Regulatory Best Practices for Small Water Companies May 6, 2009 John Hoy Chief Regulatory Officer...
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![Page 1: Regulatory Best Practices for Small Water Companies May 6, 2009 John Hoy Chief Regulatory Officer May 6, 2009 John Hoy Chief Regulatory Officer.](https://reader031.fdocuments.net/reader031/viewer/2022032722/56649ce05503460f949a9ee0/html5/thumbnails/1.jpg)
Regulatory Best Practices for Small Water Companies
Regulatory Best Practices for Small Water Companies
May 6, 2009
John HoyChief Regulatory Officer
May 6, 2009
John HoyChief Regulatory Officer
![Page 2: Regulatory Best Practices for Small Water Companies May 6, 2009 John Hoy Chief Regulatory Officer May 6, 2009 John Hoy Chief Regulatory Officer.](https://reader031.fdocuments.net/reader031/viewer/2022032722/56649ce05503460f949a9ee0/html5/thumbnails/2.jpg)
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43 years old
Operations in 15 states
Serving over 1 million people
90 subsidiary companies
Provide water, wastewater and reuse water services
About UsAbout Us
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Reuse WaterReuse Water
18 public access reuse plants in FL, NC, GA & NV (#19 planned for AZ)
Reuse customers include golf courses, nurseries, car washes and residential
10 million gallons per day of reuse capacity
![Page 4: Regulatory Best Practices for Small Water Companies May 6, 2009 John Hoy Chief Regulatory Officer May 6, 2009 John Hoy Chief Regulatory Officer.](https://reader031.fdocuments.net/reader031/viewer/2022032722/56649ce05503460f949a9ee0/html5/thumbnails/4.jpg)
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Water Utility LandscapeWater Utility Landscape
Fragmented― Over 52,000 Utilities in the US
Regional/Local in Nature― 85% Municipally owned
Minority regulated by State Commissions― 20% compared to 80% Electric
Product is Ingested― Stringent EPA regulation
Capital intensive
Telecom Gas Electric Water$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
Capital Invested per $ of Revenue
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Relative Utility BillsRelative Utility Bills
Energy Phone Water$0
$20
$40
$60
$80
$100
$120
$140
$160
$180Average Household Monthly Bill
However, water is priced the lowest of the major household utilities.
Source: U.S. Bureau of Labor Statistics
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Community Water System BreakdownCommunity Water System Breakdown
System Size(by population
served)<500
501-3,300
3,301-10,000
10,001-100,000 >100,000
% of Systems 56% 27% 9% 7% 1%
% of Population 2% 7% 10% 36% 46%
Source: EPA 2008 Drinking Water Factoids
83% of the total systems serve just 9% of the total population83% of the total systems serve just 9% of the total population
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Aging Water InfrastructureAging Water Infrastructure
System Size Need($Bil)
Large(>100,000) $116.3
Medium(3,001-100,000) $145.1
Small(<3,000) $59.4
Total $320.8
Source: EPA 2007 Needs Survey
The EPA is projecting $320 billion will need to be invested in community water systems over the next 20 years.
Similar need on the wastewater side
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Aging Water InfrastructureAging Water Infrastructure
Large Medium Small$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000Need /Population Served
The burden will be greatest on small system customers
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Small System Infrastructure NeedsSmall System Infrastructure Needs
Source: EPA 2007 Needs Survey
Distrib
utio
n
Treat
men
t
Stora
ge
Sourc
eOth
er$0
$5
$10
$15
$20
$25
$30
$35
$40
$B
illio
ns
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Small Water Utility IssuesSmall Water Utility Issues
Deteriorating infrastructure
Meeting growing environmental regulations
Access to capital
Spreading costs over small customer base
Regulatory lag and cash flow
Rate case expense
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The Perfect StormThe Perfect Storm
Fragmented Industry
+ Capital Intensive
+ Aging Infrastructure
+ Increased Public Health Requirements
+ Tight Credit Markets
+ Scarce Supply
+ Security Concerns
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NARUC is Focused on Best PracticesNARUC is Focused on Best Practices
Resolution Supporting Consideration of Regulatory Policies Deemed as “Best Practices”
(Excerpt)
WHEREAS, Small water company viability issues continue to be a challenge for regulators, drinking water program administrators and the water industry; best practices identified by Forum participants include: a) stakeholder collaboration; b) a memoranda of understanding among relevant State agencies and health departments; c) condemnation and receivership authority; and d) capacity development planning;
_______________________________________________Sponsored by the Committee on WaterAdopted by the NARUC Board of Directors July 27, 2005
Product of the 2005 NAWC Water Policy Forum
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Other Regulatory ObjectivesOther Regulatory Objectives
Safe and adequate service at just and reasonable rates
Financially stable utilities
System consolidation
Infrastructure replacement
Minimal rate shock
Streamlined rate proceedings
Conservation
Need Picture
Source: National Draught Monitor Mitigation Center
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Best PracticesBest Practices
Consolidation― Limit new utilities
― Incentives to acquire troubled systems
― Incentives for efficiency improvements
― Single tariff pricing
― Combining water, wastewater and reuse water
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Best PracticesBest Practices
Alternative Ratemaking― Future Test Years
― Indexes/Trackers
― DSICS
― Surcharges
― Phased-in Rates
Expedited Rate Proceedings― Limited Proceedings
― Mediation and Settlement Procedures
― Small Company Filings
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Best PracticesBest Practices
Promoting Conservation― Tiered Rates
― Repression Adjustment
― Reuse Incentives
― Decoupling
Communication, Education and Collaboration
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Regulatory Best Practices for Small Water Companies
Regulatory Best Practices for Small Water Companies
May 6, 2009
John HoyChief Regulatory Officer
May 6, 2009
John HoyChief Regulatory Officer