06-02-1980 Council Minutes - Laserfiche WebLink

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� Memo # 80-22 �age 20 TO: City Council City Administrator FROM: Tom Kuehn, Finance Director DATE: May 30, 1980 SUBJECT: Sewer and Water Utility Rates The City engineers have completed a rate study for both the sewer and water utilities. Public Works Coordinator, John Gerhardson, and City Engineer Anderlik, and I met to discuss the results_ We are recommend- ing the following; Water Rates: Orono (Navarre Area) The existing rate has an 8,000 gal minimum useage at $7.20 with all use over 8,000 gal at $.90/1000. It is recommended that the rate structure be modified to inclnde a "Ready to Serve" charge and an "Administrative and Billing" charge in addition to the normal rate for purchased water_ There are certain fixed adminis- trative costs not related to volume of water purchased which we feel shoul be billed on a connection basis_ As an example, it costs the City the sam to send a bill to a customer who used 30,000 gallons of water per quarter as well as one who uses 6 ,000 gallons per quarter. Therefore, it is sugg- ested that the fixed administrative costs such as billing , auditing, data processing, office supplies, etc. be considered as a flat rate chargeable to each customer. A "Ready to Serve" charge should be considered for the City of Orono becau the system is being maintained for all potent�al customers but is being us by only a portion of those where service is available. Certain costs are fixed which include the majority of the maintenance items, miscellaneous items not considered to be administrative, and in- ' surance_ These costs are incurred for the entire system and are 'not de- pendent upon the sale of any water.. These expenditures are being made so that the system is maintained to be ready to serve all customers and poten tial customers at all times_ If no one were to use any water, the City would still have to fix water main breaks, paint the water tank from time to time, maintain insurance against fire and similar peril, to keep the system in readiness to serve. In addition to maintaining the system in a ready to serve condition, the properties not currently connected receive the benefit of immediate avail- ability in the event of failure of their current water supply. These same properties are also receiving increased fire protection made available wit the hydrants located throughout the area.