2017.12.18 CC Packet - Laserfiche WebLink

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2018 Water and Sewer Rates Memo RESIDENTIAL WATER RATES (CONTINUED_ A true conservation rate schedule seeks to reward low-end users with the lowest rate while encouraging everyone to use water efficiently. The recommended water rate schedule will allow for the recapture of all operating and depreciation expenses. However, if high-end users decide to dramatically lower their usage, or if a residential irrigation ban is imposed by the DNR, it will have an impact on overall revenues. Thus, the pro forma projects a water operating buffer of $124,847 should revenue from irrigation accounts decline by 50%. With the recommended rate schedule, all 3,121 residential accounts will experience an average annual increase of $69. MULTI -FAMILY RESIDENTIAL RATES The City has 184 Multi -Family accounts that contain 1,241 dwelling units. Previously these accounts were billed the same as single-family residential accounts. But my analysis shows that these accounts use 45% less water since their irrigation is metered separately (and billed at the highest rate). Staff is recommending just one rate level - $2.00 per thousand gallons. With the recommended rate schedule, 57 of the 184 multi -family accounts will see an average annual decrease of $70 while the remaining 127 accounts will experience and average annual increase of $51. COMMERCIAL AND INDUSTRIAL RATES The only change is in the higher base charge for depreciation. The 98 accounts in this category will only experience a $20 increase per quarter. SANITARY SEWER RATES The largest expense item in the sewer department is for sewage treatment. These charges are imposed by and paid to MCES. The Council may remember that MCES treatment charges reached an all-time high of $633,000 in 2011. The City Engineer questioned the method MCES was using to measure flow and after negotiations they agreed to adjust their methodology, resulting in treatment charges dropping to $441,000 the following year. Sanitary sewer rates were lowered so this savings could be passed on to our residents. However, these charges have crept up every year since then. For 2018, MCES charges will amount to $528,000. When combined with depreciation and funds for lift -station rebuilds, staff is recommending an increase in the SAC portion of the rate schedule. The amount charged for flow (metered water use) will remain the same. Also, residential sewer charges will continue to be based on water used in the winter quarter (January, February, and March). For residential customers, the amount per SAC unit will increase from $47 to $55. All other customers will see an increase of $2 per SAC unit. DIRECTION TO STAFF The attached resolution adopts the pro forma assembled by the Finance Department and approves the recommended rate schedules. It also directs the Finance Department to develop a pro forma financial guide and service rates on an annual basis going forward. Upon approval, a notice of the new rates will be provided to all municipal utility customers.