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SUBJECT: UTILITY FUNDS FINANCIAL PLAN UPDATE <br />DATE: MARCH 10, 2015 <br />PAGE3OF9 <br />Table 3 <br />Adjustments to Water User Charges to Reflect <br />the 2013 Cost of Service Study Results <br />Customer Class <br />2015 Revenue <br />Under <br />Existing User Charges <br />$ <br />Adjusted Cost of Service Findings <br />2015 Adjusted <br />Cost of Service <br />$ <br />Revenue <br />Change <br />($) <br />Revenue <br />Change <br />( %) <br />Single Family Residential <br />Commercial & Multi - Family <br />2,378,901 <br />2,838,820 <br />3,149,338 <br />2,068,383 <br />770,437 <br />(770,437) <br />32.4% <br />(27.1 %) <br />Total City <br />5,217,721 <br />5,217,721 <br />- <br />0.0% <br />Table 4 <br />Adjustments to Sewer User Charges to Reflect the 2013 <br />Cost of Service Study Findings <br />Customer Class <br />2015 Revenue <br />Under <br />Existing User Charges <br />$ <br />Adjusted Cost of Service Findings <br />2015 Adjusted <br />Cost of Service <br />$ <br />Revenue <br />Change <br />$ <br />Revenue <br />Change <br />% <br />Single Family Residential <br />Commercial & Multi - Family <br />1,979,107 <br />465,290 <br />1,712,220 <br />732,177 <br />(266,887) <br />266,887 <br />(13.5)% <br />57.4% <br />Total City 2,444,397 <br />2,444,397 <br />- <br />0.0% <br />As these tables indicate, based on RFC's analysis, current rates: <br />• Undercharge relative to the cost of providing water service to single family <br />residential homes <br />• Overcharge relative to the cost of providing water service to commercial and <br />multi - family residential complexes (which are typically billed to a commercial <br />account) <br />• Overcharge relative to the cost of providing residential sewer service <br />• Undercharge relative to the cost of providing commercial and multi - family <br />residential sewer service <br />The Utility Rate Task Force recommended implementing the cost of service <br />adjustments calculated in the 2013 Study. However, staff did not incorporate those <br />adjustments into the proposed 2014 rate increases because staff and Council needed <br />more time to understand and evaluate the potential impact. Staff now recommends <br />implementing the cost of service adjustments for two reasons: first, as noted above, <br />doing so would more equitably allocate the cost of providing utility service to each <br />category of customers. Second, as reflected in Table 5 below, the overall impact of the <br />cost of service adjustments on an average residential bill would be relatively small; <br />about 30 cents to 63 cents per month, depending on the year (although the impact on <br />individual customers would be more or less than this amount, depending on their actual <br />water use). <br />Table 5 shows the impact on an average residential utility bill with and without cost of <br />service adjustments. <br />CITY COUNCIL COMMUNICATION <br />4 <br />