The City of Anaheim’s (City) water rates had not been revised since 1991 and are among the lowest 20% of the 33 water agencies in Orange County. Due to increases in costs and a large Capital Improvement Program (CIP), the City retained Raftelis to conduct a water cost of service study and develop a 10-year rate and financial planning model that would be used to evaluate alternative rate structures and to provide more detailed forecasts to assist in the preparation of updating rates in the future.
The City charged all customers a fixed customer charge that is based on meter size and a uniform commodity charge. Costs related to water production were passed through to customers. To reflect the City’s desires in exploring low-income and water conservation rate programs, Raftelis recommended several rate structures. Based on the City’s selection, Raftelis modeled three rate alternatives, evaluated customer and revenue impacts for each alternative, and compared them to neighboring agencies. To assist the City with its CIP, Raftelis developed another pass through charge for the CIP so that the City can avoid having to go through an extended public hearing process. In addition, Raftelis incorporated a drought management feature in the model to analyze the impacts of a reduction in water usage on rates in case of a drought. Through the model, the City was able to identify the rate structure that best fit its goals and objectives.
Raftelis was later engaged again to develop a financial planning model and to review cost of service for the City’s water utility.