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Joint Meeting City Council/Utilities Commission <br />May 7, 1998 <br /> <br />Page 2 <br /> <br />connection and rate increases and the increase in net profit in the <br />water utility as identified in the 1997 audit, caution should be taken <br />before any more increases are approved. The project costs at this point <br />are estimates and a "wait and see approach" before approving <br />increases is supported. Additionally, the phasing in of the project, as <br />noted in the attached memo, may be one way which will soften the <br />financial impact of this project. <br /> <br />6. Contributions to the City <br /> <br />The city is very comfortable with the relationship we have with the <br />Utilities regarding its financial contribution to the city. The city is <br />dependent upon this revenue for our capital outlay program. These <br />funds help support some of the larger fire department expenditures <br />(i.e. trucks) along with the street equipment program which is planned <br />to increase significantly in the future. <br /> <br />It is noted in the memo that the city would benefit by going to a Kwh <br />formula so as to not see a decrease in city funds if the rates go down or <br />ff the sales decrease or ff wheeling and/or deregulation takes place. At <br />this time the city strongly prefers to stay with the existing system. <br />The city feels like it can respond to deregulation or wheeling prior to it <br />arriving and we need not react to this future concern at this time. It <br />should be noted that conversely to the rates going down, if rates go up <br />or sales go up, so does the city revenues under the current system. We <br />have always viewed the Utilities and the city as partners in the city's <br />growth and, as additional revenues are generated due to growth, then <br />to a certain degree, these funds should be shared. <br /> <br />A comment was made in the memo that with retail wheeling on the <br />horizon we may want to renegotiate our franchise agreement with <br />AEC. It should be noted that this long term contract was negotiated <br />by the Utilities with AEC and if any renegotiation is to take place, <br />they must take the lead. Quite frankly, the city doesn't know enough <br />about the "ins and outs" of the electric industry to negotiate such a <br />contract amendment. <br /> <br />7. Lateral Water Proiects <br /> <br />The discussed project is taking place in the western part of the city. <br />The city has established a $3,800 per acre trunk sewer and water rate <br />to cover the expenses of the trunk system. This trunk rate was not <br />planned to cover smaller lateral connections that loop and improve the <br />water system. This maybe should have been considered, but it was not <br /> <br /> <br />