Conservation Measures: “Achieving water conservation while maintaining sound financial performance”
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Fernando Aranda - Presentation at Texas Water Foundation, Central Texas Water Conservation Symposium February 26, 2013
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Conservation Measures: “Achieving water conservation while maintaining sound financial performance”
- 1. Fernando Aranda Conservation Measures: “Achieving water conservation while maintaining sound financial performance”
- 2. Conservation & Finance THE ISSUES • Drought Environmental • Scarce & Expensive Water Resources • Revenue Losses • Aging Infrastructure Economic • Population Growth • Water Storage & Water Rights • Rate Increase Aversion • Short-term View Political • Affordability • Debt Finance
- 4. The Cost of Water Water/Sewer Bill Inflation Inflation CPI 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
- 5. Water Utilities Are Among the Most Capital Intensive in the World* $0.11 $0.25 $0.26 $0.77 $ invested in physical assets for every $1.00 in revenue *based on most recent 12 months reported on SEC 10K report
- 6. AVERAGE WATER UTILITY INVESTMENT IN ASSETS FOR EACH $1.00 IN REVENUE iS BETWEEN $5-$9
- 7. City of Santa Fe, NM Oldest Capital in the US Population 79,627 CIP $113M Next 10Years Water Production 10,406 AFY Accounts 33,440
- 8. Why? Is Santa Fe’s conservation story worth telling
- 9. Consumption per Capita Vs. Population 180 82 170 80 168 160 78 76 150 139 Population (Thousands) 74 Consumption (GPCD) 140 72 130 70 120 68 110 105 115 104 66 100 64 90 62 80 60 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Population GPCD
- 10. The City Conservation Efforts Reduced GPCD Usage by 37% Since 1995 from 168 to 105 GPCD
- 11. How? Does this Compare with Other Western Cities.
- 12. GPCD Comparison Western Cities Salt Lake, UT 242 Las Vegas, NV 222 Reno, NV 204 Phoenix, AZ 185 Tucson, AZ 177 Colorado Springs, CO 173 Austin, TX 170 Denver, CO 165 Albuquerque, NM 160 San Diego, CA 152 San Antonio, TX 146 Los Angeles, CA 145 El Paso, TX 139 Aurora, CO 121 Flagtaff, AZ 111 Santa Fe, NM 105 San Francisco, CA 86 0 50 100 150 200 250 300
- 13. The Average per-capita usage in the US is: 152 Gallons* Santa Fe is 30% lower than the US Average Usage *per United Nations Development Program – Human Development Report 2006
- 14. How? Was this conservation achieved.
- 15. Conservation Policies Financial Incentives System Improvements Multiple Strategies…. That’s How
- 16. Combination of Conservation Strategies Public Water Education Losses Water Restriction Fee Fixtures Renewable Water Rate Structure Water Restriction Rebates
- 17. Conservation can not be achieved without Financial The City had to implement several rate adjustments to meet their revenue requirements Stability Which Hasn’t been easy
- 18. Financial History 2000 • Revenues fail to meet rate requirements in bond covenants 2001 • Service charges are adjusted by 76% to restore bond covenant compliance • Recommended steps for further study • Started work on first 10-year financial plan 2003 • Revenues meet rate requirements and bond covenants 2007-0 • Construction stars on Buckman Diversion project • City approves a 7-year 8.2% annual 9 rate increases
- 19. Financial History 2010-1 • City Goes Back to the Bond Market • Fitch Rate the City’s Outstanding Debt at AAA • City Finished Construction of Buckman 2 Diversion Project 01/2011 • City meets all bond and fund balance requirement
- 20. But… How can the City maintain financial stability and promote conservation?
- 22. Fixed Charge Fixed Volume Charge Inclining Blocks Simplicity Conservation Revenue Risk Seasonal Water Budget Rates Available Rate Structures
- 23. The Unmentioned Side of Conservation
- 24. The Unmentioned Side of Conservation
- 25. The Unmentioned Side of Conservation
- 26. It’s Not Rocket Science How can you design rates that will incentivize conservation and will maintain financial stability ….
- 27. Elasticity Measures the responsiveness of the demand to changes in prices Allows you to anticipate the reduction in consumption for any increase in price
- 28. Water is Inelastic 0.1 to 0.5 Increases in price produce lower decreases in usage
- 29. What About Droughts A drought is the most stressful situation a utility can have.
- 30. Options During a Drought • Rate Stabilization Fund • Rate Surcharges Design – Enhance Conservation – Maintain revenue stability
- 31. Questions
- 32. Conservation Policies & Programs • Conservation Website Public • Landscaping Classes Education • Radio Show • Children conservation programs • Over 8,000 high flush toilets were Fixtures replaced for Ultra-low flush toilets • Automated Meter Reading Program Water • May 1 – October 31 No Restriction outdoor irrigation from 10 am to 6 pm
- 33. System Improvements Water § Distribution System Leak Losses Repair & Detection Renewable § Buckman Diversion Project Water § Storage of San Juan Chama Water
- 34. Financial Incentives • 1st Violation $20 Water • 2nd Violation $50 Restriction • 3rd Violation $100 Fee • 4th and each additional Violation $200 • High-efficiency washing machine ($150 - $350) Rebates • High-efficiency toilet ($125 - $500) • Water free urinals ($500) • Water Harvesting ($12 - $50) Rate • Inclining block rate structure Structure