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Proposed User Rate AdjustmentsMarch 11, 2008

Kathleen GammellDirector of Public Works

Operations Evaluation

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A Nationwide Reality - Aging/Failing Water and Sewer Infrastructure

“.... utilities are grappling with ….. a convergence of several factors that translate to higher costs for supplying drinking water service:

– Deteriorating infrastructure that needs to be replaced

– Both growing and declining service populations

– Increasing operating costs

– More complex regulatory requirements

– Undervaluation of water supply and service.”(American Water Works Association, E-Main Stream, 9/12/06, Mary A. Parmelee, Editor)

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A Nationwide Reality - Aging/Failing Water and Sewer Infrastructure

“Communities across North America are at a turning point in financing the replacement of aging water and wastewater infrastructure…”

(American Water Works Association, 3/26/07)

“In the latest State of the Industry report … water professionals talked about not just aging infrastructure, but failing infrastructure.”

(American Water Works Association, “E-Main Stream,”Terry Rolan, 9/12/06

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City Challenges

System– Wells have operated far beyond life expectancy and are showing

signs of failing quality

– Aging water and sewer pipes are breaking frequently

– Sewer pipes are experiencing inflow & infiltration (rain water seeping into the sewer pipe), which increases UOSA costs

– Routine Operation and Maintenance Costs continue to rise (UOSA costs, salaries, fuel, materials, equipment, outsourcing)

New and More Complex Regulations– Higher wholesale water rates for new treatment processes

– Increased UOSA debt for new treatment processes

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City Challenges (Con’t)

Capacity Needs– Commercial developments

– Well replacement

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Engineering Evaluation

Whitman Requardt Engineers completed a water and sewer system evaluation in Summer 2007

– Identified areas of near and long term improvements and associated costs for water and sewer system.

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Water System Capital Needs

$27,695,000 over next ten years• Water Connection Construction

- Ensure redundancy from wholesale suppliers

• Water Meter Replacement, 2900 remaining

• Well Chlorination – Backup Water Supply

• SCADA – Monitoring / Control of System

• Study for Unaccounted For Water

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Water System Capital Needs (Con’t)

• Water Capacity- Well Replacement

- Service new commercial developments

• Water Mains / Hydrants - 13,640 linear feet are urgent

- 43,295 linear feet are badly needed

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Sewer System Capital Needs

$3,640,000 over next ten years• Sanitary sewer relining

- 16,400 linear feet are urgent- 14,300 linear feet badly needed

• Rehabilitate 50 manholes including manhole inserts to contain odor

• Install pump station Grinder to prevent pump station backups

• I&I Study• Replace 700 partial service laterals

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Annual Operations and Maintenance

• Water and sewer pipe repair

• Hydrant repair• Capital projects

management• Construction

inspections

Rising costs for personnel, equipment, materials, fuel, outsourcing

• Water quality sampling• Meter reading• Meter replacement• Water and sewer system

flushing• Valve testing and repair

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Summary

Regulations are becoming more stringent, resulting in higher consumption and capacity costs.

The water and sewer system is old and needs attention now.

Operation and Maintenance costs are rising.

The current rates have been rendered inadequate for needed maintenance, repair and replacement.

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So How Does This Impact Me? 

Ensures delivery of water and collection of wastewater in the future

Minimizes outages due to pipeline breaks

Need User rate adjustment to cover costs

Proposed areas of adjustment:– Base (minimum) fee is zero

– Fees for usage will go up in line with surrounding jurisdictions

– Water / Sewer Customers using 4,000 or less will have a lower monthly bill

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Proposed User Rate AdjustmentsMarch 11, 2008

Karen SpenceBudget Manager

Finance Evaluation

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Customer Base– Average Total Number of Residential Accounts - 3,690– Average Total Number of Commercial Accounts - 295

Average Monthly Consumption:– Residential Accounts - 5,600 gallons/month– Commercial Accounts - 17,900 gallons/month

Average Monthly Bill– Residential Accounts - $57.40– Commercial Accounts - $194.11

Last assessment and adjustment to water and sewer rates

– April 18, 1995

Current Status

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$3.8

$4.9 $3.8

$5.3 $4.0

$7.2

$4.6 $4.6

$0

$2

$4

$6

$8

$10

(Mill

ions)

FY'06 FY'07 FY'08 FY'09

Revenue Expenditures

Current Water / Sewer FundRevenue vs. Expenditures

Projected(Includes $3.5 M for Unspent

Capacity Purchase)

With Tiered- Rate Adjustment

Actual Actual

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Analysis Highlights

10 year projection of revenue, operational & debt needs keeping fund self-sufficient

Part 2 of a 2-part solution– Tap fees reserved for water & sewer capital fund– Water & Sewer consumption fee adjustment

Implements a water conservation or tiered approach

A four-tiered approach is used for residential & commercial accounts

Recommend rates be re-evaluated every other year

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Manassas Park Water and Sewer Tiered Rates

Gallons

Used

Current Charge

$35 base,

$4.00/1,000

Utility Bill

Adjust Rates to

$0 base, Tiered Rates

Utility BillIncrease / (Decrease) since 4/95

1,000 $39.00 $11.75 (69.87%)

2,000 $43.00 $23.50 (45.35%)

3,000 $47.00 $35.25 (25.00%)

4,000 $51.00 $47.00 (7.84%)

5,000 $55.00 $58.75 6.82%

6,000 $59.00 $70.50 19.49%

7,000 $63.00 $82.50 30.95%

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Manassas Park Water and Sewer Tiered Rates

Gallons

Used

Current Charge

$35 base,

$4.00/1,000

Utility Bill

Adjust Rates to

$0 base, Tiered Rates

Utility BillIncrease / (Decrease) since 4/95

8,000 $67.00 $94.50 41.04%

9,000 $71.00 $106.50 50.00%

10,000 $75.00 $118.50 58.00%

11,000 $79.00 $131.50 66.46%

12,000 $83.00 $144.50 74.10%

13,000 $87.00 $157.50 81.03%

14,000 $91.00 $170.50 87.36%

15,000 $95.00 $184.75 94.47%

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Residential Tiers Commercial Tiers

Tier 1: 63% of accounts Tier 1: 53% of accounts

0 – 6,000 gals 0 – 10,000 galsTier 2: 27% of accounts Tier 2: 13% of accounts

6,001 – 10,000 gals 10,001 – 20,000 gals

plus $0.25 / 1000 gal plus $0.25 / 1000 gal

Tier 3: 7% of accounts Tier 3: 13% of accounts

10,001 – 14,000 gals 20,001 – 40,000 gals

plus $1.00 / 1000 gal plus $1.00 / 1000 gal

Tier 4: 3% of accounts Tier 4: 21% of accounts

14,001 and above 40,001 and above

plus $1.25 / 1000 gal plus $1.25 / 1000 gal

Water and Sewer Tiered Rates

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Annual Residential Rate Adjustments10 year Projection

Fiscal

Year

Manassas Park

Tiered Rate – Zero Base

Base Rate $/1,000 gals

2009 $0 $11.75

2011 $0 $11.85

2013 $0 $12.00

2015 $0 $12.30

2017 $0 $12.60

2019 $0 $12.80

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Annual Commercial Rate Adjustments10 year Projection

Fiscal

Year

Manassas Park

Tiered Rate – Zero Base

Base Rate $/1,000 gals

2009 0.00 + EU* $12.25

2011 0.00 + EU $12.35

2013 0.00 + EU $12.50

2015 0.00 + EU $12.80

2017 0.00 + EU $13.10

2019 0.00 + EU $13.30

*EU – “equivalent units” – flat monthly rate charged to commercial customers based on industry standards and AWWA.

Commercial average bill currently - $194.11 New average commercial bill – tiered rate $0 base - $221.25+EU increase 14%

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Monthly Utility Bill Comparison

Average 5,600 gal usage

Current Residential Bill

Base Fee $35.00

Consumption 22.40

Total $57.40

New Residential Bill – tiered $0 base

Base Fee $0.00

Consumption 65.80

Total $65.80

Increase – $8.40 or 15%

Low 1,500 gal usage

Current Residential Bill

Base Fee $19.00

Consumption 6.00

Total $25.00

New Residential Bill – tiered $0 base

Base Fee $0.00

Consumption 11.75

Total $11.75

Decrease – ($13.25) or (53%)

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Proposed User Rate Adjustments

QUESTIONS?