02-23-2005 Council Agenda - Laserfiche WebLink

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Assuming the estimated system infrastructure cost is considered reasonable, the flat charge required would be approximately $8.51. Factoring in the typical cost for unaccounted water increases this flat charge to $10.26. Reducing the Water Service Charge to this level would reduce Revenues by $90,460. This amount represents 70% of our 2005 anticipated savings from St. Paul's rate adjustment. Approximately 425 in additional Water Service units will be billed in 2005 producing additional revenues of S17,442. These additional units charged are the result of an overall audit of the Water Service Charges. Staff is recommending that certain accounts be modified in the number of water service [nits they are being billed. The number of Water Service charges an account is billed is based off the Sewer Availability Charge (SAC) units associated with that property. Based on the Met Council's method of determining SAC, some older properties are paying an insufficient number of units. It is unclear why variances in charges exist, but some can be attributed to Met Council's changes to SAC calculation methods over time, therefore, causing newer properties to more closely resemble today's calculation than older properties. See attachment C for a listing of Properties adjusted thus far. It is estimated the adjustment total will reach at least 425 upon completion of our review. While these properties will all see increases in their water billing, it will get them paying an equitable amount compared to like properties. The adjustments above would decrease the 2005 - budgeted income from $126,897 to $53,879. Option A in regards to the water usage rates would be to keep them at the 2004 levels. It would be the third year in a row without a change in the usage rate. With a lower Water Service charge and no increase in current rates, we significantly improve on the survey of rates. Also, the rates are less regressive to smaller consumers of water. By not lowering usage rates, the 2005 operating income can serve to cushion further rate increases from St. Paul in the next few years. For example, if St. Paul were to raise their rates by 3% in each of the two successive years and we could choose to hold the line on rates and bleed down the profit to breakeven. Option B would be to lower the rates to achieve breakeven currently and just match St. Paul increases in future years. The Rates in that scenario would go from $2.15 to $2.00 for the winter and $2.23 to 2.07 in the summer. In Option A, a residential account using 20,000 gallons a quarter would see an annual savings over 2004 of $16.24, in fact that would be the amount of savings for any size residential account. In Option B, a residential account using 20,000 gallons a quarter would see an annual savings over 2004 of $28.24, and this savings would increase with greater usage amounts. We are currently anticipating an increase in sewer rates. The rate for the first 15,000 gallons would remain the same, but subsequent usage would increase from $2.75 to 53.00 per 1,000 gallons. This would cost a residential account using 20,000 gallons a quarter $5.00 annually. At 30,000 gallons this cost would be $10.00. Please note that the 2005 budgeted income is conservative in that it does not include late fees, which have averaged over $20,000 the last two years, growth from development and