RFP #15-9779-4CS
April 16, 2015
REQUEST FOR PROPOSAL
UTILITIES RATE STUDY
DEPARTMENT OF PUBLIC UTILITIES
COUNTY OF HENRICO, VIRGINIA
Your firm is invited to submit a proposal to provide a comprehensive rate study for the County’s water utility and sewer utility in accordance with the enclosed specifications. The submittal, consisting of the original proposal and five (5) additional copies marked, “Utilities Rate Study for Public Utilities", will be received no later than 2:30 p.m., May 8, 2015 by:
IN PERSON OR SPECIAL COURIER U.S. POSTAL SERVICE
County of Henrico County of Henrico
Department of Finance Department of Finance
Purchasing Division OR Purchasing Division
1590 E. Parham Road P O Box 90775
Henrico, Virginia 23228 Henrico, Virginia 23273-0775
This RFP and any addenda are available on the County of Henrico Purchasing website at http://henrico.us/purchasing/ To download the (IFB or RFP), click the link and save the
document to your hard drive. To receive an email copy of this document, please send a request to
Time is of the essence and any proposal received after 2:30 p.m., May 8, 2015, whether by mail or otherwise, will be returned unopened. The time of receipt shall be determined by the time clock stamp in the Purchasing Division, Department of Finance. Proposals shall be placed in a sealed, opaque envelope, marked in the lower left-hand corner with the RFP number, title, and date and hour proposals are scheduled to be received. Offerors are responsible for insuring that their proposal is stamped by Purchasing Division personnel by the deadline indicated.
Nothing herein is intended to exclude any responsible firm or in any way restrain or restrict competition. On the contrary, all responsible firms are encouraged to submit proposals. The County of Henrico reserves the right to accept or reject any or all proposals submitted.
The awarding authority for this contract is the Purchasing Director.
Technical questions concerning this Request for Proposal should be submitted to Cecelia H. Stowe, Purchasing Director @ ter than April 24, 2015.
Very truly yours,
Cecelia H. Stowe, CPPO, C.P.M.
Purchasing Director
804-501-5685
1590 E. PARHAM ROAD/P O BOX 90775/HENRICO VA 23273-0775
(804) 501-5660 FAX (804) 501-5693
NON PROFESSIONAL
REQUEST FOR PROPOSAL
UTILITIES RATE STUDY
DEPARTMENT OF PUBLIC UTILITIES
COUNTY OF HENRICO
I. INTRODUCTION:
The intent of this Request for Proposal (RFP) and resulting contract is to obtain the services of a Financial and Rate Consultant to prepare and provide a comprehensive cost of service and rate study for the County’s water utility and sewer utility and propose rate and fee schedule designs or adjustment to the existing rates and fees as needed.
II. BACKGROUND:
The Henrico County Department of Public Utilities (Department) has primary responsibility for the County’s water and sewer systems, the County’s solid waste operations, and the County’s street lights. The water and sewer operations and capital improvements are accounted for separately in an enterprise fund, the Water and Sewer Revenue Fund. The Department is organized into seven divisions: Engineering, Construction Inspection, Operations (including Cobbs Creek Reservoir), Water Reclamation Facility, Water Treatment Plant, Business, and Solid Waste. There are 375 employees in the Department; 69 are assigned to the Solid Waste Division.
The Department provides retail water service to approximately 95,800 customers and retail sewer service to approximately 92,800 customers. Approximately 94% of the customers are residential. The Department also has cost of service agreements with certain adjoining localities to provide specified quantities of water and accepts and treats specified quantities of sewage. Average daily water flows billed during the fiscal year ended June 30, 2014 were 28.5 million gallons per day (MGD), and average daily sewer flows billed during the same period were 24.1 MGD. The Department added approximately 1,075 new water connections and 1,015 new sewer connections during that same period.
The Department purchases some water for resale from the City of Richmond and began operating its own 55 MGD Water Treatment Plant in April 2004. An upgrade to 80 MGD will be in service in late Spring 2015. The County operates a 75 MGD Wastewater Treatment Facility. The Department operates 9 water pumping stations, 24 sewer pumping stations and facilities, and maintains 1,592 miles of water mains, 1,479 miles of sewer mains, and 12,650 fire hydrants.
The Department reads most meters bi-monthly. Meters for some of the larger commercial and industrial accounts and all of the cost of service accounts are read monthly. The Department implemented a new utility billing system in 2009 (“Infinity” by Advanced Utility Systems) and completed an automated meter reading system in 2014. Accounts are billed bi-monthly after the meter has been read. Accounts that are read monthly are billed monthly. Charges for both water and sewer service consist of a service charge based on the meter size, and a commodity charge based on consumption. Sewer consumption is measured by the water meter reading unless an account has a specified sewer meter.
Service rates, connection fees, strong waste charges, miscellaneous fees, and the off-site and oversized mains credit policy are contained in the County Code and established by ordinance.
Funds are available for this project.
III. SCOPE OF SERVICES: The Successful Offeror shall provide all equipment, supplies, labor and supervision to provide the following services:
A. General Requirements:
1. The Successful Offeror will provide the County with a report for the water utility, the sewer utility, and for the combined operations detailing revenue requirements, cost of service allocations, financing alternatives, and recommended rates and fees.
2. The report will provide ten year projections of all operating costs and capital improvement costs and determine the revenue required to support those costs. The consultant will include adequate detail and discussion of all underlying assumptions used in the report. The report will distribute the costs of service to classes of customers in accordance with the service requirements of each class and develop equitable schedules of rates and service charges for both the water utility and sewer utility.
3. The Successful Offeror’s report will make recommendations for adjustments to service rates, including strong waste charges, based on the findings and will recommend a financing plan for the capital improvement program. The report should also include an evaluation of existing connection fees and recommendations for changes to those fees based on the costs to meet the capacity needs of each type of customer and connect them to the water system and sewer system.
4. The current connection fee structure includes fees based on type of use (i.e., “motel and hotel”, “Nursing homes and dormitories”) and the consultant will make a recommendation on whether or not to maintain that structure or base all fee amounts on meter size. The connection fee evaluation should include review of the off-site and oversized mains credit policy and make recommendations for changes to the policy and the way it is administered.
5. The report should also evaluate miscellaneous charges and fees such as reconnection fees, delinquent charges and account set-up fees.
6. The report should evaluate the effectiveness of the financial models used by the Department to project future costs, revenues, and rates and provide appropriate recommendations for changes to the methods or the models.
7. The report should evaluate the fee charged for truck hauled waste received at the WRF adequately meets the costs for provision of this service.
B. Specific Requirements (Overview):
1. Revenue Requirements.
The Successful Offeror will prepare a ten year analysis of revenue requirements for the water utility, the sewer utility, and the combined utility based on projections of operating expenses, debt service requirements, and costs for the capital improvement program. The analysis should develop base revenue from existing customers at current rates, and then provide a breakdown of any incremental revenue required detailing the amount that will come from the addition of new customers and the amount that will come from rate increases.
The analysis should provide a distinction between revenue derived from the sale of services and revenue derived from connection fees and basic policies related to repair and maintenance reserve levels and capital funding levels.
2. Cost of Service Study.
The Successful Offeror will prepare a full cost of service study for the water utility and the sewer utility based on a reasonable allocation of costs to the different classes of customers. The report should be prepared using cost allocation methods that are generally accepted within the utility industry.
3. Financing Plan for the Capital Improvement Program.
The Successful Offeror will prepare recommendations for financing the utility capital improvement program. Recommended financing alternatives should be developed that minimize any rate impacts to existing ratepayers and comply with the existing water and sewer revenue bond covenants.
4. Recommended Service Rates.
The Successful Offeror will recommend water and sewer service rates for each class of customer and compare those rates to the existing rates. The Successful Offeror will also provide an analysis of the impact of the rate changes on each class of customer. Rates must be recommended that support the long term operating and capital improvement needs of each utility and comply with the rate covenants required under the County’s outstanding water and sewer revenue bonds and are in accordance with generally accepted and legally defensible methodology. The Successful Offeror will also recommend adjustments to the rates charged for strong waste discharges into the County sewer system which exceed the limits allowed by the County Code. The Successful Offeror should include a comparison of the recommended rates to rates charged by other localities in the region and standard practices in the industry.
5. Recommended Connection Fees.
The Successful Offeror will recommend connection fees based on the cost to provide the required water or sewer system capacity to the customer and connect the customer to the system. All connection fees required under the Henrico County code must be reviewed, including the off-site and oversized mains credit policy. The Successful Offeror will make recommendations for changes to the credit policy and include those recommendations in the report. The Successful Offeror should include a comparison of the recommended fees and fee structure to fees and fee structure charged by other localities in the region and standard practices in the industry.
6. Effectiveness of Forecasting Methods and Models.
The Successful Offeror will evaluate the forecasting methods and models used by the County to project revenues, expenses, and determine rate increases. The Successful Offeror will provide recommendations for changes to the forecasting methods or models as appropriate and insure that future use of the methods and models will adequately project revenue requirements and rates.
7. The Successful Offeror will present the report in person to the Director of Public Utilities and other appropriate County staff at the completion of the requirements outlined in the Scope of Services.
8. In addition to the pricing for the requirements outlined in the Scope of Services, Offerors shall provide pricing structure either based on hourly rates or a firm fixed fee to provide assistance with implementation if needed and requested by the County.
IV. COUNTY RESPONSIBILITIES:
A. Henrico County will designate an individual to act as the County’s representative with respect to the work to be performed under this contract. Such individual shall have the authority to transmit instructions, receive information, and interpret and define the County’s policies and decisions with respect to the contract.
B. The County will provide the following information related to the Water and Sewer Fund to assist the Successful Offeror in completing the study and report. All reports referenced are for the fiscal year ended June 30, 2014 unless otherwise noted:
1. Annual report from the billing system detailing water and sewer sales.
2. Report from the billing system detailing the largest water and sewer customers.
3. Report from the connection fee system detailing connections to the system and the fees charged.
4. Reports from the County’s financial system detailing operating expenses by cost centers.
5. Reports from the County’s financial system detailing revenues.
6. Reports from the Department’s fixed asset system.
7. The approved fiscal 2015 and proposed fiscal 2016 operating budget and capital improvement program.
8. Departmental revenue and rate projections.
9. The previous draft rate study completed in 2013.
10. Information from the County’s water and sewer facilities plan. Information available will include projected water and sewer demands for the period covered by this study, proposed capital projects needed to meet those demands, and estimated costs to complete the proposed projects.
11. Henrico County Code sections related to water and sewer which includes all current rates and fees.
· copy of Bond Covenants
V. ANTICIPATED SCHEDULE:
The following represents a tentative outline of the process currently anticipated by the County:
° Request for Proposals distributed April 16, 2015
° Advertised in newspaper April 19, 2015
° Receive written proposals 2:30 p.m., May 8, 2015
° Conduct oral interviews with Offerors June 2015
° Contract begins July 2015
° Rate Study Complete October 16, 2015
VI. GENERAL CONTRACT TERMS AND CONDITIONS:
A. Annual Appropriations
It is understood and agreed that the contract resulting from this procurement (“Contract”) shall be subject to annual appropriations by the County of Henrico, Board of Supervisors. Should the Board fail to appropriate funds for this Contract, the Contract shall be terminated when existing funds are exhausted. The successful offeror (“Successful Offeror” or “contractor”) shall not be entitled to seek redress from the County or its elected officials, officers, agents, employees, or volunteers should the Board of Supervisors fail to make annual appropriations for the Contract.
B. Award of the Contract
1. The County reserves the right to reject any or all proposals and to waive any informalities.
2. The Successful Offeror shall, within fifteen (15) calendar days after Contract documents are presented for signature, execute and deliver to the Purchasing office the Contract documents and any other forms or bonds required by the RFP.