22-2013 Water and Wastewater Cost of Service Studymemo�andum
To: c�Ty co���l
John Godwin, City Manager
FROM: Gene Anderson, Finance Director
SUBJECT: 2013 WATER & WASTEWATER COST OF SERVICE STUDY
DATE: May l, 2013
BACKGROIJND: The City of Paris currently has treated water contracts with four local
industries (Campbell Soup, PGEN or Direct Energy, Lamar County Water Supply District, and
Daisy Farms). One of the requirements of these contracts is that the City has 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 sewer customer classes
(residential, commercial, and industrial customers). This study is the basis for any non-contract
rates 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 Fund. The fact that the
study is performed annually is looked upon favorably by Moody's and other credit rating
agencies when the City is attempting to issue bond debt.
STATUS OF ISSUE: The 2013 study has been completed. The contract rates determined by the
study automatically become effective June 1 S` per the contract terms. The current rates for non-
contract customers were determined to be sufficient to generate the necessary revenue needed for
the Water & Sewer Fund. Therefore, no rate increases are being requested for non-contract
customers. The report is being presented as an informational item, and no vote is required. A
representative from J Stowe & Company has a brief presentation to make and will answer any
questions you may have.
BUDGET: The rate study final cost has not been determined but is expected to be between
$20,000 and $25,000. This is a similar cost to previous years. The funds are budgeted for this
project in the Water Billing Office budget.
RECOMMENDATION: No action required.
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