Future of Pricing.

Transcription

1 Future of Pricing Jeff Hughes Shadi Eskaf Austin Thompson

2 What not including depreciation looks like

3 What not including depreciation looks like Fair Bluff Causey St. PS

4 What will your future rate adjustment do? Data Source: 2017 NC Water and Wastewater Utility Management Survey (funded by the North Carolina Policy Collaboratory)

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6 FINANCIAL PERFORMANCE

7 Charlotte Water collected $379 million in water and wastewater operating revenues in FY2018 Highest in North Carolina. Down 6% from FY2017. Picture Source: Charlotte Water

8 Picture Source: Google Maps Streetview Town of Proctorville collected $21,211 in wastewater operating revenues in FY2018 (no wastewater system) Lowest in North Carolina. Up 14% from FY2017. Raised monthly flat fee from $25 to $30 per customer = 20% increase.

9 Picture Source: Indio Water Authority NC local government utilities collected more than $3.04 billion in water and wastewater operating revenues in FY2017 Preliminary projections show that revenues may have exceeded $3.1 billion in FY2018 (incomplete data)

10 The largest 10 utilities collected 43% of all of the water and wastewater operating revenues in FY2017

11 NC local government utilities had more than $2.43 billion in water and wastewater operating expenses in FY2017 Yet: ~22% of local government utilities had lower operating revenues than O&M expenditures plus debt service in FY2017

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14 Your sneak peak into THE STATE OF RATES IN NC IN 2019 PRELIMINARY RESULTS Final results may be published in the forthcoming 2019 NCLM/EFC North Carolina Water & Wastewater Rates Survey Report

15 NC Water and Wastewater Rates Survey Joint annual surveys since survey: 495 utilities included (95%) Rates Dashboard coming very soon! Tables and summary report to be distributed in coming weeks at and Resources for utilities provided and funded by the Division of Water Infrastructure of the NC Department of Environmental Quality

16 Half of the utilities charge residential (inside) customers more than $65.45 for combined water and wastewater per month $29.16 for water $36.52 for wastewater For inside residential customers using 4,000 gallons/month

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19 Picture Source: Wikimedia Commons 82% of NC s municipalities charge different rates outside city limits Half of the municipalities charge 1.77x higher for water and 1.91x higher for wastewater than they do for inside customers For residential customers using 4,000 gallons/month

20 The Average North Carolinian pays $58.94/month for 4,000 gallons of water and wastewater, combined. Accounting for service populations and inside/outside rates.

21 Water rates in 42% of rate structures and Wastewater rates in 45% of rate structures were raised last year Out of 479 water & 396 wastewater rate structures since last year Half of the rate increases were greater than 4.6% for water and 5.0% for wastewater At 5,000 gallons/month

22 2019 by the Numbers - Inside Rates Monthly water base charge Monthly wastewater base charge Highest volumetric rate per 1,000 gallons at 4,000 gallons/month Median percentage of customer bill due to base charge at 4,000 Min non-zero: $3.25 (Cary) Median: $16.55 Max: $50.00 (Martin County) Unique section in one utility charges more Min non-zero: $2.00 (Laurel Park, Spring Hope) Median: $18.00 Max: $69.50 (Lake Lure) Currituck County charges $ in Moyock Commons $13.60/1000 gallons Water (Saratoga) $25.00/1000 gallons Wastewater (Walstonburg) Yadkin County charges $19.50/1000 gallons for water in its Jonesville service area (Jonesville outside rates) 55% Water 51% Wastewater

23 THE FUTURE OF RATES

24 Before we start A little about me: Project Director at the Environmental Finance Center Analysis, Technical Assistance, and Education Background Biology Environmental Economics and Policy

25 Why look at trends?

26 Why look at trends? (cont.)

27 THE ANALYSIS

28 What Data is included in this analysis? Utility-Level Rates Data from EPA SDWIS data from US Census Bureau American Community Surveys Data from Bureau of Labor Statistics Consumer Price Index for the South Region from All together, the analysis represents approximately utilities. Each graph represents data from utilities for which we have data in every year.

29 TRENDS IN RATE STRUCTURES

30 Trends in Residential Rate Structures, 2007 & % Increase % Decline 88 Increasing Block Uniform Decreasing Block : Residential 2017: Residential Data analyzed by the Environmental Finance Center at the University of North Carolina, Chapel Hill. Data Sources: NC League of Municipalities and Environmental Finance Center's annual water & wastewater rates surveys. The cohort of utilities is consistent across all years.

31 TRENDS IN PRICING

32 Median Monthly Water and Wastewater Bills at 4,000 and 15,000 Gallons per Month, $ $90.00 $80.00 (N water =245 & N wastewater =201) $94.55 $70.00 $60.00 $50.00 $40.00 $30.00 $20.00 $10.00 $61.04 $50.19 $21.10 $17.68 $78.23 $32.86 $27.04 $ Inside Water Rates, 4 Kgal Inside Wastewater Rates, 4 Kgal Inside Water Rates, 15 Kgal Inside Wastewater Rates, 15 Kgal Data analyzed by the Environmental Finance Center at the University of North Carolina, Chapel Hill. Data Sources: NC League of Municipalities and Environmental Finance Center's annual water & wastewater rates surveys. The cohort of utilities is consistent across all years.

33 Median Water and Wastewater Bills at 4,000 Gallons per Month for Large and Small Utilities, (N Large =80 & N Small =146) $37.00 $35.00 $33.00 $31.00 $29.00 $27.00 $25.00 $23.00 $21.00 $19.00 $ Median Wastewater Bills at 4 Kgal, Small Utilities (<=10,000 Service Population) Median Wastewater Bills at 4 Kgal, Large Utilities (>10,000 Service Population) Median Water Bills at 4 Kgal, Small Utilities (<=10,000 Service Population) Median Water Bills at 4 Kgal, Large Utilities (>10,000 Service Population) Small Small The median bill for small utilities is higher, both for water and wastewater at 4 Kgal Data analyzed by the Environmental Finance Center at the University of North Carolina, Chapel Hill. Data Sources: SDWIS and NC League of Municipalities and Environmental Finance Center's annual water & wastewater rates surveys. The cohort of utilities is consistent across all years.

34 Weighted Median Water Bills at 4,000 Gallons per Month, Relative to CPI-South, (n=226) $ $ $27.54 $ $23.06 $ Weighted Median Inside Water Bills at 4 Kgal Weighted Median Inside Water Bills at 4 Kgal, Forecasting to 2030 (Full Dataset) Weighted Median Inside Water Bills at 4 Kgal, Forecasting to 2030 (Last Five Years of Data) Weighted Median Inside Water Bills at 4Kgal Rising at CPI, Based on Bills in 2009 Weighted Median Inside Water Bills at 4Kgal Rising at CPI, Forecasting to 2030 (Full Dataset) Inside Water Bills at 4Kgal Rising at CPI, Forecasting to 2030 (Last Five Years of Data) Data analyzed by the Environmental Finance Center at the University of North Carolina, Chapel Hill. Data Sources: SDWIS, BLS, and NC League of Municipalities and Environmental Finance Center's annual water & wastewater rates surveys. The cohort of utilities is consistent across all years. SDWIS service population values were linearly interpolated for 2014 and 2015 based on values from 2013 and 2016.

35 Weighted Median Wastewater Bills at 4,000 Gallons per Month, Relative to CPI-South, (n=226) 50 $ $ $32.86 $ $26.86 $ Weighted Median Inside Wastewater Bills at 4 Kgal Weighted Median Inside Wastewater Bills at 4 Kgal, Forecasting to 2030 (Based on Full Dataset) Weighted Median Inside Wastewater Bills at 4 Kgal, Forecasting to 2030 (Based on Last Five Years of Data) Weighted Median Inside Wastewater Bills at 4Kgal Rising at CPI, Forecasting to 2030 (Last Five Years of Data) Weighted Median Inside Wastewater Bills at 4Kgal Rising at CPI, Forecasting to 2030 (Full Dataset) Weighted Median Inside Wastewater Bills at 4Kgal Rising at CPI, Based on Bills in 2009 Data analyzed by the Environmental Finance Center at the University of North Carolina, Chapel Hill. Data Sources: SDWIS, BLS, and NC League of Municipalities and Environmental Finance Center's annual water & wastewater rates surveys. The cohort of utilities is consistent across all years. SDWIS service population values were linearly interpolated for 2014 and 2015 based on values from 2013 and 2016.

36 Percent of Surveyed Service Population Paying More than $40 for Water or $40 for Wastewater (2018 dollars), (n=226 Utilities, Million Customers) 18.00% 16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% We see a steeper rise with Wastewater Bills % of Service Population Paying more than $40 for Wastewater at 4 Kgal (2018 Dollars) % of Service Population Paying more than $40 for Water at 4 Kgal (2018 Dollars) Data analyzed by the Environmental Finance Center at the University of North Carolina, Chapel Hill. Data Sources: SDWIS, BLS, and NC League of Municipalities and Environmental Finance Center's annual water & wastewater rates surveys. The cohort of utilities is consistent across all years. SDWIS service population values were linearly interpolated for 2014 and 2015 based on values from 2013 and 2016.

37 TRENDS IN MEDIAN HOUSEHOLD INCOME

38 North Carolina Median Household Income, , Forecasted to 2030, Relative to CPI-South (in 2017 dollars) $77, $75, $72, $67, $62, $57, $63, $60, $52, $46, $52, $47, $42, NC MHI NC MHI Rising at CPI-South, Based on NC MHI in 2007 NC MHI, Forecasted to 2030 (Full Dataset) NC MHI Rising at CPI, Based on NC MHI in 2007 (Full Dataset) NC MHI, Forecasted to 2030 (Last Five Years of Data) NC MHI Rising at CPI, Based on NC MHI in 2007, Forecasted to 2030 (Last Five Years of Data) Despite falling below CPI between the recession and 2016, NC MHI has been rising rapidly over the last five years Data analyzed by the Environmental Finance Center at the University of North Carolina, Chapel Hill. Data Sources: US Census Bureau American Community Survey, BLS-CPI, and NC League of Municipalities and Environmental Finance Center's annual water & wastewater rates surveys. The cohort of utilities is consistent across all years.

39 Percent of Utilities with Bills Greater than 16% 14% 12% 10% 8% 6% 4% 2% 1.5% MHI in 2010 vs (N water =292 & N wastewater =245) 4% 7% 10% 15% A greater proportion of NC utilities are charging more than 1.5% MHI in 2017 than % Water Bills at 4Kgal (n=292) Wastewater Bills at 4Kgal (n=245) Percent of Utilities Charging Greater than 1.5% MHI, 2010 Percent of Utilities Charging Greater than 1.5% MHI, 2017 Data analyzed by the Environmental Finance Center at the University of North Carolina, Chapel Hill. Data Sources: US Census Bureau American Community Survey and NC League of Municipalities and Environmental Finance Center's annual water & wastewater rates surveys. The cohort of utilities is consistent across all years.

40 So, what does this all mean? Since 2009, in North Carolina, water and wastewater rates have risen faster than inflation. Based on both the last ten years and last five years of data, rates are expected to continue rising faster than inflation. Median Household Income is rising, but only realigned with inflation in 2017.

41 Looking forward Affordability issues will continue to be a challenge for utilities. Although MHI is beginning to rebound postrecession, it is not a good representation of the distribution of income. More customers are likely to struggle with rising bills in future years. Customer assistance programs will likely be even more crucial for customers in the lowest income brackets.