CCP 12-14-1998 - Laserfiche WebLink

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") I . e CITY OF ARDEN HILLS ., --------- ,---- --------- -------- MEMORANDUM DATE: December 10, 1998 TO: Brian Fritsinger, City Administrator FROM: Terrance Post, City Accountant @ SUBJECT: Utility Rate Recommendations Background The Arden Hills City Council last took action on water and sanitary sewer utility rates by adopting Resolutions #94-52 and #94-53 respectively on October 10,1994, These rate changes were effective beginning on January I, 1995, During the last four (4) years, the utility rates have been adequate to deliver an operating profit, fund regular ongoing capital outlays, and improve the financial condition of these enterprises, However, the long range capital improvement plan for the water and surface water management enterprises identify a significantly higher level of capital spending than has been the case previously, The remainder of this memorandum will e discuss utility rate recommendations for these enterprises, Water Utility (Fund No. 601) The St, Paul Water Board has notified the City ofRoseville (our immediate water supplier) ofa 3,0% increase in wholesale water cost for 1999, This level of increase parallels that of other city generated operating costs. In addition, two significant capital projects have been identified (West Round Lake Road water line upsizing- $230,550; and a residential water meter replacement program - $500,000) that will significantly draw down the reserves of this utility. Sanitarv Sewer Utility (Fund No. 602) The Metropolitan Council Environmental Services Division (MCES) has notified the City of a 5,0% decrease in treatment costs for 1999. MCES treatment costs reflect approximately 60% of the operating costs of the utility, The remaining 40% of the utility's operating costs will experience cost increases in the 2,0 - 3.0% range. Weighting these two factors would suggest a rate decrease of2.0%. Analysis of "Senior" rate customer consumption over the last several years has resulted in the observation that such customers typically use two-thirds (67%) of the water consumption of non- senior rate residential customers. This is in contrast to the fifty percent (50%) rate reduction currently enjoyed by these customers, Without getting into the rationale as to if there should or e should not be a "senior" rate plan, staff believes it appropriate to close the rate reduction gap to reflect actual consumption patterns.