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1 2 3 Cost of Service Objectives • Develop rates that: • Meet annual Financial Plan needs • Ensure water and wastewater services are each self-sustaining • Meet AW objectives while ensuring equitable cost recovery from customer classes • Included a Public Involvement Committee (PIC) to review Cost of Service methodology and provide input and recommendations 4 5 Purpose 1. Bolster transparency in the rate-setting process 2. Raise awareness about the Cost of Service Study 3. Obtain customer input on pricing objectives Approach As of 9/27, 98 open issues currently being worked As of 9/27, 4,242 issues resolved  Promotion of Feedback Opportunities Reached 200,000 unique Austinites • Press Release • Media Coverage • Direct email through My ATX Water Portal • Social Media Posts • Reached 39,830 unique people • Displayed content 45,650 times • Notifications to all Council Offices 400 Voices Heard • Nearly 200 responded on Speak Up Austin • Over 100 attended Open Houses in 10 Council Districts • 20 attended Virtual Open House • 56 participated in the emailed survey • 27 participated in Focus Groups • 32 attended an Austin Neighborhood Council meeting Community Priorities Most important to least important: 1. Affordability for essential uses of water. 2. Water conservation to encourage sustainable use of water. 3. System resilience to withstand climate impacts and reliability to minimize outages. 4. Affordability for low-income users. 5. Minimizing bill impacts by gradually increasing rates over time. 6. Revenue stability so that Austin Water receives a stable level of revenue despite fluctuations in water use. Recommendations • Affordability for basic services and system resiliency. • Lower cash financing of CIP for large, generational projects. • Bill discount target of 50% for Customer Assistance Program (CAP) customers. • Community Benefit Charge increase from $0.15 to $0.30 per thousand gallons to support the Customer Assistance Program. • Implementation of water budget billing to address high irrigation for commercial and multifamily customers. 12 Budget Overview & Highlights • Incorporate Cost of Service Study and Community Engagement results. • Balance affordability with necessary operational and infrastructure investments. • Continue resiliency and service reliability investments for essential infrastructure. • Support staffing additions, including temporary employee and contractor conversions. • Continue debt management strategies. • Maintain financial strength with stable bond ratings, as in place since 2016. 13 Budget Overview & Highlights • Proposed average monthly residential bill increase of $8.14 per month. • Smaller increases in the first two rate tiers to support affordability for essential water use. • Rate structure maintains strong water conservation goals. • Customer Assistance Program customers maintain a near 50% discount; average increase of $7.95 per month. 14 Fund Summary DESCRIPTION Beginning Fund Balance Revenue & Transfers In Expenditures & Transfers Out Ending Fund Balance Debt Service Coverage Days Cash on Hand FTEs 15 FY24 AMENDED FY24 ESTIMATED FY25 PROPOSED $267.1 $703.3 $769.0 1.51 243 1,381 $298.0 $715.7 $741.1 1.88 313 1,381 $272.6 $767.0 $768.6 (-$1.6) $271.0 1.91 312 1,410 Change in Fund Balance (-$65.7) (-$25.4) $201.4 $272.6 16 Sources of Funds $351.9 $327.1 $324.7 $289.1 Department Service Revenue: FY 2024 Amended: $640.6 million FY 2025 Proposed: $704.9 million $400 $350 $300 $250 $200 $150 $100 $50 $0 17 Water Services Wastewater Services Reclaimed Water FY24 Amended FY 25 Proposed $3.1 $3.7 Services $21.3 $21.3 Miscellaneous Revenue Uses of Funds $305.1 $317.5 Department Expenditures: FY 2024 Amended: $769.0 million FY 2025 Proposed: $768.6 million $350 $300 $250 $200 $150 $100 $50 $0 18 $244.4 $235.2 $186.6 $178.2 $32.9 $37.7 Program Requirements Other Requirements Debt Service Transfers FY 2024 Amended FY 2025 Proposed Significant Operating Req. Changes • Wages and Benefits • Contractuals and Commodities • $5.7M net increase for wage • $3.5M increase for chemicals adjustment, market study and retirement contribution • $3.4M increase for 29 new FTEs • $2.1M increase for health / life / dental insurance • $1.1M increase for pipes & fittings • $1.0M increase for flow meter contract • Go Purple Initiatives - $4.0M increase • Infrastructure Academy - $3.3M increase • ($8.3)M decrease for end • Utility Billing System Support - $2.0M of across-the-board retention stipend increase 19 Proposed new FTEs • 10 - Operational Optimization • 5 - Infrastructure Performance • 5 - Enterprise Resiliency • 3 - Customer Satisfaction • 3 - Employee Leadership & Development • 2 - Facility Improvements • 1 - Affordability *7 new FTEs are Temporary and Contractor conversions • 20 21 5-Year Capital Plan Highlights 2025 2026 2027 2028 2029 Total Water $120.7 $133.3 $135.2 $117.4 $113.3 $ 619.9 Wastewater 213.1 364.1 416.8 345.3 277.0 1,616.3 Reclaimed 16.9 19.4 14.7 3.9 1.9 56.8 m i l l i o n s Combined $350.7 $516.8 $566.7 $466.6 $392.2 $2,293.0 • Walnut Creek WWTP Expansion to 100 Million Gallons Per Day • Walnut Creek Primary Clarifier and Flow Equalization Basin Rehab • South Austin Regional WWTP Trains A&B Improvements • Williamson Creek Wastewater Interceptor • Aquifer Storage and Recovery • Center Street Pump Station Replacement and Electrical Improvements • Austin Water Control Center 22 CIP Plan Funding 23 24 Debt Savings Achieve $582M Total Debt Service Requirements Comparison - FY2018 through FY2029 $49.3 $60.8 35.3% $47.4 $20.9 $46.1 $36.6 29.8% 29.4% 28.7% 31.3% $86.3 $74.9 $33.8 $20.4 $39.1 $7.9 23.3% 25.0% 20.7% 22.3% 24.7% 25.0% 27.5% 2017-18 Actual 2018-19 Actual 2019-20 Actual 2020-21 Actual 2021-22 Actual 2022-23 Actual 2023-24 Estimate 2024-25 Forecast 2025-26 Forecast 2026-27 Forecast 2027-28 Forecast 2028-29 Forecast Current Debt Service Requirements Debt Svc % of Total Requirements *Total debt service savings includes saving for years prior to 2017 and after 2028 are not shown on graph Fiscal Year Debt Svc Savings $320 $280 $240 $200 $160 $120 $80 $40 $0 ) s n o i l l i m n i ( e c i v r e S t b e D 25 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Capital Recovery Fee Collections 26 27 Average Residential Bill Impacts 28 Customer Assistance Program • Over 21,000 Residential CAP participants as of June 2024 • Over 32,000 Multifamily CAP participants as of June 2024 • Waived residential monthly water and wastewater fixed fees • Discounted residential volumetric water and wastewater rates • Multifamily CAP monthly credit $17 ($11 Water and $6 Wastewater) 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 $ 20.01 $ 26.37 $ 46.75 $ 27.54 $ 19.21 $ 93.13 $ 47.55 $ 45.58 56.9% 41.1% 48.9% Percentage Increase: 9.60% 20.0% 29 30 Ongoing Budget Considerations • Slowing development is impacting defeasance funding availability • Growing Capital Improvements Plan • Several large strategic projects on the horizon • Construction costs continue to rise • Continued debt management efforts • Capital Recovery Fee Revenue • Drought Impacts • Continue to monitor lake levels and inflows • GoPurple investment in reuse strategies • Rate design continues conservation focus • Water Forward supply strategies 31