HomeMy WebLinkAbout2.a. Water and Sewer Fixed Rate Phase-OutI:\City Clerk\Agenda Items\Approved Items\2.a. Water and Sewer Fixed Rate Phase-Out.docx
EXECUTIVE SUMMARY
City Council Work Session: December 4, 2018
AGENDA ITEM: Water and Sewer Fixed Rate Phase-Out AGENDA SECTION:
Discussion
PREPARED BY: Brian Erickson, PE, Public Works Director / City
Engineer Christine Watson, Public Works
Coordinator
AGENDA NO. 2.a.
ATTACHMENTS: None APPROVED BY: LJM
RECOMMENDED ACTION: Direct staff to update the 2019 Schedule of Rates and Fees
with the rates from the Phase-Out models for water and sewer
BACKGROUND
The proposed phase out of the fixed rates for water and sewer has been discussed twice with the Utility
Commission and twice previously with the City Council at the October and November Work Sessions.
The phase-out models are being presented again so a final decision can be made whether to approve the
phase-out models or the standard models for 2019.
As discussed previously, phasing out the fixed rates for water and sewer will provide the following
benefits:
• Reduced overall utility bill for low and average users
• Greater transparency in our billing methods, with easier-to-understand utility bills
• Greater opportunity for individuals to lower their utility costs through conservation
• Shifts the proportion of costs to the highest users who are putting the greatest strain on the
system
• No negative impact to the overall “bottom line” balance in the Water Utility or Sewer Utility
funds
At the previous Work Session in November, Council members shared a concern about how the proposed
phase-out model will impact commercial accounts, and how our commercial accounts will compare to
other Dakota County cities if the phase-out model is implemented. Staff has researched this information
and will provide the results at the work session.
The following page includes a summary of how the two models will impact various users in 2019. The
phase-out model will produce a substantial decrease for the average low user, a slight increase for the
average high user, and a moderate increase for the average business user, while having an almost neutral
effect on the average residential user. It is important to note, the moderate increase for the average
business user still compares very favorably to other Dakota County cities, which will be shown with
detailed information at the Work Session.
I:\City Clerk\Agenda Items\Approved Items\2.a. Water and Sewer Fixed Rate Phase-Out.docx
The Water Utility fund balance will remain nearly the same with either model, while the Sewer Utility fund
balance will slightly increase with the phase-out model. Additional funds generated by this model may be
used to implement a much-needed preventive maintenance and replacement plan for our sanitary sewer
infrastructure.
SUMMARY
The Standard and Phase-Out models have been discussed with the Utility Commission at two separate
meetings. During those discussions the Utility Commission supported the switch to the Phase-Out
models for water and sewer, a position that is also supported by the Public Works Director and Finance
Director. Staff is requesting a Council recommendation to update the 2019 Schedule of Rates and Fees
with the rates from the water and sewer Phase-Out models as shown below: