Newport News, City of
RFC concluded a cost of service study for City of Newport News Department of Public Utilities, Waterworks Division (Waterworks) in April 2011. The study helped support Waterworks getting approval of its proposed FY 2012 water rates. It involved a comprehensive cost of service analysis that resulted in modifications to the rate structure. These modifications included increasing the base charge to improve revenue stability for Waterworks, eliminating the summer surcharge, adding a third block to the residential rate structure, and developing separate general class and industrial class rate structures that included a decreasing block for very large industrial customers. RFC prepared a report summarizing the study and assisted Waterworks staff prepare materials, such as a presentation and Executive Summary, for City Council.
RFC conducted a financial feasibility evaluation for the Waterworks related to the proposed issuance of revenue bonds in 2007. Waterworks, in partnership with other Virginia Peninsula localities, was seeking capital market funds to develop and implement a long-term solution to the area’s water supply needs. The most significant project in the capital plan was the development of a new 12.0 billion gallon off stream reservoir and pumping station on the Mattaponi River in King William County, Virginia. Our analysis included a forecast of revenues, expenses, and debt service over a five-year period, to ensure compliance with all bond covenants and debt service coverage requirements.
RFC also assisted Waterworks with defining appropriate and effective financial policies to mitigate operational risk, ensure adequate reserves, and improve the credit profile of the utility. Recommendations were provided for specific categories of reserves including rate stabilization funds, operating reserves and capital reserves, among others. Specific metrics were identified that defined target fund levels that balanced risk mitigation and funding requirements with the potential impact on rates and charges.