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City of McKinney, Texas

2. Objectives. Develop bases to project the water and wastewater units of service and cost of service Identify the full cost of the water and wastewater services over the multi-year planning period, based on the FY2009 BudgetDevelop cost-based water and wastewater rates to provide sufficient reven

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City of McKinney, Texas

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    1. 1 City of McKinney, Texas Water and Wastewater Cost of Service Study July 2008

    2. 2 Objectives Develop bases to project the water and wastewater units of service and cost of service Identify the full cost of the water and wastewater services over the multi-year planning period, based on the FY2009 Budget Develop cost-based water and wastewater rates to provide sufficient revenues to meet expenditures Develop alternative water and wastewater rates Prepare financial projections using the alternatives, supplemented by a description of key assumptions Documenting findings and recommendations

    3. 3 Assumptions Growth rate at 4% per year Staffing level as provided by departments Salaries & benefits increase by 5.2% from 2010 Charges from NTMWD as projected by NTMWD Annual cost increase for expenses: Fuel 10% Power 4% Chemicals 4% Other 3% Capital expenditures follow CIP plans Debt services according to existing & planned debt services

    4. 4 Finding/Analysis Related to Existing Rate Design Water Monthly Minimum Bills Water Volumetric Rates Wastewater Monthly Minimum Bills Wastewater Volumetric Rates

    5. 5 Finding/Analysis The fund was in good financial condition as of 9/30/2007 (77 days of operating expenses) Financial condition will deteriorate without a 20% revenue increase. Revenues did not cover costs in FY2008. Cash and investments will be reduced by over $2 million in FY2008.

    6. 6 Finding/Analysis Related to Rate Design Alternatives Cost-based Rates Alternative 1 – two-tier Alternative 2 – four-tier

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