Large Municipal Waste Management Utility
Our client wished to develop a long-term funding model for their waste and recycling services which reflected a comprehensive treatment of service costs in alignment with a new, integrated rate structure.
Stack’d was engaged to lead a year-long detailed financial review, yielding the following deliverables:
- A new funding model to meet the needs of their next 4-year business cycle;
- A detailed cost of service study;
- A new rate structure, integrated rates model, and indicative rates; and,
- An implementation plan, including both financial and operational performance measures.
A ‘to-be’ 2010-2022 funding model has been established with the client’s management team based on a comprehensive ‘as-is’ financial model review, input from leading practices, and WRS’ desired outcomes. This vision included the identification of specific sources of funds (e.g. user fees, commodity sales, tipping fees, etc.) which shall be used to pay for their corresponding services. In addition, a 10-year forward-looking cost of service study was performed and used to support the subsequent rate structure development for 2019-2022.
To ensure understanding of how costs were allocated, Stack’d worked extensively and collaboratively with internal subject-matter-experts to understand the underlying nature of the work performed. In addition, we developed and confirmed a “translation” document with the client management team for how costs within each department and activity mapped to services, functions, and cost centers. Further, we conducted several strategic working sessions with the management team to gain input on strategic issues and confirm draft solutions for several deliverables.
Municipality and Wholly-Owned Utility
An Alberta municipality had previously established a wholly-owned utility as a municipally-controlled corporation. Since forming the Utility as a corporation, the municipality had been challenged with providing it appropriate guidance as part of reviewing the annual rate applications.
Stack’d was engaged to assist the municipality by reviewing the current situation and establishing a go-forward mandate and rate regulatory framework. The Stack’d team worked closely with the municipality’s Mayor, Council, CAO and the Utility’s Board of Directors and CEO to develop, review and confirm the project’s deliverables. A new mandate was established which provided the desired scope and direction for the Utility to pursue a financially sustainable suite of regulated versus non-regulated services. In addition, an updated regulatory framework was established which addressed rate-making mechanisms and processes, and defined the role of the municipality as both shareholder and rate regulator.
Electric Utility Service Provider
In a challenging economic climate our client was experiencing a period of flat revenues. With the mandate to grow, the leadership team was faced with a number of strategic questions, including:
- How will we grow in the future?
- What markets, geographies, services provide the best opportunities for growth?
- Do we grow organically or through acquisition or both?
- What types of acquisitions might be a fit for consideration?
- How will we take market share from our competitors?
- What will it take to succeed?
- What do we need to invest in?
To address these questions, our client engaged Stack’d to lead a strategic planning process in collaboration with the executive team. Through a series of workshops combined with supporting market research and analysis, Stack’d helped enable the client to define a new 5-year strategic plan to double their business.
The client is now in the process of implementing the strategic plan.
Provincial Utility Operator
Our team was engaged by an organization operating within the Alberta power industry that was grappling with how to better execute on its portfolio of over 200 projects across the enterprise. Each year, no matter how much effort or intent was exhibited by the executive team and staff, the organization continually failed to execute on all of its commitments.
We recommended to the client that they implement an enterprise portfolio management office (EPMO). Key elements of the implemented EPMO included: portfolio management processes to manage trade-offs between strategic priorities, programs and projects, business case development and approval guidelines, improved portfolio reporting, and guidelines on how to work with existing PMOs across the organization.
The resulting EPMO enabled the client to identify, evaluate, prioritize, allocate resources to, and report against its range of day-to-day base work, technology investments, and strategic / performance improvement projects.
County Water & Wastewater Utility
Our client recognized that rates for their utility services had significantly increased in recent years and Council wanted to ensure rate stability going forward. In addition, although a high-level rates model was previously developed based on a “full utility basis”, the model did not allocate costs between different customer classes.
As a result, the County engaged Stack’d to perform a detailed cost of service and rate study. This included developing the following deliverables:
- A comprehensive “as-is” review to understand the unique utility systems, service levels, operational volumes and customer consumption levels, and customer classes;
- A detailed cost of service study; and,
- A new 10-year rate structure based on changes to current customer classes and desired rate-making objectives.
As a result, the client established a fit-for-purpose methodology for determining rate revenue requirements based on availability of asset financing data and sufficient funding for forward-looking infrastructure investments. A “modified utility basis” was developed and selected as the most appropriate method to calculate rate revenue requirements for the Utility. In addition, a focused rate study resulted in an updated rate structure that reflected (1); changes to existing customer classes (based on different service levels, advanced statistical analysis of customer class consumption patterns, and costs), and (2); desired rate-making objectives.
The municipality (pop. 50k+) required a review of its funding requirements for its Waste, Wastewater, Storm Water, and Waste Management Utilities for the purpose of developing Utility Fiscal Policies.
Stack’d Consulting performed a comprehensive cost structure and policy review resulting in recommendations in utility funding, financing, reserves management, rate-setting, and overall financial management. Key considerations were given to how the Utility should fund projected infrastructure replacement and growth requirements.
Council provided accolades on the quality of analysis and reporting and ultimately adopted policy recommendations as brought forward by administration.
Regional Utility Commission
A regional waste management commission required assistance in establishing 5-year rates for its various services. The commission was comprised of 6 individual member municipalities and supported 7 different waste management services across 4 distinct customer classes.
Our team performed a detailed cost of service study and designed a custom rates model for the waste management commission. This included projecting future desired rates given anticipated capital expansion, financing, and operating cost projections. Detailed cost structure analysis was performed to ascertain appropriate fixed vs. variable cost characteristics and allocate fully-loaded costs to each distinct service and customer class. An integrated rates model was developed to enable the customer to determine future rates given annual operational and financial updates. The model was delivered complete with full end-user documentation and support.
At the project’s conclusion, the Commission’s Board of Directors and Manager noted the quality of work as “exceptional”.