Utility Committee Agenda and Packet 2019 09 13

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Mr. Kowar explained the different components of the pages and went on to say we go through the cost of service methodology to determine the expenses we have and a snapshot of one year that we are trying to cover. We look at peaking factors where we looked at the last 5 years. We updated peaking factors to our actual peaking factors using 2017 and we have a graph of the last 5 years and a table so you can see year to year the different peaking factors and how they move around or not. So our system peaking in our last round was 2 for max day and 4 for max hour. We are at 2.61 for max day and 2.99 for max hour so what that is saying is that the max day hits us harder than max hour. If we have a 100 degree day everyone turns on their sprinklers and that’s what gives us a max day. Committee discussed peaking factors, average/max day and volume. Mr. Kowar explained the peaking factor is different across the customer classes. He uses a system peaking factor and a customer class peaking which he calls the user type. So each customer is looked at for their average day and max day. We don’t have a peak day on a customer. Later on there is a table that shows the max day in a given year. Councilmember Stolzmann asked how the tap size is determined. Mr. Kowar said we start with a ¾” tap equivalent or 1 single family home. Kevin stated that it’s all calculated on volume not by tap size for utility rates and Mr. Kowar agreed. The rate structure is different from the cost of services and is based on volume by tap size. Councilmember Stolzmann continued with asking should the tap size impact how much you pay per 1,000 gal of water. Mr. Kowar doesn’t think so. Cory explained the difference between commercial vs residential in that the way a commercial 1,000 gal hits the system is different than the way the residential 1,000 gal hits. Mr. Kowar referred to page 31 for a visual that looks at the rate per 1,000 gal. Committee continued discussing customer class then Mr. Kowar referenced two other charts “WCS0-6 that shows each of the user class for Revenue that they should pay and WCS0-7 is where we lump into our system. Councilmember Stolzmann is concerned that the Commercial users are getting charged less and asked if this is fair and should the first gallon be different? Mr. Kowar stated you want to charge on a higher level. Councilmember Maloney asked how the customer class is helping us with this and what purpose does it serve in setting rates. Mr. Kowar explained that it recognizes and tries to charge the people that are peaking to make sure that they are getting charged what they should and when you look at the end of the year then we know to adjust the rate overall. The latest cost of service which we just did on 2017, which is the first full year where we actually did what the report said and we did some smoothing and some incremental changes over the 3-4 year period where 2017 is the most accurate. Councilmember Maloney stated he’s trying to understand how we determine equity because when you’re trying to recover some costs where the user groups own some level of responsibility toward equity. Mr. Kowar agreed there’s some amount they should pay. Committee continued discussing the peaking, rate numbers and how it’s calculated. Mr. Kowar referred to the chart on page 15 and explains the 3 stacked graphs that shows Commercial, Residential and Multi-Family. Mr. Kowar went on to say the GFO standards are what we try to follow by breaking out the customer class. To give you a little background we had to build a Facility Master Plan and build a big infrastructure on a fast schedule so we needed Federal money. So we pulled the methodology in and we signed loan documents for 5