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<br />Sewer Rates: <br />Within the Sewer fund there also exists two primary operating functions. These <br />functions are the treatment of sanitary sewer flow and the collection sanitary sewer <br />flow. As seen in Exhibit D, the Sewer Fund expenditures have been categorized by <br />collection system costs and the sanitary sewer treatment costs. Metropolitan Council <br />Environmental Services (MCES) provides the sanitary sewer treatment process. The <br />labor costs associated with the maintenance of the collection system, water billing and <br />administrative support, along with other operating costs make up the collection system <br />costs. <br /> <br />Treatment costs are considered to be substantially driven by flow volumes while overall <br />collection costs were considered to be 21% related to usage. The remaining distribution <br />costs correlate to common infrastructure maintenance needs and customer service. This <br />share of costs is considered fixed and not impacted by flow volumes. Based on the <br />analysis at Exhibit D, the table below summarizes the amounts of sewer operating <br />expense and depreciation expense assigned as usage based and fixed cost. <br /> <br /> <br /> <br /> <br /> <br /> <br />Again at this juncture, there is the opportunity to align revenue sources with <br />corresponding costs. Similarly, this involves establishing a flat rate fee to cover the <br />corresponding fixed costs. This allows the usage rate to be set at an amount to cover the <br />usage driven expenses. This approach would provide: <br /> Greater transparency as to the basis of rates. <br /> An increased ability to maintain a structural balanced operation as the usage <br />revenue could be matched to swings in sewer flows (dry vs wet summers) and <br />MCES rate adjustments. <br /> The flat rate fee would be computed based on the total fixed costs divided by the <br />total the residential equivalent units (according to the Metropolitan Council <br />formula) for all sewer accounts. <br /> A single family home would represent one unit. Multi-family residential <br />properties would have multipliers based on the number units. Commercial <br />accounts will have multipliers based the residential equivalent units. <br /> <br /> OPERATING DEPRECIATION OVERALL <br />FIXED 366,519 35%104,755 70%471,274 40% <br />USAGE 668,218 65%44,895 30%713,113 60% <br />1,034,737 100%149,650 100%1,184,387 100%