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CL- 2086 New Business   Item #:   D.    
City Council Regular Meeting
Meeting Date: 05/07/2019  
Subject:    Utilities Biennial Rate Study 2019
From: Jason Grey

COUNCIL ACTION
Business Meeting:     05/07/2019
SUMMARY
The 2019 biennial rate study was recommended by the Danville Utility Commission. Our rate consultant and City staff completed the study which would go into effect July 1, 2019, if approved by City Council. Proposed adjustments to electric rates include rate decreases in outdoor lighting and street lighting. Depending on the type of light, some fees are decreasing due to the evolution to lower cost LED lights.  The rates are determined by the cost to provide power to the fixture and the cost to maintain the infrastructure.  There is also a recommendation to modify the Worship Sanctuary rate to allow more energy efficient places of worship to lower their energy costs based on their energy habits.  This would be a revenue neutral change to the electric fund and was recommended by the Utility Commission to go into effect July 1, 2020 to allow places of worship to make changes.  There are no other proposed electric changes.
 
There are recommended changes to the water and wastewater rates that would be revenue neutral for most customers.  This would allow additional revenue for capital projects to replace obsolete water mains.  There is also a recommended overall 4% rate decrease in natural gas due to the ending of the 20-year gas pipeline replacement project.  There are no significant capital needs in natural gas once the pipeline project is completed.  Please review the supporting documentation for detailed existing and proposed changes in utility rates. 
BACKGROUND
The 2019 Biennial Utility Rate Study by GDS Associates, separately distributed to the Utility Commission and to City Council, fully describes revenue requirements, proposed changes, and impacts of proposed changes on each customer class.  Fiscal Year 2020 adjustments are an effort to bring our rates to the cost of service.  Substantial improvements continue to be made to the utility infrastructure, and operational improvements are ongoing.  These combined efforts reflect our commitment to provide safe, reliable utility services at the lowest rates currently possible.

Following Council's adoption of the recommended rates, the Utility Commission will oversee the modification of Rate Schedules and Riders that specify definitions and describe character, terms, provisions, and conditions of services associated with the approved rates. 

Chapter 2, Article I of the Danville City Code delegates to the Utility Commission, responsibilities for determining and establishing such policies as, non-consumption utility fees, utility extensions, service fee connections, and other general service policies not designated to City Council.
RECOMMENDATION
Staff recommends City Council adopt the accompanying Ordinance authorizing modifications to utility services for Fiscal Years 2020 and 2021.  The Danville Utility Commission supported these modifications during their budget review.
 

Attachments
Ordinance

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