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With consumer gasoline prices soaring higher than most utilities had bargained for last year when the bean counters were penciling in the annual budgets, many rural water and wastewater systems have been left wondering what the future holds.

This means that it is costing your system more each and every time you send employees out to read a meter or fix a leaking water line. The best way to combat these, and other, unforeseen expenses is to review and strengthen your system’s financial planning.

Remember, like a well maintained vehicle, a properly managed system will continue to operate smoothly and efficiently well into the future.

While higher fuel prices don’t necessarily mean that the sky is about to fall or that you should encourage your employees to trade in their gas-guzzling trucks for cute little VW Beetles, it is always a good idea to plan ahead. Whether cutting your fuel costs, streamlining your operational processes, or ordering your supplies in bulk, we all have a responsibility to provide safe drinking water as efficiently and affordably as possible.

In this issue of the Safe Drinking Water Trust eBulletin we’ll take a look at a few practical steps you can take to help keep your fuel costs down and streamline your system’s financial management practices.

Additional Resources

http://www.eia.doe.gov/

Higher Gas Prices = Big Pain in the Budget

Rural communities (where the nearest parts warehouse always seems to be at least a thirty minute drive away) are clearly feeling the pressure of higher fuel costs.

“We’re probably going to have to buy S-10 pickup trucks and Volkswagens for the police department,” lamented Rolland, OK town administrator Dave Redden recently. “We had projected a twenty-five percent increase in this year’s budget (for gas and diesel fuel). That’s just not going to be enough.”

Thankfully, according to the folks at the Automobile Association of America (AAA) there are a few, simple things we all can do to help cut down on the amount of fuel we use ranging from:

· Consolidating trips to cut down on the amount of driving we do.

· Slowing down when we drive.

· Properly maintaining our vehicles.

While these tips offer short-term answers, in the future, alternative fuel and hybrid vehicles may soon prove to be a cost effective option. Another option for some systems is to consider purchasing fuel in bulk when prices are low (well, before they go any higher, anyway).

Whether purchasing fuel in bulk or driving smarter, it is important to frequently remind ourselves, and our employees, that responsible use of energy and all of our resources is a learned behavior. To conserve, we must all find ways to slow down and do more with less.

It’s also important to plan ahead so that your system isn’t overwhelmed when unplanned financial needs arise. Many state and federal sources are recommending that utilities cushion their fuel budgets by an additional 20 to 30 percent over the next year to meet the rising cost of fuel.

TIP: If you’ve already cut every possible corner (without risking the safety of your customer’s, of course), and spending more money just to keep your utility’s vehicles on the road just isn’t possible, then this may be a good time to check out How to Raise Your Rates and Stay Alive in the Safe Drinking Water Trust eBulletin’s archive section.

Additional Resources

www.aaa.com/AAA/023/home/AAA_Gas_Watchers_Guide.pdf

www.fypower.org/inst/case/

We’re All in This Together

A community water or wastewater system is just like any other business. To be successful it must be managed efficiently. The job of setting the proper course and providing continual direction falls squarely on the shoulders of the system’s board.

Strategic planning is essential to the success of small water and wastewater systems—especially during difficult financial times.

In order to be prepared, all utilities, regardless of size, need to develop a strategic financial plan that will focus on at least a three-year period and identify the following:

1. The current and future needs of the system.
2. The system's staffing needs.
3. The system's strengths and weaknesses and a strategy for correcting the weaknesses (parts of the system that will need repaired or replaced over the next three years).
4. A list of external changes taking place in the community and the state that may affect your water system (growth, new industry, economic down-turns, drastically higher fuel prices), and a strategy for responding to these changes.
5. A "What if?" emergency plan.
6. Goals, budgeting, timetables, and those responsible for each action.

Since most of the money you need to cover your system's expenses will come from user fees (operating revenue) it is also critical to make certain that your rates are reviewed on a regular basis to ensure that a fair and equitable price is being charged for your product.

If not, as a board, you will be faced with either increasing rates or finding ways to decrease expenses. Remember, you aren't doing your customers any favors by keeping water rates too low to properly operate the system now and in the future.

Additional Resources

www.epa.gov/safewater/smallsys/pdfs/guide_smallsystems_stratplan.pdf
And

www.epa.gov/safewater/smallsys/pdfs/guide_smallsystems_asset_mgmnt.pdf

Nobody Rides (or delivers) for Free

Whenever gas prices go up, the associated costs often trickle down to the consumers. Water and wastewater utilities, like all informed consumers, need to be aware that higher prices at the pumps will eventually mean higher prices across the board that must be considered when planning for your system’s financial future.

To counter the rising cost of fuel, both FedEX and UPS have imposed special fuel surcharges on top of normal delivery fees. Each company currently levies a 2.75 percent fuel charge on ground shipments. For airborne packages, FedEX’s rate is 12.5 percent and UPS has capped its air surcharge at 9.5 percent.

Therefore, it is a good idea to reevaluate your chemical and supply program and make every effort to purchase supplies in bulk to weed out any unnecessary deliveries. This might also be a good time to explore an agreement with other local utilities to purchase supplies together to save on shipping fees.

Capacity Development

Safe water 365 days a year. Consistent pressure day and night. No odor. No Color. No stains on clothing, dishes, pans, or bathtubs. No service interruptions. Above all, low water rates. Sound familiar? Whether your water system serves 35 people or 5,000, that’s all that customers are asking for.

In order to make it all happen, systems must reduce expenses and maximize income (It sounds pretty easy when we put it that way!). Whether you’re talking about reducing fuel consumption, purchasing supplies in bulk or buying VW Beetles rather than trucks, it all boils down to Capacity Development.

Capacity development is defined by the Safe Drinking Water Act Amendments of 1996 as: “…the process of water systems acquiring and maintaining adequate technical, managerial, and financial capabilities to enable them to consistently provide safe drinking water.”

If your utility needs ideas about stretching dollars, help is often only an email away. Through RCAP's Ask an Expert link, you have direct access to the Rural Community Assistance Partnership’s team of technical assistance providers. By utilizing this resource, you might just save yourself the cost of a phone call or a trip to your engineer’s office.

Depending on the size of the problem, this might just save you enough pocket-change to help make your next trip a little easier on the pocket-book (if you remember to roll up the windows, maintain a speed below 35 miles per hour, and can somehow talk your fellow employees into pushing your truck so you don’t have to start it up).

Additional Resources

www.epa.gov/safewater/smallsys.html