Fountain staff present water cost-of-service study and five-year rate options; council schedules public review

City staff presented the results of a water cost-of-service and rate-design study and solicited public comment on Jan. 28, saying the water fund needs rate revenue increases and structural changes to avoid continued interfund borrowing and to build operating reserves.

Dan Blankenship, a utilities staff member, laid out the utility enterprise structure and financial background, and said the water fund is financed separately from the general fund and electric fund. Blankenship told the council that 2023 water revenues from rates were $9.8 million and that the fund has significant debt-service obligations tied to water resources and treatment; he said annual debt payments are roughly $3.5 million through 2027 and that some bonded debt will extend into the 2040s.

Blankenship said the water fund has relied on interfund loans from the electric fund in past years and that the balance of those loans had declined to about $4 million by 2023 from earlier highs. The city adopted a Water Fund Stabilization Plan in March 2024 to eliminate the interfund loan and create an…