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Department of Utilities
Reference: Clarifications to Utilities 2018 Proposed Rates and Fees Presentation
To: Mayor Richard N. McLean and Members of City Council
Through: Philip Rodriguez, City Manager
Prepared By: Curtis Bauers, Director of Utilities
Date Prepared: November 20, 2017
PURPOSE:
To present additional information requested following the November 14th Study Session to support the results and rationale to modify the current Utilities rates and fees based on Willdan Financial Services rate study analysis, in conjunction with the Utilities Cash Flow Model, to meet 2018 Utilities revenue requirements.
BACKGROUND/HISTORY:
Rates
Willdan Financial Services and the Utilities Department staff have completed a rate study analysis on the City's utility rates and fees. The analysis included a thorough review of current and future operational and capital expenditures required to operate City utilities in a conscientious and sustainable manner over the next 30 years.
Willdan reviewed the Department's updated information and analyzed the model for consistency and validity. The result of this study showed the need for a 2018 revenue increase of 2% in the water fund, 4% in the wastewater fund, and 15% in the stormwater fund, over the average revenues that were generated from 2016-2017. Not merely meeting future expenditure needs, rates are also required by Colorado statute to be based on "cost of service". This means that each customer class (such as residential, commercial, or irrigation users) should be charged fairly and equitably based on how much it costs to provide those services to those particular customer classes. While a full cost of service rate analysis has not been performed this year, it is anticipated that this more detailed analysis will occur late in 2018. However, it is a fair position that there are no significant changes to our most recent analysis that the proposed rates would not still represent the cost of service.
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