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Rate Increases: Reasons Methods
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Reasons: Capital Projects Cost of Service
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Capital Projects
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WATER TREATMENT PLANT Design Capacity 5.3 MGD
Current Daily Production MGD Current Daily Production 77% of Capacity KDOW Limit = 85% Capacity MGD Available Capacity ,000 Gallons per Day At 1% Population Growth Year 8 Years to Restrictions Design & Construction = 3 Years
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Rates
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Max Daily Production 95% or Greater in 7 of 11 Years
Max Daily Production 100% or 101% in 3 of 11 Years Average Age of Plant: Years Depreciation Schedule for Plant: 15 / 20 / 40 Years Plant is Prone to Flooding Water Quality Increases = Plant Capacity Decreases
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Methods 2-Part Computer Model: Part A – Revenue Increase %
Part B – Convert % to $
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Part A – Input Current Expenses Capital Plan Dollars and Dates
Current Revenue Current Expenses Capital Plan Dollars and Dates Loan Terms – Interest and Time
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Part A – Output $ Available 1.4 $ Due Debt Service Ratio =
Cash Reserve Days 1.4 = $ Due
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Part A Output Part B Part B Output $ Rate
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Part B
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50 Industrial @ $0.40 $20.00 $50.00 100 gal 50 Residential @ $0.60 $30.00 50 Industrial @ $0.70 $35.00 $70.00 100 gal $35.00 50 Residential @ $0.70 @ $0.70 @ $0.70 $70.00 = 1.75 = 1.17 = 1.40 @ $0.40 @ $0.60 $50.00 Industrial Increase 75% Residential Increase 17% Overall Revenue Increase 40%
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