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In 2014, the North Carolina Utilities Commission issued its Order Granting Partial Rate Increase, Approving Rate Adjustment Mechanism, and Requiring Customer Notice in Docket No. W-218, Sub 363. As part of this Order, the Commission required that Aqua North Carolina, Inc. (Aqua) fund two studies: one study on the replacement of flat-rate wastewater billing with rates tied to volumetric consumption, and one study on mechanisms that address the rate impact to customers and the revenue impact to Aqua from significant changes in customer water consumption patterns (a consumption adjustment mechanism). This report presents the results of both studies.

The main goal of these studies is to assess the effect on customer bills and Aqua revenues by implementing a volumetric wastewater rate structure or implementing a consumption adjustment mechanism water rate structures, relative to the status quo. This assessment is carried out in this report by simulating the alternative rate structures on actual, existing, historic customer bills for Aqua’s customers and answering the following questions:

a) If Aqua had implemented (revenue-neutral) volumetric wastewater rates for metered water and wastewater customers in the recent past, how many customers would have had their wastewater bills increase or decrease and by how much?

b) If Aqua had implemented volumetric wastewater rates for metered water and wastewater customers in the recent past, how would have Aqua’s modeled wastewater revenues compared to their actual revenues from the status quo rates?

c) If Aqua had implemented a consumption adjustment mechanism for its water rates in the recent past, what would have the water rates surcharge and/or credit been in the recent past, given actual changes to average water use levels?

d) If Aqua had implemented a consumption adjustment mechanism for its water rates in the recent past, how many customers would have had their water bills increase or decrease after the application of surcharges and/or credit surcharges and by how much?

e) If Aqua had implemented a consumption adjustment mechanism for its water rates in the recent past, how would have Aqua’s modeled water revenues compared to their actual revenues from the status quo rates and to the revenues projected in the rate case that set the utility’s water rates a priorito water consumption changes?

 

This report was officially filed on March 31, 2016 in Docket W-218 Sub 363A. All documents related to this docket are available on the North Carolina Utilities Commission’s website.

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