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Utilities Committee January 13, 2003 Page 4 He stated that there has not been open dialogue on the issues and that extensive communication is necessary and important to the entire community. He stressed the need to have large and small users involved in the process. Mr. Cullinan suggested that an independent outside person be used to suggest all alternatives to the city. He stated that if this is passed it will result in more than an 80% to the University. He suggested that this be mediated so that the increase now and the increase in two(2) years would not be untenable. Council Member Kirsits then invited the City Administration to provide any rebuttal information. Mr. Skump stated that today's information is identical to what was given earlier except that it is now based on the 12-20-03 cost of service study. He noted that there have been some modifications in some of the documents. The ten (10) largest customers will experience increases between 60%to 80%. He stated that he believes that there has been"give and take". Council Member Varner inquired about the 55 %of revenues from fixed and 45 % of the revenues from flow which Mr. Skump addressed. He noted that if the fixed rates are proposed to provide 30% of the revenue and if the flow rates are proposed to provide 70% of the revenue that this "change is enormous and how it affects people will be enormous". Dr. Varner noted that if the City's proposal depends on flow and if incentives are put in place by conservation that this will result in a"huge increase again being requested by the City". Mr. Skump stated that consultation with IDEM and EPA has taken place with the proposed rate increases being based on the cost of service study and EPA and IDEM guidelines. He noted that the percentages themselves are not given as a directive. Dr. Varner inquired about the EPA and IDEM guidelines with regard to cost accuracy, to which Mr. Skump stated that their principles were used in the process. Council President White inquired if there was any consideration by the Administration for a flat 24% increase and what affect it would have on the system. She noted that she has received over forty (40) telephone calls on this issue who have voiced concerns over the amount of the increase and the overall process being used. Council President White noted that she is grateful to how much work the City Administration has put into this, but she is concerned about the significant users in light of the economy. Mayor Luecke stated that a 24% increase across the board would meet the revenue needs. He stated that the City would need to come back and set the rates for 2005 and forward. He noted that the cost of service study would provide a fair basis for the use of the sewage facility. Under the current consumption amounts the residential pay 42% which would be raised to 51% of the cost. Industrial users would pay 39% flow and 21%of the cost. The Mayor stated that they are trying to spread the cost based on cost of service principles. The Mayor added that the flow rates would be raised from 55% to 70%. He noted that they have tried to share as much information as possible and that no one has been excluded, however they did not attempt to contact everyone. Mayor Luecke encouraged the Council to vote favorably on the proposal. Dr. Varner inquired what will happen when people start conserving, especially the largest users. He stated that he believes that the"procedure may be flawed". Mr. Skump stated that variable expenses may go down and that there will be another rate