Res 2494 4/1/1980r
RESOLUTION NO. 100
RESOLUTION APPROVING MEMORANDUM OF AGREEMENT
BETWEEN THE CITY OF WICHITA FALLS AND VARIOUS
ENTITIES PURCHASING WATER FROM THE CITY,
ESTABLISHING RATE SETTING PRINCIPLES POLICIES
AND RESPONSIBILITIES AND THE INITIAL RATES
AND PLANT ALLOCATIONS.
WHEREAS, heretofore the City of Wichita Falls contracted
with Joe M. Nall and Associates, , Inc. to complete a water
cost of service and rate design study for the City; and,
WHEREAS, such study has been completed, and it is deemed
advisable that a Memorandum of Agreement be executed by
all parties involved, to implement the results of the study.
NOW, THEREFORE , BE IT RESOLVED BY THE BOARD OF ALDERMEN
OF THE CITY OF WICHITA FALLS, TEXAS, THAT:
That certain Memorandum of Agreement, a copy of which
is attached hereto, between the City of Wichita Falls and
certain entities which are purchasing water from the City,
which would establish the rate setting principles policy
and responsibilities as well as the initial rates and plant
allocations, is hereby approved, and the City Manager is
authorized to execute the same for the City of Wichita
Falls.
PASSED AND APPROVED this the 1st day of April, 1980.
MAYOR
ATTEST:
City Clerk
MEMORANDUM OF AGREEMENT
1. Purpose: The purpose of this agreement is to settle current rate disputes,
and to provide a basis for determining rates in the future.
2. Water System Policy: Wichita Falls operates a water system to provide safe
and reliable water supply),jadequate for the current water use and future
growth of Wichita Falls and outside customers, and to avoid any substantial
subsidization of any class of customers by any other class of customers.
3. Responsibilities:
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a. Wichita Falls is responsible for planning, financing, constructing and
operating the water supply system to the extent permitted by available
water revenues , for developing cost of service information to support
rate changes, and for informing outside customers of changes and finan-
cial data.
b. Outside customers are responsible for keeping Wichita Falls informed
concerning their projected water supply needs and operating require-
ments, for planning and managing their system to promote water con-
servation and efficient system operation, and for paying rates adequate
to cover costs incurred in providing service to them.
4. *Rate Setting Principles (For Raw Water Only, Treated Water Only and
Transmitted Treated Water to Outside Customer
User Classes)
a. Revenue requirements to be determined on utility basis at an agreed
test year's Original Cost adjusted 30% toward Current Cost to cover
its costs and as compensation for ownership.
b. Wichita Falls to receive a Rate of Return on the agreed adjusted value
Rate Base equal to a composite of the utility's test year embedded cost
of money weighed on the debt portion of capital invested in plant in
service and the utility's latest cost of money weighed on the remaining
equity portion of plant in service to cover its risks.
c. All existing reservoirs and associated facilities to be included in common
rate base. Outside customers as a class either raw water, treated water
only and transmitted treated water will pay their portionate share of all
costs based on current use.
d. A flat rate (volume only) , with allocation of 100% current use to encour-
age conservation and thereby resulting in efficient utilization of the
water system.
e. The risk of financing all future raw water transmission lines and reser-
voirs must be borne by the Wichita Falls Water Utility, and all costs will
be allocated on current use basis.
f. At the end of ten years, the City of Wichita Falls or the outside custo-
mers who are a party to this agreement may request a review of the
above rate setting principles; and if so, the principles shall be subject
to re-negotiation.
1979 Original Cost Rate Base as determined by Joe M. Nall and Associates,
Inc. for the City of Wichita Falls shall be used in all rate determinations
with no arbitrary changes in classification of property permitted without
approval of all parties, and this Rate Base be changed only by routine ad-
ditions and retirements as recorded in the Auditied Financial Report of the
Wichita Falls Water Utility. Further, that no changes shall be permitted in
current expense allocations as determined by the Joe M. Nall Study. Any
deviation of this directive must be approved by all parties to the contract.
The outside customers shall receive at the end of each fiscal year an annual
report giving enough information so that the outside customer shall be aware
of the current Rate of Return and how it has been determined. The books
of the Wichita Falls Water Utility shall be open at all times to representatives
of the outside customer, and the Wichita Falls Water Utility personnel shall
render such aid and assistance to the representatives of the outside cus-
tomer to enable those representatives to audit all the various component
parts making up the Rate of Return.
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5. Initial Rates and Plant Allocations: The initial rates accepted under this agree-
ment are:
Raw Water Only Flat Rate 20.00/1000 gal.
Treated Water Only Flat Rate = 37. 54/100 C.F.
Transmitted Treated later = 45.00/100 C.F.
Initial Plant Allocations based on actual consumption during 1979 test year
shall be as follows:
Outside
Customer Wichita Falls
Reservoirs 15. 5% 84. 5% i
Raw Water Transmission and
Purification Facilities 11. 39% 88. 61%
Treated Water Transmission 6.48% 93.52%
Wichita Falls has prepared a cost of service study to support these rates and
allocations, and has submitted it to the outside customers to review and accept.
6. Term : The term of this agreement is twenty years, and such additional periods
as the parties may agree upon.
7. Approved changes: Changes in the rate setting principles or other conditions
may be made by mutual agreement of all parties at any time. If any state or
federal governmental agency having jurisdication disapproves any material part
of this agreement during the term , the agreement is subject to cancellation by
any party.
8. Individual contracts for wholesale water service between Wichita Falls and
outside customers will be consistent with this Memorandum of Agreement.
Wichita Falls and outside customers will honor their existing water service
contracts.
9. Execution of this agreement by the undersigned indicate that such individuals
will recommend to their respective city councils or governing boards settlement
of the rate controversy on the basis set forth herein.
Archer County Municipal Utility
District No. 1 City of Burkburnett
By:By:
Red River Authority City of Holliday
By:By:
City of Iowa Park City of Lakeside City
By:By:
City of Scotland Windthorst Water Supply Corporation
By:By:
City of Archer City Wichita Valley Water Supply Corporation
By:By:
City of Olney Frieburg-Cooper Water Supply Corporatior
By:By: L
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City of Electra Dean Dale Water Supply Corporation
By:By:
Town of Pleasant Valley • Arrowhead Ranch Estates
By:_ By:
City of Wichita Falls
By:
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