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Page 2 <br />transmission mains and distribution mains, and the reason why they <br />are doing this is the system was designed to meet a need, that need <br />is being brought about by residential customers, commercial <br />customers, and industrial customers, and what they will be doing is <br />getting the assets and operating expenses all classified as what <br />their function is doing, then the Engineers will look at the <br />customers as to what demands they are putting on the system that <br />requires the system to be built that way, and the expenses being <br />incurred in that manner, and what they do is assign the expenses over <br />to the customer classes. <br />Mr. Stowe told the Committee that one of the first things to look at <br />in a rate study is the water supply,which the City of Paris is very <br />fortunate to have Pat Mayse Lake. The City has a 55 MGD reserve, out <br />of that the City is only using 21 MGD or 40% of the 55 MGD which has <br />a cost to it, and the City is paying through the Operating and <br />Maintenance. The contract states that for the present use or the 21 <br />MGD the City will be paying the debt service on 1.6 million dollars <br />which is the allocated cost relating to the 21 MGD that built Pat <br />Mayse Lake. The City is paying for the raw water used based on a 50 <br />year payout, and based on stated interest rate, we look at this as a <br />contractual debt obligation, and when it is paid, it is Operating and <br />Maintenance. $77,000.00 has been budgeted for this year of which <br />$49,000.00 is debt service. <br />City Attorney Haynes explained that the City is meeting their minimum <br />obligation only, which is the 21 MGD, and feels we should be paying <br />or setting aside funds to pay for the full 55 MGD reserved, and <br />allowing everyone's participation in the future rights to pay for it, <br />if we do not, when we get down to the end when we have to take the <br />maximum amount of water from Pat Mayse, we will have to pay a larger <br />amount, that is why we need to plan ahead. Mr. Haynes explained that <br />the Consultants will be studying each of our contracts for water, <br />they will tell us where we stand and how to proceed, this will be <br />part of what we will be receiving in future meetings. <br />Mr. Keith Reed explained that the longer the City delays making <br />payments on the future reserve capacity at Pat Mayse, the City runs <br />the risk of someone going to the Water Commission requesting water <br />rights to Pat Mayse because the City of Paris has not payed anything <br />on it. If the City makes an effort to pay or set aside a dedicated <br />reserve, the City would have that as an argument. Mr. Reed said that <br />we are only paying or the first 21 MGD of water taken from Pat Mayse, <br />but when the City exceeds the 21 MGD, the City will have to start <br />paying for a debt service which interest is being accrued. <br />City Attorney Haynes said there has been interest shown by some of <br />the Councilmen for what to do to try and take care of the people who <br />are on a small fixed income without them having large water bills. <br />Mr. Stowe said one of the first thing they will present is a cost <br />base rate, compare it with the cost block rate currently being <br />charged. Mr. Stowe said the cost block rate structure loads the cost <br />on low users. They will take cost base rate and compare, and if that <br />