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Home My WebLink AboutFCS Group, Inc - Process Water Reuse Facility (PWRF) Cost of Service Rate Study PSA (#22-024) - Amendment No. 1AMENDMENT NUMBER 1 to PROFESSIONAL SERVICES AGREEMENT Process Water Reuse Facility (PWRF) Cost of Service Rate Study Project No. 21324 AGREEMENT NO.22-024 WHEREAS, the City and FCS Group, entered into a Professional Services Agreement on 7/11/2022 to provide professional services with respect to the Process Water Reuse Facility (PWRF) — Phase 3 project. NOW, THEREFORE, this agreement is amended to allow FCS Group, to provide additional professional services for financial analysis and support related to the PWRF Facility as well as extend the time of performance. 1. Scope of Work: - PWRF Cost of Service Model Updates - Analysis of changes to forecasting assumptions - Requested meeting/workshop attendances - Continued initial work on PWRF Billing Model For breakdown of initial study scope please see Exhibit A. 2. Fee: The compensation for the additional work is based on a Time & Materials Basis of $20,000.00, increasing the overall total authorization amount to $69,830.00. 3. Time of performance: The services shall now be complete for the project on or before 12/31/2024. DATED THIS DAY OF CITY OF PASCO: City of Pasco Adam R. Lincoln — City Manager 2023. CONSULTANT FCS Gro - Angie Sanchez Virnoche — Vice President Amendment No. 1 to Professional Services Agreement Page 1 FCS Group Process Water Reuse Facility (PWRF) Cost of Service Rate Study • FCj GROUP Solutions-Orimted Ginatlting Firm Heedquaiets RuhV d ToW Center 7525166r Ave NE, SL- D-215 Redmond, Washington 98052 CITY OF PASCO PROCESS WATER REUSE FACILITY COST OF SERVICE RATE STUDY EXHIBIT A Established in 1908 Wastfm9ton 1425.867.1802 Onon 1503.841.6543 Colorado 1719,284.9168 FCS GROUP is pleased to submit this proposed scope of services and budget to update the cost -of - service model for the Process Water Reuse Facility (PWRF), recognizing new future conditions. The City of Pasco (City) is currently working with Burnham SEV to design facilities that capture methane gas produced by the decomposition of wastewater and turn it into renewable natural gas for sale on the market. The sharing of this additional revenue source, as well as the costs paid to Burnham SEV for wastewater treatment expenses, will be incorporated into the City's rate model to determine cost - of -service based rates. Total revenues and expenses will be forecast into the future to ensure ongoing operational and future capital costs are fully satisfied and customers are charged commensurate with the cost incurred to serve them. The following tasks describe the process required to complete the discussed analysis. TASK 1A I RATE STUDY PROJECT KICK OFF MEETING FCS GROUP will schedule a project initiation meeting with the City to commence work on the rate study update portion of this study. The meeting will identify study objectives, review methodology and expectations, confirm schedule, and discuss team roles. We recommend this meeting be conducted remotely to save budget. TASK 1 B I RATE STUDY DATA COLLECTIONNALIDATION FCS GROUP will provide a data needs list encompassing historical and projected revenue, expenses, capital improvement plans, monitored loading metrics, debt schedules, fiscal policies, deferred maintenance strategies and other relevant planning information. The data will be reviewed, analyzed and validated for inclusion in the study process. CITY OF PASCO June 2022 PWRF Cost of Service Rate Study page 2 TASK 1C I REVENUE REQUIREMENT FCS GROUP will update the revenue requirement to include the most recent budget projections, growth assumptions, and capital improvement plans. We will design the analysis to be flexible and stable enough to analyze multiple scenarios. Sub -tasks include: a. Develop the forecast of operating revenues and expenses to reflect the most current budget. Adjust for the addition of payments to Burnham SEV for design, build and operation of wastewater treatment infrastructure (Phase I11). b. Incorporate the most recent capital plans related to the Phase I and Phase 11 improvements providing conveyance and storage, as well as any additional infrastructure to provide the necessary service levels. Develop a capital funding plan that balances internal and external resources including additional debt requirements. c. Update the capital reinvestment strategy for the utility, identifying the annual funding target for replacement of utility infrastructure. d. Update the reserve analysis for compliance with existing policies, targets and industry best practices for public/private partnerships. e. Evaluate cash flow needs to meet existing and anticipated new annual debt service requirements and debt coverage requirements. f. Identify the total annual financial requirements from two perspectives: the ability to meet all cash obligations, and the attainment of any debt coverage requirements. g. Develop a forecast of total annual costs to provide service over a 3 to 6-year planning horizon. Total costs developed in this task will be allocated to customers in the following Task 1 D. h. Provide up to three (3) sensitivity analyses to evaluate the impact of changes to key variables such as funding sources, project timing, new customers, increases in flow, or others identified by the City. TASK 1 D I COST ALLOCATION The cost allocation task will be revised for the PWRF based on new future conditions. Customers and their characteristics developed in the original 2018 PWRF rate study will be updated based on the most recent monitoring data and used to develop cost allocation factors. The allocation factors used will be based on system cost data and engineering/planning criteria in order to assign utility cost recovery to customers in proportion to their facility requirements and capacity allocations. TASK 1 E I RATE DESIGN The rate design task will develop rate structures in alignment with the City's goals and supported by the cost allocations identified in task I D while generating sufficient revenue to meet the revenue requirement forecast. Key task outcomes include the following: a. Design rates to achieve total system cost recovery while promoting pricing goals and objectives. a. Provide alternative rate structures that look at flow -based rates, constituent -based rates or a combination of the two. GRO ��`�...�w V� CITY OF PASCO PWRF Cost of Service Rate Study June 2022 page 3 b. Rate structure alternatives will determine the level of fixed and variable rates as well as up -front costs to be recovered from existing and new facility users. b. Bill comparisons will be generated comparing the impact of the rate structure update on typical bills for each processor. TASK 1 F I MEETINGS It will be important to interact frequently with City staff throughout the project, to ensure that the findings and recommendations reflect approaches that are understood by impacted parties and that they can be implemented within the City's administrative practices. In addition, frequent interaction will ensure that the study develops work products collaboratively, reflecting the industry expertise of the Project Team and the specific needs and goals of the City. Review meetings can be conducted remotely to save budget. a. Meet with City staff in up to five (5) meetings to review study results at key milestones. We anticipate the fallowing review meetings; Two (2) remote meetings to review revenue requirement and cost allocations Two (2) remote meetings to review proposed rate designs/structures One (1) remote meeting to review final rate recommendations TASK 1 G I RATE STUDY DOCUMENTATION FCS GROUP will document findings and provide a copy of the spreadsheet analysis for future City use. Technical Memorandum — At the conclusion of the project, we will provide a technical memorandum summarizing the methodology, key factors, results and conclusions of the cost - of -service rate study. Spreadsheet Model — FCS GROUP will deliver a final copy of the Excel -based spreadsheet model to the Finance Director for City use. +++ ➢'C„ GRC)UP www.fcsgroup.cwn