Utility Management Review Board Water and Wastewater Financing Board Water Loss Accountability.

Utility Management Review Utility Management Review BoardBoard

Water and Wastewater Water and Wastewater Financing BoardFinancing Board

Water Loss AccountabilityWater Loss Accountability

General IntroductionGeneral Introduction

• Utility Management Review BoardUtility Management Review Board

• Water and Wastewater Financing Water and Wastewater Financing BoardBoard


• Established in 1989 to advise utility Established in 1989 to advise utility district boards of commissioners in district boards of commissioners in the area of utility management.the area of utility management.


Nine member board, consisting of:Nine member board, consisting of:

• Commissioner of Environment and Commissioner of Environment and Conservation or the commissioner’s designeeConservation or the commissioner’s designee

• Comptroller of the Treasury or the Comptroller of the Treasury or the comptroller’s designeecomptroller’s designee

• Four experienced utility district managersFour experienced utility district managers

• Three experienced utility district Three experienced utility district commissionerscommissioners

• Last seven to be appointed by the GovernorLast seven to be appointed by the Governor


DutiesDuties• Oversight of financially distressed utility districtsOversight of financially distressed utility districts• Providing advisory technical assistance upon Providing advisory technical assistance upon

requestrequest• Review any decision of a district upon simple Review any decision of a district upon simple

written request (Are policies being followed?)written request (Are policies being followed?)• Establish an alternate mechanism for Establish an alternate mechanism for

consideration and resolution of customer consideration and resolution of customer complaintscomplaints

• Conduct hearings to determine if commissioners Conduct hearings to determine if commissioners should be removed from office or the method of should be removed from office or the method of commissioner appointmentcommissioner appointment


DutiesDuties

• Adopt rules for commissioner trainingAdopt rules for commissioner training

• Adopt rules to define excessive unaccounted Adopt rules to define excessive unaccounted for water lossesfor water losses

• Review and approve ethical standards for Review and approve ethical standards for utility districts and water, wastewater and utility districts and water, wastewater and gas authoritiesgas authorities

• Subpoena powerSubpoena power

• Enforce decisions through Chancery courtEnforce decisions through Chancery court


DutiesDuties• Review and comment on petitions for Review and comment on petitions for

incorporation, modification, merger or incorporation, modification, merger or consolidation of utility districtsconsolidation of utility districts

• Determine the financial, technical and Determine the financial, technical and managerial capacity of the public water managerial capacity of the public water system to comply with federal and state system to comply with federal and state laws and require systems to take laws and require systems to take appropriate actionappropriate action


20082008 LegislationLegislation• PC 852PC 852• A single customer of a UD may file a A single customer of a UD may file a

request with the UMRB to obtain utility request with the UMRB to obtain utility service from an adjoining district if:service from an adjoining district if:

• The primary district has refused to or is The primary district has refused to or is not able to provide service within a not able to provide service within a reasonable period of time at a reasonable reasonable period of time at a reasonable cost as determined by the UMRB, AND,cost as determined by the UMRB, AND,

• The adjoining district is willing to provide The adjoining district is willing to provide the servicethe service


2008 Legislation2008 Legislation

• PC 700PC 700

• Changes the criteria for reporting Changes the criteria for reporting utility districts to the Boardutility districts to the Board

• Allows interest income and grant Allows interest income and grant fundsfunds



• PC 1179PC 1179

• Requires the development of a Requires the development of a program for board members of program for board members of authorities and utility districts to authorities and utility districts to educate them about open meetings educate them about open meetings laws and how to remain in laws and how to remain in compliance with the lawscompliance with the laws



• PC 720PC 720

• Allows the creation of a public Allows the creation of a public building authority for utility districtsbuilding authority for utility districts


• Appearances before the Board since Appearances before the Board since 1989: 215 different entities – cases 1989: 215 different entities – cases related to financial distress, related to financial distress, relocation loans, complaints, relocation loans, complaints, petitions, mergers, etc.petitions, mergers, etc.

• Annual average water loss for utility Annual average water loss for utility districts as reported in 2007 audits: districts as reported in 2007 audits: 25.14% (53 districts)25.14% (53 districts)

Water and Wastewater Financing Water and Wastewater Financing BoardBoard

• ALL public water systems and wastewater ALL public water systems and wastewater facilities (municipal, authority and utility facilities (municipal, authority and utility district) are under the jurisdiction of the district) are under the jurisdiction of the WWFB (TCA 68-221-1015(d) allows the WWFB (TCA 68-221-1015(d) allows the WWFB to defer to the UMRB cases under WWFB to defer to the UMRB cases under the jurisdiction of the UMRB)the jurisdiction of the UMRB)

• Established in 1987 and empowered to Established in 1987 and empowered to effect reasonable user rates to correct effect reasonable user rates to correct financial lossesfinancial losses


Nine member board consisting of:Nine member board consisting of:• Commissioner of Environment and Conservation or the Commissioner of Environment and Conservation or the

commissioner’s designeecommissioner’s designee• Comptroller of the Treasury or the comptroller’s designeeComptroller of the Treasury or the comptroller’s designee• Municipal representative (TML)Municipal representative (TML)• Utility district representative (TAUD)Utility district representative (TAUD)• Environmental representative (Environmental Council)Environmental representative (Environmental Council)• Manufacturing representative (Assoc of Business)Manufacturing representative (Assoc of Business)• Minority representative with governmental finance Minority representative with governmental finance

experienceexperience• Active member of a municipal water utilityActive member of a municipal water utility• Active member of a water utility districtActive member of a water utility district• Last seven appointed by the GovernorLast seven appointed by the Governor


DutiesDuties• Subpoena powerSubpoena power• Enforce decisions through Chancery courtEnforce decisions through Chancery court


DutiesDuties• Investigate and determine the financial Investigate and determine the financial

condition of water systems and wastewater condition of water systems and wastewater facilities under its jurisdictionfacilities under its jurisdiction

• Determine the financial, technical and Determine the financial, technical and managerial capacity of the water systems to managerial capacity of the water systems to comply with requirements of federal and comply with requirements of federal and state laws and require system to take actionstate laws and require system to take action

• Adopt rules to define excessive Adopt rules to define excessive unaccounted for water lossesunaccounted for water losses


2008 Legislation2008 Legislation• PC 779PC 779• Requires a study of all water and sewer Requires a study of all water and sewer

rates and tap fees set by a municipality for rates and tap fees set by a municipality for customers inside and outside the municipal customers inside and outside the municipal jurisdictional boundariesjurisdictional boundaries

• Board is to evaluate differences in rates if Board is to evaluate differences in rates if outside rates are greater than 100% of the outside rates are greater than 100% of the inside rates and determine if the rates are inside rates and determine if the rates are reasonable and justifiedreasonable and justified

• Report to Governor and speakers by 1/1/09Report to Governor and speakers by 1/1/09


• Since 1987, 177 different entities Since 1987, 177 different entities have appeared before the boardhave appeared before the board

• Annual average water loss reported Annual average water loss reported for municipal systems:for municipal systems:

26.51% (118 systems)26.51% (118 systems)

Comparison of BoardsComparison of Boards

• Both deal with financial distress, capacity Both deal with financial distress, capacity development, water loss and have Chancery development, water loss and have Chancery Court enforcement powerCourt enforcement power

• WWFB – evaluates inside/outside rates that WWFB – evaluates inside/outside rates that vary by 100%vary by 100%

• UMRB – Customer complaints, ethics policies, UMRB – Customer complaints, ethics policies, commissioner training, commissioner commissioner training, commissioner replacement, management, creation, addition replacement, management, creation, addition of service types (sewer, gas)of service types (sewer, gas)

Water Loss LegislationWater Loss LegislationPublic Acts 2007Public Acts 2007

Public Chapter No. 243Public Chapter No. 243HB743-SB738HB743-SB738

Effective July 1, 2007Effective July 1, 2007

Affects bothAffects bothUtility Management Review BoardUtility Management Review Board

And And Water and Wastewater Financing BoardWater and Wastewater Financing Board

Tennessee Code AnnotatedTennessee Code Annotated

• Public water systems shall include in their …Public water systems shall include in their …audit the…annual average unaccounted for audit the…annual average unaccounted for water loss water loss percentagepercentage in the manner in the manner prescribed by the Comptroller of the prescribed by the Comptroller of the Treasury.Treasury.

• UMRB and WWFB are to investigate public UMRB and WWFB are to investigate public water systems whose unaccounted for water water systems whose unaccounted for water loss as reported in the audit is excessive as loss as reported in the audit is excessive as established by rules…of the boardestablished by rules…of the board


• In the event a water system fails to take In the event a water system fails to take the appropriate actions required by the the appropriate actions required by the board to reduce such water loss to an board to reduce such water loss to an acceptable level, the board may petition acceptable level, the board may petition the chancery court in a jurisdiction in the chancery court in a jurisdiction in which the system is operating to require which the system is operating to require the system to take such actions.the system to take such actions.

• Boards are required to promulgate rules Boards are required to promulgate rules to determine excessive water loss.to determine excessive water loss.


• The UMRB is required to provide a The UMRB is required to provide a report to the chairs of the House report to the chairs of the House Conservation and Environment Conservation and Environment committee and Senate Environment, committee and Senate Environment, Conservation and Tourism committee by Conservation and Tourism committee by February 1 of each year.February 1 of each year.

• The WWFB has no such requirement, The WWFB has no such requirement, but Municipal Audit has agreed to but Municipal Audit has agreed to prepare a similar reportprepare a similar report

Proposed RuleProposed Rule

– The Board will review … no less than annually to The Board will review … no less than annually to determine the acceptable unaccounted for water loss determine the acceptable unaccounted for water loss percentage …. Any amount greater than the percentage …. Any amount greater than the acceptable unaccounted for water loss percentage acceptable unaccounted for water loss percentage established by the Board shall be considered established by the Board shall be considered excessive. excessive.

– Once the percentage is determined, the Board shall Once the percentage is determined, the Board shall notify the Division of Municipal Audit within the Office notify the Division of Municipal Audit within the Office of the Comptroller of the Treasury in an appropriate of the Comptroller of the Treasury in an appropriate manner of its determination of acceptable manner of its determination of acceptable unaccounted for water loss percentage. The Division unaccounted for water loss percentage. The Division of Municipal Audit will make referrals to the Board of Municipal Audit will make referrals to the Board based on that percentage.based on that percentage.

– The acceptable unaccounted for water loss percentage The acceptable unaccounted for water loss percentage shall be posted on the website of the Board within 30 shall be posted on the website of the Board within 30 days of its decision.days of its decision.

Audit requirementsAudit requirements

• Believing the proposed legislation would Believing the proposed legislation would pass, the Division of Municipal Audit was pass, the Division of Municipal Audit was proactive and required municipalities and proactive and required municipalities and utility districts to include the information utility districts to include the information in their financial statements for fiscal in their financial statements for fiscal year 2007. The 2007 reported year 2007. The 2007 reported percentage was to be “pumped vs. sold.”percentage was to be “pumped vs. sold.”

• The 2008 calculation is now online at the The 2008 calculation is now online at the Comptroller’s websiteComptroller’s website

2008 Calculation Formula2008 Calculation Formula

Town/Utility District of AnywhereTown/Utility District of AnywhereSchedule of Unaccounted For WaterSchedule of Unaccounted For Water

June 30, 2008June 30, 2008

• (All amounts in gallons)(All amounts in gallons)• A A Water Treated and Purchased:Water Treated and Purchased:• BB Water Pumped (potable) 2,000,000Water Pumped (potable) 2,000,000• CC Water Purchased 500,000Water Purchased 500,000• DD Total Water Treated and Purchased Total Water Treated and Purchased• (Sum Lines (Sum Lines BB and and CC)) 2,500,0002,500,000


• EE Accounted for Water: Accounted for Water:• FF Water Sold 1,800,000Water Sold 1,800,000• GG Metered for Consumption 200,000Metered for Consumption 200,000• HH Fire Department(s) Usage 50,000Fire Department(s) Usage 50,000• II Flushing 10,000Flushing 10,000• JJ Tank Cleaning/Filling 7,200Tank Cleaning/Filling 7,200• KK Street Cleaning 0Street Cleaning 0• LL Bulk Sales 0Bulk Sales 0• MM Water Bill Adjustments 2,000Water Bill Adjustments 2,000• NN Other (explain) 150,000Other (explain) 150,000• OO Total Accounted for Water Total Accounted for Water

2,219,2002,219,200• ((Sum Lines Sum Lines FF thru thru NN))


• PP Unaccounted for Water Unaccounted for Water• (Line (Line DD minus Line minus Line OO)) 280,800280,800

• QQ Percent Unaccounted for Water Percent Unaccounted for Water• (Line (Line PP divided by Line divided by Line DD times 100 times 100) ) 11.232%11.232%

• RR Cost per 1,000 gallons of water Cost per 1,000 gallons of water $2.12$2.12

• SS Cost of Unaccounted for Water Cost of Unaccounted for Water

• ((Line Line PP divided by 1000, times Line divided by 1000, times Line RR)) $595.30$595.30

• Explain Other:Explain Other:

Water LossWater Loss

• The WWFB voted on the rules on July 10, The WWFB voted on the rules on July 10, 2008.2008.

• The UMRB is scheduled to vote on the The UMRB is scheduled to vote on the rules August 8, 2008.rules August 8, 2008.

• Both rules must be filed with the Attorney Both rules must be filed with the Attorney General and the Secretary of State for General and the Secretary of State for review.review.

• When the review is complete, the Boards When the review is complete, the Boards can then establish an acceptable water can then establish an acceptable water loss percentage.loss percentage.

ContactContact

Joyce WelbornJoyce Welborn

615-401-7864615-401-7864

615-532-5232 fax615-532-5232 fax

[email protected]@state.tn.us

505 Deaderick Street, Ste 1700505 Deaderick Street, Ste 1700

Nashville, TN 37243-0274Nashville, TN 37243-0274

mailto:[email protected]

Utility Management Review Board Water and Wastewater Financing Board Water Loss Accountability.

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