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Sewer <br />The 2011 Sewer Utility Fund budgeted deficit was $44,399. The actual 2011 operating results are a <br />loss of $13,074. This positive variance of $31,329 is attributable to a 2.4% improvement in <br />anticipated revenues. Residential sewer billing for the year is based on the first quarter's water usage. <br />The first quarter water usage for 2011 was 2.9% greater than usage estimated for 2011 budget <br />calculations. <br />The 2012 budgeted operations are currently projected to result in a loss of $34,376. The 2012 <br />revenues include a usage rate increase of $0.38 (10.0 %) and a $5.00 increase in the quarterly <br />minimum (10.0 %). The Met Council's treatment rate increased 0.5% for 2012. The City's metered <br />flows for the 20010/11 measurement period increased by 29 %, resulting in increased treatment costs <br />of $144,655! (18.4% increase). The 2011/2012 meter replacement program is estimated to produce <br />a 2% increase in the first quarter's meter usage. This factor mitigates the rate increase require for <br />2012. Another factor which is City anticipated to reduce flow charges in 2013 is the lining of a Met <br />Council sanitary line within the City's boundaries. <br />Given the wet season this year and last year we have seen our sewer flows increase and water usage <br />fall. These combined factors put pressure on the rates required to maintain a reasonable operating <br />profit, while trying not to fully recover the cost of a wet season in one period. Given this situation the <br />minimum was increased at higher percentage to produce additional revenues to offset a portion of the <br />2012 treatment costs due to prior year's flows. The thought being if the 2011/12 flow level returns to <br />normal flows the 2013 increase can be limited to the usage rates and the Minimum requirement can <br />be reduced to be proportional. <br />According to the 2012 survey of sewer rates the City's charges were comparable to other <br />municipal ities. <br />Summary <br />Based on the above Staff is recommending that the 2012 utility rates be modified as follows: <br />Sewer Minimum <br />Sewer Use rate <br />Water winter rate <br />Water summer rate <br />Water Service Fee <br />2011 2012 <br />550.00 555.00 <br />53.25 53.58 <br />52.88 52.95 <br />52.98 53.05 <br />512.60 512.60 <br />I I:\1cx.lI I \CorrespondcneoVoel 2012 \Water & Sewer Rate Memo - 3 09.12.doe <br />2 <br />