Raftelis was retained by the City of Boulder to evaluate and complete a comprehensive water, wastewater, and stormwater rate assessment and to develop rate alternatives for each utility. The study included a detailed review of policies and practices incorporated in separate utility rate models maintained by the City and of potential improvements to the utility rate structures. As part of the study, Raftelis also reviewed the City’s separate utility financial planning forecasts and revenue requirements and provided recommendations on utility debt service coverage and cash reserve policies. Findings and recommendations were adopted by City Council in May 2017 with rate structure modifications effective January 1, 2018, implementing rate structure modifications while increasing the overall rate revenue for each respective utility.
The City had implemented an individualized customer water budget-based rate structure nearly a decade ago. As part of our recent study, Raftelis assessed the effectiveness of the water budget rate structure by reviewing customer water use behaviors and revenue generated and comparing against other utilities in Colorado and California with similar water budget rate structures. The City adopted recommended changes to the water budget rate structure which reduced indoor allocations for single-family residential and multi-family residential customers by 1,000 gallons per month per dwelling unit while increasing rate revenues to generate an additional 8% in 2018. The adopted rate structure also reduced the number of potential water budget rate structure options for commercial, institutional, and industrial (CII) customers – replacing the Average Monthly Use (AMU) water budget option used by most CII customers with one that includes each customer’s average winter consumption plus outdoor budget tied to irrigable area and 15 gallons per square foot. The AMU rate structure had been tied to 2005 customer water use since implementation in 2007 and a change was needed to better align ongoing customer water budgets with more recent water use while providing an efficient water budget for outdoor customer use. A Historical Monthly Use (HMU) water budget option is still available to CII customers with seasonal use not tied to irrigation which uses a rolling three-year monthly average as basis for each customer’s monthly water budget.
The City’s wastewater utility faces rising capital costs associated with increased regulatory requirements combined with repair and replacement needs. The adopted wastewater rate structure was designed to improve overall revenue stability by recovering 25% of the annual revenue requirements through the fixed charge and adjusting the volume rate accordingly as the previous rate structure recovered 4% through the fixed charge resulting in revenue instability as billed sewer volume use continues to trend lower on a per account basis. Raftelis also recommended updates to the City’s Industrial Pre-Treatment Program (IPT) administrative fees and extra-strength surcharges for high-strength customers.
The City’s stormwater collection and drainage systems are faced with equitably recovering increased operating and capital requirements following the flooding experienced in Boulder in the fall of 2013. The City’s rate structure was perceived as being overly complex and was implemented before the City had individual property pervious and impervious area information. The City adopted a rate structure which included a fixed charge for all properties and an impervious area rate aligned with the City’s philosophy to equitably recover utility costs from customers while promoting green and pervious spaces throughout the City. Raftelis also worked with the City to evaluate incentives for sustainable stormwater management practices through updates to the credits program applicable to new development.
To assist in the review of multiple rate structures for each utility, Raftelis developed a customer bill impact analysis tool which calculated the dollar and percent bill impact monthly and annually for each individual customer for each utility, as well as the combined utility bill. This detailed customer bill impact supported an informed decision-making process by identifying the impact to all customers resulting for each alternative, and assisted Raftelis and City staff in developing and refining rate structure alternatives for each utility, as well as detailing expected customer bill impacts across the three utilities and the various alternatives evaluated.
Throughout the project, Raftelis worked extensively with City staff to refine interim study findings and recommendations. Raftelis and City staff presented final recommendations to the standing Water Resource Advisory Board (WRAB) in late 2016 and early 2017. The resulting WRAB endorsed findings and recommendations were presented to City Council and adopted in May 2017.
Additional details on the rate study are shown on the City’s website.