raise and increases in retirement and health care costs
Assistance program for qualifying City Water and Wastewater customers ($1.0M)
Increased cost for contracted services ($0.7M) due to Consumer Price Index increases
System (eg: CIS, CRM, MicroFocus) upgrades and/or replacement costs ($0.6M)
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Major Budget Changes/Reasons for Changes
Increased plant operating/maintenance supplies ($0.6M) due to escalation and aging infrastructure
Increased training costs ($0.5M) driven by DPU employee pride and ownership program
Increased temporary labor ($0.5M) primarily driven by non-recurring (post FY15) professional services provided for federally mandated Gas Distribution Integrity Management Program (DIMP)
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Budget Challenges / Issues
Unfunded mandates Revenue sufficiency – changing rate structures Employee recruitment and retention Aging infrastructure (plants, pumping stations,
floodwalls, mains)
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Major CIP Projects (if applicable)
Gas System Replacements Gas New Business Water Distribution System Improvements Transmission Main Improvements Water Plant & Pumping (eg: Byrd Park Reservoir) Wastewater Treatment Plant (eg: Biological Nutrient
Removal Project) Sanitary Sewers Stormwater Facilities Improvements
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New Services/Programs Proposed
Assistance program for qualified City Water and Wastewater customers ($1.0M)
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DPU New Services/Programs Not Funded
LED Streetlight Replacement Program (engineering analysis in FY14)