01-10-1994 Council Packet - Laserfiche WebLink

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Water and Sei»er Rate Study January 6. 1994 pa«e2 3. The irKKiificd operating rate was used as the basis fOT senmg the current rates. 4. The utility rates should not reflect full dcpreciatK>n because this would impoa too large a burden on the current utilits customers. Proposed Rate Increases The rate study resulted in a staff recommendation to increase both sewer and water rates by approximately 30^ The rate increases for both sew^r and water arc divided into an admtmstrative ind billing charge and an operation and maintenance charge. The administrative and billing charge rctlects the costs of ihr: utility billing clerk and a jxmion of other finance staff, the Public Works Director and the City Adininisirator for administrative support including general accounting, financial managenieni and geneui managen«nt support. The administrative and billing charges have increased by large percentages but relatively small dollar amounts. The increase is due to more closely reflecting the actual cost of providing administrative support for these funds. Sewer Fund Operating Budget The operating loss in the sewer fund in 1992 was due mostly to a $60,000 increase in MWCC charges. This trend of rapidly increasing MWCC charges will continue through 1995. The large increases in MWCC charges are due to the sudden change from very dry conditions to very wet conditions in the early 1990 ’s. Because the MWCC estimates flows as the basis tor annual billing, they make a correction to reflect the actual flows on a two year time lag. In the late 1980’s the dr> conditions were resulting in credits of $40-50.000 due to actual flows being much lower than estimates. In the very wet early 1990 ’s the flows were much higher than the estimates. This substantially increased MWCC charges for two reasons. First, the flows were substantially higher. Second, the $40-50.000 credits were replaced by $40-50,000 debits due to the flow being substantially above the MWCC estimates. This double increase has resulted in MWCC charges increasing from $165,000 in 1991 to $281,000 in 1994. This is a 70% increase over tour years or a 17.5% average annual increase. The MWCC fees are lurther projected to increase to $320,000 in 1995. This would be a 94% increase over five years. The large fluctuation MWCC charges based on wet and dry conditions makes it clear that infiltration and inflow (I & I) is a sig:ificant problem in the City’s sewer system. Staff is in die process of updating the City’s 19801 & I Study to identify the cause of the 1 & I and determine the most cost effective .wluiions. Sewer Rate Increases Attachment A shows the staff’s recommendation concerning sewer rates and a comparison to current rates. Attachment B shows the alternate rates under the minimum, modified, and fiiil