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The revenue analysis also includes other operating and non -operating revenues such as penalties and
<br />NPDES water. These revenues are used to offset the revenue requirements that need to be recovered
<br />from customers' rates. This projection was created under the status quo rates and does not include
<br />proposed revenue adjustments.
<br />The system's total revenue for the study period is estimated to be approximately $9.8 million annually
<br />under the current rates. Table 74 shows the projected sewer system revenues by category for the study
<br />period (FY 2026 — FY 2031) without any revenue adjustments. Projections are based on customer growth
<br />projections as well as other operating and non -operating revenue estimates provided by City staff.
<br />Table 74. Sewer System Revenue Forecast, FY 2026 to FY 2031
<br />Revenue from Rates
<br />Fixed Revenue
<br />Rate Revenue Total
<br />Other Operating Revenues
<br />Non -operating Revenues
<br />$8,922,314 $8,939,774 $8,951,412 $8,969,036 $8,986,813 $8,999,084
<br />$8,922,314 $8,939,774 $8,951,412 $8,969,036 $8,986,813 $8,999,084
<br />$450,000 $450,000 $450,000 $450,000 $450,000 $450,000
<br />$400,000 $400,000 $400,000 $400,000 $400,000 $400,000
<br />Total $9,772,314 $9,789,774 $9,801,412 $9,819,036 $9,836,813 $9,849,084
<br />Operating and Maintenance (O&M) Expense
<br />The itemized O&M expenses were carefully reviewed by the City and forecast for the study period using
<br />escalation factors discussed in the Key Assumptions section. Table 75 shows the City's projected O&M
<br />expenses for the sewer utility during the study period. O&M Expenses are expected to increase by 4.0
<br />percent on average annually.
<br />Table 75. Sewer System O&M Expense Forecast, FY 2026 to FY 2031
<br />Sanitary Service $8,759,440 $9,132,875 $9,517,728 $9,894,897 $10,287,824 $10,671,969
<br />Total Operating $8,759,440 $9,132,875 $9,517,728 $9,894,897 $10,287,824 $10,671,969
<br />Other Obligations
<br />Other obligations included in the financial plan are capital improvement projects funded by PAYGO (Pay
<br />As You Go), debt service obligations, and reserve contributions made from rates.
<br />Capital Improvement Projects
<br />The City plans to spend an average of $5.0 million a year on sewer rate funded capital expenditures
<br />during the rate setting period. Table 76 shows the capital expenditure by expenditure type. The City plans
<br />to use customer rates to accomplish the proposed capital plan. Figure 9 graphically shows the rate study
<br />capital plan by funding source, only PAYGO funded expenditure will impact customer rates.
<br />City of Santa Ana - 2026 Water and Sewer Rate Study 49
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