Regional and National Water and Sewer Rate Trends

Brian F. Goetz

Project Manger Tighe & Bond

Regional and National Water and Sewer Rate Trends

Environmental Business Council of New England

New Hampshire Chapter Meeting

February 12, 2013

Manchester, New Hampshire

Brian F. Goetz

Project Manager

Portsmouth, NH

Water and Sewer Systems Generally Rely on Metered Use for Revenue

Water

Meter

• Water and sewer are set on a zero sum basis

► Reductions in revenues due to decreased usage, rate structure changes or other factors result in the need for rate increases

Principals of Rate Setting

Typical Rate Designs based on Customer’s Metered Usage

• Common variable usage charge structures

► Uniform: All metered water and sewer use billed at the same unit rate.

► Inclining Block: Metered water and sewer use billed at increased rate with increased use.

► Seasonal: Metered water use billed at higher rate during summer for usage that exceeds winter usage.

► Pyramid: Metered water and sewer use billed at increased rate with increased use to a point and then rate reduced for higher usage.

Typical Rate Setting Components

Financial Model

Technical Evaluation

of Data

Water & Sewer System Costs

Capital Costs and Financing

Customer Allocations Develop

Alternatives

Regional and

National Trends

Policy Factors

Regional Rate Comparison for City of Portsmouth, NH

1. New Hampshire Systems

2. Systems with Similar Demographics

3. Coastal Communities

Rate Comparison - Water

Rate Comparison - Sewer

Rate Comparison - Combined

Rate Comparison – Sewer Bill Offsets

• Some Systems Utilize General Funds to offset capital and/or operating costs:

• Peabody, MA:

• 20% of sewer costs are paid for by the General Fund

• Wolfeboro, NH:

• All sewer capital projects are financed through the General Fund (43% of overall sewer costs)

Sewer Billing based on a % of Water Consumption

■ Attleboro – Sewer uses 90% of water consumption for billing

■ Clinton – Sewer uses 75% of water consumption for billing

■ Concord – Sewer uses 77% of water consumption for billing, only during summer months

■ Dighton – Sewer uses 80% of water consumption for billing

■ Huntington – Sewer use is based on 80% of water consumption

■ Mansfield – Sewer use is based on 85% of water consumption

■ Melrose – Sewer use is based on 90% of water consumption

■ North Brookfield – Sewer use is based on 90% of water consumption

■ Northbridge – Uses winter average consumption for residential sewer bills year round

■ Norwood – Sewer use is based on 60% of water consumption

■ Plainfield – Sewer use is based on 85% of water consumption, only for residential customers

■ Walpole – Sewer use if based on 80% of water consumption

■ Westborough – Sewer use is based on 80% of water consumption

■ Worcester – Sewer use is based on 80% of water consumption for 5/8” metered services (residential)

Sewer - Flat Fee Structures

■ Bourne – Flat fee of $734/year which includes 45,000 gallons of consumption. $0.10/gallon after that.

■ Raynham – Flat fee of $228/year

■ Dalton – Flat fee of $110/dwelling unit, 2x/year

■ Dracut – Flat fee of $460/year

■ Tyngsborough – Flat fee of $496/year

■ Woburn – Flat fee of $328/year

■ Montague – Unmetered customers pay flat fee of $334/year

■ South Hadley – Flat fee of $265/year for residential customers

■ Granby - $183.50/Equivalent Dwelling Unit, 2x year

■ Ludlow – Well accounts are billed $50.00/person living in household

■ Stoughton – Well accounts pay $242/private home, $161/condominium

Sewer - Seasonal Rates

■ Chatham – Seasonal rates: Summer is 2x winter rate

Sewer - Early Payment Discounts

■ Mansfield – Early payment discount of 10%

■ Wakefield – Early discount of 10%

Stormwater and Infiltration Fees

■ Fall River – Stormwater fee of $140/year assessed to each customer

■ Rutland – Infiltration and inflow fee of $32.00/quarter to each customer ($128/year)

Rate Increases – Regionally 10 Year Percentages

Community Period Water Increase

Sewer Increase

Manchester, NH 2001-2010 53% 105%

Boston, MA 2001-2010 122% 56%

South Burlington, VT 2001-2010 67% 108%

Tighe & Bond’s Water and Sewer Rate Surveys

Typical Annual Homeowner’s Cost in Massachusetts

$271 $290 $321

$363

$426 $470

$323 $357

$408

$485

$584 $638

2000 2002 2004 2006 2009 2010

Average Annual Cost

Water Sewer

Note: Based on 120 HCF/90,000 gallons per year (247 gpd).

$5

.32

/ H

CF

$3

.92

/ H

CF

Water – 73% Increase Sewer – 98% Increase

Reference: Tighe & Bond Water and Sewer Rate Surveys

Results - Typical Annual Homeowner’s Cost in CT

$265 $278 $285

$331 $355

$415

$200 $211

$261

$305

$364 $369

2001 2003 2005 2007 2009 2011

Average Annual Cost

Water Sewer

Note: Based on 96 HCF/72,000 gallons per year (197 gpd).

$3

.84

/ H

CF

$4

.32

/ H

CF

Water – 57% Increase Sewer – 85% Increase

Reference: Tighe & Bond Water and Sewer Rate Surveys

National Trends - Rates

■ Overall United States Water and Sewer Rates Increased 53% from 2001 to 2009

– Black & Veach 2009/2010 Water/Wastewater Rate Survey

Combined Water and Sewer Rate Increases 2000 to 2010 (70% to 89%) 2010 Water and Wastewater Rate Survey

American Water Works Association

Combined Water and Sewer Rate Increases 2000 to 2010 (80% to 129%) 2010 Water and Wastewater Rate Survey

American Water Works Association

Combined Water and Sewer Rate Increases 2000 to 2010 (Over 130 to 233%)

2010 Water and Wastewater Rate Survey

American Water Works Association

Regional and National Trends Effecting Water and Sewer Rates

• Aging Infrastructure

• Regulatory Requirements

• Safe Drinking Water Act

• Clean Water Act (Sewer)

• Reduction in Billable Usage

Usage Trends – Regionally Vermont

■ Champlain Water District – 18% Decrease from 2001 to 2010

– Champlain Water District - “2010-2011 Annual Report”

Usage Trends – Regionally Maine

Source: Maine Public Utilities Commission – Annual Reports of Portland Water District

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

2005 2006 2007 2008 2009 2010 2011

Ave

rage

An

nu

al W

ate

r U

se (

Gal

lon

s p

er

Cu

sto

me

r)

Portland Water District - Annual Use Per Customer

Usage Trends – Regionally Massachusetts

0

50

100

150

200

250

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Massachusetts Water Resources Authority Average Daily Delivery – Million Gallons

Source: Summary Report of MWRA’s Demand Management Program for Fiscal Year 2012

Usage Trends – Regionally Connecticut

Source: Connecticut DPUC Annual Reports

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

2005 2006 2007 2008 2009 2010 2011

Tota

l An

nu

al W

ate

r Sa

les

(Gal

lon

s)

Aquarion Water Co., of Connecticut - Total Annual Water Sales

0.00

1.00

2.00

3.00

4.00

5.00

6.00

Million Gallons per Day and 5 Year Rolling Average

Usage Trends – New Hampshire

Portsmouth, NH Water Division

Source: Portsmouth Water System Master Plan (2012 draft) – Tighe & Bond

4.7

4.8 4.9 4.9

4.4 4.1 4.0 4.1

4.6 4.3

0.0

1.0

2.0

3.0

4.0

5.0

6.0

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Averag

e D

ail

y W

ith

draw

al -

Mil

lio

n G

all

on

s

City of Concord - Annual Water Treatment Withdrawals

Usage Trends – New Hampshire

Source: NHDES OneStop Data Query

Usage Trends – New Hampshire

Source: NHDES OneStop Data Query

12.3 11.5

9.9

11.3

10.2 10.9

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

2007 2008 2009 2010 2011 2012

Ave

rage

Dai

ly W

ith

dra

wal

- M

illio

n G

allo

ns

Pennichuck Water (Nashua) - Water Treatment Flows

Usage Trends – New Hampshire

Source: NHDES OneStop Data Query

0.6 0.6

0.6

0.7

0.6

0.7

0.6

0.6

0.5

0.6

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Averag

e D

ail

y W

ith

draw

al -

Mil

lio

n G

all

on

s

Town of Wolfeboro - Water Treatment Flows

Usage Trends – New Hampshire

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

2007 2008 2009 2010 2011

Aquarion Water Company of NH Average Residential Customer Annual Use (Gallons)

Source: Attachment MAN-5 NHPUC DW 12-085 Docket

■ Milwaukee, Wisconsin: 46% reduction in Residential Use since 1975

– AWWA Streamlines, August 23, 2012

■ Seattle, Washington: 30% reduction in Total Use since 1995

– AWWA Streamlines, August 23, 2012

■ Louisville, Kentucky: 20% reduction in Total Use from 1975 to 2000

– AWWA Journal, February 2011

■ “When the price of residential water increases by one percent, the quantity demanded falls by 0.41%”

– USEPA: The Importance of Water to the U.S. Economy, September 2012 Public Review Draft

Usage Trends – Nationally

Faucets – 16%

Showers – 17%

Clothes Washers – 22%

Toilet Flushing – 27%

Typical Indoor Water Use – 1990’s

SHOWER HEADS:

Typical Shower

Heads use 2.5

gallons-per-minute,

Higher Efficient

Shower Heads use

2.0 gallons-per-

minute or less.

Most full-sized High

Efficiency washers

use 13 gallons of water

per load, compared to

the 27 gallons used by

standard top loading

machines.

20 Years Later –

More Efficient Plumbing

HIGH EFFICIENCY

TOILETS:

• 1.28 to 1.6 Gallons per

Flush versus older

models that used 3.5

to 5.0 Gallons per flush

Tampa Water Study:

49% Reduction of Indoor Use after Retrofit with

High Efficiency Plumbing Fixtures

Water Efficient Appliances are Mainstream

Declining Water Use – Mark Naylor, New Hampshire Public Utilities Commission - testimony on January 11, 2013

■ “Declining water use is a national trend and the reasons are many. Among these reasons are changing attitudes toward conservation, greater use of low flow appliances, changing demographics including smaller households, economic conditions, greater use of bottled water, and customer response to the rising cost of water resulting in part from regulatory requiremtns such as the Safe Drinking Water Act.”

■ The resulting reduction in sales columes creates upward pressure on customer rates.

More frequent water billing

■ More frequent billing can result in a reduction of water use, as consumers feel the immediate impact of high water use on their bill, and are more likely to adjust for it during the next month.

■ Helps identify leaks quickly as water consumption is compared to prior month or yearly use.

Large Customers Cutting Back

■ Between 2000 to 2009 IBM cut it’s water use by 29%

■ “IBM discovered, the measuring of its water use alone created a change in behavior – just like when you keep track of every calorie you eat, you start cutting back”

– “The Big Thirst” by Charles Fishman, Free Press (2011)

IBM – Burlington, Vermont:

Large Customers Cutting Back:

Usage trends are critical to other systems:

Usage trends are critical to other systems:

Usage trends are critical to other systems:

The Car Analogy

■ 1976 Volkswagen Rabbit

■ 24 MPG

■ 2012 Honda Civic

■ 34 MPG

The Car Analogy

■ 1976 Volkswagen Rabbit ■ 2012 Honda Civic

Year Car MPG Annual Miles

Annual Gallons Change

% Change

Gasoline Cost Gal

Change in Cost

% Change in Cost

Annual Cost

Annual Cost

Change

% Annual Change in

Cost

1980 1976 Volkswagen Rabbit 24 12,000 500 $1.00 $500

2012 2012 Honda Civic 34 12,000 353 -147 -29% $3.50 $2.50 250% $1,235 $735 147%

The Car Analogy – Another Way to Look at it… Still driving the Rabbit

■ 1976 Volkswagen Rabbit

Year Car MPG Annual Miles

Annual Gallons Change

% Change

Gasoline Cost Gal

Change in Cost

% Change in Cost

Annual Cost

Annual Cost

Change

% Annual Change in

Cost

1980 1976 Volkswagen Rabbit 24 12,000 500 $1.00 $500

2012 1976 Volkswagen Rabbit 24 12,000 500 0 0% $3.50 $2.50 250% $1,750 $1,250 250%

Thank You!

Brian Goetz

Ph: 603.433.8818 ext. 24

Email: BFGoetz@Tighebond.com