Louisville Water Board of Water Works Approves 2012 Budget
Tuesday November 8, 2011
Louisville Water’s Board of Water Works has approved the 2012 operating and capital budget for the company. The budget reflects the company’s commitment to provide an affordable and safe supply of drinking water during tough economic conditions and declining water use, while continuing a focus on maintaining and improving the water system.
Continued Decline in Water Consumption
Water sales are the most fundamental assumption in developing Louisville Water’s budget. To prepare the forecast, staff utilized a University of Louisville (UofL) study on water use projections for the next 30 years and demographic and growth projections from Dr. Paul Coomes with UofL.
Like many water utilities in the United States, Louisville Water continues to see a decline in water consumption. Water consumption in 2011 will fall short of the budgeted 37.5 billion gallons. As a result, the 2012 budget assumes water consumption of 37.0 billion gallons.
The drivers for the decline in water use include:
- Economic recession (Louisville has shifted from an economy that included 34% of customers in an industrial class in 1977 that typically use more water to less than 10% industrial customers in 2011)
- Increase in the number of low-flow fixtures and low-flow appliances
- Smaller household size
- Wet weather patterns and lower irrigation consumption
Capital Budget Includes a Continued Focus on Infrastructure
The capital budget is $73 million and includes over $11 million to assess, repair and replace water mains. Louisville Water expects to complete an overhaul of the Crescent Hill Filtration Plant in 2012 and will begin a multi-year project to implement new technology for metering and customer billing.
Operations & Maintenance Budget
The Operations and Maintenance budget is $65.75 million. Louisville Water has a number of fixed costs (power, chemicals and fuel) that will increase in 2012. The company is also working to manage increases in health care and retirement costs. Employment levels are expected to reduce from 422 full time employees in 2011 to approximately 417 through attrition.
Maintaining Affordable Water Rates
In 2012, the average monthly residential water bill for 6,000 gallons will increase by 85-cents a month to $23.47, reflecting a 3.75% rate increase.
Louisville Water will continue its commitment to help customers who may struggle to pay their water bill. The 2012 budget includes $75,000 for the Customer Assistance Program. The funds are administered through three local entities that work directly with clients. Louisville Water funds this program with 10% of the proceeds of its home water and sewer line protection programs.
“The 3.75% increase approved by our Board allows us to continue our investment in infrastructure while continuing to provide our customers with a high-quality, reliable supply of drinking water,” said Greg Heitzman, President and CEO of Louisville Water. “In light of these challenging economic conditions, we are working to streamline our operations, assist customers and provide outstanding quality and value.”
The 3.75% rate increase mirrors the 2011 increase. The projected 2012 dividend for the company’s stockholder, Louisville Metro, is $19.2 million.