The City of Naperville’s (City) Department of Public Utilities engaged Raftelis to conduct a comprehensive water and wastewater cost-of-service analysis. The purpose of this analysis was to determine rate increases to provide adequate operational funding and ensure the long-term financial viability for the City’s Water and Sewer Fund. As part of the cost-of-service analysis, Raftelis developed comprehensive “stand-alone” long-range financial plans for the City’s water and wastewater utilities as well as a consolidated long-range financial plan for the City’s Water and Sewer Utility Fund. Based on the results of the financial planning process, Raftelis then performed a cost-of-service rate study to determine the water and wastewater rates that must be paid by each customer class during the period FY 2012-FY 2016.
A critical component of the financial planning process was the development of water and wastewater demand forecasts that better reflected actual customer consumption patterns than the City’s previous cost-of-service analysis. A key driver of the City’s required water rate increases were the purchased water costs charged by the City’s wholesale water supplier. As requested by the Department of Public Utilities, Raftelis’ recommended volumetric rate design for water featured a separately identified component for purchased water charges.
As part of the engagement, Raftelis conducted a preliminary review of the rate structure currently employed by the City to charge a wholesale wastewater customer served by the City’s wastewater treatment facility. The purpose of this review was to develop conceptual alternatives to the current pricing structure that would allow the City to appropriately recover the cost of providing wholesale wastewater service. Raftelis also reviewed the useful life assumptions used by the Department of Public Utilities to depreciate water and wastewater infrastructure assets. As part of the review, the depreciation rates used by the City were compared to selected Raftelis clients in order to develop recommendations regarding potential modifications to the depreciation rates used by the City for selected categories of water and wastewater assets.
