Central Arkansas Water

Arkansas

Central Arkansas Water (CAW) was challenged with increasing capital costs associated with addressing aging infrastructure and regulatory requirements. While CAW was able to cash fund capital projects in the past, the capital projects identified through the asset management program required the issuance of several bonds over the next five years.  As a result, CAW was interested in developing a rate and financial planning model to forecast revenue requirements over the next several years to ensure bonds could be issued and to determine the impact on water rates under various levels of bond funded and cash funded capital projects. CAW was also interested in reviewing its rate structure and making modifications to address several pricing objectives. CAW engaged RFC to conduct a comprehensive water rate study. As part of the study, RFC developed a rate and financial planning model to forecast rate adjustments for both retail and wholesale customers, and used the rate model to identify alternative rate structures for the Commission to consider. RFC also conducted several workshops with the Commission on rate setting principals and to review various rate structure alternatives.

CAW has recently engaged RFC to delve deeper into the wholesale service water rates, in response to community interest.  Specifically, CAW has engaged RFC to update the existing wholesale water rates and rate model using the current methodology.  Additionally, RFC is to identify and evaluate alternative wholesale rate approaches.  The project is currently underway and results are expected in early May. 

Prior to both of the rate studies mentioned above, RFC was engaged by CAW to conduct a comprehensive assessment of the utility’s management practices in comparison to the standards of Effective Utility Management (EUM) and to collaborate with CAW to develop recommendations that enabled CAW to move closer to the ideal state. This project addressed measures and actions relating to each of the ten attributes of an effectively managed utility, which are product quality, customer satisfaction, employee leadership and development, operational optimization, financial viability, infrastructure stability, operational resiliency, community sustainability, water resource adequacy, and stakeholder understanding and support.  In addition, recommendations were developed relating to the five EUM keys to management success, which are leadership, strategic planning, organizational approaches, measurement, and continual improvement.  As a result of this project CAW enhanced its teamwork and the commitment of its management and employees with a focus on improving it management and operational practices and achieving a leadership position as one of the nation’s most effectively managed utilities.