No formal action is expected at this work session, but staff is seeking feedback from the Council on the proposed rates, as well as direction from City Council on the residential water tier structure and bulk water reseller rate options.

At the September 8, 2020 Council work session, staff requested direction on issues Council desired to have analyzed in the upcoming water and wastewater rate study.  The following was the general direction provided by Council:

• Change the chart on the utility bills to show the rate tiers.
• Investigate the possibility of reporting consumption in gallons rather than Ccfs.
• Analyze an alternative residential water tier structure that provided a rate for users with minimal consumption ("lifeline rate").
• Provide rate options for bulk water resellers located in the City limits (charged inside City rate) and selling water outside the City of Billings limits.

Public works engaged AE2S Nexus to conduct a cost of service rate study to review and recommend appropriate water and wastewater user rates, the resale rate for the County Water District of Billings Heights, and wholesale rates for Lockwood Water and Sewer District, Philips 66 Billings Refinery and ExxonMobil Refinery, as well as the System Development Fees (SDFs) for water and wastewater.  An analysis of an alternative residential tier structure and bulk water reseller rates was also conducted as requested by Council.  The rate study reports are attached.  Staff will present an overview of the water and wastewater systems, the primary drivers of the rate increases, and the recommended rates for each class of user.  Staff will also report on the status and recommendations of the four items above that Council had requested.    

This is a work session, so no formal action may be taken at this time.  However, staff is asking the City Council to provide direction on the residential water tier structure options and rates for bulk water resellers.  Council will be asked to approve water and wastewater rates for fiscal years 2020 and 2021 at the May 24, 2021, business meeting.

There are no direct fiscal effects for the discussion.