Fairfax County: Responding to the Pandemic

Raftelis recently performed a financial stress test for Fairfax County, VA to examine how the impacts of COVID-19 stay-at-home orders and longer-term economic challenges might impact the County’s financial position and its current rate, operating, and capital plans.

As part of the analysis, Raftelis developed an industry risk profile by assessing jobs by industry in the County and categorizing them by risk. Raftelis assisted the County in estimating the potential risk of revenue loss associated with business closures and increased unemployment. The County has strong economic demographics with a high median income, and the risk to industries that appears lower than the national average. The findings of the risk assessment were used to update the financial forecast so the utility could evaluate potential budgetary amendments and assess effects from potential rate deferral options for the benefit of utility customers.

After this baseline was established, the County identified five different scenarios that reflected changes in timing and level of rate adjustments, as well as deferrals in capital spending and finance plans.

Raftelis worked with the County to review the financial projections utilizing the capabilities of the sensitivity dashboard to examine pre- and post-COVID-19 adjustments, changes in capital spending and rate adjustments. The analysis examined the cumulative effects of such changes over a 10-year period to understand how changes in the rate setting policy compared to the potential negative effects of COVID-19.

In several instances Raftelis identified how deferring previously adopted rates would result in greater negative impact than the potentially reduced commercial sales and increased payment delinquencies attributed to COVID-19. Findings from the analysis were summarized in a technical memorandum that utility management used to inform administration and others within the County.

To learn more, see how we helped Raleigh Water with their financial stress testing, view our insight on stress testing your financial plan, or explore how Raftelis can help you with financial stress testing.