Utility Rate Increases

June 4, 2014
Council Worksession
Complete sewer infrastructure
improvements as identified and prioritized
by SIAG
Complete the water pipe and EPA
mandated water treatment projects
Cover annual debt service payments
Meet operational needs
Strive to maintain the bond rating
Maintain and/or build reserves
Objectives for rate increases
City of Bend
Sew er Rat e Opt i ons
3 options for sewer rate increases on J uly 1,
2014:
% Mo. Increases
Option 1 9.0% $3.99
Option 2 6.5% $2.88
Option 3 4.2% $1.86 2025-26
FY 2014-15 When rate incr. can
be reduced to 0-3%
2015-16
2016-17
Note: The higher the rate increase adopted in FY 2014-15, the sooner the City can
raise sufficient revenues for its infrastructure, operational and reserve needs. Once
the City has raised sufficient revenues, future increases can be reduced to 0-3%. For
example, under option 3, the City will need at least an annual rate increase of 4.2%
until 2025-26.
Wat er Rat e Opt i ons
2 options for water rate increases on J uly 1,
2014:
% Mo. Increase
Option 1 5.0% $1.38
Option 2 3.8% $1.05
FY 2014-15 When rate incr. can
be reduced to 0-3%
2016-17
2018-19
Note: The higher the rate increase adopted in FY 2014-15, the sooner the City can
raise sufficient revenues for its infrastructure, operational and reserve needs. Once
the City has raised sufficient revenues, future increases can be reduced to 0-3%..
Rat e Compar i sons and Bi l l
I mpac t s
Refer to handouts:
Total utility bill impact
Comparison to Median Household Income
Ut i l i t y Assi st anc e Pr ogr ams
Senior/Disabled discount for sewer and
stormwater customers
Water utility assistance
Historical rate increases
City of Bend
7.8%
7.8%
4.8%
5.0%
5.5%
8.3% 8.3%
7.1%
7.0%
5.0% 5.0%
6.0% 6.0%
2.9%
6.0%
6.0%
14.5% 14.5%
8.8%
10.0%
6.0%
6.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014
Water Sewer
Pros & Cons of Each Rate Option
City of Bend
Sewer Water Pros Cons
Sufficient revenues immediately High rate increase
Protection of bond rating
Higher reserves
Cushion against risks (construction
inflation, increased interest rates, etc.)
Sufficient revenues within 2 years Add'l year of higher rate increases
Maintain reserves Less protection of bond rating
Sufficient revenues for water Add'l years of higher rate increases
Sufficient revenues for sewer for 1 year Sewer operating reserves needed to
meet annual obligations through
2016-17
Low initial rate increase Limitations on operational needs
Least protection of bond rating
9.0%
6.5% 5.0%
4.2% 3.8%
Utility
Rates
Increase
Establish
revenue
requirement
Establish
revenue
requirement
Fund projects
already
identified
Fund projects
already
identified
Rate
Structure
Analysis
Collaborative
workshop &
focus groups
Collaborative
workshop &
focus groups
Options and
Impacts
Options and
Impacts
Implement
Policies &
Guiding
Principles
Policies &
Guiding
Principles
Strategy for
rate structure
adoption
Strategy for
rate structure
adoption
Roadmap to Rate Modernization
City of Bend
July 2014
July - October 2014
October - December 2014
10
Courtesy of City of Gresham
Complete sewer infrastructure
improvements as identified and prioritized
by SIAG
Complete the water pipe and EPA
mandated water treatment projects
Cover annual debt service payments
Meet operational needs
Strive to maintain the bond rating
Maintain and/or build reserves
Objectives for rate increases
City of Bend
Nex t St eps
Direction on FY 14/15 rate increases
Further refinement of rate models and
financing strategies to identify ways to
reduce future rate increases
Council retreat on rate policy