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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 11/16/1999 - ITEMS RELATING TO UTILITY RATES FOR 2000 AGENDA ITEM SUMMARY ITEM NUMBER: 34 A-E DATE: November 16, 1999 FORT COLLINS CITY COUNCIL STAFF• ffihke Smith/Dave Agee SUBJECT: Items Relating to Utility Rates for 2000. RECOMMENDATION: Staff,the Water Board and the Electric Board recommend adoption of the Ordinances on Second Reading. EXECUTIVE SUMMARY: A. Second Reading of Ordinance No. 166, 1999,Amending Chapter 26, Article III, Division 4 of the City Code Relating to User Fees and Charges for Water. B. Second Reading of Ordinance No. 167, 1999, Amending Chapter 26, Article IV, Division 4 of the City Code Relating to Wastewater Fees and Charges. C. Second Reading of Ordinance No. 168, 1999,Amending Chapter 26, Article VI, Division 4 of the City Code Relating to Electric Rates and Charges. D. Second Reading of Ordinance No. 169, 1999,Amending Chapter 26,Article VII,Division 2 of the City Code Relating to Stormwater Fees. E. Second Reading of Ordinance No. 170, 1999 Amending Chapter 26 of the City Code Relating to Fees for Raw-water Requirements for the Water Utility. These five ordinances, which were unanimously adopted on First Reading on November 2, 1999, increase the City's utility rates for water by an average of 6%,wastewater by 2%and stormwater by 10%. The rate increase for water vanes by customer class based on the Utilities' cost of service study. There is no monthly rate increase for electric customers; however,the charge for initiating a new service will increase. The Water and Electric Boards have reviewed the rate changes in conjunction with their discussions on the recommended 2000-2001 budget. AGENDA ITEM SUMMARY ITEM NUMBER: 28 A-E DATE: November 2, 1999 FORT COLLINS CITY COUNCIL STAFF1GIike Smith/Dave Agee SUBJECT: Items Relating to Utility Rates for 2000. RECOMMENDATION: Staff, the Water Board and tcElecti, i oar ec eyaption of the Ordinances on First Reading. FINANCIAL IMPACT: These ordinances increase annual Water Fund operating revenues by an estimated 6% and Wastewater Fund operating revenues by 2%. Payments in lieu of taxes paid to the General Fund by Water and Wastewater will al o hZria e`by`l e-Z rce�n s. �torm Drainage Fund operating revenues will increase 10%. Light and Pow dr=reve, es will not change significantly. Approval of the ordinances wi :ensure t1at theat ',Waste er and Storm Drainage Funds will all meet or exceed debt service o erage requirerni& EXECUTIVE SUMMARY: A. First Reading of Ordinance No. 166, 1999,Amending Chapter 26,Article III,Division 4 of the City Code Relating to User Fees and Charges for Water. B. First Reading of Ordinance No.07171in%, aper 26,Article IV,Division 4 of the City Code Relatin #o Wasts and Charg C. First Reading of Ordinance No. 168, 1999,Amending Chapter 26,Article VI,Division 4 of the City Code Relating to Electric Rates and Charges. D. First Reading of Ordinance No. 169, 1999, Amending Chapter 26, Article VII, Division 2 of the City Code Relating to Stormwater Fees. E. First Reading of Ordinance No. 170, 1999 Amending Chapter 26 of the City Code Relating to Fees for Raw-water Requirements for the Water Utility. DATE: November 2, 1999 2 ITEM NUMBER: 28 A-E These five ordinances increase the City's utility rates for water by an average of 6%,wastewater by 2% and stormwater by 10%. The rate increase for water varies by customer class based on the Utilities' cost of service study. There is no monthly rate increase for electric customers; however, the charge for initiating a new service will increase. The Water and Electric Boards have reviewed the rate changes in conjunction with their discussions on the recommended 2000-2001 budget. The table below shows the rate impacts on a typical single family residential customer's monthly bill. Increase Utility Service 1999 2000 $ and % Electric $3 .09 $31.09 $0.00 (500 kWh per month) 0% Water IL 28. 30.35 $1.59 7 (160,000 gal. per year) 5.5% Wastewater $15.62 $15.95 $0.33 (5,600 gal./mo. WQC) 2.1% Stormwater $6.76 $7.44 $0.68 (8,600 sq. ft. lot, light 10% [residential] runoff) Total Utility Bill $82.23 $84.83 $2.60 3.2% The cost of cash in lieu of raw;el ngh�an the ' c A01'recommended. cmmercial accounts using water in excess of the applicable allotment wilinciease a4mately 30%to reflect the current market for raw-water purchase ` e Wafer Board r iewe the approval of this increase in the cash in lieu of water rights rate. All changes will become effective January 1, 2000. BACKGROUND: Water If approved by Council,water es %wi. 'UFacili erage % e increase is necessary to pay debt service for the Water Batmen ter Pl '`sand to fend the operations and maintenance of the City's wat stemcrease w not be the same for all customer classes. The proposed increase or each rate class is determined by the Utilities' cost of service study. Staff produced the cost of service study. John Gallagher,P.E.,a utility consultant with Black and Veatch,reviewed the methodology and results of the study. Based on this cost of service study, it is recommended that the commercial water rates increase 9.15%and residential rates(metered and non-metered) increase 5.44%. The above increases are only for those customers inside the City limits. The customers outside the city limits currently pay higher rates than inside rates. In accordance with Council policy,they will remain frozen until the water rates inside and outside the City limits are the same. It is anticipated that future water rates will increase an average of 6%per year for the next 5 years. This Ordinance also eliminates the special rate for Colorado State University's water accounts. In order to simplify rate administration, each CSU account will be served under the applicable non-residential rate schedule. The fire hydrant fees and charges are also being increased to more accurately reflect the cost of providing this service. DATE: November 2, 1999 3 ITEM NUMBER: 28 A-E Wastewater • This ordinance will increase wastewater rates 2%for all customer classes in 2000. The increase is needed to fund the operations and maintenance of the City's wastewater system and to finance capital improvements. Current projections indicate that another 2% increase in wastewater rates will be needed in 2001 and that an annual 4%increase will be necessary in the years 2002-2004. The Utility will conduct a cost of service study to determine the distribution by rate class of future increases. Except for wastewater strength surcharges, the wastewater rates will increase for only those customers inside the city limits. The customers outside the City limits currently pay higher rates than inside rates. In accordance with Council policy, they remain frozen (except for wastewater strength surcharges)until the Mi? oi side a City limits are the same. Electric There is no increase proposed for the monthly electric rates in 2000, however, a 2% increase is proj ected for 2001. Administrative"housekeeping"changes are being proposed for the electric rates. Several of the changes are needed in order to accommodate the implementation of the new Banner Customer Service System in 2000. These changes include: • Delete the interim rates GSSOX and GS50TX from the Code. These interim large commercial rates were only valid through March 31, 1998 at which time they were ref 5fa'e o b e iiiM` it p'61k rafFGS50. Add a new r for th mane '.wattage flo 'ght as requested by our • customers. Th 70-wa gh- ssgre sodi ight is smaller than other floodlights offere by the ?h . The rate will a$5.78 per month. • Revise the customer of record for the water heater control rebate (Hot Shot) from the specific date of March 15th to the "March billing cycle" in order to reflect new business practices required for Banner. Specify that the rebate is made as a credit on the utility bill. • Revise the small commercial (General Service) seasonal rate to permit a utility bill to be issued during an off-season month. This is necessary for timely collection of on-season energy usage. The seasonal rate is used mainly for irrigatiit'purp ' . • Delete the tim $f dem° '(TO P, cJ rest ntial and small commercial customers.Al ugh the tility TOates for small commercial and residential c In s e ew omers have selected these rates. At this time there are only two residential customers on the TOD rate. These two customers save an average of$7 or 1%per year on the rate. Since the cost to modify Banner to accommodate the TOD rate offering is prohibitive,the Utility recommends that the TOD rates be eliminated. • Increase the service charge for initiating a request for electric service from $10.65 to $14.59. The increase is based on the Utilities cost to provide this service to new or relocating residential and small commercial customers. The service charge is 8% less than it was in 1993, when the charge was $15.87. DATE: November2, 1999 4 ITEM NUMBER: 28 A-E Stormwater The proposed ordinance increases stonnwater fees by 10%. The increase is necessary to fund the operations and maintenance of the City's stonnwater system and to pay debt service for the accelerated capital improvements program. Since both the O&M and capital improvement monthly fees are no longer basin-specific,they have been combined into a single fee amount. Current budget projections indicate that another 8%increase in stonnwater rates will be needed in 2001 and that a 6% increase per year will be necessary in the years 2002-2004. Cash in Lieu of Raw-Water Requirements The proposed ordinance will ' crease th ash r Pba d de pers for satisfaction of raw-water requirements from$2,700 to$ 00 er .,r�e,-f4t. sh r which is adjusted periodically to reflect the current price of raw-water, is also thfor a surcharge paid by nonresidential customers for water used in excess of their annual allotment. Developers have the option of turning in water rights or cash when satisfying the City's raw-water requirements. Over the last several years, about 20%to 30% of the raw-water requirements have been satisfied with cash. The"cash in lieu of water rights"rate is periodically adjusted to reflect the market price of water rights in this area. The price of Colorado-Big Thompson (CBT) units has historically been used to set this rate,as there is enough market activity to establish the going price. The price of CBT water has incr se"ignificantlyrfig ast wo years,from about$2,800 per acre-foot unit to over$5,000 per unit. The rapid mcr as_enn pnt ppears to be because of numerous CBT water purchases by man} commum es in the Northern Corado Water Conservancy District. Other cities and water districts n s area-f sently have cash rates ranging from approximately $4,000 to $6,000 per acre-foot. With the significant increases in the price of CBT water,local developers are turning more and more to the local irrigation companies,such as North Poudre Irrigation Company and the southside ditch companies, or paying cash in lieu of water rights to satisfy the City's raw-water requirements. Because of this,it is appropriate to consider more than just the price of CBT water when adjusting the cash-in-lieu rate. Taking into consideration the wide range of prices among available sources of water,the staff and Water BoafdlN liev bl ash-' =lieu rate would be $3,500 per acre-foot. The City Code provides that no ttenhl Vcusto pay a ge on water used in excess of their annual allotment. As this charge is based on the cash-in-lieu rate,it also needs to be increased from $1.27 to $1.65 per one thousand gallons. The Water Board at its August 26, 1999 meeting endorsed the proposed increases. The new rates will go into effect for all building permits or billings issued on or after January 1,2000.