AE2S is pleased to announce that the 11th annual North Central Region Utility Rate Study is complete, and it will soon be distributed to all of the participating utilities. This year, survey respondents included 75 systems with populations greater than 5,000 people outside of the Minneapolis/St. Paul Metro area, 27 systems serving greater than 5,000 people from within the Metro area, 139 systems serving less than 5,000 people, and 35 rural water systems. As in previous years, survey data was solicited from systems in Minnesota, North Dakota, South Dakota, Montana, and Wyoming.
Survey results indicate that 48% of respondents serving 5,000 people or greater (excluding the Minneapolis-St. Paul area), 66.7% of Metro survey respondents, 31.7% of systems serving less than 5,000 people, and 47.6% of regional water system respondents implemented increases to water rates in 2012. Overall, this means that only 41.6% of all survey respondents reported increasing water rates in 2012. It is interesting to note that in both 2010 and 2011, greater that 50% of all survey respondents reported increasing their rates.
In comparison, 40.5% of survey respondents reported increasing wastewater rates in 2012. This is also down from the 2011 survey, in which 46.9% of all survey respondents had increased wastewater rates. Individual survey results in 2012 showed that 50.7% of respondents serving 5,000 people or greater (excluding the Minneapolis-St. Paul area), 69.2% of Metro survey respondents, and 29.5% of responding systems serving less than 5,000 people increased wastewater rates. In addition to comparing 2012 rates, the rate survey document contains information related to the anticipated rate increases for 2013.
Average Residential Bill for 6,000 Gallons Usage 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 a significant portion of utility operational costs are fixed. Reported costs per account by size will be covered in a future edition of The Source.
Figure 2 illustrates the average reported rate increases for systems that serve more than 5,000.
Figure 3 illustrates the average rate increases for systems serving less than 5,000.
Anticipated Increases for Communities Serving 5,000 People and Greater
Roughly one-half of the respondents from communities serving 5,000 people or more (excluding the Minneapolis-St. Paul area) anticipate water and wastewater rate increases in 2013. Of the respondents in this group, 56% of water respondents and 51% of wastewater respondents reported an intent to raise rates next year.
Figures 4 and 5 show the percentages of projected 2013 rate increases to water and wastewater rates, respectively, for non-metro communities serving more than 5,000.
Anticipated Increases for Metro Communities Serving 5,000 People and Greater
For Metro communities serving 5,000 people or greater, a larger percentage of survey respondents reported projected increases to water and wastewater fee structures for 2013. Specifically, 70.4% of water and 66.7% of wastewater systems in this group reported an intent to raise rates in 2013.
Anticipated Increases for Communities Serving Less than 5,000 People
Whereas data from the larger systems indicated that greater than half of those systems intend to raise water and/or wastewater rates in 2013, data reported by communities serving less than 5,000 people indicates a slightly lesser percentage of systems plan to raise rates next year. This is a continuation of a trend noted in previous years. Thirty-seven percent of water systems in this category indicated an intent to increase rates, and 33% of wastewater systems projected an increase.
Figures 8 and 9 show the percentages of anticipated 2013 rate increases for water and wastewater rates, respectively, for non-metro communities serving less than 5,000 people.
To Be Continued…
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 additional data and topics addressed in the survey on a monthly basis in The Source.
If you participated in the 2012 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 2012 North Central Region Utility Rate Survey or have suggestions for future topics to be highlighted in the survey, please contact Miranda Kleven at Miranda.Kleven@ae2s.com.
The SourceThe Source is a quarterly technical-based newsletter that features financial and utility rate issues and resources for utility managers, city finance managers, and auditors.
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