2011 Rate Survey Results and Anticipated 2012 Rate Increases

clipboardAE2S is pleased to announce that the 10th annual North Central Region Utility Rate Study has been completed and will soon be distributed to all participating utilities.  This year survey respondents included 84 systems greater than 5,000 people outside of the Minneapolis/St. Paul metropolitan area (referred to as Metro), 34 systems serving greater than 5,000 people from within the Metro area, 105 systems serving less than 5,000 people, and 50 rural water systems.   As in previous years, survey data was solicited from systems in the states of Minnesota, Montana, North Dakota, South Dakota, and Wyoming.

Survey results indicated that 64.3 percent of respondents serving 5,000 people or greater (excluding the Minneapolis-St. Paul area), 79.4 percent of Metro survey respondents, 38.8 percent of systems serving less than 5,000 people, and 42.0 percent of regional water system respondents implemented increases to water rates in 2011.  Overall, this means that 52.3 percent of all survey respondents reported increasing water rates in 2011.  It is interesting to note that, in 2010, 52.2 percent of all survey respondents reported increasing water rates.

In comparison, an overall 46.9 percent of survey respondents reported increasing wastewater rates in 2011.  This is down from statistics in the 2010 rate survey, in which overall 53.7 percent of survey respondents had increased wastewater rates in 2010.  Individual survey results in 2011 showed that 56.6 percent of respondents serving 5,000 people or greater (excluding the Minneapolis-St. Paul area), 69.7 percent of Metro survey respondents, and 31.7 percent of responding systems serving less than 5,000 people increased wastewater rates in 2011.  In addition to comparing 2011 rates, the rate survey document contains information related to the anticipated rate increases for 2012.

2011 Reference Point – 6,000 Gallons per Month
Based on feedback obtained in recent years, the value used to generate rate comparisons for the 2011 survey was adjusted from 7,500 gallons to 6,000 gallons per month.  Figure 1 summarizes the average monthly charges, by population, for 6,000 gallons of water as reported by all survey respondents irrespective of water or wastewater treatment type.  The graphic illustrates that the cost of water and wastewater is generally decreasing as the population served by the utility increases.  This economy of scale factor is likely a reflection of the fact that the bulk of utility operational costs are fixed costs.  A future issue of The Source will address fixed and variable costs and explore the 2011 rate survey data in greater detail.

june source charts.xls

 

Anticipated Increases for Communities Serving 5,000 People and Greater
A majority of the respondents from communities serving 5,000 people or more (excluding the Minneapolis-St. Paul area) reported anticipated water and wastewater rate increases in 2012. Of the respondents in this group, 53.7 percent reported an intent to raise water and wastewater rates in 2012.  Percentages of anticipated 2012 increases to water and wastewater rates for non-metro communities serving 5,000 people or greater are provided in Figures 2 and 3, respectively.

june source charts.xls

june source charts.xls

Anticipated Increases for Metro Communities Serving 5,000 People and Greater
Similar to the statistics for the non-metro communities serving 5,000 people or greater, it was reported that the majority of Metro systems completing the survey also expect to make increases to water and wastewater fee structures in 2012.  Specifically, 71 percent of water and 70 percent of wastewater systems in this group reported an intent to raise rates in 2012.  Percentages of anticipated 2012 rate increases for water and wastewater rates for respondents in the Metro area are shown in Figures 4 and 5, respectively.

june source charts.xls

june source charts.xls

Anticipated Increases for Communities Serving Less than 5,000 People
Whereas data from the larger systems indicated that well over half of those systems intended to raise water and/or wastewater rates in 2012, data reported by survey respondents from communities serving less than 5,000 people indicated a slightly lesser percentage of systems plan to raise rates in 2012.  Forty-nine percent of water systems in this category indicated an intent to increase rates, and 41 percent of wastewater systems projected an increase. Percentages of anticipated 2012 rate increases for water and wastewater rates for respondents serving less than 5,000 people are shown in Figure 6 and 7, respectively.

june source charts.xls june source charts.xls

So Much Information, So Little Time
Data collected for the rate survey was not limited to detailed billing rates, but included a range of topics generated based on suggestions from previous rate survey participants, AE2S staff members, and clients.  We look forward to presenting a synopsis of the data/topics addressed in the survey on a monthly basis in The Source publication. We will strive to present each topic in a brief and hard-hitting manner so that the time you spend reading The Source is both efficient and well-spent.

If you participated in the 2011 rate survey, watch for your copy to be delivered by mail or by an AE2S or AE2S Nexus representative soon.  If you have questions related to the 2011 North Central Region Utility Rate Survey or have suggestions for future topics highlighted in the survey, please contact Shawn Gaddie at Shawn.Gaddie@ae2s.com.