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Amador Water Agency

System-Wide Cost of Serviceand Wastewater Rate Study

October 9, 2014

The Reed Group, Inc.

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Study Objectives Develop wastewater rates that accurately reflect

the cost of providing service Improve equity for customers across all wastewater

service areas Improve Agency’s financial stability Avoid more costly multiple, duplicative rate-setting

processes Provide rates that reduce administrative and

customer service costs Support more efficient budgeting and accounting

practices

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Study Approach

Develop 5-year financial plan Identify annual wastewater rate revenue

requirements Perform detailed cost of service analysis Design wastewater rates that reflect the

cost of providing service Recommend a multi-year rate plan to fully

meet financial needs

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Wastewater Service AreasNo. of Accts.

No. of EDUs

WWFlow

Current WW Rate

WW ID#1* 305 351 14.5 MG $94.35/mo.**

Camanche 346 353 15.8 MG $102.65/mo.

Martell 160 577 20.3 MG $74.05/mo.***

Totals 811 1,281 50.6 MG

* Wastewater ID#1 includes Eagles Nest, Surrey Junction, Wildwood, Gayla Manor, Viewpoint, Fairway Pines, Jackson Pines, Pine

Grove, and Tiger Creek Estates. ** Monthly rate in Pine Grove is $109.35, due to a debt obligation.*** Non-residential rates include a fixed service charge and usage

charges tied to sewage strength.

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Financial Plan Assumptions

FY 13-14 estimates and year-end balances FY 14-15 approved budget

Combine wastewater service areas Staffing and cost analysis consistent with water

rate study Debt service schedules and 5-year CIP

Debt obligations remain with each area Inflation and interest assumptions No new growth

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Changes Since September

Reduced operating reserve target to 2-months (16.7%), rather than 3-months (25%), of annual O&M expenses

Reduced level of rate increases in January 2015 and July 2015

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Financial Plan Summary

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Preliminary and Revised Wastewater Rate Plans

Preliminary Revised

January 2015 4.5%* 2.5%*

July 2015 5% 4%

July 2016 5% 6%

July 2017 5% 6%

July 2018 3% or Infl.** 3% or Infl.**

July 2019 3% or Infl.** 3% or Infl.**

Compounded 28.3% 27.1%

* Includes proposed rate restructuring.** Rate adjustments could be indexed to changes in

inflation, as with water rates.

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Total Wastewater SystemCost Summary

Personnel40%

Admin.12%

Collect./Disposal

10%

Treatment18%

Other O&M 3%

Rehab/Re-plac Projects

5%

Debt Service13%

Total = $1,604,000

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WW Rate Revenue Requirement

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Wastewater Rate Revenue Requirement Summary

Current rate revenues $1,377,000

2015 WW rate rev. reqmt. $1,412,000

Increase $35,000

Proposed overall system-wide wastewater rate revenue increase is 2.5%

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Summary of System-WideNet Cost Allocation

Fixed O, M & R

Costs40%

Variable Collect./ Disposal Costs

23%

Vari-able

Trtmt. Costs37%

System-Wide O, M & R Costs$1,302,000

WW ID#147%

Ca-manch

e41%

Martell11%

Debt Service$110,000

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Wastewater Rate Structure Monthly service charges

For each dwelling unit or equivalent dwelling unit (EDU)

Wastewater usage rate Based on winter water usage Low, medium, and high strength categories for

non-residential accounts Monthly debt service charge

Distinct for each service area for each DU or EDU

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Current Wastewater Rates

WW ID#1 Pine Grove Camanche Martell

Resid. Charge (per DU) $94.35 $109.35 $102.65 $74.05

Non-Resid. Chrg. (per EDU) $94.35 $109.35 $102.65 $23.91

Low Strength ($/CCF)* $9.14

Medium Strength ($/CCF)* $11.15

High Strength ($/CCF)* $15.18

* Usage charges based on winter water use.

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Proposed Wastewater Rates

System-Wide WW

Rates

Debt Service Charges

WW ID#1Pine

GroveCamanche Martell

Residential (per DU) $86.68 $9.88 $21.40 $10.80 $1.83

Non-Resid. (per EDU) $34.29 $9.88 $21.40 $10.80 $1.83

Low Strength ($/CCF)* $10.48

Med. Strength ($/CCF)* $12.35

High Strength ($/CCF)* $16.10* Usage charges based on winter water use.

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Sample Monthly

WW Bills

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Monthly Single Family Wastewater Bills

WW ID#1 Pine Grove Camanche Martell $-

$20

$40

$60

$80

$100

$120

$140

$160 CurrentProposed

Mo

nth

ly W

aste

wat

er B

ill

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Benefits of Proposed System-Wide Wastewater Rates

Improves financial stability and ability to meet financial obligations

Accurately reflects the cost of providing service and improves equity for all customers

Avoids more costly multiple, duplicative rate setting processes

Reduces administrative and customer service costs Supports more efficient budgeting and accounting

practices Completes water/wastewater rate realignment efforts

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Why Not Have Separate Rates for Each Wastewater System?

Conflicts with Grand Jury recommendation Conflicts with Agency’s direction for past decade Not supported by data, and would require

additional costly accounting and tracking processes

Not legally required, and not a standard industry practice either in rate-setting or in utility management

Adds financial risk and uncertainty to both the Agency and to customers of each system

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Next Steps

Initiate Prop. 218 rate hearing notification process, and prepare final report

Conduct public workshop on proposed wastewater rates (date to be determined)

Conduct public hearing on proposed wastewater rates (date to be determined)

If approved, implement new wastewater rates in January 2015