Agenda - 06-12-2007-4gg - Laserfiche WebLink

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n...~.. ~... A ^i EFLAND SEWER SYSTEM 1~-- Proposal for Rate Study for Small Wastewater Collection Utility revenues from miscellaneous sources. The cost of service module is designed to support the equitable allocation of costs to different customer groups. The rate calculation module determines rates by taking into account the utility's pricing objectives. The model created for this engagement will be developed using Microsoft' Excel® and will be based on a model framework that incorporates industry standard rate setting methodology. During the course of the project, County staff will be provided with working copies of the rate model such that they will be able to provide input into the development of the model, if desired. TASK 3: Forecast Revenue Requirements For this study, revenue requirements will be projected for afive-year forecast period based upon historical results, the current budget and the planned capital costs associated with the Efland system. All costs allocated for the operation of the Efland system will be incorporated into the revenue requirements, including the treatment charges assessed by the Town of i-Tillsborough. It will be important to consider any prospective increases in the cost of treatment from the Town, as these costs will have a significant impact on the forecast of revenue requirements. In addition, the revenue requirements will incorporate any proportionate allocations of County contributions to reserve fund balances and debt service coverage requirements. RFC will work closely with the County's Finance Department in order to develop a plan for funding the capital projects associated with the Efland System, to ensure that these costs can be incorporated accurately into the total revenue requirements. Ultimately, RFC will project exactly how much cash needs to be collected through wastewater rates in order to meet expenses, both operations and maintenance ("O&M'~ and capital, in each year of the forecast period. TASK 4: Rate Calculation Since the Efland System consists primarily of residential customers that exhibit similar flow characteristics, RFC does not anticipate conducting a detailed cost of service analysis that allocates costs into functional components and then to customers classes based on usage characteristics. However, RFC may consider certain modifications to the exiting rate structure that could require the allocation of revenue requirements to different rate components. For example, depending on the usage characteristics of the Efland System's customers, a potential alternative for consideration is the use of a base charge rather than a minimum charge. If it is determined that a significant number of low-income customers are using less than 3,000 gallons per month, a base charge could provide rate relief to those customers who are currently paying for more than they are using. Conversely, those customers that are using more than 3,000 gallons per month will be required to absorb the additional revenue requirements, which is more consistent with cost of service principles. RFC will use projected flows, accounts, and revenue requirements to calculate rates. We will project these rates for five years so the County can gain an understanding of the long-term impact of the proposed rates. Once proposed rates have been calculated, the model will also generate rate impact schedules ,that will demonstrate the impact of the proposed rates on the bills paid by various types of customers. This is especially important since the County is sensitive to affordability issues impacting disadvantaged customers. ONSULTANTS, NC 8