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Scope of Services: <br /> Task 1- Data Request <br /> A written data request will be submitted to Client detailing the data required for the <br /> study. The data is necessary to facilitate an in-depth understanding of the <br /> relationship between Client's expenses, revenues and sales to retail customers. <br /> Task 2 — Kickoff Meeting/Data Review <br /> Once Client staff has compiled the information requested as part of Task 1, <br /> Consultant will travel to Client's offices to meet with Client staff to reviewg oals <br /> for the study and the data compiled. Any specific rate strategies requested by the <br /> Client will be examined during this meeting and included as part of the study <br /> effort. <br /> Task 3 — Financial Forecast— Existing Rates <br /> Based on projected sales to retail customers and estimated utility revenue <br /> requirements, a 5- year forecast (the study period) of Client's electric operating <br /> results will be prepared. Revenues for this forecast will be based on Client's <br /> existing retail rates. This forecast will also include funding for expected capital <br /> improvements during the study period and an analysis of the resulting impact on <br /> Client's reserve fund levels. <br /> Task 4 — Cost of Service Analysis <br /> The results of Task 3 give an indication of overall revenue needs for the utility. <br /> The cost-of-service analysis is utilized to determine how the revenues should be <br /> collected from different classes of customers as well as through different <br /> components of the rates within each class. To facilitate the cost-of-service <br /> analysis, a 'test year' revenue requirement is established. The test year financial <br /> and operating statistics provide the basis for determining the relationship between <br /> sales and expenses for the utility. The test year revenue requirements are first <br /> functionalized by their operational category such as wholesale power, distribution <br /> and customer service. Within each function, the revenue requirements are then <br /> classified as demand, energy, customer, revenue-related or direct assignment cost <br /> related as to their classified purpose. Based on the classified costs within each <br /> function, the revenue requirements are allocated to each of the customer classes. <br /> Demand allocators are used for demand classified costs, energy allocators are used <br /> for energy classified costs and customer allocators are used for customer classified <br /> costs. Based on this analysis, the allocated cost to serve each customer class is <br /> determined. The allocated cost to serve each class is then compared to the <br /> revenues received from that class to determine if any class-specific revenue <br /> 1 <br /> 67 <br />