2025.03.03 CC Packet - Laserfiche WebLink

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2025 Water and Sewer Rates Memo Page 4 of 4 Commercial, Industrial and Institutional sewer customers will see a base rate increase of $14.00 per SAC unit annually, or $3.50 per SAC unit each quarter. These customers will also see an increased usage rate for gallons used over 3,000. These customers are billed each quarter based on actual usage. Overall, an average single‐family residential utility customer would be charged $665.00 annually for both water and sewer services. This equates to $166.25 a quarter or $55.42 a month, reflecting a monthly increase of $7.25 compared to the 2024 rates. This past November, Metropolitan Council Environmental Services published a comparison of 2024 sewer rates across the seven‐county metropolitan area served by MCES. The study examined rates from 111 communities based on an annual consumption of 60,000 gallons. The lowest annual cost was $160.00, while the highest annual cost was $1,048.00, with an average annual cost of $419.00. Hugo’s reported annual cost of $346.00 is well below the reported average and ranked 39th lowest on the list. MCES last updated their water rate study in 2016, comparing 93 communities based on 75,456 gallons consumed annually, with an average cost of $268.56 a year. That data is nearly a decade old, and factoring in just a small 3% increase over those years would result in an average annual cost of $350.00. Using the proposed water rates for 2025, a single‐family residential water user in Hugo, consuming the same gallons, would see a yearly bill of approximately $300.00. The overall goal is to provide adequate revenue to cover water and sewer operations as contained in the pro forma financial guide. The fund should neither operate with a deficit, nor generate excessive profits. The utility fund operates under the principle that cash on hand should equal the amount of accumulated depreciation, with any profits earned retained in the fund to support that goal. DIRECTION TO STAFF The attached resolution adopts the pro forma financial guide 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. ATTACHMENTS Resolution Adopting the Pro Forma Financial Guide and Rate Schedule 2025 Water and Sewer Rate Schedule (year to year comparison) Water and Sanitary Sewer Operations Pro Forma Financial Guide for 2025