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Regulatory Best Practices for Small Water Companies

Regulatory Best Practices for Small Water Companies. May 6, 2009 John Hoy Chief Regulatory Officer. About Us. 43 years old Operations in 15 states Serving over 1 million people 90 subsidiary companies Provide water, wastewater and reuse water services. Reuse Water.

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Regulatory Best Practices for Small Water Companies

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  1. Regulatory Best Practices for Small Water Companies May 6, 2009 John Hoy Chief Regulatory Officer

  2. About Us • 43 years old • Operations in 15 states • Serving over 1 million people • 90 subsidiary companies • Provide water, wastewater and reuse water services

  3. Reuse Water • 18 public access reuse plants in FL, NC, GA & NV (#19 planned for AZ) • Reuse customers include golf courses, nurseries, car washes and residential • 10 million gallons per day of reuse capacity

  4. Water Utility Landscape • Fragmented • Over 52,000 Utilities in the US • Regional/Local in Nature • 85% Municipally owned • Minority regulated by State Commissions • 20% compared to 80% Electric • Product is Ingested • Stringent EPA regulation • Capital intensive

  5. Relative Utility Bills • However, water is priced the lowest of the major household utilities. Source: U.S. Bureau of Labor Statistics

  6. Community Water System Breakdown 83% of the total systems serve just 9% of the total population Source: EPA 2008 Drinking Water Factoids

  7. Aging Water Infrastructure • The EPA is projecting $320 billion will need to be invested in community water systems over the next 20 years. • Similar need on the wastewater side Source: EPA 2007 Needs Survey

  8. Aging Water Infrastructure • The burden will be greatest on small system customers

  9. Small System Infrastructure Needs Source: EPA 2007 Needs Survey

  10. Small Water Utility Issues • Deteriorating infrastructure • Meeting growing environmental regulations • Access to capital • Spreading costs over small customer base • Regulatory lag and cash flow • Rate case expense

  11. The Perfect Storm • Fragmented Industry • + Capital Intensive • + Aging Infrastructure • + Increased Public Health Requirements • + Tight Credit Markets • + Scarce Supply • + Security Concerns

  12. NARUC is Focused on Best Practices • Resolution Supporting Consideration of Regulatory Policies Deemed as “Best Practices” • (Excerpt) • WHEREAS, Small water company viability issues continue to be a challenge for regulators, drinking water program administrators and the water industry; best practices identified by Forum participants include: a) stakeholder collaboration; b) a memoranda of understanding among relevant State agencies and health departments; c) condemnation and receivership authority; and d) capacity development planning; • _______________________________________________ • Sponsored by the Committee on Water • Adopted by the NARUC Board of Directors July 27, 2005 • Product of the 2005 NAWC Water Policy Forum

  13. Other Regulatory Objectives • Safe and adequate service at just and reasonable rates • Financially stable utilities • System consolidation • Infrastructure replacement • Minimal rate shock • Streamlined rate proceedings • Conservation Need Picture Source: National Draught Monitor Mitigation Center

  14. Best Practices • Consolidation • Limit new utilities • Incentives to acquire troubled systems • Incentives for efficiency improvements • Single tariff pricing • Combining water, wastewater and reuse water

  15. Best Practices • Alternative Ratemaking • Future Test Years • Indexes/Trackers • DSICS • Surcharges • Phased-in Rates • Expedited Rate Proceedings • Limited Proceedings • Mediation and Settlement Procedures • Small Company Filings

  16. Best Practices • Promoting Conservation • Tiered Rates • Repression Adjustment • Reuse Incentives • Decoupling • Communication, Education and Collaboration

  17. Regulatory Best Practices for Small Water Companies May 6, 2009 John Hoy Chief Regulatory Officer

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