Utility Committee Agenda and Packet 2019 04 12

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Ilj CitVot Louisville COLORADO • SINCE 1878 Memorandum I Department of Public Works To: Utility Committee From: Cory Peterson, Water Resources Engineer Date: 4/12/19 Re: Utility Financial Review and Rate Setting Plan Overview: One of Public Work's 2019 goals is to complete a review of the overall rate setting process. The past five years of utility rates have been based on the methodologies and processes outlined in the Water, Wastewater Stormwater Utility Rate Study that was completed in 2014. The performance of this periodic review intends to ensure that best practices are being maintained and that rates are meeting the objectives of the utility. Plan: Given the significant investment in effort required to complete this review, Public Works has developed a plan that will serve as a guiding document through this process. Each defined sub section will be evaluated at a high level, prior to engaging in a full detailed process. In addition, the breadth of the assessment can be varied based on the desired outcomes. The plan has been divided in to six sub section: 1) Cost of Service — ensures customer class equity 2) Rate Design — determines how customer class equity is implemented and charged 3) Financial Policies — guides long term planning and rate decisions 4) Budget and CIP Integration — covers short term utility needs and operations 5) Financial Model Modifications — optimizes accuracy and suitability in results 6) Rate Adjustment — culmination of sections 1 through 5 While the sub sections can be evaluated separately, each is interrelated and can result in the need for an iterative process between sub sections to accommodate modifications. As to be expected, the greater the change impact, the more complexity will be introduced in the process. Below is a flow chart delineating the relationships and interactions between sub sections. 8