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<br />DRAFT REPORT <br /> <br />v. WATER AND W ASTEW A TER UTILITY FINANCIAL OPERATIONS <br /> <br />A. Determination of Test Year Revenue Requirements <br />To recognize the City's contract customers' contractual terms, two test year revenue <br />requirements were developed, one for the contract customers, and one for the retail customers. <br />Table B-1 in ,Appendix B shows the revenue requirement, as adjusted, for the test year for the <br />contract customers. Table C-l in Appendix C shows the revenue requirement, as adjusted, for <br />the test year for the retail customers. The revenue requirement for the contract customers was <br />developed on the fiscal year ended September 30,2004 actual expenses, adjusted for the increase <br /> <br />-- <br /> <br />in electricity costs, while the retail customer revenue requirement was based on the City's FY <br />2004/2005 budget, adjusted for the increase in electricity costs. Adjustments and <br />reclassifications to the revenue requirements are as follows: <br /> <br />Raw Water Supply <br />Since the City budgets both raw water supply and water treatment O&M expenses in <br />Water Production, it is necessary to separate raw water supply costs into their own <br />separately-allocable cost section. <br />'Vater Distribution and Transmission <br />Water distribution and transmission costs must be reclassified from expense type to cost- <br />causal categories. Personnel, supplies, contractual, building maintenance, equipment <br />maintenance, sundry costs, and equipment capital outlay are classified into the three <br />categories of distribution and transmission (less than 8", 8" to 24", and greater than 24") <br />based upon the test year water system inch-feet percentages calculated on Table A-2 in <br />Appendix A. Hydrants/valves and meters/meter boxes remain separate categories for <br />cost allocation purposes. <br /> <br />Debt Service <br />The contracts for Campbell Soup and Tenaska III allow for adjustments in known and <br />measurable changes from the end of the fiscal year to the cost of service determination. <br />Debt Service is based on the projected principal and interest payments for FY 2004/2005 <br />of the City's current outstanding debt issues. <br /> <br />City of Paris, Texas <br />Water and Wastewater Cost of Service Study <br />May 2005 <br /> <br />13 <br />