HomeMy WebLinkAboutAgenda Packet 04/09/2013VI. Information Only Items:
VIII. Adjournment
Utility Advisory Committee
Jack Pittis Room
Port Angeles, WA 98362
April 9, 2013 3:00 PM
AGENDA
I. Call To Order
II. Roll Call
III. Approval Of Minutes For March 12, 2013
IV. Late Items
V. Discussion Items:
A. NPDES Phase II Stormwater Annual Report
B. Cost of Service Studies Consultant Agreement
A. Port Angeles Power Sales Agreement Contract No. 09PB -13093
B. Wireless Mobile Data System (WMDS) Broadband Technologies
Opportunities Program (BTOP) Grant Update
VII. Next Meeting Date: May 14, 2013
N: \UAC\MEETINGS \UAC2013 \UAC040913
I. Call To Order
Chairman Dan DiGuilio called the meeting to order at 3 :00 p.m.
II. Roll Call
UAC Assigned
Councilmembers Present:
Other Councilmembers
Present:
Other Councilmembers
Absent:
Utility Advisory
Committee Members
Present:
Utility Advisory
Committee Members
Absent:
Staff Present:
Others Present:
III. Approval of Minutes
Utility Advisory Committee
Jack Pittis Conference Rooms
Port Angeles, WA 98362
March 12, 2013
3:00 p.m.
Dan Di Guilio, Cherie Kidd, Sissi Bruch
Brad Collins, Brooke Nelson, Max Mania, Patrick Downie
Dean Reed, Paul Elliot, Murven Sears II
Michael Jacobs
Dan McKeen, Glenn Cutler, Bill Bloor, Byron Olson, Kathryn Neal,
Phil Lusk, Ernie Klimek, Rick Hostetler (3:56)
Arnold Schouten Public
Herrera Environmental Consultants Various via telephone
Jennifer Garcelon Clallam County (3:02)
Bob Jenson Capacity Provisioning, Inc. (3:02)
Paul Gottlieb Peninsula Daily News (3:07)
Chairman Dan Di Guilio asked if there were any corrections to the minutes of February 12, 2013.
Dean Reed moved to approve the minutes. Murven Sears seconded the motion, which carried
unanimously.
IV. Late Items:
NWPPA Safety Award Winner
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V. Discussion Items:
A. Landfill Bluff Stabilization Agreement
Kathryn Neal, P.E., Engineering Manager discussed the erosions of the marine bluffs is threatening
to expose municipal solid waste and allow the waste to spill onto the beach. An amendment is
needed to develop permits and design in order to resolve the problem. There was a lengthy
discussion.
Dean Reed moved to recommend City Council to approve and authorize the City Manager to
sign Amendment 3 to the 2011 On -Call Landfill Cell Stabilization Professional Services
Agreement with Herrera in an amount not to exceed $1,171,121, which will increase the
contract amount to $1,567,771, and to make minor modifications to the agreement if
necessary. Murven Sears seconded the motion, which carried unanimously.
B. Solid Waste Comprehensive Plan Amendment Resolution
Kathryn Neal, P.E., Engineering Manager reviewed the draft resolution. The Clallam County Solid
Waste Management Plan was last updated in 2006. The plan does not reflect the current events at
the closed Port Angeles Landfill and needs to be amended to add provisions and to support the
current projects. There was a lengthy discussion.
Paul Elliot moved to recommend City Council to approve and authorize the City Mayor to
sign a Resolution amending the Clallam County Comprehensive Solid Waste Management
Plan Update 2006. Cherrie Kid seconded the motion, which carried unanimously.
C. 2012 Water Utility Consumer Confidence Report (info only)
Ernie Klimek, Water Superintendent shared the 2012 Water Quality Report. There has been a
change for the report as it is now distributed electronically rather than mailing hard copies saving
the City around $5,000. A review over the report was given.
For information only, no action requested.
D. Simple Steps Promotion Agreement
Phil Lusk, Deputy Director of Power Telecommunications Systems, discussed a new agreement
that was offered to the City for the "Simple Steps Smart Savings" energy efficient product
promotion with Fluid Market Strategies. All City expenses under the agreement are eligible for
reimbursement under the Bonneville Power Administration's Energy Efficiency Incentive program.
There was a discussion.
Paul Elliot moved to recommend City Council to authorize the City Manager to sign the
agreement and make minor modifications to the agreement, if necessary, as well as to sign any
subsequent amendments to the Simple Steps -Smart Solutions Agreement with Fluid Market
Strategies through January 2015. Murven Sears seconded the motion, which carried
unanimously.
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VIII.
E. Capacity Provisioning Inc. Right -of -Way Agreement
Phil Lusk, Deputy Director of Power Telecommunications Systems reviewed the City's license
with Capacity Provisioning, Inc. for its telecommunications systems within the City. The Right -Of-
Way License Agreement expired on September 8, 2012 and needs to be renewed. There was a brief
discussion.
VII.
Dean Reed moved to recommend City Council to authorize the Public Works and Utilities
Director, to renew the Telecommunications Right -Of -Way License with Capacity
Provisioning, Inc. for a five -year term. Murven Sears seconded the motion, which carried
unanimously.
VI. Information Only Items:
A. Advanced Metering Infrastructure System Update
Information only. No action taken.
B. Demand Response Program Update (verbal)
Information only. No action taken.
C. New and Lapsed Agreements
Information only. No action taken.
D. Utility Discount Ordinance Update
Information only. No action taken.
Next Meeting Date: April 9, 2013
Adjournment: 4:55 p.m.
Cherie Kidd, Mayor Sondya Wray, Administrative Specialist
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W A S H I N G T O N U.S.A.
Utility Advisory Committee Memo
Date: April 9, 2013
To: Utility Advisory Committee
From: Jonathan Boehme, P.E., Stormwater Engineer and Program Manager
Subject: NPDES Phase II Stormwater Annual Report
Summary: The NPDES Phase II Stormwater Annual Report was submitted to the Washington
Department of Ecology on March 28. The City's performance was measured by 85 standardized
criteria. The City has met all requirements, and is in full compliance with our NPDES Phase II
Stormwater Permit.
Recommendation: Information only, no action is needed.
Background /Analysis: The required NPDES Phase II Stormwater annual report was submitted to
Washington Department of Ecology on March 28. The City's performance was measured by 85
standardized criteria. The City has met all requirements, and is in full compliance with our NPDES
Phase II Stormwater Permit. This accomplishment reflects well not only on the Stormwater Utility
and the City as a whole, but on the staff involved in street operations, spill response (Illicit
Discharge Detection and Elimination), public education for residents and businesses, construction
inspection, water quality sampling and testing, mapping and facility maintenance (including not
only stormwater facilities, but also buildings and parks). It also is a credit to members of the public
who are involved in minimizing water pollution. Examples of specific actions the public can take
include making sure that runoff from car washing does not flow to a stream, picking up pet waste,
keeping vehicles well- maintained, and preventing leaks and spills.
In addition to the checklist that is attached, the Annual Report contains detailed information about
the implementation and progress of the major elements of the stormwater program. Also included
is the City's Stormwater Management Plan (SWMP), which is updated annually. On March 6, a
public meeting was held to solicit public input on the SWMP and on ideas to improve the
Stormwater Program. The most significant change in the current SWMP is the completion of the
2012 gap analysis and the resulting decision to raise stormwater utility rates, enabling the City to
fund the cost of operations, recurring capital projects, and other program elements required to stay
in compliance with the NPDES Phase II permit.
Staff will give a brief presentation outlining this year's major accomplishments and challenges of
the Stormwater Program. The Annual Report and the SWMP are posted on the City's website at
www.citvofna.us /Stormwater
Attachment: Port Angeles 2012 Annual Report Checklist, Stormwater NPDES Phase II
N• \UAC\MEETINGS \UAC2013 \UAC040913 \2012 Stormwater NPDES Phase II Annual Report.doc
Question
VI. Status Report Covering Calendar Yr: 2012 Jurisdiction Name: City of Port Angeles
PLEASE indicate reporting year and your jurisdiction in Line 1, above.
PLEASE refer to the INSTRUCTIONS tab for assistance filling out this table.
NOTE: For clarification on how to answer questions, place cursor over cells with red flags.
NOTE: Please answer all questions.
PLEASE review your work for completeness and accuracy. Save this worksheet as you go!
1. Attached annual written update of Permittee's
Stormwater Management Program (SWMP),
including applicable requirements under
S5.A.2 and S9?
2. Attached a copy of any annexations,
incorporations or boundary changes resulting
in an increase or decrease in the Permittee's
geographic area of permit coverage during the
reporting period, and implications for the
SWMP as per S9.E.3?
3. Implemented an ongoing program for
gathering, tracking, maintaining, and using
information to evaluate SWMP development,
implementation and permit compliance and to
set priorities? (S5.A.3)
4. Tracked costs or estimated costs of the
development and implementation of the
SWMP? (S5.A.3.a)
Y /N/ Comments (50 word limit)
NA
Y
NA
The most significant update to the SWMP in
2012 a comprehensive analysis of the
Stormwater Utility NPDES implementation and
capital needs was completed.
No annexations, incorporations or boundary
changes occurred in the City in 2012
Y The City maintains three spreadsheets for
tracking the SWMP, planning and tracking
public education and outreach, private facility
inspections and development review. IDDE
and maintenance activities are tracked used a
Cityworks database.
Y The City tracks costs of each major component
of the SWMP (Public Education, Public
Involvement, Illicit Discharge, Construction Site
Runoff and Operations and Maintenance) in
our arrnunting software program, Sunguard
Public Sector Naviline.
Page 1 of 14
Name of Attachment
Page if applicable
Attachment A, SWMPP
Attachment K, Stormwater
NPDES and Capital Needs
Assessment
Question
5. SWMP includes an education program aimed
at residents, businesses, industries, elected
officials, policy makers, planning staff and
other employees of the Permittee? (S5.C.1)
6. Number of public education and outreach
activities implemented:
7. Provided opportunities for the public to
participate in the decision making processes
involving the development, implementation
and updates of the Permittee's SWMP?
(S5.C.2.a)
8. Implemented a process for public involvement
and consideration of public comments on the
SWMP? (S5.C.2.a)
9. Made the most current version of the SWMP
available to the public. (S5.C.2.b)
10. Posted the SWMP and latest annual report on
Permittee's website. (S5.C.2.b)
11. NOTE website address in Attachment field:
12. Maintained a map of your MS4, including
requirements listed in S5.C.3.a.i -iii?
Y /N/ Comments (50 word limit)
NA
Y The SWMP contains an education program
aimed at target audiences.
Y The SWMP and contact information are
available to the public on the City's website,
and at the front counter of the City's
Engineering Department. In January 2012 the
public was invited to a meeting at City Hall and
invited to participate in the program. A City
Council presentation was also given in June
2012.
Opportunities for involvement and public
comment are created through public meetings
and through the general availability of the
SWMP. Comments made during presentations
or received though other means are considered
and incorporated in SWMP annual updates as
appropriate.
The most current version of the SWMP is
available to the public on the City's website and
at the front desk of the City's Engineering
Division.
Y
Name of Attachment
Page if applicable
Attachment B, "Outreach and
Public Participation Tracking
Spreadsheets"
hhtp.//www.cityofpa.us/Stormwat
er. htm
Y The stormwater system map is maintained and
continuously updated in the City's GIS system.
Page 2 of 14
Question
13. Map has been made available upon request?
(S5.C.3.a.iv)
14. Implemented an ordinance or other regulatory
mechanism to effectively prohibit non
stormwater, illicit discharges into the
Permittee's MS4? (S5.C.3.b)
15. Implemented an ongoing program to detect and
address non- stormwater illicit discharges,
including spills, and illicit connections into the
Permittee's MS4? (S5.C.3.c)
16. Implemented field assessment activities,
including visual inspection of priority outfalls
identified during dry weather, and for the
purposes of verifying outfall locations,
identifying previously unknown outfalls, and
detecting illicit discharges. (S5.C.3.c.ii)
17. Conducted field assessments on at least one
high priority water body? (S5.C.3.c.ii)
18. Implemented procedures for characterizing the
nature of, and potential public or
environmental threat posed by, any illicit
discharges found by or reported to the
Permittee? (S5.C.3.c.iii)
Y /N/ Comments (50 word limit) Name of Attachment
NA Page if applicable
Y The City's stormwater GIS is available for
public access via a dedicated computer station
in the City's engineering department. And on
the City website
http //65. 243.151.72 /PublicWeb /index.html
The City passed a comprehensive stormwater
ordinance on July 16th, 2009.
Y v v °h The City is using the Illicit Discharge Detection Policy included in the SWMP,
and Elimination (IDDE) Response Policy Attachment A
(promulgated 2/2012). Pollution reporting
number is listed on City website. Magnets with
reporting number have been distributed at
public outreach events. Pollution Prevention
Specialist makes regular site visits to
businesses.
Y
Y
Y
Field assessment was completed on all priority
outfalls in September
Dry Creek dry weather stream walk was
performed in September.
The City is using the Illicit Discharge Detection Policy included in the SWMP,
and Elimination (IDDE) Response Policy Staff Attachment A
training was conducted on November 29th
2012.
Page 3 of 14
Question
19. Implemented procedures for tracing the source
of an illicit discharge; including visual
inspections, and when necessary, opening
manholes, using mobile cameras, collecting
and analyzing water samples, and /or other
detailed inspection procedures? (S5.C.3.c.iv)
20. Implemented procedures for removing the
source of the discharge, including notification
of appropriate authorities; notification of the
property owner; technical assistance for
eliminating the discharge; follow -up
inspections; and escalating enforcement and
legal actions if the discharge is not eliminated?
(S5.C.3.c.v.)
21. Provided updated information to public
employees, businesses, and the general public
of hazards associated with illegal discharges
and improper disposal of waste? (S5.C.3.d)
22. Distributed appropriate information to target
audiences identified pursuant to S5.C.1?
(S5.C.3.d.i)
Y /N/
NA
Y
Comments (50 word limit)
I The City is using the Illicit Discharge Detection
and Elimination (IDDE) Response Policy.
Y The City is using the illicit Discharge Detection
and Elimination (IDDE) Response Policy. A
IDDE closure form was developed to ensure
follow up action was taken and problems
resolved.
Y In November 2012 IDDE Awareness Training
was presented to City staff. From July through
December over 100 site visits were made to
individual businesses where education
concerning illegal discharges and improper
disposal of waste was covered. Information
was also provided at outreach and public
participation events. Installed over 50 CB drain
markers
Y Information is provided at outreach and public
participation events. Partnered with West
Sound Stormwater Outreach Group, resulted in
distribution flier concerning proper disposal of
pet waste and installing Mutt Mitt pet waste
stations.
Page 4 of 14
Name of Attachment
Page if applicable
Policy included in the SWMP.
Policy included in the SWMP,
Attachment A
Attachment B, "Outreach and
Public Participation Tracking
Spreadsheets"
Attachment B, "Outreach and
Public Participation Tracking
Spreadsheets Attachment C
Kitsap Co. ILA, "Summary of
West Sound Stormwater
Outreach Group Activities"
Question
23. Publicized and maintained a hotline or other
local telephone number for public reporting of
spills and other illicit discharges?
(S5.C.3.d.ii)
24. Number of hotline calls received:
25. Number of follow -up actions taken in response
to calls:
26. NOTE hotline number in Comments field
27. Number of illicit discharges identified
(S5.C.3.e):
28. Number of inspections made for illicit
connections (S5.C.3.e):
29. Municipal field staff responsible for
identification, investigation, termination,
cleanup, and reporting of illicit discharges,
improper disposal and illicit connections are
trained to conduct these activities? (S5.C.3.f.i)
Y /N/
NA
Y
2
X21
Comments (50 word limit)
Using a magnet the hotline number is
publicized at almost all outreach and public
participation events Hotline number is
highlighted at IDDE training for City staff.
Partnered with West Sound Stormwater
Outreach Group with conducted focus groups
on how to make the hotline more effective
Only 1 hotline call was received (car wash),
however City staff responded to 22 incidents.
Follow up was provided, car wash education
360- 417 -4745
IDDE training was provided for municipal field
staff on August 30, 2012. IDDE Response and
Enforcement training was held for municipal
field staff on November 29, 2012.
Page 5 of 14
Name of Attachment
Page if applicable
Attachment B, "Outreach and
Public Participation Tracking
Spreadsheets" Attachment C,
"IDDE Hotline Magnet, Water
Pollution Reporting Hotline
Promotion"
See Attachment G, Illicit
Ilicrharna Rannrtc anri
Response for 2012"
See Attachment G, Illicit
Discharge Reports and
Response for 2012"
See Attachment H. Stormwater
Training"
Question
30. Implemented an ongoing training program on
the identification of an illicit
discharge /connection, and on the proper
procedures for reporting and responding to the
illicit discharge /connection for all municipal
field staff, which, as part of their normal job
responsibilities, might come into contact with
or otherwise observe an illicit discharge or
illicit connection to the storm sewer system?
(S5.C.3.f.ii.)
31. Applied stormwater runoff program to private
and public development, including roads?
(S5.C.4)
32. Applied the Technical Thresholds in Appendix
1 to all sites 1 acre or greater, including
projects less than one acre that are part of a
larger common plan of the development or
sale? (S5.C.4)
33. Implemented a regulatory mechanism (such as
an ordinance) necessary to address run -off
from new development, redevelopment and
construction site activities? (S5.C.4.a)
34. Retained existing local requirements to apply
stormwater controls at smaller sites or at lower
thresholds than required pursuant to S5.C.4?
(S5.A.4)
35. Number of exceptions to the minimum
requirements in Appendix 1 granted
(S5.C.4.a.i and Appendix 1)?
Y /N/
NA
Y
Comments (50 word limit) Name of Attachment
Page if applicable
IDDE General Awareness refresher training See Attachment H. "Stormwater
was held for City staff on November 29, 2012 Training"
Applied comprehensive stormwater ordinance
and development codes that have been in
place since July 16th, 2009.
Y See comment for question 31.
See comment for question 31.
Y
Regulatory requirements for small sites were
retained.
Page 6 of 14
Question
36. Number of variances to the minimum
requirements in Appendix 1 allowed
(S5.C.4.a.i and Appendix 1)?
37. Implemented a permitting process to address
runoff from new development, redevelopment
and construction site activities with plan
review, inspection, and enforcement
capability? (S5.C.4.b)
38. Reviewed Stormwater Site Plans for new
development and redevelopment projects that
disturb a land area 1 acre or greater, including
projects less than one acre that are part of a
larger common plan of development or sale?
(S5.C.4.b.i)
39. Number of site plans reviewed during the
reporting period:
40. Inspected, prior to clearing and construction,
all known development sites that have a high
potential for sediment transport as determined
through plan review based on definitions and
requirements in Appendix 7 Determining
Construction Site Sediment Potential?
(S5.C.4.b.ii and v)
41. Number of qualifying sites inspected prior to
clearing and construction during the reporting
period:
Y /N/ Comments (50 word limit)
NA
Y
Port Angeles Municipal Code Title 13
Stormwater Utility and Regulations,
specifically PAMC 13.63.190 Stormwater
Design and Construction Requirements"
Page 7 of 14
Name of Attachment
Page if applicable
See Attachment E, "Stormwater
Development Review Tracking"
See Attachment E, "Stormwater
Development Review Tracking"
See Attachment E, "Stormwater
Development Review Tracking"
See Attachment E, "Stormwater
Development Review Tracking"
Question
42. Inspected construction -phase stormwater
controls at all known permitted development
sites during construction to verify proper
installation and maintenance of required
erosion and sediment controls? (S5.C.4.b.iii
and v)
43. Number of sites inspected during the
construction phase for the reporting period:
44. Based on inspections at new development and
redevelopment construction projects, enforced
requirements related to the proper installation
and maintenance of erosion and sediment
controls? (S5.C.4.b.iii and vi)
45. Number of enforcement actions taken during
the reporting period:
46. Inspected qualifying permitted development
sites upon completion of construction and prior
to final approval or occupancy to ensure proper
installation of permanent stormwater controls
such as stormwater facilities and structural
BMPs? (S5.C.4.b.iv and v)
47. Number of qualifying sites known during the
reporting period:
48. Number of qualifying sites inspected during
the reporting period:
49. Verified a maintenance plan is completed and
responsibility for maintenance is assigned for
qualifying permitted development sites
(S5.C.4.b.iv)
Y /N/ Comments (50 word limit) Name of Attachment
NA
Y
NA
Y Two sites were completed and received final See Attachment E, "Stormwater
No enforcement actions were required.
approval inspections
Page 8 of 14
Page if applicable
See Attachment E, "Stormwater
Development Review Tracking"
See Attachment E, "Stormwater
Development Review Tracking"
See Attachment E, "Stormwater
Development Review Tracking"
See Attachment E, "Stormwater
Development Review Tracking"
Development Review Tracking"
See Attachment E, "Stormwater
Development Review Tracking"
See Attachment E, "Stormwater
Development Review Tracking"
Maintenance plan is required as part of project See Attachment F, "Private
completion. Stormwater Annual Inspections"
Question
50. Enforced regulations to ensure proper
installation of permanent stormwater controls?
(S5.C.4.b.iv)
51. Number of enforcement actions taken during
the reporting period:
52. Implemented a long -term operation and
maintenance (O &M) program for post
construction stormwater facilities permitted
and constructed pursuant to S5.C.4.a. and b.?
(S5.C.4.c)
53. Annually inspected all post- construction
stormwater controls, including structural
RM A c at new µleyelnnmant and rarla�ie lnnmpnt
r,... r-
projects permitted according to S5.C.4.b.
(unless maintenance records justify a different
frequency)? (S5.C.4.c.iii)
54. If using reduced inspection frequency,
Attached documentation as per S5.C.4.c.iii?
55. Performed timely maintenance of post
construction stormwater facilities and BMPs as
per S5.C.4.c.ii?
56. Attached documentation of any maintenance
delays. (S5.C.4.c.ii)
Y /N/
NA
NA
NA
Y
NA
Comments (50 word limit) Name of Attachment
Page if applicable
No enforcement actions were required.
Long term private operations and maintenance
requirements are detailed in the City's
stormwater ordinance and development code
and are being followed.
All eligible new developments and
redevelopments were inspected.
Not using any reduced inspection frequencies.
Enforcement notifications have been sent
within 30 days and are being followed up on
within preset timelines in maintenance
aq reements..
No delays.
Page 9 of 14
See Attachment F, "Private
Stormwater Annual Inspections"
Question
57. Inspected all new stormwater treatment and
flow control facilities owned or operated,
including catch basins, for new residential
developments that are a part of a larger
common plan of development or sale, every 6
months during the period of heaviest house
construction (i.e., 1 to 2 years following
subdivision approval) to identify maintenance
needs and enforce compliance with
maintenance standards as needed?
(S5.C.4.c.iv)
58. Number of facilities inspected during the
reporting period:
59. Implemented a procedure for keeping records
of inspections and enforcement actions by
staff, including inspection reports, warning
letters, notices of violations, other enforcement
records, maintenance inspections and
maintenance activities? (S5.C.4.d)
60. Provided copies of the Notice of Intent for
Construction Activity and Notice of Intent
for Industrial Activity to representatives of
proposed new development and
redevelopment? (S5.C.4.e)
Y /N/ Comments (50 word limit) Name of Attachment
NA Page if applicable
Y Six month inspections were performed on the See Attachment F, "Private
one eligible site, Maloney Heights
A annual inspection spreadsheet is used to
track inspections and enforcement.
Y_ Copies are provided in the front lobby of the
Engineering Division.
Page 10 of 14
Stormwater Annual Inspections"
See Attachment F, "Private
Stormwater Annual Inspections"
Question
61. All staff responsible for implementing the
program to control stormwater runoff from
new development, redevelopment, and
construction sites, including permitting, plan
review, construction site inspections, and
enforcement were trained to conduct these
activities? (S5.C.4.f)
62. Performed timely maintenance as per
S5.C.5.a.ii
63. Attached documentation of any maintenance
.L.i.._.,, roc n c
�uciay�. 7J.1 .✓.a.u)
64. Implemented a program designed to annually
inspect and maintained all stormwater
treatment and flow control facilities (other than
catch basins)? (S5.C.5.b)
65. (Number of known facilities:
66. Number of facilities inspected during the
reporting period:
67. If using reduced inspection frequency,
Attached documentation as per S5.C.5.a.ii?
(S5.C.5.b)
68. Conducted spot checks of stormwater facilities
after major storms? (S5.C.5.c)
69. (Number of known facilities:
70. Number of facilities inspected during the
reporting period:
Y /N/ Comments (50 word limit)
NA
CESCL Training provided for City staff in May
2012. Stormwater Site Plan Development
Training was provided for City staff and local
consultants in October 2012.
Y
NA
Y
All required maintenance activities are being
performed in a timely manor. Maintenance
actions are being tracked through Cityworks
CMMS (Computer Maintenance Management
System)
No maintenance delays have occurred.
Maintenance actions are being tracked through
Cityworks CMMS (Computer Maintenance
Management System).
Contech Storm Filters, Auquaswirl, Vortechs,
were inspected in July 2012. Inspections on
these facilities also include associated energy
dissipaters on the same inspection.
No reduced inspection frequencies have been
requested or documented
No qualifying major storm, defined as the 10
year storm, 3.2" in 24 hours.
Page 11 of 14
Name of Attachment
Page if applicable
See Attachment H, "Stormwater
Training"
Question
71. Inspected 20% of municipally owned or
operated catch basins at least once before the
end of the Permit term? (S5.C.5.d and Permit
Reference Table)
72. 'Number of known catch basins:
73. 'Number of inspections:
74. 'Number of catch basins cleaned:
75. Implemented practices to reduce stormwater
impacts associated with runoff from streets,
parking lots, roads or highways owned or
maintained by the Permittee, and road
maintenance activities conducted by the
Permittee? (S5.C.5.f)
76. Implemented policies and procedures to reduce
pollutants in discharges from all lands owned
or maintained by the Permittee and subject to
this Permit, including but not limited to: parks,
open space, road right -of -way, maintenance
yards, and stormwater treatment and flow
control facilities? (S5.C.5.g)
77. Implemented an operations and maintenance
(O &M) training program that has the ultimate
goal of preventing or reducing pollutant runoff
from municipal operations? (S5.C.5.h.)
Y /N/
NA
Y
Y
Y Dog waste stations have been installed or
maintained at 10 city facilities and parks and
14,000 dog waste bags were used to reduce
stormwater pollutants. Corp Yard Waste and
Transfer Station SWPPP's are up -to -date and
followed. Regular inspections and required
maintenance is performed on all city
stormwater treatment facilities.
Y
12479
11534
11534
Comments (50 word limit) Name of Attachment
Page if applicable
Within COPA Jurisdiction
Inspect all CBs as they are cleaned
Maintenance actions are being tracked through
Cityworks CMMS (Computer Maintenance
Management System).
BMP procedures and practices are in place to
reduce impacts of stormwater. A regular
program is in place to clean curb and gutter
lines, alley approaches, and 10,536 miles has
been recorded on city sweeping equipment.
Proper BMPs are utilized during all construction
and maintenance activities.
BMP and SWPPP training was held in August See Attachment H. Stormwater
2012. Training"
Page 12 of 14
Question
78. Implemented a Stormwater Pollution
Prevention Plan (SWPPP) for all heavy
equipment maintenance or storage yards, and
material storage facilities owned or operated
by the Permittee in areas subject to this Permit
that are not required to have coverage under
the Industrial Stormwater General Permit?
(S5.C.5.i)
79. Complied with the specific requirements
associated with approved TMDLs identified in
Appendix 2? (S7.A and Permit Reference
Table)
vn A t4 ti a ort „f TI T TDT
VV. Al L[ll.11•.11 JLULLAJ 1 V1J V V
implementation? (S7.A and Permit Reference
Table)
81. Where monitoring was required in Appendix
2, did you conduct the monitoring according to
an approved Quality Assurance Project Plan?
(S7.A and Permit Reference Table)
82. Notified Ecology immediately in cases where
the Permittee becomes aware of a discharge
from the Permittees MS4 which may cause or
contribute to an imminent threat to human
health or the environment? (G3)
83. Took appropriate action to correct or minimize
discharges into or from the MS4 which could
constitute a threat to human health, welfare, or
the environment? (G3)
Y /N/
NA
Y
NA
I NA
NA
Y
Y
Comments (50 word limit)
The SWPPP for the City of Port Angeles Public
Works and Utilities Maintenance Facility "Corp
Yard was previously documented in the 2010
Annual Report. Transfer Station SWPPP is
included as an attachment to this report
No TMDLs have been required in Port Angeles
All 6 G3 eligible notification events which may
cause or contribute to an imminent threat to
human health or the environments were made
to Ecology.
Spill response was performed by City crews
When necessary education or violation letters
were issued.
Page 13 of 14
Name of Attachment
Page if applicable
See Attachment G, "Transfer
Station SWPPP"
Question
84. Attached a summary of the status of
implementation of any actions taken pursuant
to S4.F and the status of any montioring,
assessment, or evaluation efforts conducted
during the reporting period? (S4.F.3.d)
85. Notified Ecology of the failure to comply with NA
any permit term or condition within 30 days of
becoming aware of the non compliance? (G20)
Y /N/ Comments (50 word limit)
NA
Y {r °i An S4F1 notification was made to the
Department of Ecology on January 4, 2011.
Funding constraints have limited the
monitoring, but sampling continues when
possible on the outfall locations identified in the
S4F1. Monitoring data is attached. Analysis
has been performed by Herrera Environmental
to help the City decide how to proceed.
No notifications required.
Page 14 of 14
Name of Attachment
Page if applicable
Attachment J, Fecal Coliform
monitoring data, Herrera Water
Quality Data Analysis Report,
Drainage Contaminant Survey
Report
C1TY0OF
I1f2RT NGELES
W A S H I N G T O N U.S.A.
Utility Advisory Committee Memo
Date: April 9, 2013
To: Utility Advisory Committee
From: Phil Lusk, Deputy Director of Power and Telecommunications Systems
Subject: Consultant Agreement for Utility Cost of Service Analysis (COSA)
Summary: The City has periodically retained a consultant to independently assess the revenue and cash
reserve requirements of the eight individual utilities operated by the City. This information is then used
to evaluate each utility's cost of service and its rate designs. A full Cost of Service Analysis is
scheduled to be completed in 2013 for the electric, solid waste collection, and solid waste transfer
station utilities. Revenue requirement studies will also be competed in 2013 for the water and
wastewater utilities, with their cost of service and rate design evaluations programmed for completion in
2014. A revenue requirement study for the telecommunications utility is also scheduled in 2014.
Recommendation: Forward a favorable recommendation to City Council to approve and
authorize the City Manager to sign the Utility Cost of Service Analysis Professional Services
Agreement with FCS Group in an amount not to exceed $145,876, ($105,106 will be obligated in
2013 and $40,770 will be conditionally budgeted for spending in 2014) and to make minor
modifications to the agreement, if necessa ry.
Background /Analysis: The City has traditionally used a consultant every three years to
independently assess and evaluate the revenue needs and cash reserve requirements of the eight
individual utilities operated by the City. This information is then used to evaluate each utility's cost of
service and its rate designs, a practice known as a Cost of Service Analysis (COSA). However, with the
exception of the stormwater utility COSA in 2012, the most recent comparable utility COSAs were
completed in 2005 for the electric utility and in 2008 for the remaining six utilities (water, wastewater,
CSO, stormwater, solid waste collection, and solid waste transfer station). A telecommunications utility
was added in 2012 for the City -owned wireless mobile data system.
Alternative rate designs for the electric, solid waste collection and solid waste transfer utilities should
also be evaluated as a part of the COSA process. For example, due to the Bonneville Power
Administration (BPA) Tiered Rates, the electric utility has added revenue risk because the recovery of
fixed revenues from customers do not balance to the level of fixed cost expenses to the BPA. Alternative
rate designs should be considered to evaluate different ways of allocating fixed and variable charges in a
way that minimizes the economic impact on residential electric utility customers. Also, alternative rate
designs for the solid waste collection utility may reveal new ways of evaluating service options for
customer collections and recycling.
N \UAC\ MEETINGS \UAC2013 \UAC040913\2013 -14 Utility COSA docx
2013 Utility Cost of Service Studies
April 9, 2013
Page 2
As part of the consultant selection process, staff advertised a Request for Qualifications (RFQ) for utility
COSAs. A total of 11 consultant inquiries were received and five consultants submitted their
qualifications on the due date of March 1, 2013. The consulting groups included Baker Tilly, EES
Consulting, FCS Group, Raftelis Financial Consultants, and SAIC Energy, Environment and
Infrastructure. A proposal selection committee consisting of Mayor Cherie Kidd, Utility Advisory
Committee Community Representative Dean Reed, Chief Financial Officer Byron Olson, Public Works
and Utilities Director Glenn Cutler and myself unanimously determined that FCS Group submitted the
most responsive proposal. Staff subsequently negotiated a scope of work and budget for the project.
Full COSAs and rate design evaluations are scheduled for completion in 2013 for the electric, solid
waste collection, and solid waste transfer station utilities. Revenue requirement studies will also be
competed in 2013 for the water and wastewater utilities, with their COSAs and rate design evaluations
conditionally budgeted for completion in 2014. A telecommunications utility revenue requirement study
is also conditionally budgeted in 2014. Staff therefore proposes that the duration of the new Agreement
be through March 31, 2015. The draft Agreement is now being reviewed by the City Attorney.
An optional scope of work is separately listed and recommended by staff. The optional scope would
review the City's excise tax reporting practices to identify any overpayments or underpayments of state
taxes, providing information that the City may use to pursue a refund with the Depaittnent of Revenue
or amend its reporting practices (either to take advantage of additional deductions or mitigate any tax
liabilities). A similar study was conducted in 2008, which found the City's reporting practices complied
with applicable tax laws, but some potential enhancements to those reporting practices could be made.
Table 1 outlines the key tasks in the proposed consultant agreement, with costs budgeted for each task.
Funding sources are from the approved 2013 budgets for the electric water, wastewater, solid waste
collection, and solid waste transfer station utilities. The proposed budget is in excess of the funding
approved in the 2013 budget. While the reasons for this will be discussed below, the required additional
funding is available within the electric utility's annual budget by offsetting savings in other budget costs
to support the proposed 2013 COSA.
The current scope of work exceeds the approved budget for a number of reasons:
1) The evaluation of the adequacy of the City's capital improvement program to ensure that
renewals and replacements are similar to annual depreciation is already bundled into the fee
schedule, rather than treated as an optional item as proposed in the RFQ. Because the COSA
results will feed into the City's strategic financial plan, staff strongly supports this inclusion.
2) The original budget did not include a budget for the consultant to meet with policy makers and
staff during the development of the COSAs.
3) The complexity of the COSA process has increased significantly since the last studies were
completed in 2005 and 2008, especially with the advent of BPA Tiered Rates.
It is requested that the Utility Advisory Committee forward a favorable recommendation to City Council
to approve and authorize the City Manager to sign the Utility Cost of Service Analysis Professional
Services Agreement with the FCS Group in an amount not to exceed $145,876, ($105,106 will be
obligated in 2013 and $40,770 will be conditionally budgeted for spending in 2014) and to make minor
modifications to the agreement, if necessary.
N \UAC\ MEETINGS \UAC2013 \UAC040913\2013 -14 Utility COSA docx
TASKS
Table 1 Summary of Utility Cost of Service Analysis Scope and Budget
FCS
Group
Task
Fee
2013 2013 2013 2014
Approved Budget Supplemental Conditional
Budget Required Budget' Budget
Electric Utility COSA 52,549 25,000 25,000 27,549
Telecommunications
Utility Revenue 5,130 5,130
Requirements
Water Utility COSA 29,075 15,000 13,895 15,180
Wastewater Utility COSA 28,705 15,000 14,405 14,300
Solid Waste Collection
and Transfer Station 24,257 25,000 24,257
Utility COSA
Sub -Total 139,716 80,000 77,557 27,549 34,610
Optional Excise 6,160
6,160
Tax Review
Grand Total 145,876 80,000 77,557 27,549 40,770
OPTIONAL TASKS NOT RECOMMENDED FCS Group Task Fee
7b. Capital Improvements Renewals and Replacements Bundled in COSA
7c. Water Wastewater System Development Charge 7,370
7d. Municipal Code Title 3 (Fees) Evaluation 7,560
I The required $26,918 will be re- programmed from cost savings already affected in the electric utility's procurement and
operating budget for 2013.
2 The condition is that the proposed funding must be contained in the approved 2014 City budget.
N \UAC\ MEETINGS \UAC2013 \UAC040913\2013 -14 Utility COSA docx
Total
Budget
52,549
5,130
29,075
28,705
24,257
139,716
6,160
145,876
AGREEMENT FOR PROFESSIONAL SERVICES
BETWEEN THE
CITY OF PORT ANGELES
AND
FCS GROUP, INC.
RELATING TO: UTILITY COST OF SERVICE STUDIES
THIS AGREEMENT is made and entered into this day of
2013, by and between THE CITY OF PORT ANGELES, a non charter code city of the State of
Washington, (hereinafter called the "CITY and FCS Group, Inc., a Washington Corporation
authorized to do business in the state of Washington (hereinafter called the "CONSULTANT
WHEREAS, the CITY desires professional services related to cost of service studies for its
electric, telecommunications, water, wastewater, solid waste collection, and solid waste
transfer station utilities; and
WHEREAS, the CITY desires to engage the professional services and assistance of a qualified
consulting firm to perform the scope of work as detailed in Exhibit A, and
WHEREAS, the CONSULTANT represents that it is in full compliance with the statutes of the
State of Washington for professional registration and /or other applicable requirements, and
WHEREAS, the CONSULTANT represents that it has the background, experience, and ability
to perform the required work in accordance with the standards of the profession, and
WHEREAS, the CONSULTANT represents that it will provide qualified personnel and
appropriate facilities necessary to accomplish the work;
NOW, THEREFORE, in consideration of the above representations and the terms, conditions,
covenants, and agreements set forth below, the parties hereto agree as follows:
I SCOPE OF WORK
The scope of professional services to be performed and the results to be achieved by the
CONSULTANT shall be as detailed in the attached Exhibit A and shall include all services and
material necessary to accomplish the work.
The CITY may review the CONSULTANT'S work product, and if it is not satisfactory, the
CONSULTANT shall make such changes as may be required by the CITY. Such changes
shall not constitute "Extra Work" as related in Section XII of this Agreement.
The CONSULTANT agrees that all services performed under this Agreement shall be in
accordance with the standards of the profession and in compliance with applicable federal,
state and local laws.
The Scope of Work may be amended upon written approval of both parties.
PW 0410_01 Professional Services Agreement Page 1 of 7
Revised [05/12/06]
II OWNERSHIP OF DOCUMENTS
Upon completion of the work, all documents, exhibits, photographic negatives, or other
presentations of the work shall become the property of the CITY for use without restriction and
without representation as to suitability for reuse by any other party unless specifically verified
or adapted by the CONSULTANT. H owever, any alteration of the documents, by the City or by
others acting through or on behalf of the City, will be at the City's sole risk.
III DESIGNATION OF REPRESENTATIVES
Each party shall designate its representatives in writing. The CONSULTANT'S representative
shall be subject to the approval of the CITY.
IV TIME OF PERFORMANCE
The CONSULTANT may begin work upon execution of this Agreement by both parties and the
duration of the Agreement shall extend through March 31, 2015. The work shall be completed
in accordance with the schedule set forth in the attached Exhibit C.
V PAYMENT
The CITY shall pay the CONSULTANT as set forth in this section of the Agreement. Such
payment shall be full compensation for work performed, services rendered, and all labor,
materials, supplies, equipment and incidentals necessary to complete the work.
A. Payment shall be on the basis of the CONSULTANT'S standard billing rates as set forth in
Exhibit B multiplied by the actual hours worked, cost for actual labor, overhead and profit
plus CONSULTANT'S direct non -salary reimbursable costs as set forth in the attached
Exhibit B.
B. The CONSULTANT shall submit invoices to the CITY per schedule in Exhibit B. Invoices
shall detail the work, hours, employee name, and hourly rate; shall itemize with receipts
and invoices the non -salary direct costs; shall indicate the specific task or activity in the
Scope of Work to which the costs are related; and shall indicate the cumulative total for
each task.
C. The CITY shall review the invoices and make payment for the percentage of the project
that has been completed less the amounts previously paid.
D. The CONSULTANT invoices are due and payable within 30 days of receipt. In the event
of a disputed billing, only the disputed portion will be withheld from payment.
E. Final payment for the balance due to the CONSULTANT will be made after the completion
of the work and acceptance by the CITY.
F. Payment for "Extra Work" performed under Section XII of this Agreement shall be as
agreed to by the parties in writing.
PW 0410_01 Professional Services Agreement Page 2 of 7
Revised [05/12/06]
VI MAXIMUM COMPENSATION
Unless otherwise agreed to in writing by both parties, the CONSULTANT'S total compensation
and reimbursement under this Agreement, including labor, direct non -salary reimbursable
costs and outside services, shall not exceed the maximum sum of $145,876. The budget for
each task is as set forth in the attached Exhibit B. Budgets for task(s) may be modified upon
mutual agreement between the two parties, but in any event, the total payment to
CONSULTANT shall not exceed $145,876, and of which $105,106 will be obligated in 2013
and $40,770 will be conditionally budgeted for spending in 2014.
VII INDEPENDENT CONTRACTOR STATUS
The relation created by this Agreement is that of owner independent contractor. The
CONSULTANT is not an employee of the City and is not entitled to the benefits provided by
the City to its employees. The CONSULTANT, as an independent contractor, has the authority
to control and direct the performance of the services to be provided. The CONSULTANT shall
assume full responsibility for payment of all Federal, State, and local taxes or contributions
imposed or required, including, but not limited to, unemployment insurance, Social Security,
and income tax.
VIII EMPLOYMENT
Employees of the CONSULTANT, while engaged in the performance of any work or services
under this Agreement, shall be considered employees of the CONSULTANT only and not of
the CITY, and claims that may arise under the Workman's Compensation Act on behalf of said
employees while so engaged, and any and all claims made by a third party as a consequence
of any negligent act or omission on the part of the CONSULTANT'S employees while so
engaged, on any of the work or services provided to be rendered herein, shall be the sole
obligation and responsibility of the CONSULTANT.
In performing this Agreement, the CONSULTANT shall not employ or contract with any CITY
employee without the City's written consent.
IX NONDISCRIMINATION
The CONSULTANT shall conduct its business in a manner, which assures fair, equal and
non discriminatory treatment of all persons, without respect to race, creed or national origin, or
other legally protected classification and, in particular:
A. The CONSULTANT shall maintain open hiring and employment practices and will welcome
applications for employment in all positions, from qualified individuals who are members of
minorities protected by federal equal opportunity /affirmative action requirements; and,
B. The CONSULTANT shall comply with all requirements of applicable federal, state or local
laws or regulations issued pursuant thereto, relating to the establishment of non
discriminatory requirements in hiring and employment practices and assuring the service
of all persons without discrimination as to any person's race, color, religion, sex, Vietnam
era veteran status, disabled veteran condition, physical or mental handicap, or national
origin.
PW 0410_01 Professional Services Agreement Page 3 of 7
Revised [05/12/06]
X SUBCONTRACTS
A. The CONSULTANT shall not sublet or assign any of the work covered by this Agreement
without the written consent of the CITY.
B. In all solicitation either by competitive bidding or negotiation made by the CONSULTANT
for work to be performed pursuant to a subcontract, including procurement of materials
and equipment, each potential subconsultant or supplier shall be notified by the
CONSULTANT of CONSULTANT'S obligations under this Agreement, including the
nondiscrimination requirements.
XI CHANGES IN WORK
Other than changes directed by the CITY as set forth in Section I above, either party may
request changes in the scope of work. Such changes shall not become part of this Agreement
unless and until mutually agreed upon and incorporated herein by written amendments to this
Agreement executed by both parties.
XII EXTRA WORK
The CITY may desire to have the CONSULTANT perform work or render services in
connection with this project, in addition to the scope of work set forth in Exhibit A and minor
revisions to satisfactorily completed work. Such work shall be considered as "Extra Work" and
shall be addressed in a written supplement to this Agreement. The CITY shall not be
responsible for paying for such extra work unless and until the written supplement is executed
by both parties.
XIII TERMINATION OF AGREEMENT
A. The CITY may terminate this Agreement at any time upon not less than ten (10) days
written notice to the CONSULTANT. Written notice will be by certified mail sent to the
CONSULTANT'S designated representative at the address provided by the
CONSULTANT.
B. In the event this Agreement is terminated prior to the completion of the work, a final
payment shall be made to the CONSULTANT, which, when added to any payments
previously made, shall compensate the CONSULTANT for the percentage of work
completed.
C. In the event this Agreement is terminated prior to completion of the work, documents that
are the property of the CITY pursuant to Section 11 above, shall be delivered to and
received by the CITY prior to transmittal of final payment to the CONSULTANT.
XIV INDEMNIFICATION /HOLD HARMLESS
CONSULTANT shall defend, indemnify and hold the CITY, its officers, officials, employees and
volunteers harmless from any and all claims, injuries, damages, losses or suits including
attorney fees, arising out of or resulting from the negligent acts, errors or omissions of the
CONSULTANT in performance of this Agreement, except for injuries and damages caused by
the sole negligence of the CITY.
PW 0410_01 Professional Services Agreement Page 4 of 7
Revised [05/12/06]
The CITY agrees to indemnify the CONSULTANT from any claims, damages, losses, and
costs, including, but not limited to, attorney's fees and litigation costs, arising out of claims by
third parties for property damage and bodily injury, including death, caused solely by the
negligence or willful misconduct of the CITY, CITY's employees, or agents in connection with
the work performed under this Agreement.
If the negligence or willful misconduct of both CONSULTANT and CITY (or a person identified
above for whom each is liable) is a cause of such damage or injury, the Toss, cost, or expense
shall be shared between the CONSULTANT and the CITY in proportion to their relative
degrees of negligence or willful misconduct and the right of indemnity shall apply for such
proportion.
Should a court of competent jurisdiction determine that this Agreement is subject to RCW
4.24.115, then, in the event of liability for damages arising out of bodily injury to persons or
damages to property caused by or resulting from the concurrent negligence of the
CONSULTANT, the CITY, and the officers, officials, employees, and volunteers of either, the
CONSULTANT'S liability hereunder shall be only to the extent of the CONSULTANT'S
negligence. It is further specifically and expressly understood that the indemnification provided
herein constitutes the CONSULTANT'S waiver of immunity under Industrial Insurance, Title 51
RCW, solely for the purposes of this indemnification. This waiver has been mutually
negotiated by the parties. The provisions of this section shall survive the expiration or
termination of this Agreement. However, the CONSULTANT expressly reserves its rights as a
third person set forth in RCW 51.24.035.
XV INSURANCE
The CONSULTANT shall procure and maintain for the duration of the Agreement, insurance
against claims for injuries to persons or damage to property which may arise from or in
connection with the performance of the work hereunder by the CONSULTANT, its agents,
representatives, employees or subcontractors.
No Limitation. CONSULTANT'S maintenance of insurance as required by the agreement
shall not be construed to limit the liability of the CONSULTANT to the coverage provided by
such insurance, or otherwise limit the CITY'S recourse to any remedy available at law or in
equity.
Failure on the part of the CONSULTANT to maintain the insurance as required shall constitute
a material breach of contract, up which the City may, after giving five business days notice to
the CONSULTANT to correct the breach, immediately terminate the Agreement, or, at its
discretion, procure or renew such insurance and pay any and all premiums in connection
therewith, with any sum so expended to be repaid to the City on demand, or at the sole
discretion of the City, offset against funds due the CONSULTANT from the City.
A. Minimum Scope of Insurance
CONSULTANT shall obtain insurance of the types described below:
1. Automobile Liability insurance covering all owned, non owned, hired and leased vehicles.
Coverage shall be written on Insurance Services Office (ISO) form CA 00 01 or a substitute
PW 0410_01 Professional Services Agreement Page 5 of 7
Revised [05/12/06]
form providing equivalent liability coverage. If necessary, the policy shall be endorsed to
provide contractual liability coverage; and,
2. Commercial General Liability insurance shall be written on ISO occurrence form CG 00 01
and shall cover liability arising from premises, operations, independent contractors, and
personal injury and advertising injury. The City shall be named as an insured under the
CONSULTANT'S Commercial General Liability insurance policy with respect to the work
performed for the City; and,
3. Workers' Compensation coverage as required by the Industrial Insurances laws of the State
of Washington; and
4. Professional Liability insurance appropriate to the CONSULTANT'S profession.
B. Minimum Amounts of Insurance
CONSULTANT shall maintain the following insurance limits:
1. Automobile Liability insurance with a minimum combined single limit for bodily
injury and property damage of $1,000,000 per accident.
2. Commercial General Liability insurance shall be written with limits no Tess than
$1,000,000 each occurrence, $2,000,000 general aggregate.
3. Professional Liability insurance shall be written with limits no less than
$1,000,000 per claim and $1,000,000 policy aggregate limit.
C. Other Insurance Provisions
The insurance policies are to contain, or be endorsed to contain, the following provisions for
Automobile Liability, Professional Liability and Commercial General Liability insurance:
1. The CONSULTANT'S insurance coverage shall be primary insurance as respect
the City. Any insurance, self- insurance, or insurance pool coverage maintained
by the City shall be excess of the CONSULTANT'S insurance and shall not
contribute with it.
2. The CONSULTANT shall provide the City and any additional insureds with
written notice of any policy cancellation, within two business days of their receipt
of such notice.
3. Any payment of deductible or self- insured retention shall be the sole
responsibility of the CONSULTANT.
4. The CONSULTANT'S insurance shall contain a clause stating that
coverage shall apply separately to each insured against whom claim is made or
suit is brought, except with respects to the limits of the insurer's liability.
PW 0410_01 Professional Services Agreement Page 6 of 7
Revised [05/12/06]
D. Acceptability of Insurers
Insurance is to be placed with insurers with a current A.M. Best rating of not less than A:VII.
E. Verification of Coverage
CONSULTANT shall furnish the City with original certificates and a copy of the amendatory
endorsements, including but not necessarily limited to the additional insured endorsement,
evidencing the insurance requirements of the CONSULTANT before commencement of the
work.
XVI APPLICABLE LAW
This Agreement shall be construed and interpreted in accordance with the laws of the State of
Washington, and in the event of dispute the venue of any litigation brought hereunder shall be
Clallam County.
XVII EXHIBITS AND SIGNATURES
This Agreement, including its exhibits, constitutes the entire Agreement, supersedes all prior
written or oral understandings, and may only be changed by a written amendment executed by
both parties. The following exhibits are hereby made a part of this Agreement:
Exhibit A Scope of Work
Exhibit B Budget Costs for Each Task
Exhibit C Schedule for the Work
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and
year first written above.
CITY OF PORT ANGELES APPROVED AS TO FORM:
DAN MCKEEN, CITY MANAGER WILLIAM E. BLOOR, CITY ATTORNEY
FCS GROUP, INC. ATTEST:
ANGIE SANCHEZ VIRNOCHE, PRINCIPAL JANESSA HURD, CITY CLERK
PW 0410_01 Professional Services Agreement Page 7 of 7
Revised [05/12/06]
City of Port Angeles Utility Cost of Service Studies
EXHIBIT A SCOPE OF WORK
The following scope of services has been agreed upon by the City or Port Angeles and
FCS GROUP for the Utility Cost of Service Studies. The scope of services has been
separated into tasks proposed to be completed in 2013 and tasks anticipated to be
completed in 2014 if contained in the City's approved budget.
SCOPE OF WORK TO BE COMPLETED IN 2013
ELECTRIC UTILITY
Revenue Requirement
Budget 2013 and projected 2014 2016
Customer statistics validation of rate revenue
Customer class load projection (include new TOU customer classes)
Power cost projection
Budget revenue and expenses (O &M, taxes, debt service and capital from
rates)
Evaluate if facility replacement fund contributions should continue
Capital funding plan (2 scenarios: debt /cash split and annual depreciation
funding
Annual rate strategy (2014 -2016)
Up to two rate strategy sensitivity analyses
Cost of Service
Review functionalization, classification and allocation
Adjust power cost classification and allocation as appropriate
Rate Design
Evaluate fixed and variable charges
Up to two alternative rate options
Bill comparisons
Update pole attachment fees
1
City of Port Angeles Utility Cost of Service Studies
WATER UTILITY
Revenue Requirement
Budget 2013 and projected 2014 2016
Customer statistics validation of rate revenue
Budget revenue and expenses (O &M, taxes, debt service and capital from
rates)
Evaluate adequacy of transfer from water treatment plant fund to offset
operating costs
Capital funding plan (2 scenarios: debt /cash split and annual depreciation
funding)
Annual rate strategy (2014 -2016)
Up to two rate strategy sensitivity analyses
WASTEWATER UTILITY
Revenue Requirement
Budget 2013 and projected 2014 2016
Include CSO financing plan 2014 -2016
Customer statistics validation of rate revenue
Budget revenue and expenses (O &M, taxes, debt service and capital from
rates)
Capital funding plan (2 scenarios: debt /cash split and annual depreciation
funding)
Annual rate strategy (2014 -2016)
Two rate strategy sensitivity analyses (harbor clean -up liability)
SOLID WASTE (COLLECTION AND TRANSFER STATION)
Revenue Requirement
Budget 2013 and projected 2014 2016
Customer statistics validation of rate revenue
Review contracts and apply appropriate indices per contract
Budget revenue and expenses (O &M, taxes, debt service and
capital /equipment)
Evaluate post closure maintenance fund
2
City of Port Angeles Utility Cost of Service Studies
Annual rate strategy (2014 -2016)
Two rate strategy sensitivity analyses
s Cost of Service
Review functionalization, classification and allocation
Evaluate cost of minimum fee, rate waiver /reductions, allocation of costs to
entities and self haulers, co- composting operations, impacts of change in pick-
up frequency
s Rate Design
Two alternative rate option (cost of service or phase -in cost of service)
SCOPE OF WORK TO BE COMPLETED IN 2014
TELECOMMUNICATIONS
s Revenue Requirement
Budget 2014 and projected 2015 2017
Evaluate ability to transfer funds to general fund
Evaluate sufficiency of funds to cover costs
WATER UTILITY
s Cost of Service
Review functionalization, classification and allocation
Calculate fire cost liability
s Rate Design
Evaluate effectiveness of conservation rate structure (need customer statistics)
Evaluate fixed and variable charges
Up to two alternative rate op Lion
Bill comparisons
WASTEWATER UTILITY
s Cost of Service
Review functionalization, classification and allocation
3
City of Port Angeles Utility Cost of Service Studies
Review cost of service to septic haulers
Rate Design
Evaluate fixed and variable charges
Two alternative rate option (commodity rate structure for WW and CSO)
Bill comparisons
EXCISE TAX REVIEW
Review the City's current methodology for calculating state excise taxes and how
revenues are categorized for tax reporting purposes.
Review supporting tax worksheets to determine potential areas of overpayment
and underpayment.
Review applicable legal references within the Revised Code of Washington
(RCW) and Washington Administrative Code (WAC).
4
City of Port Angeles Utility Cost of Service Studies
EXHIBIT B BUDGET BY TASK
Task
H000l Rol
Task 1 Data Collection
Task 6 1 Revenue Requirement
01 Load Projection Customer Stales ics
82- Power Cost Projection
Task C I Cost 04 Service (new customer classes /power
dasYRcalion /allocation)
Task D 1 Rate Design
D 2- Update Pole Alt achment Fees
Total Electric UBidy
Task A 1 Data CdlecHOn
Task 6 1 Revenue Requirement
Total Telecommunications
TaskA 1 Data Collection
Task 6 I Revenue Requirement
8 1 Customer Statistics Vabdatlon
TaskC 1 Cosi o5 Service
Task El 1 Rate Design
Total Water U6Uty
Wastewater Utility
TaskA 1 Data Collection
Task 6 1 Revenue Requirement
6 1 Customer Statistics Validation
8 2- CSO 89095181 Plan
Task C 1 Cost ot Service
task D 1 Rate Design (commodity rate option)
Total Wastewater u16ty
4 $4e( $480. $0
Staid W asie(Collection i Transfer Staff
1
Task 1 Data Collection
Task 01 Cost d Service
Task D 1 Rate Design
1 Tota1 Solid Waste UB1Hy
TOTAL TECHNICAL ANALYSIS
Process Elements
Presentations 14) Moreno! Development *Meeting
Draft and Final Report
Total Process Elements
TOTAL LABOR ALL
Technology Charge
Travel Two 141 Onsde meetings I mieoge and I erry)
Total Expenses
Total Project Labor and Expenses
Optional Services
Excise Tax Review 1 Techocal review only)
1 T9401 Project Labor and Expenses
City of Port Angeles Utility Cost of Service Studies
Task 61 Revenue Requirement 44 6160 6160
81- Customer Statistics Valldatlon 32 5 50 5 5o
748 $124410 $89800 $34610
a�
(AR..F
6 5810 $811
40 748( 7 4
56 980( 980C
40 688( 688(
64 II 56( 11 56(
36 6440 644(
22 3 26( 3 260
264 $46 o. 544,2
4 $370 $0
34 4 760
6
36
30 5060 5060
52
32
156 525 01071. 5151
6
28
28
3 96
4 730
16 1 76(
42 7 590
38 6710 0 6710
36 660( 6606
6
1321 5216001 521
38
44
82
1.18. tax•. ,s.
awry,
$810
484(
9 46(
573
$810
Rf0904
581(
484(
$810
3 960
4 730
1 76(
2860 2860
$7 190 67190
$7340 $734(
$1453( $14530
5138 640 5104,330
Expenses
$c
$776 1776
$7761 $776
1
$139,7161 $105,1061
80
$370
4760
IC
946C
573
08
7590
$0
0
$34,6101
$61N$ $6160
1 $145,8761 $105,1061 $40,770
City of Port Angeles Utility Cost of Service Studies
EXHIBIT C SCHEDULE
Section 8. (page 5 of 8) of the Request for Qualifications identified the key milestones
and schedule for the study.
City Council acceptance of agreement and notice to
proceed
Consultant submits draft spreadsheet models reports
Consultant submits draft rate study presentation
Consultant presentation to senior management
Consultant presentation to Joint Solid Waste Advisory
Board
Consultant presentation to Utility Advisory Committee
Consultant presentation to City Council
City Council considers proposed rate ordinance
amendments
Consultant delivers final reports and electronic files
6
April 16, 2013
August 23, 2013
September 6, 2013
September 20, 2013
To be determined
October 8, 2013
October 15, 2013
November 5, 2013
November 30, 2013
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•:o> F S GROUP
Solutions- Oriented Consulting
Firm Headquarters
Redmond Town Center
7525 166 Ave NE
Suite D -215
Redmond, Washington 98052
Serving the Western U.S.
and Canada since 1988
Washington 1 425 867.1802
Oregon 1 503 841 6543
California 415 445 8947
March 1, 2013
Director of Public Works Utilities
City of Port Angeles
321 East Fifth Street
PO Box 1150
Port Angeles, WA 98632
Subject: City of Port Angeles Utility Cost of Service Studies
Dear Mr. Cutler and proposal review and selection committee:
Thank you for the opportunity to propose on the City of Port Angeles (City) comprehensive utility cost of
service studies project. As requested, our proposal includes details concerning our company experience,
key personnel and their qualifications, project examples, and our approach. As the proposed study
manager for this engagement, I wanted to begin by introducing you to some of our team highlights:
FCS GROUP has worked with the City since 2008 when it executed the previous comprehensive
utility cost of service study. I have worked with the City since the late 1990s. We most recently
completed a small electric utility tax project in 2012. Benefit: We know the City.
We have completed over 1,250 independent utility rate studies, nearly 800 of which are in
Washington State. Benefit: We have substantial local /regional utility rate experience.
Among those 800 projects, a significant percentage of those have been for cities of a similar size
and /or demographic as compared to Port Angeles. Although each utility has its own unique
complexities, we can draw from our experience with cities like Centralia, Bainbridge Island, Camas,
Port Townsend and Bremerton to support your needs. Benefit: We apply our experience with
similar systems.
Founded in 1988, FCS GROUP is celebrating its 25 year in supporting city governments. As an
objective and independent finance focused firm. We help establish practical, sustainable utility rates
and charges. Benefit: We are established, independent and focused.
Our key staff includes a team of individuals with the availability and capacity to quickly address all
of your utility needs inclusive of electric, water, wastewater, and solid waste. Benefit: We have an
unrivaled depth and breadth of Northwest -based technical resources.
Time and again, our project team has worked with citizen groups and city Councils on highly
technical and politically sensitive studies and achieved positive results. Benefit: Our commitment
to effective communication builds consensus and gets positive results.
We look forward to a possible interview and the opportunity to continue our relationship with the City.
Please do not hesitate to contact us at (425) 867 -1802 x 230 or angies @fcsgroup.com.
Sincerely,
FCS GROUP
S ;tn/t.r:t
Angie Sanchez Virnoche
Study Manager
1 1 LETTER OF INTEREST AND
INTRODUCTION
City of Port Angeles Utility Cost of Service Studies
2 1 QUALIFICATIONS AND PRIOR PERFORMANCE
STAFF EXPERIENCE
After successfully completing the previous 2008 -2009
comprehensive utility rate studies for the City of Port
Angeles, Angie Sanchez Virnoche will again anchor our
FCS GROUP team as the study manager. Exhibit 1 lists our
proposed key staff, inclusive of our core staff (Angie,
Karyn and Sergey), and their experience with the
anticipated scope of work. The final column identifies their
experience with our two highlighted projects.
Angie Sanchez
Virnoche
I
Karyn Johnson
Sergey Project
Tarasov Consultant
Andy Technical
Evancho Advisor
Catherine Often Analyst
Chris Gonzalez
Nathan Reese
City or Port
Angeles (PA)
City of Centralia
Exhibit 1 I Staff Experience with Anticipated Scope of Work
Study
Manager
Principal
Tax
Specialist
Cost
Allocation
Specialist
2008 -2012
MI
III
1995 -2012
2
Karyn Johnson
Angie Sanchez Virnoche
Sergey Tarasov
Principal -In- Charge Study Manager Project Consultant
O 0 0
;FCS GROUP
Port Angeles,
Centralia
Centralia
Port Angeles,
Centralia
Port Angeles
Centralia
Senior -level experience Mid to Project Consultant -level experience 0 Junior -level with requisite experience
COMPREHENSIVE RATE STUDY EXPERIENCE
FCS GROUP, established in 1988, is celebrating its 25th anniversary of delivering sound financial, economic
and management consulting solutions to public agency challenges. In that time we have completed over 2,200
engagements, including over 1,250 electric, water, wastewater, solid waste and stormwater utility rate studies.
Exhibit 2 summarizes experience on two Washington State comprehensive utility rate studies, both of which
were completed within the past 3 -5 years. The last column identifies key proposed staff who were involved.
Appendix A includes Centralia report examples. Resumes for key proposed staff are included in Appendix B.
Exhibit 2 1 Summary of Comprehensive Rate Studies
ASV, ST, CG
ASV, KJ, ST,
NR
1
City of Port Angeles Utility Cost of Service Studies
City of Port Angeles Electric,
Rate Stu
D ater, Wastewater, and Solid Waste Utility
les
References
Glen Cutler, Director of Public Works
(360) 417 -4800 ph
Phil Lusk, Deputy Director of Power and
Telecommunication Systems
(360) 417 -4703 ph
Larry Dunbar, Ellensburg Energy Services Director
(formerly with the City of Port Angeles)
(509) 962 -7124 ph
Angie Sanchez has worked with the City since the late
1990's on water, wastewater, solid waste and electric
utility rate study issues. Most recently, Angie completed
a comprehensive rate study for the City's water,
wastewater, and solid waste utilities in 2008- 2009. Subsequently,
Angie completed a 2009 comprehensive electric cost of service rate
study and a 2012 electric utility tax review. Specific elements
included the following:
Electric
Six year financial plan and rate strategy.
Forecast of BPA purchased power costs changes
and scenario development to determine effects
of changing power costs.
Forecasted load data based on historical year
and anticipated growth rates by customer class.
Projected revenue and power costs based on
load data forecast.
Reviewed pole attachment fees.
Reviewed public utility codes for improvements
and simplification.
Reviewed the state utility excise tax returns for
accuracy.
Held multiple meetings with the Utility
Advisory Committee and City staff to review
results, assumptions, and recommendations.
Water and Wastewater
Developed a six -year financial plan.
Evaluated adequacy of target fund balances.
Developed a capital funding plan for $54.3
million in capital projects.
3
Key Personnel Involved
Angie Sanchez Virnoche
Study Manager
Sergey Tarasov
Project Analyst
Chris Gonzalez
Project Analyst
•FCS GROUP
h�artr srro Naste aria Soho ;fir
Col5e ,vrce Rate S'ua
Fin Report s r ite
GROLIP
Evaluated the adequacy of customer class
distinctions.
Phased -in cost of service results by class.
Updated and phased -in water and sewer SDCs
increases over three years.
Updated water and sewer connection charges
Developed a three -block residential
conservation rate structure to comply with
House Bill 1338 water efficiency rule.
Created a separate irrigation class composed of
both commercial and residential customers to
take advantage of state excise tax exemption.
Solid Waste Collections and Transfer
Developed an independent financial plan and
rate strategy for the solid waste collections and
transfer station operations.
The transfer station study included recalibrating
costs to account for actual tonnage and ticket
data previously estimated.
Completed a forecast of costs based on fuel and
consumer price indices related to the Waste
Connections contract. Provided scenarios to
evaluate impacts of volatile fuel costs.
Incorporated assumptions for the recent down
City of Port Angeles Utility Cost of Service Studies
turn of the economy that included reduced
tonnage and revenue (due to housing
slowdown).
Set yard waste rates to encourage this waste
stream thereby deferring the need to ship bio-
solids out at a cost to the transfer station entity.
Rates were set for: municipal solid waste,
asbestos, contaminated soils, metals and white
goods recycling, WWTP bio- solids and
compost.
City of Centralia
Electric, Water and Wastewater Utility Rate Studies
and Cost Allocation Study
References
Kahle Jennings, Public Works Director
(360) 417 -7512 ph
Water and Wastewater Rates
Randi Leach, Financial Officer
(360) 417 -7512 ph
Water and Wastewater Rates
Ed Williams, PE, General Manager (Retired)
(360) 740 -4434 (home), 360- 807 -3127 (cell)
Electric Rates
Bradley Ford, Lewis County PUD
(former Centralia Finance Director)
(360) 748 -9261 ph
Cost Allocation Study
w iTRALtA
R Ittrifr4
The City of Centralia first
engaged FCS GROUP in
1998 to develop a
Other Factors
comprehensive water and wastewater rate
study. Since then, we have continued providing
on -call consulting services for those utilities in
addition to supporting the City with other
financial analyses such as the stormwater utility formation and an
appraisal assessing the potential impacts to electric customers of
selling the City owned electric utility to Public Utility District #1 of
Lewis County. See Appendix A for example reports from
Centralia.
Electric
Angie has worked with the City on electric rate and
cost of service studies in 2006, 2008, 2009 and most
recently 2012.
Developed a 6 -year revenue requirement
forecast and rate transition plan.
4
The cost of service incorporated the results of
the first weight study completed by the City.
Reviewed public utility codes for improvements
and simplification and state utility excise tax
returns for accuracy.
Held multiple meetings with the Utility
Advisory Committee and City staff to review
results, assumptions and. recommendations
before presentation to Council.
Key Personnel Involved
Karyn Johnson
Managing Principal for Water and Wastewater
Angie Sanchez Virnoche
Managing Principal for Electric
Sergey Tarasov
Project Analyst for Electric
Nathan Reese
Project Consultant for Cost Allocation
FCS GROUP
Projected power costs for the City's own
hydroelectric facility, under the BPA Tiered
Rate Methodology and incorporating the recent
revisions to the transmission rate methodology.
Developed a capital funding plan for $40.5
City of Port Angeles Utility Cost of Service Studies
million in capital needs and provided rate
impact scenarios based on priority ranking of
capital projects.
Conducted 36 sensitivity analyses evaluating
different capital funding levels, project timing,
project costs, and debt service coverage impacts.
Prepared an issue paper on the role of long -term
debt in capital financing.
Conducted a cost of service analysis to equitably
allocate system costs to specific customer
classes. Developed new allocation factors to
align with the Tiered Rate Methodology.
Developed two alternative customer classes
from the existing large general service based on
a detailed customer statistics and bill frequency
analysis.
Developed a tiered rate methodology for the
residential class.
Developed four alternative rate increases
assuming different levels of fixed cost recovery.
Evaluated financial impacts of a new large
single load on the system under different cost
sharing approaches.
Compared sample customer bills for each rate
option proposed and to neighboring systems.
Held three work sessions with the City Council.
Developed Q &A
Water and Wastewater
In 2010 FCS GROUP and Karyn Johnson updated
the sewer rate study initially performed in 2004,
completed a water rate study, and developed capital
facilities charges for both utilities.
Updated financial policies to incorporate phase
in strategies for system reinvestment funding; a
change in practice from use of capital facilities
charges for debt service to capital project
funding only; and incorporation of debt
management policies.
5
>FCS GROUP
Updated capital facilities charges to reflect
current and planned infrastructure and system
capital. Developed a phase -in strategy to reach
full cost recovery over a three -year period,
incorporating inflationary adjustments.
Evaluated four (4) alternative capital programs,
funding levels, and associated rate impacts.
Evaluated cost of service by customer class and
developed phase -in strategies to achieve full
cost of service within three years, while
mitigating customer impacts and promoting
economic development.
Designed alternative rate structures to meet City
pricing objectives. For the water utility class
specific rates were developed for each customer
class to recognizing differing service
requirements (single family residential, multi-
family residential, commercial /industrial, and
irrigation. A three tiered conservation rate
structure was developed for single family
residential customers.
Updated outside city wastewater rates to
incorporate an outside city multiple, consistent
with the water utility.
Calculated miscellaneous utility charges to
recover unique utility costs that are not
applicable to all customers on the system.
Other Factors
In 2010 FCS GROUP and Nathan Reese prepared a
full -cost allocation plan for the City.
The study was initiated to update its cost
allocation plan and improve its cost allocation
practices. The approach and scope of work
involved defining the uses and goals for the
plan; identifying indirect services, their costs,
and allocation factors; developing a flexible and
adaptable allocation model; and preparing the
written plan.
City of Port Angeles Utility Cost of Service Studies
3 1 PROPOSED STAFF
Angie Sanchez
Virnoche
Study Manager
Karyn Johnson
Principal
Sergey Tarasov
Project Consultant
Andy Evancho
Technical Advisor
Analyst
Chris Gonzalez
Tax Specialist
Nathan Reese
Cost Allocation
Specialist
ABM
Active APWA
Member and
Conference
Presenter
20
301
9
Active AWC
Member and
Contributor
wastewater and solid waste studies
Project consultant with special expertise in cost allocation, city
government organizational issues, and >50 cost and fee studies.
O
te
AWWA
AWWA
National
Rates and
Charges
Committee
6
NaMwast Public Power Asaoeiatton
NWPPA
Associate
Member
SWANA
Evergreen
Chapter Board
of Directors
•FCS GROUP
Exhibit 3 summarizes the years of experience (and with FCS GROUP) possessed by staff in addition to notes
on their local and relevant experience. Appendix B resumes include additional project information for each.
Exhibit 3 1 Proposed Staff Summary of Experience and Years with FCS GROUP
Summary of Local and Relevant Experience
Proposed Key Staff Total Yrs Exp 1
and Project Role Yrs w FCS GROUP
>200 utility rate and financial studies. Managed prior Port Angeles rate
studies Serves as the FCS GROUP expert on electric and solid waste
utility rates and has extensive water and sewer utility experience.
Oversees Sergey, Andy, Catherine, and Chns.
>200 utility rate and financial studies. FCS Group Director responsible
28 i 11 for example Centralia project and has extensive water, sewer and
solid waste rate experience. Oversees Nathan.
Nearly 100 utility rate and financial studies including previous Port
8 1 Angeles rate study. Broad experience in water, wastewater, electric,
and solid waste
30 years of public industry experience including 27 years spent at
Tacoma Public Utilities where he managed power and water rates
Catherine Otten 8 1 2 Utility rate studies throughout Western Washington including >20 water,
Project manager with special experience in excise taxes including
10 1 10 recent Port Angeles electric excise tax and >100 utility rate and
financial studies for water, wastewater and stormwater.
FCS GROUP personnel and management are active members, participants, contributors and leaders within the
professional associations that establish the standards for the effective management of resources and set the
guidelines for achieving fiscally sustainability utilities including the American Public Works Association
(APWA), Association of Washington Cities (AWC), American Water Works Association (AWWA), Northwest
Public Power Association (NWPPA), Solid Waste Association of North America (SWANA), and Washington
Finance Officers Association (WFOA). FCS GROUP'S staff actively gives back to the cities and utilities
that support our communities!
Active WFOA
Member,
Committee
Participant and
Presenter
City of Port Angeles Utility Cost of Service Studies
4 1 UNDERSTANDING OF CITY NEEDS
The utility cost of service studies requested by the City is comprehensive in its requirements. The services will
be accomplished through completion of a comprehensive rate study process that includes a revenue
requirement, cost of service and rate design evaluation. The deliverables will inform the 2013 Strategic
Financial Plan through evaluation of existing rate levels, development of a capital funding plan, formation of a
multi -year rate strategy and establishment of equitable and cost of service based rates. The studies will serve as
a tool for maintaining financially sustainable ui ilities now and into the future.
KEY ANALYTICAL TASKS
d Project Relevance
1 1 Revenue Requirement Analysis
WHAT
Establishes a sustainable, multi -year (2014 -2016)
rate strategy that meets the projected total financial
needs of each utility through the generation of
sufficient ongoing revenue with minimal reliance on
reserves.
HOW
Analyzes cash flow needs by identifying capital
improvement needs, expenses incurred to operate
and manage the system, new and existing debt
repayment obligations and fisca;. policy
achievement.
2 I Cost of Service Analysis
WHAT
Establishes a defensible basis for assigning "cost
shares" and establishing "equity" for system
customers.
HOW
The COSA develops a series of functional
allocations that distribute cost pools to classes of
customers linked to a proportionate share of costs
required to serve their demand.
3 I Rate Design
WHAT
Rate design determines how the target level of
revenue will be generated (fixed v. variable
charges).
HOW
Rate design considers both the level (amount of
revenue that must be generated) and structwe (how
the revenue will be collected or bill assessed). Each
developed rate design alternative should generate
sufficient revenue to meet the revenue requirement
forecast and begin to address any material inequities
identified in the COSA findings. In addition, rate
designs will be consistent with the City s fiscal
policies, billing system capabilities, and goals.
7
••>FCS GROUP
Offers the City the tool to evaluate and analyze
future changes in the economic environment and
craft a rate strategy to meet its short and long-
term objectives.
Results will inform the City's Strategic
Financial Plan regarding projected revenue and
expense levels, capital funding plan, use of
reserves, identification of new debt
requirements, and the annual rate strategy
required to meet each system's total needs
independently.
Establishes the necessary amount of annual
revenue to be recovered from the rates for each
class.
Identifies any warranted shifts in cost burden
that could improve equity between customers
from the existing rate structure.
Identifies the guidelines for unit cost recovery
from each cost category (monthly fixed fee and
variable charges fee).
Allows for innovative approaches to cost
recovery and can be a tool for sending the
appropriate price signals to meet the City
objectives.
Due to the increased revenue volatility over the
last few years, fixed and variable costs will be
evaluated and aligned to better reflect how costs
are incurred.
Rate design process will aim to balance the
priorities of promoting conservation and
preserving revenue stability, and liquidity.
Proposed rates will be split into the portion
related to operating costs and the portion related
to capital costs.
City of Port Angeles Utility Cost of Service Studies
IMPORTANT RATE STUDY ISSUES FOR CONSIDERATION
Electric
The most significant issue for the electric cost
of service is to incorporate the Bonneville
Power Administration (BPA) Tiered Rate
Methodology. The last cost of service study
was conducted under the old melded BPA
methodology. The City's power costs are now
incurred differently with the majority of costs
now fixed. The study will need to establish
new cost allocations for the new power and
transmission billing determinants. A change in
the allocation approach for power and
transmission may result in significant changes
to the last cost of service study completed.
Evaluate if there is sufficient AMI information
available to evaluate changes in time of use
rate periods. Lack of data may require that this
evaluation be moved to a future date.
Water
The 2010 and 2011 time period has
experienced declining demand in the region.
Recalibrating anticipated revenue levels for
future projections is critical. This recalibration
will consider factors such as economic
conditions, weather, demographics, effects of
conservation pricing and the City's
conservation goals to mitigate volatility and
stabilize revenue. Review the City's detailed
customer statistics to determine if recalibration
will be necessary.
The cost of service indicated increases to the
irrigation and the industrial class that were not
implemented. This study may again show cost
of service adjustments may be warranted.
Determine the City's approach to compliance
with Lane v. Seattle. The 2008 ruling held that
"providing fire hydrants is a government
responsibility for which the general
government of the area must pay." The court
case applies to Cities. The City must calculate
the fire protection liability for the water utility
and identify the level of transfer from the
general fund to pay for public fire protection.
Alternatives to recovering this fire cost will
include exploring an increase to the excise tax
and imposing charges on third party general
governments. Note, there is proposed
legislation to adopt a statute that would, in
part, change the Lane case impact.
8
FCS GROUP
Wastewater
Evaluate cost of service phase -in progress
from the last rate study.
Evaluate the combined sewer overflow
revenues and costs independently and
determine its impact on wastewater rates.
Review the tax rate applied to CSO revenue.
Create tool for evaluating the possible
financial implications of the Harbor Clean -up
Mandate litigation.
Identify if sufficient customer data is available
to evaluate a commodity (volume based) rate
structure.
Solid Waste Collection
The last study did not move to cost of service
for the Commercial 90 and 300 container sizes
until additional weight survey information is
gathered. Incorporate findings from weight
studies, if completed
Conduct sensitivity analysis to evaluate rate
impacts of varying fuel prices and operational
changes resulting from offering curbside
collection of recyclable
The transfer station rate analysis should be
completed first since the collection system
rates will need to incorporate changes to
disposal costs.
Solid Waste Transfer Station
Analyze actual tonnage trends to determine a
realistic forecast of revenue. The analysis
should consider Economic and market
considerations that may affect tonnage.
Evaluate sensitivity of fuel price changes.
Optional Tasks
Several optional issues could be addressed as
part of this study including: state excise tax,
capital renewal and replacement evaluation,
system development fees, connection fee
update and review of miscellaneous fees. Each
of these services was provided as part of the
2009 study for the City. FCS GROUP is able
to deliver the necessary experience, expertise
and resource to meet the City's needs in these
areas.
City of Port Angeles Utility Cost of Service Studies
PROJECT MILESTONES
The City's milestones and schedule allows for 4 months to complete the Utility Cost of Service Studies. This is
a very ambitious schedule for the comprehensive nature of the request. The City has stated it would like to
complete the solid waste rate studies first before authorizing additional work. Typically, all rate studies would
be started concurrently for efficiency. This approach would leave approximately 3 months to complete the
remaining studies. FCS GROUP believes it can meet this schedule due to the depth of available resources so
long as both parties work together to ensure tirnely receipt of requested data /information; the quality of data
received is sufficient; meetings are scheduled in a timely manner; and the ability of the City to provide policy
direction for the study to move forward at key study milestones.
It is important for all parties to recognize that due to the expedited schedule there is little room for schedule
slip on any of the tasks or planned review meetings. We are willing to work collaboratively to develop a
schedule that meets the City's time constraints. An overview of the key milestones for completion of the
technical analysis is summarized below.
w
d 6,
o, c
c o
d April
a
C c o
d C N
H N a,
u c c
0 0
A:
Notice to
Proceed
4/16
Complete Solid
Waste Study
5/20
Solid Waste Rate
Stu
ti
(Collection/Transter)
Kick off
Meeting
Engineering /Planning Documents
Comprehensive Planning Data. Recent water
and wastewater plans /drafts.
Growth Estimates. Estimates for new
developments.
Financial Data
Fixed Asset Listing. Plant in service for
water, wastewater and electric
Cash Balances. 2012 year end.
Budget Revenue and Expense Reports.
Detailed 2013 revenues and expenses.
Exhibit 4 1 Project Timeline
June
iis
Water, Wastewater and Electric Study
Meeting to Review
Revenue
Requirements
9
Technical Analysis
Complete
8/23
July August
1 1 I
Meeting to
Review Cost of
Service
>FCS GROUP
Proceed )ftth
Presentatrons
Meeting to Finalize
Rate Designs
CONCERNS REGARDING THE PROFESSIONAL SERVICES AGREEMENT
Citing our previous work with the City, and providing that there are no significant differences, we have no
concerns regarding the professional services agreement.
DATA NEEDS REQUEST
In addition to documents already on your FTP, we will need detailed and /or supporting information. Our brief
data needs request that imparts specifics for the listed items below, is included in Appendix C.
Debt Service Repayment Schedules. Long-
term debt obligations.
Purchased Power /Power Supply. Various
details required.
Customer Data
Detailed Water Customer Billing Data
Detailed Wastewater Customer Billing Data
Detailed Electric Customer Billing Data
Detailed Solid Waste Data
Other
Waste Management Contracts
City of Port Angeles Utility Cost of Service Studies
5 1 STAFF AVAILABILITY
Exhibit 5 shows our staff availability both as a percent of
involvement against your project, as well as within the
context of total project load. Angie, Sergey, and Catherine
(dark highlight) represent a majority of the assigned project
hours. Citing that FCS GROUP has extensive breadth and
depth within the region for utility rate studies, we maintain
the necessary staff to address any capacity concerns and to
facilitate the work in a timely manner after notice to proceed. AE 1 Technical Advisor
6 1 PROJECT MANAGEMENT
Our proposed study manager is Angie Sanchez Virnoche.
Angie is an FCS GROUP principal with 20 years of
experience providing financial services in a variety of
capacities for water, sewer, stormwater, solid waste and
electric utilities. Her project work includes multi -year
financial planning, cost -of- service studies, rate design
restructuring, capital/ infrastructure planning, funding
alternatives, cost benefit analyses, reserve analysis, and
community education and involvement.
Prior to joining FCS GROUP, Angie had an ongoing
working relationship with the City of Port Angeles and has
continued to work with the City since 2008. As a member
of the American Water Works Association (AWWA),
Washington Finance Officers Association (WFOA),
Partnership for Water Conservation, Washington Public
Utility District Association (WPUDA) and Northwest
Public Power Association (NWPPA), Angie's significant
industry knowledge and involvement are defined by the
qualifications featured in her resume and summarized to the
right.
Establish project schedule with key milestones
to help keep tasks on schedule.
Project review meetings with City
management staff at critical points throughout
the study process. These meetings will review
work in progress, obtain feedback on critical
issues, highlight potential challenges, and
determine next steps.
Provide meeting summaries outlining follow
10
ASV 1 Study Manager
KJ 1 Principal
ST 1 Project Consultant
CO 1 Analyst
Exhibit 5 1 Staff Availability
CG 1 Specialist
NR 1 Specialist
WFOA Education Committee
e ms A r., ..7. 0'54 f
•FCS GROUP
25 1 30
7 1 10
34 1 34
4 1 n/a
26130
2 1 as needed
2 1 as needed
Angie Sanchez Virnoche
Contributing author to the "Business Practices for
Operation and Management AWWA, G410 -09
AWWA Rates and Charges Subcommittee and the
Standards Committee
4. Angie has given presentations that focus on the
emerging trends in water, wastewater, and electnc
utility industries, including the following
Electric Cost of Service and Rate Setting, 2012
Staffing and Funding for Collection Systems, 2012
Correctly Calculating Rates and Connection
Charges, 2011
Trends in Water Rate Making, 2011
Conservation Based Rate Considerations, 2011
Comprehensive Financial Master Planning
Setting a Roadmap for Long -Term Strategic
Management, 2010
Rate Relief During Economic Hard Times, 2010
PROJECT
MANAGEMENT /COMMUNICATION
APPROACH
We anticipate a collaborative and interactive process in communicating with the City to facilitate an open
approach and keep the project on schedule and within budget. Key elements in communicating with the City
will include:
up items and any assigned tasks.
Schedule standing weekly project status calls.
Monthly invoicing with detailed progress
reports to allow for regular tracking of project
deliverables to budget.
GoToMeeting project review meetings when
possible to minimize budget.
City of Port Angeles Utility Cost of Service Studies
APPENDIX A CENTRALIA STUDY REPORTS
WATER AND SEWER RATE STUDY FINAL REPORT, 2009
Karyn Johnson, Managing Principal
ELECTRIC UTILITY COST OF SERVICE RATE STUDY, 201 1
Angie Sanchez Virnoche, Managing Principal
Appendix A Centralia Reports
•.;>FCS GROUP
Consulting Services Provided by:
FCS GROUP
7 525 166th Avenue NE, Suite D -215, Redmond, WashinE,ton 98052
P 425 867 -1802 F 425 -867 -1937 www fcsgroup core
[his enure is made of teaddt recyclable materials, including the bto tee wire binding
and the front and back Lover, which are made from post- consumer recycled plastic bottle,
City of Centralia,
Washington
Water and Sewer
Rate Study
FINAL REPORT
March 2009
UTILITY RATES CHARGES STUDY:
WATER AND WASTEWATER SYSTEMS
PREPARED FOR THE
CITY OF CENTRALIA, WASHINGTON
CONSULTING SERVICES PROVIDED BY
A FCS CR UP
Solutions Oriented Consulting
7525 166` Ave. NE, Suite D -215 Redmond, Washington 98052
(425) 867 -1802 fax (425) 867 -1937 www.fcsgroup.com
FCS GROUP
Solutions- C)rrcnted Consulting
March 18, 2009
Ms. Randi Leach, Financial Officer
City of Centralia, Utilities
1100 N. Tower Ave.
Centralia, WA 98451
TRANSMITTAL OF DRAFT STUDY REPORT:
UTILITY RATES CHARGES STUDY FOR THE WATER AND WASTEWATER SYSTEMS
Dear Ms. Leach,
Redmond Town Center
7525166' Ave NE, Suite D -215
Redmond, V/ashington 98052
T 425 8671802 F 425 8671937
225 Bush Street
Suite 1825
San Francisco, California 94104
T 415 445 8947 F 415 3981601
14020 SE Johnson Road
Suite 205
Milwaukie, Oregon 97267
T 503 353 7440 F 503 353 7442
FCS GROUP is pleased to submit our final report describing findings and recommendations of
the Water and Wastewater Rates Charges Study, which we have prepared for the City of
Centralia. This study began in February 2008, with substantial completion and delivery of our
draft report in January 2009. City comments were incorporated into this final study report.
We would like to acknowledge and thank you for your diligent efforts in managing this
important study for the City. It has been a pleasure working with you and City staff, as well as
with the City Council members.
It is important to note that due to the timing of this rate study, the rate analysis presented herein
does not address the recent (October 2008) ruling of the Washington State Supreme Court for
Lane v. Seattle, regarding the recovery of costs in water rates related to fire hydrants. In terms
of water rates and related costs, the breadth of the implication of this ruling is not yet clearly
defined from our perspective. As FCS GROUP does not practice law, it is imperative that you
consult with your own legal counsel on how best to respond to this issue.
Any questions or commentary regarding this report can be directed to me at (425) 867 -1802,
ext. 241, or send email to karvniafcsgrouD.com.
Sincerely,
Karyn Johnson Samantha Holert
Principal Project Consultant
REPORT CONTENTS
Section 1 Study Framework 1
A. Introduction 1
B. Methodology 1
C. Report Organization 2
Section 2 Policy Development 3
A. Fund Accounting 3
B. System Reinvestment Funding 5
C. Debt Service Coverage 6
D. Use of Capital Facilities Charges for Debt Service 7
E. Capital Program Funding Debt Management 8
F. Cumulative Impact of Fiscal Policies 9
Section 3 Capital Facilities Charges 10
A. Methodology 10
B. Results 13
Section 4 Revenue Requirements 16
A. Methodology 16
B. Results 20
C. Implementation 26
Section 5 Cost of Service Analysis 27
A. Methodology 27
B. Results 29
Section 6 Rate Design 39
A. Methodology 39
B. Results 44
C. Implementation 57
Technical Appendices
Water System Technical Analyses Appendix A
Wastewater System Technical Analyses Appendix B
Technical Memorandum Miscellaneous Utility Fees Review Appendix C
A. INTRODUCTION
B. METHODOLOGY
FCS GROUP
SECTION 1
STUDY FRAMEWORK
In early 2008, the City of Centralia authorized FCS GROUP to complete a Utility Rates
Charges Study for its Water and Wastewater Systems. The purpose of this comprehensive rate
study was to assist the City in maintaining financially stable utilities and to promote a fair and
equitable allocation of costs to customers. The scope of this study included the following major
elements:
Data collection validation
Fiscal policy evaluation
Capital facilities charge development
Capital financial planning analysis
Revenue requirement forecast
Cost of service rate structure evaluation
Miscellaneous utility fees review
Meetings documentation
These scope elements are addressed throughout each section described in this report.
In analyzing and determining rate and charge structures, there are four fundamental analyses
performed: a Capital Facilities Charge Analysis, a Revenue Requirement Analysis, a Cost of
Service Analysis; and the Rate Design. The methods used to complete our work are based on
analytical principals that are generally accepted and widely followed throughout the industry
rates and charges must generate enough revenue to maintain self supporting and financially
viable utilities without undue discrimination toward or against any customer.
This study process, which evolved over a period of about one year, involved several iterations of
data analyses and the development of scenarios for rate and charge increase strategies and
customer class rate structures. Several rneetings were held with City staff to validate input
parameters, review interim findings, arid receive policy direction. In addition, several workshops
were held with the City Council to evaluate findings and arrive at rate and charge
implementation strategies consistent with City policy objectives.
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 1
C. REPORT ORGANIZATION
The following sections provide an overview of the major analytical methods employed by FCS
GROUP to complete this work, as well as study findings and recommendations. The remainder
of this report provides separate sections for Policy Development (Section 2); Capital Facilities
Charges (Section 3); Revenue Requirements (Section 4); Cost of Service Analysis (Section 5);
and Rate Design (Section 6). The Technical Appendix contains the analytical detail supporting
the analysis for each utility, as well as a supplemental technical memorandum prepared to
support our review of miscellaneous utility fees.
FCS GROUP
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 2
4) FCS GROUP
The purpose of establishing financial polices for the City's utility enterprises is to promote the
financial integrity and stability of the utilities and help ensure the sustainability of essential
utility services. These policies form the foundation of utility management and, with routine
application, can act as overarching guidelines for consistent decision making.
Some financial policies are literally imposed by outside influence (minimum debt service
coverage, bond reserves, and regulatory guidelines) while other policies are specific to the agency
and its utilities (discretionary reserve levels, reinvestment protocols, use of debt). In an attempt
to provide consistency to rates and the rate setting process in the future, our study provides
recommended policies that should help the City achieve financial and rate stability from year -to-
year. In developing the financial plans, we have incorporated the following fiscal policies.
A. FUND ACCOUNTING
SECTION 2
POLICY DEVELOPMENT
From an industry and financial management perspective, cash balances are a necessary and
appropriate part of prudent utility management practices. Within each utility enterprise,
appropriate segregation of monies should be established and maintained to provide adequate
controls as to the sources and uses of funds. This practice helps to ensure that funds raised
through each utility are applied to the appropriate purposes, and that equity attained through
rate and charge structures is maintained in application. Above all, the City should establish and
maintain a financial structure that provides for adequate and predictable revenues to meet the
forecasted needs and operational, legal, and policy objectives of the water and wastewater
systems.
The City currently maintains a separate fund for each utility: Water Fund (402) and Wastewater
Fund (403). Separate accounts have been established within each fund to recognize segregation
of operating, capital, and restricted reserve activities.
The rate management strategy presented in this study presumes that each utility will continue to
operate as a self supporting enterprise fund. This means, utility- specific rates and charges have
been designed to recover the forecasted costs and financial obligations of each utility without
subsidy between the two utilities, and without subsidy from other City general fund revenue
sources, such as property taxes.
1. Operating Reserves
An operating reserve is designed to provide a liquidity cushion to help ensure financial viability
of the utilities despite short -term variability in revenues and expenses, primarily caused by
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study. Water and Wastewater Systems
Study Report 3
seasonal fluctuations in billings and receipts, unanticipated cash operating expenses, or lower
than expected revenue collections. Target funding levels are generally expressed in number of
days' operating and maintenance (O &M) expenses, with the minimum requirement varying
with the expected risk of unanticipated needs or revenue volatility. For this study, operating
reserve targets have been established at 60 to 90 days for the water utility and 45 to 60 days of
O &M for the wastewater utility. Consistent with industry practice, the higher target for the
water utility is to safeguard against the increased variability in revenue collections resulting from
discretionary water use in the summer period. Conservation -based rate structures can increase
revenue instability due to a greater reliance on revenues from the volume charge component
which is more susceptible to changes in customer use and weather patterns.
The Operating Reserve target should be as of December 31" of each calendar year, with the
balance expected to vary during the course of the year. Generally, in any year where operating
reserves exceed the maximum target, we recommend using the excess cash to help pay for capital
projects. This can be accomplished by calculating the target balance at year end (e.g. 90/365 x
actual O &M expense for the year) and comparing it against the actual ending cash balance. If
the actual balance is greater than the target, transfer the difference to the respective utility
Capital Account.
The operating reserve includes cash held in the following accounts: "cash and cash equivalents
petty cash and "the working capital reserve." The rate management strategy presented herein
complies with the above established target balance threshold for each utility.
It is important to note that City policy direction was to use a portion of cash reserves over and
above the minimum targeted threshold to buy -down annual rate increases for both utilities in
years 2008 and 2009. Thus, critical to achieving the rate management strategy presented in this
study is the carry- forward of annual cash balances within each utility's respective operating
accounts to be used as a supplemental resource to meet annual planned expenditures in years
2008 and 2009. To illustrate for 2008, cash balances of$652, 000 (water) and $664,000
(wastewater) are planned to be used to supplement the projected 2008 revenue shortfall. Should
actual cash balances fall short of projections, rates might need to increase in addition to the
adjustments presented herein.
As a point of reference, as of December 31, 2008, the operating reserve was $1.4 million for the
water utility, reducing to about $758,000 by the end of the six -year study period. For the
wastewater utility, the reserve began at $1.9 million, reducing to about $733,000 by the end of
the study period.
2. Capital Contingency Reserves
A Capital Contingency Reserve is an amount of cash set aside in case of an emergency, should a
major piece of equipment or a portion of the utility's infrastructure fail unexpectedly.
Additionally, the reserve could be used for other unanticipated capital needs or capital cost
FCS GROUP
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 4
overruns. These reserves are not intended to cover the cost of system -wide failures resulting from
catastrophic events; a more common practice is to carry property and casualty insurance for such
purposes. The Capital Account holds debt proceeds, capital facilities charge revenues, system
reinvestment funding from rates, and any transfers of cash reserves from the Operating Account.
For this study, we assume that cash from rates for system reinvestment funding and surplus cash
from the Operating Account (not being used to buy -down rates) will be transferred to the
Capital Account at year's end and become available for capital use in subsequent years.
Common industry practice is to maintain a minimum balance in the Capital Account equal to
1% to 2% of system fixed assets. The capital reserve includes cash held in the following accounts:
"capital facilities" and "equipment reserve." The rate management strategy presented herein
complies with the above established target balance threshold for each utility.
Based on the current fixed assets and planned capital additions for the utilities over the study
period, the recommended contingency reserve for the water utility is forecasted to reduce from
$2.5 million to $914,000 by the end oFstudy period, and from $903,000 increasing to $1.3
million by the end of the study period for the wastewater utility well within industry standards.
3. Restricted Debt Reserves
When issuing revenue bonds (and some other types of debt), underwriters require the
municipality to establish and maintain a restricted cash reserve for the utilities through the term
of debt repayment. The purpose of a debt reserve is to provide one safeguard for bondholders, in
the event the utilities have insufficient funds to meet annual debt service (i.e., scheduled
principal and interest payments). This reserve is generally equal to one year's debt service
payment for each bond issue. The reserve can be used to fund the last year's debt service
payment for each issue.
The City historically has issued revenue bonds and taken out State Revolving Fund (SFR) loans
and Public Works Trust Fund (PWTF) loans to finance utility system capital needs. Revenue
bonds always require a debt reserve and the City's current wastewater SRF loans require a debt
reserve. PWTF loans do not require a debt reserve. The rate management strategy presented in
this study conservatively presumes that the City will use revenue bonds for any future debt
financing needs; thus, additional reserves have been incorporated for each future bond issue
(assumed to be funded with debt proceeds equal to one year's principal and interest payment).
The City will continue to pursue the lower cost state loans to reduce future bond financing
requirements.
B. SYSTEM REINVESTMENT FUNDING
The phrase "system reinvestment funding" refers to the practice of setting aside cash revenues
from rates each year to help provide for the replacement of aging system facilities to ensure
sustainability of the system for ongoing operations. A common approach of municipal utilities is
FCS GROUP
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 5
to establish a policy of system reinvestment funding through rates using depreciation expense as
the benchmark for the appropriate level of funding.
Annual depreciation is a non -cash expense intended to recognize the consumption of utility
assets over their useful lives, using original cost. Collecting the amount of annual depreciation
expense through rates provides a funding source for capital expenditures, especially those related
to repair and replacement of existing utility plant. Further, funding depreciation through rates
helps to ensure that existing ratepayers pay for the use of the assets serving them (rate equity),
with the cash flow funding at least a portion of the eventual replacement of those assets. It is
important to note that depreciation is not equal to the future replacement cost of the utility
systems, but serves simply as a starting point for addressing long -term replacement needs. Actual
system replacement costs will be significantly higher than the cost originally incurred to build the
systems.
As an alternative to full depreciation funding, depreciation funding net of outstanding debt
principal is sometimes used as a relatively moderate replacement funding strategy. Using this
approach, the full funding of depreciation is seen as having two uses: first, reducing liabilities by
paying debt principal as due, and second, generating a cash asset for system reinvestment. Debt
reduction, cash accumulation, or both thereby offset depreciation. This "net debt funding"
benchmark is roughly equivalent to "break- even" performance from a balance sheet perspective.
The annual funding is assumed to be transferred from the operating account to the capital
account at year -end, and available to help pay for capital expenditures in the following year.
Based on City staff direction, the rate management strategy presented in this study provides for
system reinvestment funding for each utility as follows:
Water Utility Phase in to 100% depreciation funding over five years, in 20% annual
increments. Water system annual depreciation expense is currently about $405,000,
reaching $547,000 by the end of this study period. First year funding is planned at
$83,000, increasing annually until full funding is achieved.
Wastewater Utility Due to the substantially higher debt load for the wastewater utility,
fund 100% of annual depreciation expense net of annual debt principal payments. This
serves to avoid overly burdening existing ratepayers with the payment of debt and
funding for future asset replacement at the same time. Wastewater system annual
depreciation expense is currently $2.0 million, reaching $2.3 million by the end of this
five -year study period. Funding depreciation net of debt principal payments will vary
from year to year, ranging from $85,000 to $180,000.
C. DEBT SERVICE COVERAGE REQUIREMENTS
When a municipality issues revenue bonds (and other types of debt instruments), it agrees to
certain terms and conditions related to the repayment of those bonds. One of those terms is
referred to as bond coverage. Simply put, the agency agrees to collect enough in annual revenues
4> FCS GROUP
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 6
to meet all operating expenses (net of internal utility taxes) and not only pay debt service, but
actually collect an additional multiple of that debt service. Bond coverage ratios typically range
from 1.10 to 1.50, meaning that the agency would collect expenses plus 1.10 to 1.50 times
revenue bond debt service as a minimum legal level of revenues. The stated coverage factor is a
minimum requirement meaning anything less than this level would be a technical default of
the bond covenant.
The City's current minimum debt service coverage requirement on the outstanding water
revenue bonds is 1.25 times annual debt service. Per the bond covenant, capital facilities charge
(CFC) revenue collections can be included in the definition of net revenues.
To ensure compliance, many utilities establish a more stringent internal policy for coverage. As a
more conservative internal policy, the rate management strategy presented for this rate study
applies a coverage test of 1.25, excluding the use of CFC revenues. Revenue generated above
cash needs to comply with coverage requirements may be used for capital purposes, and thus
reduce future borrowing needs.
D. USE OF CAPITAL FACILITIES CHARGES FOR DEBT SERVICE
Capital facilities charges are derived from new development rather than from the existing
customer base, and are thus subject to wide fluctuations. The City should estimate and budget
CFC revenues based on long -term growth estimates, recent growth experience, and the scale of
known development planned or underway. The purpose is to establish a reasonable and
conservative estimate of potential CFC revenue collections.
CFC revenue should be deposited in the Capital Account of each utility and made available for
capital purposes only. CFCs can legally be used in two ways they can be applied to project
costs directly (reducing the amount of debt issued), or they can be applied toward annual debt
service payments.
FCS GROUP recommends that, as a general policy, CFC revenues be used to directly fund
capital expenditures. In times of significant rate increase projections, as a tool for transition,
CFC revenue could be budgeted as available to repay debt service. However, we strongly
recommend that no more than 50% of projected annual CFC revenues be used for debt service
this mitigates the risk of not being able to meet committed debt service obligations if growth
does not occur as planned. After the transition period, CFC revenues should be used 100% for
capital expenditures.
To mitigate near -term rate increases for the water utility, City policy direction for this rate study
was to apply 50% of annual CFC revenues toward paying annual debt service for the water
utility only for years 2009 and 2010. Thus, critical to achieving the rate management strategy
presented in this study is the actual collection offorecasted water CFC revenues. Should actual
collections fall short of projections, wa ter rates might need to increase in addition to the
FCS GROUP
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 7
adjustments presented herein. After the transition period, 100% of CFCs are used directly to pay
capital expenditures.
E. CAPITAL PROGRAM FUNDING DEBT MANAGEMENT
In conjunction with establishing or planning its capital program, the City should develop a
corresponding capital financing plan that supports execution of that program. This program
should incorporate system replacement and rehabilitation, system upgrade and improvement,
and system expansion. The policy intent is to establish an integrated capital funding strategy
that considers best management practices for debt management.
1. Capital Funding
Utilities can typically draw funds for capital projects from a variety of sources:
Grants
Developer contributions
Capital Facilities Charges
System Reinvestment Funding
Direct Funding from Rates
Other Capital Revenues
Debt
Given all of these potential funding sources, utilities often find themselves having to choose
between funding sources when establishing a capital financing plan. While grants and developer
contributions would logically be applied to project costs first, the next choice in the funding
"hierarchy" is not necessarily apparent.
The specific decision regarding whether to fund projects by cash or debt is an important policy
decision that will likely be driven by a number of considerations. Cash funding might be cheaper
in the long -run because there is no interest, but debt funding could be the more practical option
since it allows for the payment of project costs over an extended period of time. In addition,
using debt to spread the cost over time will help ensure that future customers pay for their fair
share of system costs.
Finding the appropriate balance of cash debt financing requires an evaluation of debt
management policies discussed below.
2. Debt Management
The City does not have a formal debt management policy, but historically has funded capital
projects through a combination of "pay -as- you -go" cash funding (cash reserves, capital facilities
charges, rates) and debt issuance. Excessive use of debt is unfavorable for a utility, and can
damage the utility's credit rating, reducing its ability to acquire low -cost debt in the future. On
4 FCS GROUP
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 8
the other hand, "pay -as- you -go" funding might create excessive burdens for existing customers,
raising questions of practicality and equity between current and future customers.
Industry standards (and bond underwriter's preference) suggest that municipalities should
maintain a debt -to -equity ratio (total debt divided by the sum of total debt and equity) of no
greater than 50% debt and 50% equity (cash). The City's current debt -to -equity ratio on a
combined basis for the water and wastewater utilities is 49% debt and 51% equity right in line
with the industry standard.
To assist the City in maintaining the target ratio, we suggest that the City limit debt funding of
future capital improvements to 50% to 75 This should be measured over a rolling timeframe,
such as a five -year period, to avoid issues related to short -term cash flow and project scheduling.
Even so, a provision allowing higher use of debt for exceptionally large capital outlays would
remain a prudent safeguard.
The rate management strategy presented for this rate study presumes the City will fund its
capital programs first, with available capital cash resources (generated from CFCs, system
reinvestment funding, and transfers from the operating account in excess of minimum balance
thresholds) and next with the use of debt. As a point of reference, capital programs are
forecasted to be funded over the six -year study period as follows: Water Utility 63% cash
37% debt; Wastewater Utility 46% cash 54% debt well within debt management best
practices.
F. CUMULATIVE IMPACT OF FISCAL POLICIES
Satisfying all of these policy objectives (might seem daunting at first, but the outcome is that
multiple benchmarks overlap, resulting in the simultaneous achievement of multiple objectives
within the same level of rates. For exarnple, the cash requirement for system reinvestment
funding through rates may assure adequate debt service coverage, while also helping to maintain
an appropriate debt -to -equity ratio.
Each criterion provides a different perspective on how much revenue is appropriate, and
satisfying them all generally results in a higher rate than if only a single standard is considered.
However, this approach reduces financial risk and increases financial stability any near term
increases that result will help to ensure more stable, and lower, long -term rates.
FCS GROUP
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 9
SECTION 3
CAPITAL FACILITIES CHARGES
A connection charge or capital facilities charge (CFC), as provided for by RCW 35.92.025, is a
charge imposed on new development as a condition of connection to the utility systems or when
increasing the capacity of an existing connection. In general, the purpose of a CFC is to mitigate
the impact of growth on the utility systems, or to compensate for investments already made to
provide available capacity to serve future growth.
A. METHODOLOGY
Revenues generated from CFCs can be used to directly fund capital projects or to pay debt
service incurred to finance capital projects but can not be used to pay operating and
maintenance costs.
There are several documented approaches used in the industry to establish CFCs. Within the
range of legally defensible approaches, the choice of the costs the City targets is a matter of
policy. It is important, however, that the City follow a methodical and rational approach to
consistently determine and implement cost -based CFCs. To that end, this study used the
approach that combines elements of the "equity" method and "incremental" method for
calculating the charge (described in the American Water Works Association Rates and Charges,
M1 Manual). In short, this approach is based on the original cost of non contributed plant
investment, plus planned capital improvement projects (excluding replacements), spread over the
total customer base (existing and future).
A description of the components included in the calculation of the charge follows.
1. Existing Cost Basis
Utilities most often design and build infrastructure with the capacity to serve more customers
than are currently connected to the system. The existing cost basis component of the CFC is
intended to recover an equitable share of the current system(s). Legal interpretations of
connection charge statutes have provided guidelines for CFCs, which suggest that such charges
should reflect the actual original cost of the utility system and can include interest on that cost at
the rate of interest applicable at the time of construction (up to a 10 -year period, not to exceed
100 percent of the construction costs). This cost is net of donated facilities and non utility cash
payments, whether from grants, developers or through Local Improvement District assessments.
This method most accurately reflects what utility customers paid for the system. Until future
customers connect to the system, existing customers will have to cover the costs of "excess
capacity" available to serve growth. This obligation essentially represents a loan from existing
FCS GROUP
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 10
customers to future customers. Given This, it is reasonable to expect that future customers will
pay for their share of costs when they connect to the system, plus interest.
Though not required, some municipalities deduct outstanding debt principal from plant -in-
service in recognition that some assets were debt financed. Cash should be netted against the
outstanding debt liability for this calculation since cash is an asset generated by existing
customers that could be used to buy down existing debt on the system, and thereby reduce debt
service payments for all customers. This "net debt" deduction serves to reduce the CFC to better
reflect "equity" in the system, and to avoid double charging if new customers will pay their share
of debt service through user rates.
Plant assets (net of contributed assets) used in the calculations were derived from the City's fixed
assets listings as of December 31, 2007, plus current construction work -in- progress.
Outstanding debt and cash balances were provided in the 2007 financial reports.
2. Future Cost Basis
The future cost basis component of the CFC is intended to recover a fair share of the costs of
planned future capital facilities that will serve new customers. Legal interpretations also suggest
that the "cost of the system" can include a component for future improvement costs to serve
growth, as well as regulatory system improvements (planned for construction and identified in
comprehensive system planning documents). Projects directly funded by grants, developer
contributions or assessments are not included in the calculation. Repair and replacement projects
are most often excluded from the calculation unless needed to upgrade or increase the size of the
system, including upsizing of existing inains. The original costs of those assets are already
included in the existing cost basis. Further, as a new customer connects and becomes an existing
customer, they will pay for their share of repair and replacement project costs through user rates.
Double charging would occur if those costs were also recovered in the future cost basis.
In the absence of specific regulation for cities, the planning horizon of the CIP to be used in the
calculation is debatable. The key consideration in determining an appropriate planning horizon
is to maintain consistency between the capital construction (and related costs) that will be
incurred and the system capacity that will be available to serve growth commensurate with that
capital construction. For calculation of the City's CFCs, a 10 -year CIP was used, which is
expected to provide system capacity for growth through the year 2025.
3. Customer Base System Capacity
The customer base used in the calculation of the charge is typically expressed in terms of
equivalent residential units that can be supported by the system capacity. This concept charges
customers based on the potential demand that they will place on the system(s). As stated above,
the City estimates that the existing and planned system infrastructure will provide capacity to
serve growth through the year 2025.
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CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
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4. Calculation of Charges
The sum of the existing cost basis and the future cost basis is divided by the customer base to
determine the maximum allowable CFC. The calculated charge represents the maximum
allowable charge the City may choose to implement a charge at any level up to the calculated
charge. Revenues generated, as well as equity achieved, will vary depending upon whether or not
the full CFC is implemented (e.g., phase -in strategies). The lower the charge and longer the
phase -in period, the less revenue will be collected and available to help pay capital- related costs.
It is important to note that the calculated CFCs are expressed in terms of current dollars. In
other words, the calculated charges will only recover an equitable share of costs from new
customers connecting to the system in the first year of implementation. A customer connecting
in the following year should pay a CFC that reflects the cumulative system investment at the
time they connect. Relative to the calculated (2008) CFCs presented herein, this would include:
Assets added to the system during 2008
An extra year of interest accrued
Updated costs for the capital improvement program and construction work -in- progress
Given these considerations, the calculated charges would not recover a fair share of costs from
customers connecting in subsequent years. The City could potentially address this concern in
several ways:
Recalculate the charges annually,
Build a provision for inflation into the connection charges, or
Compute CFCs in current dollars and adjust annually for inflation (recommended
approach).
Calculating the CFCs annually is the most accurate method, but might not be practical given the
amount of effort required. FCS GROUP recommends that the City adopt a policy for annual
inflationary adjustments to the calculated charges, based on established sources, such as the
Engineering News Record's "Construction Cost Index" (ENR CCI). This practice facilitates
both appropriate cost recovery and increased equitability.
5. Phase in Strategy
In response to concerns about economic development and the burden increased CFCs could
place on the development community, a three -year phase -in strategy was developed and
evaluated to determine if the burden on growth could be lessened in the near -term without
unduly burdening existing ratepayers. The phase -in strategy was accomplished for the wastewater
utility with no additional impact to wastewater rates. An additional 1.5% average increase in
water rates over the study period was necessary to accommodate the CFC phase -in plan.
FCS GROUP
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 12
B. RESULTS
Results of the CFC analysis for each u1 ility are summarized in this section. Additional detail
identifying specific assets and eligible capital projects (or portions of projects) is provided in the
Technical Appendices.
1. Water Utility
The City's current water capital facilities charge is $1,518 per equivalent residential unit (ERU),
where one ERU is equal to a 3 /4 -inch meter. The data sources and assumptions relied on in the
calculation of the updated CFCs are described herein.
As of year end 2007, water utility system assets equal $26.7 million, including construction
work-in- progress and net of contributed assets. Ten years of interest accumulation totaling $9.1
million was added to the cost basis. Finally, outstanding debt (net of existing cash balances) of
$3.2 million was deducted. The resulting existing cost basis totals $32.6 million.
The City has planned for about $15.3 million (current day dollars) of capital projects over the
next 10 years. About $8.1 million of this total is for repair and replacement projects, which are
excluded from the cost basis. The remaining $7.2 million in future upgrade /expansion projects
forms the future cost basis.
The total cost basis (existing plus future) for the CFC is $39.8 million.
Based on utility billing system records, the water utility currently has 9,964 meter capacity
equivalents. Incorporating the City's growth assumption of 0.50% per year, the utility will add
936 meter capacity equivalents by 2025 reaching a total customer base of 10,900.
A 2008 water CFC of $3,655 per meter capacity equivalent (3/4 -inch meter) is derived by
dividing the total cost basis by the total customer base. The charge increases by meter size based
on the American Water Works Association (AWWA) meter capacity ratios.
Phase -in Strategy
Water CFCs were phased -in over the three -year period (2008 2011) to reach the calculated
charge, plus interest, by 2011 ($3,953). Future year increases assume 4% per year. Exhibit 3 -1
presents the proposed schedule of annual water CFCs by meter size.
FCS GROUP
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 13
Exhibit 3 -1: Schedule of Water Capital Facilities Charges
2009 RN0 gipig Nal,
3/4" 2,330 1 3,141 3,953 4,111 4,275
1" 3,890 5,246 6,601 6,865 7,140
1 1/2" 7,758 10,460 13,163 13,690 14,237
2" 12,417 i 16,743 21,069 21,912 22,788
3" 24,857 33,517 42,177 43,864 45,619
4" 38,835 52,365 65,895 68,530 71,272
6" 77,647 104,698 131,750 137,020 142,501
8" 124,239 167,523 210,808 219,240 228,010
2. Wastewater Utility
The City's current wastewater capital facilities charge is $4,282 per dwelling unit for residential
customers. Non- residential customers are charged based upon the cost of extending sewer
service plus the value of treatment capacity used. To simplify the non- residential structure, this
study revises the current basis to one by equivalent meter size, similar to the water CFC
structure. The data sources and assumptions relied on in the calculation of the updated CFCs are
described herein.
As of year end 2007, wastewater utility system assets equal $70.5 million, including
construction work -in- progress and net of contributed assets. Ten years of interest accumulation
totaling $16.4 million was added to the cost basis. Finally, outstanding debt (net of existing cash
balances) of $27.8 million was deducted. The resulting existing cost basis totals $59.1million.
The City has planned for about $17.3 million (current day dollars) of capital projects over the
next 10 years. About $12.6 million of this total is for repair and replacement projects, which are
excluded from the cost basis. The remaining $4.7 million in future upgrade /expansion projects
forms the future cost basis.
The total cost basis (existing plus future) for the CFC is $63.8 million.
Based on utility billing system records, the wastewater utility currently has 9,252 equivalent
customers. Incorporating the City's growth assumption of 1.0% per year, the utility will add
1,815 customer equivalents by 2025 reaching a total customer base of 11,067.
A 2008 wastewater CFC of $5,762 per meter capacity equivalent (3/4 -inch meter) is derived by
dividing the total cost basis by the total customer base. The charge increases by meter size based
on the American Water Works Association (AWWA) meter capacity ratios.
FCS GROUP
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 14
Phase -in Strategy
Wastewater CFCs were phased -in over the three -year period (2008 2011) to reach the
calculated charge, plus interest, by 2011 ($6,232). Future year increases assume 4% per year.
Exhibit 3 -2 presents the proposed schedule of annual wastewater CFCs by meter size.
Exhibit 3 -2: Schedule of Wastewater Capital Facilities Charges
3/4" 4,932 5,582 6,232 i 6,481 6,741
1" 8,236 9,322 10,407 10,824 11,257
1 1/2" 16,424 18,588 20,753 21,583 22,446
2" 26,288 29,752 33,217 34,545 35,927
3" 52,625 59,560 66,496 69,155 71,922
4" 82,217 93,052 103,888 108,043 112,365
6" 164,384 186,048 207,713 216,022 224,663
8" 263,024 297,689 332,354 345,648 359,474
C. IMPLEMENTATION
The City Council adopted the three -year schedule of proposed water and wastewater CFCs
(December 9, 2008 Council Meeting), effective January 1 of each of the three years, 2009, 2010,
and 2011. On January 1" of each year beginning in 2012, CFCs shall be adjusted to reflect the
annual percentage increase of the Engineering News Record Construction Cost Index as
published for November of the preceding year. Calculation of the change in the index is made by
dividing the current index for November by the preceding index for November and subtracting
one.
The CFCs reflected in the exhibits for years 2012 and 2013 are provided for planning purposes
only and assume an increase of 4% per year. We recommend that the City review CFC levels
about every 3 to 6 years, perhaps on schedule with the water and wastewater comprehensive
system planning updates.
FCS GROUP
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 15
SECTION 4
REVENUE REQUIREMENTS
The revenue requirement analysis forms the basis for a long -range financial plan and multi -year
rate management strategy for each utility. It also enables the City to set utility rate structures that
are rooted in the "costs -of- service" and which fully recover the total costs of operating each
utility: capital improvement and replacement, operations, maintenance, general administration,
and fiscal policy attainment. Linking utility rate levels to a financial plan such as this helps to
enable not only sound financial performance for the City's utility enterprises, but also, a clear
and reasonable relationship between the costs imposed on utility customers and the costs
incurred to provide them the service.
A. METHODOLOGY
When FCS GROUP conducts a revenue requirement analysis the financial plan for each utility
it includes the following core elements, which together, form a complete portrayal of the
financial obligations:
utility's
Capital Funding Analysis— Defines a strategy for funding the utility systems' capital
improvement programs including an analysis of available resources from rate revenues,
capital facilities charges, debt financing, and any special resources (e.g., grants, developer
participation, etc.).
o Operating Forecast— Identifies future annual non capital costs associated with the
operation, maintenance, and administration of the utility systems.
Sufficiency Testing— Evaluates the sufficiency of utility revenues in meeting all
obligations, including cash uses such as operating expenses, debt service, capital outlays,
and reserve contributions, as well as any coverage requirements associated with long-
term debt.
Strategy Development— Designs a forward- looking strategy for adjusting utility
resources to fully fund all utility obligations on an annual or periodic basis over the
forecast period.
Reserve Analysis Forecasts cash flow and fund balance activity in utility reserves. Tests
for satisfaction of recommended minimum fund balance policies (as discussed in Section
2 Policy Development).
From this foundation, utility rate structures can be adjusted to meet the defined annual and
long -term funding targets, as well as the City's pricing objectives.
FCS GROUP
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 16
The financial plans were developed for a six -year planning horizon calendar year 2008 through
2013. The approach used for each core element of the financial plan is described below.
1. Capital Projects and Funding
The capital funding analysis aims to identify the costs of capital projects and summarizes funding
sources available to help meet those costs. In other words, total sources of funds must at least
equal capital expenditures and provide for the targeted level of capital reserve funding.
The first step is to estimate current day costs of capital improvements and replacement needs
over the study period. City staff provided a listing of annual capital projects and associated costs
stated in 2007 dollars. Four alternative capital programs were evaluated for each utility:
Option 1 No capital program
Option 2 Capital costs associated with legal requirements
Water: fire flow requirements
Wastewater: Department of Ecology "agreed order"
Option 3 Option 2, plus capital costs associated with system improvements and
upgrades
Option 4 Option 3, plus capital costs associated with growth and expansion (projects
to incorporate new service areas)
The final capital programs selected for use in this rate study included necessary repair and
replacement projects and those projects required to meet legal requirements (Option 2).
To account for construction costs increasing over time, annual inflation is applied to escalate
current day capital costs to the date of anticipated construction. Historical construction cost
inflation has averaged about 4.1 over the last five years.' An inflation rate of 4.0% per year
was used for this study.
With the system's capital needs defined, the next step is to identify the sources of funding
available to help the City meet those needs. Potential sources include grants, developer
contributions, reimbursements and capital reserves (including capital facilities charge revenues
and system reinvestment funding). Debt can be issued to cover any costs not met by these other
funding sources.
The capital financing strategy developed for this rate study utilizes the City's preferred hierarchy
of funding sources, as follows:
Capital project needs are first funded with available capital cash resources generated
from capital facilities charges, system reinvestment funding from rates, transfers from the
operating account, and interest earnings on capital account balances.
Engineering News Record, "Construction Cost Index 2003 through 2007.
•:>FCS GROUP
CITY OF CENTRALIA, WASHINGTON
Unhty Rates Charges Study Water and Wastewater Systems
Study Report 17
Capital needs not met from the above cash resources will be funded with debt. The City
will regularly pursue low -cost state loans, but unless approved at the time of planning,
the financing strategy will assume the issuance of revenue bonds.
Debt service payments are assumed to begin in the year debt is issued. Current financing
terms assume a 20 -year repayment period; 6.0% rate of interest; 2% issuance cost; and
debt service coverage of 1.25 excluding CFC revenues. It is worth reiterating that
although the City's bond covenants allow for the use of CFC revenues, the City has
established an internal policy to generate revenues sufficient to meet the higher coverage
of 1.25 times annual revenue bond debt service, excluding the use of CFC revenues.
2. Operating Forecast
The operating forecast focuses on annual expenses incurred to operate, maintain, and manage
the utility systems. The forecast used in this study is based on the calendar year 2008 operating
budget (plus adjustments provided by City staff to incorporate known or estimated future
expenditures for some line item categories).
Operating and maintenance (O &M) costs generally go up over time due to inflation. Historical
general cost inflation has averaged about 2.9 over the last five years. A general inflation rate
of 3.0% per year was used for this study. Employee benefits escalation is assumed at a slightly
higher rate of 5% to recognize historical cost increases above the rate of general inflation.
Variable costs such as chemicals, printing, and postage costs are forecasted to increase with the
size of the customer base in addition to inflationary impacts.
3. Revenue Needs Assessment
After forecasting the complete array of obligations facing the utilities, those costs are compared
to forecasted revenues comprised primarily by rate revenues at their current levels. Rate
revenues are increased over the forecast period by the amount of incremental rate revenues
presumed to be generated from potential growth in the service areas.
When comparing utility obligations with available resources, we have examined sufficiency from
two perspectives: cash sufficiency and debt coverage sufficiency.
The "Cash Test "focuses on cash resources against cash obligations. Cash resources in
this test include rate revenue, miscellaneous operating revenue, and interest earnings in
the Operating Account. The rate management strategy presented for this study also
integrates the City's direction to use Operating Account cash reserves (in excess of
minimum annual balance thresholds) to supplement annual revenues in years 2008 and
2009. Cash obligations include operating expenses, debt service, system reinvestment
funding from rates, direct rate funding of capital projects, and any contributions to the
2 Bureau of Labor Statistics, All Urban Customers, "Consumer Price Index 2003 through 2007.
FCS GROUP
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study. Water and Wastewater Systems
Study Report 18
Water Utility
Wastewater Utility
Operating Account to achieve minimum balance thresholds. If these cash obligations
exceed resources available, a rate increase is required to fully fund the needs of the
utilities.
The "Coverage Test" refers to the ability of the utilities to meet debt covenants (or
established internal policies) which require utility revenue streams to satisfy a specific
margin. The coverage test evaluates revenues and expenses somewhat differently than
under the cash test. For the coverage test, obligations include operating expenses (net of
internal utility taxes), revenue bond debt service, and incremental debt service coverage
(25% of annual revenue bond debt service). In addition to the revenues included in the
cash test, the coverage test allows for the inclusion of interest earnings from all utility
accounts (operating account, capital account, and any restricted reserve accounts), and
often allows for annual capital facilities charge revenues (excluded for this study). This
test does not allow for the use of cash reserves in meeting annual coverage obligations.
In determining the revenue requirements, both the cash and coverage sufficiency tests must be
met. If a rate revenue deficiency exists under both tests, the analysis adds the greatest deficiency
to the forecasted rate revenue. This yields the total rate revenue requirement for any given year.
The analysis uses the revenue requirement to indicate system -wide annual rate revenue
adjustments for each utility and to drive the cost of service analysis.
4. Rate Management Strategy
FCS GROUP prepared several rate management strategies for City staff review, which provided
for alternative capital programs and various approaches for phasing in to recommended fiscal
policies and other utility needs over the study period. Exhibit 4 -1 summarizes the initial results
presented to the City Council for consideration (May 27, 2008 Council Meeting).
Exhibit 4 -1: Initial Water and Wastewater Rate Forecast
Rate Forecast
2008
Annual Rate Increases
Annual Rate Increases
Cumulative Rate Increases
FCS GROUP
20.00%
Rate Forecast 2008
14.00%
2009 2010 2011 2012 2013
9.00%
9.00%
7.00%
9.00%
3.00%
14.00% 24.26% 32.96% 36.95%
4.00%
3.00%
3.00%
Cumulative Rate Increases 20.00% 30.80% 42.57% 55.40% 61.62% 66.47%
2009 2010
2011 2012
2013
3.00%
41.06% 45.29%
The City Council adopted a 12% increase for the water utility and a 10% increase for the
wastewater utility, effective with the August 2008 billing cycle, and applied "across- the board" to
the existing rate structures. Further direction was provided for City staff and FCS GROUP to
revisit the analysis following completion of the 2009 budget process and refine the rate forecast
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 19
for the future years 2009 through 2013. The following section presents the updated results for
each utility.
B. RESULTS
Results of the revenue requirement analysis for each utility are summarized in this section.
Additional detail can be viewed in the Technical Appendices (e.g., detailed listings of capital
projects, budgeted revenue and expense line items, inflows and outflows of fund balances, etc.).
1. Water Utility
The water utility financial plan includes a capital funding strategy, operating forecast, revenue
needs assessment, rate management strategy, and reserve analysis.
Capital Funding Strategy
Over the six -year forecast, the water system faces a total of $7.9 million (inflated) in capital
program costs: an average of $1.3 million per year. Of this six -year total, 72% is related to
replacement projects and 28% is related to system improvements and upgrades (detailed project
lists are included in the technical appendix).
The capital funding plan presumes that the capital program will be funded through a
combination of capital cash resources and debt issuance. Based on our analysis, 63% ($5 million)
of the total capital program can be funded with current cash reserves, CFC revenue collections,
planned annual contributions for system reinvestment funding, and transfers from the operating
account. The remaining 37% of capital needs are assumed to be funded with revenue bond
proceeds ($2.9 million), beginning in the year 2011. Exhibit 4 -2 summarizes annual planned
capital expenditures, along with assumed funding sources.
Exhibit 4 -2: Water Capital Projects and Funding Sources
Ga •ital
Fundin
Total Capital Projects
Revenue Bond Proceeds
Use of Capital Fund Balance [a]
Total Funding Sources
FCS GROUP
2008
2009
177,275
177.275
177,275
[a] Includes annual capital facilities charge revenues and system reinvestment funding
1,052,434 1,250,342 1,977,165 1,552,985 1,910,248
836,107 943,825 1,172,038
1.052.434 1.250.342 1.141.058 609.160 738.209
1,052,434 1,250,342 1,977,165 1,552,985 1,910,248
It should be emphasized that this capital funding strategy presumes implementation of the
system reinvestment funding policy at the level described in Section 2 Policy Development,
and implementation of the proposed level and use of capital facilities charges described in
Section 3 Capital Facilities Charges. Furthermore, any changes in the amount of planned
annual capital expenditures could impact this strategy.
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study. Water and Wastewater Systems
Study Report 20
Operating Forecast
EXPENSES
Water operating expenses are categorized into six categories: salaries wages; benefits; supplies;
other services charges; intergovernmental; and interfund expenditures. Over the six -year
planning horizon, the utility's total operating expenditures are forecasted to range from $2.9
million to $3.4 million per year (inclusive of inflation effects). The annual forecast is provided in
Exhibit 4 -3. In addition to O &M expenditures, existing and new annual debt service payments
are forecast over the planning horizon. Existing debt service payment schedules were provided by
City staff, with annual payments of $760,000 in 2008 reducing to $469,000 by the end of study
period as existing debt is paid off. Future years' debt service incorporates impacts of the capital
funding strategy. Incremental debt service incurred to finance the capital program will begin in
2011 at about $82,000 and reaching 207,000 per year by the end of the study period.
REVENUES
Water operating revenues are categorized as rate revenues and non -rate revenues. The revenue
forecast relied on a combination of hiss orical expenditures, budgeted line items, customer
growth, and cost escalation. The annual forecast is provided in Exhibit 4 -3. In summary:
RATE REVENUES UNDER EXISTING RATES:
The forecast of rate revenues under the existing level of rates reflect actual 2007 billing system
and financial records, plus estimated customer growth over the study period. City staff provided
estimated customer growth of 0.50% per year.
NON —RATE REVENUES:
Non -rate revenues include late penalties, latecomer assessments, miscellaneous utilities fees,
rents, and other miscellaneous revenues. The forecast of non -rate revenues relies on the 2008
budget, escalated in proportion to customer growth, general cost escalation, or some
combination depending upon the type of revenue.
As part of this study, FCS GROUP evaluated the City's existing schedule of water and
wastewater miscellaneous utility fees, and provided updated charges to better reflect the cost of
services provided by the utility. A Technical Memorandum summarizing the analysis is provided
in Technical Appendix C.
Revenue Needs Assessment
The water utility faces $25.5 million in total cash obligations over the six -year planning period,
including operating expenses; existing and new debt service; system reinvestment funding; and
contributions to reserves. Rate revenues under existing levels and other available revenues
(excluding the use of cash reserves) are forecasted at $18.5 million over the same time period
FCS GROUP
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 21
yielding a deficit of $7 million over the next six years. Based on our review, it appears that the
City has historically relied on cash reserves and /or CFC revenue collections to help pay annual
operating expenses (inclusive of debt service payments). As these reserves are drawn down and
growth continues to slow, rate increases are required to meet the current and forecasted annual
financial obligations of the water utility.
The cash test drives this revenue deficiency. Given the level of cash needs above operating
expenses (primarily driven by system reinvestment funding and debt service on loans), additional
coverage above cash needs is not required. To eliminate this cash deficiency (with the use of cash
reserves), rate revenues would need to increase about 72% above current levels, cumulative over
the study period.
Rate Management Strategy
To reiterate, the selected rate management strategy serves to smooth the rate impacts over the
study period by phasing in fiscal policy recommendations and relying on the use of Operating
Account cash reserves in 2008 and 2009 to supplement annual obligations.
Under this strategy, water rate adjustments are planned as follows: a 12% increase was adopted
effective with the August 2008 billing cycle. Future year increases are forecasted at 12.5% for
2009; 11.5% for 2010; 13.5% for 2011; and 4% per year in years 2012 and 2013, for a
cumulative increase of 72% over the study period. Future year increases are scheduled to become
effective January 1 of each year.
Exhibit 4 -3 provides a summary of water utility revenue requirements over the study period.
Exhibit 4 -3: Water Revenue Requirements Analysis
Revenue Re'•`utreme nts
2008 2009 2010 2011. 2012 2013
Revenues
Rate Revenues Under Existing Rates 2,858,705 2,872,999 2,887,364 2,901,800 2,916,309 2,930,891
Non -Rate Revenues 175,488 154,535 150,764 153,144 159,248 164,930
Use of CFCs to Pay Debt Service 58.031 78.640
Total Revenues 3,034,193 3,085,565 3,116,768 3,054,945 3,075,557 3,095,821
Expenses
Cash Operating Expenses
Existing Debt Service
New Debt Service
Rate- Funded System Reinvestment
Rate- Funded Debt Reserve
Total Expenses
Annual Surplus (Deficiency)
Annual Rate Adjustment
Cumulative Rate Adjustment
Rate Revenues After Rate Increase
Net Cash Flow After Rate Increase
No of Days of Cash Operating Expenses
Coverage Ratio After Increase
FCS GROUP
2,937,350 2,991,972 3,079,162 3,267,640
760,286 747,378 748,842 739,074
81,647
376,020
4,464,381
82,706 168,738 266,436
27.159
3,807,501 3,908,089 4,094,440
3,261,981
728,728
173,813
512,036
0
4,676,558
3,357,829
469,433
206,617
547,354
4,581,233
(773,308) (822,523) (977,672) (1,409,436) (1,601,001) (1,485,412)
12.00 12.50 11.50% 13.50% 4.00% 4.00%
12.00 26.00 40.49% 59.46% 65.83% 72.47%
3,001,640 3,619,978 4,056,457 4,627,099 4,836,244 5,054,842
(651,855) (187,807) 15,718 56,567 30,387 319,331
90 62 62 65 69 90
1 84 3 43 4 28 4 28 3 92 330
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 22
Reserve Analysis
A presumed interest earning rate of 3.0% is applied to annual beginning cash balances in the
Operating and Capital Accounts. Opelating interest is used to help pay annual operating
expenditures, while capital interest is used to offset annual capital expenditures.
The cash balance in the water Operating Account is projected to reduce from $1.4 million at the
end of 2007 to $758,000 by year end 2013 (consistent with the recommended policy of 60 to 90
days of O &M expense).
The Capital Account balance is projected to reduce from $2.5 million at the end of 2007 to
$914,000 by year end 2013 (well within the recommended reserve level of 1% to 2% of fixed
assets).
2. Wastewater Utility
The wastewater utility financial plan includes a capital funding strategy, operating forecast,
revenue needs assessment, rate management strategy, and reserve analysis.
Capital Funding Strategy
Over the six -year forecast, the wastewater system faces a total of $12.1 million (inflated) in
capital program costs: an average of $2 million per year. Of this six -year total, 63% is related to
replacement projects and 37% is related to system improvements and upgrades (detailed project
lists are included in the technical appendix).
The capital funding plan presumes that the capital program will be funded through a
combination of capital cash resources and debt issuance. Based on our analysis, 46% ($5.6
million) of the total capital program can be funded with current cash reserves, CFC revenue
collections, planned annual contributions for system reinvestment funding, and transfers from
the operating account. The remaining 54% of capital needs are assumed to be funded with
revenue bond proceeds ($6.5 million), beginning in the year 2009. Exhibit 4 -4 summarizes
annual planned capital expenditures, along with assumed funding sources.
Exhibit 4 -4: Wastewater Capital Projects and Funding Sources
Ca•ital Funding 2008
Total Capital Projects
Revenue Bond Proceeds 43,776 4,010,390 242,878 2,203,821
Use of Capital Fund Balance [a] 480.575 1,637,904 667.530 524.187 1.107.138 1.161.441
Total Funding Sources 480,575 1,681,680 4,677,920 524,187 1,350,017 3,365,262
[a] Includes annual capital facilities charge revenues and system reinvestment funding
It should be emphasized that this capital funding strategy presumes implementation of the
system reinvestment funding policy at the level described in Section 2 Policy Development,
FCS GROUP
2009 2010 2011 2012
480,575 1,681,680 4,677,920
524,187 1,350,017 3,365,262
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 23
and implementation of the proposed level and use of capital facilities charges described in
Section 3 Capital Facilities Charges. Furthermore, any changes in the amount of planned
annual capital expenditures could impact this strategy.
Operating Forecast
EXPENSES
Consistent with the water utility, wastewater operating expenses are categorized into six
categories: salaries wages; benefits; supplies; other services charges; intergovernmental; and
interfund expenditures. Over the six -year planning horizon, the utility's total operating
expenditures are forecasted to range from $4.3 million to $5.0 million per year (inclusive of
inflation effects). The annual forecast is provided in Exhibit 4 -5. In addition to O &M
expenditures, existing and new annual debt service payments are forecast over the planning
horizon. Existing debt service payment schedules were provided by City staff, with annual
payments of just under $2 million per year. Future years' debt service incorporates impacts of the
capital funding strategy. Incremental debt service incurred to finance the capital program will
begin in 2009 at about $4,000 and reaching $630,000 per year by the end of the study period.
REVENUES
Wastewater operating revenues are categorized as rate revenues and non -rate revenues. The
revenue forecast relied on a combination of historical expenditures, budgeted line items,
customer growth, and cost escalation. The annual forecast is provided in Exhibit 4 -5. In
summary:
RATE REVENUES UNDER EXISTING RATES:
The forecast of rate revenues under the existing level of rates reflect actual 2007 billing system
and financial records, plus estimated customer growth over the study period. City staff provided
estimated customer growth of 1% per year. In addition, the 5% rate increase implemented at the
beginning of 2008 was incorporated into the forecast.
NON —RATE REVENUES:
Non -rate revenues include late penalties, latecomer assessments, miscellaneous utilities fees,
rents, and other miscellaneous revenues. The forecast of non -rate revenues relies on the 2008
budget, escalated in proportion to customer growth, general cost escalation, or some
combination depending upon the type of revenue.
Revenue Needs Assessment
The wastewater utility faces $42.9 million in total cash obligations over the planning period,
including operating expenses; existing and new debt service; system reinvestment funding; and
FCS GROUP
CITY OF CENTRALIA, WASHINGTON
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Study Report 24
contributions to reserves. Rate revenues under existing levels and other available revenues
(excluding the use of cash reserves) are forecasted at $33.9 million over the same time period
yielding a deficit of $9 million over the next six years. Similar to the water utility, the City has
relied on cash reserves and /or CFC revenues to help pay annual wastewater operating expenses
(inclusive of debt service payments). As these reserves are drawn down and growth continues to
slow, rate increases are required to meet the financial obligations of the wastewater utility.
The cash test drives this revenue deficiency. Given the level of cash needs above operating
expenses, additional coverage above cash needs is not required. To eliminate this cash deficiency
(with the use of cash reserves), rate revenues would need to increase about 49% above current
levels, cumulative over the study period.
Rate Management Strategy
The selected rate management strategy serves to smooth the rate impacts over the study period
by phasing in fiscal policy recommendations and relying on the use of Operating Account cash
reserves in 2008 and 2009 to supplement annual obligations.
Under this strategy, wastewater rate adjustments are planned as follows: a 10% increase was
adopted effective with the August 2008 billing cycle. Future year increases are forecasted at
11.5% per year in years 2009 and 2010 and 3% per year in years 2011 through 2013, for a
cumulative increase of 49% over the study period. Future year increases are scheduled to become
effective January 1 of each year.
Exhibit 4 -5 summarizes wastewater utility revenue requirements over the study period.
Exhibit 4 -4: Wastewater Revenue Requirements Analysis
Revenue Requirements 20
Revenues
Rate Revenues Under Exishng Rates
Non -Rate Revenues
Use of CFCs Revenues to Pay Debt Service
Total Revenues
Expenses
Cash Operating Expenses 4,231,870 4,408,868 4,553,329 4,703,170 4,959,899 5,019,851
Existing Debt Service 1,9 35,458 1,962,870 1,960, 282 1,957,693 1,955,105 1,948,242
New Debt Service 4,275 395,894 395,894 419,612 630,543
Rate Funded System Reinvestment 151,696 161,201 85,271 179,855 178,349 129,594
Rate Funded Debt Reserve 167.007 288.206 6.071 3.541 0
Total Expenses 6,379,024 6,704,221 7,282,983 7,242,684 7,516,507 7,728,229
Annual Surplus (Deficiency) (854,761) (1,164,224) (1,685,775) (1,567,956) (1,780,494) (1,932,911)
Annual Rate Adjustment [a]
Cumulative Rate Adjustment
Rate Revenues After Rate Increase
Net Cash Flow After Rate Increase
No of Days of Cash Operating Expenses
Coverage Ratio After Increase
[a] 2008 increase needed in addition to 5% adjustment implemented at beginning of year
FCS GROUP
2009
2010 2011 2012 1, 2013
5,327,135 5,380,407 5,434,211 5,488,553 5,543,439 5,598,873
1'37,127 159,591 162,997 186,174 192,574 196,445
5,524,263 5,539,998 5,597,208 5,674,727 5,736,013 5,795,318
0.00% 11.50% 11.50% 3.00% 3.00% 3.00%
0.00% 22.65% 36.75% 40.86% 45.08% 49.44%
5,549,099 6,599,069 7,431,541 7,731,033 8,042,593 8,366,710
(663,544) (114,371) 34,885 363,895 372,478 451,525
60 47 49 60 60 60
n/a 676 27 8 91 9 34 8 98 6 35
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 25
Reserve Analysis
A presumed interest earning rate of 3.0% is applied to annual beginning cash balances in the
Operating and Capital Accounts. Operating interest is used to help pay annual operating
expenditures, while capital interest is used to offset annual capital expenditures.
The cash balance in the wastewater Operating Account is projected to reduce from $1.9 million
at the end of 2007 to $733,000 by year end 2013 (consistent with the recommended policy of
45 to 60 days of O &M expense).
The Capital Account balance is projected to increase from $903,000 at the end of 2007 to $1.3
million by year end 2013 (well within the recommended reserve level of 1% to 2% of fixed
assets).
C. IMPLEMENTATION
The City adopted the 2008 water and wastewater rate increases of 12% and 10 respectively,
across the -board to the existing rate structures.
The cost of service analysis presented in the next section assigns cost recovery by customer class
consistent with the rate adjustment strategy for years 2009 through 2013 for each utility. The
proposed rates for this five -year period, adopted by City Council, are presented in Section 6
Rate Design.
FCS GROUP
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 26
•:>FCS GROUP
The purpose of a cost of service analysis is to provide a rational basis for distributing the full
costs of utility service to each class of customer in proportion to the distinct demands they place
on the system. Detailed cost allocations, along with appropriate customer class designations, help
to sharpen the degree of equity that can be achieved in the resulting rate structure design.
A. METHODOLOGY
SECTION 5
COST OF SERVICE ANALYSIS
The cost of service analysis was perforrned for a selected "test year," corresponding to the year in
which new rates will take place. In this case, we used calendar year 2009, with proposed rates
planned to be implemented January 1, 2009. Consistent with industry practice, the cost of
service analysis includes the following components:
Functional Cost Allocation Apportions the annual revenue requirement for the
selected test year by major function of utility service. For the water system, functional
categories include customer, meters services, base demand, peak demand, and fire
protection. For the wastewater system, functional cost pools include those incurred to
handle user flows, to treat the volume of user flows, to treat the strength of user flows,
and to provide customer service.
Customer Classification Cost Allocation Allocates functional cost pools to classes of
customers based on their unique demands for service, as defined by system planning
documents, industry standards, and recorded user history (from billing system
information). Identifies shifts in cost recovery by customer class from that experienced
under the existing rate structures. Determines the amount of revenue to be recovered
from each class of customer, linked to a proportionate share of costs required to service
their demand. Determines whether new or revised classes are warranted, depending on
characteristics obtained from detailed customer data and /or City goals for class equity.
1. Functional Allocations
The cost of service analysis begins with a functional allocation of utility costs. The purpose of
this allocation is to categorize the total annual rate revenue requirement of the utility into
functions of service, which can then be examined for cost recovery according to the manner in
which different classes of customers use or place demands on the system for those specific
categories of service.
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
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Allocation of Capital Costs
Capital related costs include debt service payments, system reinvestment funding, and a portion
of additions /uses of cash reserves. The most common methodology for assigning the capital
portion of the revenue requirement to functional components is to allocate such costs on the
basis of each system's existing plant -in- service. The allocations for plant -in- service utilized
documented engineering planning criteria from both the City of Centralia and industry
standards. In allocating this utility plant -in- service, we used the City's fixed assets listing as of
December 31, 2007, organized into major categories for each system.
Allocation of Operating Costs
Operating costs include O &M expenses and a portion of additions /uses of cash reserves. These
costs are allocated to the functions based on a detailed review of line item categories, generally
following the cost causation process used in the allocation of plant. For example, customer
billing costs are allocated to the "customer" category; maintenance and engineering costs are
allocated in proportion to total plant -in- service; administrative costs are allocated in proportion
to all other costs, and so on.
2. Customer Class Allocations
Once the annual revenue requirement has been categorized into functional cost pools, each cost
pool can be further apportioned to the classes of customers who use the utility system. First,
existing customer classes need to be either affirmed or modified to more appropriately group like
users. To accomplish this, the characteristics and historical demands of each class need to be
studied. Then, using those characteristics and demands, each functional cost pool is allocated to
each customer class in a manner that reflects each group's use of (or demands on) the utility
system. These allocations draw upon account data, historical usage data, or system planning
requirements. Ultimately, this element of the analysis defines the total annual revenue that
should be generated from each customer class, in order to achieve a reasonably equitable system
of cost recovery from rates.
Customer Usage Statistics
A key component in the distribution of costs to customer classes is testing the reliability and
accuracy of customer statistics. This is accomplished through a review of historical billing system
data and application of the rate schedule in effect for that year. City staff provided historical
billing system records for 2007, including number of accounts and dwelling units, size of meters,
and monthly water usage. The total revenue generated from these customer statistics should
approximate the actual revenue receipts shown in the financial statements (with minor
differences due to the timing of new connections disconnects, delinquencies, etc.). If the
FCS GROUP
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study. Water and Wastewater Systems
Study Report 28
revenue estimates are with reasonable limits', statistics are determined "valid" and an adjustment
factor is applied to the statistics if necessary to account for any minor discrepancies. The results
of this analysis indicate that the City's customer statistics are valid and will serve as a reasonable
basis for forecasting revenue and allocating system costs to the customer classes.
Further, customer usage statistics are evaluated to determine if current customer class
designations represent an appropriate grouping of customers, or if revisions are warranted to
better reflect customer groupings that exhibit similar usage patterns. This addresses rate equity
among customer classes.
Distribution of Costs
The functionally allocated system -wide costs are distributed to the customer classes to determine
"cost shares" based on the relative demands placed on the system by each class. This analysis
identifies shifts in cost recovery by customer class from that experienced under the existing rate
structure. Through this process, if one customer class places a higher or lower proportional
average demand in one functional category, that customer class pays a higher or lower portion of
that functional category's costs.
B. RESULTS
Results of the cost of service analysis for each utility are summarized in this section. Additional
detail can be viewed in the Technical Appendices (e.g., detailed cost allocations, customer
statistics, etc.).
1. Water Utility
The water utility cost of service analysis includes a functional allocation, customer allocation,
and a cost of service phase -in strategy.
Functional Allocation
The rate revenue requirement for the water utility for year 2009 is projected to be 3.6 million
(incorporating the proposed 12.5% inc:rease). Using the approach described above, the revenue
requirement was allocated to water service functional categories. Exhibit 5 -1 illustrates the
breakdown of water utility costs among these functional categories:
Customer— These costs are associated with services that do not vary by water
consumption, including utility billing, meter reading, and office support.
Meters &Services— These costs are associated with installation, maintenance, and
repairs of meters and services.
3 As a rule of thumb, 3% or less is an acceptable discrepancy Calculated revenues were within 1.8% and 2.6
respectively, of reported revenues for the water and wastewater utilities within the acceptable range of discrepancy.
FCS GROUP
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 29
Base Demand These costs are associated with the utility's ability to deliver water for
average annual levels of demand. These costs tend to vary with the amount of water
consumption, such as source of supply, chemical, and power.
Peak Demand —These costs are associated with the utility's ability to deliver water
during periods of peak consumption, such as summer period irrigation.
Fire Protection These costs are associated with the water system's delivery of direct
fire protection, including the duration and flow rate of water used for fire suppression.
Exhibit 5 -1: Allocation of Water Revenue Requirement to Functional Components
FIRE
PROTECTION
10%
FCS GROUP
CUSTOMER
14%
PEAK
32%
BASE
35%
METER
SERVICES
9%
This distribution was developed using the following assumptions:
The water system's ratio of peak day demand to average day demand is 1.83, as
documented in the City's water system plan update. This ratio was used to allocate
demand related costs between base and peak demands.
Allocation of storage facilities is based on storage capacity dedicated to equalizing,
emergency (standby) and fire suppression functions as documented in the City's water
system plan update.
Allocations to pumping and transmission distribution (T &D) facilities are based on
professional judgment, with the concurrence of City staff. The analysis assumes that 10
percent of pumping and T &D facilities are allocated to the fire protection component
(for over- sizing). The remaining costs are assigned to base and peak demand using the
ratio of peak to average day demand.
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 30
Meters services costs are directly assigned to the meters services functional
component. Hydrant costs are directly assigned to fire protection, and general plant is
allocated in proportion to all other infrastructure costs.
Operating maintenance costs are allocated based on a detailed review of line items,
such as salaries, office and operating supplies, chemicals, power costs, etc., and assigned
to functions based on assumed cost causation.
After netting non -rate revenues from expenditures, the net revenue requirement to be recovered
from water rates ($3.6 million) is allocated to the functional categories as follows: 14% to
customer; 9% to meters services; 35% to base demand; 32% to peak demand, and 10% to fire
protection.
Customer Allocation
The City's billing system categorizes customers as: inside city, outside city, and urban growth
area (UGA). Within these categories, customers are classified as: single family residential; multi-
family residential; commercial; industrial; irrigation; and private fire lines. The City also
separately identifies low- income customers.
In analyzing these customer classes, comparing actual service requirements and demand patterns
and relying on industry practices, FCS GROUP maintained these customer classes for purposes
of assessing cost of service and establishing class specific rates, with one exception. In our
evaluation, we found no cost -based difference that warrants a distinction in service requirements
between commercial and industrial customers for the purpose of setting rates.
Water system functional cost pools were distributed to customer classes using the demographics
described below. Exhibit 5 -2 illustrates the result of this process:
Customer Accounts This statistic relates simply to the number of accounts in each
customer class. Customer related costs are allocated to customer classes based on
their proportional share of total system number of accounts.
Meters Services Equivalents (MSEs) This statistic relates to the number and size
of meters included in each customer class. The American Water Works Association
(AWWA) has developed a meter service equivalency factor that reflects relative costs
for different size meters, using the smallest meter as the baseline. Meters services
costs are allocated to customer classes based on proportional shares of total system
MSEs.
Annual Water Usage This statistic relates to total water usage consumed by the
customer classes within a y°ar. Base demand costs are allocated to customer classes in
proportion to total system annual water usage.
Peak Water Usage This statistic relates to water usage consumed by each customer
class within the system's peak period. The peak season is defined as June through
FCS GROUP
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 31
Meter Capacity Equivalents (MCEs) This statistic also relates to the meter size
included in each customer class. A meter capacity equivalency factor has been
developed by the AWWA that reflects maximum potential flow for different sized
meters. Fire Protection costs are allocated to customer classes based on proportional
shares of total system MCEs. Irrigation customers and fire meter customers are not
allocated fire protection costs. Irrigation customers do not benefit from fire
protection services. Fire meters are only subject to costs associated with providing
customer and meters services related costs fire related costs are recovered
through the domestic meter.
Exhibit 5 -2: Distribution of Costs to Water Customer Classes
ca ion :.actor.
Single Family Residential
Multi- Family Residential
Commercial Industnal
Irrigation
Rrelines
TOTAL
[a] Based on AWWA meters services cost ratio
[b] Based on June September billing records
[c] Based on AWWA meter capacity ratios
FCS GROUP
Number of
Meters
83 96
4 25
9.45%
1.31%
1 03%
Meter Service
Equnralents [a],
66 06%
4 75%
12 29%
1.41%
15 49%
as
rr-
iron`
57.90%
13.33%
26 13%
2 64%
0 00%
Peak Season
Usage [b]
59 41%
11 48%
23 69%
5 42%
0.00%
Meter Capacity
Equivalents [c]
7481%
7 55%
17 63%
0 00%
0 00%
100 00% 100 00% 100 00% 100 00% 100 00%
The respective percentages are applied to the total costs allocated to each functional component
(shown in Exhibit 5 -1) to determine the share of total costs assigned to each class.
Exhibit 5 -3 summarizes the customer class distribution of the $3.6 million in revenue required
from water rates in 2009. The cost of service analysis has identified that some shifts in cost
burden amongst the customer classes is warranted.
Referring to the exhibit, customer class percentage adjustments that are less than the system -wide
average "total increase of 12.5% indicates current over recovery of customer class cost of
service, while percentage adjustments greater than the system -wide average increase indicates a
current under recovery of customer class cost of service.
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 32
Exhibit 5 -3: Comparison of Water Revenue Distribution by Customer Class
Customer Classes
Single Family Residential 2,142,570 2,296,643
Multi- Family Residential 293,609 359,709
Commercial Industnal 592,727 743,841
Irrigation 66,479 105,192
Firelines 70,555 56,297
II 8
TOTAL u 3,165,941 I 3,561,683
[a] Includes 12% across- the -board increase, efiective with August billing
Customer Classes
TOTAL
FCS GROUP
2009 Revenue
under Current
Rates [al
Under the current rate structure, the single family residential class (as a whole) and customers
with private fire lines are paying more than their share of cost of service; thereby subsidizing all
other customer classes. This finding suggests that a shift in cost recovery amongst customer
classes would result in a more equitable rate structure than that currently in effect.
Phase in Strategy
A phase -in strategy was developed to transition commercial industrial rates to their indicated
full cost of service over a three -year period. The intent of this strategy was to mitigate near term
impacts to these customers for the benefit of economic development. As a whole, the single
family residential class will continue to carry the rate subsidy over this transition period. The
phase -in strategy was developed such that increases to the commercial industrial classes were set
as low as possible, while maintaining a reduction in the monthly bill for inside city low- income
customers and single family customers with relatively low water usage (discussed further in the
Section 6 Rate Design). Exhibit 5 -4 presents the redistribution of costs for the first year of the
phase -in plan 2009.
Exhibit 5 -4: Phase -in Plan Water Revenue Distribution by Customer Class
2009 Revenue
under Current
Rates (a]
1
2009 Cost of
Service
2009 Cost of
Service
Cost of
1
(Decrease)
Cost of Service
Increase/
(Decrease)
7.19%
22 51%
25.49%
58 23%
-20 21%
12.50%
Single Family Residential 2,142,570 2,296,643 7 19% 2,326,808
Multi -Family Residential 293,609 359,709 22 51% 359,709
Commeraal Industnal 592,727 743,841 25 49% 699,418
Irrigation 66,479 105,192 58 23% 105,192
Firelines 70,555 56,297 -20 21% 70,555
Phase -tn an
2009 Revenue f Increase l%'=
(Decre,ase
8 60%
2251%
18 00%
58 23%
I 3,165,941 3,561,683 12.50% 3,561,683 I 12.50%
As shown in the exhibit, the commercial /industrial class average increase was reduced from the
cost -of- service derived increase of 25.49% to an 18% increase. To accomplish this, the single
family class average increase was increased from the cost -of- service derived increase of 7.19% to
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 33
an 8.60% average increase. It is important to note that the class "average" increase will vary by
individual customer based on their individual level of water usage and location (inside city,
outside city, and UGA). Refer to Section 6, Rate Design, under Customer Bill Impacts for
further discussion).
This proposed redistribution of costs serves as the revenue target for the design of water rates
discussed in Section 6 Rate Design.
2. Wastewater Utility
The wastewater utility cost of service analysis includes a functional allocation, customer
allocation, and a cost of service phase -in strategy.
Functional Allocation
The rate revenue requirement for the wastewater utility for year 2009 is projected to be 6.6
million (incorporating the proposed 11.5% increase). Using the approach described previously,
this revenue requirement was allocated to wastewater service functional categories. Exhibit 5 -6
illustrates the breakdown of wastewater utility costs amongst these functional categories:
Customer— These costs are associated with services that do not vary by wastewater
volume or strength, including utility billing, meter reading, and office support.
Flow— These costs are associated with the utility's ability through its collection and
conveyance system to manage and process total volume of wastewater.
Strength— These costs are associated with the utility's ability to treat sewage to required
discharge standards. A portion of treatment related costs is influenced by the total
volume of sewage processed, which is captured as "flow" cost, while other treatment
costs can vary depending on sewage strength, measured by biochemical oxygen demand
(BOD) and total suspended solids (TSS).
FCS GROUP
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study. Water and Wastewater Systems
Study Report 34
Exhibit 5 -6: Allocation of Wastewater Revenue Requirement to Functional Components
FCS GROUP
FLOW
63%
This distribution was developed using the following assumptions:
Collection facilities are allocated 100% to the flow component.
Treatment costs are allocated to the functional components consistent with the design
criteria used for the new wastewater treatment plant (Flow 41.3 BOD 40.5
and TSS 18.2
Customer related facilities are directly assigned to the customer component, and general
plant is allocated in proportion to all other infrastructure costs.
Operating maintenance costs are allocated based on a detailed review of line items,
such as salaries, office and operating supplies, etc., and assigned to functions based on
assumed cost causation.
After netting non -rate revenues from expenditures, the net revenue requirement to be recovered
from wastewater rates ($6.6 million) is allocated to the functional categories as follows: 8% to
customer; 63% to flow; 20% to BOD: and 9% to TSS.
Customer Allocation
The City's billing system categorizes customers as inside city and outside city. Within these
categories, customers are classified as: single family residential; multi family residential;
commercial /industrial domestic strength; and commercial /industrial high strength. The City
also separately identifies low- income customers.
In analyzing these customer classes, comparing actual service requirements and demand patterns
and relying on industry practices, FCS GROUP maintained these customer classes for purposes
of assessing cost of service and establishing class specific rates, with one exception. Based on
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 35
discussions with City staff, there are no high strength customers on the wastewater system; thus,
the high strength commercial /industrial class was eliminated.
Wastewater system functional cost pools were distributed to customer classes using the
demographics described below. Exhibit 5 -7 illustrates the result of this process:
Customer Accounts/Units This statistic relates to the number of accounts or dwelling
units in each customer class. Customer related costs are allocated to customer classes
based on their proportional share of total system number of units.
Contributed Wastewater— This statistic relates to the annual volume of wastewater
contributed to the plant by each customer class. Since wastewater flow is not measured
for individual customers, water usage is commonly used as a proxy for wastewater
volume. Annual volume for non residential customers represents that amount of total
water usage actually recorded in the utility billing system. Annual volume for residential
customers represents the lesser of actual water usage or winter average water usage.
Winter water usage refers to water usage observed October through May. This
annualized volume as opposed to actual water usage is used to recognize that
increased water consumption observed in the peak season of June through September is
primarily caused by outdoor uses, which never enters the wastewater system. Flow and
strength related costs are distributed to the customer classes based on their proportional
share of total contributed wastewater volume. Since all customers on the wastewater
system are assumed to exhibit domestic level strength, no distinction in strength in
necessary.
Exhibit 5 -7: Distribution of Costs to Wastewater Customer Classes
TOTAL
AY11:05030 t
Ailoea on
Basis
Single Family
Multi Family
Comm/Indust Domestic
4> FCS GROUP
C cw, 7
u a
/41BafriD3 Wciteaco
63 79%
27 26%
8 95%
46 99%
18 24%
34 77%
a[3D
o'ontn o ute
Wi ck
46 99%
18 24%
34 77%
ontri o uteri
WcluRD
46 99%
18 24%
34 77%
100 00% 100.00% 100 00% 100.00%
The respective percentages are applied to the total costs allocated to each functional component
(shown in Exhibit 5 -6) to determine the share of total costs assigned to each class.
Exhibit 5 -8 summarizes the customer class distribution of the $6.6 million in revenue required
from wastewater rates in 2009. The cost of service analysis has identified that some shifts in cost
burden amongst the customer classes is warranted.
Referring to the exhibit, customer class percentage adjustments that are less than the system -wide
average "total increase of 11.5% indicates current over recovery of customer class cost of
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 36
service, while percentage adjustments greater than the system -wide average increase indicates a
current under recovery of customer class cost of service.
Exhibit 5 -8: Comparison of Wastewater Revenue Distribution by Customer Class
Single Family
Multi- Family
Comm/Indust Domestic
TOTAL
Customer Classes
4 ue
Under Existing
Rates
Single Family
Multi -Family
Comm/Indust Domestic
TOTAL
FCS GROUP
2009 R
Under
Rat
3,106,276 3,186, 687
1,1 26,324 1,249, 700
1,636,057 2,162, 682
5,918,657 6,599,069 11.50%
Under the current rate structure, the single family residential class (as a whole) is paying more
than its share of cost of service; thereby subsidizing the commercial /industrial customers. The
multi family residential class is paying close to cost of service. This finding suggests that a shift in
cost recovery amongst customer classes would result in a more equitable rate structure than that
currently in effect.
Phase in Strategy
A phase -in strategy was developed to transition commercial and industrial rates to their indicated
full cost of service over a three -year period. The intent of this strategy was to mitigate near term
impacts to these customers for the benefit of economic development. The single family
residential class will continue to carry the rate subsidy over this transition period; although their
class increases was kept well below the system -wide increase of 11.5% (discussed further in the
Section 6 Rate Design). Exhibit 5 -9 presents the redistribution of costs for the first year of the
phase -in plan 2009.
Exhibit 5 -9: Phase -in Plan Wastewater Revenue Distribution by Customer Class
1
009 Cost of
Service
3,106,276 3,186,687
1,126,324 1,249, 700
1,686,057 2,162,682
5,918,657 6,599,069
2009 Cost of
Service
Cost of Service
Increaser
(Decrease):
2 59%
10 95%
28 27%
11.50%
Cost of Service
{Decrease)
2.59%
10.95%
28.27%
ase- n an
Phase-i9 Plan'
increase f
(Decrease);
3,326,101
1,249,700
2,023,268
6,599,0691
7 08%
10 95%
20 00%
11.50%
As shown in the exhibit, the commercial /industrial class average increase was reduced from the
cost -of- service derived increase of 28.27% to a 20% increase. To accomplish this, the single
family residential class average increase was increased from the cost -of- service derived increase of
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 37
2.59% to 7.08 It is important to note that the class "average" increase will vary by individual
customer based on their individual level of water usage and location (inside city and outside
city). Refer to Section 6, Rate Design, under Customer Bill Impacts for further discussion).
This proposed redistribution of costs serves as the revenue target for the design of wastewater
rates discussed in Section 6 Rate Design.
FCS GROUP
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 38
A. METHODOLOGY
SECTION 6
RATE DESIGN
The rate design element focuses on constructing rate structures, including fixed and variable rate
components, for each class of customer to recover the appropriate amount of revenue from each
class of customer and to recover the revenue necessary in total to fully fund utility financial
obligations. Further, City pricing objectives regarding affordability, equity, and conservation are
applied.
Prior to this section, our findings rested on financial and technical analyses to derive the total
annual revenue need from each utility and the amount that should be collected from each
customer class. In this section, we focus more on the art of a utility rate study, which is the
design of the pricing structure itself. M uch of this rate design focuses on intended outcomes that
carry out desired public policy, such as affordability to the customer, equity considerations, and
administrative practicality. The rate design begins with an evaluation of the City's current rate
structures. Alternative rate structures are recommended, as warranted, to better achieve the City's
desired outcomes.
1. Water Rate Structure Evaluation
The rate structure evaluation reviews the existing water rate structure and presents proposed
changes for the City's consideration.
Existing Rate Structure
The City's existing water rate structure consists primarily of two components: a minimum
monthly charge (fixed charge) that increases by meter size and a volume charge per 100 cubic
feet of water consumption applicable to all residential, multi family, commercial, and irrigation
customers. Manufacturing, schools, hospitals, processing, or similar type enterprises using an
average greater than 600,000 gallons oEwater per month pay a lower volume charge. Customers
categorized as "urban growth area" (UGA) currently pay the same rates as inside city customers.
Customers located outside of the UGA, pay a multiplier of 1.5 times inside city rates. Customers
located in higher elevation zones where extra pumping is required also pay a booster surcharge
per account. The City offers a discounted fixed charge (roughly 84% of the regular rate) to
qualified single family residential low- income customers. Finally, a separate schedule of inside
city and outside city rates applies for customers with private fire service lines.
FCS GROUP
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 39
Exhibit 6 -1 presents the existing water rate structure, incorporating the adopted 2008 rate levels.
Exhibit 6 -1: Existing Water Rate Structure
Minimum Monthly Charges Per Meter Size
3/4" 16 69 25.08
1" 1861 27.89
1 1/2" 20 41 30.68
2" 25 57 38.42
3" 63.59 95 48
4" 77.60 116.57
6" 11045 16592
Low Income
Outside UGA
All Applicable customers
FGS GROUP
aside. City
UGA
1402 21 15
Charge for Water Use
Booster Surcharges
Ins ide City
UGA
Fire Service Line Rate
Inside City
UGA
2" 15 12
4" 61.67
6" 88 92
8" 122.11
Outside UGA
11 98 'i
Outside UGA
11.98
Outside UGA
2313
92.51
133 32
183.11
Based on the cost of service analysis, it appears that the current rate structure recovers a
disproportionately high share of costs from the single family residential class, and too low a share
of costs from commercial and irrigation customers. Further, even though the single family
customer class as a whole is paying more than its indicated share of cost of service, the current
rate structure is not very strong in sending appropriate pricing signals to encourage water
conservation. This suggests that within the single family residential class, low to average water
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 40
users are likely subsiding higher water users. Also, inside city customers are subsidizing customers
located in the UGA; from a ratemaking perspective, UGA customers should be subject to the
outside city rate multiplier.
Proposed Rate Structure
Based on the results of the cost of service analysis and discussions with City staff, the following
alternative water rate structure was designed:
MINIMUM MONTHLY CHARGES
Design of class specific minimum monthly charges that increase with the size of meter. This
charge recovers customer related costs, meters services costs, fire protection costs, and a
portion of peak demand costs. The following components are included:
Customer related costs that do not vary by customer class or with the size of meter were
assigned a ratio of 1.0, meaning the portion of the charge related to customer costs is the
same for all customer classes and all meters sizes.
Meters services cost, such as the cost of assembly, repair and maintenance of meters
and services were assigned the Meters Services (MS) Cost ratio, documented in the
AWWA Rates and Charges Manual (M1). The ratio is the same for all customer classes,
but increases with each larger meter size in relationship to its cost compared to that of
the smallest meter.
Fire protection costs and the portion of peak demand costs (currently established at 20%
of peak demand costs) included in the monthly charge was assigned the Meter Capacity
(MC) ratio, documented in the AWWA M1 manual. Similar to the MS ratio, this ratio
increases with each larger meter size. This component of the charge also varies by
customer class incorporating the differing peak demands of each class.
As noted previously, the fire protection component of the charge was excluded for
irrigation and fire lines customers.
WATER USE CHARGES
Class specific usage -based charges, designed to recover all base demand costs and the remaining
portion of peak demand costs (currently established at 80% of peak demand costs):
Single Family Residential (SFR) A three tiered increasing block rate, where the rate
per unit of consumption increases above each established threshold of usage; thus, both
the incremental and average cost of water to the consumer increases with increased
usage. The intent of this rate structure is to promote water conservation (or at least to
charge appropriately for peak use). Since the SFR class represents the largest portion of
FCS GROUP
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study. Water and Wastewater Systems
Study Report 41
total system water usage and has relatively high peak demands on the water system, it is
reasonable to target this class for water conservation.
Multi- Family Residential (MFR), Commercial /Industrial, and Irrigation A class
specific single block usage charge, where a single rate per unit of consumption is applied
to all units of consumption.
Low Income Discount Maintain the City's existing discount policy.
Booster Surcharges No change to existing charges
Outside City Multiplier Maintain the City's existing outside City multiplier of 1.5
times inside City rates. Establish a new policy to apply the multiplier to customers in the
urban growth area (UGA).
2. Wastewater Rate Structure Evaluation
The rate structure evaluation reviews the existing wastewater rate structure and presents proposed
changes for the City's consideration.
Existing Rate Structure
The City's existing wastewater rate structure consists of a class specific monthly base rate and a
volume charge per 100 cubic feet of water consumption. The residential volume charge is
applied to the lesser of actual water use or the winter cap. The non residential volume charge is
applied to actual water usage, with a minimum monthly charge set equal to the single family
residential base rate. Customers located outside of city limits pay the same rates as inside city
customers. The City offers a discounted base rate (roughly 90% of the regular) to qualified single
family residential low income customers.
Exhibit 6 -2 presents the existing wastewater rate structure, incorporating the adopted 2008 rate
levels.
FCS GROUP
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 42
Exhibit 6 -2: Existing Wastewater Rate Structure
Monthly Charges
in le Famil Residential
Monthly Base Rate
Low Income
Usage [a]
Multi e-Fami Residential;
First Dwelling Unit
Each Additional Unit
Usage [a]
Domestic- Stren•th Commercial
Monthly Base Rate
Usage per 100 cf
Monthly Minimum
Hi' h -Stren th Commercial!
Monthly Base Rate
Usage per 100 cf
50 59
45 50
1.79
1506
8 0;
50 59
1
47.06
41.94
166
48 87
37 58
1
Based on the cost of service analysis, it appears that the current rate structure recovers a
disproportionately high share of costs from the single family residential class, and too low a share
of costs from commercial customers. Further, even though the single family customer class as a
whole is paying more than its indicates[ share of cost of service, inside city customers are
subsidizing outside city customers; from a ratemaking perspective, these customers should be
subject to an outside city rate multiplier.
Proposed Rate Structure
Based on the results of the cost of service analysis and discussions with City staff it was
determined that the existing structure will be maintained with customer class rates adjusted in
accordance with the cost of service results. The only change to the structure itself, was the
incorporation of an outside city multiplier of 1.5 times the inside city rates, consistent with the
policy for the water utility. As discussed previously, the high strength commercial /industrial class
was eliminated.
>FCS GROUP
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 43
B. RESULTS
Results of the rate design for each utility are summarized in this section. Additional detail can be
viewed in the Technical Appendices.
1. Water Utility
The water utility rate design element includes the rate design and a comparison of customer bill
impacts under proposed rates against existing rates.
Rate Design
Exhibit 6 -3(a) through (f) present the proposed rates for the water utility.
Exhibit 6 -3(a) Single Family Residential
Monthly Base Charges
Meter Size
3/4"
1"
1 1/2"
2"
Low Income
onthly Volume Charges.
Single Family and Low
Income Customers
Block One (0 6 ccf)
Block Two (6 15 ccf)
Block Three (Over 15 ccf)
Weighted Average
>FCS GROUP
2009 2010 2011 2012 2013
M
14 50 15 95 17 60 18 30 19 03
1944 21 43 23 93 24 89 25 89
29 89 32 99 37 28 38 77 40 32
44 35 49 01 55 80 58 03 60 35
12181$
13 40
2009 2010 2011
14 78 15 37 15 98
2012 I 2013
2 09 2 29 2 62 2 72 2 83
2 75 3 05 3 50 3 64 3 79
341 381 437 454 472
2 42 2 68 3 07 3 19 3 32
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 44
Outside C
Meter Size
3/4" 21 75 23 93 26 40 27 46 28 56
1" 2917 32 14 35 89 37 33 38 82
1 1 /2" 44 83 49 49 55 93 58 17 60 50
2" 66 52 73 52 83 70 87 05 90 53
Low Income
Monthly Volume
Income Customers
Single Family and Low
Block One (0 6 ccf)
Block Two (6 -15 ccf)
Block Three (Over 15 ccf)
Weighted Average
Meter Size
3/4"
1"
1 1/2"
2
Low Income
Single Family and Low
Income Customers
FCS GROUP
Monthly, Base
Monthly Volume
harges
2009 2010 2011 2012 2013
18 27 20 10 22 18 23 07 23 99
Charges
2009 I 2011) 2011 1 2012 I 2013
313 344 394 410 426
412 458 525 546 568
511 571 656 682 709
364 402 461 479 498
harges
2009 2011) 2011 2012 2013
21 75 23 93 26 40 27 46 28 56
2917 32 14 35 89 37 33 38 82
44 83 49 49 55 93 58 17 60 50
66 52 73 52 83 70 87 05 90 53
18 27 20 10 22 18 23 07 23 99
Charges
2009 I 2010 2011 2012 I 2013
Block One (0 6 ccf) 313 3 44 3 94 4 10 4 26
Block Two (6 15 ccf) 412 4 58 5.25 5 46 5 68
Block Three (Over 15 ccf) 511 5 71 6 56 6 82 7 09
Weighted Average 3 64 4 02 4 61 4 79 4 98
DETERMINATION OF BLOCK RATE THRESHOLDS
There is no pre established appropriate number of blocks to use in the design of an increasing
block rate structure. A common structure includes three blocks, but can be designed with any
number of blocks depending on rate structure goals. Each utility's goals and customer usage
patterns should be evaluated when determining the number of blocks to establish. Based on
discussions with City staff, it was determined that a three -block rate structure would best meet
the water system needs.
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 45
The recommended thresholds for each of the three blocks were determined based on an
evaluation of historical water usage patterns for the single family residential class. The following
"rule of thumb" was used in the analysis:
Block 1 (0 -6 ccf per month) is set equal to average monthly winter period usage per
account for the class. This is assumed to approximate normal indoor usage and a
nominal amount of outdoor winter use. On an average annual basis, about 60% of
customer bills are expected to remain within this rate block threshold.
Block 2 (6 -15 ccf per month) is set roughly equal to two times average annual usage per
account. This is assumed to capture the majority of base demand use and a reasonable
amount for normal summer use (peak use). About 32% of customer bills fall into the
second block.
Block 3 (over 15 ccf per month) captures all water usage above the block 2 threshold
and is designed to target higher summer use. The third block captures the remaining 8%
of customer bills.
DETERMINATION OF BLOCK RATE DIFFERENTIALS
As with the number of blocks, there is no pre established appropriate rate differential between
the block thresholds. Mitigating revenue instability and promoting conservation are the primary
factors to be considered. The third block rate is set equal to the calculated cost -of- service based
irrigation rate (since usage in this block is assumed to be discretionary irrigation use). The price
differential between the blocks was then established to provide for an equal incremental cost
amongst the blocks. The City might consider modifying these rate block differentials and /or the
proposed block thresholds over time if desired conservation is not achieved.
Exhibit 6 -3(b) Multi family Residential
Monthly. Base Charges
Meter Size
o> FCS GROUP
2009 2010 2011 2012 2013
3/4" 15 99 17 77 19 75 20 54 21 36
1" 21 99 24 48 27 52 28 62 29 76
1 12" 35 07 39 11 44 44 46 22 48 07
2" 52 69 58 82 67 26 69 95 72 75
3" 11527 12883 14841 15435 16052
4" 167 23 186 95 215 67 224 30 233 27
6" 307 52 343 84 397 24 413 13 429 66
'Charges'
Meat* vol,
Charge per ccf j 2009 2010 2011
All Usage
2012 2013
2231$ 2491$ 2861$ 2971$ 309
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 46
Monthly, Base
Meter Size
Monthly Volume
Charge per ccf 2009 I 2010
Monthly, Base
Meter Size
onthly Volume
Charge per ccf
All Usage
Exhibit 6 -3(c) Commercial Industrial
FCS GROUP
hares
2009 2010 2011 2012 2013
3/4" 23 98 26 66 29 62 30 80 32 03
1" 32 98 36 72 41 27 42 92 44 64
1 1 /2" 52 60 58 67 66 66 69 33 72 10
2" 79 04 88 24 100 88 104 92 109 12
3" 172 90 193 24 222 61 231 51 240 77
4" 250 84 280 42 323 51 336 45 349 91
6" 461 27 515 77 595 86 619 69 644 48
2011 1 2012 I 2013
All Usage 1 3 35 1 :3 74 1 4 29 1 4 46 1 4 64
harges
2009 2010 2011 2012 2013
3/4" 23 98 26.66 29 62 30 80 32 03
1" 32 98 36 72 41 27 42 92 44 64
1 1/2" 52 60 53 67 66 66 69 33 72 10
2" 79 04 83 24 100 88 104 92 109 12
3" 172 90 193 24 222 61 231 51 240 77
4" 250 84 280 42 323 51 336 45 349 91
6" 461 27 515 77 595 86 619 69 644 48
I n arges
2009 I 2010 2011 I
2012 I 2013
7$ 3 35 1$ 3 74 1 4 29 1$ 4 46 1$ 4 64
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 47
Monthly, Base Charges
Meter Sae
3/4" 14 65 17 00 19 23 20 00 20 80
1" 20 03 23 28 26 64 27 71 28 82
1 1/2" 31 70 36 90 42 70 44 41 46 19
2" 47 50 55 35 64 47 67 05
3" 104 30 121 67 142 83 148 54 154 48
4" 150 86 176 03 206 96 215 24 223 85
6" 276 40 322 58 379 82 395 01 410 81
Monthly Volume Charges
Charge per ccf
All Usage
Meter Size
Charge per ccf
All Usage
FCS GROUP
2009 2010 2011 2012 2013
2009 I 2010 2011 2012 2013
2141$ 2491$ 2921$ 3041$ 316
Outside City
Monthly Base Charges
2009 2010 2011 2012 2013
3/4" 21 98 25 50 28 84
1" 30 05 34 92 39 96
1 1 /2" 47 55 55 35 64 05
2" 71 26 83 03 96 70
3" 156 45 182 51 214 24
4" 226 30 264 05 31044
6" 414 60 483 87 569 73
29 99 31 19
41 56 43 22
66 61 69 27
100 57 104 59
222 81 231 72
322 86 335 77
592 52 616 22
Monthly Volume Charges
2009 2010
2011 2012
2013
3211$ 3741$ 438 1 4561$ 474
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 48
Monthly Base
Meter Size
3/4" 21 98 25 50 28 84 29 99 31 19
1" 30 05 34 92 39 96 41 56 43 22
1 1/2" 47 55 55 35 64 05 66 61 69 27
2" 71 26 83 03 96 70 100 57 104 59
3" 156 45 182 51 214 24 222 81 231 72
4" 226 30 264 05 31044 322 86 335 77
6" 414 60 483 87 569 73 592 52 616 22
Monthly Volume
Charge per ccf
All Usage i 3211$ 3 74 4 4381$ 4 56 474
Exhibit 6 -3(d) Irrigation
2009 2011)
Monthly Base
Meter Size
Monthly Volume
FCS GROUP
harges
2009 2011) 2011 2012 2013
Charges
2011 2012
2013
harges
2009 2011) 2011 2012 2013
3/4" 14 86 16 51 18 24 18 97 19 73
1" 2010 22 36 25 00 26 00 27 04
1 1/2" 31 31 34 89 39 42 41 00 42 64
2" 46 68 52 06 59 22 61 59 64 05
3" 103 23 115 30 132 32 137 61 143 11
4" 148 42 165 81 190 54 198 16 206 09
6" 269 92 301 57 347 00 360 88 375 32
Charge per ccf I 2009 I 2011) 2011
All Usage 1 3 41 1 3 81 1 4 37
Charges
2012
2013
4 54 1 4 72
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 49
Monthly Base Charges
Meter Size
3/4" 22 29 24 76 27 36 28 45 29 59
1" 3015 33 55 37 50 39 00 40 56
1 1/2" 46 97 52 34 59 13 61 50 63 96
2" 70 02 78 10 88 83 92 38 96 08
3" 154 84 172 95 198 48 206 42 214 68
4" 222 64 248 71 285 81 297 24 309 13
6" 404 87 452 36 520 49 541 31 562 96
Monthly Volume Charges
Charge per ccf
All Usage
Monthly Base Charges
Meter Size
3/4" 22 29 24 76 27 36 28 45 29 59
1" 3015 33 55 37 50 39 00 40 56
1 1 /2" 46 97 52 34 59 13 61 50 63 96
2" 70 02 78 10 88 83 92 38 96 08
3" 154 84 172 95 198.48 206 42 214 68
4" 222 64 248 71 285 81 297 24 309 13
6" 404 87 452 36 520 49 541 31 562 96
Monthly Volume Charges
Charge per ccf
All Usage
Exhibit 6 -3(e) Fire Lines
Monthly Charges for Fire Service
Meter Size
FCS GROUP
2009 2010 2011 2012 2013
2009 I 2010 2011 2012 2013
1$ 511 5711$ 6561$ 6821$ 709
2009 2010 2011 2012 2013
I 2009 I 2010 2011 2012 1 2013
1$ 5111$ 5711$ 6561$ 6821$ 709
2009 2010 2011 2012 2013
1 1 /2" 15 12 15 12 15 12 15 12 15 12
2" 1512 1512 1512 1512 1512
4" 6167 6167 6167 6167 6167
6" 88 92 88 92 88 92 88 92 88 92
8" 122 11 122 11 122 11 122 11 122 11
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study: Water and Wastewater Systems
Study Report 50
Monthly Charges for
Meter Size
1 1/2" 2313 23 13 23 13 23 13 23 13
2" 2313 2313 2313 2313 2313
4" 92 51 92 51 92 51 92 51 92 51
6" 133 32 133 32 133 32 133 32 133 32
8" 18311 183 11 183 11 183 11 183 11
Monthly Charges f
Meter Size
112" 2313 2313 2313 2313 2313
2" 2313 2313 2313 2313 2313
4" 92 51 92 51 92 51 92 51 92 51
6" 133 32 133 32 133 32 133 32 133 32
8" 18311 183 11 183 11 183 11 183 11
Exhibit 6 -3(f) Booster Surcharges
Monthly Surc
All Applicable Customers I 13 48 1 15 03 I 17 06 I 17 74 I 18 45
Monthly Surc
FCS GROUP
2009 2011) 2011 2012 2013
2009 2011) 2011 2012 2013
2009 2011) 2011 2012 2013
Fire Service
Fire Service
arge
arge
2009 2010 2011 2012 2013
All Applicable Customers I 13 48 I 15.03 I 17 06 I 17 74 I 18 45
Monthly Sur
arge
2009 2010 2011 2012 2013
All Applicable Customers 1 13 48 1 15 03 I 17 06 I 17 74 I 18 45
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 51
Customer Bill Impacts
Summaries of monthly water bill impacts for each class are presented in a series of Exhibits
below.
As an example, an inside city single family residential customer using the "class average" of 6.9
ccf a month, would experience a $0.33 decrease in their monthly bills ($29.83 to $26.50). As
water use increases, the monthly bill impact increases.
Exhibit 6 -4(a) Single Family Residential Customers
3/4" Single Fa
ly Residential, Inside City (4340 Customers)
Monthly Bill Monthly Bill
Monthly Volume (ccf) At 2008 At 2009
Rates Rates
Winter Average 1 5 9 1 27 92 1 26 82 (1 11) -4 0%
Annual Average I 6.9 1 29.83 1 29.50 1 (0.33) -1.1 %1
Summer Average 1 8 8 1$ 33 44 1 34 72 1$ 1 27 3 8 %1
Other I 15 0 I 45 25 1 51 75 1 6 50 14 4%
I Other I 30 0 1 73 81 1 102 86 I 29 05 1 39 4%
314" Single Family Residential, Outside City (572 Customers)
i
Monthly Volume (ccf)
Winter Average 1 7 2
Annual Average 1 8.9
Summer Average I 12 3
Other 1 15 0
Other 1 30 0
Increase I Increase I
(Decrease) (Decrease)
ont y i orrt y
At 2008 At 2009 Increase I Increase I
RatPS Rates (Decrease) (Decrease)
I 4564 1 4548 1 (016)1 -0 3%
1 50.50 I 52.49 I 1.99 1 3.9%
6021 6650 1 6 29 1 105%
6792 77 62 1 971 1 143%
I 110 76 1 154 29 1 43 53 1 39 3%
3/4" Single Family Residential, IJGA (334 Customers)
Monthly Bill Monthly Bill Increase Increase
Monthly Volume (ccf) At 2008 At 2009 (Decrease) (Decrease)
Rates Rates
Winter Average 1 6 0 I 2811 1 40 54 1 12 43 1 44 2 %1
Annual Average I 7.2 30.40 1 45.48 1 15.09 1 49.6%
1 Summer Average 1 9 7 35 16 1 55 78 20 63 58 7%
1 Other 1 15 0 I 45 25 1 77 62 32 38 71 6 %1
1 Other 1 30 0 1 73 81 1 154 29 1 80 48 109 0 %1
Low Income Single Family Residential Inside City (274 Customers)
Monthly Bill Monthly Bill Monthly Volume (ccf) At 2008 At 2009 Increase /o Increase
Rates Rates (Decrease) (Decrease)
Winter Average 1 5 3 I 2411 1 23 24 1 (0 87)1 -3 6%
Annual Average 1 5.3 1 24.11 I 23.24 1 (0.87)1 -3.6%
1 Summer Average l 5 4 1 24 30 1 23 45 (0 85)1 -3 5%
1 Other 1 7 0 27 35 27 45 010 1 0 4%
Other 1 10 0 33 06 35 69 1 2 63 1 8 0%
FCS GROUP
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 52
Low Income Single Family Residential, Out
Monthly Volume (ccf)
Winter Average
Annual Average
Summer Average
Other
Other
ow Income Single Family Residential,
1 Winter Average
1 Annual Average
1 Summer Average
1 Other
1 Other
1/2" Multi- Family Residential, Insid
Monthly Volume (ccf)
Winter Average 1
Annual Average I
1 Summer Average 1
Other 1
Other 1
40
4.1
43
70
100
51 0
52.8
56 3
75 0
100 0
1 112" Multi- Family Residential
Monthly Volume (ccf)
1 Winter Average 1 125 4
Annual Average I 130.4
Summer Average i 140 3
Other 1 250 0
Other 1 500 0
FCS GROUP
I$
I$
I
I$
I$
58 1$
71 1$
97 1$
150 1
300 1
32 57 1 30 80 1
32.86 I 3'1.11
33 43 1 31 74 1
41 14 1 41 18 1
49 71 1 5354 1
25 06 1
27.54 1
32 49 1
42 58 1
71 14 1
Monthly Bill
At 2008
Rates
I$
I$
I$
I$
I$
117 51
120.94 I
12760 1
163211$
21081 1
388 82 472 12
1 403.10 I 4£18.85
I 431 37 1 521 96 1
1 744 68 1 888 96 1
1 1.458.68 1 1.725 31 1
ide City (13 Customers)
Monthly Bill Monthly Bill
At 2008 At 201)9 Increase Increase
Rates Rates (Decrease) (Decrease)
(1 78)1
(1.75)1
(1 70)1
0 04 1
3 83 I
UGA (18 Customers)
Monthly Bill Monthly Bill Increase I Increase I
Monthly Volume (ccf) At 2008 At 2009
Rates Rates (Decrease) (Decrease)
36 43 1
41.59 1
52 30 1
7314 1
150811$
11 37 1
14.05 I
19 82 1
31 56
79 67 1
Exhibit 6 -4(b) Multi- Family Residential Customers
14881 1
1°2.83
1E063
202 34
25810 1
31 30 1
31.89 I
33 03
3913
47 29 I
Monthly Bill Monthly 1ff Increase
At 2008 At 2009 (Decrease)
Rates Rates
83 30 I
85.75
90 59
14428 1
266 63 1
-5 5%
-5.3%
-5 1%
01%
7 7%
45 4%
51 0%
61 0%
741%
112 0%
City (69 Customers)
MonthfTEiff Increase Increase
At 2009 (Decrease) (Decrease)
Rates
26 6%
26.4%
25 9%
24 0%
224%
2 Customers)
Increase I
(Decrease)
21 4 %1
21.3%
21 0%
194%
18 3%
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 53
1 1/2" Multi-Family Residential (3 Customers)
Monthly Volume (ccf)
I Winter Average 1
1 Annual Average
Summer Averaae I
Other I
Other I
Exhibit 6 -4(c) Commercial
Commercial, Inside
City (429 Customers)
Monthly Volume (ccf)
I Winter Average
I Annual Average
I Summer Averaae
Other
Other
Monthly Bill Monthly Bill
Monthly Volume (ccf) At 2008 At 2009
Rates Rates
I Winter Average I 18 3 I 77 34 I 80 70
I Annual Average I 19.8 I 81.63 I 85.51
I Summer Averaae I 22 9 90 48 I 9546
I I Other I 50 0 I 167 88 I 182 41
Other I 75 0 I 239 28 I 262 63
Monthly Volume (ccf)
Winter Average
Annual Average
Summer Averaae
Other
Other
Monthly Volume (ccf)
I Winter Average 1 825 0 I
I Annual Average 1 918.2 1
I Summer Averaae 1 1.104 5 I
Other 1 1,500 0 I
Other 1 2,000 0 1
FCS GROUP
83 8
89.6
101 3
250 0
500 0
81
8.7
99
150
30 0
on y 1 ro ont $Increase
At 2008 At 2009
Rates Rates (Decrease)
1$ 17817I$ 313.321$
189211$ 332.73 1
211 49 1 371871$
1 494 61 I 869 33 I
970 61 1 1,705 68 1
ont y :iI
At 2008
Rates
3211
33251
35 54 1
45 25 1
73 81 1
Industrial Customers
Month1yfl
At 2009
Rates
31 98
3326
35 83
46 74
78 82
Increase
(Decrease)
3/4 Commercial, Outsi
City (8 Customers)
Increase I Increase I
(Decrease) (Decrease)
3/4" Commercial, IJGA (10 Customers)
Monthly Bill ont y i
At 2008 At2009
Rates Rates
89 I$ 33631$
8.4 I 32.681$
7 3 I 30 59
150 I 4525
30 0 I 73 81 1
50 53 I
48.93 1
45 40 I
70111$
11824 I
1,40570 1 2,04120
1,552.03 1 2,240.56 I
1.844 52 I 2.639 09 1
2,46545 I 3,48512 I
3.250 45 1 4.554 70 I
Increase I
(Decrease)
13515 I 75 9 %1
143.51 I 75.8%
160 38 I 75 8%
374 72 1 75 8%
735 07 I 75 7 °/p
(0 13)
0.01
0 29
1 49
5 02
3 35
3.88
4 98
14 53
23 35
Increase
(Decrease)
1690 1
16.25 I
1481 I
24 86 I
44 43 I
6" Industrial, Inside City (1 Customer)
V
ont i
r ont y Increase
At 2008 At2009 (Decrease)
Rates Rates
635 49 1
688.54 1
794 57 I
1,01967 1
1.304 24 1
Increase 1
(Decrease)
-0 4%
0.0 %I
0 8 %I
3 3 %I
6 8 %I
4 3%
4.8 %I
5 5 %I
8 7 %I
9 8 %I
Increase I
(Decrease)
502%
49.7%
484%
54 9 %I
602%
Increase
(Decrease)
45 2%
44.4%
43 1%
41 4%
40 1%1
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study. Water and Wastewater Systems
Study Report 54
Exhibit 6 -4(d) Irrigation Customers
3/4" Irrigation, Inside City (57
Monthly Bill
Monthly Volume (ccf) At 2008
Rates
Winter Average 1 3 4 1 2316
1 Annual Average 1 11.4 1 38.39
!Summer Average I 27 2 I 68 48
Other 1 50 0 I 111 89
Other 1 75 0 I 159 49 I
Exhibit 6 -4(e) Fire Line Customers
Firelines, Inside Ci
Meter Size
1 1/2"
2"
4"
6"
8"
Firelines, Outside C
Meter Size
No. of
Accts
1 1/2" 0 2313 1 2313 1 0 0%
2" 1 1 2313 I 2313 1 0 0%
4" 1 2 1 92.51 1 9251 1 0 0%
6" I 0 —1 __133 32 1 133 32 1 1 0 0%
8" 0 I$ 18311 1$ 18311 1$ 1 0 0
Firelines, UGA
No. of Monthly Bill Monthly�if( Increase Increase
Accts At 2008 At 2009 (Decrease) (Decrease)
Rates Rates
1 1/2" 0 I 1512 1 2313 1 801 I 530%
2" 1 0 1 15 12 1 2313 801 530%
4" 1 0 I 61 67 1 9:2 51 1 30 84 50 0%
6" 1 0 I 88 92 1 133 32 44 41 1 49 9%
8" 1 3 1 12211 1 18311 61 00 1 49 9
Meter Size
FCS GROUP
Customers)
Monthfylifi $Increase
At 2009 (Decrease)
Rates
2644 1
53.70 I
107 53 1
185221
270 40 1
3 28
15.31 I
39 06 1
73 33 I
11091 1
No of Monthly Bill ront Increase Increase
Accts At 2008 At 201)9 (Decrease) (Decrease)
Rates Rates
3 I 1512 1 1512
5 1$ 1512I 1512
15 61 67 1 61 67
25 88 92 I 88 92
17 I 122 11 1 122 11 1
Increase I
(Decrease)
142%
39.9%
57 0%
65 5%
69 5%
0 0%
0 0%
0 0%
0 0%
0 0%
M onthly i ont 11 Increase I %increase I
At 2008 At 201)9
Rates Rates (Decrease) (Decrease)
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 55
2. Wastewater Utility
The wastewater utility rate design element includes the rate design and a comparison of customer
bill impacts under proposed rates against existing rates.
Rate Design
As previously noted, a new wastewater rate structure was not designed in this study. Class
specific cost of service adjustments were applied to the City's current rate structure. Proposed
rates are shown in Exhibit 6 -5.
Exhibit 6 -5 Proposed Wastewater Rates
DE CITY RATES
Customer Class
Single Family
Muttt- Family
(per add! unit) [a]
Comm /Indust Domestic
Monthly Minimum (b]
Comm /Indust High
Low Income /Senior
Wastewater Only [c]
OUTSIDE CITY RATES
Customer Class
Single Family
Mufti- Family
(per add! unit) [a]
Comm/Indust Domestic
Monthly Minimum (b]
Comm/Indust High
Low Income /Senior
Wastewater Only [c]
2009
Volume
Fixed Charge
Ch arge (per
per acct)
cal
52 92
51 28
45 70
17 79 9 48
59 74
N/A N/A
47 59 1 87
52 92 1 87
2009
Fused Charge Volume
(per acct)
Charge (per
ccfl
79 37
76 93
68 56
26 68
89 62
N/A N/A
7139 281
79 37 2 81
2010
Fixed Charge Volume Fixed Charge
Charge
(per acct) 1per (per acct)
1 87 52 96 2 01
1 81 55 40 1 96
49 37
21 35 11 38
71 69
N/A N/A
51 22 2 01
56 95 2 01
2010
Fixed Charge
(per acct)
Volume
Charge (per
cal
2 81 85 43 3 02
271 8311 293
74 07
14 22 32 02 17 06
10754
N/A N/A
76 84 3 02
85 43 3 02
58 40
5716
50 94
22 12
74 26
N/A
52 52
58 40
[a] Multi- family customers charged for additional units
[b] Monthly minimum bill for Domestic-Strength Commercial Industrial customers
[c] Wastewater only customers charged based on average Single Family Residential water usage
FCS GROUP
2011
Volume
Charge (per
cal
Fixed Charge Volume
(per acct) Charge (per
ccO
8759 310
85 74 3 02
76 42
3317 1767
111 40
N/A N/A
78 78 310
87 60 3 10
206 6015
2 02 58 87
5247
11 79 22 78
76 49
N/A N/A
2 06 5410
2 06 6015
20
Volume e r
Fixed Charge
Cher Fixed Charge
(per acct) g(pe
ccfl (per acct)
Fixed Charge
(per acct)
212
2 08
12 14
N/A
212
212
201
Volume Fixed Charge
Charge (per
ccFl (per acct)
9022 319 9293
88 31 311 90 96
78 71 81 07
3417 18 20 35 20
114 75 118 19
N/A N/A N/A
81 14 319 83 57
90.22 319 92 93
Customer Bill Impacts
Summaries of monthly wastewater bill impacts for each class are presented in Exhibit 6 -6.
Volume
Charge (per
ccfl
2 18
2 14
61 95
60 64
54 04
23 46 12 51
78 78
N/A N/A
5572 218
61 95 2 18
2011
201
2013
Volume
Charge (per
ccfl
3 29
3 20
18 75
N/A
3 29
3 29
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 56
Exhibit 6 -6 Wastewater Bill Impacts
INSIDE CITY CU
C U
C
N
E p
OUTSIDE CITY C
Billed No. of Monthly Bill Monthly Bill
Volume Units at 2008 Rates at 2009
(ccfl Phased Rates
3 55 96 58 53 2 57
5 59.33 62.05 2.73
15 77 44 81 00 3 56
15 2 113 90 124 12 10 22
25 9 423.55 461.56 38.01
75 30 1,387 82 1,512 37 124 55
15 135 51 160 03 24 52
25 216.42 255.59 39.16
100 818 06 966 09 148 03
Billed
Volume
(ccfl
FCS GROUP
N o. of
Units
Monthly Bill Monthly Bill
at 2008 Rates at 2009
Phased Rates
OMERS
Increase Increase
(Decrease) (Decrease)
4 60%
4.60%
4 60%
8 97%
8.97%
8 97%
18 09%
18.09%
18 09%
TOMERS
Increase
(Decrease)
Increase
(Decrease)
3 55 96 87 80 31 84 56 90%
5 59.33 93.08 33.75 56.90%
15 7744 121 50 44 06 56 90%
15 2 113 90 186 18 72 28 63 46%
25 9 423.55 692.34 268.79 63.46%
75 30 1,38782 2,268 56 880 74 63 46%
15 135 51 240 05 104 54 77 14%
25 216.42 383.38 166.95 77.14%
100 818 06 1,449 13 631 07 77 14%
C. IMPLEMENTATION
In addition to the adopted 2008 water and wastewater rate increases of 12% and 10
respectively, the City Council adopted the subsequent five -year schedule of proposed water and
wastewater rate increases (December 9, 2008 Council Meeting), effective January 1 of each of
the five years, 2009 through 2013. On January 1 of each year beginning in 2014, the rates shall
be adjusted to reflect the annual percentage increase in the United States Consumer Price index,
All Urban Consumers (CPI -U) for November of the preceding year as shown in the release from
the Bureau of Labor Statistics. Calculation of the change in the index is made by dividing the
current index for November by the preceding index for November and subtracting one.
CITY OF CENTRALIA, WASHINGTON
Utility Rates Charges Study Water and Wastewater Systems
Study Report 57
City of Centralia
CEN'TT'RALIA
CITY LIGHT
ELECTRIC UTILITY
COST OF
SERVICE RATE
STUDY
Final Report
April 2011
CONSULTING SERVICES PROVIDED BY•
>FCS GROUP
Solutions Oriented Consulting
7525 166th Ave. NE, Suite D -215
Redmond, WA 98052
T: 425.867.1802
F: 425.867.1937
www.fcsgroup.com
This entire report is made of readily recyclable
materials, including the bronze wire binding and
the front and back covers, which are made
from post- consumer recycled plastic bottles The
contents are printed on 30% recycled paper
GROUP
Solutions- Oriented Consulting
To: Ed Williams, General Manager; Centralia City Light
From: Angie Sanchez Virnoche, Principal; FCS GROUP
RE: Final Electric Rate Study Report
Date: April 26, 2011
FCS GROUP is pleased to submit our report describing our assumptions, findings and
recommendations for the Electric Utility Rate Study for the period of 2010 2014. Although the
study provided a rate forecast through 2014, adoption of a three year rate strategy of annual 5.5
percent rate increases for 2010 through 2012 were recommended. The new rates will take effect on
the June billing of each year.
Since the conclusion of the rate study in April of 2010, some noteworthy events have occurred.
These events are different from the assumptions used to develop the rate study results; therefore, we
wanted to highlight the areas that should be monitored by the City. If the trends continue to diverge
from the assumptions used in the rate study, a rate plan adjustment may be warranted before the
scheduled 2012 rate update. The noteworthy events are as follows:
2010 rate revenue is down due to a milder than average winter. It is assumed that 2011 rate
revenue levels will return to the levels anticipated in the rate study. The operating fund balance
was used to meet the 2010 revenue difference.
$1.3 million in capital costs for Yelm rebuild was not planned. An emergency contingency
amount was included in the capital plan which should cover this emergency capital cost.
The rate study assumed an 8% increase, in BPA generation rates October 1, 2011. This will likely
be in the range of the actual increase anticipated for the City.
In 2010 the Yelm outage due to rebuild did not allow for operation at full capacity (48,000 MWh
in 2010). This means more power was required to be purchased increasing this expense.
The rate analysis assumed Yelm operating at high water year capacity (75,000 MWh). The
output is susceptible to water year risk. It is likely Yelm output will not meet the assumptions
used in the rate study. Future rate assumptions should set Yelm at average water capacity levels
(52,000 68,000 MWh) plus anticipate reduced generation for the annual maintenance outage
(95 percent availability) to account for potential water year risk and actual operating practice.
Additional capital projects have materialized or been accelerated. This may result in additional
funding needs for future rate periods.
The City will continue monitoring the noteworthy events identified along with operating and capital
fund balances. If downward trends continue in revenue and /or upward trends continue in expenses
resulting in pressure on fund balances, the City may require a rate plan adjustment. The City is
scheduled for a rate update in 2012.
City of Centralia Electric Utility Rate Study April 2011
REPORT CONTENTS
Section 1: Introduction 1
A. Introduction 1
Section 2: Rate Study Methodology 2
A. Utility Setting Principals and Methodology 2
B. Revenue Requirement Overview and Approach 2
C. Rate Design 3
Section 3: Revenue Requirement 5
A. Introduction 5
B. Operating forecast 5
C. Capital Funding Plan 7
D. Sufficiency Tests 8
E Financial Plan and Rate Strategy 9
F. summary of revenue requirements 10
G. alternative revenue requirement scenarios 11
Section 4: Rate Design 12
A. Introduction 12
B. Existing Electric Rates 12
C. Proposed Electric Rates 13
Summary 15
Page i
Cit. of Centralia Electric tUtiliti Rate Study April 2011
A. NRODUCTI
I;
N
SECTION 1: INTRODUCTION
In 2009, the City of Centralia authorized FCS GROUP to complete a comprehensive rate study for
the electric utility. The key aspect of this study was assisting the City in reviewing the impacts of the
Bonneville Power Administration's (BPA) wholesale power rate increase, which went into effect
October 1, 2009 and development of a capital funding plan for up to $40 million in major capital
improvements identified for the electric system. The results of the study aim to establishing a
blueprint for achieving strong financial performance in the future and sustaining efficient and
effective electric services to the City's customers. The scope of the project included the following
elements:
Assess revenue needs for a multi -year period that includes adequate funding for operations and
maintenance, capital projects, debt service, and other program activities.
Develop a load forecast to assist in establishing appropriate revenue, power purchases from the
City's wholesale supplier BPA and forecast the impact of the BPA power cost increase effective
October 1, 2009.
4 Project long -term capital needs and incorporate these needs into a long -term funding forecast.
Develop and recommend rate structures that generate sufficient revenue to meet the utility's
financial obligations on a standalone basis.
The methodology, key factors, conclusions and recommendations for each of the key task area of the
study are summarized in this executive level report.
Page 1
City of Centralia Electric Utility Rate Study April 2011
SECTION 2: RATE STUDY ETHODOLOGY
A. UT1LOTY SETTING PRINCIPALS AND METHODOLOGY
The methods used to establish utility rates are based on principles that are generally accepted and
widely followed throughout the industry. These principles are designed to produce rates that
equitably recover costs from each class of customer by setting the appropriate level of revenue to be
collected from ratepayers, and establishing a rate structure to equitably collect those revenues.
The primary tasks of the rate study are listed below:
Revenue Requirements Analysis. This analysis identifies the total revenue required to fully fund
the utility on a standalone basis, considering operating and maintenance expenditures, capital
funding needs, debt requirements and policy objectives.
Rate Design Analysis. This analysis includes the development of rates that generate sufficient
revenue to meet the system's revenue requirement forecast and address the City's pricing
objectives.
C. REVENUE REQUIR M T OVERVIEW AND APPROACH
A revenue requirement analysis forms the basis for a long -range financial plan and multi -year rate
management strategy for the utility. It also enables the City to set utility rate structures, which fully
recover the total costs of operating the system: capital improvement and replacement, operations,
maintenance, power generation/purchase costs, general administration, fiscal policy attainment, cash
reserve management, and debt repayment. Linking utility rate levels to a financial plan such as this
helps to enable not only sound financial performance for the City's electric fund, but also a clear and
reasonable relationship between the costs imposed on utility customers and the costs incurred to
provide electric service.
The revenue requirements analysis includes the following core elements to form a complete portrayal
of the utility's financial obligations:
o Load Forecast A load forecast is the starting point in developing the revenue requirement
analysis. From the load forecast, energy (kWh) and demand (kW) requirements, by class of
service, are determined for the projected period. The load forecast is typically used for three
primary purposes. First, it determines the amount of power that is required from the Yelm
Hydroelectric Plant (Yelm) and the Bonneville Power Administration (BPA) to meet customer
needs. Second, it is used to calculate projected rate revenues that will be received from each
customer class of service. Third, projected power costs are calculated based on the amount of
purchased power required to meet the overall load forecast.
O Fiscal Policy Analysis The fiscal policy analysis identifies formal and informal fiscal policies
of the City to ensure that current policies are maintained, including reserve levels, capital /system
replacement funding and debt service coverage targets.
o Capital Funding Plan The capital plan defines a strategy for funding the City's capital
improvement program, including an analysis of available resources from rate revenues, debt
Page 2
City of Centralia Electric Utility Rate Study April 201 t
financing, and any special resources that may be readily available (e.g., grants, developer
contributions, etc.).
Operating Forecast The operating forecast identifies future annual non capital costs associated
with the operation, maintenance, and administration of the utility system.
Power Cost Forecast The power cost forecast is based on the load forecast developed for the
time period under review. The total power supply projection considers available supply from
Yelm with the remainder priced out at the current BPA rates. Power costs are one of the largest
expenses the City incurs.
Reserve Analysis The reserve analysis forecasts cash flow and fund balance activity in the
City's utility reserves. The analysis tests for satisfaction of actual or recommended minimum
fund balance policies, including working capital /operating reserves and capital
contingency /emergency reserves.
Sufficiency Testing The sufficiency tests cover two areas: a test of cash flow and a test of debt
service coverage. The cash flow test evaluates the sufficiency of ongoing utility revenues in
meeting all annual financial obligations. The debt service test evaluates the sufficiency of
revenues in meeting debt service coverage requirements associated with long -term debt.
Rate Strategy The rate strategy designs a forward looking plan for adjusting utility rates to
fully fund all utility obligations on a periodic or annual basis over the projection period.
C. RATE DESIGN
Rate design is focused on two areas; level and structure. Level refers to setting rates at a level
sufficient to meet the total financial obligations of the system. Structure refers to the fixed and
variable components of the rate, which are set commensurate with the cost of providing service.
Fixed costs typically attempt to cover costs of the system that do not vary while variable costs vary
with a change in user demand. Although the majority of costs are fixed in nature, in general
customers prefer more costs tied to the variable charge since changes in their behavior have a direct
correlation with the amount of their bill. Exhibit 2.1 provides an overview of the rate design
component in a rate study process.
Page 3
City of Centralia Electric Utility Rate Study April 2011
FINANCIAL MANAGEMENT H
PRACTICES GOALS
Exhibit 2.1— Overview of Rate Study Process
DEFINE POl
C'
DRIVERS PARAMETERS
REPAIR/
REPLACEMENT
IMPROVEMENTS
EXPANSION
DEBT SERVICE
ASSUMPTIONS
CUSTOMER STATISTICS
FIXED CHARGE
H
H
MULTI -YEAR FINANCIAL
PLAN
1
DEVELOP CAPITAL
FUNDING PLAN
RESERVE TARGETS
DEVELOP RATE
REVENUE
REQUIREMENTS
4
ANN UAL N EEDS
ENERGY CH ARGE /kWh)
•CASH RESERVES
RATE FUND IN
DEBT PROCEEDS
CONTRIBUTIONS
RATE FUNDING
LOAD DATA ANALYSIS
_1 OPERATING BUDGETS
H NON -RATE REVENUES
RATE DESIGN
H
PLANNING PERIOD RATE
STRATEGY
DEMAND CHARGE /kW)
PRICING OBJECTIVES
Page 4
City of Centralia Electric Utility Rate Study April 2011
A. NTRODUCf
B.
SECTION 3: REVENUE REQUIREMENT
0
hl
A revenue requirement analysis defines the full -cost required to sustain positive financial
performance in the electric fund. The analysis is composed of an operating forecast and capital plan.
The revenue requirement will determine whether the existing rates and charges are sufficient to
recover the costs the City incurs to operate and maintain the electric system.
PI I AT0NG IF
G
RECAST
The operating forecast is developed to include the annual revenue resources and financial obligations
of the electric system including: rate revenue, miscellaneous revenue, operating and maintenance
expenses, power supply costs, taxes, debt service, capital funding from rate revenue and fiscal policy
achievement. The following list highlights the key components that comprise the development of the
electric utility operating forecast:
Test Period
O The revenue requirement forecast was developed for the 2010 through 2014 time period.
Load Forecast
O The load forecast forms the basis of the rate revenue forecast and power cost projection. The load
forecast is based on the monthly customer class kWh and kW (if applicable) totals for calendar
year 2008.
Reserve Targets
O Operating Reserve Target: minimum 90 days of O &M expenses.
O Capital Contingency Reserve Target: 2 percent of Plant -in- Service.
Operating Revenue
Rate Revenue: 2008 load data was used to price out the rate revenue at existing rates. Growth is
applied to calculate the future year revenue projections.
o Customer Growth Rate Revenue: Based on City provided data.
Residential annual increases from 1.6 percent to 1.76 percent.
General Service <50 kW decreasing slightly in 2010 and increasing modestly each year
thereafter from 0.13 percent to 1 percent.
General Service >50 kW increasing 9.5 to 10.0 percent in 2010 followed by annual
increases from 1.4 percent to nearly 3 percent.
O Miscellaneous Revenue includes service and miscellaneous charges, penalties, temporary
services and interest income.
o Interest Earnings Rate: 2 percent per year increasing to 3 percent in 2012.
Page 5
City of Centralia Electric Utility Rate Study April 2011
BPA repayment settlement $350k per year through 2014.
Operating Maintenance (O &M) Expenses
Baseline O &M expenses: developed from a combination of the 2009 budget revenues and
expenses and 2009 actual information. Future year costs were calculated by applying various
escalation factors.
General Cost Inflation: 3.32 percent per year (based on analysis of historical Consumer Price
Index data and discussion with City staff).
Yelm operating and maintenance costs per budget. Increased annually 3 percent.
Construction Cost Inflation: 4.43 percent per year (to date of anticipated construction, based on
analysis of historical Engineering News Record data and discussion with City staff).
Labor Cost Inflation: 4.0 percent per year (based on discussion with City staff).
Local /State Excise Taxes: Public utility excise tax rate is 3.873 percent on all electric rate
revenues except Street and Yard Lighting.
City Tax: The City currently collects a 6.00 percent tax on all utility revenue.
State B &O Tax: 1.50 percent on all non -rate revenues.
Purchased Power Costs
As with most electric utilities, the largest expense that the City incurs is for power supply. The City
purchases the majority of its power supply needs from BPA (75 percent). Given the magnitude and
importance of this cost, the BPA purchased power costs have been projected on a monthly basis for
both 2009 and 2010 using the load forecast developed as part of this study.
The current BPA rates went into effect October 1, 2009 (includes a 7.5% rate increase) and
remain at this level through October 2011. BPA is currently preparing for a rate structure change
effective October 1, 2011. The new tiered rate methodology may have significant impacts on
power costs. The actual rates for this new rate period are unknown at this time. This analysis has
assumed the following for future power costs:
October 2011 8 percent cost increase plus customer growth for generation and transmission;
October 2012 increase only for customer growth for generation and transmission
October 2013 8 percent cost increase plus customer growth for generation costs and
increase only for customer growth for transmission costs.
Purchased power costs represent 37 percent of the total revenue requirement of the electric
system.
Including Yelm, total power costs represent 47 percent of the total revenue requirement.
Debt Service
Existing debt obligations totaling $1.9 million per year:
1999 Light Revenue Bond last debt payment in 2009, this bond is 100 percent generation.
2007 Light Refunding Revenue Bond has its first payments scheduled in 2009, which is
interest only; this bond is 100 percent generation.
2007 Light Revenue Bond; the bond proceeds are allocated 14.9 percent generation and 85.1
percent distribution.
New debt proceeds of $10 million anticipated for the study period.
Page 6
City of Centralia Electric Utility Rate Study April 2011
Actual debt issue is $11.1 million (including issuance costs and reserve requirements)
Annual debt service totals $488 thousand $890 thousand per year
The first debt issue is anticipated in 2010 with proceeds of $5.5 million
The second debt issue is anticipated in 2013 with proceeds of $4.5 million.
The analysis has assumed two debt issues. If the City chooses to consolidate and accelerate
the issues the debt service payment structures should be shaped to match the cash flow
identified in the revenue requirement.
All revenue bond debt issues are assumed to be revenue bonds with a 20 year term, 5.0
percent interest rate and 1.5 percent issuance cost.
Depreciation Funding
Depreciation funding is to ensure system integrity through reinvestment in the system. Ideally,
the minimum funding is set at an amount equal to or greater than depreciation expense. The
City's electric system asset value as of year -end 2008 is $64 million. The City's electric utility
depreciation expense as of year -end 2008 is $1.4 million. With the addition of $21.4 million in
capital project over the time period, annual depreciation increases to $1.9 million
The City is currently phasing in annual depreciation funding of $600k to 2.1 million. This study
assumes 40 percent of annual depreciation funded through rates in 2009 increasing to 60 percent
in 2010, 80 percent in 2011 and finally 100 percent by 2012.
C. CAPITAL FUNDING PLAN
An updated Comprehensive plan was prepared by Brown and Kysar, Inc. in 2009. The capital plan
resulting from this effort identified major improvements needed to the system to provide reliable
service, upgrade an aging system and accommodate new customer growth. Approximately $40
million in capital needs was identified to accomplish all system goals. Due to the significant rate
impact likely from funding the total $40 million of project needs, City staff brought forth alternative
capital funding options for consideration. The options were developed based on a 1 5 priority
ranking system.
$40.5 million Funds all system goals.
$24.1 million Removes $16.6 million of Yelm costs for transmission line rebuild, wiring
replacement, generator rewinds, turbine replacement and penstock lining replacement.
$20 million Removes priority 4 and 5 projects with the exception of one priority 4 project (B-
Street West Rebuild).
$15 million Removes all priority 4 and 5 projects, 2 priority 3 projects (Salzer Valley to B-
Street Interties /Feeder Upgrades, Stillwaters upgrade) and 1 priority 2 project (Cooks Hill to
Fords Prairie Intertie Feeder).
$18.9 million —Delay the Salzer Valley substation construction and Salzer Valley to B- Street
Interties /Feeder Upgrades to 2015. Emergency contingency in 2012 spread over 2012 and 2013.
Council selected the $18.9 million capital plan (2009 dollars) for inclusion in the rate forecast.
Inflating these projects by 4.43 percent per year to the date of construction offers a better measure of
the actual cash flow needs required on an annual basis. The inflated capital plan totals $21.4 million.
The annual average capital funding need is approximately $4.3 million, with 2011 being the highest
capital outlay year at $5.3 million. Exhibit 3.1 provides a summary of the electric utility capital
funding.
Page 7
City of Centralia Electric Utility Rate Study
Summa ,of 'Ex.endittires. 2010. :2011 2012 2013 t 14
FUNDIN G SOURCES
Total Revenue
Exhibit 3.1— Electric Utility Capital Funding Summary
Rate Funded Depreciation funding in 2010 assumes funding from the Rate Funded Depreciation Reserve existing balances
April 2011
Total
TOTAL CAPITAL EXPENDITURES 4,658,431 5,311,693 2,588,342 3,863,486 4,996,835 21,418,786
Grants Developer Donations 200,000 200,000 200,000 200,000 200,000 1,000,000
Rate Funded Depreciation 1,860,544 1,320,000 1,750,000 1,950,000 1,857,321 8,737,865
Equipment Fund 189,000 84,200 462,000 113,000 40,000 888,200
New Debt Proceeds 2,408,887 3,091,113 1,600,486 2,899,514 10,000,000
Capital Fund Balance 616,379 176,342 792,721
TOTAL CAPITAL RESOURCES 4,658,431 5,311,692 2,588,342 3,863,486 4,996,835 I 21,418,786
Notes:
Approximately 41 percent of the capital projects will be funded through rate funded depreciation, 47
percent is from new revenue bond issues and the remaining 12 percent will be funded through a
combination of grants and /or developer contributions, equipment fund transfers and existing capital
fund balances.
D. SUFFICIENCY TESTS
During the rate study process, two tests are conducted; a cash flow sufficiency test and a debt service
coverage sufficiency test. The maximum deficiency of the two tests determines the need for the rate
increase.
Cash Flow Sufficiency Test
The cash flow test evaluates if ongoing annual revenue is sufficient to support the annual ongoing
operating and capital expenses of the electric system. Exhibit 3.2 provides a summary of the electric
system cash flow sufficiency test.
Exhibit 3.2 Cash Flow Sufficiency Test
2010 2011 2012
Revenues
Rate Revenues Under Existing Rates 18,370,695 18,616,386 19,001,532 19,406,951 19,821,955
Non -Rate Revenue
717,264 729,519 784,050 791,080 825,350
19,087,959 19,345,904 19,785,582 20,198,031 20,647,305
Expenses
Cash O &M Expenses 9,250,766 9,553,063 9,882,778 10,221,808 10,575,120
Purchased Power 6,307,528 6,517,052 7,173,245 7,326,294 8,069,066
Transmission 1,030,139 1,064,358 1,171,527 1,196,523 1,222,110
Existing Debt Service 1,872,013 1,868,213 1,873,013 1,875,263 1,869,213
New Debt Service 487,793 487,793 487,793 886,896 886,896
Rate Funded Depreciation 930,000 1,320,000 1,750,000 1,950,000 2,100,000
Total Expenses 19,878,238 20,810,479 22,338,356 23,456,784 24,722,404
Sutplus (790,279) (1,464,575) (2,552,773) (3,258,754) (4,075,099)
Page 8
City of Centralia Electric Utility Rate Study April 2011
The revenue sufficiency test indicates that existing electric system revenue sources are not adequate
in 2010 -2014 to meet annual expenses. The revenue deficiency in 2010 is $790 thousand due to the
7.5% rate increase from BPA, the increase of rate funded depreciation and the addition of new debt
service to fund capital costs. The deficiency increases to $4.1 million by 2014 if rates remain at their
existing level.
Debt Service Coverage Sufficiency Test
The second test conducted as part of the rate study is a debt service coverage "DSC sufficiency
test. This test refers to the ability of the electric fund to meet bond covenant requirements which
require revenue streams to satisfy a specific margin. This ratio is particularly important since it is
anticipated that the City will need to enter the bond market to fund the capital projects identified. The
minimum bond covenant requirements are generally 1.25 which means the utility must generate
revenues sufficient to meet annual operating expenses, annual debt service on the bonds and another
25 percent of the year's principal and interest payments. Although the 1.25 is the covenant minimum,
it is seen more favorably by the bond rating agencies if the City meets a debt service coverage ratio
equal to or greater than 2.0. A higher debt service ratio can translate into favorable interest rates as a
result of higher bond ratings which may ultimately translate to lower costs. Exhibit 3.3 provides the
debt service coverage calculation before the proposed rate increases.
Coverage Sufficiency Test 201
Revenues
Rate Revenues Under Existmg Rates
Other Revenue
Interest Earnings All Funds
Total Revenue
Exhibit 3.3 Debt Service Coverage Sufficiency (before rate increase)
Expenses
Cash Operating Expenses
Purchased Power (Includes Transmission)
Revenue Bond Debt Service
Revenue Bond Coverage Requirement at 1 25
2011
2013 2014
2012
18,3'70,695 18,616,386 19,001,532 19,406,951 19,821,955
626,966 636,165 645,668 655,488 665,634
129,158 194,815 182,391 175,632 287,943
19,1 t6,820 19,447,365 19,829,592 20,238,071 20,775,532
9,250,766 9,553,063 9,882,778 10,221,808 10,575,120
7,337,667 7,581,411 8,344,772 8,522,817 9,291,175
2,359,806 2,356,006 2,360,806 2,762,159 2,756,109
5:39,951 589,001 590,201 690,540 689,027
Total Expenses 19,538,190 20,079,481 21,178,557 22,197,324 23,311,431
Surplus (Deficiency) (411,369) (632,116) (1,348,965) (1,959,253) (2,535,900)
Coverage Realized (before rate increase) 1 08 0 98 0 68 0 54 0 33
The City's debt service coverage requirement in 2009 is 1.50. The debt service coverage sufficiency
test indicates that at existing rate levels the City will not meet the minimum 1.25 DSC ratio
requirements with the addition of new debt in 2010 and 2013.
E. FINANCIAL PLAN AND RATE STRATEGY
The rate increase required is driven by the maximum of the cash flow sufficiency test or the debt
service coverage sufficiency test. The results of the tests indicate the rate increases are mainly being
driven by cash flow needs to meet the increased power costs from the new BPA rate increase, the
Page 9
City of Centralia Electric Utility Rate Study
increase in rate funded depreciation and the new annual debt service obligations. Exhibit 3.4
summarizes the rate increases required to meet the electric system cash flow needs and maintain a
healthy debt service coverage ratio.
Exhibit 3.4 Summary of Proposed Rate Increases
Rate Strategy
2010 2011 2012 2013
2014
Annual Rate Adjustment
Total Revenue after Increase*
Total Expenses*
Net Cashflow After Increase
5.50%
Coverage After Increase 1.27
*Notes:
2010 rate increase assumes partial year implementation
Total revenue includes rate revalue and miscellaneous revenue
Total expenses includes additional taxes related to rate increases
5.50%
19,593,153 20,909,913 22,514,833 24,263,178 25,518,603
19,928,116 20,964,894 22,607,815 23,858,136 25,203,347
(334,963) (54,981) (92,982) 405,041 315,256
1.58 1.72
5.50% 3.00%
April 2011
3.00%
1.87 1.92
The rate strategy developed balance customer impacts with meeting overall annual financial needs of
the electric system. The phased rate increase approach indicates a negative cash flow in 2010, 2011
and 2012 after the rate increase is incorporated. Therefore, fund balance will be required to meet this
additional deficiency. After the increases proposed, debt service coverage remains above the 1.25
requirement.
F. SUMMARY OF REVENUE REQUIREMENTS
The revenue requirement analysis indicates a rate deficiency in each year of the study ranging
from $790 thousand in 2010 increasing to $4.1 million by 2014.
In order to fund the upcoming capital projects, operating and maintenance requirements and
purchased power costs we recommend a 5.5 percent increase in 2010, 2011 and 2012 followed by
3.0 percent per year increases in 2013 and 2004.
The 2010 increase assumes 6 month of effective increase.
In order to allow a phased -in rate implementation, a total of $493 thousand of fund balance is
necessary to fund the annual deficiency remaining in 2010, 2011 and 2012.
New debt proceeds of $10 million are required to meet the capital plan identified for 2010
through 2014.
Debt service coverage of 1.25 minimum requirements is met after the proposed rate increases.
Operating fund balance is below the target of 90 days until 2014. The balance hovers around 80
85 days in 2010, 2011 and 2013, dips to 74 days in 2012 and increases to 90 days by 2014.
Capital fund target of 2.0% of plant -in- service is met nearly every year except 2012 when it dips
below the target by approximately $200 thousand.
We recommend that the City revisit and update economic and capital assumptions every 2 -3 years to
make sure assumptions used have not changed significantly. Specifically the City should revisit the
power cost assumptions before the implementation of the Tiered Rate Methodology (TRM) by BPA
in October 2011.
Page 10
City of Centralia Electric Utilit3 Rate Study April 2011
G. ALTERNATBVIE RLEV BRUCE REQMBf°3EMEENT SCCENAIPdOS
As part of the rate study process, alternative scenarios were developed that evaluated changes in the
timing of projects, the number of specific projects planned, debt funding vs. rate funding and
different phasing approaches for rate increase implementation. Over 30 scenarios were developed to
help the City evaluate these various considerations.
During the rate approval process, the City Council selected the $18.9 million scenario for rate
setting. This scenario assumes delay and /or elimination of the capital projects associated with Salzer
Valley. These projects are summarized as follows:
Salzer Valley Substation Design of $200 thousand moved out two years from 2011 to 2013
Salzer Valley Substation construction of $1.7 million moved out two years from 2013 to 2015
(outside planning period)
Salzer Valley Substation construction of $2.661 million moved out one year from 2014 to 2015
(outside planning period)
o Salzer Valley B Street Interties /feeder upgrades $863 thousand moved out two years from 2013
to 2015 (outside planning period)
Emergency /Contingency of $1 million in 2012, split into two years with $500 thousand in 2012
and $500,000 in 2013
Should it become necessary for the City to build Salzer Valley within the five year time frame due to
load growth, the additional projects can be added with minimal rate impact. The changes required to
the financial planning approach are:
o A total of $15 million in new debt proceeds will be required (additional $5 million). The original
issue of 5.5 million in 2010 remains the same. The second issue will need to be $6.0 million vs.
$4.5 million and one additional issue of $3.5 million is required in 2014.
o The additional debt increases the annual debt service obligations in 2013 and beyond from $887
thousand to $1.33 million.
o The 2010, 2011 and 2012 rate increases of 5.5 percent remain unchanged. The rate increase in
2013 and 2014 would need to increase to 4.25 percent per year from the 3.0 percent per year
increase in the recommended financial plan.
Page 11
City of Centralia Electric Utility Rate Stud3, April 2011
A. INTRODUCTION
The principal objective of the rate design stage of this rate study was to implement electric rate
structures that collect the appropriate level of revenue. The development of rate design is typically
the final step in a rate study process. There are many different rate structure options, but ultimately
all of them should reflect the type of costs the utility incurs customer, demand, energy and
generate the required levels of revenue. This section will review the existing and proposed electric
rates for the City.
B. EXISTING ELECTRIC RATES
The existing electric rates are composed of a fixed customer charge, an energy charge measured in
kilowatt hours (kWh) and a demand charge measured in kilowatts (kW) when applicable. Both the
Residential and Small General Service <50kW classes are charged a monthly customer charge and an
energy charge per kWh. The Residential rates are differentiated between inside and outside city
customers. There is a low- income discount (waiver of customer charge) available for residential
customers who qualify as a senior (62 and older) and totally disabled persons with annual household
income of $25,000 or less. The Small General Service <50 kW customer charge is differentiated
based on single phase or three phase service. The Large General Service 50 +kW customer class is
charged a customer charge, energy charge and demand charge. There are also charges for Street and
Traffic Light customers based on fixture type. Exhibit 4.1 provides a summary of the current electric
utility rate structures:
Exhibit 4.1 Summary of Existing Rate Structure
Residential
Inside
Outside
Small General Service 50kW
9ngle Phase
Three Phase
SECTION 4: RATE DESIGN
Existing Monthly Rates
Customer
;Ener•�
Demand'
9.68 0 0573 N/A
10.64 0.0634 N/A
20.67 0.0643 N/A
30.51 0.0643 N/A
Large General Service 50+ kW I 51.37 I 0.0507 I 4.17
Street Yard Lighting
150 W Customers 2.18
200 W Customers 2.88
250 W Customers 3.61
400 W Customers 5.77
1000 W Customers 14.44
Traffic Light Customers 72.82
Page 12
City of Centralia Electric Utility Rate Study April 2011
C. PROPOSED ELECTRIC RATES
Establishing rates is a blend of "Art" and "Science" and especially so when it comes to the rate levels
and structures. Several variables must be balanced to arrive at optimal rates. The rate design process
evaluated the City's existing customer classes. As a result of the evaluation of detailed customer
statistics and discussion with City staff the existing Large General Service 50 +kW class was split
into three separate classes:
Medium General Service 50kW -200kW
Large General Service 201kW 1,000 kW
Very Large General Service >1,000 kW.
The proposed electric rate schedules contain no additional structural changes. As discussed in the
revenue requirement section of this report, it was determined that the overall required adjustment for
2010, 2011 and 2012 is 5.50 percent per year. The proposed rates will adjust the energy, demand and
customer charges to collect the sufficient level of revenue. All proposed rate design options
developed collect the overall 5.50 percent rate increase.
Four options were developed for the Residential class. Approximately 84 percent of the electric
system customers are represented in this class.
Option 1 Across the board increases to both the customer charge and energy charge equally by
5.5 percent.
Option 2 Customer charge set to a range between Lewis PUD daily rate and the customer
charge unit cost from the Centralia cost of service analysis. The energy charge adjusted as needed
to collect the remaining target revenue.
Option 3 Tied increases to the fixed and variable increased costs. Energy charge increased by
proportional increase of BPA costs. Debt service and capital cost increases split 50 percent to the
fixed charge and 50 percent to the variable charge.
Option 4 All increases captured in the fixed customer charge, no increase to the variable
charge.
The Council selected rate option 3. The 2010 rate options change the rates to align with the option
selected. The 2011 and 2012 proposed rates apply the overall increase equally to both rate
components.
Two options were developed for the Small General Service <50kW class. Approximately 14 percent
of the total customers are included in this class.
Option 1 Across the board increases to both the customer charge and energy charge equally by
5.5 percent.
Option 2 Customer charge tied to the option 3 residential class customer charge. The existing
rate differential is maintained.
The Council selected rate option 2. The 2010 rate options changed the rates to align with the option
selected. The 2011 and 2012 proposed rates apply the overall increase equally to both rate
components.
A new customer class is developed for the Medium General Service customers defined as 50 kW
200 kW. This class includes approximately 156 accounts. These customers were previously in the
Large General Service class 50kW. Two options were developed:
Option 1 Across the board increases to both the customer charge and energy charge equally by
5.5 percent.
Page 13
City of Centralia Electric Utility Rate Study April 2011
Option 2 Tie customer charge to unit cost analysis (reduction of existing large general service
customer charge), remaining amount split 50 percent to the demand kW charge and 50 percent to
the energy kWh charge.
The Council selected rate option 2. The 2010 rate options changed the rates to align with the option
selected. The 2011 and 2012 proposed rates apply the overall increase equally to both rate
components.
A revised customer class definition is developed for the Large General Service customers defined as
201 kW 1,000 kW. This class includes approximately 25 accounts. Two options were developed:
Option 1 Across the board increases to both the customer charge and energy charge equally by
5.5 percent.
Option 2 Customer charge is increased by the overall 5.5 percent, remaining amount to be
collected split 50 percent to the demand kW charge and 50 percent to the energy kWh charge.
The Council selected rate option 2. The 2010 rate options changed the rates to align with the option
selected. The 2011 and 2012 proposed rates apply the overall increase equally to both rate
components.
A new customer class is developed for Very Large General Service customers defined as 1,000
kW. This class includes approximately 5 accounts.
The existing customers in this class were previously in the Large General Service customer class.
The rates will continue at the new Large General Service class rates.
New customers to this class will require a five year contract with rates developed via a
negotiation process.
Exhibit 4.2 provides a summary of the proposed 2010 through 2012 rates.
Exhibit 4.2 Summary of Proposed 2010, 2011 and 2012 Rates
Class
Residential
Inside
Outside
Small General Service< 50kW
Sngle Phase
Three Phase
Medium General Service 50kW-
200kW
1 Large General Service 201 kW-
1,000 kW I
Very Large General Service 1,000
kW (Existing Customers)
Very Large General Service 1,000
kW (NEW Customers)
Street Yard Lighting
150 W Customers
200 W Customers
250 W Customers
400 W Customers
1000 W Customers
Traffic Light Customers
210 Mones,;
Customer Enera thly Rat =Deman•)
2011 Monthly Rates
Customer ".;Ever Demand
2012 Monthly Rates
Customer ..Energy emand
10 88 0 0599 N/A 11 48 0 0632
11 96 0 0663 N/A 12 62 0 0699
23 23 0 0671 N/A 24 51 0 0708
34 29 0 0671 N/A 36 18 0 0708
44 51 0 0539
54 20 0 0526
54 20 0 0526
230;
3 04
381
609,
1523
76 83
4 43
4 75
4 75 1
Ave Year Contract, Negotiated
46 96 0 0568
57 18 0 0555
57 18 0 0555
Rate Rate
2 43
3 21
4 02
6 42
16 07
81 06
N/A 12 11 0 0667 N/A
N/A 13 31 0 0737 N/A
N/A 25 86 0 0747 N/A
N/A 38 17 0 0747 N/A
4 67 49 54 0 0600 4 93
5 01 I 60 32 0 0585 5 29
5 01 I 60 32 0 0585 5 29
Ave Year Contract, Negotiated Ave Year Contract, Negotiated
2 56
3 39
4 24
6 77
16 95
85 52
Rate
Page 14
City of Centralia Electric Utility Rate Study April 2011
SUMMARY
The analysis described above concludes the rate study for the electric utility. After performing the
rate analysis it was shown that the revenue at current rate levels is not sufficient to fund ongoing
utility obligations. As a result a 5.5 percent increase is proposed in 2010, 2011 and 2012 followed by
3.0 percent increases in 2013 and 2014. Although the rate study has provided a financial forecast and
a rate transition plan through 2014, the City is proposing the adoption of a 3-year rate plan for 2010-
2012.
We recommend that the City informally monitor the financial assumptions used in the plan to actual
results. Any significant changes should be incorporated and the rate plan adjusted. A more
comprehensive review of rates should be taken every 2 -3 years. Specifically, we recommend that the
City revisits the power cost assumptions before the Tiered Rate Methodology goes into effect
October 1, 2011.
The detailed technical exhibits developed as part of the rate study are included in the Technical
Appendices.
Page 15
City of Centralia Electric Utility Rate Study April 2011
TECHNICAL ANALYSIS EXHIBITS
City of Centralia
Electric Utility Rate Study
Summary
evenue 3d quiremen
Revenues
Rate Revenues Under Existing Rates
Non -Rate Revenues
Total Revenues
Expenses
Cash Operating Expenses
Power
Transmission
Existing Debt Service
New Debt Service
Rate Funded CIP
Rate Funded Depreciation
Total Expenses
Net Surplus (Deficiency)
of Rate Revenue
Additions To Meet Coverage
Total Surplus (Deficiency)
of Rate Revenue
Annual Rate Adjustment
Rate Revenues After Rate Increase
Additional Taxes from Rate Increase
Net Cash Flow After Rate Increase
Coverage After Rate Increases
Sample Monthly Bill (Residential 1,300 kwh)
Monthly Increase
Sample Monthly Bill (Commercial Small 15,300kwh, 43kw)
Monthly Increase
Sample Monthly Bill (Commercial Large 293,000kwh, 920kw)
Monthly Increase
0
17,568,746
758,000
18,326,746
8,901,860
5,608,547
992,348
1,877,173
599,517
17,979,446
347,301
0.00%
347,301
0.00%
0.00%
347,301
1.50
17,568,746
84.17
1,004
18,743
18,370,695
717,264
19,087,959
9,250,766
6,307,528
1,030,139
1,872,013
487,793
930,000
19,878,238
(790,279)
4.30%
(790,279)
4.30%
5.50%
9,553,063
6,517,052
1,064,358
1,868,213
487,793
18,875,889
49,878
(334,963)
1.27
88.80
4.63
1,060
55
19,774
1,031
18,616,386
729,519
19,345,904
1.320.000
20,810,479
(1,464,575)
7.87%
(1,464,575)
7.87%
5.50%
20,180,395
154,415
{54,981)
1.58
93.68
4.88
1,118
58
20,861
1,088
9,882,778
7,173,245
1,171,527
1,873,013
487,793
(2,552,773)
13.43%
5.50%
21,730,783
269,459
2012
19,001,532
784,050
19,785,582
1.750,000
22,338,356
(2,552,773)
13.43%
(92,982)
1.72
98.84
5.15
1,179
61
22,009
1,147
2013
19,406,951
791,080
20,196,031
10,221,808
7,326,294
1,196,523
1,875,263
886,896
1,950,000
23,456,784
(3,258,754)
16.79%
(3,258,754)
16.79%
3.00%
23,472,098
401,352
405,041
1.87
101.80
2.97
1,215
35
22,669
660
2014;
19,821,955
825,350
20,647,305
10,575,120
8,069,066
1,222,110
1,869,213
886,896
2,100,000
24,722,404
(4,075,099)
20.56%
(4,075,099)
20.56%
3.00%
24,693,254
480,943
315,256
1.92
104.86
3.05
1,251
36
23,349
680
City of Centralia
Electric Utility Rate Study
Summary
untl;tialance
'Operating:
Beginning Balance
Net Cash Flow after Rate Increase
Transfer of Surplus to Capital Fund
Ending Balance
Minimum Target Balance S
90 Day Target
`Capital
Beginning Balance
plus: Rate Funded Depreciation
plus: Grants Developer Donations Other Outside Sources
plus: Existing Bond Proceeds
plus: Connection Charges
plus: Net Debt Proceeds Available for Projects
plus: Interest Earnings
plus: Transfer of Surplus from Operating Fund
plus: Direct Rate Funding
Total Capital Funding Sources
less: Capital Expenditures (inflated)
Ending Balance
Minimum Capital Contingency Target
2,486,260
347,301
(638,581)
2,194,979
2,194, 979
90
832,139
915,685
1,052,000
16,643
638,581
3,455,049
3,455,049
1,283,138
2,481,693
(334,963)
2,146,730
2,281,011
85
1,943,054
1,860,544
389,000
5,500,000
38,861
9,731,459
(4,658,431)
5,073,028
1,376,306
2,146,730
(54,981)
2,091,750
2,355,550
80
5,073,028
1,320,000
284,200
101,461
6,778,689
(5.311,693)
1,466,996
1,482,540
2,091,750
(92,982)
1,998,768
2,436, 849
74
1,466,996
1,750,000
662,000
44,010
3,923, 006
(2,588,342)
1,334,664
1,534,307
20
1,998,768
405,041
2,403,809
2,520,446
86
1,334,664
1,950,000
313,000
4,500,000
40,040
8,137,704
(3,863,486)
4,274,218
2,403,809
315,256
(111,502)
2,607,564
2,607, 564
90
4,274,218
2,100,000
240,000
128,227
111,502
6,853,946
(4,996,835)
1,857,111
1,611,577 1,711,514
City of Centralia
Electric Utility Rate Study
Summary
und-Balan
System Replacement
Beginning Balance
plus: Reserve Funding
plus: Interest Earnings
less: Use of Reserves for System Replacement
Ending Balance
Minimum Annual Transfer Target
Equipment Reserve
Beginning Balance
plus: Reserve Funding Yelm
plus: Reserve Funding Centralia
plus: Interest Earnings
less: Use of Reserves
Ending Balance
309,969
599,517
6,199
(915,685)
912,298
930,000
18,246
(1,860,544)
1,434,642 1,551,103
907,819
64,710
79,170
25,000
(57,000)
1,019,699
1,042,606
60,000
91,000
20,852
(189.000)
1,025,458
1,320,000
(1.320,000)
1,683,895
1,025,458
61,993
94,023
20,509
(84,200)
1,117,783
2012
1,750,000
(1,750,000)
1,748,604
1,117,783
64,052
97,146
33,533
(462,000)
850,515
1,950,000
2,100,000
(1,950,000) (2,100,000)
1,845,191 1,939,068
850,515 929,584
66,180 68,378
100,373 103,707
25,515 27,888
(113,000) (40,000)
929,584 1,089,557
City of Centralia
Electric Utility Rate Study
Assumptions
Economic Financial Factors
1 General Cost Inflation 3.32% 3.32% 3.32% 3.32% 3.32% 3.32%
2 Construction Cost Inflation 4.43% 4.43% 4.43% 4.43% 4.43% 4.43%
3 Labor Cost Inflation 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%
4 Residential Growth -1.63% 1.79% 1.75% 1.75% 1.75% 1.75%
5 General Inflation plus Growth 1.64% 5.17% 5.13% 5.13% 5.13% 5.13%
6 Commercial Growth Small 1.37% -0.33% 0.00% 0.50% 1.00% 1.00%
7 City B&O Tax Utility Revenue existing (by statute) 6.00% 6.00% 6.00% 6.00% 6.00% 6.00%
8 No Escalation 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
9 Commercial Growth Large -0.08% 9.92% 1.41% 3.00% 3.00% 3.00%
10 Stree Lights Growth 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
11 Cumulative Growth -0.96% 4.56% 1.34% 2.07% 2.13% 2.14%
Fund Earnings (5 -year average of the LWGSIP) 2.00% 2.00% 2.00% 3.00% 3.00% 3.00%
Local State Excise Tax
State B &O Tax
2009 2010 2011 2012 2013 2014
3.8730% 3.8730% 3.8730% 3.8730% 3.8730% 3.8730%
1.50% 1.50% 1.50% 1.50% 1.50% 1.50%
City of Centralia
Electric Utility Rate Study
Assumptions
Accounting Assumptions 2009 2010 2011 2012 2013 2014
FISCAL POLICY RESTRICTIONS
Min. Op. Fund Balance Target (days of O&M expense) 90 90 90 90 90 90
Max. Op. Fund Balance (days of O &M expense) 90 90 90 90 90 90
Minimum Capital Fund Balance Target
I Select Minimum Capital Fund Balance Target 1 I Defined as of Plant
1 Defined as of Plant
Plant -in- Service in 2009 I $64,156,892 I
Minimum Capital Fund Balance of plant assets 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
2 Amount al Riyiii S
RATE FUNDED SYSTEM REINVESTMENT
I Select Reinvestment Funding Strategy I 3 1 User Input
Amount of Annual Cash Funding from Rates
1 Equal to Annual Depreciation Expense
2 Equal to Annual Depreciation Expense less Annual Debt Principal Payments
3 Equal to Amount at Right 599,517 930,000 1,320,000 1,750,000 1,950,000 2,100,000
4 Do Not Fund System Reinvestment
Depreciation Funding Levels 40.00% 60.00% 80.00% 100.00% 100.00% 100.00%
CIP From Rates
Estimated Depreciation Level 1,550,000 1,650,000 1,750,000 1,950,000 2,100,000
City of Centralia
Electric Utility Rate Study
Assumptions
Capital Financing Assumptions
Capital Related Revenue
Select GFC Alternative
1 User Input (Current Charge)
2 Calculated Charge
Total Residential Customer Equivalents (Estimate)
Capital Related Revenue
REVENUE BONDS
Term (years)
Interest Cost
Issuance Cost
PWTF LOAN
Revenue Bond Coverage Requirement 1.25
1 Current Charge is In use
2009 2010 2011 2012 2013 2014
20 20 20 20 20 20
5.00% 5.00% 5.00% 5.00% 5.00% 5.00%
1.50% 1.50% 1.50% 1.50% 1.50% 1.50%
Term (years; 10 year minimum and no more than 20 years) 20 20 20 20 20 20
Interest Cost 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
OTHER LOANS REVENUE- SUPPORTED GENERAL OBLIGATION BONDS [a]
Term (years) 20 20 20 20 20 20
Interest Cost 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%
Issuance Cost 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
[a] Tax supported general obligation bonds are assumed to be accounted for in the General Fund; terms and annual obligations of such bonds are not factors in this analysis.
City of Centralia
Electric Utility Rate Study
Operating Revenue and Expenditure Forecast
Budget Projection Projection Projection Projection Projection
2009 2010 2011 2012 2013 2014
Revenues FORECAST BASIS
Rate revenues
Residential 4 Residential Growth $8,075,888 8,212,412 8,348,864 8,495,695 8,645,110 8,797,152
General Service <50KW) 6 Commercial Growth Small 2,583,324 2,578,004 2,581,377 2,595,785 2,621,366 2,647,198
General Service >50 200 KW) 9 Commercial Growth Large 2,250,915 2,465,242 2,499,898 2,573,196 2,648,628 2,726,254
General Service (201+ KW) 9 Commercial Growth Large 4,609,029 5,065,447 5,136,657 5,287,266 5,442,258 5,601,761
StreetNYard Lighting 10 Stree Lights Growth 49,589 49,589 49,589 49,589 49,589 49,589
B No Escalation
Total Rate revenue 17,568,746 18,370,695 18,616,386 19,001,532 19,406,951 19,821,955
4.56%
Non -rate revenues [a]
Sales of Elect -SVC MISC CHGS i General Cost Inflation 48.700 50.318 51.989 53.716 55.501 57.344
SALES OF ELECT- PUBLIC ST LTS 1 General Cost Inflation
SALES OF ELECT- ELECT PENALTY 1 General Cost Inflation 211,300 218,319 225,571 233,064 240,806 248,805
SALES OF ELECT-TEMPORARY SVCS 1 General Cost Inflation 8,000 8,266 8,540 8,824 9,117 9,420
Interest Income 1 Calculated 25,000 90,297 93,354 138,381 135,592 159,716
BPA REP SETTLEMENT 8 No Escalation 465,000 350,064 350,064 350,064 350,064 350,064
1 General Cost inflation
Total Non -rate revenues 758,000 717,264 729,519 784,050 791,080 825,350
TOTAL REVENUES 18,326,746 19,087,959 19,345,904 19,785,582 20,198,031 20,647,305
City of Centralia
Electric Utility Rate Study
Operating Revenue and Expenditure Forecast
Budget Projection Projection Projection Projection Projection
2009 2010 2011 2012 2013 2014
Expenditures FORECAST BASIS
Excise Tax State Tax Excise and B&O Tax Rate 700,500 720,835 730,535 746,270 762,077 778,664
Utility Taxes Utility Tax Rate 1,086,000 1,145,278 1,160,754 1,187,135 1,211,882 1,238,838
YELM
ADMINISTRATIVE
BONDS 1 General Cost Inflation 80 83 85 88 91 94
CHARGES FOR SVCS /C H BLDG 3 Labor Cost Inflation 4,950 5,148 5,354 5,568 5,791 6,022
EMPLOYEE RECRUITMENT /SELECTION 1 General Cost Inflation 500 517 534 552 570 589
EXTERNAL TAXES 1 General Cost Inflation
FICA 3 Labor Cost Inflation 9,990 10,390 10,805 11,237 11,687 12,154
FULL TIME 3 Labor Cost Inflation 135,640 141,066 146,708 152,577 158,680 165,027
GENERAL LIABILITY INSURANCE 1 General Cost Inflation 32,640 33,724 34,845 38,002 37,198 38,434
HEALTH INSURANCE 3 Labor Cost inflation 19,720 20,509 21,329 22,182 23,070 23,992
INTERFUND PROF SVCS /COUNCIL 3 Labor Cost Inflation 6,040 6,282 6,533 6,794 7,066 7,349
INTERFUND PROF SVCS /PERSONNEL 3 Labor Cost Inflation 16,210 16,858 17,533 18,234 18,963 19,722
INTERFUND PROF SVCS -CITY ATTY 3 Labor Cost Inflation 12,540 13,042 13,563 14,106 14,670 15,257
INTERFUND PROF SVCS -CITY CLERK 3 Labor Cost Inflation 3,270 3,401 3,537 3,678 3,825 3,978
INTERFUND PROF SVCS -CITY MGR 3 Labor Cost Inflation 30,710 31,938 33,216 34,545 35,926 37,363
INTERFUND PROF SVCS -COM DEV 3 Labor Cost Inflation 23,000 23,920 24,877 25,872 26,907 27,983
INTERFUND PROF SVCS FINANCE 3 Labor Cost Inflation 33,720 35,069 36,472 37,930 39,448 41,026
INTERGOVERNMENTAL SERVICES 1 General Cost Inflation 36,900 38,126 39,392 40,701 42,053 43,450
LIFE INSURANCE 3 Labor Cost Inflation 270 281 292 304 316 328
LONGEVITY 3 Labor Cost Inflation 110 114 119 124 129 134
MISC- JUDGEMENTS SETTLEMENTS 3 Labor Cost inflation 243,510 253,250 263,380 273,916 284,872 296,267
OPERATING ASSESSMENTS /PERMITS 1 General Cost Inflation 20,000 20,664 21,351 22,060 22,793 23,550
PENSION 3 Labor Cost Inflation 11,070 11,513 11,973 12,452 12,950 13,468
PROFESSIONAL SERVICES 1 General Cost Inflation 327,000 337,862 349,086 360,682 372,663 385,042
PROPERTY INSURANCE 1 General Cost Inflation 11,580 11,965 12,362 12,773 13,197 13,635
TEAMSTER PENSION 3 Labor Cost Inflation 630 655 681 709 737 766
WORKER'S COMP 3 Labor Cost Inflation 2,000 2,080 2,163 2,250 2,340 2,433
8 No Escalation
Total ADMINISTRATIVE 982,080 1,018,456 1,056,190 1,095,334 1,135,941 1,178,065
City of Centralia
Electric Utility Rate Study
Operating Revenue and Expenditure Forecast
Budget Projection Projection Projection Projection Projection
2009 2010 2011 2012 2013 2014
MAINTENANCE
BLDG REPAIR MAINT MATERIALS 1 General Cost Inflation 6,000 6,199 6,405 6,618 6,838 7,065
CANAL MAINTENANCE SUPPLIES 1 General Cost Inflation 10,000 10,332 10,675 11,030 11,396 11,775
EQUIP VEHICLE MAINT SUPPLIES 1 General Cost Inflation 15,000 15,498 16,013 16,545 17,095 17,662
EQUIPMENT REPAIR MAINTENANCE 1 General Cost Inflation 10,000 10,332 10,675 11,030 11,396 11,775
LUBRICANTS 1 General Cost Inflation 3,000 3,100 3,203 3,309 3,419 3,532
MAINTENANCE CONTRACTS 1 General Cost Inflation 120,000 123,986 128,105 132,360 136,757 141,300
ROAD MATERIALS 1 General Cost inflation 15,000 15,498 16,013 16,545 17,095 17,662
VEHICLE REPAIR MAINTENANCE 1 General Cost Inflation 4,000 4,133 4,270 4,412 4,559 4,710
Total MAINTENANCE 183,000 189,079 195,360 201,849 208,554 215,482
OPERATIONS
ADVERTISING PROMOTIONS 331 342 353
T IONS i Gcriciai Cost Mallon .ivv aiv a�u
AGRICULTURAL ANIMAL SUPPLIES 1 General Cost Inflation 3,000 3,100 3,203 3,309 3,419 3,532
AUTOMOTIVE FUEL 1 General Cost Inflation 20,000 20,664 21,351 22,060 22,793 23,550
BUILDING MAINTENANCE SUPPLIES 1 General Cost Inflation 2,500 2,583 2,669 2,758 2,849 2,944
CHEMICALS GASES 1 General Cost Inflation 1,000 1,033 1,068 1,103 1,140 1,177
CLOTHING ALLOWANCE 1 General Cost Inflation 3,150 3,255 3,363 3,474 3,590 3,709
COMPUTER HARDWARE /SOFTWARE 1 General Cost Inflation 10,400 10,745 11,102 11,471 11,852 12,246
COPIER COPY EXPENSE 1 General Cost Inflation
DATA PROCESSING 1 General Cost Inflation 10,000 10,332 10,675 11,030 11,396 11,775
FICA 3 Labor Cost Inflation 35,960 37,398 38,894 40,450 42,068 43,751
FOOD 1 General Cost Inflation 200 207 214 221 228 235
FULL TIME 3 Labor Cost Inflation 442,090 459,774 478,165 497,291 517,183 537,870
GENERAL EQUIPMENT 1 General Cost Inflation 7,500 7,749 8,007 8,273 8,547 8,831
HEALTH INSURANCE 3 Labor Cost Inflation 98,280 102,211 106,300 110,552 114,974 119,573
INTERFUND EQ RENTAL CHARGES 1 General Cost Inflation 9,550 9,867 10,195 10,534 10,884 11,245
LABORATORY TESTING 1 General Cost Inflation 200 207 214 221 228 235
LIFE INSURANCE 1 General Cost Inflation 1,220 1,261 1,302 1,346 1,390 1,437
LONGEVITY 1 General Cost Inflation
MEETING EXPENSES 1 General Cost Inflation 4,000 4,133 4,270 4,412 4,559 4,710
MISC -DUES MEMBERSHIPS 1 General Cost Inflation 5,000 5,166 5,338 5,515 5,698 5,887
OFFICE EQUIPMENT FURNISHINGS 1 General Cost Inflation 1,000 1,033 1,068 1,103 1,140 1,177
OFFICE SUPPLIES 1 General Cost Inflation 2,100 2,170 2,242 2,316 2,393 2,473
OPERATING RENTALS LEASES 1 General Cost Inflation 5,000 5,166 5,338 5,515 5,698 5,887
City of Centralia
Electric Utility Rate Study
Operating Revenue and Expenditure Forecast
Budget Projection Projection Projection Projection Projection
2009 2010 2011 2012 2013 2014
OPERATING SUPPLIES 1 General Cost Inflation 25,000 25,830 26,688 27,575 28,491 29,437
OVERTIME 3 Labor Cost Inflation 20,000 20,800 21,632 22,497 23,397 24,333
PENSION 3 Labor Cost Inflation 37,670 39,177 40,744 42,374 44,069 45,831
PHOTOGRAPHY EQUIP SUPPLIES 1 General Cost Inflation 200 207 214 221 228 235
POSTAGE MAILING SERVICES 1 General Cost Inflation 300 310 320 331 342 353
PRINTING BINDING 1 General Cost Inflation 400 413 427 441 456 471
PUBLICATIONS SUBSCRIPTIONS 1 General Cost Inflation 1,000 1,033 1,068 1,103 1,140 1,177
RADIOS CELLULAR PHONES 1 General Cost Inflation 1,000 1,033 1,068 1,103 1,140 1,177
SAFETY SUPPLIES AMMUNITION 1 General Cost Inflation 2,000 2,066 2,135 2,206 2,279 2,355
SMALL TOOLS HARDWARE 1 General Cost Inflation 2,500 2,583 2,669 2,758 2,849 2,944
TEAMSTER PENSION 3 Labor Cost Inflation
TELEPHONE/TELECOMMUNICATION 1 General Cost Inflation 10,000 10,332 10,675 11,030 11,396 11,775
TEMPORARY FULL TIME 3 Labor Cost Inflation 22,260 23,150 24,076 25,039 26,041 27,083
TRAFFIC CONTROL SUPPLIES 1 General Cost Inflation 1,000 1,033 1,068 1,103 1,140 1,177
UNIFORM PURCHASE /CLEANING SVCS 1 General Cost Inflation 4,000 4,133 4,270 4,412 4,559 4,710
UTILITY SERVICES- ELECTRIC 1 General Cost Inflation 5,000 5,166 5,338 5,515 5,698 5,887
UTILITY SERVICES- NATURAL GAS 1 General Cost Inflation 3,000 3,100 3,203 3,309 3,419 3,532
UTILITY SERVICES -SEWER 1 General Cost Inflation 4,000 4,133 4,270 4,412 4,559 4,710
UTILITY SERVICES -WASTE DISPOSAL 1 General Cost Inflation 3,000 3,100 3,203 3,309 3,419 3,532
UTILITY SERVICES -WATER 1 General Cost Inflation 800 827 854 882 912 942
VEHICLE MAINTENANCE 1 General Cost Inflation 1,000 1,033 1,068 1,103 1,140 1,177
WORKER'S COMP 3 Labor Cost Inflation 15,250 15,860 16,494 17,154 17,840 18,554
8 No Escalation
Total OPERATIONS 821,830 853,684 886,778 921,161 956,883 S 993,996
TOTAL YELM 1,986,910 2,061,219 2,138,328 2,218,344 2,301,378 2,387,543
City of Centralia
Electric Utility Rate Study
Operating Revenue and Expenditure Forecast
Budget Projection Projection Projection Projection Projection
2009 2010 2011 2012 2013 2014
NON YELM
ADMINISTRATIVE
BONDS 1. General Cost Inflation 160 165 171 176 182 188
CHARGES FOR SVCS /C H BLDG 3 Labor Cost Inflation 14,840 15,434 16,051 16,693 17,361 18,055
EMPLOYEE RECRUITMENT /SELECTION 1 General Cost Inflation 1,000 1,033 1,068 1,103 1,140 1,177
EXTERNAL TAXES 1 General Cost Inflation
FICA 3 Labor Cost Inflation 28,900 30,056 31,258 32,509 33,809 35,161
FULL TIME 3 Labor Cost Inflation 395,720 411,549 428,011 445,131 462,936 481,454
HEALTH INSURANCE 3 Labor Cost Inflation 58,730 61,079 63,522 66,063 68,706 71,454
INSURANCE- GENERAL LIABILITY 1 General Cost Inflation 55,500 57,344 59,248 61,217 63,250 65,351
INSURANCE PROPERTY 1 General Cost Inflation 6,950 7,181 7,419 7,666 7,921 8,184
INTERFUND PROF SVCS /PERSONNEL 3 Labor Cost Inflation '48,620 50,565 52,587 54,691 56,879 59,154
INTERFUND PROF SVCS -CITY ATTY 3 Labor Cast Inflation 37,610 39,114 40,679 4Z,8O6 43,988 45,758
INTERFUND PROF SVCS -CITY CLERK 3 Labor Cost Inflation 9,800 10,192 10,600 11,024 11,465 11,923
INTERFUND PROF SVCS -CITY MGR 3 Labor Cost Inflation 92,120 95,805 99,637 103,622 107,767 112,078
INTERFUND PROF SVCS -COM DEV 3 Labor Cost Inflation 23,000 23,920 24,877 25,872 26,907 27,983
INTERFUND PROF SVCS COUNCIL 3 Labor Cost Inflation 18,120 18,845 19,599 20,383 21,198 22,046
INTERFUND PROF SVCS FINANCE 3 Labor Cost Inflation 101,170 105,217 109,425 113,802 118,355 123,089
INTERGOVERNMENTAL SERVICES 1 General Cost Inflation 2,000 2,066 2,135 2,206 2,279 2,355
INTRFND TAXES OP ASSESSMENTS 1 General Cost Inflation
LIFE INSURANCE 3 Labor Cost Inflation 820 853 887 922 959 998
LONGEVITY 3 Labor Cost Inflation 420 437 454 472 491 511
MISC- CONTRIB TO RURAL ECON DEV FL 3 Labor Cost Inflation 50,000 52,000 54,080 56,243 58,493 60,833
PENSION 3 Labor Cost Inflation 32,300 33,592 34,936 36,333 37,786 39,298
PROFESSIONAL SERVICES 1 General Cost Inflation 259,000 267,604 276,493 285,677 295,167 304,972
TEAMSTER PENSION 3 Labor Cost Inflation 3,600 3,744 3,894 4,050 4,211 4,380
WORKER'S COMP 3 Labor Cost Inflation 1,070 1,113 1,157 1,204 1,252 1,302
8 No Escalation
Total ADMINISTRATIVE 1,241,450 1,288,907 1,338,188 1,389,368 1,442,512 1,497,704
City of Centralia
Electric Utility Rate Study
Operating Revenue and Expenditure Forecast
ADMIN -ENG
COMMUNICATIONS
COMPUTER HARDWARE /SOFTWARE
DATA PROCESSING
ENGINEERING SUPPLIES
FICA
FOOD
FUEL CONSUMED
FULL TIME
HEALTH INSURANCE
INSURANCE GENERAL LIABILITY
INTERFUND EQ RENTAL CHARGES
LIFE INSURANCE
MAPS MICROFILM
MEETING EXPENSES
MISC -DUES MEMBERSHIPS
MISC- FILINGiRECORDING/WITNESS FEE
MISC PRINTING BINDING
MISC PUBLICATIONS SUBSCRIPTIONS.
MISC UNIFORM PURCHASE /CLEANING S
OFFICE SUPPLIES
OFFICE SUPPLIES COPIER COPY EXPI
OFFICE SUPPLIES -EQUIP FURNISHING
OPERATING SUPPLIES
OVERTIME
PENSION
PHOTOGRAPHY EQUIP SUPPLIES
POSTAGE MAILING SERVICES
PROFESSIONAL SERVICES
REPAIR MAINTENANCE EQUIPMENT
SAFETY SUPPLIES AMMUNITION
SMALL TOOLS MINOR EQUIPMENT
WORKMEN'S COMP
General Cost Inflation
General Cost Inflation
General Cost Inflation
General Cost Inflation
Labor Cost Inflation
General Cost Inflation
General Cost Inflation
Labor Cost Inflation
Labor Cost Inflation
General Cost Inflation
General Cost Inflation
General Cost Inflation
General Cost Inflation
General Cost Inflation
General Cost Inflation
General Cost Inflation
General Cost Inflation
General Cost Inflation
General Cost Inflation
General Cost Inflation
General Cost Inflation
General Cost Inflation
General Cost Inflation
Labor Cost Inflation
Labor Cost Inflation
General Cost Inflation
General Cost Inflation
General Cost Inflation
General Cost Inflation
General Cost Inflation
General Cost Inflation
Labor Cost Inflation
Labor Cost Inflation
Budget Projection Projection Projection Projection Projection
2009 2010 2011 2012 2013 2014
1,000 1,033 1,068 1,103 1,140 1,177
5,000 5,166 5,338 5,515 5,698 5,887
400 413 427 441 456 471
8,900 9,256 9,626 10,011 10,412 10,828
100 103 107 110 114 118
1,670 1,725 1,783 1,842 1,903 1,966
119,650 124,436 129,413 134,590 139,974 145,573
22,020 22,901 23,817 24,770 25,760 26,791
110 114 117 121 125 130
5,360 5,538 5,722 5,912 6,108 6,311
300 310 320 331 342 353
2,000 2,066 2,135 2,206 2,279 2,355
2,700 2,790 2,882 2,978 3,077 3,179
190 196 203 210 217 224
100 103 107 110 114 118
70 72 75 77 80 82
170 176 181 188 194 200
40 41 43 44 46 47
2,000 2,066 2,135 2,206 2,279 2,355
200 207 214 221 228 235
500 517 534 552 570 589
400 416 433 450 468 487
9,790 10,182 10,589 11,012 11,453 11,911
50 52 53 55 57 59
30 31 32 33 34 35
100 103 107 110 114 118
200 207 214 221 228 235
140 145 149 154 160 165
30 31 32 33 34 35
1,570 1,633 1,698 1,766 1,837 1,910
Total ADMIN -ENG 184,790 192,029 199,553 207,373 215,499 223,946
City of Centralia
Electric Utility Rate Study
Operating Revenue and Expenditure Forecast
Budget Projection Projection Projection Projection Projection
2009 2010 2011 2012 2013 2014
CONSERVATION
FICA 3 Labor Cost Inflation 2,280 2,371 2,466 2,565 2,667 2,774
FULL TIME 3 Labor Cost inflation 30,560 31,782 33,054 34,376 35,751 37,181
HEALTH INSURANCE 3 Labor Cost inflation 7,020 7,301 7,593 7,897 8,212 8,541
LIFE INSURANCE 3 Labor Cost Inflation 90 94 97 101 105 109
MISC CONTRIBS TO NON-GOVT-CONS R 1 General Cost Inflation 150,000 154,983 160,131 165,450 170,946 176,625
MISC INTERNAL CONSERVATION PROGI 1 General Cost Inflation 100,000 103,322 106,754 110,300 113,964 117,750
PENSION 3 Labor Cost Inflation 2,490 2,590 2,693 2,801 2,913 3,029
WORKMEN'S COMP 3 Labor Cost Inflation 690 718 746 776 807 839
1 General Cost Inflation
Total CONSERVATION 293,130 303,160 313,534 324,266 335,366 346,849
CUSTOMER SERVICE
ADVERTISING 1 General Cost Inflation 500 517 534 552 570 589
BUILDING MAINTENANCE SUPPLIES 1 General Cost Inflation 400 413 427 441 456 471
COMMUNICATIONS 1 General Cost Inflation 1,000 1,033 1,068 1,103 1,140 1,177
COMPUTER HARDWARE /SOFTWARE 1 General Cost Inflation 5,000 5,166 5,338 5,515 5,698 5,887
DATA PROCESSING 1 General Cost Inflation 8,000 8,266 8,540 8,824 9,117 9,420
EMERGENCY FOOD 1 General Cost Inflation 40 41 43 44 46 47
EQUIPMENT REPAIR MAINTENANCE '1 General Cost Inflation 100 103 107 110 114 118
FICA 3 Labor Cost Inflation 8,820 9,173 9,540 9,921 10,318 10,731
FILING /RECORDINGIWITNESS FEES 1 General Cost Inflation 100 103 107 110 114 118
FULL TIME 3 Labor Cost Inflation 117,480 122,179 127,066 132,149 137,435 142,932
HEALTH INSURANCE a 3 Labor Cost Inflation 32,980 34,299 35,671 37,098 38,582 40,125
LIFE INSURANCE 3 Labor Cost Inflation 470 489 508 529 550 572
LONGEVITY 3 Labor Cost Inflation 840 874 909 945 983 1,022
MEETING EXPENSES 1 General Cost Inflation 3,000 3,100 3,203 3,309 3,419 3,532
MISC PUBLICATIONS SUBSCRIPTIONS, 1 General Cost Inflation 100 103 107 110 114 118
MISC UNIFORM PURCHASE /CLEANING S 1 General Cost Inflation 980 1,013 1,046 1,081 1,117 1,154
OFFICE SUPPLIES 1 General Cost Inflation 2,200 2,273 2,349 2,427 2,507 2,590
OFFICE SUPPLIES -BANK CHARGES 1 General Cost Inflation 16,610 17,162 17,732 18,321 18,929 19,558
OFFICE SUPPLIES- COPIER COPY EXPI 1 General Cost Inflation
OFFICE SUPPLIES -EQUIP FURNISHING 1 General Cost Inflation 600 620 641 662 684 706
OVERTIME 3 Labor Cost Inflation 700. 728 757 787 819 852
PENSION 3 Labor Cost inflation 9,710 10,098 10,502 10,922 11,359 11,814
PHOTOGRAPHY EQUIPMENT 1 General Cost Inflation 1,500 1,550 1,601 1,655 1,709 1,766
City of Centralia
Electric Utility Rate Study
Operating Revenue and Expenditure Forecast
Budget Projection Projection Projection Projection Projection
2009 2010 2011 2012 2013 2014
POSTAGE MAILING SERVICES 1 General Cost Inflation 22,320 23,061 23,827 24,619 25,437 26,282
PRINTING BINDING 1 General Cost Inflation 10,000 10,332 10,675 11,030 11,396 11,775
PROFESSIONAL SERVICES 1 General Cost Inflation 15,450 15,963 16,493 17,041 17,607 18,192
REPAIR MAINTENANCE -MAINT CONTR 1 General Cost Inflation 1,630 1,684 1,740 1,798 1,858 1,919
REPAIR MAINTENANCE -OTHER I General Cost Inflation 1.000 1,033 1,068 1,103 1,140 1,177
TEAMSTER PENSION 3 Labor Cost Inflation 7,800 8,112 8,436 8,774 9,125 9,490
UTILITY SERVICES -WASTE DISPOSAL 1 General Cost Inflation 100 103 107 110 114 118
UTILITY SERVICES- WASTEWATER I General Cost Inflation 270 279 288 298 308 318
UTILITY SERVICES -WATER 1 General Cost Inflation 140 145 149 154 160 165
WORKER'S COMP 3 Labor Cost Inflation 630 655 681 709 737 766
8 No Escalation
Total CUSTOMER SERVICE 270,470 280,671 291,260 302,252 313,661 325,503
MAINTENANCE
BLDG REPAIR MAINT MATERIALS 1 General Cost Inflation 4,000 4,133 4,270 4,412 4,559 4,710
BUILDING MAINTENANCE SUPPLIES 1 General Cost Inflation 7,000 7,233 7,473 7,721 7,977 8,242
EQUIP VEHICLE MAINT SUPPLIES 1 General Cost Inflation 8,000 8,266 8,540 8,824 9,117 9,420
EQUIPMENT REPAIR MAINTENANCE 1 General Cost Inflation 11,500 11,882 12,277 12,685 13,106 13,541
LABORATORY TESTING 1 General Cost Inflation 4,000 4,133 4,270 4,412 4,559 4,710
LUBRICANTS 1 General Cost Inflation 3,000 3,100 3,203 3,309 3,419 3,532
OTHER REPAIRS MAINTENANCE 1 General Cost Inflation 1,700 1,756 1,815 1,875 1,937 2,002
REPAIR MAINTENANCE -MAINT CONTR I General Cost Inflation 28,200 29,137 30,105 31,105 32,138 33,205
ROAD MATERIALS 1 General Cost Inflation 3,000 3,100 3,203 3,309 3,419 3,532
SUBSTATION MAINTENANCE SUPPLIES 1 General Cost Inflation 5,000 5,166 5,338 5,515 5,698 5,887
VEHICLE REPAIR MAINTENANCE 1 General Cost Inflation 20,000 20,664 21,351 22,060 22,793 23,550
8 No Escalation
Total MAINTENANCE 95,400 98,569 101,843 105,226 108,722 112,333
OPERATIONS
ADVERTISING PROMOTIONS 1 General Cost Inflation 3,000 3,100 3,203 3,309 3,419 3,532
AGRICULTURAL ANIMAL SUPPLIES 1 General Cost Inflation 2,500 2,583 2,669 2,758 2,849 2,944
CABLE SERVICE 1 General Cost Inflation 1,500 1,550 1,601 1,655 1,709 1,766
CHEMICALS GASES 1 General Cost Inflation 1,500 1,550 1,601 1,655 1,709 1,766
City of Centralia
Electric Utility Rate Study
Operating Revenue and Expenditure Forecast
Budget Projection Projection Projection Projection Projection
2009 2010 2011 2012 2013 2014
CLOTHING ALLOWANCE 1 General Cost Inflation 8,100 8,369 8,647 8,934 9,231 9,538
COMPUTER HARDWARE /SOFTWARE i General Cost Inflation 115,970 119,822 123,803 127,915 132,164 136,554
CONSTRUCTION CONTRACTS 1 General Cost Inflation 100,000 103,322 106,754 110,300 113,964 117,750
DATA PROCESSING 1 General Cost Inflation 4,000 4,133 4,270 4,412 4,559 4,710
ENGINEERING SUPPLIES 1 General Cost Inflation 5,000 5,166 5,338 5,515 5,698 5,887
EXCESS COMPENSATION 1 General Cost Inflation 31,200 32,236 33,307 34,414 35,557 36,738
FICA 3 Labor Cost Inflation 106,380 110,635 115,061 119,663 124,450 129,428
FOOD 1 General Cost Inflation 600 620 641 662 684 706
FUEL CONSUMED 1 General Cost Inflation 50,400 52,074 53,804 55,591 57,438 59,346
FULL TIME 3 Labor Cost Inflation 1,314,570 1,367,153 1,421,839 1,478,712 1,537,861 1,599,375
GENERAL EQUIPMENT 1 General Cost Inflation 12,000 12,399 12,810 13,236 13,676 14,130
HEALTH INSURANCE 3 Labor Cost Inflation 262,400 272,896 283,812 295,164 306,971 319,250
INTERFUND EQ RENTAL CHARGES 1 General Cost Inflation 14,950 15,447 15,960 16,490 17,038 17,604
LIFE INSURANCE 1 General Cost Inflation 3,440 3,554 3,672 3,794 3,920 4,051
LINE MATERIALS 1 General Cost Inflation 200,000 206,644 213,508 220,600 227,928 235,500
LONGEVITY 3 Labor Cost Inflation
MAPS MICROFILM 1 General Cost Inflation 1,000' 1,033 1,068 1,103 1,140 1,177
MEETING EXPENSES 1 General Cost Inflation 37,250 38,487 39,766 41,087 42,452 43,862
MISC -DUES MEMBERSHIPS 1 General Cost Inflation 53,340 55,112 56,943 58,834 60,788 62,808
MISC FILING /RECORDING/WITNESS FEE 1 General Cost Inflation 2,000 2,066 2,135 2,206 2,279 2,355
MISC UNIFORM PURCHASE /CLEANINGS 1 General Cost Inflation 16,500 17,048 17,614 18,200 18,804 19,429
OFFICE EQUIPMENT FURNISHINGS 1 General Cost Inflation 11,730 12,120 12,522 12,938 13,368 13,812
OFFICE SUPPLIES 1 General Cost Inflation 5,700 5,889 6,085 6,287 6,496 6,712
OFFICE SUPPLIES- COPIER COPY EXPI 1 General Cost Inflation
OPERATING RENTALS LEASES 1 General Cost Inflation 44,000 45,462 46,972 48,532 50,144 51,810
OPERATING SUPPLIES 1 General Cost Inflation 50,000 51,661 53,377 55,150 56,982 58,875
OVERTIME 3 Labor Cost Inflation 100,000 104,000 108,160 112,486 116,986 121,665
PART TIME 3 Labor Cost Inflation 50,000 52,000 54,080 56,243 58,493 60,833
PENSION 3 Labor Cost Inflation 111,900 116,376 121,031 125,872 130,907 136,143
PHOTOGRAPHY EQUIP SUPPLIES 1 General Cost Inflation 1,000 1,033 1,068 1,103 1,140 1,177
POSTAGE MAILING SERVICES 1 General Cost Inflation 3,000 3,100 3,203 3,309 3,419 3,532
PRINTING BINDING 1 General Cost Inflation 2,020 2,087 2.156 2.228 2,302 2,379
PUBLICATIONS SUBSCRIPTIONS 1 General Cost Inflation 5,100 5,269 5,444 5,625 5,812 6,005
RADIOS CELLULAR PHONES 1 General Cost Inflation 5,000 5,166 5,338 5,515 5,698 5,887
SAFETY SUPPLIES AMMUNITION i General Cost Inflation 5,000 5,166 5,338 5,515 5,698 5,887
City of Centralia
Electric Utility Rate Study
Operating Revenue and Expenditure Forecast
SMALL TOOLS HARDWARE
STREET LIGHTING SUPPLIES
TEAMSTER PENSION
TELEPHONE/TELECOMMUNICATIONS
TEMPORARY FULL TIME
TRAFFIC CONTROL SUPPLIES
UTILITY SERVICES NATURAL GAS
UTILITY SERVICES -SEWER
UTILITY SERVICES -WASTE DISPOSAL
UTILITY SERVICES -WATER
WORKER'S COMP
Total OPERATIONS
TOTAL NON YELM
ADDITIONAL FUNDING
Reserve Funding Yelm
Reserve Funding Centralia
Capital Reserve Funding
Total ADDITIONAL FUNDING
Add O &M from CiP
Total Cash O &M Expenditures
Depreciation Expense in
Depreciation Expense [b]
TOTAL EXPENSES
Total PURCHASED POWER
1 General Cost Inflation
1 General Cost Inflation
1 General Cost Inflation
1 General Cost Inflation
1 General Cost Inflation
1 General Cost Inflation
1 General Cost Inflation
1 General Cost Inflation
1 General Cost Inflation
1 General Cost Inflation
3 Labor Cost Inflation
8 No Escalation
1 General Cost Inflation
1 Genera! Cost Inflation
8 No Escalation
2008
From CIP
PURCHASED POWER
POWER PURCHASED FOR RESALE BP/ 1 General Cost Inflation
TRANSMISSION BY OTHERS BRA 1 General Cost Inflation
1 General Cost Inflation
1,434,642
Budget
2009
10,000
25,000
21,400
43,310
2,000
5,500
1,800
7,200
1,950
39,120
2,899,330 3,009,098 3,123,051 3,241,349 3,364,158 3,491,653
4,984,570 5,172,434 5,367,430 5,569,831 5,779,919 5,997,988
64,710
Projection
2010
10,332
25,830
22,111
44,749
2,066
5,683
1,880
7,439
2,015
40,685
Last years plus annual additions from CIP 1,434,642 1,551,103
10,336,502 10,801,868
From Power
$5,608,547 $6,307,528
$992,348 $1,030,139
Projection
2011
10,675
26,688
22,845
46,235
2,135
5,871
1,922
7,686
2,082
42,312
60,000 61,993
79,170 91,000 94,023
Projection
2012
11,030
27,575
23,604
47,771
2,206
6,067
1,985
7,942
2,151
44,005
64,052
8% Bath phis
growth
Projection
2013
11,396
28,491
24,388
49,358
2,279
6,268
2,051
8,205
2,222
45,765
66,180
Projection
2014
11,775
29,437
25,198
50,997
2,355
6,476
2,119
8,478
2,296
47,595
68,378
97,146 100,373 103,707
143,880 151,000 156,016 161,199 166,553 172,086
8,901,860 9,250,766 9,553,063 9,882,778 10,221,808 10,575,120
1,683,895 1,748,604 1,845,191 1,939,068
11,236,958 11,631,381 12,066,999 12,514,187
8% power only
Inflation growth only plus growth on
bath
6,517,052 7,173,245 7,326,294 8,069,066
1,064,358 1,171,527 1,196,523 1,222,110
6,600,896 7,337,667 7,561,411 8,344,772 8,522,817 9,291,175
City of Centralia
Electric Utility Rate Study
Existing Debt Input
Existing Debt Service Revenue Bonds
1999 Light Revenue Bond (as revised per 2007 Refunding Bond)_
Annual interest Payment
361,560
Annual Principal Payment
Total Annual Payment
Use of Debt reserve for Debt Service
2007 Light Refunding Revenue Bond
Annual interest Payment
Annual Principal Payment
Total Annual Payment
Use of Debt reserve for Debt Service
2007 Light Revenue Bond
Annual Interest Payment
Annual Principal Payment
Total Annual Payment
Use of Debt reserve for Debt Service
REVENUE BOND 4
Annual Interest Payment
Annual Principal Payment
Total Annual Payment
Use of Debt reserve for Debt Service
REVENUE BOND 5
Annual Interest Payment
Annual Principal Payment
Total Annual Payment
Use of Debt Reserve for Debt Service
TOTAL REVENUE BONDS
Annual Interest Payment
Annual Principal Payment
Total Annual Payment
Use of Debt reserve for Debt Service
Annual Debt Reserve Target on Existing Revenue Bonds
2009 2010 2011 2012
Interest allocation 100% Gen
4:11;67,5 ;:138,475)
360000 370000 390000 410000 430000
211,675 571,675 567,275 572,475 571,025 568,475
interest Allocation: 14.9% Gen 65.17b Ciist
713938$ 690338 665,938 L5 640538 1604238 $i 585738
590 000' 610000 1835,000 660000 700 000 7350OD
1,303,938 1,300,338 1,300,938 1,300,538 1,304,238 1,300,738
Interest allocation 100% Gen
2013
S S S S
942,173 902,013 863,213 823,013 765,263
935.000 970.000 1.005.000 1.050,000 1.110.000
1,877,173 1,872,013 1,868,213 1,873,013 1,875,263
2014
704,213
1.165.000
1,869,213
1,877,173 1,875,988 1,875,988 1,875,988 1,875,988 1,875,988
City of Centralia
Electric Utility Rate Study
Capital Improvement Program
Project Costs and O &M Impacts In Year: J 2009 (Project costs are escalated using Construction Cost Inflation assumptions)
For CFC Calculation
Annual O &M Upgrade t 0 /0 R &R Specific Funding Source Upgrade I TOTAL
No Description Current Cost Year Life In Years t- Enterprise Fund, 2- Grants R &R ESCALATED
Impact Expansion Develooer Donations' Expansion COSTS
1 1 Enterprise Fund
2 Yelm Tailrace Erosion 250,000 2010 40 50% 50% 1 Enterprise Fund 125,000 125,000 261.064
3 Arc Flash Study 25,000 2010 40 50% 50% 1 Enterprise Fund 12,500 12,500 26,106
4 B-Street East Rebuild 258,000 2010 40 50% 50% 1 Enterprise Fund 129,000 129,000 269,418
5 3,972,000 2011 40 50% 50% 1 Enterprise Fund 1,986,000 1,986,000 4,331,358
6 Cooks Hilt Feeders 1,297.000 2010 40 50% 50% 1 Enterprise Fund 648,500 648,500 1,354,401
7 Yelm Swltchgear Upgrade 1,057,000 2010 40 50% 50% 1 Enterprise Fund 528,500 528,500 1,103,780
8 Yeim Security improvements 125,000 2010 40 50% 50% 1 Enterprise Fund 62,500 62,500 130,532
9 System Studies 105,000 2010 40 50% 50% 1 Enterprise Fund 52,500 52,500 109,647
10 Yelm Structural and Switchyard Improvements 450,000 2010 40 50% 50% 1 Enterprise Fund 225,000 225,000 469,916
11 180,000 2011 40 50% 50% 1 Enterprise Fund 90,000 90,000 196,285
12 B-St to Zimmerman Feeder Upgrades 33,000 2010 40 50% 50% 1 Enterprise Fund 16,500 16,500 34,460
13 515,000 2011 40 50% 50% 1 Enterprise Fund 257,500 257,500 561,593
14 Cooks Hill to B-St Feeder Upgrade 29,000 2011 40 50% 50% 1 Enterprise Fund 14,500 14,500 31,624
15 402,000 2012 40 50% 50% 1 Enterprise Fund 201,000 201,000 457,771
16 205,000 2013 40 50% 50% 1 Enterprise Fund 102,500 102,500 243,772
17 System Voltage Improvements 85,000 2010 40 50% 50% 1 Enterprise Fund 32,500 32,500 67,877
18 50,000 '2013 40 50% 50% 1 Enterprise Fund 25,000 25,00D 59,457
19 Fords Prairie to Zimmerman Feeder Upgrades 254,000 2012 40 50% 50% 1 Enterprise Fund 127,000 127,000 289,238
20 Cooks Hill to Fords Prairie Intertie Feeder 14,000 2012 40 50% 50% 1 Enterprise Fund 7,000 7,000 15,942
21 190,000 2013 40 50% 50% 1 Enterprise Fund 95,000 95,000 225,935
22 Distribution System Protection 100,000 2011 40 50% 50% 1 Enterprise Fund 50,000 50,000 109,047
23 100,000 2012 40 50% 50% 1 Enterprise Fund 50,000 50,000 113,873
24 Yelm Transmission Line Extraordinary Maintenance 100,000 2010 40 50% '50% 1 Enterprise Fund 50,000 50,000 104,426
25 50,000 2011 .40 50% 50% 1 Enterprise Fund 25,000 25,000 54,524
26 50,000 2012 40 50% 50% 1 Enterprise Fund 25,000 25,000 56,937
27 50,000 2013 40 50% 50% 1 Enterprise Fund 25,000 25,000 59,457
28 50,000 2014 40 50% 50% 1 Enterprise Fund 25,000 25,000 62,088
29 Vein' Powerhouse, Grounds and Canal Improvements 296,000 2010 40 50% 50% 1 Enterprise Fund 148,000 148,000 309,100
30 Selzer Valley Substation Land 400,000 2010 40 50% 50% 1 Enterprise Fund 200,000 200,000 417,703
31 Design 220,000 2013 40 50% 50% 1 Enterprise Fund 110,000 110,000 261,609
32 Construction 1,700,000 2015 40 50% 50% 1 Enterprise Fund 850,000 850,000 2,204,415
33 Construction 2,661,000 2015 40 50% 50% 1 Enterprise Fund 1.330,500 1,330,500 3,450,558
34 Selzer Valley to B-St Inlerges/Feeder Upgrades 61,000 2012' 40 50% 50% 1 Enterprise Fund 30,500 30,500 69,463
35 863,000 2015 40 50% 50% 1 Enterprise Fund 431,500 431,500 1,119,065
36 Stlllwaters Upgrade 190,000 2012 40 50% 50% 1 Enterprise Fund 95,000 95,000 216,359
City of Centralia
Electric Utility Rate Study
Capital Improvement Program
No
37
38
39
40
41
42
43
44
45
46
47
48
49
B-Street West Rebuild
Lum Road Underground
Alley Underground
Hospital Feeder Diversification
Emergency Contingency
Total Capital Projects
Total Upgrade /Expansion Projects
Total R &R Projects
Projects by Grants Developer Donations
Projects by Enterprise Fund
Total
Project Costs and O &M impacts in Year.
Description
2009
24,102,000
Current Cost Year
170,000 2012
1,034,000 2013
2,974,000 2014
25,000 2011
330,000 2012
100,000 2012
500,000 2013
102,000 2012
500,000 2013
500,000 2012
500,000 2013
1,000,000 2014
(Project costs are escalated using Construction Cost InfaUon assumptions)
For CFC Calculation i
Annual O &M
Impact
S
24,162,000
Year 2009$ inflated
2010 4,461,000 4,658,431
2011 4,871,000 5,311,693
2012 2,273,000 2,588,342
2013 3,249,000 3,863,486
2014 4,024,000 4.996.835
18.878,000 I 21.418.786
Life in Years
40
40
40
40
40
40
40
'40
40
40
40
Upgrade
Expansion
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
100%
50%
Specific Funding Source
R &R 1- Enterprise Fund, 2- Grants
Developer Donations
50% 1 Enterprise Fund
50% 1 Enterprise Fund
50% 1 Enterprise Fund
50% 1 Enterprise Fund
50% 1 Enterprise Fund
50% 1 Enterprise Fund
50% 1 Enterprise Fund
50% 1 Enterprise Fund
50% 1 Enterprise Fund
50% 1 Enterprise Fund
50% 1 Enterprise Fund
50% 1 Enterprise Fund
0% 1 Enterprise Fund
50%
City Assumed Funding Sources
Grant CTED /Lewis County Econ Dev Equipment Repl Reserves
189,000
84,200
462,000
113,000
40,000
Upgrade
Expansion
85,000
517,000
1,487,000
12,500
165,000
50,000
250,000
51,000
250,000
250,000
250,000
500,000
Developers /Cap Contributions
200,000
200,000
200,000
200,000
200,000
TOTAL
R &R ESCALATED
COSTS
85,000 193,585
517,000 1,229,561
1,487,000 3,592,989
12,500 27,262
165,000 375,782
50,000 113,873
250,000 594,565
51,000 116,151
250,000 594,565
250,000 569,367
250,000 594,565
500,000 1,241,758
12,051,000 12,051,000 28,192,824
14,096,412
14,096,412
12,051,000 12,051,000 28,192,824
City of Centralia
Electric Utility Rate Study
Capital Funding Analysis
Summary of Expenditures
CAPITAL PROJECTS
Improvement Upgrades Expansions
Repairs and Replacements
TOTAL CAPITAL EXPENDITURES
Capital Financing Plan
Existing PWTF/ Bond Proceeds
Project Specific Grants 1 Developer Donations
Project to be Funded
OTHER FUNDING SOURCES [NOTE Al
Equipment Fund
PWTF Loan Proceeds
Other Loan Proceeds
Connection Charges
Rate Funded Depreciation CIP
Capital Fund Balance Deficiency
Capital Fund Balance
Capital Fund Balance Deficiency
Revenue Bond Proceeds [Note B]
2009
2010
2009 2010
200,000
4,458,431
995,000
57,000;;
2011
2,329,215 2,655,846
2,329,215 2,655,846
4,658,431 5,311,693
2011
:200,000
5,111,693
189,000 84;200
2012 2013
2014
TOTAL
1,294,171 1,931,743 2,498,418 10,709,393
1,294,171 1,931,743 2,498,418 10,709,393
2,588,342 3,863,486 4,996,835 21,418,786
2012
2013
200,000 :.200 000
2,388,342 3,663,486
915,685 1,860,544 1,320,000 1,750,000 1,950,000 2,100,00D
(2,408,887) (3,707,493) (176,342) (1,600,486) (2,656,835)
1,943,054 3,707,493 176,342 1,334,664 2,656,835
(465,833) (265,822)
5,500,000 4,500,000'
2014 TOTAL
200,000 1,995,000
4,796,835 20,418,786
462,000' 113;000 40,000 945,200
9,896,229
(10,550,042)
9,818,388
(731,655)
10,000,000
City of Centralia
Electric Utility Rate Study
Capital Funding Analysis
Debt Service Summary
EXISTING DEBT SERVICE
Annual Interest Payments
Annual Principal Payments
Total Debt Service Payments
Revenue Bond Payments Only
NEW DEBT SERVICE
Annual Interest Payments
Annual Principal Payments
Total Debt Service Payments
Revenue Bond Payments Only
TOTAL DEBT SERVICE PAYMENTS
Total Interest Payments
Total Principal Payments
Total Revenue Bond Payments Only
2009
2010
2011
942,173 902,013 863,213
935.000 970.000 1.005.000
1,877,173 1,872,013 1,868,213
1,877,173 1,872,013 1,868,213
303,949
183.844
487,793
487,793
1,877,173 2,359,806
942,173 1,205,962
935,000 1,153,844
1,877,173 2,359,806
294,757
193.036
487,793
487,793
2,356,006
1,157,970
1,198,036
2,356,006
2012
823,013
1.050.000
1,873,013
1,873,013
285,105 523,656
202.688 363.240
487,793 886,896
487,793 886,896
2,360,806 2,762,159 2,756,109
1,108,118
1,252,688
2,360,806
2013
2014
765,263 704,213
1.110.000 1.165.000
1,875,263 1,869,213
1,875,263 1,869,213
505,494
381.402
886,896
886,896
1,288,919 1,209,707
1,473,240 1,546,402
2,762,159 2,756,109
City of Centralia
Electric Utility Rate Study
Revenue Requirements Analysis
Cash Flow Sufficiency Test
EXPENSES
Cash Operating Expenses 8,901,860 9,250,768 9,553,063 5 9,882,778 10,221,808 10,575,120
Purchased Power (Includes Transmission) 6,600,896 7,337,667 7,581,411 8,344,772 8,522,817 9,291,175
Existing Debt Service 1,877,173 1,872,013 1,868,213 1,873,013 1,875,263 1,869,213
New Debt Service 487,793 487,793 487,793 886,896 886,896
Rate Funded CIP
Rate Funded Depreciation 599,517 930,000 1,320,000 1,750,000 1,950,000 2,100,000
Additions Required to Meet Minimum Op. Fund Balance
Total Expenses 17,979,446 19,878,238 20,810,479 22,338,356 23,456,784 24,722,404
REVENUES
Rate Revenue 17,568,746 18,370,695 18,616,386 19,001,532 19,408,951 19,821,955
Other Revenue 733,000 626,966 636,185 645,668 655,488 665,634
Operating Fund Debt Reserve Fund Interest Earnings 25 -000 90.297 93.354 138.381 135.502 159.716
Total Revenue 18,326,746 19,087,959 19,345,904 19,705,582 20,198,031 20,647,305
NET CASH FLOW (DEFICIENCY) 347,301 (790,279) (1,464,575) (2,552,773) (3,258,754) (4,075,099)
Coverage Sufficiency Test
EXPENSES
Cash Operating Expenses
Purchased Power (Includes Transmission)
Revenue Bond Debt Service
Revenue Bond Coverage Requirement at 1.25
Total Expenses
2009 2010 2011 2012 2013 2014
2009 2010 2011 2012 2013 2014
8,901,860 9,250,766 9,553,083 9,882,778 10,221,808 10,575,120
6,600,896 7,337,667 7,581,411 8,344,772 8,522,817 9,291,175
1,877,173 2,359,806 2,356,006 2,360,806 2,762,159 2,758,109
469.293 589.951 589.001 590.201 090.540 889.027
17,849,222 19,538,190 20,079,481 21,178,557 22,197,324 23,311,431
ALLOWABLE REVENUES
Rate Revenue 17,558,746 18.370,695 18,616,386 19,001,532 19,406,951 19,821,955
Other Revenue 733,000 826,966 635,165 645,668 655,488 885,634
Interest Eamings All Funds r ry ^000 j 129.158 194.015 182.391 175 632 287.943
Total Revenue 18,326,746 19,126,820 19,447,365 19,829,592 20,238,071 20,775,531
Coverage Realized 1.50 1.08 0.98 0.68 0.54 0.33
COVERAGE SURPLUS (DEFICIENCY) 477,524 (411,369) (632,116) (1,348,965) (1,959,254) (2,535,900)
City of Centralia
Electric Utility Rate Study
Revenue Requirements Analysis
Maximum Revenue Deficiency
Sufficiency Test Driving the Deficiency
Maximum Deficiency From Tests
less: Net Revenue From Prior Rate Increases
Revenue Deficiency
Pius: Adjustment for State Excise Tax
Total Revenue Deficiency
Rate Increases
Rate Revenue with no Increase
Revenues from Prior Rate Increases
O.oin.. ,D...: D...f.cro Rot: o ",.c.r.......... n...J ....d..,,.- f.....,,.......q
Required Annual Rate Increase
Number of Months New Rates Will Be In Effect
Info: Percentage increase to Generate Required Revenue
Policy Induced Rate increases
ANNUAL RATE INCREASE
CUMULATIVE RATE INCREASE
Impacts of Rate Increases
Rate Revenues After Rate Increase
Full Year Rate Revenues After Rate Increase
Additional State Taxes Due lo Rale Increases
Net Cash Flow After Rate Increase
Coverage After Rate Increase
17,568,746 18,370,695 18,616,366
1,023,901
17,583,740 18 305 3,5.31207
0.00% 4.77% 3.00%
2009 2010 2011 2012 2013 2014
None Cash Cash Cash Cash Cash
2009 2010 2011
790,279 1,464,575 2,552,773 3,258,754 5 4,075,099
(922.811) (1,935.611) (3,047.639) (3.742.143)
790,279 541,784 617,162 211,115 332,956
$8.571 `@ate 6 I.QQZ 23 x6.473
876,850 S 601,111 684,769 234,241 369,430
0.00% 5.50%
347,301 (334,963)
1.50 1.27
5.50%
2012
5.50%
(54,951) (92,982)
1.58 1.72
2013
2009 2010 2011 2012 2013
2014
19,001,532 19,406,951 19,821,955
2,147,648 3,381,494 4,152,077
21,143,10+1 22,703,443 23,074,033
3.24% 1.03% 1.54%
3.00%
3.00%
0.00% 5.50% 11.30% 17.42% 20.95% 24.58%
5,073,028 1,466,996 5 1,334,664 4,274,218 1,857,111
2014
5 17,506,746 18,875,889 20,180,395 21,730,783 23,472,098 24,693,254
17,568,746 19,381,084 20,720,503 22,312,306 23,472,098 24,693,254
49,878 154,415 209,459 401,352 480,943
405,041 315.258
1.87 1.92
City of Centralia
Electric Utility Rate Study
Fund Activity
Funds
DPERATING FUND
Beginning Balance
plus: Net Cash Flow after Rate Increase
less: Transfer of Surplus to Capital Fund
Ending Balance
Minimum Target Balance
Maximum Funds to be Kept as Operating Reserves
Info: No of Days of Cash Operating Expenses
:APITAL FUND
Beginning Balance
plus: Rate Funded Depreciation
plus: Grants Developer Donations Other Outside Sources
plus: Existing PWTF Bond Proceeds
plus: Capital Contributions
plus: Net Debt Proceeds Available for Projects
plus: Interest Earnings
plus: Transfer of Surplus from Operating Fund
plus: Direct Rate Funding
Total Capital Funding Sources
less: Capital Expenditures
Ending Balance
Minimum Target Balance
DEBT RESERVE
Beginning Balance
plus: Reserve Funding from New Debt
less: Use of Reserves for Debt Service
Ending Balance
Minimum Target Balance
2009
2;488 ;2 60
347,301
(638.5811
2,1 94,979
2,194, 979
2,194, 979
90
832;'139 f
915,685
1,052,000
2,146,730
?81`698='
(334,963)
2,281,011
2,281,011
85
5,500,000
38,861
16,643
638,581
3,455,049 9,731,459
(4.658.431)
3,455,049 5,073,028
1,283,138 1,376,306
04;854
2010 2011
µr2a033174=
487,793
2,146,730 2,091,750
(54,981) (92,982)
2,091,750
2,355, 550
2,355, 550
80
(;943054 5,073,028 1,466,996 1,334,664 4,274,218
1,860,544 1,320,000 1,750,000 1,950,000 2,100,000
389,000 284,200 662,000 313,000 240,000
101,461
2012
1,998,768
2,436,849
2,436,849
74
44,010
2013
1,998,768
405,041
2,403,809
2,520,446
2,520,446
86
6,778,689 3,923,006 8,137,704
(5.311.693) (2.588.342) _13.863.4861
1,466,996 1,334,664 4,274,218
1,482,540 1,534,307 1,611,577
2,520,966 2,520,966 2,520,966
399,103
2014
2,403,809
315,256
(111,502)
2,607,564
2,607,564
2,607,564
90
4,500,000
40,040 128,227
111,502
6,853,946
(4.996.835)
1,857,111
1,711,514
2,920,070
2,004,854 2,520,966 2,520,966 2,520,966 2,920,070 2,920,070
1,877,173 2,363,781 2,363,781 2,363,781 2,762,884 2,762,884
City of Centralia
Electric Utility Rate Study
Fund Activity
Funds
SYSTEM REPLACEMENT RESERVE
Beginning Balance
plus: Reserve Funding
plus: Interest Earnings
less: Use of Reserves for Systme Replacement
Ending Balance
Minimum Annual Transfer Target
EQUIPMENT RESERVE COMBINED
Beginning Balance
plus: Reserve Funding Yelm
plus: Reserve Funding Centralia
plus: Interest Earnings
less: Use of Reserves
Ending Balance
1,434,642 1,551,103
907,819
64,710
79,170
25,000
(57.000)
1,019,699
2009 2010
2011
309,969 $t'g �2298,t
599,517 930,000 1,320,000
6,199 18,246
915,685) •i ('t'. 86D 5 }J (1,320,000)
1 042(6061 1,025,458
60,000 61,993
91,000 94,023
20,852 20,509
(189.0001
1,025,458
2012
1,750,000
(1,750,0001
1,683,895 1,748,604
1,117,783
64,052
97,146
33,533
(64.200) (462.0001
1,117,783 850,515
2013
1,950,000
(1,950,000)
1,845,191
850,515
66,180
100,373
25,515
(113.0001
929,584
2014
2,100,000
(2,100,000)
1,939,068
929,584
68,378
103,707
27,888
(40.0001
1,089,557
Hy of Centralia
lectric Utility Rate Study
nalysTs of Projected Load Data
tenth Jan -10 Feb -10 Mar -10 Apr -10 May -10 Jun -10 Jul -10 Aug -10 Sop-10 Oct -10 Nov -10 Dec -10 Total
lours in the Month 744 672 744 720 744 720 744 744 720 744 720 744
esidenlial
Kwh Sales at the Meter 16,055,235 15,874,074 12,587,482 12,746,804 9,926,205 7,170,261 6,450.493 5,702,833 6,322,696 7,284,748 9,926.971 12,738,697 122,796,499
Load Factor 22.15 23 01 16.22 18.67 14.70 12.14 11.66 11.00 12.08 13.90 15 39 17.85
Indio. Noncalncident Peak(NCPi(Kw) 97,491 102,641 92,851 94,622 90,733 82,042 74,354 69,696 72,605 70,466 89.589 96,996 102,641
Group Coincidence Factor 0.70 0.55 0.64 0.60 0.60 0.55 0.54 0.50 0.55 0.64 0.65 0.69
NCP at the Meter for the Group (Kw) 68,244 65,717 59,425 56,893 54,440 45,123 49,151 41,820 40,043 45,098 511,233 66,927 65,244
NCP at Primary (Kw) 3.45% 70,599 55,019 61,476 56,857 58,319 46,680 41,537 43,263 41,425 45,655 60,243 69,237 70,599
NGP at Input (Kw) 1.73% 71,817 70210 62,536 59,872 57,291 47,486 42,254 44,009 42,140 47,450 61,282 70,431 71,817
System Coincidence Factor 0,65 0.60 0.63 0.60 0.55 0.50 0.53 0.55 0.55 0.63 0.60 0.69
Coincident Peak (CP) at Input (Kw) 48,681 42,126 39,396 35,923 31,510 23,743 22,394 24,205 23,177 29,900 36,769 45,598 48,598
BPA Generation Coincidence Factor 0.600 0.931 0.955 0.975 0.647 0.670 0.787 0.560 0 687 0.941 0.730 U.879
Contnbutlon to SPA Generation Peak 37,345 39,219 37,664 35,061 20,387 15,908 17,624 20,616 20,558 28,136 26,842 42,717 342,278
SPA Iransmission Coincidence Factor 0.800 0.773 0.798 0.976 0.561 0.818 0.970 0.860 0756 0.693 0.745 1.000
Contribution to BPA Transmission Peak 37,345 32,553 31,440 35,081 17,677 19,422 21,723 20,818 17,522 20,721 27,393 48,598
Kwh at Input Voltage 16,942,250 16,740,683 13,274,667 13,442,687 10,468,104 7,561,706 6,802,643 6,014,166 6,667,869 7,682,442 10,468,912 13,434,137 129,5011,296
tenure' Service (<50KW)
Kwh Sates at the Meter 3,579,421 3,532,610 3,123,240 3,270,015 2,695,409 2,431,006 2,447,134 2,291,713 2,470,411 2,449,398 2,808,201 3,066,280 34,264,839
Load Factor 36.39 38.35 32.43 34.58 28.87 27.95 28.25 27.74 29.39 23.96 29.17 29.55
Indiv. Noncolncident Peak(NCP)(Kw) 13,221 14,097 12,944 13,133 12,559 12,079 11,640 11,104 11,574 13,738 13,370 13,947 14,1397
Group Coincidence Factor 0.70 0.70 0.55 0.60 0.57 0.50 0.60 0.70 0.65 0.72 0 65 0.65
NCP at the Meter for the Group (Kw) 9,255 9,858 7,119 7,560 7,153 6,040 6,954 7,773 7,588 9,892 6,690 9,066 9,892
NCP at Primary (Kw) 3.45% 9,574 10,209 7,365 8,152 7,400 6,248 7,225 8,041 7,850 10,233 8,990 9,375 10,233
NCP at Input (Kw) 1.73% 9,740 10,385 7,492 8,292 7,528 6,356 7,350 8,180 7,986 10,410 9,145 0,540 10,410
System Coincidence Factor 0.75 0.55 0.50 D.60 0.57 0.50 0 80 0.65 0.60 0.72 0.65 0.05
Coincident Peak (CP) at input (Kw) 7,305 8,827 3,746 4,975 4,291 3,178 4,410 5,317 4,791 7,495 5,945 5,201 8,827
BPA Generation Coincidence Factor 0.800 0 931 0.956 0,976 13,647 0.670 0.787 0.860 0.587 0.941 0.730 11.579
Contribution to BPA Generation Peak 5,844 8,218 3,551 4,856 2,776 2,129 3.471 4,573 4,250 7,053 4,340 5,451 56,541
BPA l rarrsmission Coincidence Factor 0.800 0 773 0.798 0.976 0.561 0.818 0.970 0 860 0.756 0.693 0.745 1.009
Contribution to BPA l ransmission Peak 5,844 6,823 2,989 4,856 2,407 2.600 4.278 4,573 3,622 5.194 4.429 0,201
Kwh at Input Voltage 3,774,832 3,630,924 3,293,746 3,448,537 2,642,559 2,563,721 2,560,729 2,416,824 2.605,278 2,583,117 2,961,508 3,233,676 36,135,450
leneral Service >50 200 KW)
Kwh Sales at the Meter 3,125,672 3,257,037 3,044,954 3,482,267 2,633.555 2,882,813 2,866,507 3,215,280 3,112,150 3.194.412 3,059,814 3,008,843 37,103,616
Load Factor 45.05 49.52 41.82 48.08 39.09 43.16 40,54 48.01 43.32 39.50 43.29 41.22
Indty. Noncolncident Peak(NC'P)(Kw) 9.326 9,787 9,786 10,058 9,743 9,277 9,571 9,001 9,978 10,789 9,817 9,811 10,789
Group Coincidence Factor 0.65 0.63 0.52 0.68 0.68 0.69 0.60 0.70 U 65 0.50 0.56 0.70
NCP at the Meter tor the Group (Kw) 6,062 6,166 6,066 6,540 6,625 6,401 5,743 8,301 5,485 6,473 5,491i 6,868 5,656
NCP at Primary (Kw) 3,45% 6,271 6,379 6,278 7,075 5,854 6,622 5,941 6.518 6,710 5,697 5,667 7,105 7,105
NIP at input (Kw) 1.73% 6,350 6,489 6,386 7,198 5,972 6,736 6,043 6,031 6,825 5,812 5,755 7,227 7,227
System Coincidence Factor 0.60 0.57 0.57 0.67 0.53 0.84 0.55 0.65 0.60 0.57 0.51 0.55
Coincident Peak (CP) at Input (Kw) 3,825 3,599 3.640 4,823 3,695 4,311 3,324 4,310 4,095 3,883 2,951 3,975 4,623
SPA Generation Coincidence Factor 0.800 0 931 0.955 0.976 0.647 0.670 0.787 0.860 0.667 0.941 0.730 0.879
Contribution to BPA Generation Peak 3,062 3,443 3.480 4,707 2,391 2,859 2,616 3,707 3,532 3,654 2,154 3,494 39.228
SPA lransmtssion Coincidence Factor 0.800 0.773 0.795 0.975 0,581 0.816 0.970 0.860 0.755 U.693 0,745 1.000
Contribution to BPA transmission Peak 3,062 2,859 2,905 4.707 2.073 3,527 3,224 3,707 3,096 2,691 2.198 3,975
Kwh at Input Voltage 3,295,311 3,434,848 3,211,187 3,672,373 2,988,247 3,040,194 3,044,406 3,390,811 3,252,061 3,358,804 3,226,856 3,173,104 39,129,204
lenoral Service (201+ KW)
Kwh Sales at the Meter 6,325,182 8,130,249 6,708,798 7,501,360 8,543,935 5,828,891 5,964,457 0,471,471 7.054,343 7,029,764 8,920,552 6.530,294 82,099,396
Load Factor 46.37 61.46 52.40 58.50 49.04 55.03 45,66 52.89 56.29 54.05 52.27 45,05
Indrv. Noncotncident Peak(NCP)(Kw) 15,335 19,684 17,438 17,811 17,937 17,234 17,556 16,445 18,810 17,481 18,387 19,484 19,684
Group Coincidence Factor 0.65 0.63 0.62 0.58 0.68 0.59 0.60 0.70 0.65 0.60 0.56 0.70
NCP at the Meter for the Group (Kw) 11,915 12,401 10,811 12,111 12,197 11,892 10,534 11,512 10,926 10,489 10,297 13,639 13,639
NIP at Primary (Kw) 3.45% 12,329 12,829 11,185 12,529 12,618 12,302 10.597 11,909 11,303 10,651 10,652 14,110 14.110
NEW at Input (Kw) 1.73% 12,542 13,050 11,378 12,745 12,836 12,514 11,085 12,115 11,498 11,035 10,836 14,353 14,353
System Coincidence Factor 0,60 0.57 0.57 0,57 0.53 0.64 0.55 0.65 0.60 0.57 0,51 0.55
Coincident Peak (CP) at Input (Kw) 7,525 7,439 6,485 5,539 6,503 8,1319 6,097 7,674 6,599 6,292 5,526 7,894 8,539
SPA Generation Coincidence Factor 0.800 0.931 0.956 0.976 0.647 0.670 0.787 0.860 0.887 0.641 0.730 0.879
Contribution to BPA Generation Peak 5,020 6,926 6,200 5,334 4,402 5,366 4,795 6,772 6,119 5,920 4,034 6,939 71,831
BPA transmission Coincidence Factor 0.800 0.773 0.798 0.976 0.581 0,818 0.970 0.660 0,756 0.693 0.745 1.000
Contribution to BPA 1rensmission Peak 8,020 5,750 5,175 8,334 3,817 6,551 5,914 6,772 5,216 4,360 4,117 7,894
Kwh at Input Voltage 6,670,491 8,574,102 7.169,983 7,910,879 6,901,186 7,201,699 6,290,084 6,824,766 7,439,459 7,413,535 7,298,384 6,886,801 86,551,332
iecurity/Yard Lighting
Kwh Sales al the Meter 96,157 96,157 95,106 95,157 95,208 95,205 95,208 95,208 95,208 95,208 95,208 95,208 1,144,241
Load Factor 50 110 50.00 50.09 39.00 55.00 30,00 50.00 50.00 50.00 50.00 50.00 50.00
!rider. Noncoincidenl Peak(NCP)(Kw) 258 266 256 339 233 441 256 256 264 256 264 258 441
Group Coincidence Factor 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1,00 1.00 1.00 1.00 1.00
NCP at the Meter for the Group (Kw) 258 280 256 339 233 441 256 256 264 256 284 256 441
NCP at Primary (Kw) 3.45% 267 296 254 351 241 456 265 265 274 265 274 265 456
NIP at Input (Kw) 1.73% 272 301 269 357 245 464 269 269 278 269 278 269 464
System Coincidence Factor 1.00 1.00 1.00 0.00 0.00 0.00 0.00 0.00 0.09 1.09 1.00 1.00
Coincident Peak (CP) at Input (Kw) 272 301 269 0 0 0 0 0 0 269 278 269 301
SPA Generation Coincidence Factor 0.800 0.931 0.956 0.976 0.647 0.670 0.787 0.560 0.557 0.941 0.730 0.879
Contribution to BPA Generation Peak 218 280 257 0 0 0 0 0 0 253 203 237 1.449
6PAIranomisslon Coincidence Factor 0,800 0.773 0.796 0.976 0.551 0.818 0.970 0.860 0.756 0.693 0.745 1.900
Conlnbution to BPA Transmission Peak 218 233 215 0 0 0 0 0 0 107 207 269
Kwh at input Voltage 101,406 101,406 100,298 100,352 100,406 100,406 100.406 109,405 100,406 100,408 100,400 100,406 1,206,705
City of Centralia
Electric Utility Rale Study
Summary of Projected Usage
System Kwh Q Input Voltage HLH
Residential
General Service (e-50KW)
General Service >50 200 KW)
General Service (201+ KW)
Security/Yard Lighting
Total
System Kwh input Voltage LLH
Residential
General Service (c5DKW)
General Service (>50 -200 KW)
General Service (201+ KW)
Security/Yard Lighting
Total
Total kWh's Q Input Voltage
Heavy Load Hour Breakout
Light Load Hour Breakout
Heavy Load Hour Energy
Light Load Hour Energy
Total Allocated Energy
System CP Q Input Voltage
Residential
General Service (<501(W)
General Service >50 -200 KW)
General Service (201+ KW)
Security/Yard Lighting
Total
Total System CP Input Voltage
Jan -10
Peak Capacity Subject to Delivery Charge 100%
Feb -1D Mar -10 Aor -10 May -10 Jun -10 Jul -10
Aug 10 Seo -10
Oct -10 Nov -10 Dec -10
Total
10,651,734 10,739,513 8,438,471 8,808,432 6,978,313 5,069,027 4,604,313 3,950,431 4,455,517 5,141,105 6.432,617 8,355,503 63,633.977
2,375,492 2,457,621 2,093,776 2,259,682 1,894,924 1,718,264 1,745,746 1,587,501 1,740,865 1,728.627 1,619,697 2,011,219 23,434,415
2,074,360 2,203,530 2,041,295 2,406,353 1,992,044 2,037,507 2,060,581 2,227,269 2,193,095 2.254,410 1,962,741 1,973,546 25,446,632
4,197,723 5,500,473 4,557,819 5,183,669 4,600,612 4,826,743 4,257,392 4,482,877 4,971,099 4,961.154 4,464,475 4 283 318 56,307,254
63.516 65.054 53,750 65,756 66,933 67,294 67,959 65.052 67.092 67.192 61.694 62.448 784.947
19,373,124 20,966,192 17,195,119 18,723,892 15,532,726 13,717,935 12,736,991 12,314,029 13,427,670 14,152,488 14,781,224 16,686,034 189,507,424
6,280.546 6,001,170 4,836,196 4,634,256 3.489.791 2,403,678 2,198,330 2,053,735 2,212,351 2.541,337 4,036,295 5,076,635 45,856,320
1,399,340 1,373,303 1,199,970 1,188,855 947,634 645,457 833,984 829,323 864,413 654,490 1,141,811 1,222,457 12,701,036
1,221,951 1,231,318 1,169,892 1,266,020 996,203 1,002,587 953,625 1,163,542 1,058,964 1,114,394 1,244,117 1,199,559 13,682,372
2,472,766 3,073,620 2,612,144 2,727,210 2,300,674 2,374,956 2,032,692 2,341,690 2,468,360 2,452,384 2,813,689 2,603,463 30,274,078
37,592 36,352 36,540 34,595 33.473 33,112 32A47 344,454 33,314 33.214 38.711 37.957 421,761
11,412,196 11,715,771 9,854,742 9,850,937 7,767,775 6,749,789 6,081,277 6,432,944 6,567,402 6,995,619 9,274,624 10,142,091 102,945,566
30,795,320 32,681,983 27,049,862 28,574,629 23,300,502 20,467,724 18,818,267 18,746,973 20,095,072 21,148,306 24,056,047 26,628,125 292,552,991
67 -n ;65 88.89b' .88 61.4% 2
8.2%
7.96 .796
di sa:.37d 96- 64,29(1:,..,.
82.996..,. 6
35.896x: 38.4 ,ta ;73 ,4:596 eo« :33 396` +`:j•x. 3 X32356; t: Y- _343g6ir_ 33246'•.:..,'. "-133_196 38.696._.._1 .37.696
19,373,124 20,966,192 17.195,119 18,723,892 15,532,726 13.717,935 12,736,991 12,314,029 13,427,670 14,152,488 14,781,224 16,656,034 189,607,424
11,412,196 11.715.771 9,654.742 9,850,937 7,767,775 6,749,789 6,081,277 5.432.944 6.667.402 6.995.819 9274,824 10.142.091 102.945.556
30,785,320 32,681,963 27,049,662 26,574,829 23,300,502 20,467,724 18,018,267 18,746,973 20,095,072 21,146,306 24,056,047 26,826,125 292,552,991
46,681 42,126 39,398 35,923 31,510 23,743 22,394 24,205 23,177 29,900 36,769 48,598 404,424
7,305 8,627 3,746 4,975 4,291 3,178 4,410 5,317 4,791 7,495 5,945 6,201 66,491
3,828 3,699 3,640 4,623 3.695 4,311 3,324 4,310 4,095 3,883 2,951 3,975 46,533
7,525 7,439 5,485 8,539 5,803 8,009 6,097 7,674 6,899 6,292 5,526 7,894 55,383
272 301 259 0 0 0 0 0 0 269 278 269 1.659
65,611 62,392 53,538 54,261 46,299 39,241 36,225 41,707 38,962 47,839 51,469 66,937 604,481
69,611 62,392 53,538 54,201 46,299 39,241 38,225 41,707 38,962 47,639 51,469 66,937 604,481
EPA Peak Demand Generation
Residential 37,345 39,219 37,664 35,061 20,387 15,908 17,624 20,816 20,550 28,136 26,842 42,717 342,278
General Service (<50KW) 5,844 8,218 3,581 4,855 2,776 2,129 3,471 4,573 4,250 7,053 4,340 5,451 56,541
General Service >50 200 KW) 3,062 3,443 3,480 4,707 2,391 2,889 2,616 3,707 3,632 3,654 2,154 3,494 39,228
General Service (201+ KW) 6,020 6,926 6,200 8,334 4,402 5,356 4,796 6,772 8,119 5,920 4,034 6,939 71,831
Secunty/Yard Lighting 218 280 257 0 0 0 0 0 0 253 203 237 1.449
Total 52,489 58,087 51,183 52,959 29,955 26,292 28,509 35,668 34,560 45,016 37,572 56,638 511,326
BPA Peak Demand Transmission
Residential 37,345 32,563 31,440 35,061 17,677 19,422 21,723 20,816 17,522 20,721 27,393 48,568 330,250
General Service (<50KW) 6,844 6,823 2,969 4,856 2,407 2,600 4,278 4,573 3.622 5,194 4,429 6,201 53,816
Genaral Service >50 200 KW) 3,062 2,859 2,905 4,707 2,073 3,527 3,224 3,707 3,096 2,691 2,198 3,975 38,023
General Service (201+ KW) 5,020 5,750 5.175 8,334 3,817 6,551 5,914 6,772 5.216 4,360 4,117 7,894 69,921
Security/Yard Lighting 218 233 215 0 0 0 0 0 0 187 207 269 1.328
Total 52,489 48,229 42,724 52,959 25,974 32,099 35,130 35,868 29,456 33,152 38,345 66,937 493,366
Noncoincident Peak (kW) Input Voltage
Residential 71,817 70,210 62,536 59,872 57,291 47,486 42,254 44,009 42,140 47,460 61,282 70,431 678,769
General Service (e50KW) 9,740 10,385 7,492 8,292 7,528 6,356 7,350 5,180 7,986 10,410 9,145 9,540 102,404
General Service >50 200 KW) 6,380 6,489 6,366 7,196 6,972 6,736 6,043 6,631 6,825 6,012 5,785 7,227 79,485
General Service (201+ KW) 12,542 13,050 11,378 12,745 12,835 12,514 1 1,065 12.115 11,496 11,038 10,838 14,353 145,991
Security/Yard Lighting 272 301 269 357 245 464 269 269 276 269 278 269 3.542
Total 100,750 100,435 06,061 88,465 84,871 73,556 67,001 71,204 68,727 75,989 87,327 101,621 1,008,210
Total NCP Input Voltage 100,750 100,439 81,081 08,465 84,871 73,556 67,001 71,204 68,727 75,989 87,327 101,821 1,000,210
City of Centralia
Electric Utility Rate Study
Revenue
Jan -10 Feb -10 Mar -10 Apr -10 May -10 Jun -10 Jul -10 Aug -10 Sop -10 Oc1 -10 Nov -10 Dec -10 Total
Residential Growth
Customers In5ide 1.00% 6,960 6.959 6,923 6,909 6,952 6,940 6,980 6,926 6,932 6,974 6.055 6,906 6.935
Customer Charge f Month 59.68 59.68 59 68 $9.68 59.68 59.66 59 68 59.68 59.68 59 68 59.68 39.68
Total Residential Customer Revenues $67,374 $67,364 $67,019 556,860 $67,295 $67,177 $67,562 $67,048 567,098 $67,512 $66,357 566.651 5805,538
Customers Outside 1.00% 1,509 1,496 1,503 1,494 1,494 1.492 1404 1.501 1,500 1,522 1,512 1,524 1,504
Customer Charge! Month 510.64 510.64 510 64 $10.64 $10.64 $10.64 $10.64 510.64 510,64 $1D.64 $10.64 $10 64 I
Total Residential Customer Revenues $16,053 515.923 515,988 515,901 515,901 315,079 515,999 $15,966 $15,955 316,194 516,085 316.216 3192.059
Projected Retail Sales Kwhs 16,065,236 15,674,074 12,587,482 12,746,804 9,926,205 7,170,261 6,450,493 5,702,833 6,322,696 7,284,748 9,926,971 12,738,697 122,796,499
Inside 12,209,579 12,064,296 9,692,361 9,815,039 7,643,178 5,521,101 4,837,869 4,334,153 4.868,476 5,536,408 7,445,228 9,554,023 93,521,712
Outside 3,855,656 3,809,778 2,895,121 2,931,765 2,283,027 1.649,160 1,612,623 1,368,680 1.454,220 1,748,339 2,481,743 3,184,674 29,274,787
Energy Charge All Kwh Inside 50.0573 50.0573 50.0573 $0.0573 30.0573 SO 0573 50.0573 50,0573 SO 0573 SO 0573 50.0573 50.0573
Outside 50.0634 50.0634 50 0634 50.0634 50.0634 50.0534 50,0534 50.0634 S0 0634 50.0634 50 0634 50.0634
Total Residential Energy Revenues $944,057 $932,824 5738.923 5748,276 5582,698 $420,916 $379,450 $335,121 $371,161 $428,061 $583,954 $749,354 $7,214,816
Total Residential Rate Revenues $1,027,485 $1,016,111 5821,929 $831,057 $665,094 $503,972 $463,011 5418,136 $454,214 $511,787 5686,397 5832,420 I $8,212,412
General Service (450KW)
Single Phase Customers Inside 0.50% 1,043 1,042 1,037 1,030 1,032 1,028 1,039 1,033 1,031 1,036 1,035 1.031 1.035
Three Phase Customers- Inside 0.50% 148 146 141 140 139 144 146 138 140 140 143 144 143
Total Inside Customers 1,192 1,189 1,179 1,171 1,172 1,173 1,186 1,172 1.172 1.177 1,179 1,176 1,178
Single Phase Charge Month $20.67 520.67 520 67 520.67 $20.67 $20.57 520 67 $20 67 520 67 $20.67 $20,67 $20.67
'Three Phase Charge Month $30 51 $30.51 $30.51 530.51 $30.51 $30.51 $30.51 $30.51 530 51 $30.51 530 51 530.51
Total Customer Charge Revenues 526,095 326,014 525,755 525,578 525,509 $25,660 $25,951 $25,579 325.599 $25,703 $25,775 $25,722 $309,022
Single Phase Customers -Outside 0.50% 240 238 239 239 238 237 235 236 232 236 234 233 237
Three Phase Customers -Outside 0.50% 19 19 19 19 19 19 19 19 19 19 19 19 19
Total Outside Customers 260 258 259 259 258 257 255 256 251 256 254 253 256
Single Phase Charge Month 520.67 520.67 520 67 520.67 $20.67 520.67 $20 67 520.67 520.67 520.67 320.67 $20 67
Three Phase Charge! Month 530,51 530.51 530 51 530.51 530.51 530.51 530.51 530.51 530.51 530.51 530.51 530.51
Total Customer Charge Revenues .55,554 35,513 55,533 35,533 $5,513 $5,492 $5,450 55,471 55,387 $5,471 $5,429 $5,408 $65,754
Projected Retail Sales Kwhs 3,579,421 3,632,610 3,123,240 3,270,018 2,695,409 2,431,006 2,447,134 2.291,713 2.470,411 2,449,398 2,808,201 3,066,280 34,264,839
Energy Charge -All Kwh 60.0643 50.0643 50 0643 50.0543 $0 0643 50.0643 50.0643 50 0643 50 0643 50.0543 60.0643 50.0643
Total Energy Revenues $230,157 $233,577 $200,824 $210,262 5173,315 5156,314 5157,351 $147,357 $156,847 $157,496 $180,567 $197,162 $2,203,229
Total GS <SOKW) Rate Revenues $251,897 $265,103 $232,113 $241,374 $204,416 $187,465 5188,752 $178,407 $189,834 $188,670 $211,771 5226,292 I $2,578,004
General Service >50 200 KW)
Three Phase 1.30% 151 150 153 155 154 155 158 158 159 162 161 161 156
City of Centralia
Electric Utility Rate Study
Revenue
Three Phase Charge! Month 351 37 551 37 551.37 551.37 351 37 551.37 551.37 551.37 351.37 551.37 551.37 $51.37
Total Customer Charge Revenues 57,750 57,697 57,855 $7,960 57,908 57,960 $8,119 $8,119 $8,171 58,329 58,277 58.277 $96,421
Projected Total Demand KW's 9,326 9,787 9,788 10,058 9,743 9,277 9,571 9,001 9.978 10,789 9,817 9,811 116,947
Billed Demand Calculated 9,326 9,787 9,788 10,058 9,743 9,277 9,571 9.001 9.978 10,789 9,817 9,611 116,947
Demand Charge $4.17 $4.17 54.17 54.17 54.17 $4.17 $4.17 54.17 $4.17 54.17 34.17 54.17
Total Demand Charge Revenues 538,891 340,812 540,814 $41,943 540.628 536,685 539, 911 $37,536 $41.608 544.990 540,938 $40,911 5487.867
Energy Sales Kwhs 3,125,672 3,257,037 3,044,954 3,482,267 2,833.556 2,882,813 2,886,807 3,215,280 3,112,160 3,194,412 3,059,814 3.008,843 37,103,616
Energy Charge -A11 Kwh $0 0507 $0 0507 30.0507 30.0507 $0 0507 50.0507 50.0507 50.0507 50.0507 50.0507 SO 0507 30.0507
Total Energy Charge Revenue 6158.472 5165,132 5154,379 $176,551 $143,661 $146,159 $146,361 $163,015 $157,786 6161.957 $155.133 5152,548 51,881,153
Total GS (a50 -200 KW) Rale Revenues $205,112 $213,640 $203,048 $226,455 $192,197 $192,604 5194,391 5206.669 $207,566 $215,276 $204,347 $201,737 I $2,465,242
General Service (201+ KW)
Three Phase 1.30% 12 12 13 13 13 13 13 13 13 13 13 13 13
Three Phase Charge l Month $51.37 551.37 $51.37 551.37 551.37 551.37 551.37 551.37 $51.37 351.37 551.37 551.37 I
Total Customer Charge Revenues 5633 5633 6685 6685 5685 $695 $685 $685 $685 $685 $685 $685 $8,119
Projected Total Demand -KW's 18,335 19,684 17,436 17,811 17,937 17,234 17,556 16,445 16,810 17,481 18,387 19,484 214,603
Billed Demand Calculated 18,335 19,684 17,438 17,811 17,937 17,234 17,556 16,445 16,610 17,481 18,367 19,484 214,603
Demand Charge 54.17 54.17 54.17 54.17 $4.17 $4.17 $4.17 54.17 54.17 $4.17 $4.17 $4.17
Total Demand Charge Revenues 576, 456 $82,084 $72,715 574,270 574,798 571,866 573,208 568,577 570.096 $72,896 $76,675 581,249 5894,894
Energy Sales Kwhs 6,325,182 6,130,249 6,798,798 7,501,360 6,543,935 6,828,891 5,964,467 6,471,471 7,054.343 7,029,764 6,920,552 6,530,294 62,099,306
Energy Charge All Kwh $0 0507 56 0507 50.0507 50 0507 50 0507 50.0507 50.0507 $0 0507 30.0507 50.0507 50.0507 50.0507
Total Energy Charge Revenue 6320,687 6412,204 6344,699 $380,319 $331,777 5348,225 $302,398 5326,104 $357,655 $356,409 $350,872 $331,086 $4,162,435
Total G5 (201 +1(W) Rate Revenues 397, 778 $494,920 $418,100 $455,275 $407,201 5418,777 $376,292 5397,366 $428,437 $429,990 $428,233 $413,020 $5,065,447
City of Centralia
Electric Utility Rate Study
Revenue
Street/Yard Lighting
150 W Customers 0.00% 648 648 648 648 648 648 648 648 648 648 648 648 648
Monthly Charge 52.18 52.18 $2.18 $2.18 52.18 52.18 52.18 52.18 52.18 52.18 52.18 52.18
Total 150 W Revenue 51,413 51.413 51.413 51,413 51.413 51.413 51,413 51,413 51,413 51,413 51,413 51,413 516,952
200 W Customers 0.00% 514 514 514 514 514 514 514 514 514 514 514 514 514
Monthly Charge $2.88 52.88 52.88 52.86 52.88 52.88 52.88 $2.88 $2.88 S2 BB 52.88 52.83
Total 200 W Revenue 51,480 51,480 51,480 51.480 61,480 61,480 61,480 61,480 $1,480 51,480 51,480 $1,480 $17,764
250 W Customers 0.00% 101 101 101 101 101 101 101 101 101 101 101 101 101
Monthly Charge 53.61 53 61 53.61 $3.61 $3.61 53.61 53 61 53 61 53 61 53.61 53.61 $3.61
Total 200 W Revenue 5365 $365 5365 5365 $355 $365 5365 $365 5365 5365 5365 $365 $4,375
400 W Customers 0.00% 134 134 134 134 134 134 134 134 134 134 134 134 134
Monthly Charge 55.77 55.77 55.77 $5.77 55.77 $5.77 55 77 55.77 $5.77 $5.77 55.77 55.77
Total 200 W Revenue $773 $773 $773 $773 $773 $773 $773 $773 $773 5773 $773 $773 $9,278
1000 W Customers 0.00% 2 2 2 2 2 2 2 2 2 2 2 2 2
Monthly Charge 514.44 514 44 514.44 $14.44 514.44 514.44 614.44 $14 44 514 44 514 44 514 44 514.44
Total 200 W Revenue $29 $29 S29 $29 529 $29 529 $29 $29 $29 $29 $29 $347
Traffic Light Customers 0.00% 1 1 1 1 1 1 1 1 1 1 1 1 1
Monthly Charge MGT Pays) $72.82 57212 572.82 572 82 $72.82 572.82 572.82 572.82 572.82 572.82 572 82 572.82
Total Traffic Light Revenue $73 573 573 573 573 $73 573 573 $73 573 573 $73 $874
Total Street Lights $4,132 $4,132 $4,132 $4,132 $4,132 $4,132 $4,132 $4,132 $4,132 $4,132 $4,132 $4,132 I $49,589
SUMMARY OF REVENUE PRESENT RATES
Jan -10 Feb -10 Mar -10 Apr -10 May -10 Jun-10 Jul -10 Aug -10 Sep -10 Oct -10 Nov -10 Doc -101
Total
ResIdential 51.027,485 51,016,111 5821,929 $831,057 $665,894 5503 ,972 5463,011 5418,136 $454,214 $511,787 5666,397 5832,420 58,212,412
General Service (c50KW) 261,807 265,103 232,113 241,374 204,416 187,465 188,752 178,407 189.634 188,670 211.771 228,292 2.578,004
General Service >50 -200 KW) 205,112 213,640 203,048 226,455 192,197 192,804 194,391 208,669 207,566 215,276 204,347 201,737 2,465,242
General Service 1201+ KW) 397,778 494,920 418,100 455,275 407,261 418,777 376,292 397,366 428,437 429,990 428,233 413,020 5,065.447
StreellYard Lighting 4,132 4,132 4.132 4,132 4,132 4,132 4,132 4,132 4,132 4,132 4,132 4.132 49,589
Total $1,896,314 $1,993,907 $1,679,323 $1,758,292 $1,473,901 51,307,150 51,226,577 51,208,710 51,284,183 $1,349,856 $1,514,880 $1,679,602 I $18,370,695
City of Centralia
Electric Utility
Development of 2010 Purchased Power
NT -04
NT -04
ACS -04
ACS -04
ACS-04
ACS -04
ACS -04
ACS -04
ACS -04
GRSP -04
GRSP -04
Power Rates f t
HLH Energy ($!kWh)
LLH Energy ($ikWh)
Load Variance (5/kWh)
C &R Discount (5 /kWh)
Demand (51kW)
Transmission Rates
Base Charge (51kW)
Load Shaping (5/kW)
Ancillary Service Rates
SCD NT Long Term Firm (5/kW)
GSR NT Long Term Firm (5/KW)
Regulation Frequency (5/kWh)
Spinning Reserve (5/kWh)
Supplemental Reserve (5/kWh)
CA Spinning Reserve (5 /kWh)
CA Supplemental Reserve (5 /kWh)
PFP Lagging /kVAr)
PFP Lagging Ratchet (5/kVAr)
Total Loads
Power Bill Reported kWh
Transmission Bill Reported kWh
Transmission Bill Reported Yeim
Yelm Hydro
C&R Discount
LB CRAC True UP
BPA Purchases
Total Energy
HLH Energy
LLH Energy
Total Generation Demand
Total Transmission Demand
dol
Total Transmission
Base Charge kW
Load Shaping Charge kW
Reg Freq Response kWh
Spin /Supp Reserves kWh
CA Spin /Supp Reserve Req'mt -kWh
PFP Lagging kVAr
PFP Lagging Ratchet- kVAr
Jan -10 Feb -10 Mar -10 Apr -10 May -10 Jun -10
Jul -10 Auq -10 Sep-10 Oct -10 Nov -10 Dec -10 Total
",$0.02998 $0.03031
40: 02812, 50,02839,,' $Q.92294 ,$0.01895:; "$0.02457 50,02878' '50.02970' $0.03141, $0,03350- 50.03496
'$0.021146•, $0;02168 ;.$0.01897, $0,01524 0 :01059' $0,01799:;: ,$0 :02134',;; $0.02304,,;! $0,02301 $0,02443 ''•$0,02585
$0, 00046,{ $0,00049„;',, _$0,00049, ''$0,000492,','$000049 ;,$0.00049_,; 00049 $0, 00049; $0, 00049,,,,',$0: 00049;,' ^$0,00049 $0,00049
(50.00050) ($0.00050) (50.00050) (50.00050) (50.00050) (50 00050) (50.00050) (50.00050) (50.00050) (50.00050) (50.00050) (50,00050)
f_ $1.85' 4';$1,7,4', ;_i r.,' $1:44.,., ,-..$1,32: r r .$1.61. ',$1,89; $1 $2.05 ,52.99 '$2:30
1 51:298
$0,367;
7,217,009
7,514,400
'13,072,000
0
48,489
52,489
30,785,320
793,046
5,836
51:298' i '$1,285; 1 :296;. ;$c298;,:, ;;;51298'
`$0 :367,'- :$0:367: 0.367' 0 98 0'36
:$0.20300',,,,,_$0,20300„y ;,;$0:24300;; :,;,;,$0,20300 ;$0.20300_', ":$0.20300 ^;`;$0.20300 50.20300 „;$0.20300;,, :50,20300',
F '$D,99D26 ?'$Octl0028 50i00028 {.'50,00028 ';;;';$0.00026(' $0.00028 0. 00028`;
50. 00028 ;�$OA0933.,�'$0,00033" $0.09033
50, 00793,, °.50,00793• •,'$0:00793`, ';'50,00793'1" ;50.00793' 50:00783; $0,00793-'; $000793, 50 :00793 '50 :00793 $000793
',$0,00793;',[ 50.00793) $0,00793' 50.00793, 50.00793 $0,00793 50.00793 50 :00793 ''',.S0.00793 50.00793 $9.00793
50.28000' 50, 28000'„ $0.28000 $0,28000 1 'S028000 50.28000;'., '50.20000' .$6.28000
30,785,320 32,681,963 27,049,862 28,574,829 23,300,502
'30,501',766 31,811,853 28,988,164 28,243,156 22,940,528,
8,278,000 7,442,000 8,987,000
6,787,200 7,514,400 7,272,000
13,072,000. 13,072,000 13,072,000
0 0 0
42,229
48,229
32,881,963
827,108
Q
5,636
36,724
42,724
27,049,882
701,892
5,636
7,198,000
7,514,400
13,072,000
0
23,270,920 25,094;763 ,1035,462' 21;302,829 15,788,102 ;13,195,724, 11,303,867 11,232,573
14,844,331 16,612,055 12,418,340 13,858,854 10,523,430 8,844,075 7,850,930 7,378,163
8,826,589 9,282,708 7,117,114 7,343,975 5,282,672 4,351,649 3,652,937 3,854,410
54489 ,i 58,087' 52 29,955° •26, 292;,' 28,509 35,868;
52,489,'' ;48229 42724„ 52,959 25,974 32,099',,;, 35,139 35,868
0 0 0 0 0 0 0 0
46,959 19,974
52,959 25,974
28,574,829 23,300,502
734,322 596,454
5,836 5,838
511.298'': '$1:298;
$0':387&, 50.387
'51.298 $1;298'); 51.298
51:299
50.367'' 50,387 50.387 50.367,
50,28000' $0,28000; 50.28000 ,'$9.28000
20,467,724 18,818,287 18,748,973 20,095,072 21,148,308 24,058,047 26,628,125 292,552,991
20,657,601 18,026,042 16,058,189 17,581,558 ,19,839,765 21,801,033' 28;145;533 280,595,184
7,449,000 6,704,000 4,352,000 4,352,000
7,272,000 7,514,400 7,514,400 7,272,000
13,072,000. 13,072,000 13,072,000 .13,072,000
0 0 0 0
26,099 29,138
32,099 35,138
20,487,724 18,818,287
537,098 468,729
5,938 5,838
29,888
35,868
18,746,973
417,481
0
5,636
12,823,072
6,588,488
4,254,804
'3400
29,458
0
23,456
29,458
20,095,072
457,120
0
5,636
8,037,000 4,884,000 8,899,000
7,514,400 7,272,000 7,514,400 88,478,000
13,072,000 13,072,000 ,13;072,000
0 0 0
13,833,906 16,78047 19,313,726 204,076,991
9,123, 837 10,312,948 12,012,374
4,510,070 6,471,100 7,301,351
45,018''; 37,572
33,152 38,34
0 0
27,152
33,152
21,148,308
515,834
0
5,636
32,345
38,345
24,056,047
588,827
n
5,838
58,838
'88,937
0
511,328
493,368
0
60,937 421,368
66,937 493,388
28,828,125 292,552,991
679,784 7,295,475
0
0 0
5,636 67,832
City of Centralia
Electric Utility
Development of 2010 Purchased Power
Load Variance
Total Load Variance
Generation Demand
Total Generation Demand
Transmission Costs
Base Charge
Load Shaping
Total Transmission Costs
Jan -10 Feb -10 Mar -10 Apr -10 May -10 Jun -1D Jul -10 Auq -10 Sep -10 Oct -10 Nov -10 Dec -10I Total
PF -02 Cot Power Costs
Energy Purchases (kWh)
Heavy Load Hour Energy 5434,644 $503,511 $349,204 $368,374 $231,936 $178,439 5187,953 $212,344 $254,464 5286,550 $345,484 5419,953 $3,770,935
Light Load Hour Energy 185.127 291.249 148,884 139,315 80.203 48.054 65,716 82.253 101.430 103,777 158,089 187,280 1,497.206
Total Energy Purchases $619,770 5704,760 5495,665 5507,689 $312,140 $222,523 $253,700 5294,597 $355,913 $300,355 $503,573 5807,232 $5,256,142
515.085 $18,014 $13,254 514.002 511.417 $10,029 59,221 59.156 59.547 510,383 511j57 513,145 5143,351
$15,085 518,014 513,254 $14,002 $11,417 $10,029 $9,221 59,156 59,847 $10,363 511,787 $13,146 $143,351
5102,878 5115.592 $94 592.148 543.136 534.705 545.900 567.790 $57,737 592,283 582 5135,327 5974.467
$102,878 5115,592 594,688 592,148 543,136 $34,705 $45,900 $57,790 557,737 $02,283 582,284 $135,327 5974,467
Total Base Power Costs
Energy $534,855 5720,775 5508,142 5521,891 $323,557 5232,552 $252,921 5303,783 $365,750 $400,719 $515,380 $620,378 55,411,493
Demand 5102.878 $115,592 594.688 592.148 543.138 $34,705 545.900 587.790 567.737 592.283 582.284 5135.327 5974,467
Totals $737,733 5536,367 5603,830 $613,839 5366,693 $267,257 5306,820 $371,573 $433,497 $493,002 $597,644 $755,705 $6,385,960
C&R Discount '($8.5361 ($6.5361 {$5.5381 (56.536) (56.530 (58.5361 I (56.536) (56.536) 156.S3 ($6.536) ($8,5381 ($9;536) (578.432)
Total C&R Discount ($6,536) ($6,536) (58,535) (56,536) ($6,535) (58,536) (58,538) (56,535) ($5,538) (56,536) ($6,538) (58,536) (578,432)
Total Energy $628,319 $714,239 $502,606 $515,155 $317,021 $226,016 $256,385 $297,247 $359,224 $394,183 $506,824 $613,842 15,333,061
Total Demand $102,878 $115,592 $94,688 $92,148 $43,136 $34,705 $45,900 $67,790 $67,737 $92,283 $82,284 5135,327 $974,467
Total Energy and Demand $731,197 $829,831 $597,294 $607,303 $360,157 $260,721 $302,284 $365,037 $426,961 $486,466 $591,108 $749,169 $6,307,528
560,342 554,813 $47,687 $60,952 $25,928 $33,877 537,821 536,758 530,445 535,243 541,983 $79,097 $546,936
519.263 517,700 515.660 519.436 59.532 511,780 512.896 513,183 510.510 512.187 514,072 524.566 $181,066
$79,606 572.513 553,347 580,388 535,458 $45,857 $50,717 $51,932 $41,256 $47,410 $56,056 5103,883 5728,002
Ancillary Chartres
SCD NT Long Term Firm $9,437 $8,572 $7,455 $9,533 $4,055 $5,295 $5,915 56,063 54,751 55,512 58,555 512,370 $85,535
GSR NT Long Term Firm 50 S0 $0 50 50 50 SO $0 50 $0 $0 50 SD
Regulation Freq. Response $8,540 58,907 $7,557 57,908 58,423 $5,784 55,048 $4,495 $4,923 $6,547 $7,194 $8,628 $81,956
Spinning Reserve $6,259 58,559 55,554 55,823 $4,730 $4,259 $3,717 $3,310 $3,625 54,091 $4,495 55,391 $57,653
Supplemental Reserve $6,289 $6,559 $5,584 $5,823 $4,730 $4,259 $3,717 $3,310 $3,625 $4,091 $4,495 55,391 $67,853
CA Spinning Reserve 50 50 SO SO 50 $0 $0 $0 $0 $0 $0 SO $0
CA Supplemental Reserve $0 $0 50 50 $0 $0 $0 50 $0 $0 $0 $0 $0
PFP Lagging $0 $0 $0 50 50 $0 $0 $0 $0 $0 $0 $0 $0
PFP Lagging Ratchet 51.578 $1.578 51,578 $1 51.578 51.578 51.578 $1 51.578 $1,578 51.578 51.578 518.937
Total Ancillary Charges 532,133 $32,176 $27,718 $30,665 521,516 521,179 $19,975 $18,758 $18,512 $21,518 524,328 $33,358 $302,137
Subtotal Transmission $111,739 $104,889 591,085 5111,053 556,974 568,838 $70,892 $70,690 $59,788 $89,228 $80,384 $137,021 $1,030,139
Total SPA Power Costs $842,936 $934,519 $688,358 $718,356 $417,131 $327,556 5372,976 $435,727 $486,729 5555,694 $671,492 $886,190 $7,337,667
City of Centralia Electric Utility Rate Study April 2011
COST OF SERVICE TECHNICAL
MEMORANDUM
•FCS GROUP
Solutions Oriented Consulting
To: Ed Williams, General Manager; Centralia City Light
From: Angie Sanchez Vimoche; FCS GROUP
RE Draft Electric Utility Cost of Service Results
A. T OD UCT
G
N
allocated total costs to each customer class of service and
Date: June 7, 2010
The methods used to establish utility rates are based on principles that are generally accepted and widely
followed throughout the industry. A standard rate study is composed of three interrelated analyses: a
revenue requirement analysis, a cost of service analysis and a rate design analysis.
o Revenue Requirements Analysis. This analysis identified the total revenue requirement to fully fund
the utility on a standalone basis, considering operating and maintenance expenditures, capital funding
needs, debt requirements and policy objectives.
o Cost of Service Analysis. This analysis developed an allocation of the rate revenue requirement that
identifies the functional elements of electric service and distributes those calculated costs to
customers based on their demand and use of the system.
o Rate Design Analysis. This analysis includes the development of rates that generate sufficient
revenue to meet each system's revenue requirement forecast and continue to address the City's
pricing objectives (e.g. conservation).
The rate study completed for the City in 2010 included all three of the analyses noted. Rates were set
based on the revenue requirement results only and did not include class cost of service adjustments due to
the changes anticipated with the new Bonneville Power Agency (BPA) Tiered Rate Methodology (TRM)
that will take effect October 1, 2011. Power costs under this methodology will be incurred differently than
historical power purchases resulting in potential changes to how power costs are passed on to the City's
customers. For this particular study, it was determined that the cost of service will be completed in the
traditional approach to set the benchmark of the historical cost of service allocations of the City. This
benchmark will then be updated with the new BPA rates when the costs are more firmly established.
B. COST OF SERVICE
A cost of service analysis is concerned with the equitable allocation of the system's total revenue
requirements among the customers it serves. The proper allocation of costs establishes a defensible basis
for assigning "cost shares" to customer classes. The cost of service results provides two key pieces of
information:
average unit costs for rate design
The allocation of revenue requirement among customer classes enables a fair distribution of revenue
obligation, while unit costs ensures that a rate's demand, energy and customer charges reflect the costs
incurred by the electric system.
While there are many accepted approaches to determining the proper allocation of costs among a utility's
customers, most entail the same three -step process; functionalize, classify and allocate. A short
description of each step is provided below.
City of Centralia Page 2
Cost of Service Technical Memorandum
e Step 1— "functionalize" the assets and expenses among the various services provided (i.e., power
supply, transmission, distribution). This step is largely accomplished through the City's system of
accounts.
Step 2 "classify" the assets and expenses to the utility operation (demand, energy, customer) for
which the functionalized dollars are spent.
Step 3 "allocate" the functionalized and classified costs to the utility's customers based upon their
contribution to the factors that drive the utility's costs in the relevant functional cost categories. This
is performed through the application of allocation factors developed for the City, based upon City
specific data. The utility's allocated costs then serves as a guide for setting rates that collect the
desired level of revenues from its customers.
The procedure applied and the assumptions used to complete the three -step cost of service process is
discussed in detail in the remainder of the report.
8.1 Step 1: Functionalize Assets and Expenses
To functionalize a utility's assets and expenses is to assign these costs to a particular function or service
provided by a utility. For electric utilities, assets are commonly associated with power supply,
transmission, distribution or general plant.
For this study, the utility's plant investment was categorized into the following basic utility functions:
generation, distribution, transmission, general and other (intangible). General plant assets were
functionalized as all other direct utility functions. The resulting functionalized assets for the City shows
that approximately 38 percent of the City's a ssets are generation related, 1 percent are related to
transmission investments and 61 percent are related to distribution plant investment.
Table 1: Functionalized Plant Investment (assets)
Total
Power Transmission Distribution Other
Plant
Intangible 4,862,082 4,862,082
Generation 19,570,352 19,570,352
Transmission 1,495,017 1,495,017
Distribution 34,559,792 34,559,792
General 3,669,648 1,482,270 90,700 2,096,678
Total Plant $64,156,892 $25,914,704 $1,585,717 $36,656,470
Accumulated
Generation (7,531,234) (7,531,234)
Transmission (1,051,968) (1,051,968)
Distribution (7,856,594) (7,856,594)
General (1,116,327) (511,401) (71,433) (533,494)
Total Plant $(17,556,123) (8,042,635) (1,123,401) (8,390,088)
$0
Net Plant $46,600,769 $17,872,069 $462,316 $28,266,383 $0
%of Total Plant 100% 38% 1% 61% 0%
Expenses were functionalized into purchased power, Yelm (administrative, maintenance and operation),
non -Yelm; administrative, engineering, conservation, customer service, maintenance and operation, taxes,
debt service and depreciation funding. The most significant expenses are related to purchased power and
power generation. The total power costs for the City represent 47 percent of total expenses for 2010 (10.7
percent related to Yelm and 36.9 percent for purchased power).
City of Centralia Page 3
Cost of Service Technical Memorandum
Table 2: Functionalized Expenses
2010 Expenses
Total Expenses
Total %of Total
Yelm 2,121,219 10.7%
Non Yelm
Purchased Power 7,336,863 36.9%
Administrative 1,288,907 6.5%
Engineenng 192,029 1.0%
Conservation 303,160 1.5%
Customer Service 280,671 1.4%
Maintenance 98,569 0.5%
Operations 3,100,098 15.6%
Taxes 1,866,113 9.4%
Debt Service 2,359,806 11.9%
Depreciation 930,000 4.7%
$19,877,434 100.0%
B.2 Step 2: Classification of Assets and Expenses
To classify assets and expenses is to assign cost drivers to the utility's functionalized costs. The objective
of this step of the analysis is to classify costs based on cost causation or the cost drivers. For electric
utilities, cost drivers are organized into four broad categories.
Energy Costs that vary with the total (average) consumption (flow) of the electricity over a
specified period of time.
o Demand Costs predicated upon the maximum rate of use required at one point in time. Demand
may be coincident or non coincident to the system peak.
o Customer Related Costs associated with providing service to customers, regardless of the level of
electrical consumption.
Direct Assignment Costs directly attributed to benefitting or being incurred for a specific customer
or class of customers.
The general approach to classification is to first assign the utility's plant investment to the four cost
drivers. The test period expenses are then based on the related plant account or directly assigned to one of
the four cost drivers.
B.3 Classification of Assets (plant in service)
As noted previously, the utility's plant investment were functionalized to generation, transmission,
distribution and general.
Generation
The assets listed under this function relate to the production costs associated with the Yelm Hydroelectric
plant. Of the $19 million in plant investment for generation, reservoirs /dams and waterways comprise 65
percent of the asset value. There is no water storage capabilities at Yelm, therefore 100 percent of this
asset is classified as energy related.
City of Centralia Page 4
Cost of Service Technical Memorandum
Transmission
Transmission systems generally are configured as an integrated network, where power may flow over a
number of paths to points on the utility's system. Transmission systems are designed to transmit power
from a single point of integration to a single point of delivery. The transmission expenses in this study
relate to the transmission assets that are owned by the City. The transmission system of others (e.g. BPA)
is treated as a power supply expense. The City's transmission expenses are classified 100 percent
demand related.
Distribution
Distribution facilities reduce high voltage energy from the transmission system and deliver it to the retail
loads. Most distribution expenses are attributed to meeting peak demands or are a function of the number
of customers served. The classification of distribution costs for the City is as follows:
Land /land rights and structures improvements are allocated as 100% demand
Substation costs are typically classified a s demand related on the belief that substations are typically
built to serve a peak of a certain size 100% demand.
Poles, conductors, devices are split between demand and customer classifications. The basis used to
allocate costs to demand and customer is often referred to as the "minimum system" or "minimum
size" approach. Pole and conductor costs associated with a minimally sized system are considered
customer related on the belief that the utility would incur at least this level of cost to stand "ready to
serve" its customers, regardless of the size of the load being served. Actual costs in excess of this
amount, presumably driven by the utility's need to size these facilities to meet a peak load, are
classified as being demand related. Poles, Towers, Fixtures 65% demand, 35% energy; UG
conductors /devices 54% demand, 46% energy.
Transformers are classified 100% demand related
Meters and service drops are typically classified as customer related, since their costs are primarily
related to the number of customers served 100% customer meters services.
Lighting and installations on customer premises are generally directly assigned to the customer(s)
benefiting from these investments 100% direct assignment
Other
General plant is classified as all other generation, transmission and distribution plant.
Accumulated depreciation is classified on the total related plant account (e.g. generation,
transmission, distribution).
Table 3: Classification of Plant -in- Service (Assets)
l% i ®EMAND f3EUTED I 7 EIVERGYAa ailED 1 p 'd∎ GWIt3T ERIREW1TiEt0
Total Net Plant
Nom :mm :1(JAN Peak':.
nmaN? s Seconda
EWER
Coincidem
system
Bemire NCP 1i) (NCP 2)`v (C+P118
$46,600,7681$11,193,578 $9,911,164 $01$11,950,672 $6,488,3211$4,097,178
100 0% 240% 213% 00% 256% 139% 88%
100 0% 45 3% 39 6%
eighted
We„ MOMS;)w+ i:(RR)
$0 $2,947,8881
00% 63% 00%
15 1% 0 0%
$0 I
$11.968
0 0%
0 0%
The summary of the classification of plant in service indicates that the majority of system investment, 45
percent, is related to demand requirements.
City of Centralia Page 5
Cost of Service Technical Memorandum
B.4 Classification of Expenses
Separately, the utility's operating expenses were categorized among the key cost drivers. The first step in
classifying the expenses is to assign expenses as the related plant account. Table 4 provides a summary of
the plant classification factors used to classify test period expenses.
Table 4: Plant Classification Factors
Classification Factor Demand Energy Customer Revenue DA Total
Generation Plant 34.97% 65.03% 0.00% 0.00% 0.00% 100.00%
Transmission Plant 100.00% 0.00% 0.00% 0.00% 0.00% 100.00%
Distribution Plant 74.94% 0.00% 25 02% 0.00% 0.04% 100 00%
Plant before General Plant 64.64% 21.04% 14.29% 0.00% 0.03% 100.00%
General Plant 64.66% 21.04% 14.30% 0.00% 0.00% 100.00%
Transmission Distribution 75.98% 0 00% 23.98% 0.00% 0.04% 100.00%
Net Plant in Service 66.90% 17.95% 15.12% 0.00% 0.03% 100.00%
For those expenses, that do not have a related plant account, a more detailed analysis is undertaken to
determine why the cost was incurred. A summary of the classification approach for the key expenses is
provided:
Power Supply
Power supply expenses are driven by the need to meet a utility's energy and demand requirements. Power
supply expenses are classified on the basis of cost causation. Power costs have been classified to demand
and energy as shown in Table 5.
Table 5: Classification of Purchased Power
Purchased Power Total Energy Demand
Power
HLH Energy /kWh) $3,770,935 3,770,935
LLH Energy /kWh) 1,497,206 1,497,206
Load Variance /kWh) 143,351 143,351
C &R Discount /kWh) (78,432) (78,432)
Demand /kW) 974,037 974,037
Transmission
Base Charge /kW) 546,676 546,676
Load Shaping /kW) 180,993 180,993
Ancillary Service
SCD NT Long Term Firm /kW) 85,497 85,497
GSR NT Long Term Firm /kW)
Regulation Frequency /kWh) 81,956 81,956
Spinning Reserve /kWh) 57,853 57,853
Supplemental Reserve /kWh) 57,853 57,853
CA Spinning Reserve /kWh)
CA Supplemental Reserve /kWh)
PFP Lagging /kVAr)
PFP Lagging Ratchet /kVAr) 18,937 18,937
Total $7,336,863 5,465,804 1,871,059
City of Centralia Page 6
Cost of Service Technical Memorandum
Roughly 75 percent of the City's purchased power costs are classified as being related to meeting energy
requirements, with the remaining 25 percent classified as being related to meeting peak load (or demand)
requirements.
Yelm Expenses
The Yelm hydroelectric plant expenses are identified separately in the City's budget. These expenses
include costs for administrative, operations and maintenance. Yelm expenses are classified as generation
plant; 100 percent energy related.
Other Non -Yelm Expenses
Non -Yelm expenses include administrative, engineering, conservation, customer service, operations and
maintenance expenses. In addition, costs such as taxes, debt service and depreciation funding are included
in this category. Non -Yelm costs use either the plant classification factors identified in Table 4 or 100%
direct assignments (DA) to classify expense tine items to the four cost drivers.
Administrative costs were classified as plant in service before general plant. Some items such as
general liability and property insurance were classified as general plant.
Conservation costs classified as (DA) which ultimately is based on energy
Customer Service costs are classified as weighted customer accounting
Maintenance and operations costs as transmission and distribution only since all Yelm generation
O &M is included in the Yelm accounts
Reserve funding costs for Yelm as generation and for Centralia as transmission and distribution plant
Taxes as direct assignment which ultimately is based on revenue generated by customer class
Debt service is classified as the related plant account: 2007 refunding 100 percent generation; 2007
revenue bond 14.1 percent generation the remainder to transmission/distribution plant; new future
bonds based on the related CIP projects 13.1 percent generation, the remainder to transmission and
distribution plant.
Depreciation funding from rates is based on total net plant in service
Table 6: Classification of Expenses
It is important to note that the total values shown in the summary are less purchased power costs.
I' C13:61tyOvIgR RELATE
p Weighted F or
sustome
Di re
s+ nmentt
TotaIliTest Pbnod l DEMAND RELATED 1 ENERGY RELATED
Reeenue a w es x
ley
Yaless P Pnmary ;Secondary;t
.,Power 1) +(NCP 1. a
1 $12,044,2211 $1,955,326
100 0 %I 16 2%
100 0%
i
(NCP 2) ,�w(C 1.5 (EiML170 ,a(E5LLH) AC) (sWCA) aCMS r„ .(RR).7 (DAB)
$1,731,310 $01 $3,477,112 $1,887,861 I $665,389 $272,406 $514,9451 $0 1 $1,539,872 1
30 6 0 0%1 28 5% 15 7% 5 5% 12 1% 4 3% 0 0 %I 12 8 %1
The classification of expenses (less purchased power) indicates that nearly 31 percent of costs are related
to meeting demand requirements and 44.5 percent are related to meeting energy requirements.
B.5 Step 3: Allocation of Costs
With the City's costs functionalized and classified, the study now turns to the task of allocating system
costs to its customers. As with the previous two steps of the COSA, this step is separated among each of
the utility functions. The classification cost pool totals are allocated to customers based on a variety of
allocation factors developed based on system specific criteria. The system specific information used for
this task includes the historical year 2008 and projected 2010 load data by customer class. The load data
City of Centralia Page 7
Cost of Service Technical Memorandum
developed includes monthly kWh, kW and load factors for demand metered customers. The specific
allocation factors developed include the following for each major customer class.
Demand Non Coincident Peak Primary Non coincident peak loads are those peak loads that occur
within a certain time frame regardless of the timing of the peaks of other loads on the utility's system.
The allocation basis for these costs is the maximum of the 12- monthly non coincident peak (kW) at
primary delivery
Demand Non Coincident Peak Secondary maximum of the 12- monthly non coincident peak (kW)
delivery at the meter (includes maximum losses)
Coincident Peak This peak refers to the customer's contribution to the City's monthly system peaks.
The allocation basis developed for these costs is the sum of the 12- monthly coincident peaks at input
calculated in the load data.
Energy Heavy Load Hours (HLH) metered kWh based on HLH factor from BPA bills
Energy Light Load Hours (LLH) metered kWh based on LLH factor from BPA bills
Customer Actual Actual number of customer accounts, by customer class
Customer Weighted Accounting This weighting factor is common to determine the differences in
the level of effort in providing customer meter reading, accounting and billing services. These
weighting factors typically vary from 1 to 5.
Customer Weighted Meters /Services This weighting factor is for determining the differences in the
cost of meters and service drops. These weighting factors are typically associated with the actual
replacement costs for these types of utility assets.
Revenue Related Identifies the amount of revenue generated by each customer class
Direct Assignment Direct assignment of costs /revenue to a specific customer class (e.g. street
lighting costs are 100 percent directly assigned to street lighting)
Table 7 provides a summary of the key allocation factors developed for each customer class of the City.
City of Centralia
Cost of Service Technical Memorandum
Table 7: Demand, Energy, Customer and Revenue Allocation Factors
errand
Residential
Commercial <50kW)
Commercial >50 200 kW)
Commercial (201+ kW)
Street /Yard Lighting
Total
Residential
Commercial <50kW)
Commercial >50 200 kW)
Commercial (201+ kW)
Street /Yard Lighting
Total
Residential
Commercial <50kW)
Commercial >50 200 kW)
Commercial (201+ kW)
Street /Yard Lighting
Total
Residential
Commercial (<50kW)
Commercial >50 200 kW)
Commercial (201+ kW)
Street /Yard Lighting
Total
B.6 Cost of Service Results
D emanc1iGk4 1)
83,633,977 44 11%
23,434,415 12 36%
25,446,832 13 42%
56,307 ,254 29 70%
784,947 0 41%
189,607,424 100.00%
Rewnuel e ST Qtal!
8,212,412 44.70%
2,578,004 14 03%
2,45,242 13 42%
5,065,447 27 57%
49,589 0.27%
18,370,695 100.00%
45, 866, 320
12, 701, 036
13, 682, 372
30,274,078
421,761
102,945,566
44 55% 129,500,296
12 34% 36,135,450
13 29% 39,129,204
29 41% 86, 581, 332
0 41% 1,206,708
100.00% 292,552,991
Page 8
TCo_tal`" ;NkWb) 2Total r� (kW!) tTofial
404,424 66.93% 70,599 73 87% 68,244 73.77%
66,481 11.00% 10,233 10 71% 9,892 10.69%
46,533 7 70% 7,105 7 43% 6,868 7.42%
85,383 14 13% 7,227 7 56% 7,105 7 68%
1,418 0 23% 410 0.43% 397 0 43%
604,240 100.00% 95,574 100.00% 92,504 100.00%
44 27%
12 35%
13 38%
29 60%
0.41%
100.00%
8,439 83.89% 8,439 69 38% 661,782 58 00%
1,434 14 25% 2,868 23 58% 335,513 29 41%
156 1 55% 782 643% 132,485 11 61%
13 0 13% 66 0 54% 11,155 0 98%
17 0 17% 9 0.07% 0 0 00%
10,059 100.00% 12,163 100.00% 1,140, 935 100.00%
The cost of service results are generated by applying the allocation factors to the classified cost pools.
Table 8 presents the test period revenue requirement allocated to each customer group. The total revenue
requirements (RR) of the system are allocated as follows:
o Residential: 52.5 percent
General Service <50 kW: 13 percent
General Service 50 -200 kW: 11.5 percent
City of Centralia
Cost of Service Technical Memorandum
General Service 201kW: 22 percent
Street Lighting nearly 1 percent (0.5 percent)
Table 8: Allocated Cost of Service (2010 Revenue Requirement), by Customer Class
Power
Purchased Power
Heavy Load Hour Energy
Light Load Hour Energy
Load Vanance
Generation Demand
C &R Discount
Transmission
Base Charge
Load Shaping
SCD NT Long Term Firm
Regulation Freq Response
Spinning Reserve
Supplemental Reserve
PFP Lagging Ratchet
Total Power
DEMAND RELATED
Noncoincident Peak
Pnmary
Secondary
Total NCP
Coincident Peak
System (CP -1)
System (CP -2)
BPA Generation (CP -3)
BPA Transmission (CP-4)
Total CP
Total Demand Related
ENERGY RELATED
HLH
LLH
Total Energy Related
CUSTOMER RELATED
Actual Customer
Weighted for Accounting
Weighted for Meters Services
Total Customer Related
REVENUE RELATED
Total
equirement
DIRECT ASSIGNMENT 1,539,872
TOTAL REVENUE REQUIREMENT
m50k1W3) 0914
3,770,935 1,663,323 466,066
1,497,206 667,065 184,720 198,992
143,351 95,996 15,858 11,002
974,037 652,271 107,749 74,757
(78,432) (52,523) (8,676) (6,020)
546,676 366,115 59,655 42,149
180,993 121,213 19,750 13,954
85,497 57,254 9,458 6,562
81,956 36,278 10,123 10,962
57,853 25,609 7,146 7,738
57,853 25,609 7,146 7,738
18,937 12,682 2,066 1,460
7,336,863 3,670,892 881,060 875,383
100.00% 50.03% 12 01% 11.93%
1,955,326 1,444,363 209,355 145,352 147,860 8,396
1,731,310 1,277,248 185,132 128,534 132,970 7,425
3,686,636 2,721,611 394,487 273,886 280,830 15,821
3,686,636 2,721,611 394,487 273,886 280,830
100 00% 73.82% 10 70% 7.43% 7 62%
3,477,112 1,533,720 429,752 466,656 1,032,589 14,395
1,887,861 841,117 232,917 250,913 555,179 7,734
5,364,973 2,374,837 662,669 717,570 $1,587,769 22,129
100 00% 44 27% 12 35% 13 38% 29.60% 0 41%
665,389 558,205
272,406 189,001
514,945 298,686
1,452,740 1,045,892
100 00% 71 99%
356,110
94,842
64,224
151,429
310,495
21.37%
WIMP; :.Generar
506,090 $1,119,845 15,611
440,296 6,134
20,146 349
136,887 2,374
(11,022) (191)
77,507
25,661
12,015
24,255
17,122
17,122
2,685
$1,882,519
25 66%
Page 9
1,251
414
208
338
239
239
43
27,009
0 37%
15,821
0 43%
10,346 871 1,124
17,516 1,475 190
59,795 5,035
87,657 7,381 1,315
6.03% 0 51% 0 09%
288,146 279,926 580,728 34,963
19,381,084 10,169,342 2,536,856 2,234,422 4,339,226
100 00%1 52.47% 13.09% 11.53% 22 39%
101,237
0 52 %I
The allocated costs are compared to the current revenue received by customer class to determine if each
customer class is paying their cost of service.
City of Centralia
Cost of Service Technical Memorandum
Table 9: Cost of Service Comparison
Reeenues at Present Rates
Allocated Rewnue Requirement
Balance /(Deficiency) of Funds
Change in Present Rates
Page 10
18,370,695 8,212,412 2,578,004 2,465,242 5,065,447 49,589
19, 381, 084 10,169, 342 2,536,856 2,234,422 4,339,226 101,237
(1,010,388) (1,956,930) 41,148 230,819 726,221 (51,647)
5.50 %1 23.83% -1.60% 9.36% 14.34% 104.15%
The cost of service comparison indicates some interclass discrepancies. The residential class needs to
increase by 23.83 percent in order for the existing revenue to generate the appropriate allocated costs. All
general service customer classes are over collecting their allocated cost of service. The street /yard
lighting class will need further attention in the next cost of service study to ensure the appropriate
customers are being captured in this customer grouping. It should be noted that, given the need to make a
host of assumptions to complete a cost of service analysis, the margin for error for class specific results is
typically considered to be plus -or -minus 10 percent, relative to the system average.
When comparing the cost of service results from this study to the last study in 2004, a number of changes
are important to note.
The City has improved meters that offer more detailed data on customer usage. This additional data
has improved on the load factor assumptions for the residential class.
The residential class loads which previously could not provide a demand reading, now can. The load
factors developed for this analysis used specific meter reading kWh and kW information to calculate
a load factor which previously used industry standard methodologies and a reconciliation approach.
The actual load factors range from a low of 11 to a high of 23. Past rate studies used a range of 43 to
57. Lower load factors increase the NCP and CP demand allocations to this class. This is one of the
main reasons for the large increase in the cost of service for this customer class. The residential class
represented nearly 49 percent of the total kWh use during the last study, this study kWh for this class
represents 44 percent.
The last COSA results indicated that compared to the overall average residential needed to increase
slightly over 5 percent, small general service needed to decrease the most at 13.5 percent and large
general service could also decrease by nearly 2 percent. It appears that cost of service inter class rate
shifts still remain warranted.
Street lighting during the last study required a 101 percent increase to reach cost of service. This issue
still remains.
In addition to the allocated total cost per cuss omer class, the cost of service calculates the average unit
costs for demand, energy and customer. The unit costs take the allocated costs of the system and
determine how to collect the target level of revenue based on the billing components used in each class'
rate schedule.
City of Centralia
Cost of Service Technical Memorandum
Table 10: Average Unit Costs
Average Unit Costs Cost of Service
Energy
Demand
Customer Charge
2010 Adopted Rates
Page 11
0.0705 0.0616 0.0442 0.0438
N/A N/A 3.56 2.53
10.33 18.05 46.70 46.70
Energy 0.0599 0.0671 0.0539 0.0526
Demand N/A N/A 4 43 4.75
Customer Charge 10 88 23.23 44.51 54 20
As shown by the average unit costs, the residential energy charge needs to be increased by nearly 1.06
cents per kWh to tie to the average unit costs in the cost of service. The general service 50 kW is fairly
close to the cost of service. The general service >50 -200 kW indicates that the energy and demand
charges could be reduced. The general service 201 (now changed to 201 -1,000 kW) has the largest cost
of service discrepancy. All unit costs need to be reduced for this customer class.
C. SUMMARY
The customer classes, usage characteristics, facility requirements and demands placed on the system are
used to equitably allocate costs to each class of customer served by the City's electric system. The results
of the cost of service can and will change if there are significant shifts in any of these key metrics (as
shown when comparing the 2004 study to this study). Therefore, results of the cost of service should be
interpreted and implemented with care, in particular when it has been some time since the last
comprehensive study. Any adjustments should be phased -in and results revisited with a future study to
verify that results and trends are consistent with the initial findings.
We know with good certainty that the rate changes the City will see under the new BPA Tiered Rate
Methodology will have an effect on the power cost classifications and allocations that are in use today.
Therefore, it was recommended that these cost of service findings be used as a historical benchmark only.
The City should complete a cost of service update once the new BPA Tiered Rates are established enough
to allow for the development of new power cost classifications and allocations. In the meantime, it will be
imperative for the City to begin compiling and validating load data (kWh, kW and load factors) for each
of their major customer classes (Residential, Small general service, Medium General Service (50 -200
kW), Large General Service (201 -1,000 kW) and Very Large General Service 1,000 kW) to ensure that
the most accurate data is being used in the cost of service update. As indicated by the comparison of the
2004 study results and this study, any major changes in customer load statistics can have a significant
impact on the cost of service results and ultimately how rates are adjusted.
City of Port Angeles Utility Cost of Service Studies
Appendix B Resumes
FCS GROUP
APPENDIX B RESUMES
FC S GROUP
Solutions- Oriented Consulting
ANGIE SANCHEZ VIRNOCHE
Principal
B.S., Business Administration and Finance, Oregon State University
Angie Sanchez Virnoche is an FCS GROUP
principal and shareholder with 20 years of
experience providing financial services in a
variety of capacities for water, sewer,
stormwater, solid waste and electric utilities.
Angie's utility rate expertise covers a broad
range of areas including, expert review of the
rate setting framework and methodology used
by clients, reviewing various cost allocation
approaches in support of cost of service based
utility rates, establishing renewals and
replacement capital funding targets, evaluating
fund balances, and developing alternative rate
structures targeting seasonal use, conservation,
increased revenue stability, time -of -use and
unbundled rates by service commodity.
Angie provides financial services to clients
throughout the United States, thereby giving her
the ability to offer alternative methodologies to
clients suited to their unique needs.
In addition to her project management and
technical skills, Angie routinely collaborates
with bond advisors, attorneys, and engineering
partners. She frequently gives presentation of
results to different audiences such as citizen rate
advisory groups, advisory boards, commissions
and councils. Angie is effective in engaging and
educating participants in the benefits, costs, and
decision making process that will bring
consensus and move participants towards the
fulfillment of objectives.
Finally, Angie has recently conducted several
rate setting and financial policy presentations
for public utility managers, attorneys, and
municipal finance professionals.
As the study manager for the proposed Port
Angeles Utility Cost of Service Studies, Angie
will be in direct communication with the City
Angie Sanchez Virnoche Resume Page 1
CAREER SUMMARY
20 years (since 1993) professional
municipal rate and fee consulting
experience
Joined FCS GROUP in 2006
EXPERTISE
Cost of Service Utility Rate Studies (Water,
Sewer, Stormwater, Solid Waste and
Electric)
System Development Charges
(SDCs) /Connection Charges
Comprehensive Plans Financial
Elements
Rate Design Restructuring
Utility Formations
Multi -year Financial Planning
Capital Infrastructure Planning
Funding Alternatives
Cost Benefit Analyses
Reserve Analysis
Community Education and Involvement
PROFESSIONAL AFFILIATIONS
American Water Works Association
National, Rates and Charges
Subcommittee; Standards Committee
Partnership for Water Conservation
Washington Finance Officers Association
Northwest Public Power Association
Washington Association of Public Utility
Districts
and will be responsible for the technical
direction of each study task.
•FCS GROUP
Solutions Onented Consulting
EXAMPLE PROJECT DETAILS
Water, Sewer, and Stormwater Rate Study; City of Lynnwood Angie (managing principal)
performed the last two City rate studies for the City of Lynnwood. Key project analysis included
establishing fiscal policy targets for reserves and annual system reinvestment, evaluating
impacts of different funding and timing for $37 million in capital projects, and a 6 -year cost of
service rate transition plan to reach cost of service by class and minimize customer impacts.
Additional issues addressed included a single family conservation rate structure, issuing paper
on conservation rate structures for multi family /commercial customers, options for senior /low
income /disabled discount rate programs, and educating City staff and council on the rate setting
process.
Comprehensive Water, Wastewater, and Stormwater Rate Study and Revenue
Requirement Update; City of Bremerton Angie (study manager) is performing a rate study
for the water, sewer, and stormwater utilities along with a benchmark analysis for the water and
sewer utilities. The rate study included development of a self supporting six -year financial plan
for each utility. Sensitivity analysis were provided that evaluated rate impacts resulting from
reduced revenue due to conservation, alternative capital plans, varying levels of system
reinvestment and payment in -lieu of tax levels. The benchmarking analysis provided a
quantitative comparative assessment of performance to national, regional and specific state
agencies. Angie worked extensively throughout the study with a five- member utility advisory
committee. In addition, three city council workshops were completed to incorporate input into the
analysis. The community was updated on the study through a dedicated rate study website link
that included all presentation material, frequently asked questions, comment /feedback section
and a bill calculator that allows a customer to enter their specific usage /bill history and calculate
bill impacts under the proposed rates under consideration. This has resulted in a level of
transparency and involvement that is invaluable by allowing for a diverse community review and
outreach effort.
Water, Sewer, Solid Waste and Stormwater Rate Study; City of Camas Angie (managing
principal) performed the 2008 study for water, sewer, storm, and solid waste. Key project
analysis included a 5 -year financial forecast and rate strategy, calculation of SDC for water,
sewer and storm for two separate service areas; established fund balance minimum targets, and a
capital funding plan for $40.6 million in capital projects. Additional issues addressed included; a
rate strategy to fund $30.6 million in new debt, sensitivity analyses for different levels of capital
needs, single family rate options included a three -block conservation rate structure and a sewer
volume based rate option, an issue paper was provided to address alternative low income /senior
rate discount approaches.
Electric Utility Rate Design Study; City of Richland The City of Richland Energy Services
(RES) Department retained FCS GROUP in April of 2012 to provide professional services
related to retail rate design for the City's electric utility. The services requested included a
technical review of the City's current electric rates and the development of alternative retail rate
designs that better align with the BPA tiered rate methodology. Key project analysis included; an
expert review of the RES internally developed revenue requirement and cost of service analysis
to confirm the cause of the overall rate change and customer class cost of service shifts, review
of newly developed power cost allocations, development of a residential tiered rate options,
elimination of the current declining block for all classes, development of bill frequencies to
establish the range of bill impacts by class. The City had not adjusted rates for eight years so
critical to the analysis was development of a communication and outreach approach to share the
results of the study with the public and obtain input and feedback. Meetings were held with the
Utility Advisory Committee, Key customers and the City Council. The website kept customers
Angie Sanchez Virnoche Resume Page 2
•+FCS GROUP
Solutions Oriented Consulting
informed on the rate study by posting meeting times and frequently asked questions. Key
customers were provided a bill calculator to allow them to determine their individual impact from
the proposed rate structure changes. All rate structure changes were approved along with the
proposed rate changes of 8.9 percent increase for residential customers; and 7.4 percent to 20
percent non residential customer increases.
Electric and Water Utility Study; Cowlitz County PUD #1 Angie (managing principal) prepared
an electric rate study and a water utility rate study for Cowlitz County Public Utility District
(PUD) #1. FCS GROUP prepared an electric cost of service model update (and developed a new
financial forecast module) in 2010 and 2011. The key analytical tasks provided on prior studies
included; converted the existing District Lotus 1 -2 -3 cost of service model into Microsoft®
Excel, Created a multi -year revenue requirement module incorporating the District's fiscal
policy objectives for operating, capital, and rate stabilization funds, Reviewed the District's
power resources (Swift Complex, Harvest Wind, Wanapum Priest Rapids, Nine Canyon and
White Creek) and the allocation of power resources to demand and energy, Identified rate impact
of reduction in lower cost, non federal power that had historically been allocated 95 percent to
residential customers, developed a capital funding plan for $74 million of projects, reviewed
customer class designations to ensure they were appropriate, updated direct assignments and
cost allocation for the District's two largest industrial customers, conducted cost of service
analysis that showed that interclass adjustments are warranted, conducted the 2010 -2011
industrial cost allocation review, incorporated into rate model the TEA power cost projections
under new BPA rates effective October 1, 2011 In 2006, a comprehensive water rate study was
conducted that included a connection charge update that reflected the increased cost of growth
related infrastructure.
Water, Sewer, and Solid Waste Rate Study; City of Moscow, ID Angie (managing principal)
completed the first comprehensive cost of service rate study conducted for the sanitation fund.
Key tasks included; development of a 10 -year financial plan and rate strategy for the sanitation
fund including costs for contract costs, collection, transfer station, recycling center and compost,
forecast of tonnage based on historical 5 -year trends and current market conditions,
reconciliation of revenue to tie to forecast tonnage, updated costs for the contract recycling
center and compost service, reviewed if annual fund contributions and reserves were sufficient
to meet future capital and equipment needs, integrated findings from the operational review and
revenue leakage study, reviewed the elimination of "free" tonnage at the transfer station and
implementation of a minimum charge, held three workshop with the Citizen Rate Advisory
Committee. The last workshop included all members of Council.
The water and wastewater studies for the City of Moscow included; review of the City's water
and wastewater comprehensive plans is order to update system information and to allocate costs
appropriately by function within each utility, development of a 10 -year financial plan and rate
strategy for each utility, capital funding plan for $25 million project in costs, reviewed debt
service coverage and fund balance targets, evaluated flow and strength factors by customer class
and for the University of Idaho, proposed streamline wastewater rate structures from seven
commercial rate classifications to three strength classifications, update the wastewater
connection charges based on the recently completed comprehensive plan, present results to a
Citizen's Advisory Committee for recommendation to Council.
Solid Waste Rate Model Development; City of Sacramento, CA Angie (managing
principal) updated the solid waste rate model for the City. The rate model included a 50 -year
planning horizon and included a variety of analytical features that assist the department head
track cash flow, evaluate fund balances, calculate cost of service by commodity type and most
importantly create "what-if" scenarios to determine rate impact of various operational changes
Angie Sanchez Virnoche Resume Page 3
Angie Sanchez Virnoche Resume Page 4
<+FCS GROUP
Solutions- Oriented Consulting
under consideration. The City was faced with changes resulting from moving to a 100%
containerized green waste service from a loose -in- the streets services, moving to bi- weekly
recycling, offering an appointment based neighborhood clean up service. The program was
developed in collaboration with the Districts' management team with the ultimate goal of the
City taking control of the rate model. A user's manual was developed in support of this effort.
Solid Waste Rate Study; City of Tacoma Angie (managing principal) prepared the 2010 solid
waste rate update and developed a cost of service rate model for the City of Tacoma's solid waste
system. Key analytical tasks included; development of a five year financial and rate plan with
focus on a two year rate setting period, cost escalations in line with contract provisions and
anticipated increases per year, review and maintenance of operating, rate stabilization and debt
service fund balance targets, Capital and equipment funding evaluation (identification if /when
new debt may be required), development of allocation factors to allocate costs to customer
types /container sizes, unit cost of service based rates by container size, phase -in rates for cost of
service volume collection rates, evaluation of alternative discount levels for low income
elderly /disabled rates, calculation of cost based landfill tipping fee, presentations to the
Environmental Services Commission and the Environmental and Public Works Committee.
The modeling included a multi -year forecast and rate strategy, collection costs, and revenue
projections based on a tonnage forecast that aligned with the Pierce County waste reduction
goals. The project also included the following tasks.
Water, Sewer, and Stormwater Rate Study; Town of Friday Harbor Angie (managing
principal) provided an update of the previous rate financial plan, rates, and right to connect
charges for all three utilities. The Town of Friday Harbor was faced with evaluating funding
options and alternatives for over $20.9 million in capital projects from 2008 -2015.
Water Rate Study; City of Bellevue The City of Bellevue engaged FCS GROUP to develop
alternative water rate structures that would help the City manage recently observed revenue
volatility. Angie (study manager) developed a survey comparing rate structure objectives such as
revenue stability, conservation, affordability, and administrative simplicity. Utility management
completed this survey, providing a relative prioritization of objectives that guided the
development of rate structure alternatives. Angie reviewed the City's detailed customer billing
statistics and assessed multi -year demand trends, developing alternative structures and a
recommendation based on utility management's weighting of the various policy objectives. To
aid the City in future budget planning, FCS GROUP recommended revisions to the City's
methodology for forecasting future sales revenues and suggested refinements to the formatting
of City billing records that would improve their usability and reduce demands on City
computing resources by 67% 75
Waste and Wastewater Rate Update; City of Port Townsend Angie has been working with
the City of Port Townsend since 2008 on rate setting issues. The City of Port Townsend engaged
Angie (managing principal) in 2010 to evaluate if rates were sufficient to meet varying system
operating scenarios including; baseline only O &M covered, storage projects, five different
treatment type options and replacement funding for the Olympic Gravity Water Line. FCS
GROUP is currently working with the City on a water and sewer rate study that addresses rate
adjustment needs for the next six year period, development of a capital funding surcharge for
upcoming projects, evaluation of the outside City rate multiplier and update of the water and
sewer system development charges.
EXAMPLE PROJECT EXPERIENCE
Washington
ALDERWOOD WATER AND WASTEWATER
DISTRICT
Strategic Planning for Potential City
Annexation
Water and Wastewater Utility Rate
Study /General Facilities Charges (GFC)
Update
BELLEVUE
Water Rate Structures and Revenue
Stability Study
BELLINGHAM
Sewer System Plan and Financial Chapter
BENTON COUNTY PUD
Electric Cost of Service Analysis, Load
Data Review
Cost of Service On -Call Services
BLAINE
Water and Wastewater Rate Update
Wholesale Water Rate Support Birch Bay
Water and Sewer District
BONNEY LAKE
Water Sewer Financial Plan and System
Development Charges (SDCs)
BREMERTON
Water, Sewer, and Stormwater Rate Study
and Benchmarking
CAMAS
Water, Sewer, Storm, Sanitation Utility
Rate Study
On -Call Services
CENTRALIA
City Light Valuation and Divestiture
Feasibility Study
Electric Utility Cost of Service Study and
model review
CLE ELUM
Upper Kittitas County Regional WWF Rate
Assistance
COVINGTON WATER DISTRICT
Water Long -Range Financial Plan
Water Cost of Service and Capital Facilities
Charge (CFC) Update
Angie Sanchez Virnoche Resume Page 5
•FCS GROUP
Solutions Oriented Consulting
Annual financial plan updates and Model
Development
COWLITZ COUNTY PUD #1
On -Call Electric Financial and Rate
Assistance
Electric and Water Utility Rate Studies
CRYSTAL MOUNTAIN SEWER DISTRICT
Wastewater Funding Analysis and Cost
Allocation Study
FIRGROVE MUTUAL WATER COMPANY
Water Utility Financial Plan and Share
Charge Analysis
FRANKLIN PUBLIC UTILITY DISTRICT #1
Electric Cost of Service Analysis, Rate
Design Study, and Update
FRIDAY HARBOR
Fire Cost Analysis
Water System Plan Financial Chapter
Water, Sewer, and Storm Water Rates and
Right to Connect Charges
GRANT COUNTY PUD
Electric Cost of Service Study
HIGHLINE WATER DISTRICT
Water Utility Rate Studies, GFCs, LFCs
JEFFERSON COUNTY PUD
Water and Sewer Rate Study
KING COUNTY WATER DISTRICT #49
Water Rate Study
LAKEWOOD WATER DISTRICT
Fire Cost Analysis
Water On -Call Consulting Services
Water Parity Certificate
Summit Water Company Wholesale Water
Rates
Financial Model
Water System Replacement and
Rehabilitation and Planning
LYNNWOOD
Water, Sewer, and Stormwater Rate Studies
Water System Comprehensive Plan
Policy Review of Sewer Connection
Charges
MARYSVILLE
Solid Waste Rate Study and Efficiency
Review
MCCLEARY
Water Utility Financial Plan and Connection
Charge Study
MERCER ISLAND
Water and Sewer Rate and Connection
Charge Studies
Rate Model Development
MUKILTEO WATER AND WASTEWATER DISTRICT
Water and Wastewater Rate Study
NORTH BEND
Retail Water GFC Update and Wholesale
Rate and GFC Development
Water and Wastewater Rate Study
Sewer System GFC Study
OLYMPIA
Water Rate Update, Wholesale Rate Review
PASADENA PARK IRRIGATION DISTRICT #17
Water Rate Study and Capital Facilities
Charge Study
PORT ANGELES
Electric Utility Rate Study
Water, Wastewater, and Solid Waste Utility
Rate Studies
PORT TOWNSEND
Water and Sewer Rate and SDC Study
Water Supply /Treatment Analysis
RICHLAND
Electric Utility Rate Design
Cost of Service Review
ROSLYN
Water and Wastewater Utility Rate Study
SAMMAMISH PLATEAU WATER AND SEWER
DISTRICT
Water and Wastewater Financial Consulting
Rate Study and GFC Study
SAN JUAN COUNTY
Stormwater Utility Formation Planning
SKAGIT COUNTY PUD
Review of Water Supply Agreement, Expert
Rate Review, Financial Plan Model
Development
Angie Sanchez Virnoche Resume Page 6
GROUP
Solutions- Oriented Consulting
SNOHOMISH
Water System Plan Financial Chapter
Sewer Treatment Plant Rate Impact
Analysis
Water and Sewer Connection Charge Study
Water Supply Study
Water, Sewer. and Stormwater Utility Rate
Studies
SNOQUALMIE PASS UTILITY DISTRICT
Water System Plan Financial Chapter
SPOKANE COUNTY
Sewer Utility Rate Study
Ongoing Rate Consultation
SULTAN
Water and Wastewater Comprehensive Plan
Financial Chapter
Water and Wastewater Rate Studies
Solid Waste Study
TACOMA
Solid Waste Rate Development
WHATCOM COUNTY
Birch Bay Stormwater Funding Analysis
WOODINVILLE WATER AND SEWER DISTRICT
Water and Sewer Rate Modeling Assistance
YELM
General Sewer Plan and Rate Study
Nisqually Tribe Sewer Treatment Cost of
Service Analysis
Water and Sewer Financial Plan and Rate
Forecasts
Oregon
ASTORIA
Wastewater Treatment Plant Facilities Plan
Financial Chapter
Water and Sewer Rate Forecast
CLACKAMAS RIVER WATER
Water Rate Analysis
Wholesale Review of SFWB Rate
LAKE OSWEGO
Water Rate Cost of Service Study
Water On -Call Financial Consulting
Services
Sewer Utility Financial Plan and Rate
Review
PORTLAND METRO
Solid Waste Disposal Charge Review
Idaho
COEUR D'ALENE
Water System Plan Financial Plan and Rate
Forecast
HAYDEN AREA REGIONAL SEWER BOARD
Wastewater Financial Implementation Plan
Sewer Capitalization Fee Update
Financial Plan and Capacity Fee Update
MOSCOW
Water, Sewer, and Solid Waste Utility Rate
Study
POST FALLS
Wastewater Financial Plan and Capacity
Fee Update
HAYDEN
Capacity Fee Update
PUBLICATIONS /SEMINARS /SPEAKING ENGAGEMENTS
Staffing and Funding for Collection Systems,
Pacific Northwest Clean Water Association,
October 2012
Electric Cost of Service and Rate Setting,
February 8 and 9 Public Utility District
Workshop, 2012
Correctly Calculating Rates and Connection
Charges, Conference on Municipal Utility
Law, October 2011
Rate Relief During Economic Hard Times,
Washington Public Utility Districts
Association (WPUDA), September 2011 and
Evergreen Rural Water of Washington,
October 2011
Implementing the Supreme Court Ruling on
Fire Hydrants, Evergreen Rural Water of
Washington, August 2011, Puget Sound
Financial Officers, May 2011 and,
Washington Operators Workshop, March
California
LAKE ARROWHEAD COMMUNITY SERVICES
DISTRICT
Water and Wastewater Comprehensive
Financial Master Plan
Letter of Determination for SRF Funding
Arizona
LAKE HAVASU CITY
Sewer Capital Improvement Plan (CIP)
Financial Evaluation
Water Cost of Service Analysis Update
BENSON, AZ
Water and Sewer Rate Study
Canada
DISTRICT OF NORTH VANCOUVER
Utility Rate Studies
Angie Sanchez Virnoche Resume Page 7
•FCS GROUP
Solutions-On ented Consulting
SASKATOON, S.K.
Wastewater Utility Cost of Service
Water Cost of Service Model
2011
Conservation Based Rate Considerations,
AWWA Pacific Northwest Section Water
Conservation Committee Meeting, 2011
Trends in Water Rate Making, Evergreen
Rural Water of Washington Annual
Conference, 2011
Evaluating and Improving Utility Financial
Health, Evergreen Rural Water of
Washington Annual Conference, 2011
Comprehensive Financial Master Planning:
Setting a Roadmap for Long -Term Strategic
Management, Evergreen Rural Water of
Washington Annual Conference, Aug. 2010
Setting Conservation -Based Water Rates,
Evergreen Rural Water of Washington
Annual Conference, 2010
General Facility Charges: Making Growth
Pay for Growth, Evergreen Rural Water of
Washington Annual Conference, 2010
District Finances Financing Options,
Commissioners' Workshop for Washington
Association of Sewer and Water Districts,
January 2010
Comprehensive Utility Financial Planning
During Tough Economic Times, Series of
Classes for Evergreen Rural Water of
Washington, 2009
Comprehensive Financial Management
Planning Setting a Path for Long -Term
Strategic Management, Washington Finance
Officers Association Annual Conference,
2009
Setting Water Rates to Promote
Conservation, Partnership for Water
Conservation Workshop, 2009
Fiscal Health in Economic Hard Times,
Washington Association of Sewer and Water
Districts Workshop, 2009
Fire in the Hole, Vision Magazine,
Association of Washington Cities, 2009
Business Practices for Operation and
Management, AWWA, G410 -09
Contributing Author, 2009
Utility Rate Studies, Washington Municipal
Treasurers Association Conference, April
2008
Utility Rates, Washington Finance Officers
Association, One -Day Non Conference
Workshop, 2007
Empowering Agencies to Become Financial
Stewards of Water Systems, Washington
Finance Officers Association, 51st Annual
Conference, September 2006
The Rate Process, Washington PUD
Association Finance Officers Fall Meeting,
2005
Good Until the Last Drop, APWA, August
2005, Co- Author Chapter 8 Utility
Angie Sanchez Virnoche Resume Page 8
•FCS GROUP
Solutions- Oriented Consulting
Management and Structure; Technical
Reviewer Chapter 9 Financial Issues.
American Public Works Association.
Capital Asset Management: Planning,
Funding, Policies and Procedures,
Washington Finance Officers Association
Non Conference Seminar, June 2005.
Overview of Utility Rate Setting, Montana
League of Cities and Towns Annual
Conference, March 2005.
Building Blocks of Successful Asset
Management Systems, Oregon Municipal
Finance Officers Association Annual Spring
Conference, March 2005.
Rates for Small Systems: Preparing a
Financial Plan, American Water Works
Association National Conference, June 2004
Strategic Infrastructure Planning and
Financing, Washington Finance Officers
Association Non conference Session, April
2004.
Indirect Cost Allocation: The What, Why,
Who, When and How of Cost Allocation,
Oregon Municipal Finance Officers
Association Annual Spring Conference,
March 2004.
M54 Developing Rates for Small Systems
"Chapter 2 Preparing a Financial Plan,"
AWWA, 2004
Utility Rate Strategies and Techniques,
Washington Finance Officers Association
Non conference Session, March 2004
Low Income Ratemaking, Oregon Municipal
Finance Officers Association Northwest
Government Finance Institute, October 2003
Asset Replacement Planning: Alternatives to
Duct Tape and Paint, Washington Finance
Officers Association Annual Conference,
September 2003
Karyn Johnson is a principal and FCS GROUP
shareholder with 28 years of professional
experience, including 20 years as a municipal
rate and fee consultant. She specializes in
performing a variety of government financial
studies including fiscal policy development,
capital financial plans, capital connection
charges, revenue requirements, cost of service,
rate design, and wholesale /regional water
supply issues. Her consulting engagements
exceed 200 water, wastewater, stormwater, and
solid waste utility studies.
Karyn has applied American Water Works
Association (AWWA) basic utility rate concepts
and has tailored them using FCS GROUP's
innovative processes to solve the specific and
individual issues faced by her clients throughout
Washington, Oregon, Alaska, Nevada, Canada,
and elsewhere.
She is well- versed in alternative rate structure
concepts including increasing block and
seasonal water rates, full service and
interruptible irrigation rates, volume- and
strength -based sewer rates, and specialty rates
for large or unique customer classes, just to
name a few.
Karyn is particularly effective in
communicating highly technical information
during the public process, promoting
stakeholder participation, managing staff
reviews, and facilitating industry training
forums.
Within the context of you Port Angeles Utility
Cost of Service Studies, Karyn was the
principal responsible for the example Centralia
Water and Wastewater study. She will provide
quality assurance review on this study.
,FCS GROUP
Solutions Oriented Consulting
KARYN JOHNSON
Principal
B.S., Business Management Finance Specialty, Franklin
University
M.B.A., Pepperdine University
Karyn Johnson Resume Page 1
CAREER SUMMARY
28 years (since 1985) professional
experience
Joined FCS GROUP in 2002
EXPERTISE
Strategic Utility Financial Planning
Utility Cost of Service Rate Studies
(Water, Sewer, Stormwater, Reclaimed
Water, Solid Waste)
Wholesale, Unique and Large
Customer Rate Setting and
Negotiations
System Development
Charges /Connection Charges
Economic Feasibility Studies
Capital Reinvestment /Utility
Sustainability
Fiscal Health Reviews Policy
Evaluation
Comprehensive Plans Financial
Programs
Bond Feasibility Parity Certification
Management Studies
Utility Valuations, Consolidation,
Mergers, and Acquisitions
Negotiation Assistance
PROFESSIONAL AFFILIATIONS
American Water Works Association
British Columbia Water and Waste
Association
Water Environment Federation
Eastern Washington Water Alliance
RELEVANT PROJECT EXPERIENCE
Washington
AUBURN
Interim Water, Wastewater, and Stormwater
Utility Rate Analysis
Water, Sewer, and Stormwater Utility Rate
Study
BAINBRIDGE ISLAND
Sewer Rate Study
Storm and Surface Water Rate Study and
Update
Water, Wastewater, Storm, and Surface
Water Rate Studies
BATTLEGROUND
Water System Plan Financial Program
CARNATION
Comprehensive Water Rate Study and
Subsequent Updates
Water Billing Audit
Water Parity Certificate and Bond Support
Water Project Financing
Water System Plan Financial Chapter
CASHMERE
Sewer Financial On -Call Services
Sewer Comprehensive Plan Financial
Chapter
Water and Sewer Rate Study
CENTRALIA
Stormwater Rate and Policy Development
Study and Water and Wastewater Rate Studies
and Subsequent Updates
DUVALL
Stormwater Rate Review
Comprehensive Water System Plan and
Subsequent Updates
EATONVIILE
Water Rate and Connection Fee Charge
(CFC) Study and Financial Chapter
ENUMCLAW
Parity Certificate and Supporting Financial
Analysis
Water and Wastewater Rate and Charge Study
Water Financial Chapter
Karyn Johnson Resume Page 2
•FCS GROUP
Solutions- Oriented Consulting
Wholesale Water Connection Charge and
Rate Study
EVERETT
Water, Sewer, and Storm Cost of Service
Study
Comprehensive Water Plan and Financial
Chapter
Water /Sewer /Storm Financial Services
Studies
Parity Certificate
Water and Sewer Connection Charge
Update and Model Review
Wholesale Sewer Connection Fee Charge
(CFC) Analysis and Update
GIG HARBOR
Water Comprehensive Plan Phase 2 and
Financial Chapter
KARCHER CREEK SEWER DISTRICT WEST
SOUND UTILITY DISTRICT
Comprehensive Sewer Plan and Rate
Update
Coverage Sufficiency Test Template
Water, Sewer, and Sanitary Sewer Rate
Studies and Updates
KENT
Sanitary Sewer Rate Study
Stormwater Rate Study
Water Rate Study
Water Cost of Production Study
KIRKLAND
Water and Sewer Rate and General
Facilities Charges Study and Subsequent
Updates
Water /Sewer Comprehensive Plan Financial
Program Chapters
LACEY
Stormwater Comprehensive Plan Financial
Program Development and Rate Study
Water System Comprehensive Plan
Financial Chapter
Water Utility Rate and Charge Study
LAKE WHATCOM WATER AND SEWER DISTRICT
Water and Sewer Rate and Charge Studies
and Subsequent Updates
LUMMI TRIBAL WATER AND SEWER DISTRICT
Phase 1 Sewer Capital Tariff
Model /Analysis
MANCHESTER WATER DISTRICT
Water Financial Chapter and Update
MASON COUNTY
Sewer Rate and Financial Review
Sewerage Financial Plans
MONROE
Sewer Rate Analysis and Study for the
Department of Corrections
Water, Sanitary Sewer and Stormwater Rate
Study and Subsequent Updates
MOUNTLAKE TERRACE
Water System Plan and Financial Plan
OLYMPIC VIEW WATER SEWER DISTRICT
Water Sewer GFC Evaluation
ORTING
Water, Sewer, and Stormwater Rate and
Charge Study
PASADENA PARK IRRIGATION DISTRICT #17
Water Rate and Capital Facilities Charge
Study
REDMOND
General Facilities Charge Update
RENTON
Water, Wastewater, and Surface Water
Comprehensive Rate Study and System
Development Charge Study
SAMMAMISH
Stormwater Utility Rate Study
SHELTON
Wastewater Revenue Requirement Study
Water Revenue Requirement Study
Sewer Master Plan Financial Program
Chapter
Water Master Plan Financial Program
Chapter
SKOKOMISH INDIAN TRIBE
Potlatch Sewer Financial and Rate Analysis
SKYWAY WATER SEWER DISTRICT
Water and Sewer Bond Financing Support
Karyn Johnson Resume Page 3
FCS GROUP
Solutions Oriented Consulting
Water and Sewer Rate Study and
Subsequent Updates
SPANAWAY WATER COMPANY
Water System Financial Plan
STANWOOD
Large Meter Charge Analysis
Water and Sewer Rates and Charges Study
and Financial Analysis
Water and Sewer Systems Comprehensive
Plan Financial Chapters
STEILACOOM
Water and Sewer Rate Model Update
W A PATO
Water Rate Study
WASHOUGAL
Bonding Support
Water System Plan Financial Program
Chapter
Stormwater Rate Study
Water and Wastewater Rate and Charge
Study
WENATCHEE
Sewer and Stormwater Utility On -Call
Services
Water and Sewer Revenue Requirement
Updates and Rate Forecasts and General
Facilities Charge Analyses
Water, Sewer, and Stormwater Parity
Certificates and Revenue Requirements and
Updates with Related Financial Analysis
Comprehensive Water, Sewer, and
Stormwater Rate study
YAKIMA
2012 Domestic Rate Study Update
Domestic Water System Rate and Cost of
Service Study and Subsequent Updates
Irrigation Capital Improvement Program
Financing Options
Wastewater Rate and Charge Study
Oregon
EUGENE WATER ELECTRIC BOARD
Water SDC Reviews and Consulting
Services
Water Rate Reviews and Consulting
Services
HILLSBORO
Large Water User System Development
Charge Payment Alternatives
Water On -Call Rate Services
Utilities Commission Water Rate and SDC
Study and Subsequent Updates
Water Customer Statistics Analysis
KEIZER
Water Rate Study, Model Review, and
Subsequent Update Assistance
ST. HELENS
Residential Volume -Based Sewer Rate On-
Call Analysis
Water, Sewer, and Stormwater Rate Studies
and Subsequent Updates
Wholesale Water Rate Development and
Negotiation Assistance; Subsequent
Updates
SCAPPOOSE
Wastewater Rate Study
SHERWOOD
Future Water Supply Financial Evaluation
Wastewater and Stormwater Rate and
System Development Charge Study
Water Rate and System Development
Charge Study and Financial Chapter
Water Revenue Requirement and Rate
Forecast Update
Alaska
ANCHOARGE (MUNICIPALITY)
Assessment of Residential Customer Water
Test Meter Program
DILLINGHAM (CITY)
Water and Sewer Rate Study
HAINES (BOROUGH)
Water and Sewer Master Plan Financial
Programs
Water and Sewer Revenue Requirements
Update and Acquisition Analysis of Crystal
Cathedral Water and Sewer Systems (CCWSS)
JUNEAU (CITY AND BOROUGH)
Water and Sewer Cost Allocation and Rate
Design Study
Montana
Nevada
Karyn Johnson Resume Page 4
•FCS GROUP
Solutions Oriented Consulting
Review of In -House Water and Sewer Rate
Updates and Model Review
KELOWNA
2010 Water Rate Study Phase 1
KETC H I KAN
Preliminary Stormwater Financial Services
Water, Wastewater and Storm Drain Cost
Allocation and Rate Design Study;
Stormwater Utility Formation
Ketchikan Pubic Utilities
Water /Wastewater /Storm Drain Cost
Allocation and Rate Design Study
PETERSBURG
Water, Wastewater, and Solid Waste Rate
Study
SITKA (CITY AND BOROUGH)
Water System Master Plan Rate Study
Sewer System Master Plan Rate Study
BILLINGS
Water and Wastewater Construction and
System Development Fee Studies
CLARK COUNTY WATER RECLAMATION
DISTRICT
Sewer Revenue Requirements and Cost of
Service Analysis
DOUGLAS COUNTY
Water and Sewer Rate Studies and
Subsequent Updates
Water and Sewer Capital Connection
Charge Studies and Subsequent Updates
Water Enterprise Funds Consolidation
Study and Subsequent Update
FERNLEY
Water and Sewer Rate and Charge Studies
and Subsequent Updates
LYON COUNTY
Dayton Water and Sewer and Mound House
Water Utility Rate Studies and Subsequent
Updates
SPARKS
Sanitary, Storm and Effluent Sewer System
Financial Rate Study
WASHOE COUNTY
Water, Recycled Water, and Wastewater
Financial Policy and Funding Study
Canada
KELOWNA, B.C.
Financial Policies Evaluation and Water
Rate Strategy
Water Rate Study and Subsequent Updates
PUBLICATIONS /SEMINARS /SPEAKING ENGAGEMENTS
Bench marking as a Tool for Gauging Utility
Performance, Washington Finance Officers
Association Annual Conference, September
2012
Financial Aspects of Asset Management,
BCWWA Annual Conference, Kelowna,
B.C., Canada, 2011
The Role of Financial Policies in Setting
Cost -Based Rates, BCWWA Annual
Conference, Whistler, B.C., Canada, 2010
Water Finance and Rates 101 Workshop;
Kelowna Joint Water Commission, Kelowna,
British Columbia, Canada, 2009
Implementing Cash Reserves to Promote
Stability; WFOA Annual Conference,
Bellevue, WA, 2009
Universal Metering What's Next?
Implementing an Effective Water Pricing
Strategy; BCWWA Annual Conference,
Penticton, B.C. Canada, 2009
Designing Water Rates to Reflect Cost of
Service and Support Water Sustainability,
BCWWA Annual Conference, Whistler, BC,
Canada, 2008
Long -Term Financial Rate Planning:
Policies, Practices, and Tools for Successful
Management, ACWA Spring Conference,
Sacramento, CA, 2007
Transitioning to Universal Metering Water
Conservation Rates, BCWWA Annual
Conference, Whistler, BC, Canada, 2006
Karyn Johnson Resume Page 5
•FCS GROUP
Solutions Oriented Consulting
and Analyses
DISTRICT OF NORTH VANCOUVER, BC
Water, Sewer /Drainage, and Solid
Waste /Recycling Utilities Rate Studies
DISTRICT OF WEST VANCOUVER, B.C.
Water and Sewer Rate Study and
Subsequent Updates
Basics of Cost of Service Rates, WFOA
Regional Workshop, Tumwater, WA, 2005;
and AWWA Inland Empire Subsection,
Spokane, WA, 2002
Large and Unique Customers: Defining
Costs and Structures, AWWA CA -NV
Section 2005; Los Angeles, CA; and WFOA
Annual Conference, Leavenworth, WA, 2004
Financial Forecasting for Water Irrigation
Systems, Washington Finance Officers
Association (WFOA) Annual Conference,
Tacoma, WA, 2006; American Water Works
Association (AWWA)Conference Spokane,
WA, 2004;Washington State Water
Resources Association (WSWRA)Annual
Conference, Leavenworth, WA, 2002
Small System Ownership Options, AWWA
National Conference Exposition, New
Orleans, LA, 2002
Case Study: Evaluation of Water /Sewer
Ownership Options, Pacific Northwest
Pollution Control Association (PNPCA)
Annual Conference, North Bend, OR, 2001
Importance of Long Range Financial
Planning, Water Environment Short School,
Oregon City, OR, March 1999
Managing Growth Through Implementation of
System Development Charges, PNPCA Annual
Conference, Portland, OR, October 1998
Wastewater Rates and Pricing Trends in
Washington and Oregon, PNPCA Annual
Conference, October 1997
Benchmarking for Utilities, AWWA
California- Nevada Section Conference, San
Jose, CA, April 1997
Alaska Water /Wastewater Rate Survey,
December 1997
Oregon Water /Wastewater Rate Study,
September 1996, September 1998
Washington Water /Wastewater Rate Study,
Karyn Johnson Resume Page 6
4? FCS GROUP
Solutions- Oriented Consulting
August 1996, October 1998
California Wastewater Rate Study, May
1994, May 1996
California Water Charge Survey, May 1995,
April 1993
California Changes Water Rates in Response
to Drought, (Co- author) CONSERV93, Las
Vegas, NV, December 1993
Sergey Tarasov is a project manager with FCS
GROUP specializing in utility rate design and
financial feasibility analysis for electric, water,
sewer, stormwater and solid waste utilities. His
areas of expertise are in customer statistics
analysis creating customer specific profiles to
aid in detailed load forecasting (electric),
revenue requirement analysis, cost of service
allocation, rate design analysis and unit cost
determination.
SERGEY TARASOV
Project Manager
B.S., Economics, University of Washington
Mr. Tarasov is the lead analyst in FCS
GROUP's electric utility rate group and has
extensive modeling experience which allows for
tailoring each model to meet individual client
needs and facilitates the generation of
sensitivity analysis to make sure the optimum
rate strategy is selected.
The analysis he develops from customer
statistics has allowed clients to develop
customized conservation rate structures (water
specific) unique to their system characteristics.
His work includes projecting purchased power
costs from the Bonneville Power Administration
(BPA) under prior existing wholesale rates and
the Tiered Rate Methodology. In 2012 he
conducted a two day presentation on electric
cost of service rate setting to public utility
managers in Washington State.
Sergey has extensive modeling experience
which allows for tailoring each model to meet
individual client needs and facilitates the
generation of sensitivity analysis to make sure
the optimum rate strategy is selected. He
routinely works with computer systems and
automating rate models. His responsibilities
include organizing and validating data and
ensure that the right model and applications are
applied and seamlessly integrated.
As an FCS GROUP project manager, Sergey
Sergey Tarasov Resume Page 1
•FCS GROUP
Solutions Oriented Consulting
CAREER SUMMARY
8 years (since 2005) professional
experience
7 years (since 2006) experience in
municipal rate and fee consulting
Joined FCS GROUP in 2006
EXPERTISE
Cost of Service Utility Rate Studies
(Water, Sewer, Stormwater, Solid
Waste, and Electric)
System Development Charges
(SDCs) /Connection Charges
Comprehensive Plans Financial
Elements
Cost Benefit Analysis
Rate Design Restructuring
Utility Formation
Multi -Year Financial Planning
Capital Infrastructure Planning
Funding Alternatives
Bond Feasibility Analysis
Reserve Analysis
PROFESSIONAL AFFILIATIONS
Pacific Northwest Clean Water
Association
Northwest Public Power Association
will serve as the lead project consultant in direct
support to Angie on this Port Angeles Utility
Cost of Service Study. He has prior experience
in working with each of the utilities identified
in this study.
RELEVANT PROJECT EXPERIENCE
Washington
ALDERWOOD WATER AND WASTEWATER
DISTRICT
Water and Sewer Utility Rate Study and
General Facilities Charges (GFC) Charges
Update
BELFAIR WATER DISTRICT #1
Water Revenue Requirement Study
BENTON COUNTY PUD
Electric Consulting Services for Cost of
Service Analysis
BREMERTON
Water, Sewer, and Stormwater Utility Rate
Study
BONNEY LAKE
Water System Delivery Charge (SDC) and
Rate Financial Analysis and Financial Plan
CAMAS
Water, Sewer, and Stormwater Revenue
Requirement and SDC for Utility Rate
Study
CENTRALIA
City Light Valuation and Divestiture
Feasibility Study
Electric Utility Rate Study and Cost of
Service Update
2012 Electric Rate Study Update
CHEHALIS
Industrial Area Annexation Fiscal Impact
Study
COAL CREEK UTILITY DISTRICT
Water and Sewer Rate Study Review and
Update and Water Cost of Service Analysis
COVINGTON WATER DISTRICT
Water Long -Range Financial Plan
Water Normalized Year Statistics
Water Rate Study, Cost Allocation, Cost of
Service, and Capital Facilities Charge
(CFC) Update
2012 Water Rate Study
Sergey Tarasov Resume Page 2
•FCS GROUP
Solutions- Oriented Consulting
COWLITZ COUNTY PUD
Electric Financial On -Call and Rate
Assistance
FIRGROVE MUTUAL WATER COMPANY
Water Utility Financial Plan and Share
Charge Analysis
FRANKLIN PUBLIC UTILITY DISTRICT #1
Electric Cost of Service Analysis, Rate
Design Study, and Revenue Requirement
Update
2012 Rate Analysis Services
FRIDAY HARBOR
Fire Cost Analysis
Water, Sewer, and Stormwater Rates and
Right to Connect Charges
HIGHLINE WATER DISTRICT
Water Utility Rate Studies and Connection
Charge Update
KING COUNTY WATER DISTRICT #49
Water Rate Study Technical Assistance
LAKEHAVEN UTILITY DISTRICT
Rate and Financial Services
LAKEWOOD WATER DISTRICT
Fire Cost Analysis
Water On -Call Consulting Services
Summit Wholesale Water Rates
Water System Replacement and
Rehabilitation and Planning
LEWIS COUNTY FLOOD DISTRICT
Flood District Formation
LIBERTY LAKE SEWER AND WATER DISTRICT
Sewer Rate and GFC Review
LYNNWOOD
Water, Sewer, and Stormwater Rate Study
and Cost of Service Analysis
Policy Review of Sewer Connection
Charges
MARYSVILLE
SPUD Lake Stevens Water System
Appraisal Advisory Services
MERCER ISLAND
Water Financial On -Call and Rate
Assistance
Water Rate Study and Sewer Connection
Charges Update
Sewer Rate Model Design
MCCLEARY
Water Utility Financial Plan and Connection
Charge Study
MUKILTEO WATER AND WASTEWATER DISTRICT
Water and Wastewater Rate Study
NORTH BEND
Water and Wastewater Rate Study
Sewer System GFC Study
NORTHERN ECONOMICS
Grandis Pond Development Impact
PORT ANGELES
Water, Wastewater, and Electric Utility
Rate Studies
RICHLAND
Electric Utility Rate Design
Cost of Service Review
ROSLYN
Water and Wastewater Utility Rate Study
SNOHOMISH
Water and Sewer Connection Fee and
Capital Facility Charge (CFC) Update
Water System Plan Financial Chapter
Water Treatment Plant and Water Supply
Study
Water, Sewer, and Stormwater Utility Rate
Study and Sewer Rate Update
SULTAN
Water and Wastewater Financial Chapter
for Comprehensive Plans
Alaska
Idaho
Sergey Tarasov Resume Page 3
•FCS GROUP
Solutions- Onented Consulting
Water Utility Rate Study
WHATCOM COUNTY
Birch Bay Stormwater Funding Analysis
YELM
Water and Sewer Financial Plan and Rate
Forecasts and Updates
Water Rate Study and Connection Charges
Oregon
ASTORIA
Wastewater Treatment Plant Facilities Plan
Financial Chapter
CENTRAL POINT
Transportation Utility Formation Study
CLACKAMAS RIVER WATER
Water Rate Analysis
LAKE OSWEGO
Water Financial On -call Consulting
Services
Sewer Utility Financial and Rate
Construction Services
Water Cost of Service Analysis Update
WEST SLOPE WATER DISTRICT
Water Cost of Service Rate Analysis and
SDC Study
KETCHIKAN PUBLIC UTILITIES
Water, Wastewater, and Storm Drain Cost
Allocation and Rate Design Study
MOSCOW
Water, Sewer, and Solid Waste Utility Rate
Study
PUBLICATIONS /SEMINARS /SPEAKING ENGAGEMENTS
Electric Cost of Service and Rate Setting,
February 8th and 9 Public Utility District
Workshop, 2012
Conservation Pricing of H2O, Washington
Finance Officers Association Annual
Conference, 2010
Setting Conservation -Based Water Rates,
Evergreen Rural Water of Washington
Annual Conference, 2010
Selling Your Rate Increases, Evergreen Rural
Sergey Tarasov Resume Page 4
•FCS GROUP
Solutions Oriented Consulting
Water of Washington Annual Conference,
2010
Can You Mine The Data Needed AWWA
Customer Service /IM Tech Conference, 2010
Setting Water Rates to Promote
Conservation, Partnership for Water
Conservation Workshop, 2009
ANDY EVANCHO
Technical Advisor
M.A., Economics, University of Washington, Seattle, 1974
B.A., Economics, University of Washington, Seattle, 1972
Andy Evancho brings 30 years of public
industry experience. He actively supported and
participated in the public process used to
establish rate and financial policies at Tacoma
Power. Andy possesses the comprehensive
technical knowledge of the electric rate study
process, in addition to understanding the
sensitivities surrounding political issues and
implementation challenges.
Andy Evancho has been responsible for the
development of retail rates for Tacoma Power
and Water while serving as its senior utility
economist. These responsibilities included basic
rate studies, proposals and oversight of the
public rate process. In addition he developed
sales and load forecasts for both organizations.
He was also responsible for preparing financial
and advanced rate design studies used by senior
management and policymakers for the
development of strategic planning objectiNes for
Tacoma Public Utilities.
During his 30 year tenure in the public industry,
the last 27 spent at Tacoma Public Utilities, Mr.
Evancho has managed the rate process for
Tacoma Power and Water. He actively
supported and participated in the public process
used to establish rate and financial policies at
Tacoma Power and Water including subsequent
revisions of those policies which are used in the
preparation of cost -of- service studies and final
rate designs for each of the utilities. Other
accomplishments included the development of
the economic analysis used in the decision to
develop Tacoma Water's Second Supply
Andy Evancho Resume Page 1
,FCS GROUP
CAREER SUMMARY
30 years professional experience
Joined FCS GROUP in 2012
EXPERTISE
Rate and Financial Policy
Development
Rate studies, proposals, and oversight
of public rate process
Preparation of financial and other
special studies for strategic planning
Cost -of- service studies and advanced
rate design
Development of economic analysis
Financial models for business plans
Load and revenue forecasts
Project cost analysis
Electric utility deregulation
Solutions- Oriented Consulting
Project, creation of financial models used in the
analysis for Tacoma Power and Water's
business plans. In addition for 25 years he
developed load and revenue forecasts which
provided the basis of the Integrated Resource
Plan for Tacoma Power to optimize its resource
portfolio as well as the providing the basis for
revenue projections used for budgeting at the
utility.
Mr. Evancho represented Tacoma Power during
the Washington State legislative discussions and
studies of electric utility deregulation.
At FCS, Mr. Evancho assisted in the evaluation
and design of advanced rate forms in an effort
to assist the City of Richland in managing the
impacts of the Bonneville Power Administration
tiered rate design. This effort included
evaluation of requirements to adequately
support time based rate designs.
Prior to joining Tacoma Power, from 1978 to
1983, Mr. Evancho worked for the San Diego
Gas Electric Company as a senior economist.
From 1977 to 1978, he worked for the Convair
Andy Evancho Resume Page 2
<+FCS GROUP
Solutions- Oriented Consulting
Division of the General Dynamics Corporation
in their advanced space concepts division.
Upon graduation in 1974, Mr. Evancho began
his career as an analyst /intelligence officer in
Washington, D.C.
As a technical advisor to the Port Angeles
Utility Cost of Service Studies, Andy will assist
Angie on technical elements specific to the
electric utility.
CATHERINE OTTEN
Analyst
M.B.A., Leadership Formation, Seattle University
B.A., International Relations, Boston University
Catherine Otten is a utility rate analyst who
provides analytical and technical support on
water, sewer, stormwater, and solid waste
utilities. Among her recent work, she has
created financial plans for Lakewood Water
District, the City of Lynnwood, and a number of
cities in Idaho.
In addition to financial plans, she has worked
closely with a number of Idaho cities and their
attorneys to develop a legally acceptable
methodology for Capacity Fees (GFCs), which
are currently a contentious issue in that state.
She also worked with a regional wastewater
provider in Central Washington to create a
model that reconciled capacity allocation
between partners, showed how their legal
agreement for a wastewater treatment plant
affected their historical and future payment
schedules and created a worksheet for internal
use that calculates their required pre payments
and end of the year reconciliations.
As the primary analyst for this Port Angeles
Utility Cost of Service Study, she will be
working directly with both Angie and Sergey to
Catherine Otten Resume Page 1
•FCS GROUP
Solutions- Oriented Consulting
CAREER SUMMARY
8 years professional experience
Joined FCS GROUP in 2011
EXPERTISE
Financial Planning and Analysis
Long -range Planning
Sustainable Practices
Training
Nonprofits
Presentation of Results to Stakeholders
through Social Media
PROFESSIONAL AFFILIATIONS
Net Impact, Seattle Chapter
Washington State Recycling Association
(WSRA)
provide analysis on solid waste, water,
wastewater and electric utilities.
RELEVANT PROJECT EXPERIENCE
Washington
BELLEVUE
Water Rate Structures and Revenue
Stability Study
BLAINE
Water Rate Update
Wastewater Rate Update
BREMERTON
Water, Sewer, and Stormwater Utility Rate
Study
CLE ELUM
Upper Kittitas County Regional WWF Rate
Assistance
DES MOINES
Stormwater Issue Papers and Cost of
Service Analysis
KING COUNTY CONSERVATION DISTRICT
Rate Structure Development
LAKEWOOD
WSP Financial Chapter
LAKEWOOD WATER DISTRICT
On Call Consulting Services 2012
LYNNWOOD
Comprehensive Water System Plan Chapter
Water, Sewer, and Stormwater Rate Study
NORTH BEND
Water and Wastewater Rate Study
OLYMPIA
Water Rate Update
PIERCE CONSERVATION DISTRICT
Rate Development Study
PORT TOWNSEND
Financial Reporting and Reports Review
REDMOND
Water and Wastewater GFC Study
2009 -2010 Water and Sewer Rate Study
Idaho
Catherine Often Resume Page 2
•FCS GROUP
Solutions- Onented Consulting
RONALD WASTEWATER DISTRICT
Finanical plan and Rate Forecast
SAMMAMISH PLATEAU WATER AND SEWER
DISTRICT
Water and Sewer GFC Financial Consulting
SPOKANE COUNTY
Wastewater Ongoing Rate Consultation
YELM
Water System Financial Plan Update
Oregon
ASTORIA
Wastewater Treatment Plant Facilities Plan
Rate Study Section Update
LAKE OSWEGO
Wholesale Water Rate Study
On -Call Financial Consulting Services for
Water and Sewer
COEUR D'ALENE
Water System Plan Financial Plan and Rate
Forecast
Stormwater Rate Study
HAYDEN AREA REGIONAL SEWER BOARD
(HARSB)
Cap Fee and Financial Plan Update
HAYDEN
Sewer Capitalization Fee Update
HAYDEN AREA REGIONAL SEWER BOARD
Financial Plan and Capacity Fee Update
MOSCOW
Water, Sewer, and Solid Waste Utility Rate
Study
POST FALLS
Sewer Financial Plan and Capacity Fee
Update
Chris Gonzalez is an FCS GROUP project
manager with 10 years of utility rate and
finance experience. His work to date includes
standard cost of service rate studies, connection
charge studies, and the derivation of specialized
rate structures such as interruptible water
service rates and wholesale water rates. He is
also experienced with Washington State's
excise tax rules, having spent a substantial
amount of time working with the Washington
State Department of Revenue on excise tax
audits on behalf of FCS GROUP clients around
Washington State.
Mr. Gonzalez's modeling experience involves
the development of sophisticated, user fri endly
rate models that take advantage of innovative
dashboard features. The application of his
modeling approach facilitates financial scenario
review and analysis.
Mr. Gonzalez has recently conducted
presentations for public water and sewer
managers on the topic of addressing rate relief
during economic hard times.
Chris Gonzalez specializes in developing utility
rates and connection charges, having served
numerous water and wastewater utilities around
Washington and in other western states. He has
assisted utilities in their consideration of a
variety of fiscal policy and other issues
including system reinvestment for long -term
asset management, benchmarking and managing
reserve levels, wholesale rates (and other
differential rate structures based on the level
and cost of service), and sensitivity analysis. In
recent work with his clients, he has facilitated
discussion and prioritization of conceptual rate
structure objectives by utility staff and elected
CHRIS GONZALEZ
Project Manager
B.S.E, Operations Research and Financial Engineering,
Princeton University
Chris Gonzalez Resume Page 1
,FCS GROUP
Solutions Oriented Consulting
CAREER SUMMARY
10 years experience in municipal rate
and fee consulting
Joined FCS GROUP in 2003
EXPERTISE
Utility Rate Studies (Water, Sewer)
Impact Fees /Connection
Charges /SDCs
Wholesale Rate Setting Water Supply
Economic Analysis Feasibility Studies
Excise Tax Audits
Revenue Requirements
Utility Fiscal Policy Analysis
PROFESSIONAL AFFILIATIONS
American Water Works Association
officials in an interactive workshop format
this additional element has provided useful
insight in developing rate structure
recommendations that align well with client
needs and priorities. Chris is also experienced
in developing user friendly models as dynamic
planning tools that can accommodate changing
conditions and assumptions.
Chris will be involved in the Port Angeles
Utility Cost of Service Studies, as needed, as it
relates to optional tasks inclusive of excise tax.
As an FCS GROUP project manager, he also
provides additional depth to the team in terms
of providing back -up to Sergey and Catherine.
RELEVANT PROJECT EXPERIENCE
Washington
AIRWAY HEIGHTS
Water and Sewer Rate Development and
Cost of Service Updates
2010 Water, Sewer, and Reclaimed Water
Cost of Service Rate Study
2011 Water and Wastewater Rate Update
2012 On -Call Financial Consulting Services
BELLEVUE
Water Rate Structures and Revenue
Stability Study
Water, Sewer, Drainage Utility Excise Tax
Refund Services
Wholesale Water Supply Cost Analysis
BELLINGHAM
Water and Sewer Rate and System
Development Charge (SDC) Study and
Updates
Water and Sewer Rate Study
Stormwater Rate Study
Special Sewer Rate Issues Analysis
Marginal Water Cost Analysis
BIRCH BAY WATER AND SEWER DISTRICT
Water General Facilities Charge (GFC)
Study
Water and Sewer Cost of Service and Rate
Structure Updates
BLAINE
2009 Water Rate Update
2010 Water and Sewer Cost of Service Rate
Support
2010 Wholesale Water Rate Support
2011 Wastewater and Water Rate Update
2011 Wholesale Water Rate Support
BREMERTON
Utility Rate Study
CARNATION
Comprehensive Water Rate Study Update
CASCADE WATER ALLIANCE
Water System Financial Plan
Ongoing Financial Support
Chris Gonzalez Resume Page 2
•FCS GROUP
Solutions- Oriented Consulting
2010 General Rate and Financial Support
Wholesale Negotiations Support
HIGHLAND WATER DISTRICT
Water Rate and Connection Fee Update
KENNEWICK IRRIGATION DISTRICT
Water Cost of Service and Rate Study
KING COUNTY WATER DISTRICT #45
Water General Facilities Charge (GFC)
Study
LAKEWOOD WATER DISTRICT
2012 On Call Consulting Services
LIBERTY LAKE SEWER AND WATER DISTRICT
2010 CFC and Sewer Rate Update
MUKILTEO WATER DISTRICT
Water and Sewer Excise Tax Refund
Support
OLYMPIA
2009 and 2010 Water Commercial Rate
Analysis and Cost of Service Rate Update
2009 Sewer Financial Chapter Update
2011 Water Rate Update
2012 Water Rate Update
POINT ROBERTS WATER DISTRICT #4
2009 Water Rate and GFC Updates
2010 Commercial Water Rate Review
2011 Water Rate Update
PORT ANGELES
2012 Electric Utility Tax Review
PORT TOWNSEND
Water and Wastewater Rate Update
Water and Sewer Utility Rate Update and
Water Supply /Treatment Analysis
POULSBO
Sewer Utility Financial Chapter
REDMOND
2009 Water and Sewer GFC Update and
Cost of Service Rate Study
2009 -2010 Water and Sewer Rate Study
SALLAL WATER ASSOCIATION
Water Rate Study
SAMISH WATER DISTRICT
2010 Sewer Cost of Service Rate and GFC
Update
2008 Sewer Rate Update
SAMMAMISH PLATEAU WATER AND SEWER
DISTRICT
Water and Sewer Financial Consulting
2012 Assumption Feasibility Support
Ames Lake Wholesale and Wheeling Rate
Development
SEATTLE PUBLIC UTILITIES
Water, Wastewater, and Drainage Utilities
Connection Charge Study
SKAGIT COUNTY SEWER DISTRICT #2
Water Reclamation Cost Allocation Study
SPOKANE COUNTY
Wastewater Rate Update
Wastewater Ongoing Rate Consultation
WAPATO
Water Rates Study
WOODINVILLE WATER DISTRICT
Rate Structure Conceptual Review
YAKIMA
Wastewater Rate and Charge Study
California
CARLSBAD
Water, Recycled Water, Wastewater Cost of
Service and Rate Design Study
FRESNO
Impact Linkage Fee Feasibility Study
LAKE ARROWHEAD COMMUNITY SERVICES
DISTRICT
Comprehensive Financial Master Plan
ORANGE COUNTY SANITATION DISTRICT
2008 Wastewater Revenue Program and
PUBLICATIONS /SEMINARS /SPEAKING ENGAGEMENTS
"Utility Excise Taxes", 2008.
Rate Relief During Economic Hard Times,
Washington Public Utility Districts
Association, 2011
Chris Gonzalez Resume Page 3
•FCS GROUP
Solutions- Oriented Consulting
Rate Update
Wastewater Capital Facilities Connection
Charge Update
SACRAMENTO COUNTY WATER AGENCY
Water Rate Study Zone 41
Western Municipal Water District
Financial and Economic On -Call Support
Nevada
DOUGLAS COUNTY
Water and Sewer Cost of Service Rate and
Connection Charge Studies for
LYON COUNTY
Dayton Water and Sewer and Mound House
Water Utility Cost of Service Rate Studies
WASHOE COUNTY
Cost of Service Rate Analysis
Truckee River Flood Area Funding Study
Idaho
MOSCOW
Water, Sewer, and Solid Waste Utility Rate
Study
Arizona
SCOTTSDALE
Cost of Service Rate Study for the Water
and Wastewater Rate Enterprise Funds
Colorado
WESTMINSTER
Sewer Cost of Service Update
Montana
BILLING HEIGHTS WATER DISTRICT
2011 Resale Water Rate Review
NATHAN REESE
Project Consultant
M.P.A., Maxwell School of Syracuse University
B.A., International Politics, Brigham Young University
Nathan Reese is a project consultant at FCS
GROUP. His focus is on analytical work in
support of the firm's management consulting
efforts. His previous experience includes
positions as a senior budget analyst and
management analyst for local government. most
recently in the Finance Department for the City
of Bellevue, Washington. He has worked with
several city departments, including
transportation, and has performed various
municipal /legal research functions. He has
coordinated department budget narratives,
prepared and analyzed data, and written various
city -wide performance reports. As an intern, he
ran city surveys on animal control and police
services.
His experience includes preparing cost
allocation plans and conducting comprehensive
development services fee and rate studies. He
analyzes the cost of service for each type of fee
and compares it with the fee charged, and
performs a cost recovery analysis to determine
of the cost recovery levels are consistent with
cost recovery policies.
Nathan has eight years of experience in building
flexible, user friendly financial models fot local
government for a variety of tasks, such as:
Budget development
Budget monitoring
Revenue forecasting
Indirect cost allocation
Internal service fund charges
Reserve contributions for equipment
replacement, etc.
Nathan Reese Resume Page 1
•FCS GROUP
Solutions Oriented Consulting
CAREER SUMMARY
9 years (since 2004) professional
experience
5 years (since 2008) experience in
municipal rate and fee consulting
Joined FCS GROUP in 2008
EXPERTISE
Financial Planning and Analysis
Government Finance Budgeting
Indirect Cost Allocation Plans
Cost of Service
Benchmarking and Comparative
Studies
Annexations and Development
Analysis
PROFESSIONAL AFFILIATIONS
Member, Washington Finance Officers
Association
In addition to developing financial models, also
has several years of experience in providing
training and training materials to staff so that
they can use the modeling tools we have
developed for them.
Nathan will be involved in the Port Angeles
Utility Cost of Service Studies, as needed, as it
relates to optional tasks inclusive of cost
allocation.
RELEVANT PROJECT EXPERIENCE
Washington
ABERDEEN
Ambulance Cost of Service and Rate Study
Update
AIRWAY HEIGHTS
Cost of Library Alternatives
Public Safety Cost of Service Analysis
AUBURN
OMB A -87 Cost Allocation Plan and Model
Revenue and Cost of Service Fee Study
BLAINE
East Maple Ridge Fiscal Analysis
BONNEY LAKE
Indirect Cost Allocation Plan
CENTRALIA
Indirect Cost Allocation Plan
CLARK REGIONAL WASTEWATER DISTRICT
Financial Analysis Services
COWLITZ COUNTY
Development and Building Permit Cost of
Service and Fee Study
FRANKLIN PUBLIC UTILITY DISTRICT #1
Electric Cost of Service Analysis and Rate
Design Study
FRIDAY HARBOR
Fire Department Consolidation and
Financial Analysis
ISLAND COUNTY FIRE DISTRICT #1
Cost of Service and Financial Analysis
KENNEWICK
Cost Allocation Plan and Comprehensive
Development Fee and Rate Study
KING COUNTY
Auditor's Office Assessment of the
Wastewater Treatment Division's
Productivity Initiative
Evaluation of Local Hazardous Waste
Management Program Rate Design
KING COUNTY PARKS AND RECREATION
Cost Recovery Policy and Fee Update
Nathan Reese Resume Page 2
KITSAP COUNTY
Indirect Cost Allocation Plan
RIDGEFIELD
Indirect Cost Plan Review
•FCS GROUP
Solutions Oriented Consulting
MARYSVILLE
Central Annexation Solid Waste Cost
Benefit Analysis
MASON COUNTY PUD #3
Facility Cost Benefit Analysis
MERCER ISLAND
EMS Cost of Service Study and Rate
Update
METRO PARKS TACOMA
Administrative Performance Audit
Facilities Cost Benefit Analysis
MOUNTLAKE TERRACE
Utility Overhead Analysis
OCEAN SHORES
Ambulance Cost of Service and Rate Study
ORTING
Water, Sewer, and Stormwater Rate and
Charge Study
PIERCE COUNTY
Update of CMF Cost Benefit Analysis for
Road Operations
Wastewater Collections /Transportation
Operations Center (WWC /TOC) Facility
Cost Benefit Analysis and Update
Consolidation of Natural Resource Lands
Management
PORT ANGELES
PenCom Cost of Service and Rate Study
PORT TOWNSEND
Financial Reporting Process and Reports
Review
QUADRANT CORPORATION
Impact Fee Review of the Proposed 2010
Snoqualmie Valley School District's Capital
Facilities Plan
SAMMAMISH
Fire Services Cost Analysis Update and
Briefings
Fire Services Evaluation
SILVER LAKE WATER AND SEWER DISTRICT
Everett Annexation Analysis
SPOKANE
Comprehensive User Fee Study Update;
Full Cost Allocation Plan, Benefit Rates,
and Indirect Cost Rates
Full Cost Allocation Plan and Indirect Cost
Rates for Police Department
SPOKANE COUNTY
Cost Allocation and Jail Housing Rate
Services
SPOKANE
Comprehensive User Fee Update
Full Cost Allocation Plan, Benefit Rates,
and Indirect Cost Rates
STANWOOD
Cost of Service and Financial Analysis
Indirect Cost Allocation
SUMNER
Indirect Full Cost Allocation Plan
SUNNYSIDE
Ambulance Cost of Service and Rate Study
TUKWILA
Indirect Cost Allocation Plan
Parks and Recreation Cost of Service and
Cost Recovery Analysis
VANCOUVER
Development Review Services Cost of
Service Update
WASHINGTON STATE AUDITOR'S OFFICE
Performance Based Contracting Review
WASHINGTON STATE LIQUOR CONTROL BOARD
Cost Allocation and Cost of Service Model
Update
WASHINGTON STATE INSTITUTE FOR PUBLIC:
POLICY
Wildfire Suppression Cost Study
WEST RICHLAND
Indirect Cost Allocation Plan
Nathan Reese Resume Page 3
YAKIMA
City and County Purchasing Merger
Implementation Plan
Oregon
BEND
Bend Community Development Fee Study
Long -Term Financial Plan
CENTRAL SCHOOL DISTRICT 13J
Bond Project Performance Review
CLACKAMAS COUNTY
Review and Updates of Cost Allocation
Plan
DOUGLAS COUNTY
Indirect Cost Allocation Plan
•FCS GROUP
MARION COUNTY
Cost Allocation Plan Services
Solutions Onented Consulting
FOREST GROVE
Water Rate and System Development
Charge (SDC) Study
HILLSBORO
Building and Planning Support Analysis
Indirect Cost Allocation Plan
Community Development Cost of Service
Study
METRO PORTLAND
Review of Solid Waste Disposal Charges
MULTNOMAH COUNTY
Land Use Division Fee Study
NEWPORT
Cost Allocation and User Fee Study
OREGON STATE
Department of Oregon State Police
Administrative Cost Allocation Model
SPRINGFIELD
Development Review Cost Analysis and
Recovery Methodology
TIGARD
Cost Allocation Plan and Indirect Rate
Study
Engineering Services Review
California
CAMPBELL
Indirect Cost Allocation Plan and User Fee
Study
FRESNO
Vehicle Impound Fee Analysis for Police
Department
INDIAN WELLS
Business License Cost of Service Study
LODI
OMB A -87 Cost Allocation Plans and
Indirect Cost Rates
LOS GATOS
Indirect Cost Allocation Plan and User Fee
Study
FY 2013 OMB A -87 Cost Allocation Plans
and Indirect Cost Rates
MADERA COUNTY
County wide Cost Allocation Plan
PALO ALTO
Overtime and Staffing Analysis
PUBLICATIONS /SEMINARS /SPEAKING ENGAGEMENTS
Indirect Cost Allocation Plans, Puget Sound
and Eastern Washington Finance Officers
Association Seminar, May 2012
Indirect Cost Allocation Methods,
Washington Finance Officers Association
Annual Conference, Spokane, WA 2011
Nathan Reese Resume Page 4
GROUP
Solutions- Onented Consulting
POWAY
Cost of Service and Fee Model
Documentation
Indirect Cost Allocation Model and Plan
Update
SAN FRANCISCO (CITY AND COUNTY)
Cost Allocation Plan for the Department of
Public Works
SANTA PAULA
Solid Waste Stranded Cost Analysis
Arizona
DEWEY HUMBOLDT
Indirect Cost Allocation Plan and User Fee
Study
Nevada
WASHOE COUNTY
Water, Recycled Water and Wastewater
Financial Policy and Funding Study
Federal Government
U.S. Forest Service Cost Review Panel for
FY 2009 Large Fires
Indirect Cost Allocation Methods,
Washington Finance Officers Association
Annual Conference, 2010
Good Management Practices Through
Proper Budgeting Techniques, Evergreen
Rural Water of Washington, February 2010
City of Port Angeles Utility Cost of Service Studies
APPENDIX C DATA NEEDS REQUEST
Appendix C Data Needs Request
•>FCS GROUP
•FCS GROUP
Solutions- Oriented Consulting
CITY OF PORT ANGELES
2013 Electric, Solid Waste, Transfer Station, Water and Wastewater Cost of Service Rate Study
PRELIMINARY DATA NEEDS
This preliminary data needs list is provided to allow the City to begin gathering information
required for the study. For purposes of organizing the material that you gather for us, it would be
helpful if you labeled each item in accordance with the number on this data request (e.g. F -1, F-
2, etc.). Please feel free to provide any additional data that has not been requested but you
believe would be useful.
Engineering /Planning Documents
E -1 Comprehensive Planning Data. Please
provide the City's most recent Water
and Wastewater comprehensive plans or
drafts of plans in progress, for each
utility.
E -2 Growth Estimates. Please provide
growth estimates for new development
connections per year; identify if growth
estimates are different by utility and
customer class (e.g. Water: single
family, commercial; Electric: residential,
general service, etc.)
Financial Data
F -1
Fixed Asset Listing. Please provide a
listing of all water, wastewater and
electric plant in service for most recen
year ended (2012). Include:
Plant account detail by function.
Accumulated depreciation and
annual depreciation.
Identify any new "dedicated
facilities" (e.g. facilities constructed
or used for one identifiable customer
or group of customers).
F -2 Cash Balances. Please provide 2012
ending cash balances designated for
each utility operating fund, capital fund,
debt service reserves, and any other
dedicated funding.
F -3 Budget Revenue and Expense Reports.
The 2013 preliminary budget was
available on the City website by object
summary. If possible, please provide the
detailed 2013 budget revenues and
expenditure line items for each utility.
Please specify if the budget includes any
planned increases or if there is a planned
increase on top of the budget figures.
F -4 Debt Service Repayment Schedules.
Include records pertaining to long -term
debt obligations. Relevant debt service
obligations may include revenue bonds,
state or federal loans, inter -fund loans,
and other debt instruments. Include
detail for annual principal and interest
payments over the term of the
repayment, coverage requirements, and
debt reserve requirements. If the loans
are combined loans (shared between
utilities) please specify the percentage of
the loan that each utility is responsible
for.
F -5 Purchased Power /Power Supply.
Please provide the following:
Access to the BPA portal. If this is
not possible:
Copy of monthly purchased
generation and transmission
power bills for October 2011
through present. Please
supply all pages of the bills.
Please provide the Utility's
billing determinants (rates
and billed units)
Supply the name of the Utility's
BPA account executive and contact
2013 Electric, Solid Waste, Transfer Station, Water and Wastewater Cost of Service! FCS Group 425.867.1802 Page 1
•FCS GROUP
Solutions Oriented Consulting
information.
Please identify distribution system
loss levels from transmission voltage
to primary and primary to
distribution, if known. If the
requested voltage level separation is
not available, identify expected
system losses as a percentage of
total purchases.
Customer Data
If additional rate design alternatives are to be
considered, please provide the individual
customer data described below. If rate design
alternatives are not to be considered, please
provide the annual summary by class of the
information below.
C -1
Detailed Water Customer Billing
Data. Please provide an electronic file
of detailed customer billing data from
January to December 2012. At a
minimum, please provide the following
data fields for each account and each
month:
Account
Customer class rate codes
(residential, commercial, etc.)
Meter size
Volume billed
Dollars billed
C -2 Detailed Wastewater Customer Billing
Data. Please provide an electronic file
of detailed customer billing data from
January to December 2012. At a
minimum, please provide the following
data fields for each account and each
Please CC any emailed items to:
Sergey Tarasov
month:
Account
•A Customer class rate codes
(residential, commercial,
multifamily, etc.)
Customer location (inside outside
City)
Volume billed
Dollars billed
C -3 Detailed Electric Customer Billing
Data. Please provide an electronic file
of detailed customer billing data from
January to December 2012. At a
minimum, please provide the following
data fields for each account and each
month:
Account number
Contact Information
Please direct any questions and /or items collected as a part of this data request to:
FCS GROUP
Attention: Angie Sanchez Virnoche
Redmond Town Center
7525 166 Ave NE, Suite D -215
Redmond, WA 98052
Customer class rate code
Monthly billed kWh
Monthly billed kW
Monthly billed KVA
Available time of use information by
class
C -4 Detailed Solid Waste Data. Please
provide an electronic file of detailed
customer billing data from January to
December 2012. At a minimum, please
provide the following data for the
calendar year:
Number of accounts by size and
collection frequency
Tonnage by waste type
Other
0-1 Waste Management Contracts
Tel: (425) 867 -1802, ext. 230
Fax: (425) 867 -1937
Email: angies @fcsgroup.com
Email: sergeyt @fcsgroup.com
2013 Electric, Solid Waste, Transfer Station, Water and Wastewater Cost of Service 1 FCS Group 425.867.1802 Page 2
March 28, 2013
In reply refer to: PSW /Seattle
Philip D. Lusk, Deputy Director
Power and Telecommunications Systems
City of Port Angeles
P.O. Box 1150
Port Angeles, WA 98362 -0217
Dear Phil:
.211 it/vtirtek)K. ,Lk t/►^2_
Shannon K. Greene
Power Services Account Executive
Enclosure
Depeirtment of Energy
Bonneville Power Administration
Seattle Customer Service Center
909 First Avenue, Suite 380
Seattle, WA 98104 -3636
POWER SERVICES
Enclosed is Revision No. 3 to Exhibit C of the City of Port Angeles' (Port Angeles) Power Sales
Agreement Contract No. 09PB -13093 (Agreement). The changes in the attached revision are
necessary to reflect Port Angeles' Tier 2 purchase amounts for the FY 2014 FY 2015 Rate
Period. This Rate Period is unique because it is a combination of the first Purchase Period
(FY12 -14) and the second Purchase Period (FY15 -19). Elections for the first Purchase Period
were made by November 1, 2009 and elections for the second Purchase Period were made by
September 30, 2011.
Pursuant to the Agreement, this exhibit revision is unilateral and does not require a signature.
Please feel free to contact me at (206) 220 -6775 if you have any questions or concerns.
Sincerely,
This revision updates section 2.5.2 to add Port Angeles' Tier 2 purchase amounts for the
FY 2014 FY 2015 Rate Period.
1. FIRM REQUIREMENTS POWER AT TIER 1 RATES
The portion of Port Angeles' purchase obligation that is priced at Tier 1 Rates is
established in section 8.1(1) of the body of this Agreement.
2. FIRM REQUIREMENTS POWER AT TIER 2 RATES
2.1 Notice to Purchase Zero Amounts at Tier 2 Rates
If Port Angeles elects not to purchase Firm Requirements Power at Tier 2
Rates for a Purchase Period, then by March 31 immediately following the
corresponding Notice Deadline, BPA shall update this exhibit to indicate such
election by adding an "X" to the applicable cell in the following table. Such
election means that for the Purchase Period specified below, Port Angeles
shall: (1) purchase zero amounts of Firm Requirements Power at Tier 2
Rates, and (2) serve all of its Above -RHWM Load that is greater than or
equal to 8,760 megawatt -hours with power other than Firm Requirements
Power. Port Angeles may serve its Above -RHWM Load that is less than
8,760 megawatt -hours with power other than Firm Requirements Power.
1 Zero Tier 2 1 Purchase Period
1 1 FY2012- FY2014
1 I FY 2015 FY 2019
1 FY 2020 FY 2024
1 FY 2025 FY 2028
2.2 Tier 2 Load Growth Rate
Revision No. 3, Exhibit C
PURCHASE OBLIGATIONS
Effective March 31, 2013
2.2.1 First Election Opportunity
If Port Angeles elects by the first Notice Deadline (November 1, 2009)
to purchase Firm Requirements Power at Tier 2 Load Growth Rates
starting October 1, 2011, then in its election Port Angeles shall elect
one of the three Tier 2 Load Growth Rate options listed in section 2.2.3
of this exhibit. If Port Angeles elects Option 3, then Port Angeles
shall state the amounts to be listed in the table in section 2.2.3.3 of
this exhibit and Port Angeles' Tier 2 Short -Term Rate election
pursuant to section 2.4.1 of this exhibit. BPA shall amend this exhibit
by March 31, 2010, to indicate Port Angeles' election by adding an "X"
to the "1st Notice Deadline" box next to the applicable option below. If
Port Angeles does not elect to purchase Firm Requirements Power at
Tier 2 Load Growth Rates by the first Notice Deadline, then Port
Angeles shall not have the right to purchase Firm Requirements
Power at Tier 2 Load Growth Rates during the first Purchase Period.
09PB- 13093, Port Angeles 1 of 11
2.2.2 Second Election Opportunity
2.2.2.1 If Port Angeles does not elect to purchase Firm Requirements
Power at Tier 2 Load Growth Rates starting the first
Purchase Period, then Port Angeles may purchase Firm
Requirements Power at Tier 2 Load Growth Rates starting
October 1, 2014, provided:
(1) any elections of Tier 2 Rate alternatives or additions
o F New Resources under this Agreement that extend
beyond the initial Purchase Period shall continue to
apply for their term, and
(2) the Tier 2 Load Growth Rate applicable under this
e lection may be different than the Tier 2 Load Growth
Rate that was available during the first Purchase
Period.
2.2.2.2 If Port Angeles elects by the second Notice Deadline
(September 30, 2011) to purchase Firm Requirements Power
at Tier 2 Load Growth Rates, then in its election Port Angeles
shall elect one of the three Tier 2 Load Growth Rate options
listed in section 2.2.3 of this exhibit. In such case, Port
Angeles shall purchase Firm Requirements Power at Tier 2
Load Growth Rates under such elected option starting
October 1, 2014.
2.2.2.3 If Port Angeles elects Option 3, described in section 2.2.3.3 of
this exhibit, then Port Angeles shall state the amounts to be
listed in the table in section 2.2.3.3 of this exhibit and Port
Angeles' Tier 2 Short -Term Rate election pursuant to
section 2.4.1 of this exhibit. If Port Angeles has prior
elections of rate alternatives or resource additions that
extend beyond the first Purchase Period, then Port Angeles
shall not have the right to elect Options 1 or 2 below. In such
case, the amounts listed in the table in section 2.2.3.3 of this
exhibit shall not be less than the sum of Port Angeles' prior
elections for each year.
2.2.2.4 BPA shall amend this exhibit by March 31, 2012, to indicate
Port Angeles' election by adding an "X" to the "2nd Notice
Deadline" box next to the applicable option below. If Port
Angeles does not elect to purchase Firm Requirements Power
at Tier 2 Load Growth Rates by the second Notice Deadline,
then Port Angeles shall not purchase Firm Requirements
Power at Tier 2 Load Growth Rates for the term of this
Agreement.
09PB- 13093, Port Angeles 2 of 11
Revision No. 3, Exhibit C, Purchase Obligations
1st Notice Deadline
2nd Notice Deadline
1st Notice Deadline
2nd Notice Deadline
1st Notice Deadline
2nd Notice Deadline
2.2.3 Tier 2 Load Growth Rate Options
2.2.3.1 Option 1 Full Tier 2 Load Growth Rate
If Port Angeles elects this option, then Port Angeles shall
purchase Firm Requirements Power at Tier 2 Load Growth
Rates for all of Port Angeles' Above -RHWM Load.
2.2.3.2 Option 2 Shared Rate Plan
(1) Obligation
If Port Angeles elects this option, provided that BPA
determines Port Angeles qualifies under the limit for
the Shared Rate Plan as established in section 7 of the
TRM, then Port Angeles shall pay rates under the
Shared Rate Plan for Firm Requirements Power
purchased under this Agreement. If BPA determines
Port Angeles does not qualify under such limit, then
Port Angeles shall not have the right to elect this option
and Port Angeles shall purchase Firm Requirements
Power at Tier 2 Load Growth Rates under Option 1 as
established in section 2.2.3.1 of this exhibit. For the
second election opportunity stated in section 2.2.2 of
this exhibit, availability under the limit for the Shared
Rate Plan established in section 7 of the TRM shall
equal such limit minus the amounts used by other
customers who elected this Option 2 by the first Notice
Deadline
(2) Terminating Participation
Port Angeles may terminate participation in the Shared
Rate Plan by providing BPA notice in writing by
March 31 of a Forecast Year. In such case, the change
shall be effective the next Rate Period. If Port Angeles
stops participation in the Shared Rate Plan, then Port
Angeles shall not have the right to resume
participation. Port Angeles shall continue to purchase
Firm Requirements Power priced at Tier 2 Load Growth
Rates for all of Port Angeles' Above -RHWM Load.
2.2.3.3 Option 3 Partial Tier 2 Load Growth Rate
If Port Angeles elects this option, then Port Angeles shall
purchase Firm Requirements Power at Tier 2 Load Growth
Rates for all of Port Angeles' Above -RHWM Load minus the
amounts stated in the table below that Port Angeles elects are
not subject to Tier 2 Load Growth Rates. Port Angeles shall
establish such amounts at the time Port Angeles elects this
option and such amounts shall not change for the term of this
Agreement. Port Angeles may serve such amounts with
Dedicated Resources or with Firm Requirements Power
09PB- 13093, Port Angeles 3 of 11
Revision No. 3, Exhibit C, Purchase Obligations
purchased at other Tier 2 Rates. BPA shall update the table
below by March 31 immediately following Port Angeles'
election of this option.
Load Amounts Not Subject To Tier 2 Load Growth Rates (aMW)
Fiscal Year 1 2012 1 2013 1 2014 1 2015 1 2016 1 2017 1 2018 1 2019 1 2020
Annual aMW
Fiscal Year 1 2021 1 2022 1 2023 1 2024 2025 1 2026 1 2027 1 2028
Annual aMW
Note: Fill in the table above with annual Average Megawatts rounded to
three decimal places.
2.2.4 Modification to Tier 2 Load Growth Rate Election
2.2.4.1 Notice
Port Angeles shall have the right to stop purchasing Firm
Requirements Power at Tier 2 Load Growth Rates effective the
upcoming Rate Period, except for the amount established in
section 2.2.4.2 of this exhibit. If Port Angeles chooses to modify its
purchases at Tier 2 Load Growth Rates in this manner, then Port
Angeles shall notify BPA in writing by October 31 of a Rate Case
Year.
2.2.4.2 Continued Purchase Amount
For the remaining term of this Agreement, Port Angeles shall
continue to purchase at Tier 2 Load Growth Rates the amount of
Firm Requirements Power that Port Angeles purchased at Tier 2
Load Growth Rates the year before the modification described above
is effective.
2.2.4.3 Obligation to Apply Dedicated Resources
If Port Angeles provides notice to modify its purchases at Tier 2
Load Growth Rates under section 2.2.4.1 of this exhibit, then for the
remainder of the effective Purchase Period and all of the next
Purchase Period, Port Angeles shall apply Dedicated Resources to
serve all of its Above -RHWM Load that is in excess of the sum of all
Tier 2 commitments
2.2.4.4 Charges to Modify Tier 2 Load Growth Rate Purchase
Port Angeles shall be liable for payment of any costs that apply as a
result of Port Angeles modifying its Tier 2 Load Growth Rate
purchase obligation under this section 2.2.4. Such costs shall be
those that BPA: (1) is obligated to pay and will not recover from
Port Angeles at Tier 2 Load Growth Rates as a result of the
modification, and (2) is unable to recover through other transactions.
BPA shall determine such costs, if any, during the 7(i) Process that
follows Port Angeles' notice. If BPA determines that Port Angeles
owes payment for such costs, then Port Angeles shall pay the entire
amount to BPA in no more than 24 equal monthly amounts starting
09PB- 13093, Port Angeles 4 of 11
Revision No. 3, Exhibit C, Purchase Obligations
the first month of the upcoming Rate Period. In no event shall BPA
make payment to Port Angeles as a result of Port Angeles modifying
its Tier 2 Load Growth Rate purchase obligation under this
section 2.2.4.
2.2.4.5 Exhibit Update
By March 31 following Port Angeles' notice, BPA shall indicate Port
Angeles' election to modify its Tier 2 Load Growth Rate purchase by
filling in the table below. As established in section 2.2.4.2 of this
exhibit, Port Angeles shall continue to purchase the following
amounts of Firm Requirements Power at Tier 2 Load Growth Rates:
Continuing Tier 2 Load Growth Rates Purchase Obligation
Fiscal Year 2012 2013 2014 2015 2016
aMW
Fiscal Year 2017 2018 2019 2020 2021
aMW
Fiscal Year 2022 2023 2024 2025 2026
aMW
Fiscal Year 2027 2028
aMW
Note: Fill in the table above with annual Average Megawatts, rounded
to three decimal places, for each year that follows Port Angeles'
modification beginning with the effective year of modification
2.3 Tier 2 Vintage Rates
If Port Angeles elects Option 1 or 2 in section 2.2.3 of this exhibit, then this
section shall not apply. Otherwise:
2.3.1 Election Process
2.3.1.1 Right to Convert
Subject to the amounts of power BPA makes available at one
or more Tier 2 Vintage Rates, Port Angeles shall have the
right to convert some or all of the amounts of Firm
Requirements Power it has elected to purchase at Tier 2
Short -Term Rates, as stated in section 2.4 of this exhibit, to
an equal purchase amount at Tier 2 Vintage Rates.
2.3.1.2 Statement of Intent
If Port Angeles elects to purchase Firm Requirements Power
from BPA at Tier 2 Vintage Rates, then Port Angeles shall
sign a Statement of Intent offered by BPA. "Statement of
Intent" means a statement prepared by BPA and signed by
Port Angeles that describes the approach and cost structure
that will be used for a specific Tier 2 Cost Pool. If BPA
establishes a Tier 2 Cost Pool for a Tier 2 Vintage Rate
consistent with the Statement of Intent, then Port Angeles
agrees to have the portion of its Tier 2 Rate power purchase
09PB- 13093, Port Angeles 5 of 11
Revision No. 3, Exhibit C, Purchase Obligations
specified in the Statement of Intent priced at that rate. If
BPA is unable to establish the Tier 2 Cost Pool for the specific
Tier 2 Vintage Rate, then Port Angeles agrees to purchase
such amount of Firm Requirements Power at Tier 2 Short
Term Rates, except as stated in section 2.3.1.5 of this exhibit.
2.3.1.3 Insufficient Availability
The Statement of Intent shall include procedures to allocate
between competing applications for a specific Tier 2 Cost Pool
if requests exceed amounts available.
2.3.1.4 Conversion Costs
Upon establishment of a Tier 2 Vintage Rate for which Port
Angeles signed a Statement of Intent, Port Angeles shall be
liable for payment of any outstanding costs under Tier 2
Short -Term Rates that apply to Port Angeles. Such costs
shall be those that BPA: (1) is obligated to pay and will not
recover from Port Angeles under Tier 2 Short -Term Rates as
a result of the conversion, and (2) is unable to recover
through other transactions. BPA shall determine such costs,
if any, in the first 7(i) Process that establishes the applicable
Tier 2 Vintage Rate. In no event shall BPA make payment to
Port Angeles as a result of Port Angeles' conversion of
purchase amounts at Tier 2 Short -Term Rates to purchase
amounts at Tier 2 Vintage Rates.
2.3.1.5 Additional Offerings
In addition to the right to convert to Tier 2 Vintage Rates
established in section 2.3.1.1 of this exhibit, Port Angeles
may have the opportunity to purchase Firm Requirements
Power al; Tier 2 Vintage Rates regardless of whether Port
Angeles is purchasing at Tier 2 Short -Term Rates if:
(1)
BPA determines, in its sole discretion, that all
requests for service at Tier 2 Vintage Rates by
purchasers of Firm Requirements Power at Tier 2
Short -Term Rates are able to be satisfied, and
(2) BPA determines, in its sole discretion, to offer Port
Angeles a Statement of Intent that would provide Port
Angeles the opportunity to purchase Firm
Requirements at Tier 2 Vintage Rates.
If Port Angeles signs a Statement of Intent offered by BPA
pursuant to this section 2.3.1.5, and if BPA is unable to
establish the Tier 2 Cost Pool for the applicable Tier 2
Vintage Rate, then Port Angeles' current elections for service
to its Above -RHWM Load shall continue to apply.
09PB- 13093, Port Angeles 6 of 11
Revision No. 3, Exhibit C, Purchase Obligations
Except as provided in this section 2.3.1, any election by Port
Angeles to purchase Firm Requirements Power at Tier 2
Vintage Rates shall not relieve Port Angeles of any obligation
to purchase Firm Requirements Power at another Tier 2
Rate.
2.3.1.6 Exhibit Updates
By September 15 immediately following the establishment of
a Tier 2 Vintage Rate for which Port Angeles signed a
Statement of Intent, BPA shall amend this exhibit to show
Port Angeles' Tier 2 Vintage Rate purchases and remove Port
Angeles' Tier 2 Short -Term Rate purchases by the amounts
purchased at the Tier 2 Vintage Rate, if Port Angeles is
converting to the Tier 2 Vintage Rate from the Tier 2 Short
Term Rate. BPA shall insert applicable tables, terms, and
conditions for each Tier 2 Vintage Rate in section 2.3.2 of this
exhibit.
2.3.2 Vintage Rate Elections
Port Angeles has no Tier 2 Vintage Rate elections at this time.
2.4 Tier 2 Short -Term Rate
If Port Angeles elects Option 1 or 2 in section 2.2.3 of this exhibit, then this
section shall not apply. Otherwise:
2.4.1 Short -Term Rate Purchases
Unless Port Angeles elects, in section 2.1 of this exhibit, not to
purchase Firm Requirements Power at Tier 2 Rates for a given
Purchase Period, by each Notice Deadline Port Angeles shall elect in
writing either alternative (A) or (B) below for the duration of the
corresponding Purchase Period. If Port Angeles elects alternative (A)
and elects to apply Dedicated Resources to serve its Above -RHWM
Load, then Port Angeles shall state the amounts to be listed in the
table in section 2.4.1.1(2) of this exhibit. If Port Angeles elects
alternative (B), then Port Angeles shall state the amounts to be listed
in the table in section 2.4.1.3 of this exhibit. By March 31
immediately following each Notice Deadline, BPA shall update the
tables in this section 2.4.1 to show Port Angeles' Tier 2 Short -Term
Rate election for the corresponding Purchase Period.
2.4.1.1 Alternative A Customer Planned Load Not Otherwise
Served
If Port Angeles elects this alternative, then Port Angeles
shall purchase Firm Requirements Power priced at Tier 2
Short -Term Rates to serve all of Port Angeles' Above -RHWM
Load that Port Angeles has not otherwise agreed to serve
with:
09PB- 13093, Port Angeles 7 of 11
Revision No. 3, Exhibit C, Purchase Obligations
(1) Firm Requirements Power purchased at other Tier 2
Rates, or
(2) the amounts of Dedicated Resources, stated in the
table below, that Port Angeles shall apply during the
Purchase Period to serve its Above -RHWM Load. If
Port Angeles purchases power at Tier 2 Load Growth
Rates, then these Dedicated Resource amounts shall
not exceed the amounts stated in the table in
section 2.2.3.3 of this exhibit.
Purchase Period Dedicated Resource Elections
Fiscal Year 2012 2013 2014 2015 2016
Election 0.000 0.000 0.000 0.000 0.000
Fiscal Year 2017 2018 2019 2020 2021
Election 0.000 0.000 0.000
Fiscal Year 2022 2023 2024 2025 2026
Election
Fiscal Year 2027 2028
Election
Note: Insert amounts in Average Megawatts rounded to
three decimal places for each year of the applicable Purchase
Period.
2.4.1.2 Alternative B Limited Amounts
If Port Angeles elects this alternative, then Port Angeles
shall purchase Firm Requirements Power at Tier 2 Short
Term Rates to serve Port Angeles' Above -RHWM Load that
Port Angeles has not otherwise agreed to serve with Firm
Requirements Power purchased at other Tier 2 Rates;
provided. however, that amounts purchased at Tier 2 Short
Term Rates shall not exceed the amounts (including zero
amounts) stated in the table in section 2.4.1.3 of this exhibit.
Port Angeles agrees to serve any of its remaining Above
RHWM Load with power other than Firm Requirements
Power.
2.4.1.3 Tier 2 Short -Term Rate Elections
If Port Angeles elects alternative (A) above, then BPA shall
indicate that election by adding an "X" to the table below for
each year of the applicable Purchase Period. If Port Angeles
elects alternative (B) above, then BPA shall indicate that
election by adding amounts (in Average Megawatts rounded
to three decimal places) to the table below for each year of the
applicable Purchase Period.
09PB- 13093, Port Angeles 8 of 11
Revision No. 3, Exhibit C, Purchase Obligations
Tier 2 Short -Term Rate Table
Fiscal Year 2012 2013 2014 2015
Election X X X X
Fiscal Year 2017 2018 2019 2020
Election X X X
Fiscal Year 2022 2023 2024 2025
Election
Fiscal Year 2027 2028
Election
2016
X
2021
2026
2.4.2 Right to Reduce Tier 2 Short -Term Rate Purchase Amounts
2.4.2.1 Notice
If Port Angeles notifies BPA in writing by October 31 of a
Rate Case Year, then Port Angeles may reduce, in equal
amounts for all hours of the year, some or all of the amounts
of Firm Requirements Power that Port Angeles is obligated to
purchase at Tier 2 Short -Term Rates. The reduction may
take effect in either year of the upcoming Rate Period and
shall be effective for the remaining duration of the applicable
Purchase Period(s). In its written notice, Port Angeles shall
state the amount of the reduction and the date the reduction
shall take effect. Port Angeles shall replace all reduced
Tier 2 Short -Term Rate purchase amounts with amounts of
Dedicated Resources applied pursuant to section 3.3 of the
body of this Agreement.
2.4.2.2 Charges to Reduce Purchase Amounts
Port Angeles shall be liable for payment of any costs that
apply as a result of Port Angeles reducing, under
section 2.4.2.1 of this exhibit, the amounts of Firm
Requirements Power that Port Angeles is obligated to
purchase at Tier 2 Short -Term Rates. Such costs shall be
those that BPA: (1) is obligated to pay and will not recover
from Port Angeles under Tier 2 Short -Term Rates as a result
of the reduction, and (2) is unable to recover through other
transactions. BPA shall determine such costs, if any, during
the 7(i) Process that follows Port Angeles' notice. If BPA
determines that Port Angeles owes payment for such costs,
then Port Angeles shall pay the entire amount to BPA in no
more than 24 equal monthly amounts starting the first
month of the upcoming Rate Period. In no event shall BPA
make payment to Port Angeles as a result of Port Angeles
reducing the amounts of Firm Requirements Power that Port
Angeles is obligated to purchase at Tier 2 Short -Term Rates.
2.4.2.3 Exhibit Updates
By March 31 following Port Angeles' notice, BPA shall revise
this exhibit and Exhibit A to show Port Angeles' reduced
09PB- 13093, Port Angeles 9 of 11
Revision No. 3, Exhibit C, Purchase Obhgations
Fiscal Year
Tier 2 Short -Term Rate purchase amounts and Port Angeles'
Dedicated Resource additions.
2.5 Amounts of Power to be Billed at Tier 2 Rates
2.5.1 Treatment for FY 2012 FY 2013
By March 31, 2010, BPA shall update the table in section 2.5.2 of this
exhibit, consistent with Port Angeles' elections, with amounts of Firm
Requirements Power which Port Angeles shall purchase at applicable
Tier 2 Rates for the FY 2012 FY 2013 Rate Period.
2.5.2 Amounts of Power for Subsequent Rate Periods
For each Rate Period after the FY 2012 FY 2013 Rate Period, BPA
shall establish for the upcoming Rate Period consistent with Port
Angeles' elections: (1) the planned annual average amounts of Firm
Requirements Power which Port Angeles shall purchase at applicable
Tier 2 Rates, and (2) any remarketed Tier 2 Rate purchase amounts in
accordance with section 10 of the body of this Agreement. By
March 31, 2013, and by March 31 of each Rate Case Year thereafter,
BPA shall update the table below with such amounts for each year of
the upcoming Rate Period.
Annual Amounts Priced at Tier 2 Rates (aMW)
1 2012 1 2013 1 2014 1 2015 1 2016 1 2017 1 2018 1
2019 1 2020
Tier 2 Short -Term 0.000 0.000 0.000 0.000
Rate
Remarketed
Amounts
1 Fiscal Year 1 2021 1 2022 1 2023 1 2024 1 2025 1 2026 1 2027 1 2028 1
No Tier 2 at this
time
Remarketed
Amounts
Notes:
1. List each applicable Tier 2 rate in the table above. For the first applicable Tier 2 rate
replace No Tier 2 at this time with the name of the applicable Tier 2 rate. For each
additional Tier 2 rate, add a new row above the Remarketed Amounts row. If Port
Angeles elects not to purchase at Tier 2 rates, then leave No Tier 2 at this time in the
table and leave the remainder of the table blank.
2. Fill in the table above with annual Average Megawatts rounded to three decimal places.
3. MONTHLY PF RATES
Applicable monthly Tier 1 and Tier 2 Rates are specified in BPA Wholesale Power
Rate Schedules and GRSPs.
09PB- 13093, Port Angeles 10 of 11
Revision No. 3, Exhibit C, Purchase Obligations
4. REVISIONS
BPA shall revise this exhibit to reflect Port Angeles' elections regarding service to its
Above -RHWM Load and BPA's determinations relevant to this exhibit and made in
accordance with this Agreement.
(PSW /Seattle S \PM \CUST_SKG \PORT ANGELES \PSC_2009_PF_Reg.onal Dra10gue \Exhibit C \Exh C_Rev# 3 Tier 2 FY 14 15 \PA33093 20130328 Exh C_Rev#3_Final doc) 03/28/2013
09PB- 13093, Port Angeles 11 of 11
Revision No. 3, Exhibit C, Purchase Obligations