ACTION REQUESTED:
Title
Communication from the City Manager with a Request to Approve a CONSTRUCTION AGREEMENT with ILLINOIS AMERICAN WATER COMPANY for a Water Distribution Main on the ORANGE PRAIRIE ROAD EXTENSION PROJECT. (Location Map Attached) [District 5]
Body
BACKGROUND: Illinois American Water Company (IAWC) provides water service to the City of Peoria and unincorporated areas near the City of Peoria. They hold a certificate of public convenience issued by the Illinois Commerce Commission ("ICC"), granting it the right to furnish water service within a certificated area. The City is installing a new roadway extension to Orange Prairie Road and is currently planning the second phase of this roadway which will run north from Woodsage Road to Rt. 91.
In 2012, IAWC ended their arrangement with the City whereby the Water Company placed the garbage bills on the water bill, alleviating the need for the City to bill residents directly. In closing out this arrangement, City staff discovered that the Water Company was charging more than was provide for in the agreement. This overcharge occurred when the City switched from quarterly to monthly billing. Under quarterly billing, IAWC charged the City $0.60 per bill. When the City switched to monthly billing, the charge was supposed to be $0.20/bill, but instead the City was charged $0.60 per bill. In total, IAWC charged the City $1,283,348 too much.
City staff recommends that Council approve the attached Construction Agreement as the best manner to be reimbursed for the overbilling. This Agreement would do the following:
1. IAWC would install the water distribution main and related facilities for the Orange Prairie extension out of the funds owed the City. By paying for the construction of the main, the City would be eligible for a 10-year capital cost recovery payments as customers connect onto the main, similar to a private developer. The estimated cost of the water main is $611,282.
2....
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