4.1. ERMUSR 08-09-2011 - Laserfiche WebLink

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Elk River ^~ Municipal Utilities 13069 Orono Parkway • P.O. Box 430 Elk River, MN 55330-0430 UTILITIES COMMISSION MEETING ~SI Phone: 763.441.2020 Fax: 763.441.8099 TO: Elk River Municipal Utilities Commission John Dietz, Chair Daryl Thompson, Vice Chair Allan Nadeau, Trustee FROM: Theresa Slominski -Finance Director MEETING DATE: AGENDA ITEM NUMBER: August 9, 2011 4.1 SUBJECT: Water Rate BACKGROUND: At our July Commission we presented requested information on the possibility of removing the third tier and the resulting financial impact. That memo and supporting documentation is included at the back of this section. Discussion followed and staff was directed to look at the scenarios specific to the commercial users for implementing a 5% reduction on the third tier, a 5% reduction on the total usage, and a possible exemption of the third tier for appropriate conservation measures being implemented. DISCUSSION: For this requested analysis, to remove the third tier and have only two tiers, or a portion of a tier, there would still be a revenue shift to other users, or be forgone. The information presented is an updated graph showing the current cash flow projections considering the projections of capital projects and revenues and expenses (top of the page). The second graph presents the impact of removing the third tier and our resulting cash flow projections or worst case scenario (at the bottom of the page). The next document is the same breakout presented last month with the specific category of commercial customers highlighted for further analysis. As discussed last month, the worst case scenario of removing the third tier is a $20k impact. The following document is a summary of the dollar impact for these requested scenarios for the commercial users. A 5% reduction of the third tier to all commercial customers is a potential $8k impact. A 5% reduction off the entire usage to all commercial customers is a potential $14k impact. With a third tier exemption extended to commercial customers for exercising some conservation element, the range of impact (if the top users implemented it) would be $9.Sk. An additional graph is provided showing the potential dollar reduction to the individual top customers for choosing this implementation. If all users implemented a conservation measure, it is the $20k impact. ACTION REQUESTED: Staff is requesting direction on what changes, if any, in the rate structure the commission desires.