1995 Sewer & Water Rate Survey

Introduction

This report summarizes responses from the twelfth annual Sewer and Water Rate Survey, conducted by the Ohio Environmental Protection Agency. In addition, these responses are consolidated with data from previous surveys conducted between 1983 and 1994.

The 1995 Sewer and Water Rate Survey generated responses from 395 municipalities and districts across the state. The survey gathered information concerning the following areas:

• 1995 sewer rate
• Cause of sewer rate increase
• 1995 water rate
• Cause of water rate increase
• Sewer and Water System Revenues and Expenses
• Bond, Loan and Grant Funding
• Odor and Zebra Mussel Control at Water Supply Plants
• Water System Employees

A copy of the questionnaire is included in Appendix 1. Surveys were sent to 547 municipalities and districts, including 44 systems not previously surveyed; responses were received from 73% of these municipalities and districts. Respondents consisted of 335 systems offering sewer and water service, 32 "water-only" systems, and 23 "sewer-only" systems. The survey also included 7 sewer and water systems that are in some phase of planning or construction.

Appendices 2 and 3 report sewer and water rates, respectively, for responding communities as well as rates obtained outside of the survey. In a continuing effort to report accurate data, erroneous rates were corrected in Appendices 2 and 3. Corrections have caused slight changes in the tables and figures that include data from earlier years.

Copies of this report, or the database produced from the survey, can be obtained by calling (614) 644-2897. This report and the survey database can also be obtained from the Ohio EPA Fiscal Administration web page.

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Sewer and Water Rate Calculations

Sewer and water systems differ in the method of measurement (gallons or cubic feet) and billing period (monthly, bimonthly or quarterly) utilized to calculate rate charges for customers. To standardize sewer and water rates across Ohio and to allow for comparisons across municipalities, assumptions regarding consumption were made

Annual sewer and water rates were calculated assuming that 3-person households daily consumed 85 gallons of water per person. Also, rates were calculated for users within municipal limits as opposed to those outside such limits. Calculation of the annual rate per user assumed one of the following as the average water consumption per household:

• 7,756 gallons per month (1,037 cubic feet per month)
• 23,269 gallons per quarter (3,111 cubic feet per quarter)

Actual consumption will vary among households. Because most systems charge by the level of consumption, individual households may have sewer and water costs that are higher or lower than those listed in appendices 2 and 3. For example, a 1-person household would typically consume much less than 7,756 gallons per month.

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Sewer Rates

The 1995 average annual residential sewer rate was $298, which is a 3.8% increase over 1994. This is the smallest percentage increase since the survey began in 1983. Half of all sewer systems charged rates lower than $273 per year. Seventy-eight percent (298 systems) charged from $100 to $400 per year. Communities in which a rate increase became effective during the period of January 1, 1995 through December 31, 1995 paid an average of $49 more for sewer service than during the prior year.

Table 1 summarizes annual sewer rate data for 1983 through 1995. Figure 1 displays the average annual sewer rate data; figure 2 displays the distribution of sewer rates. Appendix 2 contains 1984 through 1995 annual residential sewer rates for communities and districts.

Table 1. Annual Residential Sewer Rate 1983-1995

Year Average Sewer Rate Percentage Increase Average Rate Increase 1983 $138 N/A N/A 1984 $144 4.3% $34 1985 $153 6.3% $32 1986 $162 5.9% $36 1987 $181  11.7% $58 1988 $200  10.5% $69 1989 $218 9.0% $68 1990 $233 6.9% $49 1991 $247 6.0% $47 1992 $260 5.3% $37 1993 $276 6.2% $47 1994 $287 4.0% $49 1995 $298 3.8% $49

Click here for Figure 1: Average Annual Sewer Rates 1983-1995

Click here for Figure 2: Sewer Rate Distribution

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Sewer Rate Increases

An increase in sewer rates was reported by 76 communities (20% of respondents), with an average annual increase of $49. Major capital improvements were cited as a cause for higher sewer rates by 16.2% of those incurring a rate increase, which is about the same percentage as reported in last year's survey. Labor cost was again the most frequently cited reason for a sewer rate increase. Explanations provided for the "other" category included cost increases passed on from other systems, inflation, automatic rate increases, loss of revenue, debt service and numerous other factors. As can be seen in figure 3, causes of sewer rate increases were evenly distributed among expenditure categories.

Click here for Figure 3: Causes of Sewer Rate Increases

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Water Rates

The 1995 average annual residential water rate was $262, which is a 4.4% increase over 1994. Although the rate of growth is higher than the average recorded during the late 1980's, this is the fourth consecutive year that the rate of growth in rates has decreased. Half of all water systems charged rates lower than $241. Eighty-four percent (329 systems) charged between $100 and $400 per year. Communities in which a rate increase became effective during January 1, 1995 through December 31, 1995 paid an average $42 more for water service than during the prior year.

Table 2 summarizes annual water rate data for 1984 through 1995. Figure 4 displays the average annual water rate data; figure 5 displays the distribution of water rates. Appendix 3 contains 1984 through 1995 annual residential water rates for communities and districts.

Table 2. Annual Residential Water Rate 1984-1995

Year Average Water Rate Percentage Increase Average Rate Increase 1984 $155 N/A N/A 1985 $163 5.2% $33 1986 $168 3.1% $30 1987 $175 4.2% $31 1988 $181 3.4% $35 1989 $188 3.9% $37 1990 $195 3.7% $34 1991 $210 7.7% $37 1992 $226 7.6% $35 1993 $238 5.3% $30 1994 $251 5.5% $42 1995 $262 4.4% $34

Click here for Figure 4: Average Annual Water Rates 1984-1995

Click here for Figure 5: Water Rate Distribution

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Water Rate Increases

An increase in water rates was reported by 111 communities, representing 28% of those responding. The average reported increase in annual water rates was $34. The most frequently cited reason for a 1995 water rate increase was the "other" category. The most common explanation given in the "other" category was a rate increase from the supplier of bulk water. Additional reasons included: studies, regulatory requirements, declining customer base or consumption, inflation, licenses and anticipated costs. Increasing labor cost was the most frequent single reason given for a 1995 water rate increase. Causes of 1995 water rate increases are illustrated by figure 6.

Click here for Figure 6: Causes of Water Rate Increases

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Sewer and Water
Rates: Twelve-Year
Comparison

Figure 7 displays average annual sewer and water rates since 1983 and 1984, respectively (the survey of water rates was started one year after sewer rates). The graph illustrates the stable relationship between water rates and sewer rates over the last five years. During the last five years annual water rates have averaged 87% of annual sewer rates.

Click here for Figure 7: Average Annual Sewer and Water Rates 1983-1995

Click here for Figure 8: Average Sewer and Water Rate Increases 1984-1995

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Revenues and Expenses

Sewer and water systems were asked to report operating and nonoperating revenues and expenses. Operating revenue is the money generated by charges for sewer and water service. Operating expenses are those costs directly related to providing these services, such as plant labor, chemicals, energy and maintenance. Nonoperating revenues include items such as transfers-in, interest earned, tap fees, deposits and surcharges. Nonoperating expenditures include transfers-out, debt service, insurance, billing and administration.

The average operating ratios (operating revenue divided by operating expenses) were 1.37 and 1.25 for wastewater systems and drinking water systems, respectivel. A ratio of 1.0 indicates a breakeven point, that is, operating revenues pay for operating expenses. Operating deficits (operating ratio less than 1.0) were reported by 24% of sewer and water systems.

The average ratio of total revenues to total expenses was 1.11 for both water and sewer systems. Fund deficits were reported by 41% of sewer systems and 31% of drinking water systems. A deficit does not necessarily indicate that a system is financially troubled since systems commonly go through a cycle of surplus after a rate increase and deficit before a rate increase. A water fund surplus was reported by 68% of respondents; a sewer fund surplus was reported by 58%of respondents. The remaining 1% of both sewer and water systems reported that revenues and expenses were exactly equal.

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Bond, Loan and Grant Financing

Respondents to the 1995 Sewer and Water Rate Survey reported $266,531,289 in loans, bond issuances and grants were obtained for sewer system improvements. During 1995, loans made up the largest share of this money, accounting for 47% ($126 million) of the total. About 88% of loan funds were obtained from public sources, the majority from state agency loan funds. Proceeds from the issuance of bonds raised $120 million (45% of total); whereas grants from government agencies provided $20.2 million (8% of total). Figure 9 illustrates the sources of outside funding for sewer system improvements.

Survey respondents also reported financing $97,832,848 in water system improvements. Bonds provided the largest share of funding, accounting for 52% ($50.5 million) of the total. Loans supplied 38% ($37.6 million) of total outside funding, with loans from public sources contributing 73% of all loan money. Grants from public sources made up the remaining 10% of water system improvement funding.

Click here for Figure 9: Outside Financing for Sewer System Improvements

Click here for Figure 10: Outside Financing for Water System Improvements

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Taste/Odor and
Zebra Mussel Control

Survey respondents were asked if the water system utilized taste/odor control or mussel control procedures. Taste/Odor control procedures or equipment were reported by 37% (134) of water systems; controls for zebra mussels were reported by 7% (26) of the systems. Zebra mussel controls were reported primarily in northern Ohio, which accounted for 69% (18) of systems reporting such controls.

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Water System Employees

The last question on the survey concerned the number and types of drinking water system employees. Respondents were asked to provide the number of people employed in each of eleven categories. The most common descriptions provided for the "Other" category were supervisors, meter readers and trainees. Other common responses in the category included: unlicensed plant operators, equipment operator, engineers and data and systems personnel. Table 3 displays the average number employed in each category by size of the drinking water system. Systems were grouped according to the following definitions of size:

• Small = total revenue less than $500,000
• Medium = total revenue greater than $500,000 and less than $2 million
• Large = total revenue greater than $2 million.

These groups were created for summary purposes only and do not represent any official designation.

Table 3. Average Drinking Water System Employees by System Size

Type of Employee System Size Small Medium Large Class 1 Plant Operator 0.7 1.3 3.8 Class 2 Plant Operator 0.2 0.5 1.4 Class 3 Plant Operator 0.3 1.7 3.9 Class 4 Plant Operator 0.0 0.1 0.7 Class 1 Distribution 0.2 0.7 1.5 Class 2 Distribution 0.1 0.7 2.6 Lab Technician 0.2 0.6 2.0 Clerical 0.6 1.2 10.5 Maintenance 0.6 1.4 23.1 Laborer 0.7 1.0 6.6 Other 0.2 0.3 1.8 Total 3.8 9.5 57.9