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RATE STRATEGY

December 2 3, 2013. RATE STRATEGY. MISSION STATEMENT. To maintain and enhance the quality of life in Kirkwood by providing our customers with safe, reliable, environmentally responsible services, and provide those services openly, efficiently, and cost effectively. STRATEGIC GOALS.

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RATE STRATEGY

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  1. December 23, 2013 RATE STRATEGY

  2. MISSION STATEMENT To maintain and enhance the quality of life in Kirkwood by providing our customers with safe, reliable, environmentally responsible services, and provide those services openly, efficiently, and cost effectively.

  3. STRATEGIC GOALS • Reliable Services • Provided Openly • Provided Efficiently • Provided Cost Effectively • Environmentally Responsible

  4. POTENTIAL RATE STRATEGY GOALS • Minimize rates to customers while still providing responsible service. • Establish rates and connection fees to plan for load growth and changes in the environment. • Maintain unencumbered cash reserves in the amount of six months of operating revenue. • Ensure that all enterprise funds are self-funding on a: • Cash basis (excludes depreciation to fund future Cap Ex) • Net income basis (includes depreciation for future Cap Ex) • Maintain a rate stabilization fund to minimize the rate impact of short term issues.

  5. PROPERTY TAXES • Property Taxes are anticipated to total $834,000 for the 2013/14 Fiscal Year. • Traditionally, Property Taxes have been used to cover Operating losses and Capital expenses for all Governmental and Enterprise Departments. • In calendar year 2013, $350,760 or 42% of Property Taxes are allocated to electricity in order to make [TIER or OTIER] RUS requirement.

  6. PROPERTY TAXES2011 ALLOCATION

  7. PROPERTY TAXES2012 ALLOCATION

  8. PROPERTY TAXES2013 ALLOCATION

  9. General & Administration • G & A encompass all shared expenses of the District. • Examples include administration salaries and wages, Board of Director costs, office supplies, and insurance. • G & A expenses are tracked and then allocated to each fund. • This allocation is based on historical tracking and experience.

  10. G & A 2011 ALLOCATION

  11. G & A 2012 ALLOCATION

  12. G & A 2013 ALLOCATION

  13. ENTERPRISE VS. GOVERNMENT FUNDS Enterprise Funds • Are property-related fee based services. • Must be of a measureable benefit to the property. • Are often subject to Proposition 218 provision. Government Funds • Are community related services. • For the public good, regardless of ownership or occupancy. • Property taxes have historically funded a majority of Government funds.

  14. ENTERPRISE FUNDS • Water • Wastewater • Electric • Propane • Snow Removal • Solid Waste

  15. WATER Rate History 201120122013 Base Rate$22.13$23.86 $24.99 Usage Rate$0.00$0.00 $4.00 Meter Charge$0.00$0.00$1.46 Connection Fee$1,916$1,916$1,916

  16. WATER ($’s in 000’s) 2013 Revenues $337 EBITDA $101 G & A Allocations ($119) Cash (EBITDA w/ G&A)($18) Interest ($9) Depreciation ($137) Net Profit/Loss($164) Projections:2014/152015/162016/172017 Capital $25 $67 $20 $52 Debt$589 $530 $471 $409

  17. WASTEWATER Rate History 201120122013 Base Rate$29.33$29.96 $30.31 Usage Rate$19.46$19.46$19.69 Meter Charge $0.00 $0.00 $1.84 Connection Fee$6,030$6,030$6,030

  18. WASTEWATER ($’s in 000’s)2013 Revenues $697 EBITDA $118 G & A Allocations($248) Cash (EBITDA w/ G&A) ($130) Interest ($6) Depreciation ($340) Net Profit/Loss ($476) Projections:2014/152015/16 2016/172017/18 Capital $110 $252 $40 $57 Debt $851 $766 $680 $591

  19. ELECTRIC Rate History 201120122013 Base Rate N/A $20.43 $20.67 Usage Rate N/A $.52183 $.5437 Meter Charge N/A $2.94 $2.94 Connection Fee N/A $1,992 $1,992

  20. ELECTRIC ($’s in 000’s)2013 Revenues $4,081 EBITDA $1,314 G & A Allocations ($316) Cash (EDITDA w/ G&A) $998 Interest ($665) Depreciation ($1,020) Net Profit/Loss($687) Projections:2014/152015/16 2016/172017/18 Capital $12 $4 $4 $4 Debt $60 $59 $59 $59

  21. PROPANE Rate History 201120122013 Base Rate N/A $5.11 $5.17 Usage Rate N/A $.0911 $.09153 Meter Charge N/A $2.94 $2.94 Connection Fee N/A $750 $750

  22. PROPANE ($’s in 000’s) 2013 Revenues$1,387 EBITDA $593 G & A Allocations ($201) Cash (EBITDA w/ G&A) $392 Interest ($58)Depreciation ($84) Net Profit/Loss$250 Projections:2014/152015/162016/172017/18 Capital$23 $10 N/A N/A Debt $1,670 $1,669 $1,547 $1,545

  23. SNOW REMOVAL ($’s in 000’s)2013 Revenues $413 EBITDA $229 Cash (EBITDA w/ G&A) $135 G&A Allocations ($94) Interest ($8) Depreciation ($78) Net Profit/Loss$8 Projections:2014/152015/162016/172017/18 Capital $23 $15 $135 $149 Debt $125 $85 $43 N/A

  24. SOLID WASTE Rate History 201120122013 Base Rate $15.00$15.00 $15.00 Usage Rate N/A N/AN/A

  25. SOLID WASTE ($’s in 000’s)2013 Revenues $122 EBITDA $36 G & A Allocations ($36) Cash (EBITDA w/ G&A) $- Interest $- Depreciation ($1) Net Profit/Loss ($1) Projections: 2014/152015/162016/172017/18 Capital $10 N/A $10 N/A

  26. GOVERNMENT FUNDS Fire Department / Parks & Recreation/ Mosquito Abatement ($’s in 000’s)2013 Revenues$94 EBITDA ($87) G & A Allocations ($109) Cash (EBITDA w/ G&A) ($196) Interest N/A Depreciation ($24) Net Profit/Loss ($220) Projections:2014/152015/162016/172017/18 Capital$11 $11 $11 $11

  27. Debt Service • RUS total debt is $38,975,000. It matures 12/31/2047. Interest rate is 2.479 - 3.592%. The entire amount is in the Electric Fund. • COP total debt is $4,998,825. It matures 12/30/2023. Interest rate is 2% - 4%. It is allocated to the Electric fund (38.3%), the Water fund (2.2%), the Propane fund (32.8%), and Capital expense (26.7%). • Caterpillar Loan total debt is $164,145.35. It matures 01/31/2017. Interest rate is 3.2%. The entire amount is in the Snow Removal fund.

  28. Kirkwood Meadows Public Utility DistrictConnection Fee Comparisons

  29. POTENTIAL NEXT STEPS • Establish a minimum unencumbered operating cash balance. • Establish a minimum unencumbered capital reserve. • Establish a rate stabilization fund to minimize the impact of short term issues. • Set a goal of having enterprise funds be self-funding in a certain amount of time. • Keep rates as low as possible while striving for the above. • Maintain or improve current levels of services while striving for the above. • Suggestions?

  30. QUESTIONS

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