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<br /> CITY OF 1\RDDI BILIB <br /> H!H:IWlDtIK <br /> . J'I.me 9, 1992 <br /> morE: <br /> TO: Dorothy Person, CityMllliftiAtrator <br /> JtU(@J Tarry Post, City llccoImtant <br /> stlIl.:JECT: BllckgroImd IlIfQJ:lDllticm for Resolution #93-34, EstabH..hi"lJ <br /> Interim 1993 water Rates <br /> '!he water utility service was last reviewed in early 1992. '!he review <br /> in:ticated that a significant rate increase (35%) was necessary to <br /> rest=e the financial =n:tition of the utility. Rates had previously <br /> not cIlarqed since July 1, 1987 (4 3/4 years). Rates were increased in a <br /> two stage iJnplementation on April 1, 1992 am January 1, 1993. It was <br /> assumed that these rate increases would be adequate until a 1994 rate <br /> review. <br /> In March of this year, it was learned that the City's indirect water <br /> supplier (city of Saint Paul) would be sellirq water on a dual rate <br /> basis (summer & winter) am that rates would be increased to its <br /> wholesale customers substantially - 14% for winter water purchases and <br /> 24% for summer water purchases. <br /> . 'Ibis unanticipated price increase aOOve am beyon:i inflationary <br /> a5SUllptions in the last rate st1ldy (1992), will result in approx:imately <br /> $55,000 of additional 1993 water p.m::base costs given flat water <br /> =nsumption between 1992 am 1993. <br /> a. '!he citizen Finance CalIlnittee has reviewed this situation <br /> and rec::amnendErl by motion that a 13% summer and 8% winter <br /> rate increase is justified am that such rate increases be <br /> iJnplemented effective secorxl quarter of 1993. <br /> b. staff rec:crnrnen:iation is a cost re:::overy billirq strategy <br /> that results in increasirq water charges per thousand <br /> gallons from $1. 79 to $1.89 (a 5.6% increase) for winter <br /> water purchases (October - March) am increasirq the charges <br /> to $1.99 (a 11.2% increase) for summer water purchases <br /> (April - Septanber) effective April 1, 1993. '!he prilllary <br /> difference from the Finance CalIlnittee rE!CCJl1Ul"leOOation is an <br /> acknc:Mledgement of the inflationary cost assumption in the <br /> 1992 Rate study. No charges in minimum charges or stan:fuy <br /> fees are recanmen:ied at this t:i1ne. <br /> It is anticipated that this interim action will be superseded by the <br /> results of the 1994 utility rate review scheduled for discussion this <br /> fall with possible iJnplementation of recxmnended changes effective <br /> January 1, 1994. <br /> . TRP:rk <br />