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<br />b. The total revenue requirement for the Wastewater Utility portion of the test year <br />is estimated to be $4,595,642 (Table C-l), a 1.2% increase from the City's last <br />cost of service study. <br />c. The City's current water and wastewater rates are forecasted to recover a surplus <br />of$103,021 over budgeted expenditures. <br />d. In an effort to control cost, over the last few years the City has r~(.fuc~4 its level of <br />spending on cash funded capital replacements. In~005, RW. Beck <br />recommended that the City began cash funding water and~~stewater line <br />improvements at least to the historical levels of $4QO,OOOaIlIluallY'A.1Jhough the <br />City's current water and wastewater rates aq~igenera.ting sufficient rev~JJ\.leto <br />meet budgeted expenditures, for FY 2006/~007 only $155,000 has been Jiudgeted <br />for cash funding of water and waste~ater\Jine impJ:"()vements. For the City to <br />attempt to maintain reliability and qualitybf.scrvicc, additional cash capital <br />outlays of $245,000 more than the City's current budgeted amount must be made <br />to achieve the $400,000 historical level. It shouldB~l1oted that the historical <br />level of $400,000 in cash capital outlaY$ii~I~flectiveof dated costs and does not <br />incorporate inflationary realtif!i a!>!>oti~ted~th water and wastewater capital <br />improvement~; <br />e. Althoughtlle current,'Water and was~e~ater rates are generating sufficient revenue <br />to Ilteetpudgetedex.pen,~itures, ,because of revenue shortfalls in the past, the <br />Water and<.\YaStewater UtilitY's operating reserves are still in need of <br />replen,~~hing. Iti~ imperative that the City maintain a healthy operating reserve <br />because of the compgsition of the Water Utility's revenue stream (five customers <br />make up approximaiely 50% of the Water Utility's revenues from rates). A loss <br />or decline ij:i consumption of one of these customers could result in a significant <br />financia.l.strain for the City. In addition, operating reserves provide financial <br />suppprt when revenues are negatively influenced by weather conditions. In 2005, <br />R.W. Beck recommended that the City began replenishing the operating reserves <br />at a minimum level of $200,000 annually. To achieve this minimum level of <br />funding, an additional $96,979 ($200,000 - $103,021) in revenue is required. <br /> <br />City of Paris, Texas <br />Water and Wastewater Cost of Service Study <br />June 2007 <br /> <br />2 <br />