Professional Engineers Of North Carolina

SUM 2014

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20 the Professional Engineer Summer 2014 Drinking Water & Wastewater Utilities" presented by Jeff Hughes and Shadi Eskaf, Environmental Finance Center at the UNC School of Government. SWIA members had numerous questions and related discussions related to all four presentations. An example of the quality of information provided could be seen in the Q&A related to the presentation from the UNC Environmental Finance Center, and how this information may shape SWIA's concerns and future direction. T e presenters pointed out that fi xed costs for operating a utility are typically 70% to 80% of the total costs, but revenue from base charges makes up only 25% to 30% of revenue. T ere were several questions and answers as follows: Q Do all utilities depreciate in the same manner? A Utilities are supposed to report depreciation on a quarterly basis but only within the past fi ve years has it been captured; when budgets are set, depreciation is not captured. If a system has no debt or if projects are primarily funded with grant funds, the rates are not usually set to capture depreciation. Q Has capturing depreciation become a requirement? A T ere is a standard practice of set deprecia- tion, but a lot of internal discretion is allowed; typically when debt service is calculated, depre- ciation is not captured. Depreciation is now being called rehabilitation costs instead of depreciation. T erefore, all rehabilitation costs may not, and in many cases are probably not, refl ected in current water and sewer rate structures. SWIA operating guidelines SWIA chose to maintain a simple organization structure. T is includes operating guidelines that are only a few pages in length, an offi cer structure that includes only a possible vice-chair (the chair is specifi ed by the enabling legislations), and avoiding Designing Tomorrow's Infrastructure & Communities Raleigh/Durham n Charlotte (800) 733-5646 www.McAdamsCo.com

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