Agenda - 10-21-2008 - 6e - Laserfiche WebLink

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Mr. Kevin Lindley September 24, 2008 Orange County page 2 Monthly Bills Under Current Efland Svstr em Rates Monthly Metered Water Usage Interval Monthly Sewer Bill 0 to 3 legal (minimum charge) $15.20 3 to 4 legal $19.70 4 to 5 legal $24.20 5 to 6 legal $28.70 6 to 7 legal $33.20 7 to 8 legal $37.70 Based on the current wastewater rate structure and the typical water usage by the customers of the Efland System, the County collected approximately $62,900 in sewer charge revenues for fiscal year ("FY's 2007. Although the customers of the Efland System are assessed sewer charges based on billed water usage, the County is assessed a $10.35 wholesale sewer charge for every 1,000 gallons of metered sewer discharged from the Efland System to Hillsborough for treatment. The Town meters the sewer discharge through a sonic flow meter located approximately half a mile from the point of discharge into the Town's system. Based on the wholesale sewer charge and the metered discharges, which include substantial amounts (30%) of I&I during wet weather periods, the annual wholesale wastewater charges exceed the annual revenues collected from the Efland System customer base. In FY 2007, the Hillsborough treatment costs were approximately $140,000 compared to the $62,900 in revenues collected from customers of the Efland System. Ultimately, the current wastewater rate structure has required the County to provide an annual financial subsidy ranging from $80,000 in FY 2005, to $106,800 in FY 2007. Revenue Requirements Forecast and Revenue Sufficiency Based on the estimated operating expenses and capital costs for the Efland System, the current wastewater rates would need to be adjusted on January 1 to provide $142,000, or an additional 300% in sewer charge revenues to achieve full revenue sufficienry for FY 2009 and eliminate the current subsidy provided by the County. This estimated increase in sewer charge revenues was determined based on our forecast of annual revenue requirements and billed water usage for the Efland System. Due to substantial amounts of I&I during wet weather periods, the actual level of revenues required to achieve revenue sufficienry can be significantly influenced by weather conditions and is therefore uncertain. As part of the rate study, RFC developed afifteen-year forecast of annual revenue requirements for the Efland System. The forecast was based on a review and understanding of the historical revenue requirements, escalation of operating and maintenance ("O&M'~ expenses budgeted for FY 2008, and projected wholesale sewer costs based on anticipated annual discharges to the Town of Hillsborough for treatment. The annual O&M expenses include equipment maintenance, telephone, utilities, operations, and an allocation of Orange-Alamance expenses. The FY 2008 budgeted costs for these line items are escalated annual by 3.0% to account for inflation and salary adjustments. The Hillsborough treatment costs are forecast based on anticipated increases in metered sewer discharges and the $10.35 per 1,000 gallons rate.