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Published on: 3/28/2009
Last Visited: 5/18/2009
Engineering and Planning Section Chief Mak Yari stated the original study was completed in 1998-1999.
The methodology computes a unit charge for inside and outside customers of the water and the wastewater systems then divides the outside rate by the inside rate to calculate the rate differential.
It is an industry accepted methodology designed for privately owned utilities and accepted for use by publicly owned utilities.
The methodology uses an accounting method of appropriately allocating four costs: Operation and maintenance, interest expense, depreciation of fixed assets, and net book value of fixed assets (return on investment).
Mr. Yari spent a few minutes explaining the concept of some of these items.
He also commented on changes that prompted the need for a study, including but not limited to substantial changes in the City limit boundaries, new billing software and a new rate structure.
Mr. Yari stated a good bit of time was spent determining if the correct rate of return was being utilized.
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Upon inquiry from Council Member Wangemann, Mr. Yari stated how the assets are allocations, where the water is being used and the actual customers were the major reasons for the rate changing from 2.57 to 2.13.