investment in west linn’s water system conservation pricing options may 17, 2010

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


“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


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


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.


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


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, [email protected]


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





Phased Over Three Years


$2.56 for each CCF used (three year phase-in)

Average 7 CCF User:







75%, $12

5%, $2

5%, $2

4%, $2

3%, $1

43%, $7

16%, $4

16%, $4

4%, $2

3%, $1


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


Three-Tier

No Phase


$2.00 for 0-10 CCFs,

$2.55 for 11-30 CCFs,

$4.12 for 30+ CCFs

Average 7 CCF User:







Phased Over Three Years


$2.00 for 0-10 CCFs,

$2.55 for 11-30 CCFs,

$4.12 for 30+ CCFs

Average 7 CCF User:







50%, $8

5%, $1

5%, $1

4%, $1

3%, $1

31%, $5

12%, $3

13%, $3

4%, $1

3%, $1

(three year phase-in)


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


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


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


– Used throughout this presentation


– 2/3 of West Linn residents are using 10 CCF or less

– Assume most residential customers are 10 CCF or less users


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


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) ______.”


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


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

investment in west linn’s water system conservation pricing options may 17, 2010

Documents