1B - 2008 Utility Rate Study - Laserfiche WebLink

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This rate tier option would provide an incentive for water conservation and would likely provide a buffer to the city for lower usages which would occur during wet weather summers because there is an even split between usage charges and fixed fees. The proposed rate for Option 11 is shown in greater detail on Appendix F. Residential Rate Option III This tier option shows a meter charge for all usage and the corresponding fixed meter charge decreases dramatically. A residential user meter charge decreases from $29.22 to $9 and the senior residence increases from no charge to $9. The first tier would include all usage to 15,000 gallons at $1.50 per thousand gallons. The second tier would be for the next 20,000 gallon usage or from 15,001 to 35,000 at $3.25 per thousand gallons. The third and final tier would be for usage over 35,001 gallons billed at $4.88 per thousand gallons. The revenues generated equal $311,900 in fixed charges and $1,285,700 in usage charges for a total of $1 ,597,600. Under this option, usage charges represent a higher percentage of the total bill than Option 11. The average residential user then has a usage charge which represents approximately 81 % of their water bill. The proportion becomes higher as the usage goes up and the rate per gallon becomes higher with greater usage, which provides an incentive to conserve water. The average residential user of 25,000 gallons per quarter pays $.0027 per gallon and a higher residential user of 50,000 gallons per quarter pays $.0070 per gallon. The low senior user (16,000 gallons) would pay $.0016 per gallon. This option captures 56% of the water usage in the first tier, 26% in the second tier and the remainder in the top tier. The proposed rate for Option III is shown in greater detail on Appendix F WAC Fees We are recommending that the City study the costs of extending water utility services to the TCAAP area and institute development fees in order to recoup costs of the improvement. Some cities in the metro area have made it a policy decision to recover a targeted percentage of construction costs through WAC and SAC charges. The remainder of the costs would be recovered through user charges. Cash Balallces Operating Reserve We recommend the water fund carry a m1l11mUm cash balance for operations of an amount equal to 50% of operating expenses excluding depreciation plus annual debt service. Cash balances are available to accommodate fluctuations in revenue depending on weather and higher than anticipated operating expenses. /, I 9