24 - 2022 Water & Wastewater Cost of Service Rate StudyItem No. 24
TO: Mayor, Mayor Pro -Tem & City Council
Grayson Path, City Manager
FROM: Gene Anderson, Finance Director
SUBJECT: 2022 WATER & WASTEWATER COST OF SERVICE STUDY
DATE: April 25, 2022
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The City of Paris currently has treated water contracts with four local industries (Campbell Soup,
PGEN (Paris Generation, LP), Lamar County Water Supply District, and Daisy Farms). One of
the requirements of these contracts is for the City to have an independent rate consultant conduct
a cost of service study each year. The study determines what the contract customer water rates
should be according to the contract terms. A by-product of the study is that water and wastewater
rates are also determined for all other water and wastewater customer classes (residential,
commercial, and industrial customers). This study is the basis for any non -contract rate changes
recommended to the City Council. The study is an important financial tool enabling the City to
maintain the financial integrity of the Water & Sewer (Wastewater) Fund. This annual rate study
and the City's rate maintenance policy are looked upon favorably by Moody's and other credit
rating agencies when the City is attempting to issue bonded indebtedness. Adjusting the rates in
accordance with our 2010 Policy is also critical in attempting to fulfill the basic care and
maintenance to our Water and Wastewater system needed for the citizens and businesses of Paris.
STATUS OF ISSUE:
The 2022 study has been completed. The contract rates determined by the study automatically
become effective June 1St per the contract terms — therefore no action is necessary by the City
Council on those fourspecific accounts. The current water rates for non -contract customers were
determined to be insufficient to generate the revenue required to operate the system. A shortfall of
$231,088 is forecasted on the water side of the utility. The primary reasons for the needed increase
are increased operational costs (chemicals for example) and the decreased consumption of
residential users (8.9%). With rising costs and a necessity to maintain safe and reliable drinking
and potable water for our community, it is critical that we raise the appropriate amount of revenue
to meet the expenses associated with providing this product. The City actively seeks bidding and
competitive pricing whenever possible for all of its major expenses in both Utilities and Public
Works. However, we simply cannot just "do without" or "tighten the budget" to cut costs even
when lowest pricing has gone up from previous years as the demand for the service requires
minimum community expectations of our operation to both perform and provide. We also do not
recommend pushing maintenance, replacement, and repair projects off due to the complexity of
the system and the importance of having a functioning and operating facility. The current
wastewater„ rates as adopted by the City Council in January 2021 are sufficient to generate the
revenue required to operate that portion of the system. A representative from NewGen Strategies
& Solutions, LLC has a brief presentation to make and will answer any questions you may have.
BUDGET:
The rate study cost is $30,000. This is a similar cost to previous years. The funds are budgeted for
this project in the Water Billing Office budget.
RECOMMENDATION:
The staff recommends that the Council adopt the recommendation of the rate study as reflected in
the ordinance provided to the Council.
ORDINANCE NO. 2022 -
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PARIS, TEXAS,
AMENDING APPENDIX A, "FEE SCHEDULE," ARTICLE A10.000, "UTILITY
RATES AND CHARGES," SECTION A10.003, "WATER RATES," OF THE
CODE OF ORDINANCES OF THE CITY OF PARIS, TEXAS TO REFLECT
CHANGES RECOMMENDED BY THE 2022 WATER AND SEWER RATE
STUDY; PROVIDING A REPEALER CLAUSE, A SEVERABILITY CLAUSE, A
SAVINGS CLAUSE, A PENALTY CLAUSE; AND PROVIDING FOR AN
EFFECTIVE DATE.
WHEREAS, on the 25th day of April, 2022, the City Council of the City of Paris, Texas,
was presented a water and sewer rate study prepared by NewGen Strategies and Solutions
LLC, with certain findings and recommendations for proposed water rate increases (a copy
of which is on file with City Finance Department); and,
WHEREAS, on April 25, 2022, the City Council has determined that it is in the best
interest of the City of Paris and its citizens to implement the proposed rates for water
services recommended by the 2022 Water and Sewer Study by amending Appendix A, "Fee
Schedule," Article A10.000, "Utility Rates and charges", Section A10.003, "Water Rates," of
the City of Paris Code of Ordinances;
NOW THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF
PARIS, TEXAS:
Section 1. That the findings set out in the preamble to this ordinance are hereby in
all things approved.
Section 2. That Appendix A, "Fee Schedule," Article A10.000, "Utility Rates", Section
A10.003, "Water Rates," of the Code of Ordinances of the City of Paris, Texas, be, and the
same is hereby amended to read in its entirety as follows:
Sec. A10.003 Water rates
Charges for water furnished by the city, measured in cubic feet, are established as
follows based upon customer class and meter size and incorporate a base monthly
cost which includes the cost for the first increment of water, and a cost per one
hundred (100) cubic feet or portion of one hundred (100) cubic feet used above the
first increment:
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Section 3. That water rates established in Sections 2 shall be effective beginning
with July 1, 2022 billing (June consumption).
Section 4. That all provisions of the ordinances of the City of Paris, Texas in conflict
with the provisions of this ordinance are hereby repealed, and all other provisions of the
ordinances of the City of Paris not in conflict with the provisions of this ordinance shall remain
in full force and effect.
Section 5. That the repeal of any ordinance or part of ordinances affected by the
enactment of this ordinance shall not be construed as abandoning any action now pending
under or by virtue of such ordinance or as discontinuing, abating, modifying, or altering any
penalty accruing or to accrue, or as affecting any rights of the municipality under any section or
provision of any ordinance at the time of passage of this ordinance.
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RESIDENTIAL CLASS
Meter Size (inches)
Base Cost for First Increment
Service in Excess of Base (for
(in cubic feet)
each additional 100 cubic feet)
3/4 or less
$13.69 for first 200
$5.04
1 and larger
$66.81 for first 1,000
$5.04
COMMERCIAL/INDUSTRIAL
CLASS
Meter Size (inches)
Base Cost for First Increment
Service in Excess of Base (for
(in cubic feet)
each additional 100 cubic feet)
3/4 or less
$16.36 for first 200
$4.94
1 through 2
$65.54 for first 1,000
$4.03
3
$235.24 for first 3,000
$4.03
4
$4,034.82 for first 100,000
$4.03
6
$6,052.22 for first 150,000
$4.03
8 and larger
$8,069.63 for first 200,000
$4.03
Section 3. That water rates established in Sections 2 shall be effective beginning
with July 1, 2022 billing (June consumption).
Section 4. That all provisions of the ordinances of the City of Paris, Texas in conflict
with the provisions of this ordinance are hereby repealed, and all other provisions of the
ordinances of the City of Paris not in conflict with the provisions of this ordinance shall remain
in full force and effect.
Section 5. That the repeal of any ordinance or part of ordinances affected by the
enactment of this ordinance shall not be construed as abandoning any action now pending
under or by virtue of such ordinance or as discontinuing, abating, modifying, or altering any
penalty accruing or to accrue, or as affecting any rights of the municipality under any section or
provision of any ordinance at the time of passage of this ordinance.
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Section 6. That it is the intention of the City Council of the City of Paris that this
ordinance, and every provision hereof, shall be considered severable, and the invalidity or
partial invalidity of any section, clause, or provisions of this ordinance shall not affect the
validity of any other portion of this ordinance.
Section 7. That any person violating any of the provisions of this ordinance shall be
guilty of a Misdemeanor and, upon conviction, shall be fined in accordance with Section
1.01.009 of the Code of Ordinances, and each and every day's continuance of any violation
of the above -enumerated section(s) shall constitute and be deemed a separate offense.
Section 8. That this ordinance was introduced and read on April 25, 2022, at a
regular meeting of the City Council of the City of Paris
Section 9. That this ordinance shall become effective from and after its passage and
publication as required by law.
PASSED AND ADOPTED this 25th day of April, 2022.
ATTEST:
Janice Ellis, City Clerk
APPROVED AS TO FORM:
Stephanie H. Harris, City Attorney
Paula Portugal, Mayor
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