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memo�andunz <br />TO: City Council <br />John Godwin, City Manager <br />FROM: Gene Anderson, Finance Director <br />SUBJECT: 2013 WATER & WASTEWATER COST OF SERVICE STUDY <br />DATE: May 1, 2013 <br />BACKGROLTND: The City of Paris currently has treated water contracts with four local <br />industries (Campbell Soup, PGEN or Direct Energy, Lamar County Water Supply District, and <br />Daisy Farms). One of the requirements of these contracts is that the City has an independent rate <br />consultant conduct a cost of service study each year. The study determines what the contract <br />customer water rates should be according to the contract terms. A by-product of the study is that <br />water and wastewater rates are also determined for all other water and sewer customer classes <br />(residential, commercial, and industrial customers). This study is the basis for any non-contract <br />rates changes recommended to the City Council. The study is an important financial tool <br />enabling the City to maintain the financial integrity of the Water & Sewer Fund. The fact that the <br />study is performed annually is looked upon favorably by Moody's and other credit rating <br />agencies when the City is attempting to issue bond debt. <br />STATUS OF ISSUE: The 2013 study has been completed. The contract rates determined by the <br />study automatically become effective June 1 St per the contract terms. The current rates for non- <br />contract customers were determined to be sufficient to generate the necessary revenue needed for <br />the Water & Sewer Fund. Therefore, no rate increases are being requested for non-contract <br />customers. The report is being presented as an informational item, and no vote is required. A <br />representative from J Stowe & Company has a brief presentation to make and will answer any <br />questions you may have. <br />BUDGET: The rate study final cost has not been determined but is expected to be between <br />$20,000 and $25,000. This is a similar cost to previous years. The funds are budgeted for this <br />project in the Water Billing Office budget. <br />RECOMMENDATION: No action required. <br />� <br />