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LL C sty {' LauisVille <br />COLORADO • SINCE 1882 <br />UTILITIES DEPARTMENT <br />STATEMENT OF DEPARTMENTAL POLICY & PROCEDURE <br />Title: Modeled Combined Utility Debt Coverage <br />Effective Date: May 1, 2021 <br />Purpose & Scope <br />The purpose of this statement is to set the written rules, policies, and procedures, which <br />authorized the use of a combined calculation for determining debt service coverage within the <br />Utility Rate Model. <br />Policies & Procedures <br />The Utility Rate Model utilizes two targets (1: cash reserve and 2: debt service coverage) in the <br />determination of rates. Debt service coverage is calculated as a ratio of net revenues to annual <br />debt service payments. Net revenues are defined as operating revenues less operating expenses. <br />Debt service coverage calculations are performed individually for the water, wastewater and <br />stormwater funds and as a combination of all three funds. For the purposes of the model and <br />determining rate adjustments, only the combined debt service coverage ratio must meet or <br />exceed the target ratio for the entirety of the model period. <br />Individual fund debt service coverages are allowed to drop below target ratios as long as the <br />combined target is met or exceeded. <br />25 <br />