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1 ~- <br />people in the Towns of Carrboro and Chapel Hill and to the University of North Carolina at <br />Chapel Hill, which represents nearly 30 percent of OWASA's 8 million gallon average day <br />demand. The rest of the customer base is primarily residential and retaiUcommercial, <br />representing approximately 55 and 15 percent of total demand, respectively. <br />Capital improvements are managed through a 15-year Capital Improvements Plan (CIP), which <br />is updated annually. Anticipated project costs are programmed for the upcoming five years <br />through a Capital Improvements Budget (CIB), with capital expenditures typically ranging from <br />$7 million to $10 million per year. OWASA recovers a portion of these costs through service <br />availability fees. These one-time, upfront charges for new customer connections help fmance <br />"backbone" projects that support major water and wastewater treatment facilities and their <br />supporting infrastructure. <br />OWASA's availability fees are based on the System Buy-In approach, under which new <br />customers connecting to the system "buy in" to the existing capacity that has already been <br />provided and fmanced by existing customers. Thus, after buying in, new customers receive <br />service in an equity position comparable to that of existing customers. Availability charges <br />based on this method recognize the current value of existing backbone facilities, which is <br />determined by a variety of factors, including original construction cost, depreciation, <br />renovations, upgrades, and capacity expansions. <br />In general, the System Buy-In method is most appropriate for utilities such as OWASA that <br />are experiencing only moderate growth, and desire to have new and old customers share <br />equally in costs of the entire system. Other methods, such as MarginaU Incremental pricing, <br />are sometimes used by utilities experiencing significant customer growth and capital <br />expansion, but seeking to minimize the rate impacts of system growth and investment on <br />existing customers. <br />LOCAL HOUSING FACTORS AND WATER USE <br />In December 1997 OWASA staff conducted a reconnaissance level survey of water consumption <br />and housing parameters among 165 single family detached homes. This preliminary analysis, <br />which was based on 36 consecutive months of customer billing data, indicated a strong <br />relationship between water consumption, lot size, and tax value. Based on these fmdings, staff <br />developed additional data to support possible changes to the service availability fees. <br />Because availability fees are applied primarily to new construction, information was collected on <br />all new homes built in the OWASA service area during calendar year 1994, and then linked to <br />the subsequent billing records for each of the corresponding customer accounts. Primary <br />information sources included local building permits and tax files. After deleting incomplete or <br />unmatched records, the resulting data set included 305 valid entries containing consistent <br />information on lot size, fmished area, number of bedrooms, bathrooms, and 31 months of water <br />consumption from June 1995 through December 1997. Finished area, as recorded in local <br />building permits, represents total heated floor space. <br />As with the preliminary fmdings for existing homes, data for the new homes displayed positive <br />2 <br />