Rate Setting Information
Introduction
American Bottoms is a not for profit organization that provides wastewater treatment services to residential, commercial, and industrial customers in Alorton, Village of Cahokia, Centreville, Commonfields of Cahokia Water District, East St. Louis, and Village of Sauget. To ensure the continued operation of American Bottoms, payments received must be sufficient to meet annual expenses.
Revenue Analysis
Revenue for American Bottoms comes from residential payments, industrial payments, prior year accounts receivable collected, pretreatment program revenue, surcharge revenue, miscellaneous income, and investment income. Customers that do not pay are subtracted from the total revenue collected (this is referred to as bad debt).
Residential and Industrial payments are based on a user charge.
User charges are calculated by applying our rate to customer’s water usage. Residential customer wastewater volumes are based on metered water usage provided by Illinois American, Commonfields and Village of Cahokia. Most industrial customer wastewater volumes are metered directly by American Bottoms.
Prior Year’s Accounts Receivable Collected
Payments received from past due accounts for prior years are important to help American Bottoms meet its expenses and to help avoid further rate increases.
Pretreatment Program Revenue
This program was set up for permitted industrial customers to directly recover pretreatment expenses.
Surcharge Revenue
Some industrial customers are charged an additional charge for the treatment of extra strength wastewater.
Miscellaneous Income
Miscellaneous income consists of miscellaneous fees, charges and hauled wastewater revenue.
Investment Income
Investment income is based on interest from American Bottoms cash investments, which is about 1.5 percent.
Bad Debt
Bad debt is simply when a customer does not pay their bill. Bad debt collection has reduced from 14% in 2009 to approximately 2.5% in 2010 due largely to the water shut off program.
Revenue Requirements Analysis
Operations and Maintenance Expense
O&M expenses include the cost of employee wages and benefits, equipment used, and materials needed to treat wastewater and operate the facility on a routine basis. An Operations and Maintenance Budget is provided to the Board of Directors for approval each fiscal year. The budget also includes pretreatment program expenses, which are recovered directly from industrial customers.
Debt Service
Debt service consists of scheduled principal and interest payments made to the Illinois Environmental Protection Agency (IEPA) for loans made to American Bottoms for plant improvements. Repayment of these loans will be completed in FY 2013 and FY 2015 respectively.
Cash Flow Analysis
American Bottoms takes a look at its end of the year bank balance and the projected revenue and expenses for the upcoming year. This information is used to help determine the rate.
Rate Analysis
By looking at where the money will come from and how it will be spent, American Bottoms can make a determination on what the rate will be for the following fiscal year.