Memorandum 15-077 Water and Sewer Commodity Rate Model Review

Memorandum 15-077

TO:                       Mayor Wythe and City Council            

THROUGH:       Katie Koester, City Manager

FROM:                 John Li, Finance Director

DATE:                  May 20, 2015

SUBJECT:         Water & Sewer Commodity Rate Model Review

Water Consumption (see Chart I & Table I):

Chart I illustrates levels of consumptions for the past 5 year.
Table I - Out of approximate 1700 water users, the top 100 customers consume more than 50% of total water.   

Revenues (see Chart II & Chart III):

Overall Water & Sewer revenues have been increasing in the past 5 years.
Values graphed including ONLY consumption (volume) based revenue.
Chart III - 2014 actual operating revenue (draft audit) is below the targeted (budget) number by about $71,000. However, with the Water Hydrant Transfer of $180,499, which was factored into the current rate model, the total water and sewer revenues were more than enough to meeting the FY 2014 expenditure level. 

Expenditures:

The Water & Sewer Operating expenditures were budgeted for $3,457,288 (excluding transfers to reserves). The overall actual expenditures (draft audit) are $3,547,270. It is about $90,000 over the budget.

For FY 2014, due to the additional (non-operating, reoccurring) revenue mentioned in item 2, the Water & Sewer Operations had a $63,932 (draft Audit) surplus, which will be added to the fund balance.
Note: The reorganization of Public Works and Water & Sewer [personnel] reduced FY 2015 Water & Sewer Operating Expense budget significantly.  
Recommendations:

The Commodity Based Rate Model approved by the Council and put into effect as of January 1, 2014, seems effective. I would recommend the Council to allow the rate model to continue.