Nearly two decades of financial assistance for Raleigh

In response to the 2007-2008 North Carolina statewide drought, Raleigh Water originally engaged Raftelis to develop a conservation-based rate structure to target and discourage discretionary water use. High water use, in addition to growth in the region, was putting demand on Raleigh’s water and wastewater systems and creating an increased need for capital investment. Raleigh Water was in a unique position of trying to manage water demand while also generating sufficient revenues to pay for needed investment and infrastructure.  

Raftelis developed a financial planning and rate model to test the effects of implementing a conservation-based water rate structure and analyzing the impacts of a new rate structure on customers of the system. The City was focused on minimizing impacts to those customers that limited discretionary water use.  

Shortly thereafter, Raftelis worked with Raleigh Water as it implemented its new customer information and billing system, to ensure that the new system captured the appropriate information for future enhancements to the water and wastewater rate structures, as well as better financial planning capabilities. This process also included the implementation of monthly billing.  

The implementation of the increasing block residential rate structure significantly reduced the average customer’s bill from 6 ccf to 4.0 ccf and the residential usage overall. Additionally, the implementation of an irrigation rate also led to reduced usage. Reduced system usage enabled the City to push out significant growth-related costs that had been included in their near-term capital improvement plan which gave the City more time to plan for the infrastructure investment.  

Since 2008, Raftelis has performed numerous studies for Raleigh Water including cost-of-service and rate studies, capital recovery fee studies, and financial feasibility evaluations for revenue bond issues. Raleigh Water was able to obtain three AAA credit ratings from all three major rating agencies and maintains those ratings presently.  

Raftelis continues to assist Raleigh Water in annual rate updates, budgeting, capital and debt planning, capacity fees and interjurisdictional contract administration. As part of contract administration, Raftelis provides annual support to Raleigh Water related to its merger Town agreements and the annual management and update to support verification that the agreement terms are being satisfied.

Raftelis has also worked with City staff to develop a dedicated funding source for its varied infrastructure asset renewal program. The infrastructure replacement charges provide dedicated funding for a 50-year replacement cycle of the City’s water and sewer lines.

Affordability assessment and roadmap development

In 2023, Raftelis was engaged to develop a comprehensive affordability assessment and roadmap for Raleigh Water that was executed in two phases. The first phase of the study was an evaluation of the current affordability burdens that customers may experience when paying their monthly water and sewer bills. This included exploring commonly used metrics based on USEPA and other water industry sector guidance, customer delinquencies, payment plan performance, etc. Following this phase, Raftelis engaged in a collaborative process with Raleigh Water staff to identify objectives they wished to achieve related to customer affordability. These objectives included minimizing shut offs, addressing emergency needs, and making essential usage affordable for all. These objectives guided our prioritization of over 48 specific action items that will improve Raleigh Water’s ability to promote access to affordable water and sewer services.  

Financial planning for the City’s stormwater program

Success with the City’s water and wastewater funds led to opportunities to work with the City’s Stormwater Program to evaluate the level of service provided to the community and assist with financial planning for long-term funding of the capital program. Raftelis developed a sophisticated financial model to consider a variety of scenarios including differing future capital needs, operational program enhancements (adjustments to level of service), rate structure alternatives, sensitivity to changes in units of service, and consideration of debt funding capital needs. Raftelis continues to support the stormwater program with strategic communication, financial model updates, and other activities.

Financial planning for City’s solid waste program

Raftelis assisted the City of Raleigh in evaluating volume-based systems (VBS) for collecting residential waste and increasing recycling for the City’s Solid Waste Services Department (Department). The project involved developing a financial planning model for the Department to use for future planning, budgeting, and rate setting. In addition, the model was used to evaluate various VBS options. An integral part of the study involved the assumptions regarding customer behavior for solid waste and recycling under various VBS options. To develop a range of assumptions, the Raftelis team gathered case study information from various communities throughout the country that had implemented a VBS option. In addition, Raftelis mapped garbage and recycling data by route with census tract data within the City to further refine these assumptions and, more importantly, to identify any social equity impacts on various customer demographics.

Similar to the City’s water and sewer fund and stormwater fund, Raftelis developed a sophisticated financial model to consider a variety of scenarios. Raftelis continues to serve the City of Raleigh’s Solid Waste Services Department with financial planning and cost of service studies.  

Ultimately, nearly two decades of financial assistance and modeling have helped the City's utilities maintain financial sustainability across water, wastewater, stormwater, and solid waste programs, funding critical infrastructure renewal, promoting equitable, affordable service for customers, and enabling Raleigh Water to secure and maintain AAA credit ratings.

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