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Home My WebLink AboutCOUNCIL - AGENDA ITEM - 11/20/2001 - ITEMS RELATING TO UTILITY RATES FOR 2002 AGENDA ITEM SUMMARY ITEM NUMBER: 41 A-C FORT COLLINS CITY COUNCIL DATE: November 20, 200ISTAFF: Wendy Williams David Agee SUBJECT: Items Relating to Utility Rates for 2002. RECOMMENDATION: Staff and the Water Board recommend adoption of the Ordinances on Second Reading. FINANCIAL IMPACT: These Ordinances increase annual Water Fund operating revenues by approximately 6%, Wastewater Fund operating revenues increase by about 2% and Storm Drainage Fund operating revenues increase 45%. Approval of the rate ordinances will ensure that the Water,Wastewater and Storm Drainage Funds will meet or exceed debt service coverage requirements. EXECUTIVE SUMMARY: A. Second Reading of Ordinance No. 192, 2001, Amending Chapter 26, Article III, Division 4 of the City Code Relating to User Rates and Charges for Water. B. Second Reading of Ordinance No. 193, 2001, Amending Chapter 26, Article IV, Division 4 of the City Code Relating to Wastewater Fees and Charges. C. Second Reading of Ordinance No. 194, 2001, Amending Chapter 26, Article VII, Division 2 of the City Code Relating to Stormwater Fees. As proposed in the 2002-2003 budget, these three ordinances increase the City's utility rates for customers inside the City limits by 6%for water service and 2%for wastewater service. Stormwater rates increase by 45% for all customers. Electric rates do not change. These changes will become effective on billings issued on or after January 1, 2002. The Water Board reviewed and recommended the rate changes in conjunction with its discussion on the 2002-2003 budget. Additionally,the proposed water and wastewater ordinances eliminate the rate differences between inside and outside city customers. Historically,the rates paid by customers outside the City limits were one and one half times higher than the water and wastewater rates paid by customers inside DATE: November 20, 2001 1 2 ITEM NUMBER: 41 A-C the City limits. The cost to provide service inside and outside the City limits no longer supports the different rate levels. In 1994 Council directed staff to"freeze"the outside City rates until the inside rates "caught up". With the proposed increases for 2002, the outside rates are now close to equivalent to rates inside the City limits and in a few cases,customers outside the City may pay less than they would on inside City rates. Ordinance No. 192, 2001, was adopted on First Reading on November 6, 2001, by a vote of 5-2. Ordinance No. 193, 2001, and Ordinance No. 194, 2001, were unanimously adopted on First Reading on November 6, 2001. I i Mew AGENDA ITEM SUMMARY ITEM NUMBER: 34 A-C FORT COLLINS CITY COUNCIL DATE: November 6, 2001 STAFF: Wendy Williams David Agee SUBJECT: Items Relating to Utility Rates for 2002. RECOMMENDATION: Staff and the Water Board recommend adoption of the Ordinancesvon First Reading:; ! Mf FINANCIAL IMPACT: These Ordinances increase annual Water Fund operating,revenues by approximately 6%, Wastewater Fund operating revenues increase by about 2%and Storm Drainage Fund operating revenues increase 45%. Approval of the rate ordinances'will ensure that the Water,Wastewater and Storm Drainage Funds will meet o'r"exceed debtservice coverage requirements. EXECUTIVE SUMMARY: A. First Reading of Ordinance No. 192, 2001, Amending Chapter 26, Article III, Division 4 Relating to User Rates and Charges for Water. B. First Reading of Ordinance No. 193, 2001,Amending Chapter 26,Article IV, Division 4 of the Code of the City Relating to Wastewater Fees and Charges. C. First Reading of Ordinance No. 194, 2001, Amending Chapter 26, Article VII, Division 2 of.the Code of the City Relating to Stormwater Fees. ! F As proposed in 6e-2002-2003 budget, the three ordinances increase the City's utility rates for customers inside the City limits by 6%for water service and 2%for wastewater service. Stormwater rates increase by 45% for all customers. Electric rates do not change. The proposed changes will become effective on billings issued on or after January 1, 2002. The Water Board reviewed and recommended the rate changes in conjunction with its discussion on the 2002-2003 budget. Additionally,the proposed water and wastewater ordinances eliminate the rate differences between inside and outside city customers. Historically, the rates paid by customers outside the City limits were one and one half times higher than the water and wastewater rates paid by customers inside DATE: November 6, 2001 2 ITEM. NUMBER: 34 A-C the City limits. The cost to provide service inside and outside the City limits no longer supports the different rate levels. In 1994 Council directed staff to "freeze"the outside City rates until the inside rates "caught up". With the proposed increases for 2002, the outside rates are now close to equivalent to rates inside the City limits and in a few cases,customers outside the City may pay less than they would on inside City rates. Staff recommends that the water and wastewater rates for customers outside the City limits be established at the same levels as for like customers inside the City limits beginning in 2002. The table below shows the impacts of the proposed rate adjustments on a p single family residential customer's monthly bill. Typical Residential Increase In/crease Utility Customer 2001 2002 `S`;" 0 Water 16 $34.09 $1 93 (160,000 gal. per year) $32. Wastewater -� (5,600 gal./mo. WQC) $16.19 $I6 5Y ' .._ $0.32 2 0% Electric $31.98 $31.98 $0.00 0% (500 kWh per month) Stormwater (8,600 sq. ft. lot, light $8;13 $11.79 $3.66 45.0% runoff) Total Utility Bill $88.46 $9437 $5.91 6.7% BACKGROUND: Water If approved by City Council,water rates:for all customer classes inside the City limits will increase by 6°�r' The increase is necessary to pay debt service for the Water Treatment Facility Master Plan and to fund the operations and maintenance of the City's water system. Separate rates for customers outside the City limits will be eliminated and customers outside of the City limits will pay the same rates assimilar customers within the City limits. Historically these customers had higher rates than inside city,users. •� whJ "z.Fti* A housekeepingchange is also included in the water rate ordinance. The tern"minimum"has been replaced by"base"inocdei to clarify that the fixed monthly portion of the rate is in addition to the charges for water usage. It is anticipated that future water rates will increase an average of 6% in 2003. No water rate increases are currently projected during the years 2004-2006. Wastewater This ordinance will increase wastewater rates for all customers inside the City limits by 2%in 2002. The increase is needed to fund the operations and maintenance of the City's wastewater system and DATE: November 6,2001 3 ITEM. NUMBISR: 34 A-C to finance capital improvements. Separate rates for customers outside the City limits will be eliminated and customers outside of the City limits will pay the same rates as similar customers within the City limits. Historically these customers had higher rates than inside city users. The wastewater rate ordinance also eliminates the classification of users "Category I: Special Without Agreement". There are no customers in this rate class and it is no longer needed. Current projections indicate an additional 2%wastewater increase in 2003. An,annual 2.5%rate : increase is projected for the years 2004-2006. IMx.d Stormwater The proposed ordinance increases stormwater fees by 45% for all.customers. The: increase is necessary to fund the operations and maintenance of the City's stormwater system, to pay debt service and to accelerate the citywide capital improvements program*''`Current projections indicate an annual 10%increase will be necessary in the years 2003 and 20041 7%in 2005,and`6%in 2006. The proposed rate increases are in accordance with the Stormwater Financing Plan adopted by City Council Resolution 2001-93. The ordinance also eliminates the minimum monthly bill for stotmwater service. The minimum applied to only five customers with lot sizes less than 380 square feet. This is a housekeeping change to simplify administration of the rates. _ Electric No electric rate increases are projected for 2002 or 2003. It is currently projected that a 2%increase may be necessary in 2004 and in 2006. a e� Summary Although it has been necessary for the City to raise utility rates over the years, a comparison with inflation shows that increases to the total City utility bill for a typical residential customer have been less than inflation since 1985. The following graph shows the overall increases in monthly utility charges for a typical single family residential customer in comparison with inflation. The typical residential customer is defined as electric use of 500 kWh per month,metered water use of 160,000 gallons per year, wastewater with 5,600;gal./mo. winter quarter consumption, and stormwater for a 8,600 sq. ft. lot with light runoff. '`