FCS tells Boulder City UAC residential customers undercollect ~18%; consultants propose phased rate-design work

FCS consultants presented the electric cost-of-service portion of a multi-part rate study to the Boulder City Utility Advisory Committee on July 8, saying the FY27 test-year analysis shows a mismatch between how the utility incurs costs and how it collects revenue.

Paul Quinn of FCS explained the three-step analysis used to produce the findings: functionalize costs into power generation, transmission, distribution and customer functions; classify costs into energy, demand and customer pools; and allocate those pools to customer classes based on usage and metering characteristics.

Quinn said roughly 44% of electric costs are power-resource related and a little more than half are distribution-related (Boulder City is primarily a distribution utility and does not own transmission). Comparing how costs are incurred to current revenue collection, Quinn said about 90% of the city’s current electric revenue is recovered through a per-kilowatt-hour energy charge, while costs are split across energy, demand and customer pools.

"Residential revenue is about 82% of what it costs us to serve that customer class," Quinn said. He added FCS found commercial and some specialty classes are collecting above their cost-to-serve. Quinn told the committee the discrepancy is consistent with prior studies and recommended a phased approach to rate-design changes rather than an immediate, wholesale restructuring.

Quinn and other panelists listed possible study topics for upcoming months: raising the monthly fixed customer charge (the current $12.50 charge compares to an approximate cost-based level of about $38), considering tiered energy rates that better align hydro and market purchases, consolidating delivery and demand charges for metered commercial classes, and determining whether municipal customers should be assessed a delivery charge to better match cost responsibility.

Committee members raised metering, equity and timing questions, including whether residential customers will have demand-capable meters (staff said a pilot and some meter-changeout work are underway) and how solar and local peak timing affect demand allocation. Quinn said monthly bill examples under a 5% across-the-board revenue adjustment would raise typical residential monthly bills by about $5–$9 depending on usage.

FCS and staff said detailed rate-design proposals will be prepared for staff and UAC review in coming months; the department and consultants emphasized a phased, transparent approach to limit sudden impacts on customers.