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<br />1.7 TASK 6 - COST OF SERVICE AND COST ALLOCATION ANALYSES <br /> <br />The Consultant will: <br /> <br />1. 7.1 In order to identify the cost of service, relevant utility cost centers, and cost allocations, <br />evaluate information on trends in: <br /> <br />a. Historical and budgeted utility expenditures. <br />b. Customer use patterns and demand factors used in allocating system costs. <br />c. Effects of customer class demand factors on system variable costs. <br />d. Utility capital and other fixed costs. <br />e. Customer account maintenance costs and other utility common costs. <br />f. General govemment services rendered to the utilities. <br />g. Capital or operating costs for various functional parts of the systems that may be used to <br />defme unusual service considerations. <br /> <br />1.7.2 Review the operations and maintenance activities and project such costs based on anticipated <br />staffing, utility production volumes (affecting power and chemicals), and other related program <br />levels. <br /> <br />1.7.3 Utilize the IPFM spreadsheet model for the specification of separate rates of inflation or cost <br />change for each key expense item, important for such items as group medical, power, and other <br />potentially volatile expenses. <br /> <br />1. 7.4 Within O&M expenses, separately identify and assess various costs related to the cost of <br />maintaining meters and customer accounts as related to cost trends and any particular costs by meter <br />size. <br /> <br />1.7.5 Review and incorporate the City's Capital Improvements Plan into the rate model. <br /> <br />1.7.6 Review and assess various existing or needed service-related fees that would typically <br />include charges for the costs of purchasing and placing meters and/or connecting customers to the <br />system (tap fees), making disconnects, determining service line locations, bad check processing, <br />change of accounts, etc. <br /> <br />1.7.7 Review the City's current customer deposit (credit) policy, assess the average billing cycle, <br />and incidence of uncollected accounted and bad debt as well as determine the adequacy of the <br />existing fee structures and fee and deposit policies. The Consultant will then recommend any <br />necessary adjustments in fee amounts, types, or policies. <br /> <br />1. 7.8 Address the overall cost of service, and assess the historical spending and current budget of <br />each utility for components, levels of spending, and trends. The Consultant will also make <br />recommendations for various cost allocations. <br /> <br />HDRRate Design.wpd <br /> <br />5 <br />