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HomeMy Public PortalAboutBV Wastewater and Stormwater Rate Proposal PresentationWastewater and Stormwater Rate Proposal Recap March 31, 2023 Recap of Wastewater Proposal Assumptions: •Historical customer growth was stagnant, small growth going forward •Unmetered customer usage is projected to decrease 13% in FY2024 •No change in I/I allocation (still 40% customer, 60% contributed flow) •4-year CIRP totals $1.65B, with $565.8M (42%) related to the consent decree •MSD will seek voter support of additional bonding of $750M. Without additional bond authorization, the CIRP will be 100% PAYGO beginning in 2026, requiring higher rates in all years of the rate proposal (FY 2025 through FY 2028) •CIRP funding made up of 40% PAYGO / 60% Debt (Revenue Bonds, SRF Loans, and WIFIA) 2 Wastewater Customers •Customer Accounts –FY 2019 –FY 2022 Actual is very close to the projections in the 2019 Rate Proposal; Customer growth from FY 2019 –FY 2022 averages 0.15%; project customer growth reflects 0.26% starting in FY 2024 (Metered Non-Res declines slightly each year consistent with historical) •Metered Volumes –FY 2019 –FY 2022 Actual is lower than projected. FY 2023 and FY 2024 projections are 10% lower than previous proposal. •FY 2023 budget projects 1.4% decrease, continued annual decreases of 1.5% going forward •Unmetered Volume–FY 2023 budget projects 13% decrease, minimal annual increases going forward •13.8% decrease in gallons per day for Rooms and Water Closets •11.5% decrease in gallons per day for Baths and Separate Shower •Exhibit MSD 65 –VertexOne Study 3 Wastewater •Significant increases in proposed Extra Strength Surcharges •TSS –from $329.43/ton to $675.39 (more than 2x) •BOD –from $884.78/ton to $1,043.05 (17% increase) •COD –from $442.4/ton to $521.53 (18% increase) Report Explanation: •Increased capital costs: Fluidized bed incinerator (FBI) projects •Decreased units of service from FY 2018 to FY 2022 •BOD/COD decreased by 15% •TSS decreased by 13% 4 Wastewater Operating Expenses •FY 2024 forecast is essentially same as 2019 proposal ($211.7M) •General Insurance increased from ~$6.5M/year to ~$11M/year •Detailed support for annual cost escalation in the Appendix Financial Plan •Operating reserve decreases from ~150 days of OM in FY 2023 to 60 days by FY 2027 •Projected FY 2022 reflected annual deficit of $18.2M, Actual FY 2022 reflects surplus of $15.9M •Projected annual deficits lower the Operating Reserve fund balance to 60 days 5 Wastewater Proposed Rates •Adjustment to COS indicated rates in 1 year (FY 2025) with system revenue increases applied in each year after •COS Adjustments: •The combined Base Charge increase and System Availability decrease results in an overall increase of 2.9% in total Base Charge in FY 2024 •Compliance Charges increases range from 54% to 106% •Metered Volume Charge increases 11.4% •Unmetered Volume Charges decreases range from 1.5% to 4.6% •Extra Strength Surcharges •SS increases 105% •BOD increases 17.9% •COD increases 17.9% 6 Wastewater Preliminary Areas for Review •Unmetered Volume •O&M Escalation Factors •CIRP Costs •Proposed Compliance Charges and Extra Strength Surcharges 7 Recap of Stormwater Proposal Assumptions: •Current $0.02 stormwater property tax funds current regulatory obligations will remain in place •Revenue approximately $6M/year •Current $0.10 stormwater property tax funds stormwater related O&M expenditures will remain in place •Revenue approximately $31M/year •Implementation of new fee for Stormwater Capital Funding: •Two funding mechanisms: •$0.0745 property tax for Residential Customers •$1.05 per 1,000 square feet of impervious area for Non-Residential Customers •Proposed ballot election in April 2024 •Impervious area charge collection starting in January 2025 •OMCI property tax for specific service areas will remain in place if Stormwater Capital Funding is not approved •Revenue approximately $10M/year from 7 districts 8 Stormwater Operating Expenses •Costs increase from $25M in FY 2024 to $33.6M in FY 2028 •Detailed support for annual cost escalation in the Appendix Financial Plan •Revenues and expenses are projected for the 3 stormwater funds: •OMCI Fund (specific Districts) •Regulatory Fund ($0.02 property tax) •Districtwide Stormwater Fund ($0.10 property tax) •Target 240 days of O&M however, rate proposal does not show actual projected days cash •Proposal doesn’t show fund balances for each stormwater fund 9 Stormwater Proposed Rates •Residential tax rate based on willingness to pay •The determination of revenue from non-residential customers is based on impervious area 10 Stormwater Preliminary Areas for Review •Financial metrics proof •O&M Escalation Factors •CIRP Costs •Development of Impervious Area 11 Discussion