Cost of Service Study

A cost of service study will provide the fixed and variable costs required to service each customer class of the wastewater facility and compare actual cost with current revenues anticipated by each customer class serviced. A cost of service study will provide:

  • Identification of any need for new rate classes such as:
    • Evaluation of the need and value in adding a new class of service to large customer categories that contribute to the wastewater treatment facility
    • Developing rates for customers with multiple locations within a city's wastewater service territory to adjust for the diversity between accounts and using this data to develop a "Campus Billing" rate
  • Unbundled cost components necessary to identify appropriate water rates for customers taking service at various service levels
  • Wastewater wheeling rates that are determined using the unbundled cost of service results
  • Time of Use rates using the cost of service and the unbundled cost results

Rate Design Model

Following the cost of service study, UFS will propose adjustments to current customer charges with an agreed rate increase that works each customer towards cost of service.

  • UFS will provide a summary of the proposed rate adjustment by customer class and its affect on projected revenues
  • UFS will develop a detailed report that will identify impact to each customer class at several levels of usage

Financial Projection

UFS will develop a long-term financial planning model to identify current (test year) and future utility revenue requirements over a five year planning horizon. The model will be flexible and will provide the following:

  • Provide timing options for rate changes
  • Project future sales to customers and corresponding revenue
  • Project changes in wastewater supply costs
  • Develop a pro-forma income statement and statement of cash flows
  • Key Financial targets will be provided for the following targets:
  • Minimum Cash Reserves
  • Debt Coverage Ratios
  • Target Operating Income
  • Incorporate current and future capital improvements
  • Review impact on operating revenues and expenses
  • Identify future bonding requirements to fund capital improvements

Other Wastewater Services

UFS offers other services that are similar in scope and allow us to provide

  • Indirect Cost Allocation Review
  • Rate Survey of other similar utilities
  • Surcharges
  • Wholesale Pricing
  • Contract Negotiations
  • Developing Policies and Procedures
  • Software Selection
  • Econometric Forecasting of sales and load growth
  • Cost Reduction Strategies
  • Benchmarking Analysis
  • Strategic Planning