HomeMy WebLinkAbout1998 05 11 Public Hearings Item A
~COMMISSION AGENDA
IT1EM
A
CONSENT
INFORMATIONAL
PUBLIC HEARING X
REGULAR
May 11, 1998
Meeting
MGR j}vvt IDEPT /~
Authorization
REQUEST: Utility ])epartment Requesting Approval of the First Reading of Ordinance
#702 Updating the Potable Water Irrigation Rates
PURPOSE: The purpose of this Board item is to authorize the first reading of Ordinance #702
which modifies the potable water irrigation rates for large users as well as policies
and procedures relating to billing, payment, and delinquency procedures, deposit
and application fees, and stormwater deposit requirements.
CONSIDERATIONS:
This ordinance is needed to correct inequities between large and small irrigation
users created by the implementation ofthe water conservation rates adopted in 1996. In
addition, it was desirable to review several policies and procedures which needed to be
improved. A workshop was held on March 30, 1998 to review the recommendations of
the consultant hired to perform this work, Public Resources Management Group.
Additional information was requested at the workshop regarding the level of rates
charged and whether there should be a prior year adjustment for irrigation customers with
2" irrigation meters. Mr. Ori's response letter is attached and we concur with his
recommendations as follows:
a. Adopt the proposed rates included in Ordinance #702 to attenuate the
rate shock for the large irrigation users, and
b. Not to retroactively apply credits for this rate change.
May 11, 1998
Regular Agenda Item A
Page 2
ISSUE ANALYSIS:
The rates proposed in ordinance #702 corrects the inequity between master
metered irrigation customers and individually metered irrigation service. The block rates
adopted in 1996 were developed for 2" and smaller irrigation meters. The master
irrigation meters only were installed for developments which had reclaimed water
systems which needed an interim connection to the potable water system until reclaimed
was available.
A comparison of the proposed rates in Ordinance #702 versus the altemative rates
considered at the workshop is attached in the PRMG April 24, 1998 letter. The rate
shock increases approximately an additional 50% if the altemative rates are adopted. A
more detailed review of the issues considered in the rate analysis and customer service
review are included in the August 13, 1997 PRMG report which is also attached. A
summary ofthe comparison ofthe different rates is as follows;
Usage Charge (per 1,000 gallons)
(I - 5,000
5,001 -10,000
l' 0,001 - 15,000
1'5,001 - 20,000
20,001 - 25,000
25,001 - 30,000
Above 30,000
Current
$0.91
$0.91
$0.91
$0.91
$0.91
$0.91
$0.91
Proposed
$0.91
$0.91
$1.25
$1.50
$1.75
$2.00
$2.50
Alternative
$1.25
$1.50
$1.75
$2.00
$2.25
$2.50
$2.50
If the alternative rate is chosen, the fate table would be replaced under the General
Lrrigation Meter Service of Sec. 19-102 of Ordinance #702.
FUNDING:
No funding is needed at this time. The adoption of Ordinance #702 could
generate additional water revenues of $150,000 to $200,000 per year. However, there
May 11, 1998
Regular Agenda Item A
Page 3
will be a net decrease of revenues when these systems connect to the reclaimed water
system and the ERC factors are applied to the other irrigation meters.
RECOMMENDATION:
It is recommended that the first reading of Ordinance #702 which modifies
the potable water irrigation rates for large users as well as policies and procedures
relating to billing, payment, and delinquency procedures, deposit and application
fees, and stormwater deposit requirements be approved.
IMPLEMENTATION SCHEDULE:
The second reading of Ordinance #702 will be scheduled for the June 8, 1998 City
Commission m(~eting. The subdivisions of Howell Creek Reserve, Eagles Watch, Creeks
Run, and Grand Reserve will be notified in writing of the proposed changes.
ATTACHMENTS:
1. Ordinance #702
2. PRMG Workshop Response
3. PRMG Irrigation Rate Structure Review
4. PRMG Customer Service Review
COMMISSION ACT][ON:
Attachment No. 1
ORDINANCE NO. 702
AN ORDINANCE OF THE CITY OF WINTER SPRINGS, FLORIDA,
AMENDING SEC. 19-97 BILLING, PAYMENT, DELINQUENCY, SEC. 19-98 APPEALS,
SEe. 19-99 ANNUAL RATE REVIEW, SEe. 19-100 APPLICATION REQUIREMENTS, SEC.
19-101 OFFICE HOUF~S, SEC. 19-102(1) USER CHARGE SCHEDULE, MONTHLY WATER
SERVICE RATES, SEC. 19-102(6) USER CHARGE SCHEDULE, MISCELLANEOUS
CHARGES, AND SEe. 19-165(e) BILLING, PAYMENT, PENALTIES AND ENFORCEMENT,
GENERAL OF ARTICLE IT, CHAPTER 19, DN. 4 RATES, FEES AND CHARGES; AND
ARTICLE V, CHAPTER 19, STORMWATER MANAGEMENT UTILITY PROVIDING FOR
SEVERABILITY, CONFLICTS AND EFFECTNE DATE.
'NHEREAS, the City Commission of the City of Winter Springs, Florida,
has determined it to be in the best interest of the safety, health, and welfare of the citizens of the
City of Winter Springs to provide for the adoption of Rates, Fees and Charges relating to water and
wastewater and
WHEREAS, it is necessary to update these Codes from time to time.
NOW THEREFORE, BE IT ORDAINED BY THE CITY COMMISSION OF
THE CITY OF WINTER SPRINGS, FLORIDA:
SECTION I That Sec. 19-97 Billing, payment, delinquency, is hereby deleted in its
entirety, and the followmg replaced therefore;
Sec. 19..97. Billing, payment, delinquency. Users of the water and wastewater
treatment and fresflv;atof distribution system shall be billed monthly and payment shall be due ~
receipt of the bill whe[l rendered. A If payment is not received by the City in full within tffifty-
~ twenty (20) day:; from the date of mailing, the bill shall be unpaid amount is to be
considered to be in arrears and shall be considered delinquent. If there is an arrearage
amount due when the next monthly bill is printed, a late fee will be assessed at the rate of five
percent (5%) per mOlllth on the arrearage amount or five dollars ($5.00), whichever amount is
greater. The customer shall be notified of the delinquent amount shall be ine111ded along with
the late fee charges by reference in the next months billing or specific notification as considered
necessary by the City Manager or his designee. If the entire bill is not paid in full within flfteeft
f-81 ten (10) days from the date of mailing of the second bill, service shall be discontinued. A fee
of twenty dollars ($20.00) ten dollars ($10.00) shall be assessed to reinstate service, and a fee of
twenty five dollars ($25:001 thirty dollars ($30.00) shall be assessed for reinstallment of a meter if
removed for nonpayment or unable to lock-off. A fee of twenty dollars ($20.00) shall be assessed
for each check returned for insufficient funds or closed account. Any customer who has two (2)
returned checks within a six-month period will be required to make payment in cash or money
order.
SECTION II That Sec. 19-98. Appeals is hereby deleted in its entirety, and the
following replaced therefore;
Sec. 19-918 Appeals.
(a) Any user who feels his user charge their monthly bill for water and sewer service is
unjust and inequitable may make written application to the City Manager or his designee
requesting a review of his llser eharge their monthly bill within ten (10) days after the date of
rendering the bill by the City. The written request shall, v.vneFl neeessary, at a minimum, show
the basis of the adjustment, including the actual or estimated average flow of his wastO'.vater or
freshwater the water and sewer use in comparison to the amount upon which the charge is based
and include a statement explaining the methods used in calculating the measurements or estimates
for the f:Hs appeal.
(b) The City Manager or his designee shall review the request and, if substantiated, the
monthly bill user ehBi'ge-for that user shall be recomputed based on the revised flow data and the
new charge shall be adjusted on the next bill. The decision of the city manager may be appealed to
the city commission whose decision shall be final and binding.
SECTION III That Sec. 19-99(b). Annual Rate Review is hereby deleted in its
entirety, and the following replaced therefore;
Sec. 19-~~9 Annual Rate Review.
(b) The city shall notify each user at least annually of the rate being charged for operation, and
maintenance, and replacement including debt service and depreciation of the water and sewer
utility 'NastCy/ater treatment ',vorks and freshwater distribution system.
SECTION IV That Sec. 19-1 OO(b )(1). Application Requirements, Residential Users
is revised by the following;
Sec. 19-100 Application Requirements.
(b)(l) Residential users .....The deposit fee shall accrue interest at the a rate efnot to exceed six (6)
percent per annum as dl~termined periodically by the City Manager or his designee, and shall
be paid annually by thl~ applicant. Upon completion.....six (6) months or less.
The residential deposits will be based on the services provided by the City to such residence.
The following deposit schedule shall apply:
Residential
Deposit Amount (*)
Water Only Service
$25.00
Sewer Only Service
Water and Sewer Service
$65.00
$90.00
(*) Reflects deposit fOlr water and wastewater service only; other deposits for services billed
on the utility bill, if any, are in addition to the above-referenced deposits. An inspection fee
shall be assessed at application and for each connection when applicable; refer to miscellaneous
charges, section 19-1 02( 5)c.
SECTION V That Sec. 19-100(b)(2). Application Requirements, Nonresidential
users. is revised by the following;
(b )(2) Nonresidential users. ... The deposit fee shall accrue interest at the a rate not to exceed &f six
(6) percent per annum as determined by the City Manager or his designee, and shall be paid
'<'{hen scrvicc is tcrmina:teth annually to the applicant. The deposit shall be held for the term of
service. When service is terminated, the deposit plus interest less any outstanding fees and
charges shall be refunded to the user. There will be no interest refunded on any account in service
six (6) months or less.
The deposit shall be equal to two (2) times the average monthly bill for service as determined
by the City Manager or his designee, but in no event shall the deposit be less than $200.00.
SECTION VI That Sec. 19-101. Office Hours is revised by the following;
Sec. 19-101 Office Hours.
(a) The business office is located at One North Fairfax Avenl:le, 1126 East State Road 434, Winter
Springs, Florida. It is open ...
SECTION VII That Sec. 19-102(1) User charge schedule, general, monthly water
service rates is hereby deleted in its entirety, and the following replaced therefore:
Sec. ] 9-102. User charge schedule, general.
The following rates and charges shall apply to all systems unless otherwise specifically stated:
1. Monthly water service rates. The monthly water rate shall include the sum of the base
facility charge plus a volume charge per one thousand (1,000) gallons or a fraction thereof of
metered water consumption as set forth below:
Monthly
Charge
Individually Metered Residential Service:
Base Facility Charge
All meter sizes...................................................... ..$3.58
Charge per
Thousand (1,000) Gallons
Volume Charge - Domestic Service (gallons)
0-10,000 ................................................................ .$0.91
10,001-15,,000 ......................................................... .1.25
15,001-20,,000 ......................................................... .1.50
20,001-25,,000 ........................................................ ..1. 7 5
25,001- 30,,000 ......................................................... .2. 00
Over 30,000............................................................. .2.50
Volume Charge - Irrigation Service (gallons) [*]
0-5,000 .................................................................. .$1.25
5,001-10,000 ..................................... ..................... ..1.50
10,001-15,000 ......................................................... .1. 7 5
15,001-20,000 ........................................................ ..2. 00
Over 20,000............................................................ ..2.50
[*] Reflects water use for residential irrigation service which is metered in addition to
domestic service from a single service connection to water system. For those customers
which receive dual metered service from a single service connection, the Base Facility
Charge will only be applied to Domestic Service (one charge per service connection).
ERC Factor
Monthly
Charge
Master Metered R4~sidential
and Non Residential Service:
Base Facility Charge (meter size)
5/8 x 3/4 and 3/4 inch..................... 1.0 ..................$3.58
1 inch.............................................. 2.5 ....................8.94
1 1/2 inch........................................ 5.0..................17.89
2 inch.............................................. 8.0.. ................28.62
3 inch............................................ 16.0.............. ....57.23
4 inch.. ...... ....................................25.0................. .89.50
6 inch............................................ 50.0................178.85
Volume Charge - Domestic Service per 1,000 gallons..0.91
V olume Charge - Irrigation Service per ERC (gallons) [*]
0-5,000 .................................................................. .$1.25
5,001-10,000 ........................................................... .1.50
10,001-15,000 ......................................................... .1. 7 5
15,001-20,000 ........................................................ ..2.00
Over 20,000............................................................. .2.50
[*] For those customers which receive both individually metered domestic and
irrigation service from a single service connection, the Base Facility Charge will
only be applied to Domestic Service (one charge per service connection).
ERC Factor
Monthly
Charge
General Irrigation Meter Service: [*]
Base Facility Charge (meter size)
5/8 x 3/4 and 3/4 inch..................... 1.0..................$3.58
1 inch......, ....................................... 2.5....................8.94
1 1/2 inch........................................ 5.0 ..................17.89
2 inch.............................................. 8.0................ ..28 .62
3 inch............................................ 16.0..................57.23
4 inch............................................ 25.0................. .89.50
6 inch............................................ 50.0 ................1 78.85
Charge per
Thousand (LOOO) Gallons
V olume Charge per ERC
0-10,000 ................................................................ .$0.91
10,001-15,000 ......................................................... .1.25
15,001-20,000 ......................................................... .1.50
20,001-25,000 ........................................................ ..1. 75
25,001-30,000 ......................................................... .2.00
Over 30,000............................................................. .2.50
[*] Reflects water use for irrigation service which is metered from a separate and
distinct selvice connection to the water system.
The base facility charge: is the minimum monthly charge applied in each account and will not be
assessed if the service is discontinued.
SECTION VIII That Sec. 19-102(6) User charge schedule, general, miscellaneous
charges is revised as follows;
Sec. 19-102 User charge schedule, general.
(6) Miscellaneous Charges:
a. Reinstatement fee...
b. Fee or charge:...
c. Inspection fee...
d. Fee for all checks returned...
e. Application fee
f. Reinstallation....
g. Pretreatment.....
lr. Dcposit fcc 1Uf rcsidential users.....$65.00
$10.00
$50.00
$20.00
$20.00
$10.00
$25.00
$20.00
$15.00
t:- Dcposit fec for nOEfcsidential users.$200.00
.th. Capacity .....
It-i. Television.....
SECTION IX That Sec. 19-165. Billing, payment, penalties and enforcement of
Article V. Stormwater Management Utility is revised as follows;
Sec. 19-165. Billing, payment, penalties and enforcement
(e) The owner of developed property that is not served by City water and sewer shall not be
required to pay the city a stormwater management utility fee deposit. in an amount equi';alent to
one (I) year of fees f()r his property. The deposit may be adjusted in acwrdance \vith any
applicable f{)e credit an provided for herein. If said owner fails to pay this f{)e according to
statement as pro','ided herein, then a prorata shan:! of the deposit shall be deducted to compensate
for the delinquent fee. The property ovmer .,.lill be reqHired to reestablish the deposit to the
appropriate monetary S1:lffi equivalent to one (1) yeM of utility f{)es.
SECTION X - CONFLICTS. All ordinances or parts of ordinances in conflict
herewith being the same are hereby repealed.
SECTION XI - SEVERABILITY. If any section or portion of a section or
subsection of this ordinance proves to be invalid, unlawful or unconstitutional it shall not be held to
invalidate or impair the validity, force or effect of any other section or portion of section or
subsection or part of this Ordinance.
SECTION XII - EFFECTIVE DATE. This ordinance shall become effective
immediately upon its passage and adoption.
CITY OF WINTER SPRINGS, FLORIDA
PAUL P. PARTYKA, MAYOR
ATTEST:
CITY CLERK
First Reading
Posted
Second Reading and Public Hearing
Attachment No. 2
m IPubllc Resources Management Group, Inc.
~ Utility, Rate, Financial and Management Consultants
April 24, 1998
PRMG #1060-02
Kipton D. Lockcuff, P.E.
Director of Utilities
City of Winter Springs
110 N. Flamingo Ave.
Winter Springs, FL 32708
SUBJECT: Large User Irrigation Rates
Dear Kip:
During the presentation of the large user inigation rates at the March 30, 1998 City Commission
public workshop, there were some issues raised regarding the level of rates charged and whether
there should be any prior. year adjustment to certain irrigation customers as a result of the
proposed rate adjustment. The purpose of this letter is to provide the City with additional
information and PRMG's recommendations relative to these issues.
The first issue raised by the City Commission dealt with the rate structure and the application of
the user charges by consumption block. As was presented at the workshop, PRMG
recommended using the CUlTent rate block, currently applicable to the residential class as
opposed to the cunent :lrrigation blocks for dual use (indoor and outdoor) customers. Essentially,
this modified consumption block was recommended to be applied to "irrigation only" accounts
(accounts with no domestic or "indoor:' use) in order to reduce some of the rate shock to
ilTigation customers who are currently paying a flat rate for service; Also, we further
recommended that a base facility charge be .charged to these customers to recover certain fixed
and billing costs which provided for additional cost recovery. During the workshop, the City
Commission requested information regarding a modified structure consistent with the current
residential irrigation rates [where a residence would be considered as one (1) ERU]. The existing
PRMG proposal and City Commission alternative rates for irrigation only service are
summarized below (emphasis is on the consumption usage blocks) for the large metered
customers (the homeowner associations).
225 SOUTH SWOOPE AVENUE . SUITE 211 . MAITLAND, FL 32751
TELEPHONE (407) 628-2600 . FAX (407) 628-5884
Kipton D. Lockcuff, P.E.
April 24, 1998
Page 2
Current
(per account) [*]
Base Facility Charge N/A
Usage Charge (per 1,000 gallons)
0-5,000 $0.91
5,001 - 10,000 0.91
10,001 - 15,000 0.91
15,001 - 20,000 0.91
20,001 - 25,000 . 0.91
25,001 - 30,000 0.91
Above 30,000 0.91
Month]y Rates
PRMG Proposal
(per ERC) [*]
Varies by meter [*]
City Commission Alt.
(per ERe) [*]
Varies by meter [*]
$0.91
0.91
1.25
1.50
1.75
2.00
2.50
$1.25
1.50
1.75
2.00
2.50
2.50
2.50
[*] Rate for large users (4") irrigation customers (reflects the homeowner associations) is
$89.50 per month.
Based on the change in the pricing of the water consumption blocks as discussed at the City
Commission workshop, the 'rate impact would be higher than initially proposed by PRMG
(without any use reduction to price elasticity which could result due to the imposition of a rate
increase) as shown on the following table.
Average Monthly Water Use (gallons) [I]
Computed Annual Water Charges
Existing Ra1;es
Homeowners Association
Eagles Watch Grand Reserve Howell Creek
757,583. ]30,058 947,050
Initial PRMG Proposed Rates
Difference
Percent
$8,272.81 $1,420.24 $10,341.79
$14,491.18 $2,524.97 $19,703.60
$6,218.37 $],104.73 $9,361.81
75.2% 77.8% 90.5%
$18,551.50 $3,198.40 . $24,235.50
$10,278.69 $1,778.16 $13,893.71
.124.2% 125.2% 134.3%
Commission Workshop Alternative
Rates
Difference
. Percent
[I] Reflects ave:rage use for twelve (12) month period ended March 1997 as provided by City.
As shown above, the rate impact assuming the same irrigation rate structure (for consumption) as
that for "dual service" customers is significant, approximately 125% of cunent charges. Because
of this increase in the monthly bill for service (rate shock), PRMG recommended the alternative
rate structure which places all customers essentially on an equal basis yet still promotes the water
conservation goals of the St. John's River Water ManagementDistrict. We still believe that this
isthe best alternative based on the current rate structure of the City.
Kipton D. Lockcuff, P.E.
April 24, 1998
Page 3
In order to place all individually metered irrigation customers on a consistent basis, PRMG
recommended that all customers with the same. type of service be placed on the proposed
irrigation rate. Currently, it is our understanding that there are se,:eral irrigation only customers
which pay the current irrigation rate which does not differentiate between the capacity
requirements of such ,customer (i.e., a 5/8" meter customer pays same rate as a 3" customer).
Recognizing the change in rate application will result in some of the customers experiencing a
decrease in the monthly bill. This can be seen by the following hypothetical example.
Base Facility Charge
Consumption Charge
Total
2" Metered Service - 50,000 Gallons of Monthly Use
Current Rate . PRMG Proposed
Application Rate Application
$ $28.62
$107.50 :LU!l
$107.50 $74.12
Difference
($28.62)
(QbQQ)
$33.38
This change in rate application will place all individually metered customers on a uniform rate
basis which we believe is more defensible, Additionally, since the City has historically applied
its current rate ordinance uniformly to these customers and it is not proper to retroactively apply
credits since the existing rates were based on certain. rate principles determined as being
reasonable by the City Commission at the time of adoption, I would not recommend the City
determine any retroactive credits for this rate change. Additionally, if the charge were in place,
invariably the consumption for irrigation purposes would have been different.
I hope this addressees the concerns raised by the Gity Commission at the March 30, 1998 public
workshop. If you have any questions or comments regarding the information presented herein or
our recommendations to the City, please do not hesitate to give usa call. Furthermore, if you
need us to attend the next public hearing on this issue, please let us know.
Very truly yours,
Public Resources Management Group, Inc.
ld,JO:
Robert J. Or,i
President
cc: Ro~ald W. McLemore, City Manager, City of Winter Springs
Harry E. Martin, Finance Director, City of Winter Springs
. Terry Zaudtke, Conklin Porter & Holmes Engineers
l060-02/lock2.let
Attachment No. 3
fB
Public Resources Management Group, Inc.
Utility, Rate, Financial and Management Consultants
August 13, 1997
PRMG #1060-01
Mr. Ronald W. McLemore
City Manager
City of Winter Springs
1126 East S.R. 434
Winter Springs,FL 32708
SUBJECT: Irrigatiol1l Rate Structure Review
Dear Ron:
As requested by the City of Winter Springs (the "City"), Public Resources Management Group,
Inc. (PRMG) has performed a review of the water service rate structure associated with irrigation
meters which is included in Section 19-102 of the Winter Springs ~ode of Ordinances. The
purpose of our review of the irrigation meter service was to .evaluate the applicability of the
existing structure to the various users of such service and to offer recommendations to the City
which would meet the City's objectives of rate equitability, revenue stability, and the promotion
of the conservation of water in accordance with the policies established by the St. Johns River
Water Management District (SJRWMD) as part of the water use permitting process. This letter
summarizes the results of our review and recon1mendations for revision to the structure of the
water rates for irrigation meter service for the City' s consideration.
Existing Rates
The current rates for irrigation meter service were approved by the City pursuant to
Ordinance No. 617 and became effective with bill.s rendered on and after June 1996 (the "Rate
Ordinance"). Based on our review of the City's ordinances and discussions with City staff, the
primary purpose of Ordinance No. 617 was to modify the water conservation based rate structure
in order to increase the number of conservation blocks and promote greater pricing incentives to
meet the conservation goals of the SJRWMD. The Ordinance did not effectuate a rate increase
(i.e., the monthly rate for the water base facility charge and first and primary use consumption
block did not change nor were the sewer rates adjusted), however an increase in revenue could
have resulted due to the change in pricing imposed by the City for excessive water use by some
of the City's water customers. It should be noted that the City adopted the water conservation
based rate structure pursuant to Ordinance No. 563 on July 11, 1994 in order to meet the
Consumptive Use Permit (CUP) requirements of the SJRWMD which mandated the adoption of
a conservation based rate structure. It is our understanding that the last rate adjustment designed
to increase the revenues of the System was adopted by the City on December 14, 1992 pursuant
225 SOUTH SWOOPE AVENUE. SUITE 211 . MAITLAND, FL 32751
TELEPHONE (407) 628-2600 . F.AX (407) 628-5884
Mr. Ronald W. McLemore
August 13, 1997
Page 2
to Ordinance No. 538 or approximately 5 years ago. With respect to the current rates for
irrigation metered service, the rates (and inverted rate structure to promote water conservation)
have been in effect for j list over one year. A summary of the current irrigation meter service
rates are summarized below:
Base Facility Charge
Usage Charge (rate per 1,000 gallons of service)
o - 5,000 gallons .
5,00 I - 10,000 gallons
10,00 I - 15,000 gallons
15,00 I - 20,000 gallons
Over 20,000 gallons
Irrigation Meter Service Rates
N/A [I]
$1.25
$1.50
$1.75
$2.00
$2..50
(1] No base faci::ity is currently charged since assumed service is provided from a single point of
connection and is assumed to be in addition to Domestic (primarily indoor) water use.
Based on discussions with the City, a major issue regarding the irrigation meter service rate deals
with the applicability of such rate to the various irrigation customers located throughout the
City's service area. Specifically, it is our understanding that the rate was primarily intended to
be applicable to those individually metered residential customers who ,have a dual meter for both
domestic and irrigation service. The City, however, has several general service irrigation
customers which use potable water exclusively for common area and greenspace irrigation. The
rate is applied to all general service irrigation customers, regardless of service demand or
capacity reservations on the same basis as the residential irrigation service. When the City
attempted to apply this rate to such general service customers, it became evident to both the City
and certain of the affected customers that the rate structure was not adequate. Specifically,
several customers served by larger meters (say above 2 inches) were concerned that since they
used large volumes of water that the majority of the use would be priced in the last consumption
block which was thought to be unfair. Due to these concerns, the City revised the rate
application to certain CU:3tomers receiving irrigation service. Specifically, the City currently
charges the standard volume charge of $0.91 per 1,000 gallons for all metered water
consumption associated with general irrigation seryices for several homeowner associations
(which are large users of water and are all served by a 4 inch service). All other general service
customers are still being charged the irrigation rate as referenced in the Rate Ordinance. Thus,
there exists an apparent inequity in rate application among those customers which receive
irrigation service. Furthermore, the City has recognized that this type of service has been
designated by the SJRWMD as being non-essential and should be targeted with a pricing
incentive to promote the conservation of water. As a result, the City requested that PRMG
review the current irrigation meter rates and suggest revisions to the applicability provisions of
such rates to meet the overall goals and objectives of the City.
Mr. Ronald W. McLemore
August 13, 1997
Page 3
Rate Structure AlternaHve
Based on discussions with the City, there exists three types of customer classes which receive
irrigation meter service. These three classes include: i) separately metered irrigation service for
residential customers which have a single service line with dual metering facilities to measure
domestic (indoor) use and irrigation (outdoor) use ("residential irrigation meters"); ii) general
irrigation service which has a single service line with dual metering facilities similar to what was
discussed above for the residential irrigation service; and iii) general service irrigation which
includes a separate service distinct [rom any domestic use ("general irrigation meters"). General
irrigation meters (single service) are used primarily by such customers as homeowner
associations for common area or greenspace irrigation. It is recommended that the City
recognize these three distinct classes of service in the Rate Ordinance and charge rates
accordingly to the level of service requested by such customers. The following is a discussion of
the recommended rate stmcture for these three classes of irrigation service.
Residential Irrigation Meters - This class of customer essentially consists of one service serving
the account with two meters, the first being a domestic meter to measure indoor use and the
second being a separate irrigation meter to measure "water-only" use primarily for outdoor
irrigation used at the cus':omers' convenience (i.e., serves as a "deduct" meter for sewer charge
determination). According to the City, the majority of dual service irrigation meters are for
residential use. For the purposes of "pricing" this service, we agree with the current rate
methodology of the City which recognizes this use as an addition to the indoor use and priced at
the higher rates. Essentially, this rate structure places all residential customers generally on an
equivalent basis relative 1:0 the charging for water consumption. This is shown in the example
below for a hypothetical residential customer with 5,000 gallons of domestic use and 15,000
gallons of irrigation use {total of 20,000 gallons. of monthly water service which is a common
usage relationship based on our experience). .
Mr. Ronald W. McLemore
August 13, 1997
Page 4
Rate Component
Base Facility Charge
Residential Customer Monthly Utility Bill at Assumed
20,000 Gallons of Use
Water Only. Use Water and Sewer Use
Individually Dual Individually Dual
Metered Meter Metered Meter
$3.58 $3.58 $10.23 $10.23
Residential Use
First Block
Second Block
Third Block
o to 10,000 gallons
10,001 to 15,000 gallons
15,001 to 20,000 gallons
$9.10 $4.55 $35.00 ["'] $17.50 ["']
$6.25 $6.25
$7.50 $7.50
$6.25 $6.25
$7.50 $7.50
llJ2 Slll
$lMl llMl ~ $50.23
Irrigation Use
First Block
Second Block
Third Block
o to 5,000 gallons
5,001 to 10,000 gallons
10,001 to 15,000 gallons
Total Monthly :Bill
["'] Includes wastewater flow charge based on metered water consumption registered through domestic use
meter.
As can be seen in the above example, the dual metered customer which receives water only
service actually pays a higher charge due simply to the shift in water use among the consumption
blocks. However, the dual metered customer would avoid wastewater usage charges (if any)
which may have been billed for irrigation service received which would have occurred within the
wastewater biiling threshold (use above the domestic needs) which would not be the case with
the individually metered customer. We are of the opinion that the "layering" of the usage rates
for dual metered residential customers is reasonable and should not be modified at this time.
Since the residential customers are considered as 1 ERe for the capacity reservation process
associated with the application of the service availability charges, any flow above the threshold
use of the ERe factor should be targeted with the water conservation rates. Based on the Rate
Ordinance, an ERC is equivalent to 350 gallons of daily use or approximately 10,500 gallons per
month. Since the first block of the domestic use is for use from 0 to 10,000 gallons, any
irrigation use should be priced at the next increment of service which is how the current City
rates are structured. We agree with the current structure for residential customer pricing and
recommend that the City make a modification to the Rate Ordinance to specifically identify the
rates for irrigation use as residential irrigation meter service.
Non-Residential Irrigation Service - Based on discussions with the City staff, we were made
aware that there are some: instances where a single, service with a dual metering capability has
been installed for a non-residential or commercial account. Since the service demands and type
of metering configuration are the same as discussed for the Residential Irrigation Service above,
Mr. Ronald W. McLemore
August 13, 1997
Page 5
we would recommend that the City bill for the irrigation service in the same manner as discussed
above of the residential irrigation customers. This is the current methodology for this particular
type of customer pricing and recommend that. the City make a modification to the Rate
Ordinance to specifically identify the rates for such dual metered service relative to the irrigation
use for these particular non-residential customers.
General Irrigation Servic(~ - This class of service is different from the dual metered water service
discussed above since it represents a separate distinct connection to the water system and is not a
dual metered use originating from a single service line. It is our understanding that it is general
City policy that these cm.tomers requesting this service are required to pay a service availability
charge to the City prior to receiving service in order to allovv the City to recover the pro rata cost
of the water capacity reserved on the customers' behalf. The service availability fee as billed by
the City was based on the amount of capacity requested by the customer which generally links to
the size of the meter to service such customers.
In order to promote the conservation goals of the City and SJR WMD and reflect rate equivalency
among aU irrigation use customers, we would recommend that the City adopt an inverted
(blocked) rate structure applied on a consistent basis with the implied capacity relationships used
in the development of the base facility charge. Under this approach, the customers' use would be
more closely tied to the capacity reserved, would recognize the minimum daily flow
requirements for an equivalent residential connection (an ERC which equates to the average daily
use of an individually metered residential account), would correspond to the irrigation meter
rates for service of a typical residential user, and would attempt to place all customers on an
equal basis. The ERC factors recommended for use are consistent with the usage relationships
from information published by the American Water Works Association (A WW A) and used by
the City for the establishment of the base facility charge which is that component of rates
designed to recover the "readiness-to-serve" costs of the system. These factors are also used by
the Florida Public Service Commission in the design of rates associated with the rate regulation
of private utilities in Florida. The recommended ERC factors by meter size are summarized
below.
Meter Size (inches) .
5/8 x 3/4 and 3/4
1
1 1/2
2
3
4
6
ERC Ratio
1.0
2.5
5.0
8.0
16.0
25.0
50.0
Mr. Ronald W. McLemore
August 13, 1997
Page 6
'The proposed consumption blocks were then structured to be consistent with the ERCs reserved,
thus placing all customers on an equal basis relative to the capacity requirements. The following
table summarizes the consumption blocks recommended for each meter size.
Water Consumption by Meter Size
5/8 x 3/4 and
3/4 inch 1 inch I 1/2 inch 2 inch 3 inch 4 inch 6 inch
ERC Factor 1.0 2.5 5,0 8.0 16.0 25.0 50.0
Block I 0-10,000 0-25,000 0-50.000 0-80,000 0-160,000 0-250,000 o - 500.000
Block 2 10.001-15,000 25,001-37,500 50,001 - 75,000 80,00 I - I 20,000 160,001-240,000 250,001-375,000 500,00 I - 750,000
Block 3 15,001-20,000 37,501-50,000 75,001-100,000 120,001-160,000 240,001:320,000 375,001-500,000 750,001-1,000,000
Block 4 20,001-25,000 50,001-62,500 100,001- I 25,000 160,00 I -200,000 320,001-400,000 500,001-625,000 1,000,00 I -1 ,250,000
Block 5 25,001-30,000 62,501-75,000 125,001- I 50,000 200,00 I -240,000 400,001-480,000 625,001-750,000 1,250,00 I-I ,500,000
Block 6 over 30,000 over 75,000 over 150,000 over 240,000 over 480,000 over 750,000 over 1,500,000
Under this approach all customers, whether a 3/4 inch metered user serving a small common area.
to a customer with a 6 inch meter serving a large greenspace area, would be treated equally. It
should also be pointed out that a general irrigation customer with a 3/4 inch service would
continue to pay an irrigation consumption charge fairly close to the individual residential user.
Normally, we would recommend that the conservation blocks be similar in structure (per ERe)
as that of the residential irrigation meter service. However, because of the "rate shock" that will
result to the large irrigation users as discussed later in this letter, we are recommending that the
residential domestic rate blocks be incorporated into the general irrigation meter service rates.
This would be acceptabk since PRMG is: also recommending the application of a base facility
charge which would be consistent with the capacity reservation process of the City and that such
customers represent an individual connection to the system (as opposed to the dual metering
service ).
In addition to the consumption charge, PRMG would recommend that the general service
irrigation users be charged a base facility charge to recover the fixed costs associated with
maintaining the system in a "state of readiness" as well as the cost of metering and billing.
These customers are a se:parate and distinct connection to the utility system and have generally
paid a service availability charge associated with such connection. The recommended base
facility charge would be identical to the rates which are in effect pursuant to the Rate Ordinance
which were structured using the A WW A equivalent factors discussed earlier.
Large User Impact Analysis
A concern usually expressed by all regulatory bodies such as the City Conunission deals with the
financial impact that a rate structure change may place upon a customer. It is anticipated that
those general irrigation meter service customers currently being billed the water conservation
rates may experience ~ rate decrease since more usage will be priced at the lower consumption
blocks. However; for all of the general irrigation meter service customers which currently are
Mr. Romild W. McLemore
August 13, 1997
Page 7
billed a flat consumption charge (e.g., the Homeowner Associations), such customers will
experience an increase due to the application of the base facility charge as well as the increased
charges for consumption. Pursuant to the proposed rate structure, excessive users of water
should be charged the higher usage rates consistent with price incentive objectives of the City.
Based on my discussions with representatives of the SJR WMD, this rate structure is considered
as being consistent with the conservation program goals of the District.
Currently, there are three (3) customers considered as large users of general irrigation meter
service which are billed the flat consumption charge. These customers include the Eagles Watch
Homeowner Association, Grand Reserve Homeowners Association, and the Howell Creek
Reserve Homeowners Association. All three of these customers receive service through a 4 inch
meter. Based on the proposed rate recommendations of PRMG reflected in this letter and the
actual metered water use of the customers for the 12 month period ended March 1997, these
customers would have reeeived an increase in the irrigation water bill as shown below.
Homeowner Association
General Irrigation
Meter Account
Eagles Watch
Grand Reserve
Howell Creek
A verage Monthly
Water Use
(gallons) [1]
757,583
130,058
947,050
Existing Rates
$8,272.81
1,420.24
10,341.79
Computed Charges
Proposed
Rates [2]
$14,491.18
2,524.97
19,703.60
Difference
Amount
$6,218.37
1,104.73
9,36L81
Percent
75.2%
77.8%
90.5%
[1] Reflects average use for twelve month period ended March 1997 as provided by the City.
[2] Includes rates based on revised conservation block structure and application of a base facility charge (all .
customers receive service through 4" meter).
It should be noted that although the increases in cost to these customers are quite significant, one
must realize that these customers are substantial users of water. Expressed on an ERC basis
(assuming 25 ERCs per four inch meter consistent with meter equivalent factors currently used
by the City), these cu:;tomers have historically experienced an average monthly use of
approximately 24,329 gaUons per ERC (which would result in an average monthly equivalent
water bill under the existing rates of $22.14 for these customers). The proposed rates would
result in an average monthly bill equivalent of approximately $40.80. A residential customer
using the same amount of water per month would be charged $34.01 which is comparable to the
average ERC cost for the general irrigation meters.. The difference between the two levels of
average bills deals solely with where the consumption is charged for the general irrigation
metered service (i.e., 18.8% of the usage is priced in the last, and most costly, usage block).
Therefore, the rates incurred by the customers for similar service is essentially equivalent and
promotes a degree of fairness among all the water customers of the City. As previously
mentioned, for those genl~ral service customers receiving inigation service billed on an inverted
block rate concept, the majority of these customers may experience a slight rate reduction.
Mr. Ronald W. McLemme
August 13, 1997
Page 8
Other Rate Considerations
In addition to the proposed changes to the Rate Ordinance, we are proposing other revisions to
the rates for water service. The change being recommended is to the residential class in order to
provide a level of consis.tency relative to the proposed general irrigation rates. Specifically, we
would recommend that all residential users be considered as 1 ERC and charged a base facility
charge equal to the charge for the smallest sized meter (i.e., 5/8 x 3/4 inch and 3/4 inch). Since
the water conservation blocks and residential irrigation blocks are applied uniformly to all
residential users or accounts without regard to meter size, it would be beneficial to consider all of
this class of customers uniformly. This would also be consistent with the proposed general
irrigation meter service rate application whereby the consumption blocks are adjusted based on
the ERCs implied per meter size. The net effect of this change from a revenue standpoint is
estimated to be immaterial since the City has indicated that the majority of the residential
customers receive service through the smallest meter.
Proposed Revisions to Rate Ordinance
Since the City has adopted and codified the rates for water service by Ordinance, and the
recommendations outlined in this letter reflect changes to the. water rates, the City will need to
revise the Rate Ordinance by public hearing if such recommendations are acceptable. Included
on Attachment A at the end of this letter are proposed revisions to Section 19-1 02 "User Charge
Schedule General" for consideration by the City. Before adoption of the proposed changes and if
the City concurs with the recommendations reflected in this letter, the City should instruct the
City Attorney to review the changes to insure that no other sections of the Code of Ordinances
are in conflict with the proposed revisions.
It should be noted that the rate recommendations presented herein were not based on a cost of
service analysis and no changes are being recommended relative to the level of charges being
applied to the customers. The proposed rate application changes were based on: i) the general
rate relationships implied in the City's current rates; ii) experience of PRMG relative to the
establishment of rates; and iii) previous discussions held by PRMG with the SJRWMD. We
believe that the proposed rate application revisions presented herein promote the utility
objectives delineated in this letter.
Mr: Ronald W. McLemore
August 13, 1997
Page 9
We have appreciated thi.5 opportunity to provide rate consulting services to the City and look
forward to working with the City in the future. If you should have any questions or comments
with regards to the recommendations expressed herein, please do not hesitate to give us a call.
Very truly yours,
Public Resources Management Group, Inc.
jdf- U-~
Robert 1. Ori
President
Attachment
cc: Mr. Kipton D. Lockcuff, P.E., City of Winter Springs
Mr. Harry E. Martin, City of Winter Springs
Mr. Terry Zaudtke, Conklin Porter & Holmes Engineers
letters/mclem2Jet
ATTACHMENT A
PROPOSED REVISIONS TO SECTION 19-102
OF WINTER SPRINGS CODE OF ORDINANCES
Sec. 19-102. User charg.e schedule, general.
The following rates and charges shall apply to all systems unless otherwise specifically stated:
I. Monthly water service rates. The monthly water rate shall include the sum of the base
facility charge plus a volume charge per one thousand (l,000) gallons or a fraction thereof of
metered water consumption as set forth below:
Monthly
Charge
Individually Metered Residential Service:
Base Facility Charg;e
All meter sizes .......................................................................$3.58
Charge per
Thousand (1.000) Gallons
Volume Charge - Domestic Service (gallons)
0-10,000 .......... ....................................................................... $0.91
10,00 1-15,000, ...................................................................;..... 1.25
15,001-20,000. .................... .............. ........... ................. ........... ] .50
20,001-25,000. .............. .................... .................... ................... 1.75
25,001-30,000. ....... .................. ........ ................ .................... ....2.00
Over 30,000 ........................ .............. ......... ............. ............ ..... 2.50
Volume Charge - Irrigation Service (gallons) [*]
0-5,000.... .... ....... ......... ........... ........ ..... ........... ............... ......... $] .25
5,00] -] 0,000 ............................................................................ 1.50
10,00 1-15,000 .......................................................................... 1.75
] 5,00 1-20,000 .......................................................................... 2.00
Over 20,000 ... ......... ................ ............. ............. ............. ..........2.50
[*] Reflects water use for residential irrigation service which is metered in addition to domestic service from a
single service connection to water system. For those customers which receive dual metered service from a
single service connection, the Base Facility Charge will only be applied to Domestic Service (one charge
per service connection).
I060-01/attach.a
1
ERC Factor
Monthly
Charge
Master Metered Residential
and Non Residential Service:
Base Facility Charge (meter size)
5/8 x 3/4 and 3/4 inch ................................1.0......................$3.58
1 inch .........................................................2.5 ........................8.94
1 1/2 inch ...................................................5.0......................17.89
2 inch .........................................................8.0 ...................... 28.62
3 inch .......................................................16.0 ...................... 57.23
4 inch ............ ...........................................25.0...................... 89.50
6 inch ............ ...........................................50.0.................... 178.85
V olume Charge - Domestic Service per 1,000 gallons ................... 0.91
Volume Charge - l:rrigation Service per ERC (gallons) [*]
0-5,000 ........... ........................................................................ $1.25
5,00 1-1 0,000............................................................................ 1.50
10,00 1-15,000 .......................................................................... 1.75
15,00 1-20,000 .......................................................................... 2.00
Over 20,000 ............................................................................. 2.50
[*] For those customers which receive both individually metered domestic and irrigation service from a
single service connection, the Base Facility Charge will only be applied to Domestic Service (one
charge per service connection).
ERC Factor
Monthly
Charge
General Irrigation Metelf Service: [*)
Base Facility Charge (meter size)
5/8 x 3/4 and 3/4 inch ................................1.0 ...................... $3.58
1 inch .........................................................2.5 ........................8.94
1 1/2 inch ...................................................5.0......................17.89
2 inch ............. ............................................8.0......................28.62
3 inch .............".........................................16.0 ...................... 57.23
4 inch .............. .........................................25.0......................89.50
6 inch .............. .........................................50.0....................178.85
Charge per
Thousand (1.000) Gallons
Volume Charge per ERC
0-1 0,000 ................................................................................. $0.91
10,00 1-15,000 ..........................................................................1.25
15,00 1-20,000 .......................................................................... 1.50
20,001-25,000 .......................................................................... 1.75
25,001-30,000.. ....... ..... ..... ........... ............................ ......... .......2.00
Over 30,000 ............................................................................. 2.50
[*] Reflects water use for irrigation service which is metered from a separate and distinct service
connection to the water system.
1060-01/attach.a
2
The base facility charge is the minimum monthly charge applied in each account and will not be
assessed if the service is discontinued.
1060-0 I/attach.a
3
Attachment No. 4
m
Public Resources Management Group, Inc.
Utility. Rate, Financial and Management Consultants
August 13, 1997
PRMG #1060-01
Mr. Ronald W. McLemore
City Manager
City of Winter Springs
1126 East S.R. 434
Winter Springs, FL 32708
SUBJECT: Customer Service Review
Dear Ron:
At the request of the City of Winter Springs (the "City"), Public Resources Management Group,
Inc. (PRMG) has conducted a review of certain rate and customer billing policies associated with
the customer service function of the City's water and wastewater utility system. The purpose of
the customer service review was to identify issues and areas of concern where suggestions for
improvements could be made relative to: i) the billing and collection function; ii) rates to be
charged for specific customer-requested services; and iii) other related factors affecting the
customer service function. The review performed by PRMG should not be considered as an
audit of the customer service function but more of providing general assistance to management
as it relates to certain issues which could affect the overall performance of the customer service
function relative to utility billing and the recovery of costs from the customers of the utility
system.
In the performance of the customer service review, PRMG reviewed the billing policies and rates
as delineated in Division 4 of Chapter 19,. entitled Rates, Fees, and Charges, of the Winter
Springs Code of Ordinances (the "Code") and conducted interviews with City management and
members of the customer service staff of the utility system. The results of our review process as
well as our recommendations are summarized below for the City's consideration:
1. Utility Payment Provisions - The payments made by the utility customers of the City for the
monthly water and wastewater service are paid in arrears which is common in the utility industry.
Specifically, the customer receives utility service for a specific period (generally 30 days) and
subsequently must pay for such service within a predetermined time frame after the receipt of
such service. Based on Section 19-97 of the City's Code and discussions with the customer
service staff of the City's utility system, the maximum allowable time that a customer has to pay
for the service received (i.e., for a 30 day period) is 60 days as shown below:
225 SOUTH SWOOPE AVENUE . SUITE 2 11 . MAITLAND, FL 32751
TELEPHONE (407) 628-2600 . FAX (407) 628-5884
Mr. Ronald W. McLemore
August 13, 1997
Page 2
Description
Billing Payment Cycle
Period of Service
Period of Bill Process and Mailing (Initial Bill)
Allowable Payment Period
Period of Bill Process and Mailing (Second Bill Notification)
Service Period Until Discontinuance Recommended
Cut-off Extension/Convenience Period
. Days
30 days
5 days
30 days
5 days
15 days
5 days
Total Period After Service Rendered
Total Risk Period
60 days
90 days
As can be seen above, the period of service from the date of use to when service would be
discontinued (cut-off) can be as long as 60 days which is eq~ivalent to nearly an additional
two months of service. Technically, a customer could utilize up to three months of service
(considering the first billing period) at the risk to the City (for non-payment) which we believe to
be excessive.
Although the City does have customer deposits to help defray the risk of non-payment, the total
period which the City is at risk of 90 days is not typical. A telephone survey of the payment
practices for other neighboring utilities in the area further supports our concern regarding the
period oftime: i) for payment of the utility bill until considered delinquent; and ii) when service
is discontinued for non-payment of the utility bill. A summary of the survey results is
summarized below.
Approximately No. of A verage Time from
No. of Days Days Until Service Delinquency to
Utility to Pay Bill [1] Disconnected Disconnect
City of Winter Springs 30 days 55 days. 25 days
City of Altamonte Springs 28 days 40 days 12 days
City of Casselberry 30 days .. 60 days 30 days
City of Lake Mary 25 days 35 days 10 days
City of Longwood 14 days 25 days 11 days
City of Maitland 20 days 30 days 10 days
Orange County 16 days 40 days 14 days
City of Oviedo 10 days 40 days 30 days
City of Sanford 21 days 45 days 15 days
Seminole County 30 days 40 days 10 days
City of Winter Garden 7 days 20 days [*] 13 days
City of Winter Park 25 days 60 days 35 days
Utility Average 21 days 38 days 17 days
[*] Can vary, ifnot disconnect within 60 days, City has right by ordinance to file a lien against the property.
[1] Represents number of days until considered delinquent.
Mr. Ronald W. McLemore
August 13, 1997
Page 3
. As can be on the seen above tabulation, the average time for the payment of a utility bill and
when a customer is disconnected due to nonpayment is significantly less when compared to the
City's current payment policies. As shown on the summary, once a customer is considered
delinquent, the elapsed time to disconnect a customer for non-payment is generally within
two weeks. For those utilities which provide a longer "grace" period before disconnect (i.e.,
similar to the City), the clue date is relatively shorter, thus still condensing the time frame which
the utility is at risk.
In order to compel payment prior to discormect, many utilities will personally notify the specific
customer by the use of a "door hanger" or other communication method. Although this is an
effective notification procedure, it is more costly since field service personnel must physically
visit the site of the customer to personally notify them. This increased cost would need to be
recovered from utility system revenues and could be part of any reconnection after disconnection
fee or late payment fees which could be imposed by the City. It is our understanding that the
City does provide genera:l notification on the utility bill regarding the payment period (due dates)
which specifies when a customer is past due and when disconnection from the system could
occur. Essentially, it i~; the customer's responsibility to pay. Specific notification at the
customer premise or the rendition of a specialized notification form (say as. an additional bill
stuffer) is not provided at this time. PRMG would recommend that, at a minimum, the City
begin to specifically noti::'y its delinquent customers by an additional "bill stuffer" once the new
billing software being contemplated by the City is operational and enveloped based billing (as
opposed to postcard) is performed. We do believe direct notification of the disconnection of
service by a specific notification procedure (such as a door hanger) is more appropriate and
defensible. It should be noted that the notification procedures are a policy decision of the utility
and City and not a procedure generally set by ordinance.
During the interview process, PRMG became aware that Ordinance No. 538 adopted by the City
on December 14, 1992 re::erenced a payment period of 15 days af1er the billing date before being
considered as delinquent. It is our understanding that the payment due date as referenced in
Ordinance No. 538 of 15 days was also consistent with the customer service policies of the North
Orlando Water and Sewer Corporation and Seminole Utility Company, Inc., the private utility
systems which were regulated by the Florida Public Service Commission (FPSC) and
subsequently acquired by the City. The City increased the payment period to the current 30 day
period which has been the policy for several years.
Based on our review of the payment policies of the various utilities in the Central Florida area,
the previous policies in effect for the City, and the interviews with staff regarding current utility
billing practices, PRMG recommends that the City shorten the payment and disconnect
requirement cycle. Specifically, we would recommend the following:
Mr. Ronald W. McLemore
August 13, 1997
Page 4
i) The bill for utility service should become due and payable 20 days after the meter
reading date for the particular service period which the bill covers. This period of time
would include the bill preparation and mailing period. If one were to assume a 5 day
bill processing period, then the net payment term would be 15 days.
ii) Absent the use of "cut-off' notification at the customer site (by on-site staff visit), if a
customer is considered delinquent in the payment of a utility bill, notification should
appear on the subsequent monthly service bill (a "second notice" for payment) which is
rendere'd to the customer. For the purposes of a time line of events, notification would
occur within approximately 10 days of being delinquent. As discussed in this letter, a
late payment fee should be included on the subsequent or. "second notice" billing
statement since the customer is delinquent in payment.
iii) The City should disconnect the customers 10 days after notification. Service should not
be restored until all past due charges, penalties, and fees are paid in full or an acceptable
payment arrangement is made between the customer and the City. However, service
should not be cut-off if the customer has made satisfactory payment plans or
arrangements at the discretion of the City Manager or his designee to fulfill the payment
obligation.
The proposed payment requirements will: i) reduce the overall risk to the City associated with
the non-payment of service by 22% (essentially from 90 days to 70 days); ii) be consistent with
the current notification provisions of the City; iii) allow sufficient time for a customer to make
arrangements to pay after delinquency (customer responsibility) and notification; and iv) be more
consistent with the payment policies of other neighboring utilities.
2. Customer Deposits - To defray the risk of non-payment for utility services until the negligent
customer is disconnected" public utilities such as the City require all customers to post a deposit
prior to the initiation of service. The City provides each customer a Customer's Guarantee
Deposit Receipt at the time of deposit which provides that the:
a) Customer guarantee payment of any and all indebtedness for water, sewer, and
stormwater management fees;
b) Deposit will not preclude City from discOlmecting the customer for non-payment of
any and all services, regardless of sufficiency of deposit;
c) City shall accrue and pay interest at a rate of 6% on all deposits held for more than
six months; and
Mr. Ronald W. McLemore
August 13, 1997
Page 5
d) The City shall refund the deposit upon completion of 25 months of service with no
delinquencies during the previous 24 months.
With respect. to the deposit policies of the City, PRMG has several recommendations for the
City's consideration. These recommendations range from the level of the deposit charged to the
policies regarding the payment of interest on such deposits. A discussion of our observations
and recommendations follow:
A. Residential Deposit Fee - Pursuant to Section 19-102 of the Code of Ordinances, the City
charges a deposit of $65.00 for residential users of the s~stem. Based on discussions with staff,
this deposit is primarily applicable to water and sewer services, though it can also be applied to
stormwater management and solid waste collection.. All of these utility services are included on
the single combined monthly utility bill for service. Assuming an average residential water and
sewer customer using 8,C'00 gallons per month of service, the following deposit anlount should
be recovered from all users.
Average Monthly Bill
Period of Risk
x 3 months (current City policy)
Rounded Rate
x 2 months (proposed PRMG policy)
Rounded Rate
Water [*]
$10.86
$32.58
$30.00
$21.72
$20.00
Monthly Utility Service Charges
Wastewater [*] Stormwater Solid Waste
$27.37 $2.04 $13.68
$82.11
$80.00
$6.12
$6.00
$41.04
$40.00
Total
$53.95
$161.85
$156.00
$107.90
$104.00
[*] Based on 8,000 gallons of service, water charges do not include application of 8% Utility Tax. Assumes
customer receives all City utility services.
$54.74
$55.00
$4.08
$4.00
$27.36
$25.00
As can be seen above and recognizing either risk period assumed for the calculation, the existing
deposit of the City does not appear to be appropriate. In fact, the current deposit barely provides
sufficient funds to recover 30 days of utility service (for all services received) for the average
residential customer using 8,000 gallons of monthly water and wastewater service.
We recommend the City increase the deposits for residential users to the amounts indicated
above based on the payment procedures recommended by PRMG to be used by the City;
specifically increase the combined water and wastewater deposit (exclusive of additional
amounts for any deposit for stormwater management or solid waste collection) to $90.00 per
residential account as follows:
Utility Service
Water
Sewer
Amount
$25.00
$65.00
Mr. Ronald W. McLemore
August 13, 1997
Page 6
The proposed water and sewer deposit at $90.00 is representative of combined water and sewer
deposits collected by other neighboring utilities as shown below:
Water and Sewer
Residential Deposit Amount
City of Winter Springs
Total Current Deposit
Recommended Water and Sewer Deposit [1]
$65.00
90.00
Other Neighboring Utilities
City of Altamonte Springs
City of Casselberry
City of Lake MalY
City of Maitland
City of Longwood
Orange County
City of Oviedo
City of Sanford
Seminole County
City of Winter G:~rden
City of Winter P2.rk .
$50.00
100.00
85.00
40.00
75.00
123.00
95.00
50.00'
80.00
150.00
105.00
Other Utility Average
. .$..8.Q.M
[1] Assumes deposit at proposed payment policy.
B. Non-residential Depos~ - Pursuant to Section 19-102 of the Code of Ordinances, the City
charges a deposit of $200.00 for all non-residential users of the system. Notwithstanding the
issues discussed above regarding the applicable deposit per utility system (e.g., water service),
the deposit should be based on an average bill per customer basis, not a flat rate applicable to a
whole class of users. For example, the water and wastewater requirements of an office building
or convenience store is entirely different than a large restaurant or laundry and the deposit should
reflect such usage (billing) differences. Additionally our experience has taught us that in many
instances, it is the non-residential customers which may account for the majority of the
uncollectible revenues owed to a utility due solely to the size of the bill (amount due) as a result
of higher service requirements (e.g., greater amount of water use). We would recommend that
. the non-residential deposit be determined individually by the City and be equal to two times the
average monthly bill [assuming the recommended payment (billing) provisions discussed in issue
no. 1 above]. Additionally, our experience dictates that the industry norm is not to refund the
non-residential deposit fee \vhich appears to be consistent with the. provisions of the City Code.
However, discussions with staff indicated that these deposits may be returned to the customer if
the payment practices meet the policy standards as delineated for residential users. We agreed
with the City's Ordinances that the City maintain the non-residential deposits for the term of
serVIce.
Mr. Ronald W. McLemore
August 13, 1997
Page 7
C. Rental Deposit Fee~! - Many utilities have experienced a lot of difficulty with transient
customers such as renters. Due to the general nature of this type of user, many utilities have
imposed a higher deposit on rental units. We would recommend that the City consider a review
of the uncollectibles and delinquent payment patterns for this type of residential customer and, if
there is an issue, then determine a separate deposit requirement for such users be determined on a
basis consistent with the recommendations reflected herein.
D. Interest on Deposits ,. The City currently pays an annual rate of interest equal to 6% on all
deposits held for more than 6 months. PRMG does not disagree with the payment of interest to
those customers which have a deposit balance with the City. However, we do believe that the
amount of interest paid should be reevaluated. For the past several years, the City has not
historically earned 6% on the deposits which have been invested yet has continued to pay 6%,
which results in a net loss to the utility system which must be funded by all utility customers.
Discussions with the City indicated that it does require programming charges to the current
billing system which can be difficult to, administer and present an issue to the City. PRMG
would recommend that the City consider periodically adjusting the interest rate accrued to the
customer to an amount equal to what is actually earned in order to properly match the benefits
received to the expense incurred (only if the cost of the programming modification is less than
the benefits received by the utility).
3. Late Payment Charges - In order to encourage timely payment of the monthly service
charges and to. compensate the utility for additional expenses associated with increased customer
service costs, a late payment or penalty charge has been adopted by several utilities. This fee is
usually assessed to customers which are delinquent in the payment of utility bills for monthly
service. This fee is directly related to the payment and deposit policies of the City. This fee is
very common in the utility industry as well as other markets which extend credit or service in
advance to customers. Currently, the City does not charge a late payment fee on delinquent
accounts. The following is a survey of late payment fees charged by utilities in the Central
Florida area based on the :results of a telephone survey conducted by PRMG.
Mr. Ronald W. McLemote
August 13, 1997
Page 8
Seminole County
City of Winter Garden
City of Winter Park
Late Payment Fee
10% of outstanding balance
I 1/2% of outstanding balance;
minimum of$5.00
10% of outstanding balance
$5.00 per outstanding bill
10% of outstanding balance
No late fee
10% of outstanding balance
5% of outstanding balance;
minimum of $4.00
No late fee
$5.00 per outstanding bill
No late fee
City of Altamonte Springs
City of Casselberry
City of Lake Ma::)'
City of LongwoCtd
City of Maitland
Orange County
City of Oviedo
City of Sanford
As can be seen above, the results of the survey indicate that late payment fees range from the
application of no late payment charge to 10% of the monthly past due balance. In general, the
fee is usually charged as a percentage of the outstanding bill and provides for: i) the lost
opportunity cost of interest earnings on cash balances; ii) recovery of increased administrative
costs associated with notification to the delinquent customer, customer accounting, and data
processing; iii) incurrence of additional costs associated with the need for utilities to have cash
working capital balances in the excess of needed levels because of non-payment of bills; and
iv) a monetary incentive to compel prompt payment practices. It should be noted that the
imposition of a late payment fee is a policy decision of the City Council since, while encouraging
prompt payment, may contribute to customer dissatisfaction towards the City. However, certain
policies related to the application of the late payment fee could help to dampen any
dissatisfaction which may occur.
Based on the comparison of neighboring utility policies and information derived during
discussions with staff, PRMG would recommend the iinposition of a late payment charge.
Further, we believe the approach used by the Cities of Sanford and Casselberry would be the
most appropriate since it sends a strong payment incentive for customers with low monthly bills
(i.e., a flat charge) yet is structured to be applied on a variable basis such that an increasing
incentive is promoted as utility bills increase (e.g., a commercial customer). Based on
discussions with the City, we would recommend a late payment fee which would be equal to the
greater of $5.00 or 1.5% of the outstanding bill be adopted as a late fee to be applied to
delinquent pay customers if the policy is deemed appropriate by the City Council. In addition,
the City should recognize or consider the following late payment policies:
i) The late payment fee should be applied to all past due balances for all customers, except
public authorities~ Exceptions may be approved by a customer service supervisor when a
billing error has been made or due to extreme hardship cases.
Mr. Ronald W. McLemore.
August 13, 1997
Page 9
ii) The bill for an account with a previous balance should include the following information
at a minimum:
a. Amount due;
b. Date paymem to be posted to avoid disconnect; and
c. Date payment posted to avoid additional late payment fee (if different than
disconnect period).
iii) The first time delinquent customer should be provided one notice during a twelve (12)
month period that a late payment charge would normally have been charged, but since it
is a first time occurrence, the fee has been waived in lieu of being charged. All other
delinquent payments in a twelve (12) month period will be charged. This policy should
be reviewed on an individual or case by case basis by the customer service supervisor for
applicability provisions.
iv) The establishment of a policy that to the extent a customer does not pay the late payment
fees, but does pay for utility service, that the service will be discontinued at a certain
threshold (e.g., at an amount equal to one month of service).
v) The collection of late fee or penalty revenue should be allocated pro raja to the various
utilities for which billing is performed. If adopted, this fee should be applicable to all
utility fees and charges reflected on the utility bill.
vi) Proper notification of the adoption of a late payment fee should be made to all customers
of the utility system in advance of the effective date so as to fully identify the purpose of
the fee and to allow customers to change payment habits. Another option would be to
provide a "grace period" on fee application for a period of time until the implementation
date of the fee (i.{:., charge fee but give a credit with notification to the customer for a
certain time frame).
4. Turn-On and Turn-Off Charges - A common service provided by all utilities is a response
to a customer request for the turn-on and turn-off of utility services. The customer-requested
service can occur for a variety of reasons, including:
. initiation of service for a new customer;
. turn-on/off due: to customer request due to seasonal occupancy of residence; and
. delinquency in the payment of a utility bill.
Many utilities charge a fee for such services since this does represent specific customer requested
service for which the cost to perform is readily identifiable. As referenced in Section 19-102 of
Mr. Ronald W. McLemore
August 13, 1997
Page 10
the Code, the current fees charged by the City for initiation of service, turn-on/turn-off for
customer convenience, turn-on/turn-off for delinquency, and after hours turn-on after
delinquency are shown below:
Initiation of Service (Application Fee)
Turn-on/Turn-off for Customer Convenience
Turn-on/Turn-off for Delinquency
After Hours Turn-on After Delinquency
$10.00
$0.00
$10.00
Not provided
One of the most common occurrences associated with these types of services deals with the
initiation or application of service. This is a customer requested service which is necessary to
begin the billing process and utility relationships with the customer. This service should not be
confused with a seasonal turn-off which is considered temporary. The expenses generally
incurred for this service include customer service costs, field services, and finance and
administrative expenses. Essentially, most customers expect a charge to initiate a service, yet
feel that the termination of service should be considered as a part of nornlal or routine service. It
is recommended that the City continue to maintain a separate charge for the initiation of a new
service, whether it is at a new location or the re-establishment of a service at an existing location
. with the prior customer terminating service.
In addition to the turn-on for the initiation of an account, the City also perfonns the turn-on/turn-
off function at the request of a customer on a temporary basis (e.g., seasonal customer request) or
by the City as a component of the delinquent bill/non-payment process. With respect to the turn-
off of service for non-payment (and assuming subsequent restoration of service), the costs
incurred are generally greater than with the initiation of service. This is due primarily to the
higher level of customer service and accounting due to increased reporting .and customer
notification costs (e.g., work order generation and report analysis of non-paying accounts).
As can be seen, the City only charges a fee for the initiation of service and if a customer has
service discontinued due to the non-payment of utility service. Based on our experience relative
to the design of these fee:;, PRMG believes that the .fees may be understated and therefore not
recover the total costs of 5ervice. Although the identification of the costs for these services was
beyond the scope of this study, a comparison of fees charged by other utilities indicate that the
fees levied by the City may be understated. This is shown below:
Mr. Ronald W. McLemore
August 13, 1997
Page 11
City of Winter Springs
Initiation of
Service
$10.00
Other Neighboring Utilities
City of Altamonte Springs
City of Casselberry
25.00
City of Lake Mary
City of Longwood
City of Maitland
Orange County
City of Oviedo
City of Sanford
Seminole County
City of Winter Garden
City of Winter Park
20.00
15.00
21.50
10.00
10.00
10.00
10.00
Other Utilities Average
$11.05
Turn-on
Charges
Turn-off
Charges
Delinquent Account
Turn-on/off Charges [*]
$10.00
10.00 10.00
25.00
10.00 10.00
15.00 15.00
10.00
21.50 21.50
10.00 10.00
10.00 10.00
10.00 10.00
25.00
15.00
20.00
25.00
27.50
22.00
10.00
25.00
15.00
25.00
$10.14
$8.77
$19.05
[*] Reflects turn-on for re-establishment of service during normal working hours. Some utilities
have higher charge if work performed after normal hours or if performed more frequently than
once per year.
Based on: i) the fees charged by other utilities; ii) our knowledge regarding the actual cost to
provide such services; iii) the need to initiate these charges and to recognize a phase in of such
charges, especially without a cost of service analysis; iv) the need to provide additional revenues
to meet the overall revenue requirements of the City's utility system; and v) discussions with the
City regarding customer :service relationships, we would recommend that the City consider the
adoption of the following fees:
Recommended Fees
Initiation or Application of Service
Turn-on/Tum-off for Charge at Customer Request [*]
Turn-off for Non-Payment
$15.00
$ 0.00
$20.00
[*] Reflects fee to be charged for any trip to disconnect" water service for anything other
than non-paymw: (i,e., temporary disconnection).
With respect to the turn-off and subsequent turn-on of service at the request of the customer, it
was determined that no fee should be charged at this time. Although many utilities charge a fee
for this service, the City's experience that this request is not typical and could result in customer
dissatisfaction. The City should review the frequency or the number of occurrences of this
service and then revisit this policy relative to the application of a fee in the future. Furthermore,
if the City were to adopt a turn-on/turn-off fee for disconnection (other than for non-payment), in
those instances when a customer finalizes an account (terminates service), no turn-off fee should
Mr. Ronald W. McLemore
August 13, 1997
Page 12
be applied to such customer. Essentially, the Initiation of Service or Application Fee should
have a provision for the recovery of these costs.
5. Seasonal Disconnectiml - An issue which faces many utilities in the state deals with those
customers which are seasonal in nature. Specifically, a seasonal customer would be one which
would discontinue service for a long period of time (e.g., from 1 to 6 months) although would
not be effectively ternlinating a service (e.g., a final billed account). Although it is our
understanding that this. i~: not a significant issue with the City, we would recommend that the
City consider adopting a policy that service cannot be discontinued on a seasonal basis (say in
excess of 30 continuous days). Since the City must constru'ct water and wastewater facilities for
such customers and maintain such facilities in a "state of readiness" at all times, the City needs to
be compensated for such costs (generally considered as the "fixed" costs of operating the utility).
If a customer is allowed to disconnect from the utility period for extended periods of time, then
the ability to recover the fixed costs from such customers is reduced. Our recommendation
would be that the City charge the base facility charge (minimum bill) for that period of time the
service has been disconnected until when service is restored. This payment could be one either at
the time of the customer request for service restoration or added as a component to the next bill
rendered. The application of the base facility charge would be in addition to any turn-on/off
charges which would be imposed by the City. Finally, if this policy were adopted by the City, it
is imperative that procedures would be developed in order to properly notify the seasonal
customers of the rate application policy.
6. Enforcement Provisions - A concern expressed during our interview process with staff dealt
with the ability to enforce the collection of utility fees when it is difficult to discontinue the
service (e.g., in the event of a sewer only or stormwater management customer) as a result of
non-payment of the utility bill. One method used by several public utilities in Florida is to lien
the property for the amount of unpaid or delinquent utility fees and charges plus administrative
costs incurred relative to the liening process. As required by adoption of an ordinance, the
amount subject to collection would subsequently be deemed as a lien upon the real property or
premises which may be foreclosed in accordance with the procedure similar for foreclosing
mortgages as provided by law. It has been our understanding that this has been an effective tool
in the collection of delinquent charges and does provide the utility the ability to collect past due
charges eventually.
We would recommend that the City consider the use of property liens in the enforcement of
utility fee payments. This recommendation would also benefit the City where it is difficult to
"turn-off' service where no meter or utility connection exists (i.e., stormwater management and
solid waste collection). It is our understanding that the City has several accounts
(approximately 30) which have delinquent bills covering periods as long as four years and there
cUlTently exists no ability to enforce payment. Utilization of property liens would provide the
necessary enforcement provisions to promote the payment of the delinquent bills. Additionally,
Mr. Ronald W. McLemore
August 13, 1997
Page 13
this process does not have to be limited solely to 1110nthlyutility rates but could also be used in
those instances where it becomes necessary for the City to repair, or cause to be repaired, any
City utility facilities (e.g" a utility line, fire hydrant, meter assembly, etc.) which was damaged
by the utility customer.
If the City were to adopt the use of liens upon real property to enforce collections of utility
payments, the City will need to work with its legal counsel to develop the proper policies and
procedures relative to the application process. Based on information provided by the City, the
use of a lien to collect delinquent charges embraces a special assessment concept because no
forced sale of homestead property can occur except for the payment of taxes and assessments
thereon. If a lien enforcement mechanism is to be utilized, the charges where service is not
measured (e.g., stormwat,er management fees) should be structured to meet the legal sufficiency
tests for both a valid fee and a special assessment. The ordinance provisions should be reviewed
and clarified with appmpriate legislative findings, where appropriatel. Other issues to be
considered by the' City would include:
i) Priority status of liens to other liens on such properties (e.g., state, county, municipal
taxes);
ii) Policy of monetary amount to be considered delinquent before lien is placed on property;
iii) Notification procedures to customer relative to the placement of a lien upon the real
property of such customer;
iv) Costs to be recovered by City if any foreclosure action results (e.g., reasonable attorney's
fees, utility administration costs, etc.); and
v) Preparation of the City Ordinance which would properly codify the procedures relative to
the application of1he lien.
7. Other Customer Service Issues - During the interview process with the City staff, certain
other miscellaneous issue~; were discussed which warrant some disclosure or consideration. The.
following is a discussion of these miscellaneous issues.
A. Utility Subsistence pf(~ - As we are all aware, there are many instances when customers
may have trouble paying the utility bill due to financial hardships. Under these cases, it becomes
even more difficult to impose additional financial costs due to the application of increased fees
(e.g., late payment fee), thus fUliher limiting their ability to pay the utility bill. A program that
many utilities have implemented is a "Care to Share" program. The purpose of this program
I Derived from letter to City of Winter Springs dated May 16, 1996 from Nabors, Giblin & Nickerson, P.A.,
Attorneys at Law.
Mr. Ronald W. McLemore
August 13, 1997
Page 14
would be to have a dedicated program and funding source available to assist those customers
which have trouble paying the utility bill. Funding of the program can be derived from many
sources, including:
i) Customer donations as referenced on a bill;
ii) Dedication of a specific revenue requirements in the annual budget of the utility system;
and
iii) Transfer of funds from available (uncommitted) surplus earnings from prior years.
The program should be administered by an agency outside the utility which would have certain
policies and rules (e.g., income threshold limits) relative to assistance applicability. Although
not the total answer to assisting delinquent customers pay their utility bills, this would be a good
public relations program for the utility system. For the City's consideration, we do know that
Seminole County has implemented such a program and would be willing to share their ideas and
thoughts with the City. PRMG would recommend the implementation of such a program if
considered feasible by the City Council.
B. Customer Service Policy and Procedures Manual - We believe that the availability of a
Customer Service Policy and Procedures Manual is a very impOliant document relative to
meeting the needs of the utility customers. This manual should describe: i) the policies of the
utility in terms of customer billing; ii) application of service charges; iii) discussions of special
credits or billing adjustments which customer service representatives have authority to settle or
adjust; iv) utility customer grievance procedures; and v) builder programs and extension policies
and other required information. We believe that this manual would assist the customer service
representatives in providing consistent decisions and solutions to customer inquiries.
Additionally, this manual could be expanded to include customer-related infonnation such as
billing and payment options, location of payment drop-off centers, water conservation
information (e.g., water irrigation restrictions), water audit and quality listing programs,
customer deposit requirements, a sample of the utility bill .with explanation, and other related
information (which may not be codified by Ordinance but is beneficial to have for customer
service administration policy). PRMG also feels that this manual should really be a chapter of an
overall utility policies and procedures manual since there are other functions which should be
addressed which could affect the utility, including extension programs and builder/construction!
inspection requirements, industrial pretreatment programs, reclaimed water and irrigation service
requirements, standard and contract for agreements for capacity reservation, application of
. guaranteed revenue charges, and other developer oriented programs.
As' a result of our review of the customer billing policies, we believe there are several policies
which can be modified to improve the collection of funds for providing utility service. Please
Mr. Ronald W. McLemore
August 13, 1997
Page 15
realize that the recommendations expressed herein were directed solely to the policies referenced
in the Code and do not suggest that an improvement in the customer service depmiment is
needed. Based on our interviews with the customer service staff, we found the employees to be
open with ideas for improvement and dedicated to the utility system.
We have appreciated this opportunity to provide utility consulting services to the City and look
forward to working with the City in the future. If you should have any questions or comments
with regards to the recommendations expressed herein, please do not hesitate to give us a call.
Very truly yours,
Public Resources Management Group, Inc.
,~ .~
;a,f 0-
Robert 1. Ori
President
cc: Mr. Kipton D. Lockcuff, P.E., City of Winter Springs
Mr. Harry E. Mart:ln, City of Winter Springs.
Mr. Terry Zaudtke, Conklin Porter & Holmes Engineers
letters/mclem3.let