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| DATE:
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4/19/2016 7:00:00 PM |
| SUBJECT: |
| An Ordinance Amending Section 17-47 of the Gillette City Code to Revise Rates for Water Furnished by the City of Gillette. |
| BACKGROUND: |
Ordinance first reading 6/0 (Councilman Kuntz absent)
Ordinance second reading 7/0
This ordinance has been prepared to merge the Transmission water rate that the Council approved for the Regional Customers of the Gillette Regional Water Supply System, with the current water rate ordinance. The operational costs of the entire water system have been separated into two parts, the Transmission system and the Distribution system. Every user of the water system, whether they live in the city limits, or in a County I&S District or in Crook County will pay the same Transmission Rate. Every user of the water system may also pay a Distribution Rate, if the system that distributes water to them from the Regional system charges for that service. Gillette’s current water rates raise revenue to pay for the entire system and have not accounted for separate Transmission and Distribution charges.
The basic approach is to take the Fixed Charge and the Usage Charge from the Transmission Rate and subtract them from the Base Rate and Additional Water Rates in the existing Residential and Commercial Rates to develop new Distribution rates in those categories. Since the Transmission Rate includes a Base Rate, (Fixed Charge) that does not include water, the new Distribution Rates will also not include any water, for simplicity and consistency. The net water rates for consumption do not change, but removing 3,000 gallons from the Base rate will increase the cost of water to each customer, since they will now have to pay for the first 3,000 gallons in addition to the Base Rate.
This ordinance continues the practice of charging a Conservation Rate for Residential users that goes up as more water is used. It is established by subtracting the Transmission Rate from the Tiered rates.
The Bulk Rate covers service very similar to the Year round Transmission Rate, so that rate seems appropriate and has been included in the ordinance. This rate would also not provide any water with the monthly charge and will result in an increase.
The Regional Transmission rate in general replaces the old 1 ½ Extraterritorial Service Rate. The rates for service outside the city limits were set at 1 ½ the inside rate to recover the city's extra costs serving those locations at a time when the City’s cost of service was not well understood. This rate has no real application anymore since the Regional Transmission rates are based upon the actual delivery costs. State Statutes permit Cities to serve customers outside their city limits but only at the cost of service to those customers. The 1 ½ rate was acceptable because the City rates were so far beneath the cost of service that charging them at 1 ½ times was still beneath the cost of service!
If the customer is an extraterritorial water district or subdivision, they should pay the Transmission rate. Red Hills, for example, could be billed under the Transmission rate until annexation when the City takes over the internal water lines.
Other customers currently on the 1 ½ Extraterritorial Service Rate may be reclassified as Distribution system customers if they receive all the same distribution services as residents of the City and are serviced off that part of the system and can now be billed at that rate. |
| SUGGESTED MOTION: |
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I move for the Approval of the Ordinance Amending Section 17-47 of the Gillette City Code to Revise Rates for Water Furnished by the City of Gillette on Third and Final Reading.
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| STAFF REFERENCE: |
| Charlie Anderson, City Attorney |
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