HomeMy WebLinkAbout3H, Water Meter Charge Minimum Discussion�
�` R�EN�HILLS
Request for Council Review -
Prepared By: Patrick Klaers, City Administrator
Sue Iverson, Director of Finance Work Session Date: November 21, 2011
and Administrative Services
Water 1VIeter Charge Minimum Discussic�n
Discussion Topic:
At the Augtrst Work Session, Council asked staff to look at reducing the minimum gallons included in the
Water Meter/Rates. Specifically, Council asked staff to look at a S,OOO gallon minimum.
SuUAortinL Documents:
1: Memorandum from Patrick Klaers and Sue Iverson.
2. Utility Rate Study — Rate Tiering Options
��
EN HILLS
MEMORANDUM
DATE:
TO:
FROM:
SUBJECT:
November 21, 2011
Honorable Mayor and City Council
Patrick Klaers, City Administrator
Sue Iverson, Director of Finance and Administrative Services
Water Meter Charge Minimum Discussion
Background:
At the August worksession, Council asked staff to look at reducing the minimum gallons included in the
Water Meter/Rates. Specifically, Council asked staff to look at a 5,000 gallon minimum.
Discussion:
In 2008, the City did a comprehensive Utility Rate Study to fulfill the new water conservation rates
directed by State Statute and to determine the future needs of the utility funds. The new rates were
instituted on January 1, 2009. Staff has done an analysis of the system and the rate structure is
performing as projected.
Council has asked staff to analyze lowering the base usage that is provided by the current rate structure
from 10,000 gallons to 5,000 gallons.
Staff has done a number of iterations to determine how to achieve this result, while still maintaining the
require conservation rate structure without a complete overhaul of the current rate structure. This has
been quite challenging. The meter charges cover the City's "fixed costs" to run the system, while the
usage charges cover the "variable costs." The iteration that seems to work and still maintains the
conservation rate structure involves increasing the usage charge for the highest tier by 40% in addition to
the planned rate increase of 7%.
One thing to remember is that the meter charges remain the same, but the base usage minimum is
lowering to 5,000. This means that everyone that uses more than 10,000 gallons per quarter will now pay
$16.40 more per quarter as a result of having to pay for the additiona15,000 gallons. This is in addition to
the planned increase in rates of 7%. This results in an increase to a Low User of 16,000 gallons per
quarter of $16.41, an Average User of 25,000 gallons per quarter of $16.41, and a High User of 50,000
gallons per quarter of $48.56. The attached spreadsheet shows the impacts both on the water charge and
the total bill.
Memo
City Council
2011 Truth-in-Taxation Hearing Dates and 2012 Preliminary Tax Levy
2
Below is a summary of the billing accounts in each rate tier:
Based on the analysis run by staff, to do any further coniigurations will require an in-depth rate study to
look at the total revenues generated, total consumption, and needs of the funds.
Council Direction:
Discussion on how Council would like staff to proceed.
Attachment A
Utility Rate Study - Rate Tiering Options
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