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2015 Rate Study-Main Page

 

UTILITY RATE NEWS-The City of Flagstaff is considering an adjustment in utility rates and fees

Why do a Rate Study?

The purpose for conducting a rate study is to carefully analyze and develop rates that are sufficient to fund the operation, maintenance and replacement of essential utility infrastructure (e.g., treatment plants, pipelines, reservoirs, wells and stormwater facilities) while maintaining a commitment to affordability.  The objective of the rate study is to ensure the City can responsibly invest in the infrastructure needed to provide round-the-clock, safe and reliable Utilities services to ensure the public's health and economic vitality of our community today and into the future.

  Rate Study 2015 In 2015 Willdan Financial Services conducted a Cost of Service Rate Analysis as part of their Long Term Financial Plan and Rate and Fee Study for the City of Flagstaff Utilities Division. That study revealed the need for adjustments in water, sewer, reclaimed water and stormwater rates to keep up with inflation and increased capital improvement costs associated with aging infrastructure, treatment plant upgrades and upsizing of stormwater infrastructure. Willdan proposes a 3% annual revenue increase for water, 5.5% annual revenue increase for sewer, and a 3% annual increase for reclaimed water over the next five years. They identified several financing options for Stormwater capital program needs. While system operating costs have been streamlined, these additional revenues are essential to fund much-needed capital improvements.

To learn more about the impact of and justification for the proposed rate adjustments, customers are invited to:



Financial Planning

                        

  Rio WRF UV System
                        
  FY16-Rio Water Reclamation Facility Ultra Violet (UV) Disinfection System
                       

The City of Flagstaff internally reviews the revenue requirements for utilities operations and capital needs for the upcoming year by analyzing projected revenues under existing rates. Every four years the City of Flagstaff Utilities and finance staff, in conjunction with an independent rate consultant evaluates the long term financial plan for the water,sewer, reclaimed water and stormwater utility funds.

    
  
2015 Water Sewer, Reclaimed Water and Stormwater Rate Study
The City of Flagstaff, Utilities Division has hired an outside consultant, Willdan Financial Services, to prepare an economic model, to complete a financial analysis, and resulting recommendations for any rate adjustments to water, wastewater, stormwater, reclaimed water and development capacity fees. The goal of the analysis is to develop a rate and capacity fee structure that will ensure sufficient revenues to cover the costs of services and meet the City’s debt coverage requirements and working capital guidelines.

Background
The City of Flagstaff has approximately 19,832 water service connections and maintains 435 miles of potable water main, thirteen major reservoirs operating on five distinct pressure zones. There are two wastewater treatment plants that serve a combined population of approximately 68,800 residents. The City maintains 276 miles of gravity flow sanitary sewer. Additionally the Division maintains about 26 miles of reclaimed water main and stormwater facilities including 91 miles of storm drains, 3912 catch basins and 556 detention basins.


Aging Waterlines by Decade

Aging Infrastructure

One of the major factors affecting utility rates is the rehabilitation and replacement of aging infrastructure. Pipes are underground and out of sight, but they do not last forever.

For example, the City’s 117-year old water system needs $32 million to replace aging water mains that have reached their useful life (70 years). Postponing this replacement could cause service disruptions that may cost more money, along with inconvenience to the community. Also, old undersized water mains often prevent redevelopment or infill development from occurring within the city. The graph provided shows the aging water pipeline by decade in the City.


So how much old pipe does Flagstaff have?
In Flagstaff, 6% of all Water pipes have reached their useful life. We have a total of 435 miles of waterline, of which approximately 26.5 miles is from 70 to 100 years old. When you're not replacing your old pipe, you experience an increase in line breaks like we have had the past few years. The problems are already coming to the surface.


preparingforvalveinstallation.jpgAging Waterlines

Failing infrastructure costs local businesses money. Flagstaff experienced breaks in a 60-year-old water pipeline that resulted in water and mud gushing onto the streets and homes near the Summit Center and forced the Summit Center to cancel 60 surgeries. When large water pipeline systems break under pavement, they can cause large sinkholes and/or destruction of buildings. This can result in multi-million dollar claims against the city.
   

Funding for Capital Improvement Projects
Major
capital projects include five new wells within the next ten years, future water acquisition projects, ongoing annual replacement of 2.5 miles of waterline and 1 mile of sewer line each year. It also includes replacement of aging and undersized utility lines in the Downtown, Southside, Brannen, Mountain View, Coconino Estates, Bow and Arrow, Lower Greenlaw and Sunnyside neighborhoods in town.

The Utilities department plans to expand the wastewater treatment solids handling treatment process, implement energy efficiency projects that were identified in the energy audit of the Water Production and Wastewater facilities conducted in 2012.
 The energy audit identified several energy conservation opportunities (ECO’s) that will result in significantly lowering the departments energy consumption and saving several hundred thousand dollars in annual operating costs.

The City desires rates that fully fund operations, maintenance, and present and future capital costs for plant expansions, distribution systems, and collection system capacity infrastructure rehabilitation, enhancements, or expansion. 
                                                          
                                                                                    Planned CIP Improvements

Water Main ReplacementsPlant ImprovementsNew WellsPump House
  Water Main Replacement                  Plant Upgrades                        New City Wells           Pump House Energy
                                                                                                                                                  Efficiency Improvements

   

Background Information 

1. Utilities Integrated Master Plan
   

                                                         NCS Engineering     Brown and Caldwell Engineering

For more background information on the 2015 Rate Study Information click here