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2016-138 Contract - Utility Financial Solutions
Contract for Electric Cost of Service and Rate Stud CITY OF CONSULTANT: Utility Financial Solutions, LLC ASHLAND CONTACT: Mark Beauchamp, President, CPA, CMA, MBA 20 East Main Street Ashland, Oregon 97520 ADDRESS: 185 Sun Meadow Court, Holland, MI 49424 Telephone: 541/488-6002 Fax: 541/488-5311 TELEPHONE: 616-393-9722 DATE AGREEMENT PREPARED: May 5, 2016 EMAIL: mbeauchamp@ufsweb.com BEGINNING DATE: 05/15/2016 COMPLETION DATE: December 30, 2016 COMPENSATION: Not to exceed $44,265.00 per cost proposal attached as Exhibit C. SERVICES TO BE PROVIDED: Electric Cost of Service and Rate Study per proposal attached as Exhibit D and scope of work provided in RFP. ADDITIONAL TERMS: In the event of conflicts or discrepancies among the contract documents, the City of Ashland Contract for Personal Services will be primary and take precedence, and any exhibits or ancillary contracts or agreements having redundant or contrary provisions will be subordinate to and interpreted in a manner that will not conflict with the said rims City of Ashland Contract. FINDINGS: Pursuant to AMC 2.50.120, after reasonable inquiry and evaluation, the undersigned Department Head finds and determines that: (1) the services to be acquired are personal services; (2) the City does not have adequate personnel nor resources to perform the services; (3) the statement of work represents the department's plan for utilization of such personal services; (4) the undersigned consultant has specialized experience, education, training and capability sufficient to perform the quality, quantity and type of work requested in the scope of work within the time and financial constraints provided; (5) the consultant's proposal will best serve the needs of the City; and (6) the compensation negotiated herein is fair and reasonable. NOW THEREFORE, in consideration of the mutual covenants contained herein the CITY AND CONSULTANT AGREE as follows: 1. Findings / Recitations. The findings and recitations set forth above are true and correct and are incorporated herein by this reference. 2. All Costs by Consultant: Consultant shall, at its own risk and expense, perform the personal services described above and, unless otherwise specified, furnish all labor, equipment and materials required for the proper performance of such service. 3. Qualified Work: Consultant has represented, and by entering into this contract now represents, that all personnel assigned to the work required under this contract are fully qualified to perform the service to which they will be assigned in a skilled and worker-like manner and, if required to be registered, licensed or bonded by the State of Oregon, are so registered, licensed and bonded. 4. Completion Date: Consultant shall start performing the service under this contract by the beginning date indicated above and complete the service by the completion date indicated above. 5. Compensation: City shall pay Consultant for service performed, including costs and expenses, the sum specified above. Payments shall be made within 30 days of the date of the invoice. Should the contract be prematurely terminated, payments will be made for work completed and accepted to date of termination. 6. Ownership of Documents: All documents prepared by Consultant pursuant to this contract shall be the property of City. 7. Statutory Requirements: ORS 279C.505, 279C.515, 279C.520 and 279C.530 are made part of this contract. 8. Living Wage Requirements: If the amount of this contract is $20,142.20 or more, Consultant is required to comply with chapter 3.12 of the Ashland Municipal Code by paying a living wage, as defined in this chapter, to all employees performing work under this contract and to any Subcontractor who performs 50% or more of the service work under this contract. Consultant is also required to post the notice attached hereto as Exhibit B predominantly in areas where it will be seen by all employees. 9. Indemnification: Consultant agrees to defend, indemnify and save City, its officers, employees and agents harmless from any and all losses, claims, actions, costs, expenses, judgments, subrogations, or other damages resulting from injury to any person (including injury resulting in death), or damage (including loss or destruction) to property, of whatsoever nature arising out of or incident to the performance of this contract by Consultant (including but not limited to, Consultant's employees, agents, and others designated b Consultant to perform work or services Contract for Electric Cost of Service and Rate Study, May 5, 2016, Page 1 of 5 attendant to this contract). Consultant shall not be held responsible for any losses, expenses, claims, subrogations, actions, costs, judgments, or other damages, directly, solely, and proximately caused by the negligence of City. 10. Termination: a. Mutual Consent. This contract may be terminated at any time by mutual consent of both parties. b. City's Convenience. This contract may be terminated at any time by City upon 30 days' notice in writing and delivered by certified mail or in person. C. For Cause. City may terminate or modify this contract, in whole or in part, effective upon delivery of written notice to Consultant, or at such later date as may be established by City under any of the following conditions: i. If City funding from federal, state, county or other sources is not obtained and continued at levels sufficient to allow for the purchase of the indicated quantity of services; ii. If federal or state regulations or guidelines are modified, changed, or interpreted in such a way that the services are no longer allowable or appropriate for purchase under this contract or are no longer eligible for the funding proposed for payments authorized by this contract; or iii. If any license or certificate required by law or regulation to be held by Consultant to provide the services required by this contract is for any reason denied, revoked, suspended, or not renewed. d. For Default or Breach. i. Either City or Consultant may terminate this contract in the event of a breach of the contract by the other. Prior to such termination the party seeking termination shall give to the other party written notice of the breach and intent to terminate. If the party committing the breach has not entirely cured the breach within 15 days of the date of the notice, or within such other period as the party giving the notice may authorize or require, then the contract may be terminated at any time thereafter by a written notice of termination by the party giving notice. ii. Time is of the essence for Consultant's performance of each and every obligation and duty under this contract. City by written notice to Consultant of default or breach may at any time terminate the whole or any part of this contract if Consultant fails to provide services called for by this contract within the time specified herein or in any extension thereof. iii. The rights and remedies of City provided in this subsection (d) are not exclusive and are in addition to any other rights and remedies provided by law or under this contract. e. Obligation/Liability of Parties. Termination or modification of this contract pursuant to subsections a, b, or c above shall be without prejudice to any obligations or liabilities of either party already accrued prior to such termination or modification. However, upon receiving a notice of termination (regardless whether such notice is given pursuant to subsections a, b, c or d of this section, Consultant shall immediately cease all activities under this contract, unless expressly directed otherwise by City in the notice of termination. Further, upon termination, Consultant shall deliver to City all contract documents, information, works-in-progress and other property that are or would be deliverables had the contract been completed. City shall pay Consultant for work performed prior to the termination date if such work was performed in accordance with the Contract. 11. Independent Contractor Status: Consultant is an independent contractor and not an employee of the City. Consultant shall have the complete responsibility for the performance of this contract. Consultant shall provide workers' compensation coverage as required in ORS Ch 656 for all persons employed to perform work pursuant to this contract. Consultant is a subject employer that will comply with ORS 656.017. 12. Assignment and Subcontracts: Consultant shall not assign this contract or subcontract any portion of the work without the written consent of City. Any attempted assignment or subcontract without written consent of City shall be void. Consultant shall be fully responsible for the acts or omissions of any assigns or Subcontractors and of all persons employed by them, and the approval by City of any assignment or subcontract shall not create any contractual relation between the assignee or subcontractor and City. 13. Default. The Consultant shall be in default of this agreement if Consultant: commits any material breach or default of any covenant, warranty, certification, or obligation it owes under the Contract; its QRF status pursuant to the QRF Rules or loses any license, certificate or certification that is required to perform the Services or to qualify as a QRF if consultant has qualified as a QRF for this agreement; institutes an action for relief in bankruptcy or has instituted against it an action for insolvency; makes a general assignment for the benefit of creditors; or ceases doing business on a regular basis of the type identified in its obligations under the Contract; or attempts to assign rights in, or delegate duties under, the Contract. 14. Insurance. Consultant shall at its own expense provide the following insurance: a. Worker's Compensation insurance in compliance with ORS 656.017, which requires subject employers to provide Oregon workers' compensation coverage for all their subject workers b. Professional Liability insurance with a combined single limit, or the equivalent, of not less than Enter one: $200,000, $500,000, $1,000,000, $2,000,000 or Not Applicable for each claim, incident or occurrence. This is to cover damages caused by error, omission or negligent acts related to the professional services to be provided under this contract. C. General Liability insurance with a combined single limit, or the equivalent, of not less than Enter one: $200,000, $500,000, $1,000,000, $2,000,000 or Not Applicable for each occurrence for Bodily Injury and Property Damage. Contract for Electric Cost of Service and Rate Study, May 5, 2016, Page 2 of 5 d. Automobile Liability insurance with a combined single limit, or the equivalent, of not less than Enter one: $200,080, $500,000, $1,000,000, or Not Applicable for each accident for Bodily Injury and Property Damage, including coverage for owned, hired or non-owned vehicles, as applicable. e. Notice of cancellation or change. There shall be no cancellation, material change, reduction of limits or intent not to renew the insurance coverage(s) without 30 days' written notice from the Consultant or its insurer(s) to the City. f. Additional Insured/Certificates of Insurance. Consultant shall name The City of Ashland, Oregon, and its elected officials, officers and employees as Additional Insureds on any insurance policies required herein, excluding Professional Liability and Workers' Compensation, but only with respect to Consultant's services to be provided under this Contract. The consultant's insurance is primary and non-contributory. As evidence of the insurance coverages required by this Contract, the Consultant shall furnish acceptable insurance certificates prior to commencing work under this contract. The certificate will specify all of the parties who are Additional Insureds. Insuring companies or entities are subject to the City's acceptance. If requested, complete copies of insurance policies; trust agreements, etc. shall be provided to the City. The Consultant shall be financially responsible for all pertinent deductibles, self-insured retentions and/or self-insurance. 15. Governing Law; Jurisdiction; Venue: This contract shall be governed and construed in accordance with the laws of the State of Oregon without resort to any jurisdiction's conflict of laws, rules or doctrines. Any claim, action, suit or proceeding (collectively, "the claim") between the City (and/or any other or department of the State of Oregon) and the Consultant that arises from or relates to this contract shall be brought and conducted solely and exclusively within the Circuit Court of Jackson County for the State of Oregon. If, however, the claim must be brought in a federal forum, then it shall be brought and conducted solely and exclusively within the United States District Court for the District of Oregon filed in Jackson County, Oregon. Consultant, by the signature herein of its authorized representative, hereby consents to the in personam jurisdiction of said courts. In no event shall this section be construed as a waiver by City of any form of defense or immunity, based on the Eleventh Amendment to the United States Constitution, or otherwise, from any claim or from the jurisdiction. 16. THIS CONTRACT AND ATTACHED EXHIBITS CONSTITUTE THE ENTIRE AGREEMENT BETWEEN THE PARTIES. NO WAIVER, CONSENT, MODIFICATION OR CHANGE OF TERMS OF THIS CONTRACT SHALL BIND EITHER PARTY UNLESS IN WRITING AND SIGNED BY BOTH PARTIES. SUCH WAIVER, CONSENT, MODIFICATION OR CHANGE, IF MADE, SHALL BE EFFECTIVE ONLY IN THE SPECIFIC INSTANCE AND FOR THE SPECIFIC PURPOSE GIVEN. THERE ARE NO UNDERSTANDINGS, AGREEMENTS, OR REPRESENTATIONS, ORAL OR WRITTEN, NOT SPECIFIED HEREIN REGARDING THIS CONTRACT. CONSULTANT, BY SIGNATURE OF ITS AUTHORIZED REPRESENTATIVE, HEREBY ACKNOWLEDGES THAT HE/SHE HAS READ THIS CONTRACT, UNDERSTANDS IT, AND AGREES TO BE BOUND BY ITS TERMS AND CONDITIONS. 17. Nonappropriations Clause. Funds Available and Authorized: City has sufficient funds currently available and authorized for expenditure to finance the costs of this contract within the City's fiscal year budget. Consultant understands and agrees that City's payment of amounts under this contract attributable to work performed after the last day of the current fiscal year is contingent on City appropriations, or other expenditure authority sufficient to allow City in the exercise of its reasonable administrative discretion, to continue to make payments under this contract. In the event City has insufficient appropriations, limitations or other expenditure authority, City may terminate this contract without penalty or liability to City, effective upon the delivery of written notice to Consultant, with no further liability to Consultant. Certification. Consultant shall sign the certification attached hereto as Exhibit A and herein incorporated b reference. Consultant: City of Ashland By By Signature ~4 c r~~sc er`r' ~A) Print Name Print Name l es ~ oltN ~ z-- 3 Title Date W-9 One copy of a W-9 is to be submitted with the signed contract. Purchase Order No. P AS TO FORM t, As i d Asst. ity Attorney Dat Contract for Electric Cost of Service and Rate Study, May 5, 2016, Page 3 of 5 EXHIBIT A CERTIFICATIONS/REPRESENTATIONS: Contractor, under penalty of perjury, certifies that (a) the number shown on the attached W-9 form is its correct taxpayer ID (or is waiting for the number to be issued to it and (b) Contractor is not subject to backup withholding because (i) it is exempt from backup withholding or (ii) it has not been notified by the Internal Revenue Service (IRS) that it is subject to backup withholding as a result of a failure to report all interest or dividends, or (iii) the IRS has notified it that it is no longer subject to backup withholding. Contractor further represents and warrants to City that (a) it has the power and authority to enter into and perform the work, (b) the Contract, when executed and delivered, shall be a valid and binding obligation of Contractor enforceable in accordance with its terms, (c) the work under the Contract shall be performed in accordance with the highest professional standards, and (d) Contractor is qualified, professionally competent and duly licensed to perform the work. Contractor also certifies under penalty of perjury that its business is not in violation of any Oregon tax laws, and it is a corporation authorized to act on behalf of the entity designated above and authorized to do business in Oregon or is an independent Contractor as defined in the contract documents, and has checked four or more of the following criteria: (1) 1 carry out the labor or services at a location separate from my residence or is in a specific portion of my residence, set aside as the location of the business. (2) Commercial advertising or business cards or a trade association membership are purchased for the business. (3) Telephone listing is used for the business separate from the personal residence listing. (4) Labor or services are performed only pursuant to written contracts. (5) Labor or services are performed for two or more different persons within a period of one year. (6) 1 assume financial responsibility for defective workmanship or for service not provided as evidenced by the ownership of performance bonds, warranties, errors and omission insurance or liability insurance relating to the labor or services to be provided. Contractor (Date) Contract for Electric Cost of Service and Rate Study, May 5, 2016, Page 4 of 5 CITY OF ASHLAND, OREGON EXHIBIT B City of Ash land LIVING WA E per hour effective June 30, 2015 (Increases annually every June 30 by the Consumer Price Index) Employees must be paid a portion of business of their 401 K and IRS eligible living employer, if the employer has cafeteria plans (including ten or more employees, and childcare) benefits to the has received financial amount of wages received by assistance for the project or the employee. ➢ For all hours worked under a business from the City of service contract between their Ashland in excess of ➢ Note: "Employee" does not employer and the City of $20,142.20. include temporary or part-time Ashland if the contract employees hired for less than exceeds $20,142.20 or more. ➢ If their employer is the City of 1040 hours in any twelve- Ashland including the Parks month period. For more ➢ For all hours worked in a and Recreation Department. details on applicability of this month if the employee spends policy, please see Ashland 50% or more of the ➢ In calculating the living wage, Municipal Code Section employee's time in that month employers may add the value 3.12.020. working on a project or of health care, retirement, For additional information: Call the Ashland City Administrator's office at 541-488-6002 or write to the City Administrator, City Hall, 20 East Main Street, Ashland, OR 97520 or visit the city's website at www.ashland.or.us. Notice to Employers: This notice must be posted predominantly in areas where it can be seen by all employees. CITY OF ASHLAND Contract for Electric Cost of Service and Rate Study, May 5, 2016, Page 5 of 5 t I T r AMIX L - r--m-m CITY OF ASHLAND, OR Cost Proposal April 7, 2016 @ 2:OOP.M. PST Utility Financial Solutions, LLC 185 Sun Meadow Court Holland, MI USA 49424 Submitted Respectfully by: Mark Beauchamp, President, CPA, CMA, MBA Utility Financial Solutions, LLC mbeauchamp@ufsweb.com (616) 393-9722 ELECTRIC DEPARTMENT COST OF SERVICE AND RATE STUDY COST PROPOSAL Electric Project Fees -The City of Ashland ELECTRIC DEPARTMENT Project Rates Average Services Hours manager, manager, Analyst Hourly Rate Amount Data Collection and Analysis Data Request 3 1 1 1 $ 218 $ 655 Determine Revenue Requirements 10 2 2 6 191 1,910 Sales and Power Requirements 12 3 0 9 183 2,190 Load Data Analysis 12 3 0 9 183 2,190 Long-term Financial Projection Financial Projection and Rate Track (5-Year) 12 2 6 4 209 2,510 Identify Debt Service Ratio (Included in Financial Projection) Identify Minimum Cash Recommendation (Included in Financial Projection) Identify Rate of Return (Included in Financial Projection) Identify Five-Year Rate Track (Included in Financial Projection) Cost of Service Model Customer Class Demands & Allocation Factors 9 2 5 2 221 1,985 Class Cost of Service 8 2 2 4 .201 1,610 Study Reports 12 4 4 4 218 2,620 Rate Design Recommendation One Year Electric Rate Design 15 2 8 5 207 3,110 Indoor Agriculture Rate Design 2 2 - 1,010 Time of Use Rate Discussions/Recommendations 16 4 12 0 239 3,820 Meetings and Presentations We anticipate the following meetings to complete the analysis: We anticipate the following meetings to complete the analysis: 1. Initial meeting - (Conf Call) 7 3 2 2 227 1,590 2. Fieldwork - (On-Site) 18 9 9 0 253 4,545 3. Review draft reports with management (On-Site) 9 9 0 0 280 2,520 4. Presentation to City Council (On-Site) 9 9 0 0 280 2,520 Additional Services Fee Analysis 12 2 8 2 222 2,660 Line Extension Policy 16 4 12 0 239 3,820 Unbundling of Utility Costs (Included in Cost of Service Study) Total (less travel out-of-pocket expenses) 180 63 73 48 F$ 229 $ 41,265 Total Out of Pocket Expenses: $ 3,000 Project Total: Total Not to Exceed $44,2651 Non budgeted on-site visits add: 2,520 (Includes Out of Pocket expenses & Project Manager on-site 4 hrs- add travel time @ 50% off standard rates) Phone Page 1 UFS Proposal for Ashland (616) 393-9722 www.ufsweb.com ELECTRIC DEPARTMENT COST OF SERVICE AND RATE STUDY COST PROPOSAL Out of Jcope _IzeIrviCes on-site and travel expenses Out of Scope services, if deemed necessary and agreed upon by The City of Ashland, will be billed at the hourly rates listed below. Any out of pocket expenses will be billed at cost. Name Title Hourly Rate Mark Beauchamp President $290.00 Dawn Lund Vice President $230.00 Dan Kasbohm Manager $210.00 Mike Johnson Manager $210.00 Chris Lund Business and Technology Manager $190.00 Joan Bakenhus Senior Financial Analyst $130.00 Jillian Beauchamp Financial Analyst $105.00 Robert Blank Financial Analyst $95.00 In addition, travel time will be billed at 50% off of regular rates. Prices, terms, and conditions are good for a period of 90 days from this date. Payment will be made through submission of invoice which itemizes the work performed. "Total not to exceed amount" does not include on-site or travel expenses. Thank you, 4.7.2016 i Mark Beauchamp Date President, Utility Financial Solutions, LLC Phone Page 2 UFS Proposal for Ashland (616) 393-9722 www.ufsweb.com I P j ~ JJ C.1 T Y OF AS Huw L Im-A, v1&1v'v CITY OF ASHLAND, OR PROPOSAL FOR ELECTRIC DEPARTMENT COST OF SERVICE AND RATE STUDY April 7, 2016 @ 2:OOP.M. PST Utility Financial Solutions, LLC 185 Sun Meadow Court Holland, MI USA 49424 an Submitted Respectfully by: Mark Beauchamp, President, CPA, CMA, MBA Utility Financial Solutions, LLC mbeauchamp@ufsweb.com (616) 393-9722 II ,I'I M I II V Utility Financial Solutions, LLC April 7, 2016 Mark Holden, Director of Electric Utility and IT City of Ashland 90 N. Mountain Avenue 9 Ashland, OR 97520 Dear Mark Holden: C, Utility Financial Solutions, LLC (UFS) is pleased to submit a Proposal to provide an Electric Cost of Service, Financial Projection, Rate Design and Presentation for the City of Ashland, OR (The City). The proposed methodology. provides a systematic, balanced and thorough analysis of the cost of service and rate design options available to address key questions facing the City of Ashland. r! g Over the last decade, UFS has set the standard in independent financial analysis and cost of service/rate design for Publicly-Owned Utilities. The information in our Proposal is based on our prior experience in completing utility rate studies for municipal utilities around the nation and BPA utilities located in Oregon. UFS is an international consulting firm providing electric, water, wastewater and financial studies to over 300 municipal utilities. Our staff consists of electric cost of service and financial planning f course instructors for the American Public Power Association, National Association of Regulatory Commissioners, Rural Electric Association and State Electric Associations. Our staff includes Certified Public Accountants, Engineers, Economists and Utility Marketing Specialists. UFS will provide you with the highest quality service within an agreed-upon timeframe and has the personnel available to meet your needs. We would like to be a resource to you for many years in the future. Our success is dependent on the quality and timeliness of services provided to utilities. We are committed to the City of Ashland's complete satisfaction. Our prior experience in providing the P: requested services allows us to conduct a cost effective and efficient rate study. I I; TABLE OF CONTENTS 1. Proposal Form Exhibit A 1 2. Experience and Qualifications Firm Qualifications 2-7 Staff Qualifications 8-15 Study Example - See Appendix 1 16 3. Proposed Services About Ashland, Scope and Deliverables 17-19 Statement of Understanding 20-38 List of Data 39 Timeline 40 4. Contract Terms and Conditions City's Contract Provisions - Exhibit C 41 Certificate of Compliance - Exhibit B 41 Statement of Eligibility to Participate 42 II S. References 43-44 6. Addenda Addendum 1 45-46 7. Study Example - Appendix 1 47 I i U ELECTRIC DEPARTMENT COST OF SERVICE AND RATE STUDY EXPERIENCE AND QUALIFICATIONS C Firm Qualifications UFS has a long standing relationship and over 15 years of history in assisting municipalities with cost of service and financial analysis for Electric utilities and are recognized experts in the utility field. Our group and the project team assigned to this engagement is composed of highly qualified, experienced, and knowledgeable professionals who remain current on all issues facing utilities. UFS' reputation has 6 resulted in an industry leading status shown by our frequent request to instruct classes and speak at conferences around the nation, the number of rate studies we have completed. UFS provides consulting services to assist publicly-owned utilities in meeting their strategic and financial objectives. Services are designed to ensure complete client satisfaction and a commitment that: • Services will be completed in the agreed upon timeframe • Services are delivered within budget for services requested • Services provided will meet or exceed client expectations • Services will be unbiased and independent recommendations provided to the utility The Project Manager for The City of Ashland will be Mark Beauchamp, CPA, CMA, MBA and staff as L listed in this proposal. The resume of each individual is included in the resume section below. This section includes: 1. A summary of our experience and qualifications 2. Electric Projects completed in past 36 months 3. Name of Contact Person for UFS 4. Proposed Team Members and Locations 5. Resumes of UFS personnel 1 Our experience and commitment to publicly-owned utilities ensures that we understand the issues they face and can assist in providing a variety of services including: • Electric cost of service and rate design l • Review of indirect cost allocations • Fee and ancillary service charges • Cost reduction strategies and benchmarking analysis for utilities Financial analysis and feasibility studies for offering telecommunication services • Evaluating and developing policies and procedures • Econometric forecasts of sales and load growth • Utility valuation services • Power supply negotiation and financial analysis i Phone Page 2 UFS Proposal for Ashland (616) 393-9722 www.ufsweb.com I! ELECTRIC DEPARTMENT COST OF SERVICE AND RATE STUDY EXPERIENCE AND QUALIFICATIONS i UFS' industry leading status has allowed us to present courses on distributed generation to the US Department of Energy and provide them with proper pricing methods to recover costs and promote renewable generation. Quality Control Proper quality control and management includes help ensure the accomplished work is in alignment with the project scope, is completed timely, within budget and the results are accurate and defensible. UFS implements a number of quality controls to achieve these desired goals, including a three level review of the financial projection, cost of service studies and that rate designs achieve the desired revenue requirements. The quality controls developed by UFS are specific to utility rate studies and are based on our prior experience working with electric utilities in the USA, Guam, the Caribbean and Canada. All portions of our studies include the following at a minimum: 1. Development of a detailed work plan based on scope of services and discussion with management 2. Establish work plan with projected milestones and timelines 3. Proof and Balance historical usage, expenses, and revenues with audited financial statements 4. Compare UFS financial projections with utility budgets 5. Review by Project Manager of projections and cost of service study 6. Review by UFS President or Vice-President-of study results 7. Presentation of results by UFS with Utility Staff prior to finalizing study Timeliness of Studies Part of the quality control includes the timely completion of the rate studies. UFS experience in completing studies provides us the ability to complete the studies as requested and discussed in the initial kick-off meeting. UFS has the staff available to complete the study prior to the June 20, 2016 deadline. u Experience: UFS extensive experience includes completion of rate studies in 43 states, including Oregon and Guam, the Caribbean and Canada. We have worked with small utilities as well as some of the largest public ~I power systems around the Country. A small sample includes: Nashville TN, Rochester MN, Danville VA, Naperville IL, Cedar Falls Iowa, Palo Alto CA, and Imperial Irrigation District. I' Phone Page 4 UFS Proposal for Ashland (616) 393-9722 www.ufsweb,com ~I I' I C n i r L!Lilll Iinnnrinl Salutim+s L4C ELECTRIC DEPARTMENT COST OF SERVICE AND RATE STUDY Y . EXPERIENCE AND QUALIFICATIONS I Electric Client Ainsworth NE- KBR Rural PPD Gastonia NC Napervlle IL Wadsworth OH Algona IA Grand Haven Township MI Nashville TN Washington City UT APPA Hamilton NC New Castle DE Washington Township MI Ashland OR Hamilton OH Newberry SC Waverly IA Austin MN Hannibal MO Newton Falls OH Westerville OH Ayden NC Hertford NC Niles MI Westfield MA Battle River REA- Camrose AB Canada Highland IL North Attleborough MA Wixom MI C Bay City MI Holland Township MI North Muskegon MI WPPI Energy Bedford VA Howard Greeley NE Orrville OH York NE Bedford VA Howell MI Painesville OH Zeeland City of MI Big Rapids MI Hubbard OH Pentwater MI Boulder CO Hudson OH Perennial Power District NE Brainerd MN Hurricane UT Petoskey MI Bruce Township MI Imperial CA- IID Polk County Public Power District NE Burt County Public Power District NE Indiana Municipal Power Agency Poplar Bluff MO Butler Public Power District NE Kalamazoo MI Rantoul IL Cedar Falls IA Kaysville City UT Richlands VA Cedar- Knox NE Kennett MO Richmond IN Charlevoix MI Lake Worth FL RochelIeIL Chaska MN Lincoln Charter Township MI Rochester MN r Clailam County WA Lincoln NE- MEAN - NMPP Santa Clara UT i. Clarksburg WV Linden IN -Tipmont REMC Scotland Neck NC CLECO, LLC Little Hocking OH Selma NC CMEEC Louisburg NC Seville OH Coffeyville KS Loup Valleys NE Shelby NC Coldwater MI Loveland CO Shelby OH Columbia MO Ludington MI Smithfield NC Columbia TN Marquette MI MCSWMA South River NJ Commerce Township MI Marquette MI Southern Public Power District NE Cornhusker NE Martinsville VA St. Charles IL Custer Public Power District NE Mascoutah IL Stanton NE Cuyahoga Falls OH Mascoutah IL Sturgis MI Danville VA McMinnville OR Sylvania OH East Norwalk CT Mishawaka IN Traverse City MI Elkhorn NE Morgan UT Turlock CA Farmville NC Murfreesboro TN Twin Valleys NE Fulton County REMC - Rochester IN Muskegon MI UAMPS u _r !ri j~. Phone Page 6 UFS Proposal for Ashland h (616) 393-9722 www.ufsweb.com i I. I' i J ELECTRIC DEPARTMENT COST OF SERVICE AND RATE STUDY EXPERIENCE AND QUALIFICATIONS Staff Qualifications We have put together a project team with the knowledge and experience to successfully meet your requirements. The team has over 90 years of combined experience performing similar studies for municipal utilities. This provides the City of Ashland with experience to creatively solve financial and operational issues and help ensure financial stability in future years. The project team members are recognized national experts and have completed over 300 electric cost of service-studies in 34 states. UTILITY FINANCIAL SOLUTIONS STAFF UFS staff consists of accountants, engineers and CPA's, additional staff is available if needed to ensure r, timely completion of the project. Their role is dependent on work load and timing requirements of project and will be used in various stages of the cost of service study. Resumes of key staff members are listed below. The City of Ashland . Mark Beauchamp CPA,CMA,MBA i President & Project Manager -Dawn Lund - -_;j Vice-President & ~j Financial Manager L Joan Bakenhus Mike Johnson Dan Kasbohm Chris Lund J i Business & Technology Senior Financial Analyst Manager Manager Manager Lillian Beauchamp Robert Blank Financial Analyst Financial Analyst r i G Phone Page 8 UFS Proposal for Ashland (616) 393-9722 www.ufsweb.com ~i ELECTRIC DEPARTMENT COST OF SERVICE AND RATE STUDY Utility Fmm,cialSolutions, C , `I ,..~-...aW.-_~..-,._-.w,w. EXPERIENCE AND QUALIFICATIONS Dawn Lund Vice-President, Utility Financial Solutions, LLC Dawn has 20 years' experience pricing and marketing utility services for electric, water and wastewater. Dawn has worked with UFS for over 10 years and previously worked with a large utility and held positions as Cost and Rate Specialist and Marketing and Communications Specialist. Dawn works with utilities across the country teaching financial concepts and is also the instructor for Financial Planning courses for the American Public Power Association. She is also a regularly requested speaker for various regional and national organizations. Dawn has the following experience: Email: dlund@ufsweb.com i Cellular: 231.218.9664 Location: Traverse City, M I Cost of Service (COS) Rate Design • Completed electric water and wastewater • Development of electric rate designs to cost of service and rate design studies for meet financial and social objectives of utility utilities across the country, Guam and the Development of special rates for electric Caribbean utilities including Net Metering, Economic • Determining appropriate allocations of Development and Time of Use overhead costs between utility services Other Utility Tools Long-term financial analysis • Development of power (fuel) cost • Development of long-term sales and expense adjustments for electric utilities projections for electric, water, and • Development of connection charges for wastewater utilities water and wastewater utilities • Development of long-term financial plan and • Review and recommend changes to rate track for electric, water, and wastewater ordinances related to utility operations Presentation/Training • Development of fees for utility services • Presentations to City Councils and Boards for • Business plan development for approval of utility rates and proposed rate telecommunications and pricing of fiber tracks services to customers • Instructor for APPA's Financial Planning • Determining high strength surcharge rates courses for wastewater treatment plants consistent • Monthly presentations to various with EPA requirements organizations on topics such as: financial • Development of marketing plans for utilities planning, Key financial targets, cash policies . Experienced in pricing electric line extension and how to explain rate increases to the end fees and system development charges user, cost of services challenges/solutions, and Introduction to allocation studies Phone Page 10 UFS Proposal for Ashland (616) 393-9722 www.ufsweb.com f ELECTRIC DEPARTMENT COST OF SERVICE AND RATE STUDY Udiity F--i.]S.1.6 ns, LLC EXPERIENCE AND QUALIFICATIONS Dan Kasbohm Manager, Utility Financial Solutions, LLC Dan joined Utility Financial Solutions in 2007 and has experience in conducting cost of service and financial analysis for electric, water, wastewater and cable utilities around the nation. He has a Bachelor of Science degree in Engineering and was employed in the automotive industry for 16 years. Dan is a co-instructor for the Basic and Intermediate Cost of Service courses for the American Public Power Association and has the following experience: E-mail: dkasbohm@mail.ufsweb.com Cellular: 616.402.7045 Location: Grand Haven, MI Cost of Service (COS) Rate Design • Identification of fixed/variable costs related to: • Current Utility rate structure updates - Customer availability to be served - Utility revenue impact - Commodity based costs - Customer bill impacts at various usage - Demand based costs levels • Identification of class to class subsidization - Identify revenue stability of rates • Utility cost breakdown by function - Rate survey analysis • Detailed cost unbundling • Development of new rates including: Long-term financial analysis & identification of: - Time of Use (seasonal, daily, hourly} - Power Cost Adjustment (PCA) • Utility revenue requirements (utility and cash based _ Coincidental-Peak Rates methods) - Economic Development rates • Debt Coverage conformance - Street lighting rates • Minimum cash requirements • Optimal operating income targets Other Utility Tools • Optional rate adjustments in projected years • Power Cost Adjustment mechanisms based on Presentation/Training utility cash position, objectives and dispatch profile _ Presenting study results to management and Street Light Cost of Service by light and pole governing body of utility types • Provide utility training on use of projection & COS . Load Profile Analysis to identify utility and models customer usage patterns • Co-Instructor for the American Public Power Power supply forecasting Association Academy • Implementation of a justified minimum cash Basic & Intermediate Cost of Service policy • Calculation of fees for standard utility work • Development of line extension policies i I Phone Page 12 UFS Proposal for Ashland (616) 393-9722 www.ufsweb.com i. 4 V) _ ELECTRIC DEPARTMENT COST OF SERVICE AND RATE STUDY -,aityR.-Cta,svlm+on•.l-LC EXPERIENCE AND QUALIFICATIONS Chris Lund Business & Technology Manager, Utility Financial Solutions, LLC Chris has a bachelor's degree in Business Administration with concentration in Computer Science and Speech Communications. He has been a technology and management consultant for over 20 years. Chris is an employee of UPS and has also sub-consulted on a variety of technology projects for UPS since 2003. A few of the highlights are below: i E-mail: clund@ufsweb.com Cellular: 231.342.9798 Location: Traverse City, MI Financial Consulting Technology Experience • . Completed cost of service and rate design • Experienced in Microsoft Excel automation - studies for electric, water, wastewater, including payroll data, job costing and automated telecommunications and refuse utilities billing (office automation) • Designed, wrote and implemented long term Experienced in Microsoft Access custom database, financial projection model including revenue programming and reporting - including electronic C requirements and rate track data interchange (EDI) mapping using Microsoft • Determined avoided cost for solar (photovoltaic VBA j - PV) and wind for renewable energy rates • Lead consultant for multiple mission critical, • Lead consultant for electric vehicle (EV) rates corporate wide enterprise resource planning (ERP) and service study technology solutions • Conducted multiple fiber optic cost of service • Implemented, trained and supported multiple and rate design studies telecommunications projects • Presentations to City Councils and Boards for • Implemented and supported some of the first approval of utility rates and proposed rate tracks voice over internet protocol (VOIP) telecommuting systems Data Analytics • Guide management with technology related • Data mining and analysis specialist for electric strategy and business integration load data research • Modification and complete custom program • Specialist with data mining, data conversion and solutions on midrange and PC custom reporting • Wrote automated bill of material (BOM) r • Experienced with various ODBC (database purchasing forecasting system connectivity) • Specify, install and maintain mission critical PC Implemented job costing solution for network infrastructure, servers, workstation and manufacturing companies related software • Designed, written, implemented, supported • Experienced in network security and virtual multiple, custom bar coding and data collection private network (VPN) technology i' systems for wholesale distribution and • Implemented and supported web storefronts manufacturing organizations integrated with corporate backend database • Data collection systems pushed data to payroll solution for inventory management, order for time and attendance, automated inventory processing, billing and account status tracking and job costing Phone Page 14 UPS Proposal for Ashland (616) 393-9722 www.ufsweb.com ELECTRIC DEPARTMENT COST OF SERVICE AND RATE STUDY U,ilityFnancalSotution..LLC EXPERIENCE AND QUALIFICATIONS Study Example - See Appendix 1 i i G i~ N ~I 0 I' I Phone Page 16 UFS Proposal for Ashland (616) 393-9722 www.ufsweb.com l ELECTRIC DEPARTMENT COST OF SERVICE AND RATE STUDY UtllityfnancalSuluNons.LLC PROPOSED SERVICES B) Review and project sales and load information a. Identify sales and revenues over the test year and planning horizon. C) Determine appropriate rate of return on utility assets a. Determine revenue requirements on either a cash basis or a utility basis of rate making which includes an appropriate rate of return on utility assets and also considering factors such as current interest rates, cash balances and long term capital needs of the utility. D) Identify cost to serve each rate class and compare to projected revenue from each rate class. E) Review current rate classes and provide recommendations on developing new rate classes or combining existing rate classes. F) Review and make recommendations for net metering policies and rates; G) Make recommendation regarding rates for indoor agriculture. H) Identify the cost of each rate component for each customer class including: a. Monthly customer charge b. Energy charge c. Demand 1) Conservation a. Provide an evaluation of potential funding models/methodologies for utility self- funding (non-BPA) energy efficiency programs, conservation projects, and renewable energy projects. b.. Review current credits allocated to customers for conservation programs, such as solar, and make recommendations for changes or adjustments to the schedules/methodology. c. Describe and recommend other industry standard fees, charges, credits or other funding methodologies relating to self-funded energy efficiency programs, renewable energy and other electric conservation projects. d. The City complies with renewable portfolio standard (RPS) for Oregon municipalities' purchasing power from BPA. J) Develop rates for possible future electric consumption. a. Evaluate and make recommendations for an "integrated utility" rate structure. b. Describe and recommend solutions for time of use rates c. Evaluate the impact of BPA Tier 2 rates and recommend options, including conservation, to minimize the effect. K) Customer Fees a. Review fees charged to customers and recommend changes to the fee schedules for the following charges: Service Connection for Applicant Charges, Penalty, Return Check Charges, New Account Charges, New Service Charges, Temporary Connection Charges, Meter Test Charges, Unauthorized Connection Charges, Reconnection Charges, and any other Industry Standard Charges that the City of Ashland may or may not be currently charging. Phone Page 18 UFS Proposal for Ashland (616) 393-9722 www.ufsweb.com 4 4! 14 41 , ~k - s " TJ tr!W ELECTRIC DEPARTMENT COST OF SERVICE AND RATE STUDY . utility flnm,da, Snlutinns, U.C PROPOSED SERVICES Statement of Understanding Our approach to this project was developed to meet the objectives of the City of Ashland and our prior experience in preparing electric cost of service studies for publicly-owned utilities around the nation and in Oregon. Our proposed work plan listed below is structured with the City request and our initial work plan to meet the City's requirements. The methodologies for cost of service and financial projections are based on established standards of the American Public Power Association and the National Association of Regulatory Commissioners. Our Technical Approach and Work Plan include the following sections: A) Determination of utility revenue requirements a. Identify revenue requirements for the test year and over a five-y, r planning horizon. The financial projection should include a financial statemen ojection, cost forecast and cash flow projection. b. In formulating cost and revenue forecasts, the fiscal impacts of the following must be considered: i. Purchase power transactions and their variability ii. Renewable energy portfolio requirements, 1. Current status of compliance and 2. Future purchases as necessary. iii. Capital project spending requirements. Revenue requirements and the cost of service analysis will be completed on both the cash basis and utility cost of service basis using a base year adjusted for known changes in expenses and current financial assumptions. Costs will be determined using the embedded costs. Listed below are specific tasks that will be completed: • Expenses Working with the City, we will review operating expenses over the past fiscal year, discuss with management significant changes and exclude any non-recurring expenses from the test year projection and over the five-year planning period. • Power Supply Projection We will project power supply expenses over the five-year planning period. The power supply projection will include the projected BPA rates effective in 2013/2014. The power cost projections will incorporate projected power purchases and usage reductions from energy conservation programs. The power costs projection will be structured monthly, similar to the power cost projection listed below: Phone Page 20 UFS Proposal for Ashland (616) 393-9722 www.ufsweb.com 5;46\r Wilily ELECTRIC DEPARTMENT COST OF SERVICE AND RATE STUDY PROPOSED SERVICES Debt Service - We will request information on current debt service amortization schedules, as part of this analysis we will identify the need for new bond issuances over the five year planning period Sales will be projected over the five-year planning. period and UFS will identify the revenues from the sales and the matching power supply requirements. B. Review and project sales and load information a. Identify sales and revenues over the test year and planning horizon _ Through review of historical peak loads and energy we will project future power supply requirements. The study will be based on econometric modeling techniques that will include a minimum of the following independent variables: • Weather Patterns • Population • Demographics of WLP • Number of customers served • Industrial growth • incorporation of Demand Side Management & Energy Efficiency Programs Statistical tests will be used to evaluate the validity of the model; the projections will be evaluated for significance using parameters including R-squared, Durbin Watson, f-distribution, t-distribution, etc. Each independent variable will be evaluated to ensure the variables are not correlated in a manner that will provide false statistical results (Multicollinearityl). If necessary we will use natural logs, dummy variables, lagging variables or additional methods in the analysis to develop a statistically significant model. Once correlations are identified UFS will review available external projections on demographics for the Ashland Oregon area. Some information may be available free of charge through State, County or City Governments while other information may be available for purchase such as Woods & Poole. ' Multicollinearity occurs when the independent variables are correlated. The result may be high R-squared values but incorrect coefficients are produced. Multicollinearity may result in a wide confidence interval (i.e. 95%, 90%) Phone Page 22 UFS Proposal for Ashland (616) 393-9722 www.ufsweb.com rit' 44 ELECTRIC DEPARTMENT COST OF SERVICE AND RATE STUDY PROPOSED SERVICES i C. Determine appropriate rate of return on utility assets a. Determine revenue requirements on either a cash basis or a utility basis of rate making which includes an appropriate rate of return on utility assets and also considering factors such as current interest rates, cash balances and long term capital needs of the utility The cost of service study is completed on the utility basis of rate making using a targeted operating income based on a rate of return on utility assets. UFS is considered a national authority on determining appropriate return on investments that consider interest expense on outstanding debt, inflation, age of utility assets and the systems needs for capital improvements. _ The utility basis is the only way to accurately identify the ideal level of electric rates for customers. However practical limitations such as potential rate impacts on customers and rate comparisons of surrounding utilities also need to be considered when considering actual rate increases. To help management and the Board of Directors make informed decisions three primary financial targets are reviewed including the following: Rate of Return - Rate of Return is used to identify the target operating income. The table below is a sample rate of return calculation used to develop the first target. Table of Rate of Return Calculation Percent Projected Projected Projected Projected Projected Allocated FY2016 ' FY2017 FY2018 FY2019 FY2020 Interest Expense on Debt 2.1% $ 15,905 $ 12,305 $ 8,545 $ 4,630 $ - System Equity 6.0% 1,587,152 1,641,512 1,694,775 1,749,011 1,790,771 Target Operating Income $1,603,057 $1,653,817 $1,703,320 $1,753,641 $1,790,771 Projected Operating income $ 488,948 $ 563,671 $ 752,607 $ 950,904 $1,157,714 Rate of Return in % 6.0% 6.1% 6.3% 6.5% 6.7% Minimum level of Cash Reserves - Minimum Cash Reserve level is used to help ensure timely completion of capital improvements and enable the utility to meet requirements for large unexpected expenditures, the minimum level of cash is identified. Minimum cash reserves attempts to quantify the minimum cash the utility should keep in reserve, actual cash reserves may vary above the minimum levels.. The methodology used is based on certain assumptions related to working capital lag, operation and maintenance expenses, historical investments in assets, capital improvement program, exposure to catastrophic events, risk related to power supply costs and debt service payments. The table below is an example of the minimum cash reserve results: Phone Page 24 UFS Proposal for Ashland (616) 393-9722 www.ufsweb.com 4, ~O."IrK ELECTRIC DEPARTMENT COST OF SERVICE AND RATE STUDY PROPOSED SERVICES D. Identify cost to serve each rate class and compare to projected revenue from each rate class The cost of service study allocates the utilities revenue requirements to each class based on cost causation and the load research information used in the study. The cost of service study results will identify costs to provide service to each class and compare each with the projected revenues from each class. The table below is a summary table often used in the cost of service report. Customer Class Cost of Service Projected Revenues % Change Residential Service - Rate A 3,180,813 3,141,273 1% Residential Electric Heating - Rate AH 7,685 7,278 6% Residential Service w/Water Heating - Rate AW 163,817 162,897 1 % Residential Electric Heating w/Water Heating - Rate AH" 138,523 .127,590 9% Residential Service - Rate A - Twp 541,308 517,774 5% Residential Service wMater Heating - Rate AW - Twp 49,094 46,200 6% Residential Electric Heating w/Water Heating - Rate AH" 23,347 22,122 6% General Light and Power Service - Rate B 2,230,874 1,907,779 17% General Light and Power Service - Rate B - Twp 299,267 262,513 14% Street Lighting (MSL) - Rate SL-1 189,668 189,342 0% Traffic Light Service (MTS) - Rate SL-4 25,527 20,223 26% Outdoor Lighting Service (OL) - Rate OL 76,985 71,859 7% General Light and Power Service - Rate C 2,434,282 2,406,768 1 % General Light and Power Service - Rate C - Twp 184,881 175,228 6% Comm/Indust Primary Service - Rate D 5,392,044 5,401,906 0% Comm/Indust Primary Service - Rate D+3% 2,359,780 2,407,571 -2% Comm/Indust Primary Service - Rate D - Twp 1,672,676 1,712,838 -2% Highload Factor Indust. Primary Service - Rate D-2 1,321,329 1,346,341 -2% IMCO 846,428 649,411 30% ASAMA 2,656,399 1,881,832 41% Total 23,794,726 22,458,744 5.9% E. Review current rate classes and provide recommendations on developing new rate classes or combining existing rate classes. As part of the initial meeting with management we discuss our evaluation of the existing rate structure and current customer classes and potential rate classes to consider or combine. Customer complaints and customer service issues will be discussed and methods and approaches to reduce customer complaints related to customer rates. Phone Page 26 UFS Proposal for Ashland (616) 393-9722 www.ufsweb.com 1 _ ELECTRIC DEPARTMENT COST OF SERVICE AND RATE STUDY PROPOSED SERVICES If the customer installed a 5kW PV generator producing 700 kWh's (Estimated production from a 5kW PV) the billed energy consumption is reduced to less than 100 kWh's. When the Utility applies its current rates to the remaining usage the revenues recovered from the customer are approximately $23.00, however, the cost to provide electricity to the customer is $45.00. This occurs because residential rate structures do not align with costs. Typical Residential Summer Customer Installation of 5kW PV $50.00 945.00 540.00 - ~35.dD $30.00 $25.00 $20.00 $15.00 - f 910.00 55.00 Costs Revenue For this utility the under-recovery occurs because distribution costs should be recovered through a demand charge and customer charges rather than through the energy (kWh) charge. A variety of difficulties and limitations exist to correct the rate structure, although some can be easily corrected. They include: • Limitation on metering & billing systems • Education of the governing body & customers • Opposition from interveners and special interest groups • Past practices in rate designs • Incorrect price signals sent by certain Joint Action Agencies Phone Page 28 UFS Proposal for Ashland (616) 393-9722 www.ufsweb.com ELECTRIC DEPARTMENT COST OF SERVICE AND RATE STUDY urrg.rinana.,,soi1c PROPOSED SERVICES Table of Distribution Costs Monthly Customer Customer Distribution Billing Class Charge Rate Basis Residential $ 14.89 $ 0.0378 kWh Commercial 26.99 0.0522 kWh Street Lights 3.29 0.1048 kWh Security Lighting 3.29 0.1712 kWh Industrial 131.22 7.97 kW Table of Power Supply Cost by Season Summer Winter Customer Class Demand Energy Demand Energy Residential $ 0.0398 $ 0.0526 $ 0.0263 $ 0.0452 Commercial 0.0572 0.0530 0.0400 0.0454 Street Lights - 0.0529 - 0.0457 Village Service 0.0513 0.0521 0.0394 0.0459 Security Lighting - 0.0529 - 0.0457 Industrial 15.39 0.0515 13.72 0.0444 The cost of service results will be compared with the existing rate schedules and strategies identified to combine any rate classes or develop any new rate classes. 1. Conservation a. Provide an evaluation of potential funding models/methodologies for utility self- funding (non-BPA) energy efficiency programs, conservation projects, and renewable energy projects. UFS has established a number of programs for utilities for the funding of energy efficiency programs, conservations projects and renewable energy projects. Energy efficiency programs are often funded through a surcharge to customers, the surcharge is often a per kWh charge for all customers or through a combination of monthly charge and kWh charges. We will discuss the strengths and weaknesses of each approach with management and develop a funding mechanism based on the philosophy of management and the Board of Directors with the surcharge set to appropriately fund the desired programs. The City of Ashland currently has a number of energy efficiency programs as listed on the next page that will be reviewed with management. The programs will be evaluated against the long run marginal cost (Tier 2) savings as a result of the reduced usage and the corresponding reductions in power supply costs. Phone Page 30 UFS Proposal for Ashland (616) 393-9722 www.ufsweb.com b; 4 ELECTRIC DEPARTMENT COST OF SERVICE AND RATE STUDY PROPOSED SERVICES c. Describe and recommend other industry standard fees, charges, credits or other funding methodologies relating to self-funded energy efficiency programs, renewable energy and other electric conservation projects The City complies with renewable portfolio standard (RPS) for Oregon municipalities' purchasing power from BPA UFS has developed a number of self-funded energy efficiency programs for customer to promote energy conservation. Ashland is one of the most progressive utilities in developing and offering incentive programs to customers to reduce energy consumption and promotion of renewable energy. UFS will initially approach the review and development of additional programs through review of the Tier 2 pricing of BPA and/or the cost for Ashland to develop resources to reduce BPA's tier 2 costs. J. Develop rates for possible future electric consumption. a. Evaluate and make recommendations for an "integrated utility" rate structure b. Describe and recommend solutions for time of use rates c. Evaluate the impact of BPA Tier 2 rates and recommend options, including conservation, to minimize the effect We will project the impact BPA Tier 2 pricing will have on Ashland's electric costs and recommend options related to conservation and pricing methods to minimize the cost impact on Ashland's Electric Department. This evaluation will include a very detailed review of the time of use rates that may be offered by Ashland to reflect the BPA power supply costs. The model that's developed will allow us to fairly accurately identify the cost savings related to conservation efforts. The general work plan we will follow is listed below: For time of use rates to be effective in sending the proper price signal the cost of service analysis is supplemented with marginal costs to identify and recommend appropriate charges on a time of use basis. We will identify on-peak and off-peak time periods for customers and work with management and to develop time-of-use pricing. Revenue stability is of primary concern and we will provide various rate design options that can be considered to help ensure the long term financial stability of the utility while encouraging energy conservation at peak hours. The distribution costs for time of use customers will be provided through the cost of service study. Phone Page 32 UFS Proposal for Ashland (616) 393-9722 www.ufsweb.com -0110- ELECTRIC DEPARTMENT COST OF SERVICE AND RATE STUDY -ilyFineoGalSolutions, LLC PROPOSED SERVICES 4. identify the Distribution and Customer Charge: The cost of service study identifies the distribution and customer charge component of rate and is added to the power supply costs. The table below is an output from the model: Summer Rates Customer Charge On Peak Off Peak Demand Charge Residential 15.98 0.246 0.082 Commercial General 28.97 0.245 0.082 Commercial Demand 126.99 0.222 0.059 7.39 Winter Rates Residential 15.98 0.278 0.088 Commercial General 28.97 0.278 0.087 - Commercial Demand 126.99 0.255 0.064 7.39 Summer On Peak Hours 2:00 PM - 7:00 PM Winter On Peak Hours 6:00 AM - Noon K. Customer Fees a. Review fees charged to customers and recommend changes to the fee schedules for the following charges: Service Connection for Applicant Charges, Penalty, Return Check Charges, New Account Charges, New Service Charges, Temporary Connection Charges, Meter Test Charges, Unauthorized Connection Charges, Reconnection Charges, and any other Industry Standard Charges that the City of Ashland may or may.not be currently charging UFS has excel programs used to develop and update fee schedules are used by utilities around the nation. We have programs established to identify the cost of providing each of the services listed under miscellaneous charges. We will review the cost of providing fees based on hours, equipment rental charges, hourly rates, overhead, administration and margins to help ensure the City of Ashland is recovering the appropriate costs in the fees charged to customers. The current fees identified on the web site are listed below and will be reviewed: o Returned Check Charge o New Account Charge o New Service Charge o Temporary Connection Charge o Meter Test Charge o Unauthorized Connection Charge Phone Page 34 UFS Proposal for Ashland (616) 393-9722 www.ufsweb.com ,,,y ELECTRIC DEPARTMENT COST OF SERVICE AND RATE STUDY ~,.~,~.,n,.,~LLC PROPOSED SERVICES RATE DESIGN Design of electric rates uses input from the cost of service study as guidance on changes to rate classes and the rate components for each rate class. Cost of service results are one factor in design of electric rates for customers. Other factors must be considered such as impact on customers, social and environmental issues and philosophy of the utilities governing body. The rate design process includes discussion with utility staff and input from Council prior to developing a proposed rate structure. This allows the governing body to have input prior to the actual design of rates. The guidance provided by Council includes input on the overall increase in rates and the increases for each class of customers. Based on UFS experience, this critical step in the process allows for a smooth approval of the proposed rates. Summary of overall rate adjustments for each class - Customer Class Class Codes 2075 Revenue less 2075 Revenue with Percent Adjustments Adjustments Increase ResidentiaiRate RES RES $ 43,615,239 $ 45,197,813 3.6% Residential Dual FuelRate RES-DF RES-DF $ 10,081 $ 10,784 7.0% Residential High Efficiency HVACRate RESELGEO RESELGEO $ 128,097 $ 137,070 7.0% Small General ServiceRate GS GS $ 16,519,937 $ 17,219,208 4.2% SGS - High Efficiency HVACRate GS-HEF GS-HEF $ 50,427 $ 52,950 5.0% Medium General ServiceRate MGS MGS $ 30,157,753 $ 31,118,228 3.2% MGS - High Efficiency HVACRate MGS-HEF MGS-HEF $ 171,438 $ 179,115 4.5% MGS -Time-of-UseRate MGS-TOU MGS-TOU $ 1,904,024 $ 1,975,005 3.7% Large General ServiceRate LGS LGS $ 10,669,838 $ 10,771,426 1.0% Large Industrial ServiceRate LIS LIS $ 20,755,543 $ 21,602,500 4.1% Interruptible ServiceRate INTR INTR $ 4,683,595 $ 4,917,673 5.0% Cogen and Small Power ProdRate COGEN COGEN $ 10,183 $ 10,602 4.1% Interdepartmental Rate MUNI MUNI $ 946,527 $ 984,040 4.0% Civil DefenseSirens25 CDs R$ 8,834 9,049 2.4% City Street Lighting27 CSL $ 1,185,625 $ 1,209,774 2.0% Security Lightingvarious SL $ 209,386 $ 212,364 1.4% Traffic Signalsvarious TS $ 105,392 $ 110,373 4.7% Total $ 131,131,917 $ 135,717,975 3.50% The rate design model compares the current rates with proposed changes. The tables on the next page are sample outputs for the residential class. Phone Page 36 UFS Proposal for Ashland (616) 393-9722 www.ufsweb.com «ffi-U,« .1io-,LLC ELECTRIC DEPARTMENT COST OF SERVICE AND RATE STUDY Utility AJfS PROPOSED SERVICES FORMAT OF REPORTS UFS reports are separated into reports listed below: • Executive Summary Report - An overview that identifies the objectives, process and results of the rate study in a clear and concise format, the report includes graphs, charts, tables and recommendations. • Full Report - Includes all the detailed schedules developed to complete the study and includes the executive summary report • Rate Design Recommendation Report for one (1) test year (plus proposed rate projections for the next five years) -The rate design report is a separate module. To ensure efficiency and timeliness of the study the executive summary and the full detail report are provided to management for input into the rate design process. The rate design report includes the following: o Comparison of the current and proposed rates o Expected revenues generated from proposed rates o Impact on customer classes at various usage levels or load factors within each rate class PRESENTATION OF RESULTS A critical aspect of the study is the clear and concise presentation to management and the City Council. UFS professionals are skilled at explaining and working with advisory and governing bodies to ensure decisions are based on information they can understand and apply to the local environment. MEETINGS AND PRESENTATIONS The following meetings are anticipated: 1. Initial meeting - Clarify scope of services, expectations of management (conference call) 2. Fieldwork 3. Review draft reports with management (Conference call) 4. Draft presentation to Management (On-Site) 5. Final presentation to City Council (On-Site) We are available for additional presentations as requested by management at our rates listed in the Project Fees section of this proposal. Phone Page 38 UFS Proposal for Ashland (616) 393-9722 www.ufsweb.com A _ ELECTRIC DEPARTMENT COST OF SERVICE AND RATE STUDY C PROPOSED SERVICES _:1) ~(A TIMELINE Our experience with municipal electric cost of service and rate design studies, allows us to c ct a cost effective and efficient study. The following is the tentative project schedule fortompletion N of the electric cost of service and rate design. This schedule will be finalized dnrng the initial project kick-off meeting with management. The study will be finalized prio fo June 20, 2016. Task Expected Completion -Twelve r Weeks b ' S Initial Meeting - Preparation of Information Request Week One Completion of Information Request by.Client Week Two Planning/Set-up Models Week Three - Five Review and Development of Revenue Requirements Week Six - Seven Fieldwork Week Eight Cost of Service Analysis Component/Functional Costs Week Nine Cost based Rate Design and alternatives Week Ten Report, Recommendations & Presentation of Draft Week Eleven Final Report Week Twelve THE COMPLETION OF THE PROJECT ON THE PROPOSED SCHEDULE IS DEPENDENT ON THE COOPERATION OF VARIOUS DEPARTMENTS WITHIN THE CITY OF ASHLAND TO PREPARE THE INFORMATION REQUEST IN ATIMELY MANNER. Phone Page 40 UFS Proposal for Ashland (616) 393-9722 www,ufsweb.com ELECTRIC DEPARTMENT COST OF SERVICE AND RATE STUDY CONTRACT TERMS AND CONDITIONS STATEMENT OF ELIGIBILITY TO PARTICIPATE UFS is eligible to participate in public procurement activities. Neither UFS nor its' proposed staff have been debarred, suspended, disqualified or otherwise lawfully precluded from participating in any public procurement activity, including being disapproved or disqualified as a subcontractor with any federal, state or local government. There are no such preclusion from participation from any public procurement activity currently pending. Phone Page 42 UFS Proposal for Ashland (616) 393-9722 www.ufsweb.com ELECTRIC DEPARTMENT COST OF SERVICE AND RATE STUDY UtiliroFinondnl5alutinns,LLC REFERENCES Rochester, Minnesota • Client Contact: Bryan Blom, Manager Finance & Accounting • Phone/Email: 507-280-1616 / BBlom@RPU.ORG • Scope of Work: UFS completed a cost of service and rate design study in 2011. This project was completed in 12 months. Project included completion of the following tasks: o Seasonal customer rates o Review and assistance with Street Lighting rates o Development of car charging station rates o Development of time of use rate structures o Long-term financial plan and rate track o Review and recommendations for power cost adjustment o Identification of minimum cash reserves o Rate design for all rate classes o Identification of financial goals and targets o Review of Power Factor Penalty and Ratchet Clause o Presentation to Board of Directors Niobrara Valley Electric Membership Corporation, Nebraska • Client Contact: John Hoke • Phone/Email: 402-340-1233 • Scope of Work: UFS has worked with Niobrara Valley since 2001 and projects included the following tasks: o Conducted electric cost of service and unbundling studies o Customer Rate design o Development of Line extension methodology, (Connection Fees) o Development of interruptible rates for irrigation accounts o Development of net metering rates o Annual presentation on financial health of Utility to Board of Director Phone Page 44 UFS Proposal for Ashland (616) 393-9722 www,ufsweb.com ,-6.,_5~ „~n.=z.C MAD ELECTRIC DEPARTMENT COST OF SERVICE AND RATE STUDY u,....,.FAlf ADDENDA 7. What 15 the "Y's current AnAval budget and furore budget (forfivC y+eorWor energy +ef f icienty, conservarlon projects, and reneuv We a ftrw project.? And are rhrse progrvms attailaWe far ail cus*omer rote cfawes? The current annual budget for conservation projects is approximartely $300,000/year. Same programs afe available fa- multiple mte cusses and Otttars arc available ea specific rate classes- More i-iformation on cityCGriserration pragr r can be found on PINE City's °HebsifQ. S. Do you hove a bvdgrt in mind for rhos 9FF that you are obfe. to shrr,E? This is a duplicate question. Please referta answer for question #I- 9- earn Y:)u expla n why the city didn't twntinoe with the CansuftAt of the 2013 study? The City is required by law to competitively bid these servKes, 10_ Clan you provide a copy of the 2013 Electric Cost of Service Stvdy? 'Rie 2013 rlacuic Cost of Servicc and Ratc Studs was presrntel to the City Courwil e. a study SeSSi.un. on llecembier 16, 2013. The study is available on the, Cirti" s wttKife. htip:r? v.w.ashland.or.us.P~~gc.asp?1 av[17=159►8 Please review, sip, ,end rcture this addendum with the RFF documcnts. I cknarvledge retcipt of ADDFKDUNI fl1. Dxtc: y,/71,?o l s4ved b l / Ptinttad nsmr: RFP Blemic Cost of Savior stud Rate Study, JL,ddendutn # 1, Page 3 of 3 Phone Page 46 UFS Proposal for Ashland (616) 393-9722 www.ufsweb.com w Bookmarks Utility Full Sample Municipal Utilities Utility Short SMU Report Title Electric Cost of Service Study and Financial Projection Report sentence electric cost of service study and financial projection Report Date April 2015 Page Header Electric Draft Report Historic Year 2012, 2013 and 2014, 2015 budget Contact John Doe Title General Manager Address 104 Electric Street City State Zip Utility USA 111 Report Status Executive Report Test Year 2016 Financial FC End 2020 TY Operating Income $1.35M Final Operating $214k Income Test Year Op Inc $2.046M Target Final Year Op Inc $2.66M Target TY Cash $11.5M FC End Cash $5M TY Cash Rec $10M FC End Cash Rec $12.1M Losses 6.2% Revenue $36.3M Requirement This page intentionally left blank r Contents Utility Financial Solutions, LLC TABLE OF CONTENTS 1. Introduction ............................................................................................................................................3 2. Cost of Service Summary ........................................................................................................................4 Utility Rate Process ...................................................................................................................................................4 Utility Revenue Requirements ..................................................................................................................................4 Projected Cash Flow .................................................................................................................................................5 1 Minimum Cash Reserve ............................................................................................................................................6 Debt Coverage Ratio .................................................................................................................................................6 Rate of Return ...........................................................................................................................................................7 Recommended Rate Track ........................................................................................................................................8 Cost of Service Summary Results ..............................................................................................................................8 Cost of Service Results ..............................................................................................................................................9 Distribution Costs .....................................................................................................................................................9 Power Supply Costs .................................................................................................................................................10 Combined Cost Summary ......................................................................................................................................'.11 3. Functionalization of Costs .....................................................................................................................12 ...........................................................................................................................................................12 Transmission ............................................................................................................................................................13 Distribution Distribution Customer Types ..................................................................................................................................13 Customer-Related Services .....................................................................................................................................13 Administrative Services ..........................................................................................................................................14 System Losses .........................................................................................................................................................14 4. Unbundling Process ..............................................................................................................................15 Distribution Breakdown ..........................................................................................................................................15 Customer-Related Cost Breakdown ........................................................................................................................16 Power Supply Cost Breakdown ...............................................................................................................................16 5. Significant Assumptions ........................................................................................................................17 Forecasted Operating Expenses .............................................................................................................................17 Load Data ................................................................................................................................................................17 Annual Projection Assumptions ..............................................................................................................................17 Sample Municipal Utilities Cost of Service & Electric Unbundling Study Page 1 Utility Financial Solutions, LLC 1. Introduction This report was prepared to provide Sample Municipal Utilities (SMU) with an electric cost of service study and financial projection and a comprehensive examination of its existing rate structure by an outside party. The specific purposes of the study are identified below: 1) Determine electric utility's revenue requirements for fiscal year 2016. SMU's revenue requirements were projected for the period from 2016 - 2020 and included adjustments for the following: a. Projected power costs b. Projected changes in staffing levels c. Capital improvement plan projected over next five years - 2) Identify cross-subsidies that may exist between rate classes. Cross-subsidies exist when certain customer classes subsidize the electric costs of other customers. The rate study identifies if cross-subsidies exist and practical ways to reduce the subsidies. The cost of service study was completed using 2016 projected revenues and expenses. The financial projections are for the period from 2016 - 2020. 3) Recommend rate adjustments needed to meet targeted revenue requirements. The primary purpose of this study is to identify appropriate revenue requirements and the rate adjustments needed to meet targeted revenue requirements. The report includes a long-term rate track for SMU to help ensure the financial stability of the utility in future years. 4) Unbundled electric rates. The cost of providing electricity to customers consists of a number of components, including power generation, distribution, customer services, transmission, and payment in lieu of tax to the general fund. Electric unbundling identifies the cost of each component to assists the utility in preparing for electric restructuring and understanding its cost structure. 5) Identify the appropriate monthly customer charge for each customer class. The monthly customer charge consists of fixed costs to service customers that do not vary based on the amount of electricity used. Sample Municipal Utilities Cost of Service & Electric Unbundling Study Page 3 Utility Financial Solutions, LLC Table 1- Financial Statements (without rate adjustments) Description Projected 2016 Projected 2017 Projected 2018 Projected 2019 Projected 2020 Operating Revenues Electric Sales Residential 6,728,886 6,762,530 6,796,343 6,830,325 6,864,476 Commercial 6,248,470 6,279,712 6,311,111 6,342,666 6,374,379 Industrial 22,706,454 22,819,986 22,934,086 23,048,757 23,164,001 Public Street Lighting 174,175 175,046 175,921 176,801 177,685 Interdepartmental - - - - - Other Operating Revenue 250,000 256,250 262,656 269,223 275,953 Miscellaneous Revenues 100,000 102,500 105,063 107,689 110,381 Sales Revenue $ 36,207,984 $ 36,396,024 $ 36,585,179 $ 36,775,460 $ 36,966,875 Power Cost Adjustment Power Cost $ 24,768,204 $ 25,511,250 $ 26,276,587 $ 27,064,885 $ 27,876,832 kWh Purchases 349,466,459 351,213,791 352,969,860 354,734,709 356,508,383 Line Loses 6% 6% 6% 6% 6% Projected kWh Sales 329,026,545 330,671,677.55 332,325,035.94 333,986,661.12 335,656,594.43 Average Power Costs $ 0.0753 $ 0.0771 $ 0.0791 $ 0.0810 $ 0.0831 _ Base Power Costs $ 0.0546 $ 0.0546 $ 0.0546 $ 0.0546 $ 0.0546 PCA $ 0.0207 $ 0.0225 $ 0.0245 $ 0.0264 $ 0.0285 Additional PCA Revenues $ - 645,727 1,320,791 2,018,364 2,739,132 Total Sales Revenues $ 36,207,984 $ 37,041,751 $ 37,905,970 $ 38,793,823 $ 39,706,007 Description Projected 2016 Projected 2017 Projected 2018 Projected 2019 Projected 2020 Operating Expenses Power Supply and Fuel Purchased Power (Cost of Sales and Service) $ 24,768,204 $ 25,511,250 $ 26,276,587 $ 27,064,885 $ 27,876,832 Total Purchases Expense $ 24,768,204 $ 25,511,250 $ 26,276,587 $ 27,064,885 $ 27,876,832 Production Production Expense $ 1,242,467 $ 1,273,529 $ 1,305,367 $ 1,338,001 $ 1,371,451 Total Production Expense $ 1,242,467 $ 1,273,529 $ 1,305,367 $ 1,338,001 $ 1,371,451 Total Power Supply Expense $ 26,010,671 $ 26,784,779 $ 27,581,954 $ 28,402,886 $ 29,248,283 Distribution Total Distribution 0&M 1,863,604 1,910,194 1,957,949 2,006,897 2,057,070 Total Distribution Expense $ 1,863,604 $ 1,910,194 $ 1,957,949 $ 2,006,897 $ 2,057,070 Other Operating Expenses (Revenues) Customer/Sales Expense $ 466,692 $ 478,360 $ 490,319 $ 502,577 $ 515,141 Administrative and General Expense 2,077,132 2,129,060 2,182,287 2,236,844 2,292,765 Depreciation Expense 2,536,226 2,612,618 2,765,038 2,920,163 3,083,310 Payment in Lieu of Taxes 1,674,142 1,810,399 1,852,088 1,895,299 1,939,691 Total Other Operating Expenses $ 6,754,192 $ 7,030,437 $ 7,289,731 $ 7,554,882 $ 7,830,908 Total Operating Expenses $ 34,628,467 $ 35,725,409 $ 36,829,634 $ 37,964,666 $ 39,136,260 Projected Cash Flow Table 2 is the projected cash flow for 2016-2020, including projections of capital improvements as provided by the SMU. Changes in the capital improvement plan can greatly affect the cash balance and recommended minimum cash reserve target. The cash balance for 2016 is projected at $11.5M and $5M in 2020. The recommended minimum cash reserve level for 2016 is $10M and $12.1M for 2020. Sample Municipal Utilities Cost of Service & Electric Unbundling Study Page 5 Utility Financial Solutions, LLC • Helps to ensure adequate funds are available to meet debt service payments in years when sales are low due to temperature fluctuations. • Obtain higher bond rating, if revenue bonds are sold in the future, to lower interest cost. Table 4 - Projected Debt Coverage Ratios (without rate adjustments) Description Projected Z016 Projected 2011 Projected 2018 Projected 2019 Projected 2020 Debt Coverage Ratio Net Income $ 1,183,033 $ 735,693 $ 513,144 $ 278,099 $ 30,505 Add Depreciation/Amortization Expense 2,536,226 2,612,618 2,765,038 2,920,163 3,083,310 Add Interest Expense 546,293 639,653 616,615 598,865 580,190 Cash Avai labl e for Debt Servi ce $ 4,265,552 $ 3,987,964 $ 3,894,797 $ 3,797,127 $ 3,694,006 Debt Principal and Interest $ 1,161,293 $ 1,284,653 $ 1,216,615 $ 1,213,865 $ 1,210,190 Projected Debt Coverage Ratio Covenants 3.67 3.10 3.20 3.13 3.05 Minimum Debt Coverage Ratio 1.4 1.4 1.4 1.4 1.4 Debt coverage is adequate for the projection period without changes in rates. Rate of Return The optimal target for setting rates is the establishment of a target operating income to help ensure the following: A. Funding of interest expense on the outstanding principal on debt. Interest expense is below the operating income line and needs to be recouped through the operating income balance. B. Funding of the inflationary increase on the assets invested in the system. The inflation on the replacement of assets*invested in the utility should be recouped through the Operating Income C. Funding of depreciation expense D. Adequate rate of return on investment to help ensure current customers are paying their fair share of the use of the infrastructure and not deferring the charge to future generations. As improvements are made to the system, the optimal operating income target will increase unless annual depreciation expense is greater than yearly capital improvements. The revenue requirements for the study are set on the utility basis. Charging the rates in the cost of service study would produce the target operating income identified in Table 5. The utility basis target established for 2016 is $2.046M and increases to $2.66M in 2020. Sample Municipal Utilities Cost of Service & Electric Unbundling Study Page 7 ,1 Utility Financial Solutions, LLC Table 7 - Cost of Service Summary Projected Revenues Customer Class Cost of Service (with PCA) % Change Residential (110R) 6,050,306 5,872,688 3% Residential Heat (501RH) 810,536 780,555 4% Small General Service (130SGS) 3,538,753 3,433,778 3% Security Lighting (Sec L) 71,055 75,643 -6% Public Lighting (SL) 419,861 174,175 141% Small General Service (Demand) (140SGS) 2,570,532 2,814,691 -9% Large General Service (150LGS) 8,052,920 8,082,321 0% Large General Service Int (151LGS) 749,126 724,049 3% Large General Service TOU (160LGST) 5,201,629 5,355,727 -3% Large General Service Data (163LGSD) 2,933,472 2,911,191 1% La rge General Service>5MW (165LGS) 5,927,240 5,633,165 5% Total 36,325,430 35,857,984 Cost of Service Resuits Table 8 shows the average cost of service per kWh and compares the cost to the-average revenue per kWh for each customer class. Table 8 - Average Cost per kWh vs. Average Revenue per kWh Projected Cost of Service Revenues Customer Class $/kWh $/kWh Residential (1108) 0.1401 0.1360 Residential Heat(501RH) 0.1277 0.1230 Small General Service (130SGS) 0.1545 0.1499 Security Lighting (Sec L) 0.1054 0.1122 Public Lighting (SL) 0.2547 0.1057 Small General Service (Demand) (140SGS) 0.1131 0.1238 Large General Service (150LGS) 0.1028 0.1031 La rge Genera I Servi ce I nt (151LGS) 0.1053 0.1018 La rge General Service TOU (160LGST) 0.0979 0.1008 Large General Service Data (163LGSD) 0.0940 0.0932 La rge General Service>5MW (165LGS) 0.0961 0.0913 Cost differences result from usage patterns of customers and how efficiently each class of customer use facilities based on load data provided by SMU. Distribution Costs Separation of distribution cost helps identify distribution charges for each customer class and the fixed monthly customer charge. Distribution rates include separation of the following costs: • Operation and maintenance of distribution & transmission system Sample Municipal Utilities Cost of Service & Electric Unbundling Study Page 9 (~f Utility Financial Solutions, LLC Table 10 - Power Supply Costs by Customer Class Current Rates customer class Demand Billing Basis Energy Billing Basis Residential (110R) $ 0.0181 kWh $ 0.0644 kWh Residential Heat(501RH) $ 0.0140 kWh $ 0.0667 kWh Sma I I Genera I Servi ce (130SGS) $ 0.0262 kWh $ 0.0643 kWh Security Lighting (Sec L) $ - kWh $ 0.0642 kWh Public Lighting (SL) $ - kWh $ 0.0642 kWh Small General Service (Demand) (140SGS) $ 7.02 KW $ 0.0641 kWh Large General Service (150LGS) $ 7.73 KW $ 0.0641 kWh Large General Service lnt (151LGS) $ 7.68 KW $ 0.0641 kWh Large General Service TOU (160LGST) $ 8.25 KW $ 0.0638 kWh Large General Service Data (163LGSD) $ 8.26 KW $ 0.0643 kWh La rge Genera I Servi ce >5 MW (165 LGS) $ 9.18 KW $ 0.0619 kWh Combined Cost Summary Table 11 identifies the cost of service rates for each customer class. Charging these rates would directly match the cost of providing service to customers identified in this study. Table 11- Total Costs by Customer Class Annual Current COS Customer Customer Customer Class Charge Charge Demand Energy Residential (110R) $ 7.50 $ 14.10 $ - $ 0.1194 Residential Heat (501RH) 7.50 14.10 - 0.1108 Small General Service (130 17.50 42.31 - 0.1336 Security Lighting (Sec L) - 0.98 - 0.0991 Public Lighting (SL) - 0.98 - 0.2544 Small General Service (Den 100.00 92.47 14.37 0.0699 i Large General Service (150 150.00 141.02 15.88 0.0689 Large General Service Int (J 225.00 195.91 15.29 0.0688 Large General Service TOU 260.00 242.75 16.41 0.0685 Large General Service Data 260.00 242.75 15.48 0.0686 Large General Service >5M' 250.00 211.75 17.20 0.0661 Sample Municipal Utilities Cost of Service & Electric Unbundling Study Page 11 o a r Utility Financial Solutions, LLC Operating Reserves Spinning Operating Reserves Supplemental Reactive Power Supply Power losses from use of transmission system Distribution The distribution facilities connect the customer with the transmission grid to provide the customer with access to the electrical power that has been generated and transmitted. The distribution plant includes substations, primary and secondary conductors, poles, and line transformers that are jointly used and in the public right-of-way. Substations typically separate the distribution plant from the transmission system. The substation power transformer "steps down" the voltage to a level that is more practical to install on and under city streets. Distribution circuits are divided into primary and secondary voltages with the primary voltages usually ranging between 35 kV and 4 kV and the secondary below 4 W. Distribution Customer Types Sub-transmission customers are served directly from the substation feeder and bypass both the secondary and primary distribution lines. The charges for this type of customer should reflect the cost of the substation and not include the cost of primary or secondary line charges. Primary customers are typically referred to as customers who have purchased, owned, and maintained their own transformers that convert the voltage to the secondary voltage level. The rates for these customers should reflect the cost of substations and the cost of primary distribution lines and not include the cost of secondary line extensions. Secondary customers have the services provided by the utilities directly into their facilities. The utility provides the customer with the transformer and the connection on the customers' facilities. Customer-Related Services Certain administrative-type services are necessary to ensure customers are provided service connections and disconnections in a timely manner and the facilities are in place to read meters and bill for customer usages. These services typically consist of the following components: • Customer Services - The cost of providing personnel to assist customers with questions and dispatch personnel to connect and disconnect meters. • Billing and Collections -The cost of billing and collections personnel, postage, and supplies. • Meter Reading -The cost of reading customers' meters. • Meter Operation and Maintenance -The cost of installing and maintaining customer meters. Sample Municipal Utilities Cost of Service & Electric Unbundling Study Page 13 f Utility Financial Solutions, LLC 4. Unbundling Process The cost of power supply, distribution, and customer services are identified as part of the unbundling process and are the first step in determining unbundled charges to customers. The total revenue requirements of $36.3M are separated into three categories identified in Table 12. Table 12 - Breakdown of SMU Cost Structure Expense Type Amount Percentage Power Supply $ 26,448,119 72.8% Distribution 6,862,192 18.9% Customer 1,674,142 4.6/ Contribution 1,340,977 3.7% Total $ 36,325,430 1007/ SMU is projected to expend 72.8% of its total costs toward power supply. Distribution/transmission- related costs are 18.9%; customer service 4.6% and 3.7% contribution to the city. These components are broken down into each of the subcomponents and are identified in the following sections. Distribution Breakdown Distribution rates consist of a number of different components. Total distribution-related costs of $6.8M for 2016 are broken down into the main components including substations, transformers, transmission, and distribution lines. Figure 1 shows the breakdown of distribution components identified in the study. Figure 1- Breakdown of Distribution Costs Breakdown of Distribution Costs w r i f I Transformer',~f 6%~. Transmission 10% Each of these components is allocated to customer groups based on certain factors established in the study. These factors are based on the efficiency of each customer class and the time of day or the season the electricity is used. Other factors are also considered, such as the length of line extensions to reach certain customer classes. Sample Municipal Utilities Cost of Service & Electric Unbundling Study Page 15 Utility Financial Solutions, LLC 5. Significant Assumptions This section outlines the procedures used to develop the cost of service and unbundling study for SMU and the related significant assumptions. Forecasted Operating Expenses Forecasted expenses were based on 2012, 2013 and 2014, 2015 budget adjusted for power supply costs and inflation. The table below is a summary of the expenses used in the analysis; the projected operating expenses include an adjustment for any city contributions. Table 13 - Projected Operating Expenses for 2016- 2020 Description Projected 2016 Projected 2017 Projected 2018 Projected 2019 Projected 2020 Operating Expenses Power Supply and Fuel Purchased Power (Cost of Sales and Service) $ 24,768,204 $ 25,511,250 $ 26,276,587 $ 27,064 885 $ 27,876,832 Total Purchases Expense $ 24,768,204 $ 25,511,250 $ 26,276,587 $ 27,064,885 $ 27,876,832 Production Production Expense $ 1,242,467 $ 1,273,529 $ 1,305,367 $ 1,338,001 $ 1,371,451 Total Production Expense $ 1,242,467 $ 1,273,529 $ 1,305,367 $ 1,338,001 $ 1,371,451 Total Power Supply Expense $ 26,010,671 $ 26;784,779 $ 27,581,954 $ 28,402,886 $ 29,248,283 Distri bution Total Distribution 0&M 1,863,604 1,910,194 1,957,949 2,006,897 2,057,070 Total Distribution Expense $ 1,863,604 $ 1,910,194 $ 1,957,949 $ 2,006,897 $ 2,057,070 Other Operating Expenses (Revenues) Customer/Sales Expense $ 466,692 $ 478,360 $ 490,319 $ 502,577 $ 515,141 Administrative and General Expense 2,077,132 2,129,060 2,182,287 2,236,844 2,292,765 Depreciation Expense 2,536,226 2,612,618 2,765,038 2,920,163 3,083,310 Payment in Lieu of Taxes 1,674,142 1,846,257 1,906,504 1,968,642 2,032,338 Total Other Operating Expenses $ 6,754,192 $ 7,066,295 $ 7,344,147 $ 7,628,226 $ 7,923,555 Total Operating Expenses $ 34,628,467 $ 35,761,267 $ 36,884,050 $ 38,038,010 $ 39,228,907 Power supply costs from 2016 - 2020 are based on SMU's current charges adjusted for system growth factors and inflation. Load Data Load data is one of the most critical components of a cost of service study. Information from the billing statistics were used to determine the usage patterns of each customer class after reconciling revenues with financial statements to ensure a good basis for development of the study. Annual Projection Assumptions The kWh sales forecast is based on FY 2014 actual. Table 14 details growth, inflation of expenses, changes in purchase power costs and interest earned on investments. Sample Municipal Utilities Cost of Service & Electric Unbundling Study Page 17 Utility Financial Solutions, LLC 6. Recommendations and Additional Information We recommend that the utility move toward cost of service for each customer class. The study indicates rate adjustments are needed to meet debt coverage, minimum cash and operating income targets. To ensure the utility meets financial targets and remains financially stable, the rate track identified in may be considered: Table 15 - Recommended Rate Adjustments 2016- 2020 Projected Capital Adjusted Target Fiscal Rate Improvements Projected Projected Operating Operating Projected Cash Recommended Year Adjustments Plan Expenses Revenues Income Income Balances Minimum Cash 2016 2.0% $ 3,755,370 $ 34,628,467 $ 36,925,144 $ 2,296,677 $ 2,046,963 $ 12,517,959 $ 9,969,462 2017 1.0% 3,819,593 35,761,267 38,130,077 2,368,810 2,281,891 12,457,730 10,211,614 2018 1.0% 3,801,412 36,884,050 39,372,850 2,488,800 2,403,427 12,755,830 10,505,122 2019 1.0% 3,954,875 38,038,010 40,646,765 2,608,755 2,533,387 13,179,788 10,829,584 2020 1.0% 4,202,476 39,228,907 41,952,641 2,723,734 2,666,925 13,640,065 12,140,479 The cost of service study identified some customer classes are subsidizing other customer classes. SMU should consider movements toward cost of service using a bandwidth of plus or minus 1%. Using the 1% rate adjustment, this would result in no customer class given a rate increase greater than 3% and the lowest increase would be 1%. Table 16 identifies the cost of service charges compared with the projected current revenues for each class. Classes that indicate a lower % change than the total percentage change are providing subsidy to other customer classes, conversely customer classes with a higher % change than the total percentage are receiving subsidy. Table 16 - Cost of Service Summary Results Projected Revenues Customer Class Cost of Service (with PCA) % Change Residential (110R) 6,050,306 5,872,688 3% Residential Heat(501RH) 810,536 780,555 4% SmaI I General Service (130SGS) 3,538,753 3,433,778 3% Security Lighting (Sec L) 71,055 75,643 -6% Public Lighting (SL) 419,861 174,175 141% Small General Service (Demand) (140SGS) 2,570,532 2,814,691 -9% Large General Service (150LGS) 8,052,920 8,082,321 0% Large General Service Int (151LGS) 749,126 724,049 3% Large General Service TOU (160LGST) 5,201,629 5,355,727 -3% Large General Service Data (163LGSD) 2,933,472 2,911,191 1% Large General Service>5MW (165LGS) 5,927,240 5,633,165 5% Total 36,325,430 35,857,984 1.3% g~ SMU may consider movements in the customer charges to move toward cost of service based customer charges to help ensure fixed distribution charges are collected in the customer charge. Table 17 compares Sample Municipal Utilities Cost of Service & Electric Unbundling Study Page 19 f Utility Financial Solutions 185 Sun Meadow Ct. Holland, MI 49424 Phone: 616-393-9722 Fax: 616-393-9721 I Accountant's Compilation Report Governing Body Sample Municipal Utilities The accompanying forecasted statements of revenues and expenses of the Sample Municipal Utilities (utility) were compiled for the year ending April 30th, 2016 in accordance with guidelines established by the American Institute of Certified Public Accountants. The purpose of this report is to assist management in forecasting revenue requirements and determining the cost to service each customer class. This report should not be used for any other purpose. A compilation is limited to presenting, in the form of a forecast; information represented by management and does not include evaluation of support for any assumptions used in projecting revenue requirements. We have not audited the forecast and, accordingly, do not express an opinion or any other form of assurance on the statements or assumptions accompanying this report. Differences between forecasted and actual results will occur since some assumptions may not materialize and events and circumstances may occur that were not anticipated. Some of these variations may be material. Utility Financial Solutions has no responsibility to update this report after the date of this report. This report is intended for information and use by the governing body and management for the purposes stated above. This report is not intended to be used by anyone except the specified parties. UTILITY FINANCIAL SOLUTIONS Mark Beauchamp, CPA, CMA, MBA Holland, MI April 2015 ALP 411 ELECTRIC DEPARTMENT COST OF SERVICE AND RATE STUDY Solwi -'U.C APPENDIX -STUDY EXAMPLE Appendix B - Historical Load Data This Appendix is based on the data derived from Appendix A and functionalizes data into time period for cost allocations. ELECTRIC DEPARTMENT COST OF SERVICE AND RATE STUDY ~Utili'yw I..H°-,LLC APPENDIX -STUDY EXAMPLE Appendix D - Cost of Service Allocators This Appendix details the allocators derived from the load data within the study and the determinant on which the allocators are based. a M ELECTRIC DEPARTMENT COST OF SERVICE AND RATE STUDY APPENDIX -STUDY EXAMPLE Appendix F - Cost of Service Plant Allocations This Appendix details the allocation of forecasted test year plant to the customer classes based on the allocators derived in Appendix D. i M FWD'. rin.,ncnSnuuan+, 4i.c ELECTRIC DEPARTMENT COST OF SERVICE AND RATE STUDY APPENDIX -STUDY EXAMPLE Appendix H - Rate Design This Appendix details the rates for the test year for major customer classes (incomplete until after draft finalized and rate discussions with utility). ® ! '1 3 ELECTRIC DEPARTMENT COST OF SERVICE AND RATE STUDY APPENDIX - STUDY EXAMPLE Utility Cash Reserve Policy for Sample Municipal Utilities Purpose To help ensure financial stability, timely completion of capital improvements and enable the utility to meet requirements for large unexpected expenditures, a minimum cash reserve policy should be established. Minimum cash reserves attempts to quantify the minimum amount of cash the utility should keep in reserve. Actual cash reserves may vary substantially above the minimum and is dependent on the life cycle of assets, future capital plan, rate setting polices, and debt policies. Methodolozy The methodology outlined in this ordinance is based on certain assumptions related to percent of: 1. Operation and maintenance 2. Purchase/production electric costs 3. Historical investment in assets 4. Debt service 5. Five-year capital plan After the reserve minimum is determined, management should consider the minimum "in total" and not each individual category. For example; catastrophic events can occur and the amount may far exceed the amount set aside under "Historical investment in assets". Calculation and Risk Factors Used • The cash reserve policy will include XX% of annual operating expenses excluding depreciation expense and purchased/production electric expenditures. o XX% was derived by assuming a 45 da), lag between billing and payment receipt from customers. (45, dais/365 days). • The cash reserve policy will include the max month or XX% Power Supply costs. o XX% was derived by dividing the max month power costs by the total budgeted power supply. (RgAace the foot swing (:aWe with aetkud Oiearot) M anth ly Cast July 1,036,600 August 1,029,499 September 909,077 October 872,821 November 924,159 December 1,202,442 r---------------------------- _ _ _ uanuary 1,302,327 - Fe brua ry 1,131,752 March 1,078,727 April 1,017,599 May 1,002,997 June 1,118,811 Total $ 12,526,810 o Percentage of total 10.4 • The cash reserve policy will include XX% of the historical investment in assets as recorded in the financial statements. ti o The typical range for set aside under this category is 1.0 - 3.0%. The following table will be used to determine the risk factor as assets are added and depreciated: F 'ELECTRIC DEPARTMENT COST OF SERVICE AND RATE STUDY .C APPENDIX - STUDY EXAMPLE Percent Recommended MINIMUM Reserves Allocated Projected 2013 Operation & Maintenance Less Depreciation Expense & PP 8.2% $ 655,287 Purchase Power 10.4% 1,302,327 Historical Rate Base 1,0% 323,382 Current Portion of Debt Service 31.7% 509,682 Five Year Capital Plan - Net of bond proceeds 20.0% 600,000 lRecommended MINIMUM Reserves - $ 3,390,677 j Action/Restoration If certain events occur that results in cash reserves falling below the minimum cash reserve levels, the Board of Directors should take action to restore cash reserves to the minimum levels over the subsequent three years. These actions may include a number of options: - l. Rate Adjustments 2. Cost reductions 3. Issuance of bonds to fund capital improvement programs (The utility should strive to fund normal capital improvements through electric rates and cash generation) 4. Modification of the assumptions used to determine the cash reserve levels The methodology outlined in this policy should be used to update the minimum cash calculation part of the annual budget process. From. Chris L~un+d~ Fax. (888) 487-7731 To: +15415522436 Fax: +15415522436 Page 2 of 2 00612016 7:26 AM r 1 a DATE (MMIDDIYYYY) ACORN CERTIFICATE OF LIABILITY INSURANCE 6/16/2016 THHIIS~ CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the poiicy(ies) must be endorsed. If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s). PRODUCER CONTACT Theresa Falzetti NAME: Professional Concepts Insurance Agency, Inc. PHONE Ext: (800)969-4041 AIC No (800)969-4081 @ ciaonline.com 1127 South Old US Highway 23 ADDRES-MAILS: certs p INSURE I AFFORDING COVERAGE NAIC t Brighton MI 48114-9861 INSURER A Hartf ord Casualty Insurance Co 29424 INSURED INSURERB Hartford Insurance Co. 00914 Utility Financial Solutions, LLC INSURERC:CAMICO Mutual Insurance Co. 36340 185 Sun Meadow Court INSURER D : rIN NSURER E : Holland MI 49424 S URERF COVERAGES CERTIFICATE NUMBER:16-17 ALL REVISION NUMBER: THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. POLICY EFF POLICY EXP ADIDL- ILTR TYPE OF INSURANCE INSD WVD POLICY NUMBER MMIDD/YYYY MMIDDIYYYY LIMITS X COMMERCIAL GENERAL LIABILITY EACH OCCURRENCE $ 1,000,000 DAMAGE 10 EENTED $ 300,000 A CLAIMSMADE Eil OCCUR PREMISES Ea occurrence 35SBAPC4558 4/30/2016 4/30/2017 MED E'.P (Any one person) $ 10,000 PERSONAL & ADV INJURY $ 1,000,000 GEl AGGREGATE I APPLIES PER GENERAL AGGREGATE $ 2, 000, 000 PRO- POLIO El JECT LOC PRODUCTS - COMPIOPAGG $ 2,000,000 X Non-owned $ 1,000,000 OTHER 5 $ AUTOMOBILE LIABILITY Ea accident ANY AUTO BODILY INJURY (Pe, person) $ A ALL OWNED SCHEDULED AUTOS AUTOS 35SBAPC9558 4/3012016 4130/2017 BODILY INJURY (Pe, accident) $ NON-OWNED PROPERTY DAMAGE $ X HIRED AUTOS X AUTOS Per accident Hired-Non Owned $ 1,000,000 X UMBRELLA LIAB OCCUR EACH OCCURRENCE $ 1,000,000 A CLAIMS-M1ADE 'I AGGREGATE $ 1,000,000 EXCESS LIAB DED X RETENTION$ 10,000 35SBAPC4558 4/30/2016 4/30/2017 $ WORKERS COMPENSATION X H AND EMPLOYERS' LIABILITY YIN STATUTE ER j ANY PROPRIETORlPARTNERlEA':ECUTNE E L EACH ACCIDENT $ 1,000,000 NIA B (Mandatory In NH) EXCLUDED? 3SWECBY2823 4/30/2016 4/30/2017 E L DISEASE - EA EMPLOYEE $ 1,000,000 (Mandatory in NH) If yes, describe under DESCRIPTION OF OPERATIONS below E L DISEASE - P,--,L CY LiNlIT $ 1,000,000 C Professional Liability MIL01056-14 2/1/2016 2/1/2017 Per Claim $2,000,000 Aggregate $2,000,000 i DESCRIPTION OF OPERATIONS I LOCATIONS I VEHICLES (ACORD 101, Additional Remarks Schedule, maybe attached if more space is required) Project: Financial Consulting Services CERTIFICATE HOLDER CANCELLATION SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE City of Ashland THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS. Kariann Olson 90 N. Mountain Ave. Ashland, OR 97520 AUTHORIZED REPRESENTATIVE Mire Cosgrove/SHANNO CJ ©1988-2014 ACORD CORPORATION. All rights reserved. ACORD 25 (2014101) The ACORD name and logo are registered marks of ACORD INSIo?5 r?ntani) AC40 " CERTIFICATE OF LIABILITY INSURANCE DATE(MM/DD/YYYY) `L4~ 6/16/2016 THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must be endorsed. If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s). PRODUCER CONTACT Theresa Falzetti NAME: Professional Concepts Insurance Agency, Inc. PHON Qom. (800) 969-4041 AFAX /C No: (800)969-4081 1127 South Old US Highway 23 E-MAIL ADDRESS: certs@pciaonline.com INSURER(S) AFFORDING COVERAGE NAIC # Brighton MI 48114-9861 INSURERA Hartford Casualty Insurance Co 29424 INSURED INSURER B :Hartford Insurance Co. __00914 Utility Financial Solutions, LLC INSURERC:CAMICO Mutual Insurance Co. 36340 185 Sun Meadow Court INSURER D : INSURER E : Holland MI 49424 INSURER F COVERAGES CERTIFICATE NUMBER:16-17 ALL REVISION NUMBER: THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. INSR _AD -DL SUBR POLICY EFF POLICY EXP LIMITS LTR TYPE OF INSURANCE POLICY NUMBER MM/DD/YYYY MM/DD/YYYY X COMMERCIAL GENERAL LIABILITY EACH OCCURRENCE $ 1,000,000 DAMAGE TO RENTED $ 300,000 A CLAIMS-MADE [:x] OCCUR PREMISES Ea occurrence 35SBAPC4558 4/30/2016 4/30/2017 MED EXP (Any one person) $ 10,000 1,000,000 PERSONAL & ADV INJURY $ i GEN'L AGGREGATE LIMIT APPLIES PER: GENERAL AGGREGATE $ 2,000,000 - X POLICY E JECT PRO ~ LOC PRODUCTS - COMP/OP AGG $ 2,000,000 Non-owned $ 1,000,000 OTHER: COMBINED SINGLE LIMIT $ AUTOMOBILE LIABILITY Ea accident BODILY INJURY (Per person) $ ANY AUTO A ALL OWNED SCHEDULED 35SBAPC4558 4/30/2016 4/30/2017 BODILY INJURY (Per accident) $ AUTOS PROPERTY DAMAGE NON- I X HI,REOD AUTOS X AUUTOS NED Per accident $ Hired-Non Owned $ 1,000,000 X UMBRELLA LIAB OCCUR EACH OCCURRENCE $ 1,000,000 A EXCESS LIAB CLAIMS-MADE AGGREGATE $ 1,000,000 FD-ED X RETENTION 10,000 35SBAPC4558 4/30/2016 4/30/2017 $ WORKERS COMPENSATION X PER OTH- STATUTE ER AND EMPLOYERS' LIABILITY Y / N ANY PROPRIETOR/PARTNER/EXECUTIVE E.L. EACH ACCIDENT $ 1 000 , 000 OFFICER/MEMBER EXCLUDED? ❑ N/A B (Mandatory in NH) i35WECBY2823 4/30/2016 4/30/2017 E.L. DISEASE - EA EMPLOYE $ 1,000,000 If yes, describe under DESCRIPTION OF OPERATIONS below E.L. DISEASE -POLICY LIMIT $ 1,000,000 C Professional Liability MIL01056-14 2/1/2016 2/1/2017 Per Claim $2,000,000 Aggregate $2,000,000 DESCRIPTION OF OPERATIONS / LOCATIONS / VEHICLES (ACORD 101, Additional Remarks Schedule, may be attached if more space is required) Project: Financial Consulting Services CERTIFICATE HOLDER CANCELLATION SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE City of Ashland THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS. Kariann Olson 90 N. Mountain Ave. Ashland, OR 97520 AUTHORIZED REPRESENTATIVE Mike Cosgrove/SHANNO ©1988-2014 ACORD CORPORATION. All rights reserved. ACORD 25 (2014/01) The ACORD name and logo are registered marks of ACORD INS025 on14m y Page 1 / 1 CITY OF ASH L A N D DATE PO NUMBER AN ~1 6/23/2016 13593 FA 20 E MAIN ST. ASHLAND, OR 97520 -PA (541) 488-5300 VENDOR: 017794 SHIP TO: Ashland Electric Department UTILITY FINANCIAL SOLUTIONS (541) 488-5354 185 SUN MEADOW CT 90 N MOUNTAIN HOLLAND, MI 49424 ASHLAND, OR 97520 FOB Point: Ashland, Oreqon Req. No.: Terms: Net Dept.: Req. Del. Date: Contact: Thomas. McBartlett Special Inst: Confirming? No Quantity Unit Description Unit Price Ext. Price Electric Cost of Service and Rate Study 44,265.00 - Per consultant's proposal and scope of work City included in RFP Contract for Electric Cost of Service and Rate Study Beqinninq date: 05/15/2016 Completion date: 12/30/2016 SUBTOTAL 44 265.00 BILL TO: Account Payable TAX 0.00 20 EAST MAIN ST FREIGHT 0.00 541-552-2010 TOTAL 44,265.00 ASHLAND, OR 97520 Account Number Project Number Amount Account Number Project Number Amount E 690.11.18.00.60410 E 000509.999 44 265.00 VENDOR COPY Aut orized Signature FORM #3 - CITY OF ASHLAND REQUISITION Date of request: 05/04/16 Required date for delivery: 05/10/16 Vendor Name I I ility FFinanrial Soli itinos LLB' Address, City, State, Zip 1 Sri Sun MParinw Gt Halland. MI 49424 Contact Name & Telephone Number Q S Fax Number 616-393-9722 a~ SOURCING METHOD ❑ Exempt from Competitive Bidding ❑ Emergency ❑ Reason for exemption: ❑ Invitation to Bid (Copies on file) ❑ Form #13, Written findings and Authorization ❑ AMC 2.50 Date approved by Council: ❑ Written quote or proposal attached ❑ Written quote or proposal attached Attach co of council communication If council approval required, attach co of CC ❑ Small Procurement Cooperative Procurement Less than $5,000 ® Request for Proposal (Copies on file) ❑ State of Oregon ❑ Direct Award Date approved by Council: Contract # ❑ Verbal/Written quote(s) or proposal(s) -(Attach copy of council communication) ❑ State of Washington Intermediate Procurement ❑ Sole Source Contract # GOODS & SERVICES ❑ Applicable Form (#5,6, 7 or 8) ❑ Other government agency contract $5,000 to $100,000 ❑ Written quote or proposal attached Agency ❑ (3) Written quotes and solicitation attached ❑ Form #4, Personal Services $5K to $75K Contract # PERSONAL SERVICES ❑ Special Procurement Intergovernmental Agreement $5,000 to $75,000 ❑ Form #9, Request for Approval ❑ Agency ❑ Less than $35,000, by direct appointment ❑ Written quote or proposal attached Date original contract approved by Council: ❑ (3) Written proposals/written solicitation Date approved by Council: (Date) ® Form #4, Personal Services $5K to $75K Valid until: Date - (Attach copy of council communication) Description of SERVICES Total Cost Perform cost of service and rate stud $ 44,265 Item # Quantity Unit Description of MATERIALS Unit Price Total Cost TOTAL COST ® Per attached quotelproposal $ 44,265 Project Number 000509.999 Account Number 690.1118.00.604100 Account Number Account Number___-__ *Expenditure must be charged to the appropriate account numbers for the financials to accurately reflect the actual expenditures. IT Director in collaboration with department to approve all hardware and software purchases: IT Director Date Support -Yes /No By signing this requisition form, I certify that the City's public contracting requirements have been satisfied. Employee: Department Head: g1_- (Equal to or greater than $5,000) Department Manager/Supervisor, Fgb~~~ty Administrator: iP~k 14 1 e- (Equal to greater than $25,000) f Funds appropriated for current fiscal year. YES, / NO ~ - 0-/Z- 3 Finance Director- (Equa o or greater than $5, 000) Date Comments: Form #3 - Requisition < CITY OF ^ASHLAND FORM #4 DETERMINATIONS TO PROCURE PERSONAL SERVICES $5,000 to $75,000 To: Dave Kanner, Public Contracting Officer From: Mark Holden, electric Date: 05/04/16 Re: DETERMINATIONS TO PROCURE PERSONAL SERVICES In accordance with AMC 2.50.120(A), for personal services contracts greater than $5,000, but less than $75,000, the Department Head shall make findings that City personnel are not available to perform the services, and that the City does not have the personnel or resources to perform the services required under the proposed contract. However, the City Attorney, the Public Contracting Officer, or Local Contract Review Board, can require a formal solicitation for bids to ensure that the purposes of this chapter are upheld. Background The electric department intends to award a contract to Utility Financial Solutions to perform an electric cost of service and rate study. The intent of the study is to determine revenue requirements over the next five years and make recommendations for rate adjustments to meet the requirements. The study will also ensure that costs are allocated equitably across the different rate classes. The electric department had initially budgeted $42,500 for this study. The proposal from Utility Financial Solutions is $44,265. This difference can be absorbed within the department's distribution budget. This study is anticipated to take 12 to 16 weeks to complete. Upon completion the department intends to schedule an appropriate time to present the study findings to City Council for their recommendations on implementation. Pursuant to AMC 2.50.120(A), has a reasonable inquiry been conducted as to the availability of City personnel to perform the services, and that the City does not have the personnel and resources to perform the services required under the proposed contract? Due to the very specific focus of this project it has been determined that the City does not have the personnel on staff with the necessary expertise for this study. Form #4 - Department Head Determinations to Procure Personal Services, Page 1 of 1, 5/412016