Firm describes plans to examine utility rates

Thursday, May 31, 2007 | 12:49 a.m. CDT; updated 5:08 a.m. CDT, Sunday, July 20, 2008

A consulting firm hired by the city to investigate utility rates unveiled its plans during a preliminary meeting Wednesday night.

Tom Unke, a partner at Virchow, Krause and Company, LLP, said his firm’s goal is to determine if the current rates for water, electricity and wastewater are adequate. Its findings will be used to decide if any changes need to be made that are specifically related to rate objectives the city council deem important.

Unke explained how the rate study will be conducted. The firm will analyze current activities and trends and will then forecast future activities by using “significant assumptions,” which estimate how much revenue the city will make and what its expenses will be. Next, the firm will arrive at a forecasted revenue requirement, which will tell how much revenue will be needed to cover costs. Finally, depending on the total revenue, the overall rates will be adjusted if needed.

“We let the numbers speak for themselves,” Unke said.

Once the firm determines the results of the rate study and the cost of service study, it will factor these results in a way that is consistent with the city’s rate objectives, Unke said.

At the meeting, council members expressed the importance of having a competitive market so more people are willing to live in Columbia, even though the city is a regulated service territory with only one provider.

Council members highlighted social and environmental objectives such as providing lower rates for people using solar power.

The firm will also review rate policies, rate reviews, connection fees and minimum cash reserve levels.

City Manager Bill Watkins commented that his concern was to represent the community’s priorities when discussing the rate objectives. He added that there will be several additional meetings before the

final report is presented on July 31.

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