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Mayors Water Council December 3, 2009 Sandra Ralston Todd Cristiano Malcolm Pirnie

Staying Afloat with Water Revenues Balancing the ebb and flow of revenue stability with conservation. Mayors Water Council December 3, 2009 Sandra Ralston Todd Cristiano Malcolm Pirnie. Water Conservation A Necessity for Sustainable Utilities.

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Mayors Water Council December 3, 2009 Sandra Ralston Todd Cristiano Malcolm Pirnie

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  1. Staying Afloat with Water RevenuesBalancing the ebb and flow of revenue stability with conservation Mayors Water Council December 3, 2009 Sandra Ralston Todd Cristiano Malcolm Pirnie

  2. Water ConservationA Necessity for Sustainable Utilities • 1% of world’s water supply suitable for consumption • Water shortages projected for 36 states with next 5 years • Conservation programs can be an effective tool in protecting vital resources and minimizing costs • BUT • Conservation-based rates can affect the stability of water revenues

  3. The ‘Ebb and Flow’ of Conservation • Rate revenue before conservation • Rate revenue after conservation Available Capacity Water Utility System • Reduced consumption leads to: • Potential revenue instability • Rate increases • “I use less, and my bill goes up!” • Reduced consumption also leads to: • Capacity benefit – Delayed expansion projects • Reduced O&M • ‘Doing more with less’

  4. Volumetric Rate Structure Spectrum Water Budget Allocation: Domestic (indoor usage) Irrigation (outdoor usage) Declining Block Uniform Rate Inclining Block Seasonal Flat Rate Water Budget Basis: Indoor people per household average winter consumption Outdoor Irrigable area (square feet) Evapotranspiration The City of Boulder, CO implemented a 5-tiered water budget structure in 2007 Budget / Individualized Flat Rate Declining Block Uniform Seasonal Inclining Block Budget/ Individualized Less More CONSERVATION ORIENTATION More Less REVENUE STABILITY More Less

  5. Rate Structures and Pricing Objectives • Rate structures and prices should be designed to: • Provide a sufficient revenue stream • Easy to understand/transparency • Equitable • Legally compliant • Meet utility-specific policy goals and objectives • Provide stable revenue stream • Sustainability/Conservation goals/Education • Low income/Affordability • Growth pays its own way • Minimize impact to large volume customers Selected pricing policies can have conflicting objectives!

  6. Conservation Planning ModelsCapturing the Moving Parts Reduced O&M Additional Source of Supply • Dynamic modeling tools • “What if” scenario analysis • Optimization of variables • Real-time analysis with Stakeholders • Results summary dashboard • Flexible and updatable Delayed Capital Expansion Inclining Block Structures Reduced Revenues Rate Increases Budget-Based Rate Structure Revenue Instability Pricing Objectives

  7. Addressing Conservation Challenges Rate Increase ??% Consumption 5% Rate Increase/ Decrease ??% Delayed CIP 2009 2013 Rate Structure Change Customer Bill Impact ??%

  8. The Conservation – Revenue Stability Balance A successful conservation program promotes: Sustainable water resources for future generations Sustainable financial viability Dillon Reservoir 2009 Summit County, Colorado

  9. Discussion Sandra Ralston Principal Consultant Charleston, SC sralston@pirnie.com 843-853-7140 Todd Cristiano Senior Consultant Denver, CO tcristiano@pirnie.com 303-316-6541

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