As part of the operating budget, City Council approved the 2018 budget for utilities. That budget determines the amount of revenue The City must recover through utility rates. From there, The City forecasts the number of customers to be served, the amount of commodity to be used, and the demand placed on the system from small and large customers.
There are two components to utility rates – a fixed monthly charge and a usage charge. The fixed charge recognizes that much of the cost of operating and maintaining the utility infrastructure isn’t dependent on how much of the commodity is used. The fixed charge considers the potential demand that a customer places on the system; so large customers typically pay a higher fixed charge than small customers do.
The usage charge recognizes that some costs are related to consumption and encourages consumers to use less. Even though only a small portion of utility operating costs are related to usage in any particular year, overall reduction in use will reduce system demand and allow future capacity increases to be deferred. In the long term, this reduces the cost to operate the utility.
For water and residential wastewater customers, The City has been increasing the proportion of revenue recovered from usage rates to encourage conservation. A smaller fixed charge will continue to apply so that everyone pays a fair share of the cost to operate the utilities.