Utility Rate Studies
EES Consulting assists utilities in developing rates that incorporate price signals and utility policies and minimize rate shock to customers. There are a number of “generally accepted methodologies” for allocating costs for ratemaking purposes. EES Consulting works with each client to determine the most appropriate cost allocation methodologies. Ultimately rates can take many forms, but they should reflect the component costs that the utility incurs and collect the desired level of revenue. Changes in industry structure, power supply, or legislation often requires that a greater level of detail in retail rate design. These changes create the need to rethink traditional methods of rate design, including unbundling of rates. Consumers will also need more accurate price signals that reflect the true cost of electricity production and delivery. EES Consulting often provides a longer-term plan for rate transitions. Transition plans are particularly to mitigate bill impacts where large changes in rate design are being made. For example utilities moving from declining block to inclining block rates may want to make the transition over a period of months or years.
City of Fargo
For this project, EES Consulting completed the revenue requirement and 25-year financial plans for the street and stormwater departments, which including the division of sales tax revenue during the 2009 to 2012 period between the Water, Wastewater, Street and Storm Water Utilities as needed. EES Consulting provided the following services: 1) Developed the Revenue Requirement for the Street and Storm Water Utilities for the test year; 2) Incorporated the Street and Storm Water Utilities into the 25-year financial model previously developed for the Water and Wastewater Utilities, primarily to determine the division of sales tax revenues between the utilities; 3) Developed a variety of financial model scenarios based on input from City staff, and 4) Updated the Draft Water and Wastewater Financial Options Memo with the resulting 25-year financial model for all utilities.
Seattle City Council
EES Consulting, in cooperation with Council Staff, developed strategies for reviewing rate filings by Seattle City Light for the drainage, wastewater and solid waste utilities. These strategies determined key areas of focus for each rate proposal in the areas of revenue requirement, billing determinant forecasts, rate design, functionalization, classification and allocation methods. EES Consulting assisted Council staff in reviewing SCL rate proposals for the following utilities: wastewater, drainage and solid waste based on the strategy developed in the previous task. EES Consulting also provided assistance with the identification of issues that warranted further review, running alternative scenarios or methods for the cost allocation, and provided quantification of the impact of changes in methodology.
