Utility Economics

Utility Economics

 

Water  ♦  Wastewater  ♦  Reclaimed Water  ♦  Stormwater   

Solid Waste  ♦  Recycling  ♦  Electricity  ♦  Natural Gas

 

Services:

The most comprehensive financial analysis we perform is a Utility Rate Study. Beginning with a diagnostic rate structure evaluation, we determine whether the existing rate structure conforms to industry/legal guidelines and achieves other industry-specific objectives. Based upon the results of this evaluation, a detailed billing analysis is used to develop a new rate structure that will satisfy community objectives while ensuring adequate revenue to satisfy the utility’s cost requirements.

Most Utility Rate Studies includes a Revenue Sufficiency Analysis or RSA which provides a multi-year projection on the sufficiency of a utility’s revenues to meet all of its current and projected financial requirements. We determine the level of rate adjustments necessary in each year to provide adequate revenues to fund all of the utility’s cost requirements. 

This service allows us to apportion the cost of each department or division of a utility system to each respective service, system functions and/or customer class. These allocations are typically relied upon in the performance of an RSA or Rate Design Analysis. These studies may also include a Capital Planning & Funding Analysis, Impact Fees/Capital Charges Analysis, and/or the development of Miscellaneous Service Fees.

As a result of increased levels of historical and projected growth and development, Capital Planning & Funding Analysis evaluates the timing and funding sources for annual capital improvement plans and individual projects. The evaluation focuses on maximizing the use of existing funding sources and matching the type of funding with the useful life of each project while minimizing the impact to the customers.

As such, our FAMS-XL© model can quantify and evaluate the financial and customer impacts of facility expansion scenarios and ultimately determine the most financially feasible facility expansion that the utility should pursue.

At Burton & Associates we can identify and asses the financial and customer implications of various water supply alternatives, such as surface water or groundwater, to wholesale purchases vs. self-production or alternative treatment methods.

We can also help you develop appropriate fees for providing specific services to an individual customer. Specifically the development of service installation fees, disconnection and reconnection fees and late payment charge.  Including appropriate rates and fees will provide the necessary revenues to satisfy the annual cost of providing service and integrate a strategic financial business plan for our clients. 

This service provides a historical and pro forma projection of the revenue and expenses of the utility in order to demonstrate the ability to repay the desired borrowing amount.  The forecast is typically performed using our FAMS-XL© model, as it can be modified to replicate the financial dynamics of your system.

We can help our clients develop capital charges that are designed to recover the cost of providing capital facilities (infrastructure) needed to serve new development.  These charges are the mechanism by which new growth can “pay its own way” and minimize the extent to which existing customers must bear the cost of new or expanded facilities which are necessitated by additional customers.

Burton & Associates has the team to identify the cost and develop appropriate fees for providing specific services to individual customers, such as tap fees, meter set fees, services installation fees, disconnection and reconnection fees and late payment charges.

This service determines the value of a utility system for potential divestment or acquisition using several alternative valuation methods such as Reconstruction Construction Cost New Less Depreciation (RCNLD), Income/Debt Bearing Capacity Analysis, and Comparable Sales.

This service consists of the calculation of rates for private utility systems in accordance with the appropriate regulatory agency rules and filing requirements as well as legal precedent and industry practice. This typically includes the preparation of financial/accounting related schedules required to support rate application as well as the provision of written and oral expert testimony. 

Burton & Associates is experienced in examining the financial consequences of potential initiatives, such as divestment/acquisition, substitution of alternative water supply (such as reclaimed water for potable water), annexation, impact fee waiver programs, growth moratoriums and operational configurations/changes.

Let us create a new ordinance for the provision of your utility service, or amend an existing one!  We can adequately describe rules and terms of service, while achieving desired policy and procedure objectives to accurately present the rates of your utility.

 

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