AGENDA MEMORANDUM

 

Meeting Date:           October 8, 2007

 

From:                          Jerry Boop, Acting Finance Director

 

Subject:                      Ordinance amending Ordinance No. 04-38 pertaining to automatic annual utility rate adjustments based on the Gross Domestic Product Implicit Price Deflator Index

 

 

Staff Recommendation:

Staff recommends adoption of the amendment to the automatic annual utility rate adjustments.

 

Analysis:

Ordinance No. 04-38 provides for an automatic annual adjustment to the utility rates based upon the annual increase in the Gross Domestic Product Implicit Price Deflator Index.  The ordinance provides that the measurement of the increase in the index be based upon the increase from one October 1st to the next October 1st and that the rate increase be effective as of the next billing cycle after October 1st.  Experience has shown that this exercise is impractical, if not impossible.  The U.S. Department of Commerce Bureau of Economic Analysis releases the advance estimate at the end of the quarter, but does not release the preliminary estimate of the Gross Domestic Product until approximately thirty days after the end of the quarter and subsequently revises it again in sixty days.  This increase can only be calculated, with any reasonable degree of accuracy, approximately ninety days after the end of the quarter.  Therefore, the most current dates for the measurement of the change in the index would be at the end of the second quarter, or June 30th.  For the current year, the final revision of this index for the second quarter was not released until September 27, 2007.

Options:

1.  Approve the amendment as presented; or

2.  Such alternative action as the Commission may deem appropriate

 

Fiscal Impact

None

 

Submission Date and Time:    10/18/2007 12:06 PM____

Department: ______________________

Prepared by:  ______________________                     

Attachments:         Yes____   No ______

Advertised:   ____Not Required ______                      

Dates:   __________________________                     

Attorney Review :       Yes___  No ____

                                                

_________________________________           

Revised 6/10/04

 

Reviewed by: Dept. Head ________

 

Finance  Dept. __________________                                     

                              

Deputy C.M. ___________________                                                                         

Submitted by:

City Manager ___________________

 

Account No. _________________

 

Project No. ___________________

 

WF No. ______________________

 

Budget  ______________________

 

Available _____________________

 

 

 

 


 

ORDINANCE NO. __________

 

AN ORDINANCE OF THE CITY OF LEESBURG, FLORIDA, AMENDING ORDINANCE 04-38, WHICH ADDED SECTION 22-166 TO THE CODE OF ORDINANCES PERTAINING TO UTILITY RATES AND CHARGES; SETTING FORTH LEGISLATIVE FINDINGS; CHANGING THE TIMEFRAME FOR COMPARISON FOR THE AUTOMATIC ANNUAL ADJUSTMENTS TO UTILITY RATES BASED ON THE GROSS DOMESTIC PRODUCT IMPLICIT PRICE DEFLATOR INDEX; REPEALING CONFLICTING ORDINANCES; PROVIDING AN SAVINGS CLAUSE; AND PROVIDING AN EFFECTIVE DATE.

 

            WHEREAS, the City of Leesburg operates utility services for the benefit of its residents and other customers of the utility systems, and

 

            WHEREAS, The City has the legal authority to establish rates and charges for the utility services it furnishes,

 

            WHEREAS, it is vital to the continued financial health of the utility systems that rates and charges be adjusted to allow for increases in cost due to inflation,

 

            WHEREAS, the current system creates a built in delay in implementing the rate changes necessary to account for inflationary increases in the cost of providing services, and this ordinance changes the comparison timeframe, and

 

            WHEREAS, the City commissioned a rate study on its utility services, and Ordinance No. 04-38 implemented the recommendation of the consultants for the City to provide an automatic annual rate adjustment based on inflation, and

 

            WHEREAS,  the Florida Public Service Commission has approved, for use by regulated utilities, the Gross Domestic Project Implicit Price Deflator Index, as  a method of adjusting utility rates periodically to account for inflation,

 

            NOW THEREFORE, BE IT ENACTED BY THE PEOPLE OF THE CITY OF LEESBURG, FLORIDA:

 

SECTION I.

 

Chapter 22-166 of the Code of Ordinances of the City of Leesburg is hereby created to read as follows:

 


Sec. 22-166     Annual Rate Adjustments Based on Index

 

All utility rates and charges established in or through procedures set forth in Division 3, 4, 5, 6, 7, and 9 of this Article V, except for the effects of automatic pass-through rate components such as bulk power cost adjustment and purchased gas adjustment mechanism shall be adjusted annually on October 1 according to the percentage increase or decrease in the Gross Domestic Product Implicit Piece Deflator Index.  This increase or decrease shall be measured by comparing the final revision of the Gross Domestic Product Implicit Price Deflator Index for the second quarter of the current calendar year to the same index of the previous year.  Rates so adjusted shall go into effect as of the next billing cycle following October 1 of each year.   This adjustment shall be automatic and shall not require adoption of any ordinance or resolution by the City Commission.

 

 

SECTION II.

 

If any portion of this ordinance is declared invalid or unenforceable, then to the extent it is possible to do so without destroying the overall intent and effect of this ordinance, the portion deemed invalid or unenforceable shall be severed herefrom and the remainder of this ordinance shall continue in full force and effect as if it were enacted without including the portion found to be invalid or unenforceable.

 

 

SECTION III.

 

All ordinances or parts of ordinances which are in conflict with this ordinance are hereby repealed, to the extent necessary to alleviate the conflict, but shall continue in effect insofar as they are not in conflict herewith, unless repeal of the conflicting portion destroys the overall intent and effect of any of the conflicting ordinances, in which case those ordinances so affected shall be hereby repealed in their entirety.

 

SECTION IV.

 

This ordinance shall become effective upon its passage and adopting according to law.

 

            PASSED AND ADOPTED at the regular meeting of the City Commission of the Leesburg, Florida, held the _________ day of ___________________, 2007.

 

 

 

                                                                                                ______________________________

                                                                                                Mayor

 

ATTEST:

 

 

______________________________________________

City Clerk