The Vendor is required to provide rate study for combined utility system.
- Data Collection & Review
• Data Collection
- Project activities, the City will be provided with an initial list of basic data needed to conduct the study.
- The data request will include items such as financial and operating data, customer account and billing data, reports prepared by others, budgets, audits, capital improvement programs, official bond statements and debt service schedules.
• Data Review
- The City to gather data in accordance with the initial data request, a kick-off meeting will be made with key City representatives to receive available data collected by staff, discuss additional data requirements, and to ensure that the project objectives are clearly defined and understood by all parties.
- Data will be reviewed for completeness and to ensure a sufficient understanding of historical utility operations.
- Revenue Requirements and Rate Determinants
•Historical Billing Data Analysis
- The data request document will provide instructions for the development of historical customer billing information.
- It is anticipated that the billing information will be provided in a format necessary to summarize the wastewater system accounts and volumes by customer class, meter size and usage blocks for a recent historical period for which audited revenues exist.
- The customers and flows provide the basis on which operating revenues are derived and are therefore the primary factors utilized in reviewing the user rates and charges.
• Customer and Flow Projections
- Each system accounts and usage will be forecast for a five-year planning period. Such projections will be developed by considering historical growth trends, local economic conditions, and the potential for adding/losing major utility customers, changes in customer class usage patterns over time, and experienced judgement.
• Projected Revenues under Existing Rates
- Projections of utility system revenues under existing rates for the planning period will be developed for each utility recognizing projected accounts, flow volumes, and usage patterns by customer class (as determined in the billing analysis under the previous tasks).
•Projected Revenue Requirements
- Revenue requirements (i.e. system expenditures) will be developed for the system based on an analysis of historical, currently budgeted, and anticipated operating and capital expenditures. The revenue requirements will be projected on a fiscal year cash flow basis, taking into account expected operational changes, changes in staffing or operating expenditures for new facilities, system growth occurring from new development, anticipated extraordinary expenses, and allowances for inflation
- The projections will include, as appropriate, the following utility system requirements:
• Operation and Maintenance Expenses,
• Outlay for Routine Annual Capital Additions and Replacements, if applicable,
• Debt Service and Reserve Requirements on Existing and Anticipated Debt Instruments,
• Transfers to Fund Major Capital Improvement, and
• Other Expenditures and Transfers.
- User Rate and Charge Analysis
• Evaluate Existing Rate Structure
- The existing rate structure will be evaluated for the effectiveness in equitably recovering costs of utility service from customers; consideration will also be given to the city’s policies, existing rates, pricing objectives, and practical limitations.
• Rate Structure Alternatives
- An interactive model will be developed by the Consultant that will allow for the consideration of alternative rate structures while still meeting the funding needs required for the wastewater system. The rate structure alternatives will be developed to recover the projected revenues needed to fund utility operations, recognizing equitable cost recovery, establishing reasonable recovery of costs, and complying with applicable regulations and policies.
- Contract Period/Term: 1 year