Town of Wrentham DPW Water Department FY 2020-FY2022 Water Rate Study Findings and Recommendations Presented By: Douglas W. Gardner, President Pioneer Consulting Group, Inc.

Water Enterprise Analysis Objectives (Completed) Completed a full cost of service study Determined equitable rates by customer Prepared rate structures that fund 100% of expenses, debt & capital Designed rates to strengthen the financial health of the enterprise fund Water Enterprise Analysis Objectives (Completed)

Water Division Rate Study Findings Water rates will not generate sufficient revenue to meet FY 20 expenses $300,000 – Transmission & Distribution Line (FY 2021) $245,000 – Water Meters, Radios & Fixed Network (FY 2022) New debt will be driving the water rates in FY 2021 and beyond Water Minimum charge should be implemented (guaranteed revenue) Eliminate Consumption Range Based Assessment Implement a per 1,000 Gallon Charge Capital Assessment Charge is Inequitable Fund through combination of retained earnings, new debt and rates Must continue to fund capital improvements to improve the systems Proposed rates will fund 100% of water budget Certified Free Cash 4/30/2019 +/- $900,000 Continue to build reserves Water Division Rate Study Findings

Water Meters Water Meters are your Cash Register! Most meters are at least 15 years old Meters slow down as they age Result: Higher revenue, accurate readings Quarterly readings

Fire Protection Public Fire Protection Hydrants Cost built into the rates Private Fire Protection Dedicated line off main Unmetered Readiness to serve charge Mainly commercial customers (117 connections)

Why Are Water Rates Increasing? Operating costs continue to rise Debt Service is increasing in FY 2021 and beyond Water reserves are being slowly depleted Must fund capital improvements Water - FY 2020 $836,000 (funded by reserves) Rates should have been raised in prior years

Base Charge Base Charge is designed to recover ongoing costs regardless of flow (costs include meters, meter reading, personnel costs, portion of debt, indirect costs, etc.) Base charge should increase as meter size increases Most communities have a base charge (WWD base charge was eliminated in FY 2012) Guaranteed revenue

Average customer uses 45,000 gallons every 6 months Water Consumption

Metered Consumption Rates Present: 2 step increasing block rate Recommend: 3 Step Increasing rate Lower initial rate Benefit elderly consumers Higher 2nd & 3rd Step Metered Consumption Rates

Capital Assessment Charge Present range based charge is inequitable Recommended: Per 1,000 gallon charge Based on project cost Likely decrease each year until maturity Charge is eliminated when debt is paid off

Average Residential Customer 45,000 gallons every 6 Months Current Bill: $286.20 Proposed Rates: $344.65 Semi-Annual Increase $58.45 Yearly Increase $116.90 - $9.75/month Average Residential Customer

What does a gallon of Wrentham Water Cost? Less than $0.01 cent

Recommendations Implement FY 2020 Rates Beginning July 1, 2019 Continue to build reserves to offset future capital costs