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Section 2 <br />Projected Operating Results <br />Existing Rates <br />The rates charged for waterservice by ERMU, combined with other operating and non- <br />operating revenues, must be sufficient to meet the cost ofproviding services to ERMU <br />retail water customers. This is necessary to ensure the long-term financial health of the <br />ERMUwater utility. The cost of providing utilityservice consists of normal operating <br />expensessuch as production, pumping, distribution, customer and A&G functions, <br />system depreciation expenses, capital improvementsand other non-operating expenses. <br />An analysis of the operating results for the ERMUwaterutilityduring the 2020-2024Study <br />Period has been performed assuming the current retail rates and charges remain in effect <br />through the Study Period. This analysis has been done to determine the overall need, if <br />any, for additional revenue through rates to meet projected revenue requirements. The <br />analyses and assumptions utilized in these projectionsare explained below. <br />Estimated Revenues Existing Rates <br />ERMUsells water to residential,commercialand industrialcustomers.Total sales to <br />ERMUretail customers for the Study Period are based onERMUactual 2019 water <br />sales and discussionswith ERMU staff. For this analysis, sales areestimated to remain <br />flat duringthe Study Period. <br />Exhibit 2-A is a summarized listing of ERMU <br />results at existing rates. The historical and projected revenues from retail sales of water <br />are included as Charges for Servicesunder Operating Revenues.The existing rates <br />-2- <br />182 <br />