In accordance with such standards as the Council may from time to time ordain, the Water Department shall fix and regulate rates and charges for supplying water, including charges to be made in connection with water meters, and for supplying sewage disposal services. The standards pursuant to which rates and charges shall be fixed by the Department shall be such as to yield to the City at least an amount equal to operating expenses and interest and sinking fund charges on any debt incurred or about to be incurred for water supply, sewage and sewage disposal purposes. In computing operating expenses, there shall be included proportionate charges for all services performed for the Department by all officers, departments, boards or commissions of the City.

ANNOTATION

Sources: No specific source.

Purposes: The Water Department is to fix and regulate rates and charges for supplying water and sewage disposal services so that this function will not be subject to the political pressures that have been brought to bear upon Council when it has undertaken to perform this task. Rate-making for utility services has long been regarded as being primarily an administrative function subject to legislative standards and this section follows this practice. Council is to ordain the standards pursuant to which rates are to be fixed, a proper function of the legislative branch, and the Department is to fix rates within such standards, an appropriate function of the administrative branch. However, it is required that the standards fixed by the Council shall at least be sufficient to recoup current operating expenses and interest and sinking fund charges on debt incurred or about to be incurred for water and sewage purposes, standards which usually must be met by any utility. This requirement does not go as far as rate standards do in the case of privately operated utilities; for example, it is not required that the standards make allowance for depreciation. To require the same formula as is permitted in the case of private utilities might result in the cost of water being prohibitive because of the financial history of this utility in the City. Moreover, a City utility is not necessarily operated on the assumption that the cost of the service which it furnishes must be recouped. Separate accounting is required for operating expenses in order that it might be possible to show the cost of furnishing the utility services, a factor important in determining rates and charges.