The City of Clarksville (City) operates water and wastewater utilities that provide service to approximately 58,000 water customers and 50,000 wastewater customers through the Clarksville Gas and Water Department. The customer base is diverse and includes residential, commercial, and industrial accounts and one wholesale water customer. A significant financial and operational challenge for the City involved rebuilding the City’s wastewater treatment facility and related infrastructure after sustaining extensive damages during a flood event in 2010. This and other funding concerns led to the City’s desire for an independent review and assessment of the revenue sufficiency of its water and wastewater pricing structure.
The City engaged Raftelis to evaluate its current rate structure and make appropriate recommendations to address a number of financial and pricing objectives. As a major component of our analysis, Raftelis developed a water and wastewater rate model to forecast annual revenue requirements, demand, rates, and revenues over both 5-year (FY 2013 – FY 2017) and 10-year planning periods (FY 2013 – FY 2022) to establish strong accurate short-term projections balanced with informative long-term financial sufficiency forecasts. The model incorporated revenue requirement projections, such as O&M, pay-as-you-go cash, and debt financing. The capital spending module of the rate model which detailed capital projects “proposed” over the planning horizon, was especially useful for the City to run various debt scenarios, debt service coverage requirements, and corresponding rate impacts. Additionally, Raftelis recommended rate adjustments that would result in the financial sustainability of the utility. Raftelis recently updated the rate model and developed a new 5-year projection of water and sewer rates.
