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Name: Brenda Malinowski <br />Date: June 19, 2019 <br />Page: 2 of 3 <br /> <br />C:\Users\brenda.malinowski\AppData\Local\Microsoft\Windows\INetCache\Content.Outlook\ME0ZKJ8Z\Little Canada Water and Sewer-Cost of Service Study (3).docx <br /> <br />B. Analyze Water/Sewer Flows Sales. Pumping/flow records will be tracked over the last <br />five years minimum and projected five years into the future. Similarly, water/sewer <br />billed will be projected five years into the future to account for projected population <br />growths. <br />C. Quantify “Unaccounted For” Water. Water that is “unaccounted for” or “lost” in the <br />system will be estimated based on annual meter records between water pumped and water <br />sold. Unaccounted for water is water that is pumped but is not billed to customers <br />because it is lost in the system (hydrant flushing, firefighting, watermain breaks, leaking <br />pipes, unmetered connections, etc.). Some unaccounted for water is normal in ever y <br />system. Unaccounted for water will be quantified to determine if it is excessive. <br />D. Project O&M Expenses. Operation and maintenance expenses for the water and <br />wastewater utility will be projected based on historical trends and budgeting information <br />supplied by the city. <br />E. Estimate Unit Cost of Service. For each utility, future costs for each line item (O&M, <br />debt repayment, etc.) will be established based on actual data and projections of historical <br />data. <br />III. Future Financial Needs Determination <br />A. Dete rmine Revenue Requirements. Revenue requirements will be based on the <br />projected expenses to operate and maintain the system as well as the capital <br />improvements. Revenue requirements will include water and sanitary sewer capital <br />needs financed from operating revenue. A cash balance goal of the City will be reviewed <br />to determine if a suitable amount is kept in reserve. <br />IV. Rate Structure Development <br />A. Assess the Health of Each Utility Fund. The projected expenses will be compared with <br />the existing rates to determine if the fund is sustaining or if annual rate increases are <br />required due to future capital expenditures. <br />B. Prepare Model for Rate Adjustment. The project expenses, capital improvements and <br />debt repayment expenses will be incorporated into a rate model that can easily adjust for <br />differing input data including adjusted rates, capital improvements, etc. <br />Prior to developing the rate structure, specific objectives of the rates will be discussed <br />with the City. Developed rates will be within the specific framework outlined during our <br />preliminary discussions. <br />V. Report Production <br />A. Prepare Draft Report. A draft report in memo format will be prepared that discusses the <br />data collected, historical trends observed, projections made, financial needs estimated and <br />various rate scenarios considered. Recommendations for rates for the next five years will <br />be included. <br />B. Draft Report Review Meeting. Copies of the draft report will be delivered to the City <br />for review. Bolton & Menk staff will follow up with a meeting to discuss the City’s input <br />so that changes can be made to the final report if necessary. <br />C. Produce and Distribute Final Report Copies. Upon revision of the draft report memo, <br />the final document will be provided to the City for distribution and use. Additionally, the <br />spreadsheet program in Microsoft Excel format will be provided to the City for their use.