The “Tri-Cities” region of Eastern Washington is among the fastest growing areas in the state consisting of the cities of Richland, Pasco and Kennewick. To address the impact of growth on its utilities, and to align the utility rates with updated financial policy drivers, our team was initially engaged by the City of Richland to perform an electric utility rate study. In subsequent years our team has been retained to perform numerous projects for the city including water, sewer, electric and solid waste cost of service studies, connection charge updates, wholesale rate development and financial analyses in support of master plans and capital improvement programs. Independent projects include:
- Developed distinct multi-year financial plans and rate strategies for each utility.
- Evaluated fiscal policies targeting operating fund, capital fund, annual system reinvestment funding and debt service coverage.
- Created capital funding plans for $80.0M in water projects and $29.2M in sewer projects, optimizing funding sources and shaping debt to align with existing debt thresholds.
- Developed a financial plan for the solid waste utility to prepare for $13.2M in capital projects related to disposal capacity improvement and landfill closure costs. Also prepared a user-friendly financial toolkit to estimate annual rate adjustments for communication with stakeholder groups.
- Developed alternative rate structures for the electric utility that included tiered rates for the residential class, revision of demand charges and elimination of declining block energy charges. Also made shifts in cost of service by class to account for changes in wholesale power allocation methodology.
- Evaluated customer class equity, made rate structure changes to achieve interclass cost of service, and worked to improve financial proportionality between single family and multi-family.
- Developed overhead cost sharing methodology to allocate utility expenses between the water and irrigation utilities to phase in full cost recovery from irrigation customers.
- Evaluated impact of adding a new industrial irrigation customer to the overall system based on forecasted demand levels and increases to infrastructure and operational expenses.Developed a cost-based industrial irrigation rate to ensure full proportional recovery of operational and capital components, including options for incorporating up-front capital investment or amortization of those costs over time.