Streamline - Spring 2015 - (Page 23)

The RATES Program BY CARL BROWN, PRESIDENT, GETTINGGREATRATES.COM than a year ago, five state rural water associations, including Virginia, started up "RATES Programs." You can access the program's page by visiting and clicking on the Virginia link. A LITTLE MORE For the un-initiated, "RATES" stands for Rate Analysis and Training for Environmental Systems. Rate analysis determines where utility rates should be set and periodically reset so they will be both fairly structured and adequate to pay all costs for a long period of time. Believe it or not, most water utilities' rates, and those of many other utilities, are too low and they are unfairly structured. The RATES Program solves that problem. As the adjacent table shows, rate analyses have been completed for nine cities and districts so far. They have generated some eye opening statistics. What have we learned from the nine completed projects? *  hese systems averaged 1,592 connections. T *  ost had both water and sewer analyzed, for which they paid M an average fee of $9,807. That fee varied a lot based upon the simplicity or complexity of each project. *  n order to generate the net rate revenue increases indicated, I the average rate increase for each customer will be $21.78 per month. That varies a lot, too. RATES Program Project Status as of October 10, 2014 5-year Improvement in Cash Position Participant *  pread over five years, the normal useful life of most rate S analyses, it will cost each customer of these systems an average of $0.10 extra per month to know that their rates are fairly structured. *  he average five-year increase in net revenues will be T $2,080,415. *  he average return on investment rate will be 19,592 percent. T Beat that Wall Street! *  he average payback period; the time it will take these systems T to get their investments in analyst fees back from the extra net revenues generated by rate increases, will be 1.72 days. That varies a lot. The slowest payback was Chetopa, KS at 8.99 days and the quickest was Prince George County, Va. at 0.75 days. Numbers on a page are good, but it is easier to get a sense of the scale of extra net revenues these systems will enjoy from the following bar chart. Note that two cities in the chart actually needed to lower one of their utility's average rates. Rate analysis is not just $6,000,000 Fees Participant's Paid Return on to CBC Investment Users Water Sewer Hiawatha, KS1, 573 $592,780 $1,207,225 $8,894 621 $239,092 $104,251 $8,456 4060% Lander, WY 3,540 -$401,135 $2,755,503 $13,052 Water Sewer $5,000,000 20238% Chetopa, KS RATES Program Participants; Projected 5-year Improvement in Cash Position Following Analysis 18038% 9216% $1,049,061 $9,897 24571% Prince George Co., VA 2,998 $1,065,307 $5,114,863 $12,697 48674% Ranchos De Placitas S.D., NM 91 $222,363 N.A. $5,457 4075% Mountain View, WY 600 $784,828 $1,586,018 $10,048 23595% $2,000,000 $1,000,000 $0 $5,839,950 $11,452,253 $88,261 Total Gains Over 5 Years: 88,261Averages: 1,592 $17,292,203 $648,883 $1,431,532 -$1,000,000 $9,807 19592% Mountain View, WY $1,382,820 Ranchos De Placita s, S.D. 3,034 Prince G eorge Co. , VA Powell, WY $3,000,000 Powell, W Y 6726% Ellsworth , KS $9,311 $10,449 Atwood, KS $101,718 -$466,386 Lander, W Y $524,501 $1,429,394 Chetopa , KS 740 1,133 Hiawatha , KS Atwood, KS Ellsworth, KS $4,000,000 23 http://www.GETTINGGREATRATES.COM

Table of Contents for the Digital Edition of Streamline - Spring 2015

From the President: Power Failure
From the Executive Director: Highlights from 2014
The Sustainability Managed Utility
Communication… Say What?
Flushing Away the Ebola Threat
Hazard Communication Standards – Guidelines for OSHA Compliance
State Water Control Board Approves Controversial Permit
VRWA Said Goodbye to Past Executive Director
USDA Rural Development
The RATES Program
Adequate Rates versus Affordability
NRWA Recap
Debt Refinancing: An Alternate Source of Capital
How the Cloud is Revolutionizing the Future of Water Utility Management
Southern Corrosion Supports Victory Junction
Throwing My Loop: Call Me Anytime
Wastewater Math
Booster Club
eLearning Benefits
Membership Application
Do You Know What Your VRWA Benefits Are?
VRWA Mailbag
New Members
Board of Directors
VRWA Committees
Index to Advertisers/

Streamline - Spring 2015