Beverly Hills, City of

California

The City of Beverly Hills (City) wished to conduct a comprehensive water and wastewater rate study that included a review of revenue requirements, user classifications, costs of service, and the design of a system of user charges for the City’s water service that would promote water conservation.  The City engaged RFC to develop a rate and financial planning model that would be used to review customer classes, evaluate alternative rate structures, and to provide more detailed forecasts to assist in the preparation of updating rates in future years. RFC also assisted with the Proposition 218 notices and the public hearing.

The City’s existing water rate structure consisted of a three-tiered increasing block water rate structure with no differentiation among customer types. RFC modeled numerous alternative rate structures and reviewed customer and revenue impacts before recommending that the City modify its current three-tiered rate structure to include a fourth tier that targets large irrigation usage. In addition, RFC recommended that separate tiers be established for multi-family customers to reflect their usage characteristics. For commercial, industrial, and municipal customers, RFC recommended that the City implement a uniform commodity rate because of their non-homogenous usage characteristics. The City’s wastewater rates were restructured to more equitably recover the costs of servicing the different customer classes to conform to EPA regulations. RFC continues to provide updates to the City so that the enterprise funds can continue to be financially stable.