Birmingham Water Works 2015 Operating Budget

Water WorksSpecial To The Times

Operating Budget
1.    Operating budget increased from $90.1M to $92.3M, which is an increase of $2.2M or 2%.
2.    Budget reflects cost increases in: labor; healthcare, pension and related cost; repair and maintenance of water mains in the distribution system; and increase billing cost.
3.    Budget reflects reduced cost in several areas including: power, chemicals and consulting fees.
4.    Our financial policy goal is to limit operating cost increases to 5% or less; therefore, we are well below (within) our policy. 2% cost increase for 2015 and an average of 2.58% over last 5 years.
5.    Operating revenue reflects 3.9% rate increase which means $1.81 for the average customer per month.
6.    Water industry projects future annual rate increases of 6.9% going forward. BWW future rate increases project at 3.9% which is lower than industry average.
7.    BWW projects future rate increases at 3.9% which is lower than industry average.
8.    Water industry experiencing an annual decline in per capita water consumption
A.    AWWA indicates average annual consumption decrease of 1.73% across nine states.
B.    Newport News Waterworks experienced consumption decrease of 4% annually from 2008 to 2012.
C.    BWWB projects a .9% decline in 2015 which is lower than average.

9.    Financial Policy Goal Summary:
A.    Rate increase below national average of 7.2%. BWWB 2015 rate increase is 3.9%.
B.    Operating expense less than 5%. BWWB operating expense increased by an average of 2.58% over the last 5 years and 2015 increase is 2%.
C.    Reserve fund policy of 35% of current operations met.
D.    Reserve fund policy of 25% of Capital Budget established in 2014 and target is expected to be reached by 2017.
10. AA Bond Rating with Standard & Poor’s with a stable outlook.
11. Aa2 Bond Rating with Moody’s with a stable outlook.
12. BWW maintains approximately 320 days of cash reserves on hand (Median AA utilities have 398 days cash on hand). In 2004, we only had 14 days of cash reserves on hand.
13. Budget maintains current staffing levels.
14. Budget does not include any new projects from strategic plan.

Capital Budget
1.    Maintain $970M in assets to provide the Nation’s highest quality water at affordable prices.
2.    Maintain Existing assets at their peak performance levels.
3.    Enhance and upgrade assets where financial analysis justifies the improvements.
4.    Water main rehabilitation (especially galvanized steel which is beyond its normal useful life) to improve water quality.
5.    Position system to meet current and future demands and promote growth in the region.

System Capacity
1.    Four raw water facilities can provide 289MGD to our service area and region.
2.    Raw water facilities provide 35MGD for Industrial Usage.
3.    Four finished water facilities can treat 189MGD of water to our customers.
4.    System has excess raw water and finished water capacity to handle future growth in region.