HomeMy WebLinkAbout2011-02-16 Council Packet - Work SessionREMINDER:
C OUNCIL WORK SESSION
FEBRUARY 16, 2011
5:30 P.M.
CITY OF KENAI WATER SEWER
RATE STUDY
KENAI CITY COUNCIL CHAMBERS
21.0 FIDALGO AVENUE
KENAI, AK 99611
TECHNICAL MEMORANDUM 'i i 2'i'': €'iHILL
City of Kenai Water and Sewer Rate Study
PREPARED FOR:
PREPARED BY:
REVIEWED BY:
DATE:
Rick Koch /City Manager, City of Kenai
Kurt Playstead /CH2M HILL
Dave Green /CH2M HILL
February 7, 2011
Overview
In March 2010, the City of Kenai (the City) commissioned CH2M HILL to update its water
and sewer rates. The purpose of the update is to determine if projected operation and
maintenance expenses and capital improvement cots will require rate increases in the
future. CH2M HILL completed a water and sewer rate study in 2003 in conjunction with the
update to the City's Wastewater System Master Plan.
This technical memorandum presents a 20 -year financial plan for the water and sewer
system. The memorandum begins with an introduction to the financial plan, including the
planning assumptions. This is followed by a discussion of projected water and sewer system
revenue requirements and revenues. The memorandum ends with a discussion of rate
impacts, based on the City's current rate structure.
Introduction
This technical memorandum presents a financial analysis of the City's water and sewer
system. A 20 -year financial plan was developed to analyze the impact on water and sewer
rates of implementing the capital improvement plan (CIP), as well as addressing annual
operations and maintenance (O&M) requirements.
The building blocks of the financial plan are the projections of costs that the City will incur
during the 20 -year planning period, fiscal year 2010/11 through fiscal year 2029/30, and the
revenues, under existing and proposed rates, which the City expects to generate during the
same period. The financial plan is based on a set of overall assumptions related to customer
growth, inflation, and other factors, as well as the specific phasing of the City's CIP.
The following general assumptions were used in developing the plan:
Customer growth will occur at the following annual rates:
Residential Growth: 0.35%
Commercial Growth: 0.35%
Operation and maintenance costs annual escalation factors:
Salaries and wages: 2.5%
CITY OF KENAI WATER AND SEWER RATE STUDY
Operating expenses: 3.0%
Interfund transfers: 4.0%
Annual operating contingency equal to 30 days of operating expenses
Capital costs will increase at an annual rate of 3.0 percent to account for inflation
Interest earned on investments: 4.0%
The draft financial plan for the water and sewer system, in the form of projected sources and
uses of funds for the water and sewer utility fund, is presented in Attachment 1. Each
component of the financial plan is discussed in more detail below.
Revenue Requirements
The costs in the plan that are to be funded from annual revenues are referred to as 'revenue
requirements' for rate making purposes. Total requirements are composed of:
Operations and maintenance costs
Annual capital improvement projects funded directly from rate revenues and reserves
Debt service requirements
Transfers to the City's general fund and other funds for indirect and direct services
provided to the utility (i.e. interfund charges)
Currently, the City does not have any outstanding debt related to the water and sewer
utility and the financial plan presented herein does not anticipate the issuance of debt
during the forecast period.
In addition, annual requirements include operating contingencies equal to 30 days of annual
O &M costs. However, 100 percent of annual contingencies are assumed to be unspent and
roll forward to subsequent year beginning balances.
Revenue requirements were projected based on data provided by the City, including
adopted budget for FY 2009/10 and a proposed CIP with annual details from FY2010/11
through FY2029/30. The City's actual expenditures for FY 2007/08 and FY 2008/09, and
FY2009/10 budget for the water and sewer utility fund are presented in Exhibits 1 and 2.
Water Utility Operation and Maintenance Costs
Operation and maintenance costs include all costs associated with operating and
maintaining the water system, including personnel and materials and services costs. The
City of Kenai s water and sewer systems operate as a consolidated enterprise unit but each
utility is managed to be self supporting. The City of Kenai provided annual financial
statements and budgets for the water and sewer systems to CH2M HILL.
Exhibit 1 shows historical O &M costs for the water system for FY2007/08 and FY2008 /09,
and budgeted O &M costs for FY2009 10. Because this analysis is being performed on a cash
basis, depreciation expenses are not included. Total budgeted O &M costs for FY 2009/10 are
2
CITY OF KENAI WATER AND SEWER RATE STUDY
approximately $558,000. Approximately 31 percent of this total is personnel related (salaries
and wages and benefits).
EXHIBIT 1
Historical and Budgeted O &M Costs, Water Utility
City of Kenai Water and Sewer Rate Study
Actual Actual Budget
Salaries and Benefits FY 2007 -08 FY 2008 -09 FY 2009 -10
Salaries 102,362 112,607 113,376
Overtime 11,056 10,476 8,300
Holiday Pay 0 0 0
Leave 4,095 9,920 5,125
Medicare 1,680 1,910 1,839
Social Security 0 0 0
PERS 41,011 43,188 49,096
Unemployment Insurance 0 0 634
Workers Compensation 5,134 4,551 6,124
Health Life Insurance 19,944 20,017 22,568
Supplemental Retirement 2,739 2,677 2,813
Subtotal Personnel Expenses 188,021 205,346 209,875
Maintenance and Operations
Office Supplies 1,263 672 1,200
Operating Repair Supplies 44,676 40,794 52,530
Small Tools/Minor Equipment 4,929 12,504 11,825
Snack Bar Supplies 0 0 0
Computer Software 205 59 1,600
Professional Services 13,468 9,356 14,420
Communications 15,319 15,031 16,500
Travel Transportation 3,169 2,447 5,150
Advertising 1,034 557 300
Printing Binding 1,559 1,484 1,600
Insurance 6,500 6,600 7,200
Utilities 138,284 178,879 153,000
Repair Maintenance 39,680 12,749 48,750
Rentals 3,561 3,706 12,000
Equipment Fund Pmts 0 0 0
Postage 0 0 0
Books 0 0 250
Dues Publications 624 343 500
Contingency 0 0 20,000
Miscellaneous 1,093 370 1,700
Subtotal Operating Expenses 275,364 285,550 348,525
Total Operating Expenses 463,385 490,896 558,400
Source: City of Kenai, 2009/10 Budget
Sewer Utility Operation and Maintenance Costs
Exhibit 2 shows historical O &M costs for sewer system for FY2007/08 and FY2008 /09, and
budgeted O &M costs for FY2009 /10. The operating expenses presented in Exhibit 2 are for
the sewer department and the wastewater treatment department. Because this analysis is
being performed on a cash basis, depreciation expenses are not included. Total budgeted
3
CITY OF KENAI WATER AND SEWER RATE STUDY
O &M costs for FY 2009/10 are approximately $1.1 million. Approximately 47 percent of this
total is personnel related (i.e. salaries and wages, benefits).
EXHIBIT 2
Historical and Budgeted O &M Costs, Combined Sewer and Wastewater Treatment Departments
City of Kenai Water and Sewer Rate Study
Actual Actual Budget
Salaries and Benefits FY 2007 -08 FY 2008 -09 FY 2009 -10
Salaries 274,036 288,032 295,691
Overtime 9,128 11,342 10,300
Holiday Pay 9,846 10,077 10,456
Leave 20,077 19,825 12,247
Medicare 4,498 4,742 4,766
Social Security 0 0 0
PERS 105,950 108,609 102,950
Unemployment Insurance 0 0 1,643
Workers Compensation 10,603 9,469 12,403
Health Life Insurance 52,731 51,479 58,568
Supplemental Retirement 6,922 6,928 7,313
Subtotal Personnel Expenses 493,791 510,504 516,337
Maintenance and Operations
Office Supplies 1,538 1,002 1,900
Operating Repair Supplies 86,618 115,794 110,450
Small Tools/Minor Equipment 7,916 12,260 9,090
Snack Bar Supplies 0 0 0
Computer Software 528 59 2,900
Professional Services 5,447 11,775 14,800
Communications 6,173 6,441 7,300
Travel Transportation 2,850 6,249 8,750
Advertising 954 0 0
Printing Binding 316 0 0
Insurance 12,700 12,600 13,500
Utilities 240,642 323,576 315,253
Repair Maintenance 25,755 27,004 59,000
Rentals 0 150 500
Equipment Fund Pmts 0 0 0
Postage 0 0 0
Books 0 0 1,000
Dues Publications 212 293 520
Contingency 0 0 40,000
Miscellaneous 3,782 3,654 5,930
Subtotal Operating Expenses 395,431 520,858 590,893
Total Operating Expenses 889,222 1,031,362 1,107,230
Source: City of Kenai, 2009/10 Budget
As shown in Attachment 1, O &M costs for the water and sewer system (including personnel
services, materials and services, and operating contingency) are projected to increase to
nearly $3.9million by FY2029/30.
4
CITY OF KENAI WATER AND SEWER RATE STUDY
Capital Costs
Exhibit 3 summarizes the CIP for the water and sewer system from FY 2009/10 through
FY2029/30 in 2010 dollars. Future capital outlay expenditures are based on the CIP as
provided by city staff. Approximately $22.3 million (in 2010 dollars) in capital
improvements from FY 2010/11 through FY2029/30 have been estimated. The projects are
necessary to maintain the current level of service provided by existing facilities, replace
existing facilities /equipment that are near or beyond their design life, comply with state and
federal regulations, and provide capacity to meet the needs of projected growth. Based on
the anticipated project schedules and an estimated annual capital cost escalation rate of 3
percent, the total, inflation adjusted CIP for the combined water and sewer system is nearly
$32.8 million through FY2029/30.
As shown in Attachment 1, the projected capital improvements will be paid by a
combination of current revenues and matching state funds. For this analysis, it is assumed
the city will receive 70 percent matching funds from the state for every project listed in the
CIP. The City must fund the remaining 30 percent of capital expenses via water and /or
sewer rates or other sources. It was also assumed that many of the projects would be
constructed over a number of construction seasons, thus their costs were spread out over a
two to three year period.
The City may be eligible for a combination of lower interest loans and grants from state and
federal agencies. However, a public vote would be required to issue any debt on behalf of
the utility. One advantage to issuing debt, such as revenue bonds or acquiring low interest
loans from the Department of Environmental Conservation, is that the rate increases could
be lessened and the additional revenue requirements would be spread over a number of
years. No debt funding was assumed for this analysis.
EXHIBIT 3
Proposed Capital Improvement Program (2010$)
City of Kenai Water and Sewer Rate Study
Project Name
Year of
Cost Construction
Water Utility
Replace 10" AC Water Main with 10" HDPE Main $1,200,000 2012
Construct 10" HDPE Water Main along Swires Rd $1,100,000 2013
North Willow Street 10" Water Main Extension $750,000 2017
Construct New 16" Water Main along Beaver Loop Rd, Bridge Access to Dean
St (700011) $3,100,000 2020
Construct new 16" Water Main along Beaver Loop Rd, Togiak Ave to Ames St.
(4,30010 $1,800,000 2025
Water Truck $35,000 2026
Construct New 16" Water Main Along Beaver Loop Rd, Ames Rd, to Dean St.
(6,6001f) $3,100,000 2028
Subtotal Water CIP (2010$) $11,085,000
5
CITY OF KENAI WATER AND SEWER RATE STUDY
Sewer Utility
Sewer Truck $75,000 2012
WWTP Dump Truck $60,000 2014
WWTP Phase I UV Disinfection system $1,000,000 2015
WWTP Upgrades Phase II Belt Filter Press, Activated Sludge System
Improvements, Control Bldg Exp. $2,000,000 2017
North Willow Street 12" Sewer Main Extension $750,000 2017
WWTP Upgrades Phase III Filament control improvements $2,800,000 2021
WWTP Upgrade Phase IV New pump house, influent manhole mods, Grit
Removal, Cyclone Bar Screens $2,000,000 2025
WWTP Upgrade Phase V- Upgrades for Aerobic Digester, Solids Handling
System, Recoat Aerobic Digester $2,500,000 2028
Sewer Truck $75,000 2030
Subtotal Sewer CIP (2010$) $11,250,000
Total Water and Sewer CIP (2010$) $22,335,000
Revenues
The City of Kenai provided annual financial statements and budgets for the water and
sewer systems to CH2M HILL. Each system's revenues and costs are shown as separate
categories in the financial statements. However, other revenue sources, such as beginning
fund balance and interest income, are not separated between the two utilities. For this
analysis, other revenue sources were treated as shared revenue and were available to either
utility.
With limited federal and state assistance available, the City must rely predominantly on
water and sewer rates to fund the projected system costs over the next 20 years.
Water Revenues
Water sales revenues based on existing rates are projected to be approximately $462,000 in
FY2009 /10. The rate schedule for FY 2009 /10 is presented in Exhibit 4. The monthly rate for
unmetered residential customers in FY 2009/10 is $13.78.
Given the absence of meters, the City's current residential rate structure reflects a reasonable
approach to achieve an equitable residential water rate structure. This report recommends
no material change to the residential rate classifications or structure.
Many nonresidential customers are also unmetered. Most of these customers are
comrnercial establishments and are generally minimal water users. For customers with
meters, Kenai charges both a flat rate based on meter size and a usage charge based on
metered water consumption.
6
The City has approximately 184 metered customers. This includes both residential and
commercial customers. In FY 2009/10, the metered customers used approximately 5.3
million gallons of water per month. The current volume charge for metered customers is
$1.33 per 1,000 gallons of water used.
EXHIBIT 4
Current Water Rates by Customer Class, FY 2009/10
City of Kenai Water and Sewer Rate Study
Metered Customers Accounts /month
5/8" or 3/4" 0 $0.00
1" 88 $13.98
11/2" 40 $35.27
2" 40 $53.24
3" 15 $79.86
4" 1 $119.79
Volume Charge ($/000 gallons) $1.33
Unmetered Customers
CITY OF KENAI WATER AND SEWER RATE STUDY
Residential Accounts /month
One or Two Family residence, per unit 1,502 $13.78
Single or double unit apartment, per unit 62 $13.78
Commercial Accounts Units /Account /Unit
Bowling Alleys 1 0 $38.60 $0.00
Churches 4 277 $0.00 $0.15
Dentist 1 5 $0.00 $8.32
Doctor 1 8 $0.00 $8.32
Garage /Service Station 3 0 $16.64 $0.00
Hanger -no wash 6 0 $16.64 $0.00
Hanger -with wash 1 0 $19.29 $0.00
Hotel 1 5 $0.00 $8.65
Laundry 1 1 $0.00 $15.65
Office 14 0 $18.63 $0.00
Recreation /per restroom 2 4 $0.00 $9.32
Residential 2 0 $13.98 $0.00
Restaurant 5 310 $0.00 $1.20
Restaurant/Bar 1 28 $0.00 $1.20
School 2 64 $0.00 $0.56
Shops 73 0 $9.66 $0.00
Sleeping Rooms 1 5 $0.00 $3.67
Theater 1 100 $0.00 $0.07
Sewer Revenues
Sewer sales revenues based on existing rates are projected to be approximately $1.3 million
in FY2009 /10. The rate schedule for FY 2009/10 is presented in Exhibit 5. The monthly rate
for unmetered residential customers in FY 2009/10 is $40.35.
7
CITY OF KENAI WATER AND SEWER RATE STUDY
Given the absence of meters, the City's current residential rate structure reflects a reasonable
approach to achieve an equitable residential sewer rate structure. This report recommends
no material change to the residential rate classifications or structure.
Many nonresidential customers are also unmetered. For customers with meters, Kenai
charges both a demand rate based on meter size and a usage charge based on metered water
consumption.
The City has approximately 176 metered customers. This includes both residential and
commercial customers. In FY 2009/10, the metered customers used approximately 5.3
million gallons of water per month. The current volume charge for metered customers is
$4.00 per 1,000 gallons of water used.
EXHIBIT 5
Current Sewer Rates by Customer Class, FY 2009/10
City of Kenai Water and Sewer Rate Study
Metered Customers Accounts $/month
5/8" or 3/4" 0 $0.00
1" 86 $40.74
1 1/2" 38 $102.56
2" 37 $153.14
3" 13 $231.81
4" 2 $348.42
Volume Charge ($/000 gallons) $4.00
Unmetered Customers
Residential Accounts /month
One or Two Family residence, per unit 1,483 $40.35
Single or double unit apartment, per unit 61 $40.35
Unmetered Commercial- Demand Charge Accounts /month
5/8" or 3/4" 0 $0.00
1" 34 $40.74
11/2" 5 $102.56
2" 1 $153.14
3" 0 $231.81
4" 0 $348.42
Unmetered Commercial -Use Charge Accounts Units /Account /Unit
Bowling Alleys 1 $113.10 $0.00
Churches 4 277 $0.00 $0.43
Dentist 1 5 $0.00 $24.24
Doctor 1 8 $0.00 $24.24
Garage /Service Station 3 $49.17 $0.00
Hanger -no wash 6 $48.82 $0.00
Hanger -with wash 1 $56.20 $0.00
Hotel 1 5 50.00 $24.94
Laundry 1 1 $0.00 $45.31
Office 14 553.39 $0.00
Recreation /per restroom 2 4 $0.00 527.04
Residential 2 $40.35 $0.00
Restaurant 5 310 $0.00 $3.59
B
CfrY OF KENAI WATER AND SEWER RATE STUDY
EXHIBIT 5
Current Sewer Rates by Customer Class, FY 2009/10
City of Kenai Water and Sewer Rate Study
Restaurant/Bar 1 28 $0.00 $3.59
School 2 64 $0.00 $1.62
Shops 71 $9.66 $28.10
Sleeping Rooms 1 5 $0.00 $10.89
Theater 1 100 $0.00 $0.19
As stated previously, it was assumed that total sewer and water system miscellaneous
revenues, such as interest earnings and penalty fees, would be treated as shared revenue.
Nonrate revenues, including revenue from penalty and interest, grant funding (excluding
grants for capital expenditures), interest income, and miscellaneous revenues, are estimated
at approximately $109,000 for the water and sewer system in FY 2009/10. Over the 20 year
analysis period, other revenues, excluding grant funding for capital projects, are estimated
to average about $63,000 per year.
Rate Impacts
In FY 2010/11, the City is expected to have approximately $2.0 million available in
beginning reserves in the combined Water and Sewer fund to pay for operating expenses
and capital improvement projects. As discussed previously, the beginning fund balance is
not reported separately for the water and sewer funds. For this analysis, the beginning fund
balance was treated as shared funds for the two utilities. These funds will be drawn down to
pay for planned capital projects and operating expenses. It should also be noted that a
minimum combined beginning fund balance of approximately $1.0 million dollars was
maintained for each year of the analysis.
This report does not recommend changes to the structure of the City's current water or
sewer rates. Proposed rate increases will be proportional increases across all existing rate
classes This analysis will not require the City to invest in additional metering equipment or
billing software that would likely be required if the City were to extensively modify its
existing structure. Thus, the rate increase proposed in this analysis will be across the board
increases and could be easily implemented by the City.
The financial analysis also assumes that the City will receive a 70 percent matching grant
from the State of Alaska to cover the costs associated with the CIP. The City will be required
to cover the remaining 30 percent of capital expenditures.
Exhibit 6 presents the revenue requirements for the combined utilities and the required
percentage rate increase for each utility. Rate revenue requirements consist of operation
and maintenance expenses (including transfers) and pay -as- you -go capital expenses. Non
rate revenue sources, such as interest and miscellaneous revenue, and use of reserves are
deducted from the revenue requirements to estimate the required revenue from rates. As
Exhibit 6 illustrates, increased revenues will be necessary to cover the revenue requirements
associated with the planned capital expenditures presented in Exhibit 3. Thus, rate increases
will be necessary over the course of the analysis period to fund the capital program.
9
'0
0)
0
C
N
0
m
N
C
m
E
au co
S S�
C o
co N
F-
CD
0] O
S
w CC 0
0
0
O
LL
0)
oo
0
LL
0)
n
0
cos
LL
to
1.
N
LL
0
v)
N
LL
C
O
cot
LL
M
0
Y
LL
0)
N
O
LL
N
0
LL
O
O
a
LL
N
N
0)
N
0 O
0
0)
O
t0
N
no
N
N
at
0
N
O
O
O
M
to-
00
0
0
N
C)
n
N
00
C)
N
0
N
an
0)
N r CO CO
CO 0 0 0
0 0 0
CO V (0 C
CO O fl N
0 M 0
0
M N
0 0 CO it)
N CO N
O N- N
M 0 o
0 v o CO
04 0 0 CO
N 0 0 N
o m o
d c6
O C co O
o 0 CO 0
m 0 v
N 0 0 of
ro m co r
n co_ i-
t
CO 0 0
N d t0 0)
0 0 0 0
co a> 0 O r
to co O
N 0 0 CO
CO e 04
ti r N
N CO 0 Cl
V CO 0
V) h CO 0
0 0 N N
N CO V
N C) 0 CO
N N 0
C) C) N
O on N to
00 O
CO N 0 0
o N a
o 0
n N
CO 0
V
N
M
to
O
N
M1
N
N
N
C•4
r
N
N
N
d'
0
N
d
N
N
0
N
0
0
0)
N
N
H
0)
C)
N
M
0
a
N
0
10
0)
N
to
00
of
N
N
O
W
N
c
d
E
N
cc
a
U
N 0
'O j
C 0
L0 CC
N
O s
0 v
M 0)
o
r r CD
O N
0
DC' 0 CD
v
O h
0) CO
0 0
CO 0
0 N
0 N
r'
V M
CO 0
0 CO
r 0
M
O
0
N. O
C)
0 uS
0
0) N
N
CD v
N
N
0) O
0 0
N m
04
M
to
O
M
O
Cl
O
N
0
0)
N
0
n
0)
H
0
N
P
N
h
0
Cl
t-
n
m
N
O
0
C)
N
b
N
0)
0
N
N
0
N
0
m
N
0)
0
CO
h
00
0)
R
M
0)
04
Y
LL
N
W
O
LL
0
N
N
N
LL
N
N
N
LL
N
0)
cm
O
cm
Y
LL
0
N
d
O
N
Y
LL
N
cm
O
LL
N
0)
M
V
0)
0
M
co
V
0
(0
M
0
N
M
N
N
0)
v
M
t`
7
0
N
M
0
0
O
v
N
0 IN 0) 4
M
O
r c6
0 co N 0
0 O N
O 0) N (0
V IL M N
N CO h CO
V N r CO
M N r
1 CO CO CO
N 0) 0)
N M O
o a 00
0 7 0)
0 (0 CO 0)
(o 0 0) 0
n V N h
O N V
to rt- (0
to 0) 0)
0) r"-- 0) 0
V N 0 V
0 0 CO S
LO CO n 0
N V O
O N
v 4)
O N CO M
s 0 (0 0
0 N CO
0) 0) v
to
voo
Q 0)
co 0 d' co 0 N
NI 0 r O) V
0 cc; 0 0)
N 0 Q N •c
(V r
0) st N 0)
co at 0 M
O 0 N
0) V N 0
(0 0 M (0
n 0 CO
N CO N
O 0 0) 7
m v r n
co
0
O
N
C
O
N
0)
0)
C
O
0
0
(0
0)
m
n
t')
N
N
O
n
re
0
N
0
N
N
M
0)
a
M
n
N
CV
O
N
CO
0
0-
0-
0)
t0
0)
F
0 d
O O
s7 01
A
N M1
O 0
0) N
0) (0
N N
co
N
D7
O r-
0 0
0 0
r
0 0
0) 0
at 0
V
O N
O
V CO
to
M
N
0)
N
0
co
r
N
O)
N
00
M
N
co
co
co
co
a
ca
0
V
N
N
N
0)
'Cr
0
0)
N
0)
0)
7
0
0
cn
M
O
co
N
0
M
N
c
n
N
CO
n
N
R
r
0
M
V
(0
M
0
N
N
0)
O
W
V
C)
O
N
n
O
O
M
0)
n
N
Or
M
M
0
(0
or
N
M
tO
n
0-
M
It was assumed the City would not have a rate increase in FY 2010/11. However, in order to
fund the capital program utilizing a pay -as- you -go strategy, increases will be required over
the next 20 years. The analysis has projected significant percentage increases to the water
rates beginning in 2011/12 through 2018/19. Inflationary adjustments are programmed
starting in FY 2019/20. The analysis assumes annual, incremental increases for the sewer
utility to maintain a sufficient fund balance and to keep up with the pace of inflation.
If the City is successful in obtaining additional external funding (i.e. grants) for the planned
capital projects, some of the rate increases may be reduced or eliminated. These rate
increases have been structured to allow the City to meet projected annual revenue
requirements, while continuing to maintain an adequate fund balance. By FY 2029/30, the
sewer utility will have an ending fund balance of approximately $2.6 million.
Exhibits 7 and 8 present the forecast water and sewer rates for unmetered residential
customers based on the City's existing rates and the projected rate increases discussed
above. Based on the projected rate increases, the residential unmetered water rate will be
$45.06 per month in FY 2029 /30. The unmetered residential sewer rate will be $63.50 per
month. Attachments 2 and 3 present the projected rates for all customer classes.
12
0
q
o 0 0 0 0 0 0
1r to to d' co N
,..o Et .m«.caraatmraaiamm Er=
0 0 0 0 0 0
0 0 0 0 0 0
0
0
O
0
O
r
EA
n,
O O O O O
O O O O O
GS (fl E/9- H3 a
r0 t6+CQ76_ nagroc -uso EC7
O
O
0
ro
E
It should be noted that changes to the timing of particular projects listed in the CIP and /or
the ability of the City to obtain alternative sources of funding could impact the rate increases
estimated in this analysis. Alternative rate increase strategies could be explored to smooth
increases over the entire planning period, or achieve other objectives.
Rate Comparison
Exhibit 9 presents water and sewer rate comparison for Kenai and other communities in
Alaska. Information for other communities is for adopted rates as of 2010 and was obtained
from each city's website. For this comparison, it was assumed the average monthly water
consumption was 7,500 gallons per month. Currently, Kenai has the lowest monthly water
rate at $13.78 per month. Only Soldotna and Palmer have a lower combined water and
sewer rate than Kenai.
EXHBIT 9
Water and Sewer Rate Comparison
City of Kenai Water and Sewer Rate Study
Difference
Monthly Monthly Combined from
Community Water Bill Sewer Bill Monthly Bill Kenai
Kenai $13.78 $40.35 $54.13 NA
Kodiak $37.58 $54.55 $92.13 70%
Anchorage $40.04 $29.26 $69.30 28%
Juneau $23.06 $56.01 $79.07 46%
Cordova $29.58 $38.95 $68.53 27%
Soldotna $19.56 $28.50 $48.05 -11%
Palmer $19.88 $27.75 $47.63 -12%
Seward $49.19 $77.20 $126.38 133%
Homer $56.50 $92.75 $149.25 176%
Notes:
1) All rates as of 2010. Rates verified via internet
search.
2) For metered accounts, assumed average monthly water consumption of 1,000 cubic
feet (7,500 gallons)
CITY OF KENAI WATER AND SEWER RATE STUDY
It should be noted that direct bill comparisons between communities are difficult because of
differing system requirements (i.e. filtered system vs. unfiltered), policy decisions, tax
structures, and usage levels for the various utilities. Seasonality and pricing structures also
drive different usage levels. Finally, future rate increases of other communities are not
known at this time, which makes comparisons of future water and sewer rates difficult.
15
Water Meters
CITY OF KENAI WATER AND SEWER RATE STUDY
Currently, the City only meters a portion of their commercial and residential customer base.
The decision to install meters has many implications on the City and its customers. Some of
the issues surrounding metering include:
Water Consumption: Installing meters has proven to curb overall water usage when
compared to unmetered customers. The reduction of water usage could benefit the City
by reducing the need for future water supply, decrease the amount of water entering the
wastewater treatment plant, and encourage water conservation.
Equality: Metered customers only pay for the water they actually use, which gives
customers the opportunity to manage their water consumption and potentially decrease
their water bills. Meters also provide the City with better information about water
consumption. This can help the City effectively plan for future demand and can also
assist the City when developing equitable rates.
Leak Detection: Water meters assist customers and the City with leak detection in the
water system.
Water Rates: As stated previously, meters provide the City with better data on water
demand and consumption among customer classes. This data can help develop rate
structures that are more fair and equitable. A possible limitation to installing water
meters is the City's billing system and whether it can be modified to adapt to a metered
customer base.
Installation and O &M Costs: Installing meters will result in capital costs for the City
and /or itscustomer. It could also require a change to the City's billing system if the
current system cannot accommodate a modified rate structure. The City would also
likely experience an increase in operating costs as additional personnel time would be
needed to read and maintain the meters.
Revenue Impacts: To ensure the City continues to meet the revenue requirements
necessary to operate the utility, a detailed cost of service analysis should be conducted.
This would need to be completed as the City moves from a stable revenue stream of
unmetered, flat rate customers to a more variable revenue stream that is based on water
usage. The cost of service study would develop rates to meet the required revenue needs
of the utility.
Conclusion
Based on the study findings summarized in previous sections the following
recommendations are presented for the City's consideration:
Implement first 5 -years of rate increases presented in Attachment 2 starting in FY
2011/12.
Increase rates as needed in future years to meet the financial needs of the systems. The
projected rate increases shown in Exhibit 5, are based on the best available data and
assumptions developed by the City and CH2M HILL as of June 2010.
16
CITY OF KENAI WATER AND SEWER RATE STUDY
Review financial plan regularly to ensure actual revenues and expenditures are tracking
with the projections developed in this analysis. The City should review the financial
plan annually and adjust the rates as needed to reflect current conditions and
assumptions.
The American Water Works Association (AWWA) rate manual recommends creating
separate funds for the water and sewer utilities to separately account for revenues and
expenditures. Currently, the operating expenses for the City's water and sewer utility
are accounted for separately. However the revenues, including non -rate revenues and
fund balances, are co- mingled. This is not an uncommon practice, especially for smaller
communities. At this time, it is not recommended to create separate revenue accounts
for the water and sewer fund. The City should revisit the feasibility of establishing
separate funds when doing so would not create a financial hardship for either of the
utilities. Separating the funds at this time would require even larger rate increases to the
water utility to make it self sustaining.
17
Attachments
18
Projected
FY 2019 -20
N
0
O
't
CO
N
r
m
co
CO
V
n
r
O
h
CO
0
0
h
CO
h
h h
0 CO
r O
0 0
O
CO,
tv
m
n
m
[0
(0
W h CO O O
N O O
N 0 0
M a c c c
co W r
r
N
(O
CO
m
M
(V
N
O
O
ro
r
I Z6C868`9
Projected
FY 2018 -19
h
V'
m
lD
h
O
co
M
(0
N
0) 0
V O
co, h
CO M
O
0
0
(O
h
M
(0 0
O 0
a r
M N
O N
h
0 0
0
co
r
(0
C
m
m
N
N
CO
0 CO O m 0
n (D W
r m M
co co 4
d' r 0
O
N O
o N
to N
(0 OD
m r
r
t9b'669`S
Projected
FY 2017 -18
m
o
t0
h
y
CO
OD
m
m
N
r
r
CO
CO
m
m
to
co
r
o
o
h
M
o
0
Imo.
(O
m
o R
V co
V 't
O CO
n
O O
0
co
r
v
m
C'
W
10
N.
o
Cli
0 O CO (0 O
n N r
h N V
m h 6
m
d' O O
r r
O
r
r
h
M
M
r
n
CO
LO
h
n
r
b6b`8Z
Projected
FY 2016 -17
(0
(O
N
t1
r
10 N
CO m
O CO
M YO
O (O
r r
0
0
h
M
0 r m
(O N CO
h r r
co O
r O CO
r
0 0
O
CO
r
to
0
CO
(0
CO
00
N
N
10 W CO N O
O 0 O N
c} r m CO
N D7 ,6 C
0 a O V
r r
CO
m
h
N
r
r
r
h
r
r
6,038,365
Projected
FY 2015 -16
m
M
(D
n
N
r
CO
r
0
(D
h
m
N
0
r
M
co
N
r
O
O
n
M
0
CO
n
(O
V 10 O O
CI n 0
r CO CO„
r M r
O V
r V
0
V
N
(0
n
CO
e4
000
m 01 10 r
CO V 0 N O
0 10 h M 6
00 m CO 0) m O
S CO O 10 CO r
r r
4,378,245
Projected
FY 2014-15
N
m
O
O)
O
d' O
CO C
h CO
N
O N
r
O
0
h
6
O
0
h
(O
h M 0 0
0 O O
N N CO„
4t
o 0 r
0
C
O
V
N
0 0 0 0 0
d' 0 CO
m CO CO
10 t0 m
co
CO O 1 J
r
0 0
CO (O
O a
N 0
r CO
r
19 Lb`£ LO`b
Projected
FY 2013 -14
M
n
M
O
0 0
00 n
h M
r V
r
0 0
O m
n h
M O
0 0 0 0
n o o
n CO,
h N r
0
n
CO
O
0
r
C
N O CO 0(00
v (0 m 00
0 CJ 10 0 0
(O t0 h n O m
m m m O m r
b1£`OOL'b
Projected
FY 2012 -13
0
N
CO
N-
N
r
CO 10
0004'- CO
CO CO
O o
O CO
n CO
O
h
M
O r r
CO
h M CO
co` O o
m N
CO
0 0
0
CO
r
0
C
0
C
0)
N
v
r C0 r CO O O
6 co h co
0 CO m N
ti h v m
N d' 0 r
r M 0)
r
CO
co
CO
Oi
10
0)
O
0)
0
V
P
4,294,045
Projected
FY 2011 -12
10
N.
M
(0
u
r
O
O
M
(0
a
n
m
0
r
M
r
0 0
0 O
h h
M (6
r h
o r
M CO
(0 h
0 0
O
CO,
r
0
M
a"
m
P)
N
N N r O O
M CO N (O
N O) N 10
O 't of O)
m m n
0 m
co M
OO V
6 o
co in
r-
0 L£b68`£
Projected
FY 2010.11
im
0
M
N
0)
V
n
n
CO
M
0
V
r
o
o
o
0
0
10 0-
CO 0
0 0
o
CO
0)
COOL0000
0 r r
m
10 10
CO
CO m
0
0)
N
CO
m
0
N-
r
y
r
3,388,498
Description
N
C
co
R
m
c
c
02
0
d
m
N
iV
cc
N
5
O
m
Ul
n
s 'a
3 (5
a
in
ii a
C N a
0 L O
O O m
'O
ca
l0
N
Water Utility Capital
Sewer Utility
Treatment O &M
Sewer Utility Capital
Debt Service
Total Uses of Funds
0
10
ct
a
in CO
"0 co
CZ
0
W cc
(0
N 0)
N N
N (n
a (0
m
a) a
O p
Z 1 G
a) Y
o
a C)
d co
0 N
0) 0
O N
LL
0 N
0
p N
a LL
O
a
U
In
0
r m 0- O
m h I. h
N n ri
O co N
O 0
M r N
O 0(00
N h 1[1 h
n o of ri
y 1(J O
M r N
L 0 r O
co m r r-
6
(O N M
m h
(0 V O
M N
h 0 N
m r On
M r N
N r O
v m
0)
N
N
O m O
S 1n h
0 o
0 N
C
V 0
04 0) O
n h
M 0
n CO m o
N N 0 O
m 0 O n
(0 V M M
0 V M
10 M OJ
N r r
h 10 c0 O
co co N. o
co N. h
n co N M
N M N-
C i r r
CEP( OF KENAI VVATER AND SK,
Beginning Balance
O
(0
0-
(0
O O O O
N 0 O
0 0 0
O N
m
CO
t0
0
co
O
O
0 O N 00 0
0 0
N O D
t- 0) O
co N N
N
O
a
N
N N.
M N
N
10,093,068
O 0'
(0 M t0
N-7 0)
(O (D
0 r
N
0 0
O
M
4
CO
O)
O
co
01
N
O
0 CO 0) Lil D
4 V h 0 0
1_ CO CO, 0
V V r 0
M r h 0
O
.r N
O
0 (0
CO 0
V N
r 0
r <1'
O) N
N
669`863`01 I
0
O
N
0
a O
O O
CO r
O O'
O O
M
0 0
O
CO
r
(0
N
0)
O
W
M1 CO CO
h O W
N O CO V
M N 0 o6
O O (0 0
r O O 4 CO
r r
O
CO
01 10
O 0)
C]
Ih CO
CO N
C)
199`6£9`8
O
CO
h
0
O 0-
N M
M O
y
(O O
N
r
O O
O
M
r
r
(D
O
e
O
Oi
O CO 4 CO
0) 0 0
co O co CM N
N o o v
I-- 0 V N \I
O r O
r r r
0
Ih 0
(D 00
N O
(D r
01 04
N N
co
L991;00`6 I
co
0-
O
O O O O
CO CO o
r N r
(O 1--
1
N
m
co
N
0)
O CO ,l)
o a t .D
N r N M
V r N CO CO
O N O 01 :V
O
N<-
CO OD
O
10 CO
N 0
8,926,192
0
(D
h
(D
01 0
(D m
N N
0' V
a O O
0 0
o
CO
10
(0
o
10
1--
(000 1
(D (D v 0 CO
O O r
V O r ui C)
O 0 O 01
0 0 0 0
O) 0
CO CO
(D (1
N N
Di
7,546,615'..
o O 0- o o
1$ V O CO,
O 6 O r
r N
(D
m
Q
0)
u i
n o 0 0 O
In
0)) 0)
O O co
0)
O
0- 0
o a
O O
0) N
N
5,914,896
O
r
6
N 1-
O r
r 6
r
r
O O
O M
r
N
<I'
V
(0
M O 0) O
CO r
0) (0 4
m a O
r r-
O
N O
N r
6) ei
N N
6,784,472
0
(O
r V
h 0
M O
N O
M
N
O O
C)
4
N
O
co
M
N
N
A M 1- N
O O) O 0 O
N lh 0) O
CO O CO CO 0)
0 N I 't S O
r
O
O CO
O N
M CO
CO 0)
O r
N
Z£6`0EZ`9
ZbZ 861
9S9`EEO'Z
000100
CO
CO
O N r
LO
n
o
N 0
O co
m
M r
(V
669`899`L
8179`36 L
LLObbC'Z
Interest Revenue Misc
Grant Funding
Water Utility O &M
Water Utility Capital
Sewer Utility O &M
Treatment O &M
Sewer Utility Capital
Available Ending Fund Balance
Minimum Fund Balance
Total Uses of Funds
ND SEWER RATE ST
CITY OF KENAI WA
CO
W
H
Cr)
CC N
N
co
0
R
CC SP-
N
co
w> 0
CI
r z a
a 0 o
¢aU
O
O
(.1
LL
u CO 0 0 0 0 0 0 CO 0 N N CI CO 4 0 00 N 0 0 N N 0 r 4 0) 0 0
N 0) 0 N r CO CO N O) N C M co N 0 N N O 0) 0 t0 N N 0 0 CO r 0 0
O N N 4 N V M O N K 4 V 4 0:i 4 m in N C) C) N O O O N
co E 9 co 0 0) V N 0 f9 N N 4 4 1 0 0 (2 4 4 04 0 69 69 6 9 0 (2 49 49 0- M
69 69 69 69 r N N CO b3 M 69 69 69 E9 E9 fA f9 69 %3 ER
r
u 4 0 0 0 0 0 0 0 0) CO CO CO CO M 0 v) OI CO (0 (O N 0 0 0 0 0
O N 0 h 0 N 0 0 0 0 C 0 0 W N N h N r 0 LO N r r 9 4 0 0 h
(O O (0 N O O N r O r r 0) M O N 6 4 O M M r 6 6 O O O
M 49 0) (0 N 9 r 0 69 N N 9 4 0 N 9 4 N CO 69 63 69 N H3 E9 69 CO
f9 69 fA E9 N M f9 t9 (9 (a (fl (9 (9 E9 (9 f9 N3 f9
69 69 69 f9
ti
0 4 CO CO 0 0 N CO 9 4 N N t0 09 0 V 0 0) N CO 0
O N O O CO M CO O 0 0 CO 0 00 0 CO CO O r 0 M 0 0 0 9 r 0 0
O (0 6 6 M O O (O O O O r 0 r 6 O M C) 0 r 4 m O O N
M cs M 10 0J M 0 0 CD E9 N N 4 9 N CO 4 N CO f9 E9 69 N f9 (9 (9 M
E9 d3 60 l9 43 CA 00 49 07 f9 (9 69 H3 E9 fA HT fA M 69 69
FID M 0 0 N 4 CO N CO CO M 0) 0) 00)) CO CO '0 CO CO 9 N 0 N CO N- m M CO 0 0
O r N O r CO. N N O 6 6 N N co 6 N N r r N N r o O O r
co 4 9 9 0 04 0 CO N 00 E9 r 0 CO 4 r CO 9 N CO E9 (9 E9 N E9 E9 69 CO
69- 49 E9 E9 04 E9 M 69 0 E9 E9 E9 f9 69 N CO 0 E9
69 M 69
u N 0 9 0) 0 0 O) 9 0)L-C901 9 0 0 0 0 0 9 0 0 0 0) 0 9 0 9
10 0 0 0 0 r 0 0 0 00 CO N N V V 0) O) CO 0 N O) d' a r 0) (O O 0)
CO O 6 O C) O (0 R 6 O N N 9 9 6 N (J 6 O 6 N N r m N O O 0
N EA N 9 N r 0 9 N r CO M CO CO M N E9 S M G9 (9 O N
E9 E9 4i 43 r r Ea.
03 E9 E9 40 69 E9 f9 (a N 49 69
o co o o co co co co o co 0 0 t0 r r O CO 0 10 4' 0 0 0 0 CO 0) 0 0
N 0) 0 00 0(0 N 9 CO N 0 CO M CO C9 N 9 0 t0 C) N N 0 r m 0 CO
(0 0 0 0 0 0 0 an N O to r (p O 0) N N O N N r 00 O O O O
N f9 N 9 co O 0 N N E9 r 0 M M r N CO r N 43 69 E9 r E9 E9 E9 N
49 E9 E9 f9 r r N E9 E9 E9 f9 E9 M E9 0 0 0 E9 E9 E9
69 E9 E9
e 6 O 0 Q) 0 (0 9 0 (0 (0 0 CO CO CO (O CO 0) 0 0 0) N N 9 CO N N 0 0)
0 9 N N 9 N O N O) 0) 0) 0) 9 (O N M 0 1 0 0 0 N r 0 9
CO O M K) 6 o 9 r 4 O 6 M N h N 4 6 r 6 M N N O (O (O O O (h
N ‚9 04 0 (0 0 0 0 0 6 4 N N CO N M N f9 6 9 f9 f9 E9 U1 N
69 4'3 E9 69 f9 r N E9 f9 (9 E9 f9 69 69 69 69 0) ffl (0 0)
E9 E9
o N O N (0 CO 0) 0) 0 (0 000 0090000 N 0 0 4 O) O N
0 0 O) 0 0) 00 N O 00444 0) 0 0 0) 9 0) 0 0 0 0 0 9 r0 0 o
6 O O O r N O) O) Ci N O N N 4 a M N M N C) O r r O V (N O 0 0
N 6 N M N N r N 0 E9 N N N N N N Hi f9 69 M e f9 N
69 E9 E9 f 9 Mr E9 69 E9 1f3 E9 M E9 E9 M E9 M E9 (9
69 CO
CO 0 CO 0 00 N N CO N CO 0 0 CO C l 0 0 N 0 0 (00 M m N N 0 t0 m CO N O O 00
O (h 'r to 6 0 6 6 0 6 6 0 0 0 6 to 0 m M r r O 6 M O O M
E 9 r N co t0 N r CO E9 E9 E9 r 69 r r E9 r f9 69 H3 U3 f9 E9 E9 r
f9 E9 E9 E9 f9 r E9 a 69 f9 09 E9 E9 i9
M
c 0 0 CO 0 N 9 0 O) 0 0 N N 9 9 0) 0 t0 CO N CO 0 0 0 0 N N 0 CO
o N-. O 07 CO N N CO N o CO CO 0 0 N CO (O (O CO 0) N N t0 0 0 0 0 0)
co O C) r 0 C J o at 0 0 0 0 6 6 0 6 0 ro m Mr r O 0 co O O M
69 N 00 t0 N r 0 f9 E9 Ea 69 E9 E9 E9 f9 E9 E9 69 f9 r f9 S. 69 f9 69 r E9 69 E9 69 f9 f9 69 69
ea
0
U To
c
U) E
o
Tai E
N O
c S U
9 0 0 V
w y v N m
O N a) O) O a
a`coo r
C
0
o C
j o o a a CC
0 O 0 N 4
o c E c c
.0 o O (O N O O t
a 0 'c 2_ c n
E O L N 3 N N J d^. 5 co CD
m 3 c o° `m a a m=° o 0 0
w m a a in c 3 0 a a o CC 00 CI a m- m M t m g u N o CO 3 a a v a 8 2 9 om m 8 a a ro v o
C U E E° 5 E O d C V (J N 5
E o 0 O J g N N N o w 0) 0 L 0 t oo
CO m U❑❑ 0 m S m m J O cc cc m cc co N O H* h
O o O O h
co co N M to
N
0) C)
0) C N 69
ER L N M
e e3
n O O O (00
V O O N CJ
or 49 7 N CO
69 e3 e3
M M 0 0 CO
O M O O M
499 cv M
e3 69 f9
O N CO CO
CO N 00 h O
co r m N
0 e3 09
O O) O C N
O 7 N 0) h
C) O (f) N
h 7 CO e v3
ER (A 49 69
0 ro N 0 0
6 O O N N
69 O O N M
Err 0) fa
m
N
O
U
E
co
W
N
N CO N N
01
0) CO CO O EA M
et CO (9 N f9 O
N
(D 0) O) 0
N CO h (D O CO
N O n N N N
fa e (A fA O
N
IN v CO 0) CO
N N CO CO N
O C) 6 O
co in h 7 E9
e3 U3 (A e3 0
N
N a CO 0) CO
N N CO M N
c0 0) 0)
co co h 7 M 0
fA e3 f vs. N
f9 O
".a. O O C N h 7 h 0) O O 7 h CO h h col N CO CO O M
N O O N O M O (O N V' N N C C O N 7 0) C h 0) O CO h O N 3 O N 6 o 4 6 6 0 r V 4 M 6 O O to C) M 0 0 0 00 00 00 0 4 0
C 03 C O h (D 0) N e3 N N N to O N N O M C e3 e3 69 M 0
63 69 69 N M Y3 E9 co- oo di U3 (fl 64 69 E9 69 0)
co 4 03 e3 E9
et- O— 0 O cD 0 0 00 W h as C C CO co h N co O JO O h O N
N O CO N O O O) 0 h C f0 c0 co co CO h h co co co Do co m N N
a O C' of 6 O tci Ci (0 O 6 m ai f+i N O of 6 V ei ri O O
C M C co h 00 00 N H} N N N N O N N to N V 69 e3 d3 M M
fA co 0 N CO f9 e; 43 E9 b3 09 Vt t9 f9 0 64 (9
Ea la e3 e3 v 3
M
N
a CD O h CO IN M (D (O CO CO CO CO h h CO N N O N h O O CO (O 7 N
N C 0 0 0 N O 0 0 O) C 0 CO N N C CO N C h O h h h h M N
N O 6 6 6 4 f0 Di o] O ic O 6 (D W h o 0) M M 01 O
C f9 C 0 co C 0 0 N N 17) 17) N N C N N C 69 0 f9 N 7 0
(0 e3 fR N co f9 f9 f9 69 03 fa 69 69 fa e3 69 69
0 e3 e3 03
e N O M C C N CO C O t0 M M 0 c0 h CO h h O M N N m CO 0)
N (O O N CO N CO N C O O C 7 04 00 04 00 N 0 0 N N N I- N O O N ON
O N C' c0 O (O O t0 N O O of O r` O M (V M C) 6
C 0) C (0 O CO C (D (9 N N t0 t0 in N C 6 N C e3 49 0 N 69
f9 e3 CA N M f9 f9 f9 et E9 Y3 !9 (A 49 f9 69 0
e3 0 EA (A e3
o
u O 0) C O h N O) h co a, V O) c0 0) co co co in (0 O
0 O t0 co C to O r O ti co M 0 7 V 0 0 N d' V co, O co N
O O O— cV V h N O V V CO W cD N N V' h 0 C) C) of 0 0
C M C co O N M C e3 N N C' C N N C t0 N C E9 E9 ei N U3
(9 49 f9 N co Ea Ea (A e3 69 69 69 M fa ca (0 E9
fa 0 f9
egt; 0 M O) C h h CO CO CO CO 0 7 N 0 CO CO 0) N N O) O tO
N O h N CO t0 C O 0) CO a (O 0 M M 0) CO L C i0 h V 6t t0 an V N
O O O) O O rC O of O 6 C) r- h C C C M (O a M M h 0 0
M 49 0 00 04 co co C O e3 N N C C N N C i0 N CO e3 Ea ei N 7 69
eO e3 d3 N CO 0 fa EA 09 f9 e3 e3 e3 ei (9 0 63
M CO 0 0 69
e i0 O C N h O CO N N N N C C CO C h m to (0 O (D C O
N C O O C C O CO N h C N N C C CO 7 CO 0 0 0 M M N 0) N N
co O Oi Oi 6 6 N V t- O N C) (O O M 4 (0 6 Di M M (0 O O
CO e3 CO (0 Cr a N M O 63 N N C C i0 N C N N M d3 e3 fa N f9
c9 e3 e3 69 N CO e3 et (A f9 f9 e3 e3 e3 el f9 e3 69
e3 f9 e3 69
u 0 O 10 h 0) 0 O) CO O (O O N N h h N h O co 0 co co M C 0)
h O N N C M C r--
(0 C h h N (0 h CO CO N O N N N (O C O
Ih O 6 6 6 6 0 r 00 O N N O6
M fA CO N 0 C 7 N O e3 N N C C i0 N C N N CO 69. 0 e) N ei
69 et et f9 N NN CO E9 f9 (9 e3 e3 e3 e3 E9 f9 e3 Ea H3
0
E
0
0 6
C3
0 y E
N 0
6 U
vv
a v m
`w v
0 CO N T O
a c N
O co C C h (O h N O O or N 00 CO t0 0) CO h h !D 10 CO N
0000(00) C M C N N co r r t0 N O h h N CO t0 N
O C) 6 O h O c0 t
C c0 O c0 O N N O r 6 6 6 O M (0 O'- O
e3 c0 0 h N e3 N N CO t0 O N C N N C e3 e3 ei CO 7 E9
69 fA 7 i9 CV CO ',7, e3 d3 t9 E9 0 69 69 e3 fA e3 e3 f9
O O W t0 O O C C C C 00 CO CO N 4) h O O N 0) CO r-
0 C O C (D N h CO V (D fD 04 00 0 (0 0 00 u 0 0 0 00
O 6 4 h O d' V O a V of m r 6 (O 6 r M Ci O O
f9 Q O O h CO O e3 N N C C t0 N C to N C e) (9 e3 N d3
e3 fA e3 04 f9 EA E9 e3 EA e3 e3 c9 e3 fA e3 e3 co
N
C 7
to c c N O OU a-
O 6 O U
To 0 0 E c
U N O ro N j
`o 0 a o p_
E a_ 0 S C O N R j 1 ^v_ O N E
m c 0 `m a. a ctl C c U, E 3 O
V 0 a. 3 Z 3 t c ro Q m 0 m o w
m
o N d N 0 0 0. c N c a d `m cc a 0
N m 0 a a C s O. a 0 C 0 0 0. a 0l
C) N co C U !n `O m c 0 m o 0 N 9 m m O co d O co
R 0 EE 0 c o r e(9 o a i¢
N E p �i J C O N OU N t6 O N N N N ('OJ .c U L N
N 0) 0 >Q m 0 0 a 0W 1 x 1_ 0 cc 00 00 N co in 1—n
Or 0 m o CO CO
o ui ui t v
fl N CO
0 69 69 40
o r 0 CO 0) 0) CO
0 CO 0 CO 0 m N
o a of o co (6 v
v r (n 0
N
fa 69 E9 9
O O 00 c0 O 0 W
O M O r 0 (D
F9 V co N r F9
9 N
EA N 0 E9
O r r 0) N co O
o O co O O O
O M N V O(0
EA 0 (n N O) EA
E9 69 CO (9
0 CO V N CO V N
0 0 L 0 0 4 0 0
O N 0 O (0 V
(9
v 0 (o N CO CO
(3 N CO
64 (fl fA (0
0 0 LO 0 10 r 0)
o 0 10 (d o ri
E9 C 0 10 CO M
0
0- 49 0 69
0 0) O N (O 0) (n
0 in v in O] r co
O O N V. r co
EA V 0 0 CO V fR
N C)
Ea E9 69 M
0 0) 0) N 0)
0 r CO in CO 0) r
Oi 0 0 n O CJ
EA co O t o N V E9
r N CO
(A 69
O N r O 0
0 O V 0n 0 N h
O Oi of W N CJ
V CO E9 CJ 0) N CO 69
E9 9 r N 00
E9 EH ce
0 0 0) (O 0) CO V
O N V (O V N O
O of m 0 of r ci
EA CO 0) V N Efl
0 N CO
fa E9 69
M V
0
d
E
O
O O 0 a N N CO 0 00 N N 0 1 N t 0 0 0 CO 0 0 CO O V O N
N (V O 0 N r m W 6 O a a N O N N m 6 a N a a N N a O
0 43 to N co o) an a a (9 O CO CO 0 IN CO 0 0 CO 10 43 43 43 r 43
ea fA Co t 9 0 40 62 M H 3 (A 09 69- H3 43 (R f9 fR 69 Vi <ft
O O t V m 0 9' 0 O m ((0 CO N N CO 0 M 0 N O L0 t O CO r N
O t0 A M M O O' O O O N a a N.: h d' a d' a N N C) 0
10 69 10 N N 0) O a V 63 O CO 0 (0 0- O t0 CO CO 10 CO- ER (9 03
43 43 43 f fl 43 69
43 43 43 69 43 03 43 49 O 43 43 43
O O 0
LO m N 0 0 O 0 00 O 9. IO r CO N N N O V 9 0 0 1 1 N
O O 0 0 a r N 0 0 0 0 a O o o 6 O Ci O a a N a 6 O
0 4? i0 r N 0) 03 CO a 43 CO CO 0 CO 0 CO N N O 10 CO- 43 O 43
43 49 49 O EN9 a 43 43 43 03 43 O 43 43 M f9 l 9 43
o O O CO 0 0) r 10 (O 91 0 0 a t0 0) N CO N N LO a N CO
O (O 0 0 1'6 0 a N N N 0 N N N CO r 0 LO O 0 0 CO CO CO 0 r
co O m N c 4 m m 0 o m m Oi W 1C O a a N N V a O o
43 V r N 00 IN r CO 69 N 0 (0 0 (0 CO 10 0 CO a 43 43 69 (i3
43 E9 4) O 01 E O 43 43 4; U3 43 43 69 f9 43 43 19 43
N 0 0 r CO 1 N O 0) C 10 r r 0 V O N N N m 0) n N
O r O r O o of r N O W 6 I` r 0 m O N r a a a N O
43 V r r r O O 19 N N N 10 0 N 10 0 CO V CO (9 43 03
43 43 43 r N C4 9 43 43 43 O 43 f9 43 43 43 CO 69 4)
o O N O V m N V a N 1 t 00 V 00 CO (JD r N CO 00 CO 0) M N
O N 6 6 6 6 6 6 6 O r 1'- 1a7 6 O O a 0 0 10 a s 0 N 0
43 0' 0-0 0) N E9 N N 0 0 CO N 0 0 O a 43 43 43 43
E9 H3 f9 fA 43 CV CO 43 E9 f9 69 43 fA fA 43 H3 43 fA 03 U3
co 0 00 0 0 a N 1 r 00 a r r N CO m 1 0 0 O 00 V 0 CO CO ((0 O N
1f) a d a d o d ui c a o 6 (d a 6,- r 0 6 of a of co o ni d
a 43 t 0 a (0 10 00 N 43 0 0 1n 0 0 N 9' 1t) N V 43 43 43
69 43 43 r r NN CO IN 43 03 Eft 43 (9 0 d3 N3 43 43 43 49 69 69
M O r CO CO m 00 V N S V C V 00 N O O V) CO CO CO b 0 a 0) 0
a
N 0 0 1 0 1' O O N 0 O 1.6 N m 0 1` 10 0 6 (7 00 O a O
a 6 a 0 O 0 a co a 4 3 N N 10 7) 10 N a 10 N a 43 43 43 r r 69
CO O CO 43 43 CI O O 43 (64, 43 E9 43 69-69-9> E9 43 V3 CO-
o C0 0 r a LO r 00 V (9 O N N r N N N O C O O 0 CO 0 1)) 00 N m OD
0 0 0 o N C) 0 N o a a of 6 0 4 ui 0) r- 0 Eo 0) ai d o
a 43 a 0 O 6 CO a a- E9 N N a a 10 N a 0 N a 43 E9 43 43 43
49 49 49 r CV CO O O 19 43 43 43 43 V3 43 43 43 43 V3
0 o 0 'Cr a 1 E) a CO V CO N N r CO N m CO N 0 0 C 1 LO
0 91 0 0 00
O M O O N C) O) O a a ai o o a 0 (d r 0 C) M o O O
6 a co O 1f) CO a 43 N N a V 1() N a t9 N a 69 43 N 43 43
E9 43 E9 r 009 N CO 43 43 l9 43 43 43 (9 43 43 43 H 3
u
0 C
N a E
O 0 O
CC U
'0 a
a 0
o N
o E E
O C C
0. 7 0
0
m
`m
r
E a
co o 03
m
m o o° E c c a.
.O N O R N O O
EI N 6 r, p a O.
E u a C 0 R O d
c o d' C co N O 3 O
N 6 d N o 6 R C N C C d N¢ d
o_ En c 3 0 0 s R E g a m
m a o c a)
m C C V N c),-c) 0 ro 0 C m O I V y p 0 8 0 0 0 0)
E O L 41 O R t6 R O 0 N 0 0 0 L 0 L
m 0 m O o 0 C m 1 1 1 0 cc et cc (0 v3 En in 1—
w
N
N
CC
4)
(0
m m.
C
CC
a `m
W C
Z cis
a Y
0 0 0
0 V'
o 0 V r- O h N 0 0
O N 0)) 0 0 V 0 0
u3 f9 69 0
o CO N 0 O 0 0 O
0 10 0) 0) d' 0
0 0 09 69
O 0 N CO M 0
0 0 14 O N V
0
0 N N 0) OD M 0
0 (9 09 t0 9
0 0 0 L a N n 0
O) C) 4 N r of d'
E9 9' 0 N. 0
0 0 0 0
o CO 0 0 r CO L co
0 69' N- 03 O 0
0 N 0 CO 0 09
o N V 0 N LO
O ro 6 (6 v
0 6 ui V 0 N CO O) 0
0 69 fA 0
0 0 0 CO r
O V M 0 6 0 d'
0 V r (0 6 0 0
69 0 N 9 0 M
O CO 0) 0 0 9 0
O N. (0 0 V CO N
O N V
0 M (6
69 9 0 (0 N M 0
0 0 0 0
o r 0 r 03 9 0
O O N co r co
f9 V O t0 0) 9 69
0 0 0 0 0 9
O d (0 V N 0
o r (n r CO v o
00 '9 0 0 0) a 0- CO
99 r 0 0 LA0
r V M
N
0
m
a
0
E
0 0 0 o d 0 0 0 0 M 0 0 00 0 .4 CO 0 0 V N M 0 0 O
N
N
0 O a 6 t r 6 4 6 4 r 4 Co n O W O r O 0 O) CO 9 N 6
(O 0 0 0) 0 V' CO V r 0 CO CO r r 0 CO n 0 O
0 0 0 x 69 09 69 6 0 0 u3 0 0 0 0 0 0 e 0 0 0
N
N O 0 0 N N N (0 O
0 N 0 c 9 9' 0 CO N 9 O( N N
N O N M 1 0 (6 1r r V' O (0 r N N 0 CO O) N N
co 0 (0 CD u> CO in M h 6'i M M 18 n co M (D OJ a t0
0 0 0 6 68 68 0 0 0 0 0 0 E9 0 69 0
O 0 f00 CO N (0O CO CO 0
(0 00 0 CO O 0 N L00 1 0) CO
r O n: O O O 6 N r o O O
(D 0 (O 0 u) CO N N 0 0 3 9 N (‚-0(000 V c0
0 0 0 N CO 0 0 0 0 0 0 0 0 0 0 0 f9
e. 0 N
0 V 0 0 O N CO 0 N. 0 a 0 i 0 0 O v M 00 r CO O 00
Oi O O 0 N 9 N (0 N. O u) N N 0 4 0 1 0 0 0 0 (O 0 O) O Di
0 0 CO M r N V (D 0 M CO 0 r CO CO O 10 V N
N 0 0 0 N CO N 0 0 0 0 0 0 0 0 0 0
'.9 0 CO M r tO N 0 M M C' '9 M O D 0
N t 0 O N CO O O to
V O N <t 0) h N 0° CO CO
0 O O) r 0) N r (0 d' O N r O r 0 0 r 0 0
u) 0 10 0'9 N M O (0 680,0, (.43 1� N 0 CO O h M N
0 0 0 93 N 0 (0 00 69 0 0 0 f9 0 0 0 0 0 0
a O h r 0) CO N M 0 0 CD N r 10 00 0 V
L'7) 0 0 r N V tD 6 0 0 0 O 0 r u) LO uI N
1C d ro 03 (d c6 0 (o d c c O ai O u) c co o r
0 0 (0 CO V CO 0) CO t9 CO CO r (O CO CO 0 1- CO (0
0 CO- 0 6 9 N 0 M0 9 0 0 0 0 0 0 0 0 0 0
o 0) 0 CO N N 0 V 0) u) O N. N C 0 N r 0 o
N 000Q0 CO 0 0 CO CO N N N 0O M 0 N M
(6 O O V C6 H' M 0 O O C) (0 of 0 0 V N C h 6
0 0 0 03 e} r N CO (0 0 CO CO CO (0 r CO CO N CO 0
(fl 0 99 0 04 (0 E9 0 f9 f9 so (9 U3 ffl M (A
N 0,_ N 0 0 0 CO CD L0 N N M 0 0 o r N. CO O N
N N O tO (V O 6 r n 4 O M C) NN 6 r V (V 0) 6
N 0 (0 CO V O r r (0 0 CO CO 0 CO N. CO 0 ti CO 0
E9 0 0 r N CO d' 0 0 0 0 0 69 t9 0 0 0
e co
N O r r CO C)) 0 O) CO 3 0 L0 9' o O N CO N N
O V r' 1-: 6 N of O N 6 C) O 03 V
0 0 (0 0 M O (D N 0 M CO (0 0 n M 0 r CO u)
0 0 N CO 9 0 0 0 0 0 0 0 0 0
0 0 0 0 0
o M O (0 (0 u) 0 0 M N N N 0 O) r y N CO
N r O t0 0 0 CO N 0 0 0 0) 0 ('-0300003(0"-
('3 O c6 D) u) r u) of 6 o r v v v N 6 O 0 (d
0 0 (O N CO 0 0 0 '1 0 co co (0 t0 1- CO (0 h M in
0 0 0 69. N 0 co V 0 0 0 0 0 0 0 e 0 0 0
0 m
A
o a
V co
'O N
(0 0
E o c 0
a a o 0 0
O 0 c n o o a
O m o o m
E 0 0 N 0 0 0
c a a R a d U
v E E to'
c t N 0 8 0
co E E 0' '2 v m; m a
o 0 a
3 r m Q
2 w C a n a";°05 o n� o m
3 E
0 0 M (n 0 m -c y p C 0 0- a' a (O 0
a a a a
d a `o c N a o U m o o) C ol d o U V
E E r E O L 0 0 (0 0 U (0 N O U 0 0
(n r r N m O ¢1 0 0 0 O 8 I I I_1 O CC 0:
LO N u) O V O O O O N 0)
c0 O u) N M O r a O CO CO N
O u) N u) N 0 o V V W O
44 44 69 43 43 0 O V 0 9 49
N 4> 4Y 43 49 6 49
9 0 0 0 0) O CO C CO M 9 9
LO 0 N 0) CO N O 04 N N (0 10
to N N V (0 O O (V ro tO f` r (O
49 41 69 r r 49 4b c0 (0 co 6 co 43
41 0 69 49
(0(9 (0 0) O N(0 V d' CO 10
V V tl' (0 '4 N O (0 (0 0 O O
A A N V 443 O O v) 4 O N 6
49 43 49 41 43 0 CO (O n (0 N 43
49 0 4 N CO N
69 4} 43 43
CV (0 C 0 <1' (0 6- CO O 0 O O r 00 0 CS
N (n N 4 V7 O o O Ni I- M (O 6
43 43 68 r r 69 0 CO (0 N O r 43-
0 49 43 N M (0
C (9 43 49
N ry tO C M CO O M L0 N 0 N
N N 0 O 0 N O N 6- (0 O (0 co
L0 t0 N 4 0) O O Oi m N r O 6
0 (9 64 r r (9 9 (O V N CO O 43
43 4 N CO (0
0 49 49 69
C 0 N i4) N 0 O N V C O 9
t o U) N (0 O O W c0 6 O (0 N
4) 4) 0 69 0 10 V M 0) 41
04 04 0 0 04 N O CO N 0 4 A 0)
O O N 0 N N 0 0 9 0 0 0 0 0
10 10 04 (0 10 0 0 0 9 4 0 0 10
43 ca 43 4? )O -0 N W 43
43 4 43 49 49 49 49
0 N 0) N N O N O 0 (A 0 0O M C
43 4 N v O r 9 O N
49 43 43 49 69 M0 69
N N 0 N CO 0 004000 O N
W 0 0 0 04 O 9 N CO CO 0) M
49 c 49 69 04 6 M O N Ea
43 49 43 49 89 M 0 0
M CO r N V t0 O 0 0 1 0 (0 (0 N
N r N M N O (0 O (O 04 CO N
a e 01 N a o o ri 6 45 of u)
O 0 0 43 0 0 0 0 0 1 0 e
4) 43 0 N
43 0 CO 9 EA
a
a
0
as
C
N
(n
(n z c o
N N r
0 12 m E n
cc 0 O m E
F- a m c o E o
M -o 4E' 0 m a a 0 Q V v
x 0 s g g a) co
d o ro r/ m� 'G 8 a g id y
r '6'.. N N O a .8
r, in c a n co H g v,
0
0
0
O
O
U
O
YTS
0
O
O) U
cts tti
co CC
Ira
D
0
co
C
0 0
w :4=
ai
k
5 0 E
0 O
0 4 a
co CC CC
c
0
-o
co a
c
2.
CO LO
I�
ffl-
O
t CO
to O
ai
obi Cn
o
N
r
ts C 3
O N
co
co a
U U
O N
raj
0
0
car) Es
o
o
C
2 4g
Tri L
o
4- c
0 as
CD c
c
c cal Qa
fn
c0 ac 2
o U
co °c 2 U
c O
2 Q) cti
O O O N al
.0 U
0
0
C3 d3 0 0
o .o--+
0 U 1 j, (0
Cr c Iv co
af
E
c/) tee O 7) '7) E
c a) N D C O c
0
E
0
0
c
ct
To
o
c
ca
c
ist
r
0
0 c
c 73
w®
to -0 (n
TII °O
as
O so
c +r
it
it CJ
c
"0 W a i
O
as a) 22
a>
41
cts
0
0
(f'
O
c
O
0
co
a.
cc
0
a
7 2
O.
0
c
a)
E
2
CT
2
L
0
0)
a)
cC
ow
E
0
as
2
t/i
a
a)
E
a)
O
0_
E
76
CL
CO
0
0
c
a
x t5
W U
L
U co
C
o
U
c CC 0 5
as 0 cu CC
c z
o Cif
i
C2_ as CC o l n
1 I —I
0)
Tii
cc
0
0
co
O
0
O
c c
O Ris
0
c
L 0 E E
E E 0
c
4
w !P-
CD
CD
4J
0
0
0)
0
CCI
2
0
0
0
1
0)
tts
0
cti
0
cd
T"'
1 03
t t
co
0)
c
F
X
a)
O
V
c
(0 d'
o
cc E13-
0
0 CD
CO To 0
a) 0 c
o 0_
C
en E a)
O
r i- to
0
O c75
0
0
'1
W
Tata
ct
L
0
L 8
am
o 0
0 0
o 0
0 0
0 0
0 0
Ea Ea
D
0
0
0
N
te-
(owl$) te!Wapisaa paaalawun
0
0
0
0
0
0£ Ad
63 Ad
83 Ad
L3 -9303 Ad
93 Ad
93-b303 Ad
t3-8303 Ad
£3-3303 Ad
33 Ad
43-0303 Ad
03 Ad
61.-81-03 Ad
81- -2.1- 03 Ad
L4 -9403Ad
94-9403 Ad
-171-03 Ad
b4 403 Ad
£4-3403 Ad
34-44031d
4
01-03 Ad
L
0
0
cn
ct
a
c
0
E
0
Q
co
V
0
c
cd
0
0
N
F-
E
0
0
4
0
C6
0
E
L
0
Q)
CO CZ
0
o
Lci
s
0
E
0
a
0
C/) al
c 1 I
O u) 'Z3
j o
o o 0 s=
cn 0 0
2 c a
CL 0 0 nw
o L 0 o >1
2 4 6 4 .c c
C0 o
L
L
t` B^y
v!
o 0 0 0
U
C Q. -5 O
a
c o U m e
LL n
c� d° L
o U 0
L L
o
al as E c
I)
0
22
0
0
0
E
0
o
0
i
0
0
0
0
+.r
0,
co
r
11
r
c
N
E
0
r
0
a 9
s_ r
0
co c
L
O e
II
(p3 (1)
r
0 r
c 2 NI
To
c
0
(n
co
cts
Lee
0
13
a)
E
E
0
c
Mee'. i.:Piefeir...6.•
tetibar4ew MireMffraiti
Xliezaii":dm:ati4.14S1
ffrr ei.16.
C ;:0 dc:
ipfgraigtams4AptianaMWnia..
ns
404;74Yr
o o o 0 0 o o
0 0 cD 0
0 0 0
o o 0 0 0 0 0
r-- co is, cr c r4
a a a a a a a
(owls) leguarqsael peieleumn
0
0
0E Ad
6Z AJ
E Ai
E Ad
9Z Ai
9Z
EI Ai
Z&AZIDE: Ai
[E A
OZ ME Ad
Ad
9 Ad
L 9O Ad
9 l. Ad
5l Ad
HE Ai
EI, Ad
Le)
0
U)
rcs
0
t,
t!)
as
Ensa
c
O
•L7 C
as
O
U
cn
22
cn
EC
N
0
E
0
0
0
E
O
ai O
c
CD
c
C.) c CcS
O
C v O
C
co O
E O
O
U
0
mac
0 N
:so
Bo ca cc
25 at
t Ca
Q)
0
v
C c�
C
Y z o CO CO f� (NI CO Up
N N 1 T T
0 O
c5
co co O rti co Lo co N
r 9- Cr) O LC) O O .0
O c” 4
a) ce
C3)
LO In CO r LC O LO O LO p
co LO N O CA LO N I N LO
O d O CO O CO I`- I-: N
d LO N LC) Cr) N N f%-. O
Eft 60- Eflw Efl En- e Efl Ems} C
E CU
U
n 3
W
CZ C
U
CO CO d' CO CO CO 00 C5) O
I- LO O O Lo In CO 4- to c O
C6 l< O C'O Oi C)7 O CO O
1r CO Cr N N d LC)
CO UP
-a C
1. O 1 fa
E
a) E
C
O
C
LL 0
C
IZ U) Z
Q U U)
L
V. D c
(1) tt$
i i
on
c
(1)
in x 75
i
to c
0 0
C9
0 al
e® e Nit i
2
as
the cip
KENM,ALASKA
MEMO:
"Village with a Past, Gity with a Future'
210 Fidalgo Avenue, Kenai, Alaska 99611 -7794
Telephone: 907- 283 -7535 FAX: 907- 283 -3014 iIIIII
TO: City Council
FROM: Rick Koch
DATE: February 16, 2011
SUBJECT: Water Sewer Rate Study, Work Session
The purpose of this correspondence is to respond to questions that were submitted by
Councilor Molloy in advance of the work session.
1. Aside from fund balances, what grant funds, if any does the City currently have that
could fund part of the future CIP for water (p. 5) and sewer (p. 6)?
The Governor's FY 2012 Capital Budget includes 1,603,710 for a project to replace the
10" AC water main along the Spur Highway with HDPE piping, and to construct a 10" HDPE
water main along Swires Road. This proposed appropriation represents 70% of the
estimated project cost.
The city does not presently have grants to fund future water and sewer capital
improvement projects identified in the rate study. The City has been successful in the
past at receiving matching grants from the state that have covered approx 70% of the
funds needed for capital projects, and the study assumes the City will continue to receive
grant funding in the amount of 70% of future project costs.
2. The rate study is based on a pay -as- you -go strategy without issuance of any debt,
such as revenue bonds or low interest loans. What are the pros and cons of including
issuance of some debt for part of the future CIP for water (p. 5) and sewer (p. 6)?
The pay as you go strategy was assumed because it has been the existing policy of the City
of Kenai In addition, issuing debt requires a public vote, which may be unlikely to pass.
1992
The disadvantages of issuing debt are that the community may be debt averse, paying
interest, and the cost /time associated with the issuance. The utility may also be required
to meet certain debt coverage requirement that could have additional impacts on rates.
The advantage of revenue bonds is that the utility can avoid large, one -time rate increases
that would be necessary if the financing of the capital projects was expected to come
from rate revenue only. That is not the case in this rate study as the initial larger rate
increases are driven by operational costs. Utilizing debt also spreads the cost of the
project over time so the people who use the facilities will pay for them over time.
If a revenue bond approach to capital projects was considered the schedule for capital
improvement projects would probably be much more aggressive.
3. What are the pros and cons of moving to a metered system for water?
Pros: Installing water meters has shown to decrease water consumption for the utility,
which may reduce the need for future water supply projects; metered customers only pay
for the water they actually use, which gives them the opportunity to better control their
consumption; provides the city with leak detection data; provides better data for
developing rates.
Cons: Installation and O &M costs; the city would need to install meters, residential
meters cost $125 -$150 each; a meter reading system would need to be established, if
manually read it might require a new full -time position in both the water department and
in finance, if remotely read it would require a remote -read system (Palmer's cost
approximately $200,000), and may require additional staffing; retrofitting meters into
residences are often difficult and problematic, the cost of installation could easily be
several hundred dollars each; the city may have to install a new billing system if the
current system cannot accomodate a modified rate structure; maintaining meters;
revenue variability revenue stream for unmetered customers is more stable; may require
a cost of service study to establish new rate structure
4. At p. 16, the study states that "alternative rate strategies could be explored to
smooth increases over the entire planning period, or to achieve other objectives."
What are the recommendations for alternative rate strategies?
Smoothing of increases can be achieved through issuing debt, though if the proposed
capital projects schedule is maintained it would have minimal effect. Finding other
sources of funds (i.e. 100% grants) and delaying capital projects, would also limit rate
increases. Delaying the CIPs presented in the study would limit rate increases, although
administration has timed the projects so that there wouldn't be multiple large projects
occurring at the same time.
0
ra
z
w o
z
0
0
z
2
ct.
2 ral
424 0
0
0
0
0
Cl)
0
0
0
tzl
2
nai:
Rate Update
L 4PVX1
ir aftn
and sewer rate
1f
2005:
t 12.54 to $13.78)
3 to $40.35)
provements over
egulatory
h, and upgrade the
buted to customers in
m use; achieved through
to develop rates are
;lusty standard practices
2
3. Develop Funding Plan (Revenue
from existing rates and additional
revenue from increases)
1. IdentIf System Needs Forecast
(O &M Capital)
2. Identify Funding Sources (rates,
debt, other)
inancia
ed with City staff t velop
ptions
;fir planning period
jected based on existing rate
AY
debt funding
:Oro grant from state for all capital
3
erating irements
Capital
Regulatory requirements
s Growth needs
c Rehabilitation and
Mated replacement
ents
enue eq nts
d Maintenance Expenses
go Capital Projects
ce
equirements
e Revenue
serves
quirements from Rates
4
Plan A tions
tions:
I growth assumptions
0. 35% for residential customers
0.35% for commercial customers
O &M escalation range of 2 5% to 4.0% per year
Contingency: 30 days of O &M expenses
.Targeted Combined Ending Fund Balance of
approximately $1 million per year (adjusted for
inflation)
Capital Improvement r
ter= 10.2 million
million
ment Pla
stem
ong Beaver
ong Swires
i low St. Waterma
at= in replacem
at ck: 7.„
umed City would
4»proxirnately $4.8 m
analysis period
Most projects constru'
Funding Sources.. rate
and state rants
tension
r multiple years.
j•eserves,
a I
5
11
F Ian Re 4 s: Water
Rev xisting rates FY 2010/11=
$464,000
O &M costs in FY 2010/11 %621,000
Current revenues from rates not sufficient to
cover operating expenses)
O &M costs increase from $621,000 in FY 201
to approximately $1.2 m over the 20 year
analysis period (3,$% annually)
Rate incre needed immediately
Ya
1
te'r
6
Ca men
Tr: pgrad
fection
,ge improve
Pha ent control l_
Phase 'ump house, of
Phase 5: Aerobic Digester:
WWTP Dum: truck
Sewer Truck k:
North Willow St.jewer main
Assumed city would cover 30
million over the 20 year anal
Most projects constructed over,
Funding Source mite increa
trol building, other
ents
s apprb$
d
years
rves, and state grants
Ian
xisting
:luding
millio
ease fr
sis pe
ncreas
Sewer
11= $1.3
ility treatment)
m to $2.1m over
annually)
d immediately
r0
00
40 00
$30.00
20 00
$10 .00
$0 00
R
becau
custo
Putur
time
Com
mparison
ed to other
imes difficult
equirements,
decisions
known at this
omer, Palmer,
va
8
Com
Kena
Kodi-
fnch
;;:dune
Cord
Sold
Palmer
Seward
Homer
tia
Mo
Sew
omparison,
mers
ombined Difference
nthiy Bill from Kenai
$54.13 NA
$92.13 70%
$69.30 28%
$79.07 46%
$68.53 27%
$48.05 -11%
$47.63 -12%
$126.38 133%
$149.25 176 °1a
'monthly water
lions)
s
d rate
y to ensure actual
e tracking with the
lysis
e years to meet
s.
9
10
ci /kr el
KENKI ALASK0
PUBLIC NOTICE
The City of Kenai City Council will hold a work session on
Wednesday, February 16, 2011 to discuss its Utility Rate Study. The
work session will be held in the Kenai Council Chambers, located at
210 Fidalgo Avenue, Kenai, AK and begin at 5:30 p.m.
The work session is open to the public. Contact the Kenai City
Clerk's office at 210 Fidalgo Avenue, Kenai, 283 -7535, extension 231
with questions.
Carol L. Freas, City Clerk D/
Publish: February 11, 2011