Title
Preliminary Discussion on Sewer Rate Ordinance
Recommended Action
N/A - Discussion item only
Staff Recommendation
N/A - Discussion item only
Body
The ten-year forecast for the sewer utility presented with the FY2018 budget includes a series of incremental rate increases to generate revenues needed for current operations and to build cash reserves necessary for future infrastructure replacements, most notably the needed replacement for the White Rock waste water treatment facility. We have considered several alternatives as to timing of that plant replacement. Each has different long term cash impacts, and each is presented in this discussion.
Four scenarios are presented. The main differences are when the White Rock plant is designed and constructed, and whether the existing debt on the Los Alamos treatment plant is refinanced. The details of the four scenarios are shown on Attachment A. While the timing and magnitude of future rate increases varies by scenario, as will be discussed, three of the four scenarios presented show the budgeted 8% increase in FY2018 is necessary. The forth scenario shows only a 5% increase in 2018, but continuing increases farther into the future. It should be noted that for the commercial rate class the projected rate increases are offset by an equivalent decrease in the surcharge added to consumption based billings, so sewer charges for the commercial rate class in aggregate will remain essentially flat for the first several years of whichever scenario one considers.
Attachments B1 and B2 are graphs showing the rate trajectory over twenty forecast years for the four scenarios for single and multi-family customer classes.
Attachments C1, C2, and C3 show the cash flow projections for scenarios 10, 20, and 30. Scenario 40 was initially considered for completeness, but since it does not provide for replacing the White Rock treatment plant until 2030 and because it involves continuing rate increases for a significa...
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