Sterling 1996 WC Plan

• Project Type: Water Conservation Plan
• Project Name: City of Sterling Water Conservation Plan
• Title: Water Conservation Plan
• Date: 6/21/1996
• County: Logan
• Water Conservation - Doc Type: Complete Plan

: I
\
I
I
I
I
I
I
I
I
I
I
__Lum__
I
I
,
j
I
I

STERLING WATER CONSERVATION PLAN

MAY 28, 1996

CHAPTER 3 - UTILITY ECONOMICS

Utility Finances

The Engineering Company (TEC) developed a utility rate study for the City in 1995
entitled Sterling Water and Sewer Rates & Cost of Service Analysis. The purpose of
the study was to review the various sources of revenue, determine the equability of the
distribution of charges, and recommend rates and fees for water, and wastewater
service that will generate the funds required to meet the cash requirements and support
the City's policies.

The study used cost-of-service principles to evaluate required rate adjustments for
each customer class and determined the currently adopted water rates that are
sufficient for projected fiscal obligations. The report includes the following analyses for
each utility reviewed:

1. Projection of the total revenue requirements from 1996 - 2001
2. Allocation of the revenue requirements to the functional cost components.
3. Distribution of the component costs to the customer classes.
4. Determination of charges.
5. Review of Plant Investment Fees.

The basic objective of the rate study was the development of a rate structure that will
attain the maximum degree of equability among customers, will be consistent with local
practice and conditions, and will be in the best interest of both the customers and the
City.

Revenues

Revenues for water funds are derived from the sale of water, plant investment fees,
interest income, and miscellaneous fees. Of $773,504 in 1993 revenue, $713,714
came from the sale of water, $22,426 from interest income, $6,030 from tapping fees,
and $31,334 from other revenues. Revenues in 1996 are projected to be $952,000.

.. ___Water_~~t.!t~~_n____~_____________________________ _.

The previous water rate schedule was adopted in 1983. The rates were
subsequently increased in 1990, 1991, 1992, 1993, and 1995. Since 1990, the
total increase in the mon*.hIy minimum charge was 28 percent; and the volume
charge was 50 percent. The effective annual increase in the monthly minimum
over that period has averaged 5 percent while the annual increase in the volume
charge is 8.4 percent.

The City Council adopted a new minimum charge schedule on December 12, 1995.
The new rate format lowered the minimum volume to 4,000 gallons and eliminated
the $0.06 increase in the volume charge for use over 15,000 gallons. Another
modification was to set the monthly minimum charge based on the meter size to
reflect the higher cost of maintaining the larger meters. The current rates are
shown in Table 1.

Page13