WATER RATE INCREASE

QUESTIONS AND ANSWERS

Question: Why does the City need an increase in water revenue? Why don't they just tighten their belt a little bit like everybody else has to do?

Answer: For the past 8 years, the City has been trying to keep maintenance and operation costs to a minimum. There have been increases in Federal and State mandates, which have been costly to our system. Material, supplies and operation costs have increased dramatically over the last 8 years. These factors cause a financial burden on our utility. We are currently not able to make needed capital improvements to the system. In addition, since 1992, the water system has grown at a rate of twenty-two new customers per year (917 in 1992 to 1,049 in 1998). Each additional customer places an increased economic demand on the system. Cost reduction programs, including placing the water wells on the 'Time-of-Use' program to save electricity, have been implemented. With operating costs rising each year, no business can remain solvent forever without an increase.

Question: Why such a big increase?

Answer: The proposed three year 3-step plan will bring our rate in line with the Federal Government's projected average operating charge for a water system of our size. Federal and State Agencies look to see if a utility is generating enough revenue to maintain the infrastructure improvement before it considers granting or loaning money to a utility. Our proposed financial plan will allow us to fairly compete for those Federal dollars.

Question: When was the last water rate increase in the City of Yerington?

Answer: In 1992, the rate went from a base rate of $8.50 to $10.00.

Question: Why do the people of Mason have to pay for a City increase?

Answer: In 1988, the Public Service Commission set the last rate increase in Mason. That would put material and supply cost increases at approximately 50% for that system. The current distribution system also needs several major repairs, which will be very costly. These costs have to come in the form of a grant or a long-term loan. Federal dollars, whether in the form of a grant or a loan, are not currently available to any water company with a water rate that cannot financially maintain the newly acquired infrastructure. Also with a stable water rate, the Water Company can budget for depreciation and can also finance and maintain the day to day needs of the system.

Question: How was the requested rate increase amount determined?

Answer: The Nevada Rural Water Association (NvRWA), of which the City of Yerington is a member, has developed a rate analysis system that takes both direct and indirect costs and pits them against revenues to determine the required base rate ($18.04). It further uses annual water production verses expenses to determine the required commodity rate ($1.09). The idea is to keep the base rate as low as possible while increasing the commodity rate. This ensures that people using the most water, pay more than the people that use the minimum do.

Question: How do I know the quality of my water is worth what I will have to pay?

Answer: With enactment of the Federal Government's Clean Water Act (CWA) in 1992, all water companies in the United States were required to begin testing their water for more than one hundred constituents. Both the Mason and the City water systems have complied with this requirement and analyze the water biweekly to ensure it is within Federal standards. Unfortunately, this testing is very expensive. On the average, the City system spends nearly $7,500 and Mason spends $3,000 each year. Keep in mind that these annual costs are federal mandates and were not considered during the last rate increases.

Question: Who gets free water?

Answer: Currently, the City Council and employees of the City, who reside within the City limits, pay sewer but not water. This benefit was given to the Mayor and Councilmen as part of a pay raise in May of 1925. The City Council is considering revoking this privilege.

Question: Will we have another increase again?

Answer: The City Council is considering an annual cost of living increase to avoid future large increases such as this. This will be possible after we have obtained the average rate with the increase we have requested at this time.

Question: What about the Privilege to Connect Fees collected?

Answer: Privilege to Connect Fees are paid to ensure everyone has to help pay for the system. These fees are hard to predict, as they are tied to growth of the City. There may be four connections this year and thirty-four next year.

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