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The Cleveland
Division of Water
operates a major regional water
utility, providing retail
service to approximately 420,000
retail accounts within Cleveland
and approximately 70 suburban
communities. The Division of
Water also provides water on a
wholesale basis to five suburban
communities and provides
emergency standby connections to
several other suburban
communities.
The
Cleveland Division of Water
(CWD) operates as an Enterprise
Fund within the City of
Cleveland's
Department of Public Utilities.
As an Enterprise Fund, CWD does
not have access to tax revenues
to support operations. CWD is
solely dependent on user charges
and fees to fund its operations,
maintenance and long-term
obligations related to the water
system.
CWD
operates in a challenging
environment, facing issues such
as rising operations and
maintenance expenses, declining
per capita and aggregate water
consumption, continued support
of a multi-year capital
improvement program, and meeting
current and future debt levels
needed to support an aging
infrastructure.
Why
Does Cleveland Water need a rate
increase?
The
proposed new rates are required
so that the Division can pay for
all costs associated with
operating a safe, reliable and
efficient water system.
Some of the keys
costs are
associated with:
1.
CWD is a $2
billion regional
asset which
required major
capital
improvements
thus making it
necessary to
incur debt. This
existing debt
needs to be
repaid.
2.
In order to
preserve and
sustain the
water system it
is necessary to
continue its
Capital
Improvement
Program (CIP).
Accordingly, CWD
plans to incur
future debt to
make some of
these required
improvements.
3.
Rising operation
and maintenance
expenses (O &
M), mainly due
to inflationary
pressures.
4.
Declining
consumption
base.
CWD's
Comprehensive
Financial Plan
Goals and
Objectives
Develop a five-year financial
plan that will address:
1.
Rising operating
expenses
2.
Support the
capital
improvements
program
3.
Fund current and
future debt
obligations
4.
Recover the full
cost of
providing water
service
5.
Address
declining water
usage / revenue
6.
Provide
affordability
assistance
7.
Allow
implementation
of monthly
billing
Cleveland Water has taken the
following actions to reduce cost
1.
More efficient
use of materials
& supplies
2.
Ordered less
materials
- Held less in
stock, went to
more of a just
in time ordering
model when
possible
- Reallocated
supplies - moved
from where not
being used as
frequently to
where needed
more often
- Reduced value
of inventory on
hand from$6
million + in
2003 to $3
million today
3.
Hiring control
- Reduced staff
in some areas
(not back
filling
positions left
open by
attrition)
- Furlough of
Staff in 2010
4.
Deferred
maintenance
5.
Extended life of
vehicles/reallocated
low usage
vehicles to
areas needing
them
6.
Performed more
in house work
instead of
contracting out
for hydrant
repairs, tree
lawns etc.
What
would the impact be if Cleveland
Water did not implement a water
rate increase?
The
implication of not imposing a
rate increase would have a
significant impact not only on
our water system but on service
as well:
1.
Risk of losing
AA bond rating
leading to
higher borrowing
costs and larger
shortfalls.
2.
Capital funds
for
rehabilitation
and replacement
programs would
need to be
reduced, thus
increasing the
risk of pipeline
breaks and water
outages.
3.
Significantly
higher rate
increases would
be needed in
future years to
cover
operational
costs.
Discount
Programs
1.
The Homestead
Program and
Affordability
Programs will
still be
available for
Senior Citizens
and disabled
persons.
2.
More than 21,000
households
currently
utilize the
homestead
program.
3.
CWD is looking
to increase
participation in
these
affordability
programs.
What
Is The Value of Drinking Water?
1.
Defining water's
value is not
easy because it
means different
things to
different
people. For
example, some
people equate
price to value.
However, the
true value of
water for fire
protection,
hygiene,
economic
activity and
refreshing
hydration is
really much
great than the
rates
we pay. As your
water supplier,
three key
factors help us
define the value
of water:
2.
Quality
-
Safe drinking
water protects
public health,
sustains life
and has healing
powers.
3.
Availability
-
Water is
unlimited and
available upon
demand to
sustain our
health and
prosperity
4.
Multiple Uses
-
Water is used
for fire
protection,
cooking,
irrigation,
ecology,
sanitation,
beautification,
power and
recreation and
is a major
ingredient in
our commerce and
industry.
5.
Drinking water
costs less than
buying other
natural
resources. Water
bills are also
much less than
those for
electricity,
heating,
telephone or
cable
television.
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