Water Rates in Hawai i

Transcription

1 Water Rates in Hawai i Glenn Barnes Environmental Finance Center The University of North Carolina at Chapel Hill glennbarnes@sog.unc.edu

2 Session Objectives Become familiar with the features and benefits of our Hawai i water rates dashboard Learn how to compare one water system s rates with those of other systems Learn how to apply several useful financial benchmarks to your system(s)

3 Dedicated to enhancing the ability of governments and other organizations to provide environmental programs and services in fair, effective, and financially sustainable ways through: Applied Research Teaching and Outreach Program Design and Evaluation How you pay for it matters

4 Department of Health Safe Drinking Water Branch The mission of the Safe Drinking Water Branch of Hawaii's Department of Health is to safeguard public health by protecting Hawaii s drinking water sources (surface water and groundwater) from contamination and assure that owners and operators of public water systems provide safe drinking water to the community. Funding for this project was provided by the Safe Drinking Water Branch of the Hawaii Department of Health. Alan Dillon Hawai i Department of Health Safe Drinking Water Branch Alan.Dillon@doh.hawaii.gov

5 About the Environmental Finance Center Network (EFCN) The Environmental Finance Center Network (EFCN) is a university-based organization creating innovative solutions to the difficult how-to-pay issues of environmental protection and improvement. The EFCN works with the public and private sectors to promote sustainable environmental solutions while bolstering efforts to manage costs. The Smart Management for Small Water Systems Program This program is offered free of charge to all who are interested. The Program Team will conduct activities in every state, territory, and the Navajo Nation. All small drinking water systems are eligible to receive free training and technical assistance. What We Offer Individualized technical assistance, workshops, small group support, webinars, elearning, online tools & resources, blogs

6 Areas of Expertise Asset Management Workforce Development Rate Setting and Fiscal Planning Leadership Through Decisionmaking and Communication Water Loss Reduction Energy Management Planning Water Conservation Finance and Management Collaborating with Other Water Systems Resiliency Planning Managing Drought Accessing Infrastructure Financing Programs

7 Our Past Work in Hawai i Water finance workshops Direct technical assistance to small water systems Work with the Hawai i Public systems Commission Helped develop the GreenSun Hawai i Program

8 Quick Introductions 1. Name? 2. Organization? 3. Responsibility? 4. Details on your water system 5. What are you most proud of at your water system? 6. What is your biggest issue?

9 The Reality Water systems love to compare rates with each other They don t often make good comparisons, and the goal is often to the lowest of their neighbors

10 For example... Once again, the [City s] Water Department proved to have some of the lowest water and sewage rates in the state.

11 Our Approach Pricing is an absolutely essential policy and finance tool. Understanding the impacts of pricing is essential to promoting financial sustainability and local and state policy goals

12 Our Approach In an ideal world, systems would only focus on their needs and set perfect pricing, but we have found that the temptation to compare is too great for systems

13 Our Approach We saw lots of decisions being made by questionable comparison techniques that were not including essential information

14 Our Approach We combine pricing data with System financial data Census data SDWIS data

15 2016 HI Water Rates Survey

16 2016 HI Water Rates Survey EFC collected systems rate sheets in 2016 and 2017 from systems and from PUC Rates for residential and commercial water customer classes Base charges and volumetric rates Calculated how much systems charge customers for various consumption points

17 Supplemental Data Audited financial statements of local governments as well as private and nonprofit systems Water system data from SDWIS (US EPA) Socioeconomic data from 2015 American Community Survey (US Census)

18 Systems that Participated 35 systems serving 1.33 million people 17 for-profits 12 not-for-profits 4 County systems 2 State government entities 85% of people served by community water systems in the State

19 Automatic Power Cost Adjustment (APCA) 12 of 39 rate structures have an automatic power cost adjustment APCAs are included in the rates on the dashboard for the month of September

20 2016 HI Rates Dashboard

21 Example System

22 Example System Compare to your peer group

23 Compare Your Rates to Rates of Systems that have Similar $ Size Rate Structure Location $ Demographics Type Financials

24 Dashboard: Bill Comparison Darkest green band = middle 50% of systems Half of all systems in your peer group have bills that fall within this range

25 Dashboard: Bill Comparison Light green bands = the 15% below and above the middle 50% 15% of systems in your peer group have bills lower than the middle 50%, 15% have bills higher than the middle 50%

26 Dashboard: Bill Comparison Both greens combined = 80% of systems The majority of all systems in your peer group have bills that fall within the range of the green bands

27 Dashboard: Bill Comparison Yellow = the lowest and highest 10% of systems 10% of systems in your peer group have bills lower than 90% of other systems, 10% have bills higher than 90% of systems

28 Example System Compare to your peer group

29 Dashboard: Conservation Signal Colored bands = quartiles In this example, the marginal price of 1,000 gallons is in the 75th percentile among its peer group, promoting a moderately strong conservation signal

30 Example System Compare to benchmarks

31 Dashboard: Cost Recovery Red = costs exceed revenues; a concern for financial sustainability Operating revenues Operating costs (including depreciation)

32 Dashboard: Cost Recovery Yellow = revenues are sufficient to cover costs, but could be problematic in long-term Operating revenues Operating costs (including depreciation)

33 Dashboard: Cost Recovery Green = revenues are likely enough to pay for day to day costs as well as long-term goals Operating revenues Operating costs (including depreciation)

34 Dashboard: Cost Recovery Yellow = revenues may be too good Operating revenues Operating costs (including depreciation)

35 Dashboard: Affordability Green = Less than 1% of annual income spent on bills (based on community s MHI) The percentage of median household income (MHI) spent annually on water bills

36 Dashboard: Affordability Yellow = Between 1 1.5% of annual income spent on bills (based on community s MHI) The percentage of median household income (MHI) spent annually on water bills

37 Dashboard: Affordability Red = Over 1.5% of annual income spent on bills (based on community s MHI) The percentage of median household income (MHI) spent annually on water bills

38 Example System

39 When To Use This Tool As part of your annual rate review When presenting to boards or other decision makers on the need to change rates When explaining rates to customers For private systems, as part of your PUC rate case

40 Resources

41 or do an internet search for Hawaii water rates survey

42 Report and Tables of Rates

43 Blog posts on: Declining demands Increasing rates Financial performance indicators Conservation pricing Debt What s wrong with %MHI Affordability Financial strategies Communication strategies Inflation for cost of capital And much more!

44 Small water systems Workshops, webinars, and recordings Sign up for free in-depth (multi-day or multi-hour) direct assistance Collection of resources for small water systems (tools, guides) Free, thanks to a cooperative agreement with the U.S. E.P.A.

45 Water Rates in Hawai i Glenn Barnes Environmental Finance Center The University of North Carolina at Chapel Hill glennbarnes@sog.unc.edu