AgdaPkt 2007-07-09 - Laserfiche WebLink

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RIPORT 88 Page 1 To the Honorabl.e Mayor and Oity Council From the C' ,Mana er ". . . , . . ~ "~''''. .". .. . July 9,2007 SUBJECT Amendment of Water Utility Service Rates and Charges RECOMMENDATION 1. Introduce Ordinance amending Redwood City Code - Section 38.5 - Water Basic Service Charge. 2. Adopt a resolution amending Section 3 of the Rules and Regulations of the Redwood City Water Department (Public Works Services Department) related to water rates. BACKGROUND The Water Fund is an "enterprise" fund, which by law must be 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 commingled 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, Le.; salaries, benefits, equipment, supplies and services, which are within the direct control of the City Council. The City Council's Guiding Principles (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 2007/08 will increase, primarily due to labor and retiree medical cost increases. B. A variable usage rate, 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 programs and the City's recycled water bond payment. On June 5, 2006, the City Council approved the following adjustments to water rates and charges for Fiscal Year 2006/07, as recommended by the Utilities Committee: . Increased the residential and commercial monthly Basic Service Charge by 18.7% from $12.00 to $14.25. This increase included shifting 25% of annual debt service costs from the variable to the fixed portion of utility bills. . Increased consumption rates by an average 4% or $0.10 for each of the five rate tiers. . Council also directed staff to proceed with a comprehensive review of the rate structure for residential and commercial customers for the purpose of addressing equity and effectiveness issues that had been put forward from the community.