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HomeMy WebLinkAboutMinutes 07/22/1991UTILITY ADVISORY COMMITTEE Port Angeles, Washington July 22, 1991 I1 III CALL TO ORDER Chairman Hallett called the meeting to order at 4:30 P.M. ROLL CALL Members Present: Chairman Hallett, Richard Wight, Mike Lemon, Jeff Roshach, Thomas Hunt. Members Absent: None. Staff Present: B. Titus, K. Godhay, J. Pittis, J. Abemathy, G. Leaf, D. McFarland. APPROVAL OF MINUTES Councilman Lemon moved to approve the minutes of the June 10, 1991, meeting as submitted. Mr. Rosbach seconded the motion, which carried unanimously. IV DISCUSSION ITEMS A. Review Consultant's Re~ort on Electric Rate Issues City Light Director Titus reviewed the three issues covered by the consultant's report: (1) Was the cost-of-service study consistent with generally accepted utility practices? (2) Recommendation as to how best to allocate the expense of street lighting to other ram classes; and (3) Consider what size of reserve would be prudent for a utility the size of City Light and suggestions of how, the surplus reserve funds might be put to use. The Consultant's findings were: (1) The study was consistent with general utility practices and the assumptions were reasonable; (2) for street lighting, they recommended the allocation to the industrial rate class be on the basis of percent of property tax base which the mills represent in comparison with the total property taxes in the City, with the remaining allocation of street lighting costs to be allocated back to the other rate classes on the basis of revenues; (3) reserves should be between $2.5 and $3 million, plus any amount to ha set aside for special projects; any surplus amount should be rebated back to the customers as a one-time rebate. He then reviewed the options suggested by the consultant. Staff recommendation was similar to that of the consultant. There was discussion about the effects the change in allocation would have on the various classes of customers. Director Titus said if street lighting was funded through the General Fund, property tax valuation would be the logical way to allocate the costs. The concensus was to support Option C. With respect to the retention in the Light Fund, the present reserves are approximately $5 million. Director Titus recommended the consultant's Option C. The consultant recommended the Light Fund's surplus reserves be refunded to customers; or used to reduce the projected rate increase by 1% ($200,000); or used it to provide a rebate of $200,000 per year. UTILITY ADVISORY COMMITTEE July 22, 1991 Page 2 There was considerable discussion about the merits of making rebates to the customers. Director Titus pointed out that if the reserves are depleted, there will be lower interest income and rates will have to be increased. Based on the information available, Councilman Wight suggested a time-frame of five years and figure what the percentage should be. Mr. Rosbach suggested any rebate be only for the current two-year rate period, and then review it again. He would prefer to see reduced rates, rather than a rebate. Councilman Lemon suggested setting the rates based upon the cost-of-service study, to include something for future capital improvements. The present reserves should be used for unexpected expenditures, and in two years, look again at the rates with a view toward minimizing any rate increases. At this time, many people feel the City has been overcharging for electricity for years. Councilman Wight preferred an annual rebate over an artificially low rate. By consensus, it was agreed to increase the current rate for a two-year period, with an annual rebate for each of those years. Staff will identify extraordinary costs likely to occur in the next three years and add this amount to the $3 million fixed reserve level suggested by the consultant. Any surplus funds would be rebated back to customers over a three-year period. Councilman Wight suggested building the inflation factor for the reserves into the rates. Com~cilman Wight moved to adopt Option 'C'. Mr. Hunt seconded the motion, which carried unanimously. Director Titus said any precise numbers for rebates would be deferred at this time. B. Review Proposed Optional Electric Rate Schedules Director Titus reviewed the proposed electric rote options. Councilman Wight moved to accept Option #3, or 85 % of the cost-of-service. Councilman Lemon seconded the motion, which carded unanimously. Director Titus advised the Committee of a Bonneville meeting to be held in Seattle on Thursday, September 19, 1991. Chairman Hallett and Director Titus will attend. He also mentioned having written letters to the State Legislators regarding a meeting to be set up on front-line strategy to be discussed at the next legislative session. C. Information on Wastewater Treatment Federal Grant Status Director of Public Works Pittis presented the latest update on the Secondary Treatment Plan. A grant application has been submitted to the EPA. Construction cost estimate is up by $100,000; the grant application has been changed to $8.7 million. The design is 90% complete, and comments are coming back. He is looking to advertiffmg for bids, with the award proposed for December, 1991, and construction starting, hopefully, in January. Councilman Hallett asked what the chances were the bids would come back within the proposed figures. Director Pittis responded the contracting climate is good and contractors should be looking for work. The Federal grant allows 10% over the bid. V VI VII UTILITY ADVISORY COMMITTEE July 22, 1991 Page 3 Director Pittis also said one more meeting with the residents of Harborcrest will be held, to bring them up to date with the changes which have been made in the plans for the Secondary Treatment Plant. D. Discussion of Latecomer Fee Director of Public Works Pittis brought up the re-introduction of latecomer fees - charges or fees levied by the City for any right to connect to a system, whether it be water, wastewater, or electric. These are in addition to the actual connection fees. The intent is to recover a pro rata share of the capital investment costs provided by previous ratepayers. The latest addition to latecomer fees is the increase to $386 per equivalent residential water meter for secondary treatment. When the treatment plant is constructed, this amount will no longer be charged to new residential construction, unless it is maintained for overall capital plant costs. Other municipalities and agencies charge latecomer fees. A current need for latecomer fees is to install fire hydrants in areas where there is excessive space between them. In some of the older subdivisions, the hydrant spacing was greater than the spacing required by the current Fire Code, resulting in the need for additional hydrants. In this situation, the homeowner will not be required to install the hydrant, but the utility may install the hydrant in the event a hydrant is necessary. In the case of improvements on the large vacant suburban lots in the west end of the City, the developer will have to bear the cost of the infrastructure. Director Pittis requested the Committee give direction toward consulting with the City Attorney and the Light Department to develop some fee equities. Impact fees cannot pay for existing deficiencies. Councilman Wight suggested looking into the exist'rog problems now, in light of the UGA. LATE ITEMS NEXT MEETING The next meet~n- will be Au st 12 9 '-'~" ~ ed h 11 be f h · g ' gu . 1 91...6.~;.~,~.a .. ~g anao.unc e wi out o t e country fr~m August 19th to Qctober 17~. ~JO~ The meeting adjourned at 6:59 p.m. secTgtary q ~/ - Chairman CC.225