CITY COUNCIL AGENDA ITEM
ACTION REQUESTED:
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Conduct the first reading of an ordinance amending Title 8 (Public Utilities) Chapter 2 (Municipal Water and Sewer) Article C (Water and Sewer Rates, Connection Charges) of the Naperville Municipal Code
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DEPARTMENT: Water Utilities
SUBMITTED BY: Darrell Blenniss, Director
BACKGROUND:
Serving more than 43,500 customers and a population of more than 145,000, the Naperville Water Utilities ("Utilities') provides high quality, reliable, and critical services to the community. Detailed financial planning, including annual budget development and periodic rate studies, is essential to provide continuity of services and sustainable capital investment.
The last Utilities rate study was conducted in 2017 to help plan for financial needs through 2021, with the City Council approving rate increases that went into effect in May 2017. Amended rates were enacted in January 2018 to address discrepancies in the study discovered as part of the 2018 budget process. Increases across various customer classes were effective January 1 of 2019, 2020, and 2021, and bill impacts varied between 1.8% and 5.8%.
The cash balance for the Utilities was approximately $24.4 million at the end of 2020 and in line with City policy. With the Utilities now in the final year of the 2017 study, staff contracted with Carollo FMG to determine an appropriate financial plan through 2026 and a rate schedule for the next three years.
The 2021 rate study involved the creation of a revenue sufficiency model, a cost-of-service evaluation, expanded capital improvement plan, and a review of the existing rate design, with all components evaluated to determine their sufficiency in meeting policy goals. Anticipated cash balances at the end of the three-year rate period with the recommended rates/charges are $36.5 million.
DISCUSSION:
Study Goals
The following four goals were incorporated into preparing the 2021 rate study:
Ensure revenues rec...
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