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Austin Water Water and Wastewater Commission – Budget Committee : Cost of Service Update Joseph Gonzales Asst. Director, Financial Services July 9, 2024 Page 1 of 20Agenda Austin Water – Water and Wastewater Final Rate Recommendations Public Engagement Information Next Steps Page 2 of 20Public Engagement Information PIC Survey Results 10 responses from PIC Public Input Opportunities Completed 10 open houses conducted, with one in each Council District Virtual open house conducted on June 13th 3 focus groups conducted for more in- depth conversation Speak Up Austin Surveys 3 Page 3 of 20Engagement By The Numbers Supply: 325,000 Acre Feet Per Year Local Media 6 Outlets Ran Stories Email Sent Social Media •174,679 email addresses •68.75% open (120,092) •11.5% clicks (20,088) •63 posts (1 paid) •39,830 People Reached •45,650 Impressions Made NextDoor 16,291 Impressions Speak Up Austin • 21,011 Views • 196 Survey Responses Open Houses • 107 Attendees in Person • 20 Attendees, Virtually Austin Neighborhood Council Meeting 32 Attendees Focus Groups •27 Participants to 3 Sessions •More than 300 Applied •56 Survey Responses Page 4 of 20Public Engagement Information In-Person Open Houses Equity Revenue stability Resilience Conservation Affordability for essential uses Affordability for low income Minimal impact to bills Revenue stability Equity Minimizing impacts Affordability for low income Conservation Resilience Affordability for essential use Affordability for essential use Conservation and resilience Low-income affordability and equity Minimal impacts to bills and revenue stability Affordability (all kinds), equity Conservation and resilience Minimal bill impacts System reliability and revenue stability Speak Up Austin Survey Virtual Open House Focus Groups and Surveys Emailed 5 Page 5 of 20 PIC Survey Results 6 Page 6 of 20PIC Survey Results What percentage of cash funding for major long-term projects should be recommended? % Cash Financing 7 5 4 3 2 1 0 % Cash Financing 20% 4 25% 1 30% 3 35% 1 I don't know 1 Page 7 of 20PIC Survey Results How should Austin Water apply rate increases across the 5-tiered volume rates for residential customers? Residential Rate Increase 8 5 4 3 2 1 0 Level % increase- 10% Lower increase for lower blocks- 7%-12% NewGen rates-higher increase for lower blocks NewGen rates-higher increase for lower blocks Other- NewGen rates-slightly higher in lower blocks Other-high increases in higher blocks Rate Increase Pattern 1 4 1 1 1 1 Other-no increase to charges for lower blocks, equal in higher blocks 1 Page 8 of 20PIC Survey Results What method of rate smoothing should be recommended? 9 Rate Increase Plan 7 6 5 4 3 2 1 0 Rate Increase Plan Declining-31.5% total 6 Inclining-41.5% total 2 Level-38.5% total 0 Other-No Smoothing 1 Page 9 of 20PIC Survey Results Should CAP water rates be increased at percentage levels lower, similar, or higher than Non-CAP rate increases? 10 CAP Rate Increase 5 4 3 2 1 0 Lower % than residential Higher % than residential Similar % as residential No increase CAP Rate Increase 3 1 3 2 Other-Consider customer impact to minimize CAP increase 1 Page 10 of 20PIC Survey Results Should AW add a separate rate for non-residential customers with irrigation meters? Separate Irrigation Rate 11 No Yes I don't know Page 11 of 20Combined Rates – AW Final Recommendations 12 FY 2025 Proposed Rates Monthly Average Residential Water Bill Comparison: Non-CAP vs. CAP (5,800 Gals. Water and 4,000 Gals. Wastewater) Non-CAP CAP $ Discount % Discount Water $ 46.38 $ 20.01 $ 26.37 Wastewater $ 46.74 $ 27.52 $ 19.22 Combined $ 93.12 $ 47.53 $ 45.59 56.9% 41.1% 49.0% Percentage Increase: 9.60% 20.0% Page 12 of 20Water Rates AW Final Recommendations • Water Model Changes • Updated residential rate design as compared to NewGen model • Included CBC Surcharge increase to $0.30 from the current $0.15 per thousand gallons • Water Rate Design Changes • Focus on Affordability for Basic Services, Water Conservation, and System Resiliency • Residential – lower percentage increases in blocks 1-2, Block 4 tiered fixed fee reduced, higher increases in blocks 3-5 • Non-residential peak rates changed to 15% higher than non-peak rates • Target 50% combined CAP customer discount 13 Page 13 of 20Wastewater Rates – AW Final Recommendations • Wastewater Model Changes • Adjusted cash financing of CIP to FY25 budget level of $64.0M from the NewGen 5-year average of $77.7M (30% overall cash financing, 20% for Walnut Creek) • Included CBC Surcharge increase to $0.30 from the current $0.15 per thousand gallons • Adjusted allocation of returned check fees to be based on customer count rather than flow • Wastewater Rate Design Changes • Focus on Affordability for Basic Services and System Resiliency • Target 50% combined CAP customer discount 14 Page 14 of 20Residential Water Rates NewGen Draft Rates Residential - Non-CAP Current Rate Proposed Rate % Variance AW Recommended Rates Residential - Non-CAP Current Rate Proposed Rate % Variance Meter Charge (5/8"): $ 7.45 $ 7.75 4.0% Meter Charge (5/8"): $ 7.45 $ 7.85 5.4% Tiered Fixed Fee: Block 1: 0 - 2,000 Gals. Block 2: 2,001 - 6,000 Gals. Block 3: 6,001 - 11,000 Gals. Block 4: 11,001 - 20,000 Gals. Block 5: 20,001 - over Gals. $ $ $ $ $ 1.25 3.55 9.25 29.75 29.75 Volume Rate: Block 1: 0 - 2,000 Gals. Block 2: 2,001 - 6,000 Gals. Block 3: 6,001 - 11,000 Gals. Block 4: 11,001 - 20,000 Gals. Block 5: 20,001 - over Gals. $ $ $ $ $ 3.00 4.99 8.65 13.18 14.74 FY24 Current Average Bill: $ 42.34 FY25 Proposed Average Bill: $ 48.63 $ $ $ $ $ 1.45 4.10 10.70 34.40 34.40 $ $ $ $ $ 3.65 6.00 9.30 12.55 15.05 16.0% 15.5% 15.7% 15.6% 15.6% 21.7% 20.2% 7.5% -4.8% 2.1% Tiered Fixed Fee: Block 1: 0 - 2,000 Gals. Block 2: 2,001 - 6,000 Gals. Block 3: 6,001 - 11,000 Gals. Block 4: 11,001 - 20,000 Gals. Block 5: 20,001 - over Gals. $ $ $ $ $ 1.25 3.55 9.25 29.75 29.75 Volume Rate: Block 1: 0 - 2,000 Gals. Block 2: 2,001 - 6,000 Gals. Block 3: 6,001 - 11,000 Gals. Block 4: 11,001 - 20,000 Gals. Block 5: 20,001 - over Gals. $ $ $ $ $ 3.00 4.99 8.65 13.18 14.74 FY24 Current Average Bill: $ 42.34 FY25 Proposed Average Bill: $ 46.38 $ $ $ $ $ 1.33 3.83 10.21 23.04 34.79 $ $ $ $ $ 3.20 5.38 9.73 15.38 18.46 $ Increase / % Increase: $ 6.29 14.9% $ Increase / % Increase: $ 4.04 9.5% 15 6.4% 7.9% 10.4% -22.6% 16.9% 6.7% 7.7% 12.5% 16.7% 25.2% Page 15 of 20Residential Wastewater Rates 16 NewGen Draft Rates Residential - Non-CAP Current Rate Proposed Rate % Variance AW Recommended Rates Residential - Non-CAP Current Rate Proposed Rate % Variance Customer Charge: $ 10.35 $ 10.50 1.4% Customer Charge: $ 10.35 $ 10.90 5.3% Volume Rate: Volume Rate: Block 1: 0 - 2,000 Gals. Block 2: 2,001 - over Gals. $ $ 5.10 10.45 $ $ 6.05 12.10 18.6% 15.8% Block 1: 0 - 2,000 Gals. Block 2: 2,001 - over Gals. $ $ 5.10 10.45 $ $ 5.49 11.53 7.6% 10.4% FY24 Current Average Bill: $ 42.65 FY24 Current Average Bill: $ 42.65 FY25 Proposed Average Bill: $ 48.40 FY25 Proposed Average Bill: $ 46.75 $ Increase / % Increase: $ 5.75 13.5% $ Increase / % Increase: $ 4.10 9.6% Page 16 of 20Combined Rates – AW Final Recommendations 17 FY 2025 Proposed Rates Monthly Average Residential Water Bill Comparison: Non-CAP vs. CAP (5,800 Gals. Water and 4,000 Gals. Wastewater) Non-CAP CAP $ Discount % Discount Water Wastewater Combined $ $ $ 46.38 46.75 93.13 $ $ $ 20.01 27.54 47.55 $ $ $ 26.37 19.21 45.58 56.9% 41.1% 48.9% Page 17 of 20Combined Rates – AW Final Recommendations 18 Multifamily - Average Monthly Combined Bill FY24 FY25 $ Var. % Var. Water $ 720.44 $ 846.41 $ 125.97 Wastewater $ 1,049.31 $ 1,220.50 $ 171.19 Combined $ 1,769.75 $ 2,066.91 $ 297.16 Commercial - Average Monthly Combined Bill FY24 FY25 $ Var. % Var. Water $ 347.63 $ 430.26 $ 82.63 Wastewater $ 435.39 $ 530.54 $ 95.15 Combined $ 783.02 $ 960.80 $ 177.78 17.5% 16.3% 16.8% 23.8% 21.9% 22.7% Page 18 of 20Final FY 2025 Budget Proposal • City Manager presents FY25 Proposed Budget to Council – July 12th Next Steps • AW will finalize fee schedule with proposed water and wastewater rates and include as amendment to the FY25 budget • Council approves FY25 budget – August 14th-16th 19 Page 19 of 20Questions?