Utility Committee Agenda and Packet 2019 04 12

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Lcity,, Louisville COLORADO • SINCE 1878 Memorandum I Department of Public Works To: Utility Committee From: Cory Peterson, Water Resources Engineer Date: 4/12/19 Re: Cost of Service for Water Summary: As part of the 2013/2014 Water, Wastewater Stormwater Utility Rate Study, a Cost of Service (COS) analysis was performed for the water and wastewater funds. This analysis employed the base -extra capacity methodology supported by the AWWA Rate Manual. The conclusion of the COS indicated that single-family residential class was being subsidized by other customer classes. As compensation to ensure equity, adjustments of a 35% increase to residential rates and a 29% reduction to commercial rates were applied to the 2015 water rates. The adjustments were designed to eliminate the subsidies and ensure each class was covering their proportional responsibility in costs. Verification: Staff have recently completed a preliminary COS utilizing 2017 data. These COS analyses followed the same base -extra capacity methodology. The base -extra capacity methodology begins with the total revenue requirements for each fund. The revenue are divided in to six categories. Each category is then assigned to a cost component. The cost components are then summarized into projected charges by class. The following figure illustrates the process. Revenue Requirements • Operation and Maintenance • Utility Billing • Other City Support Services • Debt Service • Capital Outlays Functional Categories • Supply • Treatment Plant • Transmission • Distribution • Billing • Meters Cost Components • Base • Maximum Day • Maximum Hour • Meters & Services • Billing • Fire Protection User Charges By Class • Projected Charge IE 10