City of Detroit
Water and Sewerage
Department
Wholesale Customer Rates Meeting
Water Supply System
Meeting #1 – Capital Improvement
Program Summary
October 13, 2009
T FG
THE FOSTER GROUP
The 3 Fundamental Steps in
the Water Rate Methodology
• Revenue Requirement Projections
How Much Money is Needed?
• Cost of Service Analysis
From Whom Should the Money be
Collected?
• Design of Recommended Rates
How Should DWSD Services be Priced?
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Page 2
T FG
THE FOSTER GROUP
Customer Rate Season Schedule
• This is the first of a series of meetings
 10/13 –Capital Improvement Program
Presentation
 11/19 – Units of Service, Preliminary SYSTEM
Revenue Levels
 12/17 – Preliminary Cost Allocations to Customers
 1/21/2010 – Preliminary Individual Rate Proposals
 2/24/2010 – BOWC Public Hearing
 3/ /2010 – City Council Public Hearing
 7/1/2010 – Effective Date for Rates
• Parallel meetings of TAC Work Groups
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Page 3
T FG
THE FOSTER GROUP
Information Portals
• DWSD web site
 www.dwsd.org
 Customer Information / “Wholesale Customers
Season Rate Schedule”
• eroom
 For information contact Teresa Newman
 teresa@projectinnovations.com
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Page 4
T FG
THE FOSTER GROUP
Today’s Agenda
• Overview of Rate Rollout schedule for FY
2010-11 Rates
• Summary observations of July 2009 Capital
Improvement Program (CIP)
• Report out on Master Plan Visioning Process
• Q&A on specific projects in CIP
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Page 5
T FG
THE FOSTER GROUP
Detroit Water & Sewerage
Department
Capital Improvement Program
Statistics – Water Supply System
T FG
THE FOSTER GROUP
DWSD CIP Statistics – Water
Supply System
• During the 1990s, DWSD invested approximately
•
•
•
$455 million (~$45 million annually) in capital
improvements to the water system
During the 2000’s, the corresponding figure is
$1.56 billion (~$156 million annually)
The July 2008 CIP called for an additional $1.7
billion over 5 years (~$340 million annually)
The updated July 2009 5-year CIP anticipates the
need for just over $1.0 billion (~$200 million
annually)
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T FG
THE FOSTER GROUP
Annual Capital Improvement Investments
Water Supply System – ($ millions)
350
300
250
200
150
100
50
0
1987
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1990
1993
1996
1999
Projected
2002
Actual
2005
2008
2011
T FG
2014
THE FOSTER GROUP
Annual Capital Improvement Investments
Water Supply System – ($ millions)
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Page 9
T FG
THE FOSTER GROUP
Water Supply System Capital
Improvement Program
• Criteria in Report
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Page 10
 Primary Project Purpose
 System Reliability
 SDWA Water Quality Compliance
 Efficiency Measures
 Growth to New Service Areas
 Function
 Aligns with rate development categories
 Allocation Status
 Detroit only, Suburban only, common to all
 Allocation Basis
 Units used to allocate to customers
T FG
THE FOSTER GROUP
Water Supply System CIP - FUNDED
Financing Requirement Summary
SDWA - Water Quality Compliance
Maintain / Improve System Reliability
Implement Efficiency Measures
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Page 11
Expansion - Serve New Areas
T FG
THE FOSTER GROUP
Water Supply System CIP - FUNDED
Financing Requirement Summary
10/13/09
Page 12
T FG
THE FOSTER GROUP
Water Supply System CIP Comparison
July 2009 vs. July 2008– ($ millions)
450
400
350
300
250
200
150
100
50
0
2010
10/13/09
Page 13
2011
Last Year
2012
This Year
2013
2014
T FG
THE FOSTER GROUP
DWSD CIP Observations – Water
Supply System
• Dramatic reductions throughout
• 2-year Funding Window:
 37% of Prior CIP
 Reflects reduction of over $537 million
• FLOTS – deferred beyond 5-year planning
•
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window pending resolution of ongoing
discussions with Flint & Genesee County
NOTS – deferred beyond 2-year funding
window, anticipated construction contract
advertisement Fall 2011
T FG
THE FOSTER GROUP
DWSD CIP Observations – Water
Supply System
• Other minor adjustments – moderate delays
 Ready Road Pump Station and Reservoir (Land
Acquisition
 Chesterfield/Snover Pump Station and Reservoir
 24 Mile Rd Main Foss to Fairchild
 Will follow Chesterfield/Snover project
10/13/09
Page 15
T FG
THE FOSTER GROUP
Sample Capital Cost Recovery for
DWSD Infrastructure Investment
$10
Annual Revenue Req's - millions
$8
$6
$4
$2
$0
($2)
($4)
1
6
11 16 21 26 31 36 41 46 51 56 61 66
System Cash
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Suburban Utility
City Cash
T FG
THE FOSTER GROUP