2030 Plan - Grand Strand Water and Sewer Authority

To supplement this plan, RFC was asked to look at GSWSA’s rate forecast and compare
to industry averages and benchmarks. The following is taken from the RFC report.
C. Benchmarks for Future Rate Adjustments
Based on a historical rate comparison, GSWSA has managed to expand its facilities,
service area, and customer base during the period between FY 2000 and FY 2010 while
at the same time maintaining a program of water and wastewater rates adjustments that
have been better or comparable to the CPI. Furthermore, GSWSA’s program of rate
adjustments from 1998 to 2008 has easily outperformed the annualized rate increases of
our national survey groups during this same period.
However, continued growth and development in Horry County presents financial
challenges as GSWSA must continue to provide additional capacity and extend
infrastructure to a growing service area and customer base. As part of its continued
objective to meet the demands of a growing customer base while seeking to maintain
exceptional to favorable financial impacts on its customers, GSWSA requested RFC
provide appropriate water and wastewater industry rate adjustment benchmarks or targets
that it may use to assess its rate and financial performance in the coming years.
The utility industry has joined the benchmarking movement later than most industry
groups. However, the utility industry is undergoing major changes due to deregulation
that could potentially increase competition. Also, as environmental regulations become
stricter, utilities must increase capital expenditures to achieve compliance. Furthermore,
customers and other stakeholders are demanding that utilities maintain affordable rates
and charges. These factors have created pressure for utilities to decrease costs.
Continuous improvement and benchmarking have, therefore, become increasingly
important to water and wastewater utilities.
To provide GSWSA with appropriate water and wastewater rate adjustment benchmarks
for the coming years, RFC forecasted a benchmark range of rate adjustments based on
extensive experience in the water and wastewater industry and the historical data
provided by GSWSA staff and though our biennial rate survey. Specifically, RFC has
tailored a range of benchmark rate adjustment forecasts for GSWSA based on its current
(FY 2010) water and wastewater rates. Separate water and wastewater rate benchmarks
are provided, and each is tailored to provide a range of exceptional, favorable, and
unfavorable rate adjustments and impacts for the typical water and wastewater residential
customer of GSWSA.
For water, the benchmark ranges were developed with the typical monthly residential bill
of $19.60 in FY 2010 serving as the basis. The exceptional benchmark range is defined
as a program of rate adjustments and customer impacts during the period from FY 2010
through FY 2020 that is equal to or below the forecasted rate of inflation. For the
purposes of this analysis, inflation is anticipated to continue at the same annualized rate
of 2.52% observed for the All Urban CPI during the recent ten-year period used for our
historical comparison. Similarly, the favorable benchmark range is defined as a program
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