Revenue and Cost Picture

Revenue Picture:
The current rate structure, implemented in 2007, was developed in consideration of prevailing usage patterns, with a graduated rate structure that provided a higher percentage of revenues associated with higher usage tiers. This effectively provided sufficient revenues – particularly in 2011 and 2012 due to exceptionally dry summers, providing increased revenues that resulted in a healthy level of reserves. As weather patterns change from year to year, increased reserves resulting from dry summers are utilized in the years experiencing more rainfall with corresponding reduced revenues. However, since 2012, usage patterns have decreased considerably – likely for dual factors of increased rainfall and general awareness of conservation by residents. This new persistent pattern with reduced revenues has resulted in annual deficits, depleting working capital balances to less than desired levels. This prompts an immediate need to update the rate schedule to ensure sufficient revenues for continued utility operations.
Water Sales
Cost Picture:
Over the past three years, the City has experienced flooding. Apart from the reduced water sales, the flooding resulted in a significant increase (roughly $1M) in costs related to treatment of wastewater. Infiltration and inflow (I&I) – storm-water finding its way into the sewer system from open cleanouts, manholes, etc., increased effluent treatment cost from the increased wastewater volume. In addition, the City experienced increased capital project cost to find and repair the breeches. This is an ongoing challenge to a utility system, especially when many of the manholes are located along the lakeshore.

Operational Costs and City Efficiency Efforts>>