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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

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.

what is a small system

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
small systems

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.
not all small systems are bad

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
good or bad small systems do offer a challenge to both the regulator and water industry

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

what if the owner doesn t care

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
what if there isn t access to capital

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
make rate increases easy for small systems

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
nawc small companies committee best practices workgroup

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
questions and comments

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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