Summary of Rate Structure Changes

Background:   Boxelder Sanitation District has had the same monthly billing structure since 1993, with minor changes.  Since that time, the District has had more than a 20% growth in the number of customers.  Over the years, customer billing comments have focused on two central concerns:

1. A base monthly charge that incorporates a higher water usage allowance than they were actually using, and

2. A rate structure that bills each non-residential user in a multi-unit building as a stand-alone customer.

The District decided to evaluate its rates and billing structure and to that end engaged Red Oak Consulting, rate specialists, to analyze the existing rates and structure and make recommendations, as needed, based on existing conditions and to address stated customer concerns.

Rate Study:   Red Oak concluded that a new rate structure should be considered by the Board of Directors.  The Board did consider and adopt a new rate structure. It takes effect on January 1, 2010 and will be reflected in the bills sent February 2010. An overview of the new rate structure is presented below.

• The monthly billing structure will continue to have the base monthly charge (facility charge).

• The monthly billing structure will continue to surcharge consumption in excess of the flow allowance.

• Non-residential multi-unit customers (occupants of the building) will be transitioned over five years from the $31.77 base monthly charge billing to an industrial pretreatment program charge (IPP). The operation of an industrial pretreatment program is mandated by the EPA and only non-residential customers are subject to its requirements for discharge.

• Non-residential single unit customers (building owners) will be transitioned over a five year period from a base monthly and flow surcharge based on the water meter size to a base monthly charge (facility) and flow allowance independent of the size of the water meter.  This will eliminate the water meter size sliding scale base monthly charge which ranges from $31.77 to $540.80 per month.  At the end of the transition period, the base monthly facility charge will be the same for all non-residential buildings in the District.

• All non-residential property/building owners that have multi-units will be subject to a base monthly charge (facility charge) that will be phased in over a five year transition period.

• At the start of the fifth year of the transition period, all residential customers and all non-residential property/building customers will have the same base monthly facility charge and the same flow allowance per residence or non-residential building.

• At the start of the fifth year of the transition period, all residential and all non-residential customers will have the same monthly flow allowance.

Benefits:   The benefits of the new billing structure are:

• Begin implementation of flow allowance independent of the water meter size.  The reduced flow allowance will minimize paying for flow that is not used.

• Lower monthly charge to non-residential multi-unit customers as they are transitioned from a base monthly and flow charge (sanitary sewer and industrial pretreatment, with an attendant flow allowance per unit) to strictly a monthly industrial pretreatment program charge.

• Generally speaking the proposed new rates will result in a total cost of sewer service that is lower than the current rate structure for commercial multi-unit buildings, but the building owner would be billed directly for more of the total cost of service.

• The billing structure changes may encourage water conservation which benefits the environment.