3.6 Utility Rates
Request for
City Council Action
DEPARTMENT INFORMATION
ORIGINATING DEPARTMENT REQUESTOR: MEETING DATE:
Administration City Administrator/Finance Director Flaherty February 27, 2023
PRESENTER(s) REVIEWED BY: ITEM #:
Consent 3.6 – Utility Rates
STRATEGIC VISION
MEETS: THE CITY OF OTSEGO:
X Is a strong organization that is committed to leading the community through innovative
communication.
Has proactively expanded infrastructure to responsibly provide core services.
Is committed to delivery of quality emergency service responsive to community needs and
expectations in a cost-effective manner.
Is a social community with diverse housing, service options, and employment opportunities.
Is a distinctive, connected community known for its beauty and natural surroundings.
AGENDA ITEM DETAILS
RECOMMENDATION:
City staff is recommending that the City Council adopt a resolution establishing water & sanitary sewer
utility rates for 2023.
ARE YOU SEEKING APPROVAL OF A CONTRACT? IS A PUBLIC HEARING REQUIRED?
No No
BACKGROUND/JUSTIFICATION:
The City has a public utility system with Water and Sanitary Sewer operations. The current system is
comprised of 5,111 customers who include both residential and commercial accounts. Those customers
receive monthly utility bills for usage of the water and sanitary sewer utility system. The monthly charges
include both a base fee, and a consumption fee which is calculated on their actual usage of the system.
The utility rates for the water and sanitary sewer systems are analyzed by the Finance Director on an
annual basis. This analysis includes reviews of budget-to-actuals, preparation of the operating budget,
preparation of the capital improvement plan, and future projections.
In addition to analysis by City staff, the City Council commissioned a Utility Rate Study with Ehlers during
2020, which evaluated: funding capital projects, managing revenue volatility, reviewed billing structure,
competitiveness of rates and adequacy of connection fees. The recommendations for utility rates in 2023
are consistent with the forecasted increases in the 2020 Utility Rate Study and were factored into the 2023
Water and Sanitary Sewer Operating budgets.
SUPPORTING DOCUMENTS ATTACHED:
• Rate Summary Comparisons
• Monthly Bill Illustrations
• Resolution 2023-14
POSSIBLE MOTION
PLEASE WORD MOTION AS YOU WOULD LIKE IT TO APPEAR IN THE MINUTES:
Motion to adopt Resolution 2023-14, Establishing Water and Sanitary Sewer Utility Rates for 2023.
BUDGET INFORMATION
FUNDING: BUDGETED:
N/A
N/A
City of OtsegoPublic Utility ChargesWater Rate Comparison2023Actual Increases 3.00% 3.00% 6.00% 6.00%Proposed2019 2020 2021 2022 2023 ChangeBase Rate5/8" Meter 9.33$ 9.61$ 4.00$ 4.24$ 4.49$ 5.90%3/4" Meter 9.33$ 9.61$ 4.00$ 4.24$ 4.49$ 5.90%1.00" Meter 28.43$ 29.28$ 10.00$ 10.60$ 11.24$ 6.04%1.50" Meter 56.84$ 58.55$ 20.00$ 21.20$ 22.47$ 5.99%2.00" Meter 85.26$ 87.82$ 32.00$ 33.92$ 35.96$ 6.01%3.00" Meter 170.53$ 175.65$ 70.00$ 74.20$ 78.65$ 6.00%4.00" Meter 426.34$ 439.13$ 120.00$ 127.20$ 134.83$ 6.00%Residential & City Owned Consumption (per 1k)0 - 10,000 Gallons 1.75$ 1.80$ 10,000 + Gallons 1.86$ 1.92$ 0 - 5,000 Gallons 2.22$ 2.35$ 2.49$ 5.96%5,000 - 15,000 Gallons 2.78$ 2.95$ 3.13$ 6.10%15,000 + Gallons 3.48$ 3.69$ 3.91$ 5.96%Commercial, Industrial & Institutional Consumption (per 1k)0 - 50,000 Gallons 1.75$ 1.80$ 2.22$ 2.35$ 2.49$ 5.96%50,000 + Gallons 1.86$ 1.92$ 2.78$ 2.95$ 3.13$ 6.10%Irrigation & Bulk WaterConsumption (per 1k)All Usage 1.86$ 1.92$ 3.48$ 3.69$ 3.91$ 5.96%
City of OtsegoPublic Utility ChargesSanitary Sewer Rate Comparison2023Actual Increases 8.00% 8.00% 10.00% 10.00%Proposed2019 2020 2021 2022 2023 ChangeBase Rate5/8" Meter 10.24$ 11.06$ 3/4" Meter 10.24$ 11.06$ 1.00" Meter 20.49$ 22.13$ 1.50" Meter 51.22$ 55.32$ 2.00" Meter 102.46$ 110.66$ 3.00" Meter204.90$ 221.29$ 4.00" Meter512.25$ 553.23$ Base Fee14.11$ 15.52$ 17.07$ 9.99%Flat Fee51.61$ 55.95$ 54.72$ -2.19%ConsumptionPer 1,000 Gallons of Water Usage 6.35$ 6.86$ 7.50$ 8.25$ 9.08$ 10.06%
City of OtsegoPublic Utility ChargesMonthly Bill Estimations2023Proposed2022 2023 ChangeResidential (Winter = 4,147 Gallons)Base Fee 4.24$ 4.49$ Consumption: 0-5K Gallons 9.75$ 10.33$ Subtotal - Water Charges 13.99$ 14.82$ 5.94%Base Fee 15.52$ 17.07$ Consumption 34.21$ 37.65$ Subtotal - Sanitary Sewer Charges 49.73$ 54.72$ 10.04%Total Monthly Estimated Bill 63.72$ 69.54$ 9.14%Residential (Summer = 18,778 Gallons)Base Fee 4.24$ 4.49$ Consumption: 0-5K Gallons 11.75$ 12.45$ Consumption: 5-15K Gallons 29.50$ 31.30$ Consumption: 15K + Gallons 13.94$ 14.77$ Subtotal - Water Charges 59.43$ 63.01$ 6.03%Base Fee 15.52$ 17.07$ Consumption (4.147K Gallons) 34.21$ 37.65$ Subtotal - Sanitary Sewer Charges 49.73$ 54.72$ 10.04%Total Monthly Estimated Bill 109.16$ 117.74$ 7.85%
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CITY OF OTSEGO
COUNTY OF WRIGHT
STATE OF MINNESOTA
RESOLUTION NO: 2023-14
ESTABLISHING WATER & SANITARY SEWER
UTILITY RATES FOR 2023
WHEREAS, Otsego City Code Chapter 7; Section 2 outlines that in order to pay for the costs associated with
Water and Sanitary Sewer utility systems, that a just and equitable charge will be imposed upon users of those
systems; and
WHEREAS, the Otsego City Council has identified and reviewed the operating, capital and debt service
requirements of the Water and Sanitary Sewer utility systems.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF OTSEGO, MINNESOTA:
1. That the following rates, fees and charged be imposed on users of the Water utility system:
a. Base Charge (Monthly for All Users)
b. Usage Rates (Monthly Per 1,000 Gallons of Consumption)
Meter Size
2023 Base
Charge
5/8"4.49$
3/4"4.49$
1.00"11.24$
1.50"22.47$
2.00"35.96$
3.00"78.65$
4.00"134.83$
Customer Type Consumption
2023
Rate
Residential 0 - 5,000 Gallons 2.49$
Residential 5,000 - 15,000 Gallons 3.13$
Residential 15,000+ Gallons 3.91$
Commercial, Industrial & Institutional 0 - 50,000 Gallons 2.49$
Commercial, Industrial & Institutional 50,000+ Gallons 3.13$
Irrigation & Bulk Water All 3.91$
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c. Bulk Water
In order to access bulk water from the system, a meter rental from the City is required.
There is a $200.00 deposit required for that meter. The rental fee for that meter is a
minimum of $50.00, which includes the first month, with each additional month being
charged at $50.00.
The consumption tracked by the meter will be billed at the rates identified in paragraph
1(b) of this resolution. The local sales tax rate of 7.375% will also apply to the entire bulk
water rental and consumption charge incurred.
2. That the following rates, fees and charged be imposed on users of the Sanitary Sewer utility system:
a. Base Charge
b. Usage Rates (Per 1,000 Gallons of Average December-February Water Usage)
c. Usage Rates (Per 1,000 Gallons of Actual Sewer Usage)
d. Minimum Charges
These charges come into effect for new accounts where there is less than three months
of usage history to base the average off of. This minimum monthly charge is $54.72.
3. That the rates, fees and charges outlined in this resolution shall be effective for all billings issued on
or after March 1, 2023.
Customer Type Frequency
2023
Rate
All Otsego Users Monthly 17.07$
All Wholesale Users Quarterly 57.79$
Customer Type Frequency
2023
Rate
All Otsego Users Monthly 9.08$
Customer Type Frequency
2023
Rate
All Wholesale Users Quarterly 3.19$
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ADOPTED by the Otsego City Council this 27th day of February, 2023.
MOTION BY:
SECONDED BY:
IN FAVOR:
OPPOSED:
CITY OF OTSEGO
__________________________________
Jessica J. Stockamp, Mayor
ATTEST:
__________________________________
Audra Etzel, City Clerk