The Metropolitan Government of Nashville and Davidson County – Metro Water Services (MWS) has contracted with Raftelis for four five-year financial and rate consulting engagements in 2001, 2006, 2011, and 2017. During these engagements, Raftelis has conducted numerous studies for MWS including several cost-of-service and rate studies where Raftelis determined the cost to serve MWS water retail customers, segregated between specific customer classes, as well as determined the cost to serve wholesale customers. As part of the cost-of-service studies, Raftelis reviewed the methodology used to develop miscellaneous fees such as tap fees, meter inspection fees, and flow test, and provided recommendations for revising fee calculations. Capital recovery fees were also calculated, so that MWS could recover cost related to growing its system.
In addition, Raftelis has performed financial feasibility studies as part of the MWS’ Series 2002 Revenue Bond offering and as part of the Series 2010 Revenue Bond offering. The studies were completed as part of the official statements to prove the financial sufficiency of the utility system and its ability to support the associated debt service. Raftelis also provided financial forecasts for information as part of the 2017 Revenue Bond offering and is currently working with MWS to defease and restructure its existing debt in anticipation of 2021 Revenue Bond offering and proposed WIFIA loan. A $650.0 million Water Treatment Plant expansion is in the planning stages that will require this funding.
Raftelis also performs several annual updates and reviews to ensure that MWS is in compliance with their rate covenant test defined by the Water and Sewer Revenue Bond Resolution, as well as in compliance with the user fee requirements of the United States Environmental Protection Agency. The annual budget review requires the review of budgeted revenues to determine the adequacy of to cover projected operating expenses and debt service requirements, particularly with regard to compliance with the rate covenant test defined by their Water and Sewer Revenue Bond Resolution. Raftelis also conducts an analysis regarding the calculation of the average cost per billing unit (100 cubic feet) for wastewater operations, maintenance and replacement costs. This analysis is performed annually to demonstrate that MWS is in compliance with the user fee requirements of the U.S. Environmental Protection Agency.
Lastly, Raftelis has developed several high strength surcharge models for MWS. In the past, MWS was assessing surcharges to industries discharging wastewater with higher concentrations of biochemical oxygen demand and total suspended solids than normal domestic wastewater. MWS was interested in adding a surcharge for nitrogen (as measured by ammonia). To calculate an appropriate surcharge, Raftelis developed a model to determine the per unit (or per pound) cost of treating these parameters. Raftelis calculates these surcharges for MWS every three to four years.
Developing priorities and strategies during a strategic planning process is relatively easy; everyone has ideas about what needs to be improved and how the organization can be made better. Holding people accountable for making progress toward achieving those priorities and strategies, however, is considerably more difficult. Several reasons exist for this difficulty, some of which include an absence of the right data at the right point in the strategic planning process, unrealistic targets for the given timeframe, organizational cultural barriers, and a lack of meaningful outcome measures. Metro Water Services of Nashville and Davidson County (MWS) addressed these challenges in part by conducting a two-part strategic planning process. MWS began an organizational assessment prior to initiating its strategic planning process. The assessment results helped to ensure that the organization’s leadership had a strong strategic and informational baseline for its future activity.
MWS initiated its organizational assessment and strategic planning process in 2016 with the overarching goal of assessing the utility’s current performance, creating an organizational vision, and developing a framework for guiding the utility toward achieving that vision. The resulting strategic plan was designed to assure:
Prior to initiating its strategic planning process, Raftelis conducted an organizational assessment for MWS based on EUM, which provided a strong strategic and informational baseline for its future activity.
The MWS strategic planning process involved input from a broad group of internal and external stakeholders, deep involvement of more than 60 employees in the assessment process and as participants on Priority Teams, and consistent communications both internally and externally.
The strategic plan now serves as a blueprint for future MWS decision making. Furthermore, the plan provides a structure by which annual reviews can be accomplished to assure that goals and objectives retain their relevance over time.
Upon completion of the strategic plan, MWS extended the engagement to include implementation assistance and an organizational culture assessment, with which Raftelis is currently assisting.
