The Hoisington Utility Bill. A Presentation to the Utility Task Force

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1 The Hoisington Utility Bill A Presentation to the Utility Task Force

2 Today s Presentation Will Provide the Following: 1. A brief overview of a City of 2. An explanation of what the base electric rate goes toward 3. An explanation of what the rolling average goes toward 4. An explanation of how the rolling average is calculated 5. An effort to create

3 Overview of a Residential Bill: A Resident s Utility Bill Includes the Following : 1. Water 2. Water Fee 3. Sewer 4. City Electric 5. Electric Rolling Average 6. Sanitation 7. Franchise Fee 8. County Tax 9. City Tax 10. Pool Fee

4 Bill Overview: Water The Water Line of The Bill Includes the Following : 1. The Meter ID (Defines the Meter Installed on the Premise) 2. The Previous Reading 3. The Current Reading 4. The Amount Consumed (Current Read-Previous Read) 5. The Multiplier 6. The Base Charge (This is the Minimum and Includes the First Two Thousand Gallons of Water) 7. The Bill Amount: Base Charge of $16.05 plus (Amount Consumed In Excess of Two Thousand Gallons x $6.15)

5 Bill Overview: Water Fee The Water Fee Line of The Bill Includes the Following : 1. The Water Fee is billed based on consumption as required in KSA 82a-954(The State of Kansas Water Protection Fee is $0.032 per thousand gallons consumed)

6 Bill Overview: Sewer The Sewer Line of The Bill Includes the Following : 1. The Billing Determinant is based on the three month average for consumption that is established during the winter months (December, January and February) unless you are a new customer. 2. The Base Rate is $6.20 and does not include any consumption 3. The Per Unit Charge is $2.45 per thousand gallons consumed 4. The Bill Amount is the Base Charge of $6.20 plus (Amount of Water Consumed x $2.45)

7 Bill Overview: City Electric The City Electric Line Includes the Following : 1. The Meter ID (Defines the Meter Installed on the Premise) 2. The Previous Reading 3. The Current Reading 4. The Amount Consumed (Current Read-Previous Read) 5. The Multiplier 6. The Base Charge is $12.50 (This is the Minimum and Does Not Include Any Consumption) 7. The Bill Amount: Base Charge of $12.50 plus (Amount Consumed x $0.072)

8 Bill Overview: Rolling Average The Rolling Average Line Includes the Following : 1. The Amount Consumed/Billing Determinant (Identical to Consumption of City Electric): As an Example This Customer Used 1,115 kwh so the Rolling Average Charge is Multiplied by 1,115 kwh 2. The Multiplier 3. The Rolling Average Charge is calculated based on the rolling average of fees and charges from KMEA, GRDA and other production cost 4. The Bill Amount: Amount Consumed x Rolling Average Charge

9 Bill Overview: Sanitation The Sanitation Line Includes the Following : 1. The Monthly Charge for sanitation based on your consumption ($14.25 is the base rate for two poly carts once a week) 2. The Bill Amount: Monthly Charge Plus Any Additional Services (Extra Pickups, Etc.)

10 Bill Overview: Franchise Fee The Franchise Fee Line Includes the Following : 1. The Bill Amount is based on the total utility portion of the bill times five percent 2. Formula for The Bill Amount: (Total of City Electric, Electric Rolling Average, Water, Sewer & Sanitation Charges) x Five Percent

11 Bill Overview: County Tax The County Tax Line Includes the Following : 1. The Bill Amount is based on the total taxable portion of the bill multiplied by the County Sales Tax Rate 2. Formula for The Bill Amount: (Total of City Electric & Electric Rolling Average) x One Percent

12 Bill Overview: City Tax The City Tax Line Includes the Following : 1. The Bill Amount is based on the total taxable portion of the bill multiplied by the City Sales Tax Rate 2. Formula for The Bill Amount: (Total of City Electric & Electric Rolling Average) x One-Half Percent

13 Bill Overview: Pool Fee The Pool Fee Line Includes the Following : 1. The Pool Maintenance Fee is a $1.00 charge to help fund the maintenance of the swimming pool 2. The Bill Amount: $1.00 per residential living unit

14 The Electric Base Rate The Electric Base Rate Funds the Following : 1. Administration: A shared portion of the billing expenses (equipment, postage, staff, etc.) 2. Distribution: The cost of installing and maintaining the distribution network (equipment, staff, materials, etc.) 3. Generation: The cost of staffing and maintaining the power plant (equipment, staff, materials, etc.) 4. Non-Operating: Expenses such as fund transfers and the cost of servicing debt for infrastructure (cooling tower and loop project)

15 The Electric Base Rate The Electric Base Rate and Meter Charge Accounted for the Following Percentage of Electric Revenues: : 44 Percent : 48 Percent (Driven Up By Capital Outlay Expenditures) : 51 Percent (Driven Up By Significant Capital Outlay Expenditures) 4. (Estimate): 43 Percent (Reduced By a Reduction in Admin Personnel, Plant Personnel, Increasing PPA costs and Capital Outlay Expenditures)

16 The Electric Base Rate In 2009, Base Rate Expenditures Broke Down as Follows:

17 The Electric Base Rate In 2010, Base Rate Expenditures Broke Down as Follows:

18 The Electric Base Rate In 2011, Base Rate Expenditures Broke Down as Follows:

19 The Electric Base Rate In, Base Rate Expenditures Broke Down as Follows:

20 The Electric Base Rate Any Questions?

21 The Electric Rolling Average The Electric Rolling Average Funds the Following : 1. PPA Costs: Cost of Energy Purchased Through Power Purchase Agreements (Including Demand, Transmission, Spot Market, Cityto-City, Energy Purchases and Ancillary Costs) This includes our GRDA, JEC and Load Following Contracts and KMEA expenses 2. Fuel: The cost of purchasing fuel for generation (Diesel Fuel) 3. Gas and Transportation Expenses: The cost of purchasing natural gas and having it delivered to the plant to meet generation needs

22 The Electric Rolling Average The Electric Rolling Average Accounted for the Following Percentage of Electric Revenues: : 56 Percent : 52 Percent (Rising Capital Outlay Expenditures Reduced This Percentage) : 49 Percent (Driven Down By Significant Capital Outlay Expenditures) 4. (Estimate): 57 Percent (Increased By Reduced Operating Cost for Admin Personnel, Plant Personnel, Increasing PPA costs and Reduced Capital Outlay Expenditures)

23 The Electric Rolling Average Any Questions?

24 Calculating The Rolling Average The Electric Rolling Average Is Derived as Follows: 1. Cost of PPA s, Energy Costs, Generation Expenses and KMEA fees: These costs of purchasing delivered energy and producing power is totaled each month 2. Number of kwh s Sold: Our total units consumed are considered 3. Monthly Fuel Adjustment: The total cost of purchasing delivered energy and producing power is totaled and divided by the number of units sold (i.e. Total Cost is $125,000 and we sold 1,000,000 kwh of energy then the Fuel Adjustment would be $125,000 1,000,000 = $0.125)

25 Calculating The Rolling Average (Continued) 4. Stability: In an effort to reduce the volatility of the monthly fuel adjustment, the fuel adjustment was averaged over a rolling 12 month period 5. Rolling Average: The average cost of purchasing and generating energy over a 12 month period is derived by taking the total cost for energy purchase/generation over a 12 month period and dividing it by the number of kwh sold in the same 12 month period.

26 Defining The Rolling Average Rolling Average: The Average Cost of Power Purchased or Generated Over a Rolling 12- Month Period

27 The Electric Rolling Average Any Questions?

28 The Electric Rolling Average An Example w/ No City Generation

29 Rolling Average for May In May of, the following expenses and consumption helped to form the Monthly Fuel Adjustment and Rolling Average 1. KMEA Invoice: Total Cost From KMEA is $94, GRDA Invoice: Total Cost From GRDA is $20, Total kwh Consumed: 1,413,547 (Pulled From KMEA Delivered Cost Sheet) 4. Monthly Fuel Adjustment Formula: Figured by Adding KMEA Invoice to GRDA invoice ($94, $20,278.74= $114,670.55) and Dividing This Cost by Total kwh Consumed (1,413,547)

30 Rolling Average for May In May of, the following expenses and consumption helped to form the Monthly Fuel Adjustment and Rolling Average (Continued) 5. Monthly Fuel Adjustment: $114, ,413,547=$ Rolling Average: This Number is Plugged Into a Spread Sheet that totals costs from June 2011 to May along with kwh Sold during the Same Period

31 Rolling Average for May Here is What the Spreadsheet Looked Like:

32 The Electric Rolling Average An Example w/ City Generation

33 7. Monthly Fuel Adjustment Formula: ($46, $20, $15, $16, $14, = $113,789.65) Divided by Total kwh Consumed (1,227,773) 9/11/ Rolling Average for June In June of, the following expenses and consumption helped to form the Monthly Fuel Adjustment and Rolling Average 1. KMEA Invoice: Total Cost From KMEA is $46, GRDA Invoice: Total Cost From GRDA is $20, Diesel Fuel Cost: Total Costs for Diesel is $15, KMGA Gas: Total Cost for Gas is $16, KGS Transportation: Total Cost for Transportation is $14, Total kwh Consumed: 1,227,773 (Pulled From KMEA Delivered Cost Sheet)

34 Rolling Average for June In June of, the following expenses and consumption helped to form the Monthly Fuel Adjustment and Rolling Average (Continued) 8. Monthly Fuel Adjustment: $113, ,227,773=$ Rolling Average: This Number is Plugged Into a Spread Sheet that totals costs from July 2011 to June along with kwh Sold during the Same Period

35 Rolling Average for May Here is What the Spreadsheet Looked Like:

36 The Electric Rolling Average Any Questions?

37 Hoisington Electric Utility Addressing Some Frequently Asked Questions About the Electric Utility.

38 Hoisington Electric Utility Addressing Some Frequently Asked Questions: Q: Does the City just make up the rolling average to pad their pockets? A: They Do Not Pull This Number Out of Mid Air. It is Tied Directly to Units Consumed and Energy Purchase or Production Cost.

39 Hoisington Electric Utility Addressing Some Frequently Asked Questions: Q: Does the rolling average pay for benches and park improvements? A: No. The Rolling Average Pays For Electric Purchases and Electric Generation Costs.

40 Hoisington Electric Utility Addressing Some Frequently Asked Questions: Q: Why Do City Employees Get Free Utilities? A: They Don t. They Pay The Same as Any Other Hoisington Utility Customer.

41 Hoisington Electric Utility Addressing Some Frequently Asked Questions: Q: Did We Fund The Construction of the Pharmacy From the Electric Fund? A: The Pharmacy Construction Was Funded Through General Obligation Bonds That Are Serviced Annually From Capital Improvement Dollars for Economic Development Projects

42 Hoisington Electric Utility Addressing Some Frequently Asked Questions: Q: Did We Fund The Hotel or Mule Barn With Revenues From the Electric Fund? A: No.

43 Hoisington Electric Utility Addressing Some Frequently Asked Questions: Q: Has Anyone Been Given Discounted Utilities Since the Pharmacy Was Put In? A: No.

44 Hoisington Electric Utility Addressing Some Frequently Asked Questions: Q: Is the City Providing Utility Abatements to the Pharmacy? Is This Unusual? A: Yes. The City is Providing Free Utilities to the Pharmacy for Five Years (Through June of Other Entities Have Received This in The Past Including Country Place Senior Living, Country Place Home Plus and the Hospital.

45 Hoisington Electric Utility Addressing Some Frequently Asked Questions: Q: Will The City Offer Utility Abatements in the Future? A: The Governing Body Could Authorize These Abatements In The Future but I Would Recommend Against It. Such Incentives Impact Everyone s Rates in the Long Run.

46 Hoisington Electric Utility Addressing Some Frequently Asked Questions: Q: Why Can t Our Rates Be As Low as The Communities Around Us? A: It Could be Argued They Are. The Electric Utility Helps to Pay For a Number of Services The City Would Have to Fund Through Tax Levy if They Were Not Built Into Rates.

47 Hoisington Electric Utility What Does Our Electric Rate Cover? Your Rates Also Provide for the Following: Street Lights $40,000 to 50,000/Year Christmas Lights Admin. and Billing Expenses $215,000/Year Distribution Service and Line Maintenance Power Plant Lighting of Ball Parks Power for City Facilities Electric Inspector Debt Service on Infrastructure Responsiveness

48 Utility Task Force Presentation Any Other Questions?

49 The Hoisington Utility Bill A Presentation to the Utility Task Force

50 The Hoisington Utility Task Force Other Topics For Future Meetings?

51 The Hoisington Utility Task Force A Presentation to the Utility Task Force

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