HomeMy WebLinkAboutAddendum - 2
CAG-24-068, Adden #2-26
4/1/2026
EXHIBIT A-2 – SCOPE OF WORK
The following Scope of Work identifies tasks to be performed for the City of Renton’s 2026
Water, Wastewater and Surface Water Revenue Requirement and SDC Study Update for
the 2027/2028 budget cycle and planning period through 2032.
Task 1 | Project Management
Perform administrative / management procedures for efficient study performance. Submit
monthly invoices and progress reports describing recent and forthcoming efforts, potential
challenges and/or needs from the City, and a status report, schedule, and budget
adherence. Maintain regular communication with the City’s project manager to address
any issues as they arise.
Task 2 | Data Collection and Review
Provide a data request list identifying financial and operational documents, and customer
data pertinent to the performance of the study update. Review, analyze, and validate such
information as necessary for use in formulating the technical analyses. Follow up with
additional data needs and/or clarifications, as necessary. Due to the City’s need for a
preliminary rate run, there will be an initial data collection effort with some of the data
needing to be replaced later by the final numbers.
Task 3 | Revenue Requirements
Update the 2024 revenue requirement models for each utility for the current year (2026)
and six-year planning horizon (2027-2032). Determine annual rate revenue needs to fund
capital programs, operating and maintenance costs, fiscal policy achievement, and other
financial obligations of each utility over the study period. Rate adjustments will focus on
proposed rates for adoption for the 2027/2028 budget cycle with future rate adjustments
provided for planning purposes.
a | Baseline Analysis –Prepare a baseline revenue requirement analysis incorporating the
following updated information:
x Financial policies consistent with the 2024 Comprehensive Rate Study
x Economic assumptions for inflation, customer growth, and funds earnings rate
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x Assumptions for SPU purchased water costs and King County wastewater
treatment costs
x Cash balances for each fund and depreciation expense as of December 31, 2025
x Historical customer growth and rate revenues
x Adopted 2026 budget, draft and final 2027/2028 budgeted revenues and expenses
x Capital projects (“capitalized”and “expensed”) and associated annual costs for
the current year (2026) and six-year planning horizon (2027-2032)
x Capital funding sources including grants, cash reserves, SDCs, and rates
Compare revenue requirements for each utility against projected revenue under existing
rate structures and update the rate adjustment strategy across-the-board to existing rate
structures over the planning period. Rate revenue projections will take into consideration
the projections derived for each utility from the 2023 customer billing data set used for the
cost of service/alternative rate structure tasks completed for the 2024 Comprehensive
Rate Study.
Refer to optional Task 11 below, for potential additional services for the water and surface
water utility relating to the potential implementation of the water cost of service findings/
alternative rate structures and the surface water alternative rate structure prepared for the
2024 Comprehensive Rate Study.
b | Scenario Development – Prepare multiple “what if” scenarios to evaluate impacts of
incremental costs associated with potential additional staffing, new programs, equipment
needs, and/or other non-budgeted costs. The City will provide the desired set of scenarios
for each utility. Sensitivity analyses will be performed to assess customer impacts and
revenue risk for all policy implications. It is anticipated that up to six (6) scenarios will be
prepared for each utility.
c | Residential Bill Impacts – Summarize the proposed six-year rate revenue adjustments
and typical single-family residential bill impacts for each utility and on a combined basis
for all utilities.
Task 4| System Development Charges (SDCs)
Update the 2024 SDC models for each utility based on the existing methodology to reflect
current and planned capacity for the current year (2026) and six-year planning horizon
(2027-2032). SDCs will be determined for the 2027/2028 adoption cycle.
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a | Baseline Analysis –Prepare a baseline SDC analysis including the schedule of eligible
capital projects, costs, and associated capacity (consistent with the approach used for the
current adopted SDCs). Incorporate the following updated information:
x Actual data as of December 31, 2025, for plant-in-service, construction-work-in-
progress, contributed assets, customer data, cash balances and outstanding debt
principal. (Note that this effort will require adjustments to the City’s plant-in-
service records for contribution assets, similar to the work performed in past rate
studies)
x Identified eligible capital projects and costs for the planning period (2026-2032)
x Review/update the assignment of capital projects to “major maintenance”
(replacement) or “upgrades/expansions”
x Growth projections from system plans and/or current customer data
b | Scenario Development –Depending on the level of SDC increases, phase-in strategies
may be developed to achieve the proposed maximum calculated SDCs over the two-year
budget cycle.
c | Residential Bill Impacts –Summarize the proposed SDCs for each utility and on a
combined basis for all utilities for a typical single-family residential customer.
Task 5 | Wholesale Water Rates
Review and update the 2024 wholesale water rate model worksheets and calculate
proposed wholesale rates for the 2027/2028 budget cycle based on the existing
methodology and updated data.
a | System Demand Factors – Update historical and projected system demand factors for
the total water system and wholesale customer to determine wholesale share of total
system demands (e.g., accounts, water usage, average day demand, max day demand).
b | O&M Rate Component – Incorporate 2027/2028 draft and final budget detail, review
O&M allocation factors established in the previous study, and update as warranted.
Calculate resulting O&M rate component for 2027/2028.
c | Capital Rate Component – Review detail plant asset data and allocation factors
established in the previous study and update as warranted. Major efforts include:
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x Review and update water system infrastructure and the allocation of applicable
assets to wholesale customer (e.g., pump stations, reservoirs, source, and
transmission/distribution pipes)
x Review and update the allocation of original cost of total plant-in-service to
wholesale customer based on updated infrastructure allocation factors.
x Review and update the allocation of total system capital-related costs to wholesale
customer (e.g., “expensed”capital outlay and rate-funded capital contribution).
Note that outstanding water utility debt will be paid off in 2027 using existing debt
reserves. No new debt is anticipated.
x Sum the capital-related components and derive the total capital rate component
for 2027/2028.
d | Total Wholesale Water Rate – Combine O&M and capital rate components to derive
the total wholesale water rate for 2027/2028and summarize customer bill impacts. A
phase-in strategy may be developed to smooth rate impacts over the two-year budget
cycle.
Task 6 | Cost of Service Analysis
No additional services (see optionalTask 11below).
Task 7 | Rate Structure Design Alternatives
No additional services (see optional Task 11below).
Task 8 | Meetings
Prepare for and facilitate virtual meetings to review interim findings and final results. The
following meetings are anticipated:
a | Initial Project Meeting – One (1) meeting with City staff to discuss study objectives and
major milestones.
b | Revenue Requirement Results – Up to four (4) meetings to review baseline results and
“what-if” scenarios under draft and final budget numbers, and final review of proposed
results.
c| SDC Results– Up to two (2) meetings to review draft and final SDC results.
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d |Wholesale Water Rate Results – Up to two (2) meetings to review draft and final
wholesale results.
e | Wholesale Rate Meeting with Skyway –At Skyway’s request, attend one (1) meeting to
review 2027/2028 wholesale results.
f | Cost of Service/Rate Structure Alternatives – No additional services (see optional
Task 11 below).
g | Committee/Council Meeting – At the City’s request, attend up to two(2) meetings to
review study outcomes and direction.
Task 9 | Rate Model Training and User Guide
Conduct virtual training sessions with utility managers to review model inputs and
functionality for updating the revenue requirement portion of the rate model. The following
sessions are anticipated:
a | Utility Manager’s Training – One (1) meeting with utility manager’s and the study
project manager to provide an overview of model data inputs, model operations /
functionality and testing of “what if” scenarios and results.
b | Project Manager Training – One (1) additional meeting with the study project manager
to review each section of the models in more depth.
c | User Guide – Update the City’s current user guide as necessary for in-house updates of
the revenue requirement portion of the models. There is no charge for this task.
Task 10 | Documentation and Study Deliverables
Document final results of the study update in technical memorandums describing major
assumptions, findings, and proposed rates and SDCs. Submit electronic versions of
documentation and updated models. Two (2) separate memorandums will be submitted
covering the following topics:
x Revenue Requirements and SDCs
x Wholesale Water Rates
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[Optional] Task 11–Cost of Service / Alternative Rate Design Modifications
The 2024 Comprehensive Rate Study introduced significant modifications to the water and
surface water rate structures. Comparisons were prepared for rates and customer bill
impacts under adopted 2026 rates and projected 2027 rates under the alternative rate
structures. The results of those findings are pending discussion with City Council. These
findings may be shared with Council either before or at the same time as the proposed rate
adjustments prepared as part of the forthcoming 2026 Revenue Requirement and SDC
Study Update for the 2027/2028 budget cycle.
Further analysis may be necessary to revise the findings of the alternative rate structure
evaluations, ensuring alignment with the most current information, the updated proposed
rate adjustments under existing rates for the 2027/2028 budget cycle, and any additional
policy directives provided by Council.
a | Water Utility – Potential tasks may include:
x Reconcile customer growth and rate revenues projected between the 2023-2026
withactual customer billing data for years 2024-2025
x Incorporate proposed revised rate structure and phase-in strategy for 2027/2028 or
anychanges directed by Council
x Update calculation of customer bill impacts to align with the updated revenue
requirement results for the 2027/2028 budget cycle and any changes to the
proposed rate structure directed by Council
b | Surface Water Utility –Potential tasks may include:
x Reconcile customer growth and rate revenues projected between the 2023-2026
with actual customer billing data for years 2024-2025
x Incorporate proposed revised rate structure for 2027 or any changes directed by
Council
x Update calculation of customer bill impacts to align with the updated revenue
requirement results for the 2027/2028 budget cycle and any changes to the
proposed rate structure
Due to the uncertainty regarding the extent of potential requested modifications, a
planning allocation of 32hours for the water utility and 24 hours for the surface water
utility has been included in the cost estimate presented in Exhibit B-2 – Compensation.
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EXHIBIT B-2 –COMPENSATION
The exhibit below presents estimated hours by task, hourly billing rates, and total fees
for the Scope of Work described in Exhibit A-2. The unused budget allocated to specific
tasks from the 2024 Comprehensive Rate Study has been transferred to fund the hours
required for those tasks in the 2026 Revenue Requirement / SDC Study update. This
approach lowers the net additional costs for Amendment 2 to $88,377.00
2024 Comprehensive Rate Study Hourly Rate $215.00 $215.00 Net
Amendment #2 Amendment 2
2026 Revenue Requirement / SDC Update EST. EST. USE OF USE OF EST.
Sub-Task: HOURS COST HOURS COST COST
Task 1 - Project Management 22.50 4,837.50$ - -$ 4,837.50$
Task 2 - Data Collection/Review 32.00 6,880.00$ - -$ 6,880.00$
Task 3 - Revenue Requirements 138.00 29,670.00$ - -$ 29,670.00$
Task 4 -System Development Charges 60.00 12,900.00$ - -$ 12,900.00$
Task 5 - Wholesale Water Rate 20.00 4,300.00$ - -$ 4,300.00$
Task 6 - Cost of Service
(a) Water - -$ - -$ -$
(b) Wastewater - -$ - -$ -$
(c) Surface Water - -$ - -$ -$
Task 7 -Rate Structure Design Alternatives
(a) Water - -$ - -$ -$
(b) Wastewater (Survey only) - -$ - -$ -$
(c) Surface Water - -$ - -$ -$
Task 8 - Meetings
(a) Initial Project Meeting [1] 3.50 752.50$ - -$ 752.50$
(b) Revenue Requirement Results [4] 18.00 3,870.00$ - -$ 3,870.00$
(c) SDC Results [2] 9.00 1,935.00$ - -$ 1,935.00$
(d) Wholesale Water Rate Results [2] 4.00 860.00$ - -$ 860.00$
(e) Wholesale Rate Meeting with Skyway [1] 3.00 645.00$ (3.00) (645.00)$ -$
(f) Cost of Service/Rate Structure Results [4] - -$ - -$ -$
(g) Committee / Council Meeting [2] 24.00 5,160.00$ (12.00) (2,580.00)$ 2,580.00$
Task 9 - Rate Model Training
(a) Utility Manager's Training 3.00 645.00$ (3.00) (645.00)$ -$
(b) Project Manager's Training 3.00 645.00$ (3.00) (645.00)$ -$
(c) User Guide (no charge) - -$ - -$ -$
Task 10 - Documentation / Study Results
(a) Revenue Requirements and SDCs 30.00 6,450.00$ - -$ 6,450.00$
(b) Wholesale Water Rates 6.00 1,290.00$ - -$ 1,290.00$
(c) Retail Cost of Service / Rate Structure Alternatives
(1) Water - -$ - -$ -$
(2) Wastewater - -$ - -$ -$
(3) Surface Water - -$ - -$ -$
Subtotal 376.00 80,840.00$ (21.00) (4,515.00)$ 76,325.00$
Optional Tasks
Task 11 - Cost of Service/Rate Design Modifications
(a) Water 32.00 6,880.00$ - -$ 6,880.00$
(b) Surface Water 24.00 5,160.00$ - -$ 5,160.00$
Subtotal Optional Tasks 56.00 12,040.00$ - -$ 12,040.00$
Mileage 157.00$ (145.00)$ 12.00$
Total 432.00 93,037.00$ (21.00) (4,515.00)$ 88,377.00$
Amendment 2 Use of Original Budget
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EXHIBIT C-2 –SCHEDULE
Based on the discussion with City staff, the proposed schedule for completion of major
task milestones is outlined below:
x Remaining Deliverables from 2024 Comprehensive Rate Study: February -
mid-April 2026
o Technical memorandum –Revenue Requirements and SDCs
o Technical memorandum – Wholesale Water Rates
o Technical memorandum – Water Cost of Service / Alternative Rate Design
(one (1) meeting to review results)
o Technical memorandum – Surface Water Alternative Rate Design
o Technical memorandum – Wastewater Cost of Service
o Electronic version of final rate models – All Utilities
x Notice to Proceed / Data Collection for 2026 Revenue Requirement and SDC
Study Update: on or about March 20, 2026
x Kickoff Meeting –first week of April 2026
x Committee/Council Meeting: May 2026(review cost of service/rate structures)
x Revenue RequirementDraft Results:mid-May to early June 2026 (to assist City
with budget recommendations)
x SDC Draft Results:July 2026
x Wholesale Water Draft Results:July 2026
x Revenue Requirement Final Results: mid-August 2026
x SDC Final Results: mid-August 2026
x Wholesale Final Results: mid-August 2026:
x Committee/Council Meeting: October 2026 (review final results)
x Rate Model Training: October -November 2026
x Final Results and Study Deliverables: December 18, 2026