HomeMy WebLinkAbout17- RFP Submission - Advanced Engineering and Environmental Services, Inc. (AE2S) - Water and Wastewater Cost of Service and Rate Design StudyCITY OF BOZEMAN, MT
PROPOSAL FOR
WATER AND WASTEWATER UTILITY SYSTEM COST OF SERVICE & RATE DESIGN STUDY
The Financial Link
8.15.2017
August 15, 2017
Ms. Kristen Donald
Finance Director
City of Bozeman
121 North Rouse
PO Box 1230
Bozeman, MT 59771
Re: Building a Sustainable and Resilient Rate Structure Through a Comprehensive Understanding of Your System, Goals, and
Challenges
Dear Ms. Donald:
The City of Bozeman is taking big steps with its utilities to address existing infrastructure and equipment O&M needs while undergoing
a period of extremely rapid growth. These changes require you to be intentional and thoughtful in approaching the changes that are
ahead for your ratepayers, something that is apparent in the thought that has gone into the RFP. To better serve your needs with this
project, we are combining forces with our sister company, AE2S Nexus, our utility financial consulting practice, to aid you through these
exciting times. We are happy to partner with you on this opportunity and provide our expertise in accurately assessing cost of service
and designing a rate structure that will allow you to continue to have a responsive and financially sustainable utility. We understand this
project is more than a cost of service and rate study - it is an integrated financial master plan and we have assembled a team to provide the
specific expertise needed to guide you through this process. Our team brings the following benefits:
Keen Awareness of the Underlying Details Delivers Desired Outcomes. Your recent water facility plan and drought conservation
plan highlight a number of challenges, in the near-term as the you look to adapt to growth. Our team brings the best understanding of
these challenges along with strong technical expertise in the wastewater side to build our familiarity with your collection system and
Water Reclamation Facility. This understanding and awareness of the driving cause of many of your challenges will provide us with the
critical background to set fair and equitable rates that achieve your goals. Building off this knowledge, we will be able to put together a
truly comprehensive look at the fiscal health of your utility and chart a reasonable path forward that incorporates both growth and water
conservation considerations into rate and capital planning. As a result, we understand your critical needs, as well as potential flexibility in
the CIPs - depending on growth and existing system conditions. This enhances our ability to assess your cost of service and best design a
rate structure to cover your infrastructure needs.
Marriage of Financial, Utility Management, and Engineering Expertise Brings True Understanding of Your Utilities. It is clear that
you understand both the financial and technical aspects of your utilities are intertwined. We started AE2S Nexus because we know that at
the heart of good utilities is a mix of the same financial and technical aspects. Our mix of financial, utility management, and engineering
expertise enables us to truly “get” public utilities; the result is a study that addresses your concerns while balancing rate equitability.
Proven Experience Enables Efficiency. Expertise translates to efficiency - meaning you get the results you want on time and on budget.
We have a proven track record of assisting utilities achieve revenue stability and rate equability – including utilities facing similar issues as
Bozeman (e.g., high growth rates, transitions from small towns to thriving mid-size cities, large universities, and water supply constraints).
In fact, we have completed the past three comprehensive water and wastewater utility financial analyses for the City of Billings, MT, which
included key similarities in planning their conservation rates and accurately forecasting revenues by incorporating probability-based
simulations. This experience, coupled with our foundational understanding of your system challenges and goals, will achieve efficiency on
your project.
On behalf of our project team, we look forward to this opportunity to work collaboratively alongside you to complete this critical project
for the City of Bozeman. Please contact me with any questions: (o) 406-219-2633; (m) 406-570-5184; (e) Scott.Buecker@ae2s.com.
Submitted in Service,
AE2S
Scott Buecker, PE Shawn Gaddie PE
Client Services Manager Project Manager/Nexus Division Manager
Advanced Engineering and Environmental Services, Inc.
1050 E Main Street, Suite 2 • Bozeman, MT 59715 • 406-219-2633
www.ae2s.com
INSIDE
1. FIRM BACKGROUND
2. FIRM EXPERIENCE
3. PROPOSED TEAM
5. WORK SUMMARY
6. WORK PLAN AND PROJECT
SCHEDULE
7. CITY-FURNISHED DOCUMENTATION
4. REFERENCES
ATTACHMENT 1 - STATEMENT OF
NON-DISCRIMINATION FORM
ATTACHMENT 2 - EXAMPLES OF
RECENTLY COMPLETED RATE
STUDIES
1FIRM BACKGROUND
AE2S CITY OF BOZEMAN WATER AND WASTEWATER UTILITY SYSTEM COST OF SERVICE & RATE DESIGN STUDY PROPOSAL 1.1
AE2S Nexus, a Municipal Securities Rule Making Board (MSRB) Registered Municipal
Advisory Firm with dedicated Utility Financial and Asset Management expertise, is
comprised of individuals ready to assist the City of Bozeman with issues such as utility
financial health (cost of service, rate design, revenue adequacy, revenue forecasting, etc.),
State and Federal funding programs, project financing, and asset management.
Since 1999, we have established ourselves as a regional resource for financial rate making
assistance in concert with our sister company AE2S’ strong reputation as drinking water
and wastewater specialists. The experience of our financial consulting team has become
a critical component of our water and wastewater services, bolstering the financial
stability of our clients. We have not only conducted financial analyses and presented the
results, but have been available for follow-up consultation and guidance as our clients
worked through related utility efforts such as developing rate ordinances, updating low-
income assistance programs, and large-user rate negotiations. We believe so strongly in
supporting our clients in this important aspect of utility management, that for the past 15
years we have been preparing the Annual Utility Rate Survey to provide backing for the
work of our clients and to serve as a resource for utility management in our region (for
clients and non-clients).
AE2S Nexus and AE2S work as an integrated team, providing our clients with the perfect
marriage of financial and engineering expertise that enables us to truly understand your
organization and to bolster your financial stability.
SCOTT BUECKER, PE
Client Service Manager
C: 406-570-5184
Scott.Buecker@ae2s.com
SHAWN GADDIE, PE
Project Manager/Nexus
Division Manager
C: 701-866-3639
Shawn.Gaddie@ae2s.com
AE2S
1050 East Main Street, Suite 2
Bozeman, MT 59715
F: 406-219-2635
CONTACT INFORMATION
OFFICE
LOCATION
PERCENTAGE OF
SERVICES/WORK
Bozeman, MT 7 percent
Grand Forks, ND 92 percent
Fargo, ND 1 percent
•Cost of ServiceAnalysis (COSA)
•Long-Term RatePlanning
•Revenue Adequacy
•Annual Utility FinanceReview
•Rate Design
Utility Financial Management
•Condition & Opera-tional Assessments
•Sustainable AssetManagement Plans
•Financial Renewal &Replacement ValueProjections
Asset Management
•City Assessment Support
•Direct Auditor/Clerk/Finance Director SupportServices
•Training and BudgetingAssistance
•Billing Systems Support
Municipal Financial Services
•Project FundingEvaluations & Scoring
•Traditional & Non-Traditional ProjectFinancing Solutions
•On-Going FundingSupport & FundingAdministration
Project Fundingand Financing
OUR SERVICES
•Water, Sewer, andStormwater UtilityBenchmarking
•Annual Utility FinanceReview
Annual Utility Rate Survey
FIRM BACKGROUND
1
2FIRM EXPERIENCE
AE2S CITY OF BOZEMAN WATER AND WASTEWATER UTILITY SYSTEM COST OF SERVICE & RATE DESIGN STUDY PROPOSAL 2.1
Value of Experience and Expertise
The AE2S team has been assembled
to provide the City of Bozeman
with an unmatched combination of
regional public utility experience and
municipal rate study expertise. Our
financial company, AE2S Nexus, is
comprised of individuals dedicated to
fully understanding utility financial
management, rates, and finances. The
Nexus team works as an integrated
group with AE2S technical experts,
providing our clients with the perfect
marriage of financial and engineering
expertise that enables us to truly
understand and address your unique
financial, infrastructure management,
and engineering needs. AE2S has been
providing municipal utility focused
services since the company’s inception.
Utility Management
Over the last 26 years, AE2S has
developed and grown a unique service
within the broader engineering field.
The AE2S Nexus division was formed
to assist public and private clients
with utility funding and financial
services. AE2S Nexus provides utility
planning, funding development, funding
administration, and asset management
services. We work routinely with
our Water, Wastewater, and Water
Resources Practices in developing
Capital Improvement Plans (CIP) and
utility funding/financial models for
master plan and project implementation
for multiple municipalities across the
region. AE2S has broad experience
assisting communities with addressing
infrastructure challenges as a result of
expanding development, new regulation,
and aging infrastructure. Our team has
served clients in preparation of planning
level costs, projection of expenditures
over time, identification of available
funding mechanisms, and restructuring
of existing sources.
Our specific related water and
wastewater rate experience is highlighted
in greater detail on the following pages.
CLIENT PopulationWaterWastewaterRate DesignOn-call Financial ServicesCity of Billings, MT 109,060 x x x x
City of Belgrade, MT 8,254 x x
City of Whitefish, MT 6,649 x x x
City of Rapid City, SD 67,960 x x x
City of Sioux Falls, SD 158,000 x x x x
City of Eden Prairie, MN 60,800 x x x x
City of Duluth, MN 86,128 x x
City of St. Cloud, MN 67,641 x x x x
City of Williston, ND 30,000*x x
City of Minot, ND 46,320 x x x
City of Fargo, ND 105,550 x x x x
City of Grand Forks, ND 52,840 x x x x
*Extreme population growth situation
Utility Studied
RATE STUDY EXPERIENCE
AE2S Nexus has completed
hundreds of rate studies and
related financial projects for
municipal and industrial clients.
FIRM EXPERIENCE
2
2FIRM EXPERIENCE
AE2S CITY OF BOZEMAN WATER AND WASTEWATER UTILITY SYSTEM COST OF SERVICE & RATE DESIGN STUDY PROPOSAL 2.2
CITY OF BOZEMAN PLANNING AND ENGINEERING PROJECT EXPERIENCE
AE2S has completed several projects
with the City of Bozeman that have
given us an excellent understanding
and appreciation of the costs the City
incurs for water and wastewater services,
including:
• Integrated Water Resource Plan
• Distribution System Risk Assessment
Response Plan
• Water Facility Plan Update
• Lyman Creek Water System
Expansion
• Drought Management Plan
A brief summary of each of these projects
and the relevance to cost of service
follows.
Integrated Water Resource Plan
(IWRP)
Bozeman’s water supply is limited
by its location in the headwaters of the
Gallatin River watershed and the closed
basin status of groundwater. AE2S
completed the IWRP (with CH2M as a
subconsultant) in 2014 to clarify current
water supplies, identify future water
supply needs, and assess the supplies
susceptibility to climate change.
The IWRP quantified a future
water supply gap, the extent of which
will depend on growth rates, water use/
conservation, securitization of additional
water supplies, and climate change.
Alternatives to decrease or eliminate the
Bozeman, Montana
water supply gap were developed and
screened for feasibility. The evaluation
process included close collaboration with
a City Commission appointed Technical
Advisory Committee, to identify the
most feasible portfolios and cost-effective
approaches. The final IWRP included
recommendations for implementation of a
Water Conservation Program and adopt a
Drought Management Plan.
This work gave AE2S insight
into the cost of water rights and the
high costs that the City will face for
water supply and distribution as it
continues to grow at a rapid pace.
KEY PROJECT ELEMENTS
• Capital Improvements Project
Planning
• CIP Prioritization Based on Risk
• Future Water Demand Projections
• Non-potable Irrigation Study
• Drought Management Rate
Structures
DATE
2011-Present
CLIENT
City of Bozeman
CLIENT CONTACTS
Brian Heaston
Project Engineer
406-582-2280
Craig Woolard
Public Works Director
406-582-2273
2FIRM EXPERIENCE
AE2S CITY OF BOZEMAN WATER AND WASTEWATER UTILITY SYSTEM COST OF SERVICE & RATE DESIGN STUDY PROPOSAL 2.3
CITY OF BOZEMAN PLANNING AND ENGINEERING PROJECT EXPERIENCE (CONT.)
Distribution System Risk Assessment
Response Plan (DSRARP)
The DSRARP provided the City of
Bozeman with a decision making tool
for establishing appropriate condition
assessment intervention, capital
improvement planning and establishing a
prioritizing methodology to maximize the
use of available funding on an annual basis.
The primary objective was to assist
the City with optimizing prioritization
of funding water main replacement
projects so that the City uses its
available budget in the most cost-
effective manner possible.
This work gave us additional
insight into the City’s CIP funding
process, which will be a major
factor in the cost of service
analysis.
Water Facility Plan Update
The water facility plan developed
by the AE2S team addresses the many
challenges facing the City, including
rapid growth and the approaching large
infrastructure improvements that will
be necessary to accommodate growth
while continuing to provide best-in-class
service to existing customers. The team
developed a unique CIP prioritization
matrix to best balance available budgets
with business risk and level of service
goals, and delivered the tool to the City to
enable staff to continually reevaluate and
reprioritize CIP projects as needs dictate
over the coming years.
As a result, we understand
the City’s critical needs as well
as potential flexibility in the CIP
depending on growth and existing
system condition. This enhances
our ability to assess the City’s cost
of service and best design a rate
structure to cover the City’s water
infrastructure needs.
Lyman Creek Water System Expansion
The Lyman Creek Water System
Expansion project was originally intended
to increase Lyman spring’s yield, improve
capture of the yield, and replace the
existing reservoir and portions of the
transmission pipeline. The project has
since morphed to simply enabling better
capture of existing yield. This was due
to multiple factors, but in part due to the
large cost of reservoir and transmission
piping project. Lyman is one of many
water resource projects that the City
simply cannot afford to undertake
at this time. The rate study must
balance what is needed with what is
affordable for Bozeman residents.
Drought Management Plan
The Drought Management Plan grew
out of the IWRP, with the recognition
that the City could be headed for a
water supply gap, and that without
water conservation, or with a significant
drought, the gap would present sooner
rather than later. The DMP outlines the
City’s vulnerability to drought, describes
ways to mitigate that vulnerability,
provides water supply data consolidation
for use in a new drought model, and
lays out a drought response strategy for
implementation.
Part of the drought mitigation
and response strategy hinges on
the recommendation to implement
conservation based rate structures
or water shortage surcharges.
AE2S provided an overview and
examples of conservation-driven
rate structures and/or drought
surcharges, to enable the City
to consider methods it may wish
to utilize in the forthcoming rate
study work.
Bozeman, Montana
“We are so thankful for all the
hard work that the AE2S Team put
into our draft recommendations.
It was clear to everyone in our
Engineering ground that this
format and level of analysis will
be the new standard moving
forward. We can’t thank the
AE2S Team enough for all the
knowledge and experience
they brought to the table. I am
confident that the citizens of
Bozeman will benefit for years to
come!”
-Jon Henderson,
City of Bozeman
GIS Manager
2FIRM EXPERIENCE
AE2S CITY OF BOZEMAN WATER AND WASTEWATER UTILITY SYSTEM COST OF SERVICE & RATE DESIGN STUDY PROPOSAL 2.4
WATER AND WASTEWATER RATE STUDYBillings, Montana
The City of Billings, MT provides
water and wastewater service to tens of
thousands of domestic and wholesale
user accounts in the City and surrounding
region. This service includes nearly
29,000 domestic accounts, treated water
to the Water District of Billings Heights,
and wholesale wastewater service to
Lockwood Sanitary Sewer District and
Phillips 66 Billings Refinery. In early
2014, the City of Billings first retained
AE2S Nexus to update its existing
water and wastewater rate models and
recommended rates for the 2015 fiscal
year. After a successful project, the City
of Billings again retained AE2S Nexus in
late 2014 to complete a comprehensive
update to its water and wastewater cost of
service rate models (as well as the System
Development Fee) for the FY16 – FY17
KEY PROJECT ELEMENTS
• Water and Wastewater Rate
Updates
• Conservation Rate Structure
Development
• Capital and Reserve Use
Planning
• Revenue Forecasting
• Tiered User Classes
DATE
2014-2017
CLIENT
City of Billings
CLIENT CONTACT
Jennifer Duray, CPA
Public Works Finance
Manager
406-657-8239
period.
The FY16-FY17 rate setting process
allowed the City to take a deeper dive
into the rate setting process and allowed
for more flexibility to address new
challenges. Through this process, one
critical component that was addressed
was how the City was to implement a new
tiered, conservation rate structure for
their water system. Our team developed
a rate structure that balanced equitability
and potentially fixed income customers
with heavy water users. The new structure
provided a range of tiers from base to
penalty with potential ideas for additional
future revisions based on user responses.
Building on another successful project,
the City again retained AE2S Nexus for
the FY18-FY19 (as well as FY20-FY21)
rate setting updates. New projects bring
new challenges and new opportunities;
as the City began seeing how users were
responding to the new tiered water rate
structure and with the groundbreaking
of significant capital projects on the
wastewater side, our team rolled up
our sleeves and brought another tool
to the City’s toolbox. Our use of a new
probabilistic revenue forecasting tool on
the water rate side provided insights into
how water usage is continuing to change
based on rates and system demands. In
addition, it provided critical insights
as we assisted the City with finding the
balance between a sustainable reserve
policy and meeting revenue sufficiency.
As we continue our work with the City of
Billings, we continue to look to integrate
new and better tools and techniques to
further their financial sustainability.
2FIRM EXPERIENCE
AE2S CITY OF BOZEMAN WATER AND WASTEWATER UTILITY SYSTEM COST OF SERVICE & RATE DESIGN STUDY PROPOSAL 2.5
WATER & WASTEWATER FINANCIAL PLAN & RATE STRUCTURE STUDY
Whitefish, Montana
In May 2015, AE2S Nexus initiated
a Water and Wastewater Financial
Plan and Rate Structure Study for the
City of Whitefish. This study involved
completion of cost of service rate
analyses for the Water and Wastewater
Utilities, review and development of
potential modifications to the existing
rate structures, and forecasted revenue
adequacy for both utilities.
Due to the terrain in Whitefish, there
are areas of the City that require extensive
pumping, and are expensive to serve. The
Utility has some of the most expensive
rates in the region, in part due to long-
standing City philosophy of subsidizing
KEY PROJECT ELEMENTS
• Evaluation and Utilization of
Available Funding Sources
• Cost of Service Rate Analyses
• Forecasted Revenue Adequacy
DATE
2015-2016 CLIENT
City of Whitefish
CLIENT CONTACT
Dana Smith, CPA
Finance Director
406-863-2405
irrigation water use. The study specifically
developed recommendations for
appropriate charges to the portions of the
City where excessive pumping is required
and for staged increases to gradually
achieve full cost recovery for irrigation
water use.
Similar to the water system, the
wastewater system is required to pump its
wastewater multiple times, in some cases,
in its collection of wastewater across the
varied terrain to the wastewater treatment
plant. This extensive pumping network
translates to high wastewater rates when
compared to others in the region. To meet
requirements of its discharge permit, the
City of Whitefish is also planning for a
$20 million wastewater treatment plant
project. As part of the revenue adequacy
effort, funding scenarios were evaluated
with respect to the costs associated with
the new wastewater treatment facility. The
City’s wastewater utility also serves a large
resort located outside City limits. The
study specifically addressed appropriate
charges for the users located outside the
system, as well as generated a multi-year
plan to gradually increase rates to a level
that would support the future wastewater
treatment debt and meet associated
coverage requirements.
2FIRM EXPERIENCE
AE2S CITY OF BOZEMAN WATER AND WASTEWATER UTILITY SYSTEM COST OF SERVICE & RATE DESIGN STUDY PROPOSAL 2.6
WATER, SEWER, AND STORM DRAINAGE UTILITY RATE DESIGN STUDY
AE2S Nexus has served the City of
Eden Prairie with utility rate support since
2010, helping to provide consultation
and advice as they looked to tackle the
challenges they were facing. When first
retained in 2010, the City was dealing with
how to balance a period of growth and
providing for the renewal and replacement
of existing City assets. To complicate
matters, the State of Minnesota was
also implementing new and uncertain
guidelines for conservation rate structures.
Addressing these issues, we built on our
history of engineering knowledge for
our client to develop an innovative and
tailored assest management and reserve
policy as well as a new rate structure that
met State guidelines and provided for
revenue stability. After our initial study
efforts were completed, AE2S Nexus
reviewed and updated rates in 2013 and is
again performing an update to utility rates
with an increased eye to affordability and
sustainability.
Asset Management Approach
Asset management concepts were
used to develop a basis for proactive
financial planning for utility rehabilitation
and maintenance needs. To quantify CIP
utility infrastructure reinvestment costs
specific to each utility, the overall asset
R&R costs for utility system infrastructure
were estimated, the useful service life of
each asset was determined, and various
cost adjustment factors were applied to
account for existing infrastructure age and
likelihood of failure. Ultimately, a utility
specific annual CIP reinvestment cost was
determined for each of the utilities, which
was then incorporated into the City’s
reserve policies and capital spending
projections.
Rate Structure Development
Although the rate structure at the time
imposed a penalty for water use in excess
of 150% of winter use, daily and hourly
peak was were higher than desired.
Based on an evaluation of administrative
costs and benchmarking data for
comparable utilities, modification to the
fixed component of the water rate was
recommended to yield higher revenue
stability for the system. Based on typical
water use requirements for vegetation in
the region and the City’s desire to provide
users with flexibility to have some control
over charges by making changes to water
use, a series of re-designed rate structure
options were developed.
Eden Prairie, Minnesota
KEY PROJECT ELEMENTS
• Asset Management Approach
• Determination of Utility-Specific
Annual CIP Investment Costs
• Conservation Rate Design
DATE
2010-Present
(2017 Update)CLIENT
City of Eden Prairie
CLIENT CONTACT
Sue Kotchevar
Chief Financial Officer
952-949-8386
2FIRM EXPERIENCE
AE2S CITY OF BOZEMAN WATER AND WASTEWATER UTILITY SYSTEM COST OF SERVICE & RATE DESIGN STUDY PROPOSAL 2.7
GRAND FORKS MULTI-YEAR INFRASTRUCTURE PLANNING AND FINANCIAL SERVICES
Grand Forks, North Dakota
Facing significant infrastructure
needs in an approximately 10-year
planning horizon for the City’s Water,
Wastewater, and Stormwater Utilities,
as well as impending significant
rehabilitation and new capital projects
relating to the City’s transportation
infrastructure, the City of Grand Forks
retained AE2S and AE2S Nexus to
complete a Multi-year Infrastructure
Planning and Financial Services project.
The project was successful in
technically and financially quantifying
the needs of the City’s Water, Wastewater,
and Stormwater Utilities, as well as the
transportation infrastructure. As a first
task, AE2S worked with the City to
KEY PROJECT ELEMENTS
• Water, Wastewater, and
Stormwater Utilities
• Operating Plan Development
• Capital Plan Development
• Comprehensive Rate Studies
for Enterprise Funds
DATE
2011-Present
CLIENT
City of Grand Forks CLIENT CONTACTS
Todd Feland
City Administrator
701-738-8747
Maureen Storstad
Finance Director
701-787-3776
develop a prudent capital and operating
plan to address identified needs for each
infrastructure category. Potential revenue
sources available to the City of Grand
Forks were then identified based on the
capital and operating plan and updated
infrastructure financing policies. A
revenue adequacy analysis for the purpose
of determining the gap in available revenue
compared to revenue requirements was
then performed, taking into consideration
each of the newly developed/refined
CIPs and operating expense proformas,
as well as the City’s existing revenue
collection streams. Multiple scenario
analyses were performed, considering the
application of all identified and potentially
available revenue sources to close the
funding gap. The project culminated in
making recommendations regarding the
funding scenario that was most likely
to accomplish the long-term financial
objectives of the City for the infrastructure
areas of consideration.
Since the completion of the original
study effort, AE2S has been working
with the City of Grand Forks to update
the utility financial models annually to
maintain accurate financial planning
forecasts and provide ongoing rate
projections.
3PROPOSED TEAM
AE2S CITY OF BOZEMAN WATER AND WASTEWATER UTILITY SYSTEM COST OF SERVICE & RATE DESIGN STUDY PROPOSAL 3.1
The Water and Wastewater Utility Rate Study is a critical project for the City. Founded on our understanding of your project needs
and objectives, we have selected a team of our best financial and asset management experts for this project. This proven team has worked
together helping numerous municipalities throughout the region to achieve their financial goals.
An organizational chart is presented below showing how the team will interact with the City of Bozeman and each other. The
following pages contain resumes key project team members and their specific roles.
CITY OF BOZEMAN
SHAWN GADDIE, PE
Project Manager15% of total project
3
PROPOSED TEAM
Proven Track Record = Continued
Success
Our team has a history of blending
financial and engineering expertise
and provides you with the following:
• Extensive experience with Cost
of Service Anaylsis, Impact
Fees, and Municipal Financial
Services - including helping
Montana’s largest municipality
(Billings) with cost of service
based rate setting and the
design and on-going evaluation
of the City’s conservation rate
structure.
• Local presence and knowledge
- Client Services Manager Scott
Buecker is minutes away from
your office and recently worked
with the City on the Water
Facility Plan Update, providing
him with in-depth knowledge of
your water utility.
• A balance of both financial
and engineering expertise,
combined with perspective
from having worked with
municipalities and developers
alike. This provides us with a
big picture view that enables us
to develop solutions that are fair
and equitable.
• Having worked with a number or
growing Montana communities,
we have a strong understanding
of Montana financial statutes.
SCOTT BUECKER, PE
Client Services Manager6% of total project
RYAN GRAF, MPA
Lead Financial AnalystWater42% of total work
MIRANDA KLEVEN, PELead Financial AnalystWastewater35% of total work
*In-House Public Engagement Stafft
Often communities struggle with the process of rolling out changes
to rate structures and financial policies. Our team of communications
experts regularly help with stakeholder and public engagement, as well as
the communication of information such as rate changes. They are ready
to jump in on this project should you desire.
LANCE LEHIGH, PETechnical Support
1% of total work
JACOB STROMBECK, PETechnical Support
1% of total work
SUPPORT
MARIA EFFERTZ HANSON*Communications
Strategist
3PROPOSED TEAM
AE2S CITY OF BOZEMAN WATER AND WASTEWATER UTILITY SYSTEM COST OF SERVICE & RATE DESIGN STUDY PROPOSAL 3.2
TASK ASSIGNMENTS
Our Staff Assignment by Task is founded on our Project Approach. Our team expects a series of Progress Meetings conducted at
milestones throughout the course of the work. Depending on the City’s preference, these meetings can be conducted via electronic
meeting or phone.
AE2S Nexus follows the approach
outlined in the American Water
Works Association M-1 Manual -
Principles of Water Rates, Fees, and
Charges and the Water Environment
Federation Manual of Practice No.
27 – Financing and Charges for
Wastewater Systems. BUECKER CLIENT SERVICES MANAGERGADDIE PROJECT MANAGERGRAF FINANCIAL ANALYST - WATERKLEVEN FINANCIAL ANALYST - WASTEWATERLEHIGH TECHNICAL SUPPORTSTROMBECK TECHNICAL SUPPORTEFFERTZ HANSON COMMUNICATIONS STRATEGISTTASK 1: PROJECT KICKOFF AND DATA REVIEW
1.1 Kickoff Meeting (On-Site)x x
1.2 Data Collection & Information Request x x x x x
TASK 2: COST OF SERVICE ANALYSES
2.1 Client Updates & Coordination x x
2.2 System & User Profiling x x x x
2.2.1 Review Establish Test Year Budgets x x x
2.2.2 Establish and Refine Large User Characteristics x x x
2.3 COSA
2.3.1 Methodology Review x x x
2.3.2 Model Development x x x
2.3.3 Draft Review Meeting x x x x
2.4 Final COSA Model Development
2.4.1 Model Updates x x x
2.4.2 Results Review Meeting x x x x
TASK 3: INTEGRATED FINANCIAL PLANNING
3.1 Client Updates & Coordination x x
3.2 Evaluate Conservation adn Drought Rate Options and Potential Effectiveness x x x x x x
3.3 Review Recommendations Regarding Capital Financing Policies and Procedures x x x
3.3.1 Capital Financial Modeling and Debt Related Revenue Requirements Evaluation x x x
3.4 Review Recommendations Regarding Reserve and Fiscal Policies x x x x
continued on following page
STAFF ASSIGNMENT BY TASK
3PROPOSED TEAM
AE2S CITY OF BOZEMAN WATER AND WASTEWATER UTILITY SYSTEM COST OF SERVICE & RATE DESIGN STUDY PROPOSAL 3.3BUECKER CLIENT SERVICES MANAGERGADDIE PROJECT MANAGERGRAF FINANCIAL ANALYST - WATERKLEVEN FINANCIAL ANALYST - WASTEWATERLEHIGH TECHNICAL SUPPORTSTROMBECK TECHNICAL SUPPORTEFFERTZ HANSON COMMUNICATIONS STRATEGISTTASK 4: RATE DESIGN
4.1 Client Updates & Coordination x x
4.2 Rate Design x x x
4.2.1 Probabilistic Revenue Forecasting Evaluation x x
4.3 Review Meeting x x x x x x
4.4 Revenue Adequacy x x x
4.5 Rate Model Software Delivery & Training (On-site)x x
TASK 5: DOCUMENTATION AND PRESENTATION
5.1 Documentation and Report Preparation x x x
5.2 Presentation to Council x x x
5.3 Supplemental Communications Support x
3PROPOSED TEAM
AE2S CITY OF BOZEMAN WATER AND WASTEWATER UTILITY SYSTEM COST OF SERVICE & RATE DESIGN STUDY PROPOSAL 3.4
WHY SCOTT?
Scott brings a
successful history of
delivery clients for the
City of Bozeman. Scott
will continue to deliver
responsive service you
are accustomed to.
Scott Buecker, PE
Client Services Manager
EDUCATION
Master of Science, Civil and
Environmental Engineering,
University of Wisconsin
REGISTRATIONS
Professional Engineer: Montana,
California
CONTACT & LOCATION
Scott.Buecker@ae2s.com
Bozeman, MT
T: 406-219-2633
C: 406-570-5184
SPECIFIC RELEVANT EXPERIENCE
• Water Facility Plan Update, Bozeman, MT - Project Manager. Facility Plan
Update, including a water distribution system model update, fire flow analysis,
pressure zone and pressure reduction study, water audit, CIP development, and a
non-potable irrigation system study. (2015-present)
• Lyman Creek Water System Expansion, Bozeman, MT - Project Manager.
Preparation of a Preliminary Engineering Report to evaluate various alternatives to
increase the capacity of the Lyman Creek water supply system and optimize overall
infrastructure operations. (2015-present)
• Drought Management Plan, Bozeman, MT - Project Manager. Development
of a drought management plan including drought monitoring, vulnerability
assessment, mitigation actions, response actions, and operational and
administrative framework. (2016-2017)
• Water and Wastewater Facility Plan, Belgrade, MT - Project Manager. Provided
the City with an Integrated Water and Sewer Planning Study, which includes a
rate study linking engineering, financing, and policy. The services will include
preparation of a Preliminary Engineering Report addressing water and
wastewater system needs, as well as general grant writing and related grant
administration and management. The project also includes an analysis of
water and wastewater impact fees. (2016-present)
• Livingston WWRF Upgrade, Livingston, MT - Project Manager.
Preliminary and final design, funding procurement assistance and Bid
Services for upgrades to the City of Livingston’s 1.8 MGD WWRF. The
upgrades include the addition of a second mechanical screen, replacement
of the existing primary clarifiers, rotating biological contactors
and secondary clarifiers with sequencing batch reactor technology,
improvements to the existing UV disinfections system, and replacement
of the existing anaerobic digester system with aerobic digestion. For
this project, Scott was able to leverage his experience and tailor design
documents to assist the City in securing additional outside grant funding
and financing to save the City money in the long-run. (2016-present)
Mr. Buecker is a wastewater and water process design and consulting engineer with
over 17 years of experience in the water and wastewater treatment and conveyance
industries. He has worked as a project manager, design manager, and senior project
engineer. His experience spans permitting and funding procurement, facilities planning,
conceptual and preliminary design, preparation of final plans and specifications, and
construction management. He has prepared numerous treatability studies, treatment
capacity analyses, treatment process and pumping optimization evaluations, hydraulic
analyses, energy efficiency analyses, facility designs, treatment plant operations guides,
O&M manuals, facility plans, preliminary design reports, and construction documents for
a broad range of water and wastewater treatment projects.
3PROPOSED TEAM
AE2S CITY OF BOZEMAN WATER AND WASTEWATER UTILITY SYSTEM COST OF SERVICE & RATE DESIGN STUDY PROPOSAL 3.5
Shawn Gaddie, PE
Project Manager
EDUCATION
Bachelor of Science, Civil Engineering,
North Dakota State University
REGISTRATIONS
Professional Engineer: North Dakota
SEC Series 50 Municipal Advisor
TRAINING
AWWA Financial Management
Training: Cost of Service Rate-Making
CONTACT & LOCATION
Shawn.Gaddie@ae2s.com
Grand Forks, ND
T: 701-746-8087
C: 701-866-3639
SPECIFIC RELEVANT EXPERIENCE
• City of Billings Water and Wastewater Rate Study, Billings, MT - Project Manager.
AE2S Nexus has performed Cost of Service and Revenue Adequacy updates for the City
of Billings since 2014. As the City has grown, the complexity of the rate design has also
increased, adding new wholesale users and identifying equitable methods of distributing
costs. These updates have continued to refine and develop the City’s fiscal policies from
how best to identify and assign costs to incorporating impact fee accounting into the
overall process. (2014-present)
• Whitefish Water and Wastewater Financial Plan and Rate Structure Study,
Whitefish, MT - Project Manager. Faced with escalating costs to operate the City’s
wastewater utility due to significant changes to nutrient discharge regulations in the State
of Montana, the City of Whitefish retained the Services of AE2S Nexus to assist with
the development of a multi-year financial plan for the utility. Specifically, the plan was
developed to analyze the financial impacts to the City’s user base coinciding with the
study of multiple wastewater treatment facility alternatives that were under consideration
to address new numeric criteria for nitrogen and phosphorus removal. (2015-2017)
• Sioux Falls Water and Water Reclamation Rate Planning, Sioux Falls, SD - Project
Manager. On-going rate modeling and regional rate support. Specific tasks included
Revenue Adequacy evaluations, State Revolving Fund debt management and surcharge
calculations, regional rate support and associated contract development assistance, and
industrial service evaluations. (2008-present)
• Red River Valley Water Supply Project Financial Plan, Carrington,
ND - Project Manager. Development of an overall financial plan for a
supplemental water system for counties in Eastern North Dakota which
includes the creation of a wholesale water supply utility. The financial
plan includes many unique components including the development of
comprehensive utility revenue requirements for the life of the project
(capital, O&M, administrative, long-term project renewal, etc). The
financial plan also includes a unique tiered cost allocation analysis to
determine how users will benefit from their participation in the project
based on supply need and their ease of access to project water. (2015-
2017)
• Strategic Infrastructure Growth Financial Planning, Grand Forks,
ND - Project Manager. The City of Grand Forks undertook a detailed
analysis on how best to open up and access new development areas for
both residential and industrial growth. Ryan supported the technical team’s
findings on prime development areas with the financial considerations that help
turn this type of planning into reality. (2015-2016)
Mr. Gaddie is the Chief Executive Manager of AE2S Nexus. In addition to providing traditional
water, wastewater, and stormwater professional engineering services, Shawn has spent a
significant portion of his career focusing on infrastructure asset management and municipal
and utility enterprise financial planning. Shawn has conducted multiple cost of service,
rate design, and revenue adequacy analyses for a number of municipal utility enterprises
throughout the region.
WHY SHAWN?
Shawn has the perfect
combination of
engineering expertise
and financial acumen.
He has led numerous
projects throughout
Montana and the
Upper Midwest and he
is excited to put that
experience to work for
you.
3PROPOSED TEAM
AE2S CITY OF BOZEMAN WATER AND WASTEWATER UTILITY SYSTEM COST OF SERVICE & RATE DESIGN STUDY PROPOSAL 3.6
WHY RYAN?
Ryan has strong
financial analysis skills
specific to water and
wastewater systems,
and attention to detail
that ensures confidence
in all aspects of your
Rate Study.
Ryan Graf, MPA
Lead Financial Analyst - Water
EDUCATION
Master of Public Affairs, Public
Finance and Policy Analysis, Indiana
University; Bachelor of Arts, Political
Science and French, University of
North Dakota
REGISTRATIONS
SEC Series 50 Municipal Advisor
TRAINING
AWWA Financial Management
Training: Cost of Service Rate-
Making
CONTACT & LOCATION
Ryan.Graf@ae2s.com
Grand Forks, ND
T: 701-746-8087
C: 218-791-5847
SPECIFIC RELEVANT EXPERIENCE
• Water Environment Federation Manual of Practice 27 - Co-Author. Forthcoming
update to the WEF MOP-27 focused on ratemaking for wastewater utilities. As a co-
author, Ryan assisted with updating and revising the chapter on Affordability to reflect
changes in the industry over the last 15 years. (2017)
• Utility Rate Study, Eden Prairie, MN - Financial Analyst. Project consisted of
evaluating the City’s costs of providing irrigation services to customers throughout their
system. Additionally, evaluated the revenue and expense structure of the water, sewer,
and storm drainage utilities to determine the appropriateness of any rate changes. As a
result of this effort, Eden Prairie revised its conservation rate structure for residential water
usage. (2008-present)
• City of Billings Water and Wastewater Rate Study, Billings, MT - Financial Analyst.
AE2S Nexus has performed Cost of Service and Revenue Adequacy updates for the City
of Billings since 2014. As the City has grown, the complexity of the rate design has also
increased, adding new wholesale users and identifying equitable methods of distributing
costs. These updates have continued to refine and develop the City’s fiscal policies from
how best to identify and assign costs to incorporating impact fee accounting into the
overall process. (2014-present)
• City of Fargo Interconnection Cost of Service Analysis, Fargo, ND - Financial
Analyst. As part of the initial feasibility studies into providing wholesale water
and wastewater service to outside users, AE2S and AE2S Nexus evaluated both the
engineering feasibility of interconnects to various outside users, as well as appropriate
methods for charging for service. Through this process, AE2S Nexus established
a utility-method COSA for the City to provide insights into various rate setting
approaches. Ryan took the lead in establishing this new approach for the City of
Fargo and introducing the concept of the utility-method approach. (2016)
• Strategic Infrastructure Growth Financial Planning, Grand Forks, ND
– Financial Analyst. The City of Grand Forks undertook a detailed analysis
on how best to open up and access new development areas for both residential
and industrial growth. Ryan supported the technical team’s findings on prime
development areas with the financial considerations that help turn this type of
planning into reality. While working hand-in-hand with City staff, Ryan helped
identify additional City revenue streams that can be used to offset utility costs and
develop funding policies that allow for predictability into the future. (2015-2016)
Mr. Graf is a dedicated financial management consultant with experience in utility
financial policies, utility rate studies and cost of service, financial impacts of asset
management, funding programs, and regulatory considerations. He has over seven
years of experience providing financial analysis and guidance for utility management,
funding development, and regulatory compliance. Ryan has worked with municipal
water, wastewater, stormwater, and solid waste utilities, and city administration for cities
within populations ranging from as little as 500 people to as many as 165,000 people.
3PROPOSED TEAM
AE2S CITY OF BOZEMAN WATER AND WASTEWATER UTILITY SYSTEM COST OF SERVICE & RATE DESIGN STUDY PROPOSAL 3.7
WHY MIRANDA?
Miranda has completed
numerous rate studies
for municipalities
throughout the region.
Her wide range of
experience will offer
new perspectives and
creative alternatives to
achieve your goals.
Miranda Kleven, PE
Lead Financial Analyst - Water
EDUCATION
Bachelor of Science, Chemical
Engineering, University of North
Dakota
REGISTRATIONS
Professional Engineer: North Dakota
Series 50 Qualified
CONTACT & LOCATION
Miranda.Kleven@ae2s.com
Grand Forks, ND
T: 701-746-8087
SPECIFIC RELEVANT EXPERIENCE
• Whitefish Water and Wastewater Financial Plan and Rate Structure Study,
Whitefish, MT - Financial Analyst. Faced with escalating costs to operate the City’s
wastewater utility due to significant changes to nutrient discharge regulations in the State
of Montana, the City of Whitefish retained the Services of AE2S Nexus to assist with
the development of a multi-year financial plan for the utility. Specifically, the plan was
developed to analyze the financial impacts to the City’s user base coinciding with the study
of multiple wastewater treatment facility alternatives that were under consideration to
address new numeric criteria for nitrogen and phosphorus removal. In addition, Miranda
assisted the City with updating their approach to low-income rate assistance programs.
(2015-2016)
• Utility Rate Study, Eden Prairie, MN - Financial Analyst. Project consisted of
evaluating the City’s costs of providing irrigation services to customers throughout
their system. Additionally, evaluated the revenue and expense structure of the
water, sewer, and storm drainage utilities to determine the appropriateness of any
rate changes. As a result of this effort, Eden Prairie revised its conservation rate
structure for residential water usage. (2008-present)
• Water Rate Study, Watertown Municipal Utilities, Watertown, SD
- Project Manager. This project consisted of, cost of Service Analysis,
5-Year Revenue Adequacy Study, and Rate Design to evaluate the existing
rate structure to ensure rates are fair and equitable for all users, develop a
rate plan for a financially self-sufficient water utility, and develop reserve
funding strategies. One unique component of this project include how
we implemented new fire protection rates city-wide. (2016-2017)
• FY18-FY19 Water and Wastewater Rate Study, Billings, MT -
Financial Analyst. Cost of service and rate design study for the
City’s water and wastewater utilities. The AE2S Nexus Project team
completed updates to water and wastewater cost of service-based rate
models, and recommended an additional two years of rates for retail and
resale water customers and retail and wholesale wastewater customers.
(forthcoming)
• Water and Sewer Utility Rate Study, Minot, ND - Financial Analyst.
Miranda is currently wrapping up a cost-of-service and rate design study for
the City of Minot that serves as a major overhaul to her annual review of their
water and sewer rates. This analysis recommended a number of changes to the
City’s policies and rates that will set it on a more sustainable path in light of needed
capital improvements. (2017)
As a lead financial analyst, Ms. Kleven routinely works closely with clients on financial issues
as an extension of their staff. Her attention to detail, ability to work well with others, and
emphasis on listening to and addressing client needs make her a valuable addition to the
project team. Miranda has worked with municipal water, wastewater, stormwater, and solid
waste utilities, as well as rural water systems, in the evaluation and implementation of fair and
equitable cost of service-based rate structures and in the evaluation of revenue adequacy.
As an active member of the AWWA, Miranda keeps apprised of the latest issues associated
with utility rate setting as promoted by professional water industry organizations, such as the
AWWA and WEF.
3PROPOSED TEAM
AE2S CITY OF BOZEMAN WATER AND WASTEWATER UTILITY SYSTEM COST OF SERVICE & RATE DESIGN STUDY PROPOSAL 3.8
WHY LANCE?
Lance’s work on
the Bozeman Water
Facility Plan Update
translates to a unique
understanding of
your specific water
infrastructure needs.
Lance Lehigh, PE
Technical Support
EDUCATION
Bachelor of Science, Civil Engineering
Bio-Resource Option, Montana State
University
REGISTRATIONS
Professional Engineer: Montana
Certified Floodplain Manager
FEMA: Benefit-Cost Analysis
Certified
CONTACT
Lance.Lehigh@ae2s.com
Bozeman, MT
T: 406-219-2633
SPECIFIC RELEVANT EXPERIENCE
• Water Facility Plan Update, Bozeman, MT - Project Engineer. Facility plan
update, including a water distribution model update, fire flow analysis, pressure zone
and pressure reduction study, water audit, CIP development and prioritization, and a
non-potable irrigation system study. (2015-present)
• Water System Master Plan Update, Kalispell, MT - Project Manager. Oversight
and development of the Kalispell Water Facility Plan Update, including a water
distribution system model update, fire flow analysis, storage evaluation, risk
assessment (horizontal assets), and CIP development and prioritization. (2017)
• Water Reclamation Facility Upgrade, Livingston, MT - Project Engineer.
Preliminary and final design, funding procurement assistance and Bid Services for
upgrades to the City of Livingston’s 1.8 MGD WWRF. The upgrades include the
addition of a second mechanical screen, replacement of the existing primary clarifiers,
rotating biological contactors and secondary clarifiers with sequencing batch
reactor technology, improvements to the existing UV disinfections system, and
replacement of the existing anaerobic digester system with aerobic digestion.
(2016-present)
• Stormwater Master Plan, Helena, MT - Project Manager. The project includes
developing a new computer model of the existing stormwater system.
Information from the City’s GIS database is being used, along with other
public data bases, to delineate the drainage basins and develop the
appropriate drainage parameters for each basin. (2016-present)
• 5-Year Water System Capital Improvement Plan (CIP), Big
Sky, MT - Project Engineer. CIP that includes a system-wide
WaterGEMS hydraulic model to evaluate existing vs. proposed
conditions, fire flow availability, pump station sizing, and operational
enhancements. Recommendations and prioritizations developed from
the aforementioned evaluations will help the client determine the best
route for future system improvements. (2016-present)
Mr. Lehigh has nine years of experience in civil and water resources engineering performing
technical design, project management, and general consulting services. He has an extensive
background in hydrology and hydraulics, including multi-day storm events and snowmelt
model simulations, steady and unsteady state flow modeling, sediment and pollutant
transport, and two-dimensional analyses.
3PROPOSED TEAM
AE2S CITY OF BOZEMAN WATER AND WASTEWATER UTILITY SYSTEM COST OF SERVICE & RATE DESIGN STUDY PROPOSAL 3.9
EDUCATION
Bachelor of Science, Civil
Engineering,North Dakota State
University; Master of Science, Civil/
Environmental Engineering
North Dakota State University
REGISTRATIONS
Professional Engineer: North
Dakota, Minnesota
CONTACT
Jacob.Strombeck@ae2s.com
T: 701-364-9111
C: 701-866-3808
Jacob Strombeck, PE
Technical Support
Mr. Strombeck has eight years of experience with a variety of projects in the civil and
environmental engineering field. In addition, he has provided rate analysis, financial
planning and project development services for a variety of municipal and private
clients in the region. His experience also includes planning, study, design, and
construction administration services on both water- and wastewater-related projects.
SPECIFIC RELEVANT EXPERIENCE
• Red River Valley Water Supply Project Financial Plan, Carrington, ND - Project
Engineer/Financial Analyst. Development of an overall financial plan for a
supplemental water system for counties in Eastern North Dakota which includes
the creation of a wholesale water supply utility. The financial plan includes many
unique components including the development of comprehensive utility revenue
requirements for the life of the project (capital, O&M, administrative, long-term
project renewal, etc). The financial plan also includes a unique tiered cost allocation
analysis to determine how users will benefit from their participation in the project
based on supply need and their ease of access to project water. (2015-2017)
• City of Fargo Interconnection Cost of Service Analysis, Fargo, ND - Project
Manager. As part of the initial feasibility studies into providing wholesale water
and wastewater service to outside users, AE2S and AE2S Nexus evaluated both the
engineering feasibility of interconnects to various outside users, as well as appropriate
methods for charging for service. Through this process, AE2S Nexus established a
utility-method COSA for the City to provide insights into various rate setting approaches.
(2016)
• Fargo Storm Water Utility Fee Study, Fargo, ND - Project Engineer/Financial
Analyst. Review of current stormwater utility fees and analysis of the cost assigned
to stormwater, with an emphasis on system operation and maintenance. Also
included an update of the City’s existing stormwater management plan
to be in compliance with MS4 permit and State Health Department
requirements. (2017)
• Water System Master Plan Update, Bozeman, MT - Project Manager.
Facility Plan Update, including a water distribution system model
update, fire flow analysis, pressure zone and pressure reduction study,
water audit, CIP development, and a non-potable irrigation system
study. (2015-present)
• Drought Management Plan, Bozeman, MT - Project Manager.
Development of a drought management plan including drought
monitoring, vulnerability assessment, mitigation actions, response
actions, and operational and administrative framework. (2016-2017)
WHY JACOB?
Jacob’s experience with
utility rate studies
combined with his
engineering expertise
will help ensure you
receive rate studies
that work from both a
financial and a utility
standpoint.
3PROPOSED TEAM
AE2S CITY OF BOZEMAN WATER AND WASTEWATER UTILITY SYSTEM COST OF SERVICE & RATE DESIGN STUDY PROPOSAL 3.10
Maria Effertz Hanson
Communications Strategist
EDUCATION
Masters Degree, Management,
University of Mary
Bachelor of Arts, Public Relations;
Bachelor of Arts, Political Science,
University of North Dakota
CONTACT
Maria.EffertzHanson@AE2S.com
T: 701-500-1206
SPECIFIC RELEVANT EXPERIENCE
• Water and Wastewater Rate Study, Billings, MT - Communications Strategist.
Developed communications tools for the Billings Utility Department to educate the
general public on planned rate increases. These tools included press releases, web page
data and information, messaging and talking points for city council members, and
developing, analyzing and posting social media. (2017)
• Program Management Services, Williston, ND - Communications Strategist. Maria
currently manages the communications support and delivery for the City of Williston.
Program deliverables include communication planning and implementation; presentation
development and speech writing; media management; special initiatives including
Infrastructure Sales Tax Renewal vote and committee support; State of the City address;
and new airport construction communication planning. (2017)
• Western Area Water Supply Authority (WAWSA), Williston, ND - Communications
Strategist. Supported communications services and public education for ongoing project
development and construction of the system expansion. Project management includes
social media posts and monitoring, newsletter story writing, and traditional media
analysis. (2017)
• External Relations – Hess Corporation. Directed and supported the communications,
community relations, social investment and local government relations of the Hess
Corporation’s plant in Tioga, ND. Maria supported the general manager in through a
variety of non-traditional projects in risk analysis, strategic development, Succeed 2020
(major corporate education program), stakeholder relations, and local media outreach
where she served spokesperson for local events and directed public relations programs.
(2014-2017)
• Black Butte Communications and Consulting, Velva, ND - Owner. Maria currently
operates a consulting company specializing in community and economic development
with an emphasis on rural areas, small business and grant writing. Clients include
McHenry County Jobs Development Authority, school districts, and small organizations.
(2008-present)
• Congressman Rick Berg (ND) - Regional Director. Managed the daily activities of the
Minot headquarters and constituent services in the western North Dakota region. Maria
coordinated activities with the state director, staff members and local communities, as well
as supported energy, grant writing, housing, and economic development efforts. (2013)
Maria has over 20 years of experience in strategic communications, government
affairs, and community development in a range of industries. She has a deep rooted
understanding of infrastructure development issues in growing communities and rural
areas as well as communicating those needs to legislative, funding, and regulatory
bodies. Additionally, in her time in the energy industry, Maria was called upon to
provide extensive community outreach and media relations as well as craft crisis
communication strategies with local and corporate teams.
WHY MARIA?
Maria has over 20
years of experience
specializing in
communications. She
works with local and
federal governments,
communities and the
media to provide the
right perspective at just
the right time.
4REFERENCES
AE2S CITY OF BOZEMAN WATER AND WASTEWATER UTILITY SYSTEM COST OF SERVICE & RATE DESIGN STUDY PROPOSAL 4.1
4
A good client/consultant relationship
is often described by words such as trust,
responsiveness, quality, and loyalty. We
strive to develop exceptional client/
consultant relationships which go beyond
the norm by adding the value of knowing
that your consultants are an extension of
your staff, devoted to the success of your
public utilities as a whole. We believe
that exceptional relationships are the true
measure of client satisfaction.
We have presented a few key
references on this page, as well as in our
related experience section. We invite you
to contact them, or any of the other client
contacts to learn more about working with
AE2S.
REFERENCES
DANA SMITH, CPA
Assistant City Manager/Finance
Director
City of Whitefish, MT
406-863-2405
dsmith@cityofwhitefish.org
JENNIFER DURAY, CPA
Public Works Finance Manager
City of Billings, MT
406-657-8239
durayj@ci.billings.mt.us
DIANE EAGLESON
Finance Officer
City of Belgrade, MT
406-388-3760
deagleson@cityofbelgrade.net
TODD FELAND
City Administrator
City of Grand Forks, ND
701-787-3750
tfeland@grandforksgov.com
BRUCE GRUBB
City Administrator
City of Fargo, ND
701-241-1310
bgrubb@cityoffargo.com
DAVID TUAN
City Administrator
City of Williston, ND
701-577-6368
davidt@ci.williston.nd.us
“AE2S Nexus staff were all professional, exceptionally
thorough, and worked closely with City staff throughout the
project. They were able to provide the City with a vital tool
for us to use both now and in the future for financial planning
for our water and wastewater utilities.”
- Dana Smith, CPA, Finance Director
City of Whitefish, MT
4REFERENCES
AE2S CITY OF BOZEMAN WATER AND WASTEWATER UTILITY SYSTEM COST OF SERVICE & RATE DESIGN STUDY PROPOSAL 4.2
CURRENT CLIENTS
JURISDICTION NAME CONTACT NAME PHONE NUMBER LENGTH OF ENGAGEMENT (YEARS)
City of Billings, MT Jennifer Duray, Public Works Finance Manager 406-657-8239 3
City of Belgrage, MT Diane Eagleson,Finance Officer 406-388-3760 1
City of Eagle Lake, MN Brad Potter,City Administrator 507-257-3218 3
City of Eden Prairie, MN Sue Kotchevar, Finance Manager 952-949-8300 8
City of Fargo, ND Bruce Grubb, City Administrator 701-241-1310 11
City of Fosston, MN Chuck Lucken,City Administrator 218-435-1959 2
City of Grand Forks, ND Todd Feland, City Administrator 701-787-3750 26
City of Jamestown, ND Jeff Fuchs, City Administrator 701-252-5900 11
City of Killdeer, ND Dawn Marquardt,City Administrator/Auditor 701-764-5295 7
City of Minot, ND Penny Johnson, CPACity Treasurer 701-857-4771 10
City of Saint Cloud, MN Lisa Vollbrecht,Asst. Director of Public Facilities 320-255-7225 10
City of Sioux Falls, SD Trent Lubbers,Utility Operations Administrator 605-367-8604 13
City of Watford City, ND Penni Miller, Auditor 701-453-3641 5
City of Williston, ND David Tuan,City Administrator 701-577-6368 6
Grand Forks Region Economic Development Corporation Keith Lund, President and CEO 701-746-2720 2
Northeast Regional Water District Gordon Johnson,Manager 701-256-5125 3
Big Sioux CWS, Inc.Martin Jarrett,Manager 605-997-2098 1
5WORK SUMMARY
AE2S CITY OF BOZEMAN WATER AND WASTEWATER UTILITY SYSTEM COST OF SERVICE & RATE DESIGN STUDY PROPOSAL 5.1
5
WORK SUMMARY
It is our primary objective to help
you meet your rate-planning and financial
management objectives efficiently and
effectively. To facilitate construction of
a work plan designed to do just that, we
have prepared a comprehensive Task List
(see below). It should be noted that the
scope of services can be further refined to
include/exclude additional components.
We want to put together the scope of
work best suited to meet your needs,
and would be happy to discuss the
detailed scope with you. The discussion
that follows provides an overview of the
proposed Tasks.
AE2S Nexus follows the
recommended approach as
outlined in the American Water
Works Association M-1 Manual -
Principles of Water Rates, Fees, and
Charges and the Water Environment
Federation Manual of Practice
27 - Financing and Charges for
Wastewater Systems.
PROJECT APPROACH TASKS
Task 1: Project Kickoff and Data Review
Task 2: Cost of Service Analysis (COSA)
Task 3: Integrated Financial Policy & Planning
Task 3a. Financial Implications of Conservation
Task 3b. Capital Financing Policies and Procedures
Task 3b. Reserve and Fiscal Policies
Task 4: Rate Design
Task 4a. Rate Structure Recommendations
Task 4b. 5-Year Revenue Adequacy
Task 4c. Alternative Revenue Forecasting (Other Fees & Charges)
Task 5: Documentation & Presentation of Results
5WORK SUMMARY
AE2S CITY OF BOZEMAN WATER AND WASTEWATER UTILITY SYSTEM COST OF SERVICE & RATE DESIGN STUDY PROPOSAL 5.2
Task 1 – Project Orientation and
Kickoff
Under this task, AE2S Nexus will
perform project administration and
monitoring, project planning, and
scheduling. These activities include
maintaining contact and liaison with City
staff and internal project staff to ensure
that the needs of the City are met in a
timely manner.
To kick off the project, we will
develop a detailed information needs
request for completion of the Study. In
general, this request will include relevant
water and wastewater system operational,
capital, and financial data and established
City policies. Upon receipt and review of
the information, we will coordinate a study
kickoff meeting. Depending on the City’s
preference, this meeting can be conducted
either via electronic meeting or our key
financial team members will be available
to travel to Bozeman.
One goal of the kickoff meeting is
to confirm the proposed approach and
project schedule. Communications and
review protocols will be confirmed and
any questions related to the information
request will be addressed at this time.
Task 2 – Cost of Service Analysis
A detailed Cost of Service Analysis
(COSA) will provide the City with an
understanding of the portion of the total
systems costs that are attributable to each
user class currently served by the water
and wastewater systems. A COSA is an
industry standard evaluation used to
determine whether costs allocated to the
various customer classes correspond to
the level of service provided. The overall
process includes incorporating proposed
capital improvements, historic revenues
and expenses, and base user profiles to
create a representative test year.
As we understand some of the critical
issues serving users in the area, we will
build our COSA model, and Test Year,
to highlight the unique circumstances of
how significant large users, like Montana
State University, are served, as well as
how the new growth areas may differ in
service characteristics from the historic
City. The Test Year is then used to model
how both costs and revenues are realized
and demonstrate equitability among user
classes, a critical aspect to maintaining
compliance with State law.
AE2S Nexus will work closely with you to determine the most appropriate approach for
your circumstances.
In the case of Bozeman, how
conservation is represented in the
Test Year is critical to providing
a comprehensive product. As a
result, the analysis will incorporate
a conservation approach further
outlined in Task 3.
With an established “Test Year”
budget, the industry standard COSA
typically consists of a three step procedure
of 1) Functionalization, 2) Classification,
and 3) Allocation to assign utility costs
across customer classes to support
equitable and defendable utility rates,
equal to the cost of service provided.
Another key consideration in the
performance of the COSA is determining
whether to perform the analysis on a
“Cash” or “Utility” basis. This decision is
often dependent upon the specific goals
of the City as it relates to the charges
established for outside City water and
wastewater customers. We have extensive
experience in both methodologies and will
work with the City to determine the most
appropriate approach. Upon completion
of a draft Cost of Service Analysis, a
Progress Meeting to review the results will
be conducted.
5WORK SUMMARY
AE2S CITY OF BOZEMAN WATER AND WASTEWATER UTILITY SYSTEM COST OF SERVICE & RATE DESIGN STUDY PROPOSAL 5.3
Task 3 – Integrated Financial
Planning
As we evaluated the specific items
identified in the RFP from the City, and
based on our knowledge from previous
projects with the City, a key theme
emerged: Smart Utility Financial Planning.
This theme was woven throughout all tasks
of the RFP. We recognized this in how
the City requested specific consideration
in the analysis regarding growth forecasts
and impact fees. We also saw this in the
stated requirement that the rate structure
must account for the nuances of how
users are served and how conservation
planning and issues around water rights
play an important role. Lastly, this theme
was apparent in how the City requested
specific advice on how to set policy and
establish appropriate precedent moving
forward. To better serve you, we will
dedicate time to helping you frame and
think through these issues so you have a
consistent and practical approach to your
financial planning process, an approach
that reflects how you, as a community,
want to serve your existing customers, as
well as plan for new customers on your
system. The final plan will provide the
necessary flexibility and tools required to
maintain a best-in-class utility for years to
come. This task will look in-depth at three
key issues:
As we look to integrate water
conservation and water supply, we
understand that people’s habits may
change in response to both positive and
negative outside factors. One example
of a positive factor would be programs
that provide free or reduced cost low-
flow fixtures to replace existing fixtures
and lower water use (similar to the City’s
existing program). Alternatively, price
increases are often seen as a negative
factor. There are many other measures
that can be used to help craft water
conservation and supply plans that take
into account the utility as a whole and
provide options for consumers.
Our background understanding
means that we can start to build a long-
term plan for the City that will effectively
identify goals for water conservation
in light of both the growth the City is
experiencing and the capital planning
process. As this is incorporated in the rate
study, our primary focus will be on how
rates will impact this planning. We will
provide multiple scenarios to demonstrate
what the potential effects of pricing are on
usage and the subsequent effect on capital
planning.
Capital Financing and Long-
Term Capital Planning: As the City
has traditionally avoided debt service for
utility capital infrastructure, many staff
may not be intimately familiar with the
process or nuances of incorporating it
into long-term capital and rate planning.
As registered Municipal Advisors, our
team has the experience and knowledge
to guide you through the process and
avoid pitfalls. We can explain the types
of financing available and provide the
background information necessary to
really understand how financing projects
can benefit generational equity and the
utility as a whole. While every issuance
is a unique circumstance, we will outline
the commonalities with debt issuance
and allow the City to frame out a style of
funding projects that fits with governance
style. We will codify this into a policy
that will then be applied throughout
the remainder of the study to set forth a
sustainable long-term capital plan.
Better Understanding, Better
Planning: Our work on the recently
adopted Drought Management Plan
shows the current water supply
forecast cannot sustain growth in
the City at existing per capita water
use. This means action must be
taken to ensure the City is properly
positioned to continue to grow and
prosper.
How can the City integrate
conservation and water supply
planning into its rate structure?
What is the best way to integrate
financing into long-term capital
planning?
What are appropriate reserves for
system renewal and replacement
and what other practical steps
should the community take for a
sustainable utility?
5WORK SUMMARY
AE2S CITY OF BOZEMAN WATER AND WASTEWATER UTILITY SYSTEM COST OF SERVICE & RATE DESIGN STUDY PROPOSAL 5.4
Reserves and Reasonable Fiscal
Policies: Related to debt financing for
long-term capital improvements, this task
will include providing recommendations
and crafting policies that the City can use
to develop replacement policies, set reserve
levels, manage and track spending, and
meet coverage or other covenants (on new
bonds). As the City looks to finance capital
improvements with debt, having well-
defined fiscal policies can provide utility
managers and City administrative staff with
the baseline for tracking overall fiscal health
and can help reduce the overall cost of
borrowing when not using state-sponsored
programs.
Debt service isn’t the only
consideration when setting reserves for a
system. Often, repair and replacement of
existing assets is a more pressing need to
establish and fund reserves, but one that is
quite a bit more complicated to determine.
In consideration of reserve account
funding, a desktop reserve funding
analysis based on a comprehensive
review of the City’s fixed asset
database can be performed to
determine how to appropriately
balance capital spending
and contributions to reserves
considering system age, materials,
size, and forecasted renewal
rates. To forecast system renewal
needs and associated revenue
requirements, AE2S Nexus technical
experts will develop a customized
water and wastewater system
renewal and replacement financial
forecasting model based on
statistical infrastructure failure rate
distributions to evaluate appropriate
annual budgetary amounts for
contributions to reserves and rate
funded capital.
All of this will be conducted in a
constructive manner with City staff.
As industry experts, we will bring our
knowledge and experience to your service
and provide you with the information
needed to make an informed decision. We
will hold detailed meetings with City staff
to get to the heart of your philosophy and
issues and then provide recommendations
with detailed rationale so you can make
well-founded decisions.
5WORK SUMMARY
AE2S CITY OF BOZEMAN WATER AND WASTEWATER UTILITY SYSTEM COST OF SERVICE & RATE DESIGN STUDY PROPOSAL 5.5
Task 4 – Rate Design
The Rate Design task has two core
components to it: 1) determining the rate
structure as a whole reflects the approach
the City wants to take to recouping costs
from the variety of users on the system,
and 2) ensuring the rates charged are
sufficient to recoup all the costs to actually
run a sustainable utility over the 5-year
projection period.
To evaluate the rate structure
itself, the results of the COSA, which
will identify what portions of the costs
are caused by each user or user class,
will provide a basis for determining
appropriate methods for charging
individual user classes. By seeing how
they use the system, we will be able to
pinpoint what type of charges (fixed
monthly versus volumetric) make the
most sense as a baseline approach.
However, our approach will also take into
consideration the variability that comes
with water (and subsequent wastewater)
use and the price elasticity that results in
changes to consumption as costs change.
This will be done through a probabilistic
revenue forecasting model that takes into
account historic weather data, as well as
historic rates and rate structures to provide
insights into the effects of conservation
and the likelihood of meeting revenue
targets. Once we have established a base
rate scenario, we will work with the City to
approach the question of affordability in
the various rate structures. From our work
as co-authors focused on Affordability in
the latest updates to WEF’s MOP-27 to
our work in Montana specifically assisting
the City of Bozeman with updates to
their low-income assistance program, we
will bring this expertise to aid the City in
identifying their priorities and the best
ways to achieve them.
A second Progress Meeting
is anticipated to review and select
preferred rate structure approaches for
What is Probabilistic Revenue Forecasting?
As the City of Bozeman takes the steps to really fine-tune your water
and wastewater rates for a changing, growing community you are
asking poignant and informed questions of your rate consultant. These
are cross-cutting questions that will touch on every task as we look to
incorporate conservation, changes to the rate structure, and consumer
attitudes into a prudent rate structure. One of the key tools we will bring
to this discussion is a probabilistic revenue forecasting model. This tool,
originally developed by the Alliance for Water Efficiency (AWE) has proven
invaluable as we incorporate it into our detailed rate studies by allowing
new insights into how revenues may be realized and how water use
may fluctuate over various time periods to allow policy makers to make
informed decisions.
incorporation into the Revenue Adequacy
Evaluation.
The next step of rate design will
include developing a five-year revenue
adequacy model that allows the City to
see how rates and revenues may need to
change over this time period in response
to growth and system demands. We
will develop a customized model that is
comprehensive and tailored to the unique
needs and circumstances surrounding the
City. Revenue adequacy is really where
the rubber meets the road, and much of
the decision-making and development
that has gone into a rate structure is put
into practice. Throughout the revenue
adequacy evaluation, we will bring the
wide-ranging information from growth
patterns and outside revenue streams to
potential debt service and the desired rate
structure and overlay the budget to see
where rates need to be to have a healthy,
sustainable utility.
The graphic above represents a typical output from AWE sales forecasting and modeling.
5WORK SUMMARY
AE2S CITY OF BOZEMAN WATER AND WASTEWATER UTILITY SYSTEM COST OF SERVICE & RATE DESIGN STUDY PROPOSAL 5.6
Specifically, the Revenue Adequacy
evaluation will use revenue and revenue
requirement (i.e., expense) projections to
ensure sufficient revenue is generated to:
1. Provide revenue stability
(particularly in light of
conservation efforts);
2. Track on-going cash balances
and ensure that reserve targets
are met; and
3. Project debt service coverage
requirements for any planned
debt.
As we dive into the Revenue
Adequacy Evaluation, we will incorporate
the projected revenue requirements for the
most recent budget year for each system to
be analyzed.
Revenue Adequacy Evaluation =
Detailed Review and Incorporation
of:• Water and Wastewater System Operations and Maintenance (O&M) Budgets;• Capital Improvements Plans (CIPs);• The Cost of Water Supply and Conservation; and• Other On-Going Asset Management Considerations
O&M escalation factors will be
developed to provide a basis for the multi-
year pro-forma of O&M expenses and
future project financing considerations
will be incorporated based on CIP
scenario projections. These escalation
factors will be adjusted based on historic
budget increases for the utility as a whole,
as well as specific line items.
In addition to revenue requirements,
revenue projections will be developed. We
will incorporate growth and associated
impact fees along with other non-rate
revenue sources into the model. Baseline
rate revenue projections will be developed
based on projected meters and flow for the
current year, with a multi-year pro-forma
of future projections developed based on
estimated user and flow growth. We will
again look to integrate the Probabilistic
Revenue Forecasting tool here to review
that rates will likely be sufficient over
the study horizon. Recommendations
for reserve accounts and target funding
levels identified under Task 3 will be
utilized. A series of rate planning scenarios
for both Water and Wastewater will be
developed for review with City staff at a
third Progress Meeting. These scenarios
will be presented alongside data from the
Annual Rate Survey to see how your rates
compare with those of other Montana
communities, as well as other comparable
communities throughout the region.
The Revenue Adequacy models are
designed to be user-friendly. An annual
revenue adequacy reconciliation tool will
be developed and incorporated into the
Revenue Adequacy model to streamline
the annual rate model reconciliation
process. This tool, along with the models
themselves, will be provided to the City
for its continued use.
Task 5 – Study Finalization and
Documentation
At the conclusion of all outlined
project evaluations, we will prepare a
report to document final results and
recommendations. The draft report will
be submitted to City staff for review
prior to finalization. In addition, we will
prepare a presentation summarizing final
results and recommendations from the
Rate Study for presentation to the City
Commission. A fifth Progress Meeting
will be conducted at this point to review
and finalize the presentation materials for
City Commission.
As final results are presented, the
AE2S Nexus Project Team, including
dedicated communications specialists,
is prepared to support the City in a rate
education campaign designed to engage
the system users in an effort to gain
their “buy-in” to necessary changes to
utility rates and charges. This can be
accomplished through public meetings,
key stakeholder meetings, website
content, and the possible incorporation
of informational material with utility bills
to help users understand the purpose and
need for any proposed changes to water
and wastewater rates. With the assistance
of our on-staff communications experts,
we will work with the City to identify
the most appropriate communication
initiatives for messaging the results of the
Study.
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Water Wastewater CPI-U Index
To support the rate-setting efforts across the region,
we are proud to annually complete a survey of
residential water, sewer, and stormwater charges
for communities in Montana, Utah, South Dakota,
North Dakota, Minnesota. Collection of this data
on an annual basis allows us to provide a valuable
tool to utilities across the region and to gain an
understanding of rate practices for systems of
various sizes in our part of the United States.
6WORK PLAN AND PROJECT SCHEDULE
AE2S CITY OF BOZEMAN WATER AND WASTEWATER UTILITY SYSTEM COST OF SERVICE & RATE DESIGN STUDY PROPOSAL 6.1
6
WORK PLAN AND SCHEDULE
Based on your specific project objectives, we have developed a customized
schedule to meet your specific objectives for the Water and Wastewater Utility
System Cost of Service and Rate Design Study. The schedule below shows
how we plan to deliver a successful project for the City Commission to adopt in
support of FY19 rate schedules.
SEPT OCT NOV DEC JAN FEB MAR APR MAY JUNE
TASK 1 PROJECT KICKOFF AND DATA
REVIEW
Kickoff Meeting
Data Collection
TASK 1 COMPLETE
TASK 2 COST OF SERVICE STUDY
Client Updates & Coordination
System and User Profiling
Preliminary COSA Model Development
Draft Review Meeting
Final COSA Model Development
Results Review Meeting
TASK 2 COMPLETE
TASK 3 INTEGRATED FINANCIAL PLANNING
Client Updates & Coordination
Financial Implications of Conservation
Capital Financing Policies and Procedures
Reserve and Fiscal Policies
Review Meeting
TASK 3 COMPLETE
TASK 4 RATE DESIGN
Client Updates & Coordination
Rate Design
Draft Review Meeting
Revenue Adequacy
Rate Model Software Delivery and Training
TASK 4 COMPLETE
TASK 5 DOCUMENTATION AND PRESENTATION
Documentation and Report Preparation
Presentation to Council
Supplemental Communication Support
TASK 5 COMPLETE
PROPOSED SCHEDULE
As needed
As needed
Additional meetings can be scheduled as needed.
6WORK PLAN
AE2S CITY OF BOZEMAN WATER AND WASTEWATER UTILITY SYSTEM COST OF SERVICE & RATE DESIGN STUDY PROPOSAL 6.2
Gaddie Kleven Graf Strombeck Buecker Lehigh Effertz
Project
Manager
Wastewater
Lead Water Lead Technical Advisor Client Manager
Technical
Advisor
Communications
Advisor
Task 1 Project Kickoff and Data Review 15‐Sep‐17 30‐Sep‐17
1.1 Kickoff Meeting (On‐Site)12 2 14
1.2 Data Collection & Information Request 8 8 2 2 2 22
Task 1 Subtotal 12 8 8 2 4 2 0 36
Task 2 Cost of Service 20‐Sep‐17 15‐Nov‐17
2.1 Client Updates & Coordination 20‐Sep‐17 15‐Nov‐17 6 2 8
2.2 System & User Profiling 20‐Sep‐17 10‐Oct‐17 2 8 8 4 22
2.2.1 Review and Establish Test Year Budgets 20‐Sep‐17 10‐Oct‐17 2 20 20 42
2.3.1 Establish and Refine Large User Characteristics 20‐Sep‐17 10‐Oct‐17 1 4 4 9
2.3 Preliminary COSA Model Development 1‐Oct‐17 1‐Nov‐17
2.3.1 Methodology Review 1‐Oct‐17 1‐Nov‐17 2 6 6 14
2.3.2 Model Development 1‐Oct‐17 1‐Nov‐17 2 60 60 122
2.3.3 Draft Review Meeting 1‐Nov‐17 15‐Nov‐17 2 2 2 2 8
2.4 Final COSA Model Development 1‐Nov‐17 15‐Nov‐17
2.4.1 Model Updates 1‐Nov‐17 15‐Nov‐17 1 8 8 17
2.4.2 Results Review Meeting 15‐Nov‐17 30‐Nov‐17 2 2 2 2 8
Task 2 Subtotal 20 110 110 0 10 0 0 250
Task 3 Integrated Financial Planning 15‐Nov‐17 31‐Jan‐18
3.1 Client Updates & Coordination 15‐Nov‐17 15‐Jan‐18 8 2 103.2 Financial Implications of Conservation 15‐Nov‐17 15‐Jan‐18 8 16 16 8 4 8 603.3 Capital Financing Policies and Procedures 15‐Nov‐17 15‐Jan‐18 4 24 4 323.3.1 Capital Financial Modeling and Revenue Requirements Evaluation 15‐Nov‐17 15‐Jan‐18 2 12 4 183.4 Reserve and Fiscal Policies 15‐Jan‐18 31‐Jan‐18 2 12 12 2 283.5 Review Meeting 15‐Jan‐18 31‐Jan‐18 2 2 2 2 8Task 3 Subtotal 26 30 66 8 18 8 0 156
Task 4 Rate Design 15‐Jan‐18 30‐Mar‐18
4.1 Client Updates & Coordination 15‐Jan‐18 30‐Mar‐18 8 2 10
4.2 Rate Design 15‐Jan‐18 15‐Feb‐18 12 32 20 64
4.2.1 Probabilistic Revenue Forecasting Evaluation 15‐Jan‐18 15‐Feb‐18 12 12 24
4.3 Review Meeting 15‐Feb‐18 28‐Feb‐18 2 2 2 2 2 2 12
4.4 Revenue Adequacy 15‐Feb‐18 15‐Mar‐18 4 60 60 124
4.5 Rate Model Software Delivery & Training (On‐Site)15‐Mar‐18 30‐Mar‐18 16 16 32
Task 4 Subtotal 42 106 110 2 4 2 0 266
Task 5 Documentation and Presentation 1‐Apr‐18 As Needed
5.1 Documentation and Report Preparation 1‐Apr‐18 15‐May‐18 12 32 32 76
5.2 Presentation to Council 15‐May‐18 31‐May‐18 12 12 2 26
5.3 Supplemental Communications Support 1‐Apr‐18 As Needed 40 40
Task 5 Subtotal 24 32 44 0 2 0 40 142
TOTAL PROJECT HOURS/EXPENSES 124 286 338 12 38 12 40 850
Task Description
Budget Hours (All
Labor Categories)Start Date End Date
WORK PLAN
7CITY-FURNISHED DOCUMENTATION
AE2S CITY OF BOZEMAN WATER AND WASTEWATER UTILITY SYSTEM COST OF SERVICE & RATE DESIGN STUDY PROPOSAL 71
CITY-FURNISHED DOCUMENTATION
7
Collaboration with the City and getting at the heart of the data needed for this study is critical. Without having quality,
representative information the end result will not be representative of the community. Our approach to ensuring we have the right
concept and the right information hinges on collaboration with the City. Through our initial task, we will work with the City to
verify our initial approach and dive deep into the demographic, technical, and financial information needed for this effort. We
understand that not every study will have all of the information readily available; as a result, we tailor our information needs to
find the right information to deliver the right work product without burdening City staff with hours of effort. We also recognize
that much of the information we need will be available without City effort as you take pride in providing open governance and
publishing financial information on your website. We will review the sample information request provided and look to keep overall
staff time needed to fulfill this request to under 8 hours.
7CITY-FURNISHED DOCUMENTATION
AE2S CITY OF BOZEMAN WATER AND WASTEWATER UTILITY SYSTEM COST OF SERVICE & RATE DESIGN STUDY PROPOSAL 72
City of Bozeman, MT
Water and Wastewater Rate Study
Sample Request for Information
□ Water System Data
□ Billing Data (volume) for each month over the last five years and current year to date, by User Class
o By Class and Meter size, if available
o By inside and outside users (if applicable)
o Identify separately special users whose peak water use occurs during the winter
□ Daily production and pumping data for the past five years and year to date, if available
□ Actual average and peak day treated production values for the past five years, if available
□ Water system design criteria
o Treatment peak day
o Distribution/Storage/Pumping peak day and peak hour
□ Miles of distribution system pipe, by size (diameter)
□ Information regarding size of pipe (diameter) considered transmission versus distribution (i.e., 12” and below is distribution,
greater than 12” is transmission)
□ Information related to pumping system (pump sizes and locations), storage (volume and locations), and pressure zones (please
provide a map if available)
□ Information indicating how water moves through the system (may have to obtain this through discussions with engineering or
operations staff)
□ Information (please provide a map if available) related to connection points for large wholesale and outside users
□ Information related to any planned changes in operations/capacity of the existing water system in the next five years, if applica-
ble
□ Information related to historical peak day and peak hour demands for each user class, if available
□ Contract/service agreements with any users (outside or special user class), if applicable
□ Wastewater System Data
□ Billing Data (volume) for the last five years and current year to date, by User Class, if different from water billing data
o By Class
o By inside and outside users
□ Daily pumping and treatment volumes for the past five years and year to date, if available
□ Average design criteria for the system
□ Peak use of system & System Design Capacities
□ Miles and size (diameter) of collection system pipe, listed separately (if available):
o Forcemain
o Gravity pipe
□ Locations and capacities of pump/lift stations (map)
□ Any mapping or available data related to infrastructure dedicated to serve outside system users
□ If the City has an industrial pretreatment program (IPP), please provide information (responsibilities of IPP staff, such as
sampling/testing/monitoring Significant Industrial Users, minor users, commercial users, etc), including associated rates and
charges to users subject to IPP
□ List of Significant Industrial Users or other users subject to IPP regulation or monitoring
□ City of Bozeman permit from the State of MT for wastewater treatment process, if applicable
□ Actual flow, BOD, and TSS load by class for the past five years and current year to date
o By user class, if available
□ Permits between the City and any industrial users, if applicable
□ Detailed flow and loading information on any significant industrial wastewater users
□ Contract/service agreements with any outside users, if applicable
7CITY-FURNISHED DOCUMENTATION
AE2S CITY OF BOZEMAN WATER AND WASTEWATER UTILITY SYSTEM COST OF SERVICE & RATE DESIGN STUDY PROPOSAL 73
□ Economic/Financial Data
□ Assumed meter growth rate for all customer classes individual classes (residential, commercial, and industrial)
□ Population growth projections, if available, and information related to potential new major users
□ Operating budgets and year to date actuals for Water and Wastewater (past five years and year to date)
□ Operating and non-operating revenue totals Water and Wastewater for the past five years, if available
o Rate revenues by user class
□ Note anticipated changes in Water or Wastewater non-operating revenues, if applicable
□ Preliminary Water and Wastewater operating budgets for the next fiscal year
□ Information related to an extraordinary Water or Wastewater expenses anticipated for the next two fiscal years (additional staff,
etc), if applicable
□ Information regarding account balances for operating and reserve funds and targets
□ Summary of existing debt and any new Water and Wastewater Debt schedules obtained in the past year or anticipated in the
current year
□ Information related to required debt service reserves target, balances, and coverage requirements
□ Information related to funding of capital using revenues streams other than utility revenues, if applicable
□ CAFR from previous fiscal year
□ Copy of previous rate study, if available
□ Capital Data
□ Detailed information concerning planned Water and Wastewater capital improvements (CIP)
□ Understanding of amount of donated or contributed capital from new development or anticipated bulk users, if any
□ Information related to policy regarding contributed capital (upsizing, etc)
□ List of assets, their age, condition and expected remaining life:
o Original value
o Expected Useful Life
o Annual depreciation
o Accumulated depreciation through prior fiscal year
o Net fixed asset value
□ List of capital expected to comprise net asset additions for current fiscal year/construction work in progress
□ List of current year CIP items that will not be placed in service until the next fiscal year (will be work in progress at the close of
current fiscal year)
□ Documents/Policies related to capital funding practices for the City
□ Customer/Billing Data
□ Copy of current rate schedule for all users
□ Number of accounts billed by month by user class for the last five years and year to date
o Water – inside and outside City users
By meter size
o Wastewater – inside and outside City users
By meter size
□ Detailed usage information on the 10 largest water customers
□ Customer billing costs (postage, bill issuance, etc.)
□ Copy of current connection fees
□ Copy of current Special Assessment or SDF/SDC/Impact Fee policy, if applicable
AE2S CITY OF BOZEMAN WATER AND WASTEWATER UTILITY SYSTEM COST OF SERVICE & RATE DESIGN STUDY PROPOSAL
________________________________________________ [name of entity proposing] hereby affirms it
will not discriminate on the basis of race, color, religion, creed, sex, age, marital status, national origin,
or because of actual or perceived sexual orientation, gender identity, or disability and acknowledges and
understands the eventual contract will contain a provision prohibiting discrimination as described above
and this prohibition on discrimination shall apply to the hiring and treatments or proposer’s employees and
to all subcontracts.
Name and title of person authorized to sign on behalf of submitter
Statement of Non-discrimination - Attachment 1
Advanced Engineering and Environmental Services, Inc. (AE2S)
Shawn Gaddie, PE - Project Manager
To best demonstrate the product you will receive by working with us, we’ve included similar successful project study
deliverables for the City of Billings as an example.
RETAIL WASTEWATER RATE STUDY
FY18 and FY19
Billings, MT
April 14, 2017
FINAL
Attachment 2 - Examples of Recently Completed Rate Studies
WASTEWATER
WHOLESALE RATE STUDY
FY18 and FY19
Billings, MT
April 14, 2017
FINAL
| City of Billings, Montana: FY18-FY19 Wholesale Wastewater Rate Study ES-1
Executive Summary
The City of Billings, Montana (City) provides municipal wastewater service to its citizens, businesses, and industries. In addition to this retail wastewater service, the City provides wholesale wastewater service to the Phillips 66 Refinery (P66) and the Lockwood Water and Sewer District (Lockwood). AE2S Nexus was retained to update the City’s wholesale rate model and to identify cost of service based rates for Fiscal Year 2018 (FY18) as well as Fiscal Year
2019 (FY19) for P66 and Lockwood. The analysis resulted in the recommended cost of service rates as outlined in table ES.1 and ES.2.
Current FY18 FY19
Fixed, $/mo 22,901 8,026 20,555
Variable, $/ccf 0.919 0.861 0.882
Table ES.1: Proposed Lockwood Wastewater Rate
Current FY18 FY19
Fixed, $/mo 10,609 5,033 11,292
Variable, $/ccf 0.556 0.610 0.624
Table ES.2: Proposed Phillips 66 Wastewater Rate
| City of Billings, Montana: FY18-FY19 Wholesale Wastewater Rate Study 1-1
1.0 Introduction
AE2S Nexus was retained by the City of Billings (City) to calculate wholesale wastewater rates
for wholesale customers of the City’s wastewater system for Fiscal Year 2018 (FY18) and Fiscal
Year 2019 (FY19), which begins July 1 and ends June 30. The two wholesale customers connected to the City’s wastewater system are Lockwood Water and Sewer District (Lockwood) and Phillips 66 Refinery (P66). The City’s wholesale rates are set by a comprehensive rate model based on standard industry rate setting methodology and practices using a Utility-Basis approach
for calculating cost of service rates. For FY18, a majority of the rate modeling assumptions
remained consistent with previous rate setting efforts for the wholesale customers. The rate model includes a significant capital expansion of the wastewater treatment facility with it being partially capitalized in 2018 and fully online by 2020. Changes to these assumptions are noted in appendix A.
Contractual agreements between City and wholesale wastewater customers set a minimum 15 percent rate of return on equity. Consistent with these agreements, a 15 percent rate of return was utilized in the FY18 and FY19 rate model update for the establishment of capital related revenue requirements.
This report provides additional details on the methodology used in determining the rate for wholesale wastewater customers and summarizes the following topics:
Wastewater system usage parameters (Section 2.0);
Projected revenue requirements and associated assumptions (Section 3.0);
Allocation of operating and capital-related revenue requirements (Section 4.0); and
Calculated costs of service by user class and recommended FY18 and FY19 wastewater
rates (Section 5.0).
| City of Billings, Montana: FY18-FY19 Wholesale Wastewater Rate Study 2-1
2.0 Customers and Usage
The City owns and operates its wastewater treatment and conveyance facilities serving over
33,600 retail utility accounts across the City and outside city users. In addition to retail accounts,
the City has contractual relationships with two wholesale users, P66 and Lockwood, to provide wastewater service. The customer makeup, volume of wastewater flow, and strength characteristics of the wastewater for these utility accounts in large part determines how costs are allocated across different user classes. Tables 2.1 and 2.2 show the projected utility accounts
across the varying customer types and the associated equivalent meters for FY18 and FY19,
respectively. The equivalent meter counts are shown on a 3/4-inch meter basis.
Meter Size Residential Residential - Large Commercial - Domestic Commercial - High Public Buildings - Domestic
Outside City Industrial Total
3/4-Inch 30,004 330 1,380 20 11 8 0 31,753
1-Inch 369 277 359 15 5 5 0 1,030
1-1/2-Inch 23 113 239 28 13 1 1 418
2-Inch 0 58 129 8 18 1 0 214
3-Inch 4 30 68 4 24 1 1 133
4-Inch 1 16 15 3 5 0 0 40
6-Inch 0 17 10 0 4 0 0 31
8-Inch 0 3 2 0 2 1 0 8
10-Inch 0 0 0 0 0 0 0 0
12-Inch 0 0 0 0 0 0 0 0
Total 30,401 844 2,202 78 82 17 2 33,627
Equivalent Meters 30,530 1,469 2,918 137 269 39 4 35,367
Table 2.1: FY18 Customer Accounts
| City of Billings, Montana: FY18-FY19 Wholesale Wastewater Rate Study 2-2
Meter Size Residential Residential - Large Commercial - Domestic Commercial - High Public Buildings - Domestic
Outside City Industrial Total
3/4-Inch 30,154 331 1,387 20 11 8 0 31,912
1-Inch 371 279 361 15 5 5 0 1,035
1-1/2-Inch 23 113 240 28 13 1 1 420
2-Inch 0 59 129 8 18 1 0 215
3-Inch 4 30 69 4 24 1 1 133
4-Inch 1 16 15 3 5 0 0 40
6-Inch 0 17 10 0 4 0 0 31
8-Inch 0 3 2 0 2 1 0 8
10-Inch 0 0 0 0 0 0 0 0
12-Inch 0 0 0 0 0 0 0 0
Total 30,553 848 2,213 79 82 17 2 33,794
Equivalent Meters 30,683 1,477 2,933 138 269 39 4 35,543
Table 2.2: FY19 Customer Accounts FY18 and FY19 flows by customer class are shown in Table 2.3. No BOD or TSS is presumed
for Inflow/Infiltration (I/I). In calculating these flows, reserve capacity was established for
Lockwood based on their agreement and no reserve capacity was set aside for P66. Concentrations and loadings by customer class are shown in Table 2.4 and Table 2.5. All customer account, customer flow, concentrations, and loadings are consistent with the Test Year assumptions made for the FY18-FY19 Wastewater Retail Rate model.
| City of Billings, Montana: FY18-FY19 Wholesale Wastewater Rate Study 2-3
Fiscal Year 2018 Fiscal Year 2019
Customer Class Contributed Flow (MG) I/I (MG) Total (MG) Contributed Flow (MG) I/I (MG) Total (MG)
Residential 1,494 806 2,300 1,501 806 2,307
Residential - Large 471 254 725 476 255 731
Commercial - Domestic 957 517 1,474 962 516 1,479
Commercial - High 104 56 160 105 56 161
Public Buildings - Domestic 66 36 102 67 36 103
Outside City 25 13 38 25 13 38
Lockwood 43 0 43 44 0 44
Lockwood Reserve 223 0 223 222 0 222
Industrial 13 7 21 13 7 21
Retail Reserve Capacity 4,108 0 4,108 4,089 0 4,089
Phillips 66 296 0 296 296 0 296
Total 7,800 1,690 9,490 7,800 1,690 9,490
Table 2.3: Annual Customer Flows
Customer Class BOD – Capacity (mg/L)
TSS – Capacity (mg/L)
lbs. of BOD lbs. of TSS
Residential 200 200 2,493,309 2,493,309
Residential – Large 200 200 785,901 785,901
Commercial - Domestic
200 200 1,598,077 1,598,077
Commercial - High 500 500 434,044 434,044
Public Buildings - Domestic
200 200 110,541 110,541
Outside City 200 200 41,355 41,355
Lockwood & Lockwood Reserve
178.2 99.2 395,179 219,987
Industrial 500 500 55,993 55,993
Retail Reserve Capacity 200 200 6,857,142 6,857,142
Phillips 66 13.7 66.7 33,797 164,546
Total 12,805,338 12,760,896
Table 2.4: FY18 Average Daily Concentrations (mg/L) and Calculated Annual Loadings (lbs)
| City of Billings, Montana: FY18-FY19 Wholesale Wastewater Rate Study 2-4
Customer Class BOD - Capacity TSS - Capacity lbs. of BOD lbs. of TSS
Residential 200 200 2,505,775 2,505,775
Residential – Large 200 200 793,760 793,760
Commercial - Domestic 200 200 1,606,067 1,606,067
Commercial - High 500 500 438,384 438,384
Public Buildings - Domestic 200 200 111,647 111,647
Outside City 200 200 41,769 41,769
Lockwood & Lockwood Reserve 178.2 99.2 395,179 219,987
Industrial 500 500 55,993 55,993
Retail Reserve Capacity 200 200 6,825,571 6,825,571
Phillips 66 13.7 66.7 33,797 164,546
Total 12,807,942 12,763,500
Table 2.5: FY19 Average Daily Concentrations (mg/L) and Calculated Annual Loadings (lbs)
| City of Billings, Montana: FY18-FY19 Wholesale Wastewater Rate Study 3-1
3.0 Revenue Requirements
Revenue requirements are defined as the amount of revenues required to fully fund operations
and maintenance (O&M) requirements as well as capital-related expenses. Using the utility-basis
for rate setting, capital-related expenses are calculated based on asset depreciation and on the established rate of return on capital assets. 3.1 Operations and Maintenance
O&M is considered all expenses associated with the actual running of the wastewater collection and treatment system. O&M expenses include costs with operating the system as well as maintaining the collection and treatment system in good working order. Specific costs include administrative, billing and collections, electricity and chemical, part and supply, and compliance
costs.
While O&M expenses are a portion of total revenue requirements, all O&M expenses are not applied to revenue requirements. Non-rate revenue is subtracted from O&M expenses before they are applied to total revenue requirements needed from rates. Non-rate revenue includes
sewer permits, sale of material/labor, miscellaneous revenue, collection bad debt, wastewater
supply, franchise fee, and charge for services. Table 3.1 summarizes O&M expenses, non-rate revenues applied, and the resulting net O&M related revenue requirements. Consistent with previous analyses, wastewater treatment, and collection system costs are allocated on a 100 percent average annual flow (variable) basis. Environmental affairs costs were allocated as 50
percent average annual flow and 50 percent fixed meter basis. Customer costs are allocated on a
100 percent fixed meter basis.
| City of Billings, Montana: FY18-FY19 Wholesale Wastewater Rate Study 3-2
Fiscal Year 2018 Fiscal Year 2019
Line Item Total Fixed Variable Total Fixed Variable
Administrative $1,704,987 $1,704,987 $0 $1,756,520 $1,756,520 $0
Utility Commercial & Meter $654,440 $654,440 $0 $674,220 $674,220 $0
Wastewater Treatment $4,587,491 $0 $4,587,491 $4,726,148 $0 $4,868,996
Distribution & Collection $1,476,065 $0 $1,476,065 $1,520,679 $0 $1,566,642
Environmental Affairs $510,737 $255,369 $255,369 $526,174 $263,087 $263,087
O&M Total $8,933,720 $2,614,795 $6,318,925 $9,203,741 $2,693,827 $6,698,724
Less: Non-Rate O&M Revenue ($894,998) ($894,998) $0 ($922,049) ($922,049) $0
Total O&M Revenue Requirement
$8,038,722 $1,719,798 $6,318,925 $8,281,693 $1,771,779 $6,698,724
Table 3.1: O&M Related Revenue Requirements
| City of Billings, Montana: FY18-FY19 Wholesale Wastewater Rate Study 3-3
3.2 Capital Costs Consistent with the negotiated wholesale user agreements and based on industry standards, this wholesale rate analysis uses the utility-basis for calculating capital costs. Under this approach, capital costs are calculated by identifying the rate of return and then applying that rate of return to the net assets of the system (i.e., the undepreciated value of the system).
Before any rate of return can be applied to the net assets of the system (or net system value), that net system value must be calculated. Often referred to as net plant in service (NPIS), the system value is determined by identifying the assets in service by the end of FY16 and then adding the assets expected to be placed in service by the end of FY17. The calculated FY18 NPIS totals
$81.0 Million. The calculated FY19 NPIS totals $127.2 Million. The large increase from FY18 to FY19 is due to the addition of asset values for the new wastewater treatment expansion. Table 3.2 outlines the fixed assets and depreciation resulting in the current NPIS. Once identified, NPIS is then allocated across customer classes based on ownership and
functional cost component. The methodology used to allocate ownership remains consistent with previous wholesale rate analyses for the City. P66 was allocated a portion of the treatment system assets consistent with P66’s proportional share of the overall flow and strength loading of the treatment system. Similarly, P66 was allocated a proportional share of the transmission system consistent with the assets used to convey wastewater from P66 to the WWTP. No portion
of the treatment and collection system is dedicated to serve only P66 and, as a result, they are not solely allocated costs for any piece of infrastructure. For Lockwood, no sole proportion of the NPIS was identified, nor were any collection system related costs as they connect directly to the WWTP (near the headworks of the facility) through
non-City assets. The allocation of capital requirements for Lockwood and P66 are shown in Table 3.3. The allocation of NPIS and depreciation is then used to calculate the utility-basis of capital costs for both. For this analysis, the rate of return is set at the established minimum of 15 percent for both P66 and Lockwood. Table 3.4 identifies the calculated capital costs.
| City of Billings, Montana: FY18-FY19 Wholesale Wastewater Rate Study 3-4
FY18 Ratebase FY18 Depreciation FY19 Ratebase FY19 Depreciation
Collection $40,010,662 $1,082,953 $48,838,909 $1,092,427
Trunks/ Interceptors $22,239,439 $692,999 $24,939,947 $692,905
Lift Stations $2,738,995 $86,883 $2,632,649 $86,867
Common Conveyance $575 $125 $575 $125
Preliminary Treatment $6,296,022 $216,871 $7,648,264 $216,849
Lab $87,280 $16,655 $85,391 $16,655
Primary Treatment $1,647,391 $109,959 $2,769,185 $109,961
Secondary Treatment $2,965,769 $336,319 $3,737,374 $336,310
Residuals $1,720,784 $288,786 $4,935,461 $288,807
Disinfection/Outfall $3,234,064 $155,115 $15,715,484 $155,215
Nitrification $0 $0 $15,879,971 $150
Customer $467 $65 $449 $65
Exclude From Ratebase $15,089 $8,899 $14,503 $8,899
Indirect $0 $0 $0 $0
$80,956,537 $2,995,628 $127,198,162 $3,005,234
Table 3.2: Fixed Assets and Depreciation by Functional Category
Ownership FY18 Net Fixed Assets FY18 Depreciation Expense
FY19 Net Fixed Assets FY19 Depreciation Expense
Joint
Retail $15,271,847 $1,080,513 $48,591,525 $1,080,749
Lockwood $416,498 $29,942 $1,416,377 $29,944
P66 $263,539 $13,376 $763,804 $13,378
Subtotal- Joint $15,951,884 $1,123,830 $50,771,705 $1,124,071
Retail Only $64,996,624 $1,871,548 $76,417,454 $1,880,913
Lockwood Only $0 $0 $0 $0
P66 Only $8,028 $250 $9,003 $250
Total $80,956,537 $2,995,628 $127,189,159 $3,004,984
Retail Subtotal $80,268,472 $2,952,061 $124,999,975 $2,961,412
Lockwood Subtotal $416,498 $29,942 $1,416,377 $29,944
P66 Subtotal $271,567 $13,626 $772,807 $13,628
Table 3.3: Allocation of Net Plant in Service and Depreciation Expenses
| City of Billings, Montana: FY18-FY19 Wholesale Wastewater Rate Study 3-5
Lockwood P66
Total NPIS $416,498 $271,567
Additional Allowance for Working Capital $22,287 $14,532
Total Rate Base $438,785 $286,099
Rate of Return 15%
Rate Base Capital Costs $65,818 $42,915
Depreciation Costs $29,942 $13,626
Total Wholesale Capital Costs $95,759 $56,541
Residual Owner Capital Costs $6,460,649
Table 3.4: FY18 Utility Basis Capital Costs
Lockwood P66
Total NPIS $1,416,377 $772,807
Additional Allowance for Working Capital $24,484 $13,359
Total Rate Base $1,440,860 $786,166
Rate of Return 15%
Rate Base Capital Costs $216,129 $117,925
Depreciation Costs $29,944 $13,628
Total Wholesale Capital Costs $246,073 $131,553
Residual Owner Capital Costs $7,805,875
Table 3.5: FY19 Utility Basis Capital Costs
| City of Billings, Montana: FY18-FY19 Wholesale Wastewater Rate Study 3-6
3.3 Revenue Requirements As noted, total revenue requirements are the combination of O&M related expenses and capital related expenses. Table 3.6 and Table 3.7 detail the total revenue requirements by wholesale user and retail user.
Ownership Operating Costs Capital Costs Total
Retail $7,744,173 $6,460,649 $14,204,822
Lockwood & Lockwood Reserve $49,825 $95,759 $145,584
P66 $244,724 $56,541 $301,265
Total $8,038,722 $6,612,949 $14,651,671
Table 3.6: FY18 Revenue Requirements
Ownership Operating Costs Capital Costs Total
Retail $7,978,954 $7,805,875 $15,784,829
Lockwood & Lockwood Reserve $52,056 $246,073 $298,129
P66 $250,682 $131,553 $382,235
Total $8,281,693 $8,183,501 $16,465,194
Table 3.7: FY19 Revenue Requirements
| City of Billings, Montana: FY18-FY19 Wholesale Wastewater Rate Study 4-1
4.0 Allocations
4.1 Customer Class Allocations
In order to identify the cost of service for customer classes, the revenue requirements in Section 3 must first be allocated to the customer classes themselves. This analysis identifies three sets of customer service allocations: fixed O&M, variable O&M, and capital (to include depreciation and NPIS). The resulting allocations are based on, in part, how reserve capacity and I/I for the
various user classes are allocated to overall costs. P66 is not allocated any reserve capacity or I/I.
Lockwood is allocated reserve capacity, but not I/I. Flow percentages are based on the projected customer class wastewater flow compared to total projected flow. BOD and TSS percentages are based on the projected customer class specific loadings compared to the total projected loadings.
4.2 O&M Allocations
In addition to allocating revenue requirements among customer class, O&M expenses must also be allocated along functional cost components. O&M costs are spread based on how flow-, BOD-, and TSS-related costs are incurred throughout the system. Table 4.1 and Table 4.2 outline
the breakdown in allocation across these functional categories.
| City of Billings, Montana: FY18-FY19 Wholesale Wastewater Rate Study 4-2
Line Item Total Flow-Capacity Flow-Use BOD-Use TSS-Use
Collection $738,033 $0 $738,033 $0 $0
Trunks/ Interceptors/ Common Conveyance
$444,296 $0 $444,296 $0 $0
Lift Stations $293,737 $0 $293,737 $0 $0
Preliminary Treatment $589,788 $67,196 $522,591 $0 $0
Lab $0 $0 $0 $0 $0
Primary Treatment $1,376,247 $0 $688,124 $344,062 $344,062
Secondary Treatment $1,376,247 $0 $688,124 $344,062 $344,062
Residuals $917,498 $0 $0 $467,924 $449,574
Effluent/ Outfall $458,749 $0 $458,749 $0 $0
Nitrification $0 $0 $0 $0 $0
Customer $1,844,128 $1,652,601 $119,830 $36,135 $35,561
Indirect $0 $0 $0 $0 $0
Total O&M Revenue Requirement $8,038,722 $1,719,798 $3,953,483 $1,192,183 $1,173,259
Table 4.1: FY18 O&M Cost by Functional Category
| City of Billings, Montana: FY18-FY19 Wholesale Wastewater Rate Study 4-3
Line Item Total Flow-Capacity Flow-Use BOD-Use TSS-Use
Collection $760,340 $0 $760,340 $0 $0
Trunks/ Interceptors/ Common Conveyance
$457,724 $0 $457,724 $0 $0
Lift Stations $302,615 $0 $302,615 $0 $0
Preliminary Treatment $607,614 $69,227 $538,387 $0 $0
Lab $0 $0 $0 $0 $0
Primary Treatment $1,417,844 $0 $708,922 $354,461 $354,461
Secondary Treatment $1,417,844 $0 $708,922 $354,461 $354,461
Residuals $945,230 $0 $0 $482,067 $463,162
Effluent/ Outfall $472,615 $0 $472,615 $0 $0
Nitrification $0 $0 $0 $0 $0
Customer $1,899,866 $1,702,551 $123,452 $37,227 $36,636
Indirect $0 $0 $0 $0 $0
Total O&M Revenue Requirement $8,281,693 $1,771,779 $4,072,977 $1,228,216 $1,208,721
Table 4.2: FY19 O&M Cost by Functional Category
| City of Billings, Montana: FY18-FY19 Wholesale Wastewater Rate Study 4-4
4.3 Capital Cost Allocations Like the allocation of O&M costs, NPIS capital costs must be allocated across the various cost components and the functional category as they relate to flow and strength. Table 4.3 and Table
4.4 outline the allocation of NPIS based on the functional components.
Category Total Flow - Capacity BOD - Capacity TSS - Capacity
Collection $40,018,121 $40,018,121 $0 $0
Trunks/ Interceptors/Common Conveyance $22,244,159 $22,244,159 $0 $0
Lift Stations $2,739,506 $2,739,506 $0 $0
Preliminary Treatment $6,297,195 $2,877,818 $894,202 $2,525,175
Lab $87,296 $0 $43,648 $43,648
Primary Treatment $1,647,698 $0 $785,952 $861,746
Secondary Treatment $2,966,322 $0 $2,966,322 $0
Residuals $1,721,104 $0 $877,763 $843,341
Effluent/ Outfall $3,234,667 $3,234,667 $0 $0
Nitrification $0 $0 $0 $0
Customer $467 $411 $32 $25
Indirect $0 $0 $0 $0
Total Fixed Asset $80,956,537 $71,114,682 $5,567,919 $4,273,935
Table 4.3: FY18 Allocation of Net Plant in Service by Functional Category
| City of Billings, Montana: FY18-FY19 Wholesale Wastewater Rate Study 4-5
Category Total Flow - Capacity BOD - Capacity TSS - Capacity
Collection $48,844,478 $48,844,478 $0 $0
Trunks/ Interceptors/Common Conveyance $24,943,366 $24,943,366 $0 $0
Lift Stations $2,632,950 $2,632,950 $0 $0
Preliminary Treatment $7,649,136 $3,495,655 $1,086,177 $3,067,304
Lab $85,401 $0 $42,700 $42,700
Primary Treatment $2,769,501 $0 $1,321,052 $1,448,449
Secondary Treatment $3,737,800 $0 $3,737,800 $0
Residuals $4,936,024 $0 $2,517,372 $2,418,652
Effluent/ Outfall $15,717,276 $15,717,276 $0 $0
Nitrification $15,881,782 $0 $15,881,782 $0
Customer $449 $338 $87 $25
Indirect $0 $0 $0 $0
Total Fixed Asset $127,198,162 $95,634,062 $24,586,971 $6,977,129
Table 4.4: FY19 Allocation of Net Plant in Service by Functional Category
| City of Billings, Montana: FY18-FY19 Wholesale Wastewater Rate Study 4-6
Applying the rate of return to the NPIS results in capital costs associated with the current rate
base. Table 4.5 and Table 4.6 outline these rate base capital costs (excluding depreciation) allocated across the same functional categories for FY18 and FY19, respectively.
Flow - Capacity BOD - Capacity TSS - Capacity Total
Collection $1,749,219 $0 $0 $1,749,219
Trunks / Interceptors / Common Conveyance $973,229 $0 $0 $973,229
Lift Stations $119,746 $0 $0 $119,746
Preliminary Treatment $145,423 $42,510 $119,074 $307,007
Lab $0 $2,075 $2,058 $4,133
Primary Treatment $0 $37,364 $40,635 $77,999
Secondary Treatment $0 $141,017 $0 $141,017
Residuals $0 $41,728 $39,768 $81,496
Effluent/ Outfall $163,455 $0 $0 $163,455
Nitrification $0 $0 $0 $0
Customer $18 $1 $1 $20
Indirect $0 $0 $0 $0
Total $3,151,088 $264,696 $201,536 $3,617,321
Table 4.5: FY18 Rate Base Capital Costs by Functional Category
| City of Billings, Montana: FY18-FY19 Wholesale Wastewater Rate Study 4-7
Flow - Capacity BOD - Capacity TSS - Capacity Total
Collection $1,892,768 $0 $0 $1,892,768
Trunks / Interceptors / Common Conveyance
$967,607 $0 $0 $967,607
Lift Stations $102,029 $0 $0 $102,029
Preliminary Treatment $159,209 $46,231 $129,380 $334,820
Lab $0 $1,817 $1,801 $3,619
Primary Treatment $0 $56,228 $61,096 $117,324
Secondary Treatment $0 $159,093 $0 $159,093
Residuals $0 $107,148 $102,019 $209,167
Effluent/ Outfall $715,838 $0 $0 $715,838
Nitrification $0 $675,983 $0 $675,983
Customer $13 $3 $1 $17
Indirect $0 $0 $0 $0
Total $3,837,465 $1,046,505 $294,297 $5,178,267
Table 4.6: FY19 Rate Base Capital Costs by Functional Category
| City of Billings, Montana: FY18-FY19 Wholesale Wastewater Rate Study 4-8
Total capital revenue requirements also include depreciation. Table 4.7 and Table 4.8 outline
depreciation capital costs by functional category.
Flow - Capacity BOD - Capacity TSS - Capacity Total
Collection
$1,087,351 $0 $0 $1,087,351
Trunks / Interceptors / Common Conveyance $695,569 $0 $0 $695,569
Lift Stations $87,184 $0 $0 $87,184
Preliminary Treatment $99,426 $30,894 $87,243 $217,563
Lab $0 $8,332 $8,332 $16,665
Primary Treatment $0 $52,537 $57,603 $110,140
Secondary Treatment $0 $336,645 $0 $336,645
Residuals $0 $147,377 $141,598 $288,975
Effluent/ Outfall $155,471 $0 $0 $155,471
Nitrification $0 $0 $0 $0
Customer $57 $4 $3 $65
Indirect $0 $0 $0 $0
Total $2,125,059 $575,790 $294,780 $2,995,628
Table 4.7: FY18 Depreciation Capital Costs by Functional Category
| City of Billings, Montana: FY18-FY19 Wholesale Wastewater Rate Study 4-9
Flow - Capacity BOD - Capacity TSS - Capacity Total
Collection
$1,095,844 $0 $0 $1,095,844
Trunks / Interceptors / Common Conveyance $694,775 $0 $0 $694,775
Lift Stations $87,051 $0 $0 $87,051
Preliminary Treatment $99,345 $30,869 $87,171 $217,384
Lab $0 $8,330 $8,330 $16,661
Primary Treatment $0 $52,544 $57,611 $110,155
Secondary Treatment $0 $336,571 $0 $336,571
Residuals $0 $147,468 $141,684 $289,152
Effluent/ Outfall $156,315 $0 $0 $156,315
Nitrification $0 $1,261 $0 $1,261
Customer $49 $13 $4 $65
Indirect $0 $0 $0 $0
Total $2,133,379 $577,055 $294,800 $3,005,234
Table 4.8: FY19 Depreciation Capital Costs by Functional Category
| City of Billings, Montana: FY18-FY19 Wholesale Wastewater Rate Study 4-10
The O&M, Capital, and Depreciation costs as they relate to Lockwood specifically are shown in
Table 4.9 and Table 4.10.
Flow - Capacity BOD - Capacity TSS - Capacity Flow - Use BOD - Use TSS - Use Total
Collection $0 $0 $0 $0 $0 $0 $0
Trunks / Interceptors / Common Conveyance $6 $0 $0 $18 $0 $0 $24
Lift Stations $0 $0 $0 $0 $0 $0 $0
Preliminary Treatment $16,055 $5,310 $8,377 $6,449 $0 $0 $36,192
Lab $0 $470 $262 $0 $0 $0 $732
Primary Treatment $0 $5,451 $3,339 $8,492 $3,900 $2,132 $23,314
Secondary Treatment $0 $24,842 $0 $8,492 $3,900 $2,132 $39,367
Residuals $0 $8,825 $4,736 $0 $5,304 $2,786 $21,651
Effluent/ Outfall $18,643 $0 $0 $5,661 $0 $0 $24,304
Nitrification $0 $0 $0 $0 $0 $0 $0
Customer $0 $0 $0 $0 $0 $0 $0
Indirect $0 $0 $0 $0 $0 $0 $0
Total $34,704 $44,898 $16,715 $29,113 $13,104 $7,050 $145,584
Table 4.9: FY18 Lockwood Specific Costs by Functional Category
| City of Billings, Montana: FY18-FY19 Wholesale Wastewater Rate Study 4-11
Flow - Capacity BOD - Capacity TSS - Capacity Flow - Use BOD - Use TSS - Use Total
Collection $0 $0 $0 $0 $0 $0 $0
Trunks / Interceptors / Common Conveyance $6 $0 $0 $19 $0 $0 $25
Lift Stations $0 $0 $0 $0 $0 $0 $0
Preliminary Treatment $18,282 $6,063 $9,565 $6,739 $0 $0 $40,650
Lab $0 $458 $256 $0 $0 $0 $714
Primary Treatment $0 $7,837 $4,800 $8,874 $4,073 $2,227 $27,812
Secondary Treatment $0 $27,973 $0 $8,874 $4,073 $2,227 $43,147
Residuals $0 $16,395 $8,800 $0 $5,539 $2,910 $33,644
Effluent/ Outfall $71,452 $0 $0 $5,916 $0 $0 $77,368
Nitrification $0 $74,770 $0 $0 $0 $0 $74,770
Customer $0 $0 $0 $0 $0 $0 $0
Indirect $0 $0 $0 $0 $0 $0 $0
Total $89,740 $133,496 $23,421 $30,423 $13,685 $7,364 $298,129
Table 4.10: FY19 Lockwood Specific Costs by Functional Category
| City of Billings, Montana: FY18-FY19 Wholesale Wastewater Rate Study 4-12
Finally, the O&M, Capital, and Depreciation costs as they relate to P66 specifically are shown in
Table 4.11 and Table 4.12.
Flow - Capacity BOD - Capacity TSS - Capacity Flow - Use BOD - Use TSS - Use Total
Collection $0 $0 $0 $0 $0 $0 $0
Trunks / Interceptors / Common Conveyance $1,526 $0 $0 $286 $0 $0 $1,811
Lift Stations $0 $0 $0 $0 $0 $0 $0
Preliminary Treatment $21,406 $454 $6,266 $44,532 $0 $0 $72,658
Lab $0 $40 $196 $0 $0 $0 $236
Primary Treatment $0 $466 $2,497 $58,638 $2,070 $9,899 $73,570
Secondary Treatment $0 $2,125 $0 $58,638 $2,070 $9,899 $72,732
Residuals $0 $755 $3,543 $0 $2,816 $12,935 $20,048
Effluent/ Outfall $21,118 $0 $0 $39,092 $0 $0 $60,210
Nitrification $0 $0 $0 $0 $0 $0 $0
Customer $0 $0 $0 $0 $0 $0 $0
Indirect $0 $0 $0 $0 $0 $0 $0
Total $44,049 $3,840 $12,502 $201,185 $6,956 $32,733 $301,265
Table 4.11: FY18 P66 Specific Costs by Functional Category
| City of Billings, Montana: FY18-FY19 Wholesale Wastewater Rate Study 4-13
Flow - Capacity BOD - Capacity TSS - Capacity Flow - Use BOD - Use TSS - Use Total
Collection $0 $0 $0 $0 $0 $0 $0
Trunks / Interceptors / Common Conveyance $1,631 $0 $0 $294 $0 $0 $1,924
Lift Stations $0 $0 $0 $0 $0 $0 $0
Preliminary Treatment $24,000 $519 $7,154 $45,618 $0 $0 $77,291
Lab $0 $39 $191 $0 $0 $0 $231
Primary Treatment $0 $670 $3,591 $60,068 $2,120 $10,136 $76,584
Secondary Treatment $0 $2,392 $0 $60,068 $2,120 $10,136 $74,716
Residuals $0 $1,402 $6,582 $0 $2,883 $13,245 $24,111
Effluent/ Outfall $80,938 $0 $0 $40,045 $0 $0 $120,984
Nitrification $0 $6,395 $0 $0 $0 $0 $6,395
Customer $0 $0 $0 $0 $0 $0 $0
Indirect $0 $0 $0 $0 $0 $0 $0
Total $106,569 $11,417 $17,518 $206,092 $7,122 $33,517 $382,235
Table 4.12: FY19 P66 Specific Costs by Functional Category
| City of Billings, Montana: FY18-FY19 Wholesale Wastewater Rate Study 4-14
4.4 Allocation of Total Revenue Requirements Wholesale rates are based on the total allocation of both O&M costs and capital costs. Table 4.13 and Table 4.14 outline this total allocation of revenue requirements. As not all customer classes incur these costs equally, Table 4.15 and Table 4.16 outline each customer classes’ share of functional cost components.
Line Item Total Flow - Capacity BOD - Capacity TSS - Capacity Flow - Use BOD - Use TSS - Use
Revenue Requirements
O&M $8,038,722 $1,719,798 $0 $0 $3,953,483 $1,192,183 $1,173,259
Capital $6,612,949 $5,276,147 $840,486 $496,316 $0 $0 $0
Total $14,651,671 $7,022,077 $821,598 $489,072 $3,953,483 $1,192,183 $1,173,259
Table 4.13: FY18 Allocation of Total Revenue Requirements
Line Item Total Flow - Capacity BOD - Capacity TSS - Capacity Flow - Use BOD - Use TSS - Use
Revenue Requirements
O&M $8,281,693 $1,771,779 $0 $0 $4,072,977 $1,228,216 $1,208,721
Capital $8,183,501 $5,970,844 $1,623,560 $589,098 $0 $0 $0
Total $16,465,194 $7,799,829 $1,592,639 $562,812 $4,072,977 $1,228,216 $1,208,721
Table 4.14: FY19 Allocation of Total Revenue Requirements
| City of Billings, Montana: FY18-FY19 Wholesale Wastewater Rate Study 4-15
Customer Class Total Flow - Capacity BOD – Capacity TSS - Capacity Flow - Use BOD - Use TSS - Use
Residential $5,240,174 $2,164,815 $159,504 $94,101 $1,779,867 $529,674 $512,213
Residential – Large $1,651,724 $682,358 $50,276 $29,661 $561,021 $166,955 $161,452
Commercial – Domestic $3,358,670 $1,387,530 $102,233 $60,314 $1,140,799 $339,492 $328,301
Commercial – High $500,205 $150,743 $27,767 $16,381 $123,938 $92,207 $89,168
Public Buildings – Domestic $232,324 $95,978 $7,072 $4,172 $78,911 $23,483 $22,709
Outside City $86,917 $35,907 $2,646 $1,561 $29,522 $8,785 $8,496
Lockwood & Lockwood Reserve $145,584 $34,704 $44,898 $16,715 $29,113 $13,104 $7,050
Industrial $38,882 $1,404 $3,579 $2,111 $9,125 $11,525 $11,138
Retail Reserve Capacity $3,095,926 $2,398,457 $438,671 $258,798 $0 $0 $0
Phillips 66 $301,265 $44,049 $3,840 $12,502 $201,185 $6,956 $32,733
Total Revenue Requirement $14,651,671 $6,995,945 $840,486 $496,316 $3,953,483 $1,192,183 $1,173,259
Table 4.15: FY18 Allocation of Functional Revenue Requirements to Customer Class
| City of Billings, Montana: FY18-FY19 Wholesale Wastewater Rate Study 4-16
Customer Class Total Flow - Capacity BOD - Capacity TSS - Capacity Flow - Use BOD - Use TSS - Use
Residential $5,656,307 $2,341,849 $299,312 $110,960 $1,832,099 $544,973 $527,115
Residential – Large $1,791,761 $741,832 $94,814 $35,149 $580,358 $172,632 $166,975
Commercial – Domestic $3,625,389 $1,500,999 $191,843 $71,119 $1,174,277 $349,298 $337,852
Commercial – High $551,430 $163,882 $52,365 $19,412 $128,210 $95,343 $92,219
Public Buildings – Domestic $252,021 $104,343 $13,336 $4,944 $81,631 $24,282 $23,486
Outside City $94,286 $39,037 $4,989 $1,850 $30,539 $9,084 $8,787
Lockwood & Lockwood Reserve $298,129 $89,740 $133,496 $23,421 $30,423 $13,685 $7,364
Industrial $44,153 $2,445 $6,680 $2,477 $9,348 $11,798 $11,405
Retail Reserve Capacity $3,769,482 $2,651,926 $815,307 $302,248 $0 $0 $0
Phillips 66 $382,235 $106,569 $11,417 $17,518 $206,092 $7,122 $33,517
Total Revenue Requirement $16,465,194 $7,742,622 $1,623,560 $589,098 $4,072,977 $1,228,216 $1,208,721
Table 4.16: FY19 Allocation of Functional Revenue Requirements to Customer Class
| City of Billings, Montana: FY18-FY19 Wholesale Wastewater Rate Study 5-1
5.0 Costs by Class and Proposed Rates
For FY18, the total revenue requirements attributable to wholesale users to be recovered through
rates are $446,849. P66 is allocated $301,265 of these costs and Lockwood is allocated $145,584
of these. Table 5.1 shows these costs across the categories of fixed O&M, variable O&M, depreciation, and return on NPIS. For FY19, the total revenue requirements attributable to wholesale users to be recovered through rates are $680,364. P66 is allocated $382,235 of these costs and Lockwood is allocated $298,129. Table 5.2 shows these costs across the categories of
fixed O&M, variable O&M, depreciation, and return on NPIS for FY19. Wholesale rates are set
as a function of the total cost of serving these users with wastewater service. The rate is broken into both a fixed and variable component. Table 5.3 and Table 5.4 outline the proposed rates.
Line Item Fixed O&M
Variable O&M
Depreciation Return Total
Lockwood & Lockwood Reserve $558 $49,267 $29,942 $65,817 $145,584
Phillips 66 $3,850 $240,874 $13,626 $42,915 $301,265
Total $4,408 $290,141 $43,568 $108,732 $446,849
Table 5.1: FY18 Cost of Service
Line Item Fixed O&M Variable O&M Depreciation Return Total
Lockwood & Lockwood Reserve $584 $51,472 $29,944 $216,129 $298,129
Phillips 66 $3,952 $246,731 $13,628 $117,925 $382,235
Total $4,353 $298,203 $43,752 $334,054 $680,364
Table 5.2: FY19 Cost of Service
| City of Billings, Montana: FY18-FY19 Wholesale Wastewater Rate Study 5-2
Current FY18 FY19
Fixed, $/mo 22,901 8,026 20,555
Variable, $/ccf 0.919 0.861 0.882
Table 5.3: Proposed Lockwood Wastewater Rates
Current FY18 FY19
Fixed, $/mo 10,609 5,033 11,292
Variable, $/ccf 0.556 0.610 0.624
Table 5.4: Proposed Phillips 66 Wastewater Rates
| City of Billings, Montana: FY18-FY19 Wholesale Wastewater Rate Study A-1
Appendix A: Customer Class Allocations
Table A.1 & A.2 outline FY18 & FY19 Fixed O&M Cost of Service Characteristics by
Owner/Non-Owner class. Split of Flow, BOD, and TSS are for O&M purposes are based on
actual average annual flows and loadings. Retail reserve capacity is not used in O&M breakdowns.
Customer Class Flow - Capacity BOD - Capacity TSS - Capacity Flow - Use BOD - Use TSS - Use
Owners 93.44% 98.26% 96.50% 93.44% 98.87% 97.70%
Lockwood 0.83% 1.13% 0.62% 0.83% 0.74% 0.41%
Phillips 66 5.73% 0.60% 2.88% 5.73% 0.39% 1.89%
Total 100% 100% 100% 100% 100% 100%
Table A.1: FY18 Summary of Customer Service Characteristics, Fixed O&M
Customer Class Flow - Capacity BOD - Capacity TSS - Capacity Flow - Use BOD - Use TSS - Use
Residential 93.45% 98.25% 96.51% 93.45% 98.86% 97.70%
Lockwood 0.84% 1.15% 0.63% 0.84% 0.75% 0.41%
Phillips 66 5.71% 0.60% 2.86% 5.71% 0.39% 1.88%
Total 100% 100% 100% 100% 100% 100%
Table A.2: FY19 Summary of Customer Service Characteristics, Fixed O&M
| City of Billings, Montana: FY18-FY19 Wholesale Wastewater Rate Study A-2
Table A.3 and A.4 present FY18 & FY19 Variable Capital Cost of Service Characteristics by
Owner/Non-Owner class. Split of Flow, BOD, and TSS are for O&M purposes are based on actual average annual flows and loadings.
Customer Class Flow -
Capacity
BOD -
Capacity
TSS -
Capacity
Flow -
Use
BOD -
Use
TSS - Use
Owner 90.24% 98.26% 96.50% 90.24% 98.26% 96.50%
Lockwood 1.23% 1.13% 0.62% 1.23% 1.13% 0.62%
Phillips 66 8.52% 0.60% 2.88% 8.52% 0.60% 2.88%
Total 100% 100% 100% 100% 100% 100%
Table A.3: FY18 Summary of Customer Service Characteristics, Variable O&M
Customer
Class
Flow -
Capacity
BOD -
Capacity
TSS -
Capacity
Flow -
Use
BOD -
Use
TSS -
Use
Owner 90.28% 98.25% 96.51% 90.28% 98.25% 96.51%
Lockwood 1.25% 1.15% 0.63% 1.25% 1.15% 0.63%
Phillips 66 8.47% 0.60% 2.86% 8.47% 0.60% 2.86%
Total 100% 100% 100% 100% 100% 100%
Table A.4: FY19 Summary of Customer Service Characteristics, Variable O&M
| City of Billings, Montana: FY18-FY19 Wholesale Wastewater Rate Study A-3
Table A.5 and A.6 present FY18 & FY19 Fixed Capital Cost of Service Characteristics by
Owner/Non-Owner class. Split of Flow, BOD, and TSS are for O&M purposes are based on actual average annual flows and loadings. Reserve capacity are included in these capital allocations.
Customer Class Flow - Capacity BOD - Capacity TSS - Capacity Flow - Use BOD - Use TSS - Use
Owner 94.03% 96.65% 96.99% 94.09% 99.37% 98.70%
Lockwood & Lockwood Reserve 2.80% 3.09% 1.72% 2.80% 0.41% 0.23%
Phillips 66 3.17% 0.26% 1.29% 3.11% 0.22% 1.08%
Total 100% 100% 100% 100% 100% 100%
Table A.5: FY18 Summary of Customer Service Characteristics, Depreciation & Rate Base
Customer Class Flow - Capacity BOD - Capacity TSS - Capacity Flow - Use BOD - Use TSS - Use
Owner 94.03% 96.65% 96.99% 94.09% 99.36% 98.69%
Lockwood & Lockwood Reserve 2.80% 3.09% 1.72% 2.80% 0.42% 0.23%
Phillips 66 3.17% 0.26% 1.29% 3.11% 0.22% 1.08%
Total 100% 100% 100% 100% 100% 100%
Table A.6: FY19 Summary of Customer Service Characteristics, Depreciation & Rate Base
RETAIL/RESALE
WATER RATE STUDY
Fiscal Years
2018 and 2019
Billings, MT
April 14, 2017
FINAL
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study ES-1
Executive Summary
The City of Billings, Montana calculates its water rates for retail and resale customers annually
using a cost of service rate model developed specifically for its water system. The last rate
analysis was completed in April 2015, at which time rates for FY16 and FY17 were set. In
January 2017, the City retained AE2S Nexus to update its water rate model and develop
recommendations for FY18 and FY19 water rates. This report summarizes the results of the
analyses for FY18 and FY19, with detailed tables found in the Appendices.
Based on the results of this study, the recommended monthly meter charges rates for FY18 and
FY19 are shown in Table ES.1. To balance the overall need for a revenue increase between the
fixed and volumetric rates, meter rate increases are recommended for both FY18 and FY19. The
increases vary by meter sizes. The larger meter sizes are increasing at a higher rate than the
smaller sizes due to the equivalent meter weighting factors. Tables ES.2 and ES.3 summarize
the recommendations for Fire Protection charges for Owners (inside City users) and Non-Owners
(outside City users), respectively.
Table ES.1: Recommended FY18 and FY19 Meter Charges for Owners and Non-Owners
Meter Size
Inside City
Recommended
Rate FY18
Outside City
Recommended
Rate FY18
% Increase from
FY17
Inside City
Recommended
Rate FY19
Outside City
Recommended
Rate FY19
% Increase from
FY18
3/4” $8.15 8.75$ 1.9%8.15$ 8.75$ 0.0%
1” 9.15$ 10.00$ 1.6%9.15$ 10.00$ 0.0%
1-1/2” 10.80$ 11.75$ 3.3%10.80$ 11.75$ 0.0%
2” 15.30$ 16.65$ 6.2%15.30$ 16.65$ 0.0%
3” 46.10$ 50.10$ 5.8%48.50$ 52.70$ 5.2%
4” 57.80$ 62.80$ 6.3%60.80$ 66.05$ 5.2%
6” 85.05$ 92.45$ 6.9%89.45$ 97.20$ 5.2%
8” 116.20$ 126.35$ 7.2%122.20$ 132.85$ 5.2%
10” 179.80$ 195.40$ 7.6%189.05$ 205.45$ 5.1%
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study ES-2
Table ES.2: Recommended Annual Fire Protection Charges for Owners – FY18/FY19
Table ES.3: Recommended Annual Fire Protection Charges for Non-Owners – FY18/FY19
Table ES.4 presents the recommended volumetric rates for Single Family Residential users for
FY18 and FY19. Due to projected operating cost increases in FY18, the calculated cost of
service rates would increase at a faster pace than inflation. To provide for more gradual
adjustments, it is recommended the City strategically utilize cash reserves to absorb a near-term
revenue shortfall while phasing in required increases over the two-year period to minimize the
effect on the users. Consistent with the approach taken in the previous analysis, rate increase
percentages for Non-Owner Residential users are equal to the increases recommended for the
Owner Single Family Residential user class in FY18 and FY19. Table ES.5 presents the
recommended FY18 and FY19 volumetric rates for Non-Owner Single Family Residential
accounts.
Meter Size
Inside City
Current Rate
FY17 ($/Year)
Inside City
Recommended
Rate FY18
($/Year)
% Increase from
FY17
Inside City
Recommended
Rate FY19
($/Year)
% Increase from
FY18
1-1/4"23.35$ $24.40 $24.40
1-1/2"31.10$ $32.50 $32.50
2"49.80$ $52.05 $52.05
3"124.45$ $130.05 $130.05
4"217.75$ $227.55 $227.55
6"497.65$ $520.05 $520.05
8"870.90$ $910.10 $910.10
10"1,368.55$ $1,430.15 $1,430.15
12"1,970.75$ $2,059.45 $2,059.45
14"2,682.40$ $2,803.10 $2,803.10
4.5%0.0%
Meter Size
Outside City
Current Rate
FY17 ($/Year)
Outside City
Recommended
Rate FY18
($/Year)
% Increase from
FY17
Outside City
Recommended
Rate FY19
($/Year)
% Increase from
FY18
1-1/4"23.65$ $24.70 $24.70
1-1/2"31.55$ $32.95 $32.95
2"50.45$ $52.70 $52.70
3"126.15$ $131.85 $131.85
4"220.75$ $230.70 $230.70
6"504.60$ $527.30 $527.30
8"883.00$ $922.75 $922.75
10"1,387.60$ $1,450.05 $1,450.05
12"1,998.15$ $2,088.05 $2,088.05
14"2,719.70$ $2,842.10 $2,842.10
4.5%0%
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study ES-3
Table ES.4: Recommended FY18 and FY19 Volumetric Charges for Owners
Table ES.5: Recommended FY18 and FY19 Volumetric Charges for Non-Owners
Table ES.6 summarizes the recommended non-residential volumetric rates for FY18 and FY19
for Owners and Non-Owners. For the Resale user class, it is recommended that the City
continue its approach of charging the calculated cost of service rate, adopting the calculated
FY18 and FY19 rates shown in Table ES.6.
Table ES.6: Recommended Multi-Family and Non-Residential Volumetric Rates for Owners and Non-Owners – FY18 and FY19
Single Family Residential Current FY17
Rate ($/CCF)
Recommended
FY18 Rate
($/CCF)
% Increase from
FY17
Recommended
FY19 Rate
($/CCF)
% Increase from
FY18
Tier 1 2.21$ 2.29$ 2.33$
Tier 2 2.65$ 2.74$ 2.80$
Tier 3 3.45$ 3.57$ 3.64$
Tier 4 5.18$ 5.36$ 5.47$
3.5%2.0%
Single Family Residential Current FY17
Rate ($/CCF)
Recommended
FY18 Rate
($/CCF)
% Increase from
FY17
Recommended
FY19 Rate
($/CCF)
% Increase from
FY18
Tier 1 2.29$ 2.37$ 2.42$
Tier 2 2.75$ 2.85$ 2.90$
Tier 3 3.58$ 3.71$ 3.78$
Tier 4 5.37$ 5.56$ 5.67$
3.5%2.0%
Current FY17
Rate ($/CCF)
Recommended
FY18 Rate
($/CCF)
% Increase from
FY17
Recommended
FY19 Rate
($/CCF)
% Increase from
FY18
Owners
Multi-Family Residential 2.31$ 2.39$ 3.5%2.44$ 2.0%
Non-Residential 2.00$ 2.06$ 3.0%2.10$ 2.0%
Seasonal 3.18$ 3.29$ 3.5%3.41$ 3.5%
Non-Owners
Non-Residential 2.12$ 2.18$ 3.0%2.23$ 2.0%
Resale 1.86$ 1.72$ -7.5%1.81$ 5.2%
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study ES-4
Table ES.7 summarizes the projected revenue adequacy of the Water Utility for FY18 and FY19
based on the recommended rates. As shown in Table ES.7, the adoption of rates for FY18 that
are less than the calculated cost of service results in a projected revenue deficiency, however, as
shown in Table ES.8, even with significant investment of reserve funds in capital projects in
FY18, it is anticipated that utility reserves would be adequate to adsorb the projected revenue
deficiency. At the recommended rates, projected revenues in FY19 are forecast to be adequate to
meet revenue requirements given the current assumptions. In summary, under the projected
water sales and given the current cash reserve balances, the recommended rates for FY18 and
FY19 will present a stable near-term approach to rate-setting.
Table ES.7: Summary of Net Cash-Based Rate Revenue Requirements – FY18 and FY19
Table ES.8: Projected Cash Reserve Balances – FY18 and FY19
FY18 FY19
Net Rate Revenue Requirements
O&M-Related 10,823,132$ 11,098,907$
Capital-Related 13,599,356$ 13,460,386$
Net Rate Revenue Requirements 24,422,488$ 24,559,293$
Projected Rate Revenues
Owners
Residential 12,884,404$ 13,154,570$
Multi-Family 1,638,646$ 1,691,348$
Non-Residential 3,736,565$ 3,828,007$
Seasonal 1,741,973$ 1,820,052$
Fire Protection 347,505$ 347,505$
Non-Owners
Residential 125,349$ 127,349$
Non-Residential 1,831,498$ 1,868,202$
Resale 1,648,874$ 1,752,477$
Fire Protection 14,278$ 14,278$
Total Projected Rate Revenue 23,969,093$ 24,603,789$
Projected Revenue Adequacy (453,395)$ 44,495$
2017 2018 2019
Total Water Fund Balance 24,492,739$ 15,027,338$ 15,574,615$
O&M Reserve 3,401,617$ 3,535,632$ 3,621,956$
Debt Service Reserve 1,386,000$ 1,513,685$ 1,513,685$
Capital/Rate Stabilization Reserve 19,705,122$ 9,978,021$ 10,438,974$
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study ES-5
Lastly, to assess the potential revenue stability risk to the City of Billings, a probabilistic revenue
forecasting model was developed. The framework for the model was based on a publically
available tool that was recently developed by the Alliance for Water Efficiency. The probabilistic
revenue forecast completed was based on the stochastic evaluation of FY16 billing and weather
data as compared to 17 years of historical weather data. The results of the revenue forecast
resulted in the following conclusions as they related to total target FY18 rate revenues, excluding
fire protection, from Table ES.7, of $23.6M.
Table ES.9: Estimated Probability of Achieving Revenue at Varying Targets (FY18)
Although the revenue forecasting model indicated that water sales adequate to meet target
revenue of $23.6M are not forecast to be achieved at a high confidence interval, it should be
noted that:
Given that the City’s O&M expenditures are typically less than budgeted (for the most
recent three-year period the average was 89.7 percent), it is reasonable to assume for
the purposes of the forecast modeling that total target revenue requirements for FY18
could be reduced by $1.3M with no anticipated net impact on cash position of the
utility. If this were the case, total rate revenue requirements would be reduced to
$22.3M.
With a target revenue of near $22M, there is nearly a 90 percent chance of generating
sufficient revenues.
The City has adequate cash reserves that can be used to offset near-term revenue
shortfalls should they occur.
In summary, reducing water sales projections based solely on the outputs of the water sales
forecasting from the model would require the City to implement increases in excess of those
currently proposed, which does not seem prudent given the factors noted above. As long as the
City continues its practice of evaluating rates at least once every two years and maintaining a
healthy cash position, it appears that the maximum revenue shortfall as predicted by the
forecasting model could be readily offset using existing cash reserves.
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 1-1
1.0 Introduction
In January 2017, AE2S Nexus was retained by the City of Billings to update its water rate model
and recommend Retail and Resale water rates for the 2018 Fiscal Year (FY18), which begins
July 1, 2017 and ends June 30, 2018, as well as for FY19. The City has utilized a detailed and
comprehensive rate-setting model for several years. The rate model utilized by the City of
Billings was originally developed by a different utility rate consultant and was last updated by
AE2S Nexus in early 2015 for the purpose of developing rates for FY16 and FY17. The
FY18/FY19 rate review involved a comprehensive review of assumptions and methodology
upon which the analysis is based. The results of that review are described herein.
The County Water District of Billings Heights is a major outside/non-owner user of the City’s
water system, and is referred to as the Resale user class throughout this analysis. Based on the
current agreement between the City of Billings and this Resale customer, the established and
agreed upon rate of return is based on the weighted average cost of capital (WACC). The
Memorandum of Understanding between the City and the District included the following
methodology for establishing the WACC, the calculation of which is detailed in Section 3.2.2.
“The WACC will be calculated for each rate study, including the current study, using the
City’s then current effective interest rate on outstanding debt and a return on equity
equal to the average 30-year treasury rate plus 300 basis points for the most recent
twelve month period ending June 30th.”1
At the City’s request, AE2S Nexus has updated the customer billing data, O&M and capital
revenue requirements, and asset inventory. To complete a comprehensive update, assumptions
upon which the model calculations are based were also reviewed and verified or updated to
reflect current system conditions. In general, the COSA methodology utilized remains consistent
with previous analyses, which involved three steps: 1) Functionalization, 2) Classification, and
3) Allocation. The cost of service analysis completed using the City’s existing rate model and
upon which rate calculations have been historically based, involved the following steps:
1. Functionalization: in the methodology applied by the City of Billings, this step involves
the grouping of costs based on the type of customer to which the cost applies:
a. Joint allocation – costs allocated to all user classes
b. All-But-Resale allocation – costs allocated to all but the Resale user class
including both Inside City (Owner) and Outside (non-Owner) City users
c. Owner allocation – costs allocated only to the owner user classes
d. Resale allocation – costs assigned to the Resale class
1 Memorandum of Understanding Between the City of Billings and County Water District of Billings Heights, May 8, 2013.
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 1-2
2. Classification: categorization of functionalized costs based on how the cost is related to
the user characteristics (related to customer account numbers, average flow, peak flow,
etc.):
a. Fixed cost allocation
i. Customer based
ii. Meter based
b. Variable cost allocation
i. Base Capacity allocation
ii. Peak Day Capacity allocation
iii. Peak Hour Capacity allocation
c. Direct Fire allocation
3. Allocation: The distribution of functionalized and classified costs to customer classes
based on number of meters, equivalent meters, and billed flow totals.
This report summarizes the following topics:
Water system usage parameters assumed for FY18 and FY19 (Section 2.0);
Projected FY18/FY19 revenue requirements and associated assumptions (Section 3.0);
Allocation of FY18/FY19 operating and capital-related revenue requirements (Section
4.0);
Calculated FY18/FY19 costs of service by user class and recommended FY18/FY19
water rates for Retail and Resale customer classes (Section 5.0); and
Probabilistic revenue forecasting and considering of risk in rate setting (Section 6.0).
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 2-1
2.0 Customers and Usage
The City of Billings provides water service to approximately 29,080 users within City limits, 280
users outside of the City, and the Resale customer County Water District of Billings Heights.
Based on a review of billed flow and account data from FY09 through FY16, a representative
Test Year was developed. Customer classes include the following:
Owners
o Single Family Residential (single family, two- and three-unit complexes)
o Multi-Family Residential (multi-family complexes with greater than three units)
o Commercial
o Industrial
o Seasonal
o Private Fire Protection
Non-Owners
o Residential (single family, two- and three- multi-family unit complexes)
o Commercial (includes multi-family complexes with greater than three units)
o Resale (County Water District of Billings Heights)
o Private Fire Protection
Estimated FY18 customer accounts by meter size and equivalent meters for the owner and non-
owner user classes are shown in Table 2.1 and Table 2.2, respectively. Similar values for FY19
are found in Table 2.3 and Table 2.4, respectively. The equivalent meter counts are shown on a
3/4-inch meter basis. Table 2.5 summarizes the projected FY18 and FY19 billable flow for each
user class, measured in units of one hundred cubic feet (CCF), noting the basis for the FY18 and
FY19 flow assumptions.
Figure 2.1 shows the recent historical trend in meter growth for all non-irrigation meter classes.
As show, meter number growth has been relatively flat. The dip in commercial accounts in
FY14 correlates with identification of a Multi-Family Residential user class, which was
previously accounted for in the Commercial class. Figure 2.2 shows the change in Single Family
residential inside meters, which have grown at an average of 0.8 percent per year since FY13.
Despite growth in meters, water use for this class has declined, likely as a combined result of
conservation-oriented rate changes and increased use of water-saving household appliances.
Water use for other inside user classes has been sporadic, but the City expects to see continued
growth. To avoid overestimating water sales for FY18 and FY19, account growth was projected
to be 0.5 percent per year for the Single Family, Multi-Family, and Commercial Accounts.
Industrial accounts numbers were projected to remain constant and Seasonal (Irrigation)
accounts were grown at one percent annually. Based on recent historical water use per account,
Single Family Residential and Commercial water use was grown at 0.5 percent per year, and
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 2-2
Multi-Family and Seasonal water use was grown at one percent per year. Updated water demand
projections from the County Water District of Billings Heights indicated that demand is expected
to grow at one percent annually. This has been incorporated into the analysis. Meter and water
demand projections for other outside users were not assumed to grow from projected FY17
levels.
Table 2.1: Owner Customer Accounts and Equivalent Meters – Projected FY18
Table 2.2: Non-Owner Customer Accounts and Equivalent Meters – Projected FY18
Meter Size Residential
Multi-Family
Residential Commercial Industrial Seasonal Total
3/4"25,703 280 1,324 0 83 27,390
1"341 231 349 0 80 1,001
1-1/2"15 97 262 0 44 418
2"0 45 145 0 17 207
3"0 27 96 1 7 131
4"0 13 23 0 3 39
6"0 14 15 1 0 30
8"0 3 3 0 0 6
10"0 0 0 0 0 0
Total Accounts 26,059 710 2,217 2 234 29,222
Total Equivalent Meters 26,162 1,633 4,197 29 410 32,431
Meter Size Residential Commercial Resale Total
3/4"239 23 0 262
1"2 10 0 12
1-1/2"0 2 0 2
2"0 2 0 2
3"0 2 0 2
4"0 0 0 0
6"0 0 0 0
8"0 1 0 1
10"0 1 1 2
Total Accounts 241 41 1 283
Total Equivalent Meters 242 132 41 415
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 2-3
Table 2.3: Owner Customer Accounts and Equivalent Meters – Projected FY19
Table 2.4: Non-Owner Customer Accounts and Equivalent Meters – Projected FY19
Meter Size Residential
Multi-Family
Residential Commercial Industrial Seasonal Total
3/4"25,832 281 1,331 0 84 27,528
1"343 232 351 0 81 1,007
1-1/2"15 97 263 0 44 419
2"0 45 146 0 17 208
3"0 27 96 1 7 131
4"0 13 23 0 3 39
6"0 14 15 1 0 30
8"0 3 3 0 0 6
10"0 0 0 0 0 0
Total Accounts 26,190 712 2,228 2 236 29,368
Total Equivalent Meters 26,293 1,635 4,211 29 412 32,581
Meter Size Residential Commercial Resale Total
3/4"239 23 0 262
1"2 10 0 12
1-1/2"0 2 0 2
2"0 2 0 2
3"0 2 0 2
4"0 0 0 0
6"0 0 0 0
8"0 1 0 1
10"0 1 1 2
Total Accounts 241 41 1 283
Total Equivalent Meters 242 132 41 415
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 2-4
Table 2.5: Projected FY18 and FY19 Billable Water Sales
Figure 2.1: Recent Historical Meter Counts (Excluding Irrigation)
Customer Class
FY18 Usage
(CCF)
FY19 Usage
(CCF)Basis
Owners
Residential 3,629,517 3,647,665
Based on projected FY17; 0.5%
annual increase
Multi-Family Residential 638,611 644,997
Based on projected FY17; 1.0%
annual increase
Commercial 1,635,377 1,643,554
Based on average FY14-FY16; 0.5%
annual increase
Industrial 23,873 23,873 Based on FY16; held constant
Seasonal 519,641 524,837
Based on average FY12-FY16; 1.0%
annual increase
Subtotal 6,447,019 6,484,926
Non-Owners
Residential 33,875 33,875
Based on actual FY17 projected;
held constant
Commercial 834,465 834,465 FY09-FY16 Average; held constant
Resale 957,285 966,857
Based on projected FY17; 1.0%
annual increase
Subtotal 1,825,625 1,835,198
Total 8,272,644 8,320,124
0
500
1000
1500
2000
2500
3000
FY13 FY14 FY15 FY16 FY17Accounts MF Residential - Inside Commercial/Public - Inside Industrial - Inside
Residential - Outside Commercial/Public - Outside Resale
Multi-Family Residential Impact
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 2-5
Figure 2.2: Recent Historical Single Family Residential (Inside) Meter Counts
Multi-Family Water Use Characteristics
The rate recommendations for FY16 included creation of a Multi-Family Residential user class
to distinguish residential units of four or more from the rest of the Commercial user class. The
City began tracking Multi-Family Residential water use in FY15 to make such a change possible.
Based on a review of limited data (11 months from FY14/FY15), the ratio of peak water use to
average day use for the FY16 and FY17 analyses was kept equal to the value used for the
Commercial class, but in recognition of the potential impact of peak hour water use associated
with diurnal peaking from residential sources, the Multi-Family maximum hour peaking factor
was set equal to that of the Single Family Residential user class. It was recommended that the
City continue to track and monitor the water use associated with this user class and to determine
if the peaking factors should be adjusted in the future. The Multi-Family Residential user class
was only established for Owners, as data was not available regarding Multi-Family Residential
units located outside of City limits.
As part of the FY18/FY19 analysis, additional Multi-Family Residential water use data from
FY15 through FY16 was evaluated. Table 2.6 compares Multi-Family Residential average
annual water use as a percentage of average winter water use for the Single Family Residential
and Commercial user classes. The values in the Single Family Residential columns indicate that
average annual water use for that class ranges from 138 percent to nearly 300 percent the average
winter water use, suggesting a large peaking factor associated with maximum day demand.
0
5000
10000
15000
20000
25000
30000
FY13 FY14 FY15 FY16 FY17Accounts Single Family Residential - Inside
Average Growth = 0.8% per year
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 2-6
Multi-Family Residential Single Family Residential Commercial
Meter Size FY14 FY15 FY16 FY14 FY15 FY16 FY14 FY15 FY16
¾” 110% 124% 135% 177% 138% 161% 145% 131% 154%
1” 113% 92% 126% 249% 297% 191% 144% 121% 156%
1.5” 118% 122% 119% 194% 207% 160% 135% 133% 135%
2” 117% 138% 136% 125% 125% 125%
3” 106% 112% 121% 123% 125% 133%
4” 117% 131% 134% 115% 115% 125%
6” 109% 109% 115% 111% 110% 118%
Table 2.6: Ratios of Average Annual to Average Winter Water Use
The data in Table 2.6 indicates that the largest ratio of average annual Multi-Family Residential
water use to average winter water use in FY14 through FY16 was 138 percent, suggesting that
Multi-Family water use in total does not vary by season to the same degree as Single Family
Residential water use. This compares more closely to the Commercial annual average to winter
average ratios that range from 115 percent to 156 percent. As a result, it was determined that the
level of service assumption suggesting that the Multi-Family Residential class imposes demands
on the utility similar to the Commercial class is reasonable. Additionally, it is still believed likely
that diurnal water use associated with Multi-Family Residential is most likely similar to that of
the Single Family Residential class. Table 2.7 presents the peaking factors utilized in the
analysis, which are unchanged from FY16/FY17 analysis.
Table 2.7: Peaking Factors – FY18 and FY19 Analyses
Customer Class
Max (Peak)
Day
(MGD)/Averag
Max (Peak) Hour
(MGD)/Average
Day (MGD)
Owners
Residential 2.60 4.00
Multi-Family 1.75 4.00
Commercial 1.75 3.00
Industrial 1.50 2.00
Seasonal 3.50 6.00
Non-Owners
Residential 2.60 4.00
Commercial 1.75 3.00
Resale 2.54 3.90
System Data 2.20 3.40
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 3-1
3.0 Revenue Requirements
Revenue requirements consist of expenses incurred for O&M of the Water Utility, as well as
capital-related expenses such as debt service principal, capital outlays, and contributions to
reserves.
3.1 Operation and Maintenance Costs
For the purpose of developing water rates for FY18 and FY19, the O&M component of revenue
requirements was based on the preliminary FY18 Water Operating budget divisions titled
Administration, Billing, Service Center, Water Treatment Plant, Distribution/Collection
Maintenance, and Meter Shop. As agreed upon with the District, Joint O&M was determined
based on the three-year average of the difference between budgeted and actual O&M expenses.
For the FY18 and FY19 analyses, this value was 89.7 percent, updated from 92. percent in the
FY16/FY17 study. Based on future cash flow projections from the City, an increase of 2.4
percent was applied to the FY18 budget to estimate the FY19 O&M budget.
In determining net O&M revenue requirements, consideration is also given to non-rate operating
revenue, which is applied to offset the operating costs. Tables 3.1 and 3.2 summarize total
projected O&M revenue requirements, total projected O&M non-rate revenue, and net O&M
revenue requirements based on ownership for FY18 and FY19, respectively.
Changes to the cost of service assumptions upon which Tables 3.1 and 3.2 are based are
discussed in Section 4. In the FY16/FY17 analysis, it was determined that the portion of
distribution cost associated with Zones 1, 2, and 4 can be reasonably allocated to non-owners
users. This was a change from the previous approach. As a result, of this shift, the total Owner-
only O&M revenue requirements are decreased, while the total All-But-Resale O&M revenue
requirements are increased. As Owners of the system, the Owner user classes are still allocated
all of the O&M non-rate revenue except for Franchise Fees and Transfer to O&M for pipe
bursting. As a result of the decreased Owner-only revenue requirement, the net revenue
requirement once the O&M non-rate revenue is deducted appears as a negative value in Tables
3.1 and 3.2. This does not indicate an overall reduction in Owner costs, as the Owners end up
with more All-But-Resale revenue requirements under this approach.
The net revenue requirements functionalized by ownership shown in Tables 3.1 and 3.2 are
further allocated to the user classes based on the fixed or variable nature of the cost
(classification), and the system usage parameters associated with each user class (allocation).
Table 3.3 summarizes the allocated O&M revenue requirements by owner of FY18 and FY19,
noting in particular the total net O&M revenue requirements allocated to the Resale user class.
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 3-2
Table 3.1: Summary of Projected FY18 O&M Revenue Requirements
Budget Line Item Total Joint All-But-Resale Owners Resale
Water Production
Chemicals $540,000 $484,155 $55,845 $0 $0
All Other $2,853,800 $2,558,671 $295,129 $0 $0
High Service Pumping $0 $0 $0 $0
Utilities (80% to Base)$1,304,876 $1,169,931 $134,945 $0 $0
All Other $30,686 $27,513 $3,173 $0 $0
System Pumping and Storage $0 $0 $0 $0
Utilities (80% to Base)$492,474 $42,742 $198,673 $218,576 $32,483
All Other $184,116 $15,980 $74,276 $81,717 $12,144
Distribution System $0 $0 $0 $0
Fire Hydrants $243,530 $0 $243,530 $0 $0
All Other $2,151,444 $744,038 $1,060,419 $346,987 $0
Customer Billing and Meter $2,666,337 $2,390,595 $275,742 $0 $0
Admin.$2,277,669 $2,042,121 $235,547 $0 $0
O&M - Total $12,744,932 $9,475,747 $2,577,279 $647,280 $44,627
Less Non-Rate
O&M - Related Revenue Joint All-But-Resale Owners Resale
Water Permits $55,000 $0 $0 $55,000 $0
Misc. Revenue $20,800 $0 $0 $20,800 $0
Collection of Bad Debt $10,000 $0 $0 $10,000 $0
Sale of Material/Labor $275,000 $0 $0 $275,000 $0
Public Water Supply $61,000 $0 $0 $61,000 $0
Franchise Fee $935,000 $838,306 $96,694 $0 $0
Water Service Line Repair $435,000 $0 $0 $435,000 $0
Water Service Line Admin.$30,000 $0 $0 $30,000 $0
Hydrant Meter Rental Fee $30,000 $0 $0 $30,000 $0
Charge for Services $70,000 $0 $0 $70,000 $0
Transfer to O&M for Pipebursting Projects $0 $0 $0 $0 $0
Transfers In $0 $0 $0 $0 $0
Total O&M-Related $1,921,800 $838,306 $96,694 $986,800 $0
Total Joint All-But-Resale Owners Resale
Total O&M Revenue Requirement $10,823,132 $8,637,441 $2,480,585 ($339,520)$44,627
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 3-3
Table 3.2: Summary of Projected FY19 O&M Revenue Requirements
Budget Line Item Total Joint All-But-Resale Owners Resale
Water Production
Chemicals $553,184 $495,976 $57,208 $0 $0
All Other $2,923,477 $2,621,142 $302,334 $0 $0
High Service Pumping $0 $0 $0 $0 $0
Utilities (80% to Base)$1,336,735 $1,198,496 $138,240 $0 $0
All Other $31,435 $28,184 $3,251 $0 $0
System Pumping and Storage $0 $0 $0 $0 $0
Utilities (80% to Base)$504,498 $43,786 $203,523 $223,912 $33,276
All Other $188,611 $16,370 $76,089 $83,712 $12,441
Distribution System $0 $0 $0 $0 $0
Fire Hydrants $249,476 $0 $249,476 $0 $0
All Other $2,203,973 $762,204 $1,086,309 $355,459 $0
Customer Billing and Meter $2,731,437 $2,448,963 $282,474 $0 $0
Admin.$2,333,279 $2,091,981 $241,298 $0 $0
O&M - Total $13,056,107 $9,707,102 $2,640,204 $663,083 $45,716
Less Non-Rate
O&M - Related Revenue Joint All-But-Resale Owners Resale
Water Permits $55,000 $0 $0 $55,000 $0
Misc. Revenue $21,200 $0 $0 $21,200 $0
Collection of Bad Debt $10,000 $0 $0 $10,000 $0
Sale of Material/Labor $275,000 $0 $0 $275,000 $0
Public Water Supply $61,000 $0 $0 $61,000 $0
Franchise Fee $965,000 $865,204 $99,796 $0 $0
Water Service Line Repair $435,000 $0 $0 $435,000 $0
Water Service Line Admin.$30,000 $0 $0 $30,000 $0
Hydrant Meter Rental Fee $30,000 $0 $0 $0 $0
Charge for Services $75,000 $0 $0 $0 $0
Transfer to O&M for Pipebursting Projects $0 $0 $0 $30,000 $0
Transfers In $0 $0 $0 $75,000 $0
Total O&M-Related $1,957,200 $865,204 $99,796 $992,200 $0
Total Joint All-But-Resale Owners Resale
Total O&M Revenue Requirement $11,098,907 $8,841,899 $2,540,408 ($329,117)$45,716
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 3-4
Table 3.3: Summary of Net O&M Revenue Requirements by Ownership
3.2 Capital Costs
Total capital-related revenue requirements were evaluated in terms of the cash-basis for the
purpose of establishing the utility-basis capital requirements to be met with rate revenue. These
steps are described below.
3.2.1 Development of Cash-Basis Capital-Related Revenue Requirements The City provided information related to existing and anticipated debt service requirements, the
five-year Capital Improvement Plan (CIP), non-CIP capital outlays, and anticipated capital-
related non-rate revenue for FY18. In FY18, the CIP includes $24.3 million (M) in capital
improvements, $4M of which the City plans to fund through debt. The City anticipates utilizing
$1.1M in revenue from system development fee (SDF) revenues, leaving a total CIP cash-funded
capital requirement of approximately $19,262,626 to be met using cash reserves and user fees.
Of this, approximately $10,250,620 is anticipated to be funded through FY18 rate revenues, with
the balance of $9,012,006 funded with cash reserves. The total FY18 rate and reserve-funded
CIP amount is higher than average historical rate-funded capital values of around $6M to $10M,
and is similar to FY17, in which $20M is being funded through rate revenue and existing cash
reserves. Changes to the timing of projects have allowed the City to build and subsequently
strategically spend down cash reserves to fund capital in FY17 and FY18. After accounting for
reserve-funded capital, projected capital-related rate revenue requirements totaled $13,774,356,
and net capital-related revenue requirements came to $13,599,356 after netting out capital-
related non-rate revenue of $175,000.
Ownership FY18 O&M FY19 O&M
Joint
Owners 7,472,779$ 7,649,634$
Resale 661,102$ 679,665$
Other Non-Owners 503,560$ 512,600$
Total Joint 8,637,441$ 8,841,899$
All But Resale
Owners 2,308,862$ 2,365,404$
Other Non-Owners 171,722$ 175,004$
Total All But Resale 2,480,585$ 2,540,408$
Owners-Only (339,520)$ (329,117)$
Resale-Only 44,627$ 45,716$
Total 10,823,132$ 11,098,907$
Total Resale 705,729$ 725,382$
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 3-5
For FY19, the current CIP projects expenditures of $10.8M, with $1.15M funded with cash from
SDF revenues and $9.7M funded with rate revenues. Projected FY19 capital-related revenue
requirements totaled $13,655,386, with net capital-related revenue requirements of $13,460,386
when considering a projected capital-related non-rate revenue estimate of $195,000. Table 3.4
summarizes the anticipated FY18 and FY19 cash-basis capital-related revenue requirements and
capital-related non-rate revenues.
Table 3.4: Summary of Net Capital-Related Revenue Requirements – Cash Basis
3.2.2 Development of Utility-Basis Capital-Related Revenue Requirements To fairly assign the cost of only those assets in service and utilized by non-owner user classes,
the Utility-basis with cash residual methodology is utilized by the City of Billings in determining
the appropriate rates to charge non-owner user classes. This methodology calculates the capital-
related component of revenue requirements based on depreciation of system assets in service and
a return on capital investment made by the owners of the system.
Once capital-related revenue requirements have been established, the City’s methodology then
applies the utility-based approach for calculating the appropriate share of capital-related revenue
requirements for users located outside of the City. The utility approach is considered a fair
means to allocate the capital-related revenue requirements to non-owners of the system based on
the value of the infrastructure used by the non-owner users. The utility approach is based upon
the allocation of revenue requirements represented by depreciation and a rate of return on the
utility’s investment. Users located within the City are then allocated the difference between the
total capital-related revenue requirements established under the cash-basis methodology and the
outside city allocation of the utility-based capital-related revenue requirements. This
Line Item Total FY18 Total FY19
Debt Service 3,039,721$ 3,037,924$
Cash Funded CIP 19,262,626$ 9,678,356$
Water Service Line Repair 350,000$ 350,000$
Transfers To (from) O&M Reserve 134,015$ 86,324$
Increase/ (Decrease) Operating Fund Balance (9,012,006)$ 502,782$
Total Capital Revenue Requirements - Cash Basis 13,774,356$ 13,655,386$
Less: Non-Rate Capital Revenue
late payment interest 45,000$ 45,000$
interest earnings 130,000$ 150,000$
Total Non-Rate Capital -Related Revenue 175,000$ 195,000$
Net Capital Revenue Requirements - Cash Basis 13,599,356$ 13,460,386$
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 3-6
methodology is consistent with that used throughout the industry and is promoted by the
American Water Works Association (AWWA).
There are two components to the Utility-basis capital-related revenue requirements: the return on
rate base as calculated by applying a rate of return percentage to the asset base or net plant in
service, and the depreciation on the net plant in service. To identify the return on rate base, the
total assets in service must first be identified. Once the asset base is identified, the net plant in
service is calculated as the original cost less depreciation to date. The annual depreciation for
the assets currently in service must also be determined. Table 3.5 summarizes the net fixed
assets and depreciation for development of the FY18 utility-basis capital-related revenue
requirements. The net fixed asset totals in Table 3.5 indicate that based on asset values at year-
end FY16, new assets placed in service in FY17, assets that depreciated out in FY17, and assets
that remained in service for FY17, the value of net plant in service for FY18 calculated as
$145.6M. Using the FY18 net asset base and the FY17 and FY18 CIP items anticipated to be
placed in service by the close of FY17, the anticipated net asset base and annual depreciation for
FY19 was developed and is summarized in Table 3.6.
For the FY18 and FY19 asset bases, use of the system was evaluated in terms of ownership, as
was done for the evaluation of O&M revenue requirements. Tables 3.7 and 3.8 summarize the
ownership allocations of net fixed asset value and depreciation for FY18 and FY19, respectively.
Detailed fixed asset tables are found in Appendix A.
Table 3.5: Summary of FY18 Fixed Assets and Depreciation
Fixed Asset Type Original Cost Annual Dpr Accum Dep Net Fixed Assets Allocat Depr
Source of Supply $10,337,952 $217,139 $2,538,614 $7,446,885 $219,806
Water Treatment 46,324,322 1,401,969 18,981,291 35,418,938 1,573,696
High Service PS 7,739,741 242,972 5,084,664 2,171,498 242,972
Distribution System
PSs 11,921,501 382,077 5,511,467 5,701,893 382,077
Reservoirs and Tanks 28,218,330 646,831 6,708,141 20,226,245 646,854
T&D 110,880,819 2,466,125 37,011,242 71,120,127 2,524,488
Meters & Hydrants 6,722,964 95,352 4,741,626 1,790,754 95,352
General Plant 4,866,727 258,831 3,530,574 1,697,117 285,536
Net $227,012,356 $5,711,296 $84,107,619 $145,573,458 $5,970,781
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 3-7
Table 3.6: Summary of FY19 Fixed Assets and Depreciation
Table 3.7: FY18 Utility-Basis Capital-Related Revenue Requirements Based on Ownership
Table 3.8: FY19 Utility-Basis Capital-Related Revenue Requirements Based on Ownership
Fixed Asset Type Net Fixed Assets Allocat Depr
Source of Supply $12,613,390 $330,143
Water Treatment 34,689,200 1,588,701
High Service PS 1,928,500 242,972
Distribution System
PSs 8,449,600 384,808
Reservoirs and Tanks 29,435,675 826,819
T&D 84,181,015 2,845,714
Meters & Hydrants 1,695,500 95,352
General Plant 1,753,384 308,275
Net $174,746,265 $6,622,785
Ownership Net Fixed Asset Depreciation
Joint
Owners $104,093,634 $4,373,555
Resale 9,006,742 410,558
Other Non-Owners 9,411,183 394,165
Subtotal Joint $122,511,559 $5,178,277
Owners-Only $22,044,596 $743,337
Resale-Only $1,017,303 $49,167
Total $145,573,458 $5,970,781
Owner Subtotal $126,138,230 $5,116,891
Non-Owner Subtotal (including Resale)$19,435,228 $853,890
Resale Subtotal $10,024,045 $459,725
Ownership Net Fixed Asset Depreciation
Joint
Owners $120,779,239 $4,769,167
Resale 10,395,579 444,804
Other Non-Owners 10,862,493 427,690
Subtotal Joint $142,037,311 $5,641,661
Owners-Only $31,740,833 $931,957
Resale-Only $968,120 $49,167
Total $174,746,265 $6,622,785
Owner Subtotal $152,520,072 $5,701,124
Non-Owner Subtotal (including Resale)$22,226,192 $921,661
Resale Subtotal $11,363,699 $493,971
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 3-8
Per the Memorandum of Understanding between the City and its Resale customer, the rate of
return is based on the WACC, calculated using the City’s current effective interest rate on
outstanding debt and a return on equity equal to the average 30-year treasury rate plus 300 basis
points for the most recent twelve month period ending June 30th. Based on this formula, with an
average 30-year treasury rate of 2.30 percent, the calculated rate of return on equity was 5.30
percent. For FY18 the effective interest rate on water debt for the City is estimated at 3.05
percent, resulting in a FY18 WACC of 4.95 percent. Table 3.9 summarizes the WACC
calculation. For the purpose of FY18 rate-setting, the average 30-year treasury rate used for
FY18 was also used for FY19. Based on a projected effective interest rate on water debt of 2.53
percent, the FY19 weighted cost of capital was projected to be 4.83 percent.
Table 3.9: Weighted Average Cost of Capital (WACC) Calculation
Table 3.10 shows the calculated return on rate base using Non-Owner rates of return of 4.95
percent and 4.83 percent in FY18 and FY19, respectively. Total capital revenue requirements
under the utility method are equal to the capital-related revenue requirements under the cash
basis and are based on actual capital revenue requirements for each year.
Debt/Equity FY2018 FY2019
Total Outstanding Debt $27,607,000 $29,546,359
Interest on Outstanding Debt $842,000 $748,792
Effective Interest Rate on Outstanding Debt 3.05%2.53%
Total Fund Equity $149,022,734 $145,199,905.50
Rate of Return on Equity 5.30%5.30%
Total Equity and Debt $176,629,734 $174,746,265
Weighted Cost of Capital 4.95%4.83%
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 3-9
Table 3.10: Utility-Basis Capital Revenue Requirements – FY18 and FY19
The system owners are allocated the balance of the capital revenue requirements not allocated to
the non-owners. For FY18, this translates to a rate of return for Owners equal to 5.33 percent in
FY18 and 3.83 percent in FY19. Because the return percentage is calculated based on the total
rate base, the percentage decreases from FY18 to FY19 due to the $26M increase in Owner rate
base. It is interesting to note that calculated return on rate base for Owners is higher than that
calculated for Non-Owners in FY18. This is related to the delayed capitalization of projects into
the user base, which results in a reduced net plant in service value for the Owner classes. The
capitalization of $11.7M in projects currently under construction in FY18, in addition to projects
on the FY18 CIP is projected to increase the Owner asset base by 21 percent in FY19, while the
Non-Owner asset base is expected to increase by 14 percent.
3.3 Total Revenue Requirements
Tables 3.11 and 3.12 summarize the total revenue requirements for FY18 and FY19,
respectively, under both the Cash-Basis and Utility-Basis methodologies. Table 3.13
summarizes the total revenue requirements by ownership for both FY18 and FY19.
Line Item FY18 FY19
Utility Basis Capital Costs for Non-Owners
Return on Rate Base
Rate Base
Net Plant in Service $19,435,228 $22,226,192
Allowance for Working Capital $172,626 $176,623
Total Rate Base $19,607,854 $22,402,815
Rate of Return 4.95%4.83%
Total Rate of Return on Rate Base $970,259 $1,082,587
Depreciation Less Amortization Expense $853,890 $921,661
Net Utility Basis Capital Costs $1,824,149 $2,004,248
Utility Basis Capital Costs for Owners
Return on Rate Base
Rate Base
Net Plant in Service $124,201,863 $150,583,705
Allowance for Working Capital $1,180,265 $1,210,740
Total Rate Base $125,382,128 $151,794,445
Rate of Return 5.33%3.83%
Return on Rate Base $6,685,978 $5,810,339
Depreciation Less Amortization Expense $5,089,229 $5,645,799
Net Utility Basis Capital Costs $11,775,207 $11,456,138
Total Utility Basis Capital Revenue Requirement $13,599,356 $13,460,386
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 3-10
Table 3.11: Summary of Total Projected FY18 Net Revenue Requirements
Operating Costs Capital Costs Total
Cash-Basis Revenue Requirements
O&M Expense $12,744,932 $0 $12,744,932
Debt Service Requirements 3,039,721 3,039,721
Cash Financing of Construction 19,262,626 19,262,626
Water Line Service Repair 350,000 350,000
Operating Reserve 134,015 134,015
Total $12,744,932 $22,786,362 $35,531,294
Revenue Requirements Met From Other Sources
Other Operating Revenue $1,921,800 $0 $1,921,800
Interest Income 175,000 175,000
Change in Funds Available 9,012,006 9,012,006
Total $1,921,800 $9,187,006 $11,108,806
Net Costs to be Met From Charges (Rates)$10,823,132 $13,599,356 $24,422,488
Restatement of Net Costs - Utility-Basis Revenue Requirements
O&M Expenses $10,823,132 $0 $10,823,132
Capital Costs
Depreciation 5,943,119 5,943,119
Return on Rate Base 7,656,238 7,656,238
Total $10,823,132 $13,599,356 $24,422,488
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 3-11
Table 3.12: Summary of Total Projected FY19 Net Revenue Requirements
Table 3.13: Summary of Total Projected FY18 and FY19 Net Revenue Requirements by Ownership
Operating Costs Capital Costs Total
Cash-Basis Revenue Requirements
O&M Expense $13,056,107 $0 $13,056,107
Debt Service Requirements 3,037,924 3,037,924
Cash Financing of Construction 9,678,356 9,678,356
Water Line Service Repair 350,000 350,000
Operating Reserve 86,324 86,324
Total $13,056,107 $13,152,604 $26,208,711
Revenue Requirements Met From Other Sources
Other Operating Revenue $1,957,200 $0 $1,957,200
Interest Income 195,000 195,000
Change in Funds Available (502,782) (502,782)
Total $1,957,200 ($307,782) $1,649,418
Net Costs to be Met From Charges (Rates)$11,098,907 $13,460,386 $24,559,293
Restatement of Net Costs - Utility-Basis Revenue Requirements
O&M Expenses $11,098,907 $0 $11,098,907
Capital Costs
Depreciation 6,567,460 6,567,460
Return on Rate Base 6,892,926 6,892,926
Total $11,098,907 $13,460,386 $24,559,293
Ownership O&M Capital Total
FY18
Owner 9,442,121$ $11,775,207 $21,217,328
Non-Owners 1,381,011$ $1,824,149 $3,205,160
Total $10,823,132 $13,599,356 $24,422,488
Ownership O&M Capital Total
FY19
Owner 9,685,921$ $11,456,138 $21,142,060
Non-Owners 1,412,986$ $2,004,248 $3,417,234
Total $11,098,907 $13,460,386 $24,559,293
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 4-1
4.0 Cost of Service Analysis
The following sub-sections summarize the cost of service assumptions and results. Detailed
tables summarizing the costs by ownership, cost type, and cost allocation to the user classes are
found in Appendix B.
4.1 Methodology
Following the establishment of total O&M and capital revenue requirements by ownership, the
revenue requirements were then taken through a series of steps to result in allocation to each user
class. In the first step, revenue requirements were functionalized according to the ownership of
the cost. As noted in Section 1.0, Joint costs were allocated to all user classes, All-But-Resale
were allocated to all owner use classes and non-owner user classes with the exception of the
Resale class, Owner costs were allocated only to Owner user classes, and Resale costs were
allocated only to the Resale user class. In the second step, costs were classified as to how the
cost is related to usage characteristics – Customer, Meter, Base, Max Day, or Peak Day
applicability. Finally in the third step, costs were allocated to the user classes based on the
system usage characteristics of each class. For the allocation of customer costs, the percentage
of meters or accounts determined the allocation percentage. For meter costs, the percentage of
total equivalent meters in terms of 3/4-inch meter equivalents was used. For base capacity,
average day billed water use determines the allocation percentage, and for peak/max day and
peak/max hour allocations were calculated using the average day billed water use and the
peaking factors from Table 2.6. The following subsections describe the Functionalization,
Classification, and Allocation steps for the O&M and Capital-Related revenue requirements.
4.2 O&M Cost Allocations
Table 3.3 presented the O&M revenue requirements by ownership. To arrive at the final O&M
cost allocation to each user class, the costs by ownership were also classified to the appropriate
fixed or variable component based on the manner in which the cost is related to user
characteristics such as meter numbers and flow. Table 4.1 presents the functionalization
percentages for each line item O&M revenue requirement by ownership. The same values were
applied for both FY18 and FY19. Table 4.2 shows the classification of each line item. Per the
agreement with the County Water District of Billings Heights, the amount of cost eligible for
joint allocation to all users is adjusted based on the rolling three-year average percentage of
actual expenditures over budgeted expenditures. For FY18 this value was 89.7 percent. The
following bullets briefly summarize the assumptions behind the O&M functionalization
percentages in Table 4.1.
Water Production and High Service Pumping costs: Allocated to all users. Adjusted by
89.7 percent to account for agreement with Resale customer.
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 4-2
System Pumping and Storage: Allocated based on value of asset base utilization of
system components. Assumed Resale customer uses 75 percent of the Walter Pump
Station, with the rest allocated to the Owner user class. Joint allocation percentage based
on the assumption that Resale customer benefits from the Willet and Leavens Reservoirs
due to their role in serving Zone 1, and the Fox Reservoir due to it interconnect that
allows for emergency service to the Resale customer. All-But-Resale allocation is based
on the determination that Non-Owner users (other than Resale) benefit from
infrastructure in Pressure Zones 1, 2, and 4.
Allocation of Fire Hydrants based on information indicating the presence of public
hydrants served outside of City limits.
Allocation of all other Distribution (maintenance of pipelines) based on agreement that
Resale customer can be charged for transmission greater than 12” and that Non-Owner
customers (other than Resale) utilize the transmission system. In addition, it was assumed
that Non-Owner customers (other than Resale) utilize 60 percent of the distribution
system to receive water at their connection points based on the estimated miles of pipe in
Pressure Zones 1, 2, and 4.
Customer Billing and Meter: Allocated to all users. Adjusted by 89.7 percent to account
for agreement with Resale customer.
Administrative: Allocated to all users. Adjusted by 89.7 percent to account for
agreement with Resale customer.
As shown in Table 4.2, the costs were classified as Base, Max Day, Max Hour, Customer, Meter,
or Direct Fire. The revenue requirements comprising the Customer and Meter classified costs
result in the calculation of the fixed meter charges, and those allocated to the Base, Max Day,
and Max Hour components comprise the charges that derive the volumetric rates. The revenue
requirements identified as Direct Fire costs are associated with the fixed fire protection charges.
The following bullets briefly summarize the assumptions behind the O&M classification
percentages in Table 4.2.
Water Production – Chemicals: This expense varies directly with water usage and is
assigned as a 100 percent Base cost.
Water Production – All Other, High Service Pumping – All Other, and System Pumping
and Storage – All Other: These expenses are associated with meeting maximum day
demands as well as average day usage, and are split between Base (average day) and
Extra Capacity – Peak Day based on the system max day/average day design parameter
of 2.2.
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 4-3
Table 4.1: Functionalization of FY18 and FY19 O&M Revenue Requirements by Ownership
High Service Pumping – Utilities, and System Pumping and Storage – Utilities: These
expenses are classified as 80 percent Base and 20 percent Extra Capacity – Peak Day
based on a review of 2012 – 2016 daily pumping data.
Distribution System – All Other: These are costs that are driven by peak hour, as well as
peak day, and are therefore classified based on system parameters for meeting peak day
and peak hour requirements, with the remainder classified as average day costs.
Item Joint
All-But-
Resale Owners Resale Total
Water Production
Chemicals 89.7% 10.3% 0.0% 0.0% 100.0%
All Other 89.7% 10.3% 0.0% 0.0% 100.0%
High Service Pumping
Utilities (80% to Base)89.7% 10.3% 0.0% 0.0% 100.0%
All Other 89.7% 10.3% 0.0% 0.0% 100.0%
System Pumping and Storage
Utilities (80% to Base)8.7% 40.3% 44.4% 6.6% 100.0%
All Other 8.7% 40.3% 44.4% 6.6% 100.0%
Distribution System
Fire Hydrants 0.0% 100.0% 0.0% 0.0% 100.0%
All Other 34.6% 49.3% 16.1% 0.0% 100.0%
Customer Billing and Meter 89.7% 10.3% 0.0% 0.0% 100.0%
Administrative 89.7% 10.3% 0.0% 0.0% 100.0%
Total O&M-Related Non-Rate Revenues
3121 Street Sprinkling 0.0% 0.0% 100.0% 0.0% 100.0%
3122 Sewer Flushing 0.0% 0.0% 100.0% 0.0% 100.0%
Water Permits 0.0% 0.0% 100.0% 0.0% 100.0%
Misc. Revenue 0.0% 0.0% 100.0% 0.0% 100.0%
Collection of Bad Debt 0.0% 0.0% 100.0% 0.0% 100.0%
Sale of Material/Labor 0.0% 0.0% 100.0% 0.0% 100.0%
Public Water Supply 0.0% 0.0% 100.0% 0.0% 100.0%
Franchise Fee 89.7% 10.3% 0.0% 0.0% 100.0%
Water Service Line Repair 0.0% 0.0% 100.0% 0.0% 100.0%
Water Service Line Admin.0.0% 0.0% 100.0% 0.0% 100.0%
Late Payment Interest 0.0% 0.0% 100.0% 0.0% 100.0%
Hydrant Meter Rental Fee 0.0% 0.0% 100.0% 0.0% 100.0%
Charge for Services 0.0% 0.0% 100.0% 0.0% 100.0%
Transfer to O&M for Pipebursting Projects 34.6% 49.3% 16.1% 0.0% 100.0%
Interest Earnings - Operating Fund (502 & 505)0.0% 0.0% 100.0% 0.0% 100.0%
Transfers In 0.0% 0.0% 100.0% 0.0% 100.0%
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 4-4
Table 4.2: Classification of FY18 and FY19 O&M Revenue Requirements
Tables 4.3 and 4.4, respectively, summarize the O&M revenue requirements by classification for
FY18 and the allocated O&M revenue requirements to each user class for FY18. Similarly,
Tables 4.5 and 4.6 present the O&M revenue requirements by classification and the allocated
O&M revenue requirements to each user class for FY19, respectively. Detailed allocation tables
are found in Appendix B.
Item Base Max Day Max Hr. Customer Meter Direct Fire Total
Water Production
Chemicals 100.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0%
All Other 45.5% 54.5% 0.0% 0.0% 0.0% 0.0% 100.0%
High Service Pumping
Utilities (80% to Base)80.0% 20.0% 0.0% 0.0% 0.0% 0.0% 100.0%
All Other 45.5% 54.5% 0.0% 0.0% 0.0% 0.0% 100.0%
System Pumping and Storage
Utilities (80% to Base)80.0% 20.0% 0.0% 0.0% 0.0% 0.0% 100.0%
All Other 45.5% 54.5% 0.0% 0.0% 0.0% 0.0% 100.0%
Distribution System
Fire Hydrants 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 100.0%
All Other 29.4% 35.3% 35.3% 0.0% 0.0% 0.0% 100.0%
Customer Billing and Meter 0.0% 0.0% 0.0% 40.6% 59.4% 0.0% 100.0%
Administrative 24.9% 29.9% 9.3% 13.3% 19.5% 3.0% 100.0%
Total O&M-Related Non-Rate Revenues
Water Permits 38.3% 26.7% 7.3% 10.3% 15.1% 2.3% 100.0%
Misc. Revenue 38.3% 26.7% 7.3% 10.3% 15.1% 2.3% 100.0%
Collection of Bad Debt 38.3% 26.7% 7.3% 10.3% 15.1% 2.3% 100.0%
Sale of Material/Labor 38.3% 26.7% 7.3% 10.3% 15.1% 2.3% 100.0%
Public Water Supply 38.3% 26.7% 7.3% 10.3% 15.1% 2.3% 100.0%
Franchise Fee 38.3% 26.7% 7.3% 10.3% 15.1% 2.3% 100.0%
Water Service Line Repair 38.3% 26.7% 7.3% 10.3% 15.1% 2.3% 100.0%
Water Service Line Admin.38.3% 26.7% 7.3% 10.3% 15.1% 2.3% 100.0%
Late Payment Interest 38.3% 26.7% 7.3% 10.3% 15.1% 2.3% 100.0%
Hydrant Meter Rental Fee 38.3% 26.7% 7.3% 10.3% 15.1% 2.3% 100.0%
Charge for Services 38.3% 26.7% 7.3% 10.3% 15.1% 2.3% 100.0%
Transfer to O&M for Pipebursting Projects 38.3% 26.7% 7.3% 10.3% 15.1% 2.3% 100.0%
Interest Earnings - Operating Fund (502 & 505)38.3% 26.7% 7.3% 10.3% 15.1% 2.3% 100.0%
Transfers In 38.3% 26.7% 7.3% 10.3% 15.1% 2.3% 100.0%
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 4-5
Table 4.3: Classified FY18 O&M Revenue Requirements
Table 4.4: Projected FY18 O&M Revenue Requirements by Customer Classes
Item Total Base Max Day Max Hr. Customer Meter Direct Fire
Water Production
Chemicals 540,000$ 540,000$ -$ -$ -$ -$ -$
All Other 2,853,800$ 1,297,182$ 1,556,618$ -$ -$ -$ -$
High Service Pumping
Utilities (80% to Base)1,304,876$ 1,043,901$ 260,975$ -$ -$ -$ -$
All Other 30,686$ 13,948$ 16,738$ -$ -$ -$ -$
System Pumping and Storage
Utilities (80% to Base)492,474$ 393,979$ 98,495$ -$ -$ -$ -$
All Other 184,116$ 83,689$ 100,427$ -$ -$ -$ -$
Distribution System
Fire Hydrants 243,530$ -$ -$ -$ -$ -$ 243,530$
All Other 2,151,444$ 632,778$ 759,333$ 759,333$ -$ -$ -$
Customer Billing and Meter 2,666,337$ -$ -$ -$ 1,082,533$ 1,583,804$ -$
Administrative 2,277,669$ 568,050$ 681,659$ 212,734$ 303,281$ 443,717$ 68,227$
Total O&M Allocations 12,744,932$ 4,573,526$ 3,474,245$ 972,067$ 1,385,814$ 2,027,521$ 311,758$
Less: O&M-Related Non-rate Revenue
3121 Street Sprinkling 1,400$ 536$ 374$ 102$ 145$ 212$ 33$
3122 Sewer Flushing 5,200$ 1,990$ 1,387$ 377$ 538$ 787$ 121$
Water Permits 55,000$ 21,047$ 14,674$ 3,990$ 5,688$ 8,322$ 1,280$
Misc. Revenue 14,200$ 5,434$ 3,788$ 1,030$ 1,469$ 2,149$ 330$
Collection of Bad Debt 10,000$ 3,827$ 2,668$ 725$ 1,034$ 1,513$ 233$
Sale of Material/Labor 275,000$ 105,233$ 73,368$ 19,949$ 28,441$ 41,610$ 6,398$
Public Water Supply 61,000$ 23,343$ 16,274$ 4,425$ 6,309$ 9,230$ 1,419$
Franchise Fee 935,000$ 357,794$ 249,451$ 67,828$ 96,698$ 141,475$ 21,754$
Water Service Line Repair 435,000$ 166,460$ 116,055$ 31,556$ 44,988$ 65,820$ 10,121$
Water Service Line Admin.30,000$ 11,480$ 8,004$ 2,176$ 3,103$ 4,539$ 698$
Hydrant Meter Rental Fee 30,000$ 11,480$ 8,004$ 2,176$ 3,103$ 4,539$ 698$
Charge for Services 70,000$ 26,787$ 18,675$ 5,078$ 7,239$ 10,592$ 1,629$
Net Revenue Requirements 10,823,132$ 3,838,117$ 2,961,524$ 832,653$ 1,187,060$ 1,736,733$ 267,045$
Customer Class Base Max Day Max Hr. Customer Meter Direct Fire Total
Owners
Residential 1,709,613$ 1,445,273$ 232,100$ 1,047,550$ 1,381,986$ -$ 5,816,521$
Multi-Family Residential 300,805$ 119,201$ 65,632$ 28,541$ 86,273$ -$ 600,453$
Commercial 770,312$ 305,253$ 93,374$ 89,122$ 221,726$ -$ 1,479,787$
Industrial 11,245$ 2,971$ 545$ 80$ 1,537$ -$ 16,378$
Seasonal 244,767$ 323,314$ 59,339$ 9,407$ 21,649$ -$ 658,475$
Public Fire Protection -$ 259,128$ 266,618$ -$ -$ 230,735$ 756,481$
Private Fire Protection -$ 39,059$ 40,188$ -$ -$ 34,779$ 114,026$
Non-Owners
Residential 16,290$ 13,773$ 2,021$ 10,530$ 13,872$ -$ 56,485$
Commercial 401,285$ 159,038$ 44,446$ 1,791$ 7,571$ -$ 614,131$
Resale 383,800$ 292,899$ 26,870$ 39$ 2,121$ -$ 705,729$
Private Fire Protection -$ 1,616$ 1,519$ -$ -$ 1,531$ 4,667$
Total O&M Revenue Requirements 3,838,117$ 2,961,524$ 832,653$ 1,187,060$ 1,736,733$ 267,045$ 10,823,132$
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 4-6
Table 4.5: Classified FY19 O&M Revenue Requirements
Table 4.6: Projected FY19 O&M Revenue Requirements by Customer Classes
Item Total Base Max Day Max Hr. Customer Meter Direct Fire
Water Production
Chemicals 553,184$ 553,184$ -$ -$ -$ -$ -$
All Other 2,923,477$ 1,328,853$ 1,594,624$ -$ -$ -$ -$
High Service Pumping
Utilities (80% to Base)1,336,735$ 1,069,388$ 267,347$ -$ -$ -$ -$
All Other 31,435$ 14,289$ 17,146$ -$ -$ -$ -$
System Pumping and Storage
Utilities (80% to Base)504,498$ 403,598$ 100,900$ -$ -$ -$ -$
All Other 188,611$ 85,732$ 102,879$ -$ -$ -$ -$
Distribution System
Fire Hydrants 249,476$ -$ -$ -$ -$ -$ 249,476$
All Other 2,203,973$ 648,227$ 777,873$ 777,873$ -$ -$ -$
Customer Billing and Meter 2,731,437$ -$ -$ -$ 1,108,963$ 1,622,474$ -$
Administrative 2,333,279$ 581,919$ 698,303$ 217,928$ 310,686$ 454,551$ 69,893$
Total Allocations 13,056,107$ 4,685,191$ 3,559,071$ 995,801$ 1,419,650$ 2,077,024$ 319,369$
Less: O&M-Related Non-rate Revenue
3121 Street Sprinkling 1,500$ 574$ 400$ 109$ 155$ 227$ 35$
3122 Sewer Flushing 5,500$ 2,105$ 1,467$ 399$ 569$ 832$ 128$
Water Permits 55,000$ 21,047$ 14,674$ 3,990$ 5,688$ 8,322$ 1,280$
Misc. Revenue 14,200$ 5,434$ 3,788$ 1,030$ 1,469$ 2,149$ 330$
Collection of Bad Debt 10,000$ 3,827$ 2,668$ 725$ 1,034$ 1,513$ 233$
Sale of Material/Labor 275,000$ 105,233$ 73,368$ 19,949$ 28,441$ 41,610$ 6,398$
Public Water Supply 61,000$ 23,343$ 16,274$ 4,425$ 6,309$ 9,230$ 1,419$
Franchise Fee 965,000$ 369,274$ 257,455$ 70,005$ 99,801$ 146,014$ 22,452$
Water Service Line Repair 435,000$ 166,460$ 116,055$ 31,556$ 44,988$ 65,820$ 10,121$
Water Service Line Admin.30,000$ 11,480$ 8,004$ 2,176$ 3,103$ 4,539$ 698$
Late Payment Interest -$ -$ -$ -$ -$ -$ -$
Hydrant Meter Rental Fee 30,000$ 11,480$ 8,004$ 2,176$ 3,103$ 4,539$ 698$
Charge for Services 75,000$ 28,700$ 20,009$ 5,441$ 7,757$ 11,348$ 1,745$
Net Requirements 11,098,907$ 3,936,235$ 3,036,905$ 853,818$ 1,217,234$ 1,780,880$ 273,833$
Customer Class Base Max Day Max Hr. Customer Meter Direct Fire Total
Owners
Residential 1,753,108$ 1,481,930$ 238,334$ 1,074,284$ 1,417,806$ -$ 5,965,461$
Multi-Family Residential 309,993$ 122,832$ 67,730$ 29,205$ 88,189$ -$ 617,950$
Commercial 789,910$ 312,995$ 95,882$ 91,390$ 227,080$ -$ 1,517,257$
Industrial 11,474$ 3,031$ 557$ 82$ 1,569$ -$ 16,712$
Seasonal 252,243$ 333,164$ 61,236$ 9,680$ 22,221$ -$ 678,544$
Public Fire Protection -$ 264,385$ 272,424$ -$ -$ 236,609$ 773,418$
Private Fire Protection -$ 39,851$ 41,063$ -$ -$ 35,665$ 116,579$
Non-Owners
Residential 16,583$ 14,025$ 2,061$ 10,728$ 14,138$ -$ 57,535$
Commercial 408,511$ 161,946$ 45,332$ 1,825$ 7,716$ -$ 625,330$
Resale 394,413$ 301,108$ 27,659$ 40$ 2,161$ -$ 725,382$
Private Fire Protection -$ 1,638$ 1,542$ -$ -$ 1,560$ 4,739$
Total O&M Revenue Requirements 3,936,235$ 3,036,905$ 853,818$ 1,217,234$ 1,780,880$ 273,833$ 11,098,907$
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 4-7
4.3 Fixed Asset Allocations
Table 3.5 presented the fixed assets by asset type and Table 3.7 and 3.8 summarized total fixed
assets by ownership for FY18 and FY19, respectively. Tables 4.7 and 4.8, respectively,
summarize the functionalized FY18 and FY19 fixed assets by ownership and asset type.
Functionalization of fixed assets and depreciation costs, addressed later in this Section, was
similar to that described for the corresponding O&M cost categories. The following bullets
summarize specific assumptions behind the capital functionalization.
Source of Supply, Water Treatment, High Service Pumping, General Plant, Meter and
Service Connection facilities were functionalized as Joint costs.
Distribution System Pump Station facilities serving Pressure Zones 1, 2, and 4 were
functionalized to All-But-Resale. Based on an evaluation of the capital cost associated
with the Walter Pump Station as completed by the design engineer for the facility, 40
percent of the Walter Pump Station was functionalized to the Resale class and the
remainder was functionalized as an Owner cost, consistent with the previous analyses.
Reservoirs and Tanks serving the Resale customer (Fox, Leavens, and Willet) were
functionalized as Joint costs. The remaining facilities that support pressure zones 1, 2,
and 4 were functionalized as All-But-Resale costs, and the remaining facilities were
functionalized to Owner classes.
Transmission pipelines greater than 12 inches in diameter were functionalized as Joint
costs and transmission pipelines equal to 12 inches were functionalized as All-But-Resale
due to the connection of outside users. Based on a review of miles of pipe within Pressure
Zones 1, 2, and 4, 60 percent of distribution lines were allocated as All-But-Resale.
Hydrants and Hydrant mains were functionalized as All-But-Resale.
Tables 4.9 and 4.10, respectively, summarize fixed assets by classification for FY18 and FY19.
Classification of the functionalized fixed asset and depreciation costs is similar to the approach
taken for classification of O&M costs. The following bullets summarize the key assumptions for
capital classification.
Source of Supply, Water Treatment, and High Service Pumping components were
primarily classified based on peak day and average day parameters. Exceptions to this
include the intake and the water treatment plant site/landscaping, which were classified as
an average day cost associated with providing a baseline level of service.
Distribution Pump stations were classified based on peak day and average day
parameters, and booster stations were assumed to include a peak hour component as well
as peak day and average day.
Storage Reservoirs and Tanks and Transmission/Distribution components were classified
based on peak hour, peak day, and average day.
Meters and Service Connections were classified as customer costs.
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 4-8
Hydrants and Hydrant Mains were classified to the Direct Fire classification.
General Plant components were classified to peak hour, peak day, and average day based
on the composite classification of all other direct capital.
Table 4.11 and 4.12 present the allocated fixed assets to each user class for FY18 and FY19,
respectively. Detailed tables are found in Appendix B.
Table 4.7: Functionalization of FY18 Fixed Assets to Ownership Category by Asset Type
Table 4.8: Functionalization of FY19 Fixed Assets to Ownership Category by Asset Type
Fixed Asset Type Joint All But Resale Owners Resale Total
Source of Supply 7,472,859$ -$ -$ -$ 7,472,859$
Water Treatment 38,417,533$ -$ -$ -$ 38,417,533$
High Service PS 2,766,698$ -$ -$ -$ 2,766,698$
Distribution System PSs 17,476$ 2,296,892$ 2,370,223$ 1,017,303$ 5,701,893$
Reservoirs and Tanks 2,492,426$ 7,902,599$ 9,831,219$ -$ 20,226,245$
Trans/Dist 35,994,326$ 42,272,244$ 15,050,238$ -$ 93,316,808$
Meters & Hydrants 66,397$ 2,246,553$ -$ -$ 2,312,950$
General Plant 1,697,117$ -$ -$ -$ 1,697,117$
Total 88,924,832$ 54,718,288$ 27,251,679$ 1,017,303$ 171,912,102$
Less CIAC (7,489,835)$ (13,641,726)$ (5,207,083)$ -$ (26,338,644)$
Net 81,434,998$ 41,076,561$ 22,044,596$ 1,017,303$ 145,573,458$
Fixed Asset Type Joint All But Resale Owners Resale Total
Source of Supply 12,639,363$ -$ -$ -$ 12,639,363$
Water Treatment 37,651,100$ -$ -$ -$ 37,651,100$
High Service PS 2,458,800$ -$ -$ -$ 2,458,800$
Distribution System PSs -$ 4,259,667$ 3,221,813$ 968,120$ 8,449,600$
Reservoirs and Tanks 5,354,600$ 8,576,900$ 15,504,175$ -$ 29,435,675$
Trans/Dist 41,252,404$ 46,317,307$ 18,051,805$ -$ 105,621,515$
Meters & Hydrants 59,600$ 2,113,500$ -$ -$ 2,173,100$
General Plant 1,753,384$ -$ -$ -$ 1,753,384$
Total 101,169,251$ 61,267,374$ 36,777,793$ 968,120$ 200,182,538$
Less CIAC (7,176,874)$ (13,222,440)$ (5,036,960)$ -$ (25,436,274)$
Net 93,992,378$ 48,044,934$ 31,740,833$ 968,120$ 174,746,265$
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 4-9
Table 4.9: Classification of FY18 Fixed Assets by Asset Type
Table 4.10: Classification of FY19 Fixed Assets by Asset Type
Table 4.11: Allocation of FY18 Fixed Assets to Customer Classes
Fixed Asset Type Base Max Day Max Hour Meter Direct Fire Total
Source of Supply 5,280,827$ 2,192,032$ -$ -$ -$ 7,472,859$
Water Treatment 17,478,542$ 20,938,991$ -$ -$ -$ 38,417,533$
High Service PS 1,257,590$ 1,509,108$ -$ -$ -$ 2,766,698$
Distribution System PSs 2,587,967$ 3,105,560$ 8,367$ -$ -$ 5,701,893$
Reservoirs and Tanks 5,973,634$ 7,168,360$ 7,084,250$ -$ -$ 20,226,245$
T&D 27,446,120$ 32,935,344$ 32,935,344$ -$ -$ 93,316,808$
Meters & Hydrants -$ -$ -$ 66,397$ 2,246,553$ 2,312,950$
General Plant 652,962$ 658,612$ 365,227$ 753$ 19,562$ 1,697,117$
Total 60,677,642$ 68,508,007$ 40,393,188$ 67,150$ 2,266,115$ 171,912,102$
Less CIAC (8,187,952)$ (9,794,374)$ (7,834,123)$ -$ (522,196)$ (26,338,644)$
Net 52,489,690$ 58,713,633$ 32,559,065$ 67,150$ 1,743,919$ 145,573,458$
Fixed Asset Type Base Max Day Max Hour Meter Direct Fire Total
Source of Supply 7,608,165$ 5,031,198$ -$ -$ -$ 12,639,363$
Water Treatment 17,121,882$ 20,529,218$ -$ -$ -$ 37,651,100$
High Service PS 1,117,636$ 1,341,164$ -$ -$ -$ 2,458,800$
Distribution System PSs 3,839,733$ 4,607,679$ 2,188$ -$ -$ 8,449,600$
Reservoirs and Tanks 8,682,289$ 10,418,747$ 10,334,638$ -$ -$ 29,435,675$
T&D 31,065,152$ 37,278,182$ 37,278,182$ -$ -$ 105,621,515$
Meters & Hydrants -$ -$ -$ 59,600$ 2,113,500$ 2,173,100$
General Plant 660,292$ 689,480$ 382,345$ 789$ 20,479$ 1,753,384$
Total 70,095,149$ 79,895,669$ 47,997,353$ 60,389$ 2,133,979$ 200,182,538$
Less CIAC (7,919,367)$ (9,472,072)$ (7,567,235)$ -$ (477,600)$ (25,436,274)$
Net 62,175,782$ 70,423,597$ 40,430,118$ 60,389$ 1,656,379$ 174,746,265$
Customer Class Base Max Day Max Hour Customer Meter Direct Fire Total
Owners
Residential 24,367,755$ 29,513,348$ 9,225,344$ -$ 53,485$ -$ 63,159,932$
Multi-Family Residential 4,287,491$ 2,434,151$ 2,608,704$ -$ 3,339$ -$ 9,333,685$
Commercial 10,979,548$ 6,233,453$ 3,711,363$ -$ 8,581$ -$ 20,932,945$
Industrial 160,278$ 60,663$ 21,671$ -$ 59$ -$ 242,672$
Seasonal 3,488,752$ 6,602,266$ 2,358,572$ -$ 838$ -$ 12,450,428$
Public Fire Protection -$ 5,291,551$ 10,597,339$ -$ -$ 1,507,485$ 17,396,375$
Private Fire Protection -$ 797,607$ 1,597,360$ -$ -$ 227,226$ 2,622,193$
Non-Owners -$
Residential 191,233$ 230,748$ 66,408$ -$ 494$ -$ 488,883$
Commercial 4,710,777$ 2,664,451$ 1,460,594$ -$ 270$ -$ 8,836,092$
Resale 4,303,855$ 4,858,320$ 861,786$ -$ 84$ -$ 10,024,045$
Private Fire Protection -$ 27,076$ 49,924$ -$ -$ 9,208$ 86,208$
Total 52,489,690$ 58,713,633$ 32,559,065$ 67,150$ 1,743,919$ 145,573,458$
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 4-10
Table 4.12: Allocation of FY19 Fixed Assets to Customer Classes
From the values in Table 4.11, it can be determined that the total FY18 Fixed Asset base for
Non-Owners is $19,435,228. This value was previously reported in Table 3.10. To determine the
rate of return component of the revenue requirements as illustrated in Table 3.10, the total fixed
assets for non-owners in Table 4.11 was added to a working capital allowance of 12.5 percent of
the non-owners share of O&M. This resulted in a total asset base of $19,607,854 for Non-
Owners, to which the rate of return of 4.95 percent was applied to calculate a return on rate base
for Non-Owners of $970,259. Allocation of the balance of capital-related revenue requirements
to the Owner user classes under similar parameters resulted in return on rate base-component of
the owner cost of service equal to 5.33 percent for FY18.
4.4 Depreciation Allocations
Tables 3.5 and 3.6 presented the depreciation by asset type and Tables 3.7 and 3.8 summarized
total depreciation by ownership for FY18 and FY19, respectively. Tables 4.13 and 4.14
summarize functionalized depreciation expense by asset type and ownership for FY18 and FY19,
respectively. Functionalization of depreciation expense was previously described in Sub-section
4.3.
Customer Class Base Max Day Max Hour Customer Meter Direct Fire Total
Owners
Residential 29,117,483$ 35,652,673$ 11,499,631$ -$ 48,122$ -$ 76,317,910$
Multi-Family Residential 5,148,691$ 2,955,129$ 3,267,995$ -$ 2,993$ -$ 11,374,809$
Commercial 13,119,665$ 7,530,127$ 4,626,311$ -$ 7,707$ -$ 25,283,811$
Industrial 190,566$ 72,918$ 26,879$ -$ 53$ -$ 290,417$
Seasonal 4,189,514$ 8,015,341$ 2,954,648$ -$ 754$ -$ 15,160,257$
Public Fire Protection -$ 6,360,657$ 13,144,484$ -$ -$ 1,431,851$ 20,936,992$
Private Fire Protection -$ 958,756$ 1,981,296$ -$ -$ 215,826$ 3,155,878$
Non-Owners -$
Residential 218,812$ 267,334$ 78,285$ -$ 442$ -$ 564,874$
Commercial 5,390,150$ 3,086,918$ 1,721,830$ -$ 241$ -$ 10,199,140$
Resale 4,800,899$ 5,492,530$ 1,070,195$ -$ 75$ -$ 11,363,699$
Private Fire Protection -$ 31,214$ 58,562$ -$ -$ 8,702$ 98,479$
Total 62,175,782$ 70,423,597$ 40,430,118$ 60,389$ 1,656,379$ 174,746,265$
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 4-11
Table 4.13: FY18 Depreciation Expense by Ownership
Table 4.14: FY19 Depreciation Expense by Ownership
Tables 4.15 and 4.16 summarize depreciation expense by asset type classification and Tables
4.17 and 4.18 present the allocated depreciation expense to each user class for FY18 and FY19,
respectively. Classification of depreciation expense was previously described in Sub-section 4.3.
Detailed tables are found in Appendix B.
Asset Type Joint All-But-Resale Owners Resale Total
Source of Supply 219,806$ -$ -$ -$ 219,806$
Water Treatment 1,610,414$ -$ -$ -$ 1,610,414$
High Service PS 307,903$ -$ -$ -$ 307,903$
Distribution System PSs 49,768$ 151,404$ 131,737$ 49,167$ 382,077$
Reservoirs and Tanks 156,851$ 285,724$ 204,279$ -$ 646,854$
Trans/Dist 1,379,789$ 1,323,462$ 577,453$ -$ 3,280,704$
Meters & Hydrants 6,811$ 133,059$ -$ -$ 139,870$
General Plant 285,536$ -$ -$ -$ 285,536$
Total $4,016,877 1,893,650$ $913,469 $49,167 $6,873,163
Less CIAC (313,021)$ (419,229)$ (170,132)$ -$ (902,382)$
Net 3,703,856$ 1,474,421$ 743,337$ 49,167$ 5,970,781$
Asset Type Joint All-But-Resale Owners Resale Total
Source of Supply 330,143$ -$ -$ -$ 330,143$
Water Treatment 1,625,419$ -$ -$ -$ 1,625,419$
High Service PS 307,903$ -$ -$ -$ 307,903$
Distribution System PSs -$ 187,237$ 148,404$ 49,167$ 384,808$
Reservoirs and Tanks 218,851$ 305,724$ 302,244$ -$ 826,819$
Trans/Dist 1,516,045$ 1,434,444$ 651,440$ -$ 3,601,929$
Meters & Hydrants 6,811$ 133,059$ -$ -$ 139,870$
General Plant 308,275$ -$ -$ -$ 308,275$
Total $4,313,446 $2,060,465 $1,102,089 $49,167 $7,525,167
Less CIAC (313,021)$ (419,229)$ (170,132)$ -$ (902,382)$
Net 4,000,426$ 1,641,235$ 931,957$ 49,167$ 6,622,785$
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 4-12
Table 4.15: FY18 Depreciation Expense by Classification
Table 4.16: FY19 Depreciation Expense by Classification
Table 4.17: Allocated FY18 Depreciation Expense by User Class
Asset Type Base Max Day Max Hour Meter Direct Fire Total
Source of Supply 120,994$ 98,812$ -$ -$ -$ 219,806$
Water Treatment 740,294$ 870,119$ -$ -$ -$ 1,610,414$
High Service PS 139,956$ 167,947$ -$ -$ -$ 307,903$
Distribution System PSs 165,687$ 198,824$ 17,565$ -$ -$ 382,077$
Reservoirs and Tanks 190,251$ 228,301$ 228,301$ -$ -$ 646,854$
Trans/Dist 964,913$ 1,157,896$ 1,157,896$ -$ -$ 3,280,704$
Meters & Hydrants -$ -$ -$ 6,811$ 133,059$ 139,870$
General Plant 115,902$ 106,998$ 59,335$ 122$ 3,178$ 285,536$
Total $2,437,998 $2,828,898 $1,463,097 6,933$ $136,237 $6,873,163
Less CIAC (268,620)$ (322,344)$ (266,900)$ -$ (44,518)$ (902,382)
Net 2,169,378$ 2,506,553$ 1,196,197$ 6,933$ 91,720$ 5,970,781
Asset Type Base Max Day Max Hour Meter Direct Fire Total
Source of Supply 171,147$ 158,995$ -$ -$ -$ 330,143$
Water Treatment 746,572$ 878,847$ -$ -$ -$ 1,625,419$
High Service PS 139,956$ 167,947$ -$ -$ -$ 307,903$
Distribution System PSs 174,913$ 209,895$ -$ -$ -$ 384,808$
Reservoirs and Tanks 243,182$ 291,819$ 291,819$ -$ -$ 826,819$
Trans/Dist 1,059,391$ 1,271,269$ 1,271,269$ -$ -$ 3,601,929$
Meters & Hydrants -$ -$ -$ 6,811$ 133,059$ 139,870$
General Plant 124,102$ 116,170$ 64,421$ 133$ 3,450$ 308,275$
Total $2,659,263 $3,094,942 $1,627,509 $6,944 $136,510 $7,525,167
Less CIAC (268,620)$ (322,344)$ (266,900)$ -$ (44,518)$ (902,382)
Net 2,390,643$ 2,772,598$ 1,360,609$ 6,944$ 91,992$ 6,622,785
Customer Class Base Max Day Max Hr. Customer Meter Direct Fire Total
Owners
Residential 996,566$ 1,245,633$ 336,595$ -$ 5,522$ -$ 2,584,316$
Multi-Family Residential 175,345$ 102,735$ 95,181$ -$ 345$ -$ 373,606$
Commercial 449,030$ 263,088$ 135,412$ -$ 886$ -$ 848,416$
Industrial 6,555$ 2,560$ 791$ -$ 6$ -$ 9,912$
Seasonal 142,679$ 278,654$ 86,055$ -$ 87$ -$ 507,474$
Public Fire Protection -$ 223,334$ 386,653$ -$ -$ 79,285$ 689,272$
Private Fire Protection -$ 33,664$ 58,281$ -$ -$ 11,951$ 103,895$
Non-Owners
Residential 8,041$ 10,070$ 2,524$ -$ 51$ -$ 20,687$
Commercial 198,088$ 116,275$ 55,524$ -$ 28$ -$ 369,915$
Resale 193,073$ 229,359$ 37,284$ -$ 9$ -$ 459,725$
Private Fire Protection -$ 1,182$ 1,898$ -$ -$ 484$ 3,564$
Total 2,169,378$ 2,506,553$ 1,196,197$ -$ 6,933$ 91,720$ 5,970,781$
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 4-13
Table 4.18: Allocated FY19 Depreciation Expense by User Class
4.5 Capital Cost Allocations
The capital-related revenue requirements were introduced in Table 3.4. Tables 4.19 and 4.20,
respectively, show the capital-related revenue requirements allocated to each user class for FY18
and FY19.
Table 4.19: Summary of FY18 Allocated Capital-Related Revenue Requirements
Table 4.20: Summary of FY19 Allocated Capital-Related Revenue Requirements
Customer Class Base Max Day Max Hr. Customer Meter Direct Fire Total
Owners
Residential 1,103,314$ 1,383,423$ 384,263$ -$ 5,533$ -$ 2,876,533$
Multi-Family Residential 195,093$ 114,667$ 109,201$ -$ 344$ -$ 419,306$
Commercial 497,128$ 292,190$ 154,590$ -$ 886$ -$ 944,793$
Industrial 7,221$ 2,829$ 898$ -$ 6$ -$ 10,955$
Seasonal 158,748$ 311,017$ 98,730$ -$ 87$ -$ 568,583$
Public Fire Protection -$ 246,811$ 439,227$ -$ -$ 79,522$ 765,560$
Private Fire Protection -$ 37,202$ 66,206$ -$ -$ 11,987$ 115,395$
Non-Owners
Residential 8,690$ 10,924$ 2,781$ -$ 51$ -$ 22,446$
Commercial 214,067$ 126,143$ 61,167$ -$ 28$ -$ 401,405$
Resale 206,382$ 246,115$ 41,466$ -$ 9$ -$ 493,971$
Private Fire Protection -$ 1,276$ 2,080$ -$ -$ 483$ 3,839$
Total 2,390,643$ 2,772,598$ 1,360,609$ -$ 6,944$ 91,992$ 6,622,785$
Customer Class Base Max Day Max Hour Customer Meter Direct Fire Total
Owners
Residential 2,274,769$ 2,755,119$ 861,201$ -$ 4,993$ -$ 5,896,081$
Multi-Family Residential 400,244$ 227,232$ 243,527$ -$ 312$ -$ 871,315$
Commercial 1,024,958$ 581,903$ 346,462$ -$ 801$ -$ 1,954,124$
Industrial 14,962$ 5,663$ 2,023$ -$ 6$ -$ 22,654$
Seasonal 325,681$ 616,332$ 220,176$ -$ 78$ -$ 1,162,267$
Public Fire Protection -$ 493,975$ 989,279$ -$ -$ 140,726$ 1,623,980$
Private Fire Protection -$ 74,458$ 149,116$ -$ -$ 21,212$ 244,786$
Non-Owners -$
Residential 17,949$ 21,657$ 6,233$ -$ 46$ -$ 45,885$
Commercial 442,144$ 250,080$ 137,088$ -$ 25$ -$ 829,337$
Resale 403,951$ 455,992$ 80,885$ -$ 8$ -$ 940,836$
Private Fire Protection -$ 2,541$ 4,686$ -$ -$ 864$ 8,091$
Total 4,904,658$ 5,484,951$ 3,040,676$ 6,269$ 162,802$ 13,599,356$
Customer Class Base Max Day Max Hour Customer Meter Direct Fire Total
Owners
Residential 2,187,082$ 2,677,955$ 863,764$ -$ 3,615$ -$ 5,732,416$
Multi-Family Residential 386,730$ 221,967$ 245,467$ -$ 225$ -$ 854,388$
Commercial 985,449$ 565,605$ 347,493$ -$ 579$ -$ 1,899,126$
Industrial 14,314$ 5,477$ 2,019$ -$ 4$ -$ 21,814$
Seasonal 314,684$ 602,051$ 221,930$ -$ 57$ -$ 1,138,722$
Public Fire Protection -$ 477,764$ 987,313$ -$ -$ 107,550$ 1,572,626$
Private Fire Protection -$ 72,014$ 148,820$ -$ -$ 16,211$ 237,045$
Non-Owners -$
Residential 19,731$ 24,107$ 7,059$ -$ 40$ -$ 50,938$
Commercial 486,057$ 278,363$ 155,266$ -$ 22$ -$ 919,708$
Resale 432,921$ 495,289$ 96,505$ -$ 7$ -$ 1,024,722$
Private Fire Protection -$ 2,815$ 5,281$ -$ -$ 785$ 8,880$
Total 4,826,969$ 5,423,407$ 3,080,917$ 4,547$ 124,546$ 13,460,386$
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 5-1
5.0 Results and Proposed Rates
5.1 Cost of Service Results
For FY18, the total revenue requirements to be recovered through rates or use of cash reserves
total $24,422,488. Tables 5.1 and 5.2 summarize the allocated revenue requirements by user
class for FY18 and FY19, respectively. Note that the Max Day and Max Hour revenue
requirements allocated to Owner and Non-Owner Residential, Commercial, and Industrial user
classes include public fire protection costs. The Resale user class is not allocated fire protection
charges as the Resale system provides its own fire protection. Tables 5.3 and 5.4, respectively,
present the calculated unit costs of service for each user class for FY18 and FY19.
Table 5.1: Summary of FY18 Cost of Service Results
Table 5.2: Summary of FY19 Cost of Service Results
Customer Class Base Max Day Max Hr. Customer Meter Direct Fire Total
Owners
Residential $3,984,382 $4,837,069 $1,892,923 $1,047,550 $1,386,978 $0 $13,148,902
Multi-Family Residential $701,050 $398,943 $535,273 $28,541 $86,585 $0 $1,750,392
Commercial $1,795,271 $1,021,627 $761,524 $89,122 $222,527 $0 $3,890,071
Industrial $26,207 $9,942 $4,447 $80 $1,542 $0 $42,219
Seasonal $570,447 $939,646 $279,516 $9,407 $21,727 $0 $1,820,743
Public Fire Protection $0 -$139,248 -$232,213 $0 $0 $371,461 $0
Private Fire Protection $0 $113,517 $189,304 $0 $0 $55,991 $358,812
Non-Owners
Residential $34,239 $40,801 $14,290 $10,530 $13,918 $0 $113,778
Commercial $843,428 $471,130 $314,305 $1,791 $7,596 $0 $1,638,251
Unused $0 $0 $0 $0 $0 $0 $0
Resale $787,750 $748,891 $107,756 $39 $2,129 $0 $1,646,564
Private Fire Protection $0 $4,157 $6,205 $0 $0 $2,395 $12,758
Total $8,742,774 $8,446,475 $3,873,329 $1,187,060 $1,743,002 $198,026 $24,422,488
Customer Class Base Max Day Max Hr. Customer Meter Direct Fire Total
Owners
Residential $3,940,191 $4,776,216 $1,887,739 $1,074,284 $1,421,420 $0 $13,099,850
Multi-Family Residential $696,723 $395,884 $536,463 $29,205 $88,414 $0 $1,746,689
Commercial $1,775,359 $1,008,775 $759,439 $91,390 $227,659 $0 $3,862,621
Industrial $25,788 $9,768 $4,412 $82 $1,573 $0 $41,623
Seasonal $566,927 $935,214 $283,167 $9,680 $22,278 $0 $1,817,266
Public Fire Protection $0 -$127,588 -$216,570 $0 $0 $344,159 $0
Private Fire Protection $0 $111,866 $189,883 $0 $0 $51,876 $353,624
Non-Owners
Residential $36,315 $43,781 $15,622 $10,728 $14,178 $0 $120,624
Commercial $894,568 $505,546 $343,596 $1,825 $7,738 $0 $1,753,272
Resale $827,335 $796,397 $124,164 $40 $2,168 $0 $1,750,104
Private Fire Protection $0 $4,452 $6,823 $0 $0 $2,345 $13,620
Total $8,763,204 $8,460,313 $3,934,736 $1,217,234 $1,785,427 $198,026 $24,559,293
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 5-2
Table 5.3: Summary of FY18 Cost of Service Results – Unit Results
Table 5.4: Summary of FY19 Cost of Service Results – Unit Results
5.2 Resale Water Rate
Based on parameters outlined in the 2009 Memorandum of Agreement between the City of
Billings and the County Water District of Billings Heights, the City’s rate model applies the
utility basis cost of service approach to establish the water rate for the Resale user class. As part
of this study, the functionalization, classification, and allocation assumptions upon which the
analyses is based were reviewed and updated, where applicable, to reflect the current
configuration and operation of the system. In addition, water usage in recent years has shown a
steady pattern, partly due to fluctuating weather conditions. Table 5.5 provides a summary of
assumptions used in recent water rate calculations as compared to analyses in previous years.
Customer Class Base ($/CCF) Max Day ($/CCF) Max Hour ($/CCF)
Customer
($/month)
Meter ($/month
for 3/4-inch
Meter)
Direct Fire
($/month for 6-
inch Meter)
Owners
Residential $1.10 $1.33 $0.52 $3.35 $4.42 $0.00
Multi-Family Residential $1.10 $0.62 $0.82 $3.35 $4.42 $0.00
Commercial $1.10 $0.62 $0.47 $3.35 $4.42 0.00
Industrial $1.10 $0.42 $0.19 $3.35 $4.42 0.00
Seasonal $1.07 $1.74 $0.53 $3.35 $4.42 0.00
Public Fire Protection N/A N/A N/A 0.00 0.00 0.00
Private Fire Protection N/A N/A N/A 0.00 0.00 44.75
Non-Owners
Residential $1.01 $1.20 $0.42 $3.64 $4.80 $0.00
Commercial 1.01 0.56 0.38 3.64 4.80 0.00
Resale 0.82 0.78 0.11 3.26 4.31 0.00
Private Fire Protection N/A N/A N/A 0.00 0.00 39.26
Customer Class Base ($/CCF) Max Day ($/CCF) Max Hour ($/CCF)
Customer
($/month)
Meter ($/month
for 3/4-inch
Meter)
Direct Fire
($/month for 6-
inch Meter)
Owners
Residential $1.08 $1.31 $0.52 $3.42 $4.51 $0.00
Multi-Family Residential $1.08 $0.61 $0.82 $3.42 $4.51 $0.00
Commercial 1.08 0.61 0.46 3.42 4.51 0.00
Industrial 1.08 0.41 0.18 3.42 4.51 0.00
Seasonal 1.06 1.73 0.53 3.42 4.51 0.00
Public Fire Protection N/A N/A N/A 0.00 0.00 0.00
Private Fire Protection N/A N/A N/A 0.00 0.00 43.88
Non-Owners
Residential $1.07 $1.29 $0.46 $3.71 $4.89 $0.00
Commercial 1.07 0.61 0.41 3.71 4.89 0.00
Resale 0.86 0.82 0.13 3.33 4.39 0.00
Private Fire Protection N/A N/A N/A 0.00 0.00 41.92
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 5-3
Table 5.5: Summary of Resale Water Rate Calculations – FY16-FY19
The cost of service-based rate for the Resale customer is decreased in FY18 as compared to
FY17. This is due to the reduction of O&M allocated as a joint expense (from 92.11 percent to
89.7 percent) as well as a decrease in the calculated cost of capital based on the reduced 30-year
Treasury rate from 3.66 percent to 2.30 percent. The cost of service-based rate increases in
FY19 primarily due to an increase in the rate base associated with capitalization of water
supply/intake capital expenditures, as well as improvements to the Leavens Reservoir.
Resale Water Rate Summary FY2016 FY2017 FY2018 FY2019
Projected Water Purchase (CCF)997,878 1,027,815 957,285 966,857
Actual Water Sales (CCF)
Peaking Factor - Peak Day 2.54 2.54 2.54 2.54
Projected Peak Day Flow (CCF)1,536,732 1,582,834 1,474,218 1,488,960
Peaking Factor - Peak Hour 3.90 3.90 3.90 3.90
Projected Peak Hour Flow (CCF)1,357,114 1,397,828 1,301,907 1,314,926
Allocated O&M Revenue Requirements - Resale FY2016 FY2017 FY2018 FY2019
Base 439,471$ 462,219$ 383,800$ 394,413$
Max Day 338,674$ 356,877$ 292,899$ 301,108$
Max Hr.38,168$ 40,395$ 26,870$ 27,659$
Customer 39$ 41$ 39$ 40$
Meter 2,117$ 2,230$ 2,121$ 2,161$
Direct Fire -$ -$ -$ -$
Total Resale O&M Revenue Requirements 818,469$ 861,762$ 705,729$ 725,382$
Debt/Equity FY2016 FY2017 FY2018 FY2019
Total Outstanding Debt 30,524,000$ 28,659,000$ 27,607,000$ 29,546,359$
Interest on Outstanding Debt 719,500$ 862,000$ 842,000$ 748,792$
Effective Interest Rate on Outstanding Debt 2.36%3.01%3.05%2.53%
Total Fund Equity 129,942,568$ 129,942,568$ 149,022,734$ 145,199,906$
Rate of Return on Equity 6.66%6.66%5.30%5.30%
Total Equity and Debt 160,466,568$ 158,601,568$ 176,629,734$ 174,746,265$
Weighted Cost of Capital 5.84%6.00%4.95%4.83%
Summary of Capital Revenue Requirements - Non-Owners FY2016 FY2017 FY2018 FY2019
Net Plant in Service for Non-Owners 17,591,763$ 20,071,364$ 19,435,228$ 22,226,192$
Share of Working Capital for Non-Owners 187,623$ 195,055$ 172,626$ 176,623$
Total Rate Base for Non-Owners 17,779,386$ 20,266,419$ 19,607,854$ 22,402,815$
Return on Rate Base for Non-Owners 1,038,585$ 1,215,995$ 970,259$ 1,082,587$
Depreciation Less Amortization for Non-Owners 802,344$ 844,354$ 853,890$ 921,661$
Total Capital-Based Revenue Requirements for Non-Owners 1,840,929$ 2,060,350$ 1,824,149$ 2,004,248$
Allocated Capital Revenue Requirements - Resale FY2016 FY2017 FY2018 FY2019
Base 411,144$ 459,554$ 403,951$ 432,921$
Max Day 455,348$ 501,695$ 455,992$ 495,289$
Max Hr.87,145$ 88,739$ 80,885$ 96,505$
Customer -$ -$ -$ -$
Meter 11$ 10$ 8$ 7$
Direct Fire -$ -$ -$ -$
Total Resale Capital Revenue Requirements 953,647$ 1,049,997$ 940,836$ 1,024,722$
Total Resale Revenue Requirements 1,772,116$ 1,911,760$ 1,646,564$ 1,750,104$
Calculated Rate - Resale ($/CCF)1.78$ 1.86$ 1.72$ 1.81$
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 5-4
5.3 Recommended FY18 and FY19 Water Rates
Based on the results of this study, the recommended monthly meter rates for FY18 and FY19 are
shown in Table 5.6. To balance the overall need for a revenue increase between the fixed and
volumetric rates, meter rate increases are recommended for both FY18 and FY19. The increases
vary by meter sizes. The increases vary by meter sizes. The larger meter sizes are increasing at
a higher rate than the smaller sizes due to the equivalent meter weighting factors. Tables 5.7 and
5.8 summarize the cost of service-based recommendations for Fire Protection charges for
Owners and Non-Owners, respectively.
Table 5.9 presents the recommended volumetric rates for Single Family Residential users for
FY18 and FY19. A combination of decreased water sales and increasing costs has driven the
need for increases for this user class. Because the utility has adequate cash reserves to absorb a
near-term revenue shortfall, it is recommended that required increases be phased in over several
years to minimize the effect on the users. Consistent with the approach taken in the previous
analysis, rate increases for Non-Owner Residential users are equal to the increases recommended
for the Owner Single Family Residential user class in FY18 and FY19. Table 5.10 presents the
recommended FY18 and FY19 volumetric rates for Non-Owner Single Family accounts.
Table 5.6: Recommended FY18 and FY19 Meter Charges for Owners and Non-Owners
Meter Size
Inside City
Recommended
Rate FY18
Outside City
Recommended
Rate FY18
% Increase from
FY17
Inside City
Recommended
Rate FY19
Outside City
Recommended
Rate FY19
% Increase from
FY18
3/4” $8.15 8.75$ 1.9%8.15$ 8.75$ 0.0%
1” 9.15$ 10.00$ 1.6%9.15$ 10.00$ 0.0%
1-1/2” 10.80$ 11.75$ 3.3%10.80$ 11.75$ 0.0%
2” 15.30$ 16.65$ 6.2%15.30$ 16.65$ 0.0%
3” 46.10$ 50.10$ 5.8%48.50$ 52.70$ 5.2%
4” 57.80$ 62.80$ 6.3%60.80$ 66.05$ 5.2%
6” 85.05$ 92.45$ 6.9%89.45$ 97.20$ 5.2%
8” 116.20$ 126.35$ 7.2%122.20$ 132.85$ 5.2%
10” 179.80$ 195.40$ 7.6%189.05$ 205.45$ 5.1%
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 5-5
Table 5.7: Recommended Annual Fire Protection Charges for Owners – FY18/FY19
Table 5.8: Calculated Annual Fire Protection Charges for Non-Owners – FY18/FY19
Table 5.9: Recommended FY18 and FY19 Volumetric Charges for Owners
Meter Size
Inside City
Current Rate
FY17 ($/Year)
Inside City
Recommended
Rate FY18
($/Year)
% Increase from
FY17
Inside City
Recommended
Rate FY19
($/Year)
% Increase from
FY18
1-1/4"23.35$ $24.40 $24.40
1-1/2"31.10$ $32.50 $32.50
2"49.80$ $52.05 $52.05
3"124.45$ $130.05 $130.05
4"217.75$ $227.55 $227.55
6"497.65$ $520.05 $520.05
8"870.90$ $910.10 $910.10
10"1,368.55$ $1,430.15 $1,430.15
12"1,970.75$ $2,059.45 $2,059.45
14"2,682.40$ $2,803.10 $2,803.10
4.5%0.0%
Meter Size
Outside City
Current Rate
FY17 ($/Year)
Outside City
Recommended
Rate FY18
($/Year)
% Increase from
FY17
Outside City
Recommended
Rate FY19
($/Year)
% Increase from
FY18
1-1/4"23.65$ $24.70 $24.70
1-1/2"31.55$ $32.95 $32.95
2"50.45$ $52.70 $52.70
3"126.15$ $131.85 $131.85
4"220.75$ $230.70 $230.70
6"504.60$ $527.30 $527.30
8"883.00$ $922.75 $922.75
10"1,387.60$ $1,450.05 $1,450.05
12"1,998.15$ $2,088.05 $2,088.05
14"2,719.70$ $2,842.10 $2,842.10
4.5%0%
Single Family Residential Current FY17
Rate ($/CCF)
Recommended
FY18 Rate
($/CCF)
% Increase from
FY17
Recommended
FY19 Rate
($/CCF)
% Increase from
FY18
Tier 1 2.21$ 2.29$ 2.33$
Tier 2 2.65$ 2.74$ 2.80$
Tier 3 3.45$ 3.57$ 3.64$
Tier 4 5.18$ 5.36$ 5.47$
3.5%2.0%
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 5-6
Table 5.10: Recommended FY18 and FY19 Volumetric Charges for Non-Owners
Table 5.11 presents the recommended non-residential volumetric rates for FY18 and FY19 for
Owner and Non-Owner user classes. Similar to the approach for Single Family Residential rates,
it is recommended that required increases be phased in over several years to minimize the effect
on the users. For the Resale user class, it is recommended that the City continue its approach of
charging the calculated cost of service rate, adopting the calculated FY18 and FY19 rates shown
in Table 5.11.
Table 5.11: Recommended Multi-Family and Non-Residential Volumetric Rates for Owners and Non-Owners – FY18 and FY19
Table 5.12 summarizes the projected revenue adequacy of the Water Utility for FY18 and FY19
based on the recommended rates. As shown in Table 5.12, the adoption of rates for FY18 that are
less than the calculated cost of service results in a projected revenue deficiency for FY18;
however, as shown in Table 5.13, even with significant investment of reserve funds in capital
projects in FY18, it is anticipated that utility reserves would be adequate to adsorb the projected
revenue deficiency. At the recommended rates, projected revenues in FY19 are forecast to be
adequate to meet revenue requirements given the current assumptions. In summary, under the
projected water sales and given the current cash reserve balances, the recommended rates for
FY18 and FY19 will present a stable near-term approach to rate-setting approach without
significantly impacting overall revenue adequacy.
Single Family Residential Current FY17
Rate ($/CCF)
Recommended
FY18 Rate
($/CCF)
% Increase from
FY17
Recommended
FY19 Rate
($/CCF)
% Increase from
FY18
Tier 1 2.29$ 2.37$ 2.42$
Tier 2 2.75$ 2.85$ 2.90$
Tier 3 3.58$ 3.71$ 3.78$
Tier 4 5.37$ 5.56$ 5.67$
3.5%2.0%
Current FY17
Rate ($/CCF)
Recommended
FY18 Rate
($/CCF)
% Increase from
FY17
Recommended
FY19 Rate
($/CCF)
% Increase from
FY18
Owners
Multi-Family Residential 2.31$ 2.39$ 3.5%2.44$ 2.0%
Non-Residential 2.00$ 2.06$ 3.0%2.10$ 2.0%
Seasonal 3.18$ 3.29$ 3.5%3.41$ 3.5%
Non-Owners
Non-Residential 2.12$ 2.18$ 3.0%2.23$ 2.0%
Resale 1.86$ 1.72$ -7.5%1.81$ 5.2%
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 5-7
Table 5.12: Net Cash-Based Rate Revenue Requirements – FY18 and FY19
Table 5.13: Projected Cash Reserve Balances – FY18 and FY19
FY18 FY19
Net Rate Revenue Requirements
O&M-Related 10,823,132$ 11,098,907$
Capital-Related 13,599,356$ 13,460,386$
Net Rate Revenue Requirements 24,422,488$ 24,559,293$
Projected Rate Revenues
Owners
Residential 12,884,404$ 13,154,570$
Multi-Family 1,638,646$ 1,691,348$
Non-Residential 3,736,565$ 3,828,007$
Seasonal 1,741,973$ 1,820,052$
Fire Protection 347,505$ 347,505$
Non-Owners
Residential 125,349$ 127,349$
Non-Residential 1,831,498$ 1,868,202$
Resale 1,648,874$ 1,752,477$
Fire Protection 14,278$ 14,278$
Total Projected Rate Revenue 23,969,093$ 24,603,789$
Projected Revenue Adequacy (453,395)$ 44,495$
2017 2018 2019
Total Water Fund Balance 24,492,739$ 15,027,338$ 15,574,615$
O&M Reserve 3,401,617$ 3,535,632$ 3,621,956$
Debt Service Reserve 1,386,000$ 1,513,685$ 1,513,685$
Capital/Rate Stabilization Reserve 19,705,122$ 9,978,021$ 10,438,974$
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 5-1
6.0 Revenue Forecasting
The recommended rates presented in Section 5.3 are based on a number of assumptions outlined
in this report, primarily: O&M revenue requirements, capital revenue requirements, number of
users, and water sales. While actual expenditures rarely are exactly equal to the budget, utilities
are very good at forecasting and managing expenditures. The most volatile variable in the
forecasting model is water sales, which can be attributed to factors outside the control of the
utility – primarily weather.
Rate-setting approaches generally involve making a realistic but conservative estimate of future
water sales. If sales are overestimated, rates can be set too low to obtain the required revenue,
while taking an overly conservative approach and greatly underestimating sales can result in rate
increases that place an undue burden on the users. In the end, projecting water sales involves
determining the amount of risk that can be reasonably accepted by the utility.
To assess the potential risk to the City of Billings, a probabilistic revenue forecasting model
developed by the Alliance for Water Efficiency was utilized. The model evaluates the
probability of varying levels of water sales and revenue based on a minimum of 15 years of
monthly maximum temperature and total rainfall values and a recent year of billed water sales.
For the purpose of this analysis, actual meter and flow data (existing fire services) from FY16
was evaluated based on 17 years of weather data. Table 6.1 summarizes the total precipitation
by (fiscal) year for the City of Billings and indicates that the 17-year average is 12.95 inches.
Table 6.1: Precipitation Data, City of Billings (National Oceanic and Atmospheric Administration)
FY Inches of
Precipitation
Average 12.95
2016 11.32
2015 11.72
2014 18.96
2013 10.06
2012 9.48
2011 23.03
2010 14.90
2009 13.89
2008 12.80
2007 16.99
2006 12.66
2005 14.24
2004 8.03
2003 10.96
2002 8.82
2001 11.33
2000 10.95
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 5-2
A review of recent annual residential water sales as compared to precipitation found that the City
of Billings’ water use patterns followed a predictable pattern – there is a general inverse
relationship between water use and precipitation, as show in Figure 6.1.
Other factors considered in the revenue forecasting model included existing and projected water
rates, growth factors, and demand elasticity factors. Once all data was entered, the model ran
through 1,000 simulations to project the average, maximum, and minimum water sales and
revenue values. The model results are shown in Figure 6.2 and Table 6.2.
Figure 6.1: Precipitation Data vs Residential Water Sales, City of Billings
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
0.00
5.00
10.00
15.00
20.00
25.00
Annual Residential Water Sales (CCF) Inches of Precipitation Fiscal Year
Annual Rainfall Totals - Billings, MT
Total Annual Rainfall Water Sales
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 5-3
Figure 6.2: Probabilistic Revenue Forecast for FY18
Table 6.2: Estimated Probability of Achieving Revenue at Varying Targets (FY18)
Figure 6.2 and Table 6.2 give an illustration of the risk associated with adoption of the FY18
rates. Total FY18 rate revenues, excluding fire protection, from Table 5.12, are $23.6M. Figure
6.2 would suggest it is highly improbable to obtain revenues at that level. However, there are
other factors that warrant consideration when determining the City’s comfort with the level of
risk associated with the current water sales projections. Although the revenue forecasting model
indicated that target revenue of $23.6M is not achieved at a high confidence interval, it should be
noted that:
Given that the City’s O&M expenditures are typically less than budgeted (for the most
recent three-year period the average was 89.7 percent), it is reasonable to assume for
the purposes of the forecast modeling that total target revenue requirements for FY18
could be reduced by $1.3M with no anticipated net impact on cash position of the
utility. If this were the case, total rate revenue requirements would be reduced to
$22.3M.
With a target revenue of near $22M, there is nearly a 90 percent chance of generating
revenues at this level.
The City has healthy cash reserves that can be used to offset near-term revenue
shortfalls should they occur.
In summary, reducing water sales projections based solely on the outputs of the water sales
forecasting from the model would require the City to implement increases in excess of those
0%
20%
40%
60%
80%
100%
0
50
100
150
Cumulative % of Outcomes Frequency of Outcomes Sales Revenue (Thou. $)
Annual Service Charge and Sales Revenue
Simulation Distributions
Under Current Rates Under Proposed Rates
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study 5-4
currently proposed, which does not seem prudent given the factors noted above. As long as the
City continues its practice of evaluating rates at least once every two years and maintaining a
healthy cash position, it appears that the maximum revenue shortfall as predicted by the
forecasting model could be readily offset using existing cash reserves should a shortfall
materialize.
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study A-1
Appendix A: Fixed Asset Tables
Fixed Asset Original Cost Annual
Depreciation
Accumulated
Depreciation
Through
FY2016
Net Fixed
Assets (Book
Value FY18)
FY18
Allocated
Depreciation
Expense
Net Fixed Assets
(Book Value
FY19)
FY19
Allocated
Depreciation
Expense
Source of Supply
#2 River Intake $4,472,094 $38,651 $940,808 $3,454,133 $38,651 $3,415,500 $38,651
#2 Low Duty PS 358,304 0 358,304 0 0 0 0
#1 Intake Chnl Hdwrk 2,945,079 86,924 778,486 1,994,421 86,924 5,420,643 158,621
#1 Low Duty PS 2,588,449 91,564 461,016 1,944,305 91,564 1,852,700 91,564
River Riprap 0 0 0 80,000 2,667 77,300 2,667
WATER MANAGEMENT
PLAN/DROUGHT PLANNING
0 0 0 0 0 1,873,220 38,640
Total Source of Supply $10,363,925 $217,139 $2,538,614 $7,472,859 $219,806 $12,639,363 $330,143
Water Treatment
Plant Maint. Wrhs $17,990 $0 $17,990 $0 $0 0 0
Maint. & Persnl. Bldg. 68,310 0 68,310 0 0 0 0
Chem Bldg & Trtmnt Bsn 10,441,678 152,942 3,312,777 16,122,136 285,786 15,984,157 287,929
Filter Bldg, Clr Bsn & PS 29,911,726 1,038,756 10,602,239 17,233,290 1,038,756 16,253,643 1,039,613
Clear Well Standpipe 5,827,516 199,205 2,362,113 3,796,406 221,088 3,575,300 221,088
Yard Piping & Flumes 3,049,545 13,950 2,997,232 174,413 16,950 157,500 16,950
Site Work & Landscp 120,139 15,195 60,366 29,383 15,195 14,200 14,200
Plant Elec. Shop 559,167 18,639 159,984 1,061,905 32,639 1,666,300 45,639
WTP Rapid Mix Study, Lab renov,
Backup Power
0 0 0 0 0 0 0
Total Water Treatment $49,996,071 $1,438,687 $19,581,010 $38,417,533 $1,610,414 $37,651,100 $1,625,419
High Service Pumping Station $8,713,705 $307,903 $5,333,566 $2,766,698 $307,903 $2,458,800 307,903
Distribution System PS
WILLETT Reservoir 742,693 49,768 625,680 17,476 49,768 0 0
WILLETT PS #1 881,728 44,086 686,575 162,358 44,086 118,300 0
WALTER PS 3,668,523 122,918 879,430 2,543,257 122,918 2,420,300 44,086
BOOSTER ST-12 AV N & N27 6,230 0 0 6,230 0 6,200 122,918
WILLETT SP #2 0 0 0 0 0 0 0
LEAVENS PS 869,347 1,945 832,553 32,904 1,945 31,000 1,945
STAPLES PS #1 2,741,800 83,045 833,222 1,742,489 83,045 1,659,400 83,045
FOX PS (Zone 4) 202,593 6,078 77,494 112,942 6,078 2,221,067 41,912
WALDO PS 452,109 7,794 152,706 283,816 7,794 276,000 7,794
VOELKER PUMP-29W & MONAD 910,150 39,652 577,457 253,707 39,652 1,197,433 56,318
CHAPPLE PS 1,238,738 18,194 929,475 272,874 18,194 254,700 18,194
Terrace Estates PS 255,748 8,525 43,329 195,368 8,525 186,800 8,525
THOMAS PS 79,522 71 907 78,473 71 78,400 71
Total Distribution System PS 12,049,178 382,077 5,638,827 5,701,893 382,077 8,449,600 384,808
Reservoirs & Tanks
Leavens #1 $80,527 $0 $80,527 $0 $0 $912,000 19,000
Ironwood $137,024 $0 $0 $137,024 $0 $137,000 0
Staples #1 2,145,187 78,676 1,433,849 553,984 78,676 $475,300 78,676
Staples #2 1,065,870 53,294 119,911 839,373 53,294 $786,100 53,294
Staples #3 72,559 1,401 68,940 817 1,401 $0 0
Fox 3,661,314 156,851 861,595 2,492,426 156,851 $4,442,600 199,851
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study A-2
Fixed Asset Original Cost Annual
Depreciation
Accumulated
Depreciation
Through
FY2016
Net Fixed
Assets (Book
Value FY18)
FY18
Allocated
Depreciation
Expense
Net Fixed Assets
(Book Value
FY19)
FY19
Allocated
Depreciation
Expense
Waldo 40,509 0 40,509 0 0 $0 0
Logan 330,763 969 327,453 1,372 969 $3,917,075 80,336
Christensen 3,403,350 0 3,249,148 154,202 0 $154,200 0
Zone 4 7,341,460 153,754 663,898 6,372,218 153,754 $7,178,500 173,754
Zone 3 6,579,214 131,584 10,965 6,306,225 131,607 $8,134,600 151,607
Zone 4 3,515,064 70,301 5,858 3,368,603 70,301 $3,298,300 70,301
Total Reservoirs & Tanks $28,372,840 $646,831 $6,862,652 $20,226,245 $646,854 $29,435,675 $826,819
T&D System
TRANSMISSION MAINS = 12" 22,864,161 457,283 1,509,223 19,696,888 457,283 19,239,600 457,283
DISTRIBUTION MAINS 63,953,111 1,410,677 25,172,949 37,625,594 1,443,632 45,129,512 1,628,601
TRANSMISSION MAINS > 12" 62,827,100 1,354,380 25,411,002 35,994,326 1,379,789 41,252,404 1,516,045
Total T&D $149,644,372 $3,222,341 $52,093,173 $93,316,808 $3,280,704 $105,621,515 $3,601,929
Meters & Hydrants
Service Connections $29,182 $0 $29,182 $0 $0 $0 0
Meters 3,225,935 6,811 3,145,916 66,397 6,811 $59,600 6,811
Hydrants 4,029,719 111,871 1,821,825 1,985,756 111,871 $1,873,900 111,871
Hydrant Mains 1,289,801 21,188 987,729 260,797 21,188 $239,600 21,188
Total Meters & Hydrants $8,574,636 $139,870 $5,984,652 $2,312,950 $139,870 $2,173,100 $139,870
General Plant
Utilities Service Center $661,170 $7,486 $523,199 $410,999 $16,126 $394,900 16,126
Cold Storage Bldg. 188,305 3,206 123,119 58,774 3,206 $55,600 3,206
Rights & Licenses 68,101 0 68,101 0 0 $0 0
Transportation Equip. 1,309,703 123,671 757,736 318,253 123,671 $194,600 123,671
Construction Equip. 1,030,965 31,158 902,089 75,676 31,158 $44,500 31,158
Lab & Test Equip. 294,566 20,247 196,270 64,166 20,247 $43,900 20,247
Communication Equip. 487,970 42,412 223,430 184,390 42,412 $142,000 42,412
Tools & Working Equip. 352,352 14,089 310,650 561,171 32,155 $866,884 69,697
Office Furniture & Equip. 352,458 14,803 321,091 10,958 14,803 $0 0
Gas Pumps 46,833 1,095 38,879 5,764 1,095 $4,700 1,095
Heated Stg Bldg & Stg Yd 74,304 663 66,011 6,965 663 $6,300 663
Total General Plant $4,866,727 $258,831 $3,530,574 $1,697,117 $285,536 $1,753,384 $308,275
Grand Total $272,581,454 $6,613,678 $101,563,068 $171,912,102 $6,873,163 $200,182,538 $7,525,167
Less CIAC
Voelker Pump ($127,678) $0 ($127,360) $0 $0 $0 0
METERS ($3,089,721) $0 ($3,089,721) $0 $0 $0 0
Fox Reservoir (154,511) 0 (154,511) $0 0 $0 0
Transmission Mains (5,975,662) (119,513) (427,730) ($5,308,905) (119,513) ($5,189,400) (119,513)
Distribution (22,682,450) (425,330) (8,825,847) ($13,017,709) (425,330) ($12,592,400) (425,330)
Hydrants (1,230,501) (30,984) (796,861) ($373,216) (30,984) ($342,200) (30,984)
Hydrant Mains (621,171) (13,534) (446,165) ($148,980) (13,534) ($135,400) (13,534)
High Service Pumping Station (973,964) (64,931) (248,902) ($595,200) (64,931) ($530,300) (64,931)
#2 RIVER INTAKE (25,974) 0 0 ($25,974) 0 ($25,974) 0
CHEM BLDG & TREATMENT (3,671,748) (36,717) (599,719) ($2,998,595) (36,717) ($2,961,900) (36,717)
TRANSMISSION MAINS > 12" (10,105,440) (211,372) (5,828,355) ($3,870,067) (211,372) ($3,658,700) (211,372)
Laboratory and Testing Equip (15,324) 0 (15,324) $0 0 $0 0
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study A-3
Fixed Asset Original Cost Annual
Depreciation
Accumulated
Depreciation
Through
FY2016
Net Fixed
Assets (Book
Value FY18)
FY18
Allocated
Depreciation
Expense
Net Fixed Assets
(Book Value
FY19)
FY19
Allocated
Depreciation
Expense
Total CIAC ($48,674,143) ($902,382) ($20,560,494) ($26,338,644) ($902,382) ($25,436,274) ($902,382)
Net Fixed Assets & Depreciation $223,907,311 $5,711,296 $81,002,574 $145,573,458 $5,970,781 $174,746,265 $6,622,785
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-1
Appendix B: Detailed Allocation Tables
Table B.1: Summary of Customer Service Characteristics - Joint
Table B.2: Summary of Customer Service Characteristics – All-But-Resale
Customer Class Base Max Day Max Hour Customer Meter Direct Fire
Owners
Single Family Residential 43.9% 47.7% 26.7% 88.3% 79.7% 0.0%
Multi-Family Residential 7.7% 3.9% 7.6% 2.4% 5.0% 0.0%
Commercial 19.8% 10.1% 10.7% 7.5% 12.8% 0.0%
Industrial 0.3% 0.1% 0.1% 0.0% 0.1% 0.0%
Seasonal 6.3% 10.7% 6.8% 0.8% 1.2% 0.0%
Public Fire Protection 0.0% 8.5% 30.7% 0.0% 0.0% 86.4%
Private Fire Protection 0.0% 1.3% 4.6% 0.0% 0.0% 13.0%
Non-Owners
Residential 0.4% 0.4% 0.2% 0.8% 0.7% 0.0%
Commercial 10.1% 5.1% 5.5% 0.1% 0.4% 0.0%
Resale 11.6% 12.1% 6.8% 0.0% 0.1% 0.0%
Private Fire Protection 0.0% 0.1% 0.2% 0.0% 0.0% 0.5%
Total - Joint 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Customer Class Base Max Day Max Hour Customer Meter Direct Fire
Owners
Single Family Residential 49.6% 54.2% 28.7% 88.3% 79.8% 0.0%
Multi-Family Residential 8.7% 4.5% 8.1% 2.4% 5.0% 0.0%
Commercial 22.4% 11.5% 11.5% 7.5% 12.8% 0.0%
Industrial 0.3% 0.1% 0.1% 0.0% 0.1% 0.0%
Seasonal 7.1% 12.1% 7.3% 0.8% 1.2% 0.0%
Public Fire Protection 0.0% 9.7% 32.9% 0.0% 0.0% 86.4%
Private Fire Protection 0.0% 1.5% 5.0% 0.0% 0.0% 13.0%
Non-Owners 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Residential 0.5% 0.5% 0.3% 0.8% 0.7% 0.0%
Commercial 11.4% 5.8% 5.9% 0.1% 0.4% 0.0%
Resale 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Private Fire Protection 0.0% 0.1% 0.2% 0.0% 0.0% 0.5%
Total - Joint 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-2
Table B.3: Summary of Customer Service Characteristics – Owner
Table B.4: Summary of Customer Service Characteristics – Resale
Customer Class Base Max Day Max Hour Customer Meter Direct Fire
Owners
Single Family Residential 56.3% 57.9% 30.6% 89.2% 80.7% 0.0%
Multi-Family Residential 9.9% 4.8% 8.7% 2.4% 5.0% 0.0%
Commercial 25.4% 12.2% 12.3% 7.6% 12.9% 0.0%
Industrial 0.4% 0.1% 0.1% 0.0% 0.1% 0.0%
Seasonal 8.1% 13.0% 7.8% 0.8% 1.3% 0.0%
Public Fire Protection 0.0% 10.4% 35.2% 0.0% 0.0% 86.9%
Private Fire Protection 0.0% 1.6% 5.3% 0.0% 0.0% 13.1%
Total - Owner 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Customer Class Base Max Day Max Hour Customer Meter Direct Fire
Non-Owners
Residential 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Commercial 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Resale 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Private Fire Protection 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Total - Resale 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-3
Table B.5: Joint O&M Costs by Functional Cost Component – FY18
Line Item Total Base Max Day Max Hour Customer Meter Direct Fire
Water Production
Chemicals $484,155 $484,155 $0 $0 $0 $0 $0
All Other 2,558,671 1,163,032 1,395,639 0 0 0 0
High Service Pumping
Utilities 1,169,931 935,945 233,986 0 0 0 0
All Other 27,513 12,506 15,007 0 0 0 0
System Pumping & Storage
Utilities 42,742 34,194 8,548 0 0 0 0
All Other 15,980 7,263 8,716 0 0 0 0
Distribution System
Fire Hydrants 0 0 0 0 0 0 0
All Other 744,038 218,835 262,602 262,602 0 0 0
Customer Billing & Meter 2,390,595 0 0 0 970,582 1,420,013 0
Admin.2,042,121 509,304 611,165 190,734 271,917 397,830 61,171
O&M - Total $9,475,747 $3,365,235 $2,535,663 $453,336 $1,242,499 $1,817,843 $61,171
Less: O&M Non-Rate Rev
Water Permits $0 $0 $0 $0 $0 $0 $0
Misc. Revenue 0 0 0 0 0 0 0
Collection of Bad Debt 0 0 0 0 0 0 0
Sale of Material/Labor 0 0 0 0 0 0 0
Public Water Supply 0 0 0 0 0 0 0
Franchise Fee 838,306 320,792 223,654 60,814 86,698 126,844 19,504
Water Srvc Line Repair 0 0 0 0 0 0 0
Water Srvc Line Admin.0 0 0 0 0 0 0
Hydrant Mtr Rental Fee 0 0 0 0 0 0 0
Charge for Services 0 0 0 0 0 0 0
Total O&M Non-Rate Rev $838,306 $320,792 $223,654 $60,814 $86,698 $126,844 $19,504
Total Joint O&M Rev Req. $8,637,441 $3,044,442 $2,312,010 $392,522 $1,155,801 $1,690,999 $41,668
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-4
Table B.6: All-But-Resale O&M Costs by Functional Cost Component – FY18
Line Item Total Base Max Day Max Hour Customer Meter Direct Fire
Water Production
Chemicals $55,845 $55,845 $0 $0 $0 $0 $0
All Other 295,129 134,149 160,979 0 0 0 0
High Service Pumping
Utilities 134,945 107,956 26,989 0 0 0 0
All Other 3,173 1,442 1,731 0 0 0 0
System Pumping & Storage
Utilities 198,673 158,938 39,735 0 0 0 0
All Other 74,276 33,762 40,514 0 0 0 0
Distribution System
Fire Hydrants 243,530 0 0 0 0 0 243,530
All Other 1,060,419 311,888 374,265 374,265 0 0 0
Customer Billing & Meter 275,742 0 0 0 111,951 163,791 0
Admin.235,547 58,745 70,495 22,000 31,364 45,887 7,056
O&M - Total $2,577,279 $862,726 $714,708 $396,266 $143,315 $209,678 $250,586
Less: O&M Non-Rate Rev
Water Permits $0 $0 $0 $0 $0 $0 $0
Misc. Revenue 0 0 0 0 0 0 0
Collection of Bad Debt 0 0 0 0 0 0 0
Sale of Material/Labor 0 0 0 0 0 0 0
Public Water Supply 0 0 0 0 0 0 0
Franchise Fee 96,694 37,002 25,797 7,015 10,000 14,631 2,250
Water Srvc Line Repair 0 0 0 0 0 0 0
Water Srvc Line Admin.0 0 0 0 0 0 0
Hydrant Mtr Rental Fee 0 0 0 0 0 0 0
Charge for Services 0 0 0 0 0 0 0
Total O&M Non-Rate Rev $96,694 $37,002 $25,797 $7,015 $10,000 $14,631 $2,250
Total All-But-Resale O&M
Rev Req.$2,480,585 $825,724 $688,910 $389,251 $133,315 $195,047 $248,337
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-5
Table B.7: Owner O&M Costs by Functional Cost Component – FY18
Line Item Total Base Max Day Max Hour Customer Meter Direct Fire
Water Production
Chemicals $0 $0 $0 $0 $0 $0 $0
All Other 0 0 0 0 0 0 0
High Service Pumping
Utilities 0 0 0 0 0 0 0
All Other 0 0 0 0 0 0 0
System Pumping & Storage
Utilities 218,576 174,861 43,715 0 0 0 0
All Other 81,717 37,144 44,573 0 0 0 0
Distribution System
Fire Hydrants 0 0 0 0 0 0 0
All Other 346,987 102,055 122,466 122,466 0 0 0
Customer Billing & Meter 0 0 0 0 0 0 0
Admin.0 0 0 0 0 0 0
O&M - Total $647,280 $314,060 $210,754 $122,466 $0 $0 $0
Less: O&M Non-Rate Rev
3121 Street Sprinkling $1,400 $536 $374 $102 $145 $212 $33
3122 Sewer Flushing $5,200 $1,990 $1,387 $377 $538 $787 $121
Water Permits $55,000 $21,047 $14,674 $3,990 $5,688 $8,322 $1,280
Misc. Revenue 14,200 5,434 3,788 1,030 1,469 2,149 330
Collection of Bad Debt 10,000 3,827 2,668 725 1,034 1,513 233
Sale of Material/Labor 275,000 105,233 73,368 19,949 28,441 41,610 6,398
Public Water Supply 61,000 23,343 16,274 4,425 6,309 9,230 1,419
Franchise Fee 0 0 0 0 0 0 0
Water Srvc Line Repair 435,000 166,460 116,055 31,556 44,988 65,820 10,121
Water Srvc Line Admin.30,000 11,480 8,004 2,176 3,103 4,539 698
Hydrant Mtr Rental Fee 30,000 11,480 8,004 2,176 3,103 4,539 698
Charge for Services 70,000 26,787 18,675 5,078 7,239 10,592 1,629
Total O&M Non-Rate Rev $986,800 $377,616 $263,271 $71,586 $102,056 $149,313 $22,959
Total Owner O&M Rev Req. ($339,520) ($63,556) ($52,517) $50,880 ($102,056) ($149,313) ($22,959)
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-6
Table B.8: Resale O&M Costs by Functional Cost Component – FY18
Table B.9: Allocation of Joint O&M Costs to Customer Class – FY18
Line Item Total Base Max Day Max Hour Customer Meter Direct Fire
Water Production
Chemicals $0 $0 $0 $0 $0 $0 $0
All Other 0 0 0 0 0 0 0
High Service Pumping
Utilities 0 0 0 0 0 0 0
All Other 0 0 0 0 0 0 0
System Pumping & Storage
Utilities 32,483 25,986 6,497 0 0 0 0
All Other 12,144 5,520 6,624 0 0 0 0
Distribution System
Fire Hydrants 0 0 0 0 0 0 0
All Other 0 0 0 0 0 0 0
Customer Billing & Meter 0 0 0 0 0 0 0
Admin.0 0 0 0 0 0 0
O&M - Total $44,627 $31,506 $13,121 $0 $0 $0 $0
Less: O&M Non-Rate Rev $0 $0 $0 $0 $0 $0 $0
Total Joint O&M Rev Req. $44,627 $31,506 $13,121 $0 $0 $0 $0
Customer Class Base Max Day Max Hour Customer Meter Direct Fire Total
Owners
Single Family Residential $1,335,710 $1,102,100 $104,874 $1,020,810 $1,346,883 $0 $4,910,378
Multi-Family Residential $235,017 $90,897 $29,656 $27,813 $84,082 $0 $467,465
Commercial 601,840 232,772 42,191 86,847 216,094 0 1,179,744
Industrial 8,786 2,265 246 78 1,498 0 12,873
Seasonal 191,235 246,545 26,812 9,166 21,099 0 494,857
Public Fire Protection 0 197,599 120,471 0 0 36,018 354,089
Private Fire Protection 0 29,785 18,159 0 0 5,429 53,373
Non-Owners
Residential $12,466 $10,286 $979 $9,441 $12,436 $0 $45,608
Commercial 307,094 118,774 21,528 1,606 6,787 0 455,790
Resale 352,293 279,778 26,870 39 2,121 0 661,102
Private Fire Protection 0 1,207 736 0 0 220 2,163
Total - Joint $3,044,442 $2,312,010 $392,522 $1,155,801 $1,690,999 $41,668 $8,637,441
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-7
Table B.10: Allocation of All-But-Resale O&M Costs to Customer Class – FY18
Table B.11: Allocation of Owner O&M Costs to Customer Class – FY18
Table B.12: Allocation of Resale O&M Costs to Customer Class – FY18
Customer Class Base Max Day Max Hour Customer Meter Direct Fire Total
Owners
Single Family Residential $409,683 $373,603 $111,642 $117,749 $155,551 $0 $1,168,229
Multi-Family Residential $72,084 $30,813 $31,570 $3,208 $9,711 $0 $147,385
Commercial 184,594 78,908 44,914 10,018 24,957 0 343,390
Industrial 2,695 768 262 9 173 0 3,907
Seasonal 58,655 83,577 28,543 1,057 2,437 0 174,268
Public Fire Protection 0 66,985 128,246 0 0 214,668 409,899
Private Fire Protection 0 10,097 19,331 0 0 32,357 61,785
Non-Owners
Residential $3,824 $3,487 $1,042 $1,089 $1,436 $0 $10,878
Commercial 94,191 40,263 22,918 185 784 0 158,341
Resale 0 0 0 0 0 0 0
Private Fire Protection 0 409 783 0 0 1,311 2,504
Total - Joint $825,724 $688,910 $389,251 $133,315 $195,047 $248,337 $2,480,585
Customer Class Base Max Day Max Hour Customer Meter Direct Fire Total
Owners
Single Family Residential ($35,781) ($30,431) $15,584 ($91,009) ($120,448)$0 ($262,085)
Multi-Family Residential ($6,296) ($2,510) $4,407 ($2,480) ($7,519)$0 ($14,398)
Commercial (16,122) (6,427) 6,269 (7,743) (19,325)0 (43,347)
Industrial (235) (63)37 (7) (134)0 (402)
Seasonal (5,123) (6,808) 3,984 (817) (1,887)0 (10,650)
Public Fire Protection 0 (5,456) 17,901 0 0 (19,951) (7,506)
Private Fire Protection 0 (822) 2,698 0 0 (3,007) (1,131)
Total - Owner ($63,556) ($52,517) $50,880 ($102,056) ($149,313) ($22,959) ($339,520)
Customer Class Base Max Day Max Hour Customer Meter Direct Fire Total
Non-Owners
Residential $0 $0 $0 $0 $0 $0 $0
Commercial 0 0 0 0 0 0 0
Resale 31,506 13,121 0 0 0 0 44,627
Private Fire Protection 0 0 0 0 0 0 0
Total - Resale $31,506 $13,121 $0 $0 $0 $0 $44,627
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-8
Table B.13: Joint O&M Costs by Functional Cost Component – FY19
Line Item Total Base Max Day Max Hour Customer Meter Direct Fire
Water Production
Chemicals $495,976 $495,976 $0 $0 $0 $0 $0
All Other $2,621,142 $1,191,428 $1,429,714 $0 $0 $0 $0
High Service Pumping
Utilities $1,198,496 $958,796 $239,699 $0 $0 $0 $0
All Other $28,184 $12,811 $15,373 $0 $0 $0 $0
System Pumping & Storage
Utilities $43,786 $35,029 $8,757 $0 $0 $0 $0
All Other $16,370 $7,441 $8,929 $0 $0 $0 $0
Distribution System
Fire Hydrants $0 $0 $0 $0 $0 $0 $0
All Other $762,204 $224,178 $269,013 $269,013 $0 $0 $0
Customer Billing & Meter $2,448,963 $0 $0 $0 $994,279 $1,454,684 $0
Admin.$2,091,981 $521,739 $626,087 $195,391 $278,556 $407,543 $62,665
O&M - Total $9,707,102 $3,447,399 $2,597,573 $464,404 $1,272,835 $1,862,227 $62,665
Less: O&M Non-Rate Rev
Water Permits $0 $0 $0 $0 $0 $0 $0
Misc. Revenue $0 $0 $0 $0 $0 $0 $0
Collection of Bad Debt $0 $0 $0 $0 $0 $0 $0
Sale of Material/Labor $0 $0 $0 $0 $0 $0 $0
Public Water Supply $0 $0 $0 $0 $0 $0 $0
Franchise Fee $865,204 $331,085 $230,830 $62,765 $89,480 $130,914 $20,130
Water Srvc Line Repair $0 $0 $0 $0 $0 $0 $0
Water Srvc Line Admin.$0 $0 $0 $0 $0 $0 $0
Hydrant Mtr Rental Fee $0 $0 $0 $0 $0 $0 $0
Charge for Services $0 $0 $0 $0 $0 $0 $0
Total O&M Non-Rate Rev $865,204 $331,085 $230,830 $62,765 $89,480 $130,914 $20,130
Total Joint O&M Rev Req. $8,841,899 $3,116,314 $2,366,743 $401,639 $1,183,355 $1,731,313 $42,535
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-9
Table B.14: All-But-Resale O&M Costs by Functional Cost Component – FY19
Line Item Total Base Max Day Max Hour Customer Meter Direct Fire
Water Production
Chemicals $57,208 $57,208 $0 $0 $0 $0 $0
All Other $302,334 $137,425 $164,910 $0 $0 $0 $0
High Service Pumping
Utilities $138,240 $110,592 $27,648 $0 $0 $0 $0
All Other $3,251 $1,478 $1,773 $0 $0 $0 $0
System Pumping & Storage
Utilities $203,523 $162,819 $40,705 $0 $0 $0 $0
All Other $76,089 $34,586 $41,503 $0 $0 $0 $0
Distribution System
Fire Hydrants $249,476 $0 $0 $0 $0 $0 $249,476
All Other $1,086,309 $319,503 $383,403 $383,403 $0 $0 $0
Customer Billing & Meter $282,474 $0 $0 $0 $114,685 $167,790 $0
Admin.$241,298 $60,180 $72,216 $22,537 $32,130 $47,008 $7,228
O&M - Total $2,640,204 $883,790 $732,158 $405,941 $146,815 $214,798 $256,704
Less: O&M Non-Rate Rev
Water Permits $0 $0 $0 $0 $0 $0 $0
Misc. Revenue $0 $0 $0 $0 $0 $0 $0
Collection of Bad Debt $0 $0 $0 $0 $0 $0 $0
Sale of Material/Labor $0 $0 $0 $0 $0 $0 $0
Public Water Supply $0 $0 $0 $0 $0 $0 $0
Franchise Fee $99,796 $38,189 $26,625 $7,240 $10,321 $15,100 $2,322
Water Srvc Line Repair $0 $0 $0 $0 $0 $0 $0
Water Srvc Line Admin.$0 $0 $0 $0 $0 $0 $0
Hydrant Mtr Rental Fee $0 $0 $0 $0 $0 $0 $0
Charge for Services $0 $0 $0 $0 $0 $0 $0
Total O&M Non-Rate Rev $99,796 $38,189 $26,625 $7,240 $10,321 $15,100 $2,322
Total All-But-Resale O&M
Rev Req.$2,540,408 $845,601 $705,533 $398,701 $136,493 $199,697 $254,383
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-10
Table B.15: Owner O&M Costs by Functional Cost Component – FY19
Line Item Total Base Max Day Max Hour Customer Meter Direct Fire
Water Production
Chemicals $0 $0 $0 $0 $0 $0 $0
All Other $0 $0 $0 $0 $0 $0 $0
High Service Pumping
Utilities $0 $0 $0 $0 $0 $0 $0
All Other $0 $0 $0 $0 $0 $0 $0
System Pumping & Storage
Utilities $223,912 $179,130 $44,782 $0 $0 $0 $0
All Other $83,712 $38,051 $45,661 $0 $0 $0 $0
Distribution System
Fire Hydrants $0 $0 $0 $0 $0 $0 $0
All Other $355,459 $104,547 $125,456 $125,456 $0 $0 $0
Customer Billing & Meter $0 $0 $0 $0 $0 $0 $0
Admin.$0 $0 $0 $0 $0 $0 $0
O&M - Total $663,083 $321,728 $215,900 $125,456 $0 $0 $0
Less: O&M Non-Rate Rev
3121 Street Sprinkling $1,500 $574 $400 $109 $155 $227 $35
3122 Sewer Flushing $5,500 $2,105 $1,467 $399 $569 $832 $128
Water Permits $55,000 $21,047 $14,674 $3,990 $5,688 $8,322 $1,280
Misc. Revenue $14,200 $5,434 $3,788 $1,030 $1,469 $2,149 $330
Collection of Bad Debt $10,000 $3,827 $2,668 $725 $1,034 $1,513 $233
Sale of Material/Labor $275,000 $105,233 $73,368 $19,949 $28,441 $41,610 $6,398
Public Water Supply $61,000 $23,343 $16,274 $4,425 $6,309 $9,230 $1,419
Franchise Fee $0 $0 $0 $0 $0 $0 $0
Water Srvc Line Repair $435,000 $166,460 $116,055 $31,556 $44,988 $65,820 $10,121
Water Srvc Line Admin.$30,000 $11,480 $8,004 $2,176 $3,103 $4,539 $698
Hydrant Mtr Rental Fee $30,000 $11,480 $8,004 $2,176 $3,103 $4,539 $698
Charge for Services $75,000 $28,700 $20,009 $5,441 $7,757 $11,348 $1,745
Total O&M Non-Rate Rev $992,200 $379,682 $264,711 $71,978 $102,614 $150,130 $23,084
Total Owner O&M Rev Req. ($329,117) ($57,955) ($48,812) $53,478 ($102,614) ($150,130) ($23,084)
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-11
Table B.16: Resale O&M Costs by Functional Cost Component – FY19
Table B.17: Allocation of Joint O&M Costs to Customer Class – FY19
Line Item Total Base Max Day Max Hour Customer Meter Direct Fire
Water Production
Chemicals $0 $0 $0 $0 $0 $0 $0
All Other $0 $0 $0 $0 $0 $0 $0
High Service Pumping
Utilities $0 $0 $0 $0 $0 $0 $0
All Other $0 $0 $0 $0 $0 $0 $0
System Pumping & Storage
Utilities $33,276 $26,621 $6,655 $0 $0 $0 $0
All Other $12,441 $5,655 $6,786 $0 $0 $0 $0
Distribution System
Fire Hydrants $0 $0 $0 $0 $0 $0 $0
All Other $0 $0 $0 $0 $0 $0 $0
Customer Billing & Meter $0 $0 $0 $0 $0 $0 $0
Admin.$0 $0 $0 $0 $0 $0 $0
O&M - Total $45,716 $32,276 $13,441 $0 $0 $0 $0
Less: O&M Non-Rate Rev $0 $0 $0 $0 $0 $0 $0
Total Joint O&M Rev Req. $45,716 $32,276 $13,441 $0 $0 $0 $0
Customer Class Base Max Day Max Hour Customer Meter Direct Fire Total
Owners
Single Family Residential 1,366,238 1,127,567 107,417 1,045,228 1,379,630 0 5,026,080
Multi-Family Residential 241,585 93,460 30,526 28,416 85,814 0 479,801
Commercial 615,595 238,151 43,214 88,918 220,966 0 1,206,844
Industrial 8,942 2,306 251 80 1,526 0 13,105
Seasonal 196,579 253,497 27,599 9,419 21,623 0 508,716
Public Fire Protection 0 201,165 122,782 0 0 36,769 360,716
Private Fire Protection 0 30,322 18,507 0 0 5,542 54,371
Non-Owners
Residential $12,688 $10,471 $998 $9,618 $12,674 $0 $46,449
Commercial $312,550 $120,914 $21,941 $1,636 $6,917 $0 $463,958
Resale $362,138 $287,667 $27,659 $40 $2,161 $0 $679,665
Private Fire Protection $0 $1,223 $746 $0 $0 $223 $2,192
Total - Joint $3,116,314 $2,366,743 $401,639 $1,183,355 $1,731,313 $42,535 $8,841,899
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-12
Table B.18: Allocation of All-But-Resale O&M Costs to Customer Class – FY19
Table B.19: Allocation of Owner O&M Costs to Customer Class – FY19
Table B.20: Allocation of Resale O&M Costs to Customer Class – FY19
Customer Class Base Max Day Max Hour Customer Meter Direct Fire Total
Owners
Single Family Residential $419,469 $382,639 $114,517 $120,565 $159,332 $0 $1,196,523
Multi-Family Residential $74,173 $31,716 $32,544 $3,278 $9,911 $0 $151,620
Commercial $189,003 $80,816 $46,070 $10,257 $25,519 $0 $351,666
Industrial $2,745 $783 $268 $9 $176 $0 $3,981
Seasonal $60,355 $86,024 $29,423 $1,086 $2,497 $0 $179,385
Public Fire Protection $0 $68,265 $130,898 $0 $0 $219,900 $419,063
Private Fire Protection $0 $10,290 $19,730 $0 $0 $33,146 $63,166
Non-Owners
Residential $3,896 $3,553 $1,063 $1,109 $1,464 $0 $11,086
Commercial $95,961 $41,032 $23,391 $189 $799 $0 $161,371
Resale $0 $0 $0 $0 $0 $0 $0
Private Fire Protection $0 $415 $796 $0 $0 $1,337 $2,547
Total - Joint $845,601 $705,533 $398,701 $136,493 $199,697 $254,383 $2,540,408
Customer Class Base Max Day Max Hour Customer Meter Direct Fire Total
Owners
Single Family Residential ($32,599) ($28,276) $16,399 ($91,510) ($121,156)$0 ($257,142)
Multi-Family Residential ($5,764) ($2,344) $4,660 ($2,488) ($7,536)$0 ($13,471)
Commercial ($14,688) ($5,972) $6,597 ($7,785) ($19,405)$0 ($41,253)
Industrial ($213) ($58)$38 ($7) ($134)$0 ($374)
Seasonal ($4,690) ($6,357) $4,213 ($825) ($1,899)$0 ($9,557)
Public Fire Protection $0 ($5,045) $18,745 $0 $0 ($20,061) ($6,361)
Private Fire Protection $0 ($760) $2,825 $0 $0 ($3,024) ($959)
Total - Owner ($57,955) ($48,812) $53,478 ($102,614) ($150,130) ($23,084) ($329,117)
Customer Class Base Max Day Max Hour Customer Meter Direct Fire Total
Non-Owners
Residential $0 $0 $0 $0 $0 $0 $0
Commercial $0 $0 $0 $0 $0 $0 $0
Resale $32,276 $13,441 $0 $0 $0 $0 $45,716
Private Fire Protection $0 $0 $0 $0 $0 $0 $0
Total - Resale $32,276 $13,441 $0 $0 $0 $0 $45,716
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-13
Fixed Asset Joint All But Resale Owners Resale Total
Source of Supply
#2 River Intake $3,454,133 $0 $0 $0 $3,454,133
#2 Low Duty PS 0 0 0 0 $0
#1 Intake Chnl Hdwrk 1,994,421 0 0 0 $1,994,421
#1 LOW DUTY PUMPING
STATION 1,944,305 0 0 0 $1,944,305
River Riprap 80,000 0 0 0 $80,000
WATER MANAGEMENT
PLAN/DROUGHT PLANNING 0 0 0 0 $0
Total Source of Supply $7,472,859 $0 $0 $0 $7,472,859
Water Treatment
Plant Maint. Wrhs 0 0 0 0 0
Maint. & Persnl. Bldg. 0 0 0 0 0
Chem Bldg & Trtmnt Bsn 16,122,136 0 0 0 16,122,136
Filter Bldg, Clr Bsn & PS 17,233,290 0 0 0 17,233,290
Clear Well Standpipe 3,796,406 0 0 0 3,796,406
Yard Piping & Flumes 174,413 0 0 0 174,413
Site Work & Landscp 29,383 0 0 0 29,383
Plant Elec. Shop 1,061,905 0 0 0 1,061,905
WTP Rapid Mix Study, Lab
renov, Backup Power 0 0 0 0 0
Total Water Treatment $38,417,533 $0 $0 $0 $38,417,533
High Service Pumping Station $2,766,698 $0 $0 $0 $2,766,698
Distribution System PS
Willett PS #3 $17,476 $0 $0 $0 $17,476
Willet PS #1 0 162,358 0 0 $162,358
Walter PS 0 0 1,525,954 1,017,303 $2,543,257
Booster ST-12 Av N & N27 0 6,230 0 0 $6,230
Willet PS #2 0 0 0 0 $0
Leavens PS 0 0 32,904 0 $32,904
Staples PS #1 0 1,742,489 0 0 $1,742,489
FOX PS (Zone 4) 0 112,942 0 0 $112,942
Booster ST-17 W & Poly 0 0 0 0 $0
Waldo PS 0 0 283,816 0 $283,816
Voelker Pump 0 0 253,707 0 $253,707
Chapple PS 0 272,874 0 0 $272,874
Terrace Estates PS 0 0 195,368 0 $195,368
Thomas PS 0 0 78,473 0 $78,473
Zone 6 PS 0 0 0 0 $0
Total Distribution System PS $17,476 $2,296,892 $2,370,223 $1,017,303 $5,701,893
Reservoirs & Tanks
Zone 6 Reservoir $0 $0 $0 $0 $0
Leavens #1 $0 $0 $0 $0 $0
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-14
Fixed Asset Joint All But Resale Owners Resale Total
Ironwood $0 $137,024 $0 $0 $137,024
Staples #1 0 553,984 0 0 $553,984
Staples #2 0 839,373 0 0 $839,373
Staples #3 0 0 817 0 $817
Fox 2,492,426 0 0 0 $2,492,426
Waldo 0 0 0 0 $0
Logan 0 0 1,372 0 $1,372
Christensen 0 0 154,202 0 $154,202
Zone 4 0 6,372,218 0 0 $6,372,218
Zone 3 0 0 6,306,225 0 $6,306,225
Zone 4 0 0 3,368,603 0 $3,368,603
Total Reservoirs & Tanks $2,492,426 $7,902,599 $9,831,219 $0 $20,226,245
T&D System
Transmission Mains $35,994,326 $19,696,888 $0 $0 $55,691,214
Distribution 0 22,575,356 15,050,238 0 $37,625,594
Total T&D $35,994,326 $42,272,244 $15,050,238 $0 $93,316,808
Meters & Hydrants
Service Connections $0 $0 $0 $0 $0
Meters 66,397 0 0 0 $66,397
Hydrants 0 1,985,756 0 0 $1,985,756
Hydrant Mains 0 260,797 0 0 $260,797
Total Meters & Hydrants $66,397 $2,246,553 $0 $0 $2,312,950
General Plant
Utilities Service Center $410,999 $0 $0 $0 $410,999
Cold Storage Bldg. 58,774 0 0 0 $58,774
Rights & Licenses 0 0 0 0 $0
Transportation Equip. 318,253 0 0 0 $318,253
Construction Equip. 75,676 0 0 0 $75,676
Lab & Test Equip. 64,166 0 0 0 $64,166
Communication Equip. 184,390 0 0 0 $184,390
Tools & Working Equip. 561,171 0 0 0 $561,171
Office Furniture & Equip. 10,958 0 0 0 $10,958
Gas Pumps 5,764 0 0 0 $5,764
Heated Stg Bldg & Stg Yd 6,965 0 0 0 $6,965
Total General Plant 1,697,117 0 0 0 1,697,117
Grand Total $88,924,832 $54,718,288 $27,251,679 $1,017,303 $171,912,102.18
Less CIAC
Voelker Pump $0 $0 $0 $0 $0
Fox Reservoir 0 0 0 0 0
Transmission Mains 0 (5,308,905) 0 0 (5,308,905)
Distribution 0 (7,810,625) (5,207,083) 0 (13,017,709)
Hydrants 0 (373,216) 0 0 (373,216)
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-15
Fixed Asset Joint All But Resale Owners Resale Total
Hydrant Mains 0 (148,980) 0 0 (148,980)
High Service Pumping Station (595,200) 0 0 0 (595,200)
#2 River Intake (25,974) 0 0 0 (25,974)
Chem Bldg & Trtmnt (2,998,595) 0 0 0 (2,998,595)
TRANSMISSION MAINS > 12" (3,870,067) 0 0 0 (3,870,067)
Total CIAC ($3,619,768) ($13,641,726) ($5,207,083) $0 ($26,338,644)
Net $85,305,064 $41,076,561 $22,044,596 $1,017,303 $145,573,458
Table B.21: Allocation of Net Fixed Assets to Ownership Categories – FY18
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-16
Fixed Asset Base Max Day Max Hour Customer Meter Direct Fire Total
Source of Supply
#2 River Intake $3,454,133 $0 $0 $0 $0 $0 $3,454,133
#2 Low Duty PS 0 0 0 0 0 0 $0
#1 Intake Chnl Hdwrk 906,555 1,087,866 0 0 0 0 $1,994,421
#1 Low Duty PS 883,775 1,060,530 0 0 0 0 $1,944,305
River Riprap 36,364 43,636 0 0 0 0 $80,000
WATER MANAGEMENT
PLAN/DROUGHT PLANNING 0 0 0 0 0 0 $0
Total Source of Supply $5,280,827 $2,192,032 $0 $0 $0 $0 $7,472,859
Water Treatment
Plant Maint. Wrhs $0 $0 $0 $0 $0 $0 $0
Maint. & Persnl. Bldg. 0 0 0 0 0 0 $0
Chem Bldg & Trtmnt Bsn 7,328,244 8,793,892 0 0 0 0 $16,122,136
Filter Bldg, Clr Bsn & PS 7,833,314 9,399,976 0 0 0 0 $17,233,290
Clear Well Standpipe 1,725,639 2,070,767 0 0 0 0 $3,796,406
Yard Piping & Flumes 79,278 95,134 0 0 0 0 $174,413
Site Work & Landscp 29,383 0 0 0 0 0 $29,383
Plant Elec. Shop 482,684 579,221 0 0 0 0 $1,061,905
WTP Rapid Mix Study, Lab renov,
Backup Power 0 0 0 0 0 0 $0
Total Water Treatment $17,478,542 $20,938,991 $0 $0 $0 $0 $38,417,533
High Service Pumping Station $1,257,590 $1,509,108 $0 $0 $0 $0 $2,766,698
Distribution System PS
Willett PS #3 $5,140 $6,168 $6,168 $0 $0 $0 $17,476
Willet PS #1 73,799 88,559 0 0 0 0 $162,358
Walter PS 1,156,026 1,387,231 0 0 0 0 $2,543,257
Booster ST-12 Av N & N27 1,832 2,199 2,199 0 0 0 $6,230
Willet PS #2 0 0 0 0 0 0 $0
Leavens PS 14,956 17,948 0 0 0 0 $32,904
Staples PS #1 792,040 950,448 0 0 0 0 $1,742,489
FOX PS (Zone 4) 51,337 61,605 0 0 0 0 $112,942
Booster ST-17 W & Poly 0 0 0 0 0 0 $0
Waldo PS 129,007 154,809 0 0 0 0 $283,816
Voelker Pump 115,322 138,386 0 0 0 0 $253,707
Chapple PS 124,033 148,840 0 0 0 0 $272,874
Terrace Estates PS 88,804 106,565 0 0 0 0 $195,368
Thomas PS 35,669 42,803 0 0 0 0 $78,473
Zone 6 PS 0 0 0 0 0 0 $0
Total Distribution System PS $2,587,967 $3,105,560 $8,367 $0 $0 $0 $5,701,893
Reservoirs & Tanks
Zone 6 Reservoir $0 $0 $0 $0 $0 $0 $0
Leavens #1 $0 $0 $0 $0 $0 $0 $0
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-17
Fixed Asset Base Max Day Max Hour Customer Meter Direct Fire Total
Ironwood $40,301 $48,361 $48,361 $0 $0 $0 $137,024
Staples #1 162,937 195,524 195,524 0 0 0 $553,984
Staples #2 246,874 296,249 296,249 0 0 0 $839,373
Staples #3 240 288 288 0 0 0 $817
Fox 733,067 879,680 879,680 0 0 0 $2,492,426
Waldo 0 0 0 0 0 0 $0
Logan 404 484 484 0 0 0 $1,372
Christensen 70,092 84,110 0 0 0 0 $154,202
Zone 4 1,874,182 2,249,018 2,249,018 0 0 0 $6,372,218
Zone 3 1,854,772 2,225,726 2,225,726 0 0 0 $6,306,225
Briarwood 990,766 1,188,919 1,188,919 0 0 0 $3,368,603
Total Reservoirs & Tanks $5,973,634 $7,168,360 $7,084,250 $0 $0 $0 $20,226,245
T&D System
Transmission Mains $16,379,769 $19,655,723 $19,655,723 $0 $0 $0 $55,691,214
Distribution 11,066,351 13,279,621 13,279,621 0 0 0 $37,625,594
Total T&D $27,446,120 $32,935,344 $32,935,344 $0 $0 $0 $93,316,808
Meters & Hydrants
Service Connections $0 $0 $0 $0 $0 $0 $0
Meters 0 0 0 0 66,397 0 $66,397
Hydrants 0 0 0 0 0 1,985,756 $1,985,756
Hydrant Mains 0 0 0 0 0 260,797 $260,797
Total Meters & Hydrants $0 $0 $0 $0 $66,397 $2,246,553 $2,312,950
General Plant
Utilities Service Center $148,195 $165,767 $91,924 $0 $190 $4,924 $410,999
Cold Storage Bldg. 21,192 23,705 13,146 0 27 704 $58,774
Rights & Licenses 0 0 0 0 0 0 $0
Transportation Equip. 114,753 128,360 71,181 0 147 3,813 $318,253
Construction Equip. 27,287 30,522 16,926 0 35 907 $75,676
Lab & Test Equip. 64,166 0 0 0 0 0 $64,166
Communication Equip. 66,486 74,369 41,241 0 85 2,209 $184,390
Tools & Working Equip. 202,342 226,335 125,512 0 259 6,723 $561,171
Office Furniture & Equip. 3,951 4,420 2,451 0 5 131 $10,958
Gas Pumps 2,078 2,325 1,289 0 3 69 $5,764
Heated Stg Bldg & Stg Yd 2,512 2,809 1,558 0 3 83 $6,965
Total General Plant $652,962 $658,612 $365,227 $0 $753 $19,562 $1,697,117
Grand Total $60,677,642 $68,508,007 $40,393,188 $0 $67,150 $2,266,115 $171,912,102
Less CIAC
Voelker Pump 0 0 0 0 0 0 0
Fox Reservoir 0 0 0 0 0 0 0
Transmission Mains (1,561,443) (1,873,731) (1,873,731) 0 0 0 (5,308,905)
Distribution (3,828,738) (4,594,485) (4,594,485) 0 0 0 (13,017,709)
Hydrants 0 0 0 0 0 (373,216) (373,216)
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-18
Fixed Asset Base Max Day Max Hour Customer Meter Direct Fire Total
Hydrant Mains 0 0 0 0 0 (148,980) (148,980)
High Service Pumping Station (270,545) (324,654) 0 0 0 0 (595,200)
#2 River Intake (25,974) 0 0 0 0 0 (25,974)
Chem Bldg & Trtmnt (1,362,998) (1,635,597) 0 0 0 0 (2,998,595)
TRANSMISSION MAINS > 12" (1,138,255) (1,365,906) (1,365,906) 0 0 0 (3,870,067)
Total CIAC (8,187,952) (9,794,374) (7,834,123) 0 0 (522,196) (26,338,644)
Net 52,489,690 58,713,633 32,559,065 0 67,150 1,743,919 145,573,458
Table B.22: Allocation of Net Fixed Assets to Functional Cost Component – FY18
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-19
Fixed Asset Base Max Day Max Hour Customer Meter Direct Fire Total
Source of Supply
#2 River Intake $3,454,133 $0 $0 $0 $0 $0 $3,454,133
#2 Low Duty PS 0 0 0 0 0 0 $0
#1 Intake Chnl Hdwrk 906,555 1,087,866 0 0 0 0 $1,994,421
#1 Low Duty PS 883,775 1,060,530 0 0 0 0 $1,944,305
River Riprap 36,364 43,636 0 0 0 0 $80,000
WATER MANAGEMENT
PLAN/DROUGHT PLANNING 0 0 0 0 0 0 $0
Total Source of Supply $5,280,827 $2,192,032 $0 $0 $0 $0 $7,472,859
Water Treatment
Plant Maint. Wrhs $0 $0 $0 $0 $0 $0 $0
Maint. & Persnl. Bldg. 0 0 0 0 0 0 $0
Chem Bldg & Trtmnt Bsn 7,328,244 8,793,892 0 0 0 0 $16,122,136
Filter Bldg, Clr Bsn & PS 7,833,314 9,399,976 0 0 0 0 $17,233,290
Clear Well Standpipe 1,725,639 2,070,767 0 0 0 0 $3,796,406
Yard Piping & Flumes 79,278 95,134 0 0 0 0 $174,413
Site Work & Landscp 29,383 0 0 0 0 0 $29,383
Plant Elec. Shop 482,684 579,221 0 0 0 0 $1,061,905
WTP Rapid Mix Study, Lab renov,
Backup Power 0 0 0 0 0 0 $0
Total Water Treatment $17,478,542 $20,938,991 $0 $0 $0 $0 $38,417,533
High Service Pumping Station $1,257,590 $1,509,108 $0 $0 $0 $0 $2,766,698
Distribution System PS
Willett PS #3 $5,140 $6,168 $6,168 $0 $0 $0 $17,476
Willet PS #1 0 0 0 0 0 0 $0
Walter PS 0 0 0 0 0 0 $0
Booster ST-12 Av N & N27 0 0 0 0 0 0 $0
Willet PS #2 0 0 0 0 0 0 $0
Leavens PS 0 0 0 0 0 0 $0
Staples PS #1 0 0 0 0 0 0 $0
FOX PS (Zone 4) 0 0 0 0 0 0 $0
Booster ST-17 W & Poly 0 0 0 0 0 0 $0
Waldo PS 0 0 0 0 0 0 $0
Voelker Pump 0 0 0 0 0 0 $0
Chapple PS 0 0 0 0 0 0 $0
Terrace Estates PS 0 0 0 0 0 0 $0
Thomas PS 0 0 0 0 0 0 $0
Zone 6 PS 0 0 0 0 0 0 $0
Total Distribution System PS $5,140 $6,168 $6,168 $0 $0 $0 $17,476
Reservoirs & Tanks
Zone 6 Reservoir $0 $0 $0 $0 $0 $0 $0
Leavens #1 $0 $0 $0 $0 $0 $0 $0
Ironwood $0 $0 $0 $0 $0 $0 $0
Staples #1 0 0 0 0 0 0 $0
Staples #2 0 0 0 0 0 0 $0
Staples #3 0 0 0 0 0 0 $0
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-20
Fixed Asset Base Max Day Max Hour Customer Meter Direct Fire Total
Fox 733,067 879,680 879,680 0 0 0 $2,492,426
Waldo 0 0 0 0 0 0 $0
Logan 0 0 0 0 0 0 $0
Christensen 0 0 0 0 0 0 $0
Zone 4 0 0 0 0 0 0 $0
Zone 3 0 0 0 0 0 0 $0
Briarwood 0 0 0 0 0 0 $0
Total Reservoirs & Tanks $733,067 $879,680 $879,680 $0 $0 $0 $2,492,426
T&D System
Transmission Mains $10,586,567 $12,703,880 $12,703,880 $0 $0 $0 $35,994,326
Distribution 0 0 0 0 0 0 $0
Total T&D $10,586,567 $12,703,880 $12,703,880 $0 $0 $0 $35,994,326
Meters & Hydrants
Service Connections $0 $0 $0 $0 $0 $0 $0
Meters 0 0 0 0 66,397 0 $66,397
Hydrants 0 0 0 0 0 0 $0
Hydrant Mains 0 0 0 0 0 0 $0
Total Meters & Hydrants $0 $0 $0 $0 $66,397 $0 $66,397
General Plant
Utilities Service Center $148,195 $165,767 $91,924 $0 $190 $4,924 $410,999
Cold Storage Bldg. 21,192 23,705 13,146 0 27 704 $58,774
Rights & Licenses 0 0 0 0 0 0 $0
Transportation Equip. 114,753 128,360 71,181 0 147 3,813 $318,253
Construction Equip. 27,287 30,522 16,926 0 35 907 $75,676
Lab & Test Equip. 64,166 0 0 0 0 0 $64,166
Communication Equip. 66,486 74,369 41,241 0 85 2,209 $184,390
Tools & Working Equip. 202,342 226,335 125,512 0 259 6,723 $561,171
Office Furniture & Equip. 3,951 4,420 2,451 0 5 131 $10,958
Gas Pumps 2,078 2,325 1,289 0 3 69 $5,764
Heated Stg Bldg & Stg Yd 2,512 2,809 1,558 0 3 83 $6,965
Total General Plant $652,962 $658,612 $365,227 $0 $753 $19,562 $1,697,117
Grand Total $35,994,694 $38,888,471 $13,954,955 $0 $67,150 $19,562 $88,924,832
Less CIAC
Voelker Pump 0 0 0 0 0 0 0
Fox Reservoir 0 0 0 0 0 0 0
Transmission Mains 0 0 0 0 0 0 0
Distribution 0 0 0 0 0 0 0
Hydrants 0 0 0 0 0 0 0
Hydrant Mains 0 0 0 0 0 0 0
High Service Pumping Station (270,545) (324,654) 0 0 0 0 (595,200)
#2 River Intake (25,974) 0 0 0 0 0 (25,974)
Chem Bldg & Trtmnt (1,362,998) (1,635,597) 0 0 0 0 (2,998,595)
TRANSMISSION MAINS > 12" (1,138,255) (1,365,906) (1,365,906) 0 0 0 (3,870,067)
Total CIAC (2,797,771) (3,326,157) (1,365,906) 0 0 0 (7,489,835)
Net 33,196,923 35,562,313 12,589,049 0 67,150 19,562 81,434,998
Table B.23: Allocation of Net Fixed Assets to Functional Cost Component – Joint – FY18
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-21
Fixed Asset Base Max Day Max Hour Customer Meter Direct Fire Total
Source of Supply
#2 River Intake $0 $0 $0 $0 $0 $0 $0
#2 Low Duty PS $0 $0 $0 $0 $0 $0 $0
#1 Intake Chnl Hdwrk $0 $0 $0 $0 $0 $0 $0
#1 Low Duty PS $0 $0 $0 $0 $0 $0 $0
River Riprap $0 $0 $0 $0 $0 $0 $0
WATER MANAGEMENT
PLAN/DROUGHT PLANNING $0 $0 $0 $0 $0 $0 $0
Total Source of Supply $0 $0 $0 $0 $0 $0 $0
Water Treatment
Plant Maint. Wrhs $0 $0 $0 $0 $0 $0 $0
Maint. & Persnl. Bldg. $0 $0 $0 $0 $0 $0 $0
Chem Bldg & Trtmnt Bsn $0 $0 $0 $0 $0 $0 $0
Filter Bldg, Clr Bsn & PS $0 $0 $0 $0 $0 $0 $0
Clear Well Standpipe $0 $0 $0 $0 $0 $0 $0
Yard Piping & Flumes $0 $0 $0 $0 $0 $0 $0
Site Work & Landscp $0 $0 $0 $0 $0 $0 $0
Plant Elec. Shop $0 $0 $0 $0 $0 $0 $0
WTP Rapid Mix Study, Lab renov,
Backup Power $0 $0 $0 $0 $0 $0 $0
Total Water Treatment $0 $0 $0 $0 $0 $0 $0
High Service Pumping Station $0 $0 $0 $0 $0 $0 $0
Distribution System PS
Willett PS #3 $0 $0 $0 $0 $0 $0 $0
Willet PS #1 $73,799 $88,559 $0 $0 $0 $0 $162,358
Walter PS $0 $0 $0 $0 $0 $0 $0
Booster ST-12 Av N & N27 $1,832 $2,199 $2,199 $0 $0 $0 $6,230
Willet PS #2 $0 $0 $0 $0 $0 $0 $0
Leavens PS $0 $0 $0 $0 $0 $0 $0
Staples PS #1 $792,040 $950,448 $0 $0 $0 $0 $1,742,489
FOX PS (Zone 4) $51,337 $61,605 $0 $0 $0 $0 $112,942
Booster ST-17 W & Poly $0 $0 $0 $0 $0 $0 $0
Waldo PS $0 $0 $0 $0 $0 $0 $0
Voelker Pump $0 $0 $0 $0 $0 $0 $0
Chapple PS $124,033 $148,840 $0 $0 $0 $0 $272,874
Terrace Estates PS $0 $0 $0 $0 $0 $0 $0
Thomas PS $0 $0 $0 $0 $0 $0 $0
Zone 6 PS $0 $0 $0 $0 $0 $0 $0
Total Distribution System PS $1,043,042 $1,251,651 $2,199 $0 $0 $0 $2,296,892
Reservoirs & Tanks
Zone 6 Reservoir $0 $0 $0 $0 $0 $0 $0
Leavens #1 $0 $0 $0 $0 $0 $0 $0
Ironwood $40,301 $48,361 $48,361 $0 $0 $0 $137,024
Staples #1 $162,937 $195,524 $195,524 $0 $0 $0 $553,984
Staples #2 $246,874 $296,249 $296,249 $0 $0 $0 $839,373
Staples #3 $0 $0 $0 $0 $0 $0 $0
Fox $0 $0 $0 $0 $0 $0 $0
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-22
Fixed Asset Base Max Day Max Hour Customer Meter Direct Fire Total
Waldo $0 $0 $0 $0 $0 $0 $0
Logan $0 $0 $0 $0 $0 $0 $0
Christensen $0 $0 $0 $0 $0 $0 $0
Zone 4 $1,874,182 $2,249,018 $2,249,018 $0 $0 $0 $6,372,218
Zone 3 $0 $0 $0 $0 $0 $0 $0
Briarwood $0 $0 $0 $0 $0 $0 $0
Total Reservoirs & Tanks $2,324,294 $2,789,153 $2,789,153 $0 $0 $0 $7,902,599
T&D System
Transmission Mains $5,793,202 $6,951,843 $6,951,843 $0 $0 $0 $19,696,888
Distribution 6,639,811 7,967,773 7,967,773 0 0 0 $22,575,356
Total T&D $12,433,013 $14,919,616 $14,919,616 $0 $0 $0 $42,272,244
Meters & Hydrants
Service Connections $0 $0 $0 $0 $0 $0 $0
Meters $0 $0 $0 $0 $0 $0 $0
Hydrants $0 $0 $0 $0 $0 $1,985,756 $1,985,756
Hydrant Mains $0 $0 $0 $0 $0 $260,797 $260,797
Total Meters & Hydrants $0 $0 $0 $0 $0 $2,246,553 $2,246,553
General Plant
Utilities Service Center $0 $0 $0 $0 $0 $0 $0
Cold Storage Bldg. $0 $0 $0 $0 $0 $0 $0
Rights & Licenses $0 $0 $0 $0 $0 $0 $0
Transportation Equip. $0 $0 $0 $0 $0 $0 $0
Construction Equip. $0 $0 $0 $0 $0 $0 $0
Lab & Test Equip. $0 $0 $0 $0 $0 $0 $0
Communication Equip. $0 $0 $0 $0 $0 $0 $0
Tools & Working Equip. $0 $0 $0 $0 $0 $0 $0
Office Furniture & Equip. $0 $0 $0 $0 $0 $0 $0
Gas Pumps $0 $0 $0 $0 $0 $0 $0
Heated Stg Bldg & Stg Yd $0 $0 $0 $0 $0 $0 $0
Total General Plant $0 $0 $0 $0 $0 $0 $0
Grand Total $15,800,349 $18,960,419 $17,710,967 $0 $0 $2,246,553 $54,718,288
Less CIAC
Voelker Pump 0 0 0 0 0 0 0
Fox Reservoir 0 0 0 0 0 0 0
Transmission Mains (1,561,443) (1,873,731) (1,873,731) 0 0 0 (5,308,905)
Distribution (2,297,243) (2,756,691) (2,756,691) 0 0 0 (7,810,625)
Hydrants 0 0 0 0 0 (373,216) (373,216)
Hydrant Mains 0 0 0 0 0 (148,980) (148,980)
#2 River Intake 0 0 0 0 0 0 0
Chem Bldg & Trtmnt 0 0 0 0 0 0 0
TRANSMISSION MAINS > 12" 0 0 0 0 0 0 0
Total CIAC (3,858,685) (4,630,423) (4,630,423) 0 0 (522,196) (13,641,726)
Net 11,941,664 14,329,996 13,080,544 0 0 1,724,357 41,076,561
Table B.24: Allocation of Net Fixed Assets to Functional Cost Component – All-But-Resale – FY18
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-23
Fixed Asset Base Max Day Max Hour Customer Meter Direct Fire Total
Source of Supply
#2 River Intake $0 $0 $0 $0 $0 $0 $0
#2 Low Duty PS 0 0 0 0 0 0 $0
#1 Intake Chnl Hdwrk 0 0 0 0 0 0 $0
#1 Low Duty PS 0 0 0 0 0 0 $0
River Riprap 0 0 0 0 0 0 $0
WATER MANAGEMENT
PLAN/DROUGHT PLANNING 0 0 0 0 0 0 $0
Total Source of Supply $0 $0 $0 $0 $0 $0 $0
Water Treatment
Plant Maint. Wrhs $0 $0 $0 $0 $0 $0 $0
Maint. & Persnl. Bldg. 0 0 0 0 0 0 $0
Chem Bldg & Trtmnt Bsn 0 0 0 0 0 0 $0
Filter Bldg, Clr Bsn & PS 0 0 0 0 0 0 $0
Clear Well Standpipe 0 0 0 0 0 0 $0
Yard Piping & Flumes 0 0 0 0 0 0 $0
Site Work & Landscp 0 0 0 0 0 0 $0
Plant Elec. Shop 0 0 0 0 0 0 $0
WTP Rapid Mix Study, Lab renov,
Backup Power 0 0 0 0 0 0 $0
Total Water Treatment $0 $0 $0 $0 $0 $0 $0
High Service Pumping Station $0 $0 $0 $0 $0 $0 $0
Distribution System PS
Willett PS #3 $0 $0 $0 $0 $0 $0 $0
Willet PS #1 0 0 0 0 0 0 $0
Walter PS 693,616 832,339 0 0 0 0 $1,525,954
Booster ST-12 Av N & N27 0 0 0 0 0 0 $0
Willet PS #2 0 0 0 0 0 0 $0
Leavens PS 14,956 17,948 0 0 0 0 $32,904
Staples PS #1 0 0 0 0 0 0 $0
FOX PS (Zone 4) 0 0 0 0 0 0 $0
Booster ST-17 W & Poly 0 0 0 0 0 0 $0
Waldo PS 129,007 154,809 0 0 0 0 $283,816
Voelker Pump 115,322 138,386 0 0 0 0 $253,707
Chapple PS 0 0 0 0 0 0 $0
Terrace Estates PS 88,804 106,565 0 0 0 0 $195,368
Thomas PS 35,669 42,803 0 0 0 0 $78,473
Zone 6 PS 0 0 0 0 0 0 $0
Total Distribution System PS $1,077,374 $1,292,849 $0 $0 $0 $0 $2,370,223
Reservoirs & Tanks
Zone 6 Reservoir $0 $0 $0 $0 $0 $0 $0
Leavens #1 $0 $0 $0 $0 $0 $0 $0
Ironwood $0 $0 $0 $0 $0 $0 $0
Staples #1 0 0 0 0 0 0 $0
Staples #2 0 0 0 0 0 0 $0
Staples #3 240 288 288 0 0 0 $817
Fox 0 0 0 0 0 0 $0
Waldo 0 0 0 0 0 0 $0
Logan 404 484 484 0 0 0 $1,372
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-24
Fixed Asset Base Max Day Max Hour Customer Meter Direct Fire Total
Christensen 70,092 84,110 0 0 0 0 $154,202
Zone 4 0 0 0 0 0 0 $0
Zone 3 1,854,772 2,225,726 2,225,726 0 0 0 $6,306,225
Briarwood 990,766 1,188,919 1,188,919 0 0 0 $3,368,603
Total Reservoirs & Tanks $2,916,273 $3,499,528 $3,415,418 $0 $0 $0 $9,831,219
T&D System
Transmission Mains $0 $0 $0 $0 $0 $0 $0
Distribution 4,426,540 5,311,849 5,311,849 0 0 0 $15,050,238
Total T&D $4,426,540 $5,311,849 $5,311,849 $0 $0 $0 $15,050,238
Meters & Hydrants
Service Connections $0 $0 $0 $0 $0 $0 $0
Meters 0 0 0 0 0 0 $0
Hydrants 0 0 0 0 0 0 $0
Hydrant Mains 0 0 0 0 0 0 $0
Total Meters & Hydrants $0 $0 $0 $0 $0 $0 $0
General Plant
Utilities Service Center $0 $0 $0 $0 $0 $0 $0
Cold Storage Bldg. 0 0 0 0 0 0 $0
Rights & Licenses 0 0 0 0 0 0 $0
Transportation Equip. 0 0 0 0 0 0 $0
Construction Equip. 0 0 0 0 0 0 $0
Lab & Test Equip. 0 0 0 0 0 0 $0
Communication Equip. 0 0 0 0 0 0 $0
Tools & Working Equip. 0 0 0 0 0 0 $0
Office Furniture & Equip. 0 0 0 0 0 0 $0
Gas Pumps 0 0 0 0 0 0 $0
Heated Stg Bldg & Stg Yd 0 0 0 0 0 0 $0
Total General Plant $0 $0 $0 $0 $0 $0 $0
Grand Total $8,420,188 $10,104,225 $8,727,266 $0 $0 $0 $27,251,679
Less CIAC
Voelker Pump 0 0 0 0 0 0 0
Fox Reservoir 0 0 0 0 0 0 0
Transmission Mains 0 0 0 0 0 0 0
Distribution (1,531,495) (1,837,794) (1,837,794) 0 0 0 (5,207,083)
Hydrants 0 0 0 0 0 0 0
Hydrant Mains 0 0 0 0 0 0 0
#2 River Intake 0 0 0 0 0 0 0
Chem Bldg & Trtmnt 0 0 0 0 0 0 0
Total CIAC (1,531,495) (1,837,794) (1,837,794) 0 0 0 (5,207,083)
Net 6,888,693 8,266,431 6,889,472 0 0 0 22,044,596
Table B.25: Allocation of Net Fixed Assets to Functional Cost Component – Owner – FY18
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-25
Fixed Asset Base Max Day Max Hour Customer Meter Direct Fire Total
Source of Supply
#2 River Intake $0 $0 $0 $0 $0 $0 $0
#2 Low Duty PS 0 0 0 0 0 0 $0
#1 Intake Chnl Hdwrk 0 0 0 0 0 0 $0
#1 Low Duty PS 0 0 0 0 0 0 $0
River Riprap 0 0 0 0 0 0 $0
WATER MANAGEMENT
PLAN/DROUGHT PLANNING 0 0 0 0 0 0 $0
Total Source of Supply $0 $0 $0 $0 $0 $0 $0
Water Treatment
Plant Maint. Wrhs $0 $0 $0 $0 $0 $0 $0
Maint. & Persnl. Bldg. 0 0 0 0 0 0 $0
Chem Bldg & Trtmnt Bsn 0 0 0 0 0 0 $0
Filter Bldg, Clr Bsn & PS 0 0 0 0 0 0 $0
Clear Well Standpipe 0 0 0 0 0 0 $0
Yard Piping & Flumes 0 0 0 0 0 0 $0
Site Work & Landscp 0 0 0 0 0 0 $0
Plant Elec. Shop 0 0 0 0 0 0 $0
WTP Rapid Mix Study, Lab renov,
Backup Power 0 0 0 0 0 0 $0
Total Water Treatment $0 $0 $0 $0 $0 $0 $0
High Service Pumping Station $0 $0 $0 $0 $0 $0 $0
Distribution System PS
Willett PS #3 $0 $0 $0 $0 $0 $0 $0
Willet PS #1 0 0 0 0 0 0 $0
Walter PS 462,410 554,893 0 0 0 0 $1,017,303
Booster ST-12 Av N & N27 0 0 0 0 0 0 $0
Willet PS #2 0 0 0 0 0 0 $0
Leavens PS 0 0 0 0 0 0 $0
Staples PS #1 0 0 0 0 0 0 $0
FOX PS (Zone 4) 0 0 0 0 0 0 $0
Booster ST-17 W & Poly 0 0 0 0 0 0 $0
Waldo PS 0 0 0 0 0 0 $0
Voelker Pump 0 0 0 0 0 0 $0
Chapple PS 0 0 0 0 0 0 $0
Terrace Estates PS 0 0 0 0 0 0 $0
Thomas PS 0 0 0 0 0 0 $0
Zone 6 PS 0 0 0 0 0 0 $0
Total Distribution System PS $462,410 $554,893 $0 $0 $0 $0 $1,017,303
Reservoirs & Tanks
Zone 6 Reservoir $0 $0 $0 $0 $0 $0 $0
Leavens #1 $0 $0 $0 $0 $0 $0 $0
Ironwood $0 $0 $0 $0 $0 $0 $0
Staples #1 0 0 0 0 0 0 $0
Staples #2 0 0 0 0 0 0 $0
Staples #3 0 0 0 0 0 0 $0
Fox 0 0 0 0 0 0 $0
Waldo 0 0 0 0 0 0 $0
Logan 0 0 0 0 0 0 $0
Christensen 0 0 0 0 0 0 $0
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-26
Fixed Asset Base Max Day Max Hour Customer Meter Direct Fire Total
Zone 4 0 0 0 0 0 0 $0
Zone 3 0 0 0 0 0 0 $0
Briarwood 0 0 0 0 0 0 $0
Total Reservoirs & Tanks $0 $0 $0 $0 $0 $0 $0
T&D System
Transmission Mains $0 $0 $0 $0 $0 $0 $0
Distribution 0 0 0 0 0 0 $0
Total T&D $0 $0 $0 $0 $0 $0 $0
Meters & Hydrants
Service Connections $0 $0 $0 $0 $0 $0 $0
Meters 0 0 0 0 0 0 $0
Hydrants 0 0 0 0 0 0 $0
Hydrant Mains 0 0 0 0 0 0 $0
Total Meters & Hydrants $0 $0 $0 $0 $0 $0 $0
General Plant
Utilities Service Center $0 $0 $0 $0 $0 $0 $0
Cold Storage Bldg. 0 0 0 0 0 0 $0
Rights & Licenses 0 0 0 0 0 0 $0
Transportation Equip. 0 0 0 0 0 0 $0
Construction Equip. 0 0 0 0 0 0 $0
Lab & Test Equip. 0 0 0 0 0 0 $0
Communication Equip. 0 0 0 0 0 0 $0
Tools & Working Equip. 0 0 0 0 0 0 $0
Office Furniture & Equip. 0 0 0 0 0 0 $0
Gas Pumps 0 0 0 0 0 0 $0
Heated Stg Bldg & Stg Yd 0 0 0 0 0 0 $0
Total General Plant $0 $0 $0 $0 $0 $0 $0
Grand Total $462,410 $554,893 $0 $0 $0 $0 $1,017,303
Less CIAC
Voelker Pump 0 0 0 0 0 0 0
Fox Reservoir 0 0 0 0 0 0 0
Transmission Mains 0 0 0 0 0 0 0
Distribution 0 0 0 0 0 0 0
Hydrants 0 0 0 0 0 0 0
Hydrant Mains 0 0 0 0 0 0 0
#2 River Intake 0 0 0 0 0 0 0
Chem Bldg & Trtmnt 0 0 0 0 0 0 0
Total CIAC 0 0 0 0 0 0 0
Net 462,410 554,893 0 0 0 0 1,017,303
Table B.26: Allocation of Net Fixed Assets to Functional Cost Component – Resale
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-27
Customer Class Base Max Day Max Hour Customer Meter Direct Fire Total
Owners
Single Family Residental $14,564,727 $16,952,024 $3,363,539 $0 $53,485 $0 $34,933,776
Multi-Family Residential $2,562,655 $1,398,140 $951,127 $0 $3,339 $0 $4,915,261
Commercial 6,562,530 3,580,402 1,353,154 0 8,581 0 11,504,667
Industrial 95,799 34,844 7,901 0 59 0 138,604
Seasonal 2,085,244 3,792,243 859,930 0 838 0 6,738,254
Public Fire Protection 0 3,039,388 3,863,765 0 0 16,910 6,920,063
Private Fire Protection 0 458,133 582,394 0 0 2,549 1,043,076
Non-Owners
Residential $135,935 $158,217 $31,393 $0 $494 $0 $326,038
Commercial 3,348,588 1,826,931 690,459 0 270 0 5,866,248
Resale 3,841,444 4,303,427 861,786 0 84 0 9,006,742
Private Fire Protection 0 18,565 23,601 0 0 103 42,269
Total - Joint $33,196,923 $35,562,313 $12,589,049 $0 $67,150 $19,562 $81,434,998
Table B.27: Allocation of Joint Related Net Fixed Assets to Customer Class – FY18
Customer Class Base Max Day Max Hour Customer Meter Direct Fire Total
Owners
Single Family Residental $5,924,859 $7,771,308 $3,751,679 $0 $0 $0 $17,447,846
Multi-Family Residential $1,042,475 $640,948 $1,060,884 $0 $0 $0 $2,744,308
Commercial $2,669,605 $1,641,362 $1,509,303 $0 $0 $0 $5,820,270
Industrial $38,971 $15,974 $8,813 $0 $0 $0 $63,757
Seasonal $848,267 $1,738,476 $959,162 $0 $0 $0 $3,545,905
Public Fire Protection $0 $1,393,345 $4,309,629 $0 $0 $1,490,575 $7,193,549
Private Fire Protection $0 $210,022 $649,600 $0 $0 $224,678 $1,084,299
Non-Owners
Residential $55,298 $72,531 $35,015 $0 $0 $0 $162,844
Commercial $1,362,189 $837,519 $770,135 $0 $0 $0 $2,969,844
Resale $0 $0 $0 $0 $0 $0 $0
Private Fire Protection $0 $8,511 $26,324 $0 $0 $9,105 $43,939
Total - Joint $11,941,664 $14,329,996 $13,080,544 $0 $0 $1,724,357 $41,076,561
Table B.28: Allocation of All-But-Resale Related Net Fixed Assets to Customer Class – FY18
Customer Class Base Max Day Max Hour Customer Meter Direct Fire Total
Owners
Single Family Residental $3,878,169 $4,790,016 $2,110,126 $0 $0 $0 $10,778,311
Multi-Family Residential $682,361 $395,063 $596,693 $0 $0 $0 $1,674,117
Commercial 1,747,413 1,011,689 848,906 0 0 0 3,608,008
Industrial 25,508 9,846 4,957 0 0 0 40,311
Seasonal 555,241 1,071,548 539,480 0 0 0 2,166,268
Public Fire Protection 0 858,819 2,423,945 0 0 0 3,282,763
Private Fire Protection 0 129,452 365,366 0 0 0 494,818
Total - Owner $6,888,693 $8,266,431 $6,889,472 $0 $0 $0 $22,044,596
Table B.29: Allocation of Owner Related Net Fixed Assets to Customer Class – FY18
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-28
Customer Class Base Max Day Max Hour Customer Meter Direct Fire Total
Non-Owners
Residential $0 $0 $0 $0 $0 $0 $0
Commercial 0 0 0 0 0 0 0
Resale 462,410 554,893 0 0 0 0 1,017,303
Private Fire Protection 0 0 0 0 0 0 0
Total - Non Owner $462,410 $554,893 $0 $0 $0 $0 $1,017,303
Table B.30: Allocation of Resale Related Net Fixed Assets to Customer Class – FY18
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-29
Fixed Asset Joint All But
Resale Owners Resale Total
Source of Supply
#2 River Intake $38,651 $0 $0 $0 $38,651
#2 Low Duty PS 0 0 0 0 $0
#1 Intake Chnl Hdwrk 86,924 0 0 0 $86,924
#1 Low Duty PS 91,564 0 0 0 $91,564
River Riprap 2,667 0 0 0 $2,667
WATER MANAGEMENT
PLAN/DROUGHT PLANNING 0 0 0 0 $0
Total Source of Supply $219,806 $0 $0 $0 $219,806
Water Treatment
Plant Maint. Wrhs $0 $0 $0 $0 $0
Maint. & Persnl. Bldg. 0 0 0 0 $0
Chem Bldg & Trtmnt Bsn 285,786 0 0 0 $285,786
Filter Bldg, Clr Bsn & PS 1,038,756 0 0 0 $1,038,756
Clear Well Standpipe 221,088 0 0 0 $221,088
Yard Piping & Flumes 16,950 0 0 0 $16,950
Site Work & Landscp 15,195 0 0 0 $15,195
Plant Elec. Shop 32,639 0 0 0 $32,639
WTP Rapid Mix Study, Lab renov,
Backup Power 0 0 0 0 $0
Total Water Treatment $1,610,414 $0 $0 $0 $1,610,414
High Service Pumping Station $307,903 $0 $0 $0 $307,903
Distribution System PS
Willett PS #3 $49,768 $0 $0 $0 $49,768
Willet PS #1 0 44,086 0 0 $44,086
Walter PS 0 0 73,751 49,167 $122,918
Booster ST-12 Av N & N27 0 0 0 0 $0
Willet PS #2 0 0 0 0 $0
Leavens PS 0 0 1,945 0 $1,945
Staples PS #1 0 83,045 0 0 $83,045
FOX PS (Zone 4) 0 6,078 0 0 $6,078
Booster ST-17 W & Poly 0 0 0 0 $0
Waldo PS 0 0 7,794 0 $7,794
Voelker Pump 0 0 39,652 0 $39,652
Chapple PS 0 18,194 0 0 $18,194
Terrace Estates PS 0 0 8,525 0 $8,525
Thomas PS 0 0 71 0 $71
Zone 6 PS 0 0 0 0 $0
Total Distribution System PS $49,768 $151,404 $131,737 $49,167 $382,077
Reservoirs & Tanks
Zone 6 Reservoir $0 $0 $0 $0 $0
Leavens #1 $0 $0 $0 $0 $0
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-30
Fixed Asset Joint All But
Resale Owners Resale Total
Ironwood $0 $0 $0 $0 $0
Staples #1 0 78,676 0 0 $78,676
Staples #2 0 53,294 0 0 $53,294
Staples #3 0 0 1,401 0 $1,401
Fox 156,851 0 0 0 $156,851
Waldo 0 0 0 0 $0
Logan 0 0 969 0 $969
Christensen 0 0 0 0 $0
Zone 4 0 153,754 0 0 $153,754
Zone 3 0 0 131,607 0 $131,607
Zone 4 0 0 70,301 0 $70,301
Total Reservoirs & Tanks $156,851 $285,724 $204,279 $0 $646,854
T&D System
Transmission Mains $1,379,789 $457,283 $0 $0 $1,837,072
Distribution 0 866,179 577,453 0 $1,443,632
Total T&D $1,379,789 $1,323,462 $577,453 $0 $3,280,704
Meters & Hydrants
Service Connections $0 $0 $0 $0 $0
Meters 6,811 0 0 0 $6,811
Hydrants 0 111,871 0 0 $111,871
Hydrant Mains 0 21,188 0 0 $21,188
Total Meters & Hydrants $6,811 $133,059 $0 $0 $139,870
General Plant
Utilities Service Center $16,126 $0 $0 $0 $16,126
Cold Storage Bldg. 3,206 0 0 0 $3,206
Rights & Licenses 0 0 0 0 $0
Transportation Equip. 123,671 0 0 0 $123,671
Construction Equip. 31,158 0 0 0 $31,158
Lab & Test Equip. 20,247 0 0 0 $20,247
Communication Equip. 42,412 0 0 0 $42,412
Tools & Working Equip. 32,155 0 0 0 $32,155
Office Furniture & Equip. 14,803 0 0 0 $14,803
Gas Pumps 1,095 0 0 0 $1,095
Heated Stg Bldg & Stg Yd 663 0 0 0 $663
Total General Plant $285,536 $0 $0 $0 $285,536
Grand Total $4,016,877 $1,893,650 $913,469 $49,167 $6,873,163
Less CIAC
Voelker Pump $0 $0 $0 $0 $0
Fox Reservoir 0 0 0 0 0
Transmission Mains 0 (119,513) 0 0 (119,513)
Distribution 0 (255,198) (170,132) 0 (425,330)
Hydrants 0 (30,984) 0 0 (30,984)
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-31
Fixed Asset Joint All But
Resale Owners Resale Total
Hydrant Mains 0 (13,534) 0 0 (13,534)
High Service Pumping Station (64,931) 0 0 0 (64,931)
#2 River Intake 0 0 0 0 0
Chem Bldg & Trtmnt (36,717) 0 0 0 (36,717)
TRANSMISSION MAINS > 12" (211,372) 0 0 0 (211,372)
Total CIAC ($313,021) ($419,229) ($170,132) $0 ($902,382)
Net $3,703,856 $1,474,421 $743,337 $49,167 $5,970,781
Table B.31: Allocation of Depreciation Expense to Ownership Categories – FY18
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-32
Fixed Asset Base Max Day Max Hour Customer Meter Direct Fire Total
Source of Supply
#2 River Intake $38,651 $0 $0 $0 $0 $0 $38,651
#2 Low Duty PS $0 $0 $0 $0 $0 $0 $0
#1 Intake Chnl Hdwrk $39,511 $47,413 $0 $0 $0 $0 $86,924
#1 Low Duty PS $41,620 $49,944 $0 $0 $0 $0 $91,564
River Riprap $1,212 $1,455 $0 $0 $0 $0 $2,667
WATER MANAGEMENT
PLAN/DROUGHT PLANNING $0 $0 $0 $0 $0 $0 $0
Total Source of Supply $120,994 $98,812 $0 $0 $0 $0 $219,806
Water Treatment
Plant Maint. Wrhs $0 $0 $0 $0 $0 $0 $0
Maint. & Persnl. Bldg. $0 $0 $0 $0 $0 $0 $0
Chem Bldg & Trtmnt Bsn $129,903 $155,884 $0 $0 $0 $0 $285,786
Filter Bldg, Clr Bsn & PS $472,162 $566,594 $0 $0 $0 $0 $1,038,756
Clear Well Standpipe $100,494 $120,593 $0 $0 $0 $0 $221,088
Yard Piping & Flumes $7,705 $9,245 $0 $0 $0 $0 $16,950
Site Work & Landscp $15,195 $0 $0 $0 $0 $0 $15,195
Plant Elec. Shop $14,836 $17,803 $0 $0 $0 $0 $32,639
WTP Rapid Mix Study, Lab renov,
Backup Power $0 $0 $0 $0 $0 $0 $0
Total Water Treatment $740,294 $870,119 $0 $0 $0 $0 $1,610,414
High Service Pumping Station $139,956 $167,947 $0 $0 $0 $0 $307,903
Distribution System PS
Willett PS #3 $14,638 $17,565 $17,565 $0 $0 $0 $49,768
Willet PS #1 $20,039 $24,047 $0 $0 $0 $0 $44,086
Walter PS $55,872 $67,046 $0 $0 $0 $0 $122,918
Booster ST-12 Av N & N27 $0 $0 $0 $0 $0 $0 $0
Willet PS #2 $0 $0 $0 $0 $0 $0 $0
Leavens PS $884 $1,061 $0 $0 $0 $0 $1,945
Staples PS #1 $37,748 $45,297 $0 $0 $0 $0 $83,045
FOX PS (Zone 4) $2,763 $3,315 $0 $0 $0 $0 $6,078
Booster ST-17 W & Poly 0 0 0 0 0 0 $0
Waldo PS 3,543 4,251 0 0 0 0 $7,794
Voelker Pump 18,024 21,628 0 0 0 0 $39,652
Chapple PS 8,270 9,924 0 0 0 0 $18,194
Terrace Estates PS 3,875 4,650 0 0 0 0 $8,525
Thomas PS 32 39 0 0 0 0 $71
Zone 6 PS 0 0 0 0 0 0 $0
Total Distribution System PS $165,687 $198,824 $17,565 $0 $0 $0 $382,077
Reservoirs & Tanks
Zone 6 Reservoir $0 $0 $0 $0 $0 $0 $0
Leavens #1 $0 $0 $0 $0 $0 $0 $0
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-33
Fixed Asset Base Max Day Max Hour Customer Meter Direct Fire Total
Ironwood $0 $0 $0 $0 $0 $0 $0
Staples #1 23,140 27,768 27,768 0 0 0 $78,676
Staples #2 15,675 18,809 18,809 0 0 0 $53,294
Staples #3 412 495 495 0 0 0 $1,401
Fox 46,133 55,359 55,359 0 0 0 $156,851
Waldo 0 0 0 0 0 0 $0
Logan 285 342 342 0 0 0 $969
Christensen 0 0 0 0 0 0 $0
Zone 4 45,222 54,266 54,266 0 0 0 $153,754
Zone 3 38,708 46,450 46,450 0 0 0 $131,607
Zone 4 20,677 24,812 24,812 0 0 0 $70,301
Total Reservoirs & Tanks $190,251 $228,301 $228,301 $0 $0 $0 $646,854
T&D System
Transmission Mains $540,315 $648,378 $648,378 $0 $0 $0 $1,837,072
Distribution $424,598 $509,517 $509,517 $0 $0 $0 $1,443,632
Total T&D $964,913 $1,157,896 $1,157,896 $0 $0 $0 $3,280,704
Meters & Hydrants
Service Connections $0 $0 $0 $0 $0 $0 $0
Meters $0 $0 $0 $0 $6,811 $0 $6,811
Hydrants $0 $0 $0 $0 $0 $111,871 $111,871
Hydrant Mains $0 $0 $0 $0 $0 $21,188 $21,188
Total Meters & Hydrants $0 $0 $0 $0 $6,811 $133,059 $139,870
General Plant
Utilities Service Center $5,815 $6,504 $3,607 $0 $7 $193 $16,126
Cold Storage Bldg. $1,156 $1,293 $717 $0 $1 $38 $3,206
Rights & Licenses $0 $0 $0 $0 $0 $0 $0
Transportation Equip. $44,592 $49,880 $27,660 $0 $57 $1,482 $123,671
Construction Equip. $11,235 $12,567 $6,969 $0 $14 $373 $31,158
Lab & Test Equip. $20,247 $0 $0 $0 $0 $0 $20,247
Communication Equip. $15,293 $17,106 $9,486 $0 $20 $508 $42,412
Tools & Working Equip. $11,594 $12,969 $7,192 $0 $15 $385 $32,155
Office Furniture & Equip. $5,338 $5,971 $3,311 $0 $7 $177 $14,803
Gas Pumps $395 $442 $245 $0 $1 $13 $1,095
Heated Stg Bldg & Stg Yd $239 $268 $148 $0 $0 $8 $663
Total General Plant $115,902 $106,998 $59,335 $0 $122 $3,178 $285,536
Grand Total $2,437,998 $2,828,898 $1,463,097 $0 $6,933 $136,237 $6,873,163
Less CIAC
Voelker Pump $0 $0 $0 $0 $0 $0 $0
Fox Reservoir $0 $0 $0 $0 $0 $0 $0
Transmission Mains ($35,151) ($42,181) ($42,181) $0 $0 $0 ($119,513)
Distribution ($125,097) ($150,117) ($150,117) $0 $0 $0 ($425,330)
Hydrants $0 $0 $0 $0 $0 ($30,984) ($30,984)
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-34
Fixed Asset Base Max Day Max Hour Customer Meter Direct Fire Total
Hydrant Mains $0 $0 $0 $0 $0 ($13,534) ($13,534)
High Service Pumping Station ($29,514) ($35,417) $0 $0 $0 $0 ($64,931)
#2 River Intake 0 0 0 0 0 0 0
Chem Bldg & Trtmnt (16,690) (20,028) 0 0 0 0 (36,717)
TRANSMISSION MAINS > 12" (62,168) (74,602) (74,602) 0 0 0 (211,372)
Total CIAC ($268,620) ($322,344) ($266,900) $0 $0 ($44,518) ($902,382)
Net $2,169,378 $2,506,553 $1,196,197 $0 $6,933 $91,720 $5,970,781
Table B.32: Allocation of Depreciation Expense to Functional Cost Component – FY18
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-35
Fixed Asset Base Max Day Max Hour Customer Meter Direct Fire Total
Source of Supply
#2 River Intake $38,651 $0 $0 $0 $0 $0 $38,651
#2 Low Duty PS 0 0 0 0 0 0 $0
#1 Intake Chnl Hdwrk 39,511 47,413 0 0 0 0 $86,924
#1 Low Duty PS 41,620 49,944 0 0 0 0 $91,564
River Riprap 1,212 1,455 0 0 0 0 $2,667
WATER MANAGEMENT
PLAN/DROUGHT PLANNING 0 0 0 0 0 0 $0
Total Source of Supply $120,994 $98,812 $0 $0 $0 $0 $219,806
Water Treatment
Plant Maint. Wrhs $0 $0 $0 $0 $0 $0 $0
Maint. & Persnl. Bldg. 0 0 0 0 0 0 $0
Chem Bldg & Trtmnt Bsn 129,903 155,884 0 0 0 0 $285,786
Filter Bldg, Clr Bsn & PS 472,162 566,594 0 0 0 0 $1,038,756
Clear Well Standpipe 100,494 120,593 0 0 0 0 $221,088
Yard Piping & Flumes 7,705 9,245 0 0 0 0 $16,950
Site Work & Landscp 15,195 0 0 0 0 0 $15,195
Plant Elec. Shop 14,836 17,803 0 0 0 0 $32,639
WTP Rapid Mix Study, Lab renov,
Backup Power 0 0 0 0 0 0 $0
Total Water Treatment $740,294 $870,119 $0 $0 $0 $0 $1,610,414
High Service Pumping Station $139,956 $167,947 $0 $0 $0 $0 $307,903
Distribution System PS
Willett PS #3 $14,638 $17,565 $17,565 $0 $0 $0 $49,768
Willet PS #1 0 0 0 0 0 0 $0
Walter PS 0 0 0 0 0 0 $0
Booster ST-12 Av N & N27 0 0 0 0 0 0 $0
Willet PS #2 0 0 0 0 0 0 $0
Leavens PS 0 0 0 0 0 0 $0
Staples PS #1 0 0 0 0 0 0 $0
FOX PS (Zone 4) 0 0 0 0 0 0 $0
Booster ST-17 W & Poly 0 0 0 0 0 0 $0
Waldo PS 0 0 0 0 0 0 $0
Voelker Pump 0 0 0 0 0 0 $0
Chapple PS 0 0 0 0 0 0 $0
Terrace Estates PS 0 0 0 0 0 0 $0
Thomas PS 0 0 0 0 0 0 $0
Zone 6 PS 0 0 0 0 0 0 $0
Total Distribution System PS $14,638 $17,565 $17,565 $0 $0 $0 $49,768
Reservoirs & Tanks
Zone 6 Reservoir $0 $0 $0 $0 $0 $0 $0
Leavens #1 $0 $0 $0 $0 $0 $0 $0
Staples #1 0 0 0 0 0 0 $0
Staples #2 0 0 0 0 0 0 $0
Staples #3 0 0 0 0 0 0 $0
Fox 46,133 55,359 55,359 0 0 0 $156,851
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-36
Fixed Asset Base Max Day Max Hour Customer Meter Direct Fire Total
Waldo 0 0 0 0 0 0 $0
Logan 0 0 0 0 0 0 $0
Christensen 0 0 0 0 0 0 $0
Zone 4 0 0 0 0 0 0 $0
Zone 3 0 0 0 0 0 0 $0
Briarwood 0 0 0 0 0 0 $0
Total Reservoirs & Tanks $46,133 $55,359 $55,359 $0 $0 $0 $156,851
T&D System
Transmission Mains $405,820 $486,984 $486,984 $0 $0 $0 $1,379,789
Distribution 0 0 0 0 0 0 $0
Total T&D $405,820 $486,984 $486,984 $0 $0 $0 $1,379,789
Meters & Hydrants
Service Connections $0 $0 $0 $0 $0 $0 $0
Meters 0 0 0 0 6,811 0 $6,811
Hydrants 0 0 0 0 0 0 $0
Hydrant Mains 0 0 0 0 0 0 $0
Total Meters & Hydrants $0 $0 $0 $0 $6,811 $0 $6,811
General Plant
Utilities Service Center $5,815 $6,504 $3,607 $0 $7 $193 $16,126
Cold Storage Bldg. 1,156 1,293 717 0 1 38 $3,206
Rights & Licenses 0 0 0 0 0 0 $0
Transportation Equip. 44,592 49,880 27,660 0 57 1,482 $123,671
Construction Equip. 11,235 12,567 6,969 0 14 373 $31,158
Lab & Test Equip. 20,247 0 0 0 0 0 $20,247
Communication Equip. 15,293 17,106 9,486 0 20 508 $42,412
Tools & Working Equip. 11,594 12,969 7,192 0 15 385 $32,155
Office Furniture & Equip. 5,338 5,971 3,311 0 7 177 $14,803
Gas Pumps 395 442 245 0 1 13 $1,095
Heated Stg Bldg & Stg Yd 239 268 148 0 0 8 $663
Total General Plant $115,902 $106,998 $59,335 $0 $122 $3,178 $285,536
Grand Total $1,583,737 $1,803,785 $619,244 $0 $6,933 $3,178 $4,016,877
Less CIAC
Voelker Pump $0 $0 $0 $0 $0 $0 $0
Fox Reservoir $0 $0 $0 $0 $0 $0 $0
Transmission Mains $0 $0 $0 $0 $0 $0 $0
Distribution $0 $0 $0 $0 $0 $0 $0
Hydrants $0 $0 $0 $0 $0 $0 $0
Hydrant Mains $0 $0 $0 $0 $0 $0 $0
High Service Pumping Station ($29,514) ($35,417) $0 $0 $0 $0 ($64,931)
#2 River Intake $0 $0 $0 $0 $0 $0 $0
Chem Bldg & Trtmnt ($16,690) ($20,028) $0 $0 $0 $0 ($36,717)
TRANSMISSION MAINS > 12" ($62,168) ($74,602) ($74,602) $0 $0 $0 ($211,372)
Total CIAC (108,372) (130,047) (74,602) 0 0 0 (313,021)
Net 1,475,365 1,673,739 544,642 0 6,933 3,178 3,703,856
Table B.33: Allocation of Joint Related Depreciation Expense to Functional Cost Component – FY18
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-37
Fixed Asset Base Max Day Max Hour Customer Meter Direct Fire Total
Source of Supply
#2 River Intake $0 $0 $0 $0 $0 $0 $0
#2 Low Duty PS $0 0 0 0 0 0 $0
#1 Intake Chnl Hdwrk $0 0 0 0 0 0 $0
#1 Low Duty PS $0 0 0 0 0 0 $0
River Riprap $0 0 0 0 0 0 $0
WATER MANAGEMENT
PLAN/DROUGHT PLANNING $0 0 0 0 0 0 $0
Total Source of Supply $0 $0 $0 $0 $0 $0 $0
Water Treatment
Plant Maint. Wrhs $0 $0 $0 $0 $0 $0 $0
Maint. & Persnl. Bldg. $0 0 0 0 0 0 $0
Chem Bldg & Trtmnt Bsn $0 0 0 0 0 0 $0
Filter Bldg, Clr Bsn & PS $0 0 0 0 0 0 $0
Clear Well Standpipe $0 0 0 0 0 0 $0
Yard Piping & Flumes $0 0 0 0 0 0 $0
Site Work & Landscp $0 0 0 0 0 0 $0
Plant Elec. Shop $0 0 0 0 0 0 $0
WTP Rapid Mix Study, Lab renov,
Backup Power $0 0 0 0 0 0 $0
Total Water Treatment
$0 $0 $0 $0 $0 $0 $0
High Service Pumping Station $0 $0 $0 $0 $0 $0 $0
Distribution System PS
Willett PS #3 $0 $0 $0 $0 $0 $0 $0
Willet PS #1 $20,039 24,047 0 0 0 0 $44,086
Walter PS $0 0 0 0 0 0 $0
Booster ST-12 Av N & N27 $0 0 0 0 0 0 $0
Willet PS #2 $0 0 0 0 0 0 $0
Leavens PS $0 0 0 0 0 0 $0
Staples PS #1 $37,748 45,297 0 0 0 0 $83,045
FOX PS (Zone 4) $2,763 3,315 0 0 0 0 $6,078
Booster ST-17 W & Poly $0 0 0 0 0 0 $0
Waldo PS $0 0 0 0 0 0 $0
Voelker Pump $0 0 0 0 0 0 $0
Chapple PS $8,270 9,924 0 0 0 0 $18,194
Terrace Estates PS $0 0 0 0 0 0 $0
Thomas PS $0 0 0 0 0 0 $0
Zone 6 PS $0 0 0 0 0 0 $0
Total Distribution System PS $68,820 $82,584 $0 $0 $0 $0 $151,404
Reservoirs & Tanks
Zone 6 Reservoir $0 $0 $0 $0 $0 $0 $0
Leavens #1 $0 $0 $0 $0 $0 $0 $0
Ironwood $0 $0 $0 $0 $0 $0 $0
Staples #1 $23,140 27,768 27,768 0 0 0 $78,676
Staples #2 $15,675 18,809 18,809 0 0 0 $53,294
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-38
Fixed Asset Base Max Day Max Hour Customer Meter Direct Fire Total
Staples #3 $0 0 0 0 0 0 $0
Fox $0 0 0 0 0 0 $0
Waldo $0 0 0 0 0 0 $0
Logan $0 0 0 0 0 0 $0
Christensen $0 0 0 0 0 0 $0
Zone 4 $45,222 54,266 54,266 0 0 0 $153,754
Zone 3 $0 0 0 0 0 0 $0
Briarwood $0 0 0 0 0 0 $0
Total Reservoirs & Tanks $84,037 $100,844 $100,844 $0 $0 $0 $285,724
T&D System
Transmission Mains $134,495 $161,394 $161,394 $0 $0 $0 $457,283
Distribution $254,759 305,710 305,710 0 0 0 $866,179
Total T&D $389,254 $467,104 $467,104 $0 $0 $0 $1,323,462
Meters & Hydrants
Service Connections $0 $0 $0 $0 $0 $0 $0
Meters $0 0 0 0 0 0 $0
Hydrants $0 0 0 0 0 111,871 $111,871
Hydrant Mains $0 0 0 0 0 21,188 $21,188
Total Meters & Hydrants $0 $0 $0 $0 $0 $133,059 $133,059
General Plant
Utilities Service Center $0 $0 $0 $0 $0 $0 $0
Cold Storage Bldg. $0 0 0 0 0 0 $0
Rights & Licenses $0 0 0 0 0 0 $0
Transportation Equip. $0 0 0 0 0 0 $0
Construction Equip. $0 0 0 0 0 0 $0
Lab & Test Equip. $0 0 0 0 0 0 $0
Communication Equip. $0 0 0 0 0 0 $0
Tools & Working Equip. $0 0 0 0 0 0 $0
Office Furniture & Equip. $0 0 0 0 0 0 $0
Gas Pumps $0 0 0 0 0 0 $0
Heated Stg Bldg & Stg Yd $0 0 0 0 0 0 $0
Total General Plant $0 $0 $0 $0 $0 $0 $0
Grand Total $542,110 $650,532 $567,948 $0 $0 $133,059 $1,893,650
Less CIAC
Voelker Pump $0 $0 $0 $0 $0 $0 $0
Fox Reservoir $0 $0 $0 $0 $0 $0 $0
Transmission Mains ($35,151) ($42,181) ($42,181) $0 $0 $0 ($119,513)
Distribution ($75,058) ($90,070) ($90,070) $0 $0 $0 ($255,198)
Hydrants $0 $0 $0 $0 $0 ($30,984) ($30,984)
Hydrant Mains $0 $0 $0 $0 $0 ($13,534) ($13,534)
High Service Pumping Station $0 $0 $0 $0 $0 $0 $0
#2 River Intake $0 $0 $0 $0 $0 $0 $0
Chem Bldg & Trtmnt $0 0 0 0 0 0 $0
TRANSMISSION MAINS > 12" $0 0 0 0 0 0 $0
Total CIAC (110,209) (132,251) (132,251) 0 0 (44,518) (419,229)
Net 431,901 518,281 435,697 0 0 88,542 1,474,421
Table B.34: Allocation of All-But-Resale Related Depreciation Expense to Functional Cost Component - FY18
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-39
Fixed Asset Base Max Day Max Hour Customer Meter Direct Fire Total
Source of Supply
#2 River Intake $0 $0 $0 $0 $0 $0 $0
#2 Low Duty PS 0 0 0 0 0 0 $0
#1 Intake Chnl Hdwrk 0 0 0 0 0 0 $0
#1 Low Duty PS 0 0 0 0 0 0 $0
River Riprap 0 0 0 0 0 0 $0
WATER MANAGEMENT
PLAN/DROUGHT PLANNING 0 0 0 0 0 0 $0
Total Source of Supply $0 $0 $0 $0 $0 $0 $0
Water Treatment
Plant Maint. Wrhs $0 $0 $0 $0 $0 $0 $0
Maint. & Persnl. Bldg. 0 0 0 0 0 0 $0
Chem Bldg & Trtmnt Bsn 0 0 0 0 0 0 $0
Filter Bldg, Clr Bsn & PS 0 0 0 0 0 0 $0
Clear Well Standpipe 0 0 0 0 0 0 $0
Yard Piping & Flumes 0 0 0 0 0 0 $0
Site Work & Landscp 0 0 0 0 0 0 $0
Plant Elec. Shop 0 0 0 0 0 0 $0
WTP Rapid Mix Study, Lab renov,
Backup Power 0 0 0 0 0 0 $0
Total Water Treatment $0 $0 $0 $0 $0 $0 $0
High Service Pumping Station 0 $0 $0 $0 $0 $0 $0
Distribution System PS
Willett PS #3 $0 $0 $0 $0 $0 $0 $0
Willet PS #1 0 0 0 0 0 0 $0
Walter PS 33,523 40,228 0 0 0 0 $73,751
Booster ST-12 Av N & N27 0 0 0 0 0 0 $0
Willet PS #2 0 0 0 0 0 0 $0
Leavens PS 884 1,061 0 0 0 0 $1,945
Staples PS #1 0 0 0 0 0 0 $0
FOX PS (Zone 4) 0 0 0 0 0 0 $0
Booster ST-17 W & Poly 0 0 0 0 0 0 $0
Waldo PS 3,543 4,251 0 0 0 0 $7,794
Voelker Pump 18,024 21,628 0 0 0 0 $39,652
Chapple PS 0 0 0 0 0 0 $0
Terrace Estates PS 3,875 4,650 0 0 0 0 $8,525
Thomas PS 32 39 0 0 0 0 $71
Zone 6 PS 0 0 0 0 0 0 $0
Total Distribution System PS $59,881 $71,857 $0 $0 $0 $0 $131,737
Reservoirs & Tanks
Zone 6 Reservoir $0 $0 $0 $0 $0 $0 $0
Leavens #1 $0 $0 $0 $0 $0 $0 $0
Staples #1 0 0 0 0 0 0 $0
Staples #2 0 0 0 0 0 0 $0
Staples #3 412 495 495 0 0 0 $1,401
Fox 0 0 0 0 0 0 $0
Waldo 0 0 0 0 0 0 $0
Logan 285 342 342 0 0 0 $969
Christensen 0 0 0 0 0 0 $0
Zone 4 0 0 0 0 0 0 $0
Zone 3 38,708 46,450 46,450 0 0 0 $131,607
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-40
Fixed Asset Base Max Day Max Hour Customer Meter Direct Fire Total
Briarwood 20,677 24,812 24,812 0 0 0 $70,301
Total Reservoirs & Tanks $60,082 $72,098 $72,098 $0 $0 $0 $204,279
T&D System
Transmission Mains $0 $0 $0 $0 $0 $0 $0
Distribution 169,839 203,807 203,807 0 0 0 $577,453
Total T&D $169,839 $203,807 $203,807 $0 $0 $0 $577,453
Meters & Hydrants
Service Connections $0 $0 $0 $0 $0 $0 $0
Meters 0 0 0 0 0 0 $0
Hydrants 0 0 0 0 0 0 $0
Hydrant Mains 0 0 0 0 0 0 $0
Total Meters & Hydrants $0 $0 $0 $0 $0 $0 $0
General Plant
Utilities Service Center $0 $0 $0 $0 $0 $0 $0
Cold Storage Bldg. 0 0 0 0 0 0 $0
Rights & Licenses 0 0 0 0 0 0 $0
Transportation Equip. 0 0 0 0 0 0 $0
Construction Equip. 0 0 0 0 0 0 $0
Lab & Test Equip. 0 0 0 0 0 0 $0
Communication Equip. 0 0 0 0 0 0 $0
Tools & Working Equip. 0 0 0 0 0 0 $0
Office Furniture & Equip. 0 0 0 0 0 0 $0
Gas Pumps 0 0 0 0 0 0 $0
Heated Stg Bldg & Stg Yd 0 0 0 0 0 0 $0
Total General Plant $0 $0 $0 $0 $0 $0 $0
Grand Total $289,802 $347,762 $275,905 $0 $0 $0 $913,469
Less CIAC
Voelker Pump $0 $0 $0 $0 $0 $0 $0
Fox Reservoir $0 $0 $0 $0 $0 $0 $0
Transmission Mains $0 $0 $0 $0 $0 $0 $0
Distribution ($50,039) ($60,047) ($60,047) $0 $0 $0 ($170,132)
Hydrants $0 $0 $0 $0 $0 $0 $0
Hydrant Mains $0 $0 $0 $0 $0 $0 $0
High Service Pumping Station $0 $0 $0 $0 $0 $0 $0
#2 River Intake $0 $0 $0 $0 $0 $0 $0
Chem Bldg & Trtmnt $0 $0 $0 $0 $0 $0 $0
TRANSMISSION MAINS > 12" $0 $0 $0 $0 $0 $0 $0
Total CIAC (50,039) (60,047) (60,047) 0 0 0 (170,132)
Net 239,763 287,715 215,859 0 0 0 743,337
Table B.35: Allocation of Owner Related Depreciation Expense to Functional Cost Component - FY18
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-41
Fixed Asset Base Max Day Max Hour Customer Meter Direct Fire Total
Source of Supply
#2 River Intake $0 $0 $0 $0 $0 $0 $0
#2 Low Duty PS 0 0 0 0 0 0 $0
#1 Intake Chnl Hdwrk 0 0 0 0 0 0 $0
#1 Low Duty PS 0 0 0 0 0 0 $0
River Riprap 0 0 0 0 0 0 $0
WATER MANAGEMENT
PLAN/DROUGHT PLANNING 0 0 0 0 0 0 $0
Total Source of Supply $0 $0 $0 $0 $0 $0 $0
Water Treatment
Plant Maint. Wrhs 0 0 0 0 0 0 0
Maint. & Persnl. Bldg. 0 0 0 0 0 0 0
Chem Bldg & Trtmnt Bsn 0 0 0 0 0 0 0
Filter Bldg, Clr Bsn & PS 0 0 0 0 0 0 0
Clear Well Standpipe 0 0 0 0 0 0 0
Yard Piping & Flumes 0 0 0 0 0 0 0
Site Work & Landscp 0 0 0 0 0 0 0
Plant Elec. Shop 0 0 0 0 0 0 0
WTP Rapid Mix Study, Lab renov,
Backup Power 0 0 0 0 0 0 0
Total Water Treatment $0 $0 $0 $0 $0 $0 $0
High Service Pumping Station 0 $0 $0 $0 $0 $0 $0
Distribution System PS
Willett PS #3 $0 $0 $0 $0 $0 $0 $0
Willet PS #1 0 0 0 0 0 0 $0
Walter PS 22,349 26,818 0 0 0 0 $49,167
Booster ST-12 Av N & N27 0 0 0 0 0 0 $0
Willet PS #2 0 0 0 0 0 0 $0
Leavens PS 0 0 0 0 0 0 $0
Staples PS #1 0 0 0 0 0 0 $0
FOX PS (Zone 4) 0 0 0 0 0 0 $0
Booster ST-17 W & Poly 0 0 0 0 0 0 $0
Waldo PS 0 0 0 0 0 0 $0
Voelker Pump 0 0 0 0 0 0 $0
Chapple PS 0 0 0 0 0 0 $0
Terrace Estates PS 0 0 0 0 0 0 $0
Thomas PS 0 0 0 0 0 0 $0
Zone 6 PS 0 0 0 0 0 0 $0
Total Distribution System PS $22,349 $26,818 $0 $0 $0 $0 $49,167
Reservoirs & Tanks
Zone 6 Reservoir $0 $0 $0 $0 $0 $0 $0
Leavens #1 $0 $0 $0 $0 $0 $0 $0
Staples #1 0 0 0 0 0 0 $0
Staples #2 0 0 0 0 0 0 $0
Staples #3 0 0 0 0 0 0 $0
Fox 0 0 0 0 0 0 $0
Waldo 0 0 0 0 0 0 $0
Logan 0 0 0 0 0 0 $0
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-42
Fixed Asset Base Max Day Max Hour Customer Meter Direct Fire Total
Christensen 0 0 0 0 0 0 $0
Zone 4 0 0 0 0 0 0 $0
Zone 3 0 0 0 0 0 0 $0
Briarwood 0 0 0 0 0 0 $0
Total Reservoirs & Tanks $0 $0 $0 $0 $0 $0 $0
T&D System
Transmission Mains $0 $0 $0 $0 $0 $0 $0
Distribution 0 0 0 0 0 0 $0
Total T&D $0 $0 $0 $0 $0 $0 $0
Meters & Hydrants
Service Connections $0 $0 $0 $0 $0 $0 $0
Meters 0 0 0 0 0 0 $0
Hydrants 0 0 0 0 0 0 $0
Hydrant Mains 0 0 0 0 0 0 $0
Total Meters & Hydrants $0 $0 $0 $0 $0 $0 $0
General Plant
Utilities Service Center $0 $0 $0 $0 $0 $0 $0
Cold Storage Bldg. 0 0 0 0 0 0 $0
Rights & Licenses 0 0 0 0 0 0 $0
Transportation Equip. 0 0 0 0 0 0 $0
Construction Equip. 0 0 0 0 0 0 $0
Lab & Test Equip. 0 0 0 0 0 0 $0
Communication Equip. 0 0 0 0 0 0 $0
Tools & Working Equip. 0 0 0 0 0 0 $0
Office Furniture & Equip. 0 0 0 0 0 0 $0
Gas Pumps 0 0 0 0 0 0 $0
Heated Stg Bldg & Stg Yd 0 0 0 0 0 0 $0
Total General Plant $0 $0 $0 $0 $0 $0 $0
Grand Total $22,349 $26,818 $0 $0 $0 $0 $49,167
Less CIAC
Voelker Pump $0 $0 $0 $0 $0 $0 $0
Fox Reservoir $0 $0 $0 $0 $0 $0 $0
Transmission Mains $0 $0 $0 $0 $0 $0 $0
Distribution $0 $0 $0 $0 $0 $0 $0
Hydrants $0 $0 $0 $0 $0 $0 $0
Hydrant Mains $0 $0 $0 $0 $0 $0 $0
#2 River Intake $0 $0 $0 $0 $0 $0 $0
Chem Bldg & Trtmnt 0 0 0 0 0 0 0
Total CIAC 0 0 0 0 0 0 0
Net 22,349 26,818 0 0 0 0 49,167
Table B.36: Allocation of Resale Related Depreciation Expense to Functional Cost Component – FY18
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-43
Customer Class Base Max Day Max Hour Customer Meter Direct Fire Total
Owners
Single Family Residential $647,298 $797,846 $145,517 $0 $5,522 $0 $1,596,183
Multi-Family Residential $113,892 $65,803 $41,149 $0 $345 $0 $221,188
Commercial 291,657 168,511 58,542 0 886 0 $519,597
Industrial 4,258 1,640 342 0 6 0 $6,245
Seasonal 92,674 178,482 37,203 0 87 0 $308,446
Public Fire Protection 0 143,049 167,159 0 0 2,747 $312,954
Private Fire Protection 0 21,562 25,196 0 0 414 $47,172
Non-Owners $0
Residential $6,041 $7,446 $1,358 $0 $51 $0 $14,897
Commercial 148,821 85,984 29,871 0 28 0 $264,704
-Resale 170,725 202,541 37,284 0 9 0 $410,558
Private Fire Protection 0 874 1,021 0 0 17 $1,912
Total - Joint $1,475,365 $1,673,739 $544,642 $0 $6,933 $3,178 $3,703,856
Table B.37: Allocation of Joint Depreciation Expense to Customer Class – FY18
Customer Class Base Max Day Max Hour Customer Meter Direct Fire Total
Owners
Single Family Residential $214,288 $281,069 $124,964 $0 $0 $0 $620,321
Multi-Family Residential $37,704 $23,182 $35,337 $0 $0 $0 $96,222
Commercial $96,553 $59,364 $50,273 $0 $0 $0 $206,190
Industrial $1,409 $578 $294 $0 $0 $0 $2,281
Seasonal $30,680 $62,876 $31,949 $0 $0 $0 $125,505
Public Fire Protection $0 $50,394 $143,549 $0 $0 $76,537 $270,480
Private Fire Protection $0 $7,596 $21,637 $0 $0 $11,537 $40,770
Non-Owners $0
Residential $2,000 $2,623 $1,166 $0 $0 $0 $5,790
Commercial $49,267 $30,291 $25,652 $0 $0 $0 $105,210
-Resale $0 $0 $0 $0 $0 $0 $0
Private Fire Protection $0 $308 $877 $0 $0 $468 $1,652
Total - Joint $431,901 $518,281 $435,697 $0 $0 $88,542 $1,474,421
Table B.38: Allocation of All-But-Resale Depreciation Expense to Customer Class – FY18
Customer Class Base Max Day Max Hour Customer Meter Direct Fire Total
Owners
Single Family Residential $134,981 $166,718 $66,114 $0 $0 $0 $367,812
Multi-Family Residential $23,750 $13,750 $18,695 $0 $0 $0 $56,195
Commercial 60,819 35,212 26,598 0 0 0 122,629
Industrial 888 343 155 0 0 0 1,386
Seasonal 19,325 37,295 16,903 0 0 0 73,524
Public Fire Protection 0 29,891 75,946 0 0 0 105,838
Private Fire Protection 0 4,506 11,448 0 0 0 15,953
Total - Owner $239,763 $287,715 $215,859 $0 $0 $0 $743,337
Table B.39: Allocation of Owner Depreciation Expense to Customer Class – FY18
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-44
Customer Class Base Max Day Max Hour Customer Meter Direct Fire Total
Non-Owners
Residential $0 $0 $0 $0 $0 $0 $0
Commercial 0 0 0 0 0 0 0
-Resale 22,349 26,818 0 0 0 0 49,167
Private Fire Protection 0 0 0 0 0 0 0
Total - Non Owner $22,349 $26,818 $0 $0 $0 $0 $49,167
Table B.40: Allocation of Resale Depreciation Expense to Customer Class – FY18
Customer Class Base Max Day Max Hour Customer Meter Direct Fire Total
Owners
Single Family Residential $694,304 $859,573 $161,039 $0 $5,533 $0 $1,720,449
Multi-Family Residential $122,770 $71,247 $45,765 $0 $344 $0 $240,126
Commercial $312,837 $181,549 $64,786 $0 $886 $0 $560,058
Industrial $4,544 $1,758 $376 $0 $6 $0 $6,685
Seasonal $99,899 $193,247 $41,376 $0 $87 $0 $334,609
Public Fire Protection $0 $153,353 $184,073 $0 $0 $2,983 $340,409
Private Fire Protection $0 $23,115 $27,746 $0 $0 $450 $51,311
Non-Owners $0
Residential $6,448 $7,983 $1,496 $0 $51 $0 $15,977
Commercial $158,834 $92,176 $32,893 $0 $28 $0 $283,931
-Resale $184,033 $219,296 $41,466 $0 $9 $0 $444,804
Private Fire Protection $0 $932 $1,119 $0 $0 $18 $2,069
Total - Joint $1,583,668 $1,804,228 $602,135 $0 $6,944 $3,450 $4,000,426
Table B.41: Allocation of Joint Depreciation Expense to Customer Class – FY19
Customer Class Base Max Day Max Hour Customer Meter Direct Fire Total
Owners
Single Family Residential $241,439 $316,757 $138,422 $0 $0 $0 $696,618
Multi-Family Residential $42,692 $26,255 $39,337 $0 $0 $0 $108,284
Commercial $108,787 $66,902 $55,687 $0 $0 $0 $231,376
Industrial $1,580 $648 $324 $0 $0 $0 $2,552
Seasonal $34,739 $71,212 $35,565 $0 $0 $0 $141,517
Public Fire Protection $0 $56,511 $158,221 $0 $0 $76,539 $291,272
Private Fire Protection $0 $8,518 $23,849 $0 $0 $11,537 $43,904
Non-Owners $0
Residential $2,242 $2,942 $1,285 $0 $0 $0 $6,469
Commercial $55,233 $33,967 $28,274 $0 $0 $0 $117,474
-Resale $0 $0 $0 $0 $0 $0 $0
Private Fire Protection $0 $343 $962 $0 $0 $465 $1,770
Total - Joint $486,713 $584,055 $481,926 $0 $0 $88,542 $1,641,235
Table B.42: Allocation of All-But-Resale Depreciation Expense to Customer Class – FY19
| City of Billings, Montana: FY2018/FY2019 Retail/Resale Water Rate Study B-45
Customer Class Base Max Day Max Hour Customer Meter Direct Fire Total
Owners
Single Family Residential $167,571 $207,093 $84,803 $0 $0 $0 $459,467
Multi-Family Residential $29,631 $17,165 $24,099 $0 $0 $0 $70,895
Commercial $75,504 $43,740 $34,116 $0 $0 $0 $153,360
Industrial $1,097 $424 $198 $0 $0 $0 $1,718
Seasonal $24,111 $46,558 $21,789 $0 $0 $0 $92,457
Public Fire Protection $0 $36,947 $96,932 $0 $0 $0 $133,879
Private Fire Protection $0 $5,569 $14,611 $0 $0 $0 $20,180
Total - Owner $297,913 $357,496 $276,548 $0 $0 $0 $931,957
Table B.43: Allocation of Owner Depreciation Expense to Customer Class – FY19
Customer Class Base Max Day Max Hour Customer Meter Direct Fire Total
Non-Owners
Residential $0 $0 $0 $0 $0 $0 $0
Commercial $0 $0 $0 $0 $0 $0 $0
-Resale $22,349 $26,818 $0 $0 $0 $0 $49,167
Private Fire Protection $0 $0 $0 $0 $0 $0 $0
Total - Non Owner $22,349 $26,818 $0 $0 $0 $0 $49,167
Table B.44: Allocation of Resale Depreciation Expense to Customer Class – FY19
RETAIL WASTEWATER
RATE STUDY
FY18 and FY19
Billings, MT
April 14, 2017
FINAL
| City of Billings, Montana: FY2018/FY2019 Retail Wastewater Rate Study ES-1
Executive Summary
The City of Billings calculates its retail wastewater rates using a cost of service rate model
developed specifically for its wastewater treatment and collection system. In January 2017, the
City retained AE2S Nexus to update its wastewater rate model and develop recommendations for
FY18 and FY19 wastewater rates.
The City currently maintains two rate models for the Wastewater System – a cash-based model
used to calculate Retail rates and a utility-based model used to calculate the rates for wholesale
users. The wholesale model, discussed in detail in the Wastewater Wholesale Rate Study, applies
a 15 percent rate of return on the asset base, which includes 12.5 percent working capital, for
wholesale users. The rate of return plus depreciation forms the basis for the capital component of
the revenue requirements for wholesale users. The Retail rate model calculates overall capital
costs slightly differently. This model utilizes the cash-basis and therefore does not readily
provide a mechanism for differentiating between inside and outside users in terms of cost
allocation.
Based on the results of this study, the recommended fixed monthly meter rates for the study
period are shown in Tables ES.1 and ES.2 for Inside City Users and Outside City Users,
respectively. Due to the City’s practice of rounding the wastewater fixed charge to the nearest
$0.05, the calculated cost of service-based rates very slightly for some of the meters in FY18 and
FY19. Overall the projected fixed monthly rates increase less than three percent annually over
the two-year period.
The recommended Retail volumetric rates are shown in Table ES.3. Based on projected
expenditures and wastewater flows, the cost of service model indicated a rate increase is
necessary in FY18 and FY19; however, these rate increases do not bring the utility into a
revenue neutral state. Over the last few years, the rate strategy has been to smooth into rate
increases needed to operate the expansion of the wastewater treatment facility (anticipated to
begin construction this April). As a result, the City planned to build cash reserves in order to use
those same cash reserves and increase rates at a more moderate pace into the full cost of service
needed for revenue sufficiency. Rate increases in FY18 and FY19 are part of the strategy to
utilize those cash reserves.
| City of Billings, Montana: FY2018/FY2019 Retail Wastewater Rate Study ES-2
Table ES.1: FY18 and FY19 Recommended Monthly Minimum Wastewater Charges – Inside City Retail Users
Table ES.2: FY18 and FY19 Recommended Monthly Minimum Wastewater Charges – Outside City Retail Users
Table ES.3: FY18 and FY19 Recommended Wastewater Volumetric Rates
Lastly, strength surcharges are shown in Table ES.4. In preparation for development of a future
strength surcharge addressing nitrogen, it is recommended that the City begin sampling the waste
streams for Total Kjeldahl Nitrogen (TKN). In particular, an understanding of the concentration
Meter Size
Inside City
Current FY17 Rate
($/Month)
Inside City
Recommended
FY18 Rate
($/Month)
% Increase
Recommended
Inside City FY19
Rate ($/Month)
% Increase
3/4” $6.45 $6.60 2.3%$6.80 3.0%
1” $8.20 $8.40 2.4%$8.65 3.0%
1-1/2” $10.10 $10.35 2.5%$10.60 2.4%
2” $10.55 $10.80 2.4%$11.10 2.8%
3” $17.00 $17.45 2.6%$17.90 2.6%
4” $64.50 $66.15 2.6%$67.90 2.6%
6” $82.10 $84.20 2.6%$86.45 2.7%
8” $123.15 $126.25 2.5%$129.65 2.7%
10” $170.05 $174.35 2.5%$179.05 2.7%
Meter Size
Outside City
Current FY17 Rate
($/Month)
Recommended
Outside City FY18
Rate ($/Month)
% Increase
Recommended
Outside City FY19
Rate ($/Month)
% Increase
3/4” $7.10 $7.25 2.1%$7.45 2.8%
1” $9.00 $9.20 2.2%$9.45 2.7%
1-1/2” $11.10 $11.35 2.3%$11.60 2.2%
2” $11.60 $11.85 2.2%$12.15 2.5%
3” $18.65 $19.10 2.4%$19.60 2.6%
4” $71.00 $72.75 2.5%$74.65 2.6%
6” $90.35 $92.60 2.5%$95.10 2.7%
8” $135.50 $138.90 2.5%$142.60 2.7%
10” $187.10 $191.80 2.5%$196.95 2.7%
User Class Current FY17 Rate
($/CCF)
Recommended
FY18 Rate ($/CCF)% Increase Recommended
FY19 Rate ($/CCF)% Increase
Residential 3.20$ 3.29$ 2.8%3.37$ 2.4%
Large Residential 3.20$ 3.29$ 2.8%3.37$ 2.4%
Commercial 3.20$ 3.29$ 2.8%3.37$ 2.4%
High Strength Commercial 4.95$ 5.10$ 3.0%5.25$ 2.9%
Public Buildings 3.20$ 3.29$ 2.8%3.37$ 2.4%
Outside Retail Users 3.20$ 3.29$ 2.8%3.37$ 2.4%
| City of Billings, Montana: FY2018/FY2019 Retail Wastewater Rate Study ES-3
of TKN in the Commercial High Strength waste streams will be needed, as well as the average
concentration in the overall wastewater stream.
Table ES.4: Recommended FY18 and FY19 Strength Surcharge Rates
Current FY17 Rate
($/Pound)
Calculated FY18
Rate ($/Pound)% Increase Calculated FY19
Rate ($/Pound)% Increase
BOD 0.4510$ 0.4510$ 0.0%0.4510$ 0.0%
TSS 0.4668$ 0.4668$ 0.0%0.4671$ 0.1%
Current FY17 Rate
($/kgal)
Calculated FY18
Rate ($/kgal)% Increase Calculated FY19
Rate ($/kgal)% Increase
Septage 39.87$ 39.87$ 0.0%39.87$ 0.0%
| City of Billings, Montana: FY2018/FY2019 Retail Wastewater Rate Study 1-1
1.0 Introduction
In January 2017, the City of Billings retained AE2S Nexus to update its wastewater rate model
and recommend Retail wastewater rates for the 2018 Fiscal Year (FY18), which begins July 1,
2017 and ends June 30, 2018, as well as for FY19. The rate model utilized by the City of
Billings was originally developed by an outside utility rate consultant and was last updated in
early 2015 by AE2S Nexus for the purpose of developing rates for FY16 and FY17.
The City’s cost of service wastewater rate model utilizes a cash-based approach in calculating
Retail rates. This approach is designed to meet all legal requirements for rate setting under
Montana law. Revenue requirements are functionalized to the categories of flow, biochemical
oxygen demand (BOD), total suspended solids (TSS), and customer costs. The flow, BOD, and
TSS costs are allocated to the user classes based on user-specific characteristics and respective
usage of the system, and form the basis for the volumetric and strength components of the user
charges. Customer costs are then allocated to the user classes and form the basis for the monthly
minimum component of the rate.
At the City’s request, AE2S Nexus has updated the customer billing data, operating and
maintenance (O&M), and capital revenue requirements. To complete a comprehensive update,
assumptions upon which the model calculations are based were also reviewed and verified or
updated to reflect current system conditions. This report summarizes the following topics:
Wastewater system usage parameters assumed for FY18 and FY19 (Section 2.0);
Projected FY18 and FY19 revenue requirements and associated assumptions (Section
3.0);
Allocation of FY18 and FY19 operating and capital-related revenue requirements
(Section 4.0); and
Calculated FY18 and FY19 costs of service by user class and recommended FY18/FY19
wastewater rates for the Retail customer classes (Section 5.0).
| City of Billings, Montana: FY2018/FY2019 Retail Wastewater Rate Study 2-1
2.0 Customers and Usage
The City of Billings provides wastewater service to approximately 33,610 users within City
limits, 17 users outside of the City, and to the wholesale customers, Lockwood and Phillips 66.
Large Residential users within the Commercial user class are charged based on winter average
flow. Projected FY18 and FY19 accounts and meters are based on actual meter and account data
from FY17, adjusted by one half of one percent annually. A growth factor of one percent per
year is used to project flows for FY18 and FY19 based on actual billed flow data from FY16.
Customer Class Description Flow Growth Factor
Residential
single family, two-
and three- multi-
family unit complexes
0.50%
Commercial -
Domestic 0.50%
Residential - Large
includes multi-family
complexes with
greater than three
units
1.00%
Commercial - High 1.00%
Public Buildings Includes governments
and schools 1.00%
Outside City -
Domestic 0.50%
Rates for the wholesale users (Lockwood Water and Sewer District and Phillips 66) are
calculated in separate rate models that apply the utility basis cost of service methodology rather
than the cash-based methodology employed for Retail rate analysis. For the purpose of
calculating rates for the Retail customers, revenue associated with the wholesale users was
treated as non-rate revenue, reducing the net revenue requirements of the Retail users. Estimated
FY18 and FY19 Retail customer accounts by meter size and equivalent meters are shown in
Tables 2.1 and 2.2, respectively. The equivalent meter counts are shown on a 3/4-inch meter
basis. Table 2.3 summarizes the projected FY18 and FY19 billable Retail flow for each user
class, measured in units of one hundred cubic feet (CCF).
| City of Billings, Montana: FY2018/FY2019 Retail Wastewater Rate Study 2-2
Table 2.1: Projected FY18 Wastewater Customer Accounts and Equivalent Meters
Table 2.2: Projected FY19 Wastewater Customer Accounts and Equivalent Meters
Table 2.3: Projected FY18 and FY19 Retail Customer Flows
Tables 2.4 and 2.5 present projected Retail customer strength concentrations and loadings for
FY18 and FY19, respectively. Consistent with previous analyses, BOD and TSS strengths of
Meter Size Residential Commercial -
Domestic
Residential-
Large
Commercial-
High
Strength
Public Buildings-
Domestic Outside City Total
3/4"30,004 1,380 330 20 11 8 31,753
1"369 359 277 15 5 5 1,030
1-1/2"23 239 113 28 13 1 417
2"- 129 58 8 18 1 214
3"4 68 30 4 24 1 132
4"1 15 16 3 5 - 40
6"- 10 17 - 4 - 31
8"- 2 3 - 2 1 8
10"- - - - - - -
12"- - 1 - - - 1
Total 30,401 2,202 845 78 82 17 33,626
Equivalent Meters 30,530 2,918 1,469 137 271 39 35,365
Meter Size Residential Commercial -
Domestic
Residential-
Large
Commercial-
High
Strength
Public Buildings-
Domestic Outside City Total
3/4"30,154 1,387 331 20 11 8 31,912
1"371 361 279 15 5 5 1,035
1-1/2"23 240 113 28 13 1 419
2"- 129 59 8 18 1 215
3"4 69 30 4 24 1 132
4"1 15 16 3 5 - 40
6"- 10 17 - 4 - 31
8"- 2 3 - 2 1 8
10"- - - - - - -
12"- - - - - - -
Total 30,553 2,213 848 79 83 17 33,793
Equivalent Meters 30,683 2,933 1,477 138 272 40 35,542
Customer Class FY18 Flow (MG)FY19 Flow (MG)
Residential 1,493.77 1,501.24
Large Residential 470.84 475.55
Commercial - Domestic 957.43 962.22
Commercial - High Strength 104.02 105.06
Public Buildings - Domestic 66.23 66.89
Outside City 24.78 25.02
Total 3,117.06 3,135.98
| City of Billings, Montana: FY2018/FY2019 Retail Wastewater Rate Study 2-3
200 milligrams per liter (mg/L) (the current domestic limit) were assumed for all user classes
with the exception of the Commercial – High Strength class. A concentration of 500 mg/L each
for BOD and TSS was assumed for the Commercial – High Strength class.
Table 2.4: Estimated FY18 Retail Concentrations and Loadings
Table 2.5: Estimated FY19 Retail Concentrations and Loadings
Customer Class BOD (mg/L)TSS (mg/L)BOD (pounds)TSS (pounds)
Residential 200 200 2,493,309 2,493,309
Large Residential 200 200 785,901 785,901
Commercial - Domestic 200 200 1,598,077 1,598,077
Commercial - High Strength 500 500 434,044 434,044
Public Buildings - Domestic 200 200 110,541 110,541
Outside City 200 200 41,355 41,355
Total 5,463,227 5,463,227
Customer Class BOD (mg/L)TSS (mg/L)BOD (pounds)TSS (pounds)
Residential 200 200 2,505,775 2,505,775
Large Residential 200 200 793,760 793,760
Commercial - Domestic 200 200 1,606,067 1,606,067
Commercial - High Strength 500 500 438,384 438,384
Public Buildings - Domestic 200 200 111,647 111,647
Outside City 200 200 41,769 41,769
Total 5,497,403 5,497,403
| City of Billings, Montana: FY2018/FY2019 Retail Wastewater Rate Study 3-1
3.0 Revenue Requirements
Revenue requirements consist of expenses incurred for O&M of the Wastewater Utility, as well
capital-related expenses such as debt service principal, capital outlays, and contributions to
reserves. These revenue requirements form the basis of costs recouped through calculated rates.
3.1 Operation and Maintenance Costs
For the purpose of developing wastewater rates for FY18 and FY19, the O&M component of
revenue requirements was based on the preliminary FY18 Wastewater Operating budget. This
preliminary budget is broken out into six divisions. These divisions have been retitled since the
previous report to better reflect the activity within each. To maintain consistency with previous
reports for historic tracking, the analysis reconciled divisions according to the old naming
system: Administration, Commercial & Meter Service Center, Wastewater Treatment Plant,
Distribution and Collection, and Environmental Affairs.
The utility also generates non-rate operating revenue, which is applied to offset operating costs.
For the purpose of calculating the Retail rates, revenues from existing wholesale users Lockwood
and Phillips 66 are accounted for as non-rate O&M revenue. Table 3.1 summarizes total
projected O&M revenue requirements for FY18 and FY19, total projected O&M non-rate
revenue, and net O&M revenue requirements.
Table 3.1: Summary of FY18 and FY19 Wastewater O&M Revenue Requirements
Line Item FY18 Total FY19 Total
Administrative 1,704,987$ 1,764,661$
Utility Commercial & Meter 654,440$ 677,346$
Wastewater Treatment 4,587,491$ 5,148,053$
Distribution & Collection 1,476,063$ 1,527,725$
Environmental Affairs 510,736$ 528,612$
O&M – Total 8,933,717$ 9,646,397$
Less: Non-Rate O&M Revenue
Sewer Permits 46,000$ 46,460$
Sale of Material/ Labor 5,000$ 5,050$
Collection of Bad Debt 13,000$ 13,130$
Wastewater Supply 45,000$ 45,450$
Franchise Fee 672,000$ 672,000$
Phillips 66 301,265$ 382,235$
Lockwood 145,584$ 298,129$
Misc & Surcharge Revenue 27,311$ 41,327$
Charge for Services 95,000$ 95,950$
Total Non-Rate O&M Revenue 1,350,160$ 1,599,731$
Net O&M Revenue Requirements 7,583,557$ 8,046,666$
| City of Billings, Montana: FY2018/FY2019 Retail Wastewater Rate Study 3-2
3.2 Capital Costs
The City provided information related to existing and anticipated debt service requirements, the
five-year Capital Improvement Plan (CIP), non-CIP capital outlays, and anticipated capital-
related non-rate revenue for FY18 and FY19. Unforeseen circumstances pushed back
construction of the wastewater treatment plant’s nutrient-related project until late FY17 and into
FY18-FY19. As a result, the FY17 CIP currently includes approximately $75.5M in capital
projects, with the majority of it being at the WWTP. In order to facilitate construction, this
project has already been bonded with anticipated debt service coming online in FY18. The FY18
CIP is anticipated to include approximately $9.6M in total capital expenditures with
approximately $6.6M cash-funded. The FY19 CIP includes approximately $8.2M in total capital
expenditures with all being cash-funded (with current capital programming encumbering all
WWTP costs in FY17 and FY18). In both years, SDF revenues of approximately $1M are netted
off to arrive at the Cash-Funded CIP requirement.
3.3 Total Revenue Requirements
Table 3.3 summarizes the total net revenue requirements for FY18 and FY19, which total
approximately $16.7M and $17.3M, respectively.
Table 3.2: Summary of Net Capital-Related Revenue Requirements
Table 3.3: Summary of Total Projected FY18 and FY19 Wastewater Net Revenue Requirements
Line Item FY18 Total FY19 Total
Debt Service 5,328,266$ 5,330,176$
Cash Funded CIP 5,592,949$ 7,143,101$
Transfers To (from) O&M Reserve 116,464$ 128,282$
Increase (Decrease) Operating Fund Balance(1,795,183)$ (3,207,736)$
Capital – Total 9,242,496$ 9,393,823$
Less: Non-Rate Capital Revenue
Late Payment Interest 41,000$ 44,280$
Interest Earnings 135,000$ 145,800$
Total Non-Rate O&M Revenue 176,000$ 190,080$
Net Capital Revenue Requirements 9,066,496$ 9,203,743$
Net Capital Revenue Requirements $ 9,066,496 $ 9,203,743
Revenue Requirement Projected FY18 Projected FY19
Net O&M 7,583,557$ 8,046,666$
Net Capital 9,066,496$ 9,203,743$
Total 16,650,053$ 17,250,409$
| City of Billings, Montana: FY2018/FY2019 Retail Wastewater Rate Study 4-1
4.0 Cost of Service Analysis
4.1 Methodology
Following the establishment of net O&M and capital revenue requirements, costs must be
allocated to each user class. To arrive at the final cost allocation to each user class, the revenue
requirements were classified based on the manner in which the cost is related to user
characteristics such as equivalent meters, flow, BOD, and TSS. The methodology employed for
this analysis utilized the following classifications:
Flow;
BOD;
TSS; and
Customer.
As noted in Section 3.0, the City will be constructing major wastewater treatment plant
improvements starting in 2017. One of the primary treatment objectives of the facility
improvements will be the reduction/removal of nitrogen from the wastewater stream. Once this
facility is online and nitrogen contributions from the user classes are better understood, the City
intends to implement a Total Kjeldahl Nitrogen (TKN) charge to properly assess costs associated
with the treatment of nitrogen. An evaluation of a future nitrogen component of the strength
surcharges was not part of this study.
Once classified, the costs were allocated to the user classes based on the service characteristics
associated with each user class for each classification. The revenue requirements comprising the
Customer classified costs result in the calculation of the fixed monthly meter charges, and those
allocated to the Flow, BOD, and TSS components comprise the charges that derive the
volumetric rates. The following subsections illustrate the classification and allocation of O&M
and Capital-related revenue requirements.
4.2 Classification of O&M Revenue Requirements
Section 3.1 and Table 3.1 summarized the O&M net revenue requirements. Table 4.1
summarizes the O&M revenue classification percentages used for both FY18 and FY19. Tables
4.2 and 4.3, respectively, summarize the classified O&M net revenue requirements for FY18 and
FY19.
| City of Billings, Montana: FY2018/FY2019 Retail Wastewater Rate Study 4-2
Table 4.1: FY18-FY19 Wastewater Classification Percentages for O&M and Non-Rate Revenue
Table 4.2: Classified FY18 O&M Net Revenue Requirements
Item Flow BOD TSS Customer Total
Revenue Requirements
Administrative 0.0% 0.0% 0.0% 100.0% 100.0%
Commercial & Meter 0.0% 0.0% 0.0% 100.0% 100.0%
Wastewater Treatment 50.0% 25.0% 25.0% 0.0% 100.0%
Distribution and Collection 100.0% 0.0% 0.0% 0.0% 100.0%
Environmental Affairs 50.0% 0.0% 0.0% 50.0% 100.0%
Non-Rate Revenues
Sewer Permits 55.7% 15.9% 15.9% 12.6% 100.0%
Sale of Material/Labor 55.7% 15.9% 15.9% 12.6% 100.0%
Misc Revenue 55.7% 15.9% 15.9% 12.6% 100.0%
Collection Bad Debt 55.7% 15.9% 15.9% 12.6% 100.0%
Wastewater Supply 55.7% 15.9% 15.9% 12.6% 100.0%
Franchise Fee 55.7% 15.9% 15.9% 12.6% 100.0%
Phillips 66 100.0% 0.0% 0.0% 0.0% 100.0%
Lockwood 100.0% 0.0% 0.0% 0.0% 100.0%
P66 Surcharge 100.0% 0.0% 0.0% 0.0% 100.0%
Charge for Service 100.0% 0.0% 0.0% 0.0% 100.0%
Transfer to O&M for Pipebursting Projects 100.0% 0.0% 0.0% 0.0% 100.0%
Line Item FY18 Total Flow BOD TSS Customer
Administrative 1,704,987$ -$ -$ -$ 1,704,987$
Utility Commercial & Meter 654,440$ -$ -$ -$ 654,440$
Wastewater Treatment 4,587,491$ 2,293,746$ 1,146,873$ 1,146,873$ -$
Distribution & Collection 1,476,063$ 1,476,063$ -$ -$ -$
Environmental Affairs 510,736$ 255,368$ -$ -$ 255,368$
O&M – Total 8,933,717$ 4,025,176$ 1,146,873$ 1,146,873$ 2,614,795$
Less: Non-Rate O&M Revenue
Sewer Permits 46,000$ 25,614$ 7,298$ 7,298$ 5,790$
Sale of Material/ Labor 5,000$ 2,784$ 793$ 793$ 629$
Collection of Bad Debt 13,000$ 7,239$ 2,063$ 2,063$ 1,636$
Wastewater Supply 45,000$ 25,057$ 7,139$ 7,139$ 5,664$
Franchise Fee 672,000$ 374,190$ 106,616$ 106,616$ 84,578$
Phillips 66 301,265$ 301,265$ -$
Lockwood 145,584$ 145,584$ -$ -$ -$
Misc & Surcharge Revenue 27,311$ 27,089$ 79$ 79$ 63$
Charge for Services 95,000$ 95,000$ -$ -$ -$
Total Non-Rate O&M Revenue 1,350,160$ 1,003,823$ 123,989$ 123,989$ 98,360$
Net O&M Revenue Requirements 7,583,557$ 3,021,354$ 1,022,884$ 1,022,884$ 2,516,435$
| City of Billings, Montana: FY2018/FY2019 Retail Wastewater Rate Study 4-3
Table 4.3: Classified FY19 O&M Net Revenue Requirements
4.3 Classification of Capital Cost Revenue Requirements
The capital-related revenue requirements are shown in Table 3.2. In general, capital-related
revenue requirements were classified in accordance with the composite makeup of the fixed asset
base according to asset type. In FY18, the utility will acquire debt related to construction of the
wastewater treatment plant (WWTP). Historically, the utility’s debt has been classified based on
net asset value of the entire utility. Because the new debt for the WWTP is specifically related to
treatment, the WWTP debt component of the capital-related revenue requirements is classified
based on the composite classification of treatment plant components.
The remainder of the capital-related revenue requirements is classified based on the makeup of
net fixed assets. Fixed assets and classification of such are summarized in detail in Appendix A.
Table 4.4 summarizes FY18 and FY19 net fixed assets for the wastewater system by asset type.
Tables 4.5 and 4.6 summarize fixed assets by classification, as well as capital-related revenue
requirements associated with capital outlays and debt for FY18 and FY19, respectively. Table
4.6 reflects rates based on a standard modification to FY18 allocation factors instead of the full
impact of the new WWTP capital on the asset allocation. This was held consistent based on the
anticipated incorporation of TKN charges into the rate structure in FY20. Classification
assumptions associated with the new WWTP are shown in Table 4.7.
Line Item FY19 Total Flow BOD TSS Customer
Administrative 1,764,661$ -$ -$ -$ 1,764,661$
Utility Commercial & Meter 677,346$ -$ -$ -$ 677,346$
Wastewater Treatment 5,148,053$ 2,574,027$ 1,287,013$ 1,287,013$ -$
Distribution & Collection 1,527,725$ 1,527,725$ -$ -$ -$
Environmental Affairs 528,612$ 264,306$ -$ -$ 264,306$
O&M – Total 9,646,397$ 4,366,058$ 1,287,013$ 1,287,013$ 2,706,313$
Less: Non-Rate O&M Revenue
Sewer Permits 46,460$ 25,870$ 7,371$ 7,371$ 5,847$
Sale of Material/ Labor 5,050$ 2,812$ 801$ 801$ 636$
Collection of Bad Debt 13,130$ 7,311$ 2,083$ 2,083$ 1,653$
Wastewater Supply 45,450$ 25,308$ 7,211$ 7,211$ 5,720$
Franchise Fee 672,000$ 374,190$ 106,616$ 106,616$ 84,578$
Phillips 66 382,235$ 382,235$ -$ -$ -$
Lockwood 298,129$ 298,129$ -$ -$ -$
Misc & Surcharge Revenue 41,327$ 41,103$ 80$ 80$ 64$
Charge for Services 95,950$ 95,950$ -$ -$ -$
Total Non-Rate O&M Revenue 1,599,731$ 1,252,908$ 124,162$ 124,162$ 98,497$
Net O&M Revenue Requirements 8,046,666$ 3,113,149$ 1,162,851$ 1,162,851$ 2,607,815$
| City of Billings, Montana: FY2018/FY2019 Retail Wastewater Rate Study 4-4
Table 4.4: Summary of FY18 and FY19 Net Fixed Assets by Asset Type
Table 4.5: Classification of FY18 Net Fixed Assets
Table 4.6: Classification of FY19 Net Fixed Assets
(note: FY19 allocation percentages held constant at FY18 in anticipation of TKN charges)
Table 4.7: Classification of New WWTP
Fixed Asset Type Original Cost Annual
Depreciation
Estimated Accumulated
Depreciation Through FY 2017
FY 2016 CWIP
Net Fixed
Assets
Net Fixed
Assets FY18
Net Fixed
Assets FY19
Wastewater Treatment 29,425,511$ 801,835$ 16,530,731$ 702,061$ 12,795,006$ 78,662,205$
Pumping & Lift Stations 7,603,247$ 262,312$ 3,232,290$ 560,042$ 4,668,687$ 7,380,322$
Collection & Distribution 82,503,647$ 1,518,921$ 19,733,182$ 2,511,404$ 63,762,948$ 75,316,304$
General Plant 10,585,072$ 413,481$ 7,233,333$ 192,000$ 3,135,702$ 3,733,867$
Total 130,117,477$ 2,996,549$ 46,729,536$ 3,965,507$ 84,362,343$ 165,092,699$
Fixed Asset Type Flow BOD TSS Customer Total
Wastewater Treatment 4,768,639$ 3,840,771$ 4,185,595$ -$ 12,795,006$
Pumping & Lift Stations 4,114,998$ 297,845$ 255,845$ -$ 4,668,687$
Collection & Distribution 63,762,948$ -$ -$ -$ 63,762,948$
General Plant 3,009,624$ 52,564$ 56,036$ 17,477$ 3,135,702$
Total - Fixed Assets 75,656,209$ 4,191,180$ 4,497,476$ 17,477$ 84,362,343$
Percent Allocation - Net Plant In Service 89.7%5.0%5.3%0.0%100.0%
Capital Outlay-Related Revenue Requirements 4,647,218$ 257,445$ 276,260$ 1,074$ 5,181,996$
Treatment-Related Assets 6,004,856$ 3,858,341$ 4,155,030$ -$ 14,018,227$
Percent Allocation - Treatment Plant 42.8%27.5%29.6%0.0%100.0%
Treatment Plant Debt-Related Revenue Requirements 1,663,967$ 1,069,160$ 1,151,373$ -$ 3,884,500$
Total Capital-Related Revenue Requirements
(Capital Outlay + Treatment Debt) 6,311,185$ 1,326,605$ 1,427,633$ 1,074$ 9,066,496$
Fixed Asset Type Flow BOD TSS Customer Total
Wastewater Treatment 33,956,078$ 34,778,635$ 9,927,492$ -$ 78,662,205$
Pumping & Lift Stations 6,256,422$ 578,650$ 545,250$ -$ 7,380,322$
Collection & Distribution 75,316,304$ -$ -$ -$ 75,316,304$
General Plant 3,444,894$ 125,480$ 130,313$ 33,180$ 3,733,867$
Total - Fixed Assets 118,973,698$ 35,482,765$ 10,603,056$ 33,180$ 165,092,699$
Percent Allocation - Net Plant In Service 72.1%21.5%6.4%0.0%100.0%
Capital Outlay-Related Revenue Requirements 3,831,788$ 1,142,794$ 341,493$ 1,069$ 5,317,143$
Treatment-Related Assets 33,754,995$ 32,617,620$ 7,672,637$ -$ 74,045,252$
Percent Allocation - Treatment Plant 45.6%27.5%26.9%0.0%100.0%
Treatment Plant Debt-Related Revenue Requirements 1,771,784$ 1,069,738$ 1,045,078$ -$ 3,886,600$
Total Capital-Related Revenue Requirements
(Capital Outlay + Treatment Debt) 5,603,571$ 2,212,532$ 1,386,571$ 1,069$ 9,203,743$
Flow BOD TSS Customer
New WWTP 46.1% 45.2% 8.7% 0.00%
| City of Billings, Montana: FY2018/FY2019 Retail Wastewater Rate Study 4-5
4.4 Summary of Total Classified Net Revenue Requirements
Table 4.8 summarizes the net O&M and Capital-related revenue requirements by classification.
Wastewater rate-setting analyses in previous years established a method for gradually bringing
fixed charges in line with the cost of service by allocating a percentage of fixed cost to a fixed
demand component. To remain consistent with this approach, 3.1 percent of the flow costs were
reallocated to the fixed demand component in FY18. Table 4.9 shows the FY18 net revenue
requirements reflecting this adjustment. Similarly, 3.0 percent of flow costs were reallocated to
the fixed demand component in the FY19 rate calculation. Net O&M and Capital-related revenue
requirements for FY19 are shown in Table 4.10, with adjusted net revenue requirements in Table
4.11.
The final step in calculating the cost of service is to allocate the classified costs to the user
classes. Table 4.12 summarizes the customer service characteristics for each Retail user class.
The allocation of revenue requirements to each user class is summarized in Section 5.0.
Table 4.8: Summary of FY18 Classified Net Revenue Requirements
Table 4.9: Summary of Adjusted FY18 Classified Net Revenue Requirements
Table 4.10: Summary of FY19 Classified Net Revenue Requirements
Table 4.11: Summary of Adjusted FY19 Classified Net Revenue Requirements
Line Item Flow BOD TSS Volume - Total Customer Total
Revenue Requirements
O&M 3,021,354$ 1,022,884$ 1,022,884$ 5,067,122$ 2,516,435$ 7,583,557$
Capital 6,311,185$ 1,326,605$ 1,427,633$ 9,065,423$ 1,074$ 9,066,496$
Total 9,332,538$ 2,349,489$ 2,450,517$ 14,132,544$ 2,517,509$ 16,650,053$
Line Item Flow BOD TSS Volume - Total Customer Total
Revenue Requirements
O&M 2,927,692$ 1,022,884$ 1,022,884$ 4,973,460$ 2,610,097$ 7,583,557$
Capital 6,115,538$ 1,326,605$ 1,427,633$ 8,869,776$ 196,720$ 9,066,496$
Total 9,043,229$ 2,349,489$ 2,450,517$ 13,843,236$ 2,806,818$ 16,650,053$
Line Item Flow BOD TSS Volume - Total Customer Total
Revenue Requirements
O&M 3,113,149$ 1,162,851$ 1,162,851$ 5,438,851$ 2,607,815$ 8,046,666$
Capital 5,603,571$ 2,212,532$ 1,386,571$ 9,202,675$ 1,069$ 9,203,743$
Total 8,716,721$ 3,375,383$ 2,549,422$ 14,641,525$ 2,608,884$ 17,250,409$
Line Item Flow BOD TSS Volume - Total Customer Total
Revenue Requirements
O&M 3,019,755$ 1,162,851$ 1,162,851$ 5,345,456$ 2,701,210$ 8,046,666$
Capital 5,435,464$ 2,212,532$ 1,386,571$ 9,034,567$ 169,176$ 9,203,743$
Total 8,455,219$ 3,375,383$ 2,549,422$ 14,380,024$ 2,870,386$ 17,250,409$
| City of Billings, Montana: FY2018/FY2019 Retail Wastewater Rate Study 4-6
Table 4.12: Summary of Retail Customer Service Characteristics
Customer Class Flow BOD TSS
Customer
(Equivalent
Meters)
Residential 48%46%46% 86%
Large Residential 15%14%14% 4%
Commercial 31%29%29% 8%
High Strength Commercial 3%8%8% 0%
Public Buildings 2%2%2% 1%
Outside City 1%1%1% 0%
Total 100%100% 100% 100%
| City of Billings, Montana: FY2018/Y2019 Retail Wastewater Rate Study 5-1
5.0 Results and Proposed Rates
5.1 Cost of Service Results
The total revenue requirements to be recovered through rates for FY18 and FY19 were projected
to total $16,650,053 and $17,250,409, respectively. Tables 5.1 and 5.2 summarize the allocated
revenue requirements by user class for these respective years.
Table 5.1: Summary of FY18 Wastewater Cost of Service Results
Table 5.2: Summary of FY19 Wastewater Cost of Service Results
User Class Total Meter Total Volume Total
Residential 2,173,346$ 6,663,007$ 8,836,353$
Large Residential 104,589$ 2,100,206$ 2,204,795$
Commercial 207,719$ 4,270,630$ 4,478,349$
High Strength Commercial 9,764$ 692,779$ 702,543$
Public Buildings 19,280$ 295,406$ 314,686$
Outside City 2,811$ 110,517$ 113,327$
Total 2,517,509$ 14,132,544$ 16,650,053$
User Class Total Meter Total Volume Total
Residential 2,252,217$ 6,873,420$ 9,125,636$
Large Residential 108,385$ 2,177,308$ 2,285,692$
Commercial 215,257$ 4,405,493$ 4,620,750$
High Strength Commercial 10,118$ 764,481$ 774,599$
Public Buildings 19,980$ 306,251$ 326,231$
Outside City 2,927$ 114,574$ 117,501$
Total 2,608,884$ 14,641,525$ 17,250,409$
| City of Billings, Montana: FY2018/Y2019 Retail Wastewater Rate Study 5-2
5.2 Recommended FY18 and FY19 Wastewater Rates
Based on the results of this study, the recommended rates for inside and outside City Users are
shown in Tables 5.3 and 5.4, respectively. Due to the City’s practice of rounding the wastewater
fixed charge to the nearest $0.05, the cost of service-based rate increases very slightly for some
of the meters in FY18 and FY19.
Based on projected expenditures and wastewater flows, the cost of service model indicated a rate
increase is necessary in FY18 and FY19; however, these rate increases do not bring the utility
into a revenue neutral state. Over the last few years, the rate strategy has been to smooth into
rate increases needed to operate the expansion of the wastewater treatment facility (anticipated to
begin construction this April). As a result, the City planned to build cash reserves in order to use
those same cash reserves and increase rates at a more moderate pace into the full cost of service
needed for revenue sufficiency. Rate increases in FY18 and FY19 are part of the strategy to
utilize those cash reserves in a fair and equitable manner for all customers. Table 5.5 outlines
recommended volumetric rates based on this approach. Calculated cost of service-based rates for
the outside users Lockwood and Phillips 66 were evaluated as part of this study, but are reported
under separate cover.
Table 5.3: FY18 and FY19 Recommended Monthly Minimum Wastewater Charges – Inside City Retail Users
Meter Size
Inside City
Current FY17 Rate
($/Month)
Inside City
Recommended
FY18 Rate
($/Month)
% Increase
Recommended
Inside City FY19
Rate ($/Month)
% Increase
3/4” $6.45 $6.60 2.3%$6.80 3.0%
1” $8.20 $8.40 2.4%$8.65 3.0%
1-1/2” $10.10 $10.35 2.5%$10.60 2.4%
2” $10.55 $10.80 2.4%$11.10 2.8%
3” $17.00 $17.45 2.6%$17.90 2.6%
4” $64.50 $66.15 2.6%$67.90 2.6%
6” $82.10 $84.20 2.6%$86.45 2.7%
8” $123.15 $126.25 2.5%$129.65 2.7%
10” $170.05 $174.35 2.5%$179.05 2.7%
| City of Billings, Montana: FY2018/Y2019 Retail Wastewater Rate Study 5-3
Table 5.4: FY18 and FY19 Recommended Monthly Minimum Wastewater Charges – Outside City Retail Users
Table 5.5: FY18 and FY19 Recommended Wastewater Volumetric Rates
Meter Size
Outside City
Current FY17 Rate
($/Month)
Recommended
Outside City FY18
Rate ($/Month)
% Increase
Recommended
Outside City FY19
Rate ($/Month)
% Increase
3/4” $7.10 $7.25 2.1%$7.45 2.8%
1” $9.00 $9.20 2.2%$9.45 2.7%
1-1/2” $11.10 $11.35 2.3%$11.60 2.2%
2” $11.60 $11.85 2.2%$12.15 2.5%
3” $18.65 $19.10 2.4%$19.60 2.6%
4” $71.00 $72.75 2.5%$74.65 2.6%
6” $90.35 $92.60 2.5%$95.10 2.7%
8” $135.50 $138.90 2.5%$142.60 2.7%
10” $187.10 $191.80 2.5%$196.95 2.7%
User Class Current FY17 Rate
($/CCF)
Recommended
FY18 Rate ($/CCF)% Increase Recommended
FY19 Rate ($/CCF)% Increase
Residential 3.20$ 3.29$ 2.8%3.37$ 2.4%
Large Residential 3.20$ 3.29$ 2.8%3.37$ 2.4%
Commercial 3.20$ 3.29$ 2.8%3.37$ 2.4%
High Strength Commercial 4.95$ 5.10$ 3.0%5.25$ 2.9%
Public Buildings 3.20$ 3.29$ 2.8%3.37$ 2.4%
Outside Retail Users 3.20$ 3.29$ 2.8%3.37$ 2.4%
| City of Billings, Montana: FY2018/Y2019 Retail Wastewater Rate Study 5-4
5.3 Strength Surcharge Recommendations
As noted throughout this report, the City is implementing significant wastewater treatment plant
improvements designed to remove nutrients from the wastewater stream. The City does not
currently have a nitrogen surcharge, but will be considering the implementation of such in FY19.
In preparation for that, it is recommended that the City collect samples to determine the nitrogen
concentration of the overall wastewater stream, as well as specifically the waste streams
associated with any Commercial High Strength users. Table 5.6 presents the recommended BOD
and TSS surcharge rates for FY18 and FY19. The cost of service results indicate that a
significant change in surcharge rates will be required in FY18 when the wastewater treatment
plant improvements come online. However, given the relatively small amount of surcharge
revenue generated for the utility, it is recommended that FY19 rates be held at or near the
recommended FY18 rates until an evaluation of a TKN rate can be completed.
Table 5.6: Recommended FY18 and FY19 Strength Surcharge Rates
Current FY17 Rate
($/Pound)
Calculated FY18
Rate ($/Pound)% Increase Calculated FY19
Rate ($/Pound)% Increase
BOD 0.4510$ 0.4510$ 0.0%0.4510$ 0.0%
TSS 0.4668$ 0.4668$ 0.0%0.4671$ 0.1%
Current FY17 Rate
($/kgal)
Calculated FY18
Rate ($/kgal)% Increase Calculated FY19
Rate ($/kgal)% Increase
Septage 39.87$ 39.87$ 0.0%39.87$ 0.0%
| City of Billings, Montana: FY2018/Y2019 Retail Wastewater Rate Study 5-5
5.4 FY18 Bill Comparison
Finally, for the purpose of illustrating the effect of the recommended FY18 rates on varying
levels of usage, Table 5.7 provides a bill comparison.
Description Meter
Size Consumption (CCF) Previous (FY17) Proposed (FY18) Difference Percent Change
Residential
3/4"
0
2
7
20
$6.45
$12.85
$28.85
$70.45
$6.60
$13.18
$29.63
$72.39
$0.15
$0.33
$0.78
$1.94
2.3%
2.6%
2.7%
2.8%
Commercial-
-Domestic
3/4"
0
8
30
100
$6.45
$32.05
$102.45
$326.45
$6.60
$32.92
$105.29
$335.56
$0.15
$0.87
$2.84
$9.11
2.3%
2.7%
2.8%
2.8%
1"
0
20
50
400
$8.20
$72.20
$168.20
$1,288.20
$8.40
$74.19
$172.88
$1,324.24
$0.20
$1.99
$4.68
$36.04
2.4%
2.8%
2.8%
2.8%
2"
0
20
90
400
$10.55
$74.55
$298.55
$1,290.55
$10.80
$76.59
$306.86
$1,326.64
$0.25
$2.04
$8.31
$36.09
2.4%
2.7%
2.8%
2.8%
3”
0
50
150
1,200
$17.00
$177.00
$497.00
$3,857.00
$17.45
$181.93
$510.89
$3,964.97
$0.45
$4.93
$13.89
$107.97
2.6%
2.8%
2.8%
2.8%
4"
0
200
350
2,600
$64.50
$704.50
$1,184.50
$8,384.50
$66.15
$724.07
$1,217.51
$8,619.11
$1.65
$19.57
$33.01
$234.61
2.6%
2.8%
2.8%
2.8%
6"
0
300
600
3,000
$82.10
$1,042.10
$2,002.10
$9,682.10
$84.20
$1,071.08
$2,057.96
$9,953.00
$2.10
$28.98
$55.86
$270.90
2.6%
2.8%
2.8%
2.8%
8"
0
800
1,150
4,000
$123.15
$2,683.15
$3,803.15
$12,923.15
$126.25
$2,757.93
$3,909.29
$13,284.65
$3.10
$74.78
$106.14
$361.50
2.5%
2.8%
2.8%
2.8%
| City of Billings, Montana: FY2018/Y2019 Retail Wastewater Rate Study 5-6
Description Meter
Size Consumption (CCF) Previous (FY17) Proposed (FY18) Difference Percent Change
Commercial-
-High
3/4"
0
30
90
100
$6.45
$154.95
$451.95
$501.45
$6.60
$159.56
$465.47
$516.45
$0.15
$4.61
$13.52
$15.00
2.3%
3.0%
3.0%
3.0%
1-1/2"
0
30
90
100
$10.10
$158.60
$455.60
$505.10
$10.35
$163.31
$469.22
$520.20
$0.25
$4.71
$13.62
$15.10
2.5%
3.0%
3.0%
3.0%
2"
0
90
175
400
$10.55
$456.05
$876.80
$1,990.55
$10.80
$469.67
$903.04
$2,050.20
$0.25
$13.62
$26.24
$59.65
2.4%
3.0%
3.0%
3.0%
3”
0
100
200
275
$17.00
$512.00
$1,007.00
$1,378.25
$17.45
$527.30
$1,037.15
$1,419.54
$0.45
$15.30
$30.15
$41.29
2.6%
3.0%
3.0%
3.0%
4"
0
200
350
500
$64.50
$1,054.50
$1,797.00
$2,539.50
$66.15
$1,085.85
$1,850.63
$2,615.40
$1.65
$31.35
$53.63
$75.90
2.6%
3.0%
3.0%
3.0%
6"
0
200
600
500
$82.10
$1,072.10
$3,052.10
$2,557.10
$84.20
$1,103.90
$3,143.30
$2,633.45
$2.10
$31.80
$91.20
$76.35
2.6%
3.0%
3.0%
3.0%
Outside City
3/4"
0
2
8
20
$7.10
$13.50
$32.70
$71.10
$7.25
$13.83
$33.57
$73.04
$0.15
$0.33
$0.87
$1.94
2.1%
2.4%
2.7%
2.7%
Table 5.7: Wastewater Bill Comparison – FY17 to FY18
| City of Billings, Montana: FY2018/FY2019 Retail Wastewater Rate Study A-1
Appendix A: Fixed Asset Tables
Asset and Asset Group Original Cost Annual
Depreciation FY2017 CWIP FY18 Net
Fixed Assets
Estimated
FY19 Net
Fixed Assets
Electrical Shop--Building $751,292 $33,547 $0 $310,955 $277,400
Admin Building--Building $1,245,809 $0 $0 $0 $96,000
Admin Building--Non-Building $248,184 $0 $0 $0 $0
Admin Building--Machinery &
Equipment $225,075 $17,482 $0 $87,387 $69,900
Waste Disposal Station--
Building $37,275 $0 $0 $0 $49,000
Waste Disposal Station--Non-
Building $0 $0 $0 $0 $0
Waste Disposal Station--
Machinery & Equipment $0 $0 $0 $0 $0
Land Site Work--Land $65,381 $0 $0 $65,381 $65,400
Land Site Work--Non-Building $1,880,157 $36,883 $0 $444,751 $407,900
Land Site Work--Machinery &
Equipment $469,633 $19,993 $0 $339,748 $319,800
Monitoring Stations--Non-
Building $0 $0 $0 $0 $0
Engine Generation--Building $518,846 $9,911 $0 $421,215 $411,300
Engine Generation--Non-
Building $507,688 $15,232 $0 $36,801 $21,600
Engine Generation--Machinery
& Equipment $536,310 $23,631 $0 $16,577 $0
Maintenance Building--Building $275,329 $8,261 $0 $19,958 $11,700
Headworks Building/Grit
Removal--Building $6,211,360 $124,227 $0 $4,969,090 $4,844,900
Headworks Building/Grit
Removal--Non-Building $76,182 $7,618 $0 $39,996 $662,026
Headworks Building/Grit
Removal--Machinery &
Equipment $0 $0 $0 $0 $0
Scum Pumping Station Building-
-Building $167,442 $4,285 $0 $31,286 $27,000
Scum Pumping Station Building-
-Non-Building $9,262 $0 $0 $1 $0
Scum Pumping Station Building-
-Machinery & Equipment $55,669 $4,285 $0 $10,713 $6,400
Sludge Pumping Station--
Building $227,596 $3,470 $0 $41,652 $626,200
Sludge Pumping Station--Non-
Building $549,929 $5,766 $0 $470,037 $464,300
| City of Billings, Montana: FY2018/FY2019 Retail Wastewater Rate Study A-2
Asset and Asset Group Original Cost Annual
Depreciation FY2017 CWIP FY18 Net
Fixed Assets
Estimated
FY19 Net
Fixed Assets
Sludge Pumping Station--
Machinery & Equipment $0 $0 $0 $0 $0
Primary Clarifiers--Non-Building $2,727,542 $77,174 $0 $1,245,507 $1,343,647
Grit Removal Building--Building $59,625 $2,981 $0 $35,787 $32,800
Grit Removal Building--Non
Building $42,000 $2,100 $0 $20,675 $18,600
Grit Removal Building--
Machinery & Equipment $294,047 $0 $0 $0 $0
Secondary Pump Station--
Building $125,000 $0 $0 $0 $0
Secondary Pump Station--Non-
Building $102,465 $3,074 $0 $23,200 $2,424,822
Secondary Pump Station--
Machinery & Equipment $3,084,022 $154,712 $0 $822,813 $668,100
Aeration Basins--Building $50,000 $0 $0 $0 $0
Aeration Basins--Non-Building $2,885,884 $86,585 $0 $1,011,443 $1,554,526
Aeration Basins--Machinery &
Equipment $567,570 $0 $35,495 $35,495 $35,500
Secondary Final Clarifier--Non-
Building $432,375 $0 $0 $0 $0
Secondary Final Clarifier--
Machinery & Equipment $31,250 $0 $0 $0 $0
Secondary Floatation--Building $444,107 $9,482 $0 $102,856 $957,400
Secondary Floatation--Non-
Building $94,166 $0 $0 $0 $0
Secondary Floatation--
Machinery & Equipment $32,500 $0 $0 $0 $0
Chlorine Contact Basins--
Building $50,000 $0 $0 $0 $0
Chlorine Contact Basins--Non-
Building $3,350,955 $108,590 $0 $2,586,021 $2,477,400
Chlorine Contact Basins--
Machinery & Equipment $0 $0 $0 $0 $14,864,246
Digester/Sludge Control--
Building $57,200 $0 $0 $0 $0
Digester/Sludge Control--Non-
Building $6,486 $0 $0 $1 $153,266
Digester/Sludge Control--
Machinery & Equipment $12,500 $0 $0 $0 $0
Secondary Digester--Non-
Building $822,354 $20,806 $0 $50,261 $3,461,107
Secondary Digester--Machinery
& Equipment $800,000 $0 $0 $0 $80,921
| City of Billings, Montana: FY2018/FY2019 Retail Wastewater Rate Study A-3
Asset and Asset Group Original Cost Annual
Depreciation FY2017 CWIP FY18 Net
Fixed Assets
Estimated
FY19 Net
Fixed Assets
Solids Processing Building--
Building $1,964,573 $12,249 $0 $111,895 $99,600
Solids Processing Building--
Non-Building $589,606 $22,130 $0 $105,048 $436,971
Solids Processing Building--
Machinery & Equipment $2,297,075 $125,354 $180,000 $557,296 $431,900
Decant Pumping/Tanks--
Building $831,496 $0 $0 $0 $0
Decant Pumping/Tanks--Non-
Building $104,674 $0 $0 ($1) $0
Decant Pumping/Tanks--
Machinery & Equipment $89,529 $0 $0 $0 $0
Odor Control--Building $181,900 $3,638 $0 $59,117 $55,500
Odor Control--Non-Building $0 $0 $0 $0 $9,088,172
Odor Control--Machinery &
Equipment $0 $0 $0 $0 $0
Primary Digester--Building $1,000,203 $30,009 $0 $72,500 $532,500
Primary Digester--Non-Building $883,972 $48,837 $0 $178,260 $129,400
Primary Digester--Machinery &
Equipment $837,355 $13,807 $0 $157,421 $143,600
Lateral Lines--Non-Building $46,687,072 $894,184 $300,000 $35,667,483 $35,327,300
Trunk Lines--Non-Building $28,595,863 $483,873 $2,211,404 $25,018,472 $37,052,804
Interceptor Lines--Non-Building $6,383,835 $124,126 $0 $2,348,888 $2,224,800
Utility Services Building--
Building $387,721 $1,884 $192,000 $215,298 $448,600
Utility Services Building--Non-
Building $96,335 $0 $0 $0 $0
Utility Services Building--
Machinery & Equipment $0 $0 $0 $0 $0
Heated Storage--Building $57,323 $0 $0 $0 $0
Cold Storage--Building $17,841 $0 $0 $0 $0
Cold Storage--Non-Building $78,446 $0 $0 $0 $0
Distribution Mains--Machinery
& Equipment $803,388 $16,068 $0 $698,970 $682,900
Five Mile Creek Lift Station--
Building $1,943,216 $38,864 $39,100 $1,846,291 $1,806,100
Five Mile Creek Lift Station--
Machinery & Equipment $957,106 $47,855 $520,942 $1,310,555 $1,245,300
Alkali Creek Lift Station--Land $112,139 $0 $0 $112,139 $112,100
Lake Hills Lift Station--
Machinery & Equipment $269,400 $0 $0 $0 $0
Central Avenue Lift Station--$0 $0 $0 $0 $0
| City of Billings, Montana: FY2018/FY2019 Retail Wastewater Rate Study A-4
Asset and Asset Group Original Cost Annual
Depreciation FY2017 CWIP FY18 Net
Fixed Assets
Estimated
FY19 Net
Fixed Assets
Non-Building
Central Avenue Lift Station--
Machinery & Equipment $0 $0 $0 $0 $0
Transportation Equipment--
Machinery & Equipment $1,705,869 $165,413 $0 $733,082 $721,367
Construction Equipment--
Machinery & Equipment $699,842 $47,922 $0 $80,301 $186,067
Lab Equipment--Machinery &
Equipment $75,324 $5,021 $0 $19,849 $168,467
Communication Equipment--
Machinery & Equipment $91,803 $9,593 $0 $0 $153,667
Tools & Working--Machinery &
Equipment $126,704 $6,433 $0 $23,974 $17,500
Office Furniture--Machinery &
Equipment $139,218 $11,132 $0 $12,404 $1,300
Gas Pumps--Machinery &
Equipment $46,162 $1,099 $0 $6,887 $5,800
Black Otter Trail Land - Land $298,405 $0 $0 $298,405 $298,400
Black Otter Trail Land -- Non-
Building $3,100 $44 $0 $2,728 $2,700
WWTP General--Non-Building $708,875 $25,392 $486,566 $984,107 $9,586,576
Hydrants--Infrastructure $33,489 $670 $0 $29,135 $28,500
Bench Sewer $0 $0 $0 $0 $0
West Mechanical Building $732,228 $70,630 $0 $410,018 $1,319,400
Supernat Tank $53,655 $0 $0 $0 $0
Rehburg Ranch Lagoons - Non-
Building $102,267 $10,227 $0 $62,213 $52,000
Nutrient Facilities $0 $0 $0 $0 $24,483,655
UV equipment $0 $0 $0 $0 $1,816,592
$130,117,477 $2,996,549 $3,965,507 $84,362,343 $165,092,699
Table A.1: Net Fixed Assets
| City of Billings, Montana: FY2018/FY2019 Retail Wastewater Rate Study A-5
Item Flow BOD TSS Custome
r Total
Electrical Shop--Building $277,831 $15,991 $17,133 $0 $310,955
Admin Building--Building $0 $0 $0 $0 $0
Admin Building--Non-Building $0 $0 $0 $0 $0
Admin Building--Machinery & Equipment $62,463 $3,595 $3,852 $17,477 $87,387
Waste Disposal Station--Building $0 $0 $0 $0 $0
Waste Disposal Station--Non-Building $0 $0 $0 $0 $0
Waste Disposal Station--Machinery & Equipment $0 $0 $0 $0 $0
Land Site Work--Land $65,381 $0 $0 $0 $65,381
Land Site Work--Non-Building $444,751 $0 $0 $0 $444,751
Land Site Work--Machinery & Equipment $339,748 $0 $0 $0 $339,748
Monitoring Stations--Non-Building $0 $0 $0 $0 $0
Engine Generation--Building $376,346 $21,662 $23,208 $0 $421,215
Engine Generation--Non-Building $32,881 $1,893 $2,028 $0 $36,801
Engine Generation--Machinery & Equipment $14,811 $852 $913 $0 $16,577
Maintenance Building--Building $17,832 $1,026 $1,100 $0 $19,958
Headworks Building/Grit Removal--Building $1,242,273
$1,242,27
3
$2,484,54
5 $0 $4,969,090
Headworks Building/Grit Removal--Non-Building $0 $0 $39,996 $0 $39,996
Headworks Building/Grit Removal--Machinery &
Equipment $0 $0 $0 $0 $0
Scum Pumping Station Building--Building $0 $31,286 $0 $0 $31,286
Scum Pumping Station Building--Non-Building $0 $1 $0 $0 $1
Scum Pumping Station Building--Machinery & Equipment $0 $10,713 $0 $0 $10,713
Sludge Pumping Station--Building $0 $20,826 $20,826 $0 $41,652
Sludge Pumping Station--Non-Building $0 $235,019 $235,019 $0 $470,037
Sludge Pumping Station--Machinery & Equipment $0 $0 $0 $0 $0
Primary Clarifiers--Non-Building $0 $548,023 $697,484 $0 $1,245,507
Grit Removal Building--Building $0 $0 $35,787 $0 $35,787
Grit Removal Building--Non Building $0 $0 $20,675 $0 $20,675
Grit Removal Building--Machinery & Equipment $0 $0 $0 $0 $0
Secondary Pump Station--Building $0 $0 $0 $0 $0
Secondary Pump Station--Non-Building $23,200 $0 $0 $0 $23,200
Secondary Pump Station--Machinery & Equipment $822,813 $0 $0 $0 $822,813
Aeration Basins--Building $0 $0 $0 $0 $0
Aeration Basins--Non-Building $0
$1,011,44
3 $0 $0 $1,011,443
Aeration Basins--Machinery & Equipment $0 $35,495 $0 $0 $35,495
Secondary Final Clarifier--Non-Building $0 $0 $0 $0 $0
Secondary Final Clarifier--Machinery & Equipment $0 $0 $0 $0 $0
Secondary Floatation--Building $0 $102,856 $0 $0 $102,856
| City of Billings, Montana: FY2018/FY2019 Retail Wastewater Rate Study A-6
Item Flow BOD TSS Custome
r Total
Secondary Floatation--Non-Building $0 $0 $0 $0 $0
Secondary Floatation--Machinery & Equipment $0 $0 $0 $0 $0
Chlorine Contact Basins--Building $0 $0 $0 $0 $0
Chlorine Contact Basins--Non-Building $2,586,021 $0 $0 $0 $2,586,021
Chlorine Contact Basins--Machinery & Equipment $0 $0 $0 $0 $0
Digester/Sludge Control--Building $0 $0 $0 $0 $0
Digester/Sludge Control--Non-Building $0 $0 $0 $0 $1
Digester/Sludge Control--Machinery & Equipment $0 $0 $0 $0 $0
Secondary Digester--Non-Building $0 $25,131 $25,131 $0 $50,261
Secondary Digester--Machinery & Equipment $0 $0 $0 $0 $0
Solids Processing Building--Building $0 $55,948 $55,948 $0 $111,895
Solids Processing Building--Non-Building $0 $52,524 $52,524 $0 $105,048
Solids Processing Building--Machinery & Equipment $0 $278,648 $278,648 $0 $557,296
Decant Pumping/Tanks--Building $0 $0 $0 $0 $0
Decant Pumping/Tanks--Non-Building $0 -$1 -$1 $0 -$1
Decant Pumping/Tanks--Machinery & Equipment $0 $0 $0 $0 $0
Odor Control--Building $52,820 $3,040 $3,257 $0 $59,117
Odor Control--Non-Building $0 $0 $0 $0 $0
Odor Control--Machinery & Equipment $0 $0 $0 $0 $0
Primary Digester--Building $0 $36,250 $36,250 $0 $72,500
Primary Digester--Non-Building $0 $89,130 $89,130 $0 $178,260
Primary Digester--Machinery & Equipment $0 $78,711 $78,711 $0 $157,421
Lateral Lines--Non-Building
$35,667,48
3 $0 $0 $0
$35,667,48
3
Trunk Lines--Non-Building
$25,018,47
2 $0 $0 $0
$25,018,47
2
Interceptor Lines--Non-Building $2,348,888 $0 $0 $0 $2,348,888
Utility Services Building--Building $215,298 $0 $0 $0 $215,298
Utility Services Building--Non-Building $0 $0 $0 $0 $0
Utility Services Building--Machinery & Equipment $0 $0 $0 $0 $0
Heated Storage--Building $0 $0 $0 $0 $0
Cold Storage--Building $0 $0 $0 $0 $0
Cold Storage--Non-Building $0 $0 $0 $0 $0
Distribution Mains--Machinery & Equipment $698,970 $0 $0 $0 $698,970
Five Mile Creek Lift Station--Machinery & Equipment $1,846,291 $0 $0 $0 $1,846,291
Alkali Creek Lift Station--Land $1,310,555 $0 $0 $0 $1,310,555
Lake Hills Lift Station--Machinery & Equipment $112,139 $0 $0 $0 $112,139
Central Avenue Lift Station--Non-Building $0 $0 $0 $0 $0
Central Avenue Lift Station--Machinery & Equipment $0 $0 $0 $0 $0
Transportation Equipment--Machinery & Equipment $0 $0 $0 $0 $0
Construction Equipment--Machinery & Equipment $733,082 $0 $0 $0 $733,082
| City of Billings, Montana: FY2018/FY2019 Retail Wastewater Rate Study A-7
Item Flow BOD TSS Custome
r Total
Lab Equipment--Machinery & Equipment $80,301 $0 $0 $0 $80,301
Communication Equipment--Machinery & Equipment $8,376 $5,674 $5,799 $0 $19,849
Tools & Working--Machinery & Equipment $0 $0 $0 $0 $0
Office Furniture--Machinery & Equipment $21,420 $1,233 $1,321 $0 $23,974
Gas Pumps--Machinery & Equipment $11,083 $638 $683 $0 $12,404
Black Otter Trail Land - Land $6,887 $0 $0 $0 $6,887
WWTP General--Non-Building $298,405 $0 $0 $0 $298,405
Hydrants--Infrastructure $2,728 $0 $0 $0 $2,728
Bench Sewer $415,296 $281,301 $287,510 $0 $984,107
West Mechanical Building $29,135 $0 $0 $0 $29,135
Supernat Tank $0 $0 $0 $0 $0
Rehburg Ranch Lagoons - Non-Building $410,018 $0 $0 $0 $410,018
Nutrient Facilities $0 $0 $0 $0 $0
UV equipment $62,213 $0 $0 $0 $62,213
Grant Total - Net Fixed Assets
$75,656,20
9
$4,191,18
0
$4,497,47
6 $17,477
$84,362,34
3
Percent Allocation 89.68% 4.97% 5.33% 0.02% 100.00%
Capital Outlay-Related Costs $4,647,218 $257,445 $276,260 $1,074 $5,181,996
Debt -Related Costs $1,663,967
$1,069,16
0
$1,151,37
3 $0 $3,884,500
Total Capital-Related Costs $6,311,185
$1,326,60
5
$1,427,63
3 $1,074 $9,066,496
Table A.2: Classification of Net Fixed Assets – FY18
| City of Billings, Montana: FY2018/FY2019 Retail Wastewater Rate Study A-8
Item Flow BOD TSS Custo
mer Total
Electrical Shop--Building $247,850 $14,266 $15,284 $0 $277,400
Admin Building--Building $68,619 $3,950 $4,231
$19,20
0 $96,000
Admin Building--Non-Building $0 $0 $0 $0 $0
Admin Building--Machinery & Equipment $49,963 $2,876 $3,081
$13,98
0 $69,900
Waste Disposal Station--Building $0 $24,500 $24,500 $0 $49,000
Waste Disposal Station--Non-Building $0 $0 $0 $0 $0
Waste Disposal Station--Machinery & Equipment $0 $0 $0 $0 $0
Land Site Work--Land $65,400 $0 $0 $0 $65,400
Land Site Work--Non-Building $407,900 $0 $0 $0 $407,900
Land Site Work--Machinery & Equipment $319,800 $0 $0 $0 $319,800
Monitoring Stations--Non-Building $0 $0 $0 $0 $0
Engine Generation--Building $367,487 $21,152 $22,662 $0 $411,300
Engine Generation--Non-Building $19,299 $1,111 $1,190 $0 $21,600
Engine Generation--Machinery & Equipment $0 $0 $0 $0 $0
Maintenance Building--Building $10,454 $602 $645 $0 $11,700
Headworks Building/Grit Removal--Building
$1,211,2
25
$1,211,2
25
$2,422,4
50 $0
$4,844,9
00
Headworks Building/Grit Removal--Non-Building $0 $0
$662,02
6 $0 $662,026
Headworks Building/Grit Removal--Machinery & Equipment $0 $0 $0 $0 $0
Scum Pumping Station Building--Building $0 $27,000 $0 $0 $27,000
Scum Pumping Station Building--Non-Building $0 $0 $0 $0 $0
Scum Pumping Station Building--Machinery & Equipment $0 $6,400 $0 $0 $6,400
Sludge Pumping Station--Building $0
$313,10
0
$313,10
0 $0 $626,200
Sludge Pumping Station--Non-Building $0
$232,15
0
$232,15
0 $0 $464,300
Sludge Pumping Station--Machinery & Equipment $0 $0 $0 $0 $0
Primary Clarifiers--Non-Building $0
$591,20
5
$752,44
2 $0
$1,343,6
47
Grit Removal Building--Building $0 $0 $32,800 $0 $32,800
Grit Removal Building--Machinery & Equipment $0 $0 $18,600 $0 $18,600
$0 $0 $0 $0 $0
Secondary Pump Station--Building $0 $0 $0 $0 $0
Secondary Pump Station--Non-Building
$2,424,8
22 $0 $0 $0
$2,424,8
22
Secondary Pump Station--Machinery & Equipment $668,100 $0 $0 $0 $668,100
Aeration Basins--Building $0 $0 $0 $0 $0
Aeration Basins--Non-Building $0
$1,554,5
26 $0 $0
$1,554,5
26
Aeration Basins--Machinery & Equipment $0 $35,500 $0 $0 $35,500
Secondary Final Clarifier--Non-Building $0 $0 $0 $0 $0
| City of Billings, Montana: FY2018/FY2019 Retail Wastewater Rate Study A-9
Item Flow BOD TSS Custo
mer Total
Secondary Final Clarifier--Machinery & Equipment $0 $0 $0 $0 $0
Secondary Floatation--Building $0
$957,40
0 $0 $0 $957,400
Secondary Floatation--Non-Building $0 $0 $0 $0 $0
Secondary Floatation--Machinery & Equipment $0 $0 $0 $0 $0
Chlorine Contact Basins--Building $0 $0 $0 $0 $0
Chlorine Contact Basins--Non-Building
$2,477,4
00 $0 $0 $0
$2,477,4
00
Chlorine Contact Basins--Machinery & Equipment
$14,864,
246 $0 $0 $0
$14,864,
246
Digester/Sludge Control--Building $0 $0 $0 $0 $0
Digester/Sludge Control--Non-Building $0 $76,633 $76,633 $0 $153,266
Digester/Sludge Control--Machinery & Equipment $0 $0 $0 $0 $0
Secondary Digester--Non-Building $0
$1,730,5
53
$1,730,5
53 $0
$3,461,1
07
Secondary Digester--Machinery & Equipment $0 $40,461 $40,461 $0 $80,921
Solids Processing Building--Building $0 $49,800 $49,800 $0 $99,600
Solids Processing Building--Non-Building $0
$218,48
6
$218,48
6 $0 $436,971
Solids Processing Building--Machinery & Equipment $0
$215,95
0
$215,95
0 $0 $431,900
Decant Pumping/Tanks--Building $0 $0 $0 $0 $0
Decant Pumping/Tanks--Non-Building $0 $0 $0 $0 $0
Decant Pumping/Tanks--Machinery & Equipment $0 $0 $0 $0 $0
Odor Control--Building $49,588 $2,854 $3,058 $0 $55,500
Odor Control--Non-Building
$8,120,0
67
$467,37
1
$500,73
4 $0
$9,088,1
72
Odor Control--Machinery & Equipment $0 $0 $0 $0 $0
Primary Digester--Building $0
$266,25
0
$266,25
0 $0 $532,500
Primary Digester--Non-Building $0 $64,700 $64,700 $0 $129,400
Primary Digester--Machinery & Equipment $0 $71,800 $71,800 $0 $143,600
Lateral Lines--Non-Building
$35,327,
300 $0 $0 $0
$35,327,
300
Trunk Lines--Non-Building
$37,052,
804 $0 $0 $0
$37,052,
804
Interceptor Lines--Non-Building
$2,224,8
00 $0 $0 $0
$2,224,8
00
Utility Services Building--Building $448,600 $0 $0 $0 $448,600
Utility Services Building--Non-Building $0 $0 $0 $0 $0
Utility Services Building--Machinery & Equipment $0 $0 $0 $0 $0
Heated Storage--Building $0 $0 $0 $0 $0
Cold Storage--Building $0 $0 $0 $0 $0
Cold Storage--Non-Building $0 $0 $0 $0 $0
Distribution Mains--Machinery & Equipment $682,900 $0 $0 $0 $682,900
Five Mile Creek Lift Station--Building $1,806,1 $0 $0 $0 $1,806,1
| City of Billings, Montana: FY2018/FY2019 Retail Wastewater Rate Study A-10
Item Flow BOD TSS Custo
mer Total
00 00
Five Mile Creek Lift Station--Machinery & Equipment
$1,245,3
00 $0 $0 $0
$1,245,3
00
Alkali Creek Lift Station--Land $112,100 $0 $0 $0 $112,100
Lake Hills Lift Station--Machinery & Equipment $0 $0 $0 $0 $0
Central Avenue Lift Station--Non-Building $0 $0 $0 $0 $0
Central Avenue Lift Station--Machinery & Equipment $0 $0 $0 $0 $0
Transportation Equipment--Machinery & Equipment $721,367 $0 $0 $0 $721,367
Construction Equipment--Machinery & Equipment $186,067 $0 $0 $0 $186,067
Lab Equipment--Machinery & Equipment $71,093 $48,155 $49,218 $0 $168,467
Communication Equipment--Machinery & Equipment $137,298 $7,903 $8,467 $0 $153,667
Tools & Working--Machinery & Equipment $15,636 $900 $964 $0 $17,500
Office Furniture--Machinery & Equipment $1,162 $67 $72 $0 $1,300
Gas Pumps--Machinery & Equipment $5,800 $0 $0 $0 $5,800
Black Otter Trail Land - Land $298,400 $0 $0 $0 $298,400
Black Otter Trail Land -- Non-Building $2,700 $0 $0 $0 $2,700
WWTP General--Non-Building
$4,045,5
59
$2,740,2
67
$2,800,7
50 $0
$9,586,5
76
Hydrants--Infrastructure $28,500 $0 $0 $0 $28,500
Bench Sewer $0 $0 $0 $0 $0
West Mechanical Building
$1,319,4
00 $0 $0 $0
$1,319,4
00
Supernat Tank $0 $0 $0 $0 $0
Rehburg Ranch Lagoons - Non-Building $52,000 $0 $0 $0 $52,000
Nutrient Facilities $0
$24,483,
655 $0 $0
$24,483,
655
UV equipment
$1,816,5
92 $0 $0 $0
$1,816,5
92
Grant Total - Net Fixed Assets
$118,973
,698
$35,482,
765
$10,603,
056
$33,18
0
$165,092
,699
Percent Allocation* 72.06% 21.49% 6.42% 0.02% 100.00%
Capital Outlay-Related Costs
$3,831,7
88
$1,142,7
94
$341,49
3 $1,069
$5,317,1
43
Debt -Related Costs
$1,771,7
84
$1,069,7
38
$1,045,0
78 $0
$3,886,6
00
Total Capital-Related Costs
$5,603,5
71
$2,212,5
32
$1,386,5
71 $1,069
$9,203,7
43
*Note: using adjusted allocation factors for FY19 to reflect hold on
shift to TKN based rates in 2020
Table A.3: Classification of Net Fixed Assets – FY19