Agenda Item: 19(b)
Prepared By: Jeffrey E. Poteet, General Manager, Water & Sewer
Business: City Council Item
Department: Water & Sewer
Subject:
Title
Water and Sewer Utility Rate Study – Review of Draft Scope of Work, Jeffrey E. Poteet, General Manager Water & Sewer
Body
BACKGROUND:
At its September 22, 2026, meeting, City Council directed staff to proceed with a comprehensive Water and Sewer Utility Rate Study to evaluate the financial sustainability of the City's Water and Sewer Utility and determine whether the existing rate structure continues to appropriately serve the needs of the utility and its customers.
The City's current water and wastewater rate structure has remained largely unchanged since 2006. During this period, the utility has experienced significant increases in operating costs, infrastructure rehabilitation and replacement needs, regulatory requirements, and capital investment obligations. A comprehensive rate study will provide an independent evaluation of the utility's financial requirements and establish a framework for maintaining reliable water and wastewater services while balancing long-term financial sustainability, equitable cost recovery, conservation objectives, and customer affordability.
The study will focus on three primary components:
Revenue Sufficiency: Evaluate whether existing rates generate adequate revenues to fund current and projected operating expenses, capital improvements, debt obligations, and appropriate reserves. This analysis will include a multi-year financial forecast and evaluation of alternative capital funding strategies.
Cost of Service: Evaluate the cost of providing water and wastewater services to the City's various customer classes and determine whether those costs are being allocated and recovered equitably, consistent with generally accepted utility rate-setting principles.
Rate Structure: Evaluate the City's existing water and wastewater rate structures and develop alternatives tha...
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