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24 Water Operations 25 The City's water operation provides City customers with safe potable water, as well as on- demand 26 water pressure sufficient to meet the City's fire protection needs. The following table provides a 27 summary of the 2013 and 2014 (Proposed) Budget: 28 2 30 31 32 The single largest operating cost for the water operation is the purchase of wholesale water from the 33 City of St. Paul. For 2014, the budgeted amount has been increased to account for additional 34 consumption should the City experience a dry spring /summer. 35 36 The City of Roseville and St. Paul recently approved an amendment to the existing contract for water 37 service which allows St. Paul to charge both a fixed fee as well as usage charges. The original contract 38 anticipated this change and included the requirement that any rate structure revision could not 39 financially harm Roseville. In fact, Roseville stands to fare slightly better under the revision which 4o allowed Roseville's use rates to remain the same in 2013 as they were in 2012. An increase of 2.3% 41 is expected in 2014. 42 43 The City expects to have inflationary -type increases in supply and other costs, while capital costs are 44 expected to increase significantly due to planned capital replacements in accordance with the City's 45 Capital Improvement Plan (CIP). The water system portion of the CIP is fully funded with the 46 exception of inflationary type costs that have occurred during the past two years. This will require an 47 increase in the City's water base rates for 2014. 48 49 The Water Fund is in poor financial condition and does not currently have any cash reserves. 50 Sustained, yet moderate increases in the water rates will be necessary in future years to strengthen the 51 fund and provide for planned capital replacements. 52 53 There has been significant discussion during the past couple of years regarding the City's Water 54 Conservation Rates and the Senior Discount Program. These issues are addressed in greater detail in 55 the attached memos (Attachments B & C). The PWET Commission also weighed in on these specific 5r) issues at their October meeting. Attachment D summarizes their recommendations. 57 Page 2 of 10 2013 2014 $ Incr. (Decrease) % Incr. (Decrease) Personnel $ 595,845 $ 583,000 Supplies & Materials 761325 78.350 Other Services & Charges 5841270 5861850 Water Purchases 510001000 511001000 Depreciation / Capital 115851000 218601000 Total $ 7,841,440 $ 9,208,200 $113661760 17.4% 30 31 32 The single largest operating cost for the water operation is the purchase of wholesale water from the 33 City of St. Paul. For 2014, the budgeted amount has been increased to account for additional 34 consumption should the City experience a dry spring /summer. 35 36 The City of Roseville and St. Paul recently approved an amendment to the existing contract for water 37 service which allows St. Paul to charge both a fixed fee as well as usage charges. The original contract 38 anticipated this change and included the requirement that any rate structure revision could not 39 financially harm Roseville. In fact, Roseville stands to fare slightly better under the revision which 4o allowed Roseville's use rates to remain the same in 2013 as they were in 2012. An increase of 2.3% 41 is expected in 2014. 42 43 The City expects to have inflationary -type increases in supply and other costs, while capital costs are 44 expected to increase significantly due to planned capital replacements in accordance with the City's 45 Capital Improvement Plan (CIP). The water system portion of the CIP is fully funded with the 46 exception of inflationary type costs that have occurred during the past two years. This will require an 47 increase in the City's water base rates for 2014. 48 49 The Water Fund is in poor financial condition and does not currently have any cash reserves. 50 Sustained, yet moderate increases in the water rates will be necessary in future years to strengthen the 51 fund and provide for planned capital replacements. 52 53 There has been significant discussion during the past couple of years regarding the City's Water 54 Conservation Rates and the Senior Discount Program. These issues are addressed in greater detail in 55 the attached memos (Attachments B & C). The PWET Commission also weighed in on these specific 5r) issues at their October meeting. Attachment D summarizes their recommendations. 57 Page 2 of 10