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Itm.- <br /> ,----ARZEN HILLS <br /> MEMORANDUM <br /> DATE: December 10, 2012 <br /> TO: Honorable Mayor and City Council members <br /> Patrick Klaers, City Administrator <br /> FROM: Kyle Howard, Finance Analyst <br /> SUBJECT: Utility Rate Study <br /> Background <br /> Since August of 2011 staff has been working trying to suggest new rate structure for the City's Water <br /> rates. In September of 2012 the Financial Planning and Analyst committee started to work on reviewing <br /> the City's Utility Rates. Staff has pulled historical data from 2009-2011 to use as the baseline for <br /> estimating revenues and usage averages. This data was then presented to FPAC to further analyze and <br /> make possible recommendations on improvements to the billing system. FPAC and staff presented <br /> possible scenarios to council at the November 19`h Council work session. From the feedback it was <br /> decided that the changes being made where too drastic and that only small changes should be made. <br /> FPAC has since reconvened and has made additional changes to the rate structure. <br /> Attachments <br /> Attached is a memo from the FPAC describing the suggested changes that could be made to improve the <br /> system. The focus of the committee was to give the lower end user more of a discount on the water. This <br /> was also the direction that staff was asked to follow at the end of 2011. <br /> Staff has prepared narratives for how the changes will affect the customers overall bills. The narratives <br /> are using the rates for 2013 and are all first quarter billings. These scenarios capture the low end (5,000 <br /> gallons) user up to the higher user(50,000 gallons). For each level there is a"Current Rate Structure" and <br /> a "New Rate Structure". The current system uses the 2012 rate structure, which includes the first 10,000 <br /> gallons in the meter fee and only has 2 tiers. The new system has a new meter fee and a new tier level, <br /> making a total of 3 tiers. It also bills from gallon 1 on. This is the only system that gave the low end users <br /> a break. Each narrative is broken down into Water portion, Sewer portion and Surface water portion. <br /> These are then combined to find the total bill. <br /> At the end of each narrative is a comparison of what residents would have paid in 2012 compared to <br /> 2013 new rate. Note that there is one rate for the current system scenarios that does not reflect the <br /> proposed 2013 fee schedule. The surface water rate has been changed due to the negative cash flow <br />