Small water systems challenges and recommendations
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NARUC STAFF SUBCOMMITTEE ON ACCOUNTING AND FINANCE 2008 FALL MEETING. SMALL WATER SYSTEMS CHALLENGES AND RECOMMENDATIONS. PRESENTED BY DAVID R. MONIE, PE, PRESIDENT GPM ASSOCIATES & SBW&S CORP. NARUC STAFF SUBCOMMITTEE ON ACCOUNTING AND FINANCE 2008 FALL MEETING. WHAT IS A SMALL SYSTEM?.

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SMALL WATER SYSTEMS CHALLENGES AND RECOMMENDATIONS

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NARUC STAFF SUBCOMMITTEE ON ACCOUNTING AND FINANCE 2008 FALL MEETING

SMALL WATER SYSTEMSCHALLENGES ANDRECOMMENDATIONS

PRESENTED BY

DAVID R. MONIE, PE, PRESIDENT

GPM ASSOCIATES & SBW&S CORP.


NARUC STAFF SUBCOMMITTEE ON ACCOUNTING AND FINANCE 2008 FALL MEETING

WHAT IS A SMALL SYSTEM?

  • EPA – Less than 3,300 Population (1,000 Service Connections)

  • Reality – Less than 500 Service Connections

    • >500 Can Support a Family

  • Extreme Reality – Less than 100 Service Connections


NARUC STAFF SUBCOMMITTEE ON ACCOUNTING AND FINANCE 2008 FALL MEETING

SMALL SYSTEMS

  • Will continue to be part of the the industry and will be an on-going concern to Regulators and the Industry

    • Some have said, The only good small system is the one that was just been acquired

    • the only good small system is the dead small system.


NARUC STAFF SUBCOMMITTEE ON ACCOUNTING AND FINANCE 2008 FALL MEETING

NOT ALL SMALL SYSTEMS ARE BAD

  • Many have maintained a high standard of regulatory compliance and service

  • Even Extremely Small Systems can be Good Small Systems

    • Example of 2 systems with <30 customers each with significant need for capital expenditure that will remain viable


NARUC STAFF SUBCOMMITTEE ON ACCOUNTING AND FINANCE 2008 FALL MEETING

GOOD OR BAD SMALL SYSTEMS DO OFFER A CHALLENGE TO BOTH THE REGULATOR AND WATER INDUSTRY

  • The issue has been on the agenda of many NAWC and NARUC conferences over the past years

  • It also occupies much of the time of the Regulators

Without much having been accomplished


NARUC STAFF SUBCOMMITTEE ON ACCOUNTING AND FINANCE 2008 FALL MEETING

ATTRIBUTES OF GOOD SMALL SYSTEMS

  • An Owner Who Cares

  • Access to Capital


NARUC STAFF SUBCOMMITTEE ON ACCOUNTING AND FINANCE 2008 FALL MEETING

WHAT IF THE OWNER DOESN’T CARE?

  • Regulations Need to be Enforced

    • May Force Attention to the Water System and Improvement

    • May Motivate a Sale to Another System

    • May Cause Bankruptcy

  • Encourage Consolidation

    • Jawbone Larger Regulated System if Available – Need to Offer Incentives (Acquisition Adj., Higher ROE, STP, etc.)

    • Consolidation of Several Small Systems Can Work

    • Institute Small System Takeover Where Available

      • Must be Fair

    • Appoint a Receiver


  • NARUC STAFF SUBCOMMITTEE ON ACCOUNTING AND FINANCE 2008 FALL MEETING

    WHAT IF THERE ISN’T ACCESS TO CAPITAL

    • If Rates are Sufficient, Access to Capital Should Follow

    • Drinking Water SRF – Small System Set Asides

    • Owner’s MasterCard

    • Equipment Lease Deals


    NARUC STAFF SUBCOMMITTEE ON ACCOUNTING AND FINANCE 2008 FALL MEETING

    MAKE RATE INCREASES EASY FOR SMALL SYSTEMS

    • Talked About for Decades, Not Done in Most Jurisdictions

    • Rate Case Costs of $100 - $500 per Customer do NOT Benefit Anyone

    • Automatic Cost of Living Adjustments

    • Easy Access to Adequate Rates Should Allow for Access to Capital and Attention by Owner

    • Service Conditions on Rate Increases May be Required


    NARUC STAFF SUBCOMMITTEE ON ACCOUNTING AND FINANCE 2008 FALL MEETING

    NAWC SMALL COMPANIES COMMITTEE BEST PRACTICES WORKGROUP

    • The NAWC SCC is Undertaking a Workgroup to Identify Best Practices for Regulating and Managing Small Systems

    • Will Build on Previous White Papers

    • Will Work with NARUC, NASUCA and NRRI to Pilot Best Practices


    NARUC STAFF SUBCOMMITTEE ON ACCOUNTING AND FINANCE 2008 FALL MEETING

    QUESTIONS AND COMMENTS

    • For Questions or Comments Following this Meeting:David R. Monie, P.E., PresidentG.P.M. Associates Inc.1920 Frontage Road, Suite 110Cherry Hill, New Jersey 08034

    • [email protected]


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