Water Rates Utility Rates & SDCs Presentation to the West Linn City Council October 5, 2009

Utility & SDC Water Rates - City of West Linn2 Tonight’s presentation How are utility and SDC rates set? –Step 1: determine 20-year project list –Step 2: break out existing (utility rate) and growth (SDC) projects –Step 3: perform financial analysis –Step 4: set rates Current utility bill comparison Average rate increases using 8 CCF comparison Utility bill comparison using potential rate increases SDC rate comparison Next discussion areas Questions

Utility & SDC Water Rates - City of West Linn3 Step 1: determine 20-year project list Adopted Water Master Plan estimates needed projects over a 20 year span –Adopted Plan estimates $33 million for future projects in 2008 dollars 2004 Master Plan estimated $24 million for future projects in 2004 dollars 2004 Master Plan equates to $30 million for future projects in 2008 dollars –Why the $3 million variance in 2008 dollars? »Inflation »Deferred maintenance

Utility & SDC Water Rates - City of West Linn4 Step 2: break out existing and growth projects Adopted Water Master Plan estimates $33 million for future projects: –$21 million in projects relate to existing infrastructure needs Example: updating existing system; water line replacement –$12 million in projects relate to future needs, or “growth” Example: capacity increasing; water line expansion

Utility & SDC Water Rates - City of West Linn5 Step 3: perform financial analysis Use cost information and financial projections to determine rates –Water Fund Use “Existing Needs” list to determine water utility rates necessary to pay for projects –Water SDC Fund Use “Future Needs” list to determine water SDC rates necessary to pay for projects

Utility & SDC Water Rates - City of West Linn6 Step 4: set rates Setting Water Utility Rates –Pioneer Consulting Group assistance –Next presentation will show some options for policy makers to consider Setting Water SDC Rates –FCS Group assistance –Recommend 46 percent base SDC rate increase from $4,628 to $6,747

Utility & SDC Water Rates - City of West Linn7 Current Utility Bill Comparison – Residential Customers

Utility & SDC Water Rates - City of West Linn8 Average Resident Monthly Utility Bill Remember: City’s total revenue yield is the same in every proposal – the impact on various user groups is different! Current Rate 5 Percent Increase 1 Rate For All Usage 2 Tier Rates 3 Tier Rates 7 Tier Rates Water16$ 17$ 28$ 23$ 22$ 19$ Sewer25 26 Surface Street Parks Total60$ 63$ 73$ 68$ 67$ 64$ 5%22%13%12%7% Residential Rates Comparison for an 8 CCF Monthly Usage Home (Median West Linn City Councilor Monthly Usage is 7 CCF) % increase from current utility total Existing Rates & Structure Tiered Water Rate Proposals

Utility & SDC Water Rates - City of West Linn9 Current Utility Bill Comparison – Residential Customers 1 rate2 rate3 rate7 rate

Utility & SDC Water Rates - City of West Linn10 SDC Comparison for New Development

Utility & SDC Water Rates - City of West Linn11 Next discussion areas Rate options, explanations & impacts Pioneer Consulting Group – tiered rate impacts FCS Group – water SDC rates

Utility & SDC Water Rates - City of West Linn12 Questions? For more information: –Richard W. Seals, CPA CMA CFM –Finance Director –City of West Linn, Oregon