M.U.D. Board Approves 2016 Budget
The Metropolitan Utilities District (M.U.D.) Board approved a budget resulting in expected 2016 revenues of $119.9 million for the Water Department and $209 million for the Gas Department in December. The revenues will be used to fund the District’s operating expenses, purchased gas costs, debt service costs as well as required capital improvements and contribute to enhanced financial strength and liquidity.
Directors approved the budget with a 3.5 percent water rate increase to the service charge and commodity components of the water bill, effective January 2, 2016. The increase is not applied to Water Infrastructure Replacement charges so the average use residential customer will see a 3.0 percent total water bill increase. The water rate increase is necessary to fund increased operational costs in 2016 and to provide for increased debt service costs associated with a 2015 bond issue related to ongoing capital improvement work at the Florence Water Treatment Plant.
The water rate increase will equate to an additional 88 cents per month for the average use residential customer. A customer with a 5/8-inch water meter will see a monthly water bill increase from an average of $29.20 to $30.08. The water rate increase will generate approximately $3.2 million in revenue during 2016.
There will not be a gas rate increase. Recent projections for gas costs show a reduction in the gas bill for the average use residential customer.
Projections for 2016 show an estimated 1.4 percent decrease on the total water and gas bill as compared to 2015 actual bills. Approximately 80 percent of residential customers use both District gas and water services.
The District recently issued $189 million in bonds, the majority of which is being used to refund and refinance the Platte West Water Treatment Plant bond issues from 2006 at a more favorable interest rate, with $41 million to be used to fund Florence capital projects that are addressed by the Florence Capital Improvement Plan and that are planned for completion by the end of 2018. The Florence Capital Improvement Plan is a multi-year plan which in its entirety includes approximately $175 million in regulatory, performance, water quality and condition improvements at the 126-year-old facility.
The 2016 Water Department budget includes $18.3 million in interest and principal payments related to outstanding bond issuances.
Prior to the bond issuance, M.U.D. received updated ratings from Standard & Poor’s Ratings Services and Moody’s Investors Service. S&P assigned a rating of “A+” to the District’s 2015 Bond Issuance with a positive outlook, an upgrade from its previous “A” rating. Moody’s affirmed the “A1” rating with a stable outlook for the District.
The District continues its long-term cast iron gas and water main replacement program. The budget includes abandonment of 10 miles of water mains and abandonment of 35 miles of gas mains in 2016 for an estimated cost of $30.6 million.
The District’s rates remain below the national average and comparable to other utilities in the Midwest. Omaha ranks as the third lowest for residential gas bills and ninth lowest for residential water bills among U.S. utilities that participated in the 2015 Memphis Light Gas and Water Utility Bill Comparison survey.
M.U.D. provides safe, reliable, and cost-effective natural gas and water services to our community, with a service area that reaches approximately 600,000 people, along with maintaining more than 27,000 hydrants for fire protection.
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