[Council Communication]  [Proposed Resolution]

Council Communication

Title:	Resolution Amending Resolutions 2003-12 and 2003-13 Delaying the Start Date of the Utility Rate Increases from Cycle 1 to Cycle 3.
Dept:	Finance Department
Date:	July 15, 2003
Submitted By:	Lee Tuneberg, Finance Director
Approved By: ...........................	Gino Grimaldi, City Administrator

Synopsis:	This resolution documents Council’s June 17, 2003, verbal approval to delay the implementation of utility bill increases approximately one week by starting with Cycle 3 instead of Cycle 1. This is being done to more fairly treat customers by rotating which cycle is first impacted by an increase.
Recommendation:	Staff recommends approval of this resolution.
Fiscal Impact:	The estimated impact is less than $20,000 in lost revenue for a delay of one week in implementing new rates.
Background:	Utility rate increases and decreases have normally been done in the beginning of July starting with Cycle 1. This is done to correspond as close as possible to the start of the fiscal year for statistical record keeping on consumption and related revenue tracking. Since rates have a tendency to go up, the earlier cycles are required to pay a higher amount sooner under this methodology. Customers have asked for a system that is more fair such as prorating all July bills back to a common start date like July 1. Such an approach is possible but costly in implementation, auditing and management. In an effort to accommodate customers, a non-programming approach that rotates on which cycle an increase, or decrease, is implemented gives everyone an opportunity to be first (or last). In July, 2002, the rate increases were effective with Cycle 5 (mid-July) attempting to “even out” the impact between two years where one year it is done at the beginning and the other half way through. This was deemed closer to the goal but not quite acceptable. Since the city bills several cycles per week, for simplicity sake, a rotation by week (cutting the month into fourths) comes acceptably close to the goal per the impacted parties. With that in mind, we have established a rotation plan as follows for rate changes: Fiscal Year Cycles Billed First 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 Cycle 1 & 2 Cycle 5 & 6 Cycle 3 & 4 Cycle 7 & 8 & 9 Cycle 1 & 2 Cycle 3 & 4 Cycle 5 & 6 Cycle 7 & 8 & 9 The above table will be used to implement increases or reductions in water sewer, storm drain, street user and electric rates and surcharges.

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RESOLUTION NO. 2003-__________

A RESOLUTION AMENDING RESOLUTIONS 2003-12 AND 2003-13 DELAYING THE START DATE OF THE UTILITY RATE INCREASES FROM CYCLE 1 TO CYCLE 3

THE CITY OF ASHLAND RESOLVES AS FOLLOWS:

SECTION 1. The Electric and Water rates were revised by Resolutions 2003-12 and 2003-13 on May6th, 2003, for implementation after July 1, 2003, starting with the billing of Cycle

SECTION 2. The City of Ashland has identified it is in the best interest of the City and customers to delay the implementation to begin with Cycle 3 approximately one week later.

SECTION 3. The City has also identified that using a rotating schedule for rate increases and decreases is deemed more fair until such time as a programming change to the utility billing system occurs that allows a better system such as proration of all bills to an agreed upon implementation date. The anticipated rotation schedule for beginning cycles for billing increases or decreases by fiscal year is 2004, Cycle 3; 2005, Cycle 7; 2006, Cycle 1; 2007, Cycle 3; 2008, Cycle 5; 2009, Cycle 7 and to continue using a 1, 3, 5 and 7 rotation.

SECTION 4. This resolution takes effect upon signing by the Mayor.

This resolution was read by title only in accordance with Ashland Municipal Code §2.04.090 duly PASSED and ADOPTED this 15th day of July, 2003.
Barbara Christensen, City Recorder

SIGNED and APPROVED this15th day of July, 2003.
Alan W. DeBoer, Mayor

Reviewed as to form:
Paul Nolte, City Attorney

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Reso2003-12_Reso2003-13.pdf (97.6KB)

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