1991-03-11 Regular Meeting - Laserfiche WebLink

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REQUEST FOR CITY COUNCIL AGENDA ITEM AGENDA DATE REQUESTED March 11. 1991 REQUESTED BY Jeff Litchfield DEPARTMENT Director of Finance REPORT RESOLUTION XX ORDINANCE EXHIBITS: Ordinance SUMMARY AND RECOMMENDATION The billing process for sanitary sewer is a very difficult process. Unlike our water billing, which is based on a meter reading, we are unable to accurately measure the amount of sewage that is generated by each customer. This presents the problem of establishing a fair and equitable method of estimating the amount of sewage that is received from each customer. While it is very difficult to determine the usage by customer, it is very easy to determine the amount of expense that we will have each year. The expense to operate the sewage system is very simple because 93$ of the costs are fixed costs. Examples of the fixed costs are debt service to service debt incurred to enhance the sewer infrastructure and personnel costs. Examples of variable costs are electrical and chemical supplies. Because of the large percentage of fixed costs, the amount of revenue we need to generate each year is very easy to estimate. To further complicate the problem of trying to determine how much each customer uses, we realize that we have a very diverse base of customers. We have customers who utilize water outside of the sewage stream (watering yards and gardens, washing cars, etc.) and those who never use water outside the stream. In the past, we have tried to reach a happy medium between the two types of customers. We have attempted to base the sewage charge on a percentage of the water consumed and have added a cap. For this last year, I proposed a method that I felt would help provide us with the necessary amount of revenue and at the same time be easy for the customer to understand. The method I recommended we change to was to base the year round sewage consumption on 25~ of the year's usage, which we have called the "winter months". While this method sounds good and passed my smell test, it has been difficult to implement. When I reviewed the impact of the new calculation based on this year's water consumption amounts, I found that its effect was to raise the amount of sewer revenue by 5.26. This increase was from stable customers and is not attributed to growth in our customer base. It was not my intention to increase the amount of revenue that the sewer charge generates. In addition to increase in revenues, I believe that we have had difficulty in implementing the method in our area because of our proximity to the coast. any variation in reading periods will drastically impact the winter average. [f you will recall, for the month of January, 1991, we had one day of sunshine. Because of the wetness of the month, our reading schedule was iisrupted. It is impossible to read meters when the area around the meters is xnder water. lith this information as background information, I went back to the drawing Board to attempt to find a method that will accomplish our objective of `finding a happy medium between the two types of customers while at the same .:ime protecting the integrity of our Utility system. I ran several scenarios on a rather large sample of our accounts. Continued