HomeMy WebLinkAboutFCS Group Inc; 2008-11-19;RATIFICATION OF AMENDMENT NO. 1 TO EXTEND THE AGREEMENT
FOR COST OF SERVICES AND RATE DESIGN STUDY SERVICES
(FCS Group, Inc.)
This Ratification of Amendment No. 1 is entered into as of the 16- day of
"rcv)W , 2010, but effective as of th- day of
6%&-- , 200 9 , extending the agreement
dated Novemberl9, 2008 (the "Agreement1') by and between the Carlsbad Municipal Water
District, a Public Agency organized under the Municipal Water Act of 191 1, and a Subsidiary
District of the City of Carlsbad ("CMWD"), and FCS Group, Inc., a California Corporation,
("Contractor") (collectively, the "Parties").
RECITALS
A. On November 19, 2008, the Parties executed a one year agreement for Cost of
Service and Rate Design Study; and
B. The Agreement expired on November 19, 2009 and Contractor continued to work
on the services specified therein without the benefit of an agreement.
C. The Parties desire to ratify the amendment extending the term of the Agreement,
and any amendments thereto, ending on June 30, 2010.
NOW, THEREFORE, in consideration of these recitals and the mutual covenants
contained herein, CMWD and Contractor agree as follows:
Amendment No. 1 of the Agreement, as may have been amended from
time to time, is hereby retroactively approved and the Agreement is hereby extended ending on
June 30,2009.
All other provisions of the Agreement, as may have been amended from
time to time, will remain in full force and effect.
All requisite insurance policies to be maintained by the Contractor pursuant to the
Agreement, as may have been amended from time to time, will include coverage for this
Amendment.
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4. The individuals executing this Amendment and the instruments referenced in if
on behalf of Contractor each represent and warrant that they have the legal power, right and
actual authority to bind Contractor to the terms and conditions of this Amendment.
CARLSBAD MUNICIPAL WATER
DISTRICT, a Public Agency organized
under the Municipal Water Act of 191 1,
and a Subsidiary District of the City of
--.Fa L;lB JP. //)A
(e-mail address) designee
i 1 ATTEST:
tdAq&&-~%c,%4'. &
(e-mail address)
If required by CMWD, proper notarial acknowledgment of execution by contractor must be
attached. If a Corporation, Agreement must be signed by one corporate officer from each of the
following two groups.
*Group A.
Chairman,
President, or
Vice-President
"Group B.
Secretary,
Assistant Secretary,
CFO or Assistant Treasurer
Otherwise, the corporation must attach a resolution certified by the secretary or assistant
secretary under corporate seal empowering the officer(s) signing to bind the corporation.
APPROVED AS TO FORM:
RONALD R. BALL, General Counsel
By:
~Gputy General - ~ouhsel
General Counsel Approved Version #07.05.01
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EXHIBIT 4
AGREEMENT FOR COST OF SERVICES AND RATE DESIGN STUDY SERVICES
(FCS Group, Inc.)
JT is made and entered into as of the / y^ day
206 ti, by and between the CARLSBAD MUNICIPAL
WATER DISTRICT, a Public Agency organized under the Municipal Water Act of
191 1 , and a Subsidiary District of the City of Carlsbad, referred to as ("CMWD"), and
and FCS Group, Inc., a California Corporation, ("Contractor").
RECITALS
A. CMWD requires the professional services of consultant that is
experienced in water utility cost of services and rate design studies.
B. Contractor has the necessary experience in providing professional
services and advice related to water utility cost of service and rate design studies.
C. Selection of Contractor is expected to achieve the desired results in an
expedited fashion.
D. Contractor has submitted a proposal to CMWD and has affirmed its
willingness and ability to perform such work.
NOW, THEREFORE, in consideration of these recitals and the mutual
covenants contained herein, CMWD and Contractor agree as follows:
1. SCOPE OF WORK
CMWD retains Contractor to perform, and Contractor agrees to render, those
services (the "Services") that are defined in attached Exhibit "A", which is
incorporated by this reference in accordance with this Agreement's terms and
conditions.
2. STANDARD OF PERFORMANCE
While performing the Services, Contractor will exercise the reasonable professional
care and skill customarily exercised by reputable members of Contractor's
profession practicing in the Metropolitan Southern California Area, and will use
reasonable diligence and best judgment while exercising its professional skill and
expertise.
3. TERM
The term of this Agreement will be effective for a period of one year from the date
first above written.
4. TIME IS OF THE ESSENCE
Time is of the essence for each and every provision of this Agreement.
5. COMPENSATION
The total fee payable for the Services to be performed during the initial Agreement
term will be not to exceed Eighty Six Thousand, Six Hundred and Ninety dollars
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($86,690). No other compensation for the Services will be allowed except for items
covered by subsequent amendments to this Agreement. The CMWD reserves the
right to withhold a ten percent (10%) retention until CMWD has accepted the work
and/or Services specified in Exhibit "A".
Incremental payments, if applicable, should be made as outlined in attached Exhibit
"A".
6. STATUS OF CONTRACTOR
Contractor will perform the Services in Contractor's own way as an independent
contractor and in pursuit of Contractor's independent calling, and not as an
employee of CMWD. Contractor will be under control of CMWD only as to the result
to be accomplished, but will consult with CMWD as necessary. The persons used by
Contractor to provide services under this Agreement will not be considered
employees of CMWD for any purposes.
The payment made to Contractor pursuant to the Agreement will be the full and
complete compensation to which Contractor is entitled. CMWD will not make any
federal or state tax withholdings on behalf of Contractor or its agents, employees or
subcontractors. CMWD will not be required to pay any workers' compensation
insurance or unemployment contributions on behalf of Contractor or its employees or
subcontractors. Contractor agrees to indemnify CMWD within thirty (30) days for
any tax, retirement contribution, social security, overtime payment, unemployment
payment or workers' compensation payment which CMWD may be required to make
on behalf of Contractor or any agent, employee, or subcontractor of Contractor for
work done under this Agreement. At CMWD's election, CMWD may deduct the
indemnification amount from any balance owing to Contractor.
7. SUBCONTRACTING
Contractor will not subcontract any portion of the Services without prior written
approval of CMWD. If Contractor subcontracts any of the Services, Contractor will
be fully responsible to CMWD for the acts and omissions of Contractor's
subcontractor and of the persons either directly or indirectly employed by the
subcontractor, as Contractor is for the acts and omissions of persons directly
employed by Contractor. Nothing contained in this Agreement will create any
contractual relationship between any subcontractor of Contractor and CMWD.
Contractor will be responsible for payment of subcontractors. Contractor will bind
every subcontractor and every subcontractor of a subcontractor by the terms of this
Agreement applicable to Contractor's work unless specifically noted to the contrary
in the subcontract and approved in writing by CMWD.
8. OTHER CONTRACTORS
CMWD reserves the right to employ other Contractors in connection with the
Services.
9. INDEMNIFICATION
Contractor agrees to indemnify and hold harmless the CMWD and its officers,
officials, employees and volunteers from and against all claims, damages, losses
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and expenses including attorneys fees arising out of the performance of the work
described herein caused by any negligence, recklessness, or willful misconduct of
the Contractor, any subcontractor, anyone directly or indirectly employed by any of
them or anyone for whose acts any of them may be liable.
The parties expressly agree that any payment, attorney's fee, costs or expense
CMWD incurs or makes to or on behalf of an injured employee under the CMWD's
self-administered workers' compensation is included as a loss, expense or cost for
the purposes of this section, and that this section will survive the expiration or early,
termination of this Agreement.
10. INSURANCE
Contractor will obtain and maintain for the duration of the Agreement and any and all
amendments, insurance against claims for injuries to persons or damage to property
which may arise out of or in connection with performance of the services by
Contractor or Contractor's agents, representatives, employees or subcontractors.
The insurance will be obtained from an insurance carrier admitted and authorized to
do business in the State of California. The insurance carrier is required to have a
current Best's Key Rating of not less than "A-:VN", OR with a surplus line insurer on
the State of California's List of Eligible Surplus Line Insurers (LESLI) with a rating in
the latest Best's Key Rating Guide of at least "A:X".
10.1 Coverages and Limits.
Contractor will maintain the types of coverages and minimum limits indicated below,
unless the General Counsel or Executive Manager approves a lower amount. These
minimum amounts of coverage will not constitute any limitations or cap on
Contractor's indemnification obligations under this Agreement. CMWD, its officers,
agents and employees make no representation that the limits of the insurance
specified to be carried by Contractor pursuant to this Agreement are adequate to
protect Contractor. If Contractor believes that any required insurance coverage is
inadequate, Contractor will obtain such additional insurance coverage, as Contractor
deems adequate, at Contractor's sole expense.
10.1.1 Commercial General Liability Insurance. $1,000,000 combined
single-limit per occurrence for bodily injury, personal injury and property damage. If
the submitted policies contain aggregate limits, general aggregate limits will apply
separately to the work under this Agreement or the general aggregate will be twice
the required per occurrence limit.
10.1.2 Automobile Liability (if the use of an automobile is involved for
Contractor's work for CMWD). $1,000,000 combined single-limit per accident for
bodily injury and property damage.
10.1.3 Workers' Compensation and Employer's Liability. Workers'
Compensation limits as required by the California Labor Code. Workers'
Compensation will not be required if Contractor has no employees and provides, to
CMWD's satisfaction, a declaration stating this.
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10.1.4 Professional Liability. Errors and omissions liability appropriate to
Contractor's profession with limits of not less than $1,000,000 per claim. Coverage
must be maintained for a period of five years following the date of completion of the
work.
10.2. Additional Provisions. Contractor will ensure that the policies of insurance
required under this Agreement contain, or are endorsed to contain, the following
provisions:
10.2.1 The CMWD will be named as an additional insured on General
Liability.
10.2.2 Contractor will obtain occurrence coverage, excluding
Professional Liability, which will be written as claims-made coverage.
10.2.3 This insurance will be in force during the life of the Agreement
and any extensions of it and will not be canceled without thirty (30) days prior written
notice to CMWD sent by certified mail pursuant to the Notice provisions of this
Agreement.
10.3 Providing Certificates of Insurance and Endorsements. Prior to CMWD's
execution of this Agreement, Contractor will furnish certificates of insurance and
endorsements to CMWD.
10.4 Failure to Maintain Coverage. If Contractor fails to maintain any of these
insurance coverages, then CMWD will have the option to declare Contractor in
breach, or may purchase replacement insurance or pay the premiums that are due
on existing policies in order to maintain the required coverages. Contractor is
responsible for any payments made by CMWD to obtain or maintain insurance and
CMWD may collect these payments from Contractor or deduct the amount paid from
any sums due Contractor under this Agreement.
10.5 Submission of Insurance Policies. CMWD reserves the right to require, at
anytime, complete and certified copies of any or all required insurance policies and
endorsements.
11. BUSINESS LICENSE
Contractor will obtain and maintain a City of Carlsbad Business License for the term
of the Agreement, as may be amended from time-to-time.
12. ACCOUNTING RECORDS
Contractor will maintain complete and accurate records with respect to costs
incurred under this Agreement. All records will be clearly identifiable. Contractor will
allow a representative of CMWD during normal business hours to examine, audit,
and make transcripts or copies of records and any other documents created
pursuant to this Agreement. Contractor will allow inspection of all work, data,
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documents, proceedings, and activities related to the Agreement for a period of
three (3) years from the date of final payment under this Agreement.
13. OWNERSHIP OF DOCUMENTS
All work product produced by Contractor or its agents, employees, and
subcontractors pursuant to this Agreement is the property of CMWD. In the event
this Agreement is terminated, all work product produced by Contractor or its agents,
employees and subcontractors pursuant to this Agreement will be delivered at once
to CMWD. Contractor will have the right to make one (1) copy of the work product
for Contractor's records.
Under this agreement, CMWD agrees not to distribute the computer models
produced during this study to outside vendors without the Consultant's authorization.
14. COPYRIGHTS
Contractor agrees that all copyrights that arise from the services will be vested in
CMWD and Contractor relinquishes all claims to the copyrights in favor of CMWD.
15. NOTICES
The name of the persons who are authorized to give written notices or to receive
written notice on behalf of CMWD and on behalf of Contractor under this Agreement.
For CMWD: For Contractor:
Name Mark Stone Name Robb Grantham
Title Deputy PW Director Title Senior Project Manager
Address 5950 El Camino Real Address 225 Bush Street. Suite 1825
Carlsbad. CA 92008 San Francisco. CA 94104
Phone No. (760)438-2722 Phone No. (415) 445-8947
Email Address mston@ci.carlsbad.ca.us E-Mail Address robbg@.fcsgroup.com
Each party will notify the other immediately of any changes of address that would
require any notice or delivery to be directed to another address.
16. CONFLICT OF INTEREST
CMWD will evaluate Contractor's duties pursuant to this Agreement to determine
whether disclosure under the Political Reform Act and CMWD's Conflict of Interest
Code is required of Contractor or any of Contractor's employees, agents, or
subcontractors. Should it be determined that disclosure is required, Contractor or
Contractor's affected employees, agents, or subcontractors will complete and file
with the Secretary of the Board those schedules specified by CMWD and contained
in the Statement of Economic Interests Form 700.
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Contractor, for Contractor and on behalf of Contractor's agents, employees,
subcontractors and consultants warrants that by execution of this Agreement, that
they have no interest, present or contemplated, in the projects affected by this
Agreement. Contractor further warrants that neither Contractor, nor Contractor's
agents, employees, subcontractors and consultants have any ancillary real property,
business interests or income that will be affected by this Agreement or, alternatively,
that Contractor will file with the CMWD an affidavit disclosing this interest.
17. GENERAL COMPLIANCE WITH LAWS
Contractor will keep fully informed of federal, state and local laws and ordinances
and regulations which in any manner affect those employed by Contractor, or in any
way affect the performance of the Services by Contractor. Contractor will at all times
observe and comply with these laws, ordinances, and regulations and will be
responsible for the compliance of Contractor's services with all applicable laws,
ordinances and regulations.
Contractor will be aware of the requirements of the Immigration Reform and Control
Act of 1986 and will comply with those requirements, including, but not limited to,
verifying the eligibility for employment of all agents, employees, subcontractors and
consultants that the services required by this Agreement.
18. DISCRIMINATION AND HARASSMENT PROHIBITED
Contractor will comply with all applicable local, state and federal laws and
regulations prohibiting discrimination and harassment.
19. DISPUTE RESOLUTION
If a dispute should arise regarding the performance of the Services the following
procedure will be used to resolve any questions of fact or interpretation not
otherwise settled by agreement between the parties. Representatives of Contractor
or CMWD will reduce such questions, and their respective views, to writing. A copy
of such documented dispute will be forwarded to both parties involved along with
recommended methods of resolution, which would be of benefit to both parties. The
representative receiving the letter will reply to the letter along with a recommended
method of resolution within ten (10) business days. If the resolution thus obtained is
unsatisfactory to the aggrieved party, a letter outlining the disputes will be forwarded
to the Executive Manager. The Executive Manager will consider the facts and
solutions recommended by each party and may then opt to direct a solution to the
problem. In such cases, the action of the Executive Manager will be binding upon
the parties involved, although nothing in this procedure will prohibit the parties from
seeking remedies available to them at law.
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20. TERMINATION
In the event of the Contractor's failure to prosecute, deliver, or perform the Services,
CMWD may terminate this Agreement for nonperformance by notifying Contractor by
certified mail of the termination. If CMWD decides to abandon or indefinitely
postpone the work or services contemplated by this Agreement, CMWD may
terminate this Agreement upon written notice to Contractor. Upon notification of
termination, Contractor has five (5) business days to deliver any documents owned
by CMWD and all work in progress to CMWD address contained in this Agreement.
CMWD will make a determination of fact based upon the work product delivered to
CMWD and of the percentage of work that Contractor has performed which is usable
and of worth to CMWD in having the Agreement completed. Based upon that finding
CMWD will determine the final payment of the Agreement.
Either party upon tendering thirty (30) days written notice to the other party may
terminate this Agreement. In this event and upon request of CMWD, Contractor will
assemble the work product and put it in order for proper filing and closing and deliver
it to CMWD. Contractor will be paid for work performed to the termination date;
however, the total will not exceed the lump sum fee payable under this Agreement.
CMWD will make the final determination as to the portions of tasks completed and
the compensation to be made.
21. COVENANTS AGAINST CONTINGENT FEES
Contractor warrants that Contractor has not employed or retained any company or
person, other than a bona fide employee working for Contractor, to solicit or secure
this Agreement, and that Contractor has not paid or agreed to pay any company or
person, other than a bona fide employee, any fee, commission, percentage,
brokerage fee, gift, or any other consideration contingent upon, or resulting from, the
award or making of this Agreement. For breach or violation of this warranty, CMWD
will have the right to annul this Agreement without liability, or, in its discretion, to
deduct from the Agreement price or consideration, or otherwise recover, the full
amount of the fee, commission, percentage, brokerage fees, gift, or contingent fee.
22. CLAIMS AND LAWSUITS
By signing this Agreement, Contractor agrees that any agreement claim submitted to
CMWD must be asserted as part of the agreement process as set forth in this
Agreement and not in anticipation of litigation or in conjunction with litigation.
Contractor acknowledges that if a false claim is submitted to CMWD, it may be
considered fraud and Contractor may be subject to criminal prosecution. Contractor
acknowledges that California Government Code sections 12650 et sea., the False
Claims Act applies to this Agreement and, provides for civil penalties where a person
knowingly submits a false claim to a public entity. These provisions include false
claims made with deliberate ignorance of the false information or in reckless
disregard of the truth or falsity of information. If CMWD seeks to recover penalties
pursuant to the False Claims Act, it is entitled to recover its litigation costs, including
attorney's fees. Contractor acknowledges that the filing of a false claim may subject
Contractor to an administrative debarment proceeding as the result of which
Contractor may be prevented to act as a Contractor on any public work or
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improvement for a period of up to five (5) years. Contractor acknowledges
debarment by another jurisdiction is grounds for CMWD to terminate this Agreement.
23. JURISDICTIONS AND VENUE
Any action at law or in equity brought by either of the parties for the purpose of
enforcing a right or rights provided for by this Agreement will be tried in a court of
competent jurisdiction in the County of San Diego, State of California, and the
parties waive all provisions of law providing for a change of venue in these
proceedings to any other county.
24. SUCCESSORS AND ASSIGNS
It is mutually understood and agreed that this Agreement will be binding upon
CMWD and Contractor and their respective successors. Neither this Agreement or
any part of it nor any monies due or to become due under it may be assigned by
Contractor without the prior consent of CMWD, which shall not be unreasonably
withheld.
25. ENTIRE AGREEMENT
This Agreement, together with any other written document referred to or
contemplated by it, along with the purchase order for this Agreement and its
provisions, embody the entire Agreement and understanding between the parties
relating to the subject matter of it. In case of conflict, the terms of the Agreement
supersede the purchase order. Neither this Agreement nor any of its provisions may
be amended, modified, waived or discharged except in a writing signed by both
parties.
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26. AUTHORITY
The individuals executing this Agreement and the instruments referenced in it on
behalf of Contractor each represent and warrant that they have the legal power, right
and actual authority to bind Contractor to the terms and conditions of this
Agreement.
CONTRACTOR
*Bv:
(sig
C^frvNjX
(sign here)
r\.v^£_o^&<\
CARLSBAD MUNICIPAL WATER
DISTRICT, a Public Agency
organized under the Municipal Water
Act of/f91MU and a Subsidiary
of
(print name/title)
LORRAINE
Secretary
If required by CMWD, proper notarial acknowledgment of execution by contractor must
be attached. If a Corporation. Agreement must be signed by one corporate officer from
each of the following two groups.
*Group A.
Chairman,
President, or
Vice-President
**Group B.
Secretary,
Assistant Secretary,
CFOor
Assistant Treasurer
Otherwise, the corporation must attach a resolution certified by the secretary or
assistant secretary under corporate seal empowering the officer(s) signing to bind the
corporation.
APPROVED AS TO FORM:
RONALD R. BALL, General Counsel
Bv:IS
I OounseDeputy General Counsel
General Counsel Approved Version #05.06.08
<:> PCS GROUP
EXHIBIT "A"
SCOPE OF WORK
TASK PLAN
The following task plan outlines PCS GROUP'S structure for undertaking the data review, policy review,
analysis, review and documentation of the cost of service and rate study process. Within this task plan,
PCS has incorporated work products for each scope of work element referenced in the District's
Request for Proposal (RFP).
Task 1 - Project Management and Communication
PCS GROUP will keep an open line of communication with the District through meetings and a project
management and control plan. This plan will establish the protocols for communication and data
transfer. The plan will help to minimize the time impacts on staff, while enhancing data transfer from
staff.
1.1 Kick-off Meeting & Data Collection - PCS GROUP will hold a project kick-off meeting with
Carlsbad staff to review the scope of work, background information, initial data needs, and to establish
appropriate lines of communication for any arising concerns. The history and context of existing fees
will be reviewed and discussed as well as management preferences related to the project. PCS
GROUP will develop a preliminary written data request that will precede the project kick-off meeting, so
that readily available materials can be assembled and remaining data needs can be reviewed and
discussed. The data request will address fiscal policies and practices, historical and projected
operational and maintenance expenditures, operating transfers, non-operating revenues, debt service
requirements, replacement funding and capital improvement needs.
1.2 Communication Plan - Following the kick-off meeting, PCS GROUP will develop a project
management and control plan to facilitate communication with the District regarding progress, technical
issues and planned activities. This plan will establish the protocols for communication and data
transfer. The plan will help to minimize the time impacts on staff, while enhancing data transfer from
staff. Our project manager will be the primary client contact, with direct and targeted interaction with
the technical advisor and analyst. We will thoroughly review the data received for adequacy and
completeness and assess the need for additional data. As necessary, PCS GROUP will work with
Carlsbad to develop a plan to fill-in any data gaps when there are omissions or deficiencies in the data.
1.3 Project Meetings - PCS GROUP will participate in progress meetings with Carlsbad staff. We
have scoped three (3) meetings, combined with the Wastewater Cost of Services Study being
conducted concurrently, including the project kick-off meeting. These workshops will allow staff to
review and provide input on the financial plan.
Task 2 - Prepare Budget Projections and Assess Revenue Requirements
PCS GROUP will perform a financial analysis which evaluates utility revenue requirements that account
for all costs associated with operating and maintaining the water, and recycled water utilities. These
analyses will rely on historic expenditures and system growth; projected operating, non-operating, debt-
related and capital expenditures; increased demands; and, projected revenues.
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The analyses will be captured in financial planning models. The models will be structured to project
revenue needs related to a 20-year planning horizon. While the primary focus of this study will be to
produce a three year rate package, the model will allow the user to evaluate both short- and long-term
rate strategies in a comprehensive manner. The model will calculate rate revenue requirements based
on cash flow, bond coverage, and fiscal policy requirements.
2.1 Fiscal Policies Review - In developing the financial models, PCS GROUP will review and evaluate
the water utility's guiding fiscal policies as they relate to capital funding, and appropriate operating,
capital, emergencies, rate stabilization and connection charge reserves/funds. We understand the
desire to cash fund capitol projects over the next 5 to 10 years.
2.2 Historical Financial Statements and Budgets - PCS GROUP will develop revenue requirements
and sufficiency analyses based on historic data and projected expenditures. The analyses will extend
through 20-year planning horizons in order to provide an estimated impact of the long-term capital
program.
2.3 Capital Improvement Program - PCS GROUP will incorporate Carlsbad's capital improvement
program within its analysis, including all future capital improvement projects. PCS GROUP will
recommend a capital funding strategy based on debt ratios, replacement and expansion needs, funding
sources, and rate impacts. The model will utilize cost "S" curves that take into account the timing,
duration and costs of specific projects. This feature will allow staff to review potential projects from a
fiscal perspective and assess the feasibility of such projects before spending too much time and money
evaluating potential projects from an engineering standpoint.
2.4 Revenue Requirement - At the heart of any utility rate study is a revenue requirement, which uses
projected cash flows and debt service requirements to project revenue shortfalls. Using historical
records, PCS GROUP will project future operating and maintenance expenditures. Ongoing
expenditures will be escalated annually on a line-item basis using a range of escalation factors. For
example, variable costs, such as power, will increase not only by general cost inflation, but also with
increases in utility demands. Additionally, debt and non-operating revenues and expenditures will also
be evaluated.
Using these projections, PCS GROUP will develop financial models for the water utility that
incorporates the preceding tasks and assess the forecasted revenues through a cash flow sufficiency
test and debt service coverage test. The result of the analyses will be an accurate projection of
revenue required to service total service operations and debt. The model will consist of a functional set
of methods and data that meet the objectives set forth in the RFP, including the ability to update
revenues and expenses, and calculate costs associated with the purchase, distribution, and treatment
of water, recycled water and wastewater.
Task 3 - Develop Proposed Utility Rates Based on Cost of Service
The rate design analysis determines, using system planning and statistical data, an allocation of costs
to customer classes, defining an equitable cost-based rate burden. Since restructuring rates will almost
inevitably shift cost burdens, a valid cost allocation analysis is essential to ensuring this equitable
allocation and recovery of costs. PCS GROUP will begin with a management review of general rate
options, is then supported by a cost analysis process, and returns to a review of specific rate proposals.
3.1 Utility Rate Review- PCS GROUP will meet with utility management to review and evaluate
potential rate structure alternatives. Based on our extensive experience, we will advise Carlsbad on
key features likely to promote policy objectives while retaining equitable cost recovery. From this
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<:> PCS GROUP
session, multiple rate structure alternatives will be identified for analysis and development. A portion of
this task will be devoted to the discussion of potential drought rate structures, and the District's
objectives in achieving water usage curtailments.
3.2 Customer Data Analysis - PCS GROUP will evaluate historical billing information. Due to the
variable nature of utility rates, it is important to evaluate a multi-year trend and determine the potential
revenue lulls during low-usage years. PCS will thoroughly examine the usage data, calibrating billing
records against actual rate revenues to prevent over or under estimation of Carlsbad's water service
area customer base. This is a critical step in setting appropriate and sufficient rates.
3.3 Develop Proposed Rates - This task involves three separate components - 1) allocating costs by
function, 2) allocating costs by customer class, and 3) calculating water, drought, and recycled water.
Based on the rate evaluation performed under the previous tasks, PCS GROUP will develop rates for
the water utility based on the preferred rate structures. These rates will be based on "cost-of-service"
principles that incorporate the work performed in all previous tasks and will adhere to Proposition 218
requirements.
3.4 Surcharges and Miscellaneous Fees - PCS GROUP will review all fees, charges and surcharges
in use. We will examine current costs associated with the purchase of water the San Diego County
Water Authority, and evaluate implementing a surcharge to recover the expenses associated with these
price increases. This will allow customers to see that a portion of their rates are increasing due to
increased water purchasing costs. Additionally, PCS GROUP will determine the cost of service for other
miscellaneous fees (fire service, meter installation, reconnection fees, etc.). These fees will be based
on fully loaded labor costs and cost of materials.
3.5 Water Connection Fees - PCS GROUP will provide a connection fee study for the water utility.
Calculation of a connection fee is a simple mathematical operation; however, defining the cost and
capacity bases that make up that operation are more complex and represent the core of the connection
fee study. Basic steps in defining the basis for and computing the connection fee are as follows:
defining existing facilities in service; defining future facilities required; allocating existing and future
facilities to beneficiaries; establishing a connection equivalency basis; and, dividing allocated facility
costs by the expected growth to be served. We will incorporate the data used from the water utility cost
of service study for efficiencies.
3.6 Internal Review - PCS GROUP will conduct an independent and objective review of the proposed
rates for the water utility. This review will be performed by a senior project manager with extensive
experience developing utility rates. This proposed task is additive to the Carlsbad's original project
scope. However, we believe this proposed QA/QC process is vital to delivering tested and defensible
recommendations. We believe the level of this review is unique and reflects the depth of our resources.
Task 4 - Project Meetings, and Draft and Final Reports
Based on the findings and recommendations of this study, PCS GROUP will develop a draft and final
report, attend meetings with staff, and present to stakeholders and the CMWD Board of Directors.
4.1 Prepare Draft Report - After all analyses have been performed, PCS GROUP will develop a draft
report. The report will contain an executive summary that provides a clear and concise overview of the
study and its recommendations. The main body of the report will provide additional detail and
supporting charts and graphs. PCS GROUP will provide an electronic version of the draft report for
staff review and comment.
City Attorney/General Counsel Approved Version #05.06.08
12
«:> PCS GROUP
4.2 Prepare Final Study Report - Based on staff review and comment, PCS GROUP will finalize the
report and produce the final report (8 copies plus one unbound reproducible copy). PCS GROUP will
finalize presentation materials and provide an electronic (MS PowerPoint) version.
4.3 Presentations - PCS GROUP will make six (6) presentations, combined with the Wastewater Cost
of Services Study being conducted concurrently, in order to articulate the methodology behind the
analysis and promote the recommendations. These presentations will be aimed at the CMWD Board of
Directors and/or Citizens.
4.4 Computer Rate Model Training -At the close of this project, a one-day training session will be
held with staff. We believe that having a usable financial planning tool is a critical project deliverable.
The models will allow Carlsbad staff to run "what-if scenarios as necessary, often times eliminating no-
go projects before spending significant time or money investigating their feasibility. The model will also
be designed to be transparent, allowing staff to quickly respond to questions regarding specific impacts
to rates. As a part of this effort, training tasks will be provided after the first session to generate added
participation and insight into model use.
COST ESTIMATES
The proposed fixed costs associated with providing the services presented within this proposal amount
to $69.428. This amount includes labor, indirect and direct costs and is broken down by task as
follows:
FCS GROUP Proposed
Project Budget
Labor Effort & Expense by Task
1. Project Management & Communication
Project Management
Kick-Off Meeting & Data Collection
2. Budget Projections & Revenue Requirements
Fiscal Policies Review
Historical Financial Statements and Budgets
Capital Improvement Program
Revenue Requirement
3. Develop Proposed Rates & Fees
Utility Rate Review
Customer Data Analysis
Develop Proposed Rates
Surcharges & Miscellaneous Fees
Water & Wastewater Connection Fees
Internal Review
Workload by Consultant
Principal
$235.00
1.0
0.0
1.0
0.0
0.5
1.0
1.0
0.0
0.5
0.0
3.0
2.0
Project
Manager
$190.00
4.0
5.0
4.0
1.0
2.0
12.0
2.0
3.0
1.0
2.0
14.0
2.0
Technical
Advisor
$190.00
0.0
0.0
1.0
0.0
0.0
0.0
0.5
0.0
0.0
0.0
0.0
4.0
Analyst
$135.00
0.0
7.0
12.0
4.0
12.0
60.0
5.0
40.0
50.0
9.0
44.0
2.0
Admin
Support
$65.00
2.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Total
Labor
Expenses
$
$
$
$
$
$
$
$
S
$
$
$
1,125
1,895
2,805
730
2,118
10,615
1,385
5,970
7,058
1,595
9,305
1,880
Direct Total
Expenses Expenses
$
S
$
$
$
$
$
$
$
$
$
$
$
450 $
$
$
$
$
$
$
$
$
$
$
1,125
2,345
2,805
730
2,118
10,615
1,385
5,970
7,058
1,595
9,305
1,880
4. Project Meetings, and Draft and Final Reports
Project Meetings (3; water & wastewater)
Prepare Draft Report
Prepare Final Study Report
Public Presentations (3)
Computer Rate Model Training
Total Study Hours
0.0
1.0
0.5
0.0
0.0
11.5
20.0
4.0
2.0
36.0
0.0
114.0
0.0
1.0
0.0
0.0
0.0
6.5
4.0
12.0
6.0
24.0
5.0
296.0
1.0
2.0
2.0
6.0
0.0
13.0
$
$
$
$
$
,,„ $
4,405
2,935
1,438
10,470
675
66,403
$
$
$
$
$
$
900 $
25 $
75 $
1,350 $
225 $
3,025 $
5,305
2,960
1,513
11,820
900
69,428
Oly At:on"ay/Gercral Counsel Aop-cvod Version #05.06.08
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<> PCS GROUP
OPTIONAL SERVICES
Carlsbad intends to update its Water and Recycled Water Master Plans by early 2011. At Carlsbad's
request, PCS GROUP will be readily available to incorporate any new information from the master
plans into a revised cost of service analysis. At this time, it is estimated that this service will cost
approximately $17.263. Please see the preliminary budget by task outlined below.
Optional Master Plan Update
Labor Effort & Expense by Task
1. Project Management & Communication
Project Management
Kick-Off Meeting & Data Collection
Workload by Consultant
Principal
$275.00
0.5
0.0
Project
Manager
$220.00
2.0
5.0
Technical
Advisor
$220.00
0.0
0.0
Analyst
$160.00
0.0
7.0
Admin
Support
$75.00
1.0
0.0
Total
Labor
Expenses
$
$
653
2,220
Direct Total
Expenses Expenses
$
$
$
450 $
653
2,670
2. Budget Projections and Revenue Requirements
3
Capital Improvement Program
Revenue Requirement
0.5
0.5
2.0
4.0
0.0
0.0
12.0
36.0
0.0
0.0
$
$
2,498
6,778
$
$
$
$
2,498
6,778
. Project Meetings, and Draft and Final Reports
Prepare Draft Update Memo
Prepare Final Update Memo
Project Meeting (1)
Total Study Hours
1.0
0.5
0.0
3.0
2.0
2.0
5.0
22.0
0.0
0.0
0.0
0.0
6.0
2.0
3.0
66.0
1.0
0.5
1.0
3.5
$
$
$
$
1,750
935
1,655
16,488
$
$
$
$
$
50 $
275 $
775 $
1,750
985
1,930
17,263
* Hourly rates are assumed to increase at 5% per year.
C'Ly AUorroy/Gareral Counsel Aoprcvod Version #05.06.03
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