SUBJECT/RECOMMENDATION:
Title
Award a contract to Raftelis Financial Consultants, Inc. (Raftelis) for natural gas utility rate study and related financial consulting services, in a total amount not to exceed $209,025, for a one-year period, with four one-year renewal options, pursuant to Request for Proposal No. 42-26, and authorize the appropriate officials to execute same.
Body
SUMMARY:
Raftelis was selected from five firms that submitted proposals in response to RFP 42-26 for natural gas utility rate study services. Raftelis has extensive experience providing rate studies and financial consulting services to municipal natural gas utilities and maintains a nationally recognized governmental utility rate and financial planning practice.
The purpose of the rate study is to evaluate CGS Energy's existing rate structure and develop recommendations to ensure the utility maintains sufficient revenues to support ongoing operations, capital investments, debt obligations, and appropriate financial reserves, while establishing rates that reasonably reflect the cost of providing service to its customers.
The scope of services includes a comprehensive cost-of-service and revenue requirements analysis, evaluation of existing customer rate classifications, development of alternative rate structures, and analysis of potential customer billing impacts. Raftelis will also review miscellaneous service charges and retail service rates, compare CGS Energy's rates with those of other municipal and investor-owned natural gas utilities in the southeastern region, and recommend any necessary revisions to the City's natural gas rate ordinance.
The five-year agreement provides for up to two comprehensive utility rate studies, anticipated in Years 1 and 5, along with financial forecasting and consulting services during the intervening years. These additional services will allow CGS Energy to periodically evaluate its financial performance, update revenue and expenditure projections, and identify potential rate adjustments between comprehensive studies.
The proposed five-year contract costs, as detailed in Attachment C (Cost Proposal), are as follows:
|
Year |
Scope of Services |
Amount |
|
#1 |
Comprehensive rate study and meetings |
$ 81,675 |
|
#2 |
Hourly consulting services |
$ 7,500 |
|
#3 |
Financial forecasting |
$ 16,350 |
|
#4 |
Hourly consulting services |
$ 7,500 |
|
#5 |
Comprehensive rate study (includes 4% annual inflation adjustment) |
$ 96,000 |
|
Total |
|
$209,025 |
The comprehensive rate studies will include presentations to the City Manager and City Council to review findings, explain proposed rate structures, and discuss the potential financial impacts of recommended adjustments. In addition to the base rate of $75,675.00, the study includes optional $6,000 in stakeholder meetings and additional Council/City Manager meetings (if needed) for a total amount in year one of $81,675.00. Any proposed rate changes requiring City Council approval will be presented separately for consideration.
Raftelis previously completed CGS Energy's most recent comprehensive rate study in November 2023. The resulting rate adjustments were approved by City Council in January 2024 and became effective March 1, 2024.
APPROPRIATION CODE AND AMOUNT:
Funding for Fiscal Year 26/27 of $81,675 is available in the CGS operating cost code 4232064-530100 (professional services). Funding for subsequent contract years will be included in future CGS operating budgets, subject to the City's annual budget appropriation process.
The operating budget of CGS Energy is funded by revenues from the Gas Utility Enterprise Fund.
USE OF RESERVE FUNDS:
STRATEGIC PRIORITY:
1.1: Provide evidence-based measurement tools to continually guide municipal performance and promote accountable governance.
1.5: Embrace a culture of innovation that drives continuous improvement and successfully serves all our customers
