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<br />Section 4 <br />Proposed Rates <br /> <br />Changes to rates are generally based on the overall need for revenues and results of the <br />cost-of-service analyses. The projected operating results at existing rates as presented <br />in Section 2 of this report outline the overall revenue needs of the water utility. Section 3 <br />summarizes the cost-of-service results. ERMU recently raised retail water rates effective <br />in 2020. In Section 2 of this report, Table 2-2 shows that the annual change in net position <br />for the water utility ranges from minus 11.6% to minus 36.8% of revenues during the <br />Study Period. Despite the annual operating results, Table 2-3 shows that the estimated <br />cash reserves fall from $7.7 million to $3.9 million, but the reserve levels remain well <br />above the ERMU goal for minimum reserves. The cost-of-service results summarized in <br />Section 3 of this report do not indicate that any changes to rates are necessary to address <br />class cost issues. The cost-of-service results are within a reasonable range relative to <br />comparison of revenues and allocated costs by class. Ultimately, the level of capital <br />improvements and debt will have an impact on resulting levels of reserves. ERMU should <br />monitor operating results and reserves on an on-going basis to determine when additional <br />water revenues through a general rate increase are warranted. <br /> <br /> <br />- 14 - <br /> <br />