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REQUEST FOR COUNCIL CONSIDERATION Agenda Section: 3' OUNDsS Report Number:Fi 93-637WS STAFF REPORT AGENDA SESSION DATE �CG�° October 4, 1993 Report Date: 9-30-93 - DISPOSITION Item Description: Consideration of Street Light Utility Rates Administrator's Review/Recommendation:,---- ;,_,,,� - No comments to supplement this repprt f - Comments attached. Explanation/Summary (attach supplement sheets as necessary.) ,ST JMMARY; At the September 27, 1993 , Regular City Council meeting, Ordinance No. 528, an ordinance that would repeal the sunset portion of the Street Light Utility, was adopted by the Council. As is annually the case with municipal utilities, it is time to reexamine the rate structure to determine if the rates are set at a level that is fair and reasonable yet enables the City to operate this Utility in a financially sound manner. Presented to you for your consideration are several options pertaining to the Street Light Utility's rate structure. There are five scenarios included that offer a range of possible rates. With each scenario, the rates decrease at a 8-9% average to help visualize the impact that decreasing revenues would have on the Street Light Utility's fund balance. Also, the expenses in each scenario are constant but show inflation increases from one year to the next for 5 years. The electricity account reflects a 5% rate increase each year and the installations, maintenance and administration accounts reflect a 3% increase each year. In all of the scenarios, the revenue remains the same for 1992 and 1993 because the rates were set for those two years. It is the years 1994-98 ---that-are-being-considered. For example, Scenario#1 examines-the—impact of no change in the existing rates. If the expenses are accurate (the increases are only guesses) , the Utility will start using fund balance to finance the Street Light Utility operations by 1997. Scenario #2 proposes a 9% decrease in revenues compared to the existing rates and reveals that fund balance begins to be used in 1994 to help balance the Street Light Utility budget. Scenario #3 reduces revenues another 9% and shows that fund balance is also being used to balance this budget in 1994, but using more fund balance to do so than Scenario #2 . Scenario #4 decreases revenues another 9% and spends down fund balance even faster. Scenario #5 cuts the existing rates in half and decreases the fund balance by $30, 000 in one year. 14i1)Ak RECOMMENDATION; Tim Cruikshank, Asst. to City Admin.