United States
Environmental Protection
Agency
Office of Municipal
Pollution Control (WH-595)
Washington DC 20460
September 1987
EPA 430/«9-87-«008
5EPA
Looking at User Charges
A State Survey and Report
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LOOKING AT USER CHARGES
A State Survey And Report
U.S. Environmental Protection Agency
Region 5, Library (PL-12J) y
77 West Jackson Boulevard, 12th FloQ.
Chicago, IL 60604-3590
WHY A USER CHARGE SURVEY AND REPORT
It has always been a part of your
role as a State regulator to provide
financial and technical information
through community outreach programs
and ensure that EPA-funded localities
comply with Clean Water Act require-
ments for user charge systems.
Indeed, communities have always
looked to you for such guidance.
But now there is a new pressure to
look even more closely at user
charges. State revolving funds, not
federal grants, will finance waste-
water construction in the future.
Your State will soon be lending large
sums of money to localities—and
expecting timely repayments to fund
the other projects. The success of
this financing approach depends upon
system solvency. Will your communi-
ties have healthy user charge systems
that support operation, maintenance,
replacement, and repayment?
It is more important than ever that
you have the information you need to
evaluate these issues. Few commun-
ities have the "big picture" on sewer
service charges that will help them
make educated decisions. To plan for
the future, both you and your local
partners must know where each
community stands in jrunning self-
sufficient wastewater systems. This
survey package will help you collect
the data you need.
EASY STEPS ARE LAID OUT
This package contains all the
materials you will need to conduct a
thorough survey and effective analy-
sis. You will find information on:
• How the Survey Was Designed.
• Specific Purpose for Each
Question.
• Suggestions on Conducting the
Survey.
• Ensuring a Good Response.
• Packaging the Survey Analysis
Report.
• Presenting the Survey Data.
The Appendices provide you with:
• A Cover Letter, Survey Form, and
Instructions.
• Data Analysis Worksheets.
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WHAT THE USER CHARGE SURVEY CAN TELL
YOU
The questions on the survey form
have been carefully designed to
collect data that will reveal:
1. Whether existing sewer service
charges across your State are
adequate. In other words, are they:
• Self-sufficient? (Do revenues
cover OM&R and debt service?)
• Equitable? (Do users pay in pro-
portion to the cost of the service
they use?)
• Affordable? (Can the community
independently bear the cost of self-
sufficient operation?)
2. How costs compare across
communities.
• This information will help you
identify high-cost systems and flag
potential financial problems.
• It may help communities to
understand that they can afford
system improvements or that they
need to raise their charges.
3. Directions for future planning.
You will be able to:
• Analyze the unit costs of treat-
ment and thus project future capital
requirements.
• Identify the types of communities
that will need financial assistance
in the future.
• Plan the kind of technical
assistance you should deliver in the
area of financial management.
One final word on what the survey
will not provide you—data on your
commercial and industrial users. To
keep the survey results manageable
and clearly focused, this survey
targets residential users only; the
State's primary concern is about the
cost of wastewater services for its
individual residents.
HOW THE SURVEY WAS DESIGNED
This survey package is not just
another EPA document to put on your
shelf. Survey designers were
experienced with State concerns and
spent considerable time putting
together the kinds of questions that
would meet your data needs. Their
goal was to create an informational
package that you can use as is. The
State staff in California field
tested the survey. They got very
good results. In fact, the data
presentations in this package used
information gathered from the
California pilot test.
While no one is forcing you to use
this survey package, it does offer
you a step-by-step approach. Like-
wise, response from your communities
should be voluntary. The suggested
cover letter included in Appendix A
points out the advantages of partici-
pating in the survey. All you need
to do is copy it on State letter-
head and address it.
We designed the user charge survey
with this voluntary approach in
mind. Thus, the survey form is:
• Short—Only 11 questions appear.
• Simple—Answers are fill-in-the-
blank or checklist format.
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• Clearly Organized—Questions
follow logically and are easy to
read.
• Relevant—No information is asked
unless it is needed for data
analysis.
EACH QUESTION HAS A SPECIFIC PURPOSE
The survey's 11 questions, although
deceptively simple, generate a
wealth of information on residential
user costs. Part of the design
process included making the
collected data easy to analyze on a
microcomputer with a spreadsheet
program, such as LOTUS 1-2-3®.
Questions 1-5 ask for demographic
and utility information. Questions
6-11 gather data on costs and
revenues.
Survey Questions
1. How many households (not
population) in your community
receive wastewater treatment
services?
2. What is the current estimated
median household income in your
community?
3. What is the current average flow
treated at your facility?
4. What is the current estimated
average wastewater flow per house-
hold per day?
5. What is the level of treatment at
your wastewater treatment facility?
6. About how much of the money
needed to construct your facility
came from State or federal grants?
7. How much does it cost to operate
your facilities for a year?
8. About how much money are you
putting aside (as a percentage of
costs) for equipment replacement?
9. How much money are you paying each
year to cover wastewater loans or
bonds?
10. How much money (revenue) are you
currently collecting to pay for
wastewater collection, treatment and
disposal, plus principal and interest
costs on wastewater debt?
11. What is the current average
annual sewer service charge per
household?
Responses on demographic and utility
characteristics are used to calculate
unit costs and flows, examine
economic impact and ensure valid
comparisons between communities.
Costs data provide the basis for
comparing user charge systems and
carefully segregate the costs of
operations, maintenance, replacement
and capitalization. Revenue
questions test whether the system is
recovering enough money to operate in
the black. Are charges fair? Do
subsidies exist?
The survey form and instructions
appear in the Appendix A. Just copy
and package them with the cover
letter.
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SUGGESTIONS ON CONDUCTING THE SURVEY
Although we have done a lot to
simplify the administration of this
survey, you will still have to plan
on some time and energy to make it a
success. The suggested steps are
straightforward:
1. Prepare the cover letter using
State letterhead, and package the
survey using a self-addressed,
stamped envelop or self-mailer.
2. Decide who will receive the
survey and prepare the mailing
list. Target the list carefully so
that the survey form gets right to
the person who can complete it.
3. Assign staff to the project to
answer questions, tabulate results,
and analyze data.
4. Publicize the survey through such
means as operators' newsletters and
press releases.
5. Set up a system for tracking
responses that triggers follow-up.
6. Send out the forms, respond to
any questions, and follow-up with
calls or letters to increase the
response rate.
7. Analyze the data by following the
steps laid out in the data analysis
sheets in Appendix B.
8. Package the results as shown in
this document and send it to
communities so they can see how they
compare.
9. Use the results to aid communi-
ties: for example, conduct work-
shops on setting sewer service
charges, provide on-site assistance
in cost reduction.
ENSURING A GOOD RESPONSE
Stimulate Interest
The cover letter and instructions
accompanying the survey form were
carefully designed to attract and
inform community participants. The
cover letter sells participation by
pointing out what's in it for
respondents. It conveys a sensi-
tivity to the respondent's busy
schedule and stresses the ease and
brevity built into the survey. The
instructions are clear and brief.
They steer the participant to
sources of information and—where
necessary—describe step-by-step
calculations.
Community interest can be sustained
by setting a deadline for returning
the survey within two weeks. This
sets a tone of importance and makes
it less likely that the community
will postpone completing the survey
until a "later time" that never comes,
Offer and Provide Assistance
Choose a contact person inside your
office and make sure his or her name
and phone number appear on the cover
letter. Make sure the contact is
available during the hours when calls
are expected. This person should be
qualified to answer typical questions
or find the answers quickly, pre-
ferably by the next day. Responsive,
reliable help will boost both the
response rate and the accuracy of
responses.
Respondents are especially likely to
ask how they should define (1) the
costs of operating the plant, (2) the
cost of paying off loans or bonds,
and (3) equipment replacement funds.
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Think about the characteristics of
communities in your State, and be
prepared for the types of questions
you think they may have.
Track Questionnaires
Establish a follow-up system for
non-respondents. A periodic review
of the file should be made; a log or
a simple database can be used for
tracking. Whatever method is chosen,
it must be used. Send reminder note
(a phone call would be better) a few
days before the due date. Such a
reminder lets the community know you
are committed to getting results and
may stimulate a response, especially
if the State contact displays
enthusiasm for the effort.
(3) Use the worksheets included in
Appendix B to guide your analysis.
(4) Present the data as shown below.
We have presented the pilot survey
data and described the results below
to guide you in discussing your
findings and targeting state
assistance.
Simplify Response
Use a self-addressed, stamped
envelope or self-mailer. If the
State shows it cares about the
survey enough to pay for its return,
communities are likely to take it
equally seriously.
PACKAGING THE SURVEY ANALYSIS REPORT
Putting the report together for your
communities is straightforward:
(1) Start with a thank-vou letter to
communities for their participa-
tion. Say again how you will be
using the information (see the
survey cover letter in Appendix A).
(2) Attach the survey form and
instructions as a reference to the
survey data.
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PRESENTING THE SURVEY DATA
Covering Costs of Operation
The most basic question that you will
want to ask is "Are sewer service
charges adequate to cover the costs
of operation and achieve clean water
goals?" This analysis shows the
ratio of revenues to costs. For
communities where revenues are not
adequate to cover costs, i.e., the
ratio is below 100%, you may want to
suggest that the community reassess
its user charge system and other
sources of revenues to ensure proper
funding. Special technical
assistance might be targeted to
communities far below 100%.
In this analysis, 47% of the
communities showed revenues below
their costs. They had an average
overall revenue shortfall of 37%.
DISTRIBUTION OF TOTAL REVENUES
TO TOTAL COSTS
TREATMENT NO. OF
LEVEL COMMUN > 100% < 100%
PRIMARY 30 70 30
SECONDARY 81 51 49
ADVANCED 22 36 64
TOTAL 133 53 47
RATIO OF REVENUES TO COSTS
u-w wo-:
71-100 100-1ZB 1ZS-1M 1SO-1TB 17B-
RATO OT KTVCNUCS TO COSTS (*)
Unit Cost by Treatment Level
Analysis of typical unit costs (cost
of treatment per 1000 gallons) can
help you identify communities where
costs are unusually high or low and
thus may need financial or technical
assistance. Unit costs for in-
dividual communities vary drama-
tically and the analysis reflects
this fact.
Communities with secondary treatment
averaged $2.61 per 1000 gallons, and
advanced treatment systems averaged
$2.10 per 1000 gallons.
This analysis can be used in
reviewing proposed user charge
systems as well as for determining
whether current treatment costs are
reasonable. You can also help
communities estimate the change in
user costs that may result from
increasing their level of treatment.
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TOTAL COSTS
($ PC* 1000 OALLOHS)
OM&R COSTS BY TREATMENT LEVEL
i
I
I -^
-•0—1 T-1.H 1.0O-X X~~4 4—1
* Kit 1OOO QALUOIU
OM&R COSTS
($ PER 1000 OALLOHS)
1-1.00 l.BO-2 1-4
$ PER 1000 QAUONS
AVERAGE UNIT COSTS BY TREATMENT LEVEL
TREATMENT
LEVEL
PRIMARY
SECONDARY
ADVANCED
OVERALL
NO. OF
COMMUN
32
83
25
140
AVER
OM&R
COSTS
$1.82
$2.16
$1.60
$1.96
AVER
CAPITAL
COSTS
$0.28
SO. 41
$0.48
$0.39
•--TOTAL UNIT
AVER
$2.11
$2.61
$2.10
$2.38
MEDIAN
$0.80
$1.40
$1.60
$1.34
COSTS- --
STD
DEV
$3.19
$3.77
$1.35
$3.32
TOTAL COSTS BY TREATMENT LEVEL
($ PER 1000 GALLONS)
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Average Annual Total Residential
Costs and Sewer Service Charges per
Household
The average annual total residential
costs and sewer service charge per
household serves as a basis for
later analyses such as the
percentage it represents of median
household income. Here, the data
has been arrayed to show the dis-
tribution by treatment levels. The
results of this survey showed a
steady cost increase as one goes
from primary to secondary to
advanced treatment. This increase
was not supported by the unit costs
data.
The secondary treatment residential
costs were concentrated in the $50
to $125 range, while the advanced
treatment costs were in the $75 to
$200 range. The sewer charges for
secondary and advanced treatment
were both concentrated in the $50 to
$150 range.
AVERAGE RESIDENTIAL COST PER HOUSEHOLD
(DMUUU m HOU3KHOLO)
AVERAGE ANNUAL CHARGE PER HOUSEHOLD
(DOLLARS PER HOUSEHOLD)
2* -
If -
24 -
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o-u U-M M-Tt rt-ioo too-izs IZS-IBO IBO-ITB t7t-xoo +too
AVERAGE ANNUAL CHARGE PER HOUSEHOLO ($)
AVERAGE ANNUAL CHARGE PER HOUSEHOLD
(DOLLARS PER HOUSEHOLD)
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7B-tOO 1OO-128 1»-1flO 19O-17B 179-ZOO
AVERAGE ANNUAL CHAMC PER HOUSEHOLD t
rST^l SECONOART g
AVERAGE RESIDENTIAL COST PER HOUSEHOLD
(DOLLARS PER HOUSEHOLD)
M-iO MO-7B 7B-100 1OO-1SI 1U-1M 1BO-17B T7S-2OO
AVO RESWENTIAL COST PER HOUSEHOLO (J)
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DISTRIBUTION OF RESIDENTIAL COSTS AND USER CHARGES
---AVERAGE USER CHARGES---
PER HOUSEHOLD
AVERAGE MEDIAN STD DEV
$120.49 $120.00 $59.56
$121.50 $114.12 $59.13
$134.27 $129.00 $56.63
$123.42 $120.00 $59.08
RESIDENTIAL SECTOR
RATIO or Revenues TO coin (•)
TREATMENT
LEVEL
PRIMARY
SECONDARY
ADVANCED
TOTAL
# IN
SAMPLE
31
80
24
135
AVG TOTAL
RESID
COST/HH
$121.83
$143.43
$151.80
$139.25
Eauitability of Residential User
Charges
Are residential customers paying for
their share of the costs? Or is one
class of users subsidizing another?
Analysis of data on the portion of
the flow, costs, and revenues
attributable to residential users
will allow you to answer these
questions. Based on the analysis,
you can advise communities on
restructuring their user charge
systems to distribute costs more
equitably.
This analysis shows that in many
communities residential users may be
paying more than their share of
treatment costs. This is especially
true for primary and secondary
treatment, where about two-thirds of
the communities in each class appear
to be charging their residential
customers more than their "share."
About one-half of advanced treatment
communities charge residential
customers more than their estimated
share of treatment costs.
0-1» U-H 9O-;
171-200 + 200
RATW or KCVCNUC3 TO COSTS QQ
RESIDENTIAL SECTOR
RATIO OF KVCNUC9 TO COSTS (•)
0-tt
tZZl
tr»-2M +2OO
DISTRIBUTION OF
TOTAL REVENUE VS. TOTAL COST
FOR RESIDENTIAL SECTOR
TREATMENT NO. OF
LEVEL COMMUN
PRIMARY
SECONDARY
ADVANCED
TOTAL
32
83
25
140
>100%
66
69
48
64
<100%
34
31
52
36
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Ability of Residential Sector to
Cover Residential Costs
Average cost per household as a
percentage of median household income
can be used to indicate whether the
cost of wastewater treatment is
becoming burdensome for community
residents. You can also use this
data to predict the ability of the
community to generate more revenue by
increasing its sewer service charges.
TOT RESIDENTIAL COST PER HH AS % OF MHI
SEWER SERVICE CHARGE AS % OF MHI
(rat mincHou)
24 -
n
M -
*• -
> .IO-.TI .r«-i 1-1 1-1
mm aamef CHAMX u » or UH
SEWER SERVICE CHARGE AS % OF MHI
(m HOUKMOIA)
0-.1S .1B-.M .SO-.71 .71-1 1-1 1-1 •*•!
TOT KaMMTML COST PER HH AS • OF MM
TOT RESIDENTIAL COST PER HH AS % OF MHI
In this analysis, communities had an
average total residential cost which
was 1.3% of the MHI, but their
average sewer service charge was only
half that value. High median
household incomes in many of the
surveyed communities caused the low
percentages for wastewater services.
EZ)
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ABILITY OF RESIDENTIAL SECTOR
TO COVER RESIDENTIAL COSTS
TREATMENT
LEVEL
PRIMARY
SECONDARY
ADVANCED
TOTAL
NO. OF
COMMUN
32
86
26
144
--COST PER HOUSEHOLD- -
AS % OF MHI
STD
AVER MEDIAN DEV
2.0
1.2
0.8
1.4
0.5
0.8
0.8
0.7
5.7
1.9
0.6
3.2
ABILITY OF RESIDENTIAL SECTOR
TO COVER RESIDENTIAL COSTS
TREATMENT
LEVEL
PRIMARY
SECONDARY
ADVANCED
TOTAL
NO. OF
COMMUN
32
86
26
144
--SEWER SERVICE CHARGE--
AS % OF MHI
STD
AVER MEDIAN DEV
0.7
0.7
0.6
0.7
0.6
0.5
0.5
0.5
0.4
0.4
0.5
0.4
Planning For Equipment Replacement
You will want to examine how
communities are planning for future
equipment replacement to identify
those communities that may need to
reassess their user charge systems.
This analysis can also identify
communities that may be shortening
the life expectancy of their
facilities and possibly be causing
future compliance problems by not
providing adequate funds for
equipment replacement.
You can use this information to
target assistance such as workshops
to educate communities about the need
for setting aside the replacement
dollars.
FUNDS FOR EQUIPMENT REPLACEMENT
1-* ft-10 1O-1I lft-10
* FM CQUmUNT MCPLACCMDIT (•)
EQUIPMENT REPLACEMENT FUNDS
TOTAL NO. OF COMMUNITIES 130
PERCENT OF COMMUNITIES WITH 82%
EQUIPMENT REPLACEMENT FUNDS
AVERAGE PERCENT VALUE 10%
OF REPLACEMENT FUNDS
MEDIAN VALUE 5%
11
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Debt Burden Without Grant Contri-
bution
You will want to examine the effect
of grant funding on capital costs by
making adjustments to the debt
financing cost figure (as reported
in the surveys) to reflect "total"
costs of capital without Federal or
State grant assistance. This will
allow you to roughly determine the
impact of grant assistance on
community treatment costs.
This analysis showed that the
average debt financing costs for
advanced treatment would have
increased from $.48 to $.95 per
thousand gallons, while it would
have increased from $.41 to $2.48
for secondary treatment. Why the
lower debt service increase for
advanced treatment? These numbers
appear to suggest that secondary
treatment communities received 75%
Federal and 12%% State grants and
advanced treatment communities
received 55% Federal and 12V4% State
grants with substantial reductions
in grant eligible costs. In this
analysis, grants reduced the average
treatment costs from $3.87 per 1000
gallons to $2.38 or 39%.
ADJUSTED COST OF DEBT
(I/10M OAUjOtn)
I
•-10
«/10M
10-1 •
A0VAJMO
ADJUSTED TOTAL COST
Z2I
I
AVG ADJUSTED DEBT BY TREATMENT LEVEL
(1/tOW OAL9)
TREATMENT
LEVEL
SECONDARY
ADVANCED
OVERALL
AVERAGE ADJUSTED COSTS FOR GRANT
CONTRIBUTION BY TREATMENT LEVEL
AVG OMSK AVG ADJ AVG ADJ
COSTS DBT COST TOT COST
NO. OF PER 1000 PER 1000 PER 1000
COMMUN GALLONS GALLONS GALLONS
SCCOMOAKV
CT71 CUMmT DOT SVC
73
19
92
$1.76
$1.52
$1.71
$2.48
$0.95
$2.16
$4.24
$2.47
$3.87
MEDIAN
$1.63
$2.09
$4.15
STD
DEV
$6.05
$1.98
$5.09
12
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User Survey Information
Summary Findings
Communities will want to see how
they compare with others in the
state. You can show this by
presenting the following information
on each community in a summary table:
• Community name or number
• Average flow
• Level of treatment
• Operation costs
• Debt financing costs per year
* Total costs per 1,000 gallons
• Average annual service charge
per household
• Total residential cost per
household
• Total residential cost as % of
medium household income
• Appropriate average values
Finally, you will want to summarize
the major findings revealed by the
survey. Some of the more interesting
findings from the pilot survey were:
1. About half of the communities are
not collecting enough revenues to
meet their expenses.
2. The average unit costs to provide
advanced wastewater treatment were
20% lower than secondary treatment.
3. The average residential user
charges for advanced treatment were
10% more than the secondary treatment
charges.
4. A significant portion of
residential users (64%) appear to be
paying more than their fair share for
wastewater treatment.
5. Most communities (82%) have
equipment replacement funds.
6. The average sewer service charge
was only 0.65% of the median
household income.
7. Federal and state grants have
reduced the average total cost of
wastewater treatment by 39%.
You want to keep in mind that the
data presentations were for
California communities. A survey in
your state will provide you with
comparable data.
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Appendix A
Model Survey Form
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Dear (State Name) Community Official,
The budget problems you've faced in paying for community services will
probably increase in the future. This means your local residents and industry
must pay more for wastewater treatment. Your challenge will be how to raise
money to meet your current and future wastewater treatment needs. The
information requested in the attached survey can help you meet this challenge.
STRIKING A BALANCE
As you know, every community needs to continuously examine its wastewater
costs and revenues to make certain they balance. The results of this survey
will help you decide if your current service charges are adequate for
operating, maintaining, and improving your wastewater treatment facilities.
HOW DO YOU COMPARE?
The information you and others provide will be analyzed to show how much
communities in the state pay for wastewater service. You'll be able to
compare your community's costs with others. If you return this survey to us,
we'll send you a copy of the survey analysis report.
DO YOU HAVE QUESTIONS?
Instructions are attached to help you answer the survey questions. To
answer some of the questions, you may need to involve various people in your
organization who know about the special aspects of your wastewater system.
Even if you or others don't know the exact answers to all the questions,
please use your best estimates and return the survey to us by (date). Please
feel free to call (name of contact) at (telephone number) if you have any
questions. The survey should be returned to (name of contact and address).
Thank you or your help.
Sincerely,
(Name of Official)
Attachment
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Community Name
Wastewater Service District (if your community
does not treat its wastewater)
Contact Person(s)
Address
Phone No.
1. How many households (not population) in your community receive wastewater
treatment services?
2. What is the current estimated median household income in your community?
3. What is the current average flow treated at your facility?
Gallons per day
4. What is your current estimated average wastewater flow per household per
day?
Gallons per day
5. What is the level of treatment at your wastewater treatment facility?
primary secondary advanced
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6. About how much of the money needed to construct your facility came from
state or federal grants?
$
7. How much does it cost to operate your facilities for a year? (operation,
maintenance, and equipment replacement costs -- DO NOT include the costs
of wastewater loans and bonds, or depreciation)
$ Year of data
8. About how much money are you putting aside (as a percentage of operating
costs) each year for equipment replacement?
9. How much are you paying each year to cover wastewater loans or bonds?
(principal and interest costs only)
$ Year of data
10. How much money (revenue) are you currently collecting to pay for
wastewater collection, treatment and disposal, plus principal and interest
costs on wastewater debt?
$ Year of data
11. What is the current average annual sewer service charge per household?
$ Year of data
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INSTRUCTIONS FOR COMPLETING SURVEY
These instructions include information plus directions to help you complete
some of the questions. If something does not fit your situation, answer as
best as you can and explain the problem or call the number shown in the cover
letter for more help.
QUESTIONS 1-6
There are several possible sources of information to complete Questions 1-6.
Use the most current source that corresponds best to your wastewater
facility's service area. Sources for data include the census, surveys
conducted by a regional planning agency, etc. In all cases, provide the best
information you have; give us your best estimate if actual numbers are not
available.
1. Households. This should be the total number of households (residential
customers) serviced, not the number of people or population. (Residential
apartment buildings should be treated as equivalent dwelling units.)
2. Median Household Income. This should be the most recent census value or
current estimate. Your local Bureau of Census, Data User Center, can
provide this information.
3. Current Average Flow Treated. This value represents flow from all
sources. Flow should be reported in gallons per day. If your flow is
calculated in cubic feet per day, multiply the flow by 7.481 to convert it
to gallons per day.
4. Average Wastewater Flow Per Household Per Day. Calculate as follows:
gallons daily . number of residential _ daily flow per household
residential flow ~ customers ~ (gallons per day)
Your figure for gallons daily residential wastewater flow might come from
your water supply department or your billing office. The wastewater flow
figure should include an adjustment for infiltration/inflow.
QUESTIONS 7-11
Cost and revenue information you provide in Questions 7-11 should include all
parts of the wastewater system: collection (sewers, pumping stations), the
treatment plant, and disposal (outfalls, sludge disposal).
7. Annual Costs. This number should include annual "operating costs,"
"maintenance costs," "replacement costs" for wastewater collection and
treatment, and any charges from Regional systems. (It DOES NOT include
the costs of wastewater loans and bonds, or depreciation).
-------
. include labor, materials and supplies, utilities, and
overhead (such as office rent).
Maintenance costs include preventive and corrective maintenance.
Replacement costs include costs to maintain but not to extend the useful
life of the facilities (like pumps and motors).
8. Equipment Replacement. This question is intended to determine what
percentage of the operating costs you included in Question 7 are being put
aside to maintain but not extend the useful life of the facilities (like
pumps and motors).
9. Costs of Loans or Bonds. This number should include all principal and
interest payments you are making annually to pay for your wastewater
treatment facilities.
10. Money (Revenues) Collected Annually. This should include all the money
you collect for operating and financing all parts of the wastewater
facilities — collection, treatment, disposal and debt service. DO NOT
include grant monies.
11. Annual Sewer Service Charge Per Household. This should be an estimate of
the typical total annual sewer service bill for a residential customer.
One method of calculating this charge would be to use the wastewater
treatment rate established in your sewer use ordinance and the average
wastewater flow per household.
-------
Appendix B
Data Analysis Worksheets
-------
HORKSHEET #1 - COVERING THE COSTS OF OPERATIONS
Analysis:
The most basic question that you will want to ask. is "Are user charges
adequate to cover the costs of operation and achieve compliance with the NPDES
permit?" For communities where revenues are not adequate to cover costs
(i.e., the ratio is below 100%), the state may want to suggest that the
community reassess its user charge system and other sources of revenues to
ensure proper funding.
Presentation:
Frequency Distribution (Ratio of Revenues to Costs)
RATIO OF REVENUES TO COSTS
RATIO OF MVCMUn TO COSTS (*)
Summary Table (Distribution of Total Revenues to Total Costs)
DISTRIBUTION OF TOTAL REVENUES
TO TOTAL COSTS
TREATMENT NO. OF
LEVEL COMMUN > 100% < 100%
PRIMARY 30 70 30
SECONDARY 81 51 49
ADVANCED 22 36 64
TOTAL 133 53 47
B-l
-------
Questions needed: 7, 9, 10
Calculations:
• Ratio of Revenue = Total Revenue (10)
to Cost OM&R Costs (7) + Debt Financing Cost (9)
Distribution of Total Revenues to Total Costs
Count number of communities with ratios of revenues to costs of 100% or
greater and less than 100%.
Average Amount of Total Revenue
Revenue Shortfall = (10) of
Communities —
with % < 100
OM&R Costs (7) + Debt Financing
Costs (9) of
Communities with %
< 100
Number of Communities with % < 100
B-2
-------
WORKSHEET #2 - UNIT COSTS
Analysis:
Unit Cost Per Gallon and Treatment Level
You can use data from the survey to determine the typical unit costs in order
to identify communities that have unusually high or low unit costs. This will
help the state to identify those communities that may need financial
assistance and/or technical assistance. You may also want to evaluate unit
costs by treatment level, since unit costs vary dramatically between different
levels of treatment.
Presentation:
Frequency Distributions (Unit Costs)
TOTAL COSTS
($ PCM IOOO GALLONS)
OM&R COSTS
(J rat IOOO GALLONS)
1» -
10 -
is -
10
1O -
IS -
O-JO -»O-1 1-1.90 1 .BO-Z 1-4 *-•
$ rat low c
O-.BO .BO-1 1-1,SO 1.9O-2 I-*
$ PCX 1000 QALLOHS
Frequency Distributions (Total Unit Costs and OM&R Costs by Treatment Level)
TOTAL COSTS BY TREATMENT LEVEL
(»F
OM&R COSTS BY TREATMENT LEVEL
FIJI IOOO OALLOMS)
14 -
ia -
so -
1* -
11 -
71
/
/\
/\
/\
/\
/ \
/\
^
/
/
/
/
/
/
\
\
\
\
\
\
\
\
\
\
\
\
\
\
\
\
\
R;
i P
\
\
\
\
\
s
\
\
\
\
\
\
\
s
\
\
s
;X
^
1
i
tf
\
\
\
\
\
\
\
\
\
n
^ p
\
\
\
\
\
\
N
S
\
\
\
r~^
\
^5 ^
1-1 W> I.M-1 2-4
I ff» 1000 GALLONS
»
rr*J
Z21
B-3
-------
Summary Table (Average Unit Costs by Treatment Level)
AVERAGE UNIT COSTS BY TREATMENT LEVEL
TREATMENT NO. OF
LEVEL COMMUN
PRIMARY
SECONDARY
ADVANCED
OVERALL
32
83
25
HO
AVER
OM&R
COSTS
$1.82
$2.16
$1.60
$1.96
AVER
CAPITAL
COSTS
$0.28
$0.41
$0.48
$0.39
-•-TOTAL UNIT COSTS- --
STD
AVER MEDIAN DEV
$2.11
$2.61
$2.10
$2.38
$0.80
$1.40
$1.60
$1.34
$3.19
$3.77
$1.35
$3.32
Questions needed: 3, 5, 7, 8, 9
Calculations:
• Total Unit Costs =
Per 1000 Gallons
• OM&R Unit Costs =
Per 1000 Gallons
OM&R Costs (7) + Debt Financing Costs (9)
Current Average Flow (3) x 365
X 1000
OM&R Costs (7)
Current Average
Flow (3) x 365
1000
Unit costs are sorted by treatment level.
Average and median cost calculations are performed to determine typical
unit costs for each treatment level. Standard deviations from the mean
would be calculated and, depending on the specific data available in a
given state, one or two standard deviations from the mean could be chosen
as control values for communities on the high and low end of costs.
B-4
-------
HORKSHEET #3 - DISTRIBUTION OF RESIDENTIAL COSTS
Analysis:
You may also want to use the survey data to present the average total resi-
dential cost and average annual sewer service charge per household. This
Information will show the range of fees paid by residents In various
communities.
Presentation:
Frequency Distributions (Average Total Residential Costs and Annual Sewer
Service Charge Per Household):
AVERAGE RESIDENTIAL COST PER HOUSEHOLD
(DOLLARS KR HOUSEHOLD)
I
I
I
I
I
AVERAGE ANNUAL CHARGE PER HOUSEHOLD
(DOLLARS PtR HOUSEHOLD)
1
0-» Zf-M iO-7» n-100 100-1» 1U-1BO 1M-171 17»-tOO
AVB RESUKN1UL COST PCR HOUSEHOLD ($)
IMO to-n n-ioo 100-1 u in-no iio-in i»-
r^
\
\
\
\
s
\
s
s
\
\
\
\
s,
C7
p
P_
\
S
\
\
s
s
\
s
s
N,
„ p-
^ V
n y
ft V
n [y
n?
S
S
V
s
s
s
s
s
s
s
s
s
s,
I
f-
/
/
/
/
/
^
N
s
s
S
S
\
\
\
N
s
s
^
L^ C^
^ Kg Kj
i m vtL
AVERAGE RESIDENTIAL COST PER HOUSEHOLD
(DOLLARS ffR HOUSOWLD)
M -
14 -
ezi
BO-7B 71-100 10O-1U 1I»-1W IftO-tTS ITV-MO
CHAROI PtR HOUSEHOLD (11
EANMUL
fY^ 31
ZZ1
M-71 7»-100 100-IIi 1U-IOO 110-171 17>->00 4X00
AVO ROMCMTUL COST P
KS1
B-5
-------
Summary Table (Distribution of Residential Costs and User Charges)
DISTRIBUTION OF RESIDENTIAL COSTS AND USER CHARGES
---AVERAGE USER CHARGES---
PER HOUSEHOLD
AVERAGE MEDIAN STD DEV
$120.49 $120.00 $59.56
$121.50 $114.12 $59.13
$134.27 $129.00 $56.63
$123.42 $120.00 $59.08
TREATMENT
LEVEL
PRIMARY
SECONDARY
ADVANCED
TOTAL
# IN
SAMPLE
31
80
24
135
AVG TOTAL
RESID
COST/HH
$121.83
$143.43
$151.80
$139.25
Questions needed: 1, 3, 4, 7, 9, 11
Calculations:
• Residential Flow (%) = Flow/Household (4) x No. of Households (1) x 100
Current Average Flow (3)
• Residential Cost = Residential Flow (%) x
Per Household
(OM&R Costs (7) + Debt
Financing
Costs (9)1
No. of Households (1)
Do a frequency distribution analysis of the current average total
residential cost and annual user charge per household.
Unit costs are sorted by treatment level.
Average and median cost calculations are performed to determine typical
unit costs for each treatment level. Standard deviations from the mean
would be calculated and, depending on the specific data available in a
given state, one or two standard deviations from the mean could be chosen
as control values for communities on the high and low end of costs.
B-6
-------
WORKSHEET #4 - EQUITABILITY OF RESIDENTIAL USER CHARGES
Analysis:
You can use the data to determine whether user charge systems are equitable
for residential customers, i.e., are residential customers paying for their
share of the costs, or are these expenses being subsidized by other categories
of users (or vice versa). This will allow the state to advise communities as
to the need to reassess/restructure user charge systems to provide for a more
equitable distribution of cost. Calculating this ratio for the residential
sector will also provide information on other customer classes.
Presentation:
Frequency Distributions (Ratio of Revenues to Cost as a Percent):
RESIDENTIAL SECTOR
MHO OF MEVCNUE9 TO COSTS -7ft 7»-1M> 10O-1U 1ZB-1M 1*O-I7» ITft-ZM •*• XOO
•ATM Or KVCNUES TO COSTS (ft)
7S-100 10O-1U 1U-1W
KVENUCS TO COSTS 00
E22 AOVANCCD
Summary Table (Distribution of Total Residential Revenues to Total Residential
Costs)
DISTRIBUTION OF
TOTAL REVENUE VS. TOTAL COST
FOR RESIDENTIAL SECTOR
TREATMENT
LEVEL
PRIMARY
SECONDARY
ADVANCED
TOTAL
NO. OF
COMMUN
32
83
25
140
>100%
66
69
48
64
<100%
34
31
52
36
B-7
-------
Questions needed: 1, 3, 4, 7, 11
Calculations:
Residential Revenue = Avg. Charge/Household (11) x No. of Households (1)
Cost of Treating = foM&R Costs + Debt ~] x [~No. of Flow/ I
Residential Flow [cost (7) Costs OJ LHouseholds (1) x Household (4)J
Current Average Flow (3)
Ratio of Residential = Residential Revenues
Sector Revenues to Cost of Treating Residential Flow
Costs
B-8
-------
WORKSHEET #5 - ABILITY OF RESIDENTIAL SECTOR TO COVER RESIDENTIAL COSTS
Analysis:
The data will allow you to examine average costs per household as a percent of
median household income and evaluate how burdensome sewer service charges are
on individual households. The state can use this data to interpret the
ability of residential sewer service charges to generate additional revenue
without over- burdening residential users.
Presentation:
Frequency Distributions (Total Residential Cost per Household and Sewer
Service Charges as a Percent of MHI):
TOT RESIDENTIAL COST PER HH AS % OF MHI
1» -
II -
14 -
t* -
1 -
TOT RESIDENTIAL COST PER HH AS % OF MHI
^
X
0-J» -tt-.M .M-.7I .Tt-\ \-l l-l +J
TOT mnomu coir rra m A> • or UHI
F
"/
^
SEWER SERVICE CHARGE AS % OF MHI
(PCR HOUSEHOLD)
SEWER SERVICE CHARGE AS % OF MHI
(rDt HOUSEHOLD}
1 .•O-.7I .70-1 1 -1 Z-»
SCWCH SERVICE CHAMC AS • OF HH
B-9
-------
Summary Table (Ability of Residential Sector to Cover Residential Costs)
ABILITY OF RESIDENTIAL SECTOR
TO COVER RESIDENTIAL COSTS
TREATMENT
LEVEL
PRIMARY
SECONDARY
ADVANCED
TOTAL
NO. OF
COMMUN
32
86
26
144
--COST PER HOUSEHOLD --
AS % Of MHI
STD
AVER MEDIAN DEV
2.0
1.2
0.8
1.4
0.5
0.8
0.8
0.7
5.7
1.9
0.6
3.2
ABILITY OF RESIDENTIAL SECTOR
TO COVER RESIDENTIAL COSTS
--SEWER SERVICE CHARGE--
AS % OF MHI
TREATMENT
LEVEL
PRIMARY
SECONDARY
ADVANCED
TOTAL
NO. OF
COMMUN
32
86
26
144
AVER
0.7
0.7
0.6
0.7
MEDIAN
0.6
0.5
0.5
0.5
STD
DEV
0.4
0.4
0.5
0.4
Questions needed: 1, 2, 3, 4, 5, 7, 9
Calculations:
Residential Flow (%)
Flow/Household (4) x No. of Households (1) x 100
Current Avg. Flow (3)
Average Total Residen-
Residential Cost = tial Flow x [OM&R Costs (7) + Debt Financing Costs (9)]
Per Household (•/„)
Average Total Residential
Cost Per Household As
°/. of Median
Household Income (MHI)
No. of Households (1)
Residential Cost Per Household
Median Household Income (2)
Sewer Service Charge
as a Percent of Median Household
Income (MHI)
Annual Sewer Service Charge
Per Household (11)
Median Household Income (2)
x 100
Average and median cost calculations are performed to determine typical
values for each treatment level. Standard deviations from the mean would
be calculated and, depending on the specific data available in a given
state, one or two standard deviations from the mean could be chosen as
control values for communities on the high and low end of costs.
B-10
-------
WORKSHEET #6 - PLANNING FOR EQUIPMENT REPLACEMENT
Analysis:
You can use the survey to examine how communities are planning for future
equipment replacement. This would assist the state in identifying those
communities that may need to reassess their user charge systems to adequately
address replacement costs. It would also assist in identifying communities
which could be shortening the life expectancy of their facilities and possibly
cause future compliance problems.
Presentation:
Frequency Distributions (Funds for Equipment Replacement):
FUNDS FOR EQUIPMENT REPLACEMENT
0-1 1-* ft-10 10-11 !»-tO + tO
Summary Table (Equipment Replacement Funds)
EQUIPMENT REPLACEMENT FUNDS
TOTAL NO. OF COMMUNITIES 130
82X
PERCENT OF COMMUNITIES WITH
EQUIPMENT REPLACEMENT FUNDS
AVERAGE PERCENT VALUE
OF REPLACEMENT FUNDS
MEDIAN VALUE
10%
Questions needed: 8
Calculations:
Do a frequency distribution analysis of the percent of OM&R costs
being set aside for replacement needs.
Average and median calculations are performed to determine typical
values.
B-ll
-------
WORKSHEET #7 - ADJUSTED CAPITAL COSTS WITHOUT GRANT FUNDS
(Supplemental Analysis)
Analysis:
You may want to examine the effect of grant funding on costs of capital by
making adjustments to the debt financing cost figure (as reported in the
surveys) to reflect the "total" costs of capital without Federal or State
grant assistance. This will allow the State to roughly determine the impact
of grant assistance on community treatment costs.
Presentation:
Frequency Distributions (Adjusted Debt Financing Costs Without Grant Funds)
AVG ADJUSTED DEBT BY TREATMENT LEVEL
(t/1000 QALJ)
ADJUSTED COST OF DEBT
CUKWNT DCVT svc )
ZZ)
ADJUSTED TOTAL COST
(*/•••• •UUOM3)
EZI
B-12
-------
Summary Table (Adjusted Average Capital Costs by Treatment Level)
AVERAGE ADJUSTED COSTS FOR GRANT
CONTRIBUTION BY TREATMENT LEVEL
AVG OM&R AVG ADJ AVG ADJ
COSTS DBT COST TOT COST
TREATMENT NO. OF PER 1000 PER 1000 PER 1000
LEVEL COMMUN GALLONS GALLONS GALLONS
SECONDARY
ADVANCED
OVERALL
73
19
92
$1.76
$1.52
$1.71
$2.48
$0.95
$2.16
$4.24
$2.47
$3.87
STD
MEDIAN DEV
$1.63 $6.05
$2.09 $1.98
$4.15 $5.09
Questions Needed: 3, 6, 9
Calculations:
Annual Debt
Financing
Cost Adjustment
= Total Grant
Dollars (6)
Capital Cost
Recovery Factor
The Capital Cost Recovery Factor is calculated to convert grant dollars into
annual debt financing costs. For purposes of this calculation, it was assumed
that money was borrowed for 20 years at an 8% interest rate (cost recovery
factor = .102). For your use, a Capital Cost Recovery Table is shown below.
CAPITAL COST RECOVERY TABLE
Length of
Maturity
10
15
20
25
30
35
40
7%
.142
.110
.094
.086
.081
.077
.075
8*
.149
.117
.102
.094
.089
.086
.084
Rate of
10%
.163
.131
.117
.110
.106
.103
.102
Interest
12%
.177
.141
.134
.128
.124
.122
.121
151
.199
.171
.160
.155
.152
.151
.151
B-13
-------
• Adjusted Annual Debt Financing Debt Financing
Debt Financing = Cost Adjustment + Costs (9) x 1000
Cost per 1000 Current Average Flow (3) x 365
Gallons
• OM&R Cost = (see Worksheet #2, OM&R
per 1000 Gallons Unit Costs per 1000 gallons)
• Adjusted Total Adjusted Annual Debt OM&R Costs
Cost per 1000 = Financing Cost per + per 1000
Gallons 1000 Gal Ions Gallons
B-14
-------
WORKSHEET #8 - SUMMARY OF USER RATE SURVEY INFORMATION
Analysis:
You can summarize key data points in a table to show communities how they
compare with others in the state. This will provide them with a basis for
comparison among communities with similar average flows and levels of
treatment. It will also provide the state with a quick reference guide that
will help them target needed assistance to specific communities.
Presentation:
Summary of User Costs Survey Information:
SUMMARY CHART OF USER COSTS SURVEY INFORMATION
COMMUNITY NAME
COMMUNITY 1
COMMUNITY 2
COMMUNITY 3
COMMUNITY 4
COMMUNITY 5
COMMUNITY 6
COMMUNITY 7
COMMUNITY 8
COMMUNITY 9
COMMUNITY 10
COMMUNITY 11
COMMUNITY 12
COMMUNITY 13
COMMUNITY U
COMMUNITY 15
COMMUNITY 16
COMMUNITY 17
COMMUNITY 18
AVERAGE FLO
(GPD)
30,000
1,300,000
4,240,000
1,500,000
250,000
1,000,000
4,650,000
319,267
2,900,000
880,000
5,000,000
380,000
200,000
333,500
350,000
160,000
650,000
100,000
LEVEL OF OPERATION DEBT FINANCING TOTAL COST AVERAGE ANNUAL TOTAL RES COST TOTAL RESIDENTIAL
TREATMENT COSTS COSTS/YEAR t/1000 GAL SERVICE CHARGE/ PER HOUSEHOLD COST AS X OF MHI
HOUSEHOLD
P
S
s
S
s
P
P
.
A
P
P
P
S
P
A
S
S
S
$56,000.00
$596,171.00
$1,698,000.00
$964,000.00
$175,968.00
$127,890.00
$145,529.00
$154,612.00
$1,440,000.00
$122,000.00
$1,015,000.00
$55,000.00
$56,000.00
$95,670.00
$269,863.00
$197,936.00
$1,331,613.00
$30,000.00
$22,700.00
$74,885.00
$443,000.00
$0.00
$52,956.52
$17,134.00
$497,856.00
$12,512.00
$211,270.00
$27,055.00
$0.00
$0.00
$5,747.50
$0.00
$81,500.00
$4,560.00
$132,950.00
$27,000.00
$7.19
$1.41
$1.38
$1.76
$2.51
$0.40
$0.38
$1.43
$1.56
$0.46
$0.56
$0.40
$0.85
$0.79
$2.75
$3.47
$6.17
$1.56
$348.00
$148.00
$63.00
$96.00
$120.00
$58.80
$140.00
$184.32
$228.00
$96.60
$10.00
$86.40
$155.00
$84.00
$150.00
$84.00
$10.50
$10.00
$491.88
$429.48
$73.22
$112.47
$102.56
$48.44
$39.99
$147.50
$148.04
$94.68
$65.37
$54.28
$123.50
$100.12
$250.97
$463.21
$457.39
$129.39
2. SIX
2.86X
0.29X
0.39X
0.89X
0.14X
0.08X
1.40X
0.74X
0.86X
0.22X
0.42X
1.00X
0.72X
1.05X
4.63X
1.18X
COMMUNITY 155
COMMUNITY 156
COMMUNITY 157
COMMUNITY 158
COMMUNITY 159
COMMUNITY 160
COMMUNITY 161
COMMUNITY 162
AVERAGE
MEDIAN
109,000
60,000
12,000,000
270,000
5,900,000
860,000
260,000
S
S
S
P
S
s
s
s
$167,750.00
$162,500.00
$4,620,000.00
$53,500.00
$1,400,000.00
$364,393.00
$200,000.00
$65,000.00
$35,000.00
$32,500.00
$490,000.00
$0.00
$0.00
$133,500.00
$40,000.00
$115,750.00
$5.10
$8.90
$1.17
$0.54
$0.65
$1.59
$2.53
$2.38
$1.34
$167.72
$226.00
$92.04
$60.00
$96.00
$55.00
$138.00
$108.00
$123.42
$120.00
$465.02
$812.50
$95.39
$39.63
$69.76
$124.47
$240.00
$139.25
$124.47
2.93X
5. SOX
0.26X
0.28X
0.24X
0.69X
1.09X
1.40X
0.70X
Questions needed: 1, 2, 3, 4, 5, 7, 9, 11
Calculations:
• Average Flow = (3)
• Level of Treatment = (5)
• Operation Costs = (7)
• Debt Financing Costs/Year = (9)
B-15
-------
Total Cost = OM&R Costs(7) + Debt Financing Costs (9) x 1000
$/l,000 Gallons Current Average Flow (3) x 365
Average Annual
Sewer Service
Charge/Household = (11)
Total Residential Cost Per Household = (See Worksheet #5, Average Total
Residential Costs Per House-
hold)
Total Residential = Average Total Cost Per Household as % of MHI
Costs as a Percent (See Worksheet #5)
of MHI
B-16
-------
US. Envirohmental Protection Agency
Region 5, Library (PL-12J)
rZ-West nackson B^levard, 12th Fln^r
Ch»cago, IL 60604-3590 d
------- |