During the Dec. 5 meeting, City Commissioners will consider whether to award a $137,313 contract to Advanced Engineering and Environmental Services, Inc., or AE2S, for a study on water and sewer costs of service.

The last survey was completed in 2001 and this one is needed to evaluate current and future costs and compare them to industry standards for Montana and the region, according to city staff.

Four proposals were received and reviewed on Nov. 13 by a 7-member committee and the AE2S scored the highest. The other proposals were from HDR Engineering, Inc., Raftelis/KLJ and Woodard & Curran.

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This project is being funded through the Water and Sanitary Sewer funds, which are generated by fees for service and not funded through the general fund.

Public Works administration, engineering, utilities and environmental staff, as well as fiscal services staff reviewed the proposals and will handle contract administration during the project.

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This study will provide:

• a comparison of current water and sewer system costs (operations, capital improvements, and bonded debt) against appropriate industry benchmarks;
• recommended baseline rate structures required to fund water and sewer systems and consider annual inflationary, indexed adjustments to rates needed to maintain each utility;
• recommended ways of communicating utility system costs including recommendations for restructuring utility bill format;
• equity for all types of property ownership including single and multi-family units, MaltEurop, Calumet, Montana Refining, Black Eagle and Malmstrom Air Force Base.

The study will also provide the following services:

• facilitate a minimum of two meetings with the City Commissioners. The first will be an educational meeting addressing the process of conducting the cost of service study and what to expect once the study is completed. AE2S will then meet to present the final results in person to the commission,
• assess the current rate structure’s performance as a baseline for comparing recommended changes;
• assess the interaction between the water conservation elements of the recommended rate structure and their impacts on the ability to fund water operations as well as their impact on the economic well-being of the community.;
• assess the ability of the revenue stream generated by the recommended rate structures to continue to fully fund water and sewer system costs;
• assess existing customer service fee structure and identify other potential areas for service and system charges and recommend changes;
• specifically analyze special customer classes (industrial, Malmstrom Air Force Base, Black Eagle) to verify cost of service and appropriate rates;
• include industrial ‘extra strength’ charges analysis and environmental/regulatory costs as a component of the overall rate structure;
• recommend methods for communicating utility costs to include layout of the utility bill and how it might be used to identify actual costs of providing water and sewer services under recommended rate structures. Assess ease of communication associated with each recommended rate structure;
• annual operating fund balance targets;
• annual target contingency fund balances and level of liquidity;
• assess appropriate budgeting horizon and cycle needed to support recommended rate structures;
• assess performance of each recommended rate structure and provide recommendation on preferred rate structure;
• provide data supporting conclusions and observations made for each of the areas above.