Ipswich

Water & Wastewater

Department
Water Base Rate Increase
Water Residential Seasonal Rate Adjustments
Wastewater Rate Increase
February 1 & 16
2016

Water
Base Rate
Increase

Base Rate Increase

Proposed base rate increase: 4%.
Rate of $8.01 increases to $8.33 per
100 cubic feet of water.
-OR-

5
5

$0.011 per gallon

Typical family of 4 will pay $30 more per year.

Why Increase Is Needed

FY17 Budget increases 7% - debt service, capital
Current rates do not support budget
Without increase, surplus depleted
Debt service increases 51% in FY17

Future Rate Increases

Increase debt service for approved projects

Jeffreys Neck Road Water Main

WTP Improvements
Linebrook Road Water Main
Town Hill Tank Painting

Potential projects
Manganese Treatment at Browns & Fellows
Execution of capital improvements identified in master plan to be completed
in FY18

Support budget and stabilize surplus

Future Rate Increases

16%

$400,000

14%

$350,000

12%

$300,000

10%

$250,000

8%

$200,000

6%

$150,000

4%

$100,000

2%

$50,000

0%
Rate Increase

FY17

FY18

FY19

FY20

FY21

4%

4%

4%

5%

0%

Surplus/(O&M+Capital)

11%

7%

10%

10%

11%

Surplus Ending Balance

$288,360

192,486

271,706

263,538

282,661

Surplus Ending Balance

Rate Increase
Surplus/(O&M+Capital)

WATER

$0

Rate Comparison
$1,600
$1,400
$1,200
$1,000
$800
$600
$400
$200
$0

Based on 12,000 cubic feet annual usage

Recommendation
Adjust Water Base Rate of $8.01 per 100 cubic feet to $8.33 per 100
cubic feet.
Proposed Base Rate effective May 1, 2016.

2016
Residential Seasonal Rate
Adjustment

Background
1990s demand exceeds DEP allowable withdrawal limits
DEP issues administrative consent order (ACO)
Requires rate structure to encourage conservation

Water Commissioners adopt seasonal residential rate structure in

2003

Seasonal Rate Goals

Manage summer water consumption - Reduce summer peak
created by residential customers
Revenue neutral
Responsive to families and their budgets

10

Rate Structure Description

Residential customer rates adjusted twice a year in May and October.
Multi-family properties included

Summer rate set at 1.5 times the base rate

Winter rate adjusted based on revenues generated in summer so

program remains revenue neutral.

11

Customer Use Comparison

Flat Use Customer

JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
TOTAL

SAVINGS

5 Month Sum/7
Base
Usage Month Winter Rate Rate
352
$13.52 $22.42
227
$8.72 $14.46
298
$11.44 $18.98
284
$10.91 $18.09
301
$28.78 $19.17
298
$28.49 $18.98
249
$23.80 $15.86
327
$31.26 $20.83
210
$20.08 $13.38
193
$7.60 $13.53
217
$8.55 $15.21
261
$10.28 $18.30
$203.43 $209.22

$5.79

Summer Peak Customer

JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
TOTAL

ADDED COST

5 Month Sum/7
Usage Month Winter Rate Base Rate
548
$21.04
$34.91
358
$13.75
$22.80
446
$17.13
$28.41
376
$14.44
$23.95
475
$45.41
$30.26
4204
$401.90 $267.79
6404
$612.22 $407.93
5723
$547.12 $364.56
1397
$133.55
$88.99
400
$15.76
$28.04
488
$19.23
$34.21
475
$18.72
$33.30
$1,860.26 $1,365.15

$495.11

12

Program Success

Average Annual Pumping Reduction with Seasonal Rate is 15%

Average Peak Month Reduction with Seasonal Rate 22%

13

Recommendation
Adjust Water Residential Winter Rate of $4.72 per 100 cubic feet to a
Residential Summer Rate of $12.50 per 100 cubic feet.
Residential Summer Rate effective May 1, 2016 through September
30, 2016.

14

Wastewater
Rate Increase

15

Rate Increase
Proposed rate increase: 12%
Rate of $7.06 increases to $7.91 per 100 cubic feet of water
Typical family of 4 will pay $81 more per year.

16

Why Increase Is Needed

FY17 Budget increases 13% - Debt service, capital, utilities shared
expenses, benefits
Current rates do not support budget

Without increase, surplus depleted

Debt service to increase 15% in FY17

17

Future Rate Increases

WASTEWATER

28%

$500,000

$400,000
$350,000

18%

$300,000

13%

$250,000

Surplus Ending Balance

Rate Increase
Surplus/(O&M+Capital)

$450,000
23%

$200,000
8%

$150,000
$100,000

3%

$50,000
-2%
Rate Increase

FY17

FY18

FY19

FY20

FY21

12%

12%

9%

0%

0%

Surplus/(O&M+Capital)

17%

7%

8%

14%

27%

Surplus Ending Balance

$289,306

114,949

143,703

238,714

448,667

$0

18

Rate Comparison
$2,000

$1,800
$1,600
$1,400
$1,200
$1,000
$800
$600
$400
$200
$0

Based on 12,000 cubic feet annual usage

19

Recommendation
Adjust Wastewater Rate of $7.06 per 100 cubic feet to $7.91 per 100
cubic feet.
Rate increase effective May 1, 2016.

20

Final Recommendations
Water Base Rate Increase
Effective May 1, 2016
3
$8.01
$8.33 per 100 ft
Water Residential Summer Rate
Effective May 1, 2016
3
$4.72
$12.50 per 100 ft

Wastewater Rate Increase

Effective May 1, 2016
3
$7.06
$7.91 per 100 ft
21

FY17
Water & Wastewater
Budget Discussion
February 1, 2016

Proposed FY17 Water Budget

$2,698,524
$726,245
$3,424,769
4%

FY18

FY19

$2,697,780
734,618
$3,432,397
4%

FY20

$2,619,113
767,652
$3,386,765
4%

FY21

$2,592,587
1,049,865
$3,642,451
5%

$2,648,264
966,897
$3,615,161
0%

April 2015 Projected Rate Increase

13%
5%
5%
4%
Surplus Use
$212,727
$95,874
-$79,219
$8,167
Surplus Ending Balance
$288,360
192,486
271,706
263,538
Surplus/(O&M+Capital)
11%
7%
10%
10%
BOS target surplus balance = $250k by FY20, not to fall below $100k in any year

-$19,123
282,661
11%

Rate Increase
Surplus/(O&M+Capital)

O&M+Capital
Long Term Debt
Total Budget
Rate Increase

FY17

16%

$400,000

14%

$350,000

12%

$300,000

10%

$250,000

8%

$200,000

6%

$150,000

4%

$100,000

2%

$50,000

0%
Rate Increase

FY17

FY18

FY19

FY20

FY21

4%

4%

4%

5%

0%

Surplus/(O&M+Capital)

11%

7%

10%

10%

11%

Surplus Ending Balance

$288,360

192,486

271,706

263,538

282,661

Surplus Ending Balance

Projections

$0

Proposed FY17 Water Budget

Changes from April 2015 projections

Smaller rate increases
Surplus higher than projected (+$154k)
Wastewater portion of Utilities shared services reevaluated Water portion reduced
(-$33k)
Bottom line less than projected (-177k)

Proposed FY17 Water Budget

Salaries & Expenses:
Long Term Debt:
Capital:
Total:

$2,308,524
$726,245
$390,000
$3,424,769

-8%
+51%
+81%

7% Increase from FY16 contractual obligations, debt service, capital

Meter replacement program funding increased. Completion of conversion to

new system estimated FY18

Dump truck replacement

Water system master plan (funded over 2 years)

4

Proposed FY17 Water Budget

Current Reserve Balance = $501,087 (16% of total budget)
Current Water Rate = $8.01/100 cubic feet
Rate increases and reserve use are required to support this and future budgets

4% rate increase and $212,727 surplus use for FY17

Proposed Water Rate = $8.33/100 cubic feet
Water Subcommittee voted unanimously to support budget

16%

$400,000

14%

$350,000

12%

$300,000

10%

$250,000

8%

$200,000

6%

$150,000

4%

$100,000

2%

$50,000

0%
Rate Increase

Notes:

FY17

FY18

FY19

FY20

FY21

4%

4%

4%

5%

0%

Surplus/(O&M+Capital)

11%

7%

10%

10%

11%

Surplus Ending Balance

$288,360

192,486

271,706

263,538

282,661

Surplus Ending Balance

Rate Increase
Surplus/(O&M+Capital)

Proposed FY17 Water Budget

$0

1. Target surplus of $250,000 by FY20, not to fall below $100,000 in any year
2. Assumes entire budget is spent each year, including $50,000 Extraordinary & Unforeseen
6

Proposed FY17 Wastewater Budget

Projections

FY17

O&M+Capital
Long Term Debt
Total Budget
Rate Increase

FY18

$1,681,250
$702,854
$2,384,104
12%

FY19

$1,749,788
689,958
$2,439,746
12%

$1,724,631
674,039
$2,398,670
9%

FY20
$1,760,820
571,593
$2,332,413
0%

April 2015 Projected Rate

Increase
12%
9%
2%
1%
Surplus Use
$311,614
$174,357
-$28,754
-$95,011
Surplus Ending Balance
$289,306
114,949
143,703
238,714
Surplus/(O&M+Capital)
17%
7%
8%
14%
BOS target surplus balance = $200k by FY20, not to fall below $100k in any year

FY21
$1,658,395
559,076
$2,217,471
0%

-$209,953
448,667
27%

28%

$500,000
$400,000
$350,000

18%

$300,000
13%

$250,000
$200,000

8%

$150,000
$100,000

3%

Surplus Ending Balance

Rate Increase
Surplus/(O&M+Capital)

$450,000
23%

$50,000
-2%

FY17

FY18

FY19

FY20

FY21

Rate Increase

12%

12%

9%

0%

0%

Surplus/(O&M+Capital)

17%

7%

8%

14%

27%

Surplus Ending Balance

$289,306

114,949

143,703

238,714

448,667

$0

Proposed FY17 Wastewater Budget

Changes from April 2015 projections

December budget draft more consistent with April projections

Septage revenue exceeds projections improves surplus position (+$259k)
Subcommittee discussed expanding budget due to favorable surplus position
Wastewater portion of Utilities shared services reevaluated (+$23k)
Benefit costs increased (+$60k)
Meter upgrade funds increased in FY18 (to achieve completion in FY18)

Rapid surplus increase FY20 to FY21

Potential large capital projects are not included

FY19 funds evaluation of Ipswich River crossing
FY20 funds evaluation of aeration blowers
Evaluations likely to identify needed upgrades in FY21
8

Proposed FY17 Wastewater Budget

Salaries & Expenses:
Long Term Debt:
Capital:
Total:

$1,451,250
$702,854
$230,000
$2,384,104

+9%
+15%
+44%

13% Increase from FY16 contractual obligations, debt service, capital

Wastewater portion of Utilities shared services reevaluated. 15% allocated to

wastewater (office salaries, town hall salaries, billing, metering support, IT)

Dump truck replacement

Proposed FY17 Wastewater Budget

Current Reserve Balance = $600,920 (29% of FY16 budget)

Current Wastewater Rate = $7.06/100 cubic feet

Rate increases and reserve use are required to support this and future budgets
12% rate increase and $311,614 surplus use for FY17
Proposed Wastewater Rate = $7.91/100 cubic feet
Wastewater Subcommittee voted unanimously to support budget
10

Proposed FY17 Wastewater Budget

28%

$500,000

$400,000
$350,000

18%

$300,000
13%

$250,000

Surplus Ending Balance

Rate Increase
Surplus/(O&M+Capital)

$450,000

23%

$200,000
8%

$150,000
$100,000

3%

$50,000
-2%

Notes:

FY17

FY18

FY19

FY20

FY21

Rate Increase

12%

12%

9%

0%

0%

Surplus/(O&M+Capital)

17%

7%

8%

14%

27%

Surplus Ending Balance

$289,306

114,949

143,703

238,714

448,667

$0

1. Target surplus balance of $200,000 by FY20, not to fall below $100,000 in any year.
2. Assumes entire budget is spent each year, including $50,000 Extraordinary & Unforeseen

11