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Municipal & Financial Services Group
Village of Downers GroveVillage of Downers GroveWater Rate StudyWater Rate Study
Rate Study Overview and RecommendationsRate Study Overview and Recommendations
September 21, 2010
Presented by:David Hyder
Municipal & Financial Services Group
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AgendaAgenda
Rate Requirements Overview
Rate Structure Alternatives Overview
Recommendations
Municipal & Financial Services Group
Rate Requirements OverviewRate Requirements Overview
3
Municipal & Financial Services Group
Contributions to Reserves
Outstanding Debt(Annual Principal and Interest Payments)
Planned Capital Improvement Projects
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Total Annual Revenue RequirementsTotal Annual Revenue Requirements
Operating and Maintenance Expenses(Day to Day Operations)
Annual
Revenue Requirement
Municipal & Financial Services Group
Projected Cash Flow with Current RatesProjected Cash Flow with Current Rates
5
$0
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
2010 2011 2012 2013 2014 2015
Net Revenue Requirements Total Revenues under Current Rates
Municipal & Financial Services Group
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Rate Requirements - Current Rate Rate Requirements - Current Rate Structure Structure
2010 Current
Rates2011 2012 2013 2014 2015
Inside Village – Rate per CCF* $3.31 $3.77 $4.30 $4.90 $5.39 $5.88
Outside Village – Rate per CCF* $3.85 $4.39 $5.00 $5.70 $6.27 $6.84
Required Rate Increase 14.0% 14.0% 14.0% 10.0% 9.0%
* Current Minimum Bill of 2 CCF
Municipal & Financial Services Group
Rate Structure Alternative OverviewRate Structure Alternative Overview
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Municipal & Financial Services Group
Water Rate Structure Alternatives
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• Alternative A - Current Rate Structure with Updated Costs
• Alternative B - Fixed Charge Based on Meter Size with Unit Rate Volume Charge
• Alternative C - Fixed Charge Based on Meter Size with Multiple Class Inclining Block Rates
*Each Alternative Produces the Same Amount of RevenueWater Increases will produce 14% more revenue for each alternative
Municipal & Financial Services Group
RecommendationsRecommendations
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Municipal & Financial Services Group
Water Rate Recommendation
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• Alternative B rate structure is recommended for implementation in 2011
• Alternative B will accomplish the following objectives:
Generate a 14% increase in revenues.
Increase revenue stability within the Water Fund.
Impose the fixed charge based on meter size resulting in greater equity among users of the system.
Minimizes the impact on most customer due to limited change in structure (compared to Alternative C)
Municipal & Financial Services Group
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Recommended Water RatesRecommended Water Rates
Bi-Monthly Fixed Charge per Meter Size
2011 2012 2013
5/8” $8.25 $9.31 $10.50
1” $12.40 $13.96 $15.75
1 ½” $41.25 $46.53 $52.52
2” $66.00 $74.45 $84.02
3” $123.70 $139.59 $157.55
4” $206.15 $232.66 $262.58
6” $412.30 $465.31 $525.15
10” $989.50 $1,116.75 $1,260.36
Bi-Monthly Volume Charge (per CCF) 2011 2012 2013
Inside Village $3.30 $3.73 $4.25
Outside Village $3.80 $4.34 $4.95
% of Total Revenue from Fixed Charge 14% 14% 14%
Municipal & Financial Services Group
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Alternative B Phase In Alternative B Phase In
Bi-Monthly Fixed Charge per Meter Size
2011 2012 2013
5/8” $5.65 $7.71 $10.50
1” $8.47 $11.57 $15.75
1 ½” $28.23 $38.57 $52.52
2” $45.18 $61.72 $84.02
3” $84.70 $115.72 $157.55
4” $141.17 $192.87 $262.58
6” $282.35 $385.74 $525.15
10” $677.63 $925.78 $1,260.36
Bi-Monthly Volume Charge (per CCF) 2011 2012 2013
Inside Village $3.50 $3.85 $4.25
Outside Village $4.00 $4.45 $4.95
% of Total Revenue from Fixed Charge 9.5% 11.5% 14%
Municipal & Financial Services Group
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Residential Sample Bi-Monthly BillResidential Sample Bi-Monthly Bill5/8” Meter - 5 CCF (Small User)5/8” Meter - 5 CCF (Small User)
$17
$25 $23
$-
$5
$10
$15
$20
$25
$30
Current Bill Alternative B 2011 Alternative B Phased 2011
Municipal & Financial Services Group
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Residential Sample Bi-Monthly BillResidential Sample Bi-Monthly Bill5/8” Meter - 15 CCF (Average User)5/8” Meter - 15 CCF (Average User)
$50
$58 $58
$44
$46
$48
$50
$52
$54
$56
$58
$60
Current Bill Alternative B 2011 Alternative B Phased 2011
Municipal & Financial Services Group
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Residential Sample Bi-Monthly BillResidential Sample Bi-Monthly Bill5/8” Meter - 40 CCF (High User)5/8” Meter - 40 CCF (High User)
$132
$140
$146
$125
$130
$135
$140
$145
$150
Current Bill Alternative B 2011 Alternative B Phased 2011
Municipal & Financial Services Group
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Commercial Sample Bi-Monthly BillCommercial Sample Bi-Monthly Bill1 ½” Meter - 100 CCF (Average User)1 ½” Meter - 100 CCF (Average User)
$331
$371 $378
$300
$310
$320
$330
$340
$350
$360
$370
$380
$390
Current Bill Alternative B 2011 Alternative B Phased 2011
Municipal & Financial Services Group
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Industrial / School Sample Bi-Monthly Industrial / School Sample Bi-Monthly BillBill
2” Meter - 200 CCF (Average User)2” Meter - 200 CCF (Average User)
$662
$726
$745
$620
$640
$660
$680
$700
$720
$740
$760
Current Bill Alternative B 2011 Alternative B Phased 2011
Municipal & Financial Services Group
Recommended Tap Fees
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• Fees imposed to recover the cost of labor and materials incurred while taping the water main for a new connection.
• Tap fees should be increased annually due to inflation.
Line Size Current - Tap Fee 2011 - Tap Fee
1" $200 $230
1 1/2" $250 $370
2" $325 $425
Over 2" $400 $590
Municipal & Financial Services Group
Recommended Meter Charges
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• Charges imposed on new customers to recover cost of meter and meter installation.
• Meter charges should be increased annually due to inflation.
Meter Size Current - Meter Charge 2011 - Meter Charge
5/8” or 3/4" $250 $260
1" $325 $370
1 1/2" $400 $1,500
2" $500 $1,780
3” - $2,940
4” - $3,900
6” - $6,240
Municipal & Financial Services Group
Recommended Capacity Fees
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• Fees imposed on new customers to recover capital cost of providing system capacity.
• We recommend that capacity fees for 4” lines and larger be evaluated on a case by case basis.
LineCurrent Proposed
Connection Fee Capacity Fee Total Capacity Fee
1" $1,900 $600 $2,500 $2,100
1 1/4" $- $- $- $2,300
1 1/2" $2,200 $600 $2,800 $5,200
2" $2,400 $600 $3,000 $10,300
4" $2,900 $600 $3,500 $16,500
6" $6,500 $600 $7,100 $31,000
8" $11,800 $600 $12,400 $51,600
10" $18,300 $600 $18,900 $103,200
12" $26,300 $600 $26,900 $247,600
Municipal & Financial Services Group
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Next StepsNext Steps
Final Report and Vote on Rate Change - October
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