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Firm AoDroach to the Rate Analvsis <br />K <br />6 -1*-. <br />B. Firm Approach to the Rate Analysis <br />Conccptual plan on how our Hrin x% ill approach the project. <br />Rate recommendations will reflect each utility's recent cost experience as <br />well as anticipated future costs during the period for which rates are <br />projected. The study is divided into four tasks, which are outlined below: <br />Task I - Review Background Information (time estimate: 1 week for City to <br />provide data, 1 week for Springsted to review) <br />Internal review of background information: <br />— Review historical financial information, volumetric rates, meter <br />maintenance fees, WAC /SAC fees, and other fees and charges <br />that provide sources of revenue for each utility <br />— Review current and historical billing data for each utility <br />— Review current funding practices, funding sources and policies <br />W <br />related to financing capital improvements for each utility <br />IF <br />— Review and update the City's capital improvement plan for each <br />utility identifying the sources of funding for each improvement <br />— Review any existing debt service coverage requirements for both <br />senior and subordinate debt and the impact of adding additional <br />debt to finance new capital improvements for each utility <br />— Review ordinances, policies and practices related to user fees, <br />connection fees -and other charges for utility services <br />— Review the historical growth of the customer base and <br />projections for anticipated growth for each utility <br />— Review any engineering studies, cost of services studies and <br />other relevant studies related to each utility <br />Analyze information and develop a preliminary cost of service <br />analysis for each utility <br />— Analyze the information to identify any omissions and /or <br />inconsistencies and collect additional information, as needed <br />W <br />— Develop projected customer growth and future service demands <br />IF <br />based upon the existing systems and anticipated growth <br />— Project the cost of providing services for each utility <br />Task it - Conduct Studtr. (time estimate: 1 -2 weeks) <br />Develop a financial projection of each Utility that integrates all <br />anticipated revenue sources, including interest on the cash balance, <br />anticipated operating expenditures including existing and projected <br />new depreciation, anticipated capital expenditures, existing debt <br />service, projected debt service for identified projects and changes in <br />the customer base over the planning period: <br />Springsted City of Pequot Lakes, Minnesota. Proposal to Provide a Utility Rate Analysis — Water and Sewer <br />