2030 Plan - Grand Strand Water and Sewer Authority

D. Financial Plan
1. Expense Projections
The financial plan to meet future service needs is based on separating costs and revenues
into two distinct categories: Capital and Operating. The capital costs and revenue
recovery are presented in detail within the Capital Improvement Plan.
The basis for the operational financial plan is segregating operating costs into service
categories in order to more appropriately charge costs on the basis of service provided.
For instance, a retail customer is charged based on a differing rate structure than a
wholesale customer because an additional level of service is provided. A complex ratemaking
model has been developed to allocate operating costs into service categories that
translate into customer rates.
The goal of the financial plan is to meet customer service needs while holding operating
cost increases to levels below inflationary indexes. This will be accomplished by
increasing operating efficiencies through a more productive work force and using the
most cost effective technology available in the industry. Debt levels will be reduced by
minor increases in impact fees and increase in monthly capital charges for wastewater
service reflecting the costs associated with more stringent regulatory requirements.
GSWSA’s goal is to maintain the lowest rates of any water or wastewater utility
operating on the coast of South Carolina and to keep rate increases well below the index
for inflation.
Forecasting costs are difficult at best because many of the factors affecting costs are
unknown. Inflation and increases in regulatory requirements in particular could have a
dramatic effect on costs and therefore the rates customers are charged. However,
recognizing the potential effect of these factors, cost projection are made in 5-year
increments to evaluate what customer rates and charges may be in the future. The
projections are made based on a combination of business growth with minor inflationary
adjustments. The major ‘assumption’ is therefore that the economic and regulatory
environment during the next 20 years will be similar to the past 5 years. If not, the
projections can be adjusted accordingly.
The expenses are based on near actual figures for Fiscal Year 2010 and proposed budget
figures for 2011 and 2012. Future projections are based on factors indicated above.
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