Municipal utility identifies revenue required to serve customers at current rates

Organization challenge

A municipal utility providing electric, water, and wastewater services requested a rate study in order to effectively structure utility rates.  The utility purchases power through a joint action electric agency with other municipal utilities members.  By following this model, the utility has been able to maintain rate stability and competitive rates.

Baker Tilly solution

The Baker Tilly energy and utilities team provided specialized rate design solutions to the municipality in order to meet the revenue goals of the utility.  As part of the study, the team calculated revenue requirements, analyzed customer class usage and load profiles, and utilized industry standard and utility specific cost allocators to distribute the calculated revenue requirement and established cost of service for each customer class. 

Results

As a result, differences in actual and forecasted revenue and cost of service to serve each customer class were identified.  The energy and utility specialists were able to provide recommendations related to adjusting rates in order to bring revenues in line with costs and design equitable customer rates.  The results of the study give the utility confidence in a rate structure that will provide a high level of future services while also meeting the long-term needs of the utility.