2013-10-22_PWETC_Minutes - Laserfiche WebLink

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2013, and Mr. Miller's supporting memoranda specific to each utility fund, as attached. Mr. Miller advised that the rates were structured and reviewed annually to address day-to-day operating costs, budgetary needs for 2014, and the twenty- year capital improvement program (CIP). At the request of Chair Vanderwall and for the benefit of the public, Mr. Miller provided clarification on the purpose for the CIP to address infrastructure needs on a sustainable schedule. The staff report detail included impacts of the proposed rates for individual customers and average single-family homeowners, from a monthly and annual view. Water Fund (Attachment A, page 2) Specific to water rates, Mr. Miller commended Mr. Schwartz for his work with the City of St. Paul, supplier of wholesale water for the City of Roseville, in recalculating cost allocations for the area and Roseville. Due to the efforts of Mr. Schwartz, Mr. Miller noted that St. Paul Regional Water Utility had frozen 2013 water rates at 2012 levels; which made a huge difference in 2014 rates, with the usage rate remaining fixed for those two years, but increasing minimally in 2014 at 2.3%, and represented a direct pass-through from St. Paul to Roseville. In reviewing CIP costs, Mr. Miller noted that long-term costs were paid separately by a base fee charged to all customers; and while not an exact science, with annual variables addressed, there was $24 million programmed into the CIP budget over the next twenty (20) years. Based on updated information, refined infrastructure conditions, additional costs coming on line, and some inflationary adjustments, Mr. Miller advised that a 10% increase in those base rates was being requested for 2014 from 2013 rates. While this was a larger increase than desired, Mr. Miller advised that savings would be realized in some other utility areas that would soften the blow. At the request of Chair Vanderwall whether those differentials were due to changes in the bid environment due to economics, or more difficult repairs of infrastructure, Mr. Schwartz advised that the most significant reason for the rate increase was due to the extensive and expensive reconditioning of the water tower programmed in 2014. At the request of Member Stenlund, Mr. Miller provided a status report on the poor condition of the Water Fund to-date relative to other utility funds. Mr. Miller advised that, over the last 15 years, the Water Fund had never realized sufficient funds to facility cash flow and operations on a day-to-day basis; and therefore, at this time was going to require some sustained rate increases to build up cash to meet those needs. At the moment, Mr. Miller advised that the funds in this fund, compared to others, was poor to meet those day-to-day operations; and had been and still relied on an internal loan from the Sanitary Sewer Fund for Page 3 of 22