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Regular City Council Meeting <br />June 16, 2003 <br />Page 2 <br /> <br />customers, it was based upon the audit financial statement for 2000-2001. Mr. <br />Stowe said that the financial data that they are looking at, at this point in time, <br />is getting stale. Mr. Stowe advised the Council if they were comparing it to the <br />2002-2003 budget, obviously the numbers that they have employed in performing <br />this rate analysis is substantially less than what would be in that budget from an <br />actual standpoint from the wholesale customers as well as the budgeting process <br />itself. Mr. Stowe said to cut to the chase on the study, they are recommending, <br />again it has been since 1999 since the last rate increase, a rate increase of <br />approximately 14% on residential customers. He said the current residential rate <br />for the first 200 hundred cubic feet is $5.91 and they are suggesting that rate goes <br />to $7.00. The current rate per 100 cubic feet is $2.15 and they are suggesting an <br />increase to $2.45. As for the wastewater, the existing base rate is $6.31 and they <br />are suggesting a change to $7.50, and for the 100 cubic feet it is currently $3.10 <br />and they are suggesting that change to $3.25. Mr. Stowe said that, in performing <br />this rate analysis, because of the city's wholesale customers being on a <br />contractual basis and specifically the Lamar County Contract provides for rather <br />than recovery of debt service, it requires for the recovery of the capital cost <br />through depreciation. The depreciable life of the assets to service Lamar County <br />are approximately 40 to 50 years. The debt to finance those capital assets is 20 <br />years. So, what they have when they calculate the rates for wholesale customers <br />is a quarter of a million dollar shortfall that has to be recovered from the retail <br />customers. He said in the years to come, that will reverse and it will become a <br />credit; the city is not there yet. Mr. Stowe advised that the City Council needs to <br />keep that in perspective as it looks at this. <br />Mr. Stowe said the rates developed to recover the revenue requirement based for <br />the retail rates was 6.4 million, and in addition to that, they had a revenue <br />shortfall on the contracts because of the contract methodology right at <br />$300,000.00, so, the retail rates are designed to recover 6.7 million and that will <br />be back based upon the 2001-2002 budget. Mayor Fendley wanted to know how <br />that compared with the 2001-2002 actual audit for the water. Mr. Stowe advised <br />that they had not gone back and looked at the 2001-2002 actual. Mayor Fendley <br />said the water sales is 5.9 million, and your estimated revenue to be 6 4, but <br />asked what was the revenue off of 2001-2002 budget. Mr. Stowe advised that the <br />budget for 2001-2002 was 6.4 million. Mayor Fendley said he thought that is <br /> <br /> <br />