Week 4 (Feb 4-8)
I spent the first part of the week completing my charts. I added on to the first chart by finding the populations of each community. I messed around with the chart a bit, organizing it by different rates to get a feel of where Gunnison lied on the charts in comparison to all the other communities. When I added the populations, I saw that Gunnison had lower rates than every community. In fact the only community that even came close to the rates of Gunnison was Alamosa. Alamosa’s rates were pretty similar, but still higher and the next closest communities were almost double what Gunnison charges. This is due to the fact that Gunnison has not increased its rates for years, while other communities raise their rates between 3-10% each year.
With the populations included, I wanted to see what the rates were for the communities that were most like the size of Gunnison’s population. So I made a third chart that compared the populations between 4,000-7,000 members since Gunnison sits at about 5,886 members. From the original list of communities that Joe gave me, this range included only Aspen, Carbondale, Eagle, Estes Park and Salida. Once again, the charges for Gunnison didn’t even account for half of what these other communities were charging their customers.
At this point, Joe had been telling me that an increase of about 5% is what was usual and about what we should be doing. When I showed him these graphs and talked to him about how much other similar communities have been charging, this began to change. For the rest of the week, I kept crunching number and testing situations. I began entering a 5% increase, a 10% increase and finally a 20% increase onto each of my charts for comparison. Even with a 20% increase, bills were only raised a couple of dollars since the rates were so low to begin with. This is where I have left off this week.
Week 5 (Feb 11-15)
This week I have spent most of my time looking over the past expenses and revenues, the future fixed expenses and the five-year capital improvement plan for the water department. I have been compiling this data into charts on the same excel sheet as before. It was interesting to see the budget that the department is given each year and how much they actually spend, usually going over and dipping into reserves in each category. Once looking at this, it was obvious that the rates needed to drastically increase. Not only does the department need to be charging more to account for the expenses of each year, they needed to increase to replenish the reserves and to account for the capital improvements necessary.
Joe and I also spent some time looking at the amount of water that is pumped out of a well each month and how much is actually billed to the customers. I was surprised to see how much more is pumped than is billed. Of course some of the pumped water escapes through leaks, fire hydrant testing and other random occurrences, but that should only be a small fraction of the actual amount billed and most months it was almost double. I asked Joe what else it could be that is causing this large discrepancy. We only really talked about one problem, the meters. The meters around the city of Gunnison are extremely outdated and could be reading completely inaccurate numbers.
This is when I began thinking that we needed to increase the minimum monthly payment. I started playing with numbers and decided that a $5 increase on a monthly payment and a 5% increase across the board for the rest of the rates would be the best way to go. Immediately this $5 addition will go to installing new meters around town. This will not only make reading the meters quicker as they are all electronically linked to the system, but it will also increase the accuracy that the meter reads and hopefully cut back on the unaccounted for water. After these new meters are payed off, this extra revenue can go towards other system improvements and eventually help to reimburse the reserves. The revenue increase of 5% will also account for inflation in the expenditures of the department.
Week 6 (Feb 18-22)
This week Joe gave me a computer program that is to help me develop a rate structure. I began going through the program and filling out all of the information, even though most of it is information I already have in my excel charts. It was good for me to go through this program though because it organized my information in a way that was easier for me to read the information as a whole.
The program was also beneficial for me to go through because it brought some questions to my attention. I finished out filling out and reading the 56 pages today and now I feel like I have everything I need to get going on a rate increase proposal. I did bring to Joe’s attention the information that I will need to move forward, which I discovered while filling out the program. For instance, I need to know how much water is used to flush systems, for fire training and things like that. I discovered that on an average over the past two years, the City of Gunnison has been pumping a way higher volume of water than it is billing its customers. On average, 34% of the water pumped is not billed for which is completely unacceptable. The introduction of updated meters will help cut this number back, but not completely. Having a number for how many gallons are spent flushing systems and such will help make my report more accurate.
I also would like to figure out how many customers each month are using more than “x” gallons. For instance, if there are a lot of people using over 20,000 gallons a month maybe we need to include another tier to promote more water conservation. I also would like to know how many new connections are made each year as they provide much more revenue than the average water sales. I also asked Joe what he would like the reserves to be. It has been depleted much more than it has been replenished in the past few years, so I am going to attempt to build it up to where it should be.
Week 7 (Feb 25-Mar 1)
At the beginning of the week I read through old rate increase proposals to get a better sense of what I would be doing next. I also took a look at the proposal that the City of Salida had available online from 2012. I noticed that all of the graphs had an average included in their comparisons, so therefore I added one to each of my tables and graphs as well.
This week I also went over everything that Joe wanted to see in the proposal for the rate increase. I also made sure to clarify some last minor details that I wanted to include in the proposal. Joe agreed to look into them for me, but he may not figure them out in time for my first draft. When going through the numbers we also realized that all of my Gunnison calculations were for a larger meter size than the average. I had calculated all the rates at a 3/4” meter when the average user only has a 5/8” meter. This resulted in my numbers all actually being higher than what the average person pays. It did not take me long to correct my mistake and fix my averages as well.
Friday I began writing the proposal. I have decided to break it up into 8 sections to introduce the current plan in place, its problems, provide my graphs, explanations, suggestions and finish with my other options and any other needed data. I chose to write my proposal this way, because it is how it was introduced in the past. I only began the proposal this week, but I look to have a draft to Joe by Wednesday next week. I will begin to work on setting up the sewer rate study as I wait for instructions from Joe on what to do for the next draft of my proposal.