Utility Fund Revenues

Sales revenue accounts for 99% of the Utility Fund’s revenue. Sales revenue is comprised of sewer collection and treatment fees, charges for in-city water, wholesale water sales, all other water and sewer related fees, and refuse and recycling fees. The interest and penalty category accounts for the majority of the remaining 1% and is comprised of penalties charged on utility accounts and interest collected on funds held in checking accounts and investments.

UTILITY RATES

The Fiscal Year 2023 Budget includes a 13.4% increase in all residential water rates as well as a $1.00 increase in the sewer service charge. However, sewer and garbage rates will remain the same.

Sales Revenue - $24,841,380

Sewer Pre-Treatment - $44,054 The North Texas Municipal Water District provides sewer pre-treatment services for industrial use. The budget is provided to the city by the North Texas Municipal Water District. Estimates are based on actual volumes being treated from the period from August to July of the preceding year. The city is billed for this service and the expense is reflected in the Utility Billing department. The charge is then passed on to Smurfit Kappa and Luminant Energy and reflected in this revenue account.

Sewer Pro-Rata Fees - $1,200 The Sewer Pro Rata charge is a fee charged to the customer, developer, or property owner to pay for the installation of sanitary sewer mains. The current budget is based on average collections in the current and previous years and remains flat.

Industrial Sewer Sales - $1,058,420 Industrial Sewer accounts for only two users: Smurfit Kappa and Luminant Energy. Smurfit Kappa pays for sewer under the terms of an industrial sewer agreement that allows for the company to pay the city at cost for every gallon that flows through the sewer system with an annual fixed profit margin. This agreement will expire on December 31, 2022. A new rate will become effective during the Fiscal Year but will need to be determined by the City Council.

Luminant Energy pays for sewer based on regular commercial rates and will receive no increase for Fiscal Year 2023. The significant decrease shown in industrial sewer is directly related to the expiring Smurfit Kappa agreement. The budget will need to be amended once a new rate is established during the Fiscal Year.

Sewer Sales - $5,342,645 The City’s sanitary sewer is delivered to the North Texas Municipal Water District for treatment via the interceptor systems. Residential and senior monthly charges are calculated using the average water usage of the three months with the lowest usage during the four-month period of November through February. Commercial sewer is calculated using the same base rate and tiered scale as residential but is based on actual month to month water usage.

With the substantial growth that has continued into and throughout Fiscal Year 2022, it is anticipated that sewer revenues will see an increase from the addition of new connections. A conservative estimate of 7% is included to account for this growth.

It must be considered that while this growth increases revenues, it also increases cost. More connections to the City’s sewer system increase the rate of flow, which impacts the immediate cost of moving wastewater. These additional connections also lead to a long term need for more sewer capacity and this requires the current infrastructure to be expanded and upgraded.

Many of the areas currently experiencing rapid development are on the City’s sewer system, but purchase water from one of the three utility districts that overlap the city limits. These connections have an additional cost increase as the utility districts charge the city an administration fee for billing city sewer on their water bills.

Wholesale Sewer Sales - $1,011,864 The city provides wholesale sewer services to two housing developments located adjacent to the city limits- Devonshire and Vintage Meadows/Lakewood Trails. These sewer contracts are structured similar to the city’s agreements with our wholesale customers. The Sewer Districts are responsible for a minimum annual amount based on actual usage from previous years, with a possible adjustment at the conclusion of the year.

Sewer Sales

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FY 2019 FY 2020 FY 2021 FY 2022 FY 2023

Sewer Discharge Sales - $55,000 Luminant Energy uses water to produce electricity and the water is metered, discharged, and then treated. The city is paid per gallon for the additional expense resulting from treating this water.

Industrial Water Sales - $1,144,407 Industrial Water, like Industrial Sewer, currently only has two users: Smurfit Kappa and Luminant Energy. The terms of Smurfit Kappa’s water agreement are the same as the sewer agreement. The company pays for water flow at the same rate as the city pays the North Texas Municipal Water District per gallon with an agreed upon annual fixed profit margin. This contract will also expire on December 31, 2022.

Luminant Energy relies heavily on reclaimed water, and their total potable water consumption is relatively low. Their water is billed at the regular commercial rate and will not increase for the 2023 Fiscal Year.

Water Sales – $6,631,850

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This represents water sales generated from approximately 6,800 residential and just over 400 commercial water customers inside the city limits. The amount charged for water service is a base rate plus a tiered scale for any usage over 2,000 gallons. The City’s water is purchased from the North Texas Municipal Water District (NTMWD) for resale to our customers.

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FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 North Texas Municipal Water District will be increasing their water rates 13.4% for the upcoming fiscal year. This budget proposes passing the increase on to all water customers. Water District Water Sales - $6,421,440 The City contracts with four water districts for the provision of water on a take or pay basis. This allows the City to plan for a minimum revenue stream on which it can rely to purchase the supply for such contracts. Contracts are based on a water consumption period that runs from August to July. This allows the city to bill adjustments for any overages and notify the water districts of rates for the upcoming year prior to the fiscal year end. The revenue budgeted for the next fiscal year is the minimum amount the contract will produce and is determined on a formula basis contained in the contracts.

On average, the water districts account for approximately 50% of the City’s take-or-pay contract minimum with the North Texas Municipal Water District. Reclaimed Water Sales - $1,700,000 The city purchases reclaimed water from the City of Garland and in turn sells it to Luminant Energy at a mark-up of $0.10 per 1,000 gallons. This type of water cannot be utilized as a potable source but is an excellent alternative for this type of industrial application. The arrangement is a straight-forward demand purchase, meaning that less demand from our end user results in less reclaimed water purchased from the City of Garland.

Meter Sales - $100,000 This fee is charged for each new meter set connecting to the City’s water system and is based on the size of the meter being purchased.

Transfer Fees - $500 This fee is charged for transferring existing utility services from one location within the city limits to another.

Connection Fees - $45,000 The connection fee is a charge of $25.00 applied to each new service.

Fire Hydrant Meter Rental Fee - $15,000 This fee is retained by the city when a contractor returns a fire hydrant meter used on a construction project within the city limits.

Sewer Connection Fee - $10,000 The city added a sewer connection fee in Fiscal Year 2021. This fee is charged as part of a development agreement and will replace sewer impact fees for a single development adjacent to the city limits.

Payment Processing Fee - $160,000 The City added a payment processing fee in Fiscal Year 2021. Credit card companies charge an average of 3% per transaction to process credit card payments and the city passes the cost to the customer.

Refuse and Recycling Sales - $1,100,000 The City contracts refuse and recycling collection with Community Waste Disposal (CWD) for residential and senior utility customers. Commercial services are not provided by the City and must be contracted directly with CWD. The current garbage contract expires in February of 2026.