orange county utilities department water and wastewater budget challenges march 9, 2010
TRANSCRIPT
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Orange County Utilities Orange County Utilities DepartmentDepartment
Water and Wastewater Water and Wastewater Budget ChallengesBudget Challenges
March 9, 2010March 9, 2010
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Budget ChallengesBudget Challenges
• IntroductionIntroduction
• Revenue Outlook Revenue Outlook
• Department ExpensesDepartment Expenses
• Budget ChallengesBudget Challenges
• Next StepsNext Steps
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Budget ChallengesBudget Challenges
• IntroductionIntroduction
• Revenue Outlook Revenue Outlook
• Department ExpensesDepartment Expenses
• Budget ChallengesBudget Challenges
• Next StepsNext Steps
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Large Water and Wastewater UtilityLarge Water and Wastewater Utility– 182,000 water & wastewater 182,000 water & wastewater
customerscustomers
– 3,830 miles of pipe3,830 miles of pipe
– 705 pump stations705 pump stations
– 57.2 MGD water produced 57.2 MGD water produced
– 51.0 MGD wastewater treated51.0 MGD wastewater treated
IntroductionIntroduction
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Budget ChallengesBudget Challenges
• IntroductionIntroduction
• Revenue OutlookRevenue Outlook
• Department ExpensesDepartment Expenses
• Budget ChallengesBudget Challenges
• Next StepsNext Steps
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Revenue OutlookRevenue Outlook
Revenue SourcesRevenue Sources
– Water ratesWater rates
– Wastewater ratesWastewater rates
– Reclaimed water ratesReclaimed water rates
– Connection feesConnection fees
– Miscellaneous Miscellaneous revenuesrevenues
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Affected by economic Affected by economic environmentenvironment
– ForeclosuresForeclosures
– UnemploymentUnemployment
– Downturn in new developmentDownturn in new development
– Reductions in tourismReductions in tourism
– Commercial establishments Commercial establishments going out of businessgoing out of business
Revenue OutlookRevenue Outlook
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• Declining revenues due Declining revenues due to economic conditionsto economic conditions
• Appropriate reductions Appropriate reductions to O&M budget while to O&M budget while ensuring essential ensuring essential services and regulatory services and regulatory requirements are metrequirements are met
• Long-term revenue Long-term revenue increases and increases and borrowing are needed borrowing are needed to fund CIPto fund CIP
Revenue OutlookRevenue Outlook
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Budget ChallengesBudget Challenges
• IntroductionIntroduction
• Revenue Outlook Revenue Outlook
• Department ExpensesDepartment Expenses
• Budget ChallengesBudget Challenges
• Next StepsNext Steps
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Department ExpensesDepartment Expenses
FY 2010FY 2010 Operating ExpensesOperating Expenses
Utilities 13%
Other 6%
Maintenance 12%
Outsourced Services 26%
Personal Services 36%
Materials and Supplies 7%
Budget = $118MBudget = $118M
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Customers per FTE
107118
145160 166
199209
223 229 228 224
251 251 248 240235 237 238 236
133
189
0
50
100
150
200
250
300
Department ExpensesDepartment Expenses
Personal ServicesPersonal Services - $43.3 million- $43.3 million
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Outsourced ServicesOutsourced Services– $30.6 million $30.6 million
– Includes:Includes:• Biosolids managementBiosolids management• Conserv II operations Conserv II operations
and maintenance and maintenance • Wastewater Wastewater
infrastructure infrastructure rehabilitationrehabilitation
Department ExpensesDepartment Expenses
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Materials & SuppliesMaterials & Supplies– $8.6 million $8.6 million
– Chemical costsChemical costs• Varies in proportion to Varies in proportion to
flow and priceflow and price• $6.5 million or 76% of $6.5 million or 76% of
totaltotal
Department ExpensesDepartment Expenses
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UtilitiesUtilities– $14.8 million $14.8 million – Electricity costsElectricity costs
• Varies in Varies in proportion to proportion to flow and priceflow and price
• $13.5 million or $13.5 million or 91% of total91% of total
Department ExpensesDepartment Expenses
Electric RatesElectric Rates
5.00
6.00
7.00
8.00
9.00
10.00
11.00
12.00
1990
1991
1992
1993
1994
1995
1997
1998
1999
2000
2001
2002
2004
2005
2006
2007
2008
2009
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Repairs & MaintenanceRepairs & Maintenance– $14.0 million $14.0 million
– Includes:Includes:• Equipment Equipment • Buildings & groundsBuildings & grounds• VehiclesVehicles
Department ExpensesDepartment Expenses
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Other ExpensesOther Expenses– $6.7 million $6.7 million
– Includes:Includes:• Self insuranceSelf insurance• Postage & messenger Postage & messenger
servicesservices• Equipment rentalEquipment rental• Bad debt expenseBad debt expense• Bank chargesBank charges
Department ExpensesDepartment Expenses
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Budget ChallengesBudget Challenges
• IntroductionIntroduction
• Revenue Outlook Revenue Outlook
• Department ExpensesDepartment Expenses
• Budget ChallengesBudget Challenges
• Next StepsNext Steps
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County Guideline: County Guideline:
7% reduction would 7% reduction would adversely impact…adversely impact…– Regulatory RequirementsRegulatory Requirements
– Service Levels Service Levels
– ProgramsPrograms
– MaintenanceMaintenance
– Equipment ReplacementEquipment Replacement
Budget ChallengesBudget Challenges
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Regulatory Requirements…Regulatory Requirements…– Statutory staffing requirements at Statutory staffing requirements at
facilities facilities
Service Levels…Service Levels…– Water qualityWater quality
– Increased risk of sewer overflowsIncreased risk of sewer overflows
– Fire protection reliabilityFire protection reliability
– Increased Call Center response timesIncreased Call Center response times
Budget ChallengesBudget Challenges
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Programs…Programs…– Water Meter ReplacementWater Meter Replacement
• Potential loss of revenuePotential loss of revenue
– Private Pump Station Private Pump Station Compliance ProgramCompliance Program
• Limited enforcementLimited enforcement
– Oil & Grease PreventionOil & Grease Prevention• Limited enforcementLimited enforcement
– Cross Connection ControlCross Connection Control• Reduced inspectionsReduced inspections
– ConservationConservation• Reduced funding for Reduced funding for
conservation initiativesconservation initiatives
Budget ChallengesBudget Challenges
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Maintenance…Maintenance…– Insufficient resources for Insufficient resources for
preventive maintenancepreventive maintenance• ValvesValves• HydrantsHydrants• PlantsPlants• Pump stationsPump stations
Equipment Replacement…Equipment Replacement…• Delayed replacement of heavy Delayed replacement of heavy
equipmentequipment• Increases maintenance costs and Increases maintenance costs and
downtimedowntime
Budget ChallengesBudget Challenges
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• Sufficient funding is needed to serve Sufficient funding is needed to serve customers and meet regulatory customers and meet regulatory requirementsrequirements
• Goal to cut budget 3%-5%Goal to cut budget 3%-5%
• Challenge is to fund CIPChallenge is to fund CIP
Budget ChallengesBudget Challenges
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Rehabilitation10%
Other9%
Infrastructure38%
Water Plants21%
Wastewater Plants21%
Total Budget $633.1MTotal Budget $633.1M
Budget ChallengesBudget Challenges
5-Year CIP5-Year CIP
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Budget ChallengesBudget Challenges
InfrastructureInfrastructure
--Horizons West Wastewater SystemsHorizons West Wastewater Systems
-South Regional Water Transmission System-South Regional Water Transmission System
-Transportation Related Water Relocation -Transportation Related Water Relocation Phase IIPhase II
-Eastern Regional Water Transmission Systems-Eastern Regional Water Transmission Systems
-South Service Area Effluent Reuse-South Service Area Effluent Reuse
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Budget ChallengesBudget Challenges
Water PlantsWater Plants-Southern Regional Water Supply Facility-Southern Regional Water Supply Facility
-Eastern Water Supply Facility Phase III-Eastern Water Supply Facility Phase III
-Western Regional Water Treatment Facilities -Western Regional Water Treatment Facilities Phase IIIPhase III
-Southwest Water Supply Facility-Southwest Water Supply Facility
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Budget ChallengesBudget Challenges
Wastewater PlantsWastewater Plants-Eastern Water Reclamation Facility Expansion-Eastern Water Reclamation Facility Expansion
-Northwest Water Reclamation Facility Phase III-Northwest Water Reclamation Facility Phase III
-South Water Reclamation Facility Phase V-South Water Reclamation Facility Phase V
-Southwest Orange County Effluent Disposal-Southwest Orange County Effluent Disposal
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Budget ChallengesBudget Challenges
RehabilitationRehabilitation
-Wastewater Collection Systems Rehabilitation -Wastewater Collection Systems Rehabilitation
-Wastewater Pumping Stations Rehabilitation -Wastewater Pumping Stations Rehabilitation
-Water Distribution Systems Rehabilitation-Water Distribution Systems Rehabilitation
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Budget ChallengesBudget Challenges
• CIP large and essentialCIP large and essential
• Current reserves and revenues no Current reserves and revenues no longer adequatelonger adequate
• Long-term revenue Long-term revenue increases and borrowing are increases and borrowing are needed to fund CIPneeded to fund CIP
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Budget ChallengesBudget Challenges
• IntroductionIntroduction
• Revenue Outlook Revenue Outlook
• Department ExpensesDepartment Expenses
• Budget ChallengesBudget Challenges
• Next StepsNext Steps
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• Finalize the budgetFinalize the budget
• Analyze cash needsAnalyze cash needs
–Ensure budget can be funded for Ensure budget can be funded for FY11 and beyondFY11 and beyond
–Re-examine CIP for current Re-examine CIP for current growth trendgrowth trend
Next StepsNext Steps
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Orange County Utilities Orange County Utilities DepartmentDepartment
Water and Wastewater Water and Wastewater Budget ChallengesBudget Challenges
March 9, 2010March 9, 2010