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81 <br /> <br />PUBLIC HEARING/ORDINANCE: UTILITY RATES <br /> <br /> Ms. Scott explained that utility rates are set each year and none of the utilities are <br />subsidized by the General Fund. Ms. Scott said they are designed to break even over <br />time, the cost of capital projects is factored into the rates, and these projects are financed <br />through bonds to avoid rate spikes. Cost elements include: cost of purchased service; the <br />City's cost to maintain and administer the utilities; and capital projects. Water rates are <br />proposed to increase an average of 15.7%, largely due to increases in the cost of <br />purchased water ard an enhanced water conservation program. Ms. Scott said higher <br />water rates are not recommended at this time. Wastewater is proposed to increase by <br />3.1%, and gas rates by 2.3%. <br /> <br /> Ms. Daugherty said that the rate report says that rates are going up due to <br />increased demand, but said she understands the demand is increasing mostly in the <br />County, <br /> <br />Ms. Scott said that is correct. <br /> <br /> Mr. O'Connell said he is retooking at all long-term agreements, and as the volume <br />of water in the area is decreasing and steps are being taken to move to the next level of <br />increasing water supply, a determination needs to be made about what the City should <br />pay toward such growth. Mr. O'ConneI1 said the increase is due largely to the need to <br />pay for the capacity to generate water. <br /> <br />Mr. Cox said the City could not accept the increase and not have to raise rates. <br /> <br /> Mr. O'ConneI1 said that it is his understanding that through the agreement with <br />RSWA the City is required to pay the increase. <br /> <br /> Ms. Richards said the City may want to consider a reverse water rate structure for <br />commercial businesses. <br /> <br />Mr. O'Connell noted that the largest water user is the University of Virginia. <br /> <br /> Mr. Cox asked if hotels have water conservation programs, and Ms. Scott said she <br />does not know and will look into it. <br /> <br />Mr. Cox noted that Westhaven is also a high water user, <br /> <br /> Mr. Cox asked who sets RWSA rates, and Ms. Scott said they go through a <br />process similar to the City's budget process and their board approves the budget and rates. <br /> <br />Mr. O'Connell said he could have RWSA make a presentation to Council. <br /> <br /> Mr. Cox said he feels having variable suwaner/winter rates would provide an <br />incentive for users to reduce their water usage in the summer. <br /> <br /> Ms. Scott said that staff feel that citizens should he given a chance to implement <br />voluntary summer water restrictions and then evaluate the results before variable rates are <br />put into place. <br /> <br /> Mr. O'ConnelI said he thinks the high water rate increase ~1 get people's <br />attention. <br /> <br /> Ms. Richards said she feels that some day the City will have to have a parallel <br />system for "gray" water. Ms. Richards asked what is included in the basic charge of $8 a <br />month in the gas rate. <br /> <br /> Ms. Scott said that the $8 covers administrative costs and internal overhead such <br />as the services of the Department of Human Resources, City Attorney's Office and City <br />Manager's Office. <br /> <br /> <br />