03-12-2014 Council Agenda - Laserfiche WebLink

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below the rates charged to other SPRWS retail customer communities (we are quite a bit lower than Arden Hills). Sewer The 2013 Sewer Utility Fund budgeted deficit was S34,234. The projected 2013 results yielded a loss of 552,87.1. This is attributable to no investment income being allocated due to unrealized losses versus a projected amount of $12,000. Another factor is an increase in depreciation of just over $16,000. Taking those two factors out of the equation, our loss would have been are a loss of S24,871. A major factor for 2014 is the reduction in the amount payable to Metropolitan Council Environmental Services (MCES) associated with sewage treatment costs. Due to our reduced flows as a percentage of the overall system flows, our costs will drop by over $255,000 in 2014. As has been discussed previously, staff is not sure this will be sustained into future years. We are hopeful this drop is the result of recent sewer lining projects undertaken in 2012 and 2013. However, we are concerned that the drop could also be attributable to an aberration in flows caused the last couple of fairly dry summers. This reduction does provide us with an opportunity to restructure our rates a bit. Staff feels our minimum charge of $55 is too high and we would like to reduce it a bit while still be conservative given the uncertainty of our reduced MCES treatment charges. This is evidenced in the Sewer Survey attached based on a consumption rate of 5,000 gallons of water a quarter. As a result, we are proposing a reduction in our minimum sewer charge of $5 (from $55 per quarter to $50). This will impact a significant percentage of our customers. We would also propose no increase in our per 1,000 gallon rate of $3.58. Our projections are this recommendation will cost us about $90,000 per year. Building this into our 2014 Sewer Budget, you will see we still project a net income of over $121,000. Over the next couple of years, we can continue to evaluate MCES charges and see if further reductions are possible. When comparing our rates to those in the attached survey at a 15,000 gallon level, we are very competitive. Summary Based on the above Staff is recommending that the 2014 utility rates be modified as follows: Sewer Minimum Sewer Use Rate per 1,000 (Based upon water usage) Water Winter Rate per 1,000 Water Summer Rate per 1,000 Water Service Fee 2013 2014 % Change $55.00 $50.00 -9.1 $3.58 $3.58 0.0 $3.04 $3.10 $3.15 $3.21 $12.60 $12.60 H: \JocIH \Correspondence\Joel 2014 \Water & Sewer Rate Mcmo - 3.07.14.docx 1.97 1.90 0.0