Agenda Item: 15(c)
Prepared By: Jeffrey E. Poteet, General Manager, Water & Sewer
Business: Presentation
Department: Water & Sewer
Subject:
Title
Water and Sewer Rate Study Discussion and Council Direction – Jeffrey E. Poteet, General Manager, Water & Sewer
Body
BACKGROUND:
City Council has expressed an interest in discussing a potential water and sewer rate study. The purpose of this agenda item is to provide background on the different types of utility rate analyses available, provide a staff recommendation, and obtain City Council direction regarding the scope of a potential study.
While the City's water and sewer rates have changed over time, the fundamental rate structure used to distribute costs among customer classes has remained largely unchanged since 2006. Because the City's existing Water and Sewer Rate Schedule is detailed and can be difficult to interpret without additional context, the September 2026 Water and Sewer Departmental Report includes a section titled “Understanding Our Existing Water and Sewer Rate Structure.” This write-up provides a simplified explanation of the base facility and consumption charges for the primary water and wastewater customer classes and has also been included as a cover sheet to the current Rate Schedule (also known Exhibit A in the May 2020 resolution) for this agenda item.
The attached discussion paper explains the differences between a Revenue Sufficiency Study, Cost-of-Service Study, and Rate Structure Study and how each may be incorporated into a broader Rate Study. At a minimum, staff recommends completing a Revenue Sufficiency Study to evaluate whether projected utility revenues are sufficient to meet current and future operating, capital, debt, and reserve requirements. City Council may also wish to expand the scope to include a Cost-of-Service Study and/or Rate Structure Study.
No changes to water or sewer rates are proposed as part of this agenda item. Staff is seeking direction on the d...
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