Spartanburg Water

South Carolina

RFC has provided financial consulting services to Spartanburg Water, which includes both a water system (Spartanburg Water System or SWS) and a sewer system (Spartanburg Sanitary Sewer District or SSSD).   The range of services provided include developing financial planning and rate models, conducting annual rate updates, developing bond feasibility reports for inclusion in revenue bond official statements, calculating miscellaneous fees, examining the feasibility of acquiring small water systems within Spartanburg County, and developing a methodology for calculating wholesale water rates.

A five-year financial planning and water rate model was developed for SWS with the objective of moving toward a rate structure that would encourage efficiency and facilitate planning for rate adjustments.  These adjustments were needed to accommodate major capital improvements during the five-year planning horizon.  The model was also used to evaluate the potential impact of two related issues.  The first issue addressed the impact on rates of different financing options for construction of the water treatment facility expansion, focusing on up-front capital contributions from water districts.  The second issue addressed the appropriateness of the separate wholesale or bulk rate charged to a private company.  Since the initial engagement in 1994, the model has been updated each year by RFC to provide rate recommendations adopted in 1995 through 2009, and has been used to assess rate impacts of a major bond issue, a subsequent refunding, a substantial reduction in purchased water by a large wholesale customer, and proposed adjustments to the outside-city retail rate differential.

RFC developed a model for SSSD to address proposed rates for FY 1999.  At that time, the SSSD had recently issued revenue bonds to pay for improvements to the sewer system (the Series 1997 Bonds) and a second series of bonds was anticipated within the next year.  The model was designed to facilitate future efforts to prepare bond feasibility forecasts, including forecasts of debt service coverage ratios, and to address other capital planning issues.  A secondary objective for the SSSD rate study was to evaluate whether the collection rate and the T&T rate were recovering an equitable proportion of total system costs.  The model was developed to allow for separate adjustments to either rate to determine the impact on total revenues and equity on customers.  

Since the model was originally developed, RFC has performed annual updates, and it has been used to develop financial forecasts for additional revenue bonds issued by SSSD in 1999, 2003, 2005, and 2009.