HomeMy WebLinkAboutFCS GROUP Summary of Negotiations FINAL REPORT w Appendices
City of Bremerton
Summary of U.S. Navy
Contract Negotiations
for Water and
Wastewater Service
FINAL REPORT
October 2020
Washington
7525 166th Avenue NE, Ste. D215
Redmond, WA 98052
425.867.1802
Oregon
4000 Kruse Way Pl., Bldg. 1, Ste 220
Lake Oswego, OR 97035
503.841.6543
Colorado
1320 Pearl St, Ste 120
Boulder, CO 80302
719.284.9168
www.fcsgroup.com
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Established 1988 Washington | 425.867.1802 Oregon | 503.841.6543 Colorado | 719.284.9168
October 7, 2020
Thomas Knuckey, P.E.
Director of Public Works and Utilities
100 Oyster Bay Ave. N.
Bremerton WA 98312
Subject: Summary of U.S. Puget Sound Naval Shipyard Contract Negotiations for Water and
Wastewater Service
Dear Mr. Knuckey:
The City of Bremerton (City) and U.S. Puget Sound Naval Shipyard (Navy) entered a ten-year
contract to provide water and Wastewater service (Navy Contract N44255-08-C-3005) on August 1,
2008. The contract was set to continue through July 31, 2018 and constitutes the basis for
development of the rates paid by the Navy during that contract term. Upon expiration of the contract,
the Navy exercised its unilateral option to continue service beyond the contact term. A follow up cost
of service study is to be completed upon contract renewal to establish the base rates for the next
contract period. In addition, the extensive 2008 contract negotiations established a mutually
acceptable methodology to use at the time of future contract negotiations. To the extent possible, the
update used the methodology prescribed in the 2008 contract.
This report will summarize the cost of service study update used to establish the base year water and
wastewater service rates for the Navy under the new contract. Negotiations with the Navy were
completed on July 10, 2020 and all technical issues associated with calculating cost-based rates were
mutually agreed upon and resolved.
Sincerely,
Angie Sanchez Virnoche
Principal
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TABLE OF CONTENTS
Section I. Introduction ................................................................................................................................. 1
I.A. Rate Setting Principles and Methodology ........................................................................................................ 1
I.A.1. Revenue Requirement ............................................................................................................................... 1
I.A.2. Cost Allocation .......................................................................................................................................... 2
I.A.3. Rate Design .............................................................................................................................................. 2
Section II. Water COS Rate Study ............................................................................................................... 3
II.A. Asset Functional Allocation & Classification .................................................................................................... 3
II.B. Revenue Requirement ................................................................................................................................... 5
II.B.1. Operating and Maintenance ................................................................................................................... 5
II.B.2. Depreciation.......................................................................................................................................... 6
II.B.3. Return on Investment ............................................................................................................................ 6
II.C. Allocation Factors .......................................................................................................................................... 8
II.D. Navy Water Cost of Service ........................................................................................................................... 9
II.E. Water Rates................................................................................................................................................. 10
Section III. Wastewater COS Rate Study ................................................................................................ 11
III.A. Asset Functional Allocation & Classification .................................................................................................. 11
III.B. Revenue Requirement ................................................................................................................................. 13
III.B.1. Operating and Maintenance ................................................................................................................. 13
III.B.2. Depreciation........................................................................................................................................ 13
III.B.3. Return on Investment .......................................................................................................................... 14
III.C. Allocation Factors ........................................................................................................................................ 16
III.D. Navy Wastewater Cost of Service................................................................................................................. 17
III.E. Wastewater Rates ........................................................................................................................................ 17
Section IV. Other Key Issues .................................................................................................................. 18
IV.A. Salinity Surcharge ........................................................................................................................................ 18
IV.B. Initiation of Negotiations ............................................................................................................................... 18
IV.C. Future Adjustment for Water and Wastewater Rates ..................................................................................... 18
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IV.D. Rate Adjustments Beyond Contract Term ..................................................................................................... 19
IV.E. Lump Sum Payment ..................................................................................................................................... 19
IV.F. Re-Opener Clause ....................................................................................................................................... 19
Technical Appendix – Water .......................................................................................................................... 20
Technical Appendix – Wastewater ................................................................................................................. 21
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LIST OF EXHIBITS
Exhibit 1: Water Asset Functionalization ............................................................................................................. 3
Exhibit 2: Water Asset Cost Classification ........................................................................................................... 4
Exhibit 3: Classification of Water Operating & Maintenance Costs ..................................................................... 6
Exhibit 4: Classification of Water System Depreciation ....................................................................................... 6
Exhibit 5: Classification of Water System Net Rate Base .................................................................................... 7
Exhibit 6: Wastewater Asset Functionalization .................................................................................................. 11
Exhibit 7: Wastewater Asset Cost Classification ............................................................................................... 12
Exhibit 8: Classification of Wastewater Operating & Maintenance Costs .......................................................... 13
Exhibit 9: Classification of Wastewater System Depreciation ............................................................................ 14
Exhibit 10: Classification of Wastewater System Net Rate Base ......................................................................... 15
LIST OF TABLES
Table 1: Comparison of Cash Basis and Utility Basis Methodology ...................................................... 2
Table 2: Summary of Navy Water Cost of Service ............................................................................................. 9
Table 3: Summary of Navy Water Fixed and Variable Charges ....................................................................... 10
Table 4: Summary of Navy Wastewater Cost of Service .................................................................................. 17
Table 5: Summary of Navy Wastewater Fixed and Variable Charges ............................................................. 17
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Section I. INTRODUCTION
The City of Bremerton (City) retained FCS GROUP to develop a follow-up cost of service (COS)
rate study in advance of the upcoming U.S. Navy (Navy) water and wastewater service contract
renewal. The cost of service study was prepared using the existing 2008 contract methodology as the
basis for establishing cost-based rates for the Navy.
I.A. RATE SETTING PRINCIPLES AND METHODOLOGY
The methods used to establish user rates are based on principles that are generally accepted and
widely followed throughout the industry. These principles are designed to produce rates that
equitably recover costs from customers by calculating the appropriate level of revenue to be collected
from ratepayers and establishing a rate structure to equitably collect those revenues.
The primary analyses of the cost of service rate study are listed below:
⚫ Revenue Requirement. This analysis calculates the total revenue requirement to fully fund each
utility on a standalone basis.
⚫ Cost Allocation. This analysis equitably distributes the revenue requirement among customer
groups based on their proportional demand and use of each system.
⚫ Rate Design. This analysis develops rate structures that generate sufficient revenue to equitably
recover each system’s revenue requirement.
I.A.1. Revenue Requirement
There are two main generally accepted methods for calculating utility revenue requirements – “cash
basis” and “utility basis.” The “cash basis” is used most commonly to set revenue requirements for
retail customers as it parallels the budgeting process of most municipalities, with the objective being
that the revenues must be sufficient to recover all cash requirements of the utility. The “utility basis”
approach is commonly used for contract customers as it recognizes unique customer service
requirements and allows for the separation of eligible facilities required to provide service. This
approach recovers applicable operating and maintenance (O&M) costs, plus a capital cost recovery
based on the original cost of capital investment committed to the customer’s service. The “capital
cost recovery” includes two components: depreciation of eligible fixed asset value as useful life is
consumed and a rate of return on the net investment or book value of eligible assets in service to the
customer. With the utility basis, debt service costs are not part of the revenue requirement; instead,
the capital cost is recovered over time by depreciation and the return on investment. Table 1
summarizes the two methods. The analysis completed for the City maintains parity betw een the cash
basis used for retail customer rate-setting and the utility basis method used for the Navy.
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Table 1: Comparison of Cash Basis and Utility Basis Methodology
Cash Basis Utility Basis
+ O&M Expenses + O&M Expenses
+ Taxes/Transfer Payments + Taxes/Transfer Payments
+ Rate Financed Capital + Depreciation Expense
+ Debt Service (Principal + Interest) + Return on Investment
= Total Revenue Requirement = Total Revenue Requirement
I.A.2. Cost Allocation
The purpose of cost allocation is to provide a rational basis for distributing the full costs of each
utility service to customers or customer groups in proportion to the demands they place on the
system. The key analytical steps of the cost allocation process are as follows:
⚫ Asset Functionalization. The assets of each system are assigned to major functions of service:
» Water: source of supply, treatment, storage, pumping, transmission, distribution, hydrants,
meters, services and general plant
» Wastewater: treatment, collection, pumping and general plant
⚫ Cost Classification. Within each asset function, costs are separated into cost categories that can
be allocated among customers by a measurable cost-defining service characteristic. Water and
wastewater classification categories are listed below. Costs wholly attributed to specific
customers can be directly assigned to those customers or customer groups:
» Water: commodity (average water demands), capacity (peak water demands), customer
(billing and customer service) meters & services (reading and servicing meters), fire
protection and direct assignment
» Wastewater: flow (sewer collection and plant inflow), strength (influent sewage strength),
customer and direct assignment
⚫ Cost Allocation. Cost categories are then allocated among customers or customer groups based
on their unique service demands, as defined by system planning documents, industry standards,
and recorded user history (e.g. billing data and/or service requirement requests). The results
identify the cost to provide service to each identified customer or customer group.
I.A.3. Rate Design
The principal objective of rate design is to develop a rate structure that generates sufficient revenues
for the system which are reasonably commensurate with the cost of providing service. Fixed and
variable charges are designed to recover the cost of service for each customer or customer group, as
determined by the revenue requirement and cost allocation process. For equity to be maintained,
economic theory suggest that a price of a commodity should roughly equal its cost. Through
refinement of cost allocation techniques and tailored rate designs customers are provided a more
accurate price signal of what the service costs to produce and deliver.
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Section II. WATER COS RATE STUDY
The City of Bremerton provides potable water service to the Navy at three 10-inch meter delivery
points located at 1st and Pacific, Charleston Gate and 1st and Rainer Avenue. The Navy has updated
its service requirement requests as part of this contract update to include average daily demand of
1.20 million gallons per day (MGD) and a max day demand of 3.50 MGD. The Navy has also
indicated that by 2028 the average daily demand and max day demand requirements are expected to
increase to 1.32 MGD and 3.85 MGD, respectively. The Navy’s water service requirements specify a
maximum fire flow demand of 7,750 gallons per minute (gpm) for a duration of four hours. The
requirements as stated define the water service requirements of the Navy and are used to allocate
costs as part of the water cost of service rate study update.
II.A. ASSET FUNCTIONAL ALLOCATION & CLASSIFICATION
The City’s assets or “plant” in service are reviewed to identify what infrastructure assets are in use
and related to providing water service. The first step is to organize assets into functions of service,
which is largely accomplished by a uniform system of accounts. As stated previously, the water
utility functions of service include source of supply, treatment, storage, pumping, transmission,
distribution, hydrants, meters, services and general plant. Exhibit 1 summarizes the original asset
cost and accumulated depreciation allocated to each function of service.
Exhibit 1: Water Asset Functionalization
The functions of service are then allocated to functional cost categories based on documented system
requirements, including engineering criteria, (e.g. average demand, peak demand) and industry
standard practices based on the relationship of each function of asset to their use of the system.
Assets are classified into cost categories that can be allocated among customers or customer groups
according to known or assumed cost “causation”. The cost classification categories for the water
system include:
⚫ Commodity costs relate to average annual water demands.
Function of Service Original Cost Accumulated
Depreciation Net Asset Value
Source of Supply 7,648,781$ 4,337,991$ 3,310,790$
Treatment 4,622,460 939,089 3,683,371
Storage 6,925,417 3,736,797 3,188,620
Transmission 2,217,633 710,388 1,507,245
Pumping 4,872,084 2,233,044 2,639,041
Distribution
Mains 2"-6"5,051,160 2,542,144 2,509,015
Mains 8"-12"21,798,963 7,118,687 14,680,276
Mains 16" - 36"12,319,647 4,350,827 7,968,820
Hydrants 2,689,288 1,036,451 1,652,837
Services 3,909,232 1,893,102 2,016,130
Fire Services 382,021 175,587 206,434
Meters 3,008,649 1,031,402 1,977,247
General Plant 18,996,429 8,497,641 10,498,788
Total Assets 94,441,765$ 38,603,151$ 55,838,614$
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⚫ Capacity costs relate to meeting peak water demand requirements.
⚫ Customer costs are associated with establishing, maintaining and serving water customers and
include administrative, billing and customer service costs.
⚫ Meters & Services costs relate to installation, maintenance and repair of meters and services.
⚫ Fire Protection costs relate to the ability of the system to provide adequate capacity and water
flow corresponding to minimum fire safety standards.
Over 2,000 system assets as of year-end 2016 are grouped by major function of service. The major
functions are then classified to the major cost categories based on the approach used in the 2008
Navy Contract, updated when appropriate to adhere to current industry standard practices. Exhibit 2
summarizes the assumptions used to classify both original asset cost and accumulated depreciation.
Exhibit 2: Water Asset Cost Classification
The approach used to assign each function of service to the cost categories is as follows:
⚫ Source of supply is allocated based on the ratio of recorded 2017 average day demand of 5.86
million gallons per day (MGD) to recorded 2017 peak day demand of 14.10 MGD.
Result – 42% commodity and 58% capacity
⚫ Treatment is allocated 100 percent to commodity or average water use.
⚫ Storage is allocated based on the City’s fire flow storage requirement (4,000 gallons per minute
for 240 minutes) identified in Table 8-5 of the 2012 Water System Plan (WSP) compared to the
total combined storage capacity of the Main System and West 517 Zone system (33.20 million
gallons) identified in Chapter 1.5.3 of the WSP.
Result – 97% capacity and 3% to fire
⚫ Transmission is allocated 100 percent to capacity or peak use.
⚫ Pumping is allocated 100 percent to capacity or peak use.
⚫ Distribution mains are allocated among three cost categories – customer, capacity and fire. The
customer allocation is based on the share of total distribution replacement costs made up by the
Source of Supply 42%58%
Treatment 100%
Storage 97%3%
Transmission 100%
Pumping 100%
Distribution
Mains 2"-6"49%27%24%
Mains 8"-12"49%27%24%
Mains 16" - 36"49%27%24%
Hydrants 100%
Services 100%
Fire Services 100%
Meters 100%
General Plant
% Asset Classification 10.38%46.34%3.28%12.21%1.81%9.17%15.20%1.61%
As All Other Plant
Fire w/o NavyCustomerCustomer w/o
Navy FireMeters &
ServicesFunctionCapacity
(Peak Use)
Commodity
(Average Use)
Capacity w/o
Navy
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cost of replacing the entire system with 2-inch diameter pipe, recognizing that at a minimum, a
system of 2-inch pipe is required to provide average water demands. The capacity allocation is
based on the total share of distribution replacement costs if all 8-inch and larger pipe was
replaced with 6-inch pipe, recognizing that 8-inch and larger distribution pipe has been upsized
to meet fire flow requirements. The remaining share of distribution costs are allocated to fire
protection. The City’s distribution main analysis separated mains into 2” – 6”; 8” – 12” and 16” –
36”. In keeping with the 2008 contract the following classification approach is applied.
» Mains 2”-6” are not allocated to the Navy as the prior Agreement recognized that the Navy is
served through three 10” meters and does not benefit from any pipe smaller than 8-inches.
» Mains 8” and greater are eligible for allocation to the Navy.
Result – 27% customer, 49% capacity and 24% fire of eligible distribution main assets
⚫ Hydrants and fire services are allocated 100 percent to fire.
⚫ Services and meters are allocated 100 percent to meters & services.
The resulting total asset allocation is referred to as the “% asset classification” and is used to classify
operating costs which cannot be more specifically assigned to one or more cost categories.
II.B. REVENUE REQUIREMENT
The water system revenue requirement is developed using the utility basis rate-setting approach. This
approach recovers operating and maintenance costs, plus a capital cost recovery based on the original
cost of capital investment committed to the customer’s service. The “capital cost recovery” includes
two components: depreciation of eligible fixed asset value as useful life is consumed and a return on
investment to offset debt interest costs and provide owner equity return.
II.B.1. Operating and Maintenance
Water system operating and maintenance costs are based on the 2020 detailed line-item fund 401
Water Utility expenditure budget. Expenditures are categorized based on the City’s budget
departments and include: administration, water resources, water distribution, forestry, customer
service and taxes. Similar to the classification of the City’s asset functions, common practice in the
allocation of O&M is to assign expenses to the cost category or categories that primarily drive each
line item or budgetary grouping. The following summarizes the key O&M allocation assumptions:
⚫ Water Administration is allocated based on the % asset classification.
⚫ Water Resources is allocated based on the allocation of source of supply assets.
⚫ Natural gas/electricity costs are allocated 100 percent to commodity or total average water use.
⚫ Water Distribution is allocated based on the % asset classification.
⚫ Forestry is allocated based on the allocation of source of supply assets.
⚫ Customer Service is allocated 100 percent to customer.
⚫ Taxes are allocated 100 percent to the revenue category, which is used to allocate costs based on
each customer or customer group’s share of total rate revenue.
Exhibit 3 summarizes the assumptions used to classify the water utility’s operating costs.
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Exhibit 3: Classification of Water Operating & Maintenance Costs
With O&M costs classified into cost categories, allocation factors are applied to each cost category
that will ultimately determine the Navy allocated portion of O&M expenses. It is important to note
that as a result of negotiations, the agreed upon allocation factor applied to the capacity portion of
O&M costs is based on the Navy’s actual recorded peak water demands, rather than the maximum
day demand service requirement.
II.B.2. Depreciation
Depreciation is the recovery of the original cost of system assets on an annual basis over the life of
the assets. It is a non-cash expense intended to recognize the consumption of utility assets over their
useful lives. Depreciation is calculated using the straight-line method on the total system assets,
excluding assets contributed by developers or funded by other outside sources. This method takes the
value of an asset and reduces it uniformly over each period until it reaches the end of its useful life.
The utility basis methodology includes depreciation expense as a source of capital funding that can
partially offset the costs of system repair, replacement or principal payments on outstanding debt.
Exhibit 4: Classification of Water System Depreciation
It is important to note that as a result of negotiations, the capacity portion of water system
depreciation is allocated to the Navy based on reserved peak demand capacity (the maximum day
demand service requirement). The depreciation component represents the fixed infrastructure
required to deliver the stated capacity needs of the customer, which are not impacted by annual
variations in water use.
II.B.3. Return on Investment
Return on investment is intended to provide a reasonable return to the City’s customers on the
investment that they have made in facilities providing service. As the owner of the water system, the
City has raised the capital necessary to pay for the infrastructure providing service. The utility basis
rate-setting approach therefore allows the City to earn compensation in the form of a return on
investment charged to outside city and contract customers. Return for a public utility is used as a
source of funds to meet outstanding debt obligations and for reinvestment in the system.
Taxes (State/City)100.00%
Administration (As Plant)10.38%46.34%3.28%12.21%1.81%9.17%15.20%1.61%
Water Resources (As Supply)42.00%58.00%
Natural Gas/Electricity 100.00%
Water Distribution (As Plant)10.38%46.34%3.28%12.21%1.81%9.17%15.20%1.61%
Natural Gas/Electricity 100.00%
Forestry (As Supply)42.00%58.00%
Electricity 100.00%
Customer Service (All Customer)100.00%
Small Tools, Equip, Furn 100.00%
% Classification 19.82%36.10%1.30%7.79%0.72%3.65%6.04%0.64%23.94%
Classification of O&M Commodity
(Average Use)
Capacity
(Peak Use)
Capacity w/o
Navy RevenueCustomerCustomer w/o
Navy
Meters &
Services Fire Fire w/o Navy
% Classification 10.38%46.34%3.28%12.21%1.81%9.17%15.20%1.61%0.00%
RevenueCustomerCustomer w/o
Navy
Meters &
Services Fire Fire w/o NavyClassification of Depreciation Commodity
(Average Use)
Capacity
(Peak Use)
Capacity w/o
Navy
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The return on investment component of the cost of service is determined by multiplying the rate base
allocated to each customer or customer group by an agreed upon rate of return.
II.B.3.a Rate Base
Rate base is determined by identifying the value of system assets used by the utility in providing
service, adding cash working capital and making appropriate deductions for contributed assets and
accumulated depreciation. The detailed asset values, accumulated depreciation and contributions
were based on City asset records as of year-end 2016.
Cash working capital has three components, and they are allocated as described below:
⚫ One-eighth of O&M expenditures is allocated based on the overall allocation of O&M.
⚫ Prepayments are allocated based on the overall allocation of O&M.
⚫ Inventories are allocated as plant-in-service.
O&M expenditures are detailed in the City’ 2020 budget, while prepayments and inventories come
from the City’s 2017 comprehensive annual financial report.
For the purpose of establishing a fair return for the City on their rate base, it is inappropriate to
include assets that the City did not pay for. Contributions in aid of construction, net of accumulated
depreciation, are subtracted from the rate base.
Prior to 2008 a contract had segregated O&M payments from capital payments. It was acknowledged
in the 2008 Agreement that these payments, referred to then as “net Navy capital charges”, were
simply the equivalent of a rate-funded capital payment and not a “true” contribution in aid of
construction. Therefore, it was agreed in 2008 that these charges would be removed from the total
value of contributions. This update continues to use the Agreement methodology, amortizing these
charges at 2.44% per year until the charges have been fully amortized.
The net rate base calculation is total water plant-in-service, plus cash working capital, less
accumulated depreciation and net contributions in aid of construction. Net rate base is multiplied by
the agreed upon rate of return to determine the total return on investment.
Exhibit 5: Classification of Water System Net Rate Base
It is important to note that as a result of negotiations, the capacity portion of water net rate base is
allocated to the Navy based on reserved peak demand capacity. Similar to the depreciation
component, rate base represents fixed infrastructure required to deliver the stated capacity needs of
the customer, which are not impacted by annual variations in water use.
II.B.3.b Rate of Return
The 2008 Agreement establishes the rate of return as the cost of debt plus a risk premium. Specific
conditional tests assure that the resulting rate of return from the formula does not create or lead to
unintended consequences. The current agreement maintains these conditional tests.
“The rate of return allowed under this contract shall be the City’s cost of debt plus a risk
premium. The rate of return will be reviewed in any cost of service study prepared by the
City for its utilities throughout the life of this contract. The rate of return shall meet the
following tests:
% Classification 11.41%44.44%2.67%13.38%1.47%8.68%16.08%1.31%0.56%
RevenueCustomerCustomer w/o
Navy
Meters &
Services Fire Fire w/o NavyClassification of Rate Base Commodity
(Average Use)
Capacity
(Peak Use)
Capacity w/o
Navy
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1. It shall be the greater of:
a) The City’s cost of embedded debt plus x%, or
b) The City’s current Cost of borrowing plus x%
2. It shall always be greater than or equal to the rate of return for in-City retail
customers (owner customers) but less than or equal to the rate of return for
outside City customers.
3. It shall always be greater than or equal to zero
The City’s cost of borrowing shall be the numerical (simple) average of at least three recent
debt issues (within the previous 90 days if possible) in the marketplace for municipal entities
with similar terms and credit ratings. The City’s “cost of embedded debt” shall be the
weighted average of all non-subsidized outstanding debt for the combine utilities. These
indexes shall be submitted to the Navy for review and comment prior to use in a future COSA
prepared by the City.”
During the negotiation process, the risk premium was a topic of considerable discussion. This value
has ranged historically from 3.5% to the current 2008 Agreement of 2.5%. The Navy’s position is
that they are a low-risk customer, and they proposed a lower rate during negotiations. In contrast the
City believes the Navy to be a high-risk customer, with financial harm directly experienced by the
City’s utilities from a direct loss of water revenue due to the significant reduction in water use
beginning in 2012 with no explanation or notice, to the inability to collect revenue on par with
increased costs due to the freezing of rate increases during contract negotiations.
As a result of these negotiations, the City and Navy agreed to a 1.5% risk premium to be added to the
City’s cost of debt. The City’s cost of embedded debt is 3.79%, which is greater than the cost of
borrowing of 3.42%. Adding the City’s cost of debt to the 1.5% risk premium results in a total rate of
return equal to 5.29%.
II.C. ALLOCATION FACTORS
The allocation factors used to allocate each cost category to customers under the methodology
previously discussed are detailed in the Water Technical Appendix. Allocation factors are used to
allocate O&M, depreciation and net rate base to all water customers including the Navy. Allocation
factors divide cost categories among customers based on each customer’s share of a measurable cost-
defining service characteristic. The following allocation factors were used to equitably distribute
water costs to customers:
⚫ Commodity costs are allocated based on each customer’s share of total system annual water use.
For the Navy, 2019 annual water use of 599,332 hundred cubic feet (CCF) constitutes a 20.88%
share of total water use.
⚫ Actual Capacity costs are allocated based on the share of each customer’s measured peak month
use to the total system peak month. Navy peak month use for 2019 was identified as 1.82 million
gallons per day (MGD) or 15.15% of 2019 system peak month use. The actual capacity allocation
is used to allocate the capacity portion of O&M costs to the Navy.
⚫ Reserved Capacity costs are allocated based on the peak capacity reserved to deliver maximum
service requirements. This allocation factor recognizes that the system is designed and sized to
meet peak capacity needs that are not impacted by annual variation in use. The 2028 system peak
day of 16.03 MGD is sourced from Table 2-5 of the 2012 WSP. The Navy’s stated 2028
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maximum day requirements indicate a 3.85 MGD requirement or 22.58% of the system total. The
reserved capacity allocation is used to allocate the capacity portion of depreciation and rate base
to the Navy.
⚫ Customer costs are allocated based on measures related to the number of customer accounts
served by the system. Three separate customer allocation factors are recognized – “actual
customer” bases the allocation on the number of billing units or customer meters served by the
system. Two other customer allocation factors – “weighted” and “meters & services” – attempt to
reflect the disproportionate costs associated with serving water users with large meters. The
weighted customer factor is for accounting costs and recognizes the additional time that it may
take to read a meter and process a bill for a larger, more complex customer. The meters &
services allocation factor reflects the difference in costs associated with servicing, maintaining
and replacing larger meters. With only three meters, the Navy constitutes a small portion of
customer costs and they are allocated 0.49% or less for each customer allocation factor.
⚫ Fire Protection costs are allocated based on the fire flow requirement for each customer or
customer class. The factor considers both fire flow in gallons per minute (gpm) and duration.
The Navy’s service requirements indicate a maximum requirement of 7,750 gpm for a duration of
240 minutes, representing 0.01% of total system fire requirements.
⚫ Revenue costs are allocated based on each customer or customer group’s share of total system
rate revenue. 2019 Navy billed revenue ($1,831,708) represents 15.20% of total system revenue.
The classified O&M, depreciation and rate base are allocated based on the allocation factors
identified above to determine the total allocated costs by customer or customer group.
II.D. NAVY WATER COST OF SERVICE
The Navy cost of service is calculated by bringing together the allocable O&M expenses,
depreciation and return on investment. Table 2 summarizes the Navy water cost of service.
Table 2: Summary of Navy Water Cost of Service
Based on the mutually agreed upon methodology, the updated Navy water cost of service to begin the
new contract period is $2.19 million. The detailed exhibits can be found in the Water Technical
Appendix.
O&M Expenses 1,697,902$
Depreciation 271,827
Total O&M plus Depreciation 1,969,729
Allocated Rate Base 4,176,757$
% Rate of Return 5.29%
Return On Investment 220,909
Total Navy Cost of Service $ 2,190,638
Cost Components Total Navy Water Costs
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II.E. WATER RATES
The cost of service for the Navy establishes the total annual revenue to be collected for water service.
The revenue is collected through a rate structure composed of a fixed charge and a variable charge.
The previous Agreement recovered the water cost of service based on a 30% fixed, 70% variable
split. During the negotiations, the City and Navy agreed to shift more costs to the fixed component
for revenue stability and to bring the water rate structure in line with the sewer rates. The agreed
upon methodology collects the cost of service 50% from the fixed charge and 50% from the variable
charge. The resulting rates are a fixed monthly charge of $91,277 and a variable charge of $1.83 per
CCF of water use.
Table 3: Summary of Navy Water Fixed and Variable Charges
Fixed Monthly Charges 1,095,319$ 91,277$
Variable Charge per CCF 1,095,319 599,332 1.83$
Total $ 2,190,638
[1] Split 50% fixed charge and 50% variable charge
[2] CCF = hundred cubic feet. Represents 2019 Navy usage
Calculated
Charge levelCalculated Water Charges Target
Revenue [1]
Billing Units
CCF [2]
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Section III. WASTEWATER COS RATE STUDY
The City of Bremerton provides sewage disposal and treatment to the Navy. Sewage flow volume is
measured through City of Bremerton meters located at 1st street and 416 S. Cambrian. The Navy has
updated its wastewater service requirement requests for each metering point, including:
⚫ 1st street not to exceed daily average flow of 300 gallons per minute (gpm) or 0.43 MGD and a
peak discharge of 500 gpm
⚫ Cambrian not to exceed daily average flow of 1,800 gallons per minute (gpm) or 2.59 MGD and
a peak discharge of 2,500 gpm
The total requirements for the combined metering points are a not to exceed daily average flow of
3.02 MGD and a peak discharge of 3,000 gpm. The requirements as stated define the wastewater
service requirements of the Navy and will be used to allocate costs as part of the wastewater cost of
service rate study update.
III.A. ASSET FUNCTIONAL ALLOCATION & CLASSIFICATION
The City’s wastewater assets in service are reviewed to identify what infrastructure assets are in use
and related to providing wastewater service. The first step is to organize assets into functions of
service, which is largely accomplished by a uniform system of accounts. As stated previously, the
wastewater utility functions of service include treatment, collection, pumping and general plant.
Exhibit 6 summarizes the original asset cost and accumulated depreciation allocated to each function
of service.
Exhibit 6: Wastewater Asset Functionalization
The functions of service are then allocated to functional cost categories based on documented system
requirements, including engineering criteria, (e.g. average daily flow, peak flow) and industry
standard practices based on the relationship of each function of asset to their use of the system.
Assets are classified into cost categories that can be allocated among customers or customer groups
according to known or assumed cost “causation”. The cost classification categories for the
wastewater system include:
⚫ Flow costs relate to the collection of customer sewer flows to be treated at the Wastewater
Treatment Plant (WWTP).
⚫ Strength costs reflect the strength of sewage processed, in terms of biochemical oxygen demand
(BOD) and total suspended solids (TSS). BOD is the parameter used to characterize the organic
strength of sewage. TSS is the parameter that measures the amount of particles suspended in
water that will not pass through a filter and require treatment.
Function of Service Original Cost Accumulated
Depreciation Net Asset Value
Collection 51,549,403$ 18,271,241$ 33,278,162$
Collection Laterals 3,018,737 1,523,219 1,495,519
Treatment 47,249,172 26,751,478 20,497,694
Pumping 25,096,890 11,458,327 13,638,563
General Plant 4,334,537 1,861,367 2,473,170
Total Assets 131,248,739$ 59,865,631$ 71,383,108$
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⚫ Customer costs are associated with establishing, maintaining, and serving wastewater customers
and include administrative, billing and customer service costs.
⚫ Direct Assignment is used to categorize assets that may be clearly identified or associated with a
specific customer or group of customers.
Over 1,600 system assets as of year-end 2016 are grouped by major function of service. The major
functions are then classified to the major cost categories based on the approach used in the 2008
Navy Contract, updated when appropriate to adhere to current industry standard practices. Exhibit 7
summarizes the assumptions used to classify both original asset cost and accumulated depreciation.
Exhibit 7: Wastewater Asset Cost Classification
The approach used to assign each function of service to the cost categories is as follows:
⚫ Collection is allocated 100 percent to flow with Navy.
⚫ Collection laterals are allocated 100 percent to flow without Navy. During 2008 contract
negotiations both parties agreed that the Navy does not benefit from collection laterals and
should not be allocated any of these assets.
Result – no allocation to Navy
⚫ Treatment is allocated using two separate methodologies. The first, treatment (capacity)
maintains the current contract classification of 50 percent treatment without Navy, 15.5 percent
BOD without Navy, 15 percent TSS without Navy and a 19.5 percent direct allocation to the
Navy. The direct allocation to the Navy is traced back to the 1989 Navy Cost Share of the sewer
treatment plant representing the Navy’s reserved portion of WWTP capacity. This allocation is
validated by the updated service requirements requested by the Navy, which total 3.02 MGD or
19.5 percent of the total WWTP West Capacity of 15.5 MGD.
A second treatment allocation, treatment (actual), was requested by the Navy for use in allocating
costs related to annual sewer flows, rather than reserved capacity. The treatment (actual) direct
allocation to the Navy, 12.1 percent, is based on the share of total flow treated at the WWTP
West in 2019 (4.73 MGD) constituted by the Navy’s 2019 flow (0.57 MGD).
Result – 19.5% direct treatment plant allocation to the Navy for capacity related allocations,
12.1% direct treatment plant allocation to the Navy for actual flow related allocations
⚫ Pumping is allocated 100 percent to flow with Navy.
The resulting total asset allocation is referred to as the “% asset classification” and is used to classify
operating costs which cannot be more specifically assigned to one or more cost categories.
Collection 100.0%
Collection Laterals 100.0%
Treatment (Capacity)50.0%15.5%15.0%19.5%
Treatment (Actual)54.6%16.9%16.4%12.1%
Pumping 100.0%
General Plant
% Asset Classification (Capacity)60.39%20.99%0.00%5.77%0.00%5.58%7.26%
% Asset Classification (Actual)60.39%22.70%0.00%6.30%0.00%6.10%4.52%
As All Other Plant
TSS w/o Navy Direct NavyFunctionFlow w/ Navy Flow w/o Navy BOD w/ Navy BOD w/o Navy TSS w/ Navy
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III.B. REVENUE REQUIREMENT
The wastewater system revenue requirement is developed using the utility basis rate-setting
approach. This approach recovers applicable operating and maintenance costs, plus a capital cost
recovery based on the original cost of capital investment committed to the customer’s service. The
“capital cost recovery” includes two components: depreciation of eligible fixed asset value as useful
life is consumed and a return on investment to offset debt interest costs and provide owner equity
return.
III.B.1. Operating and Maintenance
Wastewater system O&M is based on the 2020 detailed line item fund 451 Wastewater Utility
expenditure budget. Expenditures are categorized based on the City’s budget departments and
include: administration, sewer system, wastewater treatment plant, customer service and taxes.
Similar to the classification of the City’s asset functions, common practice in the allocation of O&M
is to allocate expenses to the cost category or categories that primarily drive each line item or
budgetary grouping. The following summarizes the key O&M allocation assumptions:
⚫ Sewer Administration is allocated based on the “% actual” asset classification allocation.
⚫ Sewer System is allocated based on the “% actual” asset classification.
⚫ Wastewater Treatment Plant is allocated based on the “% actual” asset classification.
⚫ Electricity as 100 percent to flow with Navy.
⚫ Customer Service wages and benefits, as well as postage costs, are allocated 100 percent to
customer, with all other customer service costs allocated as “% actual” asset classification.
Exhibit 8 summarizes the assumptions used to classify the wastewater utility’s operating costs.
Exhibit 8: Classification of Wastewater Operating & Maintenance Costs
With O&M classified into cost categories, allocation factors are applied to each cost category that
will ultimately determine the Navy allocated portion of O&M expenses. It is important to note that as
a result of negotiations the agreed upon allocation factor applied to the flow portion of O&M costs is
based on the Navy’s actual recorded sewer flow, rather than the not to exceed average daily flow
service requirement.
III.B.2. Depreciation
Depreciation is the recovery of the original cost of system assets on an annual basis over the life of
the assets. It is a non-cash expense intended to recognize the consumption of utility assets over their
Taxes (State/City)100.00%
Administration (As Plant)60.39%22.70%6.30%6.10%4.52%
Sewer System (As Plant)60.39%22.70%6.30%6.10%4.52%
WWTP (As Plant)60.39%22.70%6.30%6.10%4.52%
Electricity 100.00%
Customer Service (All Customer)100.00%
Other (i.e. supplies, equipment)60.39%22.70%6.30%6.10%0.00%0.00%4.52%
% Classification 43.53%14.46%0.00%4.01%0.00%3.88%1.75%29.48%2.88%
Direct NavyBOD w/o Navy TSS w/ Navy TSS w/o Navy Customer RevenueClassification of O&M Flow w/ Navy Flow w/o Navy BOD w/ Navy
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useful lives. Depreciation is calculated using the straight-line method on the total system assets,
excluding assets contributed by developers or funded by other outside sources. This method takes the
value of an asset and reduces it uniformly over each period until it reaches the end of its useful life.
The utility basis methodology includes depreciation expense as a source of capital funding that can
partially offset the cost of system repair, replacement or principal payments on outstanding debt.
Exhibit 9: Classification of Wastewater System Depreciation
It is important to note that as a result of negotiations, the agreed upon allocation factors applied to
depreciation are based on the plant-in-service allocation using reserved capacity for treatment assets.
The depreciation component represents fixed infrastructure required to deliver the stated capacity
needs of the customer, which are not impacted by annual variation in sewer flow.
III.B.3. Return on Investment
Return on investment is intended to provide a reasonable return to the City’s customers on the
investment that they have made in facilities providing service. As the owner of the wastewater
system, the City has raised the capital necessary to pay for the infrastructure providing service. The
utility basis rate-setting approach therefore allows the City to earn compensation in the form of a
return on investment charged to outside city and contract customers. Return for a public utility is
used as a source of funds to meet outstanding debt obligations and for reinvestment in the system.
The return on investment component of the cost of service is determined by multiplying the rate base
allocated to each customer or customer group by an agreed upon rate of return.
III.B.3.a Rate Base
Rate base is determined by identifying the value of system assets used by the utility in providing
service, adding cash working capital and making appropriate deductions for contributed assets and
accumulated depreciation. The detailed asset values, accumulated depreciation and contributions are
based on City asset records as of year-end 2016.
Cash working capital has three components, and they are allocated as described below:
⚫ One-eighth of O&M expenditures is allocated based on the overall allocation of O&M.
⚫ Prepayments are allocated based on the overall allocation of O&M.
⚫ Inventories are allocated as plant-in-service.
O&M expenditures are detailed in the City’ 2020 budget, while prepayments and inventories come
from the City’s 2017 comprehensive annual financial report.
For the purpose of establishing a fair return for the City on their rate base, it is inappropriate to
include assets that the City did not pay for. Contributions in aid of construction, net of accumulated
depreciation, are subtracted from the rate base.
Prior to 2008 a contract had segregated O&M payments from capital payments. It was acknowledged
in the 2008 Agreement that these payments, referred to in the Agreement as “net Navy capital
charges”, were simply the equivalent of a rate funded capital payment and not a “true” contribution
in aid of construction. Therefore, it was agreed in 2008 that these charges would be removed from
the total value of contributions. In addition to the net Navy capital charges, the Navy also made
% Classification 60.39%20.99%0.00%5.77%0.00%5.58%0.00%0.00%7.26%
Classification of Depreciation Flow w/ Navy Flow w/o Navy BOD w/ Navy BOD w/o Navy TSS w/ Navy TSS w/o Navy Customer Revenue Direct Navy
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direct contributions for the construction of the WWTP. Because this is considered a “true” capital
contribution, it is treated as a contribution in aid of construction and is directly allocated to the Navy,
therefore reducing the Navy’s allocated rate base. This update continues to use the Agreement
methodology, amortizing both net Navy capital charges and the WWTP contributions at 2.56% per
year until the charges and contributions have been fully amortized.
The net rate base calculation is total wastewater plant-in-service, plus cash working capital, less
accumulated depreciation and net contributions in aid of construction. Net rate base is multiplied by
the agreed upon rate of return to determine the total return on investment.
Exhibit 10: Classification of Wastewater System Net Rate Base
It is important to note that as a result of negotiations, the flow portion of wastewater net rate base is
allocated to the Navy based on reserved flow capacity. Similar to the depreciation component, rate
base represents fixed infrastructure required to deliver the stated capacity needs of the customer,
which are not impacted by annual variations in sewer flow.
III.B.3.b Rate of Return
The 2008 Agreement establishes the rate of return as the cost of debt plus a risk premium. Specific
conditional tests assure that the resulting rate of return from the formula does not create or lead to
unintended consequences. The current agreement maintains these conditional tests.
“The rate of return allowed under this contract shall be the City’s cost of debt plus a risk
premium. The rate of return will be reviewed in any cost of service study prepared by the
City for its utilities throughout the life of this contract. The rate of return shall meet the
following tests:
1. It shall be the greater of:
a) The City’s cost of embedded debt plus x%, or
b) The City’s current Cost of borrowing plus x%
2. It shall always be greater than or equal to the rate of return for in-City retail
customers (owner customers) but less than or equal to the rate of return for
outside City customers.
3. It shall always be greater than or equal to zero
The City’s cost of borrowing shall be the numerical (simple) average of at least three recent
debt issues (within the previous 90 days if possible) in the marketplace for municipal entities
with similar terms and credit ratings. The City’s “cost of embedded debt” shall be the
weighted average of all non-subsidized outstanding debt for the combine utilities. These
indexes shall be submitted to the Navy for review and comment prior to use in a future COSA
prepared by the City.”
During the negotiation process, the risk premium was a topic of considerable discussion. This value
has ranged historically from 3.5% to the current 2008 Agreement of 2.5%. The Navy’s position is
that they are a low-risk customer, and they proposed a lower rate during negotiations. In contrast the
City believes the Navy to be a high-risk customer, with financial harm directly experienced by the
City’s utilities from a direct loss of water revenue due to the significant reduction in water use
% Classification 68.94%17.41%0.00%4.71%0.00%4.56%0.03%0.48%3.85%
RevenueTSS w/ Navy TSS w/o Navy Customer Direct NavyBOD w/o NavyClassification of Rate Base Flow w/ Navy Flow w/o Navy BOD w/ Navy
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beginning in 2012 with no explanation or notice, and the inability to collect revenue on par with
increased costs due to the freezing of rate increases during contract negotiations.
As a result of these negotiations, the City and Navy agreed to a 1.5% risk premium to be added to the
City’s cost of debt. The City’s cost of embedded debt is 3.79%, which is greater than the cost of
borrowing of 3.42%. Adding the City’s cost of debt to the 1.5% risk premium results in a total rate of
return equal to 5.29%.
III.C. ALLOCATION FACTORS
The allocation factors used to allocate costs to customers under the methodology previously
discussed are detailed in the Wastewater Technical Appendix. Allocation factors are used to allocate
O&M, depreciation and net rate base to all wastewater customers including the Navy. Allocation
factors divide cost categories among customers based on each customer’s share of a measurable cost -
defining service characteristic. The following allocation factors were used to equitably distribute
wastewater costs to customers:
⚫ Actual Flow costs are allocated based on each customer’s share of total wastewater treatment
plant influent flow, including inflow & infiltration (I&I). No I&I is assigned to the Navy. 2019
Navy annual sewer flow of 0.57 MGD constitutes a 12.13% share of the 4.73 MGD of influent
flow at the WWTP West for 2019.
⚫ Reserved Capacity Flow costs are allocated based on the peak flow capacity reserved to deliver
maximum service requirements. This allocation factor recognizes that the system is designed and
sized to meet peak capacity needs that are not impacted by annual variation in flow. Based on
Table 1-1 of the 2014 Wastewater Comprehensive Plan Update, the WWTP West has a permit
limit maximum month daily average flow capacity of 15.5 MGD. The Navy requested service
requirements indicate a maximum daily average flow of 3.02 MGD or 19.48% of WWTP West
capacity.
⚫ Strength costs are allocated based on estimated BOD and TSS loadings for each customer. The
Navy does not receive a share of allocated BOD and TSS costs. Rather, the Navy receives a
direct allocation of the total treatment plant representing the Navy’s reserved plant capacity per
contract, which considers strength as well as flow.
⚫ Customer costs are allocated based on measures related to the number of customer accounts
served by the system. Two separate customer allocation factors are recognized – “actual
customer” bases the allocation on the number of billing units while “customer weighted”
attempts to reflect the disproportionate costs associated with serving larger wastewater users. The
weighted customer factor is used for accounting costs and recognizes the additional time that it
may take to read a meter and process a bill for a larger, more complex customer. The Navy
constitutes a small portion of customer costs and they are allocated 0.39% or less for each
customer allocation factor.
⚫ Revenue costs are allocated based on each customer or customer group’s share of total system
rate revenue. 2019 Navy billed revenue ($2,167,003) represents 14.47% of total system revenue.
⚫ Direct Assignment costs are costs that may be clearly identified or associated with a specific
customer or group of customers. As stated previously, 12.13% of flow-related O&M costs and
19.50% of flow-related depreciation and rate base is allocated directly to the Navy.
The classified O&M, depreciation and rate base is allocated based on the allocation factors identified
above to determine the total allocated costs by customer or customer group.
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III.D. NAVY WASTEWATER COST OF SERVICE
The Navy cost of service is calculated by bringing together the allocable O&M expenses,
depreciation and return on investment. Table 4 summarizes the Navy wastewater cost of service.
Table 4: Summary of Navy Wastewater Cost of Service
Based on the mutually agreed upon methodology, the updated Navy wastewater cost of service to
begin the new contract period is $2.6 million. The detailed exhibits can be found in the Wastewater
Technical Appendix.
III.E. WASTEWATER RATES
The cost of service for the Navy establishes the total annual revenue to be collected for wastewater
service. The revenue is collected through a rate structure composed of a fixed charge and variable
charge. Consistent with the 2008 Agreement, the wastewater cost of service is collected 50% from
the fixed charge and 50% from the variable charge. The resulting rates are a fixed monthly charge of
$109,695 and a variable charge of $4.70 per CCF of metered flow.
Table 5: Summary of Navy Wastewater Fixed and Variable Charges
O&M Expenses 1,526,187$
Depreciation 702,856
Total O&M plus Depreciation 2,229,044
Allocated Rate Base 7,631,732$
% Rate of Return 5.29%
Return On Investment 403,643
Total Navy Cost of Service $ 2,632,687
Cost Components Total Navy Wastewater Costs
Fixed Monthly Charges 1,316,343$ 109,695$
Variable Charge per CCF 1,316,343 280,068 4.70$
Total $ 2,632,687
[1] Split 50% fixed charge and 50% variable charge
[2] CCF = hundred cubic feet. Represents 2019 billed flow
Calculated
Charge level
Calculated Wastewater
Charges
Target Revenue
[1]
Billing Units
CCF [2]
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Section IV. OTHER KEY ISSUES
In addition to agreeing upon the overall amount of revenue to collect from the Navy for water and
wastewater service, several other key issues were discussed during the negotiation process. Each
issue was either satisfactorily agreed upon by the parties or, if necessary, both sides outlined
additional attention/study that will be required to resolve the issue. This section will discuss some of
these key issues raised during the negotiations.
IV.A. SALINITY SURCHARGE
The City would like to invoke CFR 552.243-71 "Equitable Adjustments" as part of 48 CFR 52.243-5
"Changes and Changed Conditions" in order to recover the ongoing cost of influent sewage salinity issues
as it is now a problem for the City that has real financial implications. During negotiations, there was a
commitment by both parties to complete studies, however, there has been no set time schedule
established and it remains to be seen when a satisfactory resolution will be reached. Meanwhile, the
City experiences ongoing service issues and ultimately incurs costs.
Both parties have agreed that sewage salinity is an issue and that the issue will be treated
independently from the contract negotiations. Contract language shall be included to allow for the
possibility of a salinity surcharge in the future.
IV.B. INITIATION OF NEGOTIATIONS
Due to the time it has taken to resolve current negotiations and the four-year duration of negotiations
for the 2008 contract, both parties agree that the contract documentation should memorialize that
negotiations be initiated earlier (2 years prior to contract termination). This will minimize the
potential for a gap between the termination of the new contact and the execution of the next contract.
IV.C. FUTURE ADJUSTMENT FOR WATER AND
WASTEWATER RATES
The 2008 Agreement Attachment J.2. prescribed how future rate adjustments would be applied to the
Navy. It is proposed that this process continue in the future, and the key language to be continued is
as follows:
A. RATIONALE:
(1) The parties have agreed to an approach for annually escalating or reducing rates that tie to
city of Bremerton rate changes. This method ensures an equitable treatment for all customers of
the City and provides transparency of costs to the Navy.
(2) The parties have agreed that any future rate changes applied to the Navy accounts for
contract line items 0001 (water) and 0002 (wastewater) shall be tied directly to the weighted
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average of rate increases applied to all Non-Navy customers for water and/or wastewater,
respectively.
This approach guarantees that the Navy’s rates will adjust as the City’s rates adjust as a whole.
IV.D. RATE ADJUSTMENTS BEYOND CONTRACT TERM
The Navy has exercised its unilateral option to continue service beyond the term of the contract.
However, the City is required to freeze any rate adjustments once the contract term ends. The rate
freeze is of sole benefit to the Navy and results in revenues from the Navy that do not keep pace with
the cost of service. The City’s utilities are functionally not-for-profit businesses and so the net effect
of the rate freeze is that as the City raises retail rates, the other city ratepayers (the residents and
businesses of Bremerton) will increasingly subsidize the Navy for its service.
The parties agree to invoke and include CFR 552.243-71 Section g.2 to memorialize in the contract
documentation an agreement in principle, that rate increases should apply to the Navy’s rates during
any gap between the termination of the new contract and the execution of the following contract as
this qualifies as performance beyond the completion date.
IV.E. LUMP SUM PAYMENT
The current contract rate freeze upon the contract term ending has resulted in a shortfall of water and
wastewater revenue for the City. During this time, continued water and wastewater service was
provided by the City to the Navy, with rates charged to the Navy frozen at 2017 levels. The City has
calculated the revenue shortfall consistent with the methodology outlined in Attachment J.2 and J.3
of the 2008 contract as if the contract term had not expired in July 2018. This cumulative shortfall
from the rate freeze is estimated to be nearly $1 million dollars through 2020.
Both parties agree that the City will submit a claim for consideration separate from the contract
negotiations.
IV.F. RE-OPENER CLAUSE
The City acknowledges that FAR 52.241-8 allows either party to request a change in conditions of
service, including a rate change. In an effort to remain transparent, the City would like to highlight
that in addition to any rate changes built into the contract such as Attachment J.2 of the 2008 contact,
there will likely be a need to renegotiate the rates and cost of service under FAR 52.241-8 when the
State of Washington Department of Ecology enacts new discharge limitation permit requirements for
enhanced treatment to reduce nutrient discharges to the Puget Sound.
Both parties agree to memorialize in the contact documentation that the City expects a need to re-
open negotiations in the future to address these or other new permit requirements.
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TECHNICAL APPENDIX – WATER
DocuSign Envelope ID: 63FEE366-8093-45A0-A6C8-B2F25BA1B4E2
City of BremertonNavy Water Rate Calculation
A-1 Allocation of Fixed Asset Original Cost and Accumulated Depreciation
Commodity Capacity Capacity w/o
Navy
Actual
Customer
Actual
Customer w/o
Navy
Customer
Weighted
Meters &
Services Fire Fire w/o Navy Revenue As All Others
Source of Supply 7,648,781$ 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%
Treatment 4,622,460 100.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%
Storage 6,925,417 0.00%97.00%0.00%0.00%0.00%0.00%0.00%3.00%0.00%0.00%0.00%100.00%
Transmission 2,217,633 0.00%100.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%
Pumping 4,872,084 0.00%100.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%
Distribution
Mains 2"-6" 2 5,051,160 0.00%0.00%49.00%0.00%27.00%0.00%0.00%0.00%24.00%0.00%0.00%100.00%
Mains 8"-12"21,798,963 0.00%49.00%0.00%27.00%0.00%0.00%0.00%24.00%0.00%0.00%0.00%100.00%
Mains 16" - 36"12,319,647 0.00%49.00%0.00%27.00%0.00%0.00%0.00%24.00%0.00%0.00%0.00%100.00%
Hydrants 2,689,288 0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%0.00%0.00%0.00%100.00%
Services 3,909,232 0.00%0.00%0.00%0.00%0.00%0.00%100.00%0.00%0.00%0.00%0.00%100.00%
Fire Services 382,021 0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%0.00%0.00%0.00%100.00%
Meters 3,008,649 0.00%0.00%0.00%0.00%0.00%0.00%100.00%0.00%0.00%0.00%0.00%100.00%
General Plant 3 18,996,429 0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%100.00%
Total Utility Plant 94,441,765$ 7,834,948$ 34,961,784$ 2,475,068$ 9,212,025$ 1,363,813$ -$ 6,917,881$ 11,467,538$ 1,212,278$ -$ 18,996,429$ 94,441,765$
Functions of Service 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%100.00%
Allocation of "As All Others"1,972,767$ 8,803,050$ 623,199$ 2,319,502$ 343,395$ -$ 1,741,858$ 2,887,419$ 305,240$ -$ (18,996,429)$ -$
94,441,765$ 9,807,715$ 43,764,833$ 3,098,267$ 11,531,526$ 1,707,208$ -$ 8,659,739$ 14,354,957$ 1,517,519$ -$ -$ 94,441,765$
10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%
Less: Accumulated Depreciation 1
Source of Supply 4,337,991$ 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%
Treatment 939,089 100.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%
Storage 3,736,797 0.00%97.00%0.00%0.00%0.00%0.00%0.00%3.00%0.00%0.00%0.00%
Transmission 710,388 0.00%100.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%
Pumping 2,233,044 0.00%100.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%
Distribution
Mains 2"-6"2,542,144 0.00%0.00%49.00%0.00%27.00%0.00%0.00%0.00%24.00%0.00%0.00%
Mains 8"-12"7,118,687 0.00%49.00%0.00%27.00%0.00%0.00%0.00%24.00%0.00%0.00%0.00%
Mains 16" - 36"4,350,827 0.00%49.00%0.00%27.00%0.00%0.00%0.00%24.00%0.00%0.00%0.00%
Hydrants 1,036,451 0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%0.00%0.00%0.00%
Services 1,893,102 0.00%0.00%0.00%0.00%0.00%0.00%100.00%0.00%0.00%0.00%0.00%
Fire Services 175,587 0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%0.00%0.00%0.00%
Meters 1,031,402 0.00%0.00%0.00%0.00%0.00%0.00%100.00%0.00%0.00%0.00%0.00%
General Plant 8,497,641 9.17%48.84%4.14%10.29%2.28%0.00%9.71%13.54%2.03%0.00%0.00%
Total Accumulated Depreciation 38,603,151$ 3,540,383$ 18,854,663$ 1,597,251$ 3,970,869$ 880,118$ -$ 3,749,981$ 5,227,559$ 782,327$ -$ -$
55,838,614$ 6,267,331$ 24,910,170$ 1,501,017$ 7,560,657$ 827,091$ -$ 4,909,758$ 9,127,398$ 735,192$ -$ -$
11.22%44.61%2.69%13.54%1.48%0.00%8.79%16.35%1.32%0.00%0.00%
1 Original cost of assets and accumulated depreciation from City fixed asset schedule as of 12/31/2016
2 The City and Navy agreed that the Navy does not benefit from 2"-6" water mains and should not be allocated any of these facilities
3 General plant is allocated as all other plant in service
Net Plant in Service
Plant in Service 1
Total Plant in Service
TotalTotal
Functions of Service
Prepared by FCS GROUP
(425) 867-1802
Technical Appendix - Water Rate Calculation
1
DocuSign Envelope ID: 63FEE366-8093-45A0-A6C8-B2F25BA1B4E2
City of BremertonNavy Water Rate Calculation
A-2 Allocation of Source of Supply Assets
Average Day 1 5.86 mgd
Peak Day 2 14.10 mgd
Commodity 42%
Capacity 58%
1 2017 recorded average day demand (ADD)
2 2017 recorded maximum day demand (MDD)
A-3 Allocation of Storage Assets
Fire Flow Requirements 1 240 minutes 4,000 gpm 0.96 MG
Storage Capacity 2 33.20 MG
Public Fire Protection 3%
Capacity 97%
1 Table 8-5 of 2012 Water System Plan - total system fire flow requirement
2 Section 1.5.3 of 2012 Water System Plan - total combined storage capacity of Main System and West 517 Zone System
Allocation of Source of Supply Demand (mgd)
MGAllocation of Storage Duration Gallons per
Minute
Prepared by FCS GROUP
(425) 867-1802
Technical Appendix - Water Rate Calculation
2
DocuSign Envelope ID: 63FEE366-8093-45A0-A6C8-B2F25BA1B4E2
City of BremertonNavy Water Rate Calculation
A-4 Allocation of Distribution Mains
<=2 in 68,291 LF 3,850 LF 72,141 LF 67$ 4,833,447$
3-in 10,139 LF 0 LF 10,139 LF 101 1,018,970
4-in 132,203 LF 2,316 LF 134,519 LF 134 18,025,546
6-in 421,300 LF 4,580 LF 425,880 LF 201 85,601,880
8-in 519,998 LF 31,336 LF 551,334 LF 268 147,757,512
10-in 43,276 LF 3,536 LF 46,812 LF 335 15,682,020
12-in 185,917 LF 13,525 LF 199,442 LF 402 80,175,684
Total Distribution Mains 1,381,124 LF 59,143 LF 1,440,267 LF 353,095,059$
Customer 5
2-in replacement cost of Distribution system 96,497,889$ 27.0%
Capacity 6
Cost of 6-in and smaller pipe 109,479,843$ 49.0%
Cost of 8-in and larger pipe at 6-in cost 160,315,188$
Fire Protection 7
1 - Commodity and Capacity share 24.0%
1 Mains larger than 12-in are considered Transmission only, and their costs are allocated solely to the Transmission function
2 Table 5-4 of 2012 Water System Plan - City of Bremerton Main System Pipe Inventory
3 Table 5-5 of 2012 Water System Plan - City of Bremerton West 517 Zone System Pipe Inventory
4 City Engineer's estimates
5 Customer is allocated the share of total Distribution replacement costs made up by the cost of replacing the entire system with 2-in pipe, recognizing that the minimum size required to provide average demand is 2-in6 Capacity is allocated the total share of Distribution replacement costs if all 8-in and larger pipe was replaced with 6-in pipe, recognizing that 8-in and larger pipe has been upsized to meet fire flow requirements
7 Fire Protection is allocated the remaining cost share of the Distribution system
Length (West
517 Zone
System) 3
Replacement
Cost per LF 4
Replacement
Cost (Total
System)
Total SystemAllocation of Distribution Mains 1 Length (Main
System) 2
Prepared by FCS GROUP
(425) 867-1802
Technical Appendix - Water Rate Calculation
3
DocuSign Envelope ID: 63FEE366-8093-45A0-A6C8-B2F25BA1B4E2
City of BremertonNavy Water Rate Calculation
A-5 Allocation of Operating Expenses and Depreciation
Commodity Capacity Capacity w/o Navy Actual Customer Actual Customer w/o Navy Customer Weighted Meters & Services Fire Fire w/o Navy Revenue As All Others
Taxes 3
State Taxes 669,300$ 0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%0.00%100.00%All to Revenue
City Taxes 2,394,883 0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%0.00%100.00%All to Revenue
Administration
Salaries & Wages Regular 183,900$ 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Overtime pay 500 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in ServicePersonnel Benefits 46,540 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Medical & Dental Benefits 25,500 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Office & Operating Supply 25,000 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in ServiceFuel Consumed 725 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Small tools, EQ & Furniture 5,000 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Computer Related Items 2,000 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Food & Beverage 500 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in ServiceProfessional Services Ext 85,000 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Other Services 250 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Telecommunications 200 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Telecommunications IFD 1,670 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Postage 1,000 0.00%0.00%0.00%100.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%All Actual Customer
Travel 5,000 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Training 4,500 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in ServiceAdvertising1,000 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Equipment Rential 2,000 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Information Tech - IFD 22,631 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Equipment Repair - IFD 8,996 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in ServiceMiscellaneous5,000 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Dues & Subscriptions 2,000 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Water Resources
Salaries & Wages Regular 1,002,827$ 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Salaries & Wages Extra Help 10,500 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Stand By 34,000 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of SupplyOvertime Pay 40,000 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Personnel Benefits 264,974 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Medical & Dental Benefits 184,710 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Office & Operating Supply 250,000 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Utility Inventory 3,000 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Fuel Consumed 16,656 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Items Purchased for Inventory 2,000 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of SupplySmall Tools, EQ & Furniture 50,000 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Computer Related Items 10,000 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Food & Beverage 200 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Professional Services Ext 150,000 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Professional Services IFD 7,000 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Other Services 15,000 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Intergovernmental Service 40,000 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of SupplyTelecommunications15,000 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Telecommunications IFD 3,674 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Postage 3,500 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Travel 5,000 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of SupplyTraining10,000 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Equipment Rental 3,000 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Natural Gas 2,000 100.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%All to CommodityElectricity350,000 100.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%All to Commodity
Water / Sewer / Stormwater 1,000 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Information Tech - IFD 57,320 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Equipment Repair & Maint 50,000 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of SupplyEquipment Repair - IFD 41,801 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Other Improvements 5,000 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Structures & Grounds 60,000 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Miscellaneous 5,000 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Dues & Subscriptions 5,000 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Allocation Basis 2Operating Expenses 1 Total Total
Functions of Service
Prepared by FCS GROUP
(425) 867-1802
Technical Appendix - Water Rate Calculation
4
DocuSign Envelope ID: 63FEE366-8093-45A0-A6C8-B2F25BA1B4E2
City of BremertonNavy Water Rate Calculation
A-5 Allocation of Operating Expenses and Depreciation
Commodity Capacity Capacity w/o Navy Actual Customer Actual Customer w/o Navy Customer Weighted Meters & Services Fire Fire w/o Navy Revenue As All Others Allocation Basis 2Operating Expenses 1 Total Total
Functions of Service
Water Distribution
Salaries & Wages Regular 1,360,168$ 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Salaries & Wages Extra Help 84,000 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Stand By 27,000 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Overtime Pay 20,000 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in ServicePersonnel Benefits 368,974 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Medical & Dental Benefits 309,184 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Office & Operating Supply 100,000 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Utility Inventory (80,000) 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in ServiceFuel Consumed 62,102 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Items Purchased For Inventory 180,000 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Small Tools, EQ & Furn 25,000 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in ServiceComputer Related Items 6,000 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Professional Services Ext 6,000 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Professional Services IFD 1,130,989 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Other Services 3,000 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in ServiceIntergovernmental Services 630 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Telecommunications 18,000 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Telecommunications IFD 1,002 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Travel 4,000 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Training 5,000 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Equipment Rental 5,000 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Equipment - Interfund 355,597 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in ServiceInterfund Insurance Prem 156,777 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Natural Gas 1,000 100.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%All to Commodity
Electricity 15,000 100.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%All to Commodity
Water / Sewer / Stormwater 800 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in ServiceGarbage / Waste Disposal 2,000 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Information Tech - IFD 103,167 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Equipment Repair & Maint 7,500 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in ServiceEquipment Repair - IFD 113,903 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Other Improvements 75,000 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Structures & Grounds 170,000 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Miscellaneous 5,000 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in ServiceDues & Subscriptions 33,400 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Forestry
Salaries & Wages Regular 351,400$ 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Salaries & Wages Ex Help 28,600 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Overtime Pay 65,000 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Personnel Benefits 94,300 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of SupplyMedical & Dental Benefits 87,400 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Office & Operating Supply 40,000 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Utility Inventory 500 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Fuel Consumed 14,495 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Items Purch For Inventory 1,000 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Small Tools, Eq & Furn 10,000 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Computer Related Items 5,000 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of SupplyProfessional Services Ext 100,000 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Professional Services IFD 5,000 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Other Services 290,000 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Intergovernmental Services 10,500 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of SupplyTelecommunications4,500 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Telecommunications Ifd 835 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Postage 100 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of SupplyTravel3,000 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Training 20,000 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Equipment Rental 6,000 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Equipment - Interfund 50,000 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of SupplyElectricity2,000 100.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%All to Commodity
Water/Sewer/Stormwater 1,000 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Garbage/Waste Disposal 1,000 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Information Tech− Ifd 15,325 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Equipment Repair & Maint 10,000 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Equipment Repair − Ifd 56,319 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Structures & Grounds 275,000 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of SupplyMiscellaneous10,000 42.00%58.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Source of Supply
Prepared by FCS GROUP
(425) 867-1802
Technical Appendix - Water Rate Calculation
5
DocuSign Envelope ID: 63FEE366-8093-45A0-A6C8-B2F25BA1B4E2
City of BremertonNavy Water Rate Calculation
A-5 Allocation of Operating Expenses and Depreciation
Commodity Capacity Capacity w/o Navy Actual Customer Actual Customer w/o Navy Customer Weighted Meters & Services Fire Fire w/o Navy Revenue As All Others Allocation Basis 2Operating Expenses 1 Total Total
Functions of Service
Water Customer Service
Salaries & Wages Regular 179,800$ 0.00%0.00%0.00%100.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%All to Actual Customer
Overtime Pay 10,000 0.00%0.00%0.00%100.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%All to Actual Customer
Personnel Benefits 47,100 0.00%0.00%0.00%100.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%All to Actual Customer
Medical & Dental Benefits 31,500 0.00%0.00%0.00%100.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%All to Actual CustomerOffice & Operating Supply 25,000 0.00%0.00%0.00%100.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%All to Actual Customer
Small Tools, Eq & Furn 500 0.00%0.00%0.00%0.00%0.00%0.00%100.00%0.00%0.00%0.00%0.00%100.00%All to Meters annd Services
Computer Related Items 1,500 0.00%0.00%0.00%100.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%All to Actual Customer
Other Services 12,000 0.00%0.00%0.00%100.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%All to Actual CustomerPostage50,000 0.00%0.00%0.00%100.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%All to Actual Customer
Travel 1,500 0.00%0.00%0.00%100.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%All to Actual Customer
Training 3,000 0.00%0.00%0.00%100.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%All to Actual CustomerEquipment Rental 750 0.00%0.00%0.00%0.00%0.00%100.00%0.00%0.00%0.00%0.00%0.00%100.00%All to Customer Weighted
Information Tech− Ifd 11,307 0.00%0.00%0.00%100.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%All to Actual Customer
Miscellaneous 1,000 0.00%0.00%0.00%100.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%All to Actual Customer
Depreciation Expense 4 2,143,774$ 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Total Operating Expenses 14,943,455$ 2,759,945$ 5,614,242$ 237,217$ 1,257,612$ 130,711$ 750$ 663,528$ 1,099,079$ 116,188$ 3,064,183$ -$ 14,943,455$
Functions of Service 18.47%37.57%1.59%8.42%0.87%0.01%4.44%7.35%0.78%20.51%100.00%Allocation of "As All Others"-$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
14,943,455$ 2,759,945$ 5,614,242$ 237,217$ 1,257,612$ 130,711$ 750$ 663,528$ 1,099,079$ 116,188$ 3,064,183$ -$ 14,943,455$
100.00%18.47%37.57%1.59%8.42%0.87%0.01%4.44%7.35%0.78%20.51%0.00%100.00%
1 Operating expenses sourced from detailed 2020 Water Expenditure Budget
2 Operating expenses allocated based on the utility function(s) most likely driving that cost
3 Taxes allocated based on 2019 actual water revenue4 2017 Depreciation Expense
Total Operating Expenses
Prepared by FCS GROUP
(425) 867-1802
Technical Appendix - Water Rate Calculation
6
DocuSign Envelope ID: 63FEE366-8093-45A0-A6C8-B2F25BA1B4E2
City of BremertonNavy Water Rate Calculation
A-6 Calculation of Net Contributions in aid of Construction
Pre-2004 1 18,626,794$ 11,750,269$ -$ -$
2004 2,096,462 1,551,382 - -
2005 - - 190,813 145,018
2006 176,913 137,992 189,192 147,570
2007 961,302 769,042 67,659 54,127
2008 4,114,136 3,373,592 - -
2009 639,690 537,339 29,114 24,456
2010 126,778 109,029 198,010 170,289
2011 776,669 683,469 - -
2012 647,699 582,929 6,210,419 5,589,377
2013 356,678 328,143 (9,779) (8,997)
2014 571,154 536,885 - -
2015 167,800 161,088 17,869 17,154
2016 163,495 160,225 - -
2017 550,436 550,436 - -
Total 29,976,006$ 21,231,820$ 6,893,297$ 6,138,994$ 1 Pre-2004 contributions depreciated equal to percentage of total distribution system depreciated
2 Other contributions include grants and loan forgiveness
A-7 Calculation of Net Navy Capital Charges
Net Navy capital charges 1996 5,091,931$ 2,609,105$ 2,482,826$
Total 5,091,931$ 2,609,105$ 2,482,826$ 1 Depreciated by 2.44% of original cost per year based on 2008 Agreement methodology
System Acceptances Other Contributions 2
Original Cost Net Value
Net ValueTotal
Depreciation 1Original Contract
AmountDescriptionYear
Original Cost Net ValueYear
Prepared by FCS GROUP
(425) 867-1802
Technical Appendix - Water Rate Calculation
7
DocuSign Envelope ID: 63FEE366-8093-45A0-A6C8-B2F25BA1B4E2
City of Bremerton
Navy Water Rate Calculation
A-8 Allocation of Net Rate Base
Commodity Capacity Capacity w/o
Navy
Actual
Customer
Actual
Customer w/o
Navy
Customer
Weighted
Meters &
Services Fire Fire w/o Navy Revenue As All Others
Net Plant in Service 55,838,614$ 6,267,331$ 24,910,170$ 1,501,017$ 7,560,657$ 827,091$ -$ 4,909,758$ 9,127,398$ 735,192$ -$ -$
Plus: Cash Working Capital
1/8 O&M Expense 1,599,960$ 18.47%37.57%1.59%8.42%0.87%0.01%4.44%7.35%0.78%20.51%0.00%100.00%As O&M Expenses
Prepayments - 18.47%37.57%1.59%8.42%0.87%0.01%4.44%7.35%0.78%20.51%0.00%100.00%As O&M Expenses
Inventories (materials and supplies) 1 733,619 10.38%46.34%3.28%12.21%1.81%0.00%9.17%15.20%1.61%0.00%0.00%100.00%As Plant in Service
Total Cash Working Capital 2,333,579$ 371,687$ 941,067$ 49,465$ 224,226$ 27,256$ 80$ 138,311$ 229,184$ 24,228$ 328,075$ -$
Less: Net Contributions in Aid of Construction 2 27,370,814$ 0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%100.00%As All Others
Plus: Net Navy Capital Charges 3 (2,482,826) 0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%100.00%As All Others
Net Total Contributions 24,887,988$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 24,887,988$
Total Net Plant in Service 6,639,018$ 25,851,237$ 1,550,482$ 7,784,883$ 854,347$ 80$ 5,048,069$ 9,356,583$ 759,420$ 328,075$ (24,887,988)$
Functions of Service 11.41%44.44%2.67%13.38%1.47%0.00%8.68%16.08%1.31%0.56%
Allocation of "As All Others"(2,840,392)$ (11,060,014)$ (663,347)$ (3,330,630)$ (365,518)$ (34)$ (2,159,731)$ (4,003,056)$ (324,905)$ (140,361)$ 24,887,988$
33,284,205$ 3,798,626$ 14,791,222$ 887,135$ 4,454,253$ 488,829$ 46$ 2,888,338$ 5,353,527$ 434,515$ 187,714$ -$
11.41%44.44%2.67%13.38%1.47%0.00%8.68%16.08%1.31%0.56%0.00%
1 2018 Comprehensive Annual Financial Report
2 Net book value of contributions in aid of construction is deducted from rate base
3 Net navy capital charges are deducted from contributions in aid to reflect that this capital payment was to compensate the City for capital costs, is not a "true" capital contribution and should not be used to reduce rate base
Net Rate Base
Net Rate Base Total Allocation BasisTotal
Functions of Service
Prepared by FCS GROUP
(425) 867-1802
Technical Appendix - Water Rate Calculation
8
DocuSign Envelope ID: 63FEE366-8093-45A0-A6C8-B2F25BA1B4E2
City of BremertonNavy Water Rate Calculation
A-9 Allocation of Commodity Costs to Customers
Losses 2
8.30%
Retail Inside 1,499,007 ccf 124,389 ccf 1,623,396 ccf 52.23%
Retail Outside 771,846 ccf 64,048 ccf 835,894 ccf 26.89%
PSNS 599,332 ccf 49,733 ccf 649,065 ccf 20.88%
Firelines 0 ccf 0 ccf 0.00%
Total 2,870,185 ccf 238,171 ccf 3,108,356 ccf 100.00%1 Class use provided by City for calendar year 2019 3,108,356 ccf 2017 Actual Production2 Losses calculated to reach 2017 actual production
A-10 Allocations of Capacity Costs to Customers
Used to Allocate O&M
Retail Inside 3.07 mgd 6.57 mgd 8.22 mgd 54.73%8.22 mgd 64.42%
Retail Outside 1.58 mgd 2.79 mgd 3.49 mgd 23.26%3.49 mgd 27.38%
PSNS 1.23 mgd 1.82 mgd 2.27 mgd 15.15%0.00%
Firelines 3 6.86%8.19%
Total 5.88 mgd 11.17 mgd 13.99 mgd 100.00%11.72 mgd 100.00%1 Class peak month water use 13.99 mgd 2019 Comp Plan Max Day
2 Peak day use estimated based on share of peak month
3 Firelines allocated share of capacity costs based on system fire flow requirement of 4000 gal/min x 240 min
Used to Allocate Rate Base and Depreciation
Retail Inside 6.57 mgd 8.55 mgd 50.13%8.55 mgd 64.64%
Retail Outside 2.79 mgd 3.63 mgd 21.30%3.63 mgd 27.47%
PSNS 3.85 mgd 22.58%0.00%
Firelines 2 5.99%7.88%
Total 16.03 mgd 100.00%12.18 mgd 100.00%1 Class peak month water use 16.03 mgd 2028 Comp Plan Max Day2 Firelines allocated share of capacity costs based on system fire flow requirement of 4000 gal/min x 240 min
3 Max day demand based on Navy requirements, system peak day from Table 2-5 of 2012 Bremerton Water System Plan
%Peak Day w/o
Navy
Peak Day w/o
Navy %%
Allocation of Commodity Costs Allocated
Production %
Allocation of Capacity Costs
2019 Peak Month
Peak Day
Use 2 %Peak Month
Use 1Average Day
Use
Allocation of Capacity Costs
Reserved Capacity
Peak Month
Use 1
Peak Day
Use 3
Total Usage 1
Prepared by FCS GROUP
(425) 867-1802
Technical Appendix - Water Rate Calculation
9
DocuSign Envelope ID: 63FEE366-8093-45A0-A6C8-B2F25BA1B4E2
City of BremertonNavy Water Rate Calculation
A-11 Allocations of Customer Costs to Customers
Allocation
Billing Units 1
Retail Inside 11,981 63.68%11,981 63.69%
Retail Outside 6,466 34.36%6,466 34.37%
PSNS 3 0.02%0.00%
Firelines 366 1.94%366 1.94%
Total 18,816 100.00%18,813 100.00%1 Billing units provided by City as of 12/31/2017
Allocation
Billing Units
Retail Inside 11,981 1.0 11,981 64.05%
Retail Outside 6,466 1.0 6,466 34.57%
PSNS 3 25.0 75 0.40%
Firelines 366 0.5 183 0.98%
Total 18,816 18,705 100.00%1 Weighting factors consistent with previous Agreement
Allocation
Billing Units
Retail Inside 11,981 100$ 1,198,117$ 64.63%
Retail Outside 6,466 100 646,608 34.88%
PSNS 3 3,000 9,000 0.49%
Firelines 366 - 0.00%
Total 18,816 1,853,725 100.00%
1 M&S costs consistent with previous Agreement
Allocation of Meters & Services Costs Meter Cost 1 Meters &
Services %
%
Allocation of Customer Costs - Actual %Customer w/o
Navy %
Allocation of Customer Costs - Weighted Weighting
Factor 1 Weighted
Customer
Prepared by FCS GROUP
(425) 867-1802
Technical Appendix - Water Rate Calculation
10
DocuSign Envelope ID: 63FEE366-8093-45A0-A6C8-B2F25BA1B4E2
City of BremertonNavy Water Rate Calculation
A-12 Allocation of Fire Protection Costs to Customers
Allocation
Billing Units
Retail Inside 11,981 4,000 gpm 240 min 11,501,923 64.94%11,501,923 64.95%
Retail Outside 6,466 4,000 gpm 240 min 6,207,440 35.05%6,207,440 35.05%
PSNS 3 2,583 gpm 240 min 1,860 0.01%0.00%
Firelines 366 - 0.00%0.00%
Total 18,816 17,711,223 100.00%17,709,363 100.00%
1 Retail fire flow based on highest requirement for any zone, Navy fire flow based on highest requirement for any building
A-13 Allocation of Revenue Costs to Customers
Allocation
Revenue 1
Retail Inside 5,656,643$ 46.94%5,656,643$ 55.35%
Retail Outside 4,175,667 34.65%4,175,667 40.86%
PSNS 1,831,708 15.20%0.00%
Firelines 387,033 3.21%387,033 3.79%
Total 12,051,052$ 100.00%10,219,344$ 100.00%
1 2019 actual billed revenue by class
Fire Flow
Requirement
w/o Navy
%%
Allocation of Revenue Related Costs %Revenue
Without Navy %
Allocation of Fire Protection Costs Fire Flow 1 Duration 1 Fire Flow
Requirement
(kgal)
Prepared by FCS GROUP
(425) 867-1802
Technical Appendix - Water Rate Calculation
11
DocuSign Envelope ID: 63FEE366-8093-45A0-A6C8-B2F25BA1B4E2
City of BremertonNavy Water Rate Calculation
A-14 Summary of O&M, Depreciation and Rate Base Allocations to Customers
Commodity Capacity Capacity w/o
Navy Actual Customer Actual Customer
w/o Navy
Customer
Weighted
Meters &
Services Fire Fire w/o Navy Revenue
Retail Inside 52.23%54.73%64.42%63.68%63.69%64.05%64.63%64.94%64.95%46.94%
Retail Outside 26.89%23.26%27.38%34.36%34.37%34.57%34.88%35.05%35.05%34.65%
PSNS 20.88%15.15%0.00%0.02%0.00%0.40%0.49%0.01%0.00%15.20%
Firelines 0.00%6.86%8.19%1.94%1.94%0.98%0.00%0.00%0.00%3.21%
Total 100.00%100.00%100.00%100.00%100.00%100.00%100.00%100.00%100.00%100.00%
Commodity Capacity Capacity w/o
Navy Actual Customer Actual Customer
w/o Navy
Customer
Weighted
Meters &
Services Fire Fire w/o Navy Revenue
Functionalized Operating Expenses 12,799,681$ 2,537,316$ 4,620,805$ 166,888$ 995,853$ 91,959$ 750$ 466,957$ 773,230$ 81,741$ 3,064,183$
Retail Inside 6,950,203$ 1,325,160$ 2,529,025$ 107,516$ 634,116$ 58,565$ 480$ 301,808$ 502,146$ 53,089$ 1,438,297$
Retail Outside 3,701,261 682,331 1,074,874 45,696 342,224 31,607 259 162,882 271,002 28,652 1,061,734
PSNS 1,697,902 529,825 699,824 - 159 - 3 2,267 81 - 465,743
Firelines 450,315 - 317,082 13,676 19,353 1,787 7 - - - 98,410
Total 12,799,681$ 2,537,316$ 4,620,805$ 166,888$ 995,853$ 91,959$ 750$ 466,957$ 773,230$ 81,741$ 3,064,183$
Commodity Capacity Capacity w/o
Navy Actual Customer Actual Customer
w/o Navy
Customer
Weighted
Meters &
Services Fire Fire w/o Navy Revenue
Retail Inside 52.23%50.13%64.64%63.68%63.69%64.05%64.63%64.94%64.95%46.94%
Retail Outside 26.89%21.30%27.47%34.36%34.37%34.57%34.88%35.05%35.05%34.65%
PSNS 20.88%22.58%0.00%0.02%0.00%0.40%0.49%0.01%0.00%15.20%
Firelines 0.00%5.99%7.88%1.94%1.94%0.98%0.00%0.00%0.00%3.21%
Total 100.00%100.00%100.00%100.00%100.00%100.00%100.00%100.00%100.00%100.00%
Commodity Capacity Capacity w/o
Navy Actual Customer Actual Customer
w/o Navy
Customer
Weighted
Meters &
Services Fire Fire w/o Navy Revenue
Functionalized Depreciation Expense 2,143,774$ 222,629$ 993,437$ 70,329$ 261,759$ 38,753$ -$ 196,571$ 325,849$ 34,447$ -$
Retail Inside 1,212,108$ 116,272$ 497,982$ 45,463$ 166,677$ 24,680$ -$ 127,050$ 211,611$ 22,373$ -$
Retail Outside 588,960 59,869 211,650 19,323 89,953 13,319 - 68,567 114,204 12,074 -
PSNS 271,827 46,488 224,309 - 42 - - 954 34 - -
Firelines 70,878 - 59,495 5,543 5,087 753 - - - - -
Total 2,143,774$ 222,629$ 993,437$ 70,329$ 261,759$ 38,753$ -$ 196,571$ 325,849$ 34,447$ -$
Commodity Capacity Capacity w/o
Navy Actual Customer Actual Customer
w/o Navy
Customer
Weighted
Meters &
Services Fire Fire w/o Navy Revenue
Retail Inside 52.23%50.13%64.64%63.68%63.69%64.05%64.63%64.94%64.95%46.94%
Retail Outside 26.89%21.30%27.47%34.36%34.37%34.57%34.88%35.05%35.05%34.65%
PSNS 20.88%22.58%0.00%0.02%0.00%0.40%0.49%0.01%0.00%15.20%
Firelines 0.00%5.99%7.88%1.94%1.94%0.98%0.00%0.00%0.00%3.21%
Total 100.00%100.00%100.00%100.00%100.00%100.00%100.00%100.00%100.00%100.00%
Commodity Capacity Capacity w/o
Navy Actual Customer Actual Customer
w/o Navy
Customer
Weighted
Meters &
Services Fire Fire w/o Navy Revenue
Functionalized Rate Base 33,284,205$ 3,798,626$ 14,791,222$ 887,135$ 4,454,253$ 488,829$ 46$ 2,888,338$ 5,353,527$ 434,515$ 187,714$
Retail Inside 18,833,230$ 1,983,903$ 7,414,434$ 573,476$ 2,836,277$ 311,315$ 29$ 1,866,818$ 3,476,658$ 282,210$ 88,111$
Retail Outside 9,216,389 1,021,521 3,151,248 243,736 1,530,702 168,013 16 1,007,497 1,876,307 152,305 65,042
PSNS 4,176,757 793,203 3,339,727 - 710 - 0 14,023 562 - 28,532
Firelines 1,057,828 - 885,812 69,922 86,563 9,501 0 - - - 6,029
Total 33,284,205$ 3,798,626$ 14,791,222$ 887,135$ 4,454,253$ 488,829$ 46$ 2,888,338$ 5,353,527$ 434,515$ 187,714$
Functions of Service
TotalAllocation of Rate Base
Functions of Service
Functions of Service
Summary of Customer Class Allocations
Operating Expenses
Allocation of Operating Expenses Total
Allocation of Depreciation Expense Total
Functions of Service
Summary of Customer Class Allocations
Depreciation Expense
Functions of Service
Summary of Customer Class Allocations
Rate Base
Functions of Service
Prepared by FCS GROUP
(425) 867-1802
Technical Appendix - Water Rate Calculation
12
DocuSign Envelope ID: 63FEE366-8093-45A0-A6C8-B2F25BA1B4E2
City of Bremerton
Navy Water Rate Calculation
A-15 Calculation of Rate of Return on Rate Base
Wastewater 287,160$ 7,505,193$
Water 158,450 4,255,412
Combined Cost of Debt 1 445,610$ 11,760,605$ 3.79%1.50%5.29%
Cost of Borrowing 2 3.42%1.50%4.92%
5.29%
1 Weighted average of all non-subsidized outstanding debt for the combined utilities
2 Numerical average of at least three recent debt issues for municipal entities with similar terms and credit ratings, provided by DA Davidson Municipal Advisors
TotalCalculation of Navy Rate of Return 2019 Interest
(Non-Subsidized Debt)
2019 Outstanding Principal
(Non-Subsidized Debt)Cost of Debt Risk
Premium
Prepared by FCS GROUP
(425) 867-1802
Technical Appendix - Water Rate Calculation
13
DocuSign Envelope ID: 63FEE366-8093-45A0-A6C8-B2F25BA1B4E2
City of Bremerton
Navy Water Rate Calculation
A-16 Calculation of Net Revenue Requirement
2019 Rate Revenue 1,831,708$
Less: O&M and Depreciation 1,969,729
Net Income (138,021)$
Rate Base 4,176,757$
% Rate of Return 5.29%
Return On Rate Base 220,909$
Total Net Revenue Requirement 2,190,638$
$ Difference over Existing Rates 358,930
% Difference over Existing Rates 19.6%
Net Revenue Requirement PSNS
Prepared by FCS GROUP
(425) 867-1802
Technical Appendix - Water Rate Calculation
14
DocuSign Envelope ID: 63FEE366-8093-45A0-A6C8-B2F25BA1B4E2
City of Bremerton October 2020
Summary of U.S. Navy Contract Negotiations for Water and Wastewater Service page 21
TECHNICAL APPENDIX – WASTEWATER
DocuSign Envelope ID: 63FEE366-8093-45A0-A6C8-B2F25BA1B4E2
City of BremertonNavy Wastewater Rate Calculation
B-1 Allocation of Fixed Asset Original Cost and Accumulated Depreciation, Treatment Allocated on Navy Reserved Treatment Capacity
Flow-
Collection w/
Navy
Flow-
Collection w/o
Navy
Flow-
Treatment w/
Navy
Flow-
Treatment w/o
Navy
BOD w/o Navy TSS w/o Navy Customer Customer
Weighted Revenue Direct Navy As All Others
Collection 51,549,403$ 100.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%
Collection Laterals 2 3,018,737 0.00%100.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%
Treatment 47,249,172 0.00%0.00%0.00%50.00%15.50%15.00%0.00%0.00%0.00%19.50%0.00%100.00%
Pumping 25,096,890 100.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%
General Plant 3 4,334,537 0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%100.00%
Total Utility Plant 131,248,739$ 76,646,293$ 3,018,737$ -$ 23,624,586$ 7,323,622$ 7,087,376$ -$ -$ -$ 9,213,589$ 4,334,537$ 131,248,739$
Functions of Service 60.39%2.38%0.00%18.61%5.77%5.58%0.00%0.00%0.00%7.26%100.00%
Allocation of "As All Others"2,617,722$ 103,100$ -$ 806,857$ 250,126$ 242,057$ -$ -$ -$ 314,674$ (4,334,537)$ -$
131,248,739$ 79,264,016$ 3,121,837$ -$ 24,431,443$ 7,573,747$ 7,329,433$ -$ -$ -$ 9,528,263$ -$ 131,248,739$
60.39%2.38%0.00%18.61%5.77%5.58%0.00%0.00%0.00%7.26%0.00%100.00%
Less: Accumulated Depreciation 1
Collection 18,271,241$ 100.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%
Collection Laterals 1,523,219 0.00%100.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%
Treatment 26,751,478 0.00%0.00%0.00%50.00%15.50%15.00%0.00%0.00%0.00%19.50%0.00%100.00%
Pumping 11,458,327 100.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%
General Plant 1,861,367 51.25%2.63%0.00%23.06%7.15%6.92%0.00%0.00%0.00%8.99%0.00%100.00%
Total Accumulated Depreciation 59,865,631$ 30,683,594$ 1,572,099$ -$ 13,804,969$ 4,279,540$ 4,141,491$ -$ -$ -$ 5,383,938$ -$
71,383,108$ 48,580,421$ 1,549,738$ -$ 10,626,475$ 3,294,207$ 3,187,942$ -$ -$ -$ 4,144,325$ -$
68.06%2.17%0.00%14.89%4.61%4.47%0.00%0.00%0.00%5.81%0.00%
1 Original cost of assets and accumulated depreciation from City fixed asset schedule as of 12/31/2016
2 The City and Navy agreed that the Navy does not benefit from collection laterals and should not be allocated any of these facilities
3 General plant allocated as all other plant in service
Net Plant in Service
Plant in Service 1 Total
Functions of Service
Total
Total Plant in Service
Prepared by FCS GROUP
(425) 867-1802
Technical Appendix - Wastewater Rate Calculation
1
DocuSign Envelope ID: 63FEE366-8093-45A0-A6C8-B2F25BA1B4E2
City of BremertonNavy Wastewater Rate Calculation
B-2 Allocation of Fixed Asset Original Cost and Accumulated Depreciation, Treatment Allocated on Actual Flow
Flow-
Collection w/
Navy
Flow-
Collection w/o
Navy
Flow-
Treatment w/
Navy
Flow-
Treatment w/o
Navy
BOD w/o Navy TSS w/o Navy Customer Customer
Weighted Revenue Direct Navy As All Others
Collection 51,549,403$ 100.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%
Collection Laterals 2 3,018,737 0.00%100.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%
Treatment 47,249,172 0.00%0.00%0.00%54.57%16.92%16.37%0.00%0.00%0.00%12.13%0.00%100.00%
Pumping 25,096,890 100.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%
General Plant 3 4,334,537 0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%100.00%
Total Utility Plant 131,248,739$ 76,646,293$ 3,018,737$ -$ 25,786,024$ 7,993,667$ 7,735,807$ -$ -$ -$ 5,733,673$ 4,334,537$ 131,248,739$
Functions of Service 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%100.00%
Allocation of "As All Others"2,617,722$ 103,100$ -$ 880,677$ 273,010$ 264,203$ -$ -$ -$ 195,824$ (4,334,537)$ -$
131,248,739$ 79,264,016$ 3,121,837$ -$ 26,666,701$ 8,266,677$ 8,000,010$ -$ -$ -$ 5,929,497$ -$ 131,248,739$
60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%
Less: Accumulated Depreciation 1
Collection 18,271,241$ 100.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%
Collection Laterals 1,523,219 0.00%100.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%
Treatment 26,751,478 0.00%0.00%0.00%54.57%16.92%16.37%0.00%0.00%0.00%12.13%0.00%100.00%
Pumping 11,458,327 100.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%
General Plant 1,861,367 51.25%2.63%0.00%25.17%7.80%7.55%0.00%0.00%0.00%5.60%0.00%100.00%
Total Accumulated Depreciation 59,865,631$ 30,683,594$ 1,572,099$ -$ 15,068,000$ 4,671,080$ 4,520,400$ -$ -$ -$ 3,350,458$ -$
71,383,108$ 48,580,421$ 1,549,738$ -$ 11,598,702$ 3,595,598$ 3,479,611$ -$ -$ -$ 2,579,039$ -$
68.06%2.17%0.00%16.25%5.04%4.87%0.00%0.00%0.00%3.61%0.00%
1 Original cost of assets and accumulated depreciation from City fixed asset schedule as of 12/31/2016
2 The City and Navy agreed that the Navy does not benefit from collection laterals and should not be allocated any of these facilities
3 General plant allocated as all other plant in service
Net Plant in Service
Plant in Service 1 Total
Functions of Service
Total
Total Plant in Service
Prepared by FCS GROUP
(425) 867-1802
Technical Appendix - Wastewater Rate Calculation
2
DocuSign Envelope ID: 63FEE366-8093-45A0-A6C8-B2F25BA1B4E2
City of BremertonNavy Wastewater Rate Calculation
B-3 Allocation of Operating Expenses and Depreciation
Flow-Collection
w/ Navy
Flow-Collection
w/o Navy
Flow-Treatment
w/ Navy
Flow-Treatment
w/o Navy BOD w/o Navy TSS w/o Navy Customer Customer
Weighted Revenue Direct Navy As All Others
Taxes 3
State Taxes 313,746$ 0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%0.00%0.00%100.00%As Revenue
City Taxes 3,307,408 0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%0.00%0.00%100.00%As Revenue
Administration
Salaries & Wages Regular 187,550$ 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Overtime Pay 1,500 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Personnel Benefits 48,730 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Medical & Dental Benefits 27,025 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Office & Operating Supply 5,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Small Tools, Equipment, & Furniture 500 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Computer Related Items 1,500 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Food and Beverage 500 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Professional Services Ext 85,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Intergovernmental Service 1,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Postage 700 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Travel 1,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Training 500 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Equipment Rental 500 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Information Tech− Ifd 10,421 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Miscellaneous 2,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Sewer System
Salaries & Wages Regular 542,100$ 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Stand By 11,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Overtime Pay 8,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Personnel Benefits 137,200 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Medical & Dental Benefits 118,800 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Office & Operating Supply 35,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Utility Inventory 5,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Fuel Consumed 19,246 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Small Tools, Eq & Furn 25,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Computer Related Items 2,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Professional Services Ext 5,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Professional Services Ifd 1,032,976 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Other Services 1,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Telecommunications 2,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Telecommunications Ifd 1,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Postage 500 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Travel 1,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Training 1,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Land and Building - IFD 43,776 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Equipment Rental 5,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Equipment − Interfund 312,997 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Interfund Insurance Prem 390,264 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Garbage/Waste Disposal 6,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Information Tech− Ifd 61,802 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Equipment Repair & Maint 10,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Equipment Repair − Ifd 33,499 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Other Improvements 100,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Miscellaneous 5,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Dues & Subscriptions 30,500 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Allocation Basis 2Operating Expenses 1 Total
Functions of Service
Total
Prepared by FCS GROUP
(425) 867-1802
Technical Appendix - Wastewater Rate Calculation
3
DocuSign Envelope ID: 63FEE366-8093-45A0-A6C8-B2F25BA1B4E2
City of BremertonNavy Wastewater Rate Calculation
B-3 Allocation of Operating Expenses and Depreciation
Flow-Collection
w/ Navy
Flow-Collection
w/o Navy
Flow-Treatment
w/ Navy
Flow-Treatment
w/o Navy BOD w/o Navy TSS w/o Navy Customer Customer
Weighted Revenue Direct Navy As All Others Allocation Basis 2Operating Expenses 1 Total
Functions of Service
Total
WWTP
Salaries & Wages Regular 1,538,200$ 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Stand By 74,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Overtime Pay 80,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Personnel Benefits 399,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Medical & Dental Benefits 283,700 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Office & Operating Supply 655,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Utility Inventory 1,500 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Fuel Consumed 23,803 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Items Purch For Inventory 70,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Small Tools, Eq & Furn 140,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Computer Related Items 72,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Food & Beverage 2,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Professional Services Ext 265,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Other Services 5,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Intergovernmental Service 42,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Telecommunications 120,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Telecommunications Ifd 3,674 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Postage 7,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Travel 15,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Training 40,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Equipment Rental 20,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Equipment - Interfund 100,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Natural Gas 25,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Electricity 620,000 0.00%0.00%100.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%As Flow w/ Navy
Water/Sewer/Stormwater 75,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Garbage/Waste Disposal 47,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Information Tech− Ifd 79,441 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Equipment Repair & Maint 135,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Equipment Repair − Ifd 39,076 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Structures & Grounds 75,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Miscellaneous 15,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Dues & Subscriptions 6,500 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Customer Service
Salaries & Wages Regular 107,800$ 0.00%0.00%0.00%0.00%0.00%0.00%100.00%0.00%0.00%0.00%0.00%100.00%All to Customer
Overtime Pay 10,000 0.00%0.00%0.00%0.00%0.00%0.00%100.00%0.00%0.00%0.00%0.00%100.00%All to Customer
Personnel Benefits 28,200 0.00%0.00%0.00%0.00%0.00%0.00%100.00%0.00%0.00%0.00%0.00%100.00%All to Customer
Medical & Dental Benefits 18,800 0.00%0.00%0.00%0.00%0.00%0.00%100.00%0.00%0.00%0.00%0.00%100.00%All to Customer
Office & Operating Supply 25,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Small Tools, Eq & Furn 500 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Computer Related Items 1,500 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Professional Services Ext 12,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Postage 50,000 0.00%0.00%0.00%0.00%0.00%0.00%100.00%0.00%0.00%0.00%0.00%100.00%All to Customer
Travel 1,500 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Training 3,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Equipment Rental 750 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Information Tech− Ifd 6,730 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Miscellaneous 1,000 60.39%2.38%0.00%20.32%6.30%6.10%0.00%0.00%0.00%4.52%0.00%100.00%As Plant in Service (Actual)
Depreciation Expense 4 3,694,103$ 60.39%2.38%0.00%18.61%5.77%5.58%0.00%0.00%0.00%7.26%0.00%100.00%As Plant in Service (Capacity)
Total Operating Expenses 15,976,017$ 6,957,221$ 274,012$ 620,000$ 2,277,697$ 706,086$ 683,309$ 214,800$ -$ 3,621,154$ 621,738$ -$ 15,976,017$ Functions of Service 43.55%1.72%3.88%14.26%4.42%4.28%1.34%0.00%22.67%3.89%100.00%Allocation of "As All Others"-$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
15,976,017$ 6,957,221$ 274,012$ 620,000$ 2,277,697$ 706,086$ 683,309$ 214,800$ -$ 3,621,154$ 621,738$ -$ 15,976,017$
100.00%43.55%1.72%3.88%14.26%4.42%4.28%1.34%0.00%22.67%3.89%0.00%100.00%
1 Operating expenses sourced from detailed 2020 Wastewater Expenditure Budget2 Operating expenses allocated based on the utility function(s) most likely driving that cost3 Taxes allocated based on 2019 actual wastewater revenue4 2017 Depreciation Expense
Total Operating Expenses
Prepared by FCS GROUP
(425) 867-1802
Technical Appendix - Wastewater Rate Calculation
4
DocuSign Envelope ID: 63FEE366-8093-45A0-A6C8-B2F25BA1B4E2
City of BremertonNavy Wastewater Rate Calculation
B-4 Calculation of Net Contributions in aid of Construction
Pre-2004 1 33,483,077$ 21,337,173$ -$ -$
2004 55,757 41,260 - -
2005 - - 167,068 126,972
2006 67,758 52,851 644,654 502,830
2007 946,857 757,485 1,194,615 955,692
2008 512,590 420,324 1,062,420 871,185
2009 748,743 628,944 935,986 786,228
2010 80,729 69,427 4,487 3,859
2011 453,954 399,479 - -
2012 400,176 360,159 - -
2013 1,130,179 1,039,764 772,383 710,592
2014 - - - -
2015 319,900 307,104 - -
2016 - - - -
2017 1,272,894 1,272,894 - -
Total 39,472,613$ 26,686,865$ 4,781,613$ 3,957,357$ 1 Pre-2004 contributions depreciated equal to percentage of total collection system depreciated
2 Other contributions include grants and loan forgiveness
B-5 Calculation of Net Navy Capital Charges
Net Navy capital charges 1996 5,600,796$ 3,009,812$ 2,590,984$
Navy contribution to the WWTP 1996 3,179,199 1,708,470 1,470,729
Total 8,779,995$ 4,718,282$ 4,061,713$ 1 Depreciated by 2.56% of original cost per year based on 2008 Agreement methodology
System Acceptances Other Contributions 2
Original Cost Net ValueOriginal Cost Net ValueYear
Description Year Original Contract
Amount
Total
Depreciation 1 Net Value
Prepared by FCS GROUP
(425) 867-1802
Technical Appendix - Wastewater Rate Calculation
5
DocuSign Envelope ID: 63FEE366-8093-45A0-A6C8-B2F25BA1B4E2
City of Bremerton
Navy Wastewater Rate Calculation
B-6 Allocation of Net Rate Base
Flow-
Collection w/
Navy
Flow-
Collection
w/o Navy
Flow-
Treatment w/
Navy
Flow-
Treatment
w/o Navy
BOD w/o
Navy TSS w/o Navy Customer Customer
Weighted Revenue Direct Navy As All Others
Net Plant in Service 71,383,108$ 48,580,421$ 1,549,738$ -$ 10,626,475$ 3,294,207$ 3,187,942$ -$ -$ -$ 4,144,325$ -$
Plus: Cash Working Capital
1/8 O&M Expense 1,535,239$ 43.55%1.72%3.88%14.26%4.42%4.28%1.34%0.00%22.67%3.89%0.00%100.00%As O&M Expenses
Prepayments - 43.55%1.72%3.88%14.26%4.42%4.28%1.34%0.00%22.67%3.89%0.00%100.00%As O&M Expenses
Inventories (materials and supplies) 1 577,021 60.39%2.38%0.00%18.61%5.77%5.58%0.00%0.00%0.00%7.26%0.00%100.00%As Plant in Service
Total Cash Working Capital 2,112,260$ 1,017,040$ 40,056$ 59,580$ 326,289$ 101,150$ 97,887$ 20,642$ -$ 347,980$ 101,637$ -$
Less: Net Contributions in Aid of Construction 2 30,644,222$ 0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%100.00%As All Others
Less: Navy Capital Contributions 3 1,470,729 0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%0.00%100.00%Direct Navy
Plus: Net Navy Capital Charges 4 (2,590,984) 0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%100.00%100.00%As All Others
Net Total Contributions 29,523,967$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 1,470,729$ 28,053,238$
Total Net Plant in Service 49,597,461$ 1,589,794$ 59,580$ 10,952,763$ 3,395,357$ 3,285,829$ 20,642$ -$ 347,980$ 2,775,233$ (28,053,238)$
Functions of Service 68.86%2.21%0.08%15.21%4.71%4.56%0.03%0.00%0.48%3.85%
Allocation of "As All Others"(19,317,964)$ (619,217)$ (23,206)$ (4,266,047)$ (1,322,474)$ (1,279,814)$ (8,040)$ -$ (135,537)$ (1,080,939)$ 28,053,238$
43,971,401$ 30,279,498$ 970,577$ 36,374$ 6,686,717$ 2,072,882$ 2,006,015$ 12,602$ -$ 212,444$ 1,694,293$ -$
68.86%2.21%0.08%15.21%4.71%4.56%0.03%0.00%0.48%3.85%0.00%
1 2018 Comprehensive Annual Financial Report
2 Net book value of contributions in aid of construction is deducted from rate base
3 Contributions in aid of contruction assigned to the Navy include the amortized amount for the Navy's capital contribution to the WWTP and WWTP improvements = Navy's "true" capital contribution
4 Net navy capital charges are deducted from contributions in aid to reflect that this capital payment was to compensate the City for capital costs, is not a "true" capital contribution and should not be used to reduce rate base
Net Rate Base
Net Rate Base Total
Functions of Service
Allocation BasisTotal
Prepared by FCS GROUP
(425) 867-1802
Technical Appendix - Wastewater Rate Calculation
6
DocuSign Envelope ID: 63FEE366-8093-45A0-A6C8-B2F25BA1B4E2
City of BremertonNavy Wastewater Rate Calculation
B-7 Allocations of Flow Costs to Customers
Used to Allocate O&M 5.86 mgd
I&I 2
38%
Inside City
Single Family 408,962 ccf 330,080 ccf 126,515 456,594 ccf 0.94 mgd 1.65 mgd 34.78%1.65 mgd 39.58%
Multi Family 317,564 ccf 256,311 ccf 98,240 354,551 ccf 0.73 mgd 1.28 mgd 27.01%1.28 mgd 30.74%
Commercial I 169,625 ccf 136,907 ccf 52,474 189,381 ccf 0.39 mgd 0.68 mgd 14.43%0.68 mgd 16.42%
Commercial II 29,760 ccf 24,020 ccf 9,206 33,226 ccf 0.07 mgd 0.12 mgd 2.53%0.12 mgd 2.88%
Commercial III 53,801 ccf 43,424 ccf 16,644 60,067 ccf 0.12 mgd 0.22 mgd 4.58%0.22 mgd 5.21%
Outside City
Single Family 39,402 ccf 31,802 ccf 12,189 43,991 ccf 0.09 mgd 0.16 mgd 3.35%0.16 mgd 3.81%
Multi Family 7,920 ccf 6,392 ccf 2,450 8,842 ccf 0.02 mgd 0.03 mgd 0.67%0.03 mgd 0.77%
Commercial I 5,226 ccf 4,218 ccf 1,617 5,835 ccf 0.01 mgd 0.02 mgd 0.44%0.02 mgd 0.51%
Commercial II 202 ccf 163 ccf 62 226 ccf 0.00 mgd 0.00 mgd 0.02%0.00 mgd 0.02%
Commercial III 671 ccf 542 ccf 208 749 ccf 0.00 mgd 0.00 mgd 0.06%0.00 mgd 0.06%
PSNS
Main 280,068 ccf 280,068 ccf 280,068 ccf 0.57 mgd 0.57 mgd 12.13%0.00%
Total 1,313,201 ccf 1,113,926 ccf 319,605 1,433,531 ccf 2.94 mgd 4.73 mgd 100.00%4.16 mgd 100.00%1 Class flows provided by City for calendar year 2017 for retail, 2019 for Navy 2019 Actual Flow at Treatment Plant 4.73 mgd
2 Navy not allocated I&I because flow is metered
3 Retail flow statistics adjusted to 2019 actual treated flow
Used to Allocate Rate Base and Depreciation
I&I
38%
Inside City
Single Family 330,080 ccf 126,515 456,594 ccf 0.94 mgd 4.94 mgd 31.87%4.94 mgd 39.58%
Multi Family 256,311 ccf 98,240 354,551 ccf 0.73 mgd 3.84 mgd 24.75%3.84 mgd 30.74%
Commercial I 136,907 ccf 52,474 189,381 ccf 0.39 mgd 2.05 mgd 13.22%2.05 mgd 16.42%
Commercial II 24,020 ccf 9,206 33,226 ccf 0.07 mgd 0.36 mgd 2.32%0.36 mgd 2.88%
Commercial III 43,424 ccf 16,644 60,067 ccf 0.12 mgd 0.65 mgd 4.19%0.65 mgd 5.21%
Outside City
Single Family 31,802 ccf 12,189 43,991 ccf 0.09 mgd 0.48 mgd 3.07%0.48 mgd 3.81%
Multi Family 6,392 ccf 2,450 8,842 ccf 0.02 mgd 0.10 mgd 0.62%0.10 mgd 0.77%
Commercial I 4,218 ccf 1,617 5,835 ccf 0.01 mgd 0.06 mgd 0.41%0.06 mgd 0.51%
Commercial II 163 ccf 62 226 ccf 0.00 mgd 0.00 mgd 0.02%0.00 mgd 0.02%
Commercial III 542 ccf 208 749 ccf 0.00 mgd 0.01 mgd 0.05%0.01 mgd 0.06%
PSNS
Main 280,068 ccf 3.02 mgd 3.02 mgd 19.48%0.00%
Total 1,113,926 ccf 319,605 1,153,463 ccf 5.38 mgd 15.50 mgd 100.00%12.48 mgd 100.00%
1 Navy flow based on not to exceed daily average flow service requirement WWTP Max Month Capacity 15.50 mgd
retail classes allocated share of remaining capacity
Allocation of Flow Costs
Reserved Capacity 2019 Flow
Adjusted Flow
without Navy
%Adjusted Flow
without Navy
Total Flow with
I&I (ccf)
Annual Flow
(mgd)
Flow Adjusted
to Max Month 1 %
%Allocation of Flow Costs
2019 Flow
Total Flow with
I&I (ccf)
Annual Flow
(mgd)
Flow Adjusted
to Actual 3 %2017 Flow 1 Adjusted to
2019 Flow
Prepared by FCS GROUP
(425) 867-1802
Technical Appendix - Wastewater Rate Calculation
7
DocuSign Envelope ID: 63FEE366-8093-45A0-A6C8-B2F25BA1B4E2
City of BremertonNavy Wastewater Rate Calculation
B-8 Allocations of Customer Costs to Customers
Allocation
Billing Units 1
Inside City
Single Family 8,060 44.08%1.0 8,060 41.80%
Multi Family 8,472 46.33%1.0 8,472 43.94%
Commercial I 675 3.69%2.0 1,350 7.00%
Commercial II 57 0.31%2.5 143 0.74%
Commercial III 115 0.63%2.0 231 1.20%
Outside City
Single Family 694 3.80%1.0 694 3.60%
Multi Family 161 0.88%1.0 161 0.84%
Commercial I 43 0.24%2.0 86 0.45%
Commercial II 1 0.01%2.5 3 0.01%
Commercial III 4 0.02%2.0 8 0.04%
PSNS
Main 3 0.02%25.0 75 0.39%
Total 18,286 100.00%19,282 100.00%1 Billing unit counts provided by City as of 12/31/2017
2 Weighting factors consistent with previous Agreement
B-9 Allocation of Revenue Costs to Customers
Inside City
Single Family 5,005,766$ 5,165,830$ 34.48%5,165,830$ 40.32%
Multi Family 4,367,252 4,506,898 30.09%4,506,898 35.17%
Commercial I 1,161,042 1,198,167 8.00%1,198,167 9.35%
Commercial II 253,517 261,624 1.75%261,624 2.04%
Commercial III 390,777 403,272 2.69%403,272 3.15%
Outside City
Single Family 678,777 962,499$ 6.43%962,499$ 7.51%
Multi Family 133,307 189,028 1.26%189,028 1.48%
Commercial I 76,284 108,171 0.72%108,171 0.84%
Commercial II 2,760 3,914 0.03%3,914 0.03%
Commercial III 9,770 13,854 0.09%13,854 0.11%
PSNS
Main 2,199,437 2,167,003 14.47%0.00%
Total 14,278,690$ 14,980,261$ 100.00%12,813,258$ 100.00%
1 2019 actual billed revenue for Navy, all others adjusted from 2017 to reach total revenue billed in 2019
Allocation of Customer Costs %Weighting
Factor 2
Weighted
Customer %
Revenue
Without Navy %2017 Revenue 2019 Revenue 1Allocation of Revenue Related Costs %
Prepared by FCS GROUP
(425) 867-1802
Technical Appendix - Wastewater Rate Calculation
8
DocuSign Envelope ID: 63FEE366-8093-45A0-A6C8-B2F25BA1B4E2
City of BremertonNavy Wastewater Rate Calculation
B-10 Summary of O&M, Depreciation and Rate Base Allocations to Customers
Flow-Collection
w/ Navy
Flow-Collection
w/o Navy
Flow-Treatment
w/ Navy
Flow-Treatment
w/o Navy BOD w/o Navy TSS w/o Navy Customer Customer
Weighted Revenue Direct Navy
Inside City
Single Family 34.78%39.58%34.78%39.58%33.99%33.99%44.08%41.80%34.48%0.00%
Multi Family 27.01%30.74%27.01%30.74%26.39%26.39%46.33%43.94%30.09%0.00%
Commercial I 14.43%16.42%14.43%16.42%19.74%19.74%3.69%7.00%8.00%0.00%
Commercial II 2.53%2.88%2.53%2.88%6.80%6.80%0.31%0.74%1.75%0.00%
Commercial III 4.58%5.21%4.58%5.21%8.38%8.38%0.63%1.20%2.69%0.00%
Outside City
Single Family 3.35%3.81%3.35%3.81%3.27%3.27%3.80%3.60%6.43%0.00%
Multi Family 0.67%0.77%0.67%0.77%0.66%0.66%0.88%0.84%1.26%0.00%
Commercial I 0.44%0.51%0.44%0.51%0.61%0.61%0.24%0.45%0.72%0.00%
Commercial II 0.02%0.02%0.02%0.02%0.05%0.05%0.01%0.01%0.03%0.00%
Commercial III 0.06%0.06%0.06%0.06%0.10%0.10%0.02%0.04%0.09%0.00%
PSNS
Main 12.13%0.00%12.13%0.00%0.00%0.00%0.02%0.39%14.47%100.00%
Total 100.00%100.00%100.00%100.00%100.00%100.00%100.00%100.00%100.00%100.00%
Flow-Collection
w/ Navy
Flow-Collection
w/o Navy
Flow-Treatment
w/ Navy
Flow-Treatment
w/o Navy BOD w/o Navy TSS w/o Navy Customer Customer
Weighted Revenue Direct Navy
Functionalized Operating Expenses 12,281,914$ 4,726,270$ 186,146$ 620,000$ 1,590,054$ 492,917$ 477,016$ 214,800$ -$ 3,621,154$ 353,558$
Inside City
Single Family 4,235,688$ 1,643,847$ 73,685$ 215,643$ 629,417$ 167,544$ 162,140$ 94,685$ -$ 1,248,728$ -$
Multi Family 3,434,846 1,276,467 57,217 167,449 488,750 130,100 125,903 99,514 - 1,089,445 -
Commercial I 1,551,882 681,818 30,562 89,442 261,063 97,289 94,151 7,926 - 289,631 -
Commercial II 316,366 119,622 5,362 15,692 45,802 33,528 32,447 671 - 63,242 -
Commercial III 517,280 216,256 9,694 28,369 82,803 41,327 39,994 1,354 - 97,482 -
Outside City
Single Family 519,480$ 158,379$ 7,099$ 20,776$ 60,642$ 16,142$ 15,622$ 8,156$ -$ 232,663$ -$
Multi Family 103,600 31,835 1,427 4,176 12,189 3,245 3,140 1,895 - 45,693 -
Commercial I 65,298 21,006 942 2,756 8,043 2,997 2,901 505 - 26,148 -
Commercial II 2,671 812 36 107 311 228 220 12 - 946 -
Commercial III 8,615 2,697 121 354 1,033 515 499 47 - 3,349 -
PSNS
Main 1,526,187$ 573,532$ -$ 75,237$ -$ -$ -$ 35$ -$ 523,826$ 353,558$
Total 12,281,914$ 4,726,270$ 186,146$ 620,000$ 1,590,054$ 492,917$ 477,016$ 214,800$ -$ 3,621,154$ 353,558$
Summary of Customer Class Allocations
Operating Expenses
Functions of Service
Allocation of Operating Expenses
Functions of Service
Total
Prepared by FCS GROUP
(425) 867-1802
Technical Appendix - Wastewater Rate Calculation
9
DocuSign Envelope ID: 63FEE366-8093-45A0-A6C8-B2F25BA1B4E2
City of BremertonNavy Wastewater Rate Calculation
B-10 Summary of O&M, Depreciation and Rate Base Allocations to Customers
Flow-Collection
w/ Navy
Flow-Collection
w/o Navy
Flow-Treatment
w/ Navy
Flow-Treatment
w/o Navy BOD w/o Navy TSS w/o Navy Customer Customer
Weighted Revenue Direct Navy
Inside City
Single Family 31.87%39.58%31.87%39.58%33.99%33.99%44.08%41.80%34.48%0.00%
Multi Family 24.75%30.74%24.75%30.74%26.39%26.39%46.33%43.94%30.09%0.00%
Commercial I 13.22%16.42%13.22%16.42%19.74%19.74%3.69%7.00%8.00%0.00%
Commercial II 2.32%2.88%2.32%2.88%6.80%6.80%0.31%0.74%1.75%0.00%
Commercial III 4.19%5.21%4.19%5.21%8.38%8.38%0.63%1.20%2.69%0.00%
Outside City
Single Family 3.07%3.81%3.07%3.81%3.27%3.27%3.80%3.60%6.43%0.00%
Multi Family 0.62%0.77%0.62%0.77%0.66%0.66%0.88%0.84%1.26%0.00%
Commercial I 0.41%0.51%0.41%0.51%0.61%0.61%0.24%0.45%0.72%0.00%
Commercial II 0.02%0.02%0.02%0.02%0.05%0.05%0.01%0.01%0.03%0.00%
Commercial III 0.05%0.06%0.05%0.06%0.10%0.10%0.02%0.04%0.09%0.00%
PSNS
Main 19.48%0.00%19.48%0.00%0.00%0.00%0.02%0.39%14.47%100.00%
Total 100.00%100.00%100.00%100.00%100.00%100.00%100.00%100.00%100.00%100.00%
Flow-Collection
w/ Navy
Flow-Collection
w/o Navy
Flow-Treatment
w/ Navy
Flow-Treatment
w/o Navy BOD w/o Navy TSS w/o Navy Customer Customer
Weighted Revenue Direct Navy
Functionalized Depreciation Expense 3,694,103$ 2,230,950$ 87,867$ -$ 687,643$ 213,169$ 206,293$ -$ -$ -$ 268,181$
Inside City
Single Family 1,160,608$ 711,049$ 34,782$ -$ 272,201$ 72,457$ 70,120$ -$ -$ -$ -$
Multi Family 901,227 552,138 27,008 - 211,367 56,264 54,449 - - - -
Commercial I 505,040 294,921 14,426 - 112,901 42,074 40,717 - - - -
Commercial II 102,614 51,743 2,531 - 19,808 14,500 14,032 - - - -
Commercial III 169,096 93,542 4,576 - 35,809 17,873 17,296 - - - -
Outside City
Single Family 111,820$ 68,507$ 3,351$ -$ 26,226$ 6,981$ 6,756$ -$ -$ -$ -$
Multi Family 22,476 13,770 674 - 5,271 1,403 1,358 - - - -
Commercial I 15,560 9,086 444 - 3,478 1,296 1,254 - - - -
Commercial II 697 351 17 - 134 98 95 - - - -
Commercial III 2,109 1,167 57 - 447 223 216 - - - -
PSNS
Main 702,856$ 434,675$ -$ -$ -$ -$ -$ -$ -$ -$ 268,181$
Total 3,694,103$ 2,230,950$ 87,867$ -$ 687,643$ 213,169$ 206,293$ -$ -$ -$ 268,181$
Allocation of Depreciation Expense Total
Functions of Service
Summary of Customer Class Allocations
Depreciation Expense
Functions of Service
Prepared by FCS GROUP
(425) 867-1802
Technical Appendix - Wastewater Rate Calculation
10
DocuSign Envelope ID: 63FEE366-8093-45A0-A6C8-B2F25BA1B4E2
City of BremertonNavy Wastewater Rate Calculation
B-10 Summary of O&M, Depreciation and Rate Base Allocations to Customers
Flow-Collection
w/ Navy
Flow-Collection
w/o Navy
Flow-Treatment
w/ Navy
Flow-Treatment
w/o Navy BOD w/o Navy TSS w/o Navy Customer Customer
Weighted Revenue Direct Navy
Inside City
Single Family 31.87%39.58%31.87%39.58%33.99%33.99%44.08%41.80%34.48%0.00%
Multi Family 24.75%30.74%24.75%30.74%26.39%26.39%46.33%43.94%30.09%0.00%
Commercial I 13.22%16.42%13.22%16.42%19.74%19.74%3.69%7.00%8.00%0.00%
Commercial II 2.32%2.88%2.32%2.88%6.80%6.80%0.31%0.74%1.75%0.00%
Commercial III 4.19%5.21%4.19%5.21%8.38%8.38%0.63%1.20%2.69%0.00%
Outside City
Single Family 3.07%3.81%3.07%3.81%3.27%3.27%3.80%3.60%6.43%0.00%
Multi Family 0.62%0.77%0.62%0.77%0.66%0.66%0.88%0.84%1.26%0.00%
Commercial I 0.41%0.51%0.41%0.51%0.61%0.61%0.24%0.45%0.72%0.00%
Commercial II 0.02%0.02%0.02%0.02%0.05%0.05%0.01%0.01%0.03%0.00%
Commercial III 0.05%0.06%0.05%0.06%0.10%0.10%0.02%0.04%0.09%0.00%
PSNS
Main 19.48%0.00%19.48%0.00%0.00%0.00%0.02%0.39%14.47%100.00%
Total 100.00%100.00%100.00%100.00%100.00%100.00%100.00%100.00%100.00%100.00%
Flow-Collection
w/ Navy
Flow-Collection
w/o Navy
Flow-Treatment
w/ Navy
Flow-Treatment
w/o Navy BOD w/o Navy TSS w/o Navy Customer Customer
Weighted Revenue Direct Navy
Functionalized Rate Base 43,971,401$ 30,279,498$ 970,577$ 36,374$ 6,686,717$ 2,072,882$ 2,006,015$ 12,602$ -$ 212,444$ 1,694,293$
Inside City
Single Family 14,158,640$ 9,650,687$ 384,200$ 11,593$ 2,646,913$ 704,580$ 681,852$ 5,555$ -$ 73,260$ -$
Multi Family 11,002,911 7,493,878 298,336 9,002 2,055,360 547,115 529,467 5,838 - 63,915 -
Commercial I 6,087,361 4,002,812 159,354 4,808 1,097,859 409,134 395,936 465 - 16,992 -
Commercial II 1,204,891 702,277 27,958 844 192,615 140,998 136,450 39 - 3,710 -
Commercial III 2,017,663 1,269,596 50,543 1,525 348,215 173,796 168,189 79 - 5,719 -
Outside City
Single Family 1,370,668$ 929,809$ 37,016$ 1,117$ 255,020$ 67,884$ 65,694$ 479$ -$ 13,650$ -$
Multi Family 275,463 186,896 7,440 225 51,260 13,645 13,205 111 - 2,681 -
Commercial I 188,572 123,323 4,910 148 33,824 12,605 12,198 30 - 1,534 -
Commercial II 8,209 4,767 190 6 1,307 957 926 1 - 56 -
Commercial III 25,291 15,834 630 19 4,343 2,168 2,098 3 - 196 -
PSNS
Main 7,631,732$ 5,899,618$ -$ 7,087$ -$ -$ -$ 2$ -$ 30,732$ 1,694,293$
Total 43,971,401$ 30,279,498$ 970,577$ 36,374$ 6,686,717$ 2,072,882$ 2,006,015$ 12,602$ -$ 212,444$ 1,694,293$
Allocation of Rate Base Total
Functions of Service
Summary of Customer Class Allocations
Rate Base
Functions of Service
Prepared by FCS GROUP
(425) 867-1802
Technical Appendix - Wastewater Rate Calculation
11
DocuSign Envelope ID: 63FEE366-8093-45A0-A6C8-B2F25BA1B4E2
City of Bremerton
Navy Wastewater Rate Calculation
B-11 Calculation of Rate of Return on Rate Base
Water 158,450$ 4,255,412$
Wastewater 287,160 7,505,193
Combined Cost of Debt 1 445,610$ 11,760,605$ 3.79%1.50%5.29%
Cost of Borrowing 2 3.42%1.50%4.92%
5.29%
1 Weighted average of all non-subsidized outstanding debt for the combined utilities
2 Numerical average of at least three recent debt issues for municipal entities with similar terms and credit ratings, provided by DA Davidson Municipal Advisors
TotalCalculation of Navy Rate of Return 2019 Interest
(Non-Subsidized Debt)
2019 Outstanding Principal
(Non-Subsidized Debt)Cost of Debt Risk
Premium
Prepared by FCS GROUP
(425) 867-1802
Technical Appendix - Wastewater Rate Calculation
12
DocuSign Envelope ID: 63FEE366-8093-45A0-A6C8-B2F25BA1B4E2
City of Bremerton
Navy Wastewater Rate Calculation
B-12 Calculation of Net Revenue Requirement
2019 Revenue 2,167,003$
Less: O&M and Depreciation 2,229,044
Net Income (62,041)$
Rate Base 7,631,732$
% Rate of Return 5.29%
Return On Rate Base 403,643$
Total Net Revenue Requirement 2,632,687$
$ Difference over Existing Rates 465,684
% Difference over Existing Rates 21.5%
Net Revenue Requirement PSNS
Prepared by FCS GROUP
(425) 867-1802
Technical Appendix - Wastewater Rate Calculation
13
DocuSign Envelope ID: 63FEE366-8093-45A0-A6C8-B2F25BA1B4E2