Title
Approving a wholesale water supply contract with Windermere Utility Company, and authorizing the City Manager to execute the same.
Summary
City staff have been working with Texas Water Utilities (the owner of Windermere Utility Company) to supply supplemental water to extend their wholesale water supply contract that was renewed in 2014 with the approval of the Rate Stabilization Agreement that the City entered into with Windemere Utility Company. As part of that Rate Stabilization Agreement, the City sold Windermere Utility Company an annual total of 100 million gallons (MG) on a “take-or-pay” basis at the cost of $3.25/1,000 gallons with no provision to increase this base rate. As this agreement will be expiring this year and the City wished to separate the Rate Stabilization Agreement and the Wholesale Water Contract to promote transparency in the agreements, this item is being brought forward along with the Rate Stabilization Agreement update.
After discussion with Texas Water Utilities, staff were able to work with their legal team on an updated Wholesale Water Contract that updated the wholesale cost per 1,000 gallons to match the most recent wholesale rate that the City’s rate consultant developed with an additional 5% above the wholesale rate. This rate came out to $4.97/1,000 gallons and the updated contract gave the City the ability to increase that rate if needed based on a rate study. As this is a wholesale rate, it does not encompass the entirety of a distribution rate as it does not account for retail service such as retail meter reading and maintenance, distribution line maintenance, and the maintenance of appurtenances that are not responsible for the transmission of the water to a wholesale customer. This contract would stay a “take-or-pay” contract where Texas Water Utilities will either take the full volume of 100 MG reserved for them every year, or “true-up” the final payment at the end of the year. With this updated rate and ...
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