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V. WATER AND WASTEWATER UTILITY FINANCIAL OPERATIONS <br />A. Determination of Test Year Revenue Reauirements <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 ettstomers. <br />Table B-1 in Appendix B shows the revemie requirement, as adjusted, for the test year for the <br />contract customers. TaUle B-2 provides the customer class cost allocations in recognition of <br />Campbell Soup's contract and the assumed Direct Energy contract. Table B-4 provides the <br />custonier class cost allocations in recognition of LCWSD's contract. Table G1 in Appendix C <br />shows the revenue requirement, as adjusted, for the test year for the retail customers. The <br />revenue requirement for the contract customers was developed on the fiscal year ended <br />Scptcmbcr 30, 2009 actual expenses, while the retail customer revenue requirement was based <br />on the City's FY 2010 Uudget. Adjustments and reclassifications to the revenue requirements are <br />as follows: <br />Raw Water Suuplv <br />Since lhe City budgets Uoth 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 />Water Distribution and Trausmission <br />Water distriUution and transmission costs must be reclassified from expense type to cost- <br />causal categories. Persoimel, supplies, contractual, building maintenance, equipment <br />maintenance, suudry 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 Uoxes remain separate categories for <br />cost allocation purposes. <br />Debt Service <br />The contracts for Campbell Soup and LCWSD, and the assumed contract for Direct <br />hrlergy, allow for adjustments in known and measurable changes from the end of the <br />fiscal year to the cost of service deteimination. In January 2010, the City refinanced <br />12 Cit~~ of Pnris, Texns <br />Wnter nitd Vvnsreivnter Cost ojService Studj, <br />Ame 2010 <br />~ 237 <br />