18843_Authority_Dec

municipalauthorities.org │ 53 are growing fastest or driving the biggest increases, and they might overlook non-annual costs like major equipment maintenance or periodic capital repairs . They rarely calculate per-user or per-unit costs, but this data can reveal inefficiencies and trends. The traditional approach is mostly reactive and could mask underlying issues like rising energy use, wage pressures, or the impact of deferred maintenance cycles. A more granular, trend-based, and forward-looking approach will provide more accurate predictions. • Track expenses by major category in multi-year tables to visualize growth patterns. • Identify high-impact cost areas (those that exceed 10% of total spending) and analyze them individually. • Link operational data (like electricity use per gallon pumped or average cost per employee) to financial outcomes. • Account for cyclical costs like equipment maintenance, which tends to recur every few years, not annually. • Use historical patterns to anticipate inflation-related increases like labor, benefits, or energy (which often rise faster than the consumer price index). Tracking overall operation and maintenance costs and trends in individual costs is useful because cost increases for utilities are generally greater than the published consumer price index. A table that shows the total operation and maintenance cost by year is helpful and can be more useful if it also shows the average cost per user. Every utility is different so it may be helpful to look at all operation and maintenance costs to see which ones should be analyzed. Typically, if a cost is greater than ten percent of the total, some analysis is helpful even if it doesn’t help to estimate the future cost. For example, the cost of insurance is usually significant. However, seeing how premiums have increased over several years can provide some insight into future costs. It may also illustrate how some policies are billed every two or three years and not annually. Salaries and Wages Fortunately, analyzing other costs can be more useful in determining how they will behave in the future. The cost of salaries and wages tends to increase more than general inflation . A table that shows total salaries and wages will show how these costs change over time and allows for a percentage to be calculated. A refinement would be to show the number of full-time equivalent employees so that an average cost per employee can be computed. A companion table might include employee benefits, both total cost and employee average. Energy and Chemical Costs Other costs that tend to increase greater than inflation are energy costs and chemical costs . Energy costs have two components, the amount used and the utilities rate per unit. Both water and sewer utilities rely on pumping which consumes a considerable amount of electricity. Therefore, the amount of energy used may be related to volume of water sold or wastewater collected. Electric utilities are generally regulated and tend to increase their rates every three years in keeping with the regulatory cycle. Looking at historical costs, a correlation between cost and usage may become apparent along with a pattern of electric rate increases. The cost of operating chemicals can be a bit tricky to estimate because their cost is influenced by many general economic factors including energy, transportation, and environmental regulations. Local factors like the ability to store them and