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Mayor & City Council <br />March 3, 2000 <br />Page 2 <br />To ensure that this fund does not generate significant losses, I am recommending an approximate <br />5.2% rate increase for 2000. It would increase each of the rate schedules by 10¢. The changes <br />are as follows: <br />1999 <br />2000 <br />Winter Rate <br />$1.88/1,000 gals. <br />1.98/1,000 gals. <br />Summer Rate <br />$1.95/1,000 gals. <br />2.05/1,000 gals. <br />This will reduce the projected loss to $28,925 which is more realistic given the overall health of <br />this fund. If we should have a dry summer, this loss could easily turn into a gain. <br />One other issue in this regard is Greg Schroeder's idea to look at the need for a water meter <br />change -out program Given the age of our water meters, it appears we may be starting to <br />experience higher unregistered water usage. This will impact our revenues dramatically over <br />time. More research will be done on this matter in the next few months. <br />While a 5% increase is dramatic, I think it is important to note that in the water fund since 1993, <br />has experienced an average rate increase of 2.26% a year. In 1993, our rates were $1.71 for the <br />winter period and $1.77 for the summer period. In the sewer fund, we did not go to a volume <br />rate charge until 1995. At that point, our rate was $2.15 per 1,000 versus it's current $2.31 per <br />1,000. From 1995, this averages to approximately 1.5% increase per year. Furthermore, the <br />minimum sewer charge has not changed during this period. Therefore, I think our utility rate <br />increases have been very reasonable in terms of inflation comparisons. <br />It is my recommendation that we adopt the rate increase as proposed. If you have any comments <br />or questions, please let me know. <br />JRH:kpp <br />cc: Barb Suciu <br />Page 24 <br />