01/11/1984 Meeting (2) - Laserfiche WebLink

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- e - In stating his position on the issue, Mayor Keller said he was comfortable that either program might work based upon the idea that there is one jurisdiction prepared to support one program, with the option of a one year review of opera- tions. The fact that Springfield took a positive position has a bearing on his position, and he was prepared to work out a program to present to the citizens. He said he therefore supported Councilor Smith's position. He did not wish to comment on charges as it appeared to be a "political issue." Mr. Gleason clarified how one user subsidizing another was not an accurate depiction because of the variance in consumption between water use and the allocation of cost. Fixed cost is not rationally allocated nor equitably allocated on a variable system. At a residential level the major distribution is fixed cost, which is a fixed fee distribution. It is not a variable system, rather a fixed system, using a different method to do it. The cost of implement- ing this could be substantial because of coordination of consumption and billings among three water purveyors. In addition, there could be increased litigation regarding use. Camilla Pratt then stated that the unanimous opinion of the interagency review committee was that it would be appropriate to make a major rate change only after a cost-of-service analysis had been done. This could not be done until there was a year of operating experience. The committee also believes that when there is a change in rates, it may be perceived as a rate increase. Rates were raised recently, and therefore, this fact could increase the "injury." She hoped that proceeding would be done with a basis of fact to avoid legal action. In response to Councilor Schuels question, Councilor Smith said that the cost- of-service analysis following a year of operation should have been more clearly highlighted per the background material. It is still appropriate that this procedure take place. No one on either the task force or commission have suggested eliminating the whole flow-based rate system, but rather, if it is implemented, there should be certainty that it is the proper system, after additional analysis. Councilor Schue responded that staff said more data would not be helpful on flow-based rates, but that since this is a different way to bring in the same revenues, she questioned what more could be learned that would change the goals of this project. Mr. Gleason explained that the legal way to distribute utility costs is through cost-of-service analysis. The costs attributed to a particular consumer would need to examined, and a determination made of the appropriate allocation of costs. Each consumer, commercial, industrial, and residential, would have a different use of "mix of the plant." For example, industrial users would have a different ratio and component costs than a residential user because of content and discharge levels. The law requires an analysis and distribution based upon empirical studies. If the flow-based system is implemented, staff will need to receive instructions to do a cost-of-service analysis to determine cost distri- bution. Councilor Smith added that a more accurate cost of operation will be available after a year's operation; therefore changes would be more appropriate because of the data at that time. MINUTES--Eugene City Council January 11, 1984 Page 10