2002_1118_packet - Laserfiche WebLink

Home

REQUEST FOR COUNCIL ACTION Date: 11/18/2002 Item No: III. B. Department Approval: Manager Approved: Agenda Section: rc(G Presentations Item Description: Discussion on the 2003 Utility Rate Adjustments Background Over the past several weeks, Staff has been analyzing the various City-enterprise operations to determine whether rate adjustments are necessary. The analysis entailed a review of the Water, Sanitary Sewer. Storm Water Drainage. and Recycling operations and included the following: 0 Fixed City costs including personnel, supplies and maintenance, and depreciation O Variable costs including the purchase of water from the City of St. Paul, water treatment costs from the Metropolitan Council, and Recycling Contractor costs. O Capital replacement costs D Current customer base, rates, and rate structure Earlier this year, the City Council adopted a preliminary budget for each of these operations. Based on Staffs review, it appears that the preliminary budget sufficiently accounts for the operating and capital costs noted above. The remainder of this report summarizes the rate adjustment necessary to accommodate the 2003 Budget, and scheduled capital replacements over the next few years. Discussion Items Water Operations: The City's water operation provides City customers with safe potable water, as well as on-demand water pressure sufficient to meet the City's fire protection needs. The City purchases its water supply from the City of St. Paul, which remains as the single largest operating cost to the water operation. The St. Paul Water Board has notified the City that its cost to purchase wholesale water will increase 2% in 2003. This will necessitate a similar increase to Roseville customers. In addition, the City's own operating costs are expected to increase by approximately 3% due to higher personnel and capital replacement costs. Sanitary Sewer Operating Budget: The City maintains a sanitary sewer collection system to ensure the general public's health and general welfare. The single largest operating cost to the sanitary sewer operation is the treatment costs paid to the Metropolitan Council Environmental Services Division (MCES). The MCES has notified us that our treatment costs are expected to increase 4.7%. In addition, the City's own operating costs are expected to increase by approximately 3%. The Sanitary Sewer Fund has a strong reserve level and can be used to offset some of these increases.