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ver <br />MEMORANDUM <br />TO: Utilities Commission <br />FROM: Tim Simon, Finance Director <br />DATE: February 28, 2010 <br />SUBJECT: Review of Water utility rates/cash flow projections <br />As requested, Dave Berg and I have reviewed the water utility rates for the next several <br />years. I will be presenting the cash flow analysis detail at your meeting on March 9`'', 2010. <br />The model developed is very interactive and various assumptions can be discussed. <br />Goals: <br />1. Determine if rates are sufficient for the ongoing operations and capital <br />improvements (2010-2020). <br />2. The cash balance is sufficient to cover 100% of next year's principal and interest and <br />6 months of operating expenditures. <br />Assumptions <br />Growth Residential -15 units (2011-2012), 25 units (2013-2015), 65 units (2016- <br /> 2017), 75 units (2018-2020). <br /> Commercial - 13 units every other year, (building the size of the new <br /> Metal Craft buildin <br />Capital Over the next 10 years, the Utility expects to make an average of $500,000 <br />Improvements of capital improvements per year (in today's dollars). The improvements <br /> include well rehab and reconstruction, painting/sandblasting towers, water <br /> main repair and construction as well as meters. <br /> Costs are inflated 4% annuall startin in 2011. <br />Water Usage Dave Berg and I built the model based on 2009 usage which is a rather <br /> conservative usage year. We did a sensitivity analysis and if we pumped a <br /> very dry year like 2006, the annual usage revenue could be down as much <br /> as $160,000. <br />