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'- A-I I I I I I I I I I I I I I I I I I I 7. WATER SYSTEM FINANCES 7.1 Scope and Purpose of Analysis Since the late 1970's with the increased public awareness focused on the quality of the environment, operations, maintenance and administration of public utilities have changed significantly. Managers and public officials have adopted policies that are more open to public input and customer decision-making. Additionally, the regulatory changes at the Federal and state levels which raise utility costs and shifts in the economics of the customer base which raise questions of equity in utility rates require utilities to allocate costs in an equitable and easily understood manner. The scope of this analysis of the Town's water utility finances and rates is confined to an overview of data available from Town records and from discussions with utility staff. The purpose of such analysis is to determine existing cost of providing water to the individual customers, group customers and public uses and to evaluate methods of allocation of these costs to the rate payers. Conclusions and recommendations are made, based upon the fmdings of the analysis. 7.2 Existing Water Fund Financial Structure. The financial affairs of the Town of Lyons are managed by The Town Administrator under the direction of the Board of Trustees in accordance with Colorado Statutes. Administrative practice and utility rates are controlled by Title 7 of the Town Code and changes are implemented by ordinance. The Town Accountant maintains the general ledger and prepares monthly budget reports and preliminary annual budgets for review. All water system revenues and costs are aggregated in the Water Fund. Similarly all sewer revenues and costs and all electrical revenues and costs accrue to the Sewer Fund and Electrical Fund, respectively. Each utility is operated as an "enterprise" as defined by state statute. Water, sewer and electrical utility services are billed together at one time on a monthly basis. There are approximately 570 accounts in the current computerized billing system and each account may be unique due to individual watl~r source, sewer connection and the applicable rate category. Water Accounts and Water Rates Table 12 shows a summary of water account data and rate da ta as of November 1995. The rates have been in effect since 1987. Approximately half of all accounts are not metered as to water consumption. The unmetered users are charged a flat rate per month, based upon a fixed fee sd by ordinance or, in the case of commercial or special users, by formulas established from time