HomeMy WebLinkAbout2.a. Water Rates4ROSEMOUNTEXECUTIVE SUMMARY
CITY COUNCIL
City Council Work Session: June 9, 2010
AGENDA ITEM: Water Rates
DA SECTION:
PREPARED BY: Andrew J. Brotzler, PE, City Engineer
Jeff May, Finance Director
AGENDA NO. 2 `
ATTACHMENTS: Water Rate Analysis Spreadsheets
APPROVED BY:
RECOMMENDED ACTION: Discussion
ISSUE:
In July 2008, the Minnesota Department of Natural Resources (DNR) notified public water
suppliers that each City must adopt a water conservation rate structure by January 1, 2010, or prior
to being permitted for a new well or increase in appropriations. In response, City staff worked with
the Utility Commission to develop new water rates that not only promote water conservation, but
also maintain adequate revenue to support the maintenance and operating costs of our water system.
These rates were approved in December of 2009 when our fee resolution was approved. Since that
time some homeowner associations have approached City staff with concerns over the potential
increases in their bills for the coming year with the new tiered rates for their irrigation meters. Staff
was pleased that the communications that we had with the residents was successful in the respect
that people were analyzing what impact the new rates could potentially have on them. When the
new rates were adopted last December, staff had not done any specific analysis of irrigation meters
in residential areas. Because of this and the questions raised by several homeowner associations,
staff began to look at the rates again to see if we could come up with adjustments to the rate
structure that may be fairer overall and yet not negatively impact the financial components of the
model.
BACKGROUND:
Water rates
In December, 2009 the following rates were approved by the City Council:
Res�'c�e�riai
Quarterly usage (gallons)
Rates*
0-10,000
$0.90
10,001 — 30,000
$1.10
30,001 — 60,000
$1.40
60,001 — 100,000
$1.90
> 100,000
$2.75
*per thousand gallons
Camai /it�r�r�rri�l!
Quarterly usage (gallons)
0-100,000
Rates*
$1.05
100,001 — 200,000
$1.30
200,001 — 300,000
$1.60
> 300,000
$2.00
*per thousand gallons
Along with the implementation of tiered rates, the City Council approved an increase in the fixed
rate from $8.90 per quarter to $10.00 per quarter. The water surcharge, which helps to fund system
expansion, is not proposed to increase.
After looking at what other surrounding communities are doing with irrigation meters staff went
back to the models to come up with an alternative for irrigation meters that would be fair and
consistent. The following are the changes that staff is proposing:
0-10,000
$0.90
10,001 — 30,000
$1.10
30,001 — 60,000
$1.40
60.001 — 100.000
S1.90
*per thousand
For the residential the top tier is removed and for commercial /industrial nothing is changed. However,
a new rate is proposed for all irrigation meters (residential, commercial /industrial, institutional, etc)
which would be a flat rate of $2.00 per thousand gallons for all water used. This would allow for
consistent billing for all irrigation meters, both residential and commercial, that staff feels would be a
fair amount to charge and would be in line with what other communities are doing with irrigation
meters. When our new analysis of revenue from irrigation meters and these changes were plugged into
the model it actually showed a significant increase in our total projected revenues. A big reason for this
is that the original models did not look at irrigation meters separately but rather lumped them in with
the various other types of meters (residential, commercial /industrial) and used averages in projecting
the total projected revenues. Irrigation meter revenue is a larger component of our revenue than was
shown by the averaging technique used in last year's model. As a result, there will be no negative
impact on the water system financial projections as a result of the changes proposed above. By creating
a separate class — irrigation — it hopefully allows our model to be more accurate in its projections.
SUMMARY:
Based on the research that staff has done we are making the following recommendations for changes to
the fee resolution for the water rates:
• Eliminate the top tier of $2.75 per thousand gallons for the residential rates.
• Create a separate rate for all irrigation meters regardless of type of $2.00 per thousand gallons
for all gallons used.
Staff further recommends that these changes be adopted immediately so that they apply to the current
irrigation season billings. While we think these recommendations will make the rates more fair and
consistent, we would also hope that the associations with irrigation meters will review their watering
schedules to use the minimum water necessary, which is one of the reasons tiered rates were mandated
by the DNR.
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Water Rate Analysis 2009 Version
City of Rosemount, MN
Base Scenario - WTF in 2016 - no stimulus funding
Printed on: 06 10312010 GAUtift ARATESMMerRat -4 -13-08
Description
2006 Actual
2007 Actual
2008 Actual
2009 Budgeted
2010
2011
Water Demand MG
944.07
937.54
910.00
932.51
955.71
979.63
Percent of System Expansion
142%
1.7%
2.5%
2.5%
2.5%
Growth and
Residential Connections
5,817
5,890
5,993
6,143
6,296
6,454
Demand
Commercial Connections
145
145
134
137
140
145
Institutional /Industrial Connections
42
42
52
52
53
53
Business Park/Air Cargo Connections
0
0
0
0
0
0
Water Fixed Charge ($/account/quarter
$
8.90
$
8.90
$ 8.90
$ 8.90
$ 10.00
$ 10.70
Residential Tier 1 0 - 10,000 al
$
1.02
$
1.02
$ 1.02
$ 1.02
$ 0.90
$ 0.90
Residential Tier 2 10,001 - 30,000 al
$ 1.10
$ 1.10
Residential Tier 3 30,001 - 60,000 al
$ 1.40
$ 1.40
Residential Tier 4 60,001 - 100,000 al
$ 1.90
$ 1.90
Residential Tier 5 > 100,000 al
$ 2.75
$ 2.75
Comm / Ind / Inst Tier 1 0 - 100,000 al
$ 1.05
$ 1.05
Proposed Rates
Comm / Ind / Inst Tier 2 100,001 - 200,000 al
$ 1.30
$ 1.30
and Tiers
Comm / Ind / Inst Tier 3 200,001 - 300,000 al
$ 1.60
$ 1.60
Comm / Ind / Inst Tier 4 > 300,000 al
$ 2.00
$ 2.00
'Surcharge - Single Family 5/8" ($ /account)
$
8.80
$
8.80
$ 8.80
$ 8.80
$ 8.80
$ 8.80
'Surcharge - Multi Family 5/8' ($/account)
$
6.80
$
6.80
$ 6.80
$ 6.80
$ 6.80
'Surcharge -1" $/account
$
13.50
$
13.50
$ 13.50
$ 13.50
$ 13.50
'Surcharge - 6' $ /account
$
154.00
$
154.00
$ 154.00
$ 154.00
$ 154.00
Meter Maintenance -1" $/account/ uarter
$
6.25
$
6.25
W$154.00
$ 6.25
$ 6.25
$ 6.25
Meter Maintenance - 6" $/accounti uarter
$
100.00
$
100.00
$ 100.00
$ 100.00
$ 100.00
Be innin Balance
S
$
$ 2,683,412.76
$ 2,521,712.76
$ 3,242,182.86
Total Operating Expenses
$
799039.00
$
1,134,425.00
$ 730,288.66
$ 1,205,500.00
$ 1,083,200.00
$ 1,139,170.00
Total Well and Tower Ex enses
$
159,535.00
$
799,611.00
$ 230,003.48
$ 206,400.00
$ 327,800.00
$ 336,300.00
WTP Debt Service $12,000,000 15 years @ 4.0%
$
$
-
$
$
$ -
$ -
Expenses
Debt Service
$
4,696.00
$
4,432.00
$ 4,153.21
$
$ 100,000.00
$ 450,000.00
Utility Equipment Purchases 3% increase/ r)
$
$
$
$
$ 5,000.00
$ 5,200.00
Total Expenses
S
963,270.00
$
1938,468.00
$ 964445.35
$ 1,411900.00
$ 1,516,000.00
$ 1,930,670.00
Balance after Ex senses
$
$
$
$ 1,271,512.76
$ 1,005,712.76
$ 1,311,512.86
Calculated Fixed Charges
$ 259,575.83
$ 284,697.28
Residential Tier 1 0 - 10,000 al
Residential Tier 2 10,001 - 30,000 al
Residential Tier 3 30,001 - 60,000 al
Residential Tier 4 60,001 - 100,000 al
Residential Tier 5 > 100,000 al
Comm /Ind / Inst Tier 1 0 - 100,000 al
Comm / Ind / Inst Tier 2 100,001 - 200,000 al
Revenues
Comm / Ind / Inst Tier 3 200,001 - 300,000 al
Gomm/ Ind / Inst Tier 4 >300,000 al
Calc. Meter Maintenance -1"
$ 18,500.00
$ 18,625.00
Calc. Meter Maintenance - 6"
$ 21,200.00
$ 21,200.00
Total Revenues excluding surcharge
$
1,453,927.00
$
1,404,903.00
$ 1,322,041.97
$ 1,250,200.00
$ 1,206,120.38
$ 1,254,146.57
Transfer from Capital Investment Fund
$
$
$
$
$ 798,949.72
$ 259 322.57
Miscellaneous Water Revenues antenna, interest
$
$
$
$
$ 231,400.00
$ 234,000.00
eafance a4tor Revenues ear End
$
$
s •
$ 2,521,712.76
Balance change amount
$
$
$
$ 161,700.00
$ 720,470.10
$ 183,200.87
Balance chan e %
-6.03%
28.57%
5.65%
Calc. Water Surcharge - Single Family 5/8" 95%
$ 205,416.07
$ 210,551.47
$ 215,815.26
Calc. Water Surcharge - Multi Family 518" 5%
$ 8,354.24
$ 8,563.10
$ 8,777.18
Calc. Water Surcharge - 1"
$ 7,398.00
$ 7,560.00
$ 7,830.00
Capital
Investment Fund
Calc. Water Surcharge - 6"
$ 32,032.00
$ 32,648.00
$ 32,648.00
Total Water Surcharge Revenue
$ 253,200.31
$ 259,322.57
$ 265,070.43
Transfer to Water Utility Fund
$ 798,949.72
$ 259,322.57
Capital Investment Fund Balance Year End
$ 545,749.41
$ 798,949.72
$ 259,322.57
1 $ 265,070.43
Base Scenario - WTF in 2016 - no stimulus funding
Printed on: 06 10312010 GAUtift ARATESMMerRat -4 -13-08
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Water Rate Analysis
City of Rosemount, MN
2010 Version
Category
Description
2006 Actual
2007 Actual
2008 Actual
2009 Actual
2010 Bud eted
2011
Water Demand MG
944.07
937.54
910.00
937.86
961.31
985.34
Percent of System Expansion
142%
1.7%
2.4%
2.5%
2.5%
Residential Connections (excluding multi -fam irrigation)
5,817
5,890
5,993
6,055
6,206
6,362
Growth and
Demand
Commercial Connections (excluding irrigation)
145
145
134
127
130
133
Institutional / Industrial Connections (excluding irrigation)
42
42
52
37
38
39
Irri ation -onl Connections not including single family)
-
106
109
111
Business Park / Air Cargo Connections
0
0
0
0
0
0
Water Fixed Charge ($/account/quarter
$
8.90
$
8.90
$
8.90
$ 8490
$ 10.00
$ 10.70
Residential Tier 1 0 - 10,000 al
$
1.02
$
1.02
$
1.02
$ 1.02
$ 0.90
$ 0.90
Residential Tier 2 10,001 - 30,000 al
$ 1.10
$ 1.10
Residential Tier 3 30,001 - 60,000 al
$ 1.40
$ 1.40
Residential Tier 4 > 60,000 al
$ 1.90
$ 1.90
Irrigation Meters Multi Fam / Comm / Ind / Inst
$ 2.00
$ 2.00
Comm / Ind / Inst Tier 1 0 - 100,000 al
$ 1.05
$ 1.05
Proposed Rates
Comm / Ind / Inst Tier 2 100,001 - 200,000 al
$ 1.30
$ 1430
and Tiers
Comm / Ind / Inst Tier 3 200,001 - 300,000 al
$ 1.60
$ 1.60
Comm / Ind / Inst Tier 4 > 300,000 al
$ 2.00
$ 2.00
Surcharge - Single Family 5/8" ($/account)
$
8.80
$
8.80
$
8.80
$ 8.80
$ 8.80
$ 8.80
Surcharge - Multi Family 5/8" ($ /account)
$
6.80
$
6.80..$
6.80
$ 6.80
$ 6.80
$ 6.80
Surcharge -1" ($ /account)
$
13.50
$
13.50
$
13.50
$ 13.50
$ 13.50
$ 13.50
Surcharge -1.5" ($ /account)
$
28.00
$
28.00
$
28.00
$ 28.00
$ 28.00
$ 28.00
Meter Maintenance -1" ($/account/quarter
$
6.25
$
6.25
$
6.25
$ 6.25
$ 6.25
$ 6.25
Meter Maintenance -1.5" $ /accountt uarter
$
11.25
$
11.25
$
11.25
$ 11.25
$ 11.25
$ 11.25
Beginning Balance
$
$
$
E
$ 2,841,333.03
$ 3,981,027.17
Operating Expenses
$
799,039.00
$
1,134,425.00
$
730,288.66
$ 1,039,826.00
$ 952,300.00
$ 1,058,600.00
Well and Tower Expenses
$
159,535.00
$
799,611.00
$
230,003.48
$ 188,074.00
$ 327,600.00
$ 364,000.00
Expenses
WTP Debt Service $12,000,000 15 years @ 4.0%
$
-
$
-
$
-
$ -
$ -
$ -
Debt Service
$
4,696.00
$
4,432.00
$
4,153.21
$ 3,860.87
$ 100,000.00
$ 450,000.00
Utility Equipment Purchases 3% increase/ r)
$
$
$
$
$ 5,000.00
$ 5,200.00
Total Expenses
$
963,270.00
$
1,938 468.00
$
9U,445.35
$ 1,231,760.87
$ 1,384,900.00
$ 1,877,800.00
Balance after Expenses
$
$
$
$
$ 1,456,433.03
$ 2,103,227.17
Calculated Fixed Charges
$ 259,325.00
$ 284,414.69
Residential Tier 1 0 - 10,000 al
Residential Tier 2 10,001 - 30,000 al
Residential Tier 3 30,001 - 60,000 al
Residential Tier 4 > 60,000 al
Irrigation Meters Multi Fam / Comm / Ind / Inst
Comm / Ind / Inst Tier 1 0 - 100,000 al
Comm / Ind / Inst Tier 2 100,001 - 200,000 al
Comm / Ind / Inst Tier 3 200,001 - 300,000 al
Comm / Ind / Inst Tier 4 > 300,000 al
Revenues
Calc. Meter Maintenance - 1"
$ 17,150.00
$ 17,150.00
Calc. Meter Maintenance -1.5"
$ 8,730.00
$ 8,730.00
Total Revenues excluding surcharge
$
$
$
$
$ 1,454,044.79
$ 1,500,855.48
Transfer from Capital Investment Fund
$
$
$
$
$ 845,549.35
$ 274,753.85
Miscellaneous Water Revenues antenna, interest
$
$
$
$
$ 225,000.00
$ 234,300.00
Balance after Revenues ear End
$
$
$
$
$ 3 981827.17
$ 41131 1i1
Balance change amount
$
$
$
$
$ 1,139,694.14
$ 132,109.33
Balance change %
40.11%
3.32%
Calc. Water Surcharge - Single Family 5/8" (95%)
$ 207,541.18
$ 212,729.71
Calc. Water Surcharge - Multi Family 5/8" 5%
$ 8,440.67
$ 8,651.69
Calc. Water Surcharge -1"
$ 37,044.00
$ 37,044.00
Capital
Calc. Water Surcharge - 1.5"
$ 21,728.00
$ 21,728.00
Investment Fund
Total Water Surcharge Revenue
$ 274,753.85
$ 280 153.40
Transfer to Water Utility Fund
$ 845,549.35
$ 274,753.85
,Capital Investment Fund Balance Year End
$
545,749.41
$ 845,549.2U
$ 274,753.85
$ 280,153.40
Printed on: 0810312010 G: ILANeslRATES1Water Rates 20101527