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Sewer User Rates and System Development Charges <br />User rate and SDC policies are intended to guide the Commission in establishing annual rate <br />structures and approving RWP capital improvement and operating budgets. User rate and SDC <br />policies shall be directed towards achieving the requirements of IGA Section 3.f.1. - .7. <br />Policy Rl Monthly sewer user rates, which are the primary source of revenue for the RWP, <br />are to be equitably allocated to all users based on a cost of service assessment that considers, <br />among other factors, the volume, strength, and flow rate characteristics of their discharges. <br />Policy R2 New users of the RWP shall pay an SDC in conformity with the Commission's <br />SDC methodology which is adopted consistent with State law. Discussion - "New users" means <br />users produced from: <br />'' ' 1. New connections to the existing collection system, including: <br />- a. new single family and multiple unit residential connections; and <br />`-' b. new commercial or industrial connections; <br />;' ~ 2. Expansions in activity from existing connections, including: <br />a. conversion of residential units (single or multiple) to include additional users or <br />-; equivalents, or both; and <br />b. expansions in commercial or industrial activity; and <br />3. Septic to sewer conversions; and <br />Policy R3 Existing and new sewer users shall equitably contribute to recovering all costs <br />DC methodolo ies will <br />lic user rate and S <br />this o <br />ment <br />associated vv~th the RWP. To unple p y, g <br />consider wastewater quantity, quality, and strength, consistent with State law. <br />Policy R4 MWMC rate structures shall be sufficient to fully fund reserves, comply with <br />bond covenants and cover the costs of constructing, operating, rehabilitating, maintaining, and <br />~~ improving the MWMC assets, while maintaining an un-enhanced credit rating of A for the <br />~~ Commission's bonds. <br />Discussion - A rate sufficiency covenant is a standard provision in municipal utility bond <br />contracts. The covenant requires that rates and charges be set at a level that is high enough to <br />pay the costs of operating and maintaining the utility. The intent of this policy is to assure that <br />MWMC rates and charges will be maintained at a level consistent with maintaining an un- <br />enhanced credit rating of A for the Commission's bonds. <br />MWMC should strive to maintain rates and charges that provide sufficient fmancial flexibility to <br />~~~ ", accomplish strategic objectives for long-term water and biosolids quality, customer satisfaction, <br />and community support. <br />Policy RS The Commission will attempt to adopt user rates that provide multi-year stability. <br />Discussion - A multi-year rate schedule establishes user rates that are applicable over several <br />years. They may be the same each year, or change at some frequency. A Rate Stability Reserve <br />shall be maintained to ensure that adequate funds are available to sustain the rate through <br />completion of the rate cycle. <br />2005 MWMC Financial Plan Page 16 <br />