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[06] 2016 Proposed Utility Rates
11 Council Agenda Item 6 MEETING DATE: December 21, 2015 AGENDA ITEM: Comprehensive Rate Studies/Rental Fees SUBMITTED BY: Finance BOARD/COMMISSION/COMMITTEE RECOMMENDATION: None PREVIOUS COUNCIL ACTION: Council met in November to review the fee schedule agreeing to increased rental fees. Council hired Carl Brown Consulting to conduct a comprehensive rate analysis for water and sewer. Carl presented his initial study results at the Dec. 7, 2015 council meeting. BACKGROUND INFORMATION: Carl Brown from GettingGreatRates.com presented his initial comprehensive rate analysis for water and sewer on Dec. 7t". After good discussion, staff reviewed the timing of upcoming projects and equipment purchases. A few of the capital items were able to be shifted to allow more time to build rates to help support the capital purchases. In addition, Lori asked Carl to reduce the operating reserves from 35%to 25%for the first ten years in his analysis. The goal will be to reach 35%, but not until year 15. The State Auditor recommends 35%. Carl also prepared a third run on the sewer rates to see if splitting the initial increase over three years could be done. Enclosed is Carl's supplemental report to explain the changes that were made with updated recommendations. Enclosed is a rate comparisons for St.Joseph and the surrounding cities using their 2015 rates (2016 not approved yet). Using scenario#2 from Carl's supplemental analysis,the effect of the rate increases are $4 per month for a low user senior citizen, $22 per month for an average single family user, and $174 per month for a high user commercial account. The effects will vary based on usage. Finally, staff prepared a summary of what the proposed rates over the next nine years based on Carl's three scenarios. As Carl's analysis indicates, lower increases in the early years require larger increases in future years. With lower initial increases, and higher future increases are made,the future amounts paid will be higher. In scenario#3, the rates collected in sewer will not be enough to cover operations and debt. The sewer fund will be borrowing from the water reserves that will be building up to cover costs. Some of the shortfall may have to be covered by governmental funds. Once we get through the hump of the first few years in the sewer fund, the future increases will start self-funding the sewer fund and slowly building a reserve. The table following illustrates the current rates and three different options for rate increases. On the same table is the comparison to the area Cities. 2016 2016 2016 2015 St. St. St. �016�on� 2016 2016 St.Joseph Joseph Joseph Joseph Sm,neU Sauk St. Cloud Waite �� �� �� � �ido Pm� ,k U | | U | | Water $31.95 $63.40 $55.91 $60.8A Sewer 857.36 $48,,48, $37.86 $67.8,8 Total $89.31 $111,88 $93.77 $12872 Rental fees are added back to this request for action due to the file approved at Dec. 7 1h not including the increased proposed fees agreed upon in November. Below isthe discussion item included inthe Dec. 7 1h packet. "The rental permit fees are proposed toincrease. The rental permit fees were last increased inZU13by $10. The previous fee of$7Sper unit was ineffect since ZUUO. The rental permitting process isvery time consuming from administration to inspections. Several sites require follow up inspections to correct deficiencies. The proposed increase merely covers staff time and overhead costs to comply with the rental ordinance. Below isaquick summary ofthe comparison toarea cities. Each city administers their fees alittle differently. These are the base fees to represent a comparison. The cities ofSt. Cloud and Sauk Rapids are currently reviewing their rental permit fees a|so." St.Joseph- St.Joseph-15 Proposed 16 Sartell Sauk Rapids St.Cloud* Waite Park Additional Units $17.25 $20 $51 $50 $16 $50 *Owner occupied rate represented, non-owner occupied is$135 for the first unit. Staff isrecommending adoption ofthe water, sewer and rental fees. B0DGET/FISCALUMPACT: Vodoo ATTACHMENTS: 8oq000t for Council Action—Rate S0udv/8on1olF000 Utility Rates Comparison {]oUing[koot8o1oo.00nn Supplemental Report REQUESTED COUNCIL ACTION: Consider adoption the proposed 20|6 rental fees and Option#|. 92 or 93 for the water and sewer rates with fees beginning January |, 2016. City of St.Joseph Future Water&Sewer Rate Fees Comparison Average Single Family Customer Utilities- Scenario#1 Utilities-Scenario#2 Utilities-Scenario#3 2015 $ 116.50 2015 $ 116.50 2015 $ 116.50 2016 $ 178.10 52.90% 2016 $ 153.40 31.70% 2016 $ 133.20 14.30% 2017 $ 190.40 6.90% 2017 $ 165.30 7.80% 2017 $ 155.40 16.70% 2018 $ 203.70 7.00% 2018 $ 178.20 7.80% 2018 $ 183.20 17.90% 2019 $ 208.10 2.20% 2019 $ 188.21 5.60% 2019 $ 193.50 5.60% 2020 $ 212.60 2.20% 2020 $ 198.80 5.60% 2020 $ 204.30 5.60% 2021 $ 217.20 2.20% 2021 $ 209.80 5.50% 2021 $ 215.60 5.50% 2022 $ 222.10 2.30% 2022 $ 221.50 5.60% 2022 $ 227.70 5.60% 2023 $ 227.10 2.30% 2023 $ 233.90 5.60% 2023 $ 240.50 5.60% 2024 $ 232.20 2.20% 2024 $ 246.90 5.60% 2024 $ 254.00 5.60% Rates go higher than scenario#1 Rates go higher than scenario#2 City of St.Joseph Area Cities Comparison of Utility Fees Revised Proposed as of December 21,2015 Tiered Rates scenario#2 scenario#3 Water only Sewer only Water&Sewer Sewer only St.Joseph St.Joseph St.Joseph 600 tuft Min. 6000 gal Min. 6000 gal Min. 200 tuft Min. St.Joseph Proposed Proposed Proposed Sartell Sauk Rapids Waite Park St.Cloud Water 2015 2016 2016 2016 2015 2015 2015 2015 Bi-monthly Line Charge-Commercial 22.00 22.00 22.00 22.00 13.80 19.00 35.10 27.82 Bi-monthly Line Charge-Residential 22.00 22.00 22.00 22.00 13.80 18.00 35.10 12.56 Usage per 1,000 gallons 3.60 5.09 4.64 4.64 3.08 4.40 5.85 4.20 Sewer Bi-monthly Line Charge-Commercial 27.00 27.00 27.00 27.00 - 30.07 39.54 7.84 Bi-monthly Line Charge-Residential 27.00 27.00 27.00 27.00 - 29.07 39.54 7.84 Usage per 1,000 gallons 3.15 7.34 5.80 3.78 5.52 4.51 6.59 3.53 scenario#2 scenario#5 St.Joseph St.Joseph St.Joseph Bi-Monthly Bill St.Joseph Proposed Proposed Proposed Sartell Sauk Rapids Waite Park St.Cloud Effect on SF avg user-12,000 gallons 2015 2016 2016 2016 2015 2015 2015 2015 Water 66.30 84.18 78.78 78.78 38.96 71.86 71.26 64.00 Sewer 64.80 115.08 96.60 72.36 66.26 56.13 79.08 44.92 131.10 199.26 17 5.38 151.14 105.22 127.99 150.34 108.91 Bi-Monthly Bill-1 BAC Effect on Comm user-60,000 gallons scenario#2 scenario#3 Water 255.55 351.55 322.55 322.55 200.21 303.87 414.57 283.95 Sewer 216.00 467.40 375.00 253.80 331.31 273.61 434.94 214.34 471.55 818.95 697.55 576.35 531.52 577.48 849.51 498.29 GettinglGreatRates.com Creating Informed Ratesetting Decisions Water and Sewer Rate Analysis Report Supplement 1 City of St. Joseph, Minnesota Prepared December 11, 2015 Carl Brown, President GettingGreatRates.com, LLC Executive Summary GettingGreatRates.com analyzed the water and sewer rates of the City of St. Joseph, Minnesota. Subsequently, the City wanted to consider initial rate increases that would not be as abrupt as those initially recommended. This supplemental report lays out such rates. Given that you want to reduce "rate shock" for customers, I recommend that you adopt rates modeled in Water Scenario 2 and Sewer Scenario 2. GettingGreatRates.com 1014 Carousel Drive Jefferson City Missouri 65101 carlegettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 St.Joseph,MN Rate Analysis Report, Supplement 1, 12/11/15,Page 2 of 8 Table of Contents ExecutiveSummary...................................................................................................................................1 Introduction................................................................................................................................................2 Changes Made to Lessen Initial Rate Increases.....................................................................................3 Water Scenario 2, Discussion and Resulting Rates...............................................................................4 Action Recommendations for Rates and Fees:...................................................................................4 Table 1: St.Joseph, MN Bi-monthly Water Line Charge,MDS Test Fee and Unit Charge......4 RateAffordability...................................................................................................................................5 Actual Balances You Should Expect....................................................................................................5 Closing.....................................................................................................................................................5 Sewer Scenario 2, Discussion and Resulting Rates...............................................................................5 Action Recommendations for Rates and Fees:...................................................................................6 Table 2: St.Joseph, MN Bi-monthly Sewer Line Charge and Unit Charge................................6 RateAffordability...................................................................................................................................6 Actual Balances You Should Expect....................................................................................................6 Closing.....................................................................................................................................................7 Sewer Scenario 3, Discussion and Resulting Rates...............................................................................7 Action Recommendations for Rates and Fees:...................................................................................7 Table 3: St.Joseph, MN Bi-monthly Sewer Line Charge and Unit Charge................................7 RateAffordability...................................................................................................................................8 Actual Balances You Should Expect....................................................................................................8 Closing.....................................................................................................................................................8 RateAnalysis Models..................................................................................................................Attached Introduction In 2015, the City of St.Joseph, Minnesota,later called "the City" or "you,"hired GettingGreatRates.com,later called "me" or "I" to perform rate analyses as guidance for the City in its efforts to set and maintain adequate and fairly structured user charges for its water and sewer utilities. As a result,I analyzed the financial condition of each utility, considering operating costs, capital improvement needs over the next 10 years,equipment repair and replacement needs over the next 20 years and many other issues. I made rate adjustment recommendations and presented those rates and the underlying analysis at a council meeting on December 7, 2015. Subsequently, I was asked to "push back" some capital improvements and equipment repair and replacements and consider other measures that would reduce the initial increases in rates,especially sewer rates. Getting6reatRates.com 1014 Carousel Drive Jefferson City Missouri 65101 carlegettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 St.Joseph,MN Rate Analysis Report,Supplement 1, 12/11/15,Page 3 of 8 Important note:In the previously submitted models I included the assumption that you would qualify for modest grants to help fund capital improvements. I now doubt that would be the case. Therefore, in the new models I have assumed that you will have to pay all capital improvement costs with no "outside funds"to lower your costs, and rates. Should you qualify for grants,future rate increases will not need to be as large as those modeled. The analysis models were adjusted to accomplish the above goal. Otherwise, the models are the same as the initial models. And, most of my initial recommendations remain the same, too. Therefore, in this supplemental report I will only discuss those things that are different from the first report. To make it easier to find data and assumptions that changed in the new models as compared to the previously submitted models, such things are highlighted in yellow in the new models. The rate models that accompany the narrative report are named "St.Joseph, MN,Water Rates Scenario 1015-2," "St.Joseph,MN, Sewer Rates Scenario 1015-2" and "St.Joseph, MN, Sewer Rates Scenario 1015-3." Later in this report these names will be shortened to "Water Scenario 2, "Sewer Scenario 2" and "Sewer Scenario 3," respectively. Sewer Scenario 3 is the same as Sewer Scenario 2 in all respects except that the initial rate adjustments were spread over the first three years rather than being done all at once during the first year. Within each subsection the applicable model will often simply be referred to as "the model." Changes Made to Lessen Initial Rate Increases The following changes were made to all of the new water and sewer rate models: • As shown in Table 2 of each model, future across the board increases were set higher, to allow for lower initial rate increases. For water, that worked out to 5.0 percent. For sewer that worked out to 6.0 percent each year starting in 2019 with higher increases in the years before that. • As shown near the bottom of Table 3, the operating reserve goal was reduced from 35 percent to 25 percent. Not shown on any table is the capital improvement and debt service reserve goal, which was set to be equal to (100 percent of) the last year's total expenses in the previous models. The new target for this reserve is 25 percent of that year's total expenses. • Table 4 shows the greatest number of significant changes, primarily postponing several capital improvements, which would reduce debt payments during the next 10 years. • Table 16 also includes many significant changes. Most decreased costs but some actually increased costs. • In Table 17, I decreased the final repair and replacement reserve target from one average year's worth of replacement costs to zero—no reserve after 20 years. GettingGreatRates.com 1014 Carousel Drive Jefferson City Missouri 65101 cart@gettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 St.Joseph,MN Rate Analysis Report,Supplement 1, 12/11/15,Page 4 of 8 These changes make up what I would consider to be the lowest doable rates alternatives. They are doable because the City has been operating under even lower rates, with subsidies from general revenue and other sources to make up for shortfalls in user charge revenues. Operating with these lower reserves is also riskier.But the City has been operating with even lower reserves up until now so you have been subject to even greater risk before. Thus, the rates laid out here would be less risky than your current rates regime. Water Scenario 2, Discussion and Resulting Rates The above described changes would not reduce the initial rate increase by much. Instead of going up by an average of 34 percent overall, rates would need to increase by 28.6 percent in Water Scenario 2. Those rates are shown in the following Table 1. Action Recommendations for Rates and Fees: 1. You should assess to in-citi customers the line and unit charges shown in Table 1 that follows this list. 2. The calculations assumed you will make these adjustments early enough to enable you to collect at these rates for the January 1, 2016, billing. If you miss this date by a month, your reserves will be drawn down slightly more than currently projected. 3. I recommend you continue with the planned changes to your current tap-on fees. 4. If all goes as modeled, on the one-year anniversary of making the rate adjustments called for above, and for several years thereafter, raise all rates and fees across the board by 5.0 percent. This is the combination of an inflationary increase intended to match inflation in the cost to own and operate the utility and a "catch up"increase to increase reserves to the targets more gradually. 5. You should examine your shut off and reconnection, meter charges and similar fees to determine if they are high enough to recover the related costs. Revenue generation is not the goal for such programs. It is a fairness issue because if these fees do not recover their related full costs, regular customers will have to make up the difference in the form of higher user fees. Table 1: St.Joseph, MN Bi-monthly Water Line Charge,MDS Test Fee and Unit Charge Table 1:St.Joseph, MN Bi-monthly Water Line Charge, MDS Test Fee and Unit Charge Water Line MDS Test Fee Unit Charge per Customer Class Charge per Unit per Customer 1,000 Gallons Residential, G-01, 02,03, 04, 05, 07, 09 $22.00 $1.10 $4.64 Commercial, G-06 $22.00 $1.10 $4.64 Industrial, G-08 $22.00 $1.10 $4.64 College Townhomes, G-12 $22.00 $1.10 $4.64 Senior Housing Addition, G-13 $22.00 $1.10 $4.64 City, G-10 $22.00 $1.10 $4.64 GettingGreatRates.com 1014 Carousel Drive Jefferson City Missouri 65101 cart@gettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 St.Joseph,MN Rate Analysis Report,Supplement 1, 12/11/15,Page 5 of 8 Rate Affordability As shown near the top of Table 6, page 27(highlighted blue) and graphically in Chart 4, page 31, the affordability index of your current rates, at 0.78 percent, is lower than the approximate national average of 1.0 percent. The rates modeled in Water Scenario 2 would raise the affordability index to 0.90 percent in 2016,higher,but still "affordable." Actual Balances You Should Expect The modeled rates will result in total reserves that will be very strong within about one year. However, that is not the whole picture. Discussed further in the next section, I modeled sewer rates that will be too low to fully fund that utility, more so in Sewer Scenario 3 than in Sewer Scenario 2. I assume you will make up that shortfall by borrowing from the water fund. Therefore, at the bottom of Table 6 of each model you will find the "Sum of All Reserves" for each year.You should add the water reserve amounts to the sewer reserve amounts in Sewer Scenario 2 or Sewer Scenario 3 to get the overall reserves for each year. If you adopt the Sewer Scenario 2 rates, your overall reserves will be slightly positive during the lowest reserve years. If you adopt the Sewer Scenario 3 rates, they will go slightly negative during those years. Closing I suspect you will find additional ways to economize expenses, postpone debt, etc. Even still, you should consider the rates shown above as the least you can assess initially. In addition, in future years you will need to continue with the recommended across the board increases to make this not-at-all-rosy future turn out this well. Sewer Scenario 2, Discussion and Resulting Rates The initial rate increase in these modeled rates would be significantly lower than the previously recommended rates.That will have several effects, most of which you can consider by doing the following: • Lay Table 6 of the previously submitted Sewer Scenario 1 model side by side with Table 6 from this model.You will see how these different rate strategies affect a residential customer that uses 10,000 gallons bi-monthly (5,000 gallons monthly, a common comparison benchmark). You can do the same thing graphically with Charts 3 and 4. • You should also consider the effect on reserves that the two strategies will have. Do that by comparing the last line (Sum of All Reserves) of Table 6 from each model. GettingGreatRates.com 1014 Carousel Drive Jefferson City Missouri 65101 cart@gettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 St.Joseph,MN Rate Analysis Report,Supplement 1, 12/11/15,Page 6 of 8 Action Recommendations for Rates and Fees: 1. You should assess to in-citu customers the line and unit charges shown in Table 2 that follows this list. 2. The calculations assumed you will make these adjustments early enough to enable you to collect at these rates for the January 1, 2016, billing. If you miss this date by a month, your reserves will be drawn down slightly more than currently projected. 3. I recommend you continue with the planned changes to your current tap-on fees. 4. If all goes as modeled, on the one-year anniversary of making the rate adjustments called for above, and for several years thereafter, raise all rates and fees across the board by 10.0 percent in 2017 and 2018, and 6.0 percent each year after that. These increases are the combination of an inflationary increase intended to match inflation in the cost to own and operate the utility and "catch up" increases to increase reserves to the targets more gradually. The 10.0 percent increases are needed to get you over a cost peak(for the most part) that will occur in 2018 or 2019. 5. You should examine your shut off and reconnection, meter charges and similar fees to determine if they are high enough to recover the related costs. Revenue generation is not the goal for such programs. It is a fairness issue because if these fees do not recover their related full costs, regular customers will have to make up the difference in the form of higher user fees. Table 2: St.Joseph, MN Bi-monthly Sewer Line Charge and Unit Charge Table 2: St.Joseph, MN Bi-monthly Sewer Line Charge and Unit Charge Sewer Line Unit Charge per Customer Class Charge per Unit 1,000 Gallons Residential $27.00 $5.80 Commercial $27.00 $5.80 Industrial $27.00 $5.80 CSB Student Housing $27.00 $5.80 City, G-10 $27.00 $5.80 Rate Affordability As shown near the top of Table 6, page 27 and graphically in Chart 4, page 31, the affordability index of your current rates is 0.67 percent. The rates modeled in Sewer Scenario 2 would raise the affordability index to 1.09 percent in 2016, a bit higher than the national average. Actual Balances You Should Expect These sewer rates will result in combined water and sewer reserves that will be slightly positive,even during the lowest reserve years. Of course, that is due to the fact that the water reserves will be strong enough that the sewer system will be able to borrow from it to cover sewer reserve deficits for several years. GettingGreatRates.com 1014 Carousel Drive Jefferson City Missouri 65101 cart@gettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 St.Joseph,MN Rate Analysis Report,Supplement 1, 12/11/15,Page 7 of 8 Closing Of the two sewer rate scenarios, I prefer rates from Sewer Scenario 2. Sewer Scenario 3, Discussion and Resulting Rates As described for Sewer Scenario 2 above,make comparisons of the rates and reserves but this time, add the table and charts from Sewer Scenario 3. In this scenario, the initial rate adjustment would be done by spreading it evenly over the next three years. That would require increases of 29.0 percent in each of those years. After that, rates would need to go up by 6.0 percent per year. Action Recommendations for Rates and Fees: 1. You should assess to in-citu customers the line and unit charges shown in Table 3 that follows this list. 2. The calculations assumed you will make these adjustments early enough to enable you to collect at these rates for the January 1, 2016, billing. If you miss this date by a month, your reserves will be drawn down slightly more than currently projected. 3. I recommend you continue with the planned changes to your current tap-on fees. 4. If all goes as modeled, on the one-year anniversary of making the rate adjustments called for above, and for several years thereafter, raise all rates and fees across the board by 29.0 percent in 2017 and 2018, and 6.0 percent each year after that. These increases are the combination of an inflationary increase intended to match inflation in the cost to own and operate the utility and "catch up" increases to increase reserves to the targets more gradually. The 29.0 percent increases are needed to get you over a cost peak(for the most part) that will occur in 2018 or 2019. Because you will not completely clear this cost peak, be prepared to borrow to cover the shortfall. 5. You should examine your shut off and reconnection, meter charges and similar fees to determine if they are high enough to recover the related costs. Revenue generation is not the goal for such programs. It is a fairness issue because if these fees do not recover their related full costs, regular customers will have to make up the difference in the form of higher user fees. Table 3: St.Joseph, MN Bi-monthly Sewer Line Charge and Unit Charge Table 3: St.Joseph, MN Bi-monthly Sewer Line Charge and Unit Charge Sewer Line Unit Charge per Customer Class Charge per Unit 1,000 Gallons Residential $27.00 $3.78 Commercial $27.00 $3.78 Industrial $27.00 $3.78 CSB Student Housing $27.00 $3.78 City, G-10 $27.00 $3.78 GettingGreatRates.com 1014 Carousel Drive Jefferson City Missouri 65101 cart@gettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 St.Joseph,MN Rate Analysis Report,Supplement 1, 12/11/15,Page 8 of 8 Rate Affordability As shown near the top of Table 6, page 27 and graphically in Chart 4, page 31, the affordability index of these rates would be 0.90 percent in 2016, a bit lower than the national average. This affordability index is lower than the initial rates from Sewer Scenario 2. However,by 2018, the Scenario 3 rates will overtake the Scenario 2 rates and by 2024, they will be about $12.00 more bi-monthly than the Scenario 2 rates. Thus, when you decide between making the full rate increase right away or postponing some of it for two years, you also need to consider the effect that postponing will have on future rates, too. Actual Balances You Should Expect These sewer rates will result in combined water and sewer reserves that will be slightly negative during a few years. The sewer system will need to borrow most of the available reserves from the water fund plus some from other sources to cover sewer reserve deficits for several years. This is an important difference compared to the Sewer Scenario 2 rates model. Closing I do not recommend the rates from Sewer Scenario 3,but I certainly understand your desire to reduce "rate shock" for your ratepayers. If you adopt these rates, you will at least make customers'budgeting for increased water and sewer bills easier, initially. If you adopt these rates,be prepared to make significant cuts to expenses, delays in projects and/or be prepared to borrow from other funds or outside sources to cover years you are projected to run deficits. GettingGreatRates.com 1014 Carousel Drive Jefferson City Missouri 65101 cart@gettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 St. Joseph, MN; Water Rates Scenario 2015-2 Modeling Results This document contains the calculations that were performed to arrive at new user rates and fees for the next 10 years.These calculations are complex so key issues are also described in a narrative report that accompanies this model. This analysis was conducted so as to establish user rates that are adequate to pay all reasonably expectable costs while charging rates that are fairly structured and appropriately simple or complex. Scenario Description: This analysis model is the same as the previously submitted Water Scenario 1 except for a few differences. Some of the assumed future costs have been lowered.And, future across the board increases were raised. Both of these changes result in the need for lower rate increases initially. For most,the best way to read and understand what this model means is this.Scan the"Index of Tables,Charts and Other Results" to see how the model is laid out.Scan the"Definitions"for any terms you are not already familiar with. Read and even ponder Table 1 and the line graph charts.These will show you how the proposed rate adjustments will affect ratepayers and the system. If you need more detail than that,review the entire model. Finally,rate setting involves much more than just rates so you need to read the accompanying narrative report to understand what you need to do and why. Several tables in this model depict volume usage and user rates for the various customer classes.The model includes a continuum of volumes but many volume categories had no users. Most of these lines have been hidden simply to make the tables less voluminous. However,all volume classes that had use or that are break points for rate blocks are shown. For volume classes that are not shown,rates will be the same as the previous rate that is shown. December 11,2015 This rate analysis scenario was produced by Carl E. Brown,Getting GreatRates.com 1014 Carousel Drive,Jefferson City,Missouri 65101 (573)619-3411 www.gettinggreatrates.com carl(a-)gettinggreatrates.com CBGreatRates©Version 7.2 Index of Tables, Charts and Other Results Note: When a numbered table or chart is missing from the list below and this model package, that was not a mistake. It simply means that table or chart from our master program was not needed in this situation. Name What Each is or Does Definitions The meaning of terms used in this report and in rate setting generally Return on Investment A summary of financial outcomes produced by the proposed rates Table 1 -Modeled Rates User rates depicted in this model for each user class Table 2-User Base Data and Operating Basic user statistics and operating revenues, projected for next 10 years, based upon Incomes adopting modeled rates and future inflationary increases Table 3-Operating Costs and Net Income Operating costs projected for next 10 years,excluding debt service Table 4-Capital Improvement Program Capital improvements and how they will be paid over next 10 years, including debt service Table 5-Capacity Cost; Its Amount and Capacity costs incurred on behalf of new connections, if applicable How it Will be Recovered Table 6-Financial Capacity Indicators and Balances and financial health indicators as a result of adopting the modeled rates Reserves Table 7-Bill Comparisons Before and After Illustrates effects of modeled rates on bill increases or decreases for use at various Rate Adjustments levels Table 8-User Statistics Depicts usage and revenue statistics brought on by the modeled rates Chart 1 -Operating Ratio Graph of operating ratio for next 10 years if modeled rates are adopted Chart 2-Coverage Ratio Graph of coverage ratio for next 10 years if modeled rates are adopted Chart 3-5,000 Gallon Residential User's Graph of bill for a 5,000 gallon per month residential user,with smallest available meter Bill size,for next 10 years at modeled rates(used in grant and loan eligibility determinations) Chart 4-Affordability Index Graph of affordability index of residential user's bill for next 10 years at modeled rates (used in grant and loan eligibility determinations) Chart 5-Working Capital vs Goal Graph of total (unobligated)cash assets for next 10 years at modeled rates compared to the goal for total cash assets Chart 6-Value of Cash Assets Before Graph of total (unobligated)cash assets NOT adjusted for inflation for next 10 years at Inflation modeled rates Chart 7-Value of Cash Assets After Graph of total (unobligated)cash assets adjusted for inflation for next 10 years at Inflation modeled rates Table 9-Tap Fees Based on Meter Size Calculation of tap fees based upon meter or connection size, if applicable Table 10-Capacity Charges Based on Calculation of surcharges to apply to minimum charges, based upon meter or connection Meter Size size,that will recoup part or all of the costs incurred to provide high-flow capacity, if applicable Table 11 -Initial Rate Adjustments and Recitation of current rates, and calculation of modeled rates and blended revenues they Resulting Revenues will produce during the year following the test year(usually this year in real time) Table 12-Test Year Usage Compilation of actual volume of service used by customers during the test year Table 13-Rates at End of Test Year The user rate table in effect at the end of the test year Table 14-Average Cost Classification Sumation of a specified year's costs and calculation of"cost of service"basis for recovery of fixed costs and variable costs. Incremetal (marginal)costs that would be incurred if the system produced incrementally Table 15-Marginal Cost Classification more volume of service,the system brought on a new customer or did something similar, if applicable Table 16-Equipment Replacement Detailed schedule of equipment replacements for next 20 years, if applicable Schedule Table 17-Equipment Replacement Annuity Calculation of the annual annuity(yearly savings amount)needed to pay for all Calculation equipment replacements as they come due and end with a desired balance Definitions The monthly charge for(typically)5,000 gallons of residential service divided by the median monthly household income for the area served by the system.An index of 1.0, Affordability Index meaning a household pays one percent of its income to pay its bill for 5,000 gallons of service,is generally considered affordable.Affordability index is a primary factor in determining grant and loan eligibility and grant amount. A charge that buys a new customer system capacity.This is a charge levied on a new Capacity Charge,also commonly called an customer that recovers all or part of the capital costs to build capacity to be able to Impact Fee or Availability Charge serve that customer's actual or potential demand.This charge may be a few thousand dollars for a residential customer to many thousands of dollars for a large industrial customer. A schedule of anticipated capital improvements.These are the more expensive items Capital Improvement Plan or Program(CIP) such as water towers,treatment plants and lines that generally require bond or grant funding.They do not include equipment replacement items. Capital Improvement Reserves Cash reserves dedicated to funding the CIP A thorough examination of a system's operating,capital improvement,equipment replacement and all other costs,revenues,current rates,number of users and their use of the system,growth rates and all other issues surrounding the system.This examination will determine how rates and fees should be set in the future to cash-flow Comprehensive Rate Analysis the system properly,to build appropriate reserves and to be fair the ratepayers. It also will determine how policies should be adjusted to enable the system to operate well now,operate well in the medium-range future(about 10 years)and prepare for expected and expectable events such as capital improvements and equipment replacement. A charge that buys a new customer connection to the system.This charge is levied on a new customer to recover all or part of the costs a system incurs in the course of connecting the new customer to the system.This may include labor costs for staff or Connection Charge others on-site;equipment sold by the system to the new customer for making the connection;equipment,tools and supplies used by system staff for making the connection;and the like.This charge may be a few hundred dollars for a residential customer to thousands of dollars for a large industrial customer. Conservation(Inclining)Rates Unit charges that go up as the volume used goes up There are several ways to define cost to produce.Each is acceptable for different purposes.Generally,cost to produce is the total of all variable costs required to get Cost to Produce service to a utility's customers during one year divided by the total units of service delivered during that year. In a proportional to use rate structure,this will be the variable cost.See"Cost Calculations"at the bottom of Chart 19. Cost to Serve Rates Rates where fixed and variable costs generated by each user class are paid by that class with minimum and unit charges,respectively. The two main types of costs are fixed-those that are related to the fact that someone is Cost Types; Fixed and Variable a customer;and variable-those that are related to the volume of the commodity delivered to customers.Generally,fixed costs should be recovered with minimum charges and variable costs with unit charges. Incomes available to pay debt divided by the amount of the debt for that year.Most Coverage Ratio(CR) systems should have a CR of 1.25 or higher.Note:the CR in this model also includes reserves available to pay debt in the CR calculation,which is a more realistic approach to debt coverage. For a year,the sum of all incomes and undedicated reserves minus all current financial Current Position obligations for that year. Future obligations(next year's loan payments)and depreciation are not included.Current position is a good measure of overall financial health. Declining Rates Rates where unit charges go down as the volume used goes up Flat Rates Rates where all users pay exactly the same fee regardless of the volume of service they use Based upon number of water using fixtures,average flow,potential flow or similar Equivalent Dwelling Unit(EDU)or criteria;the consumption rate of the average single family home is rated at one EDU.All Equivalent Residential Unit(ERU) other types of customers are then compared on this measuring basis and the EDUs are calculated.Generally the purpose of this exercise is to calculate fees that each EDU must pay. Rate increases done,generally annually,following the initial rate adjustment.The goal Incremental Rate Adjustments of these rate increases is to keep the system's income and reserve levels on track. Rate structure fairness is a small issue,if it is an issue at all.Such increases are usually small,in the two to five percent per year range. Definitions Rate adjustments done in follow up on the comprehensive rate analysis.Generally,the Initial Rate Adjustments goal of such adjustments is to establish rates that put the system's income and reserve levels on track with the system's financial needs and do it with a structure that is fair to the ratepayers. Inflow&Infiltration(I&I) In a sewer system,water that gets into the collection system by way of illicit connections (inflow)such as gutter downspouts and leaks in manholes and sewer lines(infiltration) Infrastructure Hard assets,such as water towers,treatment plants and lines needed to provide service to customers connected to the system The total cost to design,build,operate,maintain and eventually dispose of an asset. Life-cycle Cost One asset may cost less to build but be more expensive to operate and maintain, yielding a higher life-cycle cost. The part of fixed and/or variable costs that are unavoidable should use go up marginally,should an additional large-volume customer be added at a discounted but Marginal Costs still profitable fee or for other reasons.Generally marginal costs are less than the average fixed and variable costs but when extra use requires a system upsizing,they can be greater.These costs are especially useful when considering selling service at wholesale. Definitions and calculations vary. For rate setting purposes operating costs are costs Operating Costs incurred because a system is operated.Such costs are generally recovered through unit charges. Operating Revenues Revenues generated by user fees Current incomes divided by current expenses,not including debt.An OR of 1.0 is "break even."Most systems should have an OR of 1.25 or higher.Note:the OR Operating Ratio(OR) calculation in this model also included undedicated reserves,which is a more realistic approach to covering operating costs.However,most lenders,for example,disallow reserves from being considered in the operating ratio calculation. Payback Period Time required for the investment made to get this analysis to return that investment through increased user and other fees The volume of service that a user could demand for a short period of time at full volume Potential Demand use.The potential demand limiting factor is usually the size of the customer's meter or service line. Rates where the minimum charge recovers all fixed costs,the unit charge recovers all Proportional to Use Rates variable costs,the unit charge is the same for all volume sold,and there is no usage allowance in the minimum charge. A timetable that describes equipment replacement and important repairs that are too Replacement Schedule infrequent and/or too expensive to cover as annual operating costs but not so expensive that they need to be covered as capital improvements. Replacement Reserves Cash reserves used to fund the Replacement Schedule Return on Investment The dollar amount or percentage of revenue gain enabled by this analysis A charge that gives a new customer the right to connect to the system.This fee may include the costs of administering the connection program,such as staff time to'sign Tap Fee,also called a Hook up Fee or up'new customers,get them into the system's billing program,do an inspection of the Connection Fee service connection to assure that it meets the system's standards and the like.This charge is usually minimal for a residential customer and maybe a few thousand dollars for a large industrial customer.Capacity and connection fees are commonly added to tap fees and the total fee is just called a'tap'fee. Test Year The one year period from which data was gathered to be the basis of the rate analysis The volume,if any,that is"given away"with the minimum charge.Most systems give Usage Allowance away no volume.Those that give away an unlimited volume have what are called"flat rates." User Fee, User Charge,User Rates Fees assessed to customers for use of the system.Does not include tap,capacity or connection fees,late payment penalties or other types of charges. Measured by volume or percent,the part of a water system's net water production that Water Loss does not get to customers.This loss also includes billable volume lost due to under- registering customer meters. Working Capital, Net Income The amount left in the operating fund after paying all costs due during that month,year or other time period.Working capital of$0 is"break even." The desired percentage in excess of"break even"for the operating fund.Small systems (a few hundred connections)generally should target 35 percent or greater. Larger Working Capital Goal systems can target less,down to a minimum of about 20 percent for systems with 5,000 or more connections but the goal for each system should be based upon the needs of that system. Return on Investment St. Joseph, MN; Water Rates Scenario 2015-2 The rates depicted in this model will produce various returns on investment or paybacks. Usually the most important payback, at least to ratepayers, is a rate structure that is demonstrably fair. For the system, however, making sure that revenue will be adequate to pay all expected,expectable and many unexpectable costs is the the most important return. If revenue will increase as a result of this analysis,which is almost always the case, one can calculate a return on investment. The following calculations show what was invested and what the returns will be over two periods;five years and 10 years. Five years is a reasonable period for return projections.Ten years is a good basic planning horizon but you should not bank on amounts or returns projected that far out. Besides, most systems should have their analyses redone long before then. Consider these key points about return on investment. Higher rates will fund more improvements, better repair and replacement and more. Most increases in revenue end up being used for such expenses.Thus,few systems end up with a dramatic increase in their cash reserves but they do markedly improve their financial position. In addition,fairer and higher rates generally enable systems to qualify for grant and loan funding that they otherwise would not.That increases the importation of"other people's money,"which is a drain on the state and federal levels,where the money comes from, but it is very desirable at the utility level. Also note that rates in this model have been modeled to be adjusted during the year following the test year or even later.That year is included in the first five-year return on investment calculation.Thus,the first year of returns calculated below include most or all of one year where rates will not have been changed yet, lowering the calculated return on investment but not the real rate of return. Calculations $7,731 Fees to GettingGreatRates.com $500 Estimated value of system staff time and incidentals to assemble needed information $8,231 Total Investment for This Analysis $973,244 Five-year Increase in Revenue Due at Least Partly to This Analysis 11824% Five-year Return on Investment(increase in revenues/investment) $3,441,009 Ten-year Improvement in Cash Position Due at Least Partly to This Analysis 41805%Ten-year Return on Investment(increase in revenues/investment) This analysis was produced using the program CBGreatRates, copyright 2015.You are encouraged to distribute this report to others so long as credit is ascribed to the author, Carl E. Brown of GettingGreatRates.com. CBGreatRates©Version 7.2 Table 1 - Modeled Rates St. Joseph, MN; Water Rates Scenario 2015-2 Modeled unit charges are shown in this table. Other rate components are shown in the narrative report. Customer Class, Bottom of Volume Top of Volume Usage Allowance in Unit Charge Rate Class or Range in Gallons Range in Gallons 1,000 Gallons per 1,000 Gallons Meter Size Residential, G-01, 0 999 0.000 $4.64 02, 03, 04, 05, 07, 1,000 1,999 0.000 $4.64 09 160,000 99,999,999 0.000 $4.64 0 999 0.000 $4.64 Commercial, G-06 1,000 1,999 0.000 $4.64 160,000 99,999,999 0.000 $4.64 0 999 0.000 $4.64 Industrial, G-08 1,000 1,999 0.000 $4.64 160,000 99,999,999 0.000 $4.64 0 999 0.000 $4.64 College 1,000 1,999 Townhomes, G-12 0.000 $4.64 160,000 99,999,999 0.000 $4.64 0 999 0.000 $4.64 Senior Housing 999000 1, Addition, G-13 1, 0.000 $4.64 160,000 99,999,999 0.000 $4.64 0 999 0.000 $4.64 City, G-10 1,000 1,999 0.000 $4.64 160,000 99,999,999 0.000 $4.64 CBGreatRates©Version 7.2 m V O O o o N m O O N O O 0 N 0 0 0 0 0 0 0 0 N O O O O OW O - OWmOOOOOO NmmOWM O V (O (O Nr (O N O O N O W coco N d o (p (O (O N M N N M O m W � m o o o 0 0(» o o } r O m (`') 0 O o o N (O N N O O N O O W m 0 0 0 0 0 0 0 0 0 O O O O N (O pl c N W 0 O rO m O W m a N O m fOl3 O O m m N m m O m N jr� W m O O NO O NNO W O N N E } NNH M NO O m V '- O N N uJ O H3 O O ER V H3 N 1� fA fA N fA ER fA ER } (� pl 6 m N O O o o (h (h (O (O O O m O O V 0 0 0 0 0 0 0 0 0 0 O O O O N tll c N (O (O (O N N m O V m m W (O m O m O O O m m N m m O m W N N W O O N W W N (O V O O N O W O O O (O O O N M Co N M O M V LL N N fA EA E9 O N L N O LL m d d r f0 N m N o 0 o N o N N O O O O N fA o o O O O o o 0 0 N O O O O o N c N N O O O N EA m N N fA O m o O O fA m fA f9 O EA o W N ' r N �, N O O O fA N N W N O N O W O W I� F .L.. 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(0 M rm `p) U U_ C M (fl (fl N N Cl) O r OCn61) LO O O m N N (00 00 0 00 0 Y -p O N W U3 U3 63 U3 EH N m o 0 0 OL } Q C N 2 aCi y C m NO aNi U O M 0) � rn rn � r- -5 o CU LL CU 00 LL Mc d m ¢ Q c as �o o as �o v m o N o 0 0 0 V m m m E m m �a mo T W Cl) o0 � $ a) O o Q� (j E � 0oE 0Q 0T Q oUo O <fl c i»o o C om<fl uym3 oa 3 c c o 4 m cmi L o E «O m T U a U r w > o�d L w m N as m 3i- O m ° a m w o c0) m o .N m O N m c a W d zT.�.N - = m c c o° o U) m Tcu aa') m U a>)4 m U .� U Q v m E m > Y N a) o m x°a Z 0 �_ U = a� � ° amm o a) m mai wa° a° C- CO m axi cumin O s� U Uaa +Nc � m Y U NC O .N a) m m 0-' N p N Q C o W C Q Om m oN m o U o-0 Q Na) C y Q tT U E m E U < `c Q a) p C Q N N N U q1 m W W a) -0cu N m (tea '> o ani 0 m +i N m L� ¢ Q)fn � U Table 7 - Bill Comparisons Before and After Rate Adjustments St. Joseph, MN; Water Rates Scenario 2015-2 This table compares bills for various volumes at the current rates and billing frequency with what the same volumes would cost at the equivalent modeled rates for that same billing frequency.(An"apples to apples"comparison.)Minimum charge surcharges were calculated for these same classes of users and these bills include those surcharges. Note:The weighted-average bill increase for all customers combined will be: 28.6% Customer or Rate Gallons of Customers Above This Cumulative Bill Increase or Percent Increase Class,or Meter Size Use Volume and Below Next Customers Current Bill Modeled Bill Decrease(-) or Decrease(-) 0 0 0 $20.10 $23.10 $3.00 15% 1,000 0 0 $23.55 $27.74 $4.19 18% 2,000 0 0 $27.00 $32.38 $5.38 20% 3,000 0 0 $30.45 $37.02 $6.57 22% 4,000 0 0 $33.90 $41.66 $7.76 23% 5,000 0 0 $37.35 $46.30 $8.95 24% 6,000 0 0 $40.80 $50.94 $10.14 25% 7,000 0 0 $44.25 $55.58 $11.33 26% 8,000 0 0 $47.70 $60.22 $12.52 26% 9,000 0 0 $51.15 $64.86 $13.71 27% 10,000 1,577 1,577 $54.60 $69.50 $14.90 27% 15,000 0 1,577 $71.85 $92.70 $20.85 29% 20,000 0 1,577 $89.10 $115.91 $26.81 30% All Customers Except City 30,000 0 1,577 $123.60 $162.31 $38.71 31% 40,000 0 1,577 $158.10 $208.71 $50.61 32% 50,000 0 1,577 $192.60 $255.11 $62.51 32% 60,000 0 1,577 $227.10 $301.52 $74.42 33% 70,000 0 1,577 $261.60 $347.92 $86.32 33% 80,000 0 1,577 $296.10 $394.32 $98.22 33% 90,000 0 1,577 $330.60 $440.72 $110.12 33% 100,000 0 1,577 $365.10 $487.13 $122.03 33% 110,000 0 1,577 $399.60 $533.53 $133.93 34% 120,000 0 1,577 $434.10 $579.93 $145.83 34% 130,000 0 1,577 $468.60 $626.33 $157.73 34% 140,000 0 1,577 $503.10 $672.74 $169.64 34% 150,000 0 1,577 $537.60 $719.14 $181.54 34% 160,000 0 1,577 $572.10 $765.54 $193.44 34% 0 0 0 $0.00 $23.10 $23.10 N.A. 1,000 0 0 $0.00 $27.74 $27.74 N.A. 2,000 0 0 $0.00 $32.38 $32.38 N.A. 3,000 0 0 $0.00 $37.02 $37.02 N.A. 4,000 0 0 $0.00 $41.66 $41.66 N.A. 5,000 0 0 $0.00 $46.30 $46.30 N.A. 6,000 0 0 $0.00 $50.94 $50.94 N.A. 7,000 0 0 $0.00 $55.58 $55.58 N.A. 8,000 0 0 $0.00 $60.22 $60.22 N.A. 9,000 0 0 $0.00 $64.86 $64.86 N.A. 10,000 0 0 $0.00 $69.50 $69.50 N.A. 15,000 0 0 $0.00 $92.70 $92.70 N.A. 20,000 0 0 $0.00 $115.91 $115.91 N.A. City..G-10 30,000 17 17 $0.00 $162.31 $162.31 N.A. 40,000 0 17 $0.00 $208.71 $208.71 N.A. 50,000 0 17 $0.00 $255.11 $255.11 N.A. 60,000 0 17 $0.00 $301.52 $301.52 N.A. 70,000 0 17 $0.00 $347.92 $347.92 N.A. 80,000 0 17 $0.00 $394.32 $394.32 N.A. 90,000 0 17 $0.00 $440.72 $440.72 N.A. 100,000 0 17 $0.00 $487.13 $487.13 N.A. 110,000 0 17 $0.00 $533.53 $533.53 N.A. 120,000 0 17 $0.00 $579.93 $579.93 N.A. 130,000 0 17 $0.00 $626.33 $626.33 N.A. 140,000 0 17 $0.00 $672.74 $672.74 N.A. 150,000 0 17 $0.00 $719.14 $719.14 N.A. 160,000 0 17 $0.00 $765.54 $765.54 N.A. CBGreatRates©Version 7.2 Table 8 - User Statistics St.Joseph, MN;Water Rates Scenario 2015-2 This table shows measures of equitability of the rates as modeled in Table 11. If your rates are absolutely proportional to use on a volumetric basis,your%of usage and%of revenues figures will be the same within all the classes.That is not possible if you have any minimum charge and having no minimum charge is almost unheard of. Normally,the%of usage figure will be lower than the%of revenue for the lower volumes of use.That will switch for the higher volumes of use.Even for declining rate structures,this switch should occur near the volume of the average residential user,typically near 5,000 gallons/month(668 cu ft). In urban and suburban areas the average monthly use for residential or general customers can be twice that used by their rural and"old town"counterparts.Use is largely dependent upon who lives in a community.Older people living in longer established neighborhoods tend to use less volume than younger people living in more recently developed areas.As you make comparisons between different customers and customer classes,keep that,and the following in mind: 11,996 in gallons-This is the average residential customer's usage per Bi-monthly billing cycle. Usage allowance is the volume"given away"with the minimum charge.The higher the allowance,the less volume the utility can sell to generate income. 136,274,000 in gallons-This is the volume metered through customer meters that was available to be sold by the utility during the test year- 0 in gallons-This is the volume metered through customer meters that was given away as a usage allowance during the test year. $0 At the unit charge rate in effect during the test year,this was what it cost the utility to give away this volume. $0 At the unit charge rates modeled,this is what the current usage allowance(if any is included in the modeled rates)would cost the utility for a full year. Total Annual Cumulative Cumulative Bottom of Top of Average Volume Use Within Use in This Use in This Customer or Volume Volume Used Within Each Volume Customers Class From Class From %Revenue %Revenue Rate Class,or Range in Range in Each Volume Range in Within This Low to High High to Low at Current at Modeled Meter Size Gallons Gallons Range in Gallons Gallons Volume Range %Users %Usage Volume Volume Rates Rates Residential,G- 0 999 0 0 0 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% 01,02,03,04, 10,000 14,999 11,996 113,517,636 1,577 91.7% 83.3% 100.0% 100.0% 85.5% 83.3% 05,07,09 160,000 99,999,999 0 0 0 0.0% 0.0% 100.0% 0.0% 0.0% 0.0% Totals for Class 113,517,636 1,577 91.7% 83.3% 85.5% 83.3% 0 999 0 0 0 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% Commercial,G- 30,000 39,999 31,041 15,644,801 84 4.9% 11.5% 100.0% 100.0% 11.8% 11.5% 06 160,000 99,999,999 0 0 0 0.0% 0.0% 100.0% 0.0% 0.0% 0.0% Totals for Class 15,644,801 84 4.9% 11.5% 11.8% 11.5% 0 999 0 0 0 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% Industrial,G-08 10,000 14,999 11,675 2,101,569 30 1.7% 1.5% 100.0% 100.0% 1.6% 1.5% 160,000 99,999,999 0 0 0 0.0% 0.0% 100.0% 0.0% 0.0% 0.0% Totals for Class 2,101,569 30 1.7% 1.5% 1.6% 1.5% College 0 999 0 0 0 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% Townhomes,G- 20,000 29,999 23,159 1,389,524 10 0.6% 1.0% 100.0% 100.0% 1.0% 1.0% 12 160,000 99,999,999 0 0 0 0.0% 0.0% 100.0% 0.0% 0.0% 0.0% Totals for Class 1,389,524 10 0.6% 1.0% 1.0% 1.0% 0 999 0 0 0 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% Senior Housing 6,000 6,999 6,562 104,990 3 02% 01% 100.0% 100.0% 01% 0.1 Addition,G-13 160,000 99,999,999 0 0 0 0.0% 0.0% 100.0% 0.0% 0.0% 0.0% Totals for Class 104,990 3 0.2% 0-1% 0-1% 0.1 0 999 0 0 0 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% City,G-10 30,000 39,999 35,155 3,515,480 17 1.0% 2.6% 100.0% 100.0% 0.0% 2.6% 160,000 99,999,999 0 0 0 0.0% 0.0% 100.0% 0.0% 0.0% 0.0% Totals for Class 3,515,480 17 1.0% 2.6% 0.0% 2.6% Grand Totals 136,274,000 100.00% 100.00% 100.00% 100.00% CBGreatRates©Version 7.2 St. Joseph, MN Water Rates Scenario 2015-2 Chart 1 - Operating Ratio 3.00 2.00 1.00 0.00 11110 IN03 �O� �O �O� �O. -1.00 Proposed Rates -2.00 El Current Rates —Breakeven -3.00 -4.00 Chart 2 - Coverage Ratio 4.00 3.00 2.00 1.00 0.00 Cb 0 -1.00 Proposed Rates -2.00 o Current Rates —Breakeven -3.00 -4.00 CBGreatRates©Version 7.2 St. Joseph, MN Water Rates Scenario 2015-2 Chart 3 - 5,000 Gal Residential User's Bill $80.00 Proposed Rates Current Rates $70.00 $60.00 $50.00 $40.00 $30.00 $20.00 $10.00 $0.00 r,0 �Cb �C1 O D �OIV Chart 4 -Affordability Index 1.20% Proposed Rates Current Rates 1.00% 0.80% 0.60% El 0.40% 0.20% 0.00% CBGreatRates©Version 7.2 St. Joseph, MN Water Rates Scenario 2015-2 Chart 5 - Working Capital vs Goal $250,000 Proposed Rates -❑Current Rates $200,000 Goal $150,000 $100,000 $50,000 $0 1110 1 IN Chart 6 - Value of Cash Assets Before Inflation $2,000,000 Proposed Rates Current Rates $1,000,000 $0 -$1,000,000 -$2,000,000 -$3,000,000 -$4,000,000 -$5,000,000 CBGreatRates©Version 7.2 St. Joseph, MN Water Rates Scenario 2015-2 Chart 7 - Value of Cash Assets After Inflation $2,000,000 Proposed Rates •c Current Rates $1,000,000 $0 ! ^ I-c" 10 11110 1 -$1,000,000 -$2,000,000 -$3,000,000 -$4,000,000 -$5,000,000 CBGreatRates©Version 7.2 Table 11 - Initial Rate Adjustments and Resulting Revenues St. Joseph, MN; Water Rates Scenario 2015-2 This table depicts how rates would be set and the revenues they would generate. Out of City Multiplier 200% 12/31/15 Date when fees will first be collected at adjusted rates.Actual adjustment should occur one billing period earlier. After rate adjustments are made,general customers will be billed every other month. Sales to be billed this year:Sales at the current(Test Year)rates(gray highlighted column)will apply until rates are adjusted.Sales at the modeled rates(yellow highlighted column)would apply if the modeled rates are adopted.The grand total"blended"sales revenues are the total revneues generated by the two different sets of rates.Those show in the right-most column. Customer Bottom of Top of New New Unit Class,Rate Volume Volume Sales This Customers Above Minimum New Usage Charge Sales This Grand Total Class or Meter Range in Range in Year at This Volume and Charge Base Allowance in per 1,000 Year at 'Blended"Sales Size Gallons Gallons Current Rates Below Next Rates' 1,000 Gallons Gallons Modeled Rates This Year Residential,G- 0 999 $0 0 $0.00 0.000 $4.64 $0 $0 01,02,03,04, 10,000 14,999 $390,563 1,577 $0.00 0.000 $4.64 $1,443 $392,006 05,07,09 160,000 99,999,999 $0 0 $0.00 0.000 $4.64 $0 $0 0 999 $0 0 $0.00 0.000 $4.64 $0 $0 Commercial, 30,000 39,999 $53,827 84 $0.00 0.000 $4.64 $199 $54,026 G-06 160,000 99,999,999 $0 0 $0.00 0.000 $4.64 $0 $0 0 999 $0 0 $0.00 0.000 $4.64 $0 $0 Industrial,G- 08 10,000 14,999 $7,231 30 $0.00 0.000 $4.64 $27 $7,257 160,000 99,999,999 $0 0 $0.00 0.000 $4.64 $0 $0 College 0 999 $0 0 $0.00 0.000 $4.64 $0 $0 Townhomes, 20,000 29,999 $4,781 10 $0.00 0.000 $4.64 $18 $4,798 G-12 160,000 99,999,999 $0 0 $0.00 0.000 $4.64 $0 $0 Senior 0 999 $0 0 $0.00 0.000 $4.64 $0 $0 Housing 6,000 6,999 $361 3 $0.00 0.000 $4.64 $1 $363 Addition,G-13 160,000 99,999,999 $0 0 $0.00 0.000 $4.64 $0 $0 0 999 $0 0 $0.00 0.000 $4.64 $0 $0 City,G-10 30,000 39,999 $0 17 $0.00 0.000 $4.64 $45 $45 160,000 99,999,999 $0 0 $0.00 0.000 $4.64 $0 $0 Total Rate Rev at Current Rates $456,762 Total Rate Rev at Modeled Ratesl $1,732 Total Blended Rate Revenues for the Year 2 $458,495 Note 1,New Minimum Charge Base Rates:If meter or connection size-based minimum charges are to be used,and the user classes modeled above include meter or connection sizes,the amounts shown in this column include meter or connection size surcharges as calculated in Table 10.Otherwise,use the rates in the"Total Minimum Charge per Billing Period"column of Table 10 when setting minimum charges for each customer when their minimums will be based upon meter or connection size. Note 2,Blended Rate Revenues:During the year when rates will be adjusted,rate revenues generated will be"blended"revenues-part collected at the current rates and part collected at the adjusted rates.The table above calculates both kinds of revenue and totals them in the right-most column.Therefore,the anticipated timing of rate adjustment shown at the top of this table will cause rates to be charged as follows: 12.0 months at the old user charge rates and 10.0 months at the new user charge rates. CBGreatRates©Version 7.2 Table 12 - Test Year Usage St.Joseph, MN;Water Rates Scenario 2015-2 This table shows usage by all customers during the test year. Date this scenario created: 11/3/2015 Test year,the one-year period being analyzed starts:1/1/2014 Meter Readings per year: 6 Bills sent per year: 6 Average Count of Bills Volume of Only Number of %of Volume Used Count of Bills Total Annual Only Where Those Bills Customers With Customers Bottom of Top of Within Each With ANY Use Within Volume Where Volume Volume That That %of Total Customer or Rate Volume Volume Conversion Volume Range Volume Each Volume "Maxed Out' "Maxed Out' "Maxed Out' Averaged Use at This Class,or Meter Range in Range in Factor for in 1,000 Within Each Range in Within Each Within Each Within Each This Volume Average Size Gallons Gallons Billable Units Gallons Range Gallons Range Range Range of Use Volume 0 999 1,000 0.000 9,463 0 0 0 0 0.0% 0.0% 1,000 1,999 1,000 0.000 9,463 0 0 0 0 0.0% 0.0% 2,000 2,999 1,000 0.000 9,463 0 0 0 0 0.0% 0.0% 3,000 3,999 1,000 0.000 9,463 0 0 0 0 0.0% 0.0% 4,000 4,999 1,000 0.000 9,463 0 0 0 0 0.0% 0.0% Residential,G-01, 5,000 5,999 1,000 0.000 9,463 0 0 0 0 0.0% 0.0% 02,03,04,05, 07,09 6,000 6,999 1,000 0.000 9,463 0 0 0 0 0.0% 0.0% 7,000 7,999 1,000 0.000 9,463 0 0 0 0 0.0% 0.0% 8,000 8,999 1,000 0.000 9,463 0 0 0 0 0.0% 0.0% 9,000 9,999 1,000 0.000 9,463 0 0 0 0 0.0% 0.0% 10,000 14,999 1,000 11.996 9,463 113,517,636 9,463 113,517,636 1,577 91.7% 83.3% Monthly and Annual Subtotals: 104,093 113,517,636 9,463 113,517,636 1,577 91.7% 83.3% 0 999 1,000 0.000 504 0 0 0 0 0.0% 0.0% 1,000 1,999 1,000 0.000 504 0 0 0 0 0.0% 0.0% 2,000 2,999 1,000 0.000 504 0 0 0 0 0.0% 0.0% 3,000 3,999 1,000 0.000 504 0 0 0 0 0.0% 0.0% 4,000 4,999 1,000 0.000 504 0 0 0 0 0.0% 0.0% 5,000 5,999 1,000 0.000 504 0 0 0 0 0.0% 0.0% 6,000 6,999 1,000 0.000 504 0 0 0 0 0.0% 0.0% Commercial,G- 7,000 7,999 1,000 0.000 504 0 0 0 0 0.0% 0.0% O6 8,000 8,999 1,000 0.000 504 0 0 0 0 0.0% 0.0% 9,000 9,999 1,000 0.000 504 0 0 0 0 0.0% 0.0% 10,000 14,999 1,000 0.000 504 0 0 0 0 0.0% 0.0% 15,000 19,999 1,000 0.000 504 0 0 0 0 0.0% 0.0% 20,000 29,999 1,000 0.000 504 0 0 0 0 0.0% 0.0% 30,000 39,999 1'00031,041 504 15,644,801 504 15,644,801 84 4.9% 11.5% Monthly and Annual Subtotals: 7,056 15,644,801 504 15,644,801 84 4.9% 11.5% 0 999 1,000 0.000 180 0 0 0 0 0.0% 0.0% 1,000 1,999 1,000 0.000 180 0 0 0 0 0.0% 0.0% 2,000 2,999 1,000 0.000 180 0 0 0 0 0.0% 0.0% 3,000 3,999 1,000 0.000 180 0 0 0 0 0.0% 0.0% 4,000 4,999 1,000 0.000 180 0 0 0 0 0.0% 0.0% Industrial,G-08 5,000 5,999 1,000 0.000 180 0 0 0 0 0.0% 0.0% 6,000 6,999 1,000 0.000 180 0 0 0 0 0.0% 0.0% 7,000 7,999 1,000 0.000 180 0 0 0 0 0.0% 0.0% 8,000 8,999 1,000 0.000 180 0 0 0 0 0.0% 0.0% 9,000 9,999 1,000 0.000 180 0 0 0 0 0.0% 0.0% 10,000 14,999 1,000 11.675 180 2,101,569 180 2,101,569 30 1.7% 1.5% Monthly and Annual Subtotals: 1,980 2,101,569 180 2,101,569 30 1.7% 1.5% 0 999 1,000 0.000 60 0 0 0 0 0.0% 0.0% 1,000 1,999 1,000 0.000 60 0 0 0 0 0.0% 0.0% 2,000 2,999 1,000 0.000 60 0 0 0 0 0.0% 0.0% 3,000 3,999 1,000 0.000 60 0 0 0 0 0.0% 0.0% 4,000 4,999 1,000 0.000 60 0 0 0 0 0.0% 0.0% 5,000 5,999 1,000 0.000 60 0 0 0 0 0.0% 0.0% College 6,000 6,999 1,000 2 0.000 60 0 0 0 0 0.0% 0.0% Townhomes,G- 7.000 7,999 1,000 0.000 60 0 0 0 0 0.0% 0.0% 8,000 8,999 1,000 0.000 60 0 0 0 0 0.0% 0.0% 9,000 9,999 1,000 0.000 60 0 0 0 0 0.0% 0.0% 10,000 14,999 1,000 0.000 60 0 0 0 0 0.0% 0.0% 15,000 19,999 1,000 0.000 60 0 0 0 0 0.0% 0.0% 20,000 29,999 1,000 23.159 60 1,389,524 60 1,389,524 10 0.6% 1.0% Monthly and Annual Subtotals: 780 1,389,524 60 1,389,524 10 0.6% 1.0% 0 999 1,000 0.000 16 0 0 0 0 0.0% 0.0% 1,000 1,999 1,000 0.000 16 0 0 0 0 0.0% 0.0% 2,000 2,999 1,000 0.000 16 0 0 0 0 0.0% 0.0% Senior Housing 3,000 3,999 1,000 0.000 16 0 0 0 0 0.0% 0.0% Addition,G-13 4,000 4,999 1,000 0.000 16 0 0 0 0 0.0% 0.0% 5,000 5,999 1,000 0.000 16 0 0 0 0 0.0% 0.0% 6,000 6,999 1,000 6.562 16 104,990 16 104,990 3 0.2% 0.1% Monthly and Annual Subtotals: 112 104,990 16 104,990 3 0.2% 0.1% 0 999 1,000 0.000 100 0 0 0 0 0.0% 0.0% 1,000 1,999 1,000 0.000 100 0 0 0 0 0.0% 0.0% 2,000 2,999 1,000 0.000 100 0 0 0 0 0.0% 0.0% 3,000 3,999 1,000 0.000 100 0 0 0 0 0.0% 0.0% 4,000 4,999 1,000 0.000 100 0 0 0 0 0.0% 0.0% 5,000 5,999 1,000 0.000 100 0 0 0 0 0.0% 0.0% 6,000 6,999 1,000 0.000 100 0 0 0 0 0.0% 0.0% City,G-10 7,000 7,999 1,000 0.000 100 0 0 0 0 0.0% 0.0% 8,000 8,999 1,000 0.000 100 0 0 0 0 0.0% 0.0% 9,000 9,999 1,000 0.000 100 0 0 0 0 0.0% 0.0% 10,000 14,999 1,000 0.000 100 0 0 0 0 0.0% 0.0% 15,000 19,999 1,000 0.000 100 0 0 0 0 0.0% 0.0% 20,000 29,999 1,000 0.000 100 0 0 0 0 0.0% 0.0% 30,000 39,999 1,000 35.155 100 3,515,480 100 3,515,480 17 1.0% 2.6% Monthly and Annual Subtotals: 1,400 3,515,480 100 3,515,480 17 1.0% 2.6% Monthly and Annual Grand Totals: 115,421 136,274,000 10,323 1,721 100% 100% CBGreatRates©Version 7.2 Table 13 - Rates at End of Test Year St. Joseph, MN; Water Rates Scenario 2015-2 This table shows user unit charges at the end of the test year. Rates for volume ranges that are not shown are the same as the next lowest volume range rates. Customer or Bottom of Top of Volume Usage Rate Class, or Volume Range Range in Allowance in Unit Charge Meter Size in Gallons Gallons Minimum Charge 1,000 Gallons per 1,000 Gallons Residential, G- 0 999 $0.00 0.000 $3.45 01, 02, 03, 04, 1,000 1,999 $0.00 0.000 $3.45 05, 07, 09 160,000 99,999,999 $0.00 0.000 $3.45 0 999 $0.00 0.000 $3.45 Commercial, G 06 11000 1,999 $0.00 0.000 $3.45 160,000 99,999,999 $0.00 0.000 $3.45 0 999 $0.00 0.000 $3.45 Industrial, G- 08 1,000 1,999 $0.00 0.000 $3.45 160,000 99,999,999 $0.00 0.000 $3.45 College 0 999 $0.00 0.000 $3.45 Townhomes, G 1,000 1,999 $0.00 0.000 $3.45 12 160,000 99,999,999 $0.00 0.000 $3.45 Senior 0 999 $0.00 0.000 $3.45 Housing 1,000 1,999 $0.00 0.000 $3.45 Addition, G-13 160,000 99,999,999 $0.00 0.000 $3.45 0 999 $0.00 0.000 $0.00 City, G-10 1,000 1,999 $0.00 0.000 $0.00 160,000 99,999,999 $0.00 0.000 $0.00 CBGreatRates©Version 7.2 Table 14 - Average Cost Classification St. Joseph, MN; Water Rates Scenario 2015-2 This table distributes costs from a representative year(the"target'year)to fixed and variable categories(see Definitions)in order to calculate the"proportional to use"or"cost of service"rate structure based upon the cost breakdown for that year. The rate structure target year runs from 1/1/2016 through 12/31/2016 Variable Capacity Fixed Cost Variable Capacity Fixed Cost Cost Cost Operating Costs Amount % Cost% Cost% Amount Amount Amount DEPART 47100 Bond Payment(P&1)Except 413 MN DOT R-O-W Lease Payments CIP Below 33.3% 66.7% 0.0% $0 $0 $0 710 Loss on Disposal of Assets $0 33.3% 66.7% 0.0% $0 $0 $0 720 Transfers to Other Funds $46,800 33.3% 66.7% 0.0% $15,584 $31,216 $0 DEPART 49410 Power and Pumping $22,828 0.0% 100.0% 0.0% $0 $22,828 $0 Purification Operating Supplies $23,400 0.0% 100.0% 0.0% $0 $23,400 $0 Purification R&R $18,200 33.3% 66.7% 0.0% $6,061 $12,139 $0 Purification Professional Services&Engineering $3,016 33.3% 66.7% 0.0% $1,004 $2,012 $0 Purification Tests $1,664 100.0% 0.0% 0.0% $1,664 $0 $0 Purification Telephone $8,237 100.0% 0.0% 0.0% $8,237 $0 $0 Purification Electric&Gas $54,050 0.0% 100.0% 0.0% $0 $54,050 $0 Purification Other Equipment $15,600 33.3% 66.7% 0.0% $5,195 $10,405 $0 Purification Software and Small Tools $931 33.3% 66.7% 0.0% $310 $621 $0 DEPART 49430 Distribution $10,400 33.3% 66.7% 0.0% $3,463 $6,937 $0 DEPART 49434 Wellhead Protection $2,080 33.3% 66.7% 0.0% $693 $1,387 $0 220 Repair and Maintenance $2,080 33.3% 66.7% 0.0% $693 $1,387 $0 300 Professional Services $312 33.3% 66.7% 0.0% $104 $208 $0 303 Engineering Fee $500 33.3% 66.7% 0.0% $167 $334 $0 304 Legal Fees $500 100.0% 0.0% 0.0% $500 $0 $0 381 Electric Utilities $3,749 0.0% 100.0% 0.0% $0 $3,749 $0 530 Improvements Other than Bldgs $10,400 33.3% 66.7% 0.0% $3,463 $6,937 $0 101 Salaries $98,363 33.3% 66.7% 0.0% $32,755 $65,608 $0 111 OPEB Liability $3,120 33.3% 66.7% 0.0% $1,039 $2,081 $0 121 PERA Contributions $7,275 33.3% 66.7% 0.0% $2,423 $4,852 $0 122 FICA Contributions $5,179 33.3% 66.7% 0.0% $1,725 $3,455 $0 123 Deferred Comp-Employer $406 33.3% 66.7% 0.0% $135 $271 $0 125 Medicare Contributions $1,212 33.3% 66.7% 0.0% $403 $808 $0 130 H S A-Employer Contribution $3,120 33.3% 66.7% 0.0% $1,039 $2,081 $0 131 Health Insurance $18,668 33.3% 66.7% 0.0% $6,216 $12,452 $0 132 Dental Insurance $3,203 33.3% 66.7% 0.0% $1,067 $2,137 $0 133 Life Insurance $250 33.3% 66.7% 0.0% $83 $166 $0 134 Disabilty Insurance $666 33.3% 66.7% 0.0% $222 $444 $0 151 Workers Comp.Insur.Prem. $3,817 33.3% 66.7% 0.0% $1,271 $2,546 $0 171 Clothing Allowance $686 33.3% 66.7% 0.0% $229 $458 $0 200 Office Supplies $156 100.0% 0.0% 0.0% $156 $0 $0 210 Operating Supplies $1,820 0.0% 100.0% 0.0% $0 $1,820 $0 212 Safety Program $1,456 33.3% 66.7% 0.0% $485 $971 $0 215 Software Support $172 33.3% 66.7% 0.0% $57 $114 $0 220 Repair and Maintenance $1,820 33.3% 66.7% 0.0% $606 $1,214 $0 230 Vehicle Repair&Maintenance $1,560 33.3% 66.7% 0.0% $519 $1,041 $0 235 Motor Fuel $9,360 33.3% 66.7% 0.0% $3,117 $6,243 $0 240 Small Tool&Minor Equipment $208 33.3% 66.7% 0.0% $69 $139 $0 300 Professional Services $520 33.3% 66.7% 0.0% $173 $347 $0 303 Engineering Fee $0 33.3% 66.7% 0.0% $0 $0 $0 304 Legal Fees $0 100.0% 0.0% 0.0% $0 $0 $0 317 Other fees $0 33.3% 66.7% 0.0% $0 $0 $0 319 Gopher State Notification $1,248 33.3% 66.7% 0.0% $416 $832 $0 322 Postage $130 100.0% 0.0% 0.0% $130 $0 $0 331 Travel&Conference Expense $936 33.3% 66.7% 0.0% $312 $624 $0 CBGreatRates©Version 7.2 Table 14 - Average Cost Classification Variable Capacity Fixed Cost Variable Capacity Fixed Cost Cost Cost Operating Costs Amount % Cost% Cost% Amount Amount Amount 361 General Liability Insurance $13,385 33.3% 66.7% 0.0% $4,457 $8,928 $0 410 Rentals $0 33.3% 66.7% 0.0% $0 $0 $0 433 Dues&Memberships $660 33.3% 66.7% 0.0% $220 $440 $0 437 Real Estate Taxes $910 33.3% 66.7% 0.0% $303 $607 $0 442 Water Permit $2,080 100.0% 0.0% 0.0% $2,080 $0 $0 444 Annual Water Connection Fee $11,440 33.3% 66.7% 0.0% $3,810 $7,630 $0 446 License $312 33.3% 66.7% 0.0% $104 $208 $0 550 Motor Vehicles $2,080 33.3% 66.7% 0.0% $693 $1,387 $0 580 Other Equipment $0 33.3% 66.7% 0.0% $0 $0 $0 581 Computer Hardware $0 100.0% 0.0% 0.0% $0 $0 $0 DEPART 49490 Administration and General $40,000 100.0% 0.0% 0.0% $40,000 $0 $0 DEPART 49970 Depreciation Expense $0 33.3% 66.7% 0.0% $0 $0 $0 413 MN DOT R-O-W Lease Payments CIP Below 33.3% 66.7% 0.0% $0 $0 $0 Temporary Adjustment of R&R Annuity $0 33.3% 66.7% 0.0% $0 $0 $0 Annual Payment to Repair and Replacement(Table 17) $127,977 33.3% 66.7% 0.0% $42,616 $85,361 $0 User Charge Analysis Services $0 33.3% 66.7% 0.0% $0 $0 $0 CIP Spending Net of Grant/Loan Proceeds and Other External Incomes(Table 4) $911,350 33.3% 41.7% 25.0%1 $303,4801 $380,0331 $227,838 Grand Total Costs,Weighted Avg Percentages $1,500,291 33.3% 51.5% 15.2%1 $499,5451 $772,9081 $227,838 "Proportional to Use" Rate Structure Cost Basis 100% $1,500,291 Average Fixed Cost/User Every Other Month= $48.39 Water Loss is Estimated at 0% Cost of Water Loss is Estimated at 52% Average Variable Cost to Produce/1,000 Gallons= $5.67 Resulting Cost of Water Loss $0 Gallons/Billing Cycle Used by Average Residential Test Year Customer Metered Usage(in Gallons) 136,274,000 Customer= 11,996 + Test Year Water Loss 0 Total Test Year Volume 136,274,000 CBGreatRates©Version 7.2 Table 15 - Marginal Cost Classification St. Joseph, MN; Water Rates Scenario 2015-2 The utility incurs unavoidable,or marginal,costs.Thus,the utility must collect minimal fees from various customers to"break even"on a marginal cost basis.Costs vary by customer type and volume used. In the calculations below it is assumed that marginal costs are being calculated for: Snowbirds The rate structure target year runs from 1/1/2016 through 12/31/2016 Marginal Marginal Marginal Marginal Marginal Marginal Variable Capacity Fixed Cost Variable Capacity Fixed Cost Cost Cost Operating Costs Amount % Cost% Cost% Amount Amount Amount DEPART 47100 Bond Payment(P&I)Except 413 MN DOT R-O-W Lease Payments $0 100% 100% 100% $0 $0 $0 710 Loss on Disposal of Assets $0 100% 100% 100% $0 $0 $0 720 Transfers to Other Funds $46,800 100% 100% 100% $15,584 $31,216 $0 DEPART 49410 Power and Pumping $22,828 0% 0% 100% $0 $0 $0 Purification Operating Supplies $23,400 50% 50% 100% $0 $11,700 $0 Purification R&R $18,200 50% 50% 100% $3,030 $6,070 $0 Purification Professional Services&Engineering $3,016 100% 100% 100% $1,004 $2,012 $0 Purification Tests $1,664 100% 100% 100% $1,664 $0 $0 Purification Telephone $8,237 100% 100% 100% $8,237 $0 $0 Purification Electric&Gas $54,050 0% 0% 100% $0 $0 $0 Purification Other Equipment $15,600 100% 100% 100% $5,195 $10,405 $0 Purification Software and Small Tools $931 100% 100% 100% $310 $621 $0 DEPART 49430 Distribution $10,400 100% 100% 100% $3,463 $6,937 $0 DEPART 49434 Wellhead Protection $2,080 100% 100% 100% $693 $1,387 $0 220 Repair and Maintenance $2,080 50% 50% 100% $346 $694 $0 300 Professional Services $312 100% 100% 100% $104 $208 $0 303 Engineering Fee $500 100% 100% 100% $167 $334 $0 304 Legal Fees $500 100% 100% 100% $500 $0 $0 381 Electric Utilities $3,749 0% 0% 100% $0 $0 $0 530 Improvements Other than Bldgs $10,400 100% 100% 100% $3,463 $6,937 $0 101 Salaries $98,363 50% 50% 100% $16,377 $32,804 $0 111 OPEB Liability $3,120 50% 50% 100% $519 $1,041 $0 121 PERA Contributions $7,275 50% 50% 100% $1,211 $2,426 $0 122 FICA Contributions $5,179 50% 50% 100% $862 $1,727 $0 123 Deferred Comp-Employer $406 50% 50% 100% $68 $135 $0 125 Medicare Contributions $1,212 50% 50% 100% $202 $404 $0 130 H S A-Employer Contribution $3,120 50% 50% 100% $519 $1,041 $0 131 Health Insurance $18,668 50% 50% 100% $3,108 $6,226 $0 132 Dental Insurance $3,203 50% 50% 100% $533 $1,068 $0 133 Life Insurance $250 50% 50% 100% $42 $83 $0 134 Disabilty Insurance $666 50% 50% 100% $111 $222 $0 151 Workers Comp.Insur.Prem. $3,817 50% 50% 100% $635 $1,273 $0 171 Clothing Allowance $686 50% 50% 100% $114 $229 $0 200 Office Supplies $156 50% 50% 100% $78 $0 $0 210 Operating Supplies $1,820 50% 50% 100% $0 $910 $0 212 Safety Program $1,456 100% 100% 100% $485 $971 $0 215 Software Support $172 100% 100% 100% $57 $114 $0 220 Repair and Maintenance $1,820 50% 50% 100% $303 $607 $0 230 Vehicle Repair&Maintenance $1,560 50% 50% 100% $260 $520 $0 235 Motor Fuel $9,360 50% 50% 100% $1,558 $3,122 $0 240 Small Tool&Minor Equipment $208 50% 50% 100% $35 $69 $0 300 Professional Services $520 100% 100% 100% $173 $347 $0 303 Engineering Fee $0 100% 100% 100% $0 $0 $0 CBGreatRates©Version 7.2 Table 15 - Marginal Cost Classification Marginal Marginal Marginal Marginal Marginal Marginal Variable Capacity Fixed Cost Variable Capacity Fixed Cost Cost Cost Operating Costs Amount % Cost% Cost% Amount Amount Amount 304 Legal Fees $0 100% 100% 100% $0 $0 $0 317 Other fees $0 100% 100% 100% $0 $0 $0 319 Gopher State Notification $1,248 100% 100% 100% $416 $832 $0 322 Postage $130 100% 100% 100% $130 $0 $0 331 Travel&Conference Expense $936 100% 100% 100% $312 $624 $0 361 General Liability Insurance $13,385 100% 100% 100% $4,457 $8,928 $0 410 Rentals $0 50% 50% 100% $0 $0 $0 433 Dues&Memberships $660 100% 100% 100% $220 $440 $0 437 Real Estate Taxes $910 100% 100% 100% $303 $607 $0 442 Water Permit $2,080 100% 100% 100% $2,080 $0 $0 444 Annual Water Connection Fee $11,440 100% 100% 100% $3,810 $7,630 $0 446 License $312 100% 100% 100% $104 $208 $0 550 Motor Vehicles $2,080 50% 50% 100% $346 $694 $0 580 Other Equipment $0 50% 50% 100% $0 $0 $0 581 Computer Hardware $0 100% 100% 100% $0 $0 $0 DEPART 49490 Administration and General $40,000 100% 100% 100% $40,000 $0 $0 DEPART 49970 Depreciation Expense $0 100% 100% 100% $0 $0 $0 413 MN DOT R-O-W Lease Payments $0 100% 100% 100% $0 $0 $0 Temporary Adjustment of R&R Annuity $0 50% 50% 100% $0 $0 $0 Annual Payment to Repair and Replacement(Table 17) $127,977 50% 50% 100% $21,308 $42,680 $0 User Charge Analysis Services $0 100% 100% 100% $0 $0 $0 CIP Spending Net of Grant/Loan Proceeds and Other External Incomes(Table 4) $911,350 100% 100% 100% $303,480 $380,033 $227,838 Offset for Capacity Surcharges(Table 10) $0 100% 100% 100% $0 $0 $0 Grand Total All Costs $1,500,291 90% 75% 100% $447,977 $576,536 $227,838 Marginal Costs per Customer, Volume Unit and Capacity Share The system would suffer a net revenue loss if it set minimum and unit charges lower than the marginal costs at the right. 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E <» E» E» E» E» e1� o <» e1� e» e» <» <» e» e» E» E» E» E» E» E» o - L 0 0 N t C14 � Y m O V In CO I-. W O O N Cl) V SCJ CD t- O O) O N M V N C N N N N N N N N N N M M M M M OJ Table 17- Equipment Replacement Annuity Calculation St. Joseph, MN; Water Rates Scenario 2015-2 This schedule calculates the annual annuity needed to fund all replacement and refurbishment from Table 16,the detailed schedule. 2.00% Average Inflation Rate for the Following Water System Equipment for the Term of This Replacement Schedule 3.00% Average Interest Rate on Balances Invested for the Term of This Replacement Schedule 3.00% Average Interest Rate on Amounts Borrowed for the Term of This Replacement Schedule Minimum This Year's Future Annual Interest Earned End of Year Desired End of Year Costs in Current Inflated Net on Prior Balance in Future Year Balance in Beginning Item Description Dollars Costs Balance Dollars Future Dollars 1/1/14 Last year's replacements $13,000 $13,000 $0 -$13,000 $0 1/1/15 Total of replacements from detailed replacement $10,000 $10,200 -$390 $104,387 $0 schedule 1/1/16 Total of replacements from detailed replacement $45,750 $47,598 $3,132 $187,898 $0 schedule 1/1/17 Total of replacements from detailed replacement $100,000 $106,121 $5,637 $215,391 $0 schedule 1/1/18 Total of replacements from detailed replacement $66,750 $72,252 $6,462 $277,578 $0 schedule 1/1/19 Total of replacements from detailed replacement $55,000 $60,724 $8,327 $353,158 $0 schedule 1/1/20 Total of replacements from detailed replacement $90,250 $101,636 $10,595 $390,094 $0 schedule 1/1/21 Total of replacements from detailed replacement $70,000 $80,408 $11,703 $449,367 $0 schedule 1/1/22 Total of replacements from detailed replacement $70,000 $82,016 $13,481 $508,809 $0 schedule 1/1/23 Total of replacements from detailed replacement $90,000 $107,558 $15,264 $544,492 $0 schedule 1/1/24 Total of replacements from detailed replacement $80,000 $97,520 $16,335 $591,285 $0 schedule 1/1/25 Total of replacements from detailed replacement $100,000 $124,337 $17,739 $612,663 $0 schedule 1/1/26 Total of replacements from detailed replacement $100,750 $127,775 $18,380 $631,245 $0 schedule 1/1/27 Total of replacements from detailed replacement $95,000 $122,893 $18,937 $655,267 $0 schedule 1/1/28 Total of replacements from detailed replacement $110,000 $145,143 $19,658 $657,760 $0 schedule 1/1/29 Total of replacements from detailed replacement $100,000 $134,587 $19,733 $670,883 $0 schedule 1/1/30 Total of replacements from detailed replacement $115,000 $157,870 $20,126 $661,116 $0 schedule 1/1/31 Total of replacements from detailed replacement $100,000 $140,024 $19,833 $668,903 $0 schedule 1/1/32 Total of replacements from detailed replacement $100,000 $142,825 $20,067 $674,123 $0 schedule 1/1/33 Total of replacements from detailed replacement $115,000 $167,533 $20,224 $654,791 $0 schedule 1/1/34 Total of replacements from detailed replacement $540,000 $802,412 $19,644 $0 $0 schedule Notes:This schedule covers items in the City's replacement Starting Account Balance $0 $0 schedule with several assumed repeat cycles.No Discretionary Minimum Desired Annuity amount was added. Balance in Today's Minimum Annual Annuity $127,977 Dollars Discretionary Annuity ($0) Required Annual Deposit (Annuity)to Replacement Account $127,977 This amount is entered into Table 3 as an operating cost of the system. CBGreatRates©Version 7.2 St. Joseph, MN; Sewer Rates Scenario 2015-2 Modeling Results This document contains the calculations that were performed to arrive at new user rates and fees for the next 10 years.These calculations are complex so key issues are also described in a narrative report that accompanies this model. This analysis was conducted so as to establish user rates that are adequate to pay all reasonably expectable costs while charging rates that are fairly structured and appropriately simple or complex. Scenario Description: This analysis model is the same as the previously submitted Sewer Scenario 1 except for a few differences. Some of the assumed future costs have been lowered.And, future across the board increases were raised. Both of these changes result in the need for lower rate increases initially. For most,the best way to read and understand what this model means is this.Scan the"Index of Tables,Charts and Other Results" to see how the model is laid out.Scan the"Definitions"for any terms you are not already familiar with. Read and even ponder Table 1 and the line graph charts.These will show you how the proposed rate adjustments will affect ratepayers and the system. If you need more detail than that,review the entire model. Finally,rate setting involves much more than just rates so you need to read the accompanying narrative report to understand what you need to do and why. Several tables in this model depict volume usage and user rates for the various customer classes.The model includes a continuum of volumes but many volume categories had no users. Most of these lines have been hidden simply to make the tables less voluminous. However,all volume classes that had use or that are break points for rate blocks are shown. For volume classes that are not shown,rates will be the same as the previous rate that is shown. December 11,2015 This rate analysis scenario was produced by Carl E. Brown,Getting GreatRates.com 1014 Carousel Drive,Jefferson City,Missouri 65101 (573)619-3411 www.gettinggreatrates.com carl(a-)gettinggreatrates.com CBGreatRates©Version 7.2 Return on Investment St. Joseph, M N; Sewer Rates Scenario 2015-2 The rates depicted in this model will produce various returns on investment or paybacks. Usually the most important payback, at least to ratepayers, is a rate structure that is demonstrably fair. For the system, however, making sure that revenue will be adequate to pay all expected,expectable and many unexpectable costs is the the most important return. If revenue will increase as a result of this analysis,which is almost always the case, one can calculate a return on investment. The following calculations show what was invested and what the returns will be over two periods;five years and 10 years. Five years is a reasonable period for return projections.Ten years is a good basic planning horizon but you should not bank on amounts or returns projected that far out. Besides, most systems should have their analyses redone long before then. Consider these key points about return on investment. Higher rates will fund more improvements, better repair and replacement and more. Most increases in revenue end up being used for such expenses.Thus,few systems end up with a dramatic increase in their cash reserves but they do markedly improve their financial position. In addition,fairer and higher rates generally enable systems to qualify for grant and loan funding that they otherwise would not.That increases the importation of"other people's money,"which is a drain on the state and federal levels,where the money comes from, but it is very desirable at the utility level. Also note that rates in this model have been modeled to be adjusted during the year following the test year or even later.That year is included in the first five-year return on investment calculation.Thus,the first year of returns calculated below include most or all of one year where rates will not have been changed yet, lowering the calculated return on investment but not the real rate of return. Calculations $7,731 Fees to GettingGreatRates.com $500 Estimated value of system staff time and incidentals to assemble needed information $8,231 Total Investment for This Analysis $2,116,018 Five-year Increase in Revenue Due at Least Partly to This Analysis 25708% Five-year Return on Investment(increase in revenues/investment) $6,840,078 Ten-year Improvement in Cash Position Due at Least Partly to This Analysis 83101%Ten-year Return on Investment(increase in revenues/investment) This analysis was produced using the program CBGreatRates, copyright 2015.You are encouraged to distribute this report to others so long as credit is ascribed to the author, Carl E. Brown of GettingGreatRates.com. CBGreatRates©Version 7.2 Table 1 - Modeled Rates St. Joseph, MN; Sewer Rates Scenario 2015-2 Modeled unit charges are shown in this table. Other rate components are shown in the narrative report. Customer Class, Bottom of Volume Top of Volume Usage Allowance in Unit Charge Rate Class or Range in Gallons Range in Gallons 1,000 Gallons per 1,000 Gallons Meter Size 0 999 0.000 $5.80 Residential 1,000 1,999 0.000 $5.80 160,000 99,999,999 0.000 $5.80 0 999 0.000 $5.80 Commercial 1,000 1,999 0.000 $5.80 160,000 99,999,999 0.000 $5.80 0 999 0.000 $5.80 Industrial 1,000 1,999 0.000 $5.80 160,000 99,999,999 0.000 $5.80 0 999 0.000 $5.80 CSB Student 1,000 1,999 Housing 0.000 $5.80 160,000 99,999,999 0.000 $5.80 0 999 0.000 $5.80 Senior Housing 999000 1, Addition, G-13 1, 0.000 $5.80 160,000 99,999,999 0.000 $5.80 0 999 0.000 $5.80 City, G-10 1,000 1,999 0.000 $5.80 160,000 99,999,999 0.000 $5.80 CBGreatRates©Version 7.2 m V V O o o r r m C N CrO M O O w M w O w O O O w wV T M 0 0 O 0 In O O O O O O O O O O1° O HH VV O In r O m w 1� M In N M N In 1n V) M V3 fR M (0 O m 0 In fA LO LO 6a (O M Y 6a HT N C � m m m M m O LI) o o r M W w O O V O O O O O O O O O O M Y O C N r r N O O N w M w w M Co w O w O O O w w w c r : \ M M O M O O M O N M O In N O M O O In m m 1n V w M M w 10 r L o) V � V V ER (O N a) C m Y m N fl-J H-) fR w co E (� -p p m N V O o o M I� O O V O O O O I� m O O O O O O O O m m 0 a) C N V V O In o V) V-) w N I� V) O w O O O w w N N O W C r M co O r r V V N O N N O In N O V � m L mM M M O O V V w O M w 10 V N V d' w M w d c N m M w M M fR L O cli oLL N VJ ER ER Iw oT °) °) 0 0 o M 1° co O V O O M O O O O O O O O I� m m C N O V CO N w to O w N V w O w O O O w w to �p a) O Y Y } tf m M coO M M N N I� co N N co O In N O r F Y p 'p y m CO M N N N m co I� w M M 10 M a) m m (n w V V fA V u) H7 H7 Il tf E I� N V7 N N H-) VJ Ip m � > ° N Q '-' c m 0 V O LI) o o M O N N N O O O O O O O O O O O O O o N 'O c m a) a) C N I� M m M m w M O w M w O w O O O w w m A• (0 O N a) .L-..L N M cc) O CO O I� r- I� I� N N V O u) N O I� V/ O a) C° m O O N M r- w CO co w 1n Lo O m L (n N N In In W Vo w fR V m w Lo co C m N U N H H7 H7 H7 co V C Q m m O o o r V V co O O O o O O O O O O O O M m(0 C M V O to o 1� w V O w V w O 6G O O O 6G w N m O (n m } r M m (o O M r- r r M N N N O u) N O (J ° `m -p 3 o a) L m CO co r- coo coo m v Goo � V O E T Z }� L O U _ 10 O c-p m m m M O o o co O O M O m O O I� O O O O O O O O O O Ur O m O C \ O to M M m M H7 O w co w O w O O O w w V (0 } M O � O N N m CO N N O O In N O O L m m N m a°)'p m O M CO M M O M I- u) M 10 Y a) u3I N O N L 1� N N 67 V M w fR o) > aa) o v M� �' Mw Mw fn `n w ca CO N Q N Yr Y O ° C tf- T m I� m O o o M M M M I� O N O O N V O O O O O O O O M O ul a) m C c r N to N N I� w M O w O I� w O w O O O w w I� T'! a) y p_�p } I� o O co M CO CO M N N M O Lo N O N (n V V M M I� W N cc) 10 M a) C m e (n N M N N w w V N w H7 to N (0 M o7 KJ N N w M V E? w 67 w 6G _ a) p D ID O C ° m�p m CO M ID O o o M m co co V O Vo O V O O O O O O O O O O }' T w O N y m } � m o O O 7 V V I� V) OM O V-) O � V) 00 fR to O 00 fR fR r CQ Q W N m T m - N O co In N N co N r w r co w M O O O co co w w o) w fR Vq O 67 67 VJ fR V/ o m a) 3 r F In v o o Q m M � o o o o Io o o o o o o o o o o o o o CO N I� O M r w r O w O co O O 61) O O V U) w O M C o O m } \ I� °) Z p V o o o M o N N o o o In N N I� U • • c °'T W m C V N w M V In N V M N d-J M O c 'm y j m L O M 6a M N w w O V V w M M V M M H7 H7 L U Y j'O F N HJ H7 H7 HJ fR V/ m p Y _ _ _ °- T m m y In O o Q O O CO M 10 10 O M O m M O O O w O O m- Y N C 0 m M Z. 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C O O O O m M (O m CO m m M (O m m O m m m N V m N N m w V w r V M r m N (� LO _ I� Nm V M V m In N I� (O m (O w m V m N N 1n O 1n N m N m M m m V M I� L (� En m N m M M O M w V 6a m V m w N 6a O N N co ul O V N V) w69 fH w N w w fH (A w w fH m wV) wV w M v of ~ in (n (» <» <» (n N I� (� a) C m r N V O M m O N V M m m O m M N M M w M m m N r N CO N M O M m O m Q C m O M m O M N M m V r N m r N O M N m V m M m r CO w m m V w N m O O m m m m V M M O V N r V CO m m M m N m m O V N CO CO m N m M m N Lc) (n N N o w N In w (+ o (+ w w R VJ N V N O 6 N V h () N N o M O fA fR fA fR N fA fA H7 fA HJ V fA fR w co fR co m <n <n r Y � U m O T V Lo w m M w V V N O r Lo O m O O O m O O O N M m O O O N O O O m O O m I C M N m m q O w N m m w m m V w m N CO N O O N V r O w m w M N N m Lo O N }� mtf m r V o V V N N N M N m M w o w M M N V M O V N O N_ m r co m N M V' m a) N�O N rl M m M Lo w w w V co wV m w o w w w N M w m m m N C (n m F Lo O w w 69 HJ w - V 69 V) 6963, HJ H7 w H7 w W, ca fA fA CO N N L m 69 w Lo N v o Lo o Lo Lo o Ln o Lo Lo o o Lo o o o o o o o o o o o o o o o o o o o o Lo o o o m m m r O O O m O V m Lo r V N O m O O O O O O O m m O O O w O Lo O M M V N O (� Y/ O I� V M N M N LO N (O m Lo w O O O N O Lo O w V " O O m I� O I� O m V N CL/1 (� m Ln N I� Lo Eq M m m V m M M w w V w w O w O 69 w Ln N O w m m N m L u) 69 6am (0 F o m w w w EA V - w ua EA (fl EA w - EA Iq fR — EA fR 6q N w O69 F p > m M m N m V p V O r m m N O m Ln m (O r m V N m V V O M O r m M M r O O O V O m O m m a) O C m O M V N V m CO CO O V m - N r M V N O m m M m w m m r m w w m m O M V w M M M M V m N m O c4 w M m m M w m m m M r m V M w m w w m r V V m A, r (0 r r N w V M V N w N w N W 1n m Ln O 6 m o N w (O I� Y/ N u) to F V m w w w d3 w EH w w w w w w HJ d3 w w ER N m (n w (n (n (» (n m m p `v O O Y m O m o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o Qt m o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 N (6 0 m Y o o V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V -LLrn C Cm t5 m O o O T p O d m o Op N (0 (0 (0 m —a - L1 m m m m (0 m m L m L (0 m F to Q L W p L1 L d (1 p C C L1 d U L1 C L1 (Q Y m F J L L E L Ul to to to o p (n P2 y0 p m C X m J C m p m fp/1 7 C 7 m fA C m m W C C C C C C C O m m W C w > Q C_ � O m O O O d O O L1 O () Y m Y C m m Cl '� '� W C C U Y m '. y0 W m C F Y U '_' (� (n Co O O O O E O m C J C � O O O Co m Q Q O N m m m L1 L -O o5 N C 'N C N L L -O to M W L m K (� U `m o T 0 mn E o o in m g w J O o O m a� ri J O M m O U C d lL N 0 U O O Ln ` US O O O j C m O o O C C (1 (0 Y a) m m w m N � N oa w o d M U � 0 m Lo oa d m g a m (� O m Y N m o O aS' C M E m O C C E m ` w m O F m Q — O m M m O m m m L1 0 O O U (`) m O` > O M O N > C E axi E o CO o v o — r Cn F m p- C d J O m C o OM M O O M Co M J d co C Ul Q M V M o p (0 to o O d C O W N N M Lo 0 L cZ X 'O U 0 u) J m to o C m m N 0 Y U Y J Q m o o m u J N U E (n m 0 m O J 0 m u) m m F E m O > Z U V m M O O N O r O M O C N N O WN W, W, I� m o m M r I� N r In V N M M O) C r L I� Ga O O m M O M H7 In m 10 N VJ fA r m M v v m v m o o m o � m O C N N N N m m 10 w 69 I� w m r r :E m 10 m m O M I� N m L �p w r- w O co V M m w V In In N O m N V7 w N 0 69 N V7 H7 r W M m o O`) C N In O N r f/-7 Efl I� V-7 r r r m c� m co rn rn m M N L (D HT r d) 10 (h m ILO N wM n m m m m I� (0 N ER 69 w r m M m M m m o o o m I V M O C N M In M m m w 69 O O o 1n r r m rn m m I� rn M ch m rn rn .. (» m N m m ch rn co fH N w V I� V)Ga o O m `m 6 a� rfl r m o m N m m m O O m O m m N O C N O m O M O o w w I w V V m r m m m O M m (3 o) L �p w H7 - m M m H7 LO V N - m (O N� H7 H7 V3 o_ oo fA w O m m In V o m O) m O O m O V M V O C m M m m O w 69 I� w M m M r \ LO V In m I� N M m _ I� L N (11 m w m m m M V m (1) O V V I� m N V m " H) o) (0 N O O m M m O) Z O C m m m mm O M V7 Efl I1) N r m r In In m V M m L m I�m I� r V M m O O N fH m V V I� V3 r V V CO wm I� W -q N m V3 M O O m O m Im m D Q C m o m m N fA r m N r � � 10 m m M m r M m N (n L9 m O V N M VJ R A w 69 w > O � Um m O O O O O O O O m O M N C N N N 10 O m w w I� V7 m (D \r m N In r 0 O 0 O M V N r m w In w m M m H7 fA OD m N N 69 w w 69 y3 � V L m o OO O O O O O m m o m O O O O O O w I� r M N m 10 () Y/ In 10 o O o 10 M M I� m mo) C ii L (0 U) OF fA fA VJ fA fA VJ N M m y 0 'q O � O m m 0 n 0 V7 K7 I� r V-7 V V M r m M N M M M m M A, wwLo w m m M M M M d3 m M I� � m 10 N EA V F � fA FA d-J V7 � fR N � a� o oo o o o o o o o o Y iri N p o 0 0 0 0 0 0 0 0 0 0 0 I O LL V V V V V V 4 O O 0 J L C 6 m O ~ 0 W N to N (0 C (0 O T t/1 (0 N N ID O OC D N d N O J Q (n C C m M N W N N C co F U M o >. CC L p 'U O E C (n u) O d N N N W m m m t/l N E d m I J C O , O) -O , U N O .- Q O) Q C N m 65 V ~ 7Lo J J J V d O_ N F z Q 0 F O d a) U W E � D E ., Q T Q N a m � U o � m � C C V, Q m V O O O O O O O O O O 0 0 O O O O N O O O O O O O O O O O 0 O O O 0 0 M C N - - - - - - - - - - O 0 N - - - - O - - - O fA fR O fA f9 O O m O 0 O m m V C } +� 0 N M m O O O V M O N O m m 0 (0 N m M W m M m O M O O m O yy O p UJ r N O fA M fH fR fA m m N N fA fA fA f9 EA fA f9 O � fR fA m } T 0 m M O O O O O O O O O O m m O O O O O O O O O O O O O O O O W O O O O 0 m} n C N fA ER f9 f9 ER fR fA fR EA ER 0 1� fA fA fA ER ER fR fA fA ER f9 ER EA m 0 m 0 O+� O m O m O O O O m O 1� O O O V M O m O m m W y (0 W m V m m O M V V N m � M O fR I� f9 N fA fA � fA m m � fA � ' fA fA fA f9 fA fA fA T } � U Eo m N O O O O O O O O O O O O O O O O O O O O O O O O O m O O O m mm m Om mO mO Om - O OOmOm - m M m m M O O O M O m m 0V ~ 6 N m m V O m V m M m O r O O m m O m E9 m m I� r m m O ER N EA ER I� r M � fR Ela f� ER ' ER � f9 fA ER fA ER f� !T N Vj O } N m O O O O O O O O O O V O O O O M O O O O O O O O O O O f9 m0 O O O W m N f9 c N fA f9 fA fA fR f9 EA fA fA O m N fA V O O O O O fA m O 0 m O W fA m m } +� O EA fA W M m O O N O O O O M O m V V N (0 V m W N W m O M V m r m 1� r V to to yy V W M E» EA V N m m UJ m 0m f� N fA fR ER N � fA m m m N � fA fR ER fA EA fR fR fR fR f� E U } T N N N [A O O O O O O O 0 O O 0 m r O O O m O O 0 0 O 0 0 O 0 0 0 W 0 O O NV V O ° O 9 R A O R R O O O R 9 O O O O O A O O O O W A 0 0 N N m O O N O O O O O m O m N O N N m m N W m N O m m V 0 m m O M m N 0 N 0 M C 0 m m N m m 0 -° fA f9 ER fA EA fA EA fA f9 fA f9 fA C N c OI W O O O O O O O O O O m W N O O O } = EA fA fA fA fA fA fA f9 EA f9 1� O O O O O O O O O O O W O O O '- � O N 0 A O O O O O O O O O m W 0 0 O. m O O O N O O O O O M m W W m m Mm N N m N N N M EA EA V N m W N m m O M 0 ` o � E» o n En m 0 0 0 0 0 0 0 0 0 0m M 0 0 0 M o 0 0 0 0 0 0 0 0 0 o m 0 0 o m m m E r ^ O _ EA m O - m - - - - O N V m Elam O m ER m O O O O O O O O O m m m E m m li > +� N N V 1� m N m O O N m O O O O O M O O V N � (V N fA fA N N fA fA fA fA fA fA m r O O O O O O O O O O r N N O O V OO O O O O O O O O O m O O O m m m y E LDAA,, c \ .-. EA EA Ela EA EA EA Ela EA EA EA N V Ela EA V m O O O O O O O O O O m EA ER EA m m N EO O � m O O O N m O O O O O M O O V E U a `m v v Eri o 0 m � � r N o o m v ro ro iri y m � O N O 1� EA m M EA EA V N m N m m W m O o \ M O M V ER ER fH fR f9 N f9 m m m L L fR EA fA fA f9 fA f9 EA EA ° U m O n OU Q m m O 0 O O O O 0 0 O 0 0 M O O 0 O O 0 O O O O 0 0 O 0 O 0 0 O mVj fl3 m O EA EA EA m 1� m O m N m O O O O O O O O O O m m m Vj O O N O.n (6 } +� O O M O O m m O O N m O O O O O N N O 1� (0 V M O 1� M 1� r m N m 1� r r m O 1� V m m V ° �_ X m m O V M 1� E» V m M EA fl3 V N m O N m m O N N N EA M O V fA M V m fA EA f9 r fA fA N 1� r M (Q Z m fR ER EA EA EA fA f9 fA 0 N - f9 ER fA fA N- •CL N } O _ y Io }U m m O O O O O O O O O O m M m O O O O O O O O O O O O O O O O O m 01 (0 m_- O A R A A R R 0 R A R m M R O O O O O O O O O O R A R A O O E f� N O O O O O N m O O O O O `m ic N M � m o 0 r � � 0 0 o v v v v Eh y >O m m M M fl3 E9 V N m O N m m O O M m M M f9 I� f9 EA fR fR f9 N 0 r fA > N F p_ fA f9 fA fA fA fA fA f9 � (p 0 0 0 0 0 0 0 0 0 0 O m 0 mO o 0 0 0 0 0 0 0 0 0 n 0 0 o n r m fR f9 fA fR fR fR EA fR EA EA EA N ER N m O O m O O O O O O O m m m m V V h ~ N C V V O O O N m O O O O O m m m h �j (Q `m w m o o m o om o o r �� L ill VV fR V ff3 V N m O N �(J EH m m m 0 ° r O O ER ER EA EA E9 Ef3 EA ER ER T- N } N 9 A = 0 1. ET c c0 M V (0 t0 (0 (0 (0 �' N U C r OE Y N N N d J J J J n °' N (p ° N E N fll J J J J J N f0 t N N ❑ C ONo LL N O 0 (p 'O Y N m O N N > N U O (( m Q Y N m E. O° N 0 lA N �. > > IO N .�. m O O '.' tk (/) O N ° U LL LL LL M O y N m N N r > 5 O` m O m -° LL N N C N C N N J CO (n LL LL N N C LL m > m N U m rn '. E O E « U m o N m o m c .� o r U) co I S a � c o 0 Er ag� NN (D (D U am dS oaooZ yo W o o r'n� Y-Um_° ❑F ca WxON W❑LLO o o � E N (D EQa o_rm o (0 UN o pm Q Q f - EU N O E =O0) E 0. O. N 2 N O E YFymcoo E U LL U n U) 0 >.r E Ly n � U O E Q p Cm LLo E o o O 0oo .0 co O ( ( N o U mo.�E a m U O o m LL U U N- N E Um m tD a O >O fA ° o d m° o d m -° n U EO E o 6 3 m E (7 E Z LL a U > > � LL o N m Op o`o. > OU p > a o-m a co U E U N U Zaf ° QE 43)L ani m a >. O n m U) -MDUI n n > o p o O in n O LL ❑ U) p y.i y LL ❑ a a p 0 (D fA F U U U p 0 Z° C N O (fl a) 7 O U O N M Cl) W W r- COO r CO (fl V a c0) r- O (fl r (7 O (0 CA 'O a) 2 c ('7 (h N N LO O N V> W m_° N N N LO Cl) U3 LO (`p .0 a W EH U3 Efl Pf3 H3 a) c } O N c O Cl) LO (fl c '6-6 a) O N c (h c N (fl O N O N N U O N CO O (D W (D O 'E O N co O E C O (fl O r LO (C _ Cn 63 r- - '6 a) T M'6 N 00 (000 (p a) O N lL U3 Efl EH U3 C N LO (0 C c O co U O N a) V LLQ V Lf O E Ln O M E O c 0 N O r V V N (0 N (D `° c m N0) O O) (0 U3 N Q a) m N N (`') 6 (fl (9 c W Ef3 6 a 4 } >. E a) � O) CO O c w V ° a) cCN c N CO a) (p O O U O L() r 'E O M s O C') O O) O) N O (O N (0 OJ (7 co-6 c C7 1- V (fl r O (D V1 a) O N U3 0 U) m N LO ('7 M � V c7 N E W U3 � � � 69 > y C) � V c c s V O Lq U O � (D O (`O') r LO O V G) 'E (fl N N 'C N O 2) O O O O O V V > (0 O ° (p ,c C7 (D V 1- N r V L N co U) E O m c N N O V'T co C14 � V G) a 0 W U3 N O > O 7 U \ c a) a) c O V O 00 LO (7 N LL x O N U O Cl) N Ln co O r N o f O (0 O L(') p) 1� O N L() N V N N c (h (o N O (D r O U � O N m e N N O r- (0 � r (Q �c (0 (0 O a) W61) � � � Lo N a) o Q a) N `m > O co V CO c 2' r O O O a) c O O O O O N O N n Cl) (9 O 0 t CV c ° 1- V O N O (fl N r r a) \ U3 (LO r a' N O N O � (0 C) C7 C\ N � N � LC) O Co'- C) Y U3 S ) 0 m W N N N LLQ (D � (fl U) 6�1 6� 6�1 64 O n > Y O E ° N O I- (o LO c T O a) O) (0 N c I- r LO O) 7 O c LC) co a) N V U O o) N N O O (7 (fl CO Q a) p O_ N C O N " - N N C7 Q i� (6 cc (7 O a) ° (p c (7 LO IL() (n V a) m N N (fl V V O LO > U3 � 6 ^ (a � W i.! > } O 4) UO (fl N N e C N o) N (o Y a) c (fl N r LO LO O N O) (fl O -c O c N U N N O O N M U -E L() V O -6 cur a) O T (c0 0 _ r 1� O N (`') O V m LO N (� m c m N V N V V (D m N c U) ` v '6 C m N N O� � � � N U O W Ef3 O } O.N a U C) L() 00 O E (4 > U O L� r O� Om V O O N \ LO (7 (� 0-2 � a) p) O (7 ('7 c N O (9 L(') O '6 O Y c ('7 (D Cl) O O V (D -o U3 LO p.c m'6 N O U3 N N � O N N �5 N S W Ef3 613 613 613 a } Ow O n O Q� T O V LO (D c L Y° y0 O 7 O N c N N S L° ll) N (7 (7 Cl) O(Y) r- LO (.0 N co 0) (Y! � O O Cr-- c ('7 (+j 1- LO (fl r Q ° (n O O) C m N N M V V 6� V W U3 U3 U3 U3 EH N a) O ° ai 2 ami ° aNi ° aNi Q o Cl) m O(fl m m O(fl m ° Q or Y .� ° m N ( u3 u3 u3 Cl) a o E ° o o ° o o a w O ° Q .• .. Q N Q T c O N , a) c U o a) c o E o o s c +; g� La -_ Via` Via` > ° .° m ° ii a U aa) o o U c o m -0 LL0 ° o E o i QW)w Ooof wa°)mao) c0LcE -a D- o Q W � Em o Q O ° U > ��U .° Cl) T N a) m — ° QU) 6 a) T U Y N a) "6 L a) X Z 0 �_ U = a� � °- a° m ° ° mai wCO a° 2 as aX Amo O s� U Uaa U (0 c C y0 .N a) a) a) 77 0-' N p N t N �_ Q ° m � m oN as o U o� Q No Q a C W _T Q O)U E m E U 2 `c n to U 7 W W a) -o N m (Uo '> o ani 0 m ++ N m Ls Cl) F U0-1 Table 7 - Bill Comparisons Before and After Rate Adjustments St. Joseph, MN; Sewer Rates Scenario 2015-2 This table compares bills for various volumes at the current rates and billing frequency with what the same volumes would cost at the equivalent modeled rates for that same billing frequency.(An"apples to apples"comparison.)Minimum charge surcharges were calculated for these same classes of users and these bills include those surcharges. Note:The weighted-average bill increase for all customers combined will be: 70.2% Customer or Rate Gallons of Customers Above This Cumulative Bill Increase or Percent Increase Class,or Meter Size Use Volume and Below Next Customers Current Bill Modeled Bill Decrease(-) or Decrease(-) 0 0 0 $17.00 $27.00 $10.00 59% 1,000 0 0 $19.95 $32.80 $12.85 64% 2,000 0 0 $22.90 $38.59 $15.69 69% 3,000 0 0 $25.85 $44.39 $18.54 72% 4,000 0 0 $28.80 $50.19 $21.39 74% 5,000 0 0 $31.75 $55.98 $24.23 76% 6,000 0 0 $34.70 $61.78 $27.08 78% 7,000 0 0 $37.65 $67.58 $29.93 79% 8,000 0 0 $40.60 $73.37 $32.77 81% 9,000 0 0 $43.55 $79.17 $35.62 82% 10,000 1,579 1,579 $46.50 $84.97 $38.47 83% 15,000 0 1,579 $61.25 $113.95 $52.70 86% 20,000 0 1,579 $76.00 $142.94 $66.94 88% All Customers Except City 30,000 0 1,579 $105.50 $200.90 $95.40 90% 40,000 0 1,579 $135.00 $258.87 $123.87 92% 50,000 0 1,579 $164.50 $316.84 $152.34 93% 60,000 0 1,579 $194.00 $374.81 $180.81 93% 70,000 0 1,579 $223.50 $432.77 $209.27 94% 80,000 0 1,579 $253.00 $490.74 $237.74 94% 90,000 0 1,579 $282.50 $548.71 $266.21 94% 100,000 0 1,579 $312.00 $606.68 $294.68 94% 110,000 0 1,579 $341.50 $664.64 $323.14 95% 120,000 0 1,579 $371.00 $722.61 $351.61 95% 130,000 0 1,579 $400.50 $780.58 $380.08 95% 140,000 0 1,579 $430.00 $838.55 $408.55 95% 150,000 0 1,579 $459.50 $896.51 $437.01 95% 160,000 0 1,579 $489.00 $954.48 $465.48 95% 0 0 0 $0.00 $27.00 $27.00 N.A. 1,000 0 0 $0.00 $32.80 $32.80 N.A. 2,000 0 0 $0.00 $38.59 $38.59 N.A. 3,000 0 0 $0.00 $44.39 $44.39 N.A. 4,000 0 0 $0.00 $50.19 $50.19 N.A. 5,000 0 0 $0.00 $55.98 $55.98 N.A. 6,000 0 0 $0.00 $61.78 $61.78 N.A. 7,000 0 0 $0.00 $67.58 $67.58 N.A. 8,000 0 0 $0.00 $73.37 $73.37 N.A. 9,000 0 0 $0.00 $79.17 $79.17 N.A. 10,000 0 0 $0.00 $84.97 $84.97 N.A. 15,000 0 0 $0.00 $113.95 $113.95 N.A. 20,000 0 0 $0.00 $142.94 $142.94 N.A. City..G-10 30,000 0 0 $0.00 $200.90 $200.90 N.A. 40,000 0 0 $0.00 $258.87 $258.87 N.A. 50,000 0 0 $0.00 $316.84 $316.84 N.A. 60,000 0 0 $0.00 $374.81 $374.81 N.A. 70,000 0 0 $0.00 $432.77 $432.77 N.A. 80,000 0 0 $0.00 $490.74 $490.74 N.A. 90,000 0 0 $0.00 $548.71 $548.71 N.A. 100,000 0 0 $0.00 $606.68 $606.68 N.A. 110,000 0 0 $0.00 $664.64 $664.64 N.A. 120,000 0 0 $0.00 $722.61 $722.61 N.A. 130,000 0 0 $0.00 $780.58 $780.58 N.A. 140,000 0 0 $0.00 $838.55 $838.55 N.A. 150,000 0 0 $0.00 $896.51 $896.51 N.A. 160,000 0 0 $0.00 $954.48 $954.48 N.A. CBGreatRates©Version 7.2 Table 8 - User Statistics St.Joseph,MN; Sewer Rates Scenario 2015-2 This table shows measures of equitability of the rates as modeled in Table 11. If your rates are absolutely proportional to use on a volumetric basis,your%of usage and%of revenues figures will be the same within all the classes.That is not possible if you have any minimum charge and having no minimum charge is almost unheard of. Normally,the%of usage figure will be lower than the%of revenue for the lower volumes of use.That will switch for the higher volumes of use.Even for declining rate structures,this switch should occur near the volume of the average residential user,typically near 5,000 gallons/month(668 cu ft). In urban and suburban areas the average monthly use for residential or general customers can be twice that used by their rural and"old town"counterparts.Use is largely dependent upon who lives in a community.Older people living in longer established neighborhoods tend to use less volume than younger people living in more recently developed areas.As you make comparisons between different customers and customer classes,keep that,and the following in mind: 8,144 in gallons-This is the average residential customer's usage per Bi-monthly billing cycle. Usage allowance is the volume"given away"with the minimum charge.The higher the allowance,the less volume the utility can sell to generate income. 133,352,218 in gallons-This is the volume metered through customer meters that was available to be sold by the utility during the test year- 0 in gallons-This is the volume metered through customer meters that was given away as a usage allowance during the test year. $0 At the unit charge rate in effect during the test year,this was what it cost the utility to give away this volume. $0 At the unit charge rates modeled,this is what the current usage allowance(if any is included in the modeled rates)would cost the utility for a full year. Total Annual Cumulative Cumulative Bottom of Top of Average Volume Use Within Use in This Use in This Customer or Volume Volume Used Within Each Volume Customers Class From Class From %Revenue %Revenue Rate Class,or Range in Range in Each Volume Range in Within This Low to High High to Low at Current at Modeled Meter Size Gallons Gallons Range in Gallons Gallons Volume Range %Users %Usage Volume Volume Rates Rates 0 999 0 0.0 0.0 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% Residential 10,000 14,999 8,144 77,158,517.0 1,579.0 92.6% 57.9% 100.0% 100.0% 57.9% 57.9% 160,000 99,999,999 0 0.0 0.0 0.0% 0.0% 100.0% 0.0% 0.0% 0.0% Totals for Class 77,158,517.0 1,579.0 92.6% 57.9% 57.9% 57.9% 0 999 0.000 0.0 0.0 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% Commercial 15,000 19,999 18.434 12,829,761.0 116.0 6.8% 9.6% 100.0% 100.0% 9.6% 9.6% 160,000 99,999,999 0.000 0.0 0.0 0-0% 0-0% 1000% 0-0% 0-0% 0.0 Totals for Class 12,829,761.0 116.0 6.8% 9.6% 9.6% 9.6% 0 999 0.000 0.0 0.0 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% ndustrial 80,000 89,999 82.240 1,973,770.0 4.0 0.2% 1.5% 100.0% 100.0% 1.5% 1.5% 160,000 99,999,999 0.000 0.0 0.0 0.0% 0.0% 100.0% 0.0% 0.0% 0.0% Totals for Class 1,973,770.0 4.0 0-2 1.5% 1.5% 1.5% 0 999 0.000 0.0 0.0 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% CSB Student 150,000 159,999 0.000 0.0 0.0 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% Housing 160,000 99,999,999 1,149.727 41,390,170.0 6.0 0.4% 31.0% 100.0% 100.0% 31.0% 31.0% Totals for Class 41,390,170.0 6.0 0.4% 31.0% 31.0% 31.0% Grand Totals 133,352,218.0 100.00% 100.00% 100.00% 100.00% CBGreatRates©Version 7.2 St. Joseph, MN Sewer Rates Scenario 2015-2 Chart 1 - Operating Ratio 2.00 1.00 0.00 �O(V �O �Ory �O �O(V -1.00 Proposed Rates -2.00 Current Rates —Breakeven -3.00 -4.00 -5.00 Chart 2 - Coverage Ratio 4.00 2.00 0.00 �0 �h 1O �cb "O O ry � �O� -2.00 o-Proposed Rates -4.00 Current Rates —Breakeven -6.00 -8.00 -10.00 CBGreatRates©Version 7.2 St. Joseph, MN Sewer Rates Scenario 2015-2 Chart 3 - 5,000 Gal Residential User's Bill $120.00 Proposed Rates Current Rates $100.00 $80.00 $60.00 $40.00 $20.00 $0.00 r,0 �Cb �C1 O D �OIV Chart 4 -Affordability Index 1.60% 1.40% 1.20% 1.00% 0.80% 0.60% Proposed Rates 0.40% Current Rates 0.20% 0.00% CBGreatRates©Version 7.2 St. Joseph, MN Sewer Rates Scenario 2015-2 Chart 5 - Working Capital vs Goal $350,000 -o-Proposed Rates -❑-Current Rates $300,000 Goal $250,000 $200,000 $150,000 $100,000 $50,000 $0 1110 1 IN Chart 6 - Value of Cash Assets Before Inflation $1,000,000 $0 -$1,000,000 c`o �o �o o �o`L -$2,000,000 -$3,000,000 -$4,000,000 Proposed Rates -$5,000,000 ❑Current Rates -$6,000,000 -$7,000,000 -$8,000,000 -$9,000,000 CBGreatRates©Version 7.2 St. Joseph, MN Sewer Rates Scenario 2015-2 Chart 7 - Value of Cash Assets After Inflation $2,000,000 $0 ti o do �o`ti -$2,000,000 -$4,000,000 -o-Proposed Rates -$6,000,000 C]Current Rates -$8,000,000 ,40 -$10,000,000 CBGreatRates©Version 7.2 Table 11 - Initial Rate Adjustments and Resulting Revenues St. Joseph, MN; Sewer Rates Scenario 2015-2 This table depicts how rates would be set and the revenues they would generate. Out of City Multiplier 200% 12/31/15 Date when fees will first be collected at adjusted rates.Actual adjustment should occur one billing period earlier. After rate adjustments are made,general customers will be billed every other month. Sales to be billed this year:Sales at the current(Test Year)rates(gray highlighted column)will apply until rates are adjusted.Sales at the modeled rates(yellow highlighted column)would apply if the modeled rates are adopted.The grand total"blended"sales revenues are the total revneues generated by the two different sets of rates.Those show in the right-most column. Customer Bottom of Top of New New Unit Class,Rate Volume Volume Sales This Customers Above Minimum New Usage Charge Sales This Grand Total Class or Meter Range in Range in Year at This Volume and Charge Base Allowance in per 1,000 Year at 'Blended"Sales Size Gallons Gallons Current Rates Below Next Rates' 1,000 Gallons Gallons Modeled Rates This Year 0 999 $0 0 $0.00 0.000 $5.80 $0 $0 Residential 10,000 14,999 $226,994 1,579 $0.00 0.000 $5.80 $1,225 $228,219 160,000 99,999,999 $0 0 $0.00 0.000 $5.80 $0 $0 0 999 $0 0 $0.00 0.000 $5.80 $0 $0 Commercial 30,000 39,999 $0 0 $0.00 0.000 $5.80 $0 $0 160,000 99,999,999 $0 0 $0.00 0.000 $5.80 $0 $0 0 999 $0 0 $0.00 0.000 $5.80 $0 $0 Industrial 10,000 14,999 $0 0 $0.00 0.000 $5.80 $0 $0 160,000 99,999,999 $0 0 $0.00 0.000 $5.80 $0 $0 CSB Student 0 999 $0 0 $0.00 0.000 $5.80 $0 $0 Housing 20,000 29,999 $0 0 $0.00 0.000 $5.80 $0 $0 160,000 99,999,999 $121,766 6 $0.00 0.000 $5.80 $657 $122,424 Senior 0 999 $0 0 $0.00 0.000 $5.80 $0 $0 Housing 6,000 6,999 $0 0 $0.00 0.000 $5.80 $0 $0 Addition,G-13 160,000 99,999,999 $0 0 $0.00 0.000 $5.80 $0 $0 0 999 $0 0 $0.00 0.000 $5.80 $0 $0 City,G-10 30,000 39,999 $0 0 $0.00 0.000 $5.80 $0 $0 160,000 99,999,999 $0 0 $0.00 0.000 $5.80 $0 $0 Total Rate Rev at Current Rates $392,311 Total Rate Rev at Modeled Rates $2,118 Total Blended Rate Revenues for the Year 2 $394,429 Note 1,New Minimum Charge Base Rates:If meter or connection size-based minimum charges are to be used,and the user classes modeled above include meter or connection sizes,the amounts shown in this column include meter or connection size surcharges as calculated in Table 10.Otherwise,use the rates in the"Total Minimum Charge per Billing Period"column of Table 10 when setting minimum charges for each customer when their minimums will be based upon meter or connection size. Note 2,Blended Rate Revenues:During the year when rates will be adjusted,rate revenues generated will be"blended"revenues-part collected at the current rates and part collected at the adjusted rates.The table above calculates both kinds of revenue and totals them in the right-most column.Therefore,the anticipated timing of rate adjustment shown at the top of this table will cause rates to be charged as follows: 12.0 months at the old user charge rates and 10.0 months at the new user charge rates. CBGreatRates©Version 7.2 Table 12 - Test Year Usage St. Joseph, MN; Sewer Rates Scenario 2015-2 This table shows usage by all customers during the test year. Residential meter readings per year: 1 Date this scenario created: 12/10/2015 Test year,the one-year period being analyzed starts:1/1/2014 Other customer meter readings per year: 6 Bills sent per year: 6 Average Count of Bills Volume of Only Number of %of Volume Used Count of Bills Total Annual Only Where Those Bills Customers With Customers Bottom of Top of Within Each With ANY Use Within Volume Where Volume Volume That That %of Total Customer or Rate Volume Volume Conversion Volume Range Volume Each Volume "Maxed Out' "Maxed Out' "Maxed Out' Averaged Use at This Class,or Meter Range in Range in Factor for in 1,000 Within Each Range in Within Each Within Each Within Each This Volume Average Size Gallons Gallons Billable Units Gallons Range Gallons Range Range Range of Use Volume 0 999 1,000 0.000 9,474 0 0 0 0 0.0% 0.0% Residential 10,000 14,999 11000 8.144 9,474 77,158,517 9,474 77,158,517 1,579 92.6% 57.9% Monthly and Annual Subtotals: 104,214 77,158,517 9,474 77,158,517 1,579 92.6% 57.9% 0 999 1,000 0.000 696 0 0 0 0 0.0% 0.0% Commercial 15,000 19,999 11000 18.434 696 12,829,761 696 12,829,761 116 6.8% 9.6% Monthly and Annual Subtotals: 8,352 12,829,761 696 12,829,761 116 6.8% 9.6% 0 999 1,000 0.000 24 0 0 0 0 0.0% 0.0% Industrial 80,000 89,999 11000 82.240 24 1,973,770 24 1,973,770 4 0.2% 1.5% Monthly and Annual Subtotals: 456 1,973,770 24 1,973,770 4 0.2% 1.5% CSB Student 0 999 1,000 0.000 36 0 0 0 0 0.0% 0.0% Housing 160,000 99,999,999 1,000 1,149.727 36 41,390,170 36 41,390,170 6 0.4% 31.0% Monthly and Annual Subtotals: 972 41,390,170 36 41,390,170 6 0.4% 31.0% 0 999 1,000 0.000 0 0 0 0 0 0.0% 0.0% Senior Housing 160,000 99,999,999 11000 0.000 0 0 0 0 0 0.0% 0.0% Addition,G-13 Monthly and Annual Subtotals: 0 0 0 0 0 0.0% 0.0% 0 999 1,000 0.000 0 0 0 0 0 0.0% 0.0% City,G-10 160,000 99,999,999 11000 0.000 0 0 0 0 0 0.0% 0.0% Monthly and Annual Subtotals: 0 0 0 0 0 0.0% 0.0% Monthly and Annual Grand Totals: 113,994 133,352,218 10,230 1,705 100% 100% CBGreatRates©Version 7.2 Table 13 - Rates at End of Test Year St. Joseph, MN; Sewer Rates Scenario 2015-2 This table shows user unit charges at the end of the test year. Rates for volume ranges that are not shown are the same as the next lowest volume range rates. Customer or Bottom of Top of Volume Usage Rate Class, or Volume Range Range in Allowance in Unit Charge Meter Size in Gallons Gallons Minimum Charge 1,000 Gallons per 1,000 Gallons 0 999 $0.00 0.000 $2.95 Residential 1,000 1,999 $0.00 0.000 $2.95 160,000 99,999,999 $0.00 0.000 $2.95 0 999 $0.00 0.000 $2.95 Commercial 1,000 1,999 $0.00 0.000 $2.95 160,000 99,999,999 $0.00 0.000 $2.95 0 999 $0.00 0.000 $2.95 Industrial 1,000 1,999 $0.00 0.000 $2.95 160,000 99,999,999 $0.00 0.000 $2.95 CSB Student 0 999 $0.00 0.000 $2.95 Housing 1,000 1,999 $0.00 0.000 $2.95 160,000 99,999,999 $0.00 0.000 $2.95 Senior 0 999 $0.00 0.000 $2.95 Housing 1,000 1,999 $0.00 0.000 $2.95 Addition, G-13 160,000 99,999,999 $0.00 0.000 $2.95 0 999 $0.00 0.000 $0.00 City, G-10 1,000 1,999 $0.00 0.000 $0.00 160,000 99,999,999 $0.00 0.000 $0.00 CBGreatRates©Version 7.2 Table 14 - Average Cost Classification St. Joseph, MN; Sewer Rates Scenario 2015-2 This table distributes costs from a representative year(the"target'year)to fixed and variable categories(see Definitions)in order to calculate the"proportional to use"or"cost of service"rate structure based upon the cost breakdown for that year. The rate structure target year runs from 1/1/2016 through 12/31/2016 Variable Capacity Fixed Cost Variable Capacity Fixed Cost Cost Cost Operating Costs Amount % Cost% Cost% Amount Amount Amount DEPART 47100 Bond Payment(P&1) CIP Below 33.3% 66.7% 0.0% $0 $0 $0 720 Transfers to Other Funds $45,935 33.3% 66.7% 0.0% $15,296 $30,639 $0 101 Salaries $102,726 33.3% 66.7% 0.0% $34,208 $68,518 $0 111 OPEB Liability $2,496 33.3% 66.7% 0.0% $831 $1,665 $0 121 PERA Contributions $7,597 33.3% 66.7% 0.0% $2,530 $5,067 $0 122 FICA Contributions $5,413 33.3% 66.7% 0.0% $1,803 $3,611 $0 123 Deferred Comp-Employer $406 33.3% 66.7% 0.0% $135 $271 $0 125 Medicare Contributions $1,264 33.3% 66.7% 0.0% $421 $843 $0 130 H S A-Employer Contribution $3,224 33.3% 66.7% 0.0% $1,074 $2,150 $0 131 Health Insurance $19,287 33.3% 66.7% 0.0% $6,423 $12,864 $0 132 Dental Insurance $3,312 33.3% 66.7% 0.0% $1,103 $2,209 $0 133 Life Insurance $260 33.3% 66.7% 0.0% $87 $173 $0 134 Disabilty Insurance $697 33.3% 66.7% 0.0% $232 $465 $0 151 Workers Comp.Insur.Prem. $4,311 33.3% 66.7% 0.0% $1,435 $2,875 $0 171 Clothing Allowance $645 33.3% 66.7% 0.0% $215 $430 $0 210 Operating Supplies $1,560 0.0% 100.0% 0.0% $0 $1,560 $0 215 Software Support $99 33.3% 66.7% 0.0% $33 $66 $0 220 Repair and Maintenance $8,320 33.3% 66.7% 0.0% $2,771 $5,549 $0 230 Vehicle Repair&Maintenance $4,160 33.3% 66.7% 0.0% $1,385 $2,775 $0 235 Motor Fuel $8,320 33.3% 66.7% 0.0% $2,771 $5,549 $0 240 Small Tool&Minor Equipment $208 33.3% 66.7% 0.0% $69 $139 $0 300 Professional Services $10,400 33.3% 66.7% 0.0% $3,463 $6,937 $0 303 Engineering Fee $520 33.3% 66.7% 0.0% $173 $347 $0 331 Travel&Conference Expense $1,040 33.3% 66.7% 0.0% $346 $694 $0 361 General Liability Insurance $11,112 33.3% 66.7% 0.0% $3,700 $7,412 $0 433 Dues&Memberships $473 33.3% 66.7% 0.0% $158 $316 $0 446 License $208 33.3% 66.7% 0.0% $69 $139 $0 530 Improvements Other than Bldgs $0 33.3% 66.7% 0.0% $0 $0 $0 550 Motor Vehicles $2,080 33.3% 66.7% 0.0% $693 $1,387 $0 580 Other Equipment $0 33.3% 66.7% 0.0% $0 $0 $0 Lift Stations:220 Repair and Maintenance $11,232 33.3% 66.7% 0.0% $3,740 $7,492 $0 Lift Stations:300 Professional Services $1,820 33.3% 66.7% 0.0% $606 $1,214 $0 Lift Stations:321 Telephone $3,120 100.0% 0.0% 0.0% $3,120 $0 $0 Lift Stations:361 General Liability Insurance $780 33.3% 66.7% 0.0% $260 $520 $0 Lift Stations:381 Electric Utilities $8,356 0.0% 100.0% 0.0% $0 $8,356 $0 Lift Stations:530 Improvements Other than Bldgs $6,800 33.3% 66.7% 0.0% $2,264 $4,536 $0 Lift Stations:383 Gas Utilities $2,210 0.0% 100.0% 0.0% $0 $2,210 $0 Lift Stations:Operating Supplies&Small Tools $29,328 33.3% 66.7% 0.0% $9,766 $19,562 $0 Lift Stations:Engineering&Legal $520 33.3% 66.7% 0.0% $173 $347 $0 Lift Stations:312 Tests $5,720 33.3% 66.7% 0.0% $1,905 $3,815 $0 Lift Stations:322 Postage $520 100.0% 0.0% 0.0% $520 $0 $0 Lift Stations:419 Sewer Use Rental $315,050 33.3% 66.7% 0.0% $104,912 $210,138 $0 Lift Stations:580 Other Equipment $42,500 33.3% 66.7% 0.0% $14,153 $28,348 $0 CBGreatRates©Version 7.2 Table 14 - Average Cost Classification Variable Capacity Fixed Cost Variable Capacity Fixed Cost Cost Cost Operating Costs Amount % Cost% Cost% Amount Amount Amount DEPART 49490 Administration and General $41,080 33.3% 66.7% 0.0% $13,680 $27,400 $0 DEPART 49970 Depreciation Expense $0 33.3% 66.7% 0.0% $0 $0 $0 Temporary Adjustment of R&R Annuity $0 33.3% 66.7% 0.0% $0 $0 $0 Annual Payment to Repair and Replacement(Table 17) $173,378 33.3% 66.7% 0.0% $57,735 $115,643 $0 User Charge Analysis Services $0 33.3% 66.7% 0.0% $0 $0 $0 CIP Spending Net of Grant/Loan Proceeds and Other External Incomes(Table 4) $716,200 33.3% 41.7% 25.0% $238,495 $298,655 $179,050 Grand Total Costs,Weighted Avg Percentages $1,604,687 33.2% 55.6% 11.2% $532,7511 $892,886 $179,050 "Proportional to Use" Rate Structure Cost Basis 100% 1 $1,604,687 Average Fixed Cost/User Every Other Month= $52.08 Inflow and Infiltration is Estimated at 0% Cost of Inflow and Infiltration is Estimated at 52% Average Variable Cost to Produce/1,000 Gallons= $6.70 Resulting Cost of Inflow and Infiltration $0 Gallons/Billing Cycle Used by Average Residential Test Year Customer Metered Usage(in Gallons) 133,352,218 Customer= 8,144 + Test Year Inflow and Infiltration 0 Total Test Year Volume 133,352,218 CBGreatRates©Version 7.2 Table 15 - Marginal Cost Classification St. Joseph, MN; Sewer Rates Scenario 2015-2 The utility incurs unavoidable,or marginal,costs.Thus,the utility must collect minimal fees from various customers to"break even"on a marginal cost basis.Costs vary by customer type and volume used. In the calculations below it is assumed that marginal costs are being calculated for: Snowbirds The rate structure target year runs from 1/1/2016 through 12/31/2016 Marginal Marginal Marginal Marginal Marginal Marginal Variable Capacity Fixed Cost Variable Capacity Fixed Cost Cost Cost Operating Costs Amount % Cost% Cost% Amount Amount Amount DEPART 47100 Bond Payment(P&I) $0 100% 100% 100% $0 $0 $0 720 Transfers to Other Funds $45,935 100% 100% 100% $15,296 $30,639 $0 101 Salaries $102,726 50% 50% 100% $17,104 $34,259 $0 111 OPEB Liability $2,496 50% 50% 100% $416 $832 $0 121 PERA Contributions $7,597 50% 50% 100% $1,265 $2,534 $0 122 FICA Contributions $5,413 50% 50% 100% $901 $1,805 $0 123 Deferred Comp-Employer $406 50% 50% 100% $68 $135 $0 125 Medicare Contributions $1,264 50% 50% 100% $210 $421 $0 130 H S A-Employer Contribution $3,224 50% 50% 100% $537 $1,075 $0 131 Health Insurance $19,287 50% 50% 100% $3,211 $6,432 $0 132 Dental Insurance $3,312 50% 50% 100% $552 $1,105 $0 133 Life Insurance $260 50% 50% 100% $43 $87 $0 134 Disabilty Insurance $697 50% 50% 100% $116 $232 $0 151 Workers Comp.Insur.Prem. $4,311 50% 50% 100% $718 $1,438 $0 171 Clothing Allowance $645 50% 50% 100% $107 $215 $0 210 Operating Supplies $1,560 50% 50% 100% $0 $780 $0 215 Software Support $99 100% 100% 100% $33 $66 $0 220 Repair and Maintenance $8,320 50% 50% 100% $1,385 $2,775 $0 230 Vehicle Repair&Maintenance $4,160 50% 50% 100% $693 $1,387 $0 235 Motor Fuel $8,320 50% 50% 100% $1,385 $2,775 $0 240 Small Tool&Minor Equipment $208 50% 50% 100% $35 $69 $0 300 Professional Services $10,400 100% 100% 100% $3,463 $6,937 $0 303 Engineering Fee $520 100% 100% 100% $173 $347 $0 331 Travel&Conference Expense $1,040 100% 100% 100% $346 $694 $0 361 General Liability Insurance $11,112 100% 100% 100% $3,700 $7,412 $0 433 Dues&Memberships $473 100% 100% 100% $158 $316 $0 446 License $208 100% 100% 100% $69 $139 $0 530 Improvements Other than Bldgs $0 100% 100% 100% $0 $0 $0 550 Motor Vehicles $2,080 50% 50% 100% $346 $694 $0 580 Other Equipment $0 50% 50% 100% $0 $0 $0 Lift Stations:220 Repair and Maintenance $11,232 50% 50% 100% $1,870 $3,746 $0 Lift Stations:300 Professional Services $1,820 100% 100% 100% $606 $1,214 $0 Lift Stations:321 Telephone $3,120 100% 100% 100% $3,120 $0 $0 Lift Stations:361 General Liability Insurance $780 100% 100% 100% $260 $520 $0 Lift Stations:381 Electric Utilities $8,356 0% 0% 100% $0 $0 $0 Lift Stations:530 Improvements Other than Bldgs $6,800 100% 100% 100% $2,264 $4,536 $0 Lift Stations:383 Gas Utilities $2,210 100% 100% 100% $0 $2,210 $0 Lift Stations:Operating Supplies&Small Tools $29,328 50% 50% 100% $4,883 $9,781 $0 Lift Stations:Engineering&Legal $520 100% 100% 100% $173 $347 $0 Lift Stations:312 Tests $5,720 100% 100% 100% $1,905 $3,815 $0 Lift Stations:322 Postage $520 100% 100% 100% $520 $0 $0 Lift Stations:419 Sewer Use Rental $315,050 100% 100% 100% $104,912 $210,138 $0 Lift Stations:580 Other Equipment $42,500 100% 100% 100% $14,153 $28,348 $0 CBGreatRates©Version 7.2 Table 15 - Marginal Cost Classification Marginal Marginal Marginal Marginal Marginal Marginal Variable Capacity Fixed Cost Variable Capacity Fixed Cost Cost Cost Operating Costs Amount % Cost% Cost% Amount Amount Amount DEPART 49490 Administration and General $41,080 100% 100% 100% $13,680 $27,400 $0 DEPART 49970 Depreciation Expense $0 100% 100% 100% $0 $0 $0 Temporary Adjustment of R&R Annuity $0 50% 50% 100% $0 $0 $0 Annual Payment to Repair and Replacement(Table 17) $173,378 50% 50% 100% $28,867 $57,822 $0 User Charge Analysis Services $0 100% 100% 100% $0 $0 $0 CIP Spending Net of Grant/Loan Proceeds and Other External Incomes(Table 4) $716,200 100% 100% 100% $238,495 $298,655 $179,050 Offset for Capacity Surcharges(Table 10) $0 100% 100% 100% $0 $0 $0 Grand Total All Costs $1,604,687 88% 84% 100% $468,038 $754,131 $179,050 Marginal Costs per Customer, Volume Unit and Capacity Share The system would suffer a net revenue loss if it set minimum and unit charges lower than the marginal costs at the right. It would make a"profit"on a marginal cost basis if it charged more. Capacity costs, however,are a bit Marginal Marginal Marginal Capacity different.They can be recovered over time,as modeled here,or all at once in Volume in Fixed Cost Variable the case of connection(tap-on)fees or by using a combination of both Cost per Number of 1,000s of per Cost per AWWA methods. 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Balance in Today's Minimum Annual Annuity $173,378 Dollars Discretionary Annuity ($0) Required Annual Deposit (Annuity)to Replacement Account $173,378 This amount is entered into Table 3 as an operating cost of the system. CBGreatRates©Version 7.2 St. Joseph, MN; Sewer Rates Scenario 2015-3 Modeling Results This document contains the calculations that were performed to arrive at new user rates and fees for the next 10 years.These calculations are complex so key issues are also described in a narrative report that accompanies this model. This analysis was conducted so as to establish user rates that are adequate to pay all reasonably expectable costs while charging rates that are fairly structured and appropriately simple or complex. Scenario Description: This analysis model is the same as Sewer Scenario 2 except that the initial rate increase would be spread evenly over the next three years. This change results in the need for still lower rate increases initially, but future increases will need to be even greater to make up the difference. For most,the best way to read and understand what this model means is this.Scan the"Index of Tables,Charts and Other Results" to see how the model is laid out.Scan the"Definitions"for any terms you are not already familiar with. Read and even ponder Table 1 and the line graph charts.These will show you how the proposed rate adjustments will affect ratepayers and the system. If you need more detail than that,review the entire model. Finally,rate setting involves much more than just rates so you need to read the accompanying narrative report to understand what you need to do and why. Several tables in this model depict volume usage and user rates for the various customer classes.The model includes a continuum of volumes but many volume categories had no users. Most of these lines have been hidden simply to make the tables less voluminous. However,all volume classes that had use or that are break points for rate blocks are shown. For volume classes that are not shown,rates will be the same as the previous rate that is shown. December 11,2015 This rate analysis scenario was produced by Carl E. Brown,Getting GreatRates.com 1014 Carousel Drive,Jefferson City,Missouri 65101 (573)619-3411 www.gettinggreatrates.com carl(a-)gettinggreatrates.com CBGreatRates©Version 7.2 Return on Investment St. Joseph, M N; Sewer Rates Scenario 2015-3 The rates depicted in this model will produce various returns on investment or paybacks. Usually the most important payback, at least to ratepayers, is a rate structure that is demonstrably fair. For the system, however, making sure that revenue will be adequate to pay all expected,expectable and many unexpectable costs is the the most important return. If revenue will increase as a result of this analysis,which is almost always the case, one can calculate a return on investment. The following calculations show what was invested and what the returns will be over two periods;five years and 10 years. Five years is a reasonable period for return projections.Ten years is a good basic planning horizon but you should not bank on amounts or returns projected that far out. Besides, most systems should have their analyses redone long before then. Consider these key points about return on investment. Higher rates will fund more improvements, better repair and replacement and more. Most increases in revenue end up being used for such expenses.Thus,few systems end up with a dramatic increase in their cash reserves but they do markedly improve their financial position. In addition,fairer and higher rates generally enable systems to qualify for grant and loan funding that they otherwise would not.That increases the importation of"other people's money,"which is a drain on the state and federal levels,where the money comes from, but it is very desirable at the utility level. Also note that rates in this model have been modeled to be adjusted during the year following the test year or even later.That year is included in the first five-year return on investment calculation.Thus,the first year of returns calculated below include most or all of one year where rates will not have been changed yet, lowering the calculated return on investment but not the real rate of return. Calculations $7,731 Fees to GettingGreatRates.com $500 Estimated value of system staff time and incidentals to assemble needed information $8,231 Total Investment for This Analysis $1,420,517 Five-year Increase in Revenue Due at Least Partly to This Analysis 17258% Five-year Return on Investment(increase in revenues/investment) $5,447,145 Ten-year Improvement in Cash Position Due at Least Partly to This Analysis 66178%Ten-year Return on Investment(increase in revenues/investment) This analysis was produced using the program CBGreatRates, copyright 2015.You are encouraged to distribute this report to others so long as credit is ascribed to the author, Carl E. Brown of GettingGreatRates.com. CBGreatRates©Version 7.2 Table 1 - Modeled Rates St. Joseph, MN; Sewer Rates Scenario 2015-3 Modeled unit charges are shown in this table. Other rate components are shown in the narrative report. Customer Class, Bottom of Volume Top of Volume Usage Allowance in Unit Charge Rate Class or Range in Gallons Range in Gallons 1,000 Gallons per 1,000 Gallons Meter Size 0 999 0.000 $3.78 Residential 1,000 1,999 0.000 $3.78 160,000 99,999,999 0.000 $3.78 0 999 0.000 $3.78 Commercial 1,000 1,999 0.000 $3.78 160,000 99,999,999 0.000 $3.78 0 999 0.000 $3.78 Industrial 1,000 1,999 0.000 $3.78 160,000 99,999,999 0.000 $3.78 0 999 0.000 $3.78 CSB Student 1,000 1,999 Housing 0.000 $3.78 160,000 99,999,999 0.000 $3.78 0 999 0.000 $3.78 Senior Housing 999000 1, Addition, G-13 1, 0.000 $3.78 160,000 99,999,999 0.000 $3.78 0 999 0.000 $3.78 City, G-10 1,000 1,999 0.000 $3.78 160,000 99,999,999 0.000 $3.78 CBGreatRates©Version 7.2 m y v o 0 0 LO o in in o o o o o o m o o o o o o o o m c N M N , 1n w IO w w M N w O w O O O w w I� D oo O O V N N m O IO N O IO M co co LO V w V N w m r m m w V w fR N (0 O N 0 M (A M M 6a m V Y w VT N C � m m O) M m O o o )n N V V w O I� O O O O O O O O O O O N Y O C N r N N IO o N ff) O fH H7 M IO ff) O V7 O O O V7 w w c r \ M m O c0 1n M ( M N m O IO N O M a) mO M N (O (O V V G7 1n co w L m L m N 6a N N ER co M N c m I m w w N c o Y m } E? fR fR w co E (� -p ° a) O) N V O o o m M N N O O O O O I� M O O O O O O O O N O)O C N V O (O IO N N N V-) V H7 w N o H7 O w O O O w w N O N c >- m r N I� r N O N r O In N O r :Em L m (o o M V N 10 1n W N O O W, H7 fR Ip d C N a) w N N K7 oD w - O N VJ ER ER w LL O) w oT °) °) 0 0 o m O O O r O M O O M I� O O O O O O O O O C N O m to IO o O w I� O w N o w O w O O O w w I� tf m M c O In O m m M co N N O O IO N O m Y y M co O ( ( N M I� N co 10 M M N [fi V In w H7 to O) m O) - I� O w H-7 VJ I� O m - - fR fR N w } VJ V-J HJ fA > Op Q '�-' w c O) O V O o o N IO I� r N O N O O O M O O O O O O O O m N 'O C m a) a) m c N I� co m m O w V O w V w O w O O O w w O A• (0 O N O .L-..L N M N O (O (O V I� N N V O u) N O V V/ a) E (0 C° N M I- (O N w 1n 1p () m M M w V m U) fR ED O m N U m- N EH H7 H7 H7 V C Q m m O o o co M u) u) m O w O O o O O O O O O O O o m(0 c M M o w u) O w o w O 6F) O O O G') w M W O U m } t N w 0 IO IO M V V IO (O O u) N O u) E C m Ga Ga w w >` 5 Z }� L O U 10 O c-p m O) N m O o a m CO V V O m O O M O O O O O O O O o O Ur O m m c \ O M m O O O V-7 N O H7 M H7 O ER O O O ER ER I� V 'p } N O V V m m co (D N N M O Lo N O r L m m N m a°)'p m °) N 7 (O (O m M I- co N 10 O Y N H-7 N O N L N cc) o w W V O w Q N Yr r'O O O o o m O N N V O N O O N (O O O O O O O O O N 0 C r u) M N N r w M O w O V w O w O O O w w N } I� o O O N co co V M N N O u) N O M (n m ul c mo (0 N 10 L a) C W N IO H7 H7 N M (O H7 w w w V M (� m ? 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w V o CA w V N m N V m N M O w V fA fA fA w N H7 fA H7 V7 fA CO V7 fA V7 fA N m V7 V p ~ V7 fA fA H7 fA V7 H7 H7 H7 fA Ga A m r m M V o o m r M V M M o m N r M m M o m V m V w V m M M V m r o m w m r m m V O C N O O m m m N M w V m m Vr V 10 M V r V r m m m N N r mm w m m O N m r O m r O N m m w N M M M m m m O w m V m N CO m M w m N LO r r M O V r m o L m Lp m m M m r w V LO V w V3 10 w N O m O w co w V 69 w � N V N V V m N m t F 69 Mw w 69 w w N 67 69 d3 V7 fA CO K7 fA V7 Efl N r H-7 M m m fA fA VJ fA fA VJ fA fR � fA Q) VT A Q) } C_ V O m M m M mm V m N 10 CO V 10 r V r M m m CO m M r N O N M m r N m w m O C N m 10 m 10 m O m N m 10 N N CO N CO 10 m m m CO M Efl O V m m O r O L r m m o CO m m m O V M mm V m m LO N LO N m M O m N N CO N M m m N O r L (1 N m m M m CO V V V 1n O m O M V ca m N V N M N m N r fA N fH fR fA fH fR N HJ fA fH HJ fH m ff3 V) fA N CO fA M (n N ~ 69 fE3 ff3 EA H-J ER fR fR w fA fR EA m r m m V o N r M CO M r N o o m m m V m o M M M M M m o m M m o m V m m m m m N C N m m mm V mm M N w M V V mm N N m N m m M w N r m M M w w m V V m m r tf N r m O N m V m m V O M m N r m O N w m N o o N m 10 CO N r m m m m L Lp M OO CO> w M N co O N N LO N HJ fR H7 HJ fR N fA H7 fA V7 HJ 10 w w w N CO w M r to ~ V) V) fA 6a w w 6a VJ w w � W VJ fR } O m o V O m O m M V m N M m V 10 M V m m M r M M r m r O V M m M O O m O N r r o O C N Y O O r N m M r r r w r O m Vo N M w M V CO O O 10 V V M w V N m r w m r L LO V m m m M V r LO M m O r m r r N CO N O 10 N r V m m N N 10 M L m U r O N m m w M N M w f/7 1n w m m V m w N w M w w V N M N M m m N V N H7 fA fA HJ fA N fR fA HJ fA fR HJ HJ m ff3 V-J fA 10 ff3 M � T } L ID O m m m V O M m CO m CO r LO CO N V m m m m m m V m m O O N V V O O V r O r O r CO O CO m O V m m N N m N m m V N 10 m r Lo M m m r O co co V V 69 M V r m 10 m m m \ C m LO m m m O V V m w r N r m r r M m M N m m o m N w M CO O m m m N V m L Ur m N m m w (h (h w w V w w m V m w w N 69 w N N N N M w m O N N fA V7 w d3 w N w 69 d3 69 w w EA m w w K7 10 w M Ln m ~ fH fH 69 fR w VT VT fH � N d VT fA N m M m -O V O m O r m m r r � M V CO r r r m m m LO m N m m N m m O O m m 10 V O m O Z O C C m O O O m M CO m CO m m o CO m m O m m m N V m N N m w V w r V V r m N r m _ I� Nm V M V m IO N I� w m w w m V m N N IO O 10 N m N m M mo V M I� L W L m N m m M O M V m V m N O N N co LO d' N V) fA 69 fH w NEH w fH ua w w fH m ff3 V) fA V w M v of ~ in e> w <» <» e> N I� (� a) C m r N V O m m O N V M m m O m M N M M w M m m N r N CO N M O M m m O O C m O M m O M N o m V r N m r N O m N m V m m m r CO w m m V N m O O m m m m V M M O V N r V CO m m M m N m m O LO V N CO w m N m N m N LO (n N N o w N In w (+ o (+ w w q R VJ N V N O 6 N V h N N o E2 10 O fA fR fA fR N fA fA H7 fA HJ V fA fR co w co m <n <n r Y � U m O T i0 CO CO r M CO V V r N O r 10 O m O O O m O O O N M m O O O N O O O w O O m C M N m m q O w N m m w m m V w m N CO N O O N V r O w m w M N N m 10 O N tf m r V o V V N N N M N m M w o ca M M N V m O V N O N_ m r co m N M V' m � a) o N N rl 10 M m M V m V m o N M m m N m C (n m F Voq O w w w HJ w - 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LO M m ° p 2c M M LO O (0 Q(n (fl a) (U'6 N V co V r M O N (� U3 m N O c0 N O > LLJ �EH (a N 7 o T � � Q > O 4 UO (fl O N e C N O a) O Y a� c (fl N Cl) O LO (fl N N (fl O ° O c LO O -c U N N LO O N N N V M V m V .�..� U O a) C) CO N N O r V V co c 61) O N -� C m e N N LO Cl) M � V U LU EH } O.N a O C' M > U O Lr OM OM V M E LO Q.0 a) p) O M M M N O (9 V O '6 YM M M O O V (O -o M U3 LO O p.c m m'6 N W M61) N N �M 02 N N M N S W Ef3 U3 U3 U3 a } Ow O n O T LT V LO (fl c O M O C,4 a) c V LO N M M Cl) O M N c v c o Y U O M r- LO m ° N co L° as m ai 0) M � r O O L Y y0 C7 r a) U U c ('7 m r LO (O r Q ° U) Oe=l LO ZT C m La N N M V V 61) V lL Ef3 U3 U3 U3 EH N ° o ° ai 2 ami ° aNi ° aNi Qo M m o(fl m m O(fl m Viat > N° m o $ o w O Q N c o oE oQoT + o cu3.°gLai a a) LO C O T Qo u3 o E uNo3 > 0 U C "6 ALL (Oj L w ° v o Y m .3 L- Om a) m w a) c c a) G1 0 `o o m Na m � of m � .Q w a o ° � - ° � E m sNo Cmm O �� ° ° o m ° ° fn m T 0-6 D m U a>)4 2U m U Q v) a) T U Y N a) -p L a) X LL i 7 Z 0 �_ °- a° m ° ° CO(n a° 2 as aX Amo O s� U Uaa U (0 c C y0 .N t a) a) a) 77 0-' N p N t N c_ Q ° m � m oN as o U 45_a Q No Q a C _T Q tT U E m E U 2j5 `c d ° c sN n to U 7 a) LL L a) 'O N m (Uo '> o ani 0 m ++ N m Ls fn � U Table 7 - Bill Comparisons Before and After Rate Adjustments St. Joseph, MN; Sewer Rates Scenario 2015-3 This table compares bills for various volumes at the current rates and billing frequency with what the same volumes would cost at the equivalent modeled rates for that same billing frequency.(An"apples to apples"comparison.)Minimum charge surcharges were calculated for these same classes of users and these bills include those surcharges. Note:The weighted-average bill increase for all customers combined will be: 29.0% Customer or Rate Gallons of Customers Above This Cumulative Bill Increase or Percent Increase Class,or Meter Size Use Volume and Below Next Customers Current Bill Modeled Bill Decrease(-) or Decrease(-) 0 0 0 $17.00 $27.00 $10.00 59% 1,000 0 0 $19.95 $30.78 $10.83 54% 2,000 0 0 $22.90 $34.56 $11.66 51% 3,000 0 0 $25.85 $38.34 $12.49 48% 4,000 0 0 $28.80 $42.12 $13.32 46% 5,000 0 0 $31.75 $45.89 $14.14 45% 6,000 0 0 $34.70 $49.67 $14.97 43% 7,000 0 0 $37.65 $53.45 $15.80 42% 8,000 0 0 $40.60 $57.23 $16.63 41% 9,000 0 0 $43.55 $61.01 $17.46 40% 10,000 1,579 1,579 $46.50 $64.79 $18.29 39% 15,000 0 1,579 $61.25 $83.68 $22.43 37% 20,000 0 1,579 $76.00 $102.58 $26.58 35% All Customers Except City 30,000 0 1,579 $105.50 $140.37 $34.87 33% 40,000 0 1,579 $135.00 $178.16 $43.16 32% 50,000 0 1,579 $164.50 $215.95 $51.45 31% 60,000 0 1,579 $194.00 $253.74 $59.74 31% 70,000 0 1,579 $223.50 $291.53 $68.03 30% 80,000 0 1,579 $253.00 $329.32 $76.32 30% 90,000 0 1,579 $282.50 $367.11 $84.61 30% 100,000 0 1,579 $312.00 $404.90 $92.90 30% 110,000 0 1,579 $341.50 $442.68 $101.18 30% 120,000 0 1,579 $371.00 $480.47 $109.47 30% 130,000 0 1,579 $400.50 $518.26 $117.76 29% 140,000 0 1,579 $430.00 $556.05 $126.05 29% 150,000 0 1,579 $459.50 $593.84 $134.34 29% 160,000 0 1,579 $489.00 $631.63 $142.63 29% 0 0 0 $0.00 $27.00 $27.00 N.A. 1,000 0 0 $0.00 $30.78 $30.78 N.A. 2,000 0 0 $0.00 $34.56 $34.56 N.A. 3,000 0 0 $0.00 $38.34 $38.34 N.A. 4,000 0 0 $0.00 $42.12 $42.12 N.A. 5,000 0 0 $0.00 $45.89 $45.89 N.A. 6,000 0 0 $0.00 $49.67 $49.67 N.A. 7,000 0 0 $0.00 $53.45 $53.45 N.A. 8,000 0 0 $0.00 $57.23 $57.23 N.A. 9,000 0 0 $0.00 $61.01 $61.01 N.A. 10,000 0 0 $0.00 $64.79 $64.79 N.A. 15,000 0 0 $0.00 $83.68 $83.68 N.A. 20,000 0 0 $0.00 $102.58 $102.58 N.A. City..G-10 30,000 0 0 $0.00 $140.37 $140.37 N.A. 40,000 0 0 $0.00 $178.16 $178.16 N.A. 50,000 0 0 $0.00 $215.95 $215.95 N.A. 60,000 0 0 $0.00 $253.74 $253.74 N.A. 70,000 0 0 $0.00 $291.53 $291.53 N.A. 80,000 0 0 $0.00 $329.32 $329.32 N.A. 90,000 0 0 $0.00 $367.11 $367.11 N.A. 100,000 0 0 $0.00 $404.90 $404.90 N.A. 110,000 0 0 $0.00 $442.68 $442.68 N.A. 120,000 0 0 $0.00 $480.47 $480.47 N.A. 130,000 0 0 $0.00 $518.26 $518.26 N.A. 140,000 0 0 $0.00 $556.05 $556.05 N.A. 150,000 0 0 $0.00 $593.84 $593.84 N.A. 160,000 0 0 $0.00 $631.63 $631.63 N.A. CBGreatRates©Version 7.2 Table 8 - User Statistics St.Joseph,MN; Sewer Rates Scenario 2015-3 This table shows measures of equitability of the rates as modeled in Table 11. If your rates are absolutely proportional to use on a volumetric basis,your%of usage and%of revenues figures will be the same within all the classes.That is not possible if you have any minimum charge and having no minimum charge is almost unheard of. Normally,the%of usage figure will be lower than the%of revenue for the lower volumes of use.That will switch for the higher volumes of use.Even for declining rate structures,this switch should occur near the volume of the average residential user,typically near 5,000 gallons/month(668 cu ft). In urban and suburban areas the average monthly use for residential or general customers can be twice that used by their rural and"old town"counterparts.Use is largely dependent upon who lives in a community.Older people living in longer established neighborhoods tend to use less volume than younger people living in more recently developed areas.As you make comparisons between different customers and customer classes,keep that,and the following in mind: 8,144 in gallons-This is the average residential customer's usage per Bi-monthly billing cycle. Usage allowance is the volume"given away"with the minimum charge.The higher the allowance,the less volume the utility can sell to generate income. 133,352,218 in gallons-This is the volume metered through customer meters that was available to be sold by the utility during the test year- 0 in gallons-This is the volume metered through customer meters that was given away as a usage allowance during the test year. $0 At the unit charge rate in effect during the test year,this was what it cost the utility to give away this volume. $0 At the unit charge rates modeled,this is what the current usage allowance(if any is included in the modeled rates)would cost the utility for a full year. Total Annual Cumulative Cumulative Bottom of Top of Average Volume Use Within Use in This Use in This Customer or Volume Volume Used Within Each Volume Customers Class From Class From %Revenue %Revenue Rate Class,or Range in Range in Each Volume Range in Within This Low to High High to Low at Current at Modeled Meter Size Gallons Gallons Range in Gallons Gallons Volume Range %Users %Usage Volume Volume Rates Rates 0 999 0 0.0 0.0 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% Residential 10,000 14,999 8,144 77,158,517.0 1,579.0 92.6% 57.9% 100.0% 100.0% 57.9% 57.9% 160,000 99,999,999 0 0.0 0.0 0.0% 0.0% 100.0% 0.0% 0.0% 0.0% Totals for Class 77,158,517.0 1,579.0 92.6% 57.9% 57.9% 57.9% 0 999 0.000 0.0 0.0 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% Commercial 15,000 19,999 18.434 12,829,761.0 116.0 6.8% 9.6% 100.0% 100.0% 9.6% 9.6% 160,000 99,999,999 0.000 0.0 0.0 0-0% 0-0% 1000% 0-0% 0-0% 0.0 Totals for Class 12,829,761.0 116.0 6.8% 9.6% 9.6% 9.6% 0 999 0.000 0.0 0.0 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% ndustrial 80,000 89,999 82.240 1,973,770.0 4.0 0.2% 1.5% 100.0% 100.0% 1.5% 1.5% 160,000 99,999,999 0.000 0.0 0.0 0.0% 0.0% 100.0% 0.0% 0.0% 0.0% Totals for Class 1,973,770.0 4.0 0-2 1.5% 1.5% 1.5% 0 999 0.000 0.0 0.0 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% CSB Student 150,000 159,999 0.000 0.0 0.0 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% Housing 160,000 99,999,999 1,149.727 41,390,170.0 6.0 0.4% 31.0% 100.0% 100.0% 31.0% 31.0% Totals for Class 41,390,170.0 6.0 0.4% 31.0% 31.0% 31.0% Grand Totals 133,352,218.0 100.00% 100.00% 100.00% 100.00% CBGreatRates©Version 7.2 St. Joseph, MN Sewer Rates Scenario 2015-3 Chart 1 - Operating Ratio 2.00 1.00 0.00 -1.00 -o-Proposed Rates o Current Rates -2.00 —Breakeven -3.00 -4.00 Chart 2 - Coverage Ratio 3.00 2.00 1.00 0.00 -1.00 -2.00 o-Proposed Rates -3.00 Current Rates —Breakeven -4.00 -5.00 -6.00 -7.00 CBGreatRates©Version 7.2 St. Joseph, MN Sewer Rates Scenario 2015-3 Chart 3 - 5,000 Gal Residential User's Bill $120.00 Proposed Rates Current Rates $100.00 $80.00 $60.00 $40.00 $20.00 $0.00 r,0 �Cb �C1 O D �OIV Chart 4 -Affordability Index 1.80% 1.60% 1.40% 1.20% 1.00% 0.80% 0.60% Proposed Rates ❑ 0.40% Current Rates 0.20% 0.00% CBGreatRates©Version 7.2 St. Joseph, MN Sewer Rates Scenario 2015-3 Chart 5 - Working Capital vs Goal $350,000 -o-Proposed Rates -❑-Current Rates $300,000 Goal $250,000 $200,000 $150,000 $100,000 $50,000 $0 1110 1 IN Chart 6 - Value of Cash Assets Before Inflation $1,000,000 $0 -$1,0001000 Io �o �o o �o �o Co �o -$270007000 -$370007000 Proposed Rates -$470007000 ❑Current Rates -$570007000 -$670007000 -$7,000,000 CBGreatRates©Version 7.2 St. Joseph, MN Sewer Rates Scenario 2015-3 Chart 7 - Value of Cash Assets After Inflation $1,000,000 $0 �^ 1� 1� �Q, �� ry -$1,0001000 do �o �o o �o (o -$2,000,000 -$3,000,000 -$4,000,000 -o-Proposed Rates C]Current Rates -$570007000 -$6,000,000 -$7,000,000 -$8,0007000 CBGreatRates©Version 7.2 Table 11 - Initial Rate Adjustments and Resulting Revenues St. Joseph, MN; Sewer Rates Scenario 2015-3 This table depicts how rates would be set and the revenues they would generate. Out of City Multiplier 200% 12/31/15 Date when fees will first be collected at adjusted rates.Actual adjustment should occur one billing period earlier. After rate adjustments are made,general customers will be billed every other month. Sales to be billed this year:Sales at the current(Test Year)rates(gray highlighted column)will apply until rates are adjusted.Sales at the modeled rates(yellow highlighted column)would apply if the modeled rates are adopted.The grand total"blended"sales revenues are the total revneues generated by the two different sets of rates.Those show in the right-most column. Customer Bottom of Top of New New Unit Class,Rate Volume Volume Sales This Customers Above Minimum New Usage Charge Sales This Grand Total Class or Meter Range in Range in Year at This Volume and Charge Base Allowance in per 1,000 Year at 'Blended"Sales Size Gallons Gallons Current Rates Below Next Rates' 1,000 Gallons Gallons Modeled Rates This Year 0 999 $0 0 $0.00 0.000 $3.78 $0 $0 Residential 10,000 14,999 $226,994 1,579 $0.00 0.000 $3.78 $799 $227,793 160,000 99,999,999 $0 0 $0.00 0.000 $3.78 $0 $0 0 999 $0 0 $0.00 0.000 $3.78 $0 $0 Commercial 30,000 39,999 $0 0 $0.00 0.000 $3.78 $0 $0 160,000 99,999,999 $0 0 $0.00 0.000 $3.78 $0 $0 0 999 $0 0 $0.00 0.000 $3.78 $0 $0 Industrial 10,000 14,999 $0 0 $0.00 0.000 $3.78 $0 $0 160,000 99,999,999 $0 0 $0.00 0.000 $3.78 $0 $0 CSB Student 0 999 $0 0 $0.00 0.000 $3.78 $0 $0 Housing 20,000 29,999 $0 0 $0.00 0.000 $3.78 $0 $0 160,000 99,999,999 $121,766 6 $0.00 0.000 $3.78 $429 $122,195 Senior 0 999 $0 0 $0.00 0.000 $3.78 $0 $0 Housing 6,000 6,999 $0 0 $0.00 0.000 $3.78 $0 $0 Addition,G-13 160,000 99,999,999 $0 0 $0.00 0.000 $3.78 $0 $0 0 999 $0 0 $0.00 0.000 $3.78 $0 $0 City,G-10 30,000 39,999 $0 0 $0.00 0.000 $3.78 $0 $0 160,000 99,999,999 $0 0 $0.00 0.000 $3.78 $0 $0 Total Rate Rev at Current Rates $392,311 Total Rate Rev at Modeled Rates $1,381 Total Blended Rate Revenues for the Year 2 $393,692 Note 1,New Minimum Charge Base Rates:If meter or connection size-based minimum charges are to be used,and the user classes modeled above include meter or connection sizes,the amounts shown in this column include meter or connection size surcharges as calculated in Table 10.Otherwise,use the rates in the"Total Minimum Charge per Billing Period"column of Table 10 when setting minimum charges for each customer when their minimums will be based upon meter or connection size. Note 2,Blended Rate Revenues:During the year when rates will be adjusted,rate revenues generated will be"blended"revenues-part collected at the current rates and part collected at the adjusted rates.The table above calculates both kinds of revenue and totals them in the right-most column.Therefore,the anticipated timing of rate adjustment shown at the top of this table will cause rates to be charged as follows: 12.0 months at the old user charge rates and 10.0 months at the new user charge rates. CBGreatRates©Version 7.2 Table 12 - Test Year Usage St. Joseph, MN; Sewer Rates Scenario 2015-3 This table shows usage by all customers during the test year. Residential meter readings per year: 1 Date this scenario created: 12/10/2015 Test year,the one-year period being analyzed starts:1/1/2014 Other customer meter readings per year: 6 Bills sent per year: 6 Average Count of Bills Volume of Only Number of %of Volume Used Count of Bills Total Annual Only Where Those Bills Customers With Customers Bottom of Top of Within Each With ANY Use Within Volume Where Volume Volume That That %of Total Customer or Rate Volume Volume Conversion Volume Range Volume Each Volume "Maxed Out' "Maxed Out' "Maxed Out' Averaged Use at This Class,or Meter Range in Range in Factor for in 1,000 Within Each Range in Within Each Within Each Within Each This Volume Average Size Gallons Gallons Billable Units Gallons Range Gallons Range Range Range of Use Volume 0 999 1,000 0.000 9,474 0 0 0 0 0.0% 0.0% Residential 10,000 14,999 11000 8.144 9,474 77,158,517 9,474 77,158,517 1,579 92.6% 57.9% Monthly and Annual Subtotals: 104,214 77,158,517 9,474 77,158,517 1,579 92.6% 57.9% 0 999 1,000 0.000 696 0 0 0 0 0.0% 0.0% Commercial 15,000 19,999 11000 18.434 696 12,829,761 696 12,829,761 116 6.8% 9.6% Monthly and Annual Subtotals: 8,352 12,829,761 696 12,829,761 116 6.8% 9.6% 0 999 1,000 0.000 24 0 0 0 0 0.0% 0.0% Industrial 80,000 89,999 11000 82.240 24 1,973,770 24 1,973,770 4 0.2% 1.5% Monthly and Annual Subtotals: 456 1,973,770 24 1,973,770 4 0.2% 1.5% CSB Student 0 999 1,000 0.000 36 0 0 0 0 0.0% 0.0% Housing 160,000 99,999,999 1,000 1,149.727 36 41,390,170 36 41,390,170 6 0.4% 31.0% Monthly and Annual Subtotals: 972 41,390,170 36 41,390,170 6 0.4% 31.0% 0 999 1,000 0.000 0 0 0 0 0 0.0% 0.0% Senior Housing 160,000 99,999,999 11000 0.000 0 0 0 0 0 0.0% 0.0% Addition,G-13 Monthly and Annual Subtotals: 0 0 0 0 0 0.0% 0.0% 0 999 1,000 0.000 0 0 0 0 0 0.0% 0.0% City,G-10 160,000 99,999,999 11000 0.000 0 0 0 0 0 0.0% 0.0% Monthly and Annual Subtotals: 0 0 0 0 0 0.0% 0.0% Monthly and Annual Grand Totals: 113,994 133,352,218 10,230 1,705 100% 100% CBGreatRates©Version 7.2 Table 13 - Rates at End of Test Year St. Joseph, MN; Sewer Rates Scenario 2015-3 This table shows user unit charges at the end of the test year. Rates for volume ranges that are not shown are the same as the next lowest volume range rates. Customer or Bottom of Top of Volume Usage Rate Class, or Volume Range Range in Allowance in Unit Charge Meter Size in Gallons Gallons Minimum Charge 1,000 Gallons per 1,000 Gallons 0 999 $0.00 0.000 $2.95 Residential 1,000 1,999 $0.00 0.000 $2.95 160,000 99,999,999 $0.00 0.000 $2.95 0 999 $0.00 0.000 $2.95 Commercial 1,000 1,999 $0.00 0.000 $2.95 160,000 99,999,999 $0.00 0.000 $2.95 0 999 $0.00 0.000 $2.95 Industrial 1,000 1,999 $0.00 0.000 $2.95 160,000 99,999,999 $0.00 0.000 $2.95 CSB Student 0 999 $0.00 0.000 $2.95 Housing 1,000 1,999 $0.00 0.000 $2.95 160,000 99,999,999 $0.00 0.000 $2.95 Senior 0 999 $0.00 0.000 $2.95 Housing 1,000 1,999 $0.00 0.000 $2.95 Addition, G-13 160,000 99,999,999 $0.00 0.000 $2.95 0 999 $0.00 0.000 $0.00 City, G-10 1,000 1,999 $0.00 0.000 $0.00 160,000 99,999,999 $0.00 0.000 $0.00 CBGreatRates©Version 7.2 Table 14 - Average Cost Classification St. Joseph, MN; Sewer Rates Scenario 2015-3 This table distributes costs from a representative year(the"target'year)to fixed and variable categories(see Definitions)in order to calculate the"proportional to use"or"cost of service"rate structure based upon the cost breakdown for that year. The rate structure target year runs from 1/1/2016 through 12/31/2016 Variable Capacity Fixed Cost Variable Capacity Fixed Cost Cost Cost Operating Costs Amount % Cost% Cost% Amount Amount Amount DEPART 47100 Bond Payment(P&1) CIP Below 33.3% 66.7% 0.0% $0 $0 $0 720 Transfers to Other Funds $45,935 33.3% 66.7% 0.0% $15,296 $30,639 $0 101 Salaries $102,726 33.3% 66.7% 0.0% $34,208 $68,518 $0 111 OPEB Liability $2,496 33.3% 66.7% 0.0% $831 $1,665 $0 121 PERA Contributions $7,597 33.3% 66.7% 0.0% $2,530 $5,067 $0 122 FICA Contributions $5,413 33.3% 66.7% 0.0% $1,803 $3,611 $0 123 Deferred Comp-Employer $406 33.3% 66.7% 0.0% $135 $271 $0 125 Medicare Contributions $1,264 33.3% 66.7% 0.0% $421 $843 $0 130 H S A-Employer Contribution $3,224 33.3% 66.7% 0.0% $1,074 $2,150 $0 131 Health Insurance $19,287 33.3% 66.7% 0.0% $6,423 $12,864 $0 132 Dental Insurance $3,312 33.3% 66.7% 0.0% $1,103 $2,209 $0 133 Life Insurance $260 33.3% 66.7% 0.0% $87 $173 $0 134 Disabilty Insurance $697 33.3% 66.7% 0.0% $232 $465 $0 151 Workers Comp.Insur.Prem. $4,311 33.3% 66.7% 0.0% $1,435 $2,875 $0 171 Clothing Allowance $645 33.3% 66.7% 0.0% $215 $430 $0 210 Operating Supplies $1,560 0.0% 100.0% 0.0% $0 $1,560 $0 215 Software Support $99 33.3% 66.7% 0.0% $33 $66 $0 220 Repair and Maintenance $8,320 33.3% 66.7% 0.0% $2,771 $5,549 $0 230 Vehicle Repair&Maintenance $4,160 33.3% 66.7% 0.0% $1,385 $2,775 $0 235 Motor Fuel $8,320 33.3% 66.7% 0.0% $2,771 $5,549 $0 240 Small Tool&Minor Equipment $208 33.3% 66.7% 0.0% $69 $139 $0 300 Professional Services $10,400 33.3% 66.7% 0.0% $3,463 $6,937 $0 303 Engineering Fee $520 33.3% 66.7% 0.0% $173 $347 $0 331 Travel&Conference Expense $1,040 33.3% 66.7% 0.0% $346 $694 $0 361 General Liability Insurance $11,112 33.3% 66.7% 0.0% $3,700 $7,412 $0 433 Dues&Memberships $473 33.3% 66.7% 0.0% $158 $316 $0 446 License $208 33.3% 66.7% 0.0% $69 $139 $0 530 Improvements Other than Bldgs $0 33.3% 66.7% 0.0% $0 $0 $0 550 Motor Vehicles $2,080 33.3% 66.7% 0.0% $693 $1,387 $0 580 Other Equipment $0 33.3% 66.7% 0.0% $0 $0 $0 Lift Stations:220 Repair and Maintenance $11,232 33.3% 66.7% 0.0% $3,740 $7,492 $0 Lift Stations:300 Professional Services $1,820 33.3% 66.7% 0.0% $606 $1,214 $0 Lift Stations:321 Telephone $3,120 100.0% 0.0% 0.0% $3,120 $0 $0 Lift Stations:361 General Liability Insurance $780 33.3% 66.7% 0.0% $260 $520 $0 Lift Stations:381 Electric Utilities $8,356 0.0% 100.0% 0.0% $0 $8,356 $0 Lift Stations:530 Improvements Other than Bldgs $6,800 33.3% 66.7% 0.0% $2,264 $4,536 $0 Lift Stations:383 Gas Utilities $2,210 0.0% 100.0% 0.0% $0 $2,210 $0 Lift Stations:Operating Supplies&Small Tools $29,328 33.3% 66.7% 0.0% $9,766 $19,562 $0 Lift Stations:Engineering&Legal $520 33.3% 66.7% 0.0% $173 $347 $0 Lift Stations:312 Tests $5,720 33.3% 66.7% 0.0% $1,905 $3,815 $0 Lift Stations:322 Postage $520 100.0% 0.0% 0.0% $520 $0 $0 Lift Stations:419 Sewer Use Rental $315,050 33.3% 66.7% 0.0% $104,912 $210,138 $0 Lift Stations:580 Other Equipment $42,500 33.3% 66.7% 0.0% $14,153 $28,348 $0 CBGreatRates©Version 7.2 Table 14 - Average Cost Classification Variable Capacity Fixed Cost Variable Capacity Fixed Cost Cost Cost Operating Costs Amount % Cost% Cost% Amount Amount Amount DEPART 49490 Administration and General $41,080 33.3% 66.7% 0.0% $13,680 $27,400 $0 DEPART 49970 Depreciation Expense $0 33.3% 66.7% 0.0% $0 $0 $0 Temporary Adjustment of R&R Annuity $0 33.3% 66.7% 0.0% $0 $0 $0 Annual Payment to Repair and Replacement(Table 17) $173,378 33.3% 66.7% 0.0% $57,735 $115,643 $0 User Charge Analysis Services $0 33.3% 66.7% 0.0% $0 $0 $0 CIP Spending Net of Grant/Loan Proceeds and Other External Incomes(Table 4) $716,200 33.3% 41.7% 25.0% $238,495 $298,655 $179,050 Grand Total Costs,Weighted Avg Percentages $1,604,687 33.2% 55.6% 11.2% $532,7511 $892,886 $179,050 "Proportional to Use" Rate Structure Cost Basis 100% 1 $1,604,687 Average Fixed Cost/User Every Other Month= $52.08 Inflow and Infiltration is Estimated at 0% Cost of Inflow and Infiltration is Estimated at 52% Average Variable Cost to Produce/1,000 Gallons= $6.70 Resulting Cost of Inflow and Infiltration $0 Gallons/Billing Cycle Used by Average Residential Test Year Customer Metered Usage(in Gallons) 133,352,218 Customer= 8,144 + Test Year Inflow and Infiltration 0 Total Test Year Volume 133,352,218 CBGreatRates©Version 7.2 Table 15 - Marginal Cost Classification St. Joseph, MN; Sewer Rates Scenario 2015-3 The utility incurs unavoidable,or marginal,costs.Thus,the utility must collect minimal fees from various customers to"break even"on a marginal cost basis.Costs vary by customer type and volume used. In the calculations below it is assumed that marginal costs are being calculated for: Snowbirds The rate structure target year runs from 1/1/2016 through 12/31/2016 Marginal Marginal Marginal Marginal Marginal Marginal Variable Capacity Fixed Cost Variable Capacity Fixed Cost Cost Cost Operating Costs Amount % Cost% Cost% Amount Amount Amount DEPART 47100 Bond Payment(P&I) $0 100% 100% 100% $0 $0 $0 720 Transfers to Other Funds $45,935 100% 100% 100% $15,296 $30,639 $0 101 Salaries $102,726 50% 50% 100% $17,104 $34,259 $0 111 OPEB Liability $2,496 50% 50% 100% $416 $832 $0 121 PERA Contributions $7,597 50% 50% 100% $1,265 $2,534 $0 122 FICA Contributions $5,413 50% 50% 100% $901 $1,805 $0 123 Deferred Comp-Employer $406 50% 50% 100% $68 $135 $0 125 Medicare Contributions $1,264 50% 50% 100% $210 $421 $0 130 H S A-Employer Contribution $3,224 50% 50% 100% $537 $1,075 $0 131 Health Insurance $19,287 50% 50% 100% $3,211 $6,432 $0 132 Dental Insurance $3,312 50% 50% 100% $552 $1,105 $0 133 Life Insurance $260 50% 50% 100% $43 $87 $0 134 Disabilty Insurance $697 50% 50% 100% $116 $232 $0 151 Workers Comp.Insur.Prem. $4,311 50% 50% 100% $718 $1,438 $0 171 Clothing Allowance $645 50% 50% 100% $107 $215 $0 210 Operating Supplies $1,560 50% 50% 100% $0 $780 $0 215 Software Support $99 100% 100% 100% $33 $66 $0 220 Repair and Maintenance $8,320 50% 50% 100% $1,385 $2,775 $0 230 Vehicle Repair&Maintenance $4,160 50% 50% 100% $693 $1,387 $0 235 Motor Fuel $8,320 50% 50% 100% $1,385 $2,775 $0 240 Small Tool&Minor Equipment $208 50% 50% 100% $35 $69 $0 300 Professional Services $10,400 100% 100% 100% $3,463 $6,937 $0 303 Engineering Fee $520 100% 100% 100% $173 $347 $0 331 Travel&Conference Expense $1,040 100% 100% 100% $346 $694 $0 361 General Liability Insurance $11,112 100% 100% 100% $3,700 $7,412 $0 433 Dues&Memberships $473 100% 100% 100% $158 $316 $0 446 License $208 100% 100% 100% $69 $139 $0 530 Improvements Other than Bldgs $0 100% 100% 100% $0 $0 $0 550 Motor Vehicles $2,080 50% 50% 100% $346 $694 $0 580 Other Equipment $0 50% 50% 100% $0 $0 $0 Lift Stations:220 Repair and Maintenance $11,232 50% 50% 100% $1,870 $3,746 $0 Lift Stations:300 Professional Services $1,820 100% 100% 100% $606 $1,214 $0 Lift Stations:321 Telephone $3,120 100% 100% 100% $3,120 $0 $0 Lift Stations:361 General Liability Insurance $780 100% 100% 100% $260 $520 $0 Lift Stations:381 Electric Utilities $8,356 0% 0% 100% $0 $0 $0 Lift Stations:530 Improvements Other than Bldgs $6,800 100% 100% 100% $2,264 $4,536 $0 Lift Stations:383 Gas Utilities $2,210 100% 100% 100% $0 $2,210 $0 Lift Stations:Operating Supplies&Small Tools $29,328 50% 50% 100% $4,883 $9,781 $0 Lift Stations:Engineering&Legal $520 100% 100% 100% $173 $347 $0 Lift Stations:312 Tests $5,720 100% 100% 100% $1,905 $3,815 $0 Lift Stations:322 Postage $520 100% 100% 100% $520 $0 $0 Lift Stations:419 Sewer Use Rental $315,050 100% 100% 100% $104,912 $210,138 $0 Lift Stations:580 Other Equipment $42,500 100% 100% 100% $14,153 $28,348 $0 CBGreatRates©Version 7.2 Table 15 - Marginal Cost Classification Marginal Marginal Marginal Marginal Marginal Marginal Variable Capacity Fixed Cost Variable Capacity Fixed Cost Cost Cost Operating Costs Amount % Cost% Cost% Amount Amount Amount DEPART 49490 Administration and General $41,080 100% 100% 100% $13,680 $27,400 $0 DEPART 49970 Depreciation Expense $0 100% 100% 100% $0 $0 $0 Temporary Adjustment of R&R Annuity $0 50% 50% 100% $0 $0 $0 Annual Payment to Repair and Replacement(Table 17) $173,378 50% 50% 100% $28,867 $57,822 $0 User Charge Analysis Services $0 100% 100% 100% $0 $0 $0 CIP Spending Net of Grant/Loan Proceeds and Other External Incomes(Table 4) $716,200 100% 100% 100% $238,495 $298,655 $179,050 Offset for Capacity Surcharges(Table 10) $0 100% 100% 100% $0 $0 $0 Grand Total All Costs $1,604,687 88% 84% 100% $468,038 $754,131 $179,050 Marginal Costs per Customer, Volume Unit and Capacity Share The system would suffer a net revenue loss if it set minimum and unit charges lower than the marginal costs at the right. It would make a"profit"on a marginal cost basis if it charged more. Capacity costs, however,are a bit Marginal Marginal Marginal Capacity different.They can be recovered over time,as modeled here,or all at once in Volume in Fixed Cost Variable the case of connection(tap-on)fees or by using a combination of both Cost per Number of 1,000s of per Cost per AWWA methods. 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CO CO Cn N O O V O CO N M N N O O N a V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) H a) O O O O O O O O O O O O O O O O O O O O O V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) O O O O O O O O O O O O O O O O O O O O O V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) O O O O O O O O O O O O O O O O O O O O O A, V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) W A� W w = 0 Y O O O O O O O O O O O O O O O O O O O O O J ,O U � V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) ) V) V V = mEr ++ o W „N„ N O O O O O O O O O O O O O O O O O O O O O Q V) V) V) o V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) t u) Eo N r V o oN a o E c o O O O O O O O O O O O O O O O O O O O O O ,o V) V) V) o V) V) V) <» V) V) V) <» <» V) V) <» V) V) V) <» V) ILa) O U U) C Cl) O Y Jco A, co W co < E o •� o a O O O O O O O O O O O O O O O O O O O O V) o V ) V ) ) ) Vo V) V) V ) VV) V O O Cl) m V) V) N U cr W O O O O O O O O O O O O O O O O O O O O O 3 Q O O V) V) V) V) V) V) V) V) V) O V) V) V) V) V) V) V) V) V) a) E Lo m m V) V) r a) _-.: w = o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 /1 Q E a) J ,O O O O O V) O O O O O O O O O O O O O O O O idf E Nof O U) V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) V) EU) c a) a) a w = O O O O O O O O O O O O O O O O O O O O O :E E _ a o O O O V) V) O O O O O O O O O O O O O O O O EMCOM U) VO4) � 0) 61) V) 61) 0) V) V) 61) � V) V) 61) 0) V) 0) E N t c ar � Z a) a = O O O o O O O o O O O O O O O O O O O O O :E E c O O O V) O O O O O O O O O O O O O O O O O Ea ° NvNror r` OOOOOOOOOOOOOO a) i a E a (n ) a) N J a) co O C V CO CO Il. co O) O N CO V Cn CO t` CO O) O N M V (Q = N N N N N N N N N N M M M M M OJ Table 17- Equipment Replacement Annuity Calculation St. Joseph, MN; Sewer Rates Scenario 2015-3 This schedule calculates the annual annuity needed to fund all replacement and refurbishment from Table 16,the detailed schedule. 2.00% Average Inflation Rate for the Following Sewer System Equipment for the Term of This Replacement Schedule 3.00% Average Interest Rate on Balances Invested for the Term of This Replacement Schedule 3.00% Average Interest Rate on Amounts Borrowed for the Term of This Replacement Schedule Minimum This Year's Future Annual Interest Earned End of Year Desired End of Year Costs in Current Inflated Net on Prior Balance in Future Year Balance in Beginning Item Description Dollars Costs Balance Dollars Future Dollars 1/1/14 Last year's replacements $75,053 $75,053 $0 -$75,053 $0 1/1/15 Total of replacements from detailed replacement $127,762 $130,317 -$2,252 -$34,244 $0 schedule 1/1/16 Total of replacements from detailed replacement $175,348 $182,432 -$1,027 -$44,325 $0 schedule 1/1/17 Total of replacements from detailed replacement $272,260 $288,924 -$1,330 -$161,201 $0 schedule 1/1/18 Total of replacements from detailed replacement $74,200 $80,316 -$4,836 -$72,976 $0 schedule 1/1/19 Total of replacements from detailed replacement $63,700 $70,330 -$2,189 $27,883 $0 schedule 1/1/20 Total of replacements from detailed replacement $265,950 $299,503 $836 -$97,405 $0 schedule 1/1/21 Total of replacements from detailed replacement $150,000 $172,303 -$2,922 -$99,252 $0 schedule 1/1/22 Total of replacements from detailed replacement $120,000 $140,599 -$2,978 -$69,451 $0 schedule 1/1/23 Total of replacements from detailed replacement $100,000 $119,509 -$2,084 -$17,666 $0 schedule 1/1/24 Total of replacements from detailed replacement $95,000 $115,804 -$530 $39,378 $0 schedule 1/1/25 Total of replacements from detailed replacement $147,000 $182,776 $1,181 $31,161 $0 schedule 1/1/26 Total of replacements from detailed replacement $205,000 $259,990 $935 -$54,515 $0 schedule 1/1/27 Total of replacements from detailed replacement $155,000 $200,509 -$1,635 -$83,282 $0 schedule 1/1/28 Total of replacements from detailed replacement $120,000 $158,337 -$2,498 -$70,740 $0 schedule 1/1/29 Total of replacements from detailed replacement $115,000 $154,775 -$2,122 -$54,259 $0 schedule 1/1/30 Total of replacements from detailed replacement $130,000 $178,462 -$1,628 -$60,970 $0 schedule 1/1/31 Total of replacements from detailed replacement $120,000 $168,029 -$1,829 -$57,450 $0 schedule 1/1/32 Total of replacements from detailed replacement $120,000 $171,390 -$1,724 -$57,185 $0 schedule 1/1/33 Total of replacements from detailed replacement $105,000 $152,965 -$1,716 -$38,488 $0 schedule 1/1/34 Total of replacements from detailed replacement $90,000 $133,735 -$1,155 $0 $0 schedule Notes:This schedule covers items in the City's replacement Starting Account Balance $0 $0 schedule with several assumed repeat cycles.No Discretionary Minimum Desired Annuity amount was added. Balance in Today's Minimum Annual Annuity $173,378 Dollars Discretionary Annuity ($0) Required Annual Deposit (Annuity)to Replacement Account $173,378 This amount is entered into Table 3 as an operating cost of the system. CBGreatRates©Version 7.2