Consultants outline Boulder City utility rate study; committee flags electric capital and water cash‑flow timing

A consultant team led by Melanie presented a draft utility rate study to the Boulder City Utility Advisory Committee on the study steps, draft cash‑flow forecasts and policy choices for the city’s electric, water, wastewater and landfill utilities. The presentation described the study as a living 20‑year model and said the immediate focus is to finalize the revenue requirement that will inform later cost‑of‑service and rate‑design work.

Melanie said the study will treat each utility separately to avoid masking cross‑subsidies and highlighted three principles for rate setting: full cost recovery, incentives for efficient use where appropriate, and proportionality of rates to customer demand. “A rate study enables each utility to remain self‑sufficient,” she said, adding that the model would also support capital funding decisions and public education about rate changes.

The consultants presented draft forecasts showing electric as the dominant capital burden and the largest revenue source; they said electric operating revenues currently cover ongoing expenses and power purchases but that capital timing is the primary stressor. “What’s driving electric is the capital,” the presenter said, identifying roughly $19,000,000 in electric capital in fiscal year 1 and roughly $47 million over the near forecast as the factor likely to shape the rate path.

On water, the team said operating expenses are about $9 million and that existing debt service causes a projected cash‑flow deficiency beginning in fiscal 2027, though the utility has a healthy fund balance. The presenter told the committee that the water utility also receives about $1,000,000 per year in infrastructure tax revenue included in the forecast, and asked the committee whether municipal water use is charged at full cost or intentionally subsidized as a policy choice.

Wastewater looks healthy on an operating basis, the consultants reported, but two large lift‑station replacements scheduled in 2030 and 2031 create a material capital need later in the forecast; committee members were asked to consider whether timing could be shifted, outside funding found, or rates built now to prepare. The landfill/solid‑waste utility had no capital in the plan, but rising contract costs were flagged as a long‑term risk.

The team reviewed fiscal‑policy tools that affect revenue needs: operating reserves (recommended 60–120 days cash on hand), a capital reserve (often set as 1% of asset value), and debt‑service coverage targets (commonly 1.5; some bond covenants require 1.25). They also outlined capital‑funding options from grants and connection fees (cheapest) to loans and revenue bonds (more expensive) and noted a requirement for voter approval for bond funding above $1,000,000.

Committee members focused detailed questions on rate structure and equity. Larry asked about meeting cadence and how the committee will digest revenue‑requirement, cost‑of‑service and rate‑design outputs; he also urged careful review of fixed monthly charges and meter‑size fees for large commercial connections. Several members raised concerns about master‑metered multi‑unit properties and trailer‑park billing, and whether current tier thresholds and fixed charges produce unfair results for particular customer groups.

The consultant said they will run customer‑level bill‑frequency analyses and pull out master‑metered and multi‑unit customers as separate cohorts during the cost‑of‑service work to show whether the existing structure is equitable. “Commercial is really hard to have tiered rates for because each type of commercial customer varies,” the presenter said, explaining that a restaurant, brewery and office have very different usage profiles.

On timing, the consultant team said they will hold staff review meetings (water/wastewater/landfill, then electric), finalize revenue‑requirement scenarios the week of the 24th, return to the committee in April with revenue‑requirement results for the FY2027 budget decision, and then proceed into cost‑of‑service and rate design in May with draft recommendations for committee review in June–July and a tentative council presentation in August.

No formal votes or policy adoptions occurred at the meeting. The committee requested corrected rate‑schedule tables, the utility resolutions that define current tiers and fixed charges, and more granular customer statistics to support class definitions and tier thresholds. The consultants agreed to provide scenarios showing the rate impacts of different capital‑funding and reinvestment approaches.

The meeting closed after opening the phone line for public comment; the transcript shows no substantive public callers in the recorded excerpt. The consultant and staff will meet with city staff to refine assumptions and return with materials for the committee’s April meeting.