Water and Wastewater Rates City of Petersburg Water and Wastewater Rates Tuesday, April 10, 2012 Budget Workshop

Agenda History of Water and Sewer Rate Increases Overview of Current Rates Revenue and Expenses Projected Future Costs PILOT Reserve Fund Recommended Increases for FY 2013 and Beyond Comparisons

History In 2006 - 2007, comprehensive review of water and sewer rates and fees Rate structure was revised and simplified Most residential customers increase of 5-6% (or less) to combined water and sewer bill Increase of $2.00 or less to combined bill Larger customers Increases of 50% - 60% - depending on consumption and size of water meter Recommended continued monitoring of costs and increases as necessary

FY 2012 Budget Water rates – 5% increase Sewer rates – 7.25% increase Typical residential customer 10 – 12 ccf consumption 6.5% increase $3.01 - $3.48 per bi-monthly bill Additional increases forecast for FY 2013 – 2016 Actual revenues for FY2012 are very close to projected

Current Rates (adopted in June 2011) Commodity Charges Water ($ / CCF) Sewer ($ / CCF) 0 to 6 CCF $0.320 $0.610 7 – 250 CCF $1.350 $2.630 Over 250 CCF $0.870 $1.680 Bi-Monthly Capacity Charges Meter Size Water Sewer Residential $9.45 $18.34 Non-Residential 5/8” 1” $23.65 $45.85 1.5” $41.35 $80.30 2” $75.60 $146.70 3” $151.20 $297.75 4” $236.25 $458.50 6” $472.50 $917.00 8” $945.00 $1,834.00 10” $1,464.75 $2,842.70 12” $1,890.00 $3,667.95

Residential Usage Typical residential usage 10 CCF to 12 CCF 10 CCF = 7,480 gallons over 2-month period 12 CCF = 8,977 gallons over 2-month period Bi-Monthly Bills Consumption Water Sewer Total 10 CCF $16.77 $32.52 $49.29 12 CCF $19.47 $37.78 $57.25

FY 2013 Factors Influencing Rates Operating costs continue to increase Cost to purchase and distribute water Cost of wastewater collection and treatment Customer base is not increasing Water and sewer billings are not increasing Considered new budget line-items PILOT Contribution to Debt Reserve

PILOT PILOT (Payment in Lieu of Taxes) Payment made to compensate a local government for all or some of the services provided to the entity Utility Department receives office space, support from Department of Finance, City Manager’s Office, etc. PILOT payment is a method of reimbursing City for expenses Suggested PILOT - $500,000 Water Fund $112,500 Sewer Fund $137,500 Goal – self-sufficiency

Taxes from Enterprise Fund Localities with PILOT Payments in Lieu of Locality Taxes from Enterprise Fund Suffolk, City of $ 12,033 Smyth, County of $ 48,972 Scott County $ 79,928 Roanoke, City of $ 80,000 Virginia Beach, City of $ 100,000 Falls Church, City of $ 150,000 Martinsville, City of $ 150,007 Front Royal, City of $ 337,469 Stafford County $ 340,000 Hanover County $ 378,254 Blackstone, Town of $ 728,069 Bristol, City of $ 792,233 Portsmouth, City of $ 1,008,568 Staunton, City of $ 1,127,162 Radford, City of $ 1,688,205 Newport News, City of $ 2,720,052 Norfolk, City of $ 6,371,344 Richmond, City of $ 19,448,244 Source: 2011 Comparative Report, Auditor of Public Accounts

Debt Reserve Fund Goal – establish a reserve fund that is equal to one year of operating expenses Water - $3.3 million Sewer - $5.9 million Use to offset future rate increases related to new debt or to pay for capital projects

Projected Rate Increases FY 2013 – 2018 RECOMMENDED - Increase Rates to Cover Operating, Debt, PILOT and Reserve FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 Water Operating Revenue (without rate increases) $ 3,068,942 $ 3,087,560 $ 3,105,083 $ 3,122,606 $ 3,140,129 $ 3,157,652 Operating Expenses (including debt service) $ 3,372,328 $ 3,695,343 $ 4,026,837 $ 4,358,530 $ 4,693,266 $ 5,029,930 Net Income (Deficit) $ (303,386) $ (607,783) $ (921,754) $ (1,235,924) $ (1,553,137) $ (1,872,278) % Increase Needed 10.3% 20.5% 30.9% 41.2% 51.4% 61.6% Sewer $ 5,149,139 $ 5,183,812 $ 5,217,814 $ 5,251,816 $ 5,285,818 $ 5,319,820 $ 5,970,325 $ 6,279,671 $ 6,588,936 $ 6,902,385 $ 7,221,054 $ 7,541,794 $ (821,186) $ (1,095,859) $ (1,371,122) $ (1,650,568) $ (1,935,236) $ (2,221,974) 16.4% 21.8% 27.0% 32.3% 37.7% 42.9% PILOT is funded at 50% of the desired amount and Reserve is funded at 2.4% of the operating budget – 10% is ideal.

Current and Recommended Rates (+10.3% Water and +16.4% Sewer) Bi-Monthly Commodity Charges Consumption Water ($/CCF) Sewer ($/CCF) Total ($/CCF) 0 to 6 CCF $0.320 $0.610 $0.930 $0.350 $0.710 $1.060 7 to 250 CCF $1.350 $2.630 $3.980 $1.490 $3.060 $4.550 over 250 CCF $0.870 $1.6800 $2.550 $0.960 $1.960 $2.920 Bi-Monthly Capacity Charges Meter Size Water Sewer Total Residential $9.45 $18.34 $27.79 $10.42 $21.35 $31.77 Non-Residential   5/8 1 $23.65 $45.85 $69.50 $26.09 $53.37 $79.46 1.50 $41.35 $80.30 $121.65 $45.61 $93.47 $139.08 2 $75.60 $146.70 $222.30 $83.39 $170.76 $254.15 3 $151.20 $297.75 $448.95 $166.77 $346.58 $513.35 4 $236.25 $458.50 $694.75 $260.58 $533.69 $794.27 6 $472.50 $917.00 $1,389.50 $521.17 $1,067.39 $1,588.56 8 $945.00 $1,834.00 $2,779.00 $1,042.34 $2,134.78 $3,177.12 10 $1,464.75 $2,842.70 $4,307.45 $1,615.62 $3,308.90 $4,924.52 12 $1,890.00 $3,667.95 $5,557.95 $2,084.67 $4,269.49 $6,354.16

Impacts Current Recommended Consumption (CCF) Water Sewer Total Water (+10.3%) Sewer (+16.4%) Total (+14.3%) 10 $16.77 $32.52 $49.29 $18.50 $37.85 $56.35 11 $18.12 $35.15 $53.27 $19.99 $40.91 $60.90 12 $19.47 $37.78 $57.25 $21.48 $43.98 $65.45 Customers using 10-12 CCF will see increases of $7.06 - $8.20 per billing period All customers will see a 14.3% increase – regardless of type of customer, consumption, meter size.

Compare to Neighbors Rate increases for FY13 Henrico County – 5% City of Richmond – 3.5% Chesterfield – 4.5% Prince George County no increase at this time City of Colonial Heights no increase

Bi-Monthly Water and Sewer Charges - Residential Customers Based on Consumption of 12 CCF Over 2 Months Water Sewer Total City of Petersburg – Existing $ 19.47 $ 37.78 $ 57.25 City of Petersburg – Proposed $ 21.48 $ 43.98 $ 65.46 Chesterfield County – Proposed $ 33.46 $ 47.46 $ 80.92 Henrico County – Proposed $ 40.55 $ 53.24 $ 93.79 City of Richmond – Proposed $ 31.09 $ 47.82 $ 78.91 Prince George County $ 39.90 $ 55.95 $ 95.85 Colonial Heights, City of $ 19.31 $ 44.52 $ 63.83 Average in Virginia (2011) $ 50.52 $ 61.58 $ 112.10 (12 CCF - 8,976 gallons) Notes: Amounts shown for Chesterfield, Henrico and Richmond are proposed, not adopted. Prince George County is not proposing a rate increase now, but may increase rates later in FY. Colonial Heights does not plan to increase rates this year.

Questions / Discussion

Impacts on Customer Bills Current Recommended Consumption (CCF) Water Sewer Total Water (+10.3%) Sewer (+16.4%) Total (+14.3%) $9.45 $18.34 $27.79 $10.42 $21.35 $31.77 1 $9.77 $18.95 $28.72 $10.78 $22.06 $32.83 2 $10.09 $19.56 $29.65 $11.13 $22.77 $33.90 3 $10.41 $20.17 $30.58 $11.48 $23.48 $34.96 4 $10.73 $20.78 $31.51 $11.84 $24.19 $36.02 5 $11.05 $21.39 $32.44 $12.19 $24.90 $37.09 6 $11.37 $22.00 $33.37 $12.54 $25.61 $38.15 7 $12.72 $24.63 $37.35 $14.03 $28.67 $42.70 8 $14.07 $27.26 $41.33 $15.52 $31.73 $47.25 9 $15.42 $29.89 $45.31 $17.01 $34.79 $51.80 10 $16.77 $32.52 $49.29 $18.50 $37.85 $56.35 11 $18.12 $35.15 $53.27 $19.99 $40.91 $60.90 12 $19.47 $37.78 $57.25 $21.48 $43.98 $65.45 13 $20.82 $40.41 $61.23 $22.96 $47.04 $70.00 14 $22.17 $43.04 $65.21 $24.45 $50.10 $74.55 15 $23.52 $45.67 $69.19 $25.94 $53.16 $79.10 16 $24.87 $48.30 $73.17 $27.43 $56.22 $83.65 17 $26.22 $50.93 $77.15 $28.92 $59.28 $88.20 18 $27.57 $53.56 $81.13 $30.41 $62.34 $92.75 19 $56.19 $85.11 $31.90 $65.41 $97.30