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HomeMy WebLinkAbout2025-129 AGRMT Utility Financial Solutions, LLC IT r Personal Services Agreement ASHLAND City Information Consultant Information City of Ashland Firm Name: Utility Financial Solutions, LLC Attn: Thomas McBartlett Contact: Dawn Lund 90 N. Mountain Ave. Address: 185 Sun Meadow Court Ashland, Oregon 97520 Holland, MI 49424 Phone:(541) 552-2314 Phone: (231)218-9664 Email: thomas.mcbartlett@ashland.or.us Email: dlund@ufsWeb.com Contract Summary Procurement Method: Direct Appointment Completion Date: 06/30/2025 Contract Amount: $ 37,900.00 thirty seven thousand, nine hundred dollars Description of Services: Electric Cost Of Service 3-Year Rate Design Supporting Documents: UFS Proposal Dated: 1/30/25 Dated: Dated: Dated: This Personal Services Agreement(hereinafter"Agreement") is entered into by and between the City of Ashland, an Oregon municipal corporation (hereinafter "City") and the Consultant listed under Consultant Information above, ("hereinafter "Consultant"), for the services listed under Description of Services and Supporting Documents as noted in the Contract Summary above. In the event of conflict between provisions of the Supporting Documents,the Supporting Documents shall be given precedence in the order listed above. This Agreement, the Exhibits and the Supporting Documents shall be construed to be mutually complementary and supplementary wherever possible. In the event of a conflict which cannot be so resolved, the provisions of this Agreement itself shall control over any conflicting provisions in any of the exhibits or supporting documents, The Consultant's initials [ DL 1 herein signify acknowledgment and agreement to this provision, if applicable, or if not sign "N/A". Consultant's services are collectively referred to in this Agreement as the "Work." Page 1 of 8 Personal Services Agreement Between the City of Ashland and Utility Financial Solutions, LL NOW THEREFORE, in consideration of the mutual covenants contained herein, the City and Consultant hereby agree as follows: 1. Effective Date and Duration: This Agreement shall become effective on the date of execution on behalf of the City, as set forth below (the "Effective Date"), and unless sooner terminated as specifically provided herein, shall terminate upon the City's affirmative acceptance of Consultant's Work as complete and Consultant's acceptance of the City's final payment therefore, but not later than the Completion Date listed under the Contract Summary in the table one page one of this agreement. 1.1. Time is of the essence. Time is of the essence for Consultant's performance of each and every obligation and duty under this Agreement. City, by written notice to Consultant of default or breach, may at any time terminate the whole or any part of this Agreement if Consultant fails to provide the Work called for by this Agreement within the time specified herein or within any extension thereof. 2. Compensation: City shall pay Consultant the sum listed as the"Contract Amount" under the Contract Summary on page one of this document as full compensation for Consultant's performance of all Work under this Agreement. In no event shall Consultant's total of all compensation and reimbursement under this Agreement exceed the Contract Amount without the express, written approval from the appropriate Department Head or City Manager. Payments shall be made within thirty(30)days of the date of receipt by the City of Consultant's invoice. Should this Agreement be terminated prior to completion of all Work, payments will be made for any phase of the Work completed and accepted as of the date of termination. 3. Consultant Obligations: 3.1. Independent Contractor Status. Consultant is an independent contractor and not an employee of the City for any purpose. Consultant shall have the complete responsibility for the performance of this Agreement. Consultant shall provide workers' compensation coverage as required in ORS Chapter 656 for all persons employed to perform Work pursuant to this Agreement. Consultant is a subject employer that will comply with ORS 656,017, 3.2. Qualified Work. Consultant has represented, and by entering into this Agreement now represents,that all personnel assigned to the Work to be performed under this Agreement are fully qualified to perform the services to which they will be assigned in a skilled manner and, if required to be registered, licensed, or bonded by the State of Oregon, are so registered, licensed, or bonded. 3.3. Assignment. Consultant shall not assign this Agreement 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 of the Work shall not create any contractual relation between the assignee or subcontractor and City. Page 2 of 8 Personal Services Agreement Between the City of Ashland and Utility Financial Solutions, LL� 3.4. Work Performance Obligation. Consultant shall, at its own risk, perform the Work described in the Description of Services and in the Supporting Documents and, unless otherwise specified in this Agreement,furnish all labor,equipment, and materials required for the proper performance of such Work. 3.5. Certification. Consultant agrees to and shall sign the certification attached hereto as "Exhibit C" and incorporated herein by this reference. 4. Insurance: Consultant shall, at its own expense, maintain the following insurance: 4.1. Worker's Compensation. 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. 4.2. Workers' Compensation Exemption. If applicable, Consultant affirms and certifies that it is exempt from providing Workers' Compensation per ORS 656.027. Exemption criteria: Enter criteria here or delete if not applicable Consultant initials if exempt: Date: 4.3. Professional Liability insurance with a combined single limit, or the equivalent, of not less than $2,000,000 (two million dollars) per occurrence. This is to cover any damage caused by error, omission or negligent acts related to the Work to be provided under this Agreement. 4.4. General Liability insurance with a combined single limit, or the equivalent, of not less than$2,000,000(two million dollars)per occurrence for Bodily Injury, Death,and Property Damage. 4.5. Automobile Liability insurance with a combined single limit, or the equivalent, of not less than $2,000,000(two million dollars)for each accident for Bodily Injury and Property Damage, including coverage for owned, hired or non-owned vehicles, as applicable. 4.6. 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 thirty(30)days' prior written notice from the Consultant or its insurer(s)to the City. 4.7. 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, excluding Professional Liability and Workers' Compensation, required herein, but only with respect to Consultant's services to be provided under this Agreement. The consultant's insurance is primary and non-contributory. As evidence of the insurance coverages required by this Agreement, the Consultant shall furnish acceptable insurance certificates prior to commencing the Work under this Agreement. The certificate will specify all of the parties who are Additional Insureds. Insuring Page 3 of 8 Personal Services Agreement Between the City of Ashland and Utility Financial Solutions, LLfi 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. 5. Termination: 5.1. Mutual Consent. This Agreement may be terminated at any time by the mutual consent of both parties. 5.2. City's Convenience. This Agreement may be terminated by City at any time upon not less than thirty (30) days' prior written notice delivered by certified mail or in person. 5.3. For Cause. City may terminate or modify this Agreement, 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: • 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; or • 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 Agreement or are no longer eligible for the funding proposed for payments authorized by this Agreement; or • If any license or certificate required by law or regulation to be held by Consultant to provide the services required by this Agreement is for any reason denied, revoked, suspended, or not renewed. 5.4. For Default or Breach. Either City or Consultant may terminate this Agreement in the event of a breach of the Agreement by the other. Prior to such termination the party seeking termination shall give to the other party written notice of the breach and its intent to terminate. If the party committing the breach has not entirely cured the breach within fifteen (15) days of the date of the notice, or within such other period as the party giving the notice may authorize in writing, then the Agreement may be terminated at any time thereafter by a written notice of termination by the party giving notice. 5.4.1. 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 under the 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 Agreement; or attempts to assign rights in, or delegate duties under, this Agreement. Page 4 of 8 Personal Services Agreement Between the City of Ashland and Utility Financial Solutions, ILL� 5.5. Obligation/Liability of Parties. Termination or modification of this Agreement pursuant to subsections 5.1, 5.2, or 5.3 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 of whether such notice is given pursuant to subsection 5.1, 5.2, 5.3, or 5.4 of this section, Consultant shall immediately cease all activities under this Agreement, unless expressly directed otherwise by City in the notice of termination. Further, upon termination, Consultant shall deliver to City all documents, information, works-in-progress and other property that are or would be deliverables had the Agreement been completed. City shall pay Consultant for Work performed prior to the termination date if such Work was performed in accordance with this Agreement. 5.6. The rights and remedies of City provided in this subsection are not exclusive and are in addition to any other rights and remedies provided by law or under this Agreement. 6. Indemnification: Consultant hereby agrees to defend, indemnify, save, and hold City, its officers, employees, and agents harmless from any and all losses, claims, actions, costs, expenses, judgments, 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 Agreement by Consultant (including but not limited to, Consultant's employees, agents, and others designated by Consultant to perform Work or services attendant to this Agreement). However, Consultant shall not be held responsible for any losses, expenses, claims, costs, judgments, or other damages, caused solely by the gross negligence of City. 7. Consultant's Compliance with Tax Laws: Consultant represents and warrants to the City that: Consultant shall comply with all Oregon tax laws, including but not limited to ORS 305.620, ORS 305.380(4), and ORS Chapters 316, 317, 318, in addition to any rules, regulations, charter provisions, or ordinances that implement or enforce any of the foregoing tax laws or provisions and any tax provisions imposed by a political subdivisions of the State of Oregon. 8. Living Wage Requirements: If the amount of this Agreement is $26,429.65 or more, Consultant is required to comply with Chapter 3.12 of the Ashland Municipal Code by paying a living wage, as defined in that chapter, to all employees performing Work under this Agreement and to any Subcontractor who performs 50% or more of the Work under this Agreement. 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. Notice: Whenever notice is required or permitted to be given under this Agreement, such notice shall be given in writing to the other party by personal delivery, by sending via a reputable commercial overnight courier, by mailing using registered or certified United States mail, return receipt requested, postage prepaid, or by electronically confirmed at the addresses set forth on page one of this agreement with a copy to: Page 5 of Personal Services Agreement Between the City of Ashland and Utility Financial Solutions, LLC } I City of Ashland —Legal Department 20 E. Main Street Ashland, Oregon 97520 Phone: (541) 488-5350 10.General Provisions: 10.1. Ownership of Work/Documents: All Work, work product, or other documents produced in furtherance of this Agreement belong to the City, and any copyright, patent, trademark proprietary or any other protected intellectual property right shall vest in and is hereby assigned to the City. All Work, work product, or other documents will be provided in PDF format as requested 10.2. Non-appropriations Clause -Funds Available and Authorized: City has sufficient funds currently available and authorized for expenditure to finance the costs of this Agreement within the City's fiscal year budget. Consultant understands and agrees that City's payment of amounts under this Agreement 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 I administrative discretion, to continue to make payments under this Agreement. In the event City has insufficient appropriations, limitations or other expenditure authority, City may terminate this Agreement without penalty or liability to City, effective upon the delivery of written notice to Consultant, with no further liability to Consultant. 10.3. Statutory Requirements: The following laws of the State of Oregon are hereby incorporated by reference into this Agreement: ORS 2798.220, 2798.230 and 2798.235. 10.4. Nondiscrimination: Consultant agrees that no person shall, on the grounds of race, color, religion, creed, sex, marital status, familial status or domestic partnership, national origin, age, mental or physical disability, sexual orientation, gender identity or i source of income, suffer discrimination in the performance of any Work under this Agreement when employed by Consultant. Consultant agrees to comply with all applicable requirements of federal and state civil rights and rehabilitation statutes, rules and regulations. Further, Consultant agrees not to discriminate against a disadvantaged business enterprise, minority-owned business, woman-owned business, a business that a service-disabled veteran owns or an emerging small business enterprise certified under ORS 200.055, in awarding subcontracts as required by ORS 279A.110. 10.5. Governing Law: This Agreement shall be governed by the laws of the State of Oregon without regard to conflict of laws principles. Exclusive venue for litigation of any action arising under this Agreement shall be in the Circuit Court of the State of Oregon for Jackson County unless exclusive jurisdiction is in federal court, in which case exclusive venue shall be in the federal district court for the district of Oregon. Each party expressly waives any and all rights to maintain an action under this Agreement in any Page 6 of Personal Services Agreement Between the City of Ashland and Utility Financial Solutions, LL� other venue, and expressly consents that, upon motion of the other party, any case may be dismissed, or its venue transferred, as appropriate, so as to effectuate this choice of venue. 11. Merger: This agreement and the attached exhibits constitute the entire understanding and agreement between the parties. No waiver, consent, modification or change of terms of this agreement 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 agreement. Consultant, by signature of its authorized representative, hereby acknowledges that he/she has read this agreement, understands it, and agrees to be bound by its terms and conditions. Page 7 of 8 Personal Services Agreement Between the City of Ashland and Utility Financial Solutions, ILL� WITNESS WHEREOF, the parties have executed this Agreement in their respective names by their duly authorized representatives as of the dates indicated below. This Agreement may be executed in two counterpada, each of which shall be deemed an original, with equal force and effect auif executed ina single document. City ofAshland: Utility Financial Solutions, LLC (Consultant) By: Th008SMCB8rU �� 02/13/2025 Signature Dawn Lund Date Printed Name Vice President Title Purchase Order No. O2/13/2O25 Doho (L-_9iybxbe submitted with this signed Agreement) APPROVED ASTOFORM: City Attorney Dote Page MnfO Personal Services Agreement Between the City of Ashland and Utility Financial Solutions, LLC CITY OF ASHLAND, OREGON taty of Ashland LIVING WAGE •. per hour, effective June 30, 2024. aUu The Living Wage is adjusted annually every raifi June 30 by the Consumer Price Index. . - paid portion of the business of of health care, retirement, their employer, if the 401 K, and IRS eligible employer has ten or more cafeteria plans(including employees, and has received childcare) benefits to the For all hours worked under a financial assistance for the employee's amount of wages. service contract between their project or business from the employer and the city of City of Ashland over Note: For temporary and Ashland if the contract $26,429.65; part.-time employees,the exceeds$26,429.65 or more. living Wage does not apply If their employer is the City of to the first 1040 hours worked For all hours worked in a Ashland, including the Darks in any calendar year. For month, if the employee and Recreation Department. more details, please see spends 50%or more of the Ashland Municipal Code employee's time in that month In calculating the living wage, Section 3.12.020. working on a project or employers may add the value Call the Ashland City Manager's office at 541488-6002 or write to the City Manager, City I-fall, 20 Cast Main Street, Ashland, OR 97520, or visit the City's website at vy r._ dAIS w tfla .or , Notice to Employers: "this notice must be posted in areas where it can be seen by all employees. : ATV 0 S.. Exhibit C Certifications/Representations: Consultant, by and through its authorized representative, 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) Consultant 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. Consultant further represents and warrants to City that: (a) it has the power and authority to enter into this Agreement and perform the Work, (b) the Agreement, when executed and delivered, shall be a valid and binding obligation of Consultant enforceable in accordance with its terms, (c)the work under the Agreement shall be performed in accordance with the highest professional standards, and(d)Consultant is qualified, professionally competent, and duly licensed (if applicable)to perform the Work. Consultant also certifies under penalty of perjury that its business is not in violation of any Oregon tax laws, it is an independent contractor as defined in the Agreement, it is authorized to do business in the State of Oregon, and Consultant has checked four or more of the following criteria that apply to its business. (1) Consultant carries out the work or services at a location separate from a private residence or is in a specific portion of a private 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) Consultant assumes financial responsibility for defective workmanship or for service not provided as evidenced by the ownership of performance bonds, warranties, errors and omission (professional liability) insurance or liability insurance relating to the Work or services to be provided. Consultant's signature 02/13/2025 Date Page 1 of 1: Exhibit C SHLA, ND City of Ashland Electric Cost of Service Study January 30, 2025 U�S UTILITY FINANCIAL Im SOLUTIONS, LLC Corporate location: • -• °- •- • Utility Financial Solutions, l_LC r- • 1.85 Skin Meadow Court - ° •� • • Holland, MI USA49424 • o • -• • o °•®a (616)393-9722 Fax(888)566-4430 Utility Financial 50|miDns, U1 d|und��uf�v b�cvm UTILITY FINANCIALc (zsz)Zzo�so4 ���/�—'v��� S��LUT|��NS. LUC � January 3O, 2O2S Tom Mc8art|ett, Director ofElectric City ofAshland 9ON. Mountain Ave. Ashland, OR9752O Utility Financial Solutions, LLC(UFS) is pleased to submit a proposal to provide an electric cost of service,financial projection, and rate design for the City of Ashland. Our proposal is based on years of experience navigating complex financial challenges for municipal utilities around the United States. We approach challenges strategically, partnering with your team to understand your goals before using innovative processes and in-depth research to determine the best solution to suit your needs, VVe stay on top of industry trends and anticipate challenges to help you solve existing problems and prepare your utility for long- term success. Our methodology and educational components have earned us a reputation as the preferred provider of rate studies in the United States. Our project team members are experts in their respective fields and instruct for leading utility groups including the American Public Power Association, Southern Gas Association, and the National Association of Regulatory Utility Commissioners, Our specialized team of accountants, engineers, and economists have years of industry- specific experience to help ensure that you reach your goals. UF6was incorporated in 2001 and brings decades of experience tn your utility. For your project, UFS will complete the study and provide an executive report detailing the process to help communicate with members nf your governing body and community. The goal of these efforts isto: " Establish and maintain long-term financial stability. ° Educate on principals of cost of service and financial planning. ° Earn positive engagement from members ofgovernment We appreciate the Opportunity to submit this proposal and look forward to discussing it with you. If you have questions or need additional information, please contact me at(231)218-9664. Sincerely, Dawn Lund Yice'President Utility Financial Solutions, LLC pitsUTILITY FINANCIAL SOLUTIONS, LLC Table nfContents Understanding of Project Requirements......................................... ...................... .................................................../ Summaryof Ability.....................................................................................................................................................a FinancialProjection................................................................................................................................................ 8 DevekopnnentofCos of3ep�ce Study-------------------------------..------' 12 Rate Des�n---------------------------------------------------. 15 Review and Potenbx| |m�ementak,nnf Power Cost Admtment----------------------.. Meetings, Reports,and Preyentatons--------------------------------------' 16 Finn Qualifications ------------------------------------------------.. 17 Resumes 19 ----------------------------------------------------.. Z8 References----------------------------------------------------- ProjectSchedule...................................................................................................................................................... ]O Proposed Professional Services Agreement............................................................................................................ 31 UTILITY FINANCIAL �m�����/ SOLUTIONS. LLC Understanding nfProject AeQU'[eDl2Dts Summary of Scope of Services for the Electric Department Described below ison overview nf the services VE5 will provide. Greater detail is included within the detailed scope of service section, The list below includes sections not directly identified within the proposal but are critical in meeting the needs of the community and the utility department. 1. Development of Long-Term Financial Projections—These studies are included as part of the UFS mope and are critical in development of long-term rate strategy. Our study incorporates the strategic plan, funding of long-term capital plans, amount, and timing of any financing needs, and balances the financial stability of the electric department. The long-term financial projection and development of key financial targets is discussed in the detailed work plan of our proposal. 2. Cost of Service Study—This study identifies the cost of providing services to each class of customer. Our electric study identifies the cost by customer class for general rate components including variable charges (commodity), capacity related costs (demand), and facilities charges for each customer based on meter sixes o/ service level. The cost of service study will breakout each rate component. Examples of these breakouts include identification of power supply costs,transmission costs,and distribution costs byservice level. These breakouts allow the utility to develop rates that meet future challenges including time of use rates, economic development rates, electric vehicle rates, single phase and three phase service rates, or high load factor rates. 3. Customer Rate Designs—The cost of service study provides solid empirical input on sustainable long-term rate structures,however,rate impacts on customers and achieving goals and objectives of each community isa significant factor in proper design mf utility rates. UF5'rate design study identifies impacts oncustomers at various levels of usage. This function assists the governing body in making informed decisions and understanding impacts on customers and the community. 4. Review of Cost Adjustment (optional) —A cos/ adjustment is one of the most critical factors in ensuring long-term financial stability of the Utility. UFS will review the current implementation process to ensure its properly recovering costs and the fluctuations to customers are limited. UF5 cost adjustment studies are easy to use and ensure fluctuations in the true up result in limited impacts on customers. 5. Presentation to Staff& Governing Body—The presentation to staff and the governing body serves two purposes: i Obtain approval of rate adjustments and rate designs. ii Equally important is the education provided to the governing body to understand the importance of maintaining financial stability, how rates are used to achieve community goals and objectives, and why certain components such as a customer charge are used by utilities. URS staff are skilled at obtaining guidance needed to develop rates and providing education to allow the governing body to make informed decisions during this process, Utility Fin oncia|Solutions,LLc Proposal for City vfAshland Pagc | z FSUTILITY FINANCIAL SOLUTIONS. UI G. Reports(PDF) i. Executive Summary Repnrt- - Summarization of the financial projection results, key financial targets and recommended long term rate track needed to achieve financial stability for the utility. ~ Summarization of the cont of service results and cost-based rate structures for consideration in design of utility rates. ~ Description of the major assumptions used in development of the financial projection and cost of service study. — Considerations nnfuture rate adjustments and movement toward cost nfservice ~ The executive summary is used to obtain input from the governing body prior to designing utility rates. ii. RateDesignReport— ~ Summary ofanticipated revenue to be received from the rate design and impacts on customers at various usage levels. Utility Financial Solutions,LLC Proposal for City of Ashland Pagc 1 % /JPSUT[UTYF|NANCIAL SOLUTIONS, LLC Summary nfAbility x summary of the finn's ability mnodnieve the Utility's project goals, Introduction The Utility is requesting an Electric Cost of Service Study and Financial Plan to assess and evaluate the existing rates to ensure the utility operations and maintenance, capital improvement program, depreciation, and debts are adequately funded, while rate impacts are minimized. UPS has the staff available to complete the project in the Utility's desired timeframe. UR7 ability bn achieve the Utility's project goals is best demonstrated by our references (noted in a later section) and our organized and well thought out processes outlined below. Project Set Up After project award,if selected,UFS will conduct a kick-off meeting to review the information request and confirm the project schedule and deliverables. As data is gathered by the Utility, UFSmiU process and enter it into the study. Progress calls will be scheduled to address any questions and to review outstanding data requests. UPSwiU analyze revenues by completing a revenue"proof"to ensure that the monthly billing units provided calculate out to the reported sales revenue when multiplied by current rate schedules. Revenue Requirements We will analyze operating expenses and test year budgets. Expenses are itemized at the finest level of detail available from the Utility and forecasted for the test year. Expenses are then categorized such that appropriate allocations can be applied,and costs distributed to the contributing rate class.A similar approach is applied to the Utility's fixed asset net book value and depreciation costs and incorporates the capital improvement program for interim and test years. Together, the expenses, depredation and a rate of return comprise the revenue requirements of the system.These revenue requirements will flow through to both the cost of service study and the financial projection study. Utility Financial Solutions, uz Proposal for City ofAshland P a x e 13 SUTILITY FINANCIAL SOLUTK}NS. LUC Financial Proiection UP/financial analysis and the subsequent cost mf service studies are unique in their ability tn easily change from cash bads revenue requirements to Utility Basis revenue requirements.The financial analysis includes both cash basis targets such as cash reserves and debt coverage;and accrual basis targetssuch as rate ofreturn, UF5studies also include o nmievv of secondary financial matrices such as debt to equity ratios, age of system, days cash on hand and working capital requirements as part of the overall assessment of the financial health of the utility.The financial projection will incorporate assumptions such as inflation, anticipated changes in expenses, debt issuances, and capital improvements. The financial projection incorporates targets to help ensure the long-term financial stability ofthe Utility ismaintained or improved and develop plan for rate adjustments. Target One: Debt Coverage Ratio Based on review of bond issues and debt service schedules,the principal and interest expense will be identified and incorporated into the analysis. We will provide atab|e as shown below to compare projected Debt Service Ratios with requirements in the Bond Ordinance. Sample Report Table: Debt Coverage Ratio graph and calculation: Target 1: Debt Coverage Ratio xo uu 2.0 1.0 ,1 rz Yn v* ,s �e�Debt Coverage Ratio ~�—Targetnmm DescriptionProjected Projected Projected Projected Projected Yi Y2 m m Y5 Net Income $ 996,826 $ 997,4*2 $ 945213 $ 826,113 $ 758,497 Add Depreciation/Amortization Expense 2,565,601 2,609,101 2,734859 2,921.523 3,057,e31 Projected Debt Coverage Ratio(Covenants) 2.52 7.58 2.59 2.59 2.59 RatioMinimum Debt Coverage 140 140 140 140 140 Utility Financial Solutions,uc Proposal for City ofAshland Page 14 UTILITY p`IN AN IAt SOLUTIONS, LLB Target Two: Minimum Cash Reserve Calculation To help ensure timely completion of capital improvements and enable the utility to meet requirements for large, unexpected expenditures and risk factors, the recommended minimum level of cash reserves will be identified. Development of the minimum cash reserves considers several factors. A sample list is below: • Working capital • Variations in expenses • Capital improvement programs • Annual bond payments • Exposure to catastrophic events such as extreme weather Sample Report Table:Minimum Cash Reserves $30.000,000 $20,000,000 ......� t1o.. $15,000,000 $10,000,000 $5,000,000 Y1 Y2 Y3 Yet Y5 •...Project ed Cash Balances RecornmLndedMininwmCash Projected Projected Projected Projected Projected Description Y1 Y2 Y3 Y4 Y5 Minimum Cash Reserve Allocation Operation&Maintenance Less Depreciation Expense 25% 25% 25%u 25% 25% Supply Expense 25% 25% 25% 25% 25% Historical Rate Base 2% 2% 2% 2% 2% Current Portion of Debt Service Payment 83% 83% 83% 83% 83% Five Year Capital Improvements-Net of Bond Proceeds 20% 20% 20% 20% 209/6 %Plant Depreciated 56% 54% 55% 55% 59% Calculated Minimum Cash Level _ Operation&Maintenance Less Depreciation Expense $ 6,589,952 $ 6,762,400 $ 6,941,318 $ 7,153,036 $ 7,281,393 Supply Expense 8,381,482 9,722,132 9,982,984 10,548,544 11,075,971 Historical Rate Base 1,527,454 1,689,254 1,769,511 1,877,918 1,877,918 Current Portion of Debt Service Payment 1,391,419 1,401,379 1,409,679 1,416,319 1,462,799 Five Year Capital Improvements-Net of Bond Proceeds 3,939,646 3,939,646 3,939,646 3,939,646 3,939,646 Minimum Cash Reserve Levels $ 21,829,953 $ 23,514,811 $ 2.4,043,138 $ 24,935,463 $ 25,637,727 Projected Cash Reserves $ 24,692,803 $ 19,224,903 $ 17,829,253 $ 15,047,239 $ 12,790,153 Utility Financial Solutions,LLC Proposal for City of Ashland P a g e 15 UUTILITY FINANCIAL F5SO0TIONS. LLC Target Three: Operating Income The optimal target for setting rates is the establishment ofo target operating income to consistently fund capital improvements and replacements. Development of this target considers the following: ° Interest expense on the outstanding debt v Inflationary increase on asset replacement costs ° Assets contributed by customers tnthe Utility Sample Report Table:Target Operating Income 3: [jp('�--,[a1i0g 11"ICOOA2 *u'000.ono *x.sou.00n $2,000,000 *z'snn.000 *1.»»».»»» $»»».»»» *' n Y2 ,s Y4 m —+--~AdiUoteu Operating Income w.-Ja rgetmve,at|nu|ncom, Projected Projected Projected Projected Projected Description Yi Y2 Y3 Y4 Y5 Target Operating Income Determinants Net Book Value/Working Capital $ 33,525'e28 $ 38,888,526 $ 39,931,938 g 42,194174 38,927,644 Target Operating Income Allocation mto rest vn Debt 4z1% 422% 425% 4.38% 431% System E it 706% 673% 687% oen% 748% Target Operating Income Projected Operating Income 63 Utility Financial Solutions,|Lc Proposal for City ofAshland Page 16 UT LITY FINANCIAL SOLUTIONS, LLCw Five-Year Projection Summary The projections will be summarized, and development of alternative rate tracks will be reviewed and compared to each financial target to help ensure the future financial stability of the utility. We will work with Management and the Governing body in review and development of five-year strategies and rate track. All adjustments are tied to the cost of service study for the test year,so results can easily be updated,and sensitivities run within the same study, Projected Summary Financial before Rate Adjustments Projected Adjusting Target Projected Recommended Capital Debt Rate Operating Operating Cash Minimum Improvements Coverage Fiscal Year Adjustments Income Income Balances Cash Plan Ratio Year 1 0.0% $ 2,728,770 $ 3,038,480 $ 16,392,621 $ 18,099,160 $ 6,065,000 1.10 Year 2 0.0% 2,711,845 3,019,772 14,592,541 19,169,551 2,175,000 1.11 Year 3 0.0% 2,622,411 3,061,319 10,964,992 19,674,886 4,012,870 1.11 Year 0.0% 2,473,225 3,149,568 5,938,354 20,516,844 5,420,360 1.12 Year 5 0.0% 2,380,491 3,098,229 4,959,247 20,862,261 1,380,0DD 1.12 Projected Summary Financials with Rate Adjustment and$5.0 Million Bond Issuance Projected Adjusting Target Projected Recommended Capital Debt Rate Operating Operating Cash Minimum Improvements Coverage Fiscal Year Adjustments Income Income Balances Cash Plan Ratio Year 1 2.0% $ 3,350,054 $ 3,038,480 $ 17,013,904 $ 18,099,160 $ 6,065,000 1.26 Year 2.0% 3,972,613 3,019,772 22,477,689 19,169,551 2,175,000 1.44 Year 2.0% 4,216,200 3,061,319 21,453,355 19,674,886 4,012,870 1.53 Year 2.0% 4,407,444 3,149,568 21,578,377 20,516,844 5,420,360 1.62 Years 2.0% 4,662,614 3,098,229 21,908,593 20,862,261 1,380,000 1.71 Utility Financial Solutions,LLC Proposal for City of Ashland P a g e 17 UTl0TYF|NANCIAl 9—%-7;P SOLUTKJMS, LLC Development of Cost of Service Study The development of the cost of service study incorporates the revenue requirement identified as part of the financial projection. This section describes the additional procedures used in development of the cost of service study and sample outputs from previous studies. Load Profile Information Load profile information identifies hnvv customers use electricity at various times of the day and is critical to ensure the cost of service study is accurate and defensible. UFS works with utility staff in identification of the appropriate sources ofload research information. We will analyze information from the following sources: ° Electronic meters installed on time of use and other customers ° Load research information available from other sources ° Analysis of substation feeders w Utilize our data base of existing load research obtained from other utilities The load research information identifies the monthly load factors for each class, how much is being used by the c|oo at the peak time of the day when power supply demand or transmission demand charges are determined. The load research information is compared with the hourly system hourly load data to determine the class contributions. The information is then used to determine the class share of transmission and power supply costs. System Losses Losses can vary substantially depending on system loading and temperature. We will identify the system loss at the various voltage levels of service to customers. To determine the overall system losses, we typically use a three-year average of losses to reduce the impact of changing weather patterns between the last and first month of each year. The losses are then allocated between voltage level such as transmission, substations, primary service,and secondary voltage levels. Development ofAUouatoo The load profile information for each class is used to determine the allocation factors used to allocate expenses based oncost-oausadon. Examples of cost causation include the identification of the date and time power supply demand charges are determined and each class usage at the time of the peak demands. There are over 40 allocation factors often developed as part ofa UFS cost nfservice study. Allocation factors are developed for each season and developed for specific expenses. A summary of the costs where specific allocation factors need to be developed are listed below. Allocat Utility Financial Solutions,uc Proposal for City vfAshland Pogc | 8 UTILITY FINANCIAL ����--��� SOLUTIONS, LLC Prepare Cost of Service Analysis Customer classes are typically established based on differences in load and usage patterns. How customers use electricity dictates the cost of providing many utility services. The cost of service portion of the study will determine the following: neccesary to meet financial targets: pared with i"com"Nio target operating projected revenues Monthly customer income, minimum by class and charge, usage cash reserves, debt adjustments charge, and demand coverage ratio charge (for demand ne,cessary to meet metered customers) requirements broken down by A summary of the cost of service analysis is developed similar to the following table: Projected Customer Class Cost ofSen/ice Revenues Change Residential $ 4,672,077 $ 4183,897 11.7% General Secondary B 3,032,446 2,974,374 2.0% Street Light Service S 144,370 233,504 8.1% Secondary Energy&Demand C 3,144,714 3,072,174 2.4% Primary Energy&Demand D I The cost of service column from the table above identifies the cost to provide service to each class of customers and is compared with the projected revenues from each class. The percent change is the rate adjustment necessary for each class to achieve cost of service, We typically do not recommend rotes move fully to cost of service, but as part of the discussions with staff and Council we develop a plan to move classes toward cost of service to minimize rate impacts on any specific customer class. Utility Financial Solutions,|Lc Proposal for City nfAshland Pame 19 UTILITY FINANCIAL SOLUTIONS, LLC Development of new rate classes As part of the initial discussions with management and review of the existing rate tariffs,we will discuss with utility staff if new rate classes should be considered or if existing rate classes should be combined. Rate classes are created based on similarity in usage patterns, but often utilities will develop new rate classes to create incentives for customers to shift usage to periods of time where power supply costs are lower such as on and off peak time periods for time of use rates. Examples of new rate class developments are listed below. • Standby charges—Cost isolated by investment in facilities to serve customers on a standby basis. • Interruptible Loads—Rates to promote interruptible loads that reflect the savings to the Utility. Our study will isolate costs by power supply demand,energy, and transmission to identify the potential cost savings of an interruptible customer. • Seasonal Rates—The cost of service study allocates costs to each rate class based on seasonal time period. The time periods will be identified through review of system loads and power supply and transmission costs. • Time of Use — 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. • Economic Development Rates— Rates can be developed to promote economic development by attracting new customers or expansion of existing customers. It is important economic development rates be developed using a marginal cost approach to ensure existing customers are not unduly subsidizing any reduce rates or fees charged under an economic development program. • Other Potential Rates are listed below: Public education rates Green Rates — Net Metering Rates Aggregation Rates New rate designs may result in additional charges for the services provided by UFS. As part of the initial kick off conference call,we should discuss if any potential new rate classes are being considered. Utility Financial Solutions,LLC Proposal for City of Ashland P a g e 1 10 UTILITY FINANCIAL SOLUTIONS. LLC; l Breakdown of cost of service rate structure by type of expense for each class of customers UFS cost of service studies identify cost in a summary and a detail cost breakdown for each class of customers. For example,the summary of costs identifies the class cost breakdown by customer charge,power supply demand, transmission demand, distribution demand and energy costs. An example is shown below: Power Supply Monthly Summer Winter Customer Distribution Customer Class Charge Rate Demand Energy Demand Energy Residential A $ 13.65 $ 0.0249 $ 0.0181 $ 0.0479 $ 0.0101 $ 0.0353 General Secondary B 26.60 0.0288 0.0311 0.0550 0.0136 0.0319 Street Light Service S - 0.0175 - 0.0689 0.0300 Secondary Energy&Demand C 120.60 8.52 12.09 0.0577 4,88 0.0313 Primary Energy&Demand D 223.90 7.24 12.38 0.0573 4.85 0.0296 In addition,further breakdowns are available in the studies depending on the needs of the utility. A sample detailed breakdown of distribution costs is shown below: kWh kWh I<W KW Secondary Primary General Eneregy& Energy& Rate Breakdown Residential A Secondary B Demand C Demand D Demand Breakdown Distribution $ 0.0110 $ 0.0117 $ 3.44 $ 2.95 Transmission 0,0059 0.0084 2.91 2.91 Transformer 0.0027 0.0029 0.73 - Substation 0.0052 0.0057 1.43 1.39 Direct - - Subtotal-kWh, kW,111?Charge $ 0.0248 $ 0.0287 $ 8.51 $ 7.25 Customer Breakdown Distribution Customer Costs $ 6.07 $ 12.13 $ 54.59 $ 109.18 Transformer Customer Costs 2.07 4.14 18.62 - Meter 0&M 0.57 0.57 2.87 39.11 Meter Reading 0.13 0.1.3 1.15 2.30 Billing 0.08 0.15 0.70 1.39 Services 1.20 2.41 10.83 8.23 Customer Service 3.54 7.08 31.84 63.68 Customer Charge$/Meter $ 13.66 $ 26.61 $ 120,60 $ 223.89 Utility Financial Solutions,LLC Proposal for City of Ashland P a g e 11 �mmrra�w��Cw� UTILITY FINANCIAL SOLUTIONS, LLC Rate Design A five-year rate track will be provided with the financial projection,along with a three-year rate design;additional years upon request at out of scope. 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 utility's governing body. The rate design identifies the impacts on customers at various usage levels and is listed by rate class, meter size and usage level. Please note that all rate designs outside of the current rate structure will be charged hourly. Summary of overall rate adjustments for each class— Electric Projected Projected Projected Revenues Under Percentage Revenues Under Proposed Rates Change Customer Class Current Rates Year 1 Year 1 Residential A $ 4,183,897 $ 4,272,065 2.11% General Secondary B 2,974,374 3,019,822 1.53% Street Light Service S 133,504 135,687 1.64% Secondary Energy&Demand C 3,072,174 3,125,649 1.74% Primary Energy&Demand D 20,700,210 20,956,423 1.24% Totals $ 31,064,159 $ 31,509,646 1.43% Utility Financial Solutions,LLC Proposal for City of Ashland P a g e 12 arairiarl/e�- r� m0 UTILITY FINANCIAL i' SOWTIONS. LLCD Electric Sample Rate design, Single Year Projected Residential Rates Rates Current Year 1 COS Monthly Facilities Charge: All Customers $ 6.50 $ 8.50 $ 14.47 Energy Charge: All Energy $ 0.0681 $ 0.0666 $ 0.08093 Revenue from Rate $ 3,584,465 $ 3,648,247 $ 4,709,219 Change from Previous 1.8% Change by Monthly kVVh Usage (`%) 10.01/o 8.0 6.0% 4..0%n 2.0%, 400 650 900 1150 1400 1650 1J-2.0%u Year1 Average Monthly Rill Increase by Usage Year 1 Year 1 All Energy $ % 400 $1.40 4.1% 650 $1.03 2.0% 900 $0.65 1.0% 1150 $0.28 0.3% 1400 $o'a.0 -0.1% 1650 -$0.47 -0.4% 1900 -$0.85 -0.6% 21501.•2:2 -0.8% 2400 -$L60 -0.9% 2650 -$1.91 -1.1% Utility Financial Solutions,LLC Proposal for City of Ashland Page 13 SUTILITY FINANCIAL SOWTIONS, LLC Electric Sample Rate Design, Multi Year Projected Residential Rates Rates Current Year 1 Year 2 Year 3 COS Rates Monthly Facilities Charge: All Customers 11.75 13.25 14.75 $ 16.25 $ 18.86 Energy Charge: Winter All Energy 0.1018 0.1019 $ 0.1020 $ 0.1020 0.10383 Summer Block I(First2OkWhs perclay) 0.1100 0.1100 0.1100 0.1070 0.10383 Summer Block 2(Excess) 0.1249 0.1240 0.1220 0.1190 0.10383 Revenue from Rate 10,337,868 10,553,155 $ 10,762,483 10,879,557 11,175,415 Change from Previous 2.1% 2.0% 1.1% Change by Monthly kWh Usage 10.0% 9.0% 8.0% 7.09/b 6.00/a 5.0% 4.0% 10% 2.00/0 L0% 0.0% 400 Boo 600 700 800 900 1000 1100 1200 1300 ,--,-Yearl -Year2 -Year3 Average Monthly Bill Increase by Usage Year I Year 1 Year 2 Year 2 Year 3 Year 3 All Energy $ % $ % $ % 400 $1.52 2.8% $1.53 2.8% $1.10 1.9% 500 $1.52 2.4% $1,53 2.3% $1.00 1.5% 600 $1.53 2.0% $1.54 2.0% $0.90 1.2% 700 $1.20 1.9% $1.49 1.8% $0.80 1.0% 800 $1.47 1.7% $1.42 1.6% $0.70 0.8% 900 $1.44 1.6% $1.35 1.5% $0.60 0.7% 1000 $1.41 1.5% $1.29 1.4% $0.50 0.5% 1100 $1.38 1.4% $1.22 1.2% $0.40 0.4% 1200 $1.35 1.3% $1.15 1.1% $0.30 0.3% 1300 $1.32 1.2% $1.09 1.0% $0.20 0.2% Utility Financial Solutions,LLC Proposal for City of Ashland P a g e 14 UT|LRYF|NANCk\L I', SOLUT|ONS, LLC Review and Potential Implementation of Power Cost Adjustmen Power cost adjustments (PCA) are used by many municipal electric utilities to help ensue power costs are recovered from customers in a timely fashion and the electric utility remains financially stable. A PCA reduces the utility's risk and exposure to changes in power supply costs or changes in transmission charges and helps ensure retail customers are not over or undercharged for electricity in any given year. A PCA must be implemented properly to ensure dramatic changes in the PCA do not occur on a month to month basis leading to customer complaints. UFS has implemented P[As for electric utilities around the nation and has extensive experience in identifying the most appropriate method that balances customer impacts while maintaining the financial health o[the utility. UP5 will review the risks and monthly power cost tn identify the most appropriate method, Listed below are general methods used by utilities. Several variations of each method also exist. ° Monthly(Quarterly,Semi Annual)PCA—Typically calculated each month or period of time such as quarterly. This methodology tends to result in dramatic changes in the PCA at the time of the true up and may result in increased complaints from customers. ~ Annual PCA—The power costs are trued-up each year and significant changes can occur at the beginning of each year. Also, the Utility must maintain significant reserves to provide funds to cover the fluctuations in the power costs. • Rolling average PCA—Tends to smooth out the fluctuations while maintaining the financial integrity of the utility. Costs are reviewed each month with small changes occurring with the goal of balancing power costs at the end ofa specific period cf time such as22months. ° Forecasted PCA Monthly Review — Based on the annual budget then adjusted monthly to reflect actual power supply costs. Implementing a new power cost adjustment mechanism or reviewing an existing mechanism may em|t in additional charges for the services provided byUFS. Utility Financial Solutions, LLc Proposal for City ofAshland page | zs FSUTILITY FINANCIAL S{}LUTk3NS` LUC ` Meetings, ABDOF[S/ and PD8s8Of8f'oDs Meeting The following meetings are anticipated (conducted virtually): " Kickoff meeting—Clarify scope of services and expectations of management. ° Data Verification—Verify data collected. ° Financial Keview—Reviewassumptionsused in the long-term projections. ° Review draft reports with management. ° Presentation as requested by management such as review report with Governing body. Format of Reports UFS reports are typically separated into the reports listed below: ° Power Point Summary—A concise presentation of study results that is shared with management and staff. This summary will include graphs, charts,tables,and findings. m Executive Summary Report (PDF)—An overview that identifies the objectives, process, and results of the rate study ina clear and concise format. " RoteDesign—Themtedesigninc|udesthefoUowing: — Comparison of the current and proposed rates. ~ Expected revenues generated from proposed rates. ~ Impact on customer classes at various usage levels or load factors within each rate class. Presentation of Cost of Service and Rate Design Study A critical aspect of the study is the dear and concise presentation to the governing body of the utility. UF5 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 their community. i1irior1111111 UTILITY FINANCIAL. >` SOLUTIONS, LL Firm (qualifications This section discusses UFS'experience and qualifications assisting municipalities with cost of service and financial analysis. UFS personnel are recognized as national experts and include highly qualified, motivated, experienced, and knowledgeable professionals. UFS' reputation has resulted in industry leading status shown by the number of clients we serve,our frequent requests to instruct classes and speak at conferences around the nation and our frequent requests to serve as expert witnesses on rate related issues. UFS' experience includes completion of rate studies in 43 states, Guam, several Caribbean Islands and Canada. This provides UFS with the experience and knowledge to provide creative solutions. UFS is the industry leader in electric,water,and sewer studies. Our national experience is summarized below: In Demand —> UFS has completed numerous rate studies for electric, water, sewer, gas, telecommunications, and solid waste. Diverse 4 UFS is the preferred provider of rate services for municipalities,electric cooperatives,and members of Joint Action Agencies. Innovative -> UFS is leading the industry in development of Time of Use rates including variations of Variable Peak Pricing, Dynamic Pricing and Real Time Pricing. Reliable 4 Our methodologies on establishing financial targets and cash reserve policies have become industry standards and have assisted utilities in improving bond ratings with Fitch,S&P and Moody's. Supported -> Our establishment of rates for customers located outside city limits have been accepted in State Courts and resulted in UFS becoming expert witnesses and arbitrators on rate disputes across the United States. Experienced 4 UFS has provided electric,gas,water,wastewater,and telecommunications services to some of largest utilities in the country including Nashville TN, Knoxville TN, Sacramento Municipal Utility District, Rochester MN, Imperial Irrigation District CA,Austin TX, Huntsville AL,Columbia MO, and Lansing MI. Knowledgeable 4 We are frequent speakers on special rate topics around the United States including APPA's National Conference,APPA's Educational Institutes, E&O Workshop, Legal Conferences, Business and Financial Workshop, numerous webinars topics and state conferences in over 15 states. A sample of recent presentations are listed below: Development of Key Financial Targets Information provided by Cost of Service Studies Cash Reserve Policies for Municipal Utilities w Development of Utility Extension Policies Cost of Service Challenges and Solutions Appropriate levels of Contributions to City(Payment in lieu of Tax) The Rate Race Development of Avoided Cost and Rate Designs for Distributed Generation Utility Financial Solutions,LLC Proposal for City of Ashland P a g e 17 UTILITY FINANCIAL �� SO0T|ONS. LLC K� Teachers 4 UFS personnel are the instructors on cost of service and financial planning courses offered through the American Public Power Association (APPA),American Water Works Association (AVVVVA), and the National Association of Regulatory Utility Commissioners (NARUC), EUO, and Southern Gas Association. UFS' industry leading status has resulted in courses on distributed generation to the US Department of Energy. These courses include the following: ~ Basic Cost ofService — Intermediate Cost ofService ~ Advanced Cost ofService ' — Financial Planning ~ Utility Financial Check-up ~ Cost of Service and Rate Design for Distributed Generation ~ Development of Line Extension Policies ~ Rate Structures tn promote Energy Conservation ~ Rate Structures tocreate Revenue Stability ~ Advanced issues in Rate Design ~ Advanced issues in Cost Allocations p/r/e, k�� P L|TYF|NANC[AL S SOLUTIONS, LLC UFS holds a commitment to the following: ° Quality Control—Proper quality control and management help ensure the accomplished work is in alignment with the pro/ectscope, is completed timely,within budget and the results are accurate and defensible. The quality controls developed by UFS are specific to utility rate studies and are based on our prior experience working with electric utilities. ° Timeliness ofBudiea— Part of the quality onntm| includes the timely completion of the rate studies. UF5 experience in completing studies provides us the ability to complete the studies as requested and discussed in the initial kick-off meeting. ° Financial Strength — UFS commenced business in 2001 and has the highest financial rating by Dunn and Bradstreet. ~ Independence — UFS maintains its independence throughout its engagements to help ensure unbiased recommendations to the governing bodies. VYedo not provide services that could impair our independence such as engineering, accounting,or auditing services. ^ Diverse Staff Backgrounds—Proper development of rate studies require knowledge in accounting, finance, economics, and engineering. UFS staff has diverse backgrounds that include degrees in accounting (CPA), engineering,finance,economics, information technology and degrees in Water Purification Technology. Proposed service team including titles: Mark Beauchamp—President DawnLund—VicePresident Dan Kasbokm—Manager Mike Johnson—Manager ChrisLund—RusinessandT,chno|ogyManager ]iUian]uozyk—Manager Joan 8akenhus—Senior Financial Analyst Robert Blank—Financial Analyst ]nne|Albrecht—Financial Analyst Staff Availability UPS has adequate staff available tu complete the tasks in the timeline requested. Resumes The next section consists of resumes of UF3team members. Utility Financial Solutions,LLc Proposal for City vfAshland P a ge | 19 UTILITY FINANCIAL Pips SOLUTIONS, LLC; Mark Beauchamp, CPA, CMA, MBA President, Utility Financial Solutions, LLC n i//Uy i Email: mbeauchamp@ufsweb.com Cellular: 616-403-5450 Location: Holland, MI Education License and Qualifications • AAS Water Purification Technology • Class"A"license in wastewater treatment from the • ABA Business Administration State of Michigan • BBA Major—Accounting • (CPA)Certified Public Accountant—Wisconsin • MBA Master's Degree in Business • (CMA) Certified Management Accountant—Institute Certified Management Accountants Expert Witness Service • Detroit Edison vs.Ameritech—Provided expert Course Instructor witness services for Detroit Edison on development • American Public Power Association(APPA) of Pole Attachment Rates for Ameritech • Advanced Cost of Service Course(Cash Basis& • Nebraska State Unicameral—Served as an expert Utility Basis of Ratemaking) witness before the State of Nebraska Unicameral on • Intermediate Cost of Service(Cash Basis&Utility proper rate setting and credits to provide customer Basis of Ratemaking) installed renewable generation • Basic Cost of Service(Cash Basis& Utility Basis of • Dayton Power&Light—Provided expert witness Ratemaking) services on pole attachment rates. Case was • Financial Planning for Municipal Utilities resolved prior to Court appearance • Financial Planning for Board&Councils • Coldwater Board of Public Works—Provide expert . Financial Planning and Rate Setting for Managers witness services on rate challenge by large industrial (Part of Managers Certificate Program) customer. Case was dropped after deposition was • American Municipal Power(AMP) provided • Financial Planning and Rate Designs for Electric • Smethport PA—Provided deposition and responses Utilities to Pennsylvania Public Service Commission on Rate ® Michigan State University Filing for Smethport • Advanced Issues in Cost Allocation(Utility Basis of Rate Making) Industry Involvement • Retail Costing and Pricing of Electricity • Member of the American Public Power Association . Wholesale Costing and Pricing of Electricity • Member of the American Water Works Association • Member of the Institute of Management Accountants • Southwest American Water Works Association • Speaker at national conferences on Financial Planning • Michigan Rural Water Association for Municipal Utilities, Pricing for Water Utilities, • Cost of Service&Rate Making for Water Utilities Pricing Fiber Optic backbone systems, Unbundling • Michigan Finance Government Officers Association Electric Rates,and Ways to Attract and Retain • Cost of Service&Rate Making for Water& Customers Wastewater Utilities • Author of articles appearing in national magazines and newsletters regarding pricing fiber optics,training electric rates, and designing water rates Utility Financial Solutions,LLC Proposal for City of Ashland P a g e 120 UTILITY FINANCIAL St; WTIONS, LLC Dawn Lund Vice-President, Utility Financial Solutions, LLC Dawn has utility energy experience pricing and marketing utility services for electric, water and wastewater beginning in 1996. Dawn has worked with UFS since 2006 and previously worked with a large utility and held 'positions as Cost G d N and Rate Specialist and Marketing and Communications Specialist. Dawn works l�9� with utilities across the country teaching financial concepts and is also the instructor for Financial Planning courses for the American Public Power a Association. She is also a regularly requested speaker for various regional and j national organizations. Email: dlund@ufsweb.com Cellular: 231-218-9664 Location: Traverse City, MI Cost of Service(COS) Hate Design • Completed electric,water,and wastewater cost • Development of equitable rates between inside- of service and rate design studies for utilities city and outside-city customers across the country, Guam,the Caribbean,and • Development of wholesale contract rates Canada • Development of special rates; Economic and Time • Determining appropriate allocations of overhead of Use costs between utility services • Development of Connection Fees • Development of rate designs to meet financial Long-term Financial Analysis objectives of utility • Development of long-term sales and expense projections for electric,water, and wastewater Other Professional Involvement utilities • Member of AWWA Finance,Accounting, • Development of long-term financial plan and Management and Controls Committee rate track for electric,water,and wastewater • Member of AWWA Rates and Charges Committee • Member of MI-AWWA Education Committee Presentation&°Training • Developing MI-AWWA Water Academy material • Presentations to City Councils and Boards for for Cost of Service and Financial Planning approval of utility rates and proposed rate tracks • Developed the Basic Cost of Service and Financial • Instructor for APPA's Financial Planning and Basic Planning courses for APPA Cost of Services courses • Preferred consulting firm for Hometown • Monthly presentations to various organizations Connections Financial Planning, Cost of Service, on topics such as:cost of service,financial and Rate Design planning, key financial targets,cash policies, and how to explain rate increases to the end user, cost of services challenges/solutions, and introduction to allocation studies Utility Financial Solutions,LLC Proposal for City of Ashland P a g e 1 71 UTILITY FINANCIAL SOWTIONS, LLC Dan Kasbohm Manager, Utility Financial Solutions, LLC Dan joined Utility Financial Solutions, LLC 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. Dan is a co-instructor i for the Basic and Intermediate Cost of Service courses for the American Public Power Association. Email: dkasbohm@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 levels — Demand based costs — Identify revenue stability of rates • Identification of class to class subsidization — Rate survey analysis • Utility cost breakdown by function • Development of new rates including: • Detailed cost unbundling — Time of Use(seasonal,daily, hourly) — Power Cost Adjustment(PCA) Long-term Financial Analysis&Identification of: — Coincidental-Peak Rates • Utility revenue requirements(utility and cash- — Economic Development rates based methods) — Street lighting rates • Debt Coverage conformance • Minimum cash requirements Other Utility Tools • Optimal operating income targets • Power Cost Adjustment mechanisms based on • Optional rate adjustments in projected years utility cash position,objectives, and dispatch profile Presentation&Training • Street Light Cost of Service by light and pole types • Presenting study results to management and • Load Profile Analysis to identify utility and governing body of utility customer usage patterns • Provide utility training on use of projection & • Power supply forecasting COS models • Implementation of a justified minimum cash policy • Co-Instructor for the American Public Power • Calculation of fees for standard utility work Association Academy • Development of line extension policies — Basic& Intermediate Cost of Service Utility Financial Solutions,LLC Proposal for City of Ashland P a g e 122 UTILITY FINANCIAL SOLUTIONS. LLC Mike Johnson Manager, Utility Financial Solutions, LLC IIIVVVVVVVIIIVIVIIIIIjlllllllllllillllll Mike joined Utility Financial Solutions, LLC in 2011 and has experience assisting utilities since 1995. He has a Higher National Diploma in Mechatronics(Combined f'0 Electrical/Mechanical Engineering). Mike is experienced in cost of service, rate making, financial/operational modeling, automation, electric utility operations, and power supply. Email: mjohnson@ufsweb.com Cellular: 608-230-5849 Location: Madison,WI Cost of Service(COS) Rate Design • Development of cost of service studies for • Provides cost of services class allocations and rate electric, communication,gas,water, and making wastewater utilities • Designs time of use rates • Forecasts utility revenue requirements • Identify effects for different usage patterns within • Cost allocation model development the same class • Development of rates for alternative fuels and Long-term Financial Analysis vehicles • Develops utility financial analysis models • Evaluate marginal costs and development of line • Identifies growth and load forecasting extension policies and economic development • Models rate and revenue effect for customer rates change within utilities(loss of customers/additional load) Other Utinty'rools • Develops target metrics for utilities including • Computes cost functional ization and allocation cash policies, operating income,debt coverage systems for designing and managing complex changes Expert Witness Services • Evaluates data and system integration issues • Prepared and testified on filings to Public Utility associated with new software implementations Commission • Provides market analysis, bidding, and settlement processes analysis • Identification and valuation of fixed assets • Assessment of utility value for sales/purchase • Development of risk mitigation tools, power/fuel cost adjustment mechanisms Utility Financial Solutions,LLC Proposal for City of Ashland P a g e 1 23 r UTILITY FINANCIAL QLUTIONS, LLC Chris Lund Business&Technology Manager, Utility Financial Solutions, LLC Chris has a bachelor's degree in Business Administration with concentration in i' Computer Science and Speech Communications. He has been a technology and management consultant since 1992 and has utility experience since 2005. Chris is an employee of UFS since 2012 and has also sub-consulted on a variety of tC technology projects for UFS since 2003. Email: 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 requirements and rate track data interchange(EDI)mapping using Microsoft • Determined avoided cost for solar(photovoltaic- VBA PV) and wind for renewable energy rates • Lead consultant for multiple mission critical, • Lead consultant for electric vehicle(EV) rates and corporate wide enterprise resource planning (ERP) service study technology solutions • Conducted multiple fiber optic cost of service • Implemented,trained,and supported multiple and rate design studies telecommunications projects • Presentations to Governing Bodies for approval • Implemented and supported some of the first 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) • 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 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 Utility Financial Solutions,LLC Proposal for City of Ashland P a g e 124 „1riiriril%rr UTILITY FINANCIAL SOLUTIONS, LLC Jillian Jurczyk Manager, Utility Financial Solutions, LLC Jill has been with UFS since 2013.She has a Bachelor's degree in Mathematics and a Master's degree in Applied Economics from Johns Hopkins University.Jill has populated and analyzed cost of service models, developed long-term financial projections, and designed rates for utilities. Jill specializes in econometric modeling and statistical analysis to project sales and usage. She has worked with a variety of econometric software packages and is competent in handling ' seasonality, trend, heteroscedasticity, and other economic inefficiencies that arise in data analysis. E-mail: jjurczyl<@ufsweb.com Cellular: 616-283-8502 Location: Holland, MI Cost of Service(COS) Other Utility Tools Prepares and analyzes cost of service studies to d Technical expertise in conducting long-term determine appropriate allocations of cost between econometric forecasts for electric and water load customer classes, including identification affixed and forecasting variable costs, and assigning appropriate cost drivers 0 Proficient at using system and class load data to to utility expenses,such as kWh sales and non- develop load curves,calculate load factors, and coincident peak. identify system coincidence factors Y Conducting time of use studies, including Long-term Financial Analysis identification of on-peak and off-peak time Extensive experience utilizing client data to build periods,and identifying time-based cost to financial projections, determine revenue adequately set rates requirements,forecast utility sales, and develop cost ® Development of power cost adjustment allocations. methodology that allows for proper power cost recovery Efate Design ® Setting avoided cost rates for distributed Identifies cross-subsidization between rate classes generation resources through cost of service analysis and develops rate 0 Development of sales and expense projections to design plans to assist in moving utilities toward more adequately determine a financial plan and rate equitable rate structures.Analyzes customer bill track impacts at various usage levels and identifies revenue 6 Innovating rate designs to meet the financial and stability of rates. social objectives of the utility N Evaluating rate impacts at various usage levels Presentation/Training prior to rate implementation Skilled at presenting study results to management and educating governing body of utility. Speaker at Certifications and Professional Affiliations various industry conference events. 0 American Water Works Association 0 Solid Waste Association of North America Management ® 2024 American Public Power Association Business Excels at managing project workflow and timelines, and Finance Committee Corporate Officer including consistent and clear client communication a Women in leadership, Cornell University among UFS, client, and other stakeholders, throughout the project, and ensuring complete fulfillment of project deliverables. Utility Financial Solutions,LLC Proposal for City of Ashland P a g e 1 25 04010°"P, UTILITY FINANCIAL SOWTIONS. LLC Joan Bakenhus Senior Financial Analyst, Utility Financial Solutions, LLC Joan has experience working with municipal utilities from 1986-1996 and came back to industry in 2006. Joan has a degree in Business Administration. Joan has ✓ worked as a Rate Analyst for one of the largest public power systems in the nation �U (Lincoln Electric System) and for Utility Financial Solutions, LLC since 2006. Joan is experienced in development of long-term financial plans, rate design models and cost of service studies for electric,water,and wastewater utilities. Email: jbakenhus@ufsweb.com Cellular: 402-483-2542 Location: Nebraska Cost of Service(COS) Rate Design • Working with Utilities to identify information • Balancing and set up of models for development requirements to complete cost of service and rate design for water,wastewater,and electric financial plans utilities to determine commodity and customer • Set up and develop utility revenue requirements, charges cost of service program and utility revenue proof • Development of rate design models for electric, • Balancing and set up of models for development water utilities of cost of service for water,wastewater,and • Development of rate surveys electric utilities to determine commodity and customer charges Other Utility Tools • Responsible for analysis, preparation and Balancing of sales with revenue to help ensure updating cost of service models for several proper billing statistics are used in cost of service electric,water utilities models Long-term Financial Analysis • Development of long-term financial forecasts for water,wastewater,and electric utilities to determine the amount of timing of rate adjustments Utility Financial Solutions,LLC Proposal for City of Ashland P a g e 126 rrrir�r�% UTILITY FINANCIAL SOLUTIONS, LLC Robert Blank Financial Analyst, Utility Financial Solutions, LLC Robert has been working for Utility Financial Solutions,LLC since May of 2014 and has a Bachelor of Business Administration with a major in Finance from Davenport University. Over his time at UFS he has conducted Utility rate surveys as well as developed rate designs. Robert has experience with long term financial projections and cost of service studies for Electric, Water, Wastewater, and Gas l utilities. E-mail: bblank@ufsweb.com Cellular: 616-403-9926 Location: Holland, MI Robert's experience includes: • Developing rate design models for electric utilities • Conducting Rate Surveys • Responsible for analysis of financial statements and preparation of cost of service models • Working with utilities to identify the information needed to conduct an accurate cost of service study • Calculating Minimum Cash Reserve levels,Target Operating Income, and Debt Coverage Ratios Janel Albrecht Financial Analyst, Utility Financial Solutions, LLC Janel began working for Utility Financial Solutions, LLC in February 2024. She has 24 years of experience as an administrative professional, Janel worked in the paper industry with a wide variety of responsibilities, For 7 years,she managed a small group and scheduled onsite service work. r 'Z E-mail: jalbrecht@ufsweb.com Cellular: 920-213-7491 Location: Neenah, WI Janel is skilled in the following: • Billing and invoicing • Customer service and correspondence • Maintain customer information and databases • Order entry and schedule production • Prepare proposals and reports Utility Financial Solutions,LLC Proposal for City of Ashland P a g e 2.7 '100'),'AgAp SUTILITY FINANCIAL SOLUTIONS. LLC References McMinnville Water& Light—McMinnville, OR Client Contact: Trena McManus, Utility/Rate Analyst MCMINNVILLE Phone: 503-435-3113 1889 Email: tdm@mc-power.com Water & Light Utility Electric Water Services Provided 2013-2024 2017-2024 9 Long-term financial projections,review of financial targets, and long term rate track Scope of Work e Cost of service study,and four-year rate design a Reports and presentation to governing body 9 Time of use analysis Additional 9 Street lighting cost of service * Analyze pole attachment fees Information 9 Line extension analysis - Financial reserve policy North Central Public Power District—Creighton, NE Client Contact: Doyle Hazen, General Manger TRAL Phone: 402-358-5112 (41 111 ell hCE 1.-I V.I PUOLIC POWER DISTRICT Email: doyle.hazen@ncppd.com F!!W Utility Electric Services Provided 2002—2024 • Long-term financial projections, review of financial targets,and long term rate track • Cost of service study,and multi-year rate design • Line extension methodology Scope of Work 9 Minimum cash policy methodology • Distribution demand charges • Street lighting rate analysis III Town acquisition and integration analysis • Reports and presentations to governing body Utility Financial Solutions,LLC Proposal for City of Ashland P a g e 128 f UTILITY FINANCIAL i SOILLITIONS. LLC: Nashville Electric Service—Nashville, TN Client Contact: Sylvia Smith, Budget& Rates Manager Phone: 615-747-3761 Email: snsmith@nespower.com Utility Electric Services Provided 2012—2024 • Long-term financial projections,review of financial targets,and long term rate track • Cost of service study and rate design • Development of time of use rates Scope of Work • Electric line extension policy • Review and analysis on solar value—net metering, net billing • Reports and presentation to governing body Additional • Provide costs to each class of customer; charges broken down by demand, energy, and season Information . Charges to each customer based on voltage, review rate classes, and recommendation City of Shasta Lake—Shasta Lake, CA Client Contact: James Takehara, Electric Utility Director Phone: 530-275-7400 Email: jakehara@cityofshastalake.org Utility Electric Services Provided 2012—2023 • Long-term financial projections, review of financial targets, and long term rate track • Cost of service study, and multi-year rate designs Scope of Work • Line extension study • Power cost adjustment study • Solar distributed generation rate program review • Reports and presentation to governing body The City had several important objectives and considerations apart from traditional cost of service considerations,such as: promotion of economic development, impacts on low income users, and environmental objectives such as carbon free resources, utility scale renewable Additional projects, rooftop solar, energy conservation, electric vehicles. The study included analysis of Information a special contract customer that considered a pass-through power supply and margin distribution charge, with a customer owned substation accounted for in the cost of service allocations. UFS also conducted bill comparisons for each rate class to ensure customers did not receive an increase outside of the projected bandwidth. Utility Financial Solutions,LLC Proposal for City of Ashland P a g e 1 29 ��PSUTILITY FINANCIAL SOLUTIONS, LLC � Project Schedule Our experience with cost of service and rate design studies allows us to conduct e cost effective and efficient study. The following is the tentative project schedule for completion of the cost of service and rate design. This schedule will be finalized during the initial project kick-off meeting with management. Task Expected Completion—Twelve Weeks Initial Meeting—Preparation uf Information Request Week One Completion of Information Request by Client Week Two Planning/Set-up Study VKcckThper—Fivc Development of Revenue Requirements VVerksix—seven Cost of Service Analysis Component/Functional Costs VVeekBaht-Nine Review Rate Design and Alternatives Week Ten Report,Recommendations&Presentation ofDraft Week Eleven Final Report Week Twelve The completion of the project on the proposed schedule is dependent on the cooperation 4/various departments within the Utility to prepare the information request in a timely manner. - Utility Financial Solutions,Uc Proposal for City ofAshland Page 130 UAPSUTILITY FINANCIAL SOLUTIONS, LLC PFOpO32d RrnfpSS'OD8| SeFV'C8s ApFe8DleDt Prices,terms, and conditions are good for a period of 90 days from this proposal date of January 30, 2025. Payment will be made through submission of invoice which itemizes the work performed. Electric Cost of Service, Financial Projection, 3-Year Rate Design...................$37,900 Total above does not include onsite meetings, out of pocket travel expenses, or travel time. Anticipated Meetings(Virtual, unless noted): Deliverables(for all utilities): m Pnojectkickoff ° Final Report(PDF[ detailing: * Data collection summary 9 Long-term Financial Projection and RateTmck m Financial review summary ~ Minimum cash reserve determination " DeL�oervicerabo m Dra�vepo�vvkh management @ Target ope�tingincome (r�eofmtum) � Fina| repo�withmane�ement * Cost of Service Analysis ° 3-Year Rate Design Hourly Rates(travel is discounted otSD%) Out of Scope Pricing: K8ork Beauchamp $36O.OD Out of scope items and work hours will be billed at Dawn Lund $32580 the hourly rates listed on this page. Dan Kasbohm $290.00 Mike Johnson $290.00 Vndte meetings, if requested and agreed upon,will Chris Lund $290,00 be billed as out ofscope. ]iUian]urczyk $250.00 �| ��d���ou�de��ecune�mm��gu�� ]oanBakenhus � 175lN additional yeo�ofraoedes�n will be charged houdy. Support Staff 6b5.00—� 165�0O . We |ookfonward to exceeding your expectations. Please sign, date, and return to diund Ufsweb.corn at your earliest convenience. Sincerely, Date: 02/13/2025 Dawn Lund Accepted By Vioe-Pnsident Utility Financial Solutions, LLC City ofAshland Utility Financial Solutions,ur Proposal for City ufAshland puue | az L.Jfility Finai-'icialSO�l[AtiOl-ISPersor"'ia���� Services Agr,eenierit 1 -31 -2025 Final Audit Report 2025-02-13 Created: 2025-02-13 By: Cobi Glick(cobi.glick@ashland.or.us) Status: Signed Transaction ID: CBJCHBCAABAAb2glTBX-gvlTqnfSUM OnB]tV9ga6FoY "Utility Financial Solutions Personal Services Agreement 1-31-2 025" History Document created by Cobi Glick(cobi.gl ick@ash land.or.us) 2025-02-13-9:35:25 PM GMT Document emailed to Thomas McBartlett(thomas.mcba rtlett@ash land.or.us)for signature 2025-02-13-9:36:23 PM GMT Email viewed by Thomas McBartlett(thomas.mobartlett@ashiand.or.us) 2025-02-13-9:37:54 PM GMT 6�0 Document e-signed by Thomas Mcl3artlett(thomas.mcbartiett@ashiand.or.us) Signature Date:2025-02-13-9:39:56 PM GMT-Time Source:server Agreement completed. 2025-02-13-9:39:56 PM GMT Adobe Acrobat Sign