City of Suffolk

Suffolk, Virginia, United States

Raftelis’ engagement with Department of Public Utilities (DPU) addresses financial, accounting, and pricing issues confronting the City of Suffolk (City) that impact its water and wastewater systems. The City provides retail water and wastewater service to approximately 21,000 accounts, as well as wholesale water to the Western Tidewater Water Authority (Authority). During the period that Raftelis has been engaged by the City, we have assisted the DPU in dealing with rapid growth in the early years of the engagement and in more recent years with the challenges of dramatically lower growth.

The scope of services provided to the City includes an annual update of the 10-year comprehensive financial plan, determination of water and sewer costs of service, development of proposed water and sewer rates for the upcoming fiscal year, and an assessment of the City’s water and sewer system availability fees. In addition, Raftelis also conducts an annual true up analysis for wholesale water service to the Authority. The true up analysis recalculates the water rates using actual cost and water usage data to determine the actual cost of service to the Authority during the prior year.

As mentioned, Raftelis reviews and updates the City’s availability fees using the marginal incremental cost method, as a part of this engagement. We work with the City and their engineers to identify the growth-related assets and associated capacity to determine an appropriate unit rate for new customers connecting to the system. We make adjustments as necessary to account for debt service, depreciation, and construction cost escalation to determine the City’s availability fees for the water and sewer utilities.

Raftelis’ long-standing engagement with the City has afforded the project team unique insight into the City’s challenges and situation. Even though Raftelis has worked with City to develop rates and provide financial consulting services since 2003, we still begin each fiscal year with a face-to-face kick-off meeting to ensure the City and the Raftelis team understand the expectations regarding data needs and any unique challenges for that fiscal year. Additional face-to-face meetings are scheduled to review preliminary results, and interim meetings are handled via virtual conferencing software. As needed, our team is available for support at City Council presentations and other stakeholder meetings.

In addition to collaboration with utility staff in particular, we have worked closely, and often independently, with other City staff and numerous other parties including: the rate consultant and attorney for the Western Tidewater Authority, the City’s wholesale customer Isle of Wight County, the City’s engineering consultant, and the City’s third-party billing provider Hampton Roads Utility Billing Service (HRUBS).