As part of the Water Fund Stabilization Plan approved by City Council (Resolution 24-006), a water cost of service study and rate design was completed in November 2024.  The results of the study were presented to the Council in a Council workshop on December 2.  To meet the revenue requirements of the Water Utility, eliminate the interfund payable to the Electric Utility and establish an operating reserve equal to no less than 3 months of operating expenses, annual rate increases are necessary over the coming 5-year period.  The rate study was made available to the public immediately following the December 2 Council workshop. 

The purpose of this agenda item is to receive public comments and questions on the rate study and the rate increases recommended by the study.  Utilities staff will provide an introduction and basic explanation of utility enterprise finance.  A basic understanding of how municipal utility enterprises are funded, and the current financial status of the City’s Water Utility is critical to understanding the need to increase rates.  Staff will be available to assist the Council in responding to the public’s comments and questions.

There will be no action on the recommended rates at this meeting.  A second opportunity for public input on the recommended rate plan is planned to occur at the February 11 City Council meeting.  Again, no action on the recommended rates is planned for the February 11 meeting.  However, to enable future action on the rate plan, a first reading of an ordinance to repeal the existing rates will be presented at the February 11 meeting.

It is anticipated that a resolution to approve new rates will be presented to the Council for consideration on February 25.