QUESTIONS AND RESPONSES REGARDING PROPOSED PSA RATE INCREASES

v  What rate changes are being proposed?

v  Why does the PSA need to raise rates?

v  Has the PSA considered the impact to residents facing increases in other utilities as well?

v  Why cant the revenue generated by other departments within the PSA cover the losses of the water and sewer department?

v  Has the PSA done anything to reduce/control their budget?

v  Has the PSA done anything to operate more efficiently?

v  How does the proposed rate compare to other communities?

v  Why did the PSA build the Commerce Park project if rates were going to increase?

v  How much did the Commerce Park project cost and how does that impact the rates?

v  Why is the financial burden of commercial development being placed on citizens?

v  Do all citizens pay for water and sewer services?

v  Why are rates being increased when the PSA is owed money from delinquent customers?

v  What is the PSA doing about collection of delinquent accounts?

v  Why are there delinquencies in the garbage collections?

v  What does the PSA pay to dispose of sewer and garbage?

v  Who can I call with additional questions?

 

 

NOTE: The numbers in the highlighted section are being revised to reflect cost increases since the previous rate increase and the full impact of financial assistance on the Commerce Park project. An updated version will be provided at the PSA meeting.

 

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1.       What rate changes are being proposed?

  Note: In all current and proposed scenarios below the monthly bill is calculated as follows:

  Base Rate + (Gallons Used X Usage Rate 1,000)

  Water

  Current

Base Rate ($/mo):

General.................................................................................................. $ 6.50

Brookmont........................................................................................ ... $ 32.00

Herons Landing.................................................................................. .. $ 11.47

Shrader Hill........................................................................................... $ 30.56

Case Knife............................................................................................. $ 29.47

Polyester Park....................................................................................... $ 14.00

Commercial and Industrial .................................................... Same as Residential

 

Usage Rate ($/1,000 gallons):

 

up to 100,000 gal..................................................................................... $ 3.00

over 100,000 gal...................................................................................... $ 2.50

 

  Proposed

Base Rate ($/mo):

Residential/Small Business (Less Than 50,000 gal/mo).................................. $ 8.50

Medium Commercial (50,000 to 100,000 gal/mo)...................................... $ 50.00

Large Commercial/Industrial (Over 100,000 gal/mo)................................ $ 100.00

 

Usage Rate ($/1,000 gallons):

 

up to 50,000 gal...................................................................................... $ 4.00

50,000 to 100,000 gal.............................................................................. $ 3.75

over 100,000 gal..................................................................................... $ 3.50

 

 

 

 

 

 

  Sewer

  Current

Base Rate ($/mo):

General.................................................................................................. $ 6.50

New River............................................................................................. $ 12.00

Highland Park/Rolling Hills/Orchard Hills................................................... $ 25.13

Polyester Park....................................................................................... $ 14.00

Commercial and Industrial .................................................... Same as Residential

 

 

Usage Rate ($/1,000 gallons):

 

up to 100,000 gal..................................................................................... $ 4.50

over 100,000 gal...................................................................................... $ 4.00

 

  Proposed

Base Rate ($/mo):

Residential/Small Business (Less Than 50,000 gal/mo)................................. $ 10.00

Medium Commercial (50,000 to 100,000 gal/mo)....................................... $ 75.00

Large Commercial/Industrial (Over 100,000 gal/mo)................................. $ 150.00

 

Usage Rate ($/1,000 gallons):

 

up to 50,000 gal....................................................................................... $ 5.75

50,000 to 100,000 gal............................................................................... $ 5.50

over 100,000 gal....................................................................................... $ 5.25

  Refuse

  Current ($/mo)

General................................................................................................. $ 15.00

Low Volume............................................................................................ $ 8.00

Non-user................................................................................................ $10.00

 

  Proposed ($/mo)

General................................................................................................. $ 15.00

Low Volume/Non-User.............................................................................. $ 8.00

 

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2.       Why does the PSA need to raise rates?

  Sewer and water services have been in a deficit situation for the past several years (Audit reports available at the following location: http://www.pulaskicounty.org/audits.htm) with refuse revenues making up the difference. The concerns with this approach are 1) not all refuse customers are water and/or sewer customers, and 2) sufficient funds are not being set aside for equipment replacement and infrastructure depreciation costs. The proposed rate increase first seeks to begin correcting these imbalances.

  Secondly, a large number of customers have particularly low rates while a small number of residents, in more recent service area expansions, are paying significantly higher bills.Indeed, some water non-users are paying more than full service customers.

  The proposed water and sewer rate adjustment addresses both the imbalance between water/sewer and refuse services as well as providing consistency in the amounts charged for water and sewer services.

  Increasing costs power, chemical, equipment repair, and the connection to Radford.

  Records from the U.S. Energy Information Administration (EIA) document historical gasoline prices, which indicate a rise in gasoline prices of nearly 123% since 2003 and 36% since 2006.

Source: http://www.eia.gov/oil_gas/petroleum/data_publications/wrgp/mogas_history.html

  Records from the U.S. EIA document historical No. 2 Diesel prices, which indicate a rise in No. 2 Diesel prices of nearly 154% since 2003 and 42% since 2006.

Source: http://www.eia.gov/oog/info/wohdp/diesel.asp

  The U.S. Bureau of Labor and Statistics maintains a consumer price index (CPI) inflation calculator. The CPI calculator indicates that our current average water bill of $18.84 for 3,892 gallons of water, which was set in 2003, has an equivalent buying power of $23.53 in todays dollars (July 2012). The proposed rate increase would raise the cost of 3,892 gallons of water from $18.84 to $24.07.

Source: http://www.bls.gov/data/inflation_calculator.htm

  The CPI calculator indicates that our current rate of $24.86 for 2,927 gallons of sewer, which was set in 2006, has an equivalent buying power of $28.34 in todays dollars (July 2012). The proposed rate increase would raise the cost of 2,927 gallons of sewer from $24.86 to $26.83.

Source: http://www.bls.gov/data/inflation_calculator.htm

  The U.S. Bureau of Labor and Statistics also maintains CPI averages for electricity costs, which indicates and average increase of 37% between November 2003 and March 2012. The same index indicates an average increase of 17% between November 2006 and March 2012.

Source: http://data.bls.gov/timeseries/APU000072621?include_graphs=false&output_type=column&years_option=all_years

  The U.S. Census Bureau documents the historical average household income of residents of Pulaski County, which indicates an increase from $33,873 to $41,389, or 22%, between the 2000 Census and 2010 Census.

Source: http://factfinder2.census.gov/faces/nav/jsf/pages/searchresults.xhtml

 

  The last rate increases for PSA services were as follows:

  Water November 2003

  Sewer November 2006

  Garbage January 2006

  Federal and State grant and loan programs review rates as part of their selection/eligibility process. Lower rates are beginning to make the PSA ineligible for these programs.

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3.       Has the PSA considered the impact to residents facing increases in other utilities as well?

  Yes, the PSA also faces increased power and fuel costs, and has deferred raising rates for several years. As a result, new projects have had to establish a higher base rate to be eligible for federal and state funding. The increased base rate, in some cases, has actually been more than the total bill (i.e., base rate plus usage) in other areas. The proposed rate structure would actually lower the monthly bill for residents in these areas.

  Overall, the proposed rate change will increase the average monthly water bill from $18.84 to $24.07, or $5.23 per month. However, in the most extreme scenarios, some bills will increase by $5.93 per month and some will decrease by $20.96 per month.

  The average monthly sewer bill will increase from $24.86 to $26.83, or $1.97 per month. However, in the most extreme scenarios, some bills will increase by $6.93 per month and some will decrease by $11.13 per month.

  Garbage bills will remain the same.

  Waiting longer to address the current problems will only result in a more significant increase in the future.

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4.       Why cant the revenue generated by other departments within the PSA cover the losses of the water and sewer department?

  Water, sewer and refuse services all have differing groups of customers refuse throughout the County, water north of the lake only in areas not served by the towns of Dublin and Pulaski, sewer portions Dublin water service area. Restructuring rates so that each department is self supporting ensures that only those receiving services pay for the cost of operating and maintain the facilities necessary to provide that particular service.

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5.       Has the PSA done anything to reduce/control their budget?

  Yes, cuts have been made to the annual capital improvements budget.

  The Superintendents position at the water treatment plant was vacated and has remained unfilled.

  Employees have had minimal pay increases with PSA pay raises for past 5 years being as follows:

  7/1/08 $500 Bonus + 1.5%

  7/1/09 0%

  7/1/10 0%

  7/1/11 1.5% + Implement 25% of Compensation Study

  9/1/11 0.5%

  7/1/12 5.7% to cover increased cost of Employee paid VRS costs (Net 0%) + Implement remaining 75% of Compensation Study

  These rates are below the Consumer Price Index and less than Social Security Cost of Living increases.

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6.       Has the PSA done anything to operate more efficiently?

  Yes, backwash changes at the Water Treatment Plant have reduced operational costs.

  Raw water intake pumps have been rebuilt and electrical service has been upgraded to improve energy efficiency.

  Alternative measures of sludge disposal are being tested to reduce operational costs.

  Changes in chemical feed locations are currently being implemented to maximize the benefit of required additives and reduce operational costs.

  Plans to replace pump motors and lighting fixtures are being implemented to improve energy efficiency.

  Improvements have been made, within the last year, to one of the larger inflow and infiltration (I/I) contributing areas to reduce the amount of rainfall entering the wastewater collection system, which in-turn reduces treatment costs to the PSA. A list of projects, capital costs, and savings has been provided at the following location:

  Chemical Optimization Projects

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7.       How does the proposed rate compare to other communities?

  Generally, the proposed rate results in a smaller monthly bill than our surrounding County owned systems and are competitive with Town and City owned systems. Town and City owned systems serve a more densely populated area, which typically requires less infrastructure per connection. Less infrastructure per capita results in lower operation and maintenance costs per person, which generally results in lower rates.

  A comparison of the current and proposed rates to adjoining localities has been provided at the following location:

  Water Comparison

  Sewer Comparison

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8.       Why did the PSA build the Commerce Park project if rates were going to increase?

  The Virginia Department of Health (VDH) Waterworks Regulations, section 12VAC 5-590-520, requires that community waterworks reaching 80% of the rated capacity of their source, for any three-month consecutive period, must begin plans for expansion. The PSA water treatment plant (WTP) in Draper was reaching this point and plans for expansion were considered. Expansion of the existing WTP in Draper would have left the following issues unresolved:

  Single water source leaves no alternative in the event of an emergency, as was experienced during the winter of 2010 when fluctuations in water quality and the break in the Bilsby Dam prevented normal operation of the WTP.

  A smaller diameter line along Route 11 between Dublin and Fairlawn limits the amount of water that can be transferred to Fairlawn, either for continued economic growth or emergency situations.

  A smaller diameter line along Route 100 north of Dublin limits large water users from locating at the Commerce Park near the airport.

  The Commerce Park project provided an interconnection with the City of Radford and addressed each of the three items above, while providing increased capacity, all at a lower cost than expansion of the existing WTP in Draper alone.

  The Commerce Park project connected the Pulaski County PSA to the Radford City Water Treatment Plant providing County residents with two sources of water and greatly reducing the likelihood of the 2010 water crisis.

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9.       How much did the Commerce Park project cost and how does that impact the rates?

  $4,741,000 RD Loan plus $3,003,401 EDA Grant.

  The EDA Grant was utilized for infrastructure at the Commerce Park and has no annual debt service. The RD loan requires monthly payments of $15,771, or $189,252 per year, of which the Virginias First Regional Industrial Facility Authority (VFRIFA) will pay $4,583.33 per month or $55,000 per year. The remaining $11,187.67 per month, or $134,252, is included in the annual operating budget for the water system.

  Based upon current average residential usage amounts, $1.19 per month of the $5.23 per month increase will be used to cover the cost of the Commerce Park project.

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10.   Is the financial burden of commercial development being placed on citizens?

  No, approximately 73% of the water burden and 48% of the sewer burden for increased rates is proposed to be placed on residential customers served by the PSA.

  Citizens are the primary beneficiaries of services provided by the PSA (i.e. 70% water, 38% sewer, and 50% garbage by volume).

  A larger percentage of the sewer burden is placed on residential customers for sewer, due to the relatively small number of commercial/industrial sewer customers (i.e., approximately 80 total). Distributing a larger portion of the cost to such a small number of customers would make commercial sewer rates extremely high and non-competitive with surrounding communities. The residential rate being proposed was compared to surrounding localities and is still lower than what is charged by other counties.

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11.   Do all citizens pay for water and sewer services?

  No, only residents receiving each specific service from the PSA are charged water and sewer fees, based on the gallons used or contributed to the system, respectively.

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12.   Why are rates being increased when the PSA is owed money from delinquent customers?

  Delinquencies are primarily from residents not paying their bill for garbage collection services while rate increases are needed to support water and sewer services. Fees for water and sewer are collected or service is disconnected.

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13.   What is the PSA doing about collection of delinquent accounts?

  In the past, the PSA has relied on the placement of liens on properties with the understanding that any amounts owed would eventually be paid when the property was sold, refinanced or used as collateral.

  In accordance with the Virginia State Code Section 15.2-5136, the PSA charges 10% penalty on the monthly amount owed if not paid by the 15th of the next month and 10% annual interest on the unpaid balance. The PSA has authorized a grace period waiving 100% of penalty owed and 50% of interest owed for residents paying the full amount, due either in full or in payments over several months.

  The PSA plans to follow-up the aforementioned effort by hiring an individual charged with sole responsibility for collecting past due payments.

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14.   Why are there delinquencies in the garbage collections?

  Unlike water and sewer services, it is not practical to cut off garbage collection services. First, it would be very difficult for drivers and rear workers to be able to keep up with who owed for previous bills and who did not. Second, those whose garbage service was terminated could readily take their trash to the drop center, place it with a neighbors trash or throw it over the mountain. In all of these cases, the PSA would still end up picking up the trash and it is much easier to pick up trash from the curb than once it has been dumped in an unauthorized location.

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15.   What does the PSA pay to dispose of sewer and garbage?

  Sewer costs an average of $1.72 per thousand for treatment once it reaches the Peppers Ferry Regional Wastewater Treatment Plant (PFRWTP). Additional charges apply for maintenance of the pump station and force main operated by PFRWTP, debt service, biosolids charges, and capital improvements. The total charges to PFRWTP generally average $2.80 per thousand gallons treated.

  The PSA pays $32 per ton to dispose of garbage at the New River Resource Authority Landfill located on Cloyds mountain.

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16.   Who can I call with additional questions?

  Please call the County Administration Building at 540-989-7705 and ask to speak with someone regarding the PSA Rate changes.