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A very conservative estimate of what it currently costs the City of Ramsey to provide the services outlined above is $2.81 per account per quarter based on 624 accounts at December 31, 1993. These costs have been calculated as follows: Fixed Costs: Envelopes and Statements $ . l 0 Postage (all currently mailed 1 st Class) .29 Var/able Costs: Accounting Clerk 1.13 Maintenance Worker - Meter Reading ,42 Depreciation- Utility Billing Module (existing software only) .74 Meter Gun (on gun to be disposed of only) . .13 Total Cost Per Bill Per Quarter $ 2.81 While most of the fixed and variable costs would be replaced with the contract price paid to AEC, the variable costs for personnel would not be eliminated or replaced. The assumption of these services by AEC would not cause an elimination of personnel, although it could help delay the necessity of adding new personnel. The actual connections billed for 1992 and 1993 and the projected connections for 1994 through 1996 are as follows: YEAR COUNT 1992 378 1993 624 1994 876 1995 1,116 1996 1,280 65% 41% 28% 15% The rime required for the Finance area has been continually increasing over the past few years and based on the projections for utility connections, would require a request for additional personnel, probably in 1995. It should be brought to your attention that a full-time Finance position was reduced to part-time early in 1993 under the pretense that the utility billing would be done by AEC as early as August of 1993. There would also be the need to allocate additional time for the meter reading function and the maintenance of the connections. The effect on the total cost per bill, ff maintained in house, would fluctuate very lirde from the $2.8i since the personnel costs would also increase as the need for additional time allocations are met. This agreement with AEC would delay and possibly eliminate personnel additions in the near future. This venture makes sense since AEC and the City are combining and enhancing a service that is currently being duplicated by the two organizations and it is doing this at a cost savings to the customers. The City, by working with AEC, would not have the fixed costs such as statements, envelopes and postage. In addition, by urili:fing their services for cash collections, the customer writes only one check and uses only one stamp if mailing, and the City does not incur the bank service charges when depositing numerous checks. Cash flow would potent/ally be better since the customer is used to writing out a check each month for electric services and one each quarter the payment would include the utilities. The use of this service would allow the City to begin to bring its Utility Funds into a positive status without large increases in rates. Where there were a number of variable costs to deal with, there would now be a f~.xed charge per bill per quarter. This allows for more accurate forecasting and budgeting in the Utility Funds.