Management Report and Recommendations 12/31/1984

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City of Lino Lakes, Minnesota Management Report, Page 32 There are two basic factors which contribute to increased billings from the MWCC. The first is increased use of the system. The estimated increased usage for 1985 over 1984 for the City of Lino Lakes is 9.4 %. The second factor which increases the billings from MWCC is their increased cost to process gallonage. Their cost to process (per million gallons) increased from an estimated $815 to an estimated $859. This respre- sents an increase of 5.2 %. The combination of these factors increased the City's esti- mated cost in 1985 by 15 %. As the system gains users, the increased usage part of the overall increase should be offset by the billings to new users. The per unit portion of the increase, however, must be borne in full by existing users or be subsidized by overall City operations. The current charge for sewer users in the City of Lino Lakes is $30 per quarter. Based on average Lino Lakes usage (22,650 gallons per quarter as computed by the City) this charge averages to just over 757 per thousand gallons used. The MWCC currently charges the City of Lino Lakes (estimated for 1984) just over 857 per one thousand gallons processed. The City is therefore charging average use customers less than the MWCC charges the City. Variations in this analysis will occur for water which is sold that does not reach the sewer system (i.e., lawn sprinkling). This revenue /expense com- parison however reflects only the MWCC expenses incurred. The City also incurs expenses through administrative and maintenance efforts. The City has no control over the billings from the MWCC for the sewer treatment costs. This operating expense comprises 65% of the 1984 customer billings for sewer service charges. The City must set rates at levels adequate to pay for the pass through costs from MWCC. In view of this arrangement with MWCC, the City's ability to exercise control over its sewer operations is limited. The City can be construed to be acting as an agent for the MWCC with regard to sanitary sewer operations.