AgdaPkt 2002-10-07 - Laserfiche WebLink

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~Goun¢il October 7, 2002 Subject Amendment of Water Basic Service Charge and confirmation of existing water conservation usage rates Recommendation Introduce Ordinance Amending Redwood City Code - Section 38.5 - Water Basic Service Charge. Background The Water Fund is an "enterprise" fund, which by law is self-sustaining. All expenditures must be directly related to operations, maintenance, repair and system replacement. Revenues must be segregated from other municipal funds and uses, and cannot be co- mingled with other activities. There are two components of the water utility bill for all customers, which work independently of each other: A. A fixed, monthly basic service charge that provides the financial support for the operations and maintenance of the City's water system, i.e.; salaries, benefits, equipment, supplies and services, which are within the direct control of the City Council. The City Council's Guiding P~nciples (attached) for the Water Enterprise Fund state that fixed costs and basic service charge revenues shall be in balance. The Enterprise fixed costs for Fiscal Year 2002103 will increase, primarily due to labor cost increases. On July 9, 2001, Coundl approved an increase in the monthly Basic Service Charge of 3.5%, from $10.09 to $10.44 per month, to cover increases in "fixed" costs. The 10-year business plan projected annual inflationary adjustments of 3.5%. On July 29, 2002, staff presented to the City Council the Water Enterprise budget for Fiscal Year 2002/03 and advised the Council that a 3.5% increase in the Basic Service Charge will be needed to balance revenues and expenditures. The City Council Utilities Committee supports the following package of changes as this matter now goes to the full City Council for public hearing and final decision. B. A variable usage charge, based on the principle of rewarding conservation and the methodology "the more you use, the more you pay", has been in existence since the drought of 1989, created for the purpose of promoting conservation. This component provides the financial support for purchase of wholesale water, electrical power from PG&E, capital improvements, conservation rebate programs and the City's rights-of-way compensation charge.