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REQUEST FOR COUNCIL ACTION <br />Date: 11/28/2005 <br />Item No: 3.d <br />Department Approval: Manager Approved: Agenda Section: <br />� +�' �� �'� ��� � ` � � , ' � Consent <br />�� ��—����� } <br />r <br />Item Description: Adopting the 2006 Utility T�ti7�� Adjustments <br />Background <br />At the November 21, 2005 Council Worksession, the City Council received a report and <br />presentation outlining Staffs recommendation for the 2006 utility rate adjustments. An excerpt <br />of the report is included below. <br />Excerpt of Staff Report (originally submitted 11/21/OS) <br />Over the past several weeks, Staff has been analyzing the City's utility operations to determine <br />whether rate adjustments are necessary for 2006. The analysis entailed a review of the following <br />services: <br />a) Water <br />b) Sanitary Sewer <br />c) Storm Water Drainage <br />d) Recycling <br />For each operation, the following service inputs were reviewed: <br />� Fixed City costs including personnel, supplies and maintenance, and depreciation <br />�! Variable costs including the purchase of water from the City of St. Paul, water treatment <br />costs paid to the Metropolitan Council, and recycling contractor costs. <br />0 Capital replacement costs <br />� Current customer base, rates, and rate structure <br />On September 12, 2005, the City Council adopted the 2006 Preliminary Budget for each of the <br />operations listed above. The remainder of this report summarizes the rate adjustment necessary <br />to accommodate the budget, and scheduled capital replacements over the next few years. <br />Discussion Items <br />Water Operations: The City's water operation provides City customers with safe potable water, <br />as well as on-demand water pressure sufficient to meet the City's fire protection needs. The City <br />purchases its water supply from the City of St. Paul, which remains the single largest operating <br />cost to the water operation. It is estimated that are wholesale water purchase costs will increase <br />approximately 3%. In addition, the City's internal operating costs are expected to increase by <br />approximately 3.5% due to higher personnel and capital replacement costs. <br />