HomeMy WebLinkAbout08-25-2025 CC Work Session - Rate Study PresentationCity of Orono
Utility Rate Study
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•The rate study for all funds (Water, Sewer and Stormwater) is arrived at to
ensure the City meets projected targeted cash reserves and a positive
cashflow at the end of the plan in year 2030. It should be noted the water
fund recommendation does not meet the projected target reserve by 2030
but would get the City to the projected target reserve by 2032.
•Target cash reserve is calculated and presented as 100% of the following
years’ debt payments and 25% of projected operating expenses, and a 5-
year average of capital expenses.
Introduction
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•Future activity is arrived at by reviewing the three prior years actual ledger balances, and reviewing the
2025-2026 City outlined budgets. Some modifications were made for debt requirements, capital
purchases, transfers and grant receipts reviewed with management.
•Operating and Payroll Expenses increasing 3-5% per year. Normal operating expenditures are
increasing at 3% and payroll increasing at 4–5%.
•Capital improvements/infrastructure, equipment, and other capital maintenance items have been
identified in the City’s capital plan and are identified to be accounted for in the related enterprise fund.
The City does not have any major infrastructure projects outlined during the life of the plan.
•The average usage for residential and commercial customers is calculated at approximately 4,000
gallons/month. Charts and graphs were prepared using the calculated average.
Key Assumptions
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•Water
•The scenario presented proposes increase of 15% increase to usage rates and 15% increase to
fixed rates in throughout the life of the plan (2026 – 2030). It should be noted the fund is not
projected to meet the targeted cash reserves in year 2030 but does achieve a positive cashflow and
positive cash balance at the end of the plan in year 2030. It should also be noted that Water revenue
has declined over the past few years (2022 – 2025 projection)
•Sewer
•The scenario presented proposes increase 3% increase to the fixed rates throughout the life of the
plan (2026 – 2030). The projected increase is made to ensure the City keeps consistent with
inflation and increase in future expenses. The fund is projected to meet the targeted cash reserves
and have a positive cashflow at the end of the plan in year 2030.
•Stormwater
•The scenario presented proposes a 10% increase to fixed rates in 2026, and 5% thereafter
throughout the life of the plan (2027 – 2030). The projected increase is made to ensure the City
meets projected targeted cash reserves and a positive cashflow at the end of the plan in year 2030.
Important Reiteration: The recommended increases are made to ensure the City meets projected targeted
cash reserves and a positive cashflow at the end of the plan in year 2030.
Utility Rate Recommendations
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Sample Utility Bills – Current and Recommended
2025 2026 2027 2028
Client Sample 4,000 Gallons
1-101XXX-00
10 (WATER)52.35 60.20 69.23 79.62
45 (SEWER FLAT)73.21 75.41 77.67 80.00
60 (WATER TEST FEE)0.81 0.81 0.81 0.81
70 (STORM WATER)16.32 17.95$ 18.85$ 19.79$
80 (RECYCLING)6.76
Total 141.88 153.561 165.751 179.408
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Bill Projections
Water
Current
Rates 2026 2027 2028 2029 2030
Proposed Change in Rates - Blended 15%15%15%15%15%
Monthly bill based on 4,000 gallons 52.35 60.20 69.23 79.62 91.56 105.29
Monthly $ increase for a 4,000 gallon user 7.85$ 9.03$ 10.38$ 11.94$ 13.73$
Annual $ increase for an average 4,000 gallon user 94.23$ 108.36$ 124.62$ 143.31$ 164.81$
Residential/Commercial
Base fee 17.00 19.55 22.48 25.85 29.73 34.19
Per 1,000 gallons - 0 to 3,300 8.26 9.50 10.92 12.56 14.45 16.61
Per 1,000 - 3,301 to 8,300 gallons 11.56 13.29 15.29 17.58 20.22 23.25
Per 1,000 - 8,301 gallons and above 17.34 19.94 22.93 26.37 30.33 34.88
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Bill Projections
Stormwater
Sewer
Current
Rates 2026 2027 2028 2029 2030
Proposed Change in Rates 10%5%5%5%5%
Monthly bill based on a residential user 16.32$ 17.95$ 18.85$ 19.79$ 20.78$ 21.82$
Monthly $ increase for a residential user 1.63$ 0.90$ 0.94$ 0.99$ 1.04$
Annual $ increase for a residential user 19.58$ 10.77$ 11.31$ 11.88$ 12.47$
Residential 16.32 17.95 18.85 19.79 20.78 21.82
Current
Rates 2026 2027 2028 2029 2030
Proposed Change in Rates - Blended 3%3%3%3%3%
Monthly bill based on 4,000 gallons 73.21$ 75.41$ 77.67$ 80.00$ 82.40$ 84.87$
Monthly $ increase for a 4,000 gallon user 2.20$ 2.26$ 2.33$ 2.40$ 2.47$
Annual $ increase for an average 4,000 gallon user 26.36$ 27.15$ 27.96$ 28.80$ 29.66$
Residential Base
Base fee 73.21 75.41 77.67 80.00 82.40 84.87
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Water Bill - Comparison Cities
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Sewer Bill - Comparison Cities
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Questions?
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Water
Fund
Water Fund is
gaining positive
cashflow and
increasing cash from
deficits expected in
the near future.
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Water
Fund
Estimated Estimated Estimated Estimated Estimated Estimated
2025 2026 2027 2028 2029 2030
Projected rate increase
Usage 15%15%15%15%15%
Fixed 15%15%15%15%15%
Cash receipts
Receipts from customers 1,095,803$ 1,281,764$ 1,470,719$ 1,687,902$ 1,937,561$ 2,224,587$
Special assessments 15,171 15,626 16,095 16,578 17,075 17,587
Other receipts 28,180 20,717 21,339 21,979 22,638 23,317
Total Cash Receipts 1,139,154 1,318,107 1,508,153 1,726,459 1,977,274 2,265,491
Cash disbursements
Operating payments 1,014,321 1,051,241 1,086,476 1,122,919 1,160,608 1,199,589
Debt service payments 101,544 99,350 101,919 99,306 101,500 -
Acquisition of capital assets 310,900 651,800 410,480 494,080 378,860 261,300
Transfers out 47,900 47,000 58,880 61,580 100,460 47,000
Total Cash Disbursements 1,474,665 1,849,391 1,657,755 1,777,885 1,741,428 1,507,889
Net Increase (Decrease)
In Cash and Cash Equivalents (335,511) (531,284) (149,602) (51,426) 235,846 757,602
Cash and Cash Equivalents, January 1 268,890 (66,621) (597,905) (747,507) (798,933) (563,087)
Cash and Cash Equivalents, December 31 (66,621)$ (597,905)$ (747,507)$ (798,933)$ (563,087)$ 194,515$
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Sewer
Fund
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Sewer
Fund
Estimated Estimated Estimated Estimated Estimated Estimated
2025 2026 2027 2028 2029 2030
Projected rate increase
Usage rate 3%3%3%3%3%
Fixed rate 3%3%3%3%3%
Cash receipts
Receipts from customers 2,311,919$ 2,380,027$ 2,457,562$ 2,532,691$ 2,610,127$ 2,689,943$
Other receipts 84,167 83,577 82,750 85,566 78,100 80,487
Total Cash Receipts 2,396,086 2,463,604 2,540,312 2,618,257 2,688,227 2,770,430
Cash disbursements
Operating payments 1,767,808 1,843,629 1,919,662 1,998,974 2,081,717 2,168,038
Acquisition of capital assets 471,100 532,400 471,100 819,600 458,000 503,900
Transfers out 196,100 135,000 76,100 69,600 90,600 132,800
Total Cash Disbursements 2,435,008 2,511,029 2,466,862 2,888,174 2,630,317 2,804,738
Net Increase (Decrease)
In Cash and Cash Equivalents (38,922) (47,425) 73,450 (269,917) 57,910 (34,308)
Cash and Cash Equivalents, January 1 2,163,536 2,124,614 2,077,189 2,150,639 1,880,722 1,938,632
Cash and Cash Equivalents, December 31 2,124,614$ 2,077,189$ 2,150,639$ 1,880,722$ 1,938,632$ 1,904,324$
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Stormwater
Fund
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Stormwater
Fund
Estimated Estimated Estimated Estimated Estimated Estimated
2025 2026 2027 2028 2029 2030
Projected rate increase
Fixed rate 10%5%5%5%5%
Cash receipts
Receipts from customers 814,718$ 896,037$ 940,794$ 987,787$ 1,037,128$ 1,088,936$
Other receipts 54,947 39,307 39,151 41,778 34,669 36,278
Total Cash Receipts 869,665 935,344 979,945 1,029,565 1,071,797 1,125,214
Cash disbursements
Operating payments 373,001 387,969 402,454 414,922 429,380 444,159
Acquisition of capital assets 626,300 381,600 311,200 515,800 374,600 640,800
Transfers out 406,300 186,000 194,200 351,800 230,600 436,800
Total Cash Disbursements 1,405,601 955,569 907,854 1,282,522 1,034,580 1,521,759
Net Increase (Decrease)
In Cash and Cash Equivalents (535,936) (20,225) 72,091 (252,957) 37,217 (396,545)
Cash and Cash Equivalents, January 1 1,344,586 808,650 788,425 860,516 607,559 644,776
Cash and Cash Equivalents, December 31 808,650$ 788,425$ 860,516$ 607,559$ 644,776$ 248,231$