AgdaPkt 2004-07-26 - Laserfiche WebLink

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REPORT _ � �- l To the Honorable Mayor and �ity Council From the City Manager July 26, 2004 Subject Amendment of Water Rates and Basic Service Charge Recommendation A) Introduce Ordinance Amending Redwood City Code - Section 38.5 - Water Basic Service Charge B) Adopt a Resolution Amending Section 3 of Water Regulations to increase Water Use Conservation Rates Background The Water Fund is an "enterprise" fund, which by law is self-sustaining. All expenditures must be directly related to operations, maintenance, repairs and system ceplacement. 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 Cit�'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 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 FY 2004-05 will increase, primarily due to labor cost increases. On July 14, 2003 Council approved an increase in the monthly Basic Service Charge of 3.5%, from $10.80 to $11.17 per month, to cover increases in "fixed" costs. The 10- year business plan projected annual inflationary adjustments of 3.5%. B) A variable charge, calculated through usage "conservation" rates and based on the consumer's metered water consumption levels. This component provides the financial support for purchase of wholesale water, electrical power from PG&E, capital improvements, and the "Active" water conservation program. On July 14, 2003, the City Council approved an increase in the �Lifeline" rate (up to 10 units of water per bimonthly billing period) from $0.88 per unit (100 cubic feet or 748 gallons) to match the wholesale cost of $1.10 cents. The practice of matching the "Lifeline" rate with the wholesale cost was continued. In addition, the Council increased the other rate tiers, by 10%, 15%, 20°/a and 25%, respectively, in order to equitably spread the financial burden of both the San Francisco Public Utilities Commission (SFPUC) 25% wholesale cost increase and first year funding of the "active" conservation program, as delineated in the adopted Urban Water Management Plan. 1 of 3