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Home My WebLink AboutPACKET Town Board 2011-02-08 Administration Memo To: Honorable Mayor Pinkham Board of Trustees From: Jacquie Halburnt, Town Administrator Lowell Richardson, Deputy Town Administrator Date: February 7, 2011 RE: Ordinance #03-11 – Public Hearing - 2011 - 2013 Water Rate Increase. Background: In January 2007, a water rate study was performed that recommended annual increases of 5.6% through 2013. The board adopted the increases for 3 years, through 2010, and asked for the rate to be reviewed prior to further increases. In 2007, the town board took the first step toward funding capital projects at the same rate of depreciation. Staff believes a great plan was recommended in 2007, but many factors have affected the rates since that time and a review was appropriate. Factors such as the economy, conservation, realizing $1 million less in revenue than was projected in the 2007 study, less interest income, less bulk water revenues (3 agreements expired at the end of 2010), a wet summer, additional costs to the Marys Lake Water Treatment Plant including sewer tap fees, consulting fees, overtime, and design issues. At the January 25, 2011 Town Board meeting, HDR presented proposed water rate increases through 2013 for adoption. The public hearing was continued until February 8 and the town board directed staff to further research specific issues including the amount of increase necessary to meet the 2011 budget. Accounting is fluid and changes based on many factors, such as budgeted versus actual numbers, which made recommending a specific increase challenging. Staff’s recommended increase of 6.7% for the next three years is based upon two factors: revenue necessary to meet budget and working toward fully funding depreciation. However, the recommended increase is broken into two percentages; therefore the board can choose to eliminate funding depreciation. 3.7% to meet budget 3.0 % to fund capital projects at the same rate of depreciation 6.7 % total Page 2 The 3.7% recommendation is to meet 2011budget based on projected 2010 revenues, which will come in less than was budgeted. This number does not take into account that we will be 3 months short of revenue in 2011 by implementing the increase in April (that number would be 4.63%). When we considered budgeted 2010 revenues, the increase necessary to meet budgeted 2011revenues was 2.3% (or 2.9% to cover the 3 months shortage.) However, since staff has reviewed projected 2010 revenues and believe that we are not going to meet the number, it underscores the need for a higher increase knowing we most likely won’t meet 2011 budgeted revenues. This is one criteria mentioned by HDR in January 2007 to review rates when “two consecutive years of loss revenue or diminishing reserves as a result of covering costs” occurs. The water utility has failed to both meet budgeted revenues for two consecutive years in 2009 and 2010. In relationship to funding capital projects at the same rate of depreciation, staff believes an additional 3% increase will be a step in the right direction to fund our depreciated assets. The increases in meter charges were a concern to the town board. We have presented two ordinances, one with the meter charges and one without. Staff has calculated the additional meter charges as bringing in $115,000. This revenue is independent of consumption revenue. Increased meter charges were recommended by HDR was a way to bring us in line with American Water Works Association (AWWA) standards, helps us meet debt service requirements in the future, and to make revenue stable and equitable. At the mayor’s coffee chat, a resident asked why3/4” and 5/8” meter rates were the same. The answer is because the majority of these meters have the same flow, but mostly because residential customers pay the same meter charge to avoid confusion. Another question arose surrounding the town’s ability to meet its debt service coverage ratio. Staff and HDR have since determined that the town will meet the ratio in 2011 with a 3.7% increase, but just barely. If the town board does not elect to approve an increase in rates, staff will have to cut its current budget by at least $122,393. The additional recommended 3% increase is really a board decision about moving toward funding depreciation. A 3% increase over 5 years will not accomplish full funding, but it is a move in the right direction and will allow staff to begin a pipe replacement program. If we fail to meet the water loan agreement debt service coverage ratio of 1.10, or the 3 month O&M reserve, we have to commission a rate study within 90 days and implement the recommended fees within 6 months. All of the recommended increases are designed to increase our rates to sustain our utility and not overburden our customers. Recommended Motion: I move to approve/deny Ordinance 03-11. Option One ORDINANCE NO. 03-11 AN ORDINANCE AMENDING THE WATER RATE SCHEDULES OF THE TOWN OF ESTES PARK, COLORADO WHEREAS, the Board of Trustees has determined that it is necessary to amend the Water Rate Schedules of the Town of Estes Park. NOW, THEREFORE, BE IT ORDAINED BY THE BOARD OF TRUSTEES OF THE TOWN OF ESTES PARK, COLORADO: Section 1: That the Water Rate Schedules shall be amended as more fully set forth on Exhibit “A”. Section 2: These rate schedules will take effect April 1, 2011. PASSED AND ADOPTED BY THE BOARD OF TRUSTEES OF THE TOWN OF ESTES PARK, COLORADO THIS 8th DAY OF FEBRUARY, 2011. TOWN OF ESTES PARK By: Mayor ATTEST: Town Clerk I hereby certify that the above Ordinance was introduced and read at a regular meeting of the Board of Trustees on the ______ day of _______________ 2011 and published in a newspaper of general circulation in the Town of Estes Park, Colorado, on the ________ day of , 2011, all as required by the Statutes of the State of Colorado. Town Clerk Exhibit A TOWN OF ESTES PARK WATER RATE SCHEDULE 2011-2013 Volumetric Charge TOWN OF ESTES PARK Proposed Water Rate Schedule 2011-2013 created 2/7/11 TO CALCULATE YOUR MONTHLY WATER BILL: Follow the formula below using the charts for Base Fee and Volume Charge on this page Base Fee + [ (Gallons Used divided by 1,000) x Volume Charge] = Monthly Water Bill OPTION 1 BASE FEE BY METER SIZE *Most residential meters are 3/4" METER SIZE 2010 2010 2011 2011 2012 2012 2013 2013 Inches:Urban Rural Urban Rural Urban Rural Urban Rural 5/8"$17.90 $28.67 $19.10 $30.59 6.70%$20.38 $32.64 6.70%$21.74 $34.83 6.70% 3/4" *$17.90 $28.67 $19.10 $30.59 6.70%$20.38 $32.64 6.70%$21.74 $34.83 6.70% 1"$19.67 $31.50 $20.99 $33.61 6.70%$22.39 $35.86 6.70%$23.89 $38.27 6.70% 1-1/2"$23.90 $38.27 $25.50 $40.83 6.70%$27.21 $43.57 6.70%$29.03 $46.49 6.70% 2"$26.85 $42.98 $28.65 $45.86 6.70%$30.57 $48.93 6.70%$32.62 $52.21 6.70% 3"$61.59 $98.56 $65.72 $105.16 6.70%$70.12 $112.21 6.70%$74.82 $119.73 6.70% 4"$86.32 $138.13 $92.10 $147.38 6.70%$98.27 $157.26 6.70%$104.86 $167.80 6.70% OPTION 1 avg. % incr. over 2010 OPTION 1 avg. % incr. over 2011 OPTION 1 avg. % incr. over 2012 CURRENT RATES 2010 2010 2011 2011 2012 2012 2013 2013 RATE CLASS Urban Rural Urban Rural Urban Rural Urban Rural Residential $3.77 $6.03 $4.02 6.70%$6.43 6.70% $4.29 6.70% $6.87 6.70% $4.58 6.70% $7.33 6.70% Commercial $3.67 $5.88 $3.92 6.70%$6.27 6.70% $4.18 6.70% $6.69 6.70% $4.46 6.70% $7.14 6.70% Pumped Flow $5.28 $8.44 $5.63 6.70%$9.01 6.70% $6.01 6.70% $9.61 6.70% $6.41 6.70% $10.25 6.70% Bulk Water $4.22 $6.75 $4.50 6.70%$7.20 6.70% $4.80 6.70% $7.68 6.70% $5.13 6.70% $8.20 6.70% % change from 2012 CURRENT OPTION 1 OPTION 1 OPTION 1 % change from 2010 % change from 2010 % change from 2011 % change from 2011 % change over 2012 Option Two ORDINANCE NO. 03-11 AN ORDINANCE AMENDING THE WATER RATE SCHEDULES OF THE TOWN OF ESTES PARK, COLORADO WHEREAS, the Board of Trustees has determined that it is necessary to amend the Water Rate Schedules of the Town of Estes Park. NOW, THEREFORE, BE IT ORDAINED BY THE BOARD OF TRUSTEES OF THE TOWN OF ESTES PARK, COLORADO: Section 1: That the Water Rate Schedules shall be amended as more fully set forth on Exhibit “A”. Section 2: These rate schedules will take effect April 1, 2011. PASSED AND ADOPTED BY THE BOARD OF TRUSTEES OF THE TOWN OF ESTES PARK, COLORADO THIS 8th DAY OF FEBRUARY, 2011. TOWN OF ESTES PARK By: Mayor ATTEST: Town Clerk I hereby certify that the above Ordinance was introduced and read at a regular meeting of the Board of Trustees on the _____ day of _____________, 2011 and published in a newspaper of general circulation in the Town of Estes Park, Colorado, on the ________ day of , 2011, all as required by the Statutes of the State of Colorado. Town Clerk Exhibit A TOWN OF ESTES PARK Volumetric Charge 2010 2010 2011 2011 2012 2012 2013 2013 RATE CLASS Urban Rural Urban Rural Urban Rural Urban Rural Residential $3.77 $6.03 $3.96 5.04%$6.34 5.14% $4.18 5.56% $6.69 5.52% $4.40 5.26% $7.04 5.23% Commercial $3.67 $5.88 $3.76 2.45%$6.34 7.82% $3.85 2.39% $6.16 -2.84% $3.90 1.30% $6.24 1.30% Pumped Flow $5.28 $8.44 $5.55 5.11%$8.88 5.21% $5.81 4.68% $9.30 4.73% $6.08 4.65% $9.73 4.62% Bulk Water $4.22 $6.75 $4.25 0.71%$6.80 0.74% $4.25 0.00% $6.80 0.00% $4.25 0.00% $6.80 0.00% % change from 2012 % change from 2012 CURRENT OPTION 2 OPTION 2 OPTION 2 % change from 2010 % change from 2010 % change over 2011 % change from 2011 TOWN OF ESTES PARK Proposed Water Rate Schedule 2011-2013 created 2/7/11 TO CALCULATE YOUR MONTHLY WATER BILL: Follow the formula below using the charts for Base Fee and Volume Charge on this page Base Fee + [ (Gallons Used divided by 1,000) x Volume Charge] = Monthly Water Bill OPTION 2 BASE FEE BY METER SIZE *Most residential meters are 3/4" METER SIZE 2010 2010 2011 2011 2012 2012 2013 2013 Inches:Urban Rural Urban Rural Urban Rural Urban Rural 5/8"$17.90 $28.67 $19.05 $30.50 6.40%$20.35 $32.55 6.77%$21.75 $34.80 6.90% 3/4" *$17.90 $28.67 $19.05 $30.50 6.40%$20.35 $32.55 6.77%$21.75 $34.80 6.90% 1"$19.67 $31.50 $24.80 $39.70 26.06%$30.60 $48.95 23.34%$36.30 $58.10 18.66% 1-1/2"$23.90 $38.27 $39.00 $62.40 43.34%$55.90 $89.45 43.34%$72.45 $115.90 29.59% 2"$26.85 $42.98 $42.15 $67.45 73.64%$73.20 $117.10 73.64%$115.95 $185.50 58.41% 3"$61.59 $98.56 $96.20 $153.90 63.93%$157.70 $252.30 63.93%$217.50 $348.00 37.93% 4"$86.32 $138.13 $153.40 $245.45 69.16%$259.50 $415.20 69.16%$362.55 $580.10 39.71% CURRENT RATES OPTION 2 avg. % incr. over 2010 OPTION 2 avg. % incr. over 2011 OPTION 2 avg. % incr. over 2012 Water Rate Study DRIVING FACTORS Water Rate Study DRIVING FACTORS Water Rates Three Years in Review y 2007 financial plan7p y 5.6% rate increases adopted 2008-2010 y Revenues failed to meet projectionspj y Debt service requirements y Depreciated Assetsp y 2010 review of rates {CIP and Depreciated assets {Meet Debt Service requirements 2007 Water Utility Financial Plan 2007 Financial Plan Town of Estes -7 “Rates should be reviewed after two consecutive years of loss of revenue or diminishing reserves as a result of covering costs…”(HDR 2007) “A i d l l f i l f di f “An increased level of capital funding from rates will strengthen the utilities’ debt service coverage ratio ” (HDR 2007)ratio. (HDR 2007) “Staff recommends reviewing the water rates in three years if rates are approved” (Utilities' Committee three years if rates are approved (Utilities' Committee 2007) Revenue Changes Over Three Years y Water Sales {Down 5.8% y Investment Income {Down 88% y Development Tap Fees %{71% Revenues CONSERVATION and PRECIPITATIONCONSERVATION and PRECIPITATION 2008 2009 2010200820092010 Water Sales (gallons)426,003,368 409,321,201 401,500,084 Over the last three years sales dropped byyppy 24,503,284 gallons Revenues DEVELOPMENTDEVELOPMENT 2007 201020072010 Actual Tap fees $688,000 $198,000fees 71% Drop in Tap Fees71% Drop in Tap Fees Rates Option One CURRENT RATES OPTION 1 avg. % incr. over 2010 OPTION 1 avg. % incr. over 2011 OPTION 1 avg. % incr. over 2012 2010 2010 2011 2011 2012 2012 2013 2013 Urban Rural Urban Rural Urban Rural Urban Rural20102011 2012UrbanRuralUrbanRuralUrbanRuralUrbanRural 5/8"$17.90 $28.67 $19.10 $30.59 6.70%$20.38 $32.64 6.70%$21.74 $34.83 6.70% 3/4" *$17 90 $28 67 $19 10 $30 59 6 70%$20 38 $32 64 6 70%$21 74 $34 83 6 70%3/4" *$17.90 $28.67 $19.10 $30.59 6.70%$20.38 $32.64 6.70%$21.74 $34.83 6.70% 1"$19.67 $31.50 $20.99 $33.61 6.70%$22.39 $35.86 6.70%$23.89 $38.27 6.70% 1-1/2"$23.90 $38.27 $25.50 $40.83 6.70%$27.21 $43.57 6.70%$29.03 $46.49 6.70% 2"$26.85 $42.98 $28.65 $45.86 6.70%$30.57 $48.93 6.70%$32.62 $52.21 6.70% 3"$61.59 $98.56 $65.72 $105.16 6.70%$70.12 $112.21 6.70%$74.82 $119.73 6.70% 4"$86.32 $138.13 $92.10 $147.38 6.70%$98.27 $157.26 6.70%$104.86 $167.80 6.70% Rate Option One cont… Rate per thousand gallons CURRENT OPTION 1 OPTION 1 OPTION 1 2010 2010 2011 % change 2011 % change 2012 % change 2012 % chang 2013 % change 2013 % change g from 2010 g from 2010 g from 2011 g e from 2011 g from 2012 g over 2012RATE CLASS Urban Rural Urban Rural Urban Rural Urban Rural Residential $3.77 $6.03 $4.02 6.70%$6.43 6.70% $4.29 6.70% $6.87 6.70% $4.58 6.70% $7.33 6.70% Commercial $3.67 $5.88 $3.92 6.70%$6.27 6.70% $4.18 6.70% $6.69 6.70% $4.46 6.70% $7.14 6.70% Pumped Flow $5.28 $8.44 $5.63 6.70%$9.01 6.70% $6.01 6.70% $9.61 6.70% $6.41 6.70% $10.25 6.70% Bulk Water $4.22 $6.75 $4.50 6.70%$7.20 6.70% $4.80 6.70% $7.68 6.70% $5.13 6.70% $8.20 6.70% Option Two avg %avg %avg %CURRENT RATES OPTION 2 avg. % incr. over 2010 OPTION 2 avg. % incr. over 2011 OPTION 2 avg. % incr. over 2012 2010 2010 2011 2011 2012 2012 2013 2013 Urban Rural Urban Rural Urban Rural Urban Rural 5/8"$17.90 $28.67 $19.05 $30.50 6.40%$20.35 $32.55 6.77%$21.75 $34.80 6.90% 3/4" *$17.90 $28.67 $19.05 $30.50 6.40%$20.35 $32.55 6.77%$21.75 $34.80 6.90% 1"$19.67 $31.50 $24.80 $39.70 26.06%$30.60 $48.95 23.34%$36.30 $58.10 18.66% 1 1/2"$23 90 $38 27 $39 00 $62 40 43 34%$55 90 $89 45 43 34%$72 45 $115.9 0 29 59%1-1/2 $23.90 $38.27 $39.00 $62.40 43.34%$55.90 $89.45 43.34%$72.45 0 29.59% 2"$26.85 $42.98 $42.15 $67.45 73.64%$73.20 $117.10 73.64%$115.95 $185.5 0 58.41% 3"$61.59 $98.56 $96.20 $153.90 63.93%$157.70 $252.3 0 63.93%$217.50 $348.0 0 37.93% 4"$86.32 $138.13 $153.40 $245.45 69.16%$259.50 $415.2 0 69.16%$362.55 $580.1 0 39.71% Option Two cont…. Rate per thousand gallons CURRENT OPTION 2 OPTION 2 OPTION 2 2010 2010 2011 % chang efrom 2011 % chang efrom 2012 % chang e over 2012 % chang e from 2013 % chang efrom 2013 % chang efrome from 2010 e from 2010 e over 2011 from 2011 e from 2012 e from 2012RATE CLASS Urban Rural Urban Rural Urban Rural Urban Rural Residential $3.77 $6.03 $3.96 5.04%$6.34 5.14% $4.18 5.56% $6.69 5.52% $4.40 5.26% $7.04 5.23% Commercial $3.67 $5.88 $3.76 2.45%$6.34 7.82% $3.85 2.39% $6.16 - 2.84% $3.90 1.30% $6.24 1.30% PdPumped Flow $5.28 $8.44 $5.55 5.11%$8.88 5.21% $5.81 4.68% $9.30 4.73% $6.08 4.65% $9.73 4.62% Bulk Water $4.22 $6.75 $4.25 0.71%$6.80 0.74% $4.25 0.00% $6.80 0.00% $4.25 0.00% $6.80 0.00% Rates cont…Rates cont… $3 60 Chai Latte $3.60ChaiLatte Grande $1.60Regular Grande Monthly avg. Increase to an $2 10 Coffee yg Urban Residential Water customer $2.10 Bond Requirements 2011 Debt Service Ratio Minimum {Debt Service Ratio is set at 1.1 or $42,900 above expenses {90 Day Operating and Maintenance or $715,000 restricted fund balancefund balance Capital Capital Replacement Underground Water LinesLines y Assume required replacement is one mile a year y 109 miles of pipe109 miles of pipe y $100/foot replacement cost y 5,280 x $100 = $528,000 per year y 109 yrs. X $528,000 = $57,552,000 y Financial Plan Recommendation: A general financial guideline states that at a minimum a utility A general financial guideline states that, at a minimum, a utility should fund an amount equal to or greater than annual depreciation through rates. ’d ii $8 ()y Water’s depreciation, $580,170 (2009 CAFR) Recommendations y 3.7% rate increase to meet 2011 budget37 g y 3% to fund depreciation of assets for capital management {Ex. 2011 CIP budget is $486,000 {However to fund the 2011 CIP the Fund Balance is being reduced by ($456 000)reduced by ($456,000) {Rates are funding ($30,000) of the budgeted CIP y 6.7% for 2012-201373 Questions COPIES OF RATE STUDIES CAN BE FOUND AT Questions COPIES OF RATE STUDIES CAN BE FOUND AT WWW.ESTES.ORG/LIGHTPOWER Utility Rate Study for Light & Power Utility Presented by Cil Pierce and Kevin Lorentzen, HDR Engineering, Inc. February 8, 2011 Overview of the Presentation Overview of a comprehensive rate studyOverview of a comprehensive rate study Review the results of the Light and g Power (L&P) utility rate study: 9 Revenue requirement 9 Cost of service 9 Rate Options and Recommendations Public Hearing Direction from the Board 2 Direction from the Board Overview of a Comprehensive Rate Study Revenue Requirement Compares the revenues of the utility to its expenses to determine the overall level of rate adjustmentthe overall level of rate adjustment Equitably allocates the revenue Cost of Service requirements between the various customer classes of service Rate Design Design rates for each class of service to meet the revenue needs of the utility, along with any other 3 y, g y rate design goals and objectives Financial Planning Considerations Evaluate on a stand-alone basis Debt service coverage (DSC) Debt service coverage (DSC) ratios “Minimum” reserve levels Adequate Funding of Renewal and Replacement Capital PjProjects 9 Annual depreciation expense 4 Key Issues for the Study Focus on adequate funding to maintain existing system Renewal and replacement funding is key to: 9 Maintaining level of service in the most cost effective manner •Regular repair and maintenance extends useful lifeRegular repair and maintenance extends useful life •Reduces risk and liability due to potential failures 9 Funding capital from rates aids utility financial stability •Improves debt service coverage ratio (DSC) Reset purchase power rider to Zero in 2011 5 Reset purchase power rider to Zero in 2011 9 2012 through 2015 pass through purchase power rider Light and Power 6 Light and Power Capital Improvement Plan Revised 2010 2011 2012 2013 2014 2015 Revised 2010 2011 2012 2013 2014 2015201020112012201320142015 Capital Projects ‐ Capital Equipment $371 $405 $310 $310 $310 $310 Overhead 884 250 625 725 650 350 Underground 1 086 120 120 120 120 340 2010 2011 2012 2013 2014 2015 Capital Projects ‐ Capital Equipment $371 $405 $310 $310 $310 $310 Overhead 884 250 625 725 650 350 Underground 1 086 120 120 120 120 340 Underground 1,086 120 120 120 120 340 Other Projects 60 60 40 40 40 40 Total Capital Projects $2,401 $835 $1,095 $1,195 $1,120 $1,040 Less: Funding Sources Underground 1,086 120 120 120 120 340 Other Projects 60 60 40 40 40 40 Total Capital Projects $2,401 $835 $1,095 $1,195 $1,120 $1,040 Less: Funding Sources Operating Reserves $1,801 $85 $295 $345 $220 $90 New Debt 0 0 0 0 0 0 $1,801 $85 $295 $345 $220 $90 CIP Funded Through Rates $600 $750 $800 $850 $900 $950 Operating Reserves $1,801 $85 $295 $345 $220 $90 New Debt 0 0 0 0 0 0 $1,801 $85 $295 $345 $220 $90 CIP Funded Through Rates $600 $750 $800 $850 $900 $950 g $$$$$$g $$$$$$ Total 6-year (2010-2015) CIP is $7.6 million: avg. $1.28 Million Funding CIP from rates is 99% of projected depreciation expense 7 by 2015: transitions from $600,000-2010 to $950,000 by 2015 Total 6 –yr. CIP funded $4.8 million rates, $2.8 million reserves L&P Utility Revenue Requirement Results ($000)Revenue Requirement Results ($000) 2010 2011 2012 2013 2014 2015 Revenues Charge for Service $11,864 $11,923 $12,042 $12,163 $12,284 $12,407 Miscellaneous Revenue 470 470 520 541 554 552 ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ Total Revenues $12,334 $12,393 $12,562 $12,703 $12,839 $12,959 Expenses Total O&M $9,677 $10,093 $10,781 $11,507 $11,721 $11,941 Taxes and Transfers 1,363 1,393 1,397 1,411 1,425 1,439 CIP Funded Through Rates 600 750 800 850 900 950 Net Debt Service 447 448 449 450 445 450 Change in Working Capital 0 0 100 (24) 0 0 ‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐ Total Application of Funds $12,088 $12,685 $13,527 $14,194 $14,491 $14,780 Balance/(Deficiency) of Funds $246 ($292) ($965) ($1,490) ($1,652) ($1,821) Balance as % of Rev from Rates ‐2.3% 2.8% 9.1% 13.9% 15.2% 16.6% 8 In 2011 the purchase power rider will be reset to Zero. Summary of the L&P Revenue Requirement Results Revenue Requirement Results Overall cumulative deficiency is reduced to y 10% by pass through purchase power revenue 2011 total revenue requirement includes the purchase power rider (pass through) 2012 through 2015 rate adjustments are only for local cost increases due to distribution and other Town costs of operating the utility 9 Purchase power rider is pass through again 9 Additional increase beyond proposed rate 9 adjustments Summary of the L&P Financial Planning ConsiderationsFinancial Planning Considerations L&P Utility meets DSC ratio every year of review period CIP Funding from rates helps utility meet debt service coverage 90 days O&M target met 10 through 2015 Summary of L&P Cost of Service (000’s) Class of Service 2010 Rate Revenues Allocated Costs Tax Adjust. With Rate Increase $ Difference % Difference Residential $5,315 $5,676 ($47) ($409) 7.7% Residential Demand 785 836 (7) ($58) 7.4% Residential Energy TOD 411 438 (4) ($31) 7.6% Residential Basic TOD 36 36 0 $0 ‐0.9% Small Commercial 2,449 2,320 17 $146 ‐6.0% Small Commercial TOD 24 22 0 $2 ‐7.4% Large Commercial 2,139 2,149 (1) ($11) 0.5% Large Comm. Primary 448 432 2 $19 ‐4.2% Large Commercial TOD 14 14 (0)($1)64%Large Commercial TOD 14 14 (0)($1)6.4% Municipal 301 288 2 $15 ‐5.0% Outdoor Area Lights 2 4 (0) ($2) 86.6% Total $11,923 $12,215 ($38) ($330) 2.8% Snap shot in time; within 5% +/- overall adjustment Lower adjustments allow for modified implementation of cost of service: 11 of cost of service: 9 Commercial rates held to 2010 levels, helps to minimize adjustment to residential rates Rate Design 12 Goals of Rate Design Easy to understandEasy to understand Easy to administer Equitable and non-Equitable and non discriminating (cost-based) Provide revenue stability Promote conservation/ efficient use of resource Economic developmentEconomic development Those who benefit should pay The problem of competing goals! 13 The problem of competing goals! L&P Rate Design Options L&P – Maintain basic rate structure 9 Option 1 – Gradually increase customer charge over three years 9 Option 2 – Same as Option 1, but implementing a minimum energy billing for residential and small billing for residential and small commercial customer classes 9 Includes Purchase Power Rider (PPR) in 2011 rates (reset PPR) 2012 to 2015 PPR is pass th gh l 14 through, as usual Light and Power Rate Design Options 1 and 2 – Customer Charge Increased, Apply AdjustmentsCustomer Charge Increased, Apply Adjustments 2010 Present 2011 2012 2013 Residential 2010 Present 2011 2012 2013 Residential Customer Charge ‐ $/Month $4.70 $4.70 $6.00 $6.35 $6.70 Energy Charge ‐ $/kWh $0.09796 $0.10074 $0.10117 $0.10210 $0.10305 Residential Demand [1] Customer Charge $/Month $5 87 $5 87 $7 00 $7 35 $7 70 Customer Charge ‐ $/Month $4.70 $4.70 $6.00 $6.35 $6.70 Energy Charge ‐ $/kWh $0.09796 $0.10074 $0.10117 $0.10210 $0.10305 Residential Demand [1] Customer Charge $/Month $5 87 $5 87 $7 00 $7 35 $7 70Customer Charge ‐ $/Month $5.87 $5.87 $7.00 $7.35 $7.70 Energy Charge ‐ $/kWh $0.05597 $0.05875 $0.05867 $0.05943 $0.06021 Demand Charge ‐ $/kW $9.83 $9.83 $10.33 $10.48 $10.62 Residential Ener gy TOD Customer Charge ‐ $/Month $5.87 $5.87 $7.00 $7.35 $7.70 Energy Charge ‐ $/kWh $0.05597 $0.05875 $0.05867 $0.05943 $0.06021 Demand Charge ‐ $/kW $9.83 $9.83 $10.33 $10.48 $10.62 Residential Ener gy TODgy Customer Charge ‐ $/Month $5.87 $5.87 $7.00 $7.35 $7.70 Energy Charge ‐ $/kWh On‐Peak $0.11902 $0.12180 $0.11620 $0.11758 $0.11900 Off‐Peak $0.05224 $0.05502 $0.05806 $0.05875 $0.05946 gy Customer Charge ‐ $/Month $5.87 $5.87 $7.00 $7.35 $7.70 Energy Charge ‐ $/kWh On‐Peak $0.11902 $0.12180 $0.11620 $0.11758 $0.11900 Off‐Peak $0.05224 $0.05502 $0.05806 $0.05875 $0.05946OffPeak$0.05 4 $0.0550 $0.05806 $0.05875 $0.05946 Residential Basic TOD Customer Charge ‐ $/Month $5.87 $5.87 $7.00 $7.35 $7.70 Energy Charge ‐ $/kWh $$$$$ Off Peak $0.05 4 $0.0550 $0.05806 $0.05875 $0.05946 Residential Basic TOD Customer Charge ‐ $/Month $5.87 $5.87 $7.00 $7.35 $7.70 Energy Charge ‐ $/kWh $$$$$ 15Residential Option 2: $10 min. energy bill, lower energy cost On‐Peak $0.11653 $0.11931 $0.11653 $0.11814 $0.11946 Off‐Peak $0.09332 $0.09610 $0.09332 $0.09461 $0.09567 On‐Peak $0.11653 $0.11931 $0.11653 $0.11814 $0.11946 Off‐Peak $0.09332 $0.09610 $0.09332 $0.09461 $0.09567 Light and Power Rate Design Options 1 and 2 – Customer Charge Increased, Apply AdjustmentsCustomer Charge Increased, Apply Adjustments 2011 2012 2013 Small Commercial Customer Charge ‐ $/Month $8.52 $9.50 $9.85 Energy Charge ‐$/kWh $0.09740 $0.09801 $0.09919 2011 2012 2013 Small Commercial Customer Charge ‐ $/Month $8.52 $9.50 $9.85 Energy Charge ‐$/kWh $0.09740 $0.09801 $0.09919Energy Charge $/kWh $0.09740 $0.09801 $0.09919 Small Commercial TOD Customer Charge ‐ $/Month $9.69 $10.50 $10.85 Energy Charge ‐ $/kWh On‐Peak $0.12056 $0.12205 $0.12356 Off Peak $0 05286 $0 05351 $0 05417 Energy Charge $/kWh $0.09740 $0.09801 $0.09919 Small Commercial TOD Customer Charge ‐ $/Month $9.69 $10.50 $10.85 Energy Charge ‐ $/kWh On‐Peak $0.12056 $0.12205 $0.12356 Off Peak $0 05286 $0 05351 $0 05417 Small Commercial Off‐Peak $0.05286 $0.05351 $0.05417 Large Commercial Customer Charge ‐ $/Month $11.75 $13.00 $13.35 Energy Charge ‐ $/kWh $0.04435 $0.04493 $0.04555 Demand Charge ‐ $/kW $10.83 $10.98 $11.14 Off‐Peak $0.05286 $0.05351 $0.05417 Large Commercial Customer Charge ‐ $/Month $11.75 $13.00 $13.35 Energy Charge ‐ $/kWh $0.04435 $0.04493 $0.04555 Demand Charge ‐ $/kW $10.83 $10.98 $11.14 Option 2 rate: $10 minimum energy billing; Large Commercial (Primary) Customer Charge ‐ $/Month $11.28 $12.48 $12.82 Energy Charge ‐ $/kWh $0.04258 $0.04313 $0.04373 Demand Charge ‐ $/kW $10.40 $10.54 $10.69 Large Commercial TOD Large Commercial (Primary) Customer Charge ‐ $/Month $11.28 $12.48 $12.82 Energy Charge ‐ $/kWh $0.04258 $0.04313 $0.04373 Demand Charge ‐ $/kW $10.40 $10.54 $10.69 Large Commercial TOD gy g; lower energy charge Large Commercial TOD Customer Charge ‐ $/Month $15.00 $15.35 $15.70 Energy Charge ‐ $/kWh On‐Peak $0.05971 $0.06050 $0.06142 Off‐Peak $0.03237 $0.03280 $0.03330 Demand Charge ‐ $/kW $13.03 $13.21 $13.40 Large Commercial TOD Customer Charge ‐ $/Month $15.00 $15.35 $15.70 Energy Charge ‐ $/kWh On‐Peak $0.05971 $0.06050 $0.06142 Off‐Peak $0.03237 $0.03280 $0.03330 Demand Charge ‐ $/kW $13.03 $13.21 $13.40 16 g $/$$$ Municipal Customer Charge ‐ $/Month $0.00 $0.00 $0.00 Energy Charge ‐ $/kWh $0.09164 $0.09292 $0.09422 Outdoor Lights ‐ $/Light/Month $10.48 $10.62 $10.77 g $/$$$ Municipal Customer Charge ‐ $/Month $0.00 $0.00 $0.00 Energy Charge ‐ $/kWh $0.09164 $0.09292 $0.09422 Outdoor Lights ‐ $/Light/Month $10.48 $10.62 $10.77 Light and Power Rate Design Options 2 – Same as Option 1, with Minimum Energy Billas Option 1, with Minimum Energy Bill Proposed RatesProposedRates 2011 2012 2013 Proposed Rates 2011 2012 2013 Proposed Rates Residential Customer Charge ‐ $/Month $6.00 $6.35 $6.70 Minimum Energy billing ‐ $/Month $10.00 $10.00 $10.00 Residential Customer Charge ‐ $/Month $6.00 $6.35 $6.70 Minimum Energy billing ‐ $/Month $10.00 $10.00 $10.00 Energy Charge ‐ $/kWh $0.09884 $0.09979 $0.10075 Small Commercial Energy Charge ‐ $/kWh $0.09884 $0.09979 $0.10075 Small CommercialSmall Commercial Customer Charge ‐ $/Month $8.52 $9.50 $9.85 Minimum Energy billing ‐ $/Month $10.00 $10.00 $10.00 Energy Charge $/kWh $0 09624 $0 09686 $0 09804 Small Commercial Customer Charge ‐ $/Month $8.52 $9.50 $9.85 Minimum Energy billing ‐ $/Month $10.00 $10.00 $10.00 Energy Charge $/kWh $0 09624 $0 09686 $0 09804 17 Energy Charge ‐ $/kWh $0.09624 $0.09686 $0.09804Energy Charge ‐ $/kWh $0.09624 $0.09686 $0.09804 Wind Energy/Renewable Premium Rates and Net Metering Chargesand Net Metering Charges Rate Longmont 2010 - $/kWh $0.0233 Rate Longmont 2010 - $/kWh $0.0233 Longmont 2010 $/kWh $0.0233 Loveland 2010 - $/kWh $0.0220 Fort Collins 2010 - $/kWh $0.0200 Current Estes Park Fee - $/kWh $0.0130 Proposed 2011 Estes Park Fee - $/kWh $0.02 10 Longmont 2010 $/kWh $0.0233 Loveland 2010 - $/kWh $0.0220 Fort Collins 2010 - $/kWh $0.0200 Current Estes Park Fee - $/kWh $0.0130 Proposed 2011 Estes Park Fee - $/kWh $0.02 10 Proposed 2011 Estes Park Fee $/kWh $0.02 10 Proposed 2012 Estes Park Fee - $/kWh $0.0220 Proposed 2013 Estes Park Fee - $/kWh $0.0225 Proposed 2011 Estes Park Fee $/kWh $0.02 10 Proposed 2012 Estes Park Fee - $/kWh $0.0220 Proposed 2013 Estes Park Fee - $/kWh $0.0225 Wi d P h d 2010 d 2011 bl Wind Power charges update 2010 and 2011 renewable energy rate Net Metering: Recommend continued crediting each month for excess energy 18 9 Credit at the wholesale energy cost/charge 9 Refund once at year end for any total excess energy L&P Residential Monthly Bill Comparison Option 1 with Present RatesOption 1 with Present Rates 19 L&P Residential Monthly Bill Comparison Option 2 at Present RatesOption 2 at Present Rates 20 L&P Residential Monthly Bill Comparison for Options 1 and 2Bill Comparison for Options 1 and 2 21 Policy Decisions Needed and RecommendationsRecommendations Policy Direction Needed:Recommendations:Policy Direction Needed: Revenue Requirements: ¾Timing and level of rates Revenue Requirements ¾As presented Cost of Service: ¾Implement cost of service results or apply adjustments equally Cost of Service: ¾L&P – Modified cost of serviceor apply adjustments equally across the board Rate Design: service Rate Design: ¾Customer charge increased ¾Option 1 or 2 g ¾Option 2 with minimum bill 22 Questions and Answers 23