HDR Engineering, Inc. 4/10/2024 - Laserfiche WebLink

Exhibit A (Scope of Work) study period. The analysis for each utility will then consider the funding sources from current revenue streams (e.g., rates, connection charges, and capital cash reserves) and potential feasible revenue resources such as system reinvestment funding from rates, grants or contributions, low-interest loans, and/or revenue bonds. As a part of the capital funding plan, alternative capital funding strategies will be evaluated based on varying levels of CIP and/or alternative approaches to funding capital needs. The budget developed to conduct this task assumes and provides for up to two (2) capital funding scenarios for each utility. Given the projection of operating and capital needs, a test of sufficiency will be provided to evaluate the adequacy of current rates and revenues in meeting the financial obligations for each utility, along with the City’s financial policies (e.g., minimum reserve levels, debt service coverage, etc.). As a part of the analysis, each utility’s forecasted financial requirements will be compared against forecasted revenue under existing rates to determine annual and cumulative revenue adjustments needed for each utility to provide financial sustainability over time. As necessary, a rate transition strategy for each utility will be developed for the next four years that meets the utility’s financial obligations over the planning horizon and, to the extent practical, provides a smooth impact to utility customers. The budget provides for up to two (2) revenue requirement scenarios for each utility. Task 4 Assumptions:  Develop the revenue requirement for each utility for a 10-year period which incorporates the operating and capital funding analysis for each utility.  Rate transition strategy for the next four-year period for each utility.  A review of the City’s financial policies as developed in the revenue requirement analysis for each utility. Task 4 Deliverables:  An electronic copy of the rate model with the updated revenue requirement analysis for each utility. Task 5: Cost of Service Analysis A cost of service analysis differs from a revenue requirement analysis in that a revenue requirement analysis reviews the overall adequacy of a utility’s rate revenues, while a cost of service analysis equitably allocates the revenue requirement of a utility to the various customer groups served by the utility. The cost of service provides a defensible basis for proportionally assigning costs and establishing “cost-based and equitable” retail and wholesale rates which reflect each customer group’s unique facility requirements and the demands that they place upon each system. For this task, a water and sewer cost of service analysis will be developed. The cost of service analysis developed for each utility is different and unique. Given that, a detailed discussion of each utility is provided below. HDR is not proposing any changes in the overall methodology that was used as a part of the prior comprehensive rate studies. Water T&D – The water utility’s costs are segregated between transmission & distribution (T&D) and filtration. The revenue requirement for water T&D is separate and distinct from filtration. The water T&D cost of service analysis will perform three distinct functions with the data; functionalization, allocation, and distribution. The water T&D costs are functionalized based