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Home My WebLink AboutAgenda Packet 09/30/2008 Utility Advisory Committee Special Meeting Public Works Conference Room Port Angeles, W A 98362 September 30, 2008 11 :00 A.M. AGENDA I. Call To Order II. Roll Call III. Approval Of Minutes For September 9,2008 IV. Late Items V. Discussion Items A. Solid Waste Utility Cost Of Service Study B. Electric Utility Rates And Fees VI. Next Meeting Date: October 14, 2008 Special Meeting (1 :00 p.m. to 5:00 p.m.) VI. Adjournment N :\uac\final\093008 Utility Advisory Committee Public Works Conference Room Port Angeles, W A 98362 September 9,2008 3:00 p.m. b~~,. 1. Call To Order Chairman Reed called the meeting to order at 3:00 p.m. II. Roll Call Members Present: Chairman Reed, Betsy Wharton, Dan Di Guilio, Karen Rogers, Orville Campbell Members Absent: None Staff Present: Glenn Cutler, Yvonne Ziomkowski, Mike Puntenney, Steve Sperr, Larry Dunbar, Phil Lusk, Cate Rinehart Others Present: Shirley Nixon - Citizen Robert Elofson - Lower Elwha Klallam Tribe III. Approval of Minutes: Chairman Reed asked if there were any corrections to the minutes August 12,2008. Councilmember Wharton moved to approve the minutes. Councilmember Rogers seconded the motion, which carried unanimously. IV. Late Items Watermain Break September 8, 2008 Landfill Post Closure Order Consultant Agreement Future Meeting Needs Meeting Location UAC Membership V. Discussion Items: A. Watermain Break September 8,2008 Mike Puntenney, Deputy Director of Operations, gave a brief picture presentation of the 12 inch watermain break in the 900 block ofE Front by Walgreens Drug Store. Early cost estimate is $125,000. There was a brief discussion. Information only. No action taken. UTILITY ADVISORY COMMITTEE September 9, 2008 B. Landfill Post-Closure Consultant Agreement Steve Sperr, City Engineer, advised that an agreement for professional services was being negotiated which includes scope of work and fee structure. Tasks include producing biannual and annual reports. A discussion followed. Information only. No action taken. C. Water And Wastewater Utility Rates And Fees Larry Dunbar, Deputy Director of Power Systems, distributed a handout and gave a presentation based upon it. Public hearing comments were addressed as well as clarification of proposed rates. Shirley Nixon, citizen, passed out a letter of comments on the proposed adjustments. Committee members didn't have time to read the suggestions and were advised to put it aside since public hearing comments were still open. There was a brief discussion. Councilmember Rogers moved to recommend City Council proceed with the proposed rate and fee adjustments for the Water and Wastewater Utilities. Orville Campbell seconded the motion, which carried unanimously. D. Conservation Marketing Update Phil Lusk, Power Resources Manager, noted that the City was renewing its marketing efforts to target single-family homeowners, low-income customers, manufactured homeowners, small commercial customers, larger commercial customers, and primary and industrial transmission customers. A discussion followed. Information only. No action taken. E. Utility Discounts And Conservation Programs Phil Lusk, Power Resources Manager, passed out a copy of the municipal code regarding utility discounts for low-income senior citizens and low-income disabled citizens noting that customers can maintain the utility discount if they participate in City conservation programs. Staff will target owner occupied single-family homes with an estimate of impacting 100 customers. It was noted that customers applying for the discount in 2009 would need to agree to participate in conservation programs that are available at no charge. There was a brief discussion. Information only. No action taken. F. Future Meeting Needs Larry Dunbar, Deputy Director of Power Systems, requested a special meeting September 30th UTILITY ADVISORY COMMITTEE September 9,2008 from 11 a.m. to 1 p.m. for a presentation of the Solid Waste Cost of Service Study. A time change for the regular October 14th was made for 1 p.m. due to the possible length of discussions. G. Meeting Location Councilmember Wharton mentioned that she had been asked ifthe UAC couldn't meet in a more public place like the Vern Burton meeting rooms noting some citizens were uncomfortable in the current atmosphere. Glenn Cutler, Director of Public Works and Utilities explained that the current room provided special equipment for presentations that other rooms didn't have. A discussion followed. Staff was directed to use signage as a solution for public direction. H. UAC Membership Councilmember Wharton questioned the size of the committee with respect to adding another citizen at large. Glenn Cutler, Director of Public Works and Utilities gave a brief history of the purpose of the committee explaining the advantages and disadvantages of increased membership. VI. Next Meeting Date: Special Meeting September 30, 2008 (11 a.m. to 1 p.m.) <?ctober 14,2008 (1 :00 p.m. to 5 p.m.) VII. Adjournment: The meeting was adjourned at 4:23 p.m. Chairman Reed Cate Rinehart, Admin Spec II N :\PWKS\LIGHT\CONS\CA TE\sept9meet. wpd Date: To: From: Subject: ~.:..'.. '0/ R'. 'T. ''PJ......... N 'G/ iE' iL: E' is..; 1/ i~)1 /, / I' ij im!' I Ii;) , i , ,> , , i { ; ,."".....,. ,."....' WAS H I N G TON, U. S. A. Utility Advisory Committee Memo September 30, 2008 Utility Advisory Committee Larry Dunbar, Deputy Director of Power Systems Solid Waste Utility Cost of Service Study Summary: FCS Group recently completed comprehensive rate studies for the Solid Waste Collection and Transfer Station utilities. The studies will be presented to the Utility Advisory Committee including the recommended retail rate adjustments. It will be necessary to adjust retail rates at this time to maintain the funds in a financially prudent position. Recommendation: Forward a favorable recommendation to City Council to proceed with a public hearing on the cost of service studies for the Solid Waste Collection and Transfer Station Utilities. Background/Analysis: Earlier this year, the City contracted with FCS Group to complete comprehensive rate studies for the Water, Wastewater, Solid Waste Collections, and Solid Waste Transfer Station utilities. The studies for Water and Wastewater utilities have been presented and rate and fee adjustments have been considered and approved. The studies for the Solid Waste Collections and Transfer Station utilities have recently been completed. Following a web-based presentation by FCS Group, staff will seek the recommendation of the Utility Advisory Committee to City Council to proceed with a public hearing on the comprehensive rate studies for the Solid Waste Collection and Transfer Station utilities. The proposed City Council public hearing is October 7, 2008 for a presentation of the comprehensive rate studies and to allow public input to the process after the presentation. The public hearing would be continued to October 21, 2008 at which time the public hearing will be closed. Staff will return to the Utility Advisory Committee on October 14, 2008 requesting a recommendation to City Council to adopt rate ordinance amendments. The proposed rate adjustments would be effective January 1, 2009. N:\UAC\Final\Solid Waste Cost Of Service Study.doc F(~S ; ~-:,; " I, I 7525 - 1661h Ave. NE, Suite 0.215. Ralmond, \VA 911052. 425-867-IM02 Discussion Outline II Overview of Rate Study Process . Transfer Station Operations II Closure and Post-Closure Reserves 1\1 Collection Operations III Next Steps PaGe 2 1 TRA~SFER ST A nON Overview of Study Process COLLECTIO'\i I ,--VSTfn.![R II L'OULCTION II DiSPOSAL I REnTU~G I 1 YARD \\' ASIT I Page 3 ...TRAJ)fSF.......E. ..R.... .'?I{\1'ION QPERATIO.~....NS . . '. . . i' '._',' " "_'.:__.. . _ . -, '.,: ..~_ .' ','.'" '_ ,. ",- >-, _'," .;...-...". "', ,'. ,",". COSTOFSERVICESTUDY 2 Transfer Station Background .. Began operations in 2007 II New City enterprise based on 2004 cost of service study . No future capital facility plan projects anticipated . Reserves allocated for operations through 2010 Iii Scale house operated by City III 20-vear service agreement with vVaste Connections " - ./ Transfer station & moderate risk waste facility (design /buildl operate) - city owned ./ Transfer station operation, solid waste transport & disposal, composting & recycling drop-off facility, Blue Mountain drop- box facility operation P3,€ 5 Revenue Requirement: Key Factors G Study period: 2008 - 2014 Ell Rate revenue calculated using Citv annualized tonna!Ze ~ ~ ~ data ./ Tonnage growth I % annually based on historical data Iii Used 2008 and 2009 budget as base for expenses 1m Future year expenses calculated by applying all..nual escalation factors: general inflation 3.15%, Labor 5% 9 Contractual services based on contract rate forecast, which is tied to fuel and consumer price indices FJ Existing annual debt service- MR \VF $32K, Transfer Station $722K I.'il Target reserve level of$1.05M -- P3ge 6 3 Transfer Station Revenue Requirement Findings 10.5% avg. rate increase in 2009,10.5% in 2010, followed by 7.75% in 2011 Use ofreserves (S1.25M from 2009-2011) to minimize rate impact Full cost of service slowly being phased in Revenue Requirements Revenues Rate Revenues Under EXIsting Rates 4.665.414 4.712.068 4,759,189 4.806.781 Non-Rate Revenues 407.510 485.031 470.913 461.264 Total Revenues 5.072.924 5.197,100 5,230,102 5,268,045 Expenses We! Contract 3.530.819 4.013.085 4.273,183 4.568.116 Non..contract Expenses 1,376.780 1,466.915 1.504.965 1.544.630 Existing Debt Service 753.345 753.345 753.345 753,345 New Debt Service Rate Funded System Reinvestment Total Expenses 5,660,944 6,233,345 6,531.493 6,866,090 Net Surplus (Deficiency) (588,020) (1,036,245) (1,301,390) (1.598,045) % of Rate Revenue 12.60% 23.37% 30.26% 37.43% A verage Annual Rate Adjustment 0.0% 10.5% 10.5% 7.75% Rate Revenues After Rate Increase S 4.665.414 $ 5,206.836 $ 5.816.556 6.341,406 Additional Taxes from Rate Increase $ $ 64.815 $ 138.515 201,036 1588.0201 /606.292) 382,538\ 264.456 'P Page 7 :~Ifi .,j;" i~ iI' ",'\';"L' r~~: i~l: ;W~' ,',m'~ ?~'~l i,:,f,::':',!I" --~:, :J~ ::;{fL. ,;;~t! ':!~ ;:~*i -r.1/~~ Fuel Price Index $800 ,---~----- -,------ $700 I $600 I ~ $500 r ~ S400 I 5200 ~ ::'~~ !~~ .t~ $0 ' ,cf'''' ~~" ,']. '].'" ,'" '].'" '" '1.'" c\ ']." co, V ,'" '1.'" "v~...." v",'' '].",,,,eo c'" ']." c']. ']." c'" V r;? '].G ,," ,co c'" V -West Coast Aauals -West Coast Predic~(;" :\ ~;~,C; P'ge 8 4 ~:;>-i:.;'/.,:,~'~,:c:~~, ,ll,'~ ~~-\: ,n.~'.-,~' :.;:,u;;" ..;,.~/.-;.;~,:/ ~iL'l ._ '_, :~j;:~..~;;,:~;:','ti~,i: .):~jl~~.. :~;;;;"'~;.:.;..:..li~..;,l .-J;'- ,:/,~.~~:~:{ r;: :"_:l0-:'-\IJi.,.:,f"~.'1j ::':Lf_~;;';::k:l .,,' Consumer Price Index 300 r----------~---- 2751 250 I 225 M ~ 200 I " .5 175 I 1J 1J 1001 ",d" <f''' <f'''' <f'~ '" '" '" ^v ~" i' ,'" 1> ,'l- 'l-'" " 1> ," 1> ,> 'l-'" .:~> F~::: i j\1 )( f) Page 9 _ ./~i~~8".:'~\;~~;~,;1' :jUJ:iiiA;~, '".L ~;;~.';;:"r;"l~!:~<L~,;~H:::i,J\ Transfer Station Fund Balance Funds 2008 2009 2010 2011 TRANSFER STATION 405.10 Beginning Balance $ 3.012,001 $ 2,423,981 $ 1.817,689 $ 1.360.358 plus: Net Cash Flow after Rate Increase (588.020) (606,292) (382.538) (264.456) less: Transfer to Post-Closure Fund to Maintain Min_ Bal. (74792) Endin9 Balance $ 2.423.981 $ 1,817.689 1.360.358 1.095.902 Minimum Target Balance 1,050.000 1.050,000 1,050,000 1,050,000 Maximum Funds to be Kept as Operating Reserves 1,210,093 1,351.233 1,424,749 1,507,252 Info: No of Days of Cash Operating Expenses 180 121 86 65 Met Met Met Met . Fund balance used in 2010 to cover post-closure reserve minimum balance requirements -;:> F(S (;\.!.("1! '1' Page 10 5 "~..!!. ~;d.' ;~I~ fr:~ r.i~<{. ~~~ i~~h ~~~1 ~.:..-: ~'~. ".'...F.,.t. ,~;~ ;,{'~ ..~.~I:.~.~...;.l ".':IT:: ,-.",,. ~;:#l- :~~ ;~ .:~ft ...; ".--;! ::ft; ':;.~.'tf..I~'~ k~ ::1 ~"','f: /)!~ C" ' Transfer Station Cost Allocation YARD W ASTEI COMPOST, 2.8% BLUE MOUNTAIN, 4.5% SERVICE AGREEMENT, 64.8% Page 11 Transfer Station Customer Allocation Factors Self-Haulers Collection Entities Receiving & Facilities Costs % of Total Tickets 87% 13% Municipal Solid Waste Tires Asbestos Contaminated Soils Tax Free MSW Service Agreement Costs Rates x Tons 28,4% 0.7% 0.1% 0.3% 70.6% Disposal Tonnage Costs Tons 28.5% 0.3% 0.0% 0.2% 70.9% 'i I' Page 12 6 ~1~~1~~rii,t1m;{;~i~ili~;;j:;;~f:fJ:~~~f~t~g~:;i.1ijl~hiBiig~~til~.~;~r{~~;;~0.ftlf~~111Q{~A~J~fi~1~:.i~~~tS~j~~'j_v.;~~J}~ii<;fJt!i~n!ii%t1,~~t~1~t:S,'t~:;;J.Zi.~\;{j;~l~~~1~~llif.rrIi~;;11'Y.l'W Transfer Station Present and Proposed Rates per Ton Current 2009 Total 2009 Class Rate COS Prooosed Self Haul: Municipal Solid Waste $ 104.30 $ 141.32 $ 114.90 Asbestos 253.40 329.13 329.15 Contaminated Soils 104.30 172.93 172.95 Yard Waste 43.00 79.79 43.00 Metals and White Goods Recycling 51.25 70.66 57.45 Tax Exempt Transfer Station Collection Entity: Municipal Solid Waste 82.90 98.78 91.35 Yard Waste 25.75 40.18 25.75 WWTP Biosoiids 21.35 40.18 45.00 Blue Mountain 197.80 204.65 204.65 Compost >3 yards 17.00 nla 17.00 Compost <3 yards 20.00 nla 20.00 -:~) ~:C.\'; ! ;:'.~\}( ~;j P3ge 13 ;;vLtt~Li~:;:~~i~L~i'tEi~~~~~~.~'~;;~~{~~j~:t:lliJr~~;~'j~t:1~:;;lJ:~:~i1;}~i~~f:~~f~~~i;~:;;';f~~i:f;,;;t~,:f?l;itl;~;}}L~B;t~iiH'it~1sr~1~.:~;j)~J~;.ir,ll~lu~l;~t~j4jtij;;:~1:81K~;t'~;Jl@i;yj~ii:~t;1t~4WHj~~J~\~ Transfer Station Findings/Conclusions '-' 1:1 Revenue is extremely sensitive to recent economic downturn 1'1 Cost forecast will improve as better data and history available II Use of reserves to minimize rate impact - $1.25M through 2011 II Level of rate increases proposed - 10.5% average increase in 2009 .:).fCS j. ;p!jl.,p Page 14 7 i; ::;:,,':';"".;~'~~~.; ".'C,~,'. .';C;;~.:., :,' . Post-Closure Reserve II Closure and Post-Closure funds to be combined . Reserve established to meet post-closure costs .. Must maintain minimum balance assumed in final post-closure plan II Interest accumulates in this reserve Ell Annual budgeted expenses deducted II Deficiency in post-closure reserve covered by transfer station ..'.';)- :-::r' (~ : :1, 'i Page 15 ..,-..,.....'..-. .:....... . COLLEy!IgNqPE:M!I.()NS OFSERVICE STUDY .' ..' .. .... -... -... 8 Ii i~ l;~ ,.::'.~.:.'.':.k.'.'t':'''I''~~..:\'' \~- l if:il: :~!,~ lt~ It (ii'" I ~;r.rrt ~l \~1 I f;~~' ,!;;~~' ,:i~ '~::;<:j : . ./';, ;'.:~. :~:..,::Jj_;'.il: .~~..::. ~~::';'j-)'...~l' .~;;~:,': 'i~i;:~' .~: .::.: ;:, ':!;:;jl~ .;'r:; /;_~:';;:':k:,,::..'j:i~;:. ;:;~'.~';';,L.:J,l}~~i;..(. : .~:~;:~;:-~.~ :,_;.'..~:>~,t.;,:.:.;,jj;~/'i. Collection Operations: Background Info II City collects municipal solid waste ./ July '06 new every-other-week service began II Waste Connections provides collection of recyclables and yard waste ./ City charged by residential account receiving service ./ City charged for commercial cardboard recycling El Completed first disposal weight survey in 2008 ./ Ongoing plan to complete 2 surveys per year ./ Results will refine cost allocation process ..;.......:r.'\. "(;I'p Page 17 Collection Revenue Requirement: Key Factors liD Study period: 2008 - 2014 111 Rate revenue calculated using City-provided tonnage and customer forecast v" Growth rate: Residential O.7%/year, Commerciall.3%/year G Used 2008 and 2009 budget as base for expenses . m Future year expenses calculated by applying annual escalation factors: general inflation 3.15%; Labor 5%; Medical 10% 111 Transfer Station Charges (disposal)- includes proposed rate increases D 90 day working capital reserve target ~':, ~r:\:- i. ", :~1. )! i' Poge 18 9 ~~}l , ~~ ,~~~ II ''"~ ~ ~;I;" II *E {; W~ ~ ! Collection Revenue Requirement Findings 1.23% increase in 2009 (COS shifts), with additiona13.5% increases in 2010 and 2011 ';W' 'I:~ 'i1J,,'i .'..'.'....... ~~ "Ii"' Y!& Mt~ "'"~ '.'?'. ~':,~~., 2011 Revenues Rate Revenues Under Existing Rates $ 3,154,000 3.181,561 $ 3.209,389 $ 3,237.487 Non-Rate Revenues 126,000 121.000 130,297 122.52~ Total Revenues 3,280,000 3,302,561 $ 3,339,686 $ 3,360,008 Expenses Contractual Services 544.492 559. ~ 89 576,801 594,967 MSW/YW Disposal Expenses 917,200 956,473 1,070,543 1,167,014 All Other Expenses 1,773,-+32 1,829,830 1,875,098 1,924,669 Existing Debt Ser~ce New Debt SerAce Total Expenses 3.235,124 3,345,492 $ 3,522,442 3,686,650 Net Surplus (Deficiency) 44,876 (42,931) $ (182,756) (326,642) % of Rate Revenue 0.00% 1.53% 6.41% 11.36% Annual Rate Adjustment 0,00% 1.23% 3.50% 3.50% Rate Revenues After Rate Increase $ 3.154,000 $ 3,220,634 $ 3,362."41 $ 3,510,316 Additional Taxes from Rate Increase $ $ 5,900 $ 23,111 $ 41,1971 Net Cash Flow After Rate increase 159,876 9.758 152,815; 95,010 )- r~ ( .:~ Page 19 Cost Allocation DA.SCHOOL RECYCLING 0.04% COMTvERCL"L CB RECYCLING 1.71% P3qe 20 10 Residential Weekly Residential EOW Commercial 90 Commercial 300 Commercial Recvclina Onlv - Schools Residential Weekly Residential EOW Commercial 90 Commercial 300 ,':>::('" Allocation Factors Customer Costs % of Total Accounts 48.2% 40.9% 6.3% 4.6% 0.1% Disposal and Collection COStS % of Total Tons 39.7% 18.8% 10.9% 30.7% P2ge 21 Summary of Unit Costs, Present and Proposed Rates Class Residential Weekl $26.80 $27.80 $1.00 Residential EOW $19.45 $19.45 $0.00 Residential' Commercial Yardwaste 90 $7.40 $21.75 $7.40 $22.40 $0.00 $0.65 Commercial 300 $75.15 $75.15 $0.00 Scnool Rec elin $11.05 $13.05 $2.00 '.111;( Current Rate ~~. 2009 Pro osed Rate ,~U. Increase (Decrease) ~ . ;;1': 1;,!'~:,I '~;,.;tf., III ;:if1.~ .j\~1.3:. .;;)~~j :il~~ ..> c. aResidential recycling charged in monthly rate (all residential customers pay regardless if they use the recycling option or not) _Commercial cardboard charged in monthly rate (all commercial customers pay regardless if they subscribe to this service or not) ~,' I PaGe 22 11 Collection Operations Findings/Conclusions II Use of reserves to minimize rate impact - $158K through 2011 II Level of rate increases proposed - COS changes in 2009 totaling 1.2% increase, 3.5% in 2010 and 2011 II Continue current depreciation funding policy for future equipment/vehicle needs III Overall good news ./ cas analysis issues have time to correct ./ Adequate reserves ./ Will continue waste audits and refIne cost-of-service data Page 23 .::> !='CS ( ,fH 'I lfl Next Steps D Incorporate feedback and comment from Senior Management '-' IJ Meeting / Presentation ./ September 30 Utility Advisory Committee ./ Joint Solid Waste Advisory Committee (TBD) ./ October 7 Council Presentation .~:> Fes ; ".1,;1)\ p Page 24 12 Date: To: From: Subject: ~'.',.'.""" '0" R: "T' ''Pl........... N'G/ iE'it' E'iS/i I.) : ): YI !. JI ij:!, I II Ii .J , : " , ! ........., ..............; WAS H I N G TON, U. S. A. Utility Advisory Committee Memo September 30, 2008 Utility Advisory Committee Larry Dunbar, Deputy Director of Power Systems Electric Utility Rates and Fees Summary: HDR Engineering, Inc. completed a comprehensive rate study in 2005 for the Electric Utility. The study was updated by staff and was presented on August 12,2008 to the Utility Advisory Committee including the recommended retail rate and fee adjustments. It will be necessary to adjust retail rates and fees at this time to maintain the fund in a financially prudent position. Recommendation: Forward a favorable recommendation to City Council to proceed with the proposed rate and fee adjustments for the Electric Utility. Background/Analysis: In 2005, the City contracted with HDR Engineering, Inc. to complete a comprehensive rate study for the Electric Utility. The electric utility is scheduled for its next comprehensive rate study in 2009. On August 12,2008, staff presented this year's rate study update including recommendations to increase retail rates by 2.1 %, a 25.0% increase to electrical permit fees, and housekeeping ordinance amendments. The main reasons for retail rate and fee adjustments include: continuing to--' rebuild operating and rate mitigation reserves, continuing to contribute to the light operations facility reserve, inflation, primary sales & bad debt, capital facilities plan, additional light operations crew, and phasing in electrical permit fees to recover costs over the next three years. On August 12,2008, the Utility Advisory Committee recommended that City Council schedule a public hearing on October 7,2008 and directed staff to return to the Utility Advisory Committee after the Bonneville Power Administration (BP A) announces its decision about wholesale generation rates for the period of October 1,2008 through September 30,2009. Staff may need to revise its recommendation based on BPA's decision on wholesale generation rates, which is anticipated to be received prior to the September 30, 2008 Utility Advisory Committee. Staff recommends that the Utility Advisory Committee forwards a favorable recommendation to City Council to continue the public hearing to October 21, 2008, close the public hearing, then adopt rate and fee ordinance amendments. The proposed rate and fee adjustments would be effective January 1,2009. N:\UAC\Final\Electric Utility Rates & Fees.doc City of Port Angeles Electric Rate Study Update Utility Advisory Committee September 30, 2008 Presentation Agenda · August 12th presentation review · ChanQes from AUQust 12th - Review slides 6, 8 & 11 · Revised recommendations - Slide 13 1 ~ Looking Back · 2005 Cost of service study · Prior rate adjustments: - 2002 - 0% - 2003 - 5.7% - 2004 - 0% - 2005 - 6.5% - 2006 - 0% - 2007 - 5.9% 2 Rate Adjustment Needs · Operating reserves · Rate mitigation reserves · Light operations facility reserve · Inflation · Primary sales & bad debt · Capital facilities plan 3 2 Rate Adjustment Needs Vital need to expand Pole Replacement Program - seriously deteriorated infrastructure · 1500 - 2000 poles beyond their design life · Uneconomical to contract (3 times the cost) Requesting new 3 person Light Operations crew (will perform pole replacement & inspection, and utility tree trimming) · $302,800 personnel expense · $ 11,700 supplies & services expenses · -$125,000 expense reductions for contracts · $189,500 net annual cost 4 Electrical Permits · $105,500 annual expense · $64,000 annual revenue · City versus State fee schedule · Simplification where possible · Electrical contractor meeting · Cost recovery within 3-years 5 3 Residential Exchange Program · Initial compensation received · True-up compensation - finalized · New "Iookback" compensation · Investor owned utility settlement? 6 Rate Study Update · 2009 Revenues - Rate revenues based on 2008 revised budget & normal weather - Distribution weather adjustment -1.7% - Growth residential 0.9%, commercial 0.9%, industrial (0%) 7 4 Rate Study Update · 2009 Operation & Maintenance - Utilized 2008 revised budget - Escalation factors range from 3% to 30% - $200K rate mitigation reserve - $114K light operations reserve - $275K capital improvement plan · SPA FY 2009 Wholesale Generation Rates -1 % distribution system cost reduction -1.7% industrial transmission cost reduction -1.4% overall cost reduction 8 Rate Study Update · 2009 Debt Service - Existing bonds -WUGA Debt Service · 2009 Taxes & Transfers - State & City Utility Taxes - Departmental Transfers · CFP · Rate Mitigation · New Light Operations Center · Conservation · Return on Investment · NICE · Economic Development 9 5 CFP Projects ($OOO's) Capital Facilities Plan 2008 2009 Charges & Services 5 - Downtown Upgrades 60 - Upgrade College Substation 110 - Remote Monitoring 70 - Replace Cable @ Canyon Edge 50 - Downtown pedestrian lights 162 - Laurel Substation Structure 105 Replace Cable @ Crabapple Road 50 Replace Cable in Plaza Mall - 90 Rayonier Transmission Line Renovation - 30 Total 457 275 Capital Facilities Plan Funding Sources CFP Cash Cash/Rate Financed Contribution Total 2008 232 225 457 2009 (0) 275 275 Revenue Requirement ($OOO's) Without Rate Adjustments Cf) W :J Z W > W 0:: Description 2008 2009 Distribution System Sales 17,568 17,423 Industrial Transmission Sales 13,379 13,176 Permit & Construction Related 383 506 Miscellaneous 3,483 262 Contribution from Light Operations Sale 777 - Pole Rental 59 59 Total Revenues 35,649 31,426 Operation & Maintenance 5,135 5,398 Purchased Generation & Transmission 23,498 19,948 Taxes 3,016 2,985 Transfer Payments 1,570 1,131 Debt Service 448 451 Materials - Job Cost 350 520 Total Expenses 34,018 30,433 Revenues Less Expenses '. .... ".941 ','993 Cf) w Cf) z w n. x w 10 11 6 Ending Fund Balances ($OOO's) Without Rate Adjustments Type of Reserve 2008 2009 Target Operating 3,389 4,382 3,000 Rate Stabilization 900 1,100 1,500 CFP - - - Light Operations Center 403 517 2,000 Total Reserves 4,692 5,482 6,500 12 Recommendations · Current rates are sufficient through 2009 · Continue to rebuild reserves · Proposed Ordinance Amendments - 25% electrical work permit fee increase - Housekeeping amendments ./ Billing demand changes {power factor eliminated) ./ Responsibility beyond point of delivery ./ Industrial Transmission housekeeping · Proceed with fee increase & housekeepinQ amendments (no rate adiustment) 13 7