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DATE: <br />TO: <br />FROM: <br />SUBJECT <br />ITEM NO. <br />STAFF REPORT <br />F <br />SEPTEMBER 7, 2010 <br />ROD FOSTER, CITY MANAGER/GENERAL MANAGER <br />JAMES EARHART, INTERIM DIRECTOR OF UTILITY SERVICE <br />ELECTRIC UTILITY DEPARTMENT RESPONSE TO E <br />OPERATIONAL AUDIT PERFORMED BY HARVEY M. ROSE <br />ASSOCIATES, LLC. <br />RECOMMENDED ACTION <br />It is recommended that City Council direct Staff to immediately move forward with a full -cost of <br />service study. The study shall include a rate study component and a five-year plan for capital <br />improvement projects to ensure future system reliability and an organizational structure to <br />support future growth. <br />GOAL STATEMENT <br />The proposed action will support the City's goal to provide safe, reliable, affordable, and <br />environmentally sustainable electric service. <br />BACKGROUND <br />The City recently contracted with Harvey M. Rose Associates, LLC to perform an operational <br />performance audit of the city -owned municipal electric utility. The study has been completed and <br />was presented to Council on July 28, 2010. <br />ISSUES/ANALYSIS <br />The study covered seven areas of the utilities operations: (1) Utility Planning (2) Financial <br />Position, Rates and Fees (3) Financial Relations with City of Colton (4) Contract Management <br />(5) Tracking Staff Productivity (6) Billing and Customer Service and (7) Governance. <br />Rather than go into what would be a very lengthy report and address each item individually, I <br />will state that I accept the audit and its presented findings and briefly cover each area listed in the <br />audit. Below, I have touched on what I feel are the most critical areas that should be addressed. <br />However, all audit recommendations will be considered as part of the cost -of -service study. <br />