02-23-2005 Council Agenda - Laserfiche WebLink

Home Browse Search

MEMORAMDUM TO: Mayor Blesener and Members of the City Council FROM: Joel Hanson, City Administrator Shelly Rueckert, Finance Director DATE: February 17, 2005 RE: 2005 Water Rates Attached is the revised 2005 Budget for the Water utility fund. Please note that we are presenting the Water fund separately from the Sewer Fund so that we could focus on the allocation of the cost savings produced by the reduction in the St Paul wholesale water rate. The 2005 Sewer Fund along with the 2005 Water Fund revised after Council's input will be presented at the March 9111 meeting . In 2004 we budgeted a net loss of $2,403 in the Water Fund. The 2005 current estimated income is $79,547, which is a positive variance of $81,950. The variance is attributed to $25,000 in late fees, which are not included as revenues for budget purposes, $39,000 in cost savings due to 0% unaccounted for water (normally 5% of water billed) and $17,950 in savings in general operating expenses. As you know, St. Paul has modified our billing for 2005 to 71% of their retail rate. Applied to last year's usage, this would be a savings of $107,500. Given this level of savings, our rates for Water can be lowered. As you can see from the Rate survey (attachment B) our rates are among the highest even factoring in other cities with softened water. While the usage rate itself is on par, the addition of the Water Service Charge increases the effective rate and is regressive in nature. The Water Service Charge was introduced in 1978 to cover operating costs beyond the direct cost of water. This flat fee is charged to everyone who has water available whether they connect to the system or not. At today's counts, the amount charged for this fee produces $319,050 in Revenues. Since this is a flat fee in nature we believe it should be associated with the infrastructure maintenance costs within the fund. We have estimated these costs to be $189,500 annually. This amount is comprised of the following: Depreciation Cost $160,000 System Maintenance (1) 24,000 Repairs 5,500 Total $ 189,500 (1) Estimated cost associated with flushing, gate valve exercising, etc.