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Utility Fund Revenues, expenses and rates discussed at Town Council meeting
STEPHEN FASHORO, Staff Writer
To help recoup its costs for providing water for its residents through Dallas Water Utilities and Upper Trinity Water District, the town is considering a few ideas such as the use of impact fee balances and excess debt services reserves to pay debt service.
Chuck Springer, chief financial officer for Flower Mound, gave a presentation that provided an analysis of the utility fund revenues, expenses and rates.
“In terms of the efficiency of our overall system, our water loss rate for our wastewater and drought water system, based on how much water we sell to our customers and how much water we purchase at wholesale, is at 4.6 percent. This is good in comparison to the industry standard of 10-12 percent,” he said.
Springer examined some of the requirements that are required for utility rates.
Some of these requirements state that the town must cover the full cost of providing water and wastewater service to customers, they must meet the legal requirements including maintaining one year of debt service reserve and producing net revenues equal to debt service; and the town must maintain a working capital of 10 percent.
The costs for utility services were also stated in the presentation.
Springer showed the costs broken into two sections; fixed and variable costs.
The fixed cost, which makes up 84 percent of the utility budget, does not vary with usage like the variable costs. He explained that the fixed costs include items such as debt service and demand charge costs. Variable costs, which make up 16 percent of the utility budget, include the payment for water purchases and electricity, according to Springer.
Usage Projections
In terms of usage projections for later on in the year, Springer said that the town will base the rates for its water and wastewater usage on a “normalized year” concept. The normalized year was explained as the amount of usage estimated in an average weather year.
Springer estimated that the utility budget revenues for the fiscal year 2007-08 based on normal year usage would be $21,153,747. He said that the budget expenditures would be at around 25.3 million. To help with the difference he stresses that the rate increase would help with utilities.
“We will use $4.1 million from the rate increase to help us break even,” he said.
Springer then showed a comparison chart from 2002 to now between what the town pays for Dallas Water Utilities and Upper Trinity Water Districts and it showed that in 2008 the town will pay an estimate of $2,616,109 to DWU and $10,418,636 to UTRWD for water. In 2002 the town paid $2,097,791 to DWU and $5,841,417 to UTRWD.
“In terms of UTRWD, you see that the cost in 2002 to what we are estimating this year has gone up slightly under $5 million,” he said.
Utility rate stabilization strategies
To help recoup the costs from the DWU and UTRWD, Springer said that the town would need to take several measures which include; utilizing impact fee balances and excess debt services reserves to pay debt service and issuing debt for capital replacement instead of funding from rates.
Council member Laurie Long asked staff if they had shown the presentation to members of the UTRWD board.
“We have made requests to show it to them but they have made four rebuttals. We have mailed it to UTRWD’s staff and their president,” said Harlan Jefferson, town manager.
Council member Tim Trotter was concerned about the speed at which the rate for Upper Trinity increases.
“We don’t have an answer from them as far as how much their rate is going to increase in the future. As their debt increases, it seems to us that their rates have also been increasing,” he said.
Springer concluded by saying that the water and wastewater study for fiscal year would soon be completed and that recommendations by the town staff would be presented at the Nov. 19 meeting.
Contact staff writer Stephen Fashoro at 972-628-4077 or at sfashoro@acnpapers.com.
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