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FY2014-15 BUDGET REVIEW PowerPoint Presentation
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FY2014-15 BUDGET REVIEW

FY2014-15 BUDGET REVIEW

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FY2014-15 BUDGET REVIEW

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Presentation Transcript

  1. FY2014-15 BUDGET REVIEW Mayor Dwight C. Jones Byron C. Marshall, CAO

  2. Cost of Service Agenda • Overview • Rate Setting Process • Pricing Objectives • Purpose of a Cost of Service Analysis • Water and Wastewater Rate Recommendations • Gas Rate Recommendations • Stormwater Rate No Change FY14 • Affordability Program

  3. Rate Setting Process Step 5 – Assess Effectiveness of Addressing Pricing Objectives Step 4– Design Rate Structure Step 3 – Allocate Costs 5 Step 2Identify Revenue Requirements & Demand Projections 4 Step 1– Identify Financial & Pricing Objectives 3 2 1

  4. Top Pricing Objectives

  5. Cost of Service Analysis • Cost of service concept • Allocate costs to functional and cost components (e.g. buckets) • Classes of customers • Units of service Fixed Charges Variable Charges

  6. Rate Design Process that aligns rates and charges with pricing objectives

  7. Water and Wastewater Rate Recommendations

  8. Recommended Water Rates

  9. RecommendedWastewaterRates

  10. Residential Customer Impacts Water and Wastewater Monthly Combined Bill *Non-residential impacts will vary based on meter size and levels of consumption.

  11. Impact of Recommended Rates • More Than 50% of Residential Customers Will See Their Bill Decrease • Promotes Resource Conservation and Provides Customer with More Control Over Bill • Balances Key Pricing Objectives of Affordability and Revenue Stability • Consistent with Cost of Service Principles

  12. Gas Rate Recommendations

  13. RecommendedGas Rates

  14. RecommendedGas Rates

  15. Residential Customer Impacts

  16. Customer Assistance Program (CAP) • Existing Program • Provides assistance to qualifying gas customers and funded fully through voluntary contributions and DPU fundraising • Objective • To develop a more aggressive CAP that could provide assistance with water and wastewater bills to qualifying customers

  17. Proposed Structure • “Piggy Back” on Existing Virginia Department of Social Services’ Energy Assistance Program for Richmond • Establish Agreement with Richmond Department of Social Services • Simple Program Structure Initially • DPU is working with the City Attorney's Office and other City departments on the program specifics and implementation details to ensure that we will have the best program possible for Council to consider • Explore More Tailored Structure Once Database is Established

  18. Budget Overview Continues • New Services/Programs Proposed • Current Services/Programs Not Funded • Mandated Services/Programs • Impact on Service Delivery • Focus Area Results Aligned with Council’s Priorities • Major Budget Changes/Reasons for Changes • Budget Challenges / Issues • Major CIP Projects (if applicable)

  19. DPU Current Services/Programs Not Funded • None

  20. DPU Mandated Services/Programs – Gas Compliance with all Federal regulations associated with Natural Gas Provide natural gas service to customers in the City of Richmond, all of Henrico County, and parts of Chesterfield and Hanover Counties.

  21. DPU Mandated Services/Programs – Water Compliance with all State regulations associated with purification, storage and delivery of potable water Provide potable water service to customers in the City of Richmond on a retail basis Provide potable water service to the Counties of Chesterfield, Hanover, and Henrico on a wholesale basis

  22. DPU Mandated Services/Programs – Wastewater Compliance with all State regulations associated with collections and treatment of wastewater Compliance with all State regulations associated with CSO collection systems Provide wastewater service to customers in the City of Richmond on a retail basis Provide wastewater service to Goochland County on a wholesale basis Provide wastewater service to customers in Chesterfield and Henrico Counties on a direct billing reciprocal basis

  23. DPU Mandated Services/Programs – Stormwater Compliance with all Federal and State regulations associated with stormwater collections Compliance with all Federal and State regulations associated with Clean Water Compliance with all Federal and State regulations associated with flood protection Continuation of current Stormwater programs

  24. DPU Mandated Services/Programs – Electric Compliance with all Federal and State regulations associated with Streetlight installation and maintenance

  25. DPU Mandated Services/Programs – Customer Service Compliance with all Federal and State regulations associated with Natural Gas and Water Compliance with all Federal and State regulations associated with credit & collections, credit reporting, billing, and customer confidentiality Compliance with all Federal and State regulations associated with banking and electronic payment processing

  26. Impact on Service Delivery • There should be no impact on service delivery • Review – customer behavior if the proposed water and wastewater rate changes are adopted

  27. Focus Area Results Aligned with Council’s Priorities • Neighborhood Vitality • Neighborhoods are safe, clean, and well maintained • Water utility for sanitation • Wastewater utility for sanitation and floodwall , levee • Stormwater utility for pollution prevention and drainage • Natural gas utility for pollution prevention • Electric (streetlight) utility for safety • Economic and Business Opportunities - Richmond is a city of choice for successful businesses • Richmond’s regulatory environment is streamlined • Process improvements in the Call Center, Water Resources, Energy Management, Developmental Services, Wastewater and Natural Gas for permits issued for services and regulatory permits

  28. Major Budget Changes/Reasons for Changes • Increased salary & benefit costs ($1.6M) – 2% raise and increases in retirement and health care costs • Assistance program for qualifying City Water and Wastewater customers ($1.0M) • Increased cost for contracted services ($0.7M) due to Consumer Price Index increases • System (eg: CIS, CRM, MicroFocus) upgrades and/or replacement costs ($0.6M)

  29. Major Budget Changes/Reasons for Changes • Increased plant operating/maintenance supplies ($0.6M) due to escalation and aging infrastructure • Increased training costs ($0.5M) driven by DPU employee pride and ownership program • Increased temporary labor ($0.5M) primarily driven by non-recurring (post FY15) professional services provided for federally mandated Gas Distribution Integrity Management Program (DIMP)

  30. Budget Challenges / Issues • Unfunded mandates • Revenue sufficiency – changing rate structures • Employee recruitment and retention • Aging infrastructure (plants, pumping stations, floodwalls, mains)

  31. Major CIP Projects (if applicable) • Gas System Replacements • Gas New Business • Water Distribution System Improvements • Transmission Main Improvements • Water Plant & Pumping (eg: Byrd Park Reservoir) • Wastewater Treatment Plant (eg: Biological Nutrient Removal Project) • Sanitary Sewers • Stormwater Facilities Improvements

  32. New Services/Programs Proposed • Assistance program for qualified City Water and Wastewater customers ($1.0M)

  33. DPU New Services/Programs Not Funded • LED Streetlight Replacement Program (engineering analysis in FY14)