Subject
This action will ratify the utility rates scheduled to be in effect from March 1, 2021 through February 28, 2022.
Summary and Background
Resolutions 2112 & 2113 established rates for the water and sewer utilities, and were adopted on October 8th, 2018. The resolutions state that the rates, “shall be adjusted each March 1, effective March 1, 2020, by an amount equal to the year to year percentage change in the Engineering News-Record Construction Cost (20-city average) Index as of December of the preceding calendar year.”
The purpose for this automatic inflation-adjustment is to better insulate the system customers from experiencing sharp year over year price increases by keeping pace with increases in cost of materials associated with necessary system maintenance.
Although the approved rates state that they “shall” be adjusted each year according to this index, it was felt that it would be best to report-out this adjustment to the full council each year and have the council accept that report.
The ENR’s Construction Cost 20-city average Index rose by 2.15% from December 2019 through December 2020. This report recommends that this percentage change be ratified. For reference, this 2.15% adjustment will have the following impacts on the Median residential customer:
Combined Water & Sewer bill will increase by an average of $2.13 per month. August is the highest-usage month for the median water customer. This customer’s combined water and sewer August bill will be $3.06 higher than in 2020. January is the lowest-usage month for the median water customer. This customer’s combined water and sewer January bill will be $1.73 higher than the previous year.
Tie-In to Council Goals:
N/A
Fiscal Information
Total budgeted water and sewer utility revenue from user rates in FY ’20-’21 is $9,189,000. This adjustment will generate approximately $197,000 in additional revenue to protect the system from losses to inflation.
Alternatives and Recommendation
Alternatives
1. Accept the Annual Utility Rate Report.
2. Reject the Annual Utility Rate Report.
Recommendation
Accept the Annual Utility Rate Report.
Requested Action/Motion
Motion to Accept the Annual Utility Rate Report.
Submitted By: Mark Morgan