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Orange County Utilities Department Water and Wastewater Budget Challenges

Orange County Utilities Department Water and Wastewater Budget Challenges. March 9, 2010. Budget Challenges. Introduction Revenue Outlook Department Expenses Budget Challenges Next Steps. Budget Challenges. Introduction Revenue Outlook Department Expenses Budget Challenges

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Orange County Utilities Department Water and Wastewater Budget Challenges

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  1. Orange County Utilities DepartmentWater and Wastewater Budget Challenges March 9, 2010

  2. Budget Challenges • Introduction • Revenue Outlook • Department Expenses • Budget Challenges • Next Steps

  3. Budget Challenges • Introduction • Revenue Outlook • Department Expenses • Budget Challenges • Next Steps

  4. Introduction Large Water and Wastewater Utility • 182,000 water & wastewater customers • 3,830 miles of pipe • 705 pump stations • 57.2 MGD water produced • 51.0 MGD wastewater treated

  5. Budget Challenges • Introduction • Revenue Outlook • Department Expenses • Budget Challenges • Next Steps

  6. Revenue Outlook Revenue Sources • Water rates • Wastewater rates • Reclaimed water rates • Connection fees • Miscellaneous revenues

  7. Revenue Outlook Affected by economic environment • Foreclosures • Unemployment • Downturn in new development • Reductions in tourism • Commercial establishments going out of business

  8. Revenue Outlook • Declining revenues due to economic conditions • Appropriate reductions to O&M budget while ensuring essential services and regulatory requirements are met • Long-term revenue increases and borrowing are needed to fund CIP

  9. Budget Challenges • Introduction • Revenue Outlook • Department Expenses • Budget Challenges • Next Steps

  10. Department ExpensesFY 2010Operating Expenses Budget = $118M

  11. Department Expenses Personal Services - $43.3 million

  12. Department Expenses Outsourced Services • $30.6 million • Includes: • Biosolids management • Conserv II operations and maintenance • Wastewater infrastructure rehabilitation

  13. Department Expenses Materials & Supplies • $8.6 million • Chemical costs • Varies in proportion to flow and price • $6.5 million or 76% of total

  14. Department Expenses Utilities • $14.8 million • Electricity costs • Varies in proportion to flow and price • $13.5 million or 91% of total Electric Rates

  15. Department Expenses Repairs & Maintenance • $14.0 million • Includes: • Equipment • Buildings & grounds • Vehicles

  16. Department Expenses Other Expenses • $6.7 million • Includes: • Self insurance • Postage & messenger services • Equipment rental • Bad debt expense • Bank charges

  17. Budget Challenges • Introduction • Revenue Outlook • Department Expenses • Budget Challenges • Next Steps

  18. Budget Challenges County Guideline: 7% reduction would adversely impact… • Regulatory Requirements • Service Levels • Programs • Maintenance • Equipment Replacement

  19. Budget Challenges Regulatory Requirements… • Statutory staffing requirements at facilities Service Levels… • Water quality • Increased risk of sewer overflows • Fire protection reliability • Increased Call Center response times

  20. Budget Challenges Programs… • Water Meter Replacement • Potential loss of revenue • Private Pump Station Compliance Program • Limited enforcement • Oil & Grease Prevention • Limited enforcement • Cross Connection Control • Reduced inspections • Conservation • Reduced funding for conservation initiatives

  21. Budget Challenges Maintenance… • Insufficient resources for preventive maintenance • Valves • Hydrants • Plants • Pump stations Equipment Replacement… • Delayed replacement of heavy equipment • Increases maintenance costs and downtime

  22. Budget Challenges • Sufficient funding is needed to serve customers and meet regulatory requirements • Goal to cut budget 3%-5% • Challenge is to fund CIP

  23. Budget Challenges 5-Year CIP Total Budget $633.1M

  24. Budget Challenges Infrastructure -Horizons West Wastewater Systems -South Regional Water Transmission System -Transportation Related Water Relocation Phase II -Eastern Regional Water Transmission Systems -South Service Area Effluent Reuse

  25. Budget Challenges Water Plants -Southern Regional Water Supply Facility -Eastern Water Supply Facility Phase III -Western Regional Water Treatment Facilities Phase III -Southwest Water Supply Facility

  26. Budget Challenges Wastewater Plants -Eastern Water Reclamation Facility Expansion -Northwest Water Reclamation Facility Phase III -South Water Reclamation Facility Phase V -Southwest Orange County Effluent Disposal

  27. Budget Challenges Rehabilitation -Wastewater Collection Systems Rehabilitation -Wastewater Pumping Stations Rehabilitation -Water Distribution Systems Rehabilitation

  28. Budget Challenges • CIP large and essential • Current reserves and revenues no longer adequate • Long-term revenue increases and borrowing are needed to fund CIP

  29. Budget Challenges • Introduction • Revenue Outlook • Department Expenses • Budget Challenges • Next Steps

  30. Next Steps • Finalize the budget • Analyze cash needs • Ensure budget can be funded for FY11 and beyond • Re-examine CIP for current growth trend

  31. Orange County Utilities DepartmentWater and Wastewater Budget Challenges March 9, 2010

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