HomeMy Public PortalAbout2005 - Wastewater Cost of Service Analysis & Rate StudyBARTLETli
WEST
ENOINI!:I!:RI!I
Report on the
Wastewater Cost-of-Service Analysis
and
Rate Study
developed for the
City of Jefferson
2005
37669
Burrts&
McDonnell
S I NCE 18 9 8
9400 Ward Pa rkway
Kansas City, Missouri 64114-33 19
Tel: 816 333-94 00
Fax: 816 333 -3690
www.bumsmcd.com
Ma rc h 8, 2005
Mr. Eric Seaman
C ity of Jefferso n
2320 Hyd e Park Rd
Jefferson City, MO 65 109
Re: Re p ort o n the Sewer Ra te S tudy a nd Billing Ana lys is
For th e C ity of Jefferso n, Mi sso uri
Proj ect No. 37669
Dea r Mr. Seam an:
Bums & McDo nnell and Bartlett & West a re pleased to s ubmit o ur re po11 o n the sewer rate s tud y
and billing a na lys is for the C ity o f Jeffe rso n, Misso uri .
The results of o ur study a re outline d in th e fo ll owing secti o ns:
Executi ve Summary
Introduc ti o n
Financial Plan Ana lys is
Cost-of-Service A na lys is
Rat e Desig n Analysis
Billing Ana lys is
Pro v id es an overview of the Financial P lan Analysis,
Cost-of-S erv ice Analys is, and Rate D esign and Billing
Reco mme nda ti o n s.
Describes the need for the s tud y and background
infonnation o n the sewer syste m .
Develops a fma ncia l plan b ased o n rev enu e a nd
expenditure proj ectio n s to a ssess the adequa cy of th e
ex is ting schedule o f sewer rat es.
Eva lu a tes th e equity of cost recovery under th e existing
sche du le of rates a nd ide ntifi e s cost resp o ns ibility
a m o ng c us to m er c la sses.
Reconune nd s a sch e dule o f sewer rates fo r
imple m e ntatio n that wi ll ach ieve the d es ired res ults and
produ ce necessa ry revenues.
Describe s th e c urre nt billing practices and procedures
a nd reco mmend s ways to improve tho se prac ti ces.
W e apprecia te th e ass istan ce pro v ided by the C ity of J e ffe rson s taff and in particul ar M r. Eric
Seaman. W e a re pl ea sed to be of serv ice to th e C ity of Je ffe rs on in thi s s tudy. If yo u h ave an y
co nune nts o r q uestion s rega rding th e fm a l re port, please contact u s.
S incerely ,
BURNS & M c DONNELL
Ted J. K e ll y
P rinc ip a l, Bums & McDonnell
Encl osure
TJK
BARTLETT & WEST
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Jo hn T. Conway, PE
Bartle tt & Wes t
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Table of Contents
TABLE OF CONTENTS
Page No.
Executive Summary .................................................................................................................... ES-1
Need for the Study ................................. ······································································~············ ES-1
Wastewater Service .................................................................................................................. ES-1
Project Objectives ..................................................................................................................... ES-1
Project Approach. ..................................................................................................................... ES-2
Financial Plan Analysis Overview ............................................................................................. ES-2
Ten-Year Financial Plan ............................................................................................................ ES-2
System Operations Financing .................................................................................................... ES-4
Cost-of-Service Analysis Overview ........................................................................................... ES-4
Rate Design Analysis Overview ........................................................................ ~ ....................... ES-5
Rate Design Analysis Recommendations .................................................................................... ES-5
Billing Procedure Recommendations ......................................................................................... ES-6
Analysis of Additional Department Financing ............................................................................ ES-7
Part I -Introduction ...................................................................................................................... 1 -1
Need for the Study ....................................................................................................................... I-1
Wastewater Service ..................................................................................................................... I -1
Project Objectives ............ ~ ........................................................................................................... I-2
Project Approach. ........................................................................................................................ I-2
Part II -Financial Plan Analysis .................................................................................................. 11-1
Overview ................................................................................................................................... II -1
Planning Period .......................................................................................................................... TI -1
Projected Revenues Under Existing Rates .................................................................................... TI-1
Historical and Projected Customers. ............................................................................................. 11-1
Historical and Projected Volumes ................................................................................................ TI-2
Existing Schedule ofRates .......................................................................................................... II-3
Historical and Projected Revenues from Wastewater Volumes Under Existing Rates ...................... TI-3
Historical and Projected Other Revenues. ..................................................................................... TI-4
Projected Utility Expendetures ....................................... · ............................................................. TI-4
Jefferson City Wastewater Utility TOC-1 Bums & McDonnell
Bartlett & West
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Table of Contents
Historical and Projected O&M Expenses ...................................................................................... II-6
Projected CIP Expenditures ............................................................................... ~ ......................... II -6
Projected Debt Service Requirements ........................................................................................... II-8
Ten-Year Financial Plan .............................................................................................................. 11-9
System Operations Financing .................................................................................................... 11-11
Financial Plan Analysis Results ................................................................................................. 11-11
PART III-Cost-of-Service Analysis •.••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 111-1
Overview ........................................................................................................... ~ ...................... III -1
Test Period ................................................................................................................................ 111-1
Net Revenue Requirements ........................................................................................................ 111-1
Allocation of Operating Costs ..................................................................................................... 111-3
Allocation of Capital Costs .................................................. ~ ...................................................... III-3
Development of Test Period Unit Costs ofService ...................................................................... .ITI-3
Allocation of Unit Costs of Service to Customer Classes .............................................................. III-3
Cost-of-Service Analysis Results ................................................................................................ 111-7
PART IV-Rate Design Analysis ••.••••••••••••••••••••.••.••.•••••.••.••••••••••••••••••..•••••••••••••••••••••••••••••••••••••• IV-1
Overview ................................................................................................................................. IV -1
Existing Wastewater Rate Schedule ........................................................................................... IV -1
Proposed Rate Schedule ............................................................................................................ IV -1
Rate Design Analysis Recommendatbns .................................................................................... IV -2
PART V-Billing Procedures and Practices
Overview ................................................................................................................................... V -1
Current Billing Procedures and Practices ...................................................................................... V -1
Billing Procedures and Practices Recommendations ...................................................................... V -2
APPENDIX A-Analysis of Additional Department Financing
Analysis of Additional Department Financing .............................................................................. A-1
Jefferson City Wastewater Utility TOC-2 Burns & McDonnell
Bartlett & West
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Table of Contents
LIST OF TABLES
Table No. Page No.
Executive Summary
ES-1 Projected Wastewater Utility Cash Flow Analysis ............. :.................................. ES-3
ES-2 Schedule of Rate Increases................................................................................. ES-6
Part I
I-I Existing Wastewater Rate Schedule ................................................................... . 1-2
Part II
11-1 Historical and Projected Wastewater Customers................................................... II-2
11-2 . Historical and Projected Metered Wastewater Volumes........................................ 11-3
11-3 Historical and Projected Wastewater Revenues Under Existing Wastewater Rates... II-4
11-4 Historical and Projected Other Revenues Under Existing Wastewater Rates............ 11-5
11-5 Historical and Projected Wastewater Utility O&M Expenses................................. 11-7
II -6 Projected Wastewater Utility Capital Improvements............................................. II -8
11-7 Projected Wastewater Utility Debt Service.......................................................... II-9
11-8 Projected Wastewater Utility Cash Flow Analysis................................................ II-10
Part III
111-1 Development ofTest Period Wastewater Utility Net Revenue Requirements........... ID-2
I11-2 Allocation of Wastewater Utility Test Period O&M Expense................................. ill -4
III-3 Allocation of Wastewater Utility Test Period Plant Investment.............................. ID-5
III-4 Development of Wastewater Utility Unit Costs of Service..................................... ID-6
III -5 Allocation of Wastewater Utility Unit Cost of Service to Customer Classes............ ill-7
III -6 Comparison of Wastewater Utility Allocated Costs of Service and
Revenues Under Existing Rates.......................................................................... ill -8
Part IV
IV -1 Schedule of Rate Increases................................................................................. IV -2
A-1
A-2
A-3
Appendix A
Projected Wastewater Utility Cash Flow Analysis -Option 1.. .. . . .. . . . .. ............. ... .. .. A -2
Projected Wastewater Utility Cash Flow Analysis -Option 2 ......... :...................... A-3
Projected Wastewater Utility Cash Flow Analysis-Option 3................................. A-4
Jefferson City Wastewater Utility TOC-3 Burns & McDonnell
Bartlett & West
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EXECUTIVE SUMMARY
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Executive Summary
EXECUTIVE SUMMARY
NEED FOR THE STUDY
To accommodate loan repayments projected in 2000, the City of Jefferson Sewer Utility (Utility)
implemented a four percent annual increase from the years 2001 to 2010. The current implementation
plan calls for applying the increases equally across all customers. The Utility has asked the team of Burns
& McDonnell and Bartlett & West to review the costs of providing service to the customer classes served
and current billing practices and procedures. The report presents our findings and recommendations
based on the cost of service study we have conducted. A comprehensive capital improvement program
that was proposed by the Utility should be prioritized and reduced until the capacity for more debt
repayment is realized The Utility plans to fund the major system improvements by using a combination
of revenues generated by rates, debt increases, and current reserve funds.
WASTEWATER SERVICE
The Utility currently provides wastewater service to the following customer classes:
• Residential
• Commercial
• Industrial
• Contract Services
• Bulk Septage
The current Utility wastewater rate schedule is based on a base-charge/volume-charge rate structure. The
rates include a surcharge for excessive strength customers. A minimum monthly charge applies to all
customers. Customers are then charged for water use per hundred cubic feet ( ccf) of volume. Outside
city customers are charged three times the minimum monthly charge.
PROJECT OBJECTIVES
The Utility retained the services of Bums & McDonnell and Bartlett & West to assist with an evaluation
of the costs of providing wastewater service and development of a schedule of wastewater rates designed
to meet the following overall objectives:
I. Generate adequate revenues to meet projected operating and capital costs, while maintaining
sound financial performance.
2. Reflect the costs of providing wastewater service to the Utility's customers.
3. Meet the wastewater system service policies and objectives of the Utility.
Jefferson City Wastewater Utility ES-1 Burns & McDonnell
Bartlett & West
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Executive Summary
4. Review current billing practices and procedures.
PROJECT APPROACH
To meet the project objectives identified by the Utility, Bums & McDonnell developed the study in a
three-step approach. The three study steps are designed to address the following issues:
I.
2.
3.
Project Approach
Financial Plan Analysis
Cost-of-Service Analysis
Rate Design Analysis
FINANCIAL PLAN ANALYSIS OVERVIEW
Issue
Revenue Adequacy
Revenue Responsibility
Revenue Recovery
The primary issue addressed in the Financial Plan Analysis is revenue adequacy. The results of the
Financial Plan Analysis answer the questions:
• "Are the existing rates adequate?"
• "If not, what level of overall revenue increase is needed?"
To determine if the existing schedule of wastewater rates with the current approved increases will
generate adequate revenues to meet the Utility's operating and capital costs, Bums & McDonnell
prepared a ten-year financial plan projection of revenues and expenditures. A comparison of projected
revenues and the forecasted utility expenditures identified the adequacy of overall revenue levels.
The Financial Plan Analysis steps included the following:
I. Project revenues under existing rates.
2. Project utility expenditures.
3. Develop ten-year financial plan
The Financial Plan Analysis is detailed in Part II of this report.
TEN-YEAR FINANCIAL PLAN
The projection of revenues and system expenditures are summarized in a cash flow analysis to assess the
adequacy of revenues to meet all operating and capital requirements. As necessary, the cash flow analysis
identifies the overall increase in revenues produced with the four percent adjustments, on an annual basis,
to meet the Utility's overall financial objectives.
Table ES-1 presents the proposed Ten-Year Cashflow Analysis developed for the Utility. This table
shows how the Utility plans to achieve the financial plan objectives.
Jefferson City Wastewater Utility ES-2 Burns & McDonnell
Bartlett & West
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lile
No.
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
Table ES-1
PROJECTED WASTEWATER UTILITY CASH FLOW ANALYSIS
Jefferson City WastOWBter Utility
(1) (2) (3) (4) (5)
System Operations
Budget
FY2005 FY 2006 FY2007 FY2008 FY2009
Revenue from Wastewater Charges -Existing Rates
Proposed Revenue Increases:
Year Month
FY"""200s -8-
FY2006 8
FY2007
FY 2008
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
8
8
8
8
8
Month
Jliii8
June
June
June
June
June
June
June
June
June
Increase (11
4.00%
4.00%
4.00%
4.00%
4.00%
4.00%
0.00%
0.00%
0.00%
0.00%
Total Proposed Add~ional Revenues
Total Wastewater Charge Revenues
Other Operating Revenues
lnletesl Income (2)
Total Revenues
Operation and Maintenance E~penses
Outstanding Debt Service
Proposed Debt Service:
Year Month
FY2005 7
FY200613J
FY2007
FY2008
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
~
$4,700,000
$10,100,000
$0
$0
$0
$0
so
so
so
so
Total Proposed Debt Service
Net Proposed Debt Service
T ota1 Net Debt Service
Recurring Capital Improvements
Total Operating E~penses
Annual Operating Balance
BegiMing Balance -Wastewater Fund (4)
Proceeds from Previous Debt Issuance
Capital Improvement Financing
Bond 01 Note Issue
Issuance Costs
Interest Eamings-Capital Funds
Capital Improvements
Ending Balance -Wastewater Fund
Minmum Wastewater Fund Balance Target
Debt Service Coverage
Interest
2.00%
2.00%
2.00%
2.00%
2.00%
2.00%
2.00%
5.00%
5.00%
5.00%
Net Operating Revenues Available fOt Debt Service
Anrual Debt Service
Debt Service Coverage Based on Net Operating Revenues
(1) 4% Increase already approved through FY 2010
Tenn
20
20
20
20
20
35
35
35
35
35
5,680,400
94,700
94,700
5,775,100
105,000
927,700
6.807.860
3,446,390
2,417,100
143,700
143,700
143,700
2.560.800
327,400
6,334,590
473.210
4.921.700
0
4,700,000
(117,500)
5,400
4,800,180
5,182,630
0
3,361,410
2.560.800
1.31
5,717,100
228,700
99,100
327,800
6,044,900
105,000
966.500
7.116.406
3,584,250
2,011,800
287,400
617,700
905,100
905,100
2.916.900
446,000
6,947,150
169.250
5,182,630
0
5,100,000
(252,500)
233.900
7,763,100
2.670,180
0
3,532,150
2,916,900
1.21
5,754,300
230.200
239,400
103,700
573.300
6,327,600
105,000
802,800
7.235.406
3,727,620
2,013,700
287.400
617,700
0
905,100
905,100
2,918,800
506,900
7,153,320
82.080
2.670,180
0
0
0
220,600
2,700,000
272.860
0
3,507,780
2.918,800
1.20
5,791,900
231,700
240,900
250,600
108,600
831,800
6,623,700
105,000
703.600
7.432.300
3,876.720
2,013,500
287.400
617,700
0
905,100
905,100
2,918,600
434,900
7,230,220
202,080
272.860
0
211,100
686.040
0
3.555,580
2,918,600
1.22
(2) Interest Income calculated as reserve fund interest, plus 2.0 percent of Operating Funds lor FY2005, then increasing by 0.5 percent
fOt FY2()()6.FY2009. then staying constant al4.0 percent for FY2010-FY2014.
[3) Includes $5 milion of refinancing fOt 2002 Revenue Bonds
(4) Beginning Balance includes $1,410.000 of funds thai will be received mid-year. Extra calculated Interest is removed frOtn interest income.
Jefferson City Wastewater Utility ES-3
5,829,800
233,200
242,500
252,200
262.300
113,700
1,103,900
6,933,700
105,000
691,400
7.730.106
4,031,790
2,011,000
287,400
617.700
0
0
0
905,100
905.100
2,916,100
416,400
7,364,290
365.810
686,040
0
0
0
206,900
1.258.750
0
3,698,310
2,916,100
1.27
(6)
FY2010
5,868,100
234,700
244,100
253,900
264,000
114,400
116,300
1,227,400
7,095,500
105,000
682,900
7.883.400
4,193,060
2,013,700
287,400
617,700
0
0
0
0
905,100
905,100
2,918,800
460,400
7,572,260
311,140
1.258,750
0
0
0
204,900
1,n4.790
0
3,690,340
2,918,800
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Executive Summary
(7)
FY2011
5,906,700
236,300
245.700
255,500
265,800
276,400
287,500
0
1,567,200
7,473,900
105,000
701,000
8.279.900
4,360,780
2,013,800
287,400
617,700
0
0
0
0
0
905,100
905,100.
2,918,700
321,000
7,600,480
679,420
1,774,790
0
207,200
2,661,410
0
3.919,120
2,918.700
1.34
(8)
FY2012
5,945.800
237,800
247,300
257.200
267,500
115,900
282,900
0
0
1,408,600
7,354,400
105,000
736,500
8,195.900
4,535,210
2,009,400
287,400
617,700
0
0
0
0
0
0
905,100
905,100
2,914,500
560,000
8,009,710
186.190
2,661,410
0
0
0
206,800
3.054.400
0
3.680.690
2,914,500
1.26
(9)
FY2013
5,985,300
239,400
249,000
258.900
269,300
116,700
284,700
0
0
1,418,000
7.403,300
105,000
752.200
8:260.500
4,716,620
2,012,900
287,400
617,700
0
0
0
0
0
0
0
905,100
905.100
2,918.000
393,000
8,027,620
232.880
3,054.400
0
199,100
3.486.380
0
3.543.880
2,918,000
1.21
Burns & McDonnell
Bartlett & West
(10)
FY2014
6,025,100
241,000
250.600
260.700
271,100
281,900
293,200
0
0
0
0
1,598,500
7,623.600
105.000
769.500
8.498.106
4,905,290
2.012,800
287.400
617,700
0
0
0
0
0
0
0
0
905,100
905,100
2,917,900
418.000
8.241,190
256,910
3.486,380
0
191,600
3.934.890
0
3,592,810
2.917,900
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Executive Summary
SYSTEM OPERATIONS FINANCING
Lines 2 through II of Table ES-I present the previously implemented revenue increases required for
fmancing the Utility's operating and capital costs for the planning period. As noted in Table ES-I, a four
percent annual rate increase is identified through FY 20 I 0. Capital projects in Table ES-I include $15.2
million of projects over the next three years. With the increases already set, the Utility is limited on the
projects it can compete and still meet the following objectives.
1. Provide adequate funding for the capital improvement program: The revenue bond issues
totaling $14,800,000 combined with current reserve funds, and a portion of revenues generated by
rates will be adequate to fund the Utility's capital improvement schedule until FY 20 I 0.
Appendix A demonstrates options for further capital improvement funding if the need were to
occur.
2. Meet all operating and capital requirements: This criteria of meeting all annual operating and
capital requirements was the driving force behind the need for the revenue increases. Line 34 of
Table II-8 presents the annual operating balance, which is total revenues less all expenditures. As
presented in Table II -8, the annual operating balance is projected to range from a surplus of
approximately $82,000 in FY 2007 to a surplus of approximately $679,000 in FY 2011.
3. Meet all applicable debt service coverage require1nents: The debt service coverage calculations
for the proposed revenue bond issues are shown in Lines 43 to 45 of Table ES-1. Based on
revenues including proposed increases to maintain annual operations, the resulting maximum debt
service coverage ratios are more than adequate, ranging from a high of 1.34 times debt service to
a low of 1.20 in the period of 2005 through 20 I 4.
COST -OF -SERVICE ANALYSIS OVERVIEW
The Cost-of-Service Analysis is focused on determining revenue responsibility. To determine each
customer class' fair share of the cost of providing utility service, the Cost-of-Service Analysis compares
the revenues received from each customer class under the existing schedule of rates with the customer
class' allocated cost responsibility.
The Cost-of-Service Analysis was developed in the following steps:
I. Determine the net revenue requirements to be recovered from rates.
2. Estimate the system test period Wlits of service.
3. Allocate test period operating and capital costs.
4. Develop test period unit costs of service.
Jefferson City Wastewater Utility ES-4 Burns & McDonnell
Bartlett & West
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Executive Summary
5. Assign the costs of service to customer classes.
The Cost-of-Service Analysis is detailed in Part III of the Report.
RATE DESIGN ANALYSIS OVERVIEW
The Rate Design Analysis examines revenue recovery. Once the overall level of revenue increase is
identified in the Financial Plan Analysis and the responsibility of revenue is assigned in the Cost-of-
Service Analysis, the objective is to design a set of wastewater rates to achieve the following:
• Generate adequate revenues to meet the projected operating and capital costs, while maintaining
sound financial performance.
• Reflect the cost responsibility of providing wastewater service.
• Meet the wastewater system service policies and objectives of the Utility.
The Rate Design Analysis is detailed in Part IV of the report.
RATE DESIGN ANALYSIS RECOMMENDATIONS
The goal of the Rate Design Analysis was to design a set of wastewater rates to achieve the objectives
described above. The next proposed rate increase is scheduled for implementation effective June 1, 2005.
The approved increases will be implemented to all customers on the first of June for each year.
The Cost of Service Analysis shows that the rate structure could be adjusted to better assign the revenue
requirements to the appropriate customer classes. It is the Utility's decision whether the rate structure is
to be adjusted. It is recommended that the surcharges on BOD and SS be increased by approximately 50
percent shown in the allocated cost of service. The rates for surcharges have not increased since 1987 and
costs associated with their treatment have risen over that time. Table ES-2 shows the planned rate
increases and the recommended surcharge increase. Those customers that have individual contracts with
the Utility should also be evaluated on a case-by-case basis to determine which customers are no longer
paying fair value for the Utility's service.
It is also recommended that the connection fee for hooking up to the wastewater system be increased to
$400 from the current level of $300. The recommendation is based on a limited survey of comparable
utilities in Missouri.
The recommendations included in the development of the proposed rate schedules are expected to
generate adequate revenues for the ten-year plan, consistent with the Financial Plan Analysis results.
Implementation of the proposed rates will provide the revenues determined to be necessary for the
continued operation and maintenance of the waste water system.
Jefferson City Wastewater Utility ES-5 Burns & McDonnell
Bartlett & West
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Executive Summary
Table ES-2
SCHEDULE OF RATE INCREASES
Jefferson City Wastewater Utility
Effective Base Volume
Date Charge Charge
($) ($/ccf)
June 1, 2005 5.03 1.59
June 1, 2006 5.23 1.65
June 1, 2007 5.44 1.72
June 1, 2008 5.66 1.79
June 1, 2009 5.89 1.86
June 1, 2010 6.13 1.93
Industrial Surcharges {~/lb) BOD ss
Current 0.106 0.185
Recommended 0.159 0.277
BILLING PROCEDURE RECOMMENDATIONS
On-site interviews were conducted with each water utility that provides some form of water usage data or
is contracted for billing and collection services. As an outcome from these interviews, there are some
considerations that are being recommended to the Utility for further evaluation.
I. The existing written contracts with the water utilities that provide billing and collection services
for the Utility have different start dates. The contract with PWSD No. 2 of Cole County started
in 1988. The contract with PWSD No. 3 of Cole County started in I995. The contract with the
MA WC started in 2000. The Utility does not have a written contract with PWSD No. I of Cole
County, PWSD No.4 of Cole County, or PWSD No. I of Callaway County who provide water
usage data to the Utility who in tum does the billing and collection. It is recommended that the
Utility update the written Wastewater Billing Agreement for standardization and use the current
agreement with the MA WC as a model agreement. It should be noted that the MA WC is a
private utility and is subject to the Public Service Commission ~s rules and regulations. The other
water utilities are political subdivisions and are governed by a different set of statutes.
The Utility is at a distinct disadvantage for collecting delinquent sewer bills since they do not
have any control over the water system. The fees received for the water and sewer bill are first
applied to the water bill and then to the sewer bill. If the total amount remitted does not cover the
sewer bill in total, it becomes delinquent. It is not practical for the Utility to physically close off
the sewer service line from the house to the sewer main, nor is pursuing the delinquent sewer bill
by a legal means. It may not be cost effective due to the administrative costs exceeding the
amount of the delinquent sewer bill.
Jefferson City Wastewater Utility ES-6 Burns & McDonnell
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Executive Summary
2. Evaluate the need for a policy clarification for an adjustment to the sewer bill when the customer
has had a water leak on their side of the meter and the water did not go into the sewer system.
The Utility staff confers with the water utilities when this situation occurs and comes to a mutual
agreement whether to grant the request or not.
3. For the customers that receive their sewer bill in conjunction with the water bill, it is not
uncommon for the customer to think that the water district is the sewer utility. The Utility may
want to consider having the water utility identifY the sewer bill entry on the monthly statement as
"Jefferson City Sewer" rather than just "Sewer".
4. As the city's wastewater utility continues to grow, the amount of time for account servicing may
continue to increase and may require additional Utility staff to adequately provide customer
servtce.
ANALYSIS OF ADDITIONAL DEPARTMENT FINANCING
Bums & McDonnell was asked by the Utility to complete an analysis of the ability to issue additional
debt beyond that proposed in the projected wastewater utility cash flow analysis. We prepared three
options for evaluation by the Utility. These options demonstrate the Utility's ability to increase
borrowing ability as the rate adjustments are implemented and annual revenues increase. The three
alternative options are shown in Appendix A as Tables A-1, A-2, and A-3.
Jefferson City Wastewater Utility ES-7 Burns & McDonnell
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Executive Summary
In the preparation of this report, Bums & McDonnell and Bartlett and West used the information provided
by the Utility to make certain assumptions with respect to conditions that may exist in the future. While
we believe the assumptions made are reasonable for the purposes of this report, we make no
representation that the conditions assumed will occur. We have also relied on the information provided to
us without independent verification and cannot guarantee its accuracy or completeness. Therefore, to the
extent that actual future conditions differ from those assumed in this study or from the information
provided to us, the actual results may vary from those projected.
Jefferson City Wastewater Utility ES-8 Burns & McDonnell
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INTRODUCTION
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Part I Introduction
PART I
INTRODUCTION
NEED FOR THE STUDY
To accommodate loan repayments projected in 2000, the City of Jefferson Sewer Utility (Utility)
implemented a four percent annual increase from the years 200 1 to 20 1 0. The current implementation
plan calls for applying the increases equally across all customers. The Utility has asked the team of Bums
& McDonnell and Bartlett & West to review the costs of providing service and current billing practices
and procedures attributed to the customer classes served. The report presents our findings and
recommendations based on the cost of service study we have conducted A comprehensive capital
improvements program that was proposed by the wastewater division should be prioritized and reduced
until the capacity for more debt repayment is realized. The Utility plans to fund the major system
improvements by using a combination of revenues generated by rates, debt increases, and current reserve
funds.
WASTEWATER SERVICE
The Utility currently provides wastewater service to the following customer classes:
• Residential
• Commercial
• Industrial
• Contract Services
• Bulk Septage
The current Utility wastewater rate schedule is based on a base-charge/volume-charge rate structure. The
rates include a surcharge for excessive strength customers. A minimum monthly charge applies to all
customers. Customers are then charged per hundred cubic feet ( ccf) of water used during the month.
Outside city customers are currently charged three times the monthly base charge as inside city
customers. The existing schedule of wastewater rates is presented in Table I-1.
Jefferson City Wastewater Utility 1-1 Burns & McDonnell
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Part I
Table 1-1
EXISTING WASTEWATER RATE SCHEDULE
Jefferson City Wastewater Utility
Rates in Effect June 1. 2004
Base Charge
($)
Inside City 4.84
Outside City 14.52
Strength Surcharges
BOD
ss
0.106
0.185
Volume Charge
($/ccf)
per pound
per oound
1.59
1.59
PROJECT OBJECTIVES
Introduction
The Utility retained the services of Bums & McDonnell and Bartlett & West to assist with an evaluation
of the costs of providing wastewater service and development of a schedule of wastewater rates designed
to meet the following overall objectives:
I. Generate adequate revenues to meet projected operating and capital costs, while maintaining
sound financial performance.
2. Reflect the costs of providing wastewater service to customers of the City of Jefferson.
3. Meet the wastewater system service policies and objectives of the Utility.
4. Review current billing practices and procedures.
PROJECT APPROACH
To meet the project objectives identified by the Utility, Bums & McDonnell developed the study in a
three-step approach. The three study steps are designed to address the following issues:
I.
2.
3.
Project Approach
Financial Plan Analysis
Cost-of-Service Analysis
Rate Design Analysis
Issue
Revenue Adequacy
Revenue Responsibility
Revenue Recovery
As part of the Financial Plan Analysis, the primary issue is revenue adequacy. The results of the
Financial Plan Analysis answer the questions:
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Part I Introduction
• "Are the existing rates adequate?"
• "If not, what level of overall revenue increase is needed?"
The Financial Plan Analysis is detailed in Part II of this report.
The Cost-of-Service Analysis is focused on detennining revenue responsibility. To detennine each
customer class' fair share of the cost of providing utility service, the Cost-of-Service Analysis compares
the revenues received from each customer class under the existing schedule of rates with the customer
class' allocated cost responsibility. The Cost-of-Service Analysis is detailed in Part III of this report.
The Rate Design Analysis examines revenue recovery. Once the overall level of revenue increase is
identified, the objective is to design a set of wastewater rates reflecting these results. The Rate Design
Analysis is detailed in Part IV of this report.
The report also looks into the billing practices and procedures used by the Utility. Interviews with the
water districts that bill their customers independently help detennine what the Utility could do to improve
their billing procedures. Billing recommendations are described in Part V of the report.
Jefferson City Wastewater Utility 1-3 Burns & McDonnell
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FINANCIAL PLAN ANALYSIS
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Part II Financial Plan Analysis
PART II
FINANCIAL PLAN ANALYSIS
OVERVIEW
The primary issue addressed in the Financial Plan Analysis is revenue adequacy. The results of the
Financial Plan Analysis answer the questions:
• "Are the existing rates adequate?"
• "If not, what level of overall revenue increase is needed?"
To determine if the existing schedule of wastewater rates with the currently approved increases will
generate adequate revenues to meet the Utility's operating and capital costs, Burns & McDonnell
prepared a ten-year fmancial pian projection of revenues and expenditures. A comparison of projected
revenues and the forecasted utility expenditures identified the adequacy of overall revenue levels.
The Financial Plan Analysis steps included the following:
I. Project revenues under existing rates.
2. Project utility expenditures.
3. Develop ten-year financial plan
PLANNING PERIOD
A ten-year planning period covering the current FY 2005 Budget to FY 2014 was selected for the
Financial Plan Analysis. The Utility utilizes a twelve-month fiscal year beginning November I and
ending October 31. The Financial Plan Analysis recognizes and references the same fiscal year in the ten-
year planning period.
PROJECTED REVENUES UNDER EXISTING RATES
The first step in the Financial Plan Analysis was to project revenues under the existing schedule of rates.
To complete this effort required an analysis of customers, volumes, and other revenues.
HISTORICAL AND PROJECTED CUSTOMERS
Table Il-l presents the historical wastewater customers served by the Utility from 2003 through 2004 and
the projection of wastewater customers for the 2005 to 2014 planning peri:>d. For the historical period
2003 to 2004, the Utility added 119 new wastewater customers in a year. The projection of wastewater
Jefferson City Wastewater Utility 11-1 Burns & McDonnell
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Part II Financial Plan Analvsis
customers assumes only a one percent growth in residential customers, holding all other customer classes
constant from 2005 to 2014.
Table 11-1
HISTORICAL AND PROJECTED WASTEWATER CUSTOMERS
Jefferson City Wastewater Utility
(1) (2) (3) (4) (5) (6) (7) (8) (9)
Fiscal Residential-Besideotial-CCIDIDe[~ial-CCIDIDe[~ial Contract Bulk
Year Inside City Outside City · Inside City Outside City Industrial Customers Septage Total
Historical
2003 13,238 3,469 2,006 113 7 14 15 18,862
2004 13,360 3,474 1,997 111 7 14 18 18,981
Projected
2005 13,490 3,510 2,000 110 7 14 18 19,149
2006 13,630 3,540 2,000 110 7 14 18 19,319
2007 13,760 3,580 2,000 110 7 14 18 19,489
2008 13,900 3,620 2,000 110 7 14 18 19,669
2009 14,040 3,650 2,000 110 7 14 18 19,839
2010 14,180 3,690 2,000 110 7 14 18 20,019
2011 14,320 3,720 2,000 110 7 14 18 20,189
2012 14,470 3,760 2,000 110 7 14 18 20,379
2013 14,610 3,800 2,000 110 7 14 18 20,559
2014 14.760 3.840 2.000 110 7 14 18 20.749
HISTORICAL AND PROJECTED VOLUMES
Table 11-2 presents the historical Utility metered water volumes from 2003 through 2004 and the
projection of metered water volumes for the 2005 to 2014 planning period. Complete historical
information for 2000 through 2002 was not available. For the historical period 2003 to 2004, Utility
annual metered water volumes increased from 2,452,659 ccf to 2,461,442 ccf. The projection of metered
water volumes reflects a small increase in volume in all customer classes through the entire planning
period .
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Part II Financial Plan Analysis
Table 11-2
HISTORICAL AND PROJECTED METERED WASTEWATER VOLUMES
Jefferson City Wastewater Utility
(1) (2) (3) (4) (5) (6) (7) (8)
Fiscal Residential-Residential-Commercial-Commercial Contract Bulk
Year Inside City Outside Cit~ Inside City Outside Cit~ Industrial Customers Segtage
(ccf) (ccf) (ccf) (ccf) (ccf) (ccf) (ccf)
Historical l11
2003 989,579 342,211 593,351 8,733 35,153 483,039 593
2004 1,081,672 299,045 623,648 10,009 38,080 407,801 1,187
Projected
2005 1,076,900 324,100 607,200 9,600 37,300 432,057 1,306
2006 1,087,600 327,300 607,200 9,600 37,300 432,057 1,306
2007 1,098,500 330,600 607,200 9,600 37,300 432,057 1,306
2008 1,109,500 333,900 607,200 9,600 37,300 432,057 1,306
2009 1,120,600 337,200 607,200 9,600 37,300 432,057 1,306
2010 1,131,800 340,600 607,200 9,600 37,300 432,057 1,306
2011 1 ,143,100 344,000 607,200 9,600 37,300 432,057 1,306
2012 1,154,500 347,500 607,200 9,600 37,300 432,057 1,306
2013 1, 166,100 350,900 607,200 9,600 37,300 432,057 1,306
2014 1,177,700 354,400 607,200 9,600 37,300 432,057 1,306
[1] Some historical usage numbers estimated based on customer and revenue data
EXISTING SCHEDULE OF RATES
Table I-2 presents the existing Utility wastewater rate schedule for wastewater rates. The Utility has
implemented a four percent annual increase each year from 2004 to 20 I 0.
The current Utility wastewater rate schedule is based on a base-chargelvolwne-charge rate structure.
Outside customers are currently charged three times the inside city base-charge. The rates include a
surcharge for excessive strength customers.
HISTORICAL AND PROJECTED REVENUES FROM WASTEWATER VOLUMES
UNDER EXISTING RATES
(9)
Total
(ccf)
2,452,659
2,461,442
2,488,463
2,502,363
2,516,563
2,530,863
2,545,263
2,559,863
2,574,563
2,589,463
2,604,463
2,619,563
Table II-3 presents the historical Utility wastewater volume revenues under the existing schedule of rates
from 2003 through 2004 and the projection of wastewater volume revenues under existing rates for the
2005 to 2014 planning period. The projection of wastewater volume revenues was estimated based on the
previous projection of wastewater customers and volumes factored by the existing schedule of wastewater
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Part II Financial Plan Analvsis
rates. For the historical period 2003 to 2004, Utility wastewater volume revenues grew from $4,990,670
in 2003 to $5,406,688 in 2004. The projection of wastewater volume revenues reflects low growth in
customers and the modest wastewater volume growth rates previously presented. Overall, wastewater
volume revenues under existing rates are projected to rise by about five percent in 2005, then slowly
increase from 2006 to 2014.
Table 11-3
HISTORICAL AND PROJECTED WASTEWATER REVENUES
UNDER EXISTING WASTEWATER RATES
Jefferson City Wastewater Utility
(1) (2) (3) (4) (5) (6) (7) (8) (9)
Fiscal Residential -Residential-Commercial -Commercial -Contracts Bulk Industrial
Year Inside City Outside City Inside Ci~ Ouside Cit~ Industrial Customers SeQtage Surcharge
($) ($) ($) ($) ($) ($) ($) ($)
Historical
2003 2,119,577 1,045,049 954,440 26,457 50,474 585,482 16,123 193,068
2004 2,401,300 1,059,000 1,050,000 28,800 57,400 579,400 42,300 188,400
Projected
2005 2,486,300 1,193,600 1,063,100 28,700 58,500 613,900 47,900 188,400
2006 2,511,100 1,205,500 1,063,100 28,700 58,500 613,900 47,900 188,400
2007 2,536,200 1,217,600 1,063,100 28,700 58,500 613,900 47,900 188,400
2008 2,561,600 1,229,800 1,063,100 28,700 58,500 613,900 47,900 188,400
2009 2,587,200 1,242,100 1,063,100 28,700 58,500 613,900 47,900 188,400
2010 2,613,100 1,254,500 1,063,100 28,700 58,500 613,900 47,900 188,400
2011 2,639,200 1,267,000 1,063,100 28,700 58,500 613,900 47,900 188,400
2012 2,665,600 1,279,700 1,063,100 28,700 58,500 613,900 47,900 188,400
2013 2,692,300 1,292,500 1,063,100 28,700 58,500 613,900 47,900 188,400
2014 2,719,200 1,305,400 1,063,100 28,700 58,500 613,900 47,900 188,400
HISTORICAL AND PROJECTED OTHER REVENUES
Table II-4 presents the historical other revenues for the Utility during 2002 through 2004 and the
(10)
Total
($)
4,990,670
5,406,600
5,680,400
5,717,100
5,754,300
5,791,900
5,829,800
5,868,100
5,906,700
5,945,800
5,985,300
6,025,100
projection of other revenues for the 2005 to 2014 planning period. Historically, these other revenues have
ranged from $56,558 to $180,080 for a twelve-month period. The forecast of total other revenues is
projected to remain constant at a level near the historical average throughout the forecast period.
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Part II Financial Plan Analysis
Table 11-4
HISTORICAL AND PROJECTED OTHER REVENUES
UNDER EXISTING WASTEWATER RATES
Jefferson City Wastewater Utility
(1) (2) (3) (4)
Fiscal Other Operating Licenses & Farm
Year Revenues Fees Rental
($) ($) ($)
Historical
2002 51,308 5,250 0
2003 23,283 32,435 28,942
2004 87,583 74,150 18,347
Projected
2005 20,000 70,000 15,000
2006 20,000 70,000 15,000
2007 20,000 70,000 15,000
2008 20,000 70,000 15,000
2009 20,000 70,000 15,000
2010 20,000 70,000 15,000
2011 20,000 70,000 15,000
2012 20,000 70,000 15,000
2013 20,000 70,000 15,000
2014 20,000 70,000 15,000
Jefferson City Wastewater Utility 11-5
(5)
Total Other
Revenues
($)
56,558
84,660
180,080
105,000
105,000
105,000
105,000
105,000
105,000
105,000
105,000
105,000
105,000
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Part II Financial Plan Analysis
PROJECTED UTILITY EXPENDITURES
The Utility's expenditures that must be met from wastewater rates include the following operating and
capital costs:
1. Operation and Maintenance (O&M) Expenses
2. Capital Improvement Program (CIP) Expenditures
· 3. Debt Service Principal and Interest Payments
HISTORICAL AND PROJECTED O&M EXPENSES
Table 11-5 presents the historical wastewater O&M expenses from 2000 through 2004 and the projection
of wastewater system O&M expenses for the 2005 to 2014 planning period. The Utility's O&M expenses
include the costs of treatment, collection, and administrative and general Historical O&M expenses have
ranged from $2,199,569 in 2001 to $3,120,089 in 2004. Expense increases are primarily a result of
increases in personnel costs, chemical costs, power costs, and inflation.
The 2005 budgeted O&M expenses of $3,446,400 were received from the Utility. Overall, as presented
in Table 11-5, Utility O&M expenses are projected to increase I 0.5 percent for 2005, and then increase
four percent annually from the 2005 budget levels for 2006 to 2014.
PROJECTED CIP EXPENDITURES
Table 11-6 presents the projected CIP expenditures identified for the wastewater system for the 2005 to
2014 planning period. Utility personnel identified major capital improvements totaling approximately
$25.5 million over the planning period to maintain the wastewater system and serve growing areas. The
previously approved level of rate increases will limit the projects that can be completed. The revised
amount of improvements included in this analysis serve to provide essential replacement of the system
and will cost only $15.2 million. These improvements are expected to be financed in part through system
revenues generated by rates, in part from current funds held in reserve, and in part by issuing revenue
bonds that total $14.8 million over the forecast period.
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Table 11-5
HISTORICAL AND PROJECTED WASTEWATER UTILITY O&M EXPENSES
(1) (2)
Fiscal
Year Treatment
($)
2000 1,045,074
2001 978,303
2002 1,053,599
2003 1 '145,415
2004 1,255,888
2005 1,437,500
2006 1,495,000
2007 1,554,800
2008 1,616,900
2009 1,681,600
2010 1,748,900
2011 1,818,800
2012 1,891,600
2013 1,967,300
2014 2,046,000
Jefferson City Wastewater Utility
Jefferson City Wastewater Utility
(3) (4) (5)
Administrative &
Collection General Total
($) ($) ($)
Historical
635,331 541,492 2,221,897
607,124 614,142 2,199,569
734,055 731,046 2,518,700
791,862 758,737 2,696,014
964,068 900,134 3,120,089
Projected
1,061,200 947,700 3,446,400
1,103,700 985,600 3,584,300
1,147,800 1,025,000 3,727,600
1,193,700 1,066,000 3,876,600
1,241,500 1,108,700 4,031,800
1,291,100 1,153,000 4,193,000
1,342,800 1,199,200 4,360,800
1,396,500 1,247,100 4,535,200
1,452,400 1,297,000 4,716,700
1,510,400 1,348,900 4,905,300
11-7
(6)
Percent
Increase
(%)
-1.0
14.5
7.0
15.7
10.5
4.0
4.0
4.0
4.0
4.0
4.0
4.0
4.0
4.0
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Part II Financial Plan Analysis
Table 11-6
PROJECTED WASTEWATER UTILITY CAPITAL IMPROVEMENTS
Jefferson City Wastewater Utility
(1) (2) (3) (4)
Recurring Major Total
Fiscal Capital Capital Capital
Year I mQrovements lmQrovements I mQrovements
($) ($) ($)
2005 327,400 4,800,180 5,127,580
2006 446,000 7,763,100 8,209,100
2007 506,900 2,700,000 3,206,900
2008 434,900 0 434,900
2009 416,400 0 416,400
2010 460,400 0 460,400
2011 321,000 0 321,000
2012 560,000 0 560,000
2013 393,000 0 393,000
2014 418,000 0 418,000
PROJECTED DEBT SERVICE REQUIREMENTS
Table II-7 presents the projected debt service requirements on the Utility's outstanding and proposed
revenue bonds. The Utility currently has debt service obligations from outstanding bonds, which require
payments ranging from $2,417, 100 in 2005 to $2,009,400 in 2012.
The projections of proposed debt service payments for 2005 to 2014 are based on the Utility's plans to
issue revenue bonds throughout the forecast period to partially fund the capital improvements identified in
Table II-6. The annual debt service payments for the proposed bonds are based on the following
parameters.
• Total Bond Issue Amount
• Interest Rate
• Tenn
• Issuance Costs
Jefferson City Wastewater Utility
$14,800,000
2 percent
20 years
2.5 percent
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Part II Financial Plan Analvsis
Table 11-7
PROJECTED WASTEWATER UTILITY DEBT SERVICE
Jefferson City Wastewater Utility
(1) (2) (3) (4)
Outstanding Proposed Total
Fiscal Debt Debt Debt
Year Service Service Service
($) ($) ($)
2005 2,417,100 143,700 2,560,800
2006 2,011,800 905,100 2,916,900
2007 2,013,700 905,100 2,918,800
2008 2,013,500 905,100 2,918,600
2009 2,011,000 905,100 2,916,100
2010 2,013,700 905,100 2,918,800
2011 2,013,600 905,100 2,918,700
2012 2,009,400 905,100 2,914,500
2013 2,012,900 905,100 2,918,000
2014 2,012,800 905,100 2,917,900
[1] 2002 Revenue Bonds refinanced in FY 2006, removed
from Outstanding Debt Service
TEN-YEAR FINANCIAL PLAN
The projection of revenues and system expenditures are summarized in a cash flow analysis to assess the
adequacy of revenues to meet all operating and capital requirements. As necessary, the cashflow analysis
identiftes the overall increase in revenues produced with the annual four percent adjustments, to meet the
Utility's overall financial objectives.
Table 11-8 presents the proposed Ten-Year Financial Plan developed for the Utility. This table shows
how the Utility plans to achieve the financial objectives described above.
As noted previously, the financial plan is based on the issuance of revenue bonds for capital improvement
expenditures in Fiscal Years 2005 and 2006. The revenue bond issue, net of issuance costs, combined
with current reserve funds and a portion of revenues generated by rates will be adequate to finance capital
improvements during the planning period. The resulting annual debt service payments are estimated
based on the parameters identified previously and are reflected in Table 11-8 as an expenditure to be met.
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Part II
Table 11-8
PROJECTED WASTEWATER UTILITY CASH FlOW ANALYSIS
Jetterson City Wastewater Ut~dy
(1) (2) (3) (4) (5)
System Operations
Budget
FY 2005 FY2006 FY 2007 FY2008 FY 2009
Revenue from Wastewater Charges • Existing Rates
Proposed Revenue Increases:
Year Month Month
FY200s --8 Jiiie
FY2006 8 .Me
FY2007 8 .Me
FY 2008 8 June
FY 2009 8 June
FY 2010 8 June
FY 2011 8 June
FY 2012 8 June
FY 2013 8 June
FY 2014 8 June
Increase !1 I
4.00%
4.00%
4.00%
4.00%
4.00%
4.00%
0.00%
0.00%
0.00%
0.00%
Total Proposed Additional Revenues
TOCBI W8$1ewater Charge Revenues
Other Clperaklg Revenues
lnterestlncome(2J
TOCBIReveruls
Operation and Maintenance Expenses
Outstanding Debt Service
Proposed Debt Service:
Year Month
FY200s -7-
FY2006131
FY2007
FY2008
FY2009
FY 2010
Amount
$4,700:000
$10.100,000
so so
so so
so so
so
FY2011
FY2012
FY2013
FY2014 1 so
Tolal Proposed Debt Service
Net Proposed Debt Service
Total Net Debt SeMce
Recumng Capctal Improvements
Total Operallng Expenses
Annual Operat1ng Balance
Beginning Balance -Wastewater Fund (4)
Proceeds from Previous Debt Issuance
capilallmprovemenl Financina
Bond or NOlo Issue
Issuance Costs
lntereSl Eammgs-Capctal Funds
Caprulllmprovernents
Ending Balance -Wastewater Fund
Minimum Wastewater Fund Balance Target
Oebl Service Cowtage
Interest
"2:00%
2.00%
2.00%
2.00%
2.00%
2.00%
2.00%
5.00%
5.00%
5.00%
Net Operatlll!J Revenues Available tor Oebl ServiCe
Annual Oebl SeMce
Oebl Service eo-age Based on Net Operating Revenues
(1)4% Increase already approved through FY 2010
Term w
20
20
20
20
35
35
35
35
35
5,680,400
94,700
94.706
5.n5.1oo
105,000
927 700
6,807,800
3,446,390
2,417,100
143,700
143.706
143.700
2.560.800
327.400
6,334,590
473,210
4,921,700
0
4,700,000
(117,500)
5,400
4,800,180
5,182,630
0
3.361,410
2.560,800
1.31
5.717,100
228,700
99.100
327:SOO
6,044,900
105.000
966.500
7,116,400
3.584.250
2,011,800
287,400
617,700
905,100
905,100
2,916,900
446.000
6,947,150
5,754,300
230.200
239,400
103,700
573.366
6,327,600
105.000
802.800
7.235,400
3,727,620
2,013,700
287.400
617,700
0
905.106
905,100
2,918.800
506.900
7,153,320
169.250 82,080
5,182,630 2,670.180
0 0
5,100.000
(252,500) 0
233.900 220.600
7,763,100
2,670,180
0
3.532.150
2.916,900
121
2.700.000
272,860
0
3.507.780
2.918,800
1.20
5,791,900
231,700
240,900
250,600
108,600
831.800
8,623,700
105,000
703600
7.432.300
3,876,720
2,013,500
287.400
617,700
0
0
905.106
905,100
2.918,600
434.900
7,230220
202,080
272.860
0
0
211,100
686,040
0
3.555,580
2,918,600
1.22
(2)1nterestlncome calculated as reserve fund interest. plus 2.0 percent of Operating Funds for FY2005, then increasing by 0.5 percent
for FY2006-FY2009,1hen staying constant at 4.0 percent for FY2010-FY2014.
(3)1ndudes $5 million of refinancing for 2002 Revenue Bonds
(4) Beginning Balance includes $1,410,000 of funds that will be received mid-year. Extra calculated interest is removed from interest income.
Jefferson City Wastewater Utility 11-10
5,829,800
233.200
242.500
252.200
262,300
113,700
1,103.900
6,933.700
105,000
691,400
7,730,100
4,031,790
2,011,000
287,400
617,700
0
0
0
905.100
905,100
2,916,100
416,400
7,364290
365,810
686,040
0
0
0
206,900
1,258.750
0
3,698,310
2.916,100
127
Financial Plan Analysis
(6)
FY 2010
5,868,100
234,700
244,100
253.900
264,000
114,400
116,300
1.227.406
7,095,500
105,000
682.900
7,883,400
4,193,060
2,013,700
287,400
617.700
0
0
0
0
905.1oo
905,100
2,918,800
460,400
7,572.260
311,140
1,258,750
0
0
0
204,900
1,774,790
0
3,690,340
2.918,800
1.26
(7)
FY2011
5,906,700
236,300
245,700
255,500
265,800
276,400
287,500
0
1,567.200
7,473,900
105,000
701000
8.279.900
4,360,780
2,013,600
287,400
617,700
0
0
0
0
0
905,100
905,100
2,918,700
321.000
7.600.480
679,420
1,774,790
0
0
0
207200
0
2,661,410
0
3,919,120
2.918.700
1.34
(8)
FY2012
5,945,800
237,800
247.300
257.200
267,500
115,900
282,900
0
0
1.408.600
7,354,400
105.000
736 500
8,195,900
4,535.210
2,009,400
287,400
617,700
0
0
0
0
905.100
905,100
2,914,500
560,000
8.009.710
186,190
2,661,410
0
0
0
206,800
3,054,400
0
3,660,690
2.914,500
1.26
(9)
FY2013
5,985,300
239.400
249,000
258.900
269.300
116,700
284,700
0
0
0
1,418.600
7.403.300
105,000
752.200
8260,500
4,716,620
2.012,900
287.400
617,700
0
0
905.100
905.100
2.918,000
393.000
8,027,620
232,880
3,054.400
0
0
0
199.100
3,486.380
0
3.543.880
2.918,000
121
Burns & McDonnell
Bartlett & West
(10)
FY 2014
6,025,100
241,000
250.600
260.700
271,100
281,900
293,200
0
0
0
0
1.598.500
7,623,600
105,000
769.500
8,498,100
4,905,290
2,012,800
287,400
617,700
0
0
0
0
0
0
0
0
905.100
905.100
2.917,900
418.000
8,241,190
256.910
3.486,360
0
0
191,600
3,934,890
0
3.592.810
2.917,900
1.23
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Part II Financial Plan Analysis
SYSTEM OPERATIONS FINANCING
Lines 2 through II of Table II-8 present the proposed revenue increases required for financing the
Utility's operating and capital costs for the planning period. As noted in Table 11-8, a four percent annual
rate increase to enhance revenues is identified through FY 20IO.
The overall revenue increases identified are necessary to meet the annual Utility operating and capital
costs without relying on existing available funds to cover annual operating deficits. With the revenue
increases identified, the Utility can meet the following financial plan objectives.
1. Provide adequate funding for the capital improvement program: The revenue bond issues
totaling $14,800,000 combined with current reserve funds, and a portion of revenues generated by
rates will be adequate to fund the Utility's schedule of capital improvements until 20 I 0.
Appendix A demonstrates options for further capital improvement funding if the need were to
occur.
2. Meet all operating and capital requirements: This criteria of meeting all annual operating and
capital requirements was the driving force behind the need for the revenue increases proposed.
Line 34 of Table 11-8 presents the annual operating balance, which is total revenues less all
expenditures. As presented in Table II-8, the annual operating balance is projected to range from
a surplus of approximately $82,000 in FY 2007 to a surplus of approximately $679,000 in FY
2011. Additional debt beyond what is planned would result in an operating deficit due to the
increased debt service.
3. Meet all applicable debt service coverage requirements: The debt service coverage calculations
for the proposed revenue bond issues are shown in Lines 43 to 45 of Table 11-8. Based on
revenues including proposed increases to maintain annual operations, the resulting debt service
coverage ratios are more than adequate, ranging from a high of 1.34 times debt service to a low of
1.20 in the period of 2005 through 2014.
FINANCIAL PLAN ANALYSIS RESULTS
The overall revenue increases that will be implemented are necessary to meet the annual Utility operating
and capital costs. However, the amount of debt that can be issued is limited due to the pre-set rate
increases. This prevents further capital improvements that would have been constructed. This delay is
not indicated on the capital improvement plan or the cashflow, so further rate increases may be necessary
after 20 I 0 to complete delayed capital projects. With the annual revenue increases proposed and
additional revenue bond issues, the Utility can meet the financial plan objectives identified through 20 I 0.
Jefferson City Wastewater Utility 11-11 Burns & McDonnell
Bartlett & West
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PART Ill
COST -OF-SERVICE ANALYSIS
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Part Ill Cost-of-Service Analysis
PART Ill
COST -OF-SERVICE ANALYSIS
OVERVIEW
The Cost-of-Service Analysis is focused on detennining revenue responsibility. Once the overall need for
revenue increases is identified as a result of the Financial Plan Analysis, the results of the Cost-of-Service
Analysis help answer the following question:
• "Which customer classes (or class) are responsible for the costs incurred to provide service?"
To determine each customer class' fair share of the cost of providing utility service, the Cost-of-Service
Analysis compares the revenues received from each customer class under the existing schedule of rates
with the customer class' allocated cost responsibility.
The Cost-of-Service Analysis was developed in the following steps:
I. Determine the net revenue requirements to be recovered from rates.
2. Estimate the system test period units of service.
3. Allocate test period operating and capital costs.
4. Develop test period unit costs of service.
5. Assign the costs of service to customer classes.
TEST PERIOD
The test period selected for the Cost-of-Service Analysis and subsequent Rate Design Analysis was
FY 2006. The results of the Financial Plan Analysis indicated a four percent overall revenue increase to
be implemented effective June 1, 2005. Therefore, the Cost-of-Service Analysis will evaluate cost
responsibility for FY 2006.
NET REVENUE REQUIREMENTS
Table III -1 summarizes the development of the net revenue requirements to be recovered from wastewater
rates in the 2006 test period The net revenue requirements represent the level of costs that must be
recovered from volumes under the established wastewater rate schedule and are equal to total operating
and capital cost expenditures less all sources of other revenue. As presented in Table 111-1, the net
operating costs allocated to wastewater are equal to $3,479,250 and the net capital costs are equal to
$2,704,350 which equals a total net revenue requirement of $6,183,600. This is four percent higher than
Jefferson City Wastewater Utility 111-1 Burns & McDonnell
Bartlett & West
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Part Ill Cost-of-Service Analysis
Table 111-1
DEVELOPMENT OF TEST PERIOD WASTEWATER UTILITY NET REVENUE REQUIREMENTS
Jefferson Citv Wastewater Utility
Test Period 2006
Line
N.a. Operating Costs
1 Operation and Maintenance Expenses
2 Less: Other Operating Revenues
3 Net Operating Costs
4
5
6
7
8
9
10
11
Capital Costs
Net Debt Service
Recurring Capital Improvements
Source (Use) of Available Funds [1]
Less: Interest Earnings -Operations
Net Capital Costs
Net Revenue Requirements to be
Recovered from Wastewater Rates
Revenue from Wastewater Charges -Existing Rates [2]
Percentage Increase Required
(1)
Test Period FY 2006
Revenue Regujrements
3,584,250
(105,000)
3,479,250
2,916,900
446,000
311,250
(969 800)
2,704,350
6,183,600
5,945,800
4.00%
[1) Equal to annual balance from operations less transfer to major capital improvement funding.
r21 Includes industrial waste surcharQe revenues and full vear of rate increase
Jefferson City Wastewater Utility 111-2 Burns & McDonnell
Bartlett & West
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Part Ill Cost-of-Service Analvsis
revenues under existing water rates, which is consistent with the revenue increase identified in the
Financial Plan Analysis for 2006.
ALLOCATION OF OPERATING COSTS
Table III-2 summarizes the estimated allocation of the test period 2006 net operating costs of $3,479,250
for wastewater operations. The Utility's O&M expenses include the costs of Treatment, Collection, and
Administrative and General The operating costs of each group were allocated to five cost functions;
Fixed Costs, Flow, Biochemical Oxygen Demand (BOD), Suspended Solids (SS), and Customer.
ALLOCATION OF CAPITAL COSTS
Table III-3 summarizes the estimated allocation of test period 2006 plant in service which determines the
allocation of capital expenditures. Based on a review of the Utility's fixed asset records, the depreciated
plant in service for test period 2006 was estimated as $29,147,000 as shown on Table III-3.
Generally, the test period 2006 net plant in service was allocated to cost functions similar to the test
period O&M expenses described previously. More capital costs were allocated to strength surcharges
than operating costs due to the new Algoa plant that handles mostly industrial loads.
DEVELOPMENT OF TEST PERIOD UNIT COSTS OF SERVICE
Table III-4 presents the development of the test period 2006 unit costs of service by dividing the total
allocated operating costs and capital costs by the total units of service for each function.
ALLOCATION OF UNIT COSTS OF SERVICE TO CUSTOMER CLASSES
Table III-5 presents the distribution of the test period 2006 unit costs of service to each of the Utility's
customer classes.
Jefferson City Wastewater Utility 111-3 Burns & McDonnell
Bartlett & West
' ----~ ,..., ~ j ---,~ ! ----:Jt l ----:jl I ,,~---~ ~ r ----'jl ~ ... -~ I -1) ~ ~ I ------~ ~ ~ ~ ~
c... Table 111-2 ~ CD
~ ALLOCATION OF WASTEWATER UTILITY TEST PERIOD O&M EXPENSE ~
CiJ -Jefferson City Wastewater Utility -0 -::s Test Period 2006
()
~
~ Test Year 2006
Cl) Totals Fixed Costs Flow BOD ss Customer
(i) ($) ($) ($) ($) ($) ($) ~ -CD Treatment 1,494,958 583,107 683,888 136,778 91,185 ""' c: -:::.: ~ Collection 1,103,669 544,356 419,485 83,897 55,931
Administrative & General 985 618 591 371 394 247
Subtotals of O&M Expenses 3,584,246 1,718,834 1,103,373 220,675 147,116 394,247
-Percent of Total O&M 100.0% 48.0% 30.8% 6.2% 4.1% 11.0% f
Annual Fixed Costs 2,113,081
Variable Costs 1,471,164
Less other revenue (105,000) (50,353) (32,323) (6,465) (4,310) (11,549)
Net Test Period Operating Costs 3,479,246 1,668,481 1,071,050 214,210 142,807 382,698
I---~~ ____, ~ ~ ~ t ---c-:-cJ !------:") ~ t ----~---~ ~ I----~ ·-----w ~ I.----~ r-==t ~ ~ ~ I --ij
c_ Table 111-3 1J CD
~ Q)
:'.:l.
(,1 ALLOCATION OF WASTEWATER UTILITY TEST PERIOD PLANT INVESTMENT --0 -::, Jefferson City Wastewater Utility
(")
~ Test Period 2006
~
(/)
(b Fiscal Year ~ 2006 -Plant in Service OCLD Fixed Costs CD Flow BOD ss Customer ..,
s; ($) ($) ($) ($) ($) ($)
::::: ~ Collection Plant
Structures and Improvements 881,005 881,005
Grays Creek Sewer 571,678 343,007 142,920 85,752
Collection Equipment 344,816 206,890 86,204 51,722
Mise Lines and Collection 936.136 561,682 234,034 140,420
2,733,635
Treatment -Land 216,108 216,108 :::
I Stuctures and Improvements 9,303,488 9,303,488 01
Pumps, Mains, & Metering 10,815,598 6,489,359 2,703,900 1,622,340
Sewer Maintenance Equipment 431.012 258,607 107,753 64,652
20,766,206
Administration
Structures and Improvements 14,380 8,628 5,752
Administrative Supplies 3.032 1,819 1,213
17,412
General Plant & Equipment
Land 619,559 619,559
Donated Lines 4,845,432 2,907,259 1,211,358 726,815
Parking Lot Renovation 65,218 65,218
Miscellaneous Equipment 99 543 59726 24,886 14,931
5,629,752
Net Plant in Service 29,147,005 38.1% 37.1% 15.5% 9.3% 0.0% (")
0
.Overall 100.0% (/)
OJ 6
c:: Net Capital Cost Allocation 2,565,650 976,704 953,000 397,083 7'
3 238,250 613 (/)
~(/) CD
;'.:l.Po s
en o·
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PotJ :b
0
::,
~5 ~
en CD Clj
..... ::::: Ci)•
Table 111-4 1J
Q)
:t ---DEVELOPMENT OF WASTEWATER UTILITY UNIT COSTS OF SERVICE
Jefferson City Wastewater Utility
Test Period 2006
(1) (2) (3) (4) (5) (6)
Test Period
Line 2006 Flow Fixed Strength
No. Unit Costs of Service Costs Costs Costs BOD ss Customers
Total System Units of Service:
1 Number [1] 4,170,662 18,348 5,151,557 7,753,353 19,319
2 Units ccf ccf/day lbs lbs Customers
---I
Net Operating Costs:
3 Costs ($) 3,479,246 1,071,050 1,668,481 214,210 142,807 382,698
4 Unit Cost ($/Unit) 0.2568 90.9366 0.0416 0.0184 19.8090
0') Net Capital Costs:
5 Costs ($) 2,704,350 1,088,229 1,029,505 418,550 167,420 646
6 Unit Cost ($/Unit) 0.2609 56.1107 0.0812 0.0216 0.0334
6,183,596
Total Unit Costs of Service:
7 Costs of S• ($/Unit) 0.5177 147.0473 0.1228 0.0400 19.8425
percf percf/day perlb perlb per Customer
(1] Total wastewater volume, BOD, SS, and customers represent one year test period totals. Maximum day capacity requirements represents an
average within the test period.
r Part/// Cost-of-Service Analvsis
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r Table 111-5
ALLOCATION OF WASTEWATER UTILITY UNIT COST OF SERVICE TO CUSTOMER CLASSES
Jefferson City Wastewater Utility r Test Period 2006
(1) (2) (3) (4) (5) (6)
Test Period r Line 2006 Flow Fixed ~IWIJS!lb
llln. Allocated Costs ot Service Costs Costs Costs BOD ss Customers
Total Unit Costs of Service:
r Costs of Service ($/Unit) 0.5177 147.0473 0.1228 0.0400 19.8425
per ccf per ccf/day perlb per lb per Customer
Residential-Inside City
2 Units 1,993,409 8,192 1,365,582 2,766,116 13,629
li 3 Costs ($) 2,765,239 1,032,049 1,204,625 167,733 110,678 270,424
Residential -Outside City
4 Units 580,661 3,977 410,883 832,345 3,544
5 Costs ($) 1,031,975 300,626 584,826 50,468 33,304 70,318
Commercial -Inside City r 6 Units 919,013 3,525 761,383 1,542,876 1,997
7 Costs ($) 1,180,367 475,801 518,339 93,520 61,733 39,625
Commercial -Outside City
8 Units 17,236 113 12,017 24,343 111
9 Costs ($) 30,020 8,923 16,665 1,476 974 2,203 r Industrial
10 Units 52,530 201 46,815 94,880 7
11 Costs ($) 66,026 27,196 29,628 5,750 3,796 139
Contract Customers r 12 Units 605,363 2.322 541,555 1,097,571 14
13 Costs ($) 759,989 313,415 341,435 66,519 43,916 278
Bulk Septage [1]
14 Units 2,450 17 1,640 3,321 18
15 Costs ($) 49397 1 268 2467 201 133 357 r Subtotal
16 Units 4,170,662 18,348 3,139,876 6,361,452 19,319
17 Costs ($) 5,833,616 2,159,279 2,697,986 385,667 254,534 383.344
r Industrial Strength Surcharge Loads '
18 Units 2,011,681 1,391,902
19 Costs ($) 300 587 247 092 55693
r Total Wastewater System
' 20 Units 4,170,662 18,348 5,151,557 7,753,353 19,319
21 Costs ($) 6,134,202 2,159,279 2,697,986 632,760 310,227 383,344
r f11 $45,000 of costs applied directly to Bulk Septa~e. Costs removed from other classes accordinq to percenta~e of total costs
r COST -OF-SERVICE ANALYSIS RESULTS
Table III-6 summarizes the overall results of the Cost-of-Service Analysis for wastewater. This table
compares the allocated costs of service with the projected revenues under existing rates to evaluate the r equity of current cost recovery. This table shows that the current rates are not generally recovering costs
proportionally and current levels of revenue are sufficient assuming an overall four percent increase for r the test period 2006.
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Part/// Cost-of-Service Analysis
Table 111-6
COMPARISON OF WASTEWATER UTILITY ALLOCATED COSTS OF SERVICE
AND REVENUES UNDER EXISTING RATES
Jefferson Wastewater Sewer Utility
Test Period 2006
( 1) (2) (3) (4)
Revenues Revenue
Allocated Adjusted Under Increase or
Line Cost-of-Cost-of-Existing (Decrease)
No. Customer Class s~rvj~~ S~DLi~~ Ra1~~ lll Indicated
($) ($) ($) (%)
1 Residential-Inside City 2,765,239 2,765,239 2,611,600 5.9
2 Residential -Outside City 1,031,975 1,031,975 1,253,800 -17.7
3 Commercial -Inside City 1,180,367 1,180,367 1,105,700 6.8
4 Commercial -Outside City 30,020 30,020 29,800 0.7
5 Industrial 66,026 66,026 60,900 8.4
6 Contract Customers 759,989 759,989 638,400 19.0
7 Bulk Septage [2] 49.397 49.397 49.900 -1.0
8 Subtotal 5,883,013 5,883,013 5,750,100 2.3
9 Industrial Strength Surcharge Loads 300.587 300.587 196.000 53.4
10 Total Wastewater System 6,183,599 6,183,599 5,946,100 4.0
[1] Includes full year of rate increase instead of June implementation
f21 $45,000 of costs applied directly to Bulk Septaoe. Costs removed from other classes accordino to percent•
Jefferson City Wastewater Utility 111-8 Burns & McDonnell
Bartlett & West
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PART IV
RATE DESIGN ANALYSIS
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Part IV Rate Design Ana/vsis
PART IV
RATE DESIGN ANALYSIS
OVERVIEW
The Rate Design Analysis examines revenue recovery. Once the overall level of revenue increase is
identified in the Financial Plan Analysis, the objective is to design a set of wastewater rates to achieve the
following:
• Generate adequate revenues to meet the projected operating and capital costs, while maintaining
sound financial performance.
• Reflect the costs of providing wastewater service.
• Meet the wastewater system service policies and objectives of the Utility.
EXISTING WASTEWATER RATE SCHEDULE
The current Utility wastewater rate schedule is based on a base-charge/volume-charge rate structure. The
rates include a surcharge for excessive strength customers. A minimum monthly charge applies to all
customers with outside city customers charged three times the inside city base-charge. Customers are
then charged by volume per ccf.
PROPOSED RATE SCHEDULE
Table IV -1 presents the scheduled wastewater rate schedule with changes beginning June 1, 2005. The
proposed rates maintain the same rate schedule structure. The recommendations include a proposed
increase in the surcharges for BOD and SS. The surcharge rates have not been increased since 1987, and
the cost of service allocations indicate that industrial strength customers are responsible for more revenue
than they are providing.
Jefferson City Wastewater Utility /V-1 Burns & McDonnell
Bartlett & West
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Part IV Rate Design Analvsis
Table IV-1
SCHEDULE OF RATE INCREASES
Jefferson City Wastewater Utility
Effective Base Volume
Date Charge Charge
($) ($/ccf)
June 1, 2005 5.03 1.59
June 1, 2006 5.23 1.65
June 1, 2007 5.44 1.72
June 1, 2008 5.66 1.79
June 1, 2009 5.89 1.86
June 1, 2010 6.13 1.93
Industrial Surcharges (~/lb) BOD ss
Current 0.106 0.185
Recommended 0.159 0.277
RATE DESIGN ANALYSIS RECOMMENDATIONS
The goal of the Rate Design Analysis was to design a set of wastewater rates to achieve the objectives
described earlier in this section. The scheduled rate schedule presented in Table IV -1 is scheduled for
implementation effective June I, 2005. Approved rate increases will be implemented on the first of June
for each year.
The Cost of Service Analysis shows that the rate structure could be adjusted to better assign the revenue
requirements to the appropriate customer classes. It is the Utility's decision whether the rate structure is
adjusted. It is recommended that the surcharges on BOD and SS be increased by approximately 50
percent shown in the allocated cost of service.
It is also recommended that the connection fee for hooking up to the wastewater system be increased to
$400 from the current level of $300. The recommendation is based on a limited survey of comparable
utilities in Missouri. r The recommendations included in the development of the proposed rate schedules are expected to
generate adequate revenues for the ten-year plan, consistent with the Financial Plan Analysis results.
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Implementation of the proposed rates will provide the revenues determined to be necessary for the
continued operation and maintenance of the wastewater system.
Jefferson City Wastewater Utility /V-2 Burns & McDonnell
Bartlett & West
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PARTV
BILLING PROCEDURES AND PRACTICES
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Part V Billing Procedures and Practices
PARTV
BILLING PROCEDURES AND PRACTICES
OVERVIEW
The current billing procedures used by the Utility comprise the in-house services provided by the Utility
staff as well as services provided by outside agents. Currently, these services are provided for the Utility
through existing written contracts with local water utilities. The Utility staff works with each water utility
in implementing the sewer rate increase each year that becomes effective on June 1. The current service
providers for the Utility are the Missouri-American Water Company (MAWC), Public Water Supply
District Number One (PWSD No. I) of Cole County, PWSD No.2 of Cole County, PWSD No.3 of Cole
County, PWSD No.4 of Cole County, and PWSD No. I of Callaway County. MAWC, PWSD No.2 of
Cole County, and PWSD No.3 of Cole County add the sewer bill to their monthly water bill statement,
make collections, and return receipts to the Utility. PWSD No. I of Cole County, PWSD No.4 of Cole
County and PWSD No. I of Callaway County just provide water usage data for the months of January,
February, and March or annual water usage to be used by the Utility in computing the monthly sewer bill.
The Utility conducts the billing for all other sewer users. The Utility directly bills 17 commercial
accounts plus approximately 4,500 sewer customers from the water usage data provided by others. The
contracted water utilities bill approximately I3,000 sewer customers for the Utility.
CURRENT BILLING PROCEDURES AND PRACTICES
The Utility has two basic rate classifications that include commercial and residential. Within the
commercial classification there are different billings done at different times of the month. There is a
breakdown known as the Grays Creek accounts which are all outside the city limits and served by PWSD
No. I of Cole County. The grouping known as WD1 is given to all inside city limits customers that are
served by PWSD No. 1 of Cole County. Additionally, there are six commercial sewer accounts in Grays
Creek. These six accounts are invoiced at the same time that customers in Grays Creek and WD 1 are
invoiced. However, their sewer bill varies from month to month and it is based on their actual water
usage. This information is provided by PWSD No. 1 of Cole County on a monthly basis.
The Utility has a group of sewer accounts that are invoiced on the fifteenth of the month. These include
Best Western, Scholastic, Modine, and Modem Litho and their water usage is provided by the water
districts. Additionally, specific written contracts specify the sewer billing each month and include
Command Web, East Miller Trailer Park, and Central Dairy. The following sewer customers submit a
monthly report that details the amounts used to calculate the monthly sewer bill and include the City of
Jefferson City Wastewater Utility V-1 Burns & McDonnell
Bartlett & West
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Part V Billing Procedures and Practices
Holts Summit, Robo Car Wash, ABB and Unilever. Lincoln University's sewer bill is based on the
amount of water (provided by MA WC) used the previous year and their sewer bill is constant throughout
the year. The Department of Corrections submits a report once a year that determines the amount used to
calculate a monthly sewer bill and is constant for the year. Similarly, the Capitol Complex submits a
water usage report every trimester that details the water usage to invoice for every month of the reported
time frame. The Utility bills thirty-two sewer customers in Cedar City that also receive water from
Jefferson City.
All remaining sewer billings are done in conjunction with the water billings provided by PWSD No. 2 of
Cole County, PWSD No. 3 of Cole County, and the MA WC. PWSD No. 2 of Cole County and PWSD
No.3 of Cole County provide the Utility with the water usage for the months of January, February and
March of each year (if the customer has an average water usage of more than 15 ccf, then the Utility
requests the yearly average water usage for the household and calculates the new sewer bill based on the
provided information). The Utility then calculates the monthly sewer bill for each customer and
communicates this information to the water utilities so that they can invoice their respective customers.
The MA WC obtains an updated sewer rate table that enables them to calculate the monthly sewer bill for
their own customers. If a customer has not established a water usage history, the Utility provides a table
based upon the number of persons in the household to determine the water usage for the sewer billing.
BILLING PROCEDURES AND PRACTICES RECOMMENDATIONS
On-site interviews were conducted with each water utility that provides some form of water usage data or
is contracted for billing and collection services. As an outcome from these interviews, there are some
considerations that are being recommended to the Utility for further evaluation.
I. The existing written contracts with the water utilities that provide billing and collection services
for the Utility have different start dates. The contract with PWSD No. 2 of Cole County started in
I988. The contract with PWSD No. 3 of Cole County started in I 995. The contract with the
MA WC started in 2000. The Utility does not have a written contract with PWSD No. I of Cole
County, PWSD No. 4 of Cole County, or PWSD No. I of Callaway County who provide water
usage data to the Utility who in tum does the billing and collection. It is recommended that the
Utility update the written Wastewater Billing Agreement for standardization and use the current
agreement with the MA WC as a model agreement. It should be noted that the MA WC is a
private utility and is subject to the Public Service Commission's rules and regulatbns. The other
water utilities are political subdivisions and are governed by a different set of statutes.
The Utility is at a distinct disadvantage for collecting delinquent sewer bills since they do not
Jefferson City Wastewater Utility V-2 Burns & McDonnell
Bartlett & West
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Part V
2.
3.
4.
Billing Procedures and Practices
have any control over the water system. The fees received for the water and sewer bill are first
applied to the water bill and then to the sewer bill. If the total amount remitted does not cover the
sewer bill in total, it becomes delinquent. It is not practical for the Utility to physically close off
the sewer service line from the house to the sewer main, nor is pursuing the delinquent sewer bill
by a legal means. It may not be cost effective due to the administrative costs exceeding the
amount of the delinquent sewer bill.
Evaluate the need for a policy clarification for an adjustment to the sewer bill when the customer
has had a water leak on their side of the meter and the water did not go into the sewer system.
The Utility staff confers with the water utilities when this situation occurs and comes to a mutual
agreement whether to grant the request or not.
For the customers that receive their sewer bill in conjunction with the water bill, it is not
uncommon for the customer to think that the water district is the sewer utility. The Utility may
want to consider having the water utility identify the sewer bill entry on the monthly statement as
"Jefferson City Sewer" rather than just "Sewer".
As the city's wastewater utility continues to grow, the amount of time for account servicing may
continue to increase and may require additional Utility staff to adequately provide customer
servtce.
Jefferson City Wastewater Utility V-3 Burns & McDonnell
Bartlett & West
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APPENDIX A
ANALYSIS OF ADDITIONAL DEPARTMENT FINANCING
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Appendix A
APPENDIX A
ANALYSIS OF ADDITIONAL DEPARTMENT FINANCING
Other Projected Wastewater Utility
Cash Flow Analysis Options
Bums & McDonnell was asked by the Utility to complete an analysis of the ability to issue additional
debt beyond that proposed in the projected wastewater utility cash flow analysis. We prepared three
options for evaluation by the Utility. These options demonstrate the Utility's ability to increase
borrowing ability as the rate increases are implemented. The three alternative options are shown as
Tables A-1, A-2, and A-3.
Table A-I demonstrates that there is approximately $1.3 million ofborrowing that could be done in 2007
after borrowing in the previous two years. Table A-2 shows how the Utility can take on more debt
service in 2008 by now being capable of an additional $3 million if no additional borrowing is done in
2007. Table A-3 again shows how allowing the rate increases to take effect allows for additional debt
service. If no additional borrowing is done in 2007 and 2008, the Utility could increase debt by
approximately $5 million in 2009. In all three scenarios, the cash flow analysis projects positive
operating balances. With additional debt, however, the coverage ratio begins to drop after 20 I 0. At that
point, the Utility could consider additional rate increases to service the level of debt incurred and maintain
positive operating balances further into the future.
Jefferson City Wastewater Utility A-1 Burns & McDonnell
Bartlett & West
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No.
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
35
36
'SI
38
39
40
41
42
43
44
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Appendix A
TableA-1
Other Projected Wastewater Utility
Cash Flow Analysis Options
PROJECTED WASTEWATER UTIUTY CASH FLOW ANALYSIS • OPnoN 1
Jefferson City Wastewater Wily
System Operations
Revenue from Wastewater Charges • ExiSting Rates
Proposed Revenue Increases:
Veal' Month Month
FY 2005 8 June
FY 2006 8 June
FY 2007 8 June
FY 2008 8 June
FY 2009 8 June
FY 2010 8 June
FY 2011 8 June
FY 2012 8 June
FY 2013 8 June
FY 2014 8 June
Increase [1 I
4.00%
4.00%
4.00%
4.00%
4.00%
4.00%
0.00%
0.00%
0.00%
0.00%
Total Proposed Additional Revenues
loCal WastewaiC!f Charve Revenues
OCher Operating Revenues
lnleresl lnoome (21
Total Revenues
Operalion and Maintenance Expenses
Outstanding Debl Service
Proposed Oebt Service:
~ ~
FY 2005 7
FY 2006[31 1
FY 2007
Amount
$4.700:000
$10,100.000
$1.300.000
FY2008 so
so so
so
so so
FY 2009
FY 2010
FY2011
FY 2012
FY 2013
FY2014 1 so
Tolal Proposed Debl Service
Nel Proposed Oebl SeNice
T Dial Nel Oebl Service
Recumng Capclallmprovements
T olal Operating Expenses
Annual Operating Balance
l!eg•nn.ng Balance • Wastewaler Fund [4 I
Proceeds from Previous Oebllssuance
Ca!!daJ Improvement Financing
Bond Of Note Issue
Issuance Costs
Interest Earnings • Capital Funds
Capi1allmprovemen1S
Endng Balance • WaslewaiC!f Fund
Minimum Wastewater Fund Balance larval
Debl SMa Coveraoe
lnteresl
2.ii7%
2.00%
2.00%
2.00%
2.00%
2.00%
2.00%
5.00%
5.00%
5.00%
Nel Operahng Revenues Available for Oebl Service
.AMual Oebl Service
Oebl Service Coverage Based on Net Operating Revenues
[11 4% Increase already approved 11\mugtl FY 2010
Term
"'il
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20
20
20
35
35
35
35
35
(1)
Budget
FY2005
5.680.400
94,700
94,700
5,775,100
105,000
927,700
6.807,800
3,446,390
2,417,100
143.700
143.7oo
143.700
2.560.800
327.400
6,334,590
473,210
4,921.700
0
4,700,000
(117,500)
5,400
4,800,180
5,182.630
0
3,361,410
2.560.600
1.31
(2)
FY2006
5.717,100
228.700
99,100
327,800
6,044,900
105,000
966.500
7.116.406
3,584,250
2,011,800
287.400
617,700
905.100
905.100
2.916,900
446,000
6,947.150
169.250
5.182.630
0
5,100.000
(252.500)
233,900
7.763.100
2.670,180
0
3.532.150
2.916,900
1.21
(3)
FY 2007
5,754.300
230,200
239,400
103,700
573,300
6,327,600
105,000
802.800
7235.400
3,727,620
2,013,700
287,400
617,700
79.500
984.600
984,600
2,998.300
506,900
7,232.820
2.580
2.670,180
0
1,300,000
(32.500)
222,400
2.700.000
1.462.660
0
3.507,780
2.998.300
1.17
(4)
FY 2008
5,791,900
231,700
240,900
250,600
108,600
831,800
6,623,700
105,000
745,200
7.473.906
3,876,720
2,013,500
287,400
617,700
79,500
0
984.666
984,600
2.998.100
434,900
7,309,720
164,180
1,462.660
0
0
0
210.500
1.837.340
0
3,597,180
2.998,100
1.20
[21 lnt8f8Stlncome calculated as resetVe fund interest, plus 2.0 percent of Operabng Funds !Of FY2005, then Increasing by 0.5 percenl
fOf FY2006-FY2009. then staying conslant at4.0 percent for FY2010.FY2014.
[31 Includes S5 million of refinancing fOf 2002 Revenue Bonds
141 Beginning Balance includes S 1,410.000 of funds lhat will be receiVed mid-year. Exira calculated inleresl is removed frOfn inlerest income.
Jefferson City Wastewater Utility A-2
(5)
FY 2009
5,829.800
233,200
242,500
252,200
262.300
113,700
1,103,900
6,933,700
105,000
737.500
7.n6200
4,031,790
2,011,000
287.400
617,700
79.500
0
984.600
984.600
2.995.600
416,400
7,443.790
332.410
1,837.340
0
0
0
204,000
2.373,750
0
3.744.410
2.995.600
1.25
(6)
FY2010
5,868,100
234,700
244,100
253,900
264,000
114,400
116,300
1,227,400
7,095,500
105,000
727,500
7.928.000
4,193,060
2,013,700
287,400
617,700
79,500
0
984.600
984,600
2.998.300
460,400
7,651.760
276,240
2.373.750
0
0
0
199,400
2.849.390
0
3,734,940
2.998.300
125
(7)
FY2011
5.906.700
236,300
245,700
255.500
265,800
276,400
287.500
0
1,567,200
7,473,900
105.000
744,000
11.322.906
4.360,780
2,013,600
287,400
617,700
79,500
0
0
0
0
984.600
984,600
2.998266
321,000
7,679,980
642.920
2.849.390
0
0
0
199,100
3,691,410
0
3,962,120
2.998.200
1.32
(8)
FY2012
5,945,800
237,800
247,300
257,200
267,500
115,900
282.900
0
1,408,600
7,354,400
105,000
777.700
8.237.100
4,535,210
2.009,400
287,400
617,700
79,500
0
984,660
984.600
2.994.006
560.000
8,089,210
147,890
3,691,410
0
0
0
196,000
4,035.300
0
3,701.890
2,994,000
1.24
(9)
FY 2013
5.985.300
239,400
249,000
258,900
269.300
116,700
284,700
0
1,418,000
7.403.300
105.000
791.400
80299.706
4,716,620
2,012,900
287.400
617,700
79.500
0
0
0
0
0
0
984.600
984,600
2.997.500
393,000
8,107,120
192.580
4.035.300
0
0
0
185.500
4,413,380
0
3.583,080
2.997.500
1.20
Burns & McDonnell
Bartlett & West
(10)
FY 2014
6.025.100
241,000
250.600
260.700
271.100
281.900
293.200
0
0
0
0
1,598,500
7,623,600
105,000
806.500
11335.100
4,905,290
2,012,800
287,400
617,700
79,500
0
984.600
984.600
2.997.400
418,000
8.320.690
214.410
4.413.380
0
0
0
175,100
4,802.890
0
3.629.810
2.997.400
121
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Appendix A
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TablctA-2
Other Projected Wastewater Utility
Cash Flow Analysis Options
PROJECTED WASTEWATER UTILITY CASH FLOW ANALYSIS ·OPTION 2
Jefterson City Wastowa18t Utillly
(1) (2) (3) (4) (5) (6) (7) (8) (9)
No. System Operations
Budget
FY2005 FY 2006 FY 2007 FY 2008 FY 2009 FY2010 FY2011 FY 2012 FY2013
10
11
12
13
14
15
16
17
18
19
2l
21
22
23
'" 25
26
'0
28
29
ll
31
32
40
41
42
43
44
45
Revenue lrom Waslewater Charges • Existing Rales
Proposed Revenue Increases:
Year Month Month ri2ii05 --8 Juiiii
FY 2006 8 June
FY 2007 8 June
FY 2008 8 June
FY 2009 8 June
FY 2010 8 June
FY 2011 8 June
FY 2012 8 June
FY 2013 8 June
FY 2014 8 June
tnaease!1!
4.00%
4.00%
4.00%
4.00%
4.00%
4.00%
0.00%
0.00%
0.00%
0.00%
T ota1 Proposed Additional Revenues
Total Wastewater Chalge Revenues
OChet Operalmg Revenues
lnleresllncome (2)
loCal Revenues
Opetalion and Maintenance Expenses
Ou1standlf1g Debl SeMC8
Proposed Debt Service:
:!:!!! t:!l!!!!n
FY 2005 7
FY 2006131
FY 2007
FY2008
FY2009
FY2010
FY2011
FY 2012
FY 2013
Amounl
54.700:000
$10,100,000
so
$3,000,000
so so
so so so
FY 2014 1 so
Total Proposed Debt Service
Net Proposed Debt Service
Total Net Debl Service
Recurring CapitallmprovemeniS
Total Operahng Expenses
Annual Operating Balance
Begonning Balance • Wastewater Fund (4)
Proceods from Previous Oebl Issuance
Bond Of Nole Issue
Issuance Cosls
lnlerest Earn~ngs • Captal Funds
Capolallmprovements
Endng Balance ·Wastewater Fund
Minimum Wastewaler Fund Balance Target
lnleresl
2.00%
2.00%
2.00%
2.00%
2.00%
2.00%
2.00%
5.00%
5.00%
5.00%
NoC Operating Revenues Available !Of Debt Service
Annual Debt Service
Debt ServiCe Coverage Based on Net Operating Revenues
(1 J 4% Increase already approved through FY 2010
Teem ar
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35
35
35
35
35
5,680,400
94,700
94.700
5.n5.100
105.000
927700
6.807.800
3.446.390
2.417,100
143,700
143.700
143,700
2.560.800
327,400
6,334,590
473.210
4,921.700
0
4,700,000
(117,500)
5.400
4,800,180
5,182,630
0
3,361,410
2.560.800
1.31
5,717,100
228,700
99,100
327.600
6,044,900
105,000
966500
7.116,400
3.584.250
2,011,800
287,400
617.700
905.100
905,100
2,916,900
446.000
6,947,150
169.250
5,182,630
0
5,100,000
(252.500)
233.900
7.763.100
2,670,180
0
3,532,150
2.916,900
1.21
5,754,300
230,200
239,400
103,700
573.3()()
6,327,800
105,000
802600
7,235,400
3.727.620
2.013.700
287.400
617,700
0
905.1()()
905,100
2,918,800
506.900
7,153,320
82,080
2.670,180
0
0
0
220,600
2.700.000
272.860
0
3,507,760
2,918,800
1.20
5,791,900
231,700
240,900
250,600
108,600
631.666
6,823.700
105,000
703 800
7,432,300
3,878.720
2,013,500
287,400
617,700
0
183.500
1.086.606
1,088,600
3,102,100
434.900
7,413,720
18,580
272.860
0
3,000,000
(75.000)
215,300
3,431,740
0
3,555,580
3,102,100
1.15
[2) Interest Income cetculaled as reserve lund interest, plus 2.0 percent ol Operating Funds lor FY2005, then incroasing by 0.5 percent
for FY2006-FY2009, then staying constant at4.0 percent for FY2010-FY2014.
[31 Includes SS million ol refinancing for 2002 Revenue Bonds
[4J Beginning Balance includes $1,410,000 ol funds that will be received mid-year. Extra calculated Interest is removed from interest income.
Jefferson City Wastewater Utility A-3
5.829.800
233.200
242,500
252.200
262,300
113.700
1,103.900
6,933,700
105.000
801.300
7,840,000
4,031.790
2,011,000
287,400
617.700
0
183,500
0
1,066.600
1,088,600
3,099,600
416.400
7,547.790
292.210
3.431.740
0
0
0
205,800
3.929.750
0
3.808.210
3,099,600
1.23
5.868.100
234,700
244,100
253,900
264,000
114,400
116,300
10227.406
7,095,500
105.000
789.700
7,990.200
4,193,060
2,013,700
287,400
617.700
0
183.500
0
0
1,066.600
1,088,600
3,102,300
460,400
7,755,760
234,440
3,929,750
0
0
0
198.200
4,362,390
0
3,797.140
3,102,300
122
5,906,700
238,300
245,700
255,500
265,800
278,400
287,500
0
1,567:206
7,473,900
105,000
804,500
8,383,400
4,360,780
2,013,800
287,400
617,700
0
183,500
0
0
0
1.088.666
1,088,600
3,102,200
321.000
7,783,980
599,420
4,362,390
0
0
0
194,700
5,158,510
0
4,022,620
3,102.200
1.30
5,945,800
237,800
247,300
257,200
287,500
115,900
282,900
0
0
1,468.600
7,354,400
105,000
836300
8,295.700
4,535,210
2,009,400
287,400
617,700
0
183.500
0
0
0
0
1.086.600
1,088,600
3,098,000
560,000
8,193,210
102,490
5.156,510
0
0
0
188,300
5,447,300
0
3,780,490
3,098,000
1.21
5,985.300
239,400
249,000
258,900
269,300
116.700
284,700
0
0
0
1.418,000
7.403.300
105,000
847900
8.356.200
4.716,620
2,012,900
287.400
617,700
0
183,500
0
0
0
0
0
1.088.600
1,088,600
3,101,500
393,000
8.211,120
145,080
5,447,300
0
0
0
174,400
5.766.780
0
3,639.580
3,101.500
1.17
Burns & McDonnell
Bartlett & West
(10)
FY2014
6,025.100
241,000
250,600
260,700
271,100
281,900
293.200
0
0
0
0
105911.500
7,623,600
105,000
860,700
8.589.300
4,905.290
2,012.800
287.400
617,700
0
183.500
0
0
1.088.600
1,088,600
3,101,400
418.000
8,424,690
164,610
5.766,780
0
0
0
180,400
6.091,790
0
3.684.010
3,101,400
1.19
r
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r
r
r
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Appendix A
line
Other Projected Wastewater Utility
Cash Flow Analysis Options
TabloA-3
PROJECTED WASTEWATER UTILITY CASH FLOW ANALYSIS. OPTION 3
Jefferson Cily Wastewater Utility
(2) (3) (4) (5) (6) (7) (8) (9)
No. System Operahons
(1)
Budget
FY2005 FY2006 FY 2007 FY 2008 FY 2009 FY2010 FY2011 FY2012 FY2013
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
3)
21
22
Zl
<IS
:5
:!;
27
28
29
3)
31
32
l)
l)
'J1
:II
l!
41
42
43
44
45
Revenue from Wastewater Chafges -Existing Rates
~'reposed Revenue tnc:mases:
YJB Month Month
FY2005 --8 Tuiie
FY 2006 8 June
FY 2007 8 June
FY 2008 8 June
FY 2009 8 June
FY 2010 8 June
FY 2011 8 June
FY 2012 8 June
FY 2013 8 June
FY 2014 8 June
lncteaSe 111
4.00%
4.00%
4.00%
4.00%
4.00%
4.00%
0.00%
0.00%
0.00%
0.00%
Tolal Proposed Addi~onal Revenues
Total Wastewater Chatge Revenues
OCher Operabng Revenues
Interest lnoome (2)
Total Revenues
Operation and Maintenance Expenses
Outstanding Oebt SeMCe
Proposed Debt SeMCe:
YJB Month
FY2005 -7-
FY 2006!31
FY 2007
FY 2008
FY 2009
FY 2010
FY 2011
FY2012
FY2013
Amount
$4,700:000
$10,100,000
so so
$5,000,000 so
so so
so
FY 2014 1 so
Total Proposed Debt Service
Net Prt1Jl0$8d Debt SlliVice
Total Net Debt SeMCe
Recurring Cepolallmprovements
Total Operating Expenses
AMual Opera ling Balance
Beginning Balance -Wastewater Fund (4)
Proceec:ts from Previous Oebt Issuance
Cepllallmprovement Financing
Bond or Note Issue
Issuance Costs
lnlerest Earnings -Capo1al Funds
Cepdallmprovements
Ending Balance -Wastewatllf Fund
Minimum Wastewater Fund Balance Target
Debt SeMce Coverage
Interest
'"2.00%
2.00%
2.00%
2.00%
2.00%
2.00%
2.00%
5.00%
5.00%
5.00%
Net Operating Revenues Available for Debt SeMCe
Annual Debt Servioe
Debt Servioe Coverage Based on Net Operating Revenues
(1) 4% Increase already approved lhtough FY 2010
T111111 ar
a>
a>
a>
a>
l)
l)
l)
l)
l)
5,680,400
94,700
94,760
5.n5,100
105,000
927 700
6,807,800
3,448,390
2,417,100
143,700
143.760
143,700
2.580.800
327.400
6,334,590
473,210
4,921,700
0
4,700,000
(117,500)
5.400
4,800,180
5,182,630
0
3,381,410
2.580.800
1.31
5.717,100
228,700
99,100
327.600
6,044,900
105,000
966500
7,116,400
3,584,250
2,011,800
287,400
617,700
905.100
905,100
2.916,900
446,000
6,947,150
169,250
5,182,630
0
5,100,000
(252.500)
233,900
7.763.100
2.670,180
0
3,532.150
2,916,900
1.21
5,754,300
230,200
239,400
103,700
573.300
6,327,600
105,000
802 800
7,235,400
3,727,620
2,013,700
287,400
617,700
0
905.160
905,100
2,918,800
506.900
7,153,320
82,080
2.670.180
0
0
0
220,600
2,700,000
272,860
0
3,507,780
2.918,800
1.20
5,791,900
231,700
240,900
250,600
108,600
831.866
6,623,700
105,000
703 600
7,432,300
3,878,720
2,013,500
287,400
617,700
0
0
965.166
905,100
2.918,600
434,900
7,230,220
202,080
272.860
0
0
0
211,100
686,040
0
3,555,580
2.918,600
1.22
(2) lnleresllncomo calculated as reserve fund interest. plus 2.0 peroenl of Operating Funds lor FY2005, then oncreaSing by 0.5 perccnl
for FY2006-FY2009, then staying amstanl at 4.0 perconllor FY2010-FY2014.
(3) Includes SS million of refinancing lor 2002 Revenue Bonds
(4) Beginning Balanoe includes $1,410,000 o! funds that w~l be received mid-year. Extra calculated interest is removed from interest income.
Jefferson City Wastewater Utility A-4
5,829,800
233.200
242,500
252,200
262,300
113,700
1,103.900
6,933.700
105,000
691400
7.730.100
4,031,790
2,011,000
287,400
617,700
0
0
305.800
1,216.900
1.210.900
3,221,900
416,400
7,670,090
60,010
686,040
0
5,000,000
(125,000)
214,000
5,835,050
0
3,698,310
3.221.900
1.15
5,868,100
234,700
244,100
253,900
264,000
114,400
116,300
1227.400
7,095,500
105,000
865,900
8,066,400
4,193,060
2,013.700
287,400
617.700
0
0
305,800
0
(216,900
1.210,900
3,224,600
480,400
7,878,060
188,340
5,835,050
0
0
0
203,000
6,226,390
0
3,873,340
3,224,600
1.20
5,906,700
236,300
245,700
255,500
265,800
276,400
287,500
0
1.567.206
7,473.900
105.000
879100
8,458,000
4,380,780
2,013,600
287,400
617,700
0
0
305,800
0
0
1.216.960
1,210.900
3,224,500
321.000
7,906,280
551,720
6,226,390
0
0
0
198,100
6,974,210
0
4,097,220
3,224,500
1.27
5,945,800
237,800
247,300
257,200
267,500
115,900
282,900
0
0
1,408,660
7,354,400
105,000
909000
8,388,400
4,535,210
2,009,400
287,400
617,700
0
0
305,800
0
0
0
1,216.906
1,210,900
3,220,300
560,000
8,315,510
52,890
6,974,210
0
0
0
186,000
7,213,100
0
3,833,190
3,220.300
1.19
5,985,300
239,400
249,000
258,900
269.300
116,700
284,700
0
0
0
1,418,006
7,403,300
105,000
918.500
8,426,800
4,716,620
2,012,900
287,400
617.700
0
0
305,800
0
0
0
0
1;210,900
1.210,900
3,223,800
393.000
8,333,420
93.31!0
7,213,100
0
0
0
168,300
7,474,780
0
3,710,180
3.223.800
1.15
Burns & McDonnell
Bartlett & West
(10)
FY 2014
6,025.100
241,000
250,600
260.700
271,100
281,900
293.200
0
0
0
0
1,598,500
7,623,600
105,000
929,000
8,657,600
4,905.290
2,012,800
287.400
617.700
0
0
305.800
0
0
0
0
0
1216.900
1.210,900
3.223,700
418,000
8,546,990
110,610
7,474,780
0
0
0
150,400
7,735,790
0
3,752,310
3,223,700
1.16