MEMO - WATER RATE PASS THROUGH
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FROM:
C I T Y 0 F C LEA R W ATE R
Interdepartment CorrespondUrl I ~et
COlIIIIIS6lON
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Anthony L. ,Shoemake r, Ci ty Manage r ' , SEP 28 \'Sol
Cecil M. Henderson, Jr., Utilities Directo .
Elizabeth S. Haeseker, Daniel J. Deignan, Betty Deptula
TO:
COPIES:
SUBJECT: WATER RATE PASS THROUGH
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DATE:
Septe~ber 24, 1987
Effective October 1, 1987, pinellas County will increase their
rate to us for water purchased from 89.56 cents per one thousand
gallons to 95.83 cents per one thousand gallons, or a 7%
increase. Thus, their water rates increased 6.27 cents per
thousand gallons or 4.69 cents per one hundred cubic feet of
water purchased (See attachment 1).
It is recommended that we pass through this increase as
authorized in the current Code of Ordinances, Section 50.05 (e)
(1) (fl. Accordingly, we recommend your approval to increase our
billing rates to add 3 cents to tier 1 consumption levels, 4
cents to tier 2 consumption levels and add 5 cents to tier 3
consumption levels beginning with the billings on October 1,
1987. This would adjust our billing rates for domestic and lawn
water as follows:
Domestic/Lawn Water Rates
per 100 cubic feet
Consumption Level
From
To
Tier 1
Tier 2
Tier 3
$ .94
1.12
1. 31
$ .97
1.16
1. 36
We have attached background information (attachment 2) supporting
this recommendation for your review.
We have provided space below for your
Approved:
nthony L. Shoemaker
Cit; ~a er)
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Dated:
Attachments
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, Attachment 1.
PINELLAS
COUNTY. FLORIDA
PHONE 18131 462-3465 . 315 COURT STREET CLEARWATER. FLORIDA 33516
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CITY MANAGER
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CERTIFIED MAIL - REUTIU1 RECEIPT REQUESTED
July 1, 1987
Copies 10:
Commission
Press
Me. Anthony Shoemaker
Ci ty Ihnager
city of Clearwater
P. O. Box 4748
Clearwater, FL 33518
Date JUL
7 1987
City Altorney
City Clerk
Dear Me. Shoemaker:
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The Pinellas County Board of county Commissioners will consider for approval a
7% water rate adjustment for wholesale customers of pinellas county Water
System as part of the Fiscal Year 1987-8~ budget adoption process. The
proposed wholesale water rate is $0.9583 per thousand gallons and will be
effective for water used beginning October 1, 1987.
Any questions on this SUbject should be directed to Me. Arthur R. Finney, Jr.,
Director of pinellas County Water System, telephone number 462-3438.
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"Sincer ely,
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County Administrator
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Attachment 2
1 of 2
Water Rate Pass Through
Background Information
As the attached letter indicates, pinellas County will increase
their rate to us on October 1, 1987, from 89.56 cents per one
thousand gallons to 95.83 cents per thousand gallons, 9r a 7%
increase. During the most recent twelve month period (July, 1986
to June, 1987), we determined that 60% of all water obtained was
purchased from the County and 40% was pumped from City wells.
During this same twelve month periOd, we billed/sold 93% of the
total water obtained and, thus, generated revenues to support the
Water Division. With the passage of time, our City wells
production declines approximately 3 to 4% each year unless new
wells are put on line. No new wells will be placed in service
during FY 1987/88. Given a 2% decrease in the demand for water
(conservation by our customers) we consider an increase of
approximately $156,000 a reasonable estimate of the increase in
water purchased in FY 1987/88.
Our domestic and lawn meter rates are a three tier, inverted rate
structure with various minimum consumption levels for each water
meter size. The following table reflects the current rate
structure in effect:
Domestic
Lawn
Tier 1 consumption*
Tier 2 consumption*
Tier 3 consumption*
$ .94
$1.12
$1.31
$ .94
$1.12
$1.31
*per consumption (100 cubic feet)
Based on the historic consumption provided by Data processing, we
systematically calculated the revenues generated by the actual
water consumption levels less 2% conservation for each meter size
for each of the twelve months ending June 30, 1987. We also
calculated the revenues that would be generated by three possible
tests attempting to cover the expected pass through of $156,000.
The tests calculated were as follows:
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Attachment 2
2 of 2
Water Rate Pass Through
Background Information (continued)
1. Test 1 Add 4 cents to tier 1 consumption (98 cents) ,
add 5 cents to tier 2 consumption ($1.17) and add
6 cents to tier 3 consumption ($1.37) .
2. Test 2' Add 3 cents to tier 1 (97 cents) , add
3 cents to tier 2 ($1.15) and add 4 cents to
tier 3 ($1.35) .
3. Test 3 Add 3 cents to tier 1 ( 97 cents) , add
4 cents to tier 2 ($1.16) and add 5 cents to
tier 3 ($1.36) .
The incremental increase in revenues of these tes ts are as
follows based on billings from July 1, 1986 to June 30, 1987 less
2% for conservation:
1. Test 1 Total water revenues increase $216,000.
2. Test 2 Total water revenues increase $106,000.
3. Test 3 Total water revenues increase $141,000.
Test 1, 98 cents/$1.17/$1.37, appears to generate more revenue
than is needed to cover the pass through. Unless there is a 4 to
5% decrease in the demand for water next fiscal year, we would
not select this option. The revenues generated in Test 2, 97
cents/$1.15/$1.35 are not sufficient to cover the necessary water
pass through. Test 3, 97 cents/$1.16/$1.36, revenues are nearly
sufficient to cover the pass through. Since these are estimates
and historically conservation will be short lived, we believe
this to be our closest selection.