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r John A. Ilansen, llonorable ~Iayor Utility Ratcs October 9, 1979 Pag e # 2 The follo\Ving changes are recommended In the Water Rate Schedule R\v-l (Rural Customers): I $4.75 [or the first 2000 gallons or less $0.50 per thousanu gallons for all additional water used. A small user of 20,000 gallons per month would pay $13.75 as opposed to $12.82 as suggested by the consultant. The apartment complex sited before would pay $6.25 per unit or $312.50 for the complex. The consultant's recommendation would yield $3.31 per unit or $165.62 [or the complex. ~Iy recommendations may appear high, but it must be remembered that \Ve have not experienced a rate chunge in f 0 u r (4) yea l' san d \ve a l' e cat chi n g up 0 n 0 u l' C h a r g est h l' 0 ugh four of the worst inflationary years our country has experienced. I In every \Vatcr system there arc fixed costs that cover bond and debt reduction, capital cquipment purchase and repair, and main construction allu rcpair. The fixcd cost is covered by the base rate charge. Whether or not ;:lJ1Y \Vater is used by our customers, this base charge \ViII apply to cover our fixed costs. The usage charge is applied to our everyday functions - gasoline and rcpair to vehicles, water leaks, chemicals, salaries, etc. With this ill mind, it secms to me that an apartment complex of SO units that pays only $3.25 per month base rate (the same base rate that a $7,000 a year laborer is cllarged) is unfair \Vhen the benefits to the user are assesseu. As we no\... stand, the apartment complex is paying the same share as a home- owner for debt reduction, capital equipment anu expenses. Clearly this is not fair. The rates as I hllve suggested \ViII enable the Utility Department to better discharge its obligations to the State a J1Ll C i t y; a 11 ow u s to cst a b 1 ish a m c a 11 i n g f ul m a i II r c pIa c e men t and repair program; improvc systcm reliubllity; gcneratc a cap ita Iou tl a y sin kin g [ U 11 d 0 r $ 5 0 , 0 0 0 to $ 7 0 , 0 [) 0 P .L' T yea l' ; and m 0 s t imp 0 I' tall t1 y, i t \v 0 u 1 d p II t us in a fin an cia 11 y responsible posture that would result in investor confidence in the event ,,!e had to borrow to improve our system. ~ Ray V. Kotowski Acting City Manager RVK/pkg