Consultant outlines rate-study steps and options for Boulder City utilities

At a Boulder City advisory committee workshop, consultant Mark Bauschau, president of Utility Financial Solutions, presented a roadmap for the city’s upcoming utility rate study and outlined rate-design options that could affect how much customers pay and how costs are distributed across residential and commercial accounts.

Bauschau said the study generally follows three steps: multi-year financial planning to identify revenue requirements and cash-reserve needs; a cost-of-service study to allocate costs by customer class; and a rate-design phase where the governing body decides policy trade-offs such as customer charges, bandwidths around average increases, time-of-use rates and demand charges. "A cost of service study looks at who's causing certain costs to be incurred," he said, adding that the governing body’s input is critical when moving from cost allocation to the actual rate structure.

Why it matters: Boulder City currently benefits from unusually low power costs tied to its supply contracts and assets such as Hoover and Mead capacity, Bauschau noted, and those local facts should shape any study. Still, he warned that insufficient cash reserves or unplanned capital expenditures can force sharp, large rate increases later. He recommended phased, modest annual adjustments to avoid those spikes rather than a single large increase.

Key details and options discussed

- Financial targets and reserves: Bauschau described three primary targets — debt coverage ratio, minimum cash reserves (working capital, capital-improvement and a catastrophe buffer) and a target operating income as the upper boundary — and said a study uses these to develop a multi-year projection showing when rate adjustments will be necessary.

- Customer-service (fixed) charge: The presentation noted Boulder City’s current monthly customer charge of $12.50 and discussed that similar studies often find a $20–$25 range; Bauschau recommended increasing such charges gradually rather than all at once to reduce short-term bill shock.

- Time-of-use and AMI: Time-differentiated rates were presented as a price signal that can encourage conservation and shift usage away from expensive peak hours. Staff said an AMI pilot includes about 75 meters; Bauschau cautioned that identifying time-of-use rates is straightforward but implementing them (metering changes, customer impacts) is complex and usually phased in.

- Residential demand charges: Bauschau described residential demand charges (a monthly charge based on peak kilowatts in the billing month) as an option being adopted in some utilities, but noted they require more advanced metering and customer education.

- Net metering and solar: The consultant explained standard net metering (inflow minus outflow) and alternative net-billing methods that credit exported energy at an avoided-cost or value-of-solar rate. He stressed many utilities grandfather existing solar systems when altering terms for new customers and flagged that high local concentrations of rooftop solar can create distribution issues if not managed (he cited feeder problems once solar concentration exceeds about 30% at a system peak in other studies).

- Local context matters: Multiple participants and staff emphasized that Boulder City's contracts and low-cost supply make national averages a poor fit. Bauschau agreed, urging that RFP language and vendor work explicitly account for Boulder City’s Hoover/Mead arrangements and current reserve structure.

Next steps: Committee members confirmed they will provide input for the RFP; staff said the RFP will go out in July with the goal of producing a cost-of-service and rate-structure study for fiscal years 2027–2029. The committee scheduled further discussion at the next meeting (committee noted July 2) and the consultant said the RFP should request the financial-projection, cost-of-service and rate-design deliverables discussed in the workshop.

Quotes

"When you look out five years... it tells you when this is gonna happen so that you can start planning for it here to smooth that out," Bauschau said, summarizing the benefit of multi-year financial planning.

"We need to make sure the RFP reflects Boulder City's contracts and circumstances," a committee member said, emphasizing the city's atypically low power costs.

What was not decided: The workshop was a workshop — no formal motions or votes were taken to change rates, adopt new customer charges, or implement time-of-use or demand charges. Those choices will be policy decisions for the governing body after the study provides specific recommendations and models.

The committee will review draft RFP language and the consultant’s recommended scope at the next meeting before the RFP is published.