City of Elephant Butte Wastewater Utility

1
City of Elephant Butte Wastewater Utility

• Financial Analysis and Sewer User Rates
• Presentation Workshops
• February 8 and 9, 2007

2
Introductions

• Mayor Bob Barnes, City of Elephant Butte
• Julie P. Samora, P.E., J. Samora Associates
  Inc.

3
Summary of Presentation

• Presentation Outline
• Introduction Background
• Financial Plan
• Sewer User Rates
• Other Fees Charges
• What Will it Cost Me?
• Next Steps?

4
Introduction Background

• CEB is implementing a brand new sewer system.
• The new system will have substantial costs
  associated with it.
• The new sewer system must be financially sound
  revenues need to cover expenses.

5
Financial PlanOverview

• 20-year financial plan
• Cash based approach Collect revenue to cover
  cash expenses
• Increase rates gradually over time to keep up
  with expenses
• Allow for future capital expenditures expansion
  to accommodate growth

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Financial PlanAssumptions

• Future customer growth 2.7
• Sewer System is constructed in phases
• Expenses based on projected inflation and system
  growth
• Basic OM expenses
• Utility Administrative Costs
• Utility Billing
• Utility Expense and Contingency
• Reserves debt/loan service and repair and
  replacement (RR)
• Debt Payment

7
Sewer User RatesObjectives

• Revenue Adequacy Rates should be sufficient to
  generate revenues required.
• Rate Stability Rates should be as stable as
  possible.
• Equity Rates among user categories should be
  fair and equitable and reflect cost of
  providing service.
• Implementing Rate Structure should be easy to
  implement, ie., billing systems, etc.

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Sewer User RatesObjectives (Cont)

• Simplicity Structure of customer fees should
  allow for simple bill calculation.
• Public Understanding and Acceptance - Rates
  should be presented clearly and openly and be
  consistent with similar utilities.
• Rates should be examined once a year for
  adequacy.

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Sewer User RatesApproaches

• Cost recovery approach fixed and variable
  costs.
• Fixed costs Associated with system operation
  regardless of flows.
• Variable costs Vary depending on level of use or
  amount of wastewater generated.
• Base monthly fee based on fixed and variable
  costs for the system.

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Sewer User RatesProposed Sewer Rates
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Comparison of User Rates
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Other Fees and Charges

• Administrative Charges
• Administrative Set-up Charge - 75/100
• Installation Charges
• Actual costs to connect sewer line from home to
  property line and decommissioning existing septic
  tank (see following figure)

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Connection Schematic
Connection From Home Plumbing to New Sewer
Service Line
Septic Tank Collapsed and Filled w/Sand
Leach Lines (Abandoned In-Place)
House/ Commercial Building
Disconnection Point From Septic/Onsite System
Property Line
Property Line
All work within property boundary is
responsibility of property owner.
New Sewer Service Line
Connection Point To Sewer Line
Property Line
Sewer Collection Line
Roadway
CEB responsible for connection outside property
Boundary
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Other Fees and ChargesOne-Time Charges

• Applicable to all new construction connecting to
  CEB system after March 31, 2006
• Considers hook-up costs and allows for capacity
  for future development
• Amounts (Proposed)
• Residential - 2,250
• Commercial - 3,000
• For large customers case by case basis
  depending on volume and characteristics of
  customer

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Bottom LineWhat Will It Cost Me?

• Existing (Prior to March 31, 2006)
• Administrative Connection Fee 75
  Residential/100 Commercial
• Monthly Sewer Rate 22, Commercial Varies (Note -
  Rates will increase over time)
• Installation Costs - 1,000 to 2,000 range?

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Bottom LineWhat Will It Cost Me? (cont.)

• New Construction (After March 31, 2006)
• Administrative Connection Fee 75/100 plus any
  increases depending on when you connect.
• Monthly Sewer Rate 22 or higher depending on
  when you connect, Commercial Varies.
• Installation Costs - 1,000 to 2,000
• One-Time Charge
• 2,250 (Residential)
• 3,000 (Commercial)

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Next Steps

• Legal Review
• Hold Public Meeting(s) as required
• Make Revisions Based on Public Input as
  Appropriate
• Finalize User Study
• Adopt Rates Ordinance
• Develop Billing System
• Implement System
• Monitor the system
• Annual Updates of Financial Plan and Processes

18
Questions?