No formal action is expected at this work session, but staff is seeking direction from City Council on changes to the existing water and/or wastewater rate structures that Council desires be included as part of the upcoming water and wastewater rate study that will recommend rates for fiscal years 22 and 23.

The Public Works Department regularly undertakes cost of service water and wastewater rate studies to review and recommend appropriate rates for system development fees, water and wastewater user rates, resale rates for the County Water District of Billings Heights, and wholesale rates for the Lockwood Water and Sewer District, Phillips 66 Refinery, and Exxon Mobil Refinery.  The rates must comply with state law and are set to meet projected operation and maintenance costs, as well as fund major capital project needs. 

Public Works has mailed a Request for Proposals (RFP) to firms from a list of prequalified firms, and after a firm is selected, will commence on a water and wastewater rate study to recommend rates for fiscal years 22 and 23.  In addition to the basic rate study scope of work, staff is planning to include several items in the consulting agreement scope of work for the rate consultants to research and provide information on.  These items are:

• Conduct an analysis to establish rates for bulk water resellers
• Conduct an analysis to establish rates for bulk waste water customers
• Analyze high strength wastewater rates and recommend alternatives to high strength rates
• Analyze the tier structure for residential water rates and develop alternatives.  Currently, the City has 4 tiers as follows:

Tiers (1 Ccf = 748 Gallons)	$ per Ccf
0 - 14 Ccfs	$2.66
15 - 43 Ccfs	$3.19
44 - 100 Ccfs	$4.15
>100 Ccfs	$6.23

The purpose of the discussion at the work session is to provide information on the current rates and methodology, including the basis for the current structure, and solicit feedback from Council regarding additional items that Council would like incorporated in the study, as well as direction on alternatives that Council would like to see studied for the residential water rate tier structures, if any.  

This is a work session, so no formal action may be taken a this time.  However, staff is asking for the City Council to provide direction on rate structure changes that it would like staff to analyze in the upcoming water and wastewater rate study.

Revenues from water and wastewater rates are estimated to be $47 million for the current fiscal year.  It is unknown what the impact will be on revenues for the next two fiscal years until the rate study is complete.