t SAN ANTONIO WATER SYSTEM€¦ · 12/10/2019 · Rate Advisory Committee (RAC) Meeting #5 Agenda 1. Call to Order –Chairperson 2. Dinner & Deliberation 30 minutes 3. Citizens

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SAN ANTONIO WATER

SYSTEMRate Advisory Committee – Meeting #5December 10, 2019

Rate Advisory Committee (RAC) Meeting #5 Agenda

1. Call to Order – Chairperson

2. Dinner & Deliberation 30 minutes

3. Citizens to be Heard (3 minutes per person) 10 minutes

4. Mission Statement and Ground Rules 3 minutes

5. Meeting Objectives 5 minutes

6. Pricing Objectives Ranking 30 minutes

7. Revenue Requirements 25 minutes

8. Customer Classes and Characteristics 40 minutes

9. Status of Follow-up Items 5 minutes

10. Closing Comments 2 minutes

11. Adjournment – Chairperson2

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Citizens to be Heard

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Call to Order

Mission Statement

The mission of the Rate Advisory Committee is to assemble a diversity of perspectives that represent our community to evaluate and advise on the water, sewer

and recycled water rate structures

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Ground Rules

1. Take your own breaks.

2. Silence or turn off cell phones.

3. One conversation at a time. No side conversations.

4. One person talks at a time. No interruptions.

5. Everyone participates. Everyone’s input matters and is valuable.

6. Be respectful of the ideas of others. Good listening requires concentration and attention.

7. Tangent topic or questions? Put it in the “Parking Lot.”

8. We share responsibility for making the discussion constructive.

9. It’s OK to agree to disagree.

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Meeting #4 Minutes

• Provided in Member Binder

• Includes Matrix of Parking Lot Questions

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Meeting #5 Objectives

1. Discuss Results of Pricing Objectives Exercise

2. Discuss Revenue Requirements

3. Begin Discussion of Cost of Service Process

Identify appropriate customer classes for cost of service

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Pricing Objectives Results

Results

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Classification Objective Score

EssentialAffordability 74

Conservation 59

Very Important

Minimize Customer Impacts/Rate Stability 50

Cost of Service Based Allocations 49

Revenue Stability 48

Important

Simple to Understand 41

Equity 40

Drought Management 38

Least Important

Practicality of Implementation 29

Economic Development 23

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Revenue Requirements

Rate Study Process

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December 10, 2019 Page 13

2020 Revenue Requirements

1• Operations & Maintenance

2• Debt Service & Reserve Fund Requirements

3• Transfer to the City

4• Any Surplus Transferred to R&R

(provides debt coverage and cash for funding future capital program)

Rates and Charges Waterfall – SAWS’ Founding Ordinance

Generate Gross Revenues sufficient to pay:



2020 Budgeted Sources & Uses of Funds

Sources of Funds 2020 Budget

Operating Revenues $ 807.1

Non-operating Revenues 22.0

Capital Recovery Fees (Impact Fees) 100.1

Total Sources of Funds $ 929.2

Uses of Funds 2020 Budget

Operations and Maintenance $ 436.0

Debt Service & Expenses 235.9

Transfer to COSA 31.7

Available for R&R – Restricted Funds 108.1

Available for R&R – Unrestricted Funds 117.5

Total Uses of Funds $ 929.2

(in millions)



2020 Budgeted Debt Coverage CalculationSAWS Internal Target of 1.75X --- Other Similarly Rated Credits > 2.0X

Debt Coverage Calculation $ Millions

Total Sources of Funds 929.2$

Less Revenues from:

Capital Recovery Fees 100.1

CPS Energy Contract 3.2

Interest on Project Funds 3.0

Gross Revenues as Defined by Ordinance No. 75686 822.9$

Less: Operations & Maintenance 436.0

Pledged Revenues as Defined by Ordinance No. 75686 386.9$

Bonded Debt Service 225.3$

Total Bonded Debt Coverage Ratio 1.72 X



2020 Sources & Uses by Core Business(in thousands)

Sources of Funds Water Supply Water Delivery Wastewater Chilled Water Total

Total Operating Revenues $ 295,991 $ 226,289 $ 274,385 $ 10,415 $ 807,080

Non-Operating Revenues 6,637 6,583 8,815 - 22,035

Capital Recovery Fees 38,363 30,100 31,612 - 100,075

Total $ 340,991 $ 262,972 $ 314,812 $ 10,415 $ 929,190

Uses of Funds Water Supply Water Delivery Wastewater Chilled Water Total

Operations and Maintenance $ 208,556 $ 94,372 $ 125,618 $ 7,436 $ 435,982

Debt Service and Expenses 43,674 81,562 107,367 3,298 235,901

Transfer to City of San Antonio 10,762 9,256 11,247 417 31,682

R&R - Restricted 44,048 31,084 32,951 - 108,083

R&R - Unrestricted 33,951 46,698 37,629 (736) 117,542

Total $ 340,991 $ 262,972 $ 314,812 $ 10,415 $ 929,190



Chilled Water Business Unit

• Chilled Water – Provides cooling services to various

downtown hotels, Convention Center, Alamodome and Port

San Antonio tenants

• RAC Bylaws

– The RAC will provide input to the Board of Trustees on a

comprehensive study of SAWS rates and fees.

– The purpose of the Rate Design Study is to provide SAWS with

recommendations regarding the rate structures for water,

wastewater and recycled water services.

Not Part of this Rates Advisory Process



2020 Net Revenues From Rates by Core Business ($ in thousands)

Sources of Funds Water Supply Water Delivery Wastewater

Total Operating Revenues 295,991 226,289 274,385

Non-Operating Revenues 6,637 6,583 8,815

Capital Recovery Fees 38,363 30,100 31,612

Total Sources of Funds 340,991 262,972 314,812

Non-Rate Revenues Water Supply Water Delivery Wastewater

Recovery of EAA Fee 23,616 - -

Recovery of TCEQ Fee - 1,822 538

Rate Implementation Timing Adjustment (3,330) - -

Special Service Fees and Other Customer Penalties 3,161 12,265 7,082

Stormwater Revenues 5,204 - -

Reduction for Bill Adjustments & Uncollectible Accounts (3,987) (3,881) (3,333)

Reduction for Affordability Discount Program (1,795) (1,440) (3,308)

Intercompany Revenue Reallocation 5,630 (5,630) -

CPS Contract 3,223 - -

Interest Earned 6,000 6,000 8,000

Build America Bond Subsidy 637 583 815

Capital Recovery Fees 38,363 30,100 31,612

Total Non-Rate Revenues 76,722 39,819 41,406

Net Revenues From Rates 264,269 223,153 273,406



2020 Capital Improvement ProgramBy Core Business

Wastewater$413 Million

Water Delivery$95 Million

Water Resources$100 Million

Chilled Water $1 Million

TOTAL

$608.9M$6M Acquisition

$27M Design

$547M Construction

$29M Overhead

78% Replacement

22% Growth



2020 Capital Improvement Program Funding



Texas Residential Water Rate Structure Comparison

$-

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

- 1,000 2,000 3,000 4,000 5,000 6,000 7,000

Texas’ 5 Largest Cities Residential Water Rates 0 – 7,000 Gallons

Austin Dallas Fort Worth Houston San Antonio

SAWS Rate Structure Has Highest Fixed Charge but Relatively Low Volumetric Rates for Low Usage



Texas Residential Water Rate Structure Comparison

$-

$100.00

$200.00

$300.00

$400.00

$500.00

$600.00

$700.00

5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000

Texas’ 5 Largest Cities Residential Water Rates 5,000 – 50,000 Gallons


SAWS Rate Structure Has Highest Fixed Charge but Relatively Low Volumetric Rates for Low Usage UPDATE



Texas Residential Wastewater Rate Structure Comparison

$-

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

$80.00

- 1,000 2,000 3,000 4,000 5,000 6,000 7,000

Texas’ 5 Largest Cities Residential Wastewater Rates 0 – 7,000 Gallons


SAWS Rate Structure Has Highest Fixed Charge but Relatively Low Volumetric Rates



Texas Residential Water & WW Rate Structure Comparison

$-

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

- 1,000 2,000 3,000 4,000 5,000 6,000 7,000

Texas’ 5 Largest Cities Residential Combined Water & WW Rates 0 – 7,000 Gallons


SAWS Combined Residential Rates are Comparable to Other Texas Cities at Volumes Between 1,000 – 7,000 Gallons


2020 Revenue Requirements 25

Customer Classes and Characteristics

Rate Study Process

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Cost of Service Process

• Determines the amount of revenue to be recovered from each customer class based on the costs they impose on the utility

• Follow cost allocation principles as adopted by the American Water Works Association (AWWA) and Water Environment Federation (WEF)

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Allocate Revenue Requirement*

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Residential

General Class

Irrigation

Wholesale

Recycled Water

TOTAL REVENUE REQUIREMENT

*For illustrative purposes only

Water Cost of Service

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Single Family Residential

Number and size of metersWater Demands

Differing Service Characteristics

MultifamilyResidential

Commercial

Cost Allocation

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Revenue Requirement

• Cash-Basis

• Utility-Basis

Functionalization

• Budget Categories*

Cost Classification

• Base

• Max Day

• Max Hour

• Meters

• Billing

• Recycled Water

• Fire Protection

Cost Distribution

• Residential

• General Class

• Irrigation

• Wholesale

• Recycled Water

*Categorized or split between Water Supply and Water Delivery

Existing Customer Classes

Residential (Water/WW)

Inside-City Limits

Outside-City Limits

General Class (Water/WW)

Inside-City Limits

Outside-City Limits

Includes:

•Commercial

• Industrial

•Multi-family

Irrigation(Water Only)

Inside-City Limits

Outside-City Limits

Wholesale (Water/WW)

Recycled Water

Edwards Exchange

Customers

Non Edwards Exchange

Customers

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Monthly Consumption (2018 Consumption)

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Process for Class Demand Factors

Annual Consumption

•Based on Historical Billing Data by Class

Average Day

•Divide Historical Annual Consumption by 365 Days

Max Month

•Highest Month of Historical Usage by Class

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Calculation of Peaking Factors

Day Peaking Factor

• Divide Max Month by Average Day

System Max Day

• Based on Actual System Data

Max Day Peaking Factor

• Multiply Day Peaking Factor times System Max Day

• 3-Year Average

Max Hour Peaking Factor

• Multiply Max Day Peaking Factor by MH/MD Ratios*

• 3-Year Average

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*Based on M1 Manual and Industry Standards

ICL 2020 Forecast – Units of Service

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OCL 2020 Forecast – Units of Service

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*

*Max Hour Total of the sub-parts does not equal the General Max Hour Total due to weighting of the individual peaking factors. Results in a 1% difference of the max hour total.


Customer Classes & Characteristics

What Rate Classes should SAWS have?

• Purpose of rate classes

– Recovery of costs imposed on utility by customer (ie. cost of service)

– Potential differentiation in rate design for each rate class

• Disaggregating SAWS General Class

– What do we want to accomplish?

– Are there objective parameters to define a new class?

– What will be the impact?

• No effect on residential class cost of service

• New subgroups may have cost of service that differs from combined General Class

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What do other cities do?Water Rate Structures

General/Commercial Gas Well Irrigation

City/County Residential Non-Residential Multi-Family Industrial Large Volume Drilling Lawn/Outdoor

Austin X X X X

Dallas X X

El Paso X X X X

Fort Worth X X X X X

Houston X X X X X

San Antonio X X X



What do other cities do?Wastewater Rate Structures

General/Commercial One Overall

City/County Residential Non-Residential Multi-Family Industrial Large Volume Rate Class

Austin X X X X

Dallas X X

El Paso X

Fort Worth X X

Houston X X X X

San Antonio X X



What data is available to disaggregate General Class?

• General Class Subgroups

Multi-family – water meter serves more than two residential units

Industrial - accounts requiring sewer related surcharges, fees and

permits

Commercial - all other non-residential accounts (excluding wholesale

and irrigation)

• Volume usage for individual customers

Large users



What data is available to disaggregate General Class?

• North American Industry Classification System (NAICS)

– Coding system developed by the Office of Management and Budget

– Classifies businesses for statistical analysis

– In 2018, SAWS Conservation staff assigned NAICS codes to General Class accounts

• Codes are available for 88% of accounts, accounting for approximately 94% of 2018 General Class usage

• Over 700 unique NAICS codes identified

– Data would need to be verified with customers if used as a basis for determining new rate classes



What Rate Classes should SAWS have?

Rate Classes Y/N

Residential

Multi-family

Commercial/Non-residential

Irrigation

Wholesale

Other - TBD

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Questions?

Topics for Upcoming Meetings

• January 14th

› Income and Price Elasticity Results

› Cost of Service, Part 2– Allocation of costs to customer classes

• February 4th

› Finalize Cost of Service

› Rate Design Introduction

• February 18th

› Rate Design, Part 2– Affordability Considerations

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Raftelis is a Registered Municipal Advisor within the meaning as defined in Section 15B (e) of the Securities Exchange Act of 1934 and the rules

and regulations promulgated thereunder (Municipal Advisor Rule).

However, except in circumstances where Raftelis expressly agrees otherwise in writing, Raftelis is not acting as a Municipal Advisor, and the opinions or views contained herein are not intended to be, and do

not constitute “advice” within the meaning of the Municipal Advisor Rule.

Documents

t SAN ANTONIO WATER SYSTEM€¦ · 12/10/2019 · Rate Advisory Committee (RAC) Meeting #5 Agenda 1. Call to Order –Chairperson 2. Dinner & Deliberation 30 minutes 3. Citizens