3000 kb - Mid Western Regional Council - NSW Government

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Model Description The financial model forecasts income streams to match projected expenditure. The diagram on the right illustrates the main elements, which affect the financial plan. Income Annual Charges Elements of Financial Modelling Expenditure O&M The financial modelling undertaken in this plan aims to: • optimise the long term funding strategy, Developer Charges New Assets • meet the demands of the capital works program and other life cycle costs of the system assets, • ensure a minimum level of cash liquidity, and Trade W aste Subsidy Sewer Fund Asset Renewal Interest • provide a forecast of the typical residential annual charges over the long term. Interest Depreciation (non cash) Modelling Methodology Input data for the model is sourced from three main areas: • AAS27 special schedules for past financial performance of the water and sewerage funds • Estimates for uncontrollable variables eg interest rates, growth, inflation • Projected capital works, and operations and management expenses All other criteria being met, the financial plan seeks, after an initial adjustment, to model, in real dollars, the lowest steady level of charging possible. Actual bills will depend on Council’s pricing structure but this is indicative of the affordability of the services and shows the performance requirements for long-term stability. A number of variables and assumptions have to be entered into the model and these are first agreed to by Council. They include: Opening balances Council’s special accounting schedules are used to establish opening balances and baseline costs for the model. Financial statements for the last two years are compared to try to eliminate ‘one off’ occurrences from being incorporated as part of a normal trend. Developer Charges New assessments have to pay a developer charge for the benefits being received by connecting to the system. Currently Council is reviewing the developer charges calculation to introduce developer charges in accordance with DWE best practice management guidelines and has adopted $3,198/ET as developer charges for implementation from year 2008/09 onwards. Page 80 Part C - Detailed Information Mid-Western Regional Council Strategic Business Plan for Sewerage
Growth Projections A long-term average residential connection growth rate of 1.7% p.a. has been used for sewerage services. This rate of growth is based on Council’s report on recent review of 25-year population growth projections for the Region. Inflation Average long-term inflation has been assumed as 3.0% per annum. Interest Rates A borrowing rate of 6.5% and investment rate of 5.5% have been used in this analysis Revenue from non-residential customers The revenue split is the ratio of residential to non-residential revenues. This is determined from the special schedules. If a significant change is envisaged (eg increased income from trade waste charges) then the split can be adjusted to match. Residential charges currently account for 88% of sewerage revenues. Current revenue split is expected to continue also with the adoption of DWE best practice tariff structure from year 2008/09 onwards. Performance Measures Council’s minimum service criteria will have an impact on the level of charges required, eg. minimum cash levels, which is generally assumed to be 10 - 20% of annual revenues (excluding restricted revenues). For the financial model, $ 1000 K (2006$) has been considered as minimum cash level. Expected lives of assets The default average life of system assets is based on the weighted average of long-lived structures and shorter-lived mechanical plant. The average life of water and sewerage assets is currently estimated to be approximately 70 years. The life of assets controls the depreciation, which is a non-cash expense. It directly affects the need for future asset renewal works planned, which is part of the capital works program. Grants and Subsidy for Capital Works The State Government provides financial assistance to local government water supply and sewerage schemes through the Country Towns Water, Sewerage and Drainage Program. Councils can apply for funding of up to 50% of Improved Level of Service (ILOS) capital works if their average residential charge is more than $350 per annum. The financial model in this case has considered that 25% of the total estimated cost of Mudgee STP augmentation work will be available as government subsidy. Ongoing recurrent costs: Management, Operations and Maintenance By default, the model increases historical operation and maintenance expenses on a pro rata basis with respect to growth. This has been overridden where Council provided revised estimates i.e. where the action plan requires new initiatives or where new works require additional operating resources. The capital works plan and projected operations and management expenses also form a significant component of the inputs. These are shown in the section ‘Projected Cost Schedules’. Mid-Western Regional Council Part C - Detailed Information Page 81 Strategic Business Plan for Sewerage
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Strategic Business Plan for Sewerag
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Strategic Business Plan for Sewerag
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Service Provision .................
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Mid-Western Regional Council Strate
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Summary of Levels of Service Improv
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Objectives Key Result Area Objectiv
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Summary of Projected Financial Posi
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Introduction Why This Plan Has Been
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Structure of the Plan The strategic
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Page 6 Part A - Operating Environme
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The implications of Council’s vis
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In expanding Council’s vision for
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Page 12 Part A - Operating Environm
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Assets Summary Mid-Western Regional
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Figure 2 - Map of Mudgee Sewerage S
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Figure 4 - Map of Rylstone Sewerage
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Future Development Growth Projectio
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Levels of Service - Sewerage DESCRI
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Page 46 and 47: Page 30 Part A - Operating Environm
Page 48 and 49: Page 32 Part B - Strategic Plan Mid
Page 50 and 51: Service Planning There is a relatio
Page 54 and 55: Levels of Service Review The Levels
Page 56 and 57: Areas Serviced This section of the
Page 58 and 59: Objective 2: Areas Serviced To prov
Page 60 and 61: Trade Waste Management The treatmen
Page 62 and 63: Objective 3: Actions Start End Resp
Page 64 and 65: Developer Charges Developer Charges
Page 66 and 67: Customer Relations This section of
Page 68 and 69: Community Involvement This section
Page 70 and 71: Objective 6: Community Involvement
Page 72 and 73: Council effectively addresses follo
Page 76 and 77: The Plan should identify both curre
Page 78 and 79: Operations Plan Figure 8 - Operatio
Page 80 and 81: Objective 8: Operations Develop ope
Page 82 and 83: Maintenance Plan needs to consider
Page 84 and 85: Capital Works Figure 10 - Capital W
Page 88 and 89: Figure 11 - Mid-Western Council Org
Page 92 and 93: Objective 12: Finance Maintain soun
Page 94 and 95: Page 78 Part C - Detailed Informati
Page 98 and 99: Assumptions and Limitations The pro
Page 104 and 105: Figure 13 - Detailed Recurrent Cost
Page 106 and 107: Figure 16 - Sewerage Capital Works
Page 108 and 109: The borrowing outstanding is expect
Page 110 and 111: Figure 20 - Sensitivity of Typical
Page 114 and 115: The following options exist: Amalga
Page 116 and 117: The various institutional arrangeme
Page 118 and 119: Council has considered various meth
Page 120 and 121: Disadvantages • The co-ordination
Page 122 and 123: Appendices Mid-Western Regional Cou
Page 126 and 127: Independent Pricing and Regulatory
Page 128 and 129: The Act is administered by the Mini
Page 130 and 131: Other Government Initiatives Effici
Page 134 and 135: Resource Managers These are the age
Page 136 and 137: Stakeholder How to judge success Ho
Page 140 and 141: MWRC Sewer Fund Financial Model - 2
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Appendices Mid-Western Regional Cou
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MWRC Sewer Fund Financial Model - 2
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Appendices Mid-Western Regional Cou
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3000 kb - Mid Western Regional Council - NSW Government

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