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Water Rates
Annual Review

            

            RR Springs Tank 2 2014.JPG
            
          FY14-New Water Storage Reservoir
           

The City of Flagstaff annually reviews the revenue requirements for the upcoming year by analyzing projected revenues under existing rates. The City of Flagstaff Utilities and finance staff, in conjunction with an independent rate consultant has prepared the following rate and fee study.


Water Sewer, and Reclaimed Water Rate Study
The City of Flagstaff, Utilities Department is in the process of hiring a consultant to prepare an economic model, a complete analysis, and resulting recommendations for its rate and charges for water, wastewater, and reclaimed water and utilities development impact fees. The goal of the analysis is to develop a rate and impact fee structure that ensured 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 19,700 water service connections and maintains 424 miles of potable water main on thirteen major reservoirs operating on five distinct pressure zones. There are two wastewater treatment plants that serve a combined population of approximately 67,000 residents. The City maintains 270 miles of gravity flow sanitary sewer. Additionally the Department maintains about 24 miles of Class A reclaimed water main.


Why do a Rate Study?
The main reason is insufficient funds to meet the rising costs for needed improvements to city water, sewer and reclaimed water infrastructure (plants, pipelines, reservoirs, pump station equipment and wells). For example, the City’s 117-year old water system needs $29 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 below shows the aging water pipeline by decade in the City.

Aging Waterlines by Decade
Aging Water and Sewer Infrastructure

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

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 424 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 two 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, Old Town Plaza Vieja, Coconino Estates, Bow and Arrow, Lower Greenlaw and Sunnyside neighborhoods in town.

The Utilities department plans to 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


Schedule for Rate Study -2014
Date
Meeting
January
Selection of Rate Consultant
February-March Rate Analysis-Revenue Requirements
March-April
Rate Analysis-Cost of Service Analysis
April-June Presentations to Water Commission
        
May-June
Calculation of Utility Rates-Final report
May-Aug
Open House - Public Presentation on Rates and Capacity fees
June-Aug
Presentation to Chamber of Commerce, Top Users
August
City Council Work Session- Presentation and Public Comment on Rate Study
September
Date TBD
City Council Meeting 5:30 pm - Public Hearing, First Reading of Ordinance and Resolution
September Date TBD City Council Meeting 5:30 pm - Final Reading of Ordinance & Resolution and Adoption

























































Comparison of Monthly Rates -7500 gal per month