Thursday, March 23, 2017
     

  • Utilities need adequate user rates.
    Ratepayers demand fair rates.
    Getting both — and proving it — is difficult.
    Correction: It used to be difficult.

    KRWA has initiated the Kansas RATES Program to help cities and water districts get their rates set properly and simply. Through the program, KRWA provides basic rate reviews, FREE OF CHARGE!

    Most of the time, a basic review is all that is needed. But when the situations are more complex, KRWA will refer those systems to Carl Brown Consulting to get a service and fee proposal. If the city or RWD then wants to proceed, the firm will do an analysis and assist in getting rates, fees and everything else set up properly.

    Learn more about the Kansas Rates Program and
    Rate Analyst Performance Standards...

  • Kansas RATES Program

    The Kansas RATES Program is for water, sewer and other utilities. GettingGreatRates.com (GGR), under the direction of the Kansas Rural Water Association (the Association), will perform comprehensive rate analyses   and related work for utilities (you). In so doing, GGR will satisfy or exceed these performance standards.  Utilities that have gone through the program so far are achieving these results.
    GGR will discount their regular fees to Association member systems by 25 percent. The regular fees of GGR normally place in the bottom third of their comparable competition. Including the discount, it is unlikely you will find lower fees for a comparable comprehensive rate analysis. In addition, unlike other service acquisition approaches, this is a supervised program so your risk of not getting the assistance you need at the fees you expect is very low.
    Your procurement policy may require you to request proposals from other service providers, too. In that case, it is recommended that you use the process laid out in the Rate Analyst Guide and this RFQ model so you can compare “apples to apples” and maximize your chances of getting the most appropriate analyst at reasonable cost.

    GGR’s Rate Analysis Credentials:

    • Since 1993, Mr. Brown has performed rate analysis, rate setting advisement, software development and system funding and planning,
    • He has trained thousands of rate setting practitioners and local government leaders and managers around the U.S. and
    • GGR uses a real data modeling approach to solving rate and finance problems.

    See GGR’s references for more.

    RATES Program services to your system will be tailored to the needs of your system. But, your project will probably unfold like this:

    • To talk over your situation, call GGR at (573) 619-3411. If your rates do not actually need analysis right now, GGR will refer you to Association staff and other resources for handling issues appropriately.
    • If your rates do need analysis now, and you desire it, GGR will scope your project. They will also find out if your system is a member of the Association and therefore, eligible for the discount.
    • GGR will prepare a service and fee proposal for you, much like this smaller system proposal or this larger system proposal. The proposal package will also include a copy of Mr. Brown’s book, “How to Get Great Rates.”
    • If you want to accept one or more services from the proposal you should notify GGR by phone or e-mail message. Unless you desire otherwise, GGR will use its proposal, your acceptance and the performance standards from the RATES Program as its “contract.”
    • With your acceptance, work will start by acquiring data and information. Most of this is described in the “Data Needs Sheet.” You may not know what some of this data is or how to get it. Do not be concerned. GGR will guide you through everything.
    • Following your desires and using your input, GGR will perform the analysis.
    • Once the analysis is essentially complete GGR will e-mail you a proposed final report and analysis package, much like the rate analysis reports listed at the bottom of the previous link.
    • When you and GGR arrive at a plan that suits you, you should present that plan to your board or council yourself if you feel up to it. If issues are complex you should have Mr. Brown do that presentation. Alternatively, it may be sufficient to have Mr. Brown participate by speaker phone during your meeting. The report package will serve as a “road map” to your system’s financial future. It will be an important guide for future planning and rate setting so you should keep it handy and refer to it often.
    • The board or council will settle upon new rates and fees and adopt an ordinance or rule to make them effective. This is called the “initial” rate adjustment. Now you’re off and running with new rates.
    • As the year following the initial rate adjustments progresses you should track the system’s financial performance. If it performs much like the analysis had predicted, and it probably will, no changes will be needed for the rest of that year.
    • Each following year, preferably during budget preparation time, you should compare the system’s financial performance with the projections in the analysis report. If you are on track you should raise all rates and fees incrementally as recommended in the report and Chapter 9 of Mr. Brown’s book. If you are not sure of something, just call GGR.
    • Finally, about five years into the future it will be time to start this process all over.

    An important part of the RATES program is the “training” piece. Rate analysis only goes so far. YOU must do the work of actually adjusting rates, developing budgets, planning and executing equipment repair and replacement, and planning and executing capital improvements. To help you do these things well, GGR, in concert with the Association, will conduct a series of rate setting and related workshops for utility managers and decision-makers. By all means, attend if you can.
    Now it’s time to find out if your rates are where they should be and, if not, what it would take to get them there. It’s time for Step 1 above.

  • Kansas RATES Program
    Analyst Performance Standards

    As verified by the Association, GettingGreatRates.com (GGR) will serve you to at least the following standards:

    • GGR will copy to the Association all important submittals made to you. This includes at least the following: Their service and fee proposal, their invoice(s) and their final rate analysis report package. This enables Association staff to monitor GGR’s performance and the performance of the RATES Program to assure that you are being well-served.
    • GGR will respond promptly to your requests. Proposals will be offered within one week of request, usually the same day. Analyses and reports will be turned around promptly.
    • If you have specific goals you want to achieve with your system(s), GGR can probably develop rates to achieve them. However, GGR is able to develop appropriate rates for system(s) given no guidance at all, too.
    • Generally, rate analysis work should not be paid for on an hourly basis. Hours worked can be fudged. (GGR does not do that, but some might.) Lump-sum fees cannot be fudged. Therefore, unless you request otherwise, GGR’s fees will be on a lump-sum basis for each package of service. For example: $XX for the water rate analysis, $YY for the sewer rate analysis, $ZZ for each visit made to your location to present the analysis results and recommendations, etc.
    • GGR will provide you a discount of 25 percent from their customary rates and fees. GGR will not “jack up” fees in an attempt to recoup the discount.
    • GGR provides the following guarantee:

    “You will be satisfied with our work or it is free.”
    After 220+ analyses, no client has invoked this guarantee so far.

    • As a part of GGR’s proposal to you, they will give you copies of one or more rate analysis reports similar to what you can expect to receive.
    • GGR will provide you with a reference contact list of all clients for the past five years with enough information so you can tell which were similar to your situation, to make reference checking easier.
    • Unless you request something different, a GGR rate analysis for you will include the following:
      • A projection of rates; incomes; costs; capital improvements; equipment repair, refurbishment and replacement needs (R&R); and all other issues that could markedly affect the system’s rates and finances. Except for R&R, projections cover 10 years.
      • Capital improvement projections include an estimated schedule of when they need to be done, what they will cost in future dollars and how they will likely be paid for, with debt service calculated appropriately. If you have such a schedule, that will be used. If you do not, working with you GGR will develop one. These capital improvement costs will be incorporated into your analyses and rate calculations.
      • Assuming you desire an R&R schedule, R&R needs will be projected at least 20 years into the future. If you already have an R&R schedule, GGR will use that. If you do not, GGR will help you develop one. The schedule will include all R&R needs, their estimated costs, inflation of those costs over time and a present value calculation of the annual annuity (savings amount) needed to pay for all of those costs. In plain language, these calculations will show you how much you need to save each year in order to pay for all future R&R needs. This savings deposit will be incorporated into the rate calculations.
      • If future rates will be structured as flat rates or “proportional to use” rates, there are options concerning billed volume data. For all other rate structures, rate and income projections will be based upon billed volumes of each customer for each billing period of the test year(s), assuming such data is available from your billing program. That is almost always the case. If such data is not available, GGR can arrive at billed volumes in other ways. The point being, GGR will always use the most appropriate available usage data in order to produce the most reliable income projections possible.
      • If you desire, GGR will present its results and recommendations to your board, council or commission, and to the public so everyone can understand why rates and fees should be adjusted as recommended. Quite importantly, GGR will demonstrate how rate adjustments will affect various ratepayers. This demonstration normally shows that the recommended adjustments, usually increases, will not be as hard to absorb as most ratepayers fear. This smooths the way to enabling your utility to serve ratepayers well.