Page 109 - CityofColleyvilleFY23AdoptedBudget

The Utility Fund is a proprietary fund structured and operated as a stand-alone
business or enterprise. It accounts for all the activities required for the provision of
water and sanitary sewer to residents of the city. In scal year 2017, the Utility
Fund was split into two funds- the Utility Fund and Utility Capital Projects Fund,
although these funds are rolled together for nancial reporting purposes in the
Certi ed Annual Financial Report (annual audit). The Utility Fund functions as the
operating fund, whereas the Utility Capital Projects Fund is where revenues and
expenditures for utility capital projects are accounted for. This includes water and
wastewater impact fees, revenue from the CIP base rate, and year-end operating
surpluses transferred over from the Utility (operating) Fund. Creation of the Utility
Capital Projects Fund has allowed for easier tracking, communication, and
forecasting. The following sections speci cally discuss revenues and expenditures
for the Utility Fund.

Revenues
Utility bills include both volumetric and base rates. The City’s operating costs for
delivery of treated water and collection of wastewater are included in the monthly
water and wastewater base rates. The volumetric rate is a direct pass through of
the costs the City pays to Trinity River Authority (TRA) for treated water and
wastewater treatment. Because Colleyville does not have its own water source,
the City is one of many that contracts with the Trinity River Authority. The
Authority purchases and sells raw water to its member cities as well as provides
treatment services for both water and wastewater. To recoup the cost of this, the
Authority charges a volumetric rate to member cities based on their customers'
usage. Colleyville in turn charges the same rate to its individual customers in an
attempt to break even. Both the base rates and volumetric rates are reviewed and
updated on an annual basis, concurrent with the City’s scal year for base rates
and TRA’s scal year for volumetric rates. Water and wastewater volumetric
charges account for 77 percent of operating revenue and water and wastewater
base rates account for 23 percent. Interest, tap fees, and miscellaneous revenues
comprise the remainder.

Water Rates
Prior to scal year 2016, the Colleyville Utility System operated on a much more
traditional, tiered rate structure. Based on an inclining scale from 1,501 gallons
used to over 50,000 gallons used, the rates were initially intended to encourage
water conservation. In actuality, this resulted in the utility earning far more in
revenue than it needed. The years of cash surpluses built up to a point where it
was obvious the rate philosophy wasn’t working as intended. A consultant was
hired and a citizens rate advisory committee was formed to tackle the issue. The
nal recommendation was to cover the utility’s costs with static base rates based
on meter size for both operational and capital expenses and to pass through the
Trinity River Authority’s volumetric costs with a rate based on consumption. The
base rates are reviewed annually during the budget process. This year, staff and
Council determined that modest increases in the operating and capital (CIP) rates
were warranted. Below is a comparison of the monthly rates for scal years 2022
and 2023. It should be noted that approximately 96% of all customers in Colleyville
have a meter size of 1” or less.

Water Meter
Size 1" Meter 1.5" Meter 2" Meter 3" Meter 4" Meter

City of Colleyville | Budget Book 2023 Page 109