Raftelis conducted a water, wastewater, and recycled water cost-of-service and rate study for the City of Ventura (City). The City had not updated its rate structure in 20 years. Additionally, the City was under a cease and desist order that required the City to carry out improvements estimated at more than $55 million, and which the City wanted to start funding to mitigate impacts.
The goal of the study was to develop conservation-oriented rates consistent with cost of service to recover adequate revenues to pay for necessary capital improvements, meet debt service coverage requirements, and maintain sufficient reserve requirements. The study included a comprehensive review of the City’s revenue requirements and allocation methodology, review of the City’s user classification, usage patterns, a cost-of-service analysis, and rate design for City users. Raftelis developed long-range financial plans so that the water and wastewater utilities could be financially stable and save costs in the long run. We also assisted the City with developing different water and wastewater rate alternatives with various scenarios as well as calculating outside-city rates. The study was conducted with several meetings and input from stakeholders comprised of customers within the City. Raftelis educated the Citizen Advisory Committee on the basics of rates, cost allocations, and rate design to obtain their buy-in through the use of the dashboards in the rate models we developed for them to demonstrate the impacts of various revenue adjustments on the long-term financial stability of the enterprises. Raftelis also developed a schedule for funding a major wastewater program required by environmental groups. The recommended rates were implemented.
Raftelis has also completed a drought study for various stages of conservation and targeted cutbacks of water required by the state and the City.
Ventura Water, a department of the City of Ventura, was interested in performing a cost-of-service and rate design review. As part of the project scope, Ventura Water also wished to review the methodology utilized to determine right of way (ROW) fees it pays to the City of Ventura for use of the City’s streets. The original ROW fee calculations were performed in 2005, and Ventura Water wanted to review the methodology to ensure it continued to be consistent with cost-of-service principles, and to ensure the water and wastewater enterprises were paying their fair share of costs related to use, and resultant degradation, of City streets.
After reviewing the methodology, Raftelis recommended Ventura Water use a fixed ROW fee instead of a ROW fee based upon a percentage of gross revenues. Additionally, Raftelis recommended adding a fixed fee pavement obligation component to the ROW fees to account for additional degradation of streets, not part of actual trench cuts, caused by heavy machinery. The rationale was that heavy machinery used in construction and utility work degrades the overall life the streets, causing the City to repave its streets more regularly.
To assist in calculating the new ROW fees, Raftelis engaged Ventura Appraisal Consulting Corporation (VACC) to determine the rental value of the City’s ROW. Using the estimated rental value, the length of the ROW, the miles of water and wastewater pipelines, and the estimated repaving costs, Raftelis calculated proposed ROW fees and pavement obligations for Ventura Water.
