Good evening.

Thank you for being here.

This evening, we are going to present our cost of service study overview for both the sewer and solid waste utilities.

With us, we have our consultant, Kyle Stevens.

Sorry, to present.

And I'll just turn it over to Kyle.

Perfect.

Thank you so much, Aaron.

And look forward to covering all the topics this afternoon or this evening, as it were, that we'll be conducting as part of this study.

Put together a brief presentation to cover the different elements of the study that we'll be examining for the city.

For this particular rate study, we'll be looking into the sewer utility as well as the solid waste utility in detail.

Quick agenda for this evening to uh cover the different elements of the study.

First, I'll be just talking about the general industry that utilities operate in and some of the challenges that uh utilities such as the City of Columbia as well as others uh face uh in the fact that they're very capital intensive and a bit different than some of the other services and goods that we interact with in our daily lives.

Uh in additionally, I'll be taking a bit more time to go through in detail um the three big elements of the rate study for each of the utilities we looking at.

So that's a revenue sufficiency, uh cost of service, uh rate design, and then for the sewer utility, the connection fee.

And then also at the end, I'll just be talking about the project timeline and when we expect to have the uh deliverables in this study completed as we move through the springtime period.

And so just quick background, Stan Tech Consulting, as Aaron mentioned.

I'm Kyle Stevens with Stantech Consulting.

Uh Stantec is a top 10 design firm, a global engineering firm.

And I sit specifically in the management and technology component of the company, which covers roughly on the utility side, 25% to 30% of the U.S.

population in the sense that we've served them through rate studies or debt issuance support and help them with a manner of issues related to utility uh rates.

Uh we are a group uh it's been growing rapidly here.

I think we're up to uh over 50 consultants now that work full-time in this industry uh with uh municipal uh partners, much like the City of Columbia.

Uh and so what is a rate study?

Uh let's start there first and we'll dive into the elements.

The best way to think about this is it's a series of interconnected investigations.

And so we're trying to answer several detailed questions about the utility uh and its operations.

Uh first and foremost, we start with the biggest one, which is how much does it cost to run the utility?

Not only today, uh, and usually uh the city, uh, much like the City of Columbia has a really good idea through its budget of the expenditures in the next fiscal year, uh, but really taking that and building that out into the future to think about uh the next five years, the next 10 years, uh what types of investments do we need to make, what maybe are changes in services that are coming down the line that we need to plan for, and then comparing that to current revenue levels to see if we're fundamentally sustainable over time.

Uh from that jumping off point, we then next move to uh the cost of service analysis, which on here I've I've said from whom.

What we're doing here is a much more deep dive into one year's expenditures uh to understand how those expenditures align with the way the service is delivery, so delivered.

So, for example, um in solid waste, how much of the expenditure related to collection maybe versus disposal or material recovery, uh, in really thinking about uh the different ways that the uh utility supports those different functions and ultimately uh connecting that back to how customers use the service and the different ways that different customers may use the service.

Uh so current industry challenges.

Uh utilities, as I mentioned, are a bit special in the way that they interact with the the world at large.

And so there's a few unique trends that are out there that I'm sure we will see in this study as we get into the data, but we should think about up front as we we embark on this journey together uh into the study.

And so uh put a couple of these up here.

The first is uh reductions in use.

And so this has been a historical challenge uh for utilities, uh both on the water side and the wastewater side specifically.

Uh basically relates to the idea of over time folks get more efficient with their usage.

And while that's great on one side, uh on the utility side, that means potentially lower revenues over time, and we need to account for that.

We've seen that trend really play out over the last 10 years.

That's been slowing down a bit, and we'll really want to take a deep dive into the data here as we get into this study to see the impacts of that uh on potential revenue over time.

Uh aging infrastructure, a really big one.

Uh so utilities, as I mentioned, infrastructure heavy, a lot of pipes uh on the sewer side in the collection network that need to be maintained in a in a state of readiness 24-7.

And many of those pipes are old and retire and in required continued maintenance across not only Columbia but within the U.S.

And so it's really planning for the eventual replacement of those assets.

Additionally, we have regulatory pressures that are changing over time and typically move in the direction of stricter requirements, uh, especially on the wastewater side as it relates to this study.

And so factoring those in, making sure that we're meeting all of that and the cost associated with it.

Also put down here some of the other elements that I think are are maybe more uh on the side but do come into play as well, aging workforce or workforce related issues.

So as I I conduct these studies all over, I often hear about the um uh retirements uh having impact on these utilities as well as vacancies now is has been a bigger one as well, filling all the positions that we have open.

Uh and so we do take a look at that as we think about uh the uh budgeted expenditures and what we're actually expending in the fund.

Uh customer affordability.

So uh there's always uh this relationship in the utilities world as we need additional resources that increases bills, and we need to think about how that impacts customers.

And you know, one of our stated goals is always trying to minimize uh utility increases and make them as predictable as possible.

Uh additionally, uh, you know, operating cost increases uh the most recent period uh of operations here and and really broadly in the economy, we've we've seen inflation uh be higher than it has been uh over the last 10 years.

Uh that's had an acute effect on utilities.

And so something we're keyed in on and also watching as that inflation starts to slow down a bit.

Uh so next I'll jump into the specific topic.

I've got revenue sufficiency up first.

Uh what how I like to think about revenue sufficiency is it's it's fundamentally putting all of the pieces of the puzzle together in order to put together a good forecast of how the utility actually operates.