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<br />V. WATER AND W ASTEW ATER 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 th~.refuilcustomers. <br />Table B-1 in Appendix B shows the revenue requirement, as adjusted, fO.rme test year for the <br />contract customers. Table B-2 provides the customer class cost allpcationsiilrecognition of <br />Campbell Soup's and Direct Energy's contract. Table B-5 pr9"idestht customer class cost <br />allocations in recognition of LCWSD's contract. Table C-linAppendix C shows then~yenue <br />requirement, as adjusted, for the test year for the retail cll.stomers. The revenue requir~ment for <br />the contract customers was developed on the fiscaV)'eaJ." ended September 30, 2006 actual <br />expenses, while the retail customer revenue requirement was based on the City's FY 2006/2007 <br />budget. Adjustments and reclassifications to the revenue requirements areas follows: <br />Raw Water Supply <br />Since the City budgets both raw water supply anc:l water treatment O&M expenses in <br />Water Production, it is necessary to separate raw.water supply costs into their own <br />separatel y -allocablecClst ..section. <br /> <br />Water Distribution and Transmission <br />Water distriblltiClhand trllljs1l1issionso~tsrnust be reclassified from expense type to cost- <br />causal categories.P~tsonnel, supplies, contractual, building maintenance, equipment <br />m.ai11.tenance,sl.llldry cOsts~ al}d equipment capital outlay are classified into the three <br />categories of disfril.mtion and transmission (less than 8", 8" to 24", and greater than 24") <br />bas~d upon the tesfyear water system inch-feet percentages calculated on Table A-2 in <br />Appehqix A. Hygrants/valves and meters/meter boxes remain separate categories for <br />cost allocatioIlPllrposes. <br />Debt Service <br />The contracts for Campbell Soup, Direct Energy, and LCWSD allow for adjustments in <br />known and measurable changes from the end of the fiscal year to the cost of service <br />determination. Debt Service is based on the projected principal and interest payments for <br />FY 2006/2007 ofthe City's current outstanding debt issues. <br /> <br />City of Paris, Texas <br />Water and Wastewater Cost of Service Study <br />June 2007 <br /> <br />12 <br /> <br />~"_.""T <br />