In Phase I, Raftelis assisted the City of Henderson (City) in conducting a water and wastewater financial assessment. Raftelis conducted a two-day workshop with City staff and policy makers explaining the objectives, principles and methodology of a cost-of-service rate study, and the various associated issues. These meetings, which included rates and charges and conceptual design workshops, allowed Raftelis to understand the historical evolution of the City’s water and wastewater utilities and user rate structures while providing a forum for City staff to gain a better understanding of the utility financial planning and rate-setting process. These meetings also facilitated the important process of building consensus and public acceptance among the various stakeholder groups so that the City could modify its rate structure to more equitably and fairly allocate costs among different user groups while meeting its rate and conservation objectives. Raftelis developed a financial vision which will ultimately shape the utilities for the next 10 years. As part of our conceptual design process, Raftelis recommended several alternative rate philosophies to be evaluated as part of Phase II.
For Phase II, Raftelis developed a financial planning and rate model to serve as a comprehensive, yet flexible, planning tool that incorporates a 10-year financial plan, forecasted demand projections, revenue requirements, user rate calculations, system development charges, revenue projections, fund balances, customer impacts, and all relevant financial policies related to replacement and reserve funding requirements developed as part of Phase I. The model was also developed to evaluate certain rate philosophies and user charge structure modifications focused on improving the equitable recovery of costs from different user classes, legal defensibility of the rates and system development charges, revenue predictability, and conservation incentives. Raftelis reviewed the customer classification for wastewater and developed cost of service-based rates for each class based on their loadings. Raftelis developed an allocation or budget for different meter sizes to ensure that the tiered rates set up would fairly collect revenues from customers.
Finally, Raftelis updated the City’s water and wastewater system development charges, or impact fees, to reflect the current costs of providing system capacity to new customers. The fees were updated to reflect the current value of facilities available to serve new customers, plus the cost of planned capital improvements that would provide additional capacity and benefit new customers.
