investment in west linn’s water system conservation pricing options may 17, 2010
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Investment in West Linn’s Water System
Conservation Pricing Options
May 17, 2010
Water System Investment 2
Tonight’s Presentation
“Liquid Assets”
Project Costs
Reminder: Current West Linn Water Rates
Conservation Pricing
– One Tier
– Three Tiers
Next Steps
– Utility Advisory Board Role
– Community Involvement
Tentative Decision on Conservation Pricing Option
Water System Investment 3
“Liquid Assets”
This independently-produced documentary has been shared:
– On West Linn’s public access channel
– With participating Neighborhood Associations
– To the West Linn High School honors class
– At public showings at City Hall and Library
– In conjunction with UAB support
Water System Investment 4
Project Costs
Adopted Water Master Plan estimates needed projects over a 20 year span
Master Plan was beneficiary of significant public involvement prior to adoption
– Adopted Plan estimates $33 million for future projects in 2008 dollars
• Existing needs (maintenance) = $21 million
• Future needs (improvement) = $12 million
Water System Investment 5
Reminder: West Linn Water Rates Lowest in Region
Comparison of Neighboring Cities' Average Monthly Water Bills Updated for July 1, 2009 Increases
$72.69
$32.91 $32.16 $31.78 $30.23 $29.80 $28.70
$23.38$21.11 $19.42
$16.21
$-
$10
$20
$30
$40
$50
$60
$70
$80
Wilsonville Oregon City Gresham Portland Tigard Tualatin Beaverton LakeOswego
Milwaukie Hillsboro West Linn
Reminder: We share ownership of SFWB with Oregon City, so the wholesale cost of water is the same… yet Oregon City’s current rates are double West Linn’s.
Water System Investment 6
Pricing Options
“Conservation Pricing”
– Policy questions:
• One tier or three tiers?
• To phase or not to phase?
Current West Linn Pricing
– Base charge per meter size
– First 7 CCF included in base charge; any additional consumption charged at one rate ($1.67/CCF)
Rate Calculation Realities
– Calculations needed to assume the time frame in which they would be implemented – FY 2012
– Presentation increases rates to the January 1, 2011 date and then implements conservation pricing
Water System Investment 7
Pricing Option Calculations
Presentation uses a “7 CCF User” for comparison purposes
– This is the median use category for West Linn water customers
– Approximately 4,436 users use 7 CCF or less
A “3 CCF User” is the break-even point where a current user would see no increase
“No phasing” assumes a one-year rate increase in FY 2011
“Phasing” assumes a five-year cycle to phase-in the required increase
– Instead of one bulk increase, the increase is spread over three years
Please contact the West Linn Finance Department for detailed calculations
– Richard Seals, Finance Director, rseals@westlinnoregon.gov
Water System Investment 8
One-Tier
No Phase
$10.06 base rate in FY 2011
$2.56 for each CCF used
Average 7 CCF User:
Current monthly bill = $16.03
FY 2011 monthly bill = $27.98
FY 2012 monthly bill = $29.39
FY 2013 monthly bill = $30.83
FY 2014 monthly bill = $32.04
FY 2015 monthly bill = $33.02
Phased Over Three Years
$10.06 base rate in FY 2011
$2.56 for each CCF used (three year phase-in)
Average 7 CCF User:
Current monthly bill = $16.03
FY 2011 monthly bill = $22.94
FY 2012 monthly bill = $26.59
FY 2013 monthly bill = $30.83
FY 2014 monthly bill = $32.04
FY 2015 monthly bill = $33.02
75%, $12
5%, $2
5%, $2
4%, $2
3%, $1
43%, $7
16%, $4
16%, $4
4%, $2
3%, $1
Water System Investment 9
One-Tier
One-Tier Rate Increase for Sample 7 CCF Customer Comparison of Phasing Options
$-
$5
$10
$15
$20
$25
$30
$35
Current $16.03 $16.83 $17.67 $18.56 $19.48 $20.46
One Tier - No Phase $16.03 $27.98 $29.39 $30.83 $32.04 $33.02
One Tier - Three Year Phase $16.03 $22.94 $26.59 $30.83 $32.04 $33.02
FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015
Water System Investment 10
Three-Tier
No Phase
$10.06 base rate in FY 2011
$2.00 for 0-10 CCFs,
$2.55 for 11-30 CCFs,
$4.12 for 30+ CCFs
Average 7 CCF User:
Current monthly bill = $16.03
FY 2011 monthly bill = $24.06
FY 2012 monthly bill = $25.26
FY 2013 monthly bill = $26.56
FY 2014 monthly bill = $27.63
FY 2015 monthly bill = $28.47
Phased Over Three Years
$10.06 base rate in FY 2011
$2.00 for 0-10 CCFs,
$2.55 for 11-30 CCFs,
$4.12 for 30+ CCFs
Average 7 CCF User:
Current monthly bill = $16.03
FY 2011 monthly bill = $20.98
FY 2012 monthly bill = $23.55
FY 2013 monthly bill = $26.56
FY 2014 monthly bill = $27.63
FY 2015 monthly bill = $28.47
50%, $8
5%, $1
5%, $1
4%, $1
3%, $1
31%, $5
12%, $3
13%, $3
4%, $1
3%, $1
(three year phase-in)
Water System Investment 11
Three-Tier
Three-Tier Rate Increase for Sample 7 CCF Customer Comparison of Phasing Options
$-
$5
$10
$15
$20
$25
$30
$35
Current $16.03 $16.83 $17.67 $18.56 $19.48 $20.46
Three Tier - No Phase $16.03 $24.06 $25.26 $26.56 $27.63 $28.47
Three Tier - Three Year Phase $16.03 $20.98 $23.51 $26.56 $27.63 $28.47
FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015
Water System Investment 12
West Linn Comparison – Including Rate Increases
Comparison of Neighboring Cities' Average Monthly Water Bills Hypothetical for FY 2011: Assumes a Modest 5% Increase for All Other Cities
$76.32
$34.56 $33.77 $33.37 $31.74 $31.29 $30.14 $27.98$24.55 $24.06
$20.39$22.17
$-
$10
$20
$30
$40
$50
$60
$70
$80
$90
Wilso
nville
Oregon C
ity
Gresham
Portlan
dTig
ard
Tuala
tin
Beavert
on
West
Linn -
One T
ier, No Pha
se
Lake
Osw
ego
West
Linn -
Three Ti
er, No Ph
ase
Milwaukie
Hillsboro
Water System Investment 13
Impact on Various Customer Groups
3 CCF – 18% of users
– 3 CCF is the “breakeven” use amount – where the rate increases will not affect customers who use this amount or less
– Assume senior citizens, couples, conservation-focused small families into this user group
7 CCF – 52% of users
– Used throughout this presentation
10 CCF – 68% of users
– 2/3 of West Linn residents are using 10 CCF or less
– Assume most residential customers are 10 CCF or less users
Water System Investment 14
Comparison of Proposed Rates for Various User Types
Projected FY 2011 Rates for Various Customer Types
3 CCF3 CCF
3 CCF 3 CCF3 CCF
7 CCF
7 CCF
7 CCF7 CCF
7 CCF10 CCF
10 CCF
10 CCF10 CCF
10 CCF
$-
$5
$10
$15
$20
$25
$30
$35
$40
Current One Tier - No Phase One Tier - Three YearPhase
Three Tier - No Phase Three Tier - Three YearPhase
3 CCF 7 CCF 10 CCF
Water System Investment 15
Next Steps
Utility Advisory Board
– At June 16 meeting:
• Approve a resolution supporting the identified rate plan
• Sample resolution text:
– “We, the appointed Utility Advisory Board of the City of West Linn, in accordance with West Linn Charter Section 44, recommend water rate increase(s) in the amount of ___% in fiscal year(s) ______.”
Water System Investment 16
Next Steps
Community Involvement
– Encourage dialogue on a pending Council decision to place a water rate increase on the September 2010 ballot;
– Educate and inform West Linn residents on the need for a water rate increase to support infrastructure investment.
Tentative Calendar
– Public comment on May 24
– Three town hall discussions
– Various outreach activities
– Council decision to place on September 2010 ballot at June 28 Council meeting
Water System Investment 17
Tentative Decision on Conservation Pricing Option
Council Discussion
Tentative Decision Tonight on the Preferred Conservation Pricing Option
– This pricing option will be explored in even greater detail at May 24 meeting
– Community involvement plans will commence
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