At the February 6, 2024 City Council meeting, the second phase of the Rate Study was presented by Staff. This meeting was to request the Council's direction on capacity fees for new, or upsizing an existing, connection to the City’s water or wastewater system.
 
At this Work Session, Stantec will present proposed monthly user rates for the City’s current rate structure based on the Council-recommended Full CIP Financial Plan from the October 23, 2023 Joint Water Session with the Water Commission. A list of strategies and objectives to consider in this rate study, from a previous City Council, will be presented for discussion and guidance.
 
Information from this Work Session will be used to guide Stantec and Staff in preparing alternative rate structures for further analysis and presented for discussion and direction at the March 4 Joint Work Session with the Water Commission.

An objective of this rate analysis is to develop cost-of-service-based water, wastewater, and reclaimed water rates that charge customers in proportion to the cost of serving each customer. The methodologies used by Stantec are ones endorsed by the leading utility rate-making organizations in the United States, the American Water Works Association (AWWA) and the Water Environment Federation (WEF.)   Common industry practice is a two-part rate structure comprising both fixed and volume charges.  Generally accepted practice recovers a portion of the costs of the system in a fixed monthly charge (base charge), recognizing that utilities have substantial investments in system costs and other year-round fixed costs to maintain a state of readiness to meet peak demands of customers when these demands occur. In addition, fixed charges also include recovery of customer-related costs. Volume charges recover the remaining revenue requirements, often based on average day-to-day use of the systems. Peak demands of water systems may also be recovered through other forms of volume charges, such as tiered or seasonal rates.   The City currently has a monthly base charge for water service, which is scaled based on meter size. In addition, a usage charge is applied to customers based on metered water use. For wastewater service, customers are charged a uniform volume rate based on customer class.  Reclaimed water rates are established at 35% of the water rates by policy.   The City’s current rate structures for both water and wastewater services comply with common industry practice. City Council will be presented with a set of rate structure considerations and pricing objectives that are used to evaluate alternative rate structures.  These objectives include revenue stability, water conservation, and equity between customer classes and within a customer class, among other considerations.   The desired outcome from this Work Session is guidance on values and priorities of City Council for the purpose of developing monthly user rates.   Stantec will incorporate the objectives and priorities from City Council and the Water Commission and provide rate alternatives to the existing structure for discussion and direction at the Joint Water Commission-City Council Work Session scheduled for March 4, 2024. The user fee portion that addresses the cost-of-service to complete miscellaneous services is currently being worked on and the results will be presented at a future commission meeting. City Council should expect the Rate Study to remain on monthly agendas through the proposed adoption of updated rates and fees at City Council’s June 18th and July 2nd meetings.