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City Council Water & Sewer Subcommittee January 21, 2003 Page 7 last few years. City Manager Malone pointed out that the same thing applies to the residential customer that applies to Campbell Soup. If you use less water, the city has to raise the rate because there are certain fixed costs such as the debt and operation cost. Chairman Plata made a comment about telling a citizen who was complaining about his water bill that he was not using enough water and that the city would have to increase the rates for that reason. City Manager Malone explained that he would have to tell them a lot of different things and try to answer their questions, but to be honest about it, there is going to be a certain fixed cost that is going to increase due to two things, and that is inflation and mandates. He said another reason to raise rates might be a sudden demand such as additional capacity that is needed and has to built, but that has not occurred. The reason the City of Paris has had to build was not the demand for water. It is because regulations have reduced the city's ability to produce the amount of water that is needed. He said if there were no mandates and regulations, the city might not have expanded those plants at all. City Manager Malone said the mandates came along and took the city's capacity and reduced it because the city had to slow everything down in order to filter the water better to make the water cleaner. The city had to borrow money and spend money basically to increase capacity incrementally to meet a mandate. City Manager Malone said you take the raw cost and distribute it among all the customers. He said that the biggest part of this rate is going to be sewer because of all of the money the city has had to borrow and the mandates that the city has had to meet. Councilwoman Neeley said they know that the water has gone up $0.01 per thousand gallons of water a year in water production, so she wanted to know how much has it cost her from what she paid in 1987 for her cubic foot to what she pays now. Mr. Anderson said he would have to go back in 1987and see what the rates were at that time.