01-28-2015 Council Packet - Laserfiche WebLink

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for Little Canada, SPRWS would pay for the study. If not, LC would pay for it. (Note: On the standard, five-year study, we would split the costs.) That request was also rejected. Historically, Little Canada has had some equity concerns with SPRWS. I will preface these comments by saying that in the past, water became cheaper the more you used. In the late 90's, that philosophy started to change by advocating for conservation and no volume discounts. To give you a better perspective of our payment history, I have attached a spreadsheet entitled SPRWS-Little Canada Overcharges. You will note we have historically paid a dramatically higher percentage for water purchases that Roseville (that was corrected in 2004). If you go back to the origin of this contract, we actually paid a premium as compared to a St. Paul resident even though we operated and maintained our system. From staff's perspective, there have not been any true negotiations in this process. Only slight modifications have been made to the original document and we have essentially been given a contract and told that is it. I'm also not sure we have a lot of leverage in this amendment. Obviously, we want a reduced wholesale rate (71% down to 65%). However, it would also be nice to ensure we are paying only the costs of production and not retail customer distribution costs going forward. On the positive side, we will receive a rebate for 2013 and 2014 costs reducing our percentage payment from 71% to 65%. This equates to $128,199.69 credit that will be applied in 2015 once the contract amendment is approved. This issue was also complicated by SPRWS's changed to a fixed fee rate component in addition to the percentage of St. Paul retail rates. (See attached spreadsheet entitled "Refund Calculation", a memo from General Manager Steve Schneider discussing the new rate structure dated 6/21/13, and another spreadsheet entitled "Base Fee Conversion") Staff's recommendation is to approve the revised contract as presented with the understanding that we be allowed to make a presentation to the Board of Water Commissioners at the time they consider this amendment. The purpose of this presentation would be to appeal for a "sense of faimess". After making the presentation, we would accept the decision of the Board. On the positive side, we would hope they would ask for some further revisions to the contract to ensure greater equity. If they feel the current document is acceptable, we would go forward with the amendment as proposed and know we at least had a chance to speak our piece. If the Council agrees with this approach, I would also recommend the Mayor and one other Council Member accompany the City Attorney and me to this meeting. I have also asked the City Attorney to comment on this recommendation at Wednesday's meeting. cc: City Attorney 2