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HomeMy WebLinkAboutRESPONSE - RFP - 7181 STRATEGIC FINANCIAL SERVICES':44. "�i ,t .,-. 45'i - a'; a �• ib.€,-...der-64 ''�' A ` `" `. .,per -� �-- ' ,a ,e s S'a W.-sL. v$f sr'3:. w: -.-.✓ ^�_•.s'L•. i ..'e,t S .R'.- _ OKIA fill5 e r 't '; % 'r•: F �.� ,t, s �.. �,i-. F+., x rrt., t, 'w.:.:l 5 � �X "x.] c �s. s=xx:i -�s`t,. a`g,. ,t,'� " ryr'.,F Ir gall _Aid#��uf�fa '.� `Y F Mt,$ v`'. s} fi„_• gg '1 '1•L ®tly�r��1 ,11TT� PTMn 5 u� Sett g �3st�:ayr' I SO woo 41' �� y�� f�� ..f __} a t`3,� �� 4 fi ; ..:,��'�..�'�. � s p�y o� � �•; s °��=�=.,„ } b& #t y a*`#'a� , -: *� - e, t�•"-i�,;+i; „>, c't� 'gyp^"•' "`�,` .r� sv ;'� •9 ' �_ 3„ � � y`t� *;pa�"�"���,.�'�"i,,g-jA��•s .`.: ,� m lU .. _.�� a .,�"� >� ��rr � F . � -}x.f�z; ,�, z •_.' � Lr -3.,: �a:x?�.µ.,g � - 5 fir,-� 'a � � "e. an 1''s � - s� ��,�',? \�G '�, a �"r�� �t cr•;�-.��a� � r ram., � � , { r'`.��.,� a ..� � .,,.r .� �• � ��,�-� ^ { a o v t ZVI a s „ rr {i -.tom *.'"y>. ,�"'* 's iP ir,� r yh y�.p. Al :� ¢ ^tir G`�'kM+y ''gyp qC�a gO _ �• 't' 'S'"Cif,J"&"k$�'S T f F s d� o. E _ s,JTUB � a' t<. v, ttoo p a ' a., r'-_q q3 ``'" fa'�, ✓ i -t .LY.r A a7�' 1 .♦ i�j" ""e { `a"% o. Mf 4ze, q 9 vt ^ '4r y� t '� ♦ � E fin E,.33a¢P Ono Spy', s 1 y �� t '3'.'� r# .;' f:-' } 8 v`r•zc 4- t 's d �, g-.f s ,$? `€✓m5•a i s, �'� ,.3� Aga, �i• „�' `d,, rfc �€ L ?a WIT ^v't�; c«y,r go a - z , . z �II "`-.:. Wo 2'�+ r - ',°. t y § a rs "f. u. �' # L QAZ 07 a � p ♦ a ,ram . „� � " r 6 t EKCMM ,,. f L.rMunoz 4 ✓ ��-bt _9 � , �. ° i 1 E 4n d . 4 W A ' ' S` � ''4 l� S' bti '¢n'Y r. `4 ,u x 1��� s � t k 5 � � :� J y,. � �r� � `� a 4 ,` a � �''"� a.�b� 1 �r" j � s e � ,}� sv q 4 � a. �� •. •• t ' .1 '�'x �GF' � �t'ai ,' r�;rF 5�� � � .t�s h h "zu.z t,�' r � ,g ¢ ""�� � t'�.' y S`" � .y - •ci �i � I �j ..�' ; W go-�� `�xq t ��. ��6�'"��} .+.5 `�'�•>„S"' �d� r"' ;,. �" ,x t.`�,��,�,� .k?€-''� ��.. G :kl . ,� . - w .�- t W,:sT . �4,,, • ,. �? ., '.a �..w�,R. _`�>�+ ..,' ...,.>«.., s. ,-w_� �- � "� ,.. r f �.� ...' � -�. �_ .'a� 5 ,. '- F._.a a . s � .,� Section 1 1 Project Understanding and Scope of Work is critical in understanding the adequacy of current rates and the overall cost structure of the utility. Without this information, Fort Collins Utilities has no basis for making defensible rates and pricing decisions. Specific tasks to be performed in this Phase include the following: Task 1: Adjust Test Year Revenue Requirement We will adjust the adequacy of the proposed revenue requirement in portraying the electric utility's near term and future financial obligations based on our review in Phase I. Adjustments will include modifications to historical or projected cost and revenue estimates, the load forecast, wholesale power supply costs, capital improvement programs, and other significant items. A financial plan is the foundation for the development of a revenue requirement in a cost of service study. It is quite possible that Fort Collins Utilities may wish to look at multiple financial planning scenarios to better understand the range of possibilities and associated risk related to various capital improvement programs, conservation, and rate design initiatives. Each scenario can result in an alternative revenue requirement. To the extent that additional scenarios are identified in Phase I the cost estimate contained in our proposal would require adjustment. Task 2: Adjust Cost of Service Analysis Using the adjusted Test Year Revenue Requirement, we will review and adjust the Utilities' cost of service analysis. We will review the functional ization, classification, and allocation of electric system costs to each customer class based on the information available. Cost classification and allocation are critical in rate design and will be review closely. The classification process aligns costs with the underlying nature or "driver" of such costs. These "drivers" form the foundation of the associated allocation factor used to assign costs to each rate class. Allocation factor review will include class usage characteristics such as number of customers, energy consumption, and contribution to system demand. We will closely review the Utilities' supporting data used in the development of class allocation factors, particularly any supporting load research data utilized by the Utilities. With respect to the residential class, to the extent possible, we will evaluate usage characteristics of low-income customers compared to other residential customers served. Based on our review, we will work with staff to adjust the cost of service analysis as necessary. Task 3 will not commence until Utilities staff reviews and approves the allocation of costs to the customer classes and resulting rate changes per customer class. This task will include a face-to-face meeting to discuss results. The following graphic illustrates the cost of service model architecture that we would typically expect for utilities moving towards dynamic pricing. 1-5 • R. W. BECK, AN SAIC COMPANY Section 1 1 Project Understanding and Scope of Work Example Cost of Service Model Design COST OF SERVICE JCOS) BY RATE CLASS REVENUE REQUIREMENTS 0 erations 8 REVENUE P REQUIREMENTS Mairrtenance j Services, by Function, (0&M) —� Production COS by�Class, Debt Service Se vices: byF,unction Transmission COS bylClass, ` In Lieu of Tax Services by functions PLOT) Capital Distribution COS bq IC Improvement Services bylF,uncti6a Projects ICIP) Customer 1 Service > COS b�Class, Reserves Services bylFbncti6a Task 3: Development of Marginal Cost of Service Analysis An abbreviated marginal cost of service analysis will be performed for the purposes of assisting in any time -based rate design. The analysis will include an evaluation of Utilities' short- run and long- run marginal costs with particular attention on power production and customer service. The analysis will be important as it will help us understand the cost and benefits of shifting load patterns resulting from an inclining block or other conservation based rates structures. We will review the Utilities' power supply contract with Platter River Power Authority and other resources available to the utility to determine the marginal cost of generation. To the extent time -of -use and critical peak pricing rates structures are determined to be appropriate for Fort Collins Utilities, a marginal cost analysis specific to the generation function will provide important information. The marginal cost analysis will demonstrate the costs and benefits of shifting load patterns resulting from inclining block or other conservation based rate structures. Task 4: Rate Design Using the information gathered in Tasks 1-3, we will prepare rate design alternatives for the residential and commercial rate classes. Rate design will consider the desired conservation and demand response goals and objectives of the Utilities given the long term rate policy developed in Phase I. This analysis will include a revenue adequacy analysis based on billing data and bill frequency data. Generating sufficient revenue is particularly important given that the Utilities will be promoting conservation. Adequate fixed cost recovery will bean important goal required of all proposed rates. Each rate option 1-6 • R. W. BECK, AN SAIC COMPANY Section 1 1 Project Understanding and Scope of Work will include a bill impact analysis showing the impact on customer bills over a wide range of consumption levels. Rates will be designed for a multi -year implementation period as directed by the staff and based on the revenue requirement considerations per our analyses. As part of rate design, we ® will: A. Develop preliminary electric rates (options) designed to the extent practical, to be cost based, to reflect Fort Collins Utilities' policies and objectives, to reflect recognized industry practices and trends, to address the various residential and commercial rate designs discussed in the "Customer Behavior Studies" and to mitigate rate (shock) impact on customers as electric rates are transitioned from the existing rate structure and level to new rate structures and levels. Such alternative rate options designs will include "tiered" energy and or demand charges, ® variable peak pricing, time -of -use pricing and combinations thereof. B. Work closely with representatives of Fort Collins Utilities and the firm to prioritize various rate ® options and select those most likely to meet the goals and objectives and to be acceptable to utility customers. C. Prepare for the major customer classes a comparison of typical monthly bills over a reasonable range of usage levels using the existing and proposed rates. D. Prepare for the major customer classes a comparison of typical monthly bills over a reasonable range of usage levels using the proposed rates for the Electric System using the existing published rates of representative public and private electric systems in the State. E. Participate in a meeting(s) to be held in Fort Collins, CO or Denver, CO to receive guidance from Fort Collins Utilities in the design of proposed rates, to provide for the transfer of knowledge and to manage the assignment. Task 5: Letter Report and Presentation A draft letter report will be prepared that details the methodology and results of the revenue requirements, cost of service, and rate design analyses. The letter report will be submitted to staff and ® management for review at the time the final rate proposal is developed. Following our receipt of review comments from staff and the adoption of the final rate proposal by the Board, the draft letter report will ® be updated and finalized. An electronic copy of the letter report will be provided at the conclusion of the project. Up to two members of the project team will prepare and present one presentation of our study results to the Utilities Advisory Board/Council or other parties as directed by the management team. Phase II Deliverables ® ■ Fort Collins Utilities adjusted financial planning, cost of service and rate design models 1-7 • R. W. BECK, AN SAIC COMPANY Section 1 1 Project Understanding and Scope of Work ■ High-level marginal cost analysis ■ Letter report and presentation of Phase II results Phase III: Stakeholder Engagement and Public Involvement Communications Gathering public input via a clear and actionable Public Involvement Communication Plan will be essential to completion, acceptance, and use of Fort Collins Utilities' rate options study for the electric utility. This effort must align with your sustainability direction as embodied in the 21st Century Utilities initiative and the overall city direction, as well as support various efforts underway such as AMI/Smart Grid, Demand Side Management and Renewable Energy Program. Based on our background institutional knowledge, we propose to build on and refine the established framework for ongoing stakeholder engagement in order to address the specific needs of this effort. In fact, given other stakeholder engagement activities that are currently underway and/or planned at the Utilities, we absolutely must dovetail with those efforts. This also applies to the work underway related to consumer behavior research as this research should lend valuable insights to the Utilities rates strategy development. This integration represents best practices in terms of effective stakeholder engagement, as well as leverages your resources most wisely. Due to the quickly evolving and variable nature of the public and political pressures facing the utility industry, stakeholder engagement is becoming increasingly important across the country. By aligning a cross section of stakeholders representing business and industry, citizens/customers including low- income residents, non -governmental organizations, and commercial interests, the goals of the utilities and its constituents can be met. This effort will use various tools and techniques that will reinforce an expectation of transparency and, therefore, can be viewed as an ongoing element of the Utilities' Council / strategy. Business, Industry and Institutional Customers and Consumer/Special Interest Groups The stakeholder process needs to include, but also move beyond, the traditional Employees audiences. The process will create an (Utilities Et City) essential mechanism for building mutual understanding and trust with constituents and forging support for the significant changes in pricing, price disclosure, and customer responsibility with respect to controlling their monthly power costs. Our proposed stakeholder collaboration process, managed through four well -established and practiced techniques — advisory committees, public workshops/town hall meetings, electronic communications tools (web -based, social media, mobile communications) and traditional media — will create an essential mechanism for developing an inclusive process that will provide an ongoing forum for 1-8 9 R. W. BECK, AN SAIC COMPANY ■ Section 1 1 Project Understanding and Scope of Work participants to outline their needs, requirements and interests resulting in alignment between Fort Collins Utilities and its stakeholders. The most successful stakeholder engagement programs feature a mix of methodologies in order to connect with the various demographics within a community. Upon selection, we would meet with Utilities staff and draft elements of the Public Involvement Communications Plan (PICP) that best fits ® your needs. In addition, we will be available to attend, facilitate and/or lead presentations and/or community meetings as requested. For the purposes of this scope, we have included facilitation of four, two-hour advisory committee meeting as well as two, two-hour community -wide public meetings. In incorporate keep order to perspectives and these efforts aligned with the Electric Board and City Council, we have also scoped one one -hour presentation to each of those groups as well. Upon request, ® we can modify the scope/budget to increase the number of these sessions as you see fit. In order to support the direction outlined above, R. W. Beck will provide the services described below. Task 1: Internal Workshop and Public Involvement Communication Plan Development R. W. Beck will prepare draft Communications Plan elements and facilitate a one -day workshop with Utilities staff to accomplish the following: ® ■ Review financial strategy and rates options study goals and objectives ■ Create a strategic message map o Dovetail with "Fort Collins Conserves" platform o Dovetail with Smart Grid messaging ■ Validate current communication and stakeholder approach ■ Validate segmentation of stakeholder groups ■ Identify potential issues and concerns ■ Define Public Involvement Committees We anticipate that attendees at this workshop would include executive staff, members of the management team and staff. As facilitators of the process and in keeping with previous efforts, we will work closely with Utilities to make sure we are aligned with your goals and direction. The feedback obtained from staff during the workshop will be used to finalize the strategic message and finalize the Public Involvement Communications Plan (PICP). The PICP will specify tactical actions, assignments and schedule for effective implementation. This will dovetail with the Smart Grid schedule to the extent necessary. 1-9 • R. W. BECK, AN SAIC COMPANY 11 Section 1 1 Project Understanding and Scope of Work Task 2: Develop Communication Tools R. W. Beck will work with Utilities staff to present the strategic message and input obtained from internal workshops and external committee meetings. A key communication tool will include technology -enabled applications for disseminating information and engaging customers through a dedicated website and blog. Due to both public acceptance of such methodologies and the high return on investment, web -enabled communications will be essential. R. W. Beck has used this method with Arizona Public Service and ComEd (view a sample at www.comedamifuture.com). The use of web - based tools can reduce stakeholder engagement costs, as compared to other methodologies such as focus groups, while creating a permanent record of input. The website created for this project will provide information about the public meetings, answer questions posed by customers, and may also include the use of a blog to facilitate the exchange of information. R. W. Beck will develop design and content recommendations to such a website for implementation by your web design team. R. W. Beck can also support the Utilities staff in the design and development of traditional, electronic, social, and mobile communication tools. The PICP will include strategies such as the use of social media such as Facebook/Twitter to disseminate information and collect stakeholder feedback. Additionally, we can assist with traditional communication options available such as local print media, television, and radio. Given the Utilities' internal communications staff expertise and resources, we have not included this in the scope/pricing at this point. A variety of specific engagement tools are outlined below. We have specified certain numbers of meetings, which are entirely flexible to the needs of the project as it evolves but included for purposes of scoping and an initial cost estimate. Publicizing, soliciting attendance, meeting logistics and support would be the responsibility of the Utilities. Task 3: Advisory/Public Involvement Committees One common element related to external stakeholder involvement is the creation of affinity -grouped committees that will work closely with the Utilities and R. W. Beck Project Team to provide feedback from the different segments of the community with regard to the utility's rates options/dynamic pricing program. Final committees and composition will be developed and would potentially include the following: ■ Residential customers ■ Low-income community ■ Key accounts — commercial and industrial ■ General business customers ■ Institutions such as universities and medical facilities We also recommend reengaging the 21 st Century Utilities Advisory Panel as one of these committees. Each session typically includes presentation of direction and active discussion with the advisory committee members. This input will then be brought back to the project team for consideration. The 1-10 • R. W. BECK, AN SAIC COMPANY Section 1 1 Project Understanding and Scope of Work objective of the dialog established with these advisory committees is to provide information, solicit their input, adjust going forward if appropriate, and close the loop with committee members. The overall goal is to both solicit their input and develop them as ambassadors out to their broader communities. For the duration of the rates options analysis and implementation, we recommend quarterly advisory committee meetings at a minimum. This scope includes R. W. Beck preparing for and conducting four such meeting, each 1.5 hours in length and attended by two project consultants. Task 4: Public Workshops and Town Hall Meeting R. W. Beck suggests that Fort Collins Utilities host workshops that will be open to the general public. Each workshop will support and provide information about the cost of service and pricing aspects of the project. The initial two-hour workshop, included in this scope, will introduce the project and its objectives. The subsequent workshops will provide updates regarding the project and focus on specific tasks; R. W. Beck can facilitate additional workshops as requested. During these workshops, input from the general audience will be solicited and considered in the cost of service and pricing strategy. Once the rates options study has been completed, R. W. Beck suggests a town hall meeting to inform the general public of the results of the study and the design of the new rates. The general public will have the opportunity to comment on the process and rates and this information will be captured and shared with Utilities. Other Support R. W. Beck will provide communications support to 'this effort as needed to engage and inform stakeholders. In addition to those specified above and for the purposes of this scope, we have included one presentation each to staff, Electric Board and Council. In addition, R. W. Beck's stakeholder engagement staff will conduct a review of the rates options study report that details the methodology and results of the study for effectiveness from a communications standpoint. As the Utilities' need for work to support stakeholder engagement related to strategic financial services evolves over time, R. W. Beck is ready to assist with additional tasks related to the ones detailed above and/or new approaches as needs evolve. Phase III Deliverables Tasks to conduct comprehensive stakeholder engagement will vary depending upon several factors including Utilities staff resources and availability, the number of stakeholder groups identified, the frequency of meetings, and the degree that R. W. Beck is directly involved in the marketing and public relations and the like. Our initial scope and cost estimate for Phase III, as detailed above, is based on the following deliverables: ■ One, full -day internal workshop attended by two members of the R. W. Beck team ■ Public Involvement Communications Plan — draft and final 1-11 • R. W. BECK, AN SAIC COMPANY Section 1 1 Project Understanding and Scope of Work ■ Four advisory committee meetings, includes agenda and materials preparation, facilitation and documentation; attended by two members of the R. W. Beck team ■ One town hall meeting, two hours in length; task includes agenda and materials preparation, facilitation and documentation; attended by two members of the R. W. Beck team ■ Initial (one) public workshop, including agenda and materials preparation, facilitation and documentation; attended by up to three members of the R. W. Beck team ■ Preparation and delivery of one presentation to Staff ■ Preparation and delivery of one presentation to Electric Board ■ Preparation of delivery of one presentation to City Council ■ Input to design and content of website, related to rates options study ■ Input to other communications media, as requested (not included in cost estimate) ■ Review of Rates Options Study report (Phase 11 work product) Additional Strategic Financial Services There are several other financial services that Fort Collins Utilities may require over time. As a firm that offer comprehensive technical, financial and organizational business consulting across utility sectors — electric, water, wastewater and stormwater — that can address these needs. R. W. Beck has developed tailored approaches, backed up by bona fide industry experience over many decades as well as leading edge experience related to the needs of emerging technology that we can deliver in a timely and cost-effective manner. Our approach is based on both our decades -long presence in Colorado and our long-term working relationship with Fort Collins Utilities. This results in the ability to bring a high degree of knowledge of the local, regional and State initiatives regarding electricity, water, wastewater, and stormwater as they pertain to environmental regulations, regulatory compliance and utility operations. Because of our national scope and scale, we also possess a high degree of knowledge of existing and emerging utility regulations and best practices across the country and from the federal level. Regardless of the specific Strategic Financial Services that the firm is called upon to provide to Fort Collins Utilities, the firm employs the same general approach: (1) work closely with management and staff to encourage open effective communications and enable knowledge transfer, (2) obtain a thorough understanding of the current situation including collaboration with other efforts and consultants, (3) obtain an understanding of the goals, objectives and issues, (4) identify available data, information and resources, (4) independently analyze, adjust as necessary, and use available information "to avoid reinventing the wheel," (5) develop and explore alternative solutions and perform "sanity checks" and 1-12 • R. W. BECK, AN SAIC COMPANY ® Section 1 1 Project Understanding and Scope of Work sensitivity analyses, (6) ascertain what others are doing and apply the "lessons learned" by others to minimize time requirements and costs, and (7) draw and document findings and recommendations. We have provided an overview of our general approach to some of the other topical areas listed in the RFP below. Detailed scopes of work would be developed upon request and are not included in this current scope or cost estimate but are provided to underscore the comprehensive services that R. W. Beck can provide. Financial Forecasting touches virtually all aspects of utility operations. Consequently when developing, revising or using financial forecasting models, the firm strives to address all relevant assumptions, considerations and factors that could materially affect the results of the financial forecast. Examples of areas that the firm would focus on include policies; industry practices; sales forecast with adjustments for current economic conditions and for changing customer usage characteristics; estimated operating costs together with inflation and escalation allowances, changes in service levels, as well as regulatory compliance; the need to fund capital improvements and the manner in which capital improvements are funded e.g., revenues, indebtedness and/or some combination thereof, and payments to the City. The financial forecast should allow for the easy incorporation of changes and should facilitate measuring the effects of each change. As envisioned in the proposed scope of service associated with the Rate Options Study, available information from other relevant studies, sales forecasts, budgets, customer behavior study, among others will be considered to insure congruity and consistency. In addition to the alignment of this information, costs should be reduced. Assistance in the Evaluation of Various Financing Mechanisms has been an area where the firm has provided service to many of its long standing clients. Over the years, the firm has provided assistance in identifying the benefits and detriments to the utility and to customers in alternative funding vehicles including, but not limited to: (1) operating revenues (rates/user fees); (2) contributions in aid of construction (impact fees); (3) grants; and (4) indebtedness e.g., long term debt (bonds), commercial paper programs, lines of credit and combinations thereof. Based on direction from Fort Collins Utilities, the firm can quantify the long term and short term costs of various financing vehicles and optimize the mix of financing options to reduce costs to current customers, to establish or improve credit ratings or to balance these and other objectives. The use of a multi -year financial forecasting model will enable Fort Collins Utilities the ability to quantify the efforts of potential changes and to identify and select the timing of implementing such 1-13 . R. W. BECK, AN SAIC COMPANY Section 1 1 Project Understanding and Scope of Work changes e.g., external financing, implementing Smart Grid/AMI activities, rate adjustments, etc. Conducting these types of Business Case Evaluation" will enable Fort Collins Utilities to prioritize projects and events and to determine the appropriate time to commence implementation. Given that Fort Collins Utilities operates four utilities and that the City also provides services to Fort Collins Utilities, other City enterprise funds and general government departments, the City and Fort Collins Utilities have taken advantage of sharing services and costs. However, it is believed that there may be new opportunities to improve services and lower costs through undertaking a "fresh" look at existing "business processes." For example, with the implementation of the Smart Grid Activities, certain existing business processes may no longer be necessary or may be reduced due to benefits associated with the deployment of the Smart Grid/AMI project. The firm has advised utility clients in matters pertaining to administrative processes, procedures and policies so as to eliminate or streamline the process, to improve efficiency and to reduce labor costs. The use of Business Process Optimization studies would support business continuity. Over the years the firm has provided guidance and assistance to governmentally owned utilities in the areas of Enterprise Risk Management and Risk Mitigation. Due in part societal changes on attitudes regarding litigation and the avoidance of risk, there has been a tendency to shift risk (e.g., economic, governance, financial, market, regulatory, etc.) to others. Consequently, the management of the various types of risk continues to demand managerial attention. This heightened interest in risk mitigation on the part of governmentally owned utilities continues to be a major concern of the national credit rating agencies (e.g., Moody's Investors Services, Inc., Standard and Poor's Ratings Services and Fitch Ratings, Inc.). Absent the successful management of known and anticipated enterprise risks, such absence could adversely affect the sustainability of the existing entities. Additional Information In order to support the project tasks and schedule, Fort Collins Utilities will be asked to make the following available as required: ■ Copies of all existing rate schedules; reports; customer behavior studies; master plans; maps; books of account; detail budgets; electric load research activities; computer models; operating records; permits; summarized daily, weekly, monthly and annual load shape information; etc., as required to complete the work. ■ Copies of summarized historical records of electricity usage together with electric rate revenue in a form to be specified by the firm, as reflected in the City's/Fort Collins's billing records for a selected 12-month period to be determined by the City, Fort Collins Utilities and the firm (tentatively, the twelve months ended September 30, 2010). 1-14 9 R. W. BECK, AN SAIC COMPANY I ■ October 29, 2010 James B. O'Neill II, CPPO, FNIGP Director of Purchasing and Risk Management City of Fort Collins Purchasing Division 215 North Mason Street; 2" d floor Fort Collins, CO 80524 Subject: Proposal to Provide Strategic Financial Services/RFP 7178 Dear Mr. O'Neill: An SAIC Company Having served the public power industry since our inception more than 65 years ago, R. W. Beck, an SAIC company, has earned the trust of municipal utilities of all sizes and locations. We share an acute appreciation of the relationship between governing bodies, utilities, and their customers, especially the understanding of how these relationships can become tenuous in the face of economic, environmental, and political adversity. As many municipal utilities, Fort Collins Utilities is faced with significant challenges as you implement changes to your pricing strategies in support of improved system efficiency, deployment of new technologies such as smart grid, and active support of your sustainability direction. New rate structures and pricing signals must promote the desired demand response and customer behavior while maintaining the long-term financial strength of the utility. Such changes in rate structures may have a significant impact on certain customers and classes. To successfully design and implement such change, acceptable solutions must be developed that are reasonable and equitable from the perspective of the various stakeholders. Finding such a solution that stakeholders are willing to accept requires industry insight, customer relations acumen, technical expertise, and the trusted advisor reputation that R. W. Beck can bring. First and foremost, R. W. Beck views this assignment as a strategic in nature. Financial strategy and rates development work are sophisticated assignments that involve numerous and complex calculations. Cost of service studies and supporting work papers can be voluminous and complex. Issues can be numerous. Without a clear strategic view of the underlying business objectives important to the process, it is easy to "lose one's way" as the work unfolds. R. W. Beck understands the linkage between business strategy and the technical methodologies used in these studies. We understand how to anticipate study results and mitigate issues that may undermine the Utilities' efforts to achieve important goals. We work for leading municipal utilities on complex assignments. R. W. Beck has been in the utility rate consulting business for as long as we've been in business, and we work with leading municipal utilities across the country that successfully operate electric, water, wastewater and stormwater enterprises. Some examples include Austin Energy, CPS Energy, Colorado Springs Utilities, Santee Cooper, Sacramento Municipal Utility District, Brazos River Authority, Tarrant Regional Water District and several others. This list includes many multi -service utilities where we provide financial consulting across utility service areas. In fact, R. W. Beck is unique in its strength across all utility service areas, and this results in an ability to enhance the financial acumen across the organization. We have developed a broad base of experience in providing financial consulting services, including rate studies; expert testimony in rate, utility, and finance matters; periodic reports on utility systems and operations; analyses of project feasibility; and required certificates under revenue bond resolutions. Section 1 1 Project Understanding and Scope of Work ■ Assistance by the City and Fort Collins Utilities management and staff, engineers, and advisors to make determinations with respect to the Electric System regarding forecasts of sales and changes in the number of customers; changes in usage characteristics; the estimation of the elasticity of demand for electricity, financial projections of required revenues; expenses; net operating revenues; debt service; renewals, replacements and improvements, transfers to the City and fund balances. ■ Legal services and opinions as required in connection with the work, including preparation of a revised rate ordinance. In order to minimize costs, all data provided by the City and Fort Collins Utilities will be relied on and utilized in the preparation of studies; such data and information will not be independently verified by the firm for accuracy and/or completeness. R. W. Beck will provide three copies of final reports together with an electronic copy. 1-15 • R. W. BECK, AN SAIC COMPANY SECTION 2 Assigned Personnel An SAIC Company I Section 2 Assigned Personnel In response to the Utilities' desire for comprehensive and state-of-the-art services, we have assembled a team of leading consultants able to understand, anticipate, and respond to the Utilities' needs, both during the immediate Electric Rate Options Study and for ongoing strategic financial services. This team, based primarily in our Denver office, is shown in the organizational chart on the following page. Collaboration is key, and the selected R.W. Beck personnel have the fundamental belief in the importance of that approach, as well as the skill and experience necessary to make it happen. The expertise of our team members provides the depth and knowledge needed to work collaboratively with staff, every step of the way. In addition, our team is able to work successfully with consultants engaged on other important initiatives, including the asset management and smart grid efforts currently underway. We will evaluate the Utilities' electric rates options; provide well-founded, expert analysis as input to your rates strategy development; and engage with the Utilities' many stakeholders to promote understanding and acceptance of the rates strategy. Team members are also well qualified to support potential water, wastewater, and stormwater studies that may result from this contract, as well as strategic financial services that may be requested. Again, R.W. Beck stands alone in the strength of its staff to provide financial services across all four utility service areas. Together, Fort Collins Utilities and R. W. Beck will conduct a successful rate study supported by sound technical analyses, based on proven decision -making processes, and grounded in internal and external stakeholder engagement. 2-1 • R. W. BECK, AN SAIC COMPANY Section 2 1 Assigned Personnel Financial Strategy and Electric Rate Options Ted Szymankiewicz, Lead Scott Burnham I Ted Szymankiewicz -1--------------------, Scott Cochran James Lester ; Clty of F„`rt Collins Utilities Project manager Joe Mancinelli ----------------------------- Deputy Program Manager Scott Burnham Stakeholder Engagement and Public Involvement Communications Lynn Adams, Lead --------------------- Rebecca Shiflea Sabine Bendenoun ; SUBJECT MATTER EXPERTS . Pnncipal=m Charge Timothy Corrigan Water, Wastewater, and Stormwater Rates Dan Lanning, Lead --------------------- Art Griffith Jeff Schulz ; i.--- .--- ._._:----- ._._._.--- ._----- ._-- Business Case Evaluation/ Enterprise Risk Management Business Process Optimization Load Forecasting ----------------- ----------------- ----------------- i Ruben Moreno Fred Jennings Jonathan Nunes Our key team members and their roles are introduced in the following summaries. In addition, we have provided full resumes for all of our team members in Appendix A. 2-2 9 R. W. BECK, AN SAIC COMPANY Section 2 Assigned Personnel ■ Joseph Mancinelli Primary Assignment: Mr. Mancinelli will be the primary interface between R. W. Beck and Fort Role: Project Collins Utilities for the electric rate options study and this contract. He will manage the scope, Manager budget, and schedule of the rate study and oversee R. W. Beck's response to additional assignments. He will also provide direction to the project team throughout the contract. Biography: Mr. Mancinelli currently leads R. W. Beck's Rates and Regulatory Practice. He has more than 23 years of experience in the areas of cost of service and rate design for electric, water, wastewater, and natural gas utilities acting in the roles of expert witness, project manager, and lead analyst. He has worked closely with public utility commissions, senior management teams, utility boards, city councils, attorneys, and end -users with respect to the strategy and technical fundamentals of cost of service and rate design. He has taught numerous classes on cost of service and rate design methodology, including a cost of service and rate design course for Electric Utility Consultants, Inc. since 2004. He is an expert in approved industry methodologies adopted by the National Association of Regulatory Utility Commissioners, the American Public Power Association, and the American Water Works Association. He regularly speaks at conferences across the country on cost of service and rate issues. Mr. Mancinelli has developed unique and innovative rates for utilities that balance competitive issues and send the proper pricing signals to customers. For electric utilities, in addition to traditional rate design options, Mr. Mancinelli has designed rates that incorporate unbundling, net metering reliability, renewable power, transmission and distribution wheeling, and time -of - use. He has led the public process associated with adoption and approval of rates and has successfully interacted with residential groups, governmental agencies, developers, and large commercial and industrial customers. Mr. Mancinelli has worked closely with commission staff and stakeholders in the regulatory arena. Scott Burnham Primary Assignment: Mr. Burnham will act as Deputy Project Manager, monitoring the day -to - Role: Deputy day progress of our work and serving as the primary contact between Fort Collins Utilities and Project Manager the members of our technical team. He will also lead the financial planning effort for the rates project. and Financial Planning Lead Biography: Mr. Burnham leverages highly relevant experience, primarily in the area of cost -of - service analysis, rate design, asset valuation, and utility restructuring. His areas of expertise include acquisition, privatization, and competitive assessments for electric utilities, which includes financial and feasibility analysis and evaluation. His project responsibilities have included financial analyses, asset appraisals and evaluations, and project management. Mr. Burnham has participated in numerous retail rate studies for electric, water, wastewater, and gas utilities. He also performs unbundling studies for municipal and other public power clients. Additionally, Mr. Burnham has experience in water rates, wholesale electric rates, rates negotiation, and evaluation for large industrial customers. I 2-3 • R. W. BECK, AN SAIC COMPANY Section 2 1 Assigned Personnel ■ MemberTeam Timothy Corrigan, P.E. Role: Principal -in- Charge Qualifications Primary Assignment: Mr. Corrigan will provide oversight to the team as principal -in -charge and be available to Fort Collins as needed. Biography: Mr. Corrigan has provided consulting services to clients in a variety of areas, including utility operations and strategic planning; market assessments and competitive positioning; electric, natural gas, and water rates and cost of service analyses; and power supply, economic, and financial feasibility studies. He has been involved in developing and evaluating strategies and addressing issues pertaining to electric utility finance and rate matters, including providing expert testimony before numerous state and federal regulatory bodies. Mr. Corrigan has assisted utility clients in examining their competitive positions and has provided them with strategic guidance for issues such as retail wheeling, transmission access, competitive sales, and purchases of wholesale power and energy. Ted Primary Assignment: Mr. Szymankiewicz will lead the development of the Electric Rate Szymankiewicz Options Study and will provide expertise in time -of -use and other innovative rate options. Role: Financial Biography: Mr. Szymankiewicz has supervised multi -year electric, gas, water, and sewer Strategies and studies that considered, among other things, the adequacy of revenues, compensatory return Electric Rate on investment, revenue stability, fairness, avoidance of undue discrimination, cost of service, Options Lead economic price signals, regulatory precedent, and industry standards. Based on revenue requirement studies and projections of sales and requirements, Mr. Szymankiewicz has developed tariff language and has designed rate levels and rates structured to meet -the overall objectives of the client, recover costs equitably, discourage wasteful use, and comply with industry or regulatory standards. As part of the rate design process, he has utilized comparisons to determine the impact on customer classes, as well as customers within a class, resulting from changes in rate levels and rate structures. ` Lynn Adams Primary Assignment: Ms. Adams will lead tasks related to stakeholder engagement strategies Role: Stakeholder and tactical implementation. Engagement and Biography: Ms. Adams will leverage her background knowledge of the Utilities customer Public Involvement engagement approaches and ongoing efforts to create an effective approach for this current Communications effort. Ms. Adams has performed many business consulting and stakeholder engagement efforts Lead - often anchored by strategic, business and marketing planning - for infrastructure organizations, utilities, and other clients across the country. She became focused on those activities during the initial deregulation of the energy industry and has leveraged that perspective into the water industry as well. Each project features includes helping clients develop the external focus essential for success. Over time, stakeholder engagement has become increasingly important to successful project implementation across the utility industry. As such, Ms. Adams employs a plan -based, best practices approach that integrates various media including traditional, electronic and social media into an executable and accountable plan. Ms. Adams directly facilitates advisory panels, designs public meetings and briefs governing bodies. 2-4 • R. W. BECK, AN SAIC COMPANY Section 2 Assigned Personnel ■ Team Member I Qualifications Dan Lanning Primary Assignment: Mr. Lanning will lead water, wastewater, and stormwater rates work. Role: Water, Wastewater and Biography: Dan Lanning is an accountant, auditor, and financial analyst with more than 30 years of experience in water, wastewater, electric, and gas utility financial and management Stormwater Rates matters. He has conducted numerous cost -of -service, asset valuation, and management studies Lead for public and private water, sewer, storm water, reclamation districts, electric, solid waste, gas, and telephone utilities. He prepares studies and audits and presents testimony before regulatory agencies. Prior to becoming a consultant 20 years ago, Mr. Lanning was a member of the New Hampshire Public Utilities Commission staff, where he held several positions including Assistant Finance Director, Chief Auditor at the Seabrook Nuclear Power Plant, and a PUC Examiner assisting the Commission's compliance with the Public Utility Regulatory Policies Act (PURPA). 2-5 • R. W. BECK, AN SAIC COMPANY SECTION 3 Firm Capability and Experience ■ An SAIC Company ■ ■ Section 3 Firm Capability and Experience R. W. Beck has been in the utility rate consulting business since its inception more than 65 years ago. Throughout the years, we have developed a broad base of experience in providing financial and business consulting services for electric, water/wastewater and multi -service utilities, including conducting rate studies; providing expert testimony in rate, utility, and finance matters; preparing periodic reports on utility systems and operations; financial forecasting; and enterprise risk management. The projects listed in this section serve as a representative sample of our recent experience. We have highlighted both our long-standing consulting relationships, as well as our experience working with other forward -looking utilities on related issues. Many of the projects featured are in Colorado, providing valuable local/regional knowledge. We have a long history of assisting utilities with critical planning and evaluation efforts. Our approach is based on a hands-on experience that enables us to gain detailed knowledge of the situation and associated challenges, align staff and governing bodies, and develop innovative and ■ ■ actionable solutions. More recently, and in response to emerging client needs, we ■ are working with several clients to provide dynamic pricing solutions, including: ' ■ Austin Energy ■ New Hampshire Electric Cooperative ■ Kauai Island Utility Cooperative ■ Florida Municipal Power Agency ■ Central Lincoln People's Utility District ■ Green Mountain Power ■ Golden Valley Electric Association ■ Homer Electric Association Long Standing Finwn5a1 Consulting Relationships Illustrate R. W. Beck's Strength and Trusted Advisor Role Many of our cbients have engaged R. W. Beck multiple times over the years on financial strategy, cost of service and rate design engagements; we take pride in these long standing utility client relationships. The following list highlights some of the clients for whom we have Performed 'multiple financial analysis studiesover, AlabamaMunui alwElectric ■ BrownsvillePubhc Utilities Board Texas ■ Colorado SpnUtiesnih ■ ElectnCities of Norffi Carolina ■ Eugene Water and Electric Board, Oregon ■ Florida Municipal Power Agency ■ Golden Valley Electric Association, Alaska ■ City of Key West Utility Board, Florida ■ Lafayette Utilities System, Louisiana ■ Missouri River Energy Services, Louisiana ■ Municipal Electric Authority of Georgia ■ Piedmont Municipal Power Agency ■ Rochester Public Utilities, Minnesota ■ Santee Cooper (South Carolina Public. Service Authority) ■ Southern Minnesota Municipal Power Agency ■ City of Tallahassee, Florida ■ Virgin Islands Water and Power Authority 3-1 9 R. W. BECK, AN SAIC COMPANY Section 3 1 Firm Capability and Experience ,4'enginee s�'rand"analysts;(who'`seek introductory; 'hands on training^relatetltoccost6of service concepts and' techniques for el116 ric:utilities. The.courses.are widely attended by public power, investor -owned, and cooperative utilities. Representative Project Experience Select projects in which our team has provided similar services is provided below. We have presented a variety of project across utility service sectors, as well as several that feature work for multi -service utilities. We encourage Fort Collins Utilities to contact the references provided to confirm R. W. Beck's successful track record in providing similar clients with the range of services that Fort Collin's Utilities is seeking. Electric Cost of • Rate Review Client and Location: Colorado Springs Utilities, Colorado Year: 2007 Reference Name, Title, and Phone: Stella Chan, Manager, Planning and Finance Division (719)668-8549 Bill Cherrier, Chief Planning and Finance Officer (719) 668-8136 Brief Description of Work: Reviewed the cost of service methodology and rate design practices Project Duration: 6 months Total Cost: $37,393 Relevant Project Personnel: Ted Szymankiewicz and Scott Burnham Colorado Springs Utilities has relied on R. W. Beck for various efforts to support both electric and water rates efforts for several years. In late 2008, Colorado Springs Utilities retained R. W. Beck to review its historical cost of service methodology and rate design practices. Working closely with Colorado Springs Utilities management and staff, the cost of service methodology was revised to reflect the practices recognized by the Federal Energy Regulatory Commission, the Colorado Public Utilities Commission, and the National Association of Regulatory Utility Commissioners. Based on the guidance provided, revised rates, including optional time -of -use rates for residential service, demand - metered general service, and industrial service, were developed. The revised rates were approved and became effective in February. 3-2 • R. W. BECK, AN SAIC COMPANY I Letter of Transmittal Table of Contents SECTION Scopeof Work............................................................................................... 1 Assigned Personnel......................................................................................... 2 Firm Capability and Experience.......................................................................... 3 Availability, Schedule, and Cost Estimate.............................................................. 4 APPENDIX Resumes...................................................................................................... A © Copyright 2010, R. W. Beck, An SAIC Company. All Rights Reserved An SAIC Company Section 3 1 Firm Capability and Experience Water Regionalization Study,Development, and Rates Methodology Client and Location: Colorado Springs Utilities, Colorado Year: 2009-2010 Reference Name, Title, and Wayne Vanderschuere, Water Supply Manager Phone: (719)668-3811 Stella Chan, Manager, Planning and Finance Division (719) 668-8549 Brief Description of Work: Performed a water regionalization study, rates strategy development and rates methodology review Project Duration: 8 months Total Cost: $99,000 Relevant Project Personnel: Lynn Adams (Project Manager), Ted Szymankiewicz, Fred Jennings Colorado Springs Utilities is embarking on a multi -year, large-scale infrastructure project to build a water pipeline designed to serve the community's long-term water conveyance needs. At the same time, the Springs Utilities are addressing various other issues including growth in the surrounding areas, ability to serve neighboring communities, and potential to enhance revenue sources. In order to examine the viability of various long-term strategies including becoming a regional water provider to serve the needs of other communities, the Utilities retained R. W. Beck to conduct benchmarking analysis, rates strategy development, and rates methodology review. This project accomplished the following key objectives: l . Document the experience of other regional providers and highlight similarities or variances 2. Inform policy direction and develop stakeholder understanding 3. Provide a strategy for establishing a rate that was equitable to both inside system owners and potential customers 4. Review, comment on, and validate the methodology used by internal staff in developing the cost of service basis In work sessions with the Springs Utilities team, several parameters were defined that the rate strategy must satisfy. In addition, the effort considered how to balance the risks and limitations specific to the utility system, including myriad contractual issues, implications for growth and development, permit compliance, operational constraints, and so on. The resulting work expanded the perspective on financial strategy while also providing expert perspective on methodology and results. Moreover, R. W. Beck presented findings to the Springs Utilities' advisory committee during the course of this work. 3-3 • R. W. BECK, AN SAIC COMPANY Section 3 1 Firm Capability and Experience SupportingElectric System Rate Study and .- Client: Kauai Island Utility Cooperative (KIUC), Hawaii Year: 2008 Reference Name, Title, and Phone: David Bissell, Chief Financial Officer (808)246-8213 Brief Description of Work: Reviewed electric rates for submittal to utility commission Project Duration: 1 year Total Cost: $192,000 Relevant Project Personnel: Richard Cuthbert and Laurie Tomczyk R. W. Beck prepared a comprehensive review and evaluation of KIUC's electric rates necessary for submittal to the Hawaii Public Utilities Commission (HPUC). Key issues included: (i) reviewing , various ratemaking issues such as standby service rates, net -energy metering rates, wheeling rates, feed - in tariffs, cost of service levels, and renewable portfolio standards; (ii) using a projected test year analysis to assess KIUC's revenue requirements; (iii) developing load research information for each of KIUC's customer classes; (iv) assessing the cost of service changes for the customer classes served; and (v) developing new rates for all of KIUC's customer classes based on a 10.5 percent rate increase. The project was conducted jointly with KIUC staff and included several meetings and workshops with KIUC's Board of Directors. New rates sufficient to support's KIUC's long-term financial needs were , developed, approved by the KIUC Board, and presented in expert testimony to the HPUC for required regulatory approval. Electric Unbundled Cost of Service and Rate Design Studies Client and Location: Eugene Water and Electric Board (EWEB), Oregon Year: Multiple projects from mid 1990s to current Reference Name, Title, and Phone: John Yanov, Senior Financial Rates Analyst (541)685-7126 Brief Description of Work: Provided high-level review of cost of service study, developed commercial class rates, and performed billing impact analysis Project Duration: Ongoing for last 10+ years Total Cost: $180,000 Relevant Project Personnel: Joe Mancinelli, Richard Cuthbert, Laurie Tomczyk, and Jill Sangster 3-4 • R. W. BECK, AN SAIC COMPANY I Section 3 1 Firm Capability and Experience I Chartered by the City, the Eugene Water and Electric Board (EWEB) is Oregon's largest customer - owned utility. EWEB provides electricity, water, and steam to more than 86,000 homes, businesses, schools, and other customers. R. W. Beck has worked with EWEB for more than a decade to support its cost of service and rate design projects. We first helped to develop the initial cost of service model and have since played a supervisory role for EWEB's embedded cost of service study and associated rate design. R. W. Beck works closely with EWEB staff to provide oversight regarding the allocation factors and reasonableness of annual cost of service results, which are used in preparation of an annual rate case for its elected Board of Commissioners to support rate levels for residential, commercial, and large industrial rate classes. Also in support of EWEB's options analysis and rate design efforts, we regularly download monthly customer information system data into Microsoft Excel and Access to examine customer rate impacts. Our database analyses provided statistical support for splitting the general service class at two points based on different monthly demand levels, resulting in three new rate classes: general service -small, general service -medium, and general service -large. We identified specific customers adversely impacted by this change in rate classes so EWEB could contact these customers directly. Additionally, rate design for the three new general service classes included an evaluation of transition impacts between the newly formed classes as customers may move up or down in classes given changes to monthly demand over time. Electric, Water, • Sewer and Reclaimed Water Rate Study Client and Location: City of Tallahassee, Florida Year: Multiple projects including 2005, 2006, and 2007-2008 Reference Name, Title, and Richard Fernandez, Deputy City Manager Phone: (850)891-8580 Reese Goad (850) 891-6803 Brief Description of Work: Prepared an electric rate study including time -of -use pricing and a 10-year financial forecast of electric system operations. Project Duration: 3 years Total Cost: $190,000 Relevant Project Personnel: Ted Szymankiewicz Since 1966, R. W. Beck has provided consulting services to the City of Tallahassee in the areas of utility rates and finance. The City owns and operates a municipal electric generation, transmission, and distribution system; a potable water supply and distribution system; a wastewater treatment, collection, 3-5 9 R. W. BECK, AN SAIC COMPANY Section 3 1 Firm Capability and Experience and disposal system; and a natural gas distribution system. R. W. Beck has provided services which have included advice, counsel, direction, and training to the City for preparation of cost of service studies; design of cost -based rates using generally accepted rate making practices by the Florida Public Service Commission and the American Water Works Association recommendations; development of impact fees recognizing industry practices, regulatory guidelines, and judicial rulings; and design of cost -based rates for fire protection service and miscellaneous charges for customer requested services. In 2006, R. W. Beck prepared an electric rate study for the purpose of adjusting the City's rates and charges for electric service to its more than 100,000 customers and prepared a forecast of financial operations of its electric system for a 10-year period. The City owns and operates a vertically integrated electric generation, transmission, and distribution system. The rates and charges for electric service are subject to limited jurisdiction by the Florida Public Service Commission. In addition to addressing the traditional elements of such studies (e.g., coincident and non -coincident demand responsibility) and determination of test -year revenue requirements, functional ization, and classification of expenditures, the study also addressed issues pertaining to the design of cost -based rates, including inverted residential rates, interruptible, curtailable, and demand -side management rates. The financial forecast assisted the City during its long range planning activities to identify potential issues, opportunities and solutions to system operations, resource planning, and customer acquisition and retention in a changing industry environment. In 2010, the City retained R. W. Beck to develop an electric rate program to coincide with the deployment of its Smart Grid/AMI initiative. Working closely with the City's management and staff, we developed a pilot program incorporating an optional variable priced rate structure. The proposed pilot program and optional residential electric rate were approved by the City and the Florida Public Service Commission in October 2010. StudyElectric, Water, and Wastewater Rate Client and Location: Lafayette Utilities System (LUS), Louisiana Year: 2009 Reference Name, Title, and Phone: Terry Huval, Director of Utilities (337) 291-5804 Brief Description of Work: Developed a 10 year financial planning model, cost of service, and rate design for the electric, water, and wastewater systems Project Duration: 9 months Total Cost: $185,000 Relevant Project Personnel: Timothy Corrigan and Joe Mancinelli 3-6 • R. W. BECK, AN SAIC COMPANY a I Section 3 Firm Capability and Experience LUS — for whom we have performed multiple financial/rates projects over the years — engaged R. W. Beck to perform a comprehensive review of the utilities financial condition and prepare a cost of service and rate design study to support indicated rate adjustments. R. W. Beck prepared a 10 year financial model which allowed LUS to evaluate various rate and financing strategies that would meet the overall utility objectives. The financial planning model allowed LUS to run real time scenarios considering changes in rate levels, debt financing, and variations in their projected capital improvement plan. The financial planning tool interfaced with the utilities generation expansion planning tool and budget. Based on the result of the various scenarios, a significant increase in base rates was required to meet the utilities financial objectives. The financial analysis indicated that electric system base rates needed to be increased by approximately 21 percent, water system rates required an increase by approximately 18 percent, and wastewater rates required an increase of approximately 36 percent. Given the size of the increases, multiple -year phase -in strategies were considered and eventually a two- year rate phase and strategy was adopted. The financial planning tool identified specific known and measurable adjustments that were incorporated in the development of test year revenue requirement cost of service study. The test year revenue requirement was unbundled into the primary utility functions of generation, transmission, distribution, and customer service. Within each function, specific services were identified and further unbundling of costs occurred. Once the revenue requirement was unbundled, costs were classified and allocated to the various customer classes. R. W. Beck supported the LUS' management team in its interactions with the City of Lafayette and the Lafayette City Council. The proposed rates were successfully adopted in the spring of 2010. Related Project Experience The following project profiles illustrate additional financial strategy/rates analysis experience, as well as a sampling of R.W. Beck's experience with projects related to the possible other services listed in the Request for Proposals. Comparative Marginal Cost/Embedded Cost Review Seattle City Light (SCL), Washington SCL regularly prepares a marginal cost of service for its electric system in accordance with guidance from the National Association of Regulatory Utility Commissioners and utilizes those results as the basis for its retail rate design. 1n response to customer criticism of this approach, R. W. Beck was retained to review SCL's marginal cost analysis and develop an embedded cost of service analysis for comparison purposes. This required an in-depth understanding of the marginal cost of service analysis, including the cost allocations and associated cost responsibilities by customer class category. The marginal cost of service review was a critical element in the development of the embedded cost of service analysis for SCL. By determining the underlying cost rationale for each of the functional 3-7 • R. W. BECK, AN SAIC COMPANY Section 3 1 Firm Capability and Experience elements of the utility, R. W. Beck was able to present results of the comparative analysis on a system- wide and functional basis. Key issues that were addressed during the study included: i) the appropriate classification of a production plant that was nearly 100 percent hydroelectric based; (ii) the determination of costs for a minimum size system analysis with a significant underground plant; and (iii) an equitable allocation of costs between an underground downtown network service area and the remaining service area. Final draft results of the study were presented to the SCL Superintendent as well as the City of Seattle Mayor's Office and the City Council Seattle. In part, due to findings of the Study, implementation of rate changes was delayed by approximately two years. Customer Behavior Study and Dynamic Electric Rate Design City of Quincy, Florida In October 2010, the City retained R. W. Beck to assist it in complying with certain provisions of a federal grant to implement a Smart Grid/AMI program. Working with the City management and staff, vendors and others, we will conduct a multi -year "Customer Behavior Study" and design a dynamic electric rate intended to encourage customers to conserve energy and shift peak demands through economic incentives. It is contemplated that the requirements established by the Department of Energy (DOE) and made a part of the grant program will be refined and agreed to in the next 60 days. Upon receiving definitive direction from the City, we will develop a proposed electric rate program to comply with DOE requirements, to reflect City direction and to adhere to Florida Public Service Commission decisions. It is envisioned that new electric base rates will become effective in 2011. Electric, Water, Wastewater and Solid Waste Rates Study City of Weatherford, Texas The City of Weatherford retained R. W. Beck to perform the electric, water, wastewater, and sanitation studies simultaneously in order to maximize the efficiency and cost effectiveness of the project. The three phases of work included: ■ Five -Year Financial Model and Revenue Requirement: On a systemwide basis, R. W. Beck determined if client rates were adequate or required adjustment. ■ Cost of Service Model: R. W. Beck unbundled, classified, and allocated costs using generally acceptable cost allocation methodologies. Allocation factors spread utility revenue requirements to each rate class, resulting in a fully allocated cost of service analysis. ■ Rate Design: The rate design focused heavily on the review of existing rates. Working closely with client staff, R. W. Beck provided recommendations that reflected cost of service results with the objective of sending the appropriate pricing signals to client customers. Water Strategy and Pricing Analysis Brazos River Authority/Texas The Brazos River Authority, with headquarters in Waco, is steward to a river watershed including 42,000 square miles and all or part of 65 counties, and extends from the Texas -New Mexico border, 3-8 • R. W. BECK, AN SAIC COMPANY ISection 3 1 Firm Capability and Experience I west of Lubbock, to the Gulf of Mexico near Freeport. R. W. Beck was awarded a contract from the . Brazos River Authority for a Lines of Business — Strategy and Pricing Analysis. The engagement included several phases, the first of which included a bench -marking analysis of rate setting and pricing practices for a collection of organizations from across the nation. Another phase in this project included a cost of service study and revenue requirements model focused on the development of pricing strategies extending to 50-year projections. The cost of service study also developed cost allocations for all categories of costs covering three operating regions encompassing a watershed stretching across the state of Texas. Capital Optimization Study ■ Colorado Springs Utilities, Colorado R. W. Beck conducted a Capital Optimization Study targeted at identifying specific strategies for the organization to achieve its strategic directive to reduce the cost of its capital spending program by 20 focused lowering percent. The project on ways to achieve the objective through costs and delivering higher value, not merely cutting the program size. The comprehensive review included historic and planned projects of the capital improvement program (CIP) for the four services provided by Colorado Springs Utilities in order to diagnose how and where . capital funds have been invested in various utility services. The team worked extensively with the Company function leads to identify the formal and informal business processes that supported capital investments through all stages of the project. Examining business processes served as a foundation to understand key project life -cycle steps and how they factored into making capital investment decisions. These project/process steps included project needs identification, project determination, project review, alternative assessment, approval, and budgeting, as well as project management and closeout. These evaluations considered both the processes and functions within the organization that are used to authorize and implement projects, as well as internal decision processes applied to prioritize how capital spending decisions are made at the enterprise level. The study developed an implementation plan that outlined changes to the Capital Program Assessment processes and addressed new governance processes. This included, for example, a capital apportioning step conducted at the enterprise level that allows Colorado Springs Utilities to remain prepared to address critical strategic challenges in the future. Enterprise -Wide Risk Management Program Development Colorado Springs Utilities, Colorado Colorado Springs Utilities retained R. W. Beck to assist with the development of an enterprise -wide risk management program that addresses identification, assessment, and response to enterprise -level risks. R. W. Beck provided consulting services to assist in defining the appropriate role, structure, policies, and procedures for the Utilities' enterprise risk management functions. The first step in this project was the completion of a comprehensive enterprise risk assessment covering the Utilities' power, water, and natural gas businesses. After successful completion of the risk assessment and gap analysis, R. W. Beck 3-9 • R. W. BECK, AN SAIC COMPANY Section 3 1 Firm Capability and Experience worked with Utilities staff to prepare educational sessions for governing bodies. This work led to endorsement of the plan to fully implement enterprise -wide risk management at the Utilities, including significant restructuring of corporate governance policies and management processes. Utility Rate Study/Cost of Service Austin Energy, Texas Austin Energy (AE) is faced with significant challenges as the utility implements changes to its pricing strategies in support of improved system efficiency, deployment of new technologies, and active support of environmental stewardship. R. W. Beck is providing a cost of service and rate design study for AE to assist them in developing and adopting new utility rates. New utility rates will send pricing signals that align with AE's strategic direction of offering products and services that are cost-effective and environmentally responsible while rendering a predictable and adequate revenue stream. In addition to cost of service and rate design services, R. W. Beck will assist in creating and leading the public involvement strategy for AE. For the cost of service and rate design study, R. W. Beck will prepare the cost of service methodologies unbundling approaches, cost classification techniques, cost allocation methods, and rate design alternatives. We are developing a cost of service model and rate design with supporting analysis for the rate case filing requirements. We will also prepare testimony and support the regulatory process before the Public Utility Commission of Texas In addition to incorporating input from utility personnel, R. W. Beck is working to collect input from the public and other stakeholders. A process that integrates the public is essential to meet AE's organizational goals. R. W. Beck is leading stakeholder involvement with constituents and forging support for cost of service study and rate design strategy. Our stakeholder collaboration process, managed through four well -established and practiced techniques —Public Workshops, Advisory Committees, Town Hall meetings, and Web -based and potentially mobile communication tools — creates an essential mechanism for developing an inclusive process that will provide an ongoing forum for participants to merge their requirements and interests resulting in alignment between AE and its stakeholders. Municipalization Feasibility Study City of Boulder, Colorado In 2004, R. W. Beck was engaged by the City of Boulder, Colorado to prepare an study to determine the feasibility of the City's potential acquisition of its electrical distribution system from the incumbent investor -owned utility (Xcel Energy, aka Public Service Company of Colorado). This study included an economic analysis of average system rates under existing Xcel ownership compared to a municipal ownership scenario. To conduct this analysis, R. W. Beck determined the costs associated with acquiring the system as a function of the various components, including the physical assets, severance costs, stranded costs, and 3-10 • R. W. BECK, AN SAIC COMPANY • Section 3 1 Firm Capability and Experience future power prices. This analysis was conducted utilizing a custom-built financial model for the City. The results of the initial phase supported a second phase review that included a more in-depth analysis and planning for a potential severance analysis and transmission related concerns. Additionally, at the request of the City R. W. Beck solicited and reviewed potential renewable energy supply portfolios that would meet the City's electrical requirements. R. W. Beck also provided advice to City management and City Council with regards to potential concerns and issues that may be raised by Xcel in their response to the City's actions. R. W. Beck concluded the phases of its study in 2008, and ultimately, the City decided to renew its franchise agreement with Excel. Stormwater Impact Fee to Fund Capital Improvement Program City of Pueblo, Colorado As part of the City of Pueblo's Master Basin Planning Study for its stormwater enterprise, R. W. Beck ■ developed a financial plan to guide the implementation of a prioritized capital improvement program (CIP). The financial plan is a spreadsheet -based, 20-year projection of stormwater enterprise revenues and expenditures. In preparing the financial plan, R. W. Beck evaluated revenue requirements for identified cost categories including but not limited to: ■ Operations and maintenance costs of existing and proposed facilities ■ NPDES Permit programs ■ Floodplain management ■ Support services ■ Capital projects identified during the alternatives analysis portion of the Master Basin Planning Study ■ Debt service ■ Reserves Based on these expenditures, a 20-year projection of stormwater fees was developed for the City to evaluate CIP alternatives and fiscal policy decisions. Part of the overall funding strategy is the establishment of impact fees. R. W. Beck calculated an impact fee based on the cost of drainage system infrastructure needed to serve growth. R. W. Beck met with City staff and other stakeholders to discuss the findings and recommendations of the financial planning analyses and to receive feedback. In addition, we supported the public involvement program and communicated with the public about elements of the financial planning evaluations for the project. Financial Advisory Services for Proposed Regional Wastewater Treatment Plant Authority Lower South Platte Working Group (South Adams County Water ft Sanitation District; City of Brighton, Colorado; Metro Wastewater Reclamation District) In April 2004, R. W. Beck was retained by South Adams County Water and Sanitation District (SACWSD) to provide financial advisory services to the Lower South Platte Working Group (LSP Group) during its development of an Inter -Governmental Agreement (IGA) for a regional wastewater I 3-11 • R. W. BECK, AN SAIC COMPANY Section 3 1 Firm Capability and Experience ■ authority. The LSP Group was an assembly of the City of Brighton, Metro Wastewater Reclamation District (Metro) and SACWSD, developed for the purpose of creating a regional wastewater authority to develop, own, and operate a wastewater treatment facility that would be capable of serving needs of the LSP members. With continual and future growth within the communities, the LSP Group recognized they needed one wastewater treatment facility, instead of three separate facilities, for additional wastewater treatment capacity. After meeting separately with each of the three entities to obtain background information and to identify goals and objectives for the regional wastewater treatment plant (WWTP), R. W. Beck met with the LSP Group Finance Committee to review the information collected. Several meetings with the LSP Group Finance Committee were held to discuss various alternatives to be considered for the regional WWTP. A workshop was prepared for the entire LSP Group to discuss goals, objectives, and financial aspects of a WWTP agreement as well as solicit feedback from participants. R. W. Beck developed a financial model representing the next 35 years, to evaluate financial impacts from the regional WWTP. Additionally, R. W. Beck completed a sensitivity analysis of various scenarios including scheduling, connection charges, and growth rate. Based on these scenarios, an appropriate financial strategy was developed jointly by R. W. Beck and the LSP Group Finance Committee. R. W. Beck also presented results of the financial model to state funding agencies. R. W. Beck reviewed and provided comments on the IGA, to be consistent with the requirements developed for the financial model. Due to various member concerns, the Authority was not formed as originally scoped but has since reformed and is going forward with project development. Solar Future Arizona Arizona Public Service (APS), Arizona For APS to successfully utilize the abundant solar resources available in Arizona while maintaining a robust and reliable system, it was necessary to understand the technical issues in bringing significant distributed solar energy resources on line. This required the development of a solid business -case approach including program design, rate snaking, understanding consumer behavior, as well as reliable (and achievable) resource estimates. These efforts need to be supported by a regulatory recovery process and must be built upon teaming and collaboration with multiple stakeholder groups. To achieve and sustain a successful solar future for APS, R. W. Beck conducted a study for APS founded on three key strategies: applying the power of collaboration to build support among a broad range of stakeholders through education, consensus building, and transparent engagement; providing a reliable methodology for identifying and evaluating the potential benefits of distributed solar energy resources; and developing a winning business case that allows the responsibilities of APS to its shareholders and ratepayers to be met while making meaningful progress toward achieving the Arizona Renewable Energy Standard objectives in a financially and socially responsible manner. 3-12 • R. W. BECK, AN SAIC COMPANY SECTION 1 Scope of Work An SAIC Company ■ Section 3 1 Firm Capability and Experience Stakeholder Engagement for AMI Initiative Commonwealth Edison (ComEd), Illinois R. W. Beck was selected by the Illinois Commerce Commission (ICC), based on ComEd's recommendation, to serve as the facilitator for a six-month ICC mandated AMI Workshop series. The ComEd AMI Workshops took place in advance of ComEd's filing in June 2009 of a plan for an initial pilot installation of AMI technology of up to 141,000 smart meters in the Chicago area. The stakeholder process included a significant effort in education, communications, and process for ComEd and representatives of all stakeholder groups including the ICC, the Attorney General's office, advocacy groups for area businesses, regional municipal utilities, and consumer advocates. Following the series, the ICC unanimously approved ComEd's regulatory filing. This was the first time in many years that a ComEd request for regulatory approval was granted unanimously, and in record time with few negative interveners. The communications and education process engaged stakeholders from a broad range of constituencies and allowed ComEd to navigate what would normally have been a contentious process. The AMI Workshops brought together and educated a diverse group of external stakeholders on the technical aspects, costs, capabilities, and benefits of AMI technology. In addition, the ICC charged the Workshop facilitator and stakeholder community with helping ComEd determine pilot goals, desired benefits to test in the pilot, criteria for AMI pilot success, and AMI technology selection criteria. Through our facilitation, the stakeholder community also provided ComEd with specific input on the pilot Request for Proposal (RFP) to make sure stakeholder goals from the workshop were supported in the RFP and related specifications. tA key area of focus for the workshop was defining and analyzing customer -side benefits and developing the programmatic components to enable effective testing and evaluation of dynamic pricing, sharing energy usage data with customers, and other forms of demand -side management. Cost and Benefits Study of Distributed Solar PV and Small Hydro Power for Colorado Municipal and Rural Electric Utilities Governor's Energy Office (GEO)/Colorado In 2010, the Colorado General Assembly passed legislation that requires investor -owned utilities (IOUs) to increase their proportion of Renewable Energy Standard compliance to come from the acquisition of distributed generation (DG). The GEO anticipated that this would stimulate demand for new services and DG outside of IOU territories. R. W. Beck was hired to study the economic cost and benefit of distributed solar PV and small hydro from a utility perspective, specific to the load profile of a small ■ sample of non -investor owned Colorado utilities. In addition to GEO, partners in this study are City of Fort Collins Power and Light (supported by Platte River Power Authority), San Luis Valley Rural ■ Electric Association, and Holy Cross Energy. This project is funded under an American Recovery and Reinvestment Act (ARRA) grant. I ■ 3-13 • R. W. BECK, AN SAIC COMPANY SECTION 4 ■ Availability, Schedule, and Cost Estimate An SAIC Company I a ■ SECTION 4 Availability, Schedule, and Cost Estimate Availability and Project Schedule The R. W. Beck Project Team is available to begin work on this project immediately following notice to proceed. We remain flexible to modify the scope, schedule and cost estimate based on direct discussions and further understanding of both your short- and long-term needs. The schedule shown below matches the time frames indicated in your RFP and will be conducted to coordinate with the smart grid program. Given the depth and breadth of finance/rates staff housed in R. W. Beck's Denver office and our long-standing commitment to Fort Collins Utilities, this work will be a high priority with resources dedicated as necessary to be responsive to your needs and accomplish the project goals. Development of a detailed schedule would be included as part of project kick-off so that Fort Collins Utilities and the R. W. Beck Project Team can work together to refine the appropriate tasks and timeline to meet the Utilities' needs and objectives. DecNov -. Mar Authorization to Proceed Data Request Receipt of Requested Data and Information Phase Strategy and Planning Phase II ' Cost Analysis/Rate Design Phase III ' Stakeholder Engagement and I7 Public Involvement Communications Board/Council Briefing Y 4-1 • R. W. BECK, AN SAIC COMPANY Section 4 1 Availability, Schedule, and Cost Estimate Cost Estimate and Work Hours The cost estimate is based on our current understanding of your needs as detailed in the Scope of Work and is based on our experience doing this type of work for other utilities. The cost estimate for the Phases 1, 11 and III is summarized in the following table. This estimate includes minimal indirect costs of approximately $2,000. Phase Cost Work Hours I. Strategy and Planning $24,029 100 II. Cost Analysis/Rates Design $68,173 350 III. Stakeholder Engagement and Public $42,841 156 Involvement Communications Total (Phases I, II and III) $135,043 606 Other Strategic Financial Services As requested in the RFP and outlined in our response, R.W. Beck can provide comprehensive services related to financial strategy and rates design across utility sectors including electric, water, wastewater and stormwater. Given the non-specific nature of the Utilities' needs in these areas at this point, we have included a rates table that outlines costs by category for future work requested and would anticipate preparing a task order to detail the work to be performed. Rate* Billing Class (US$) RolesHourly Typical Project 1 - 6 13.00 - 79.00 Clerical, Administration, Junior Engineers and Technicians 7 - 10 92.00 - 132.00 Staff Engineers, Consultants and Technicians 11 - 14 145.00 - 185.00 Senior Engineers, Consultants and Technicians, and Project Managers 15 - 20 199.00 - 264.00 Executive Engineers and Consultants, Senior Project Managers, and Principals 21 - 31 277.00 - 409.00 Executive Engineers and Consultants, Senior Project Managers, and Senior Principals Personnel salaries are subject to change in accordance with R. W. Beck's annual salary adjustment program. 4-2 • R. W. BECK, AN SAIC COMPANY APPENDIX A Resumes An SAIC Company I Joseph A. Mancinelli Joseph Mancinelli currently leads R. W. Beck's Rates Practice. He has University of Colorado more than 23 years of experience in the areas of cost of service and rate M.B.A. in Finance design for electric, water, wastewater, and natural gas utilities acting in ■ the roles of expert witness, project manager, and lead analyst. He has Colorado School of Mines worked closely with public utility commissions, senior management B.S. in Geophysical Engineering teams, utility boards, city councils, attorneys, and end -users with respect to the strategy and technical fundamentals of cost of service and rate design. He has taught numerous classes on cost of service and rate design methodology, including a cost of service and rate design course for Electric Utility Consultants, Inc. since 2004. He is an expert in approved industry methodologies adopted by the National Association of Regulatory Utility Commissioners and the American Public Power Association. He regularly speaks at conferences across the country on cost of service and rate issues. He has assisted clients in the development and understanding of both unbundled embedded cost and marginal cost of service studies. Mr. Mancinelli has developed unique and innovative rates for utilities that balance competitive issues and send the proper pricing signals to customers. For electric utilities, in addition to traditional rate design options, Mr. Mancinelli has designed rates that incorporate unbundling, net metering reliability, renewable power, transmission and distribution wheeling, and time -of -use. He has assisted industrial clients in developing and evaluating contracts for electric service, including performing assessments of marginal, time -of -use, and seasonal rates. For water utilities, he has also designed rates that promote conservation. Mr. Mancinelli has designed service connection fees, impact fees, and other charges and surcharges assessed by utilities. Mr. Mancinelli has led the public process associated with adoption and approval of rates and has successfully interacted with residential groups, governmental agencies, developers, and large commercial and industrial customers. He has worked closely with commission staff and stakeholders in the regulatory arena. Relevant Experience Mr. Mancinelli has participated in numerous retail rate studies for electric utilities as summarized below: Municipal Electric Cost of Service and Rate Design ■ Unbundled Cost of Service and Rate Design — Bryan Texas Utilities; Texas; ongoing assignment that included a review of the utilities financial plan, unbundled cost of service, and rate design ■ Unbundled Cost of Service and Review or General Service Rates — Eugene Water and Electric Board, Oregon; reviewed unbundled cost of service model prepared in-house by the utilities regulatory staff and An SAIC Company I JOSEPH A. MANCINELLI commented on approach; using cost of service results, designed general service small, medium and large rates which included an evaluation of customer impacts and rate transition issues between classes ■ Unbundled Cost of Service and Rate Design — Lafayette Utilities System; Louisiana; a combined electric, water, and wastewater systems rate study which included financial planning, allocation of common and joint costs, cost of service, and rate design; successfully implemented a 21 percent increase in electric system base rates, 18 percent increase in water system base rates, and a 36 percent increase in wastewater system base rates ■ Unbundled Cost of Service and Rate Design — City of Weatherford; Texas; assignment included financial planning, allocation of common and joint costs, as well as unbundled cost of service and rate design ■ Unbundled Cost of Service and Rate Design — New Braunfels Utilities; Texas; developed numerous cost of service and rate design scenarios that considered various power supply and commercial class options ■ Cost of Service and Fee Development — Farmington Electric Utility System; New Mexico; development of an assessment of the cost of service for electric retail service and subsequent rate design ■ Transmission Cost of Service Analysis — Lafayette Utilities System; Louisiana; developed transmission cost of service analysis to support regional transmission planning efforts ■ Unbundled Rate Design — Bryan Texas Utilities; Texas; developed unbundled rates for residential, small commercial, and general service rate classes ■ Financial Planning Cost of Service and Rate Design — Lamar Power; Colorado; developed a financial plan and supporting rates for a municipal utility and financial distress, assisted the utility with a phased in rate program, and participated in a public hearing supporting the proposed rate changes ■ Competitive Rate Analysis, Cost of Service and Rate Design — GEUS; Greenville, Texas; performed multiple cost of service and rate design studies supporting utilities financial requirements in light of extremely competitive rate environment in Texas, particularly with the neighboring investor -owned utility ■ Unbundled Cost of Service and Rate Design — Brownsville Public Utilities Board (BPUB); Texas; assisted BPUB in developing unbundled rates in preparation for retail competition in Texas, study included unbundled cost of service analysis, competitive rate analysis, and rate design; numerous rate and cost of service analyses have been performed for this client ■ Competitive Fuel Assessment — City of Garland Power and Light (GP&L); Texas; GP&L's direct competitor is neighboring TXU; to understand the implications of a changing power market and fuel prices on the competitive relationships between each utilities retail rates, GP&L retained R. W. Beck to perform a competitive assessment; the competitive assessment evaluated the underlying cost structures of both utilities and the associated cost of service for certain rate classes ■ Unbundled Cost of Service and Rate Design — Lafayette Utilities System; Louisiana; performed an electric system unbundled cost of service analysis; assisted client in developing contractual rates for large end -users based on unbundled costs; numerous rate and cost of service analyses have been performed for this client ■ Unbundled Cost of Service Study — City Public Service (CPS) of San Antonio; Texas; working closely with the CPS staff we developed one of the first comprehensive unbundling studies in the industry; the study has served has a model for future unbundling studies that are now common place today 2 JOSEPH A. MANCINELLI Municipal Water and Wastewater Cost of Service and Rate Design ■ Cost of Service Model — Brazos River Authority; Waco, Texas; developed unbundled and supporting rates cost of service model for wholesale water system, cost of service model unbundled utility functions into water supply, water transmission, water treatment, and wastewater treatment ■ Water and Wastewater Rate Study — Brownsville Public Utilities Board; Texas; performed a cost of service analysis for water and wastewater systems that consisted of developing an integrated pro forma model of each of the systems on a stand-alone basis ■ Water and Wastewater Rate Study — Lafayette Utilities System; Louisiana; prepared a cost of service analysis and rate design for water and wastewater systems ■ Wastewater Rate Design — Lafayette Utilities System; Louisiana; developed long range financial plan for wastewater system which forecasted future rate increases and bonding requirements of system based on the financial plan; a cost of service and rate design study was prepared in support of rate increases phased over a two year period Workshops and Presentations Mr. Mancinelli has given numerous presentations and participated in training and workshops in several states. These activities have focused on cost of service, ratemaking, and competitive issues. ■ American Public Power Association — Innovative Rates and Rate Riders for Key Accounts ■ Electric Utility Consultants, Inc. — Introduction to Cost of service Concepts and Techniques for Electric Utilities. A two day course taught semi-annually — 2004 to present. ■ Electric Utility Consultants, Inc. — Introduction to Rate Design for Electric Utilities. A two day course taught semi-annually — 2004 to present. ■ American Public Power Association — Including Risk Management in the Key Account Function ■ Texas Public Power Association — Contracting with Retail Customers ■ New Mexico Rural Electric Association — Unbundling for Competition ■ Utah Association of Municipal Power — Electric Rate Unbundling ■ Utah Rural Electric Association — Electric Rate Unbundling ■ American Public Power Association — Advanced Rate Making Concepts for Publicly Owned Electric Systems ■ American Public Power Association — Retail Rate Design for Publicly Owned Electric Systems ■ New Hampshire Electric Cooperative — Two day strategy and training program pertaining to rate design and cost of service R. W. Beck, An SAIC Company 3 Scott H. Burnham Scott Burnham offers 12 years of experience, primarily in the area of Indiana University cost of service analysis, asset valuation, and utility restructuring. His Master of Public Affairs areas of expertise include acquisition, privatization, and competitive Masters of Science assessments for electric utilities, which includes financial and feasibility analysis and evaluation. His project responsibilities have included University Colorado financial analyses, asset appraisals and evaluations, and project M.B.A. in Finance management. Mr. Burnham has a leadership role in R. W. Beck's Texas A&M University Professional Resource organization, and is also responsible for the Bachelor of science mentoring and management of entry level engineers and analysts. Relevant Experience Retail Rate and Cost of Service Studies Mr. Burnham has participated in numerous retail rate studies for electric, water, wastewater, and gas utilities. He also performs unbundling studies for municipal and other public power clients. Additionally, Mr. Burnham has experience in water rates, wholesale electric rates, rates negotiation, and evaluation for large industrial customers. His cost of service and retail rate experience includes: ■ Electric Cost of Service Study — Colorado Springs Utilities; Colorado; ' R. W. Beck was selected to provide a review of the existing cost of service analysis associated with the street lighting and traffic lighting retail rate classes; Mr. Burnham provided support to the project team ■ through his review of the allocation methodology and development of the subsequent letter report ■ Cost of Service/Rate Design — Combined Utility — Lafayette Consolidated Government; Louisiana; R. W. Beck was retained to provide a cost of service analysis and proposed retail rate design for the combined utilities, electric, water, and wastewater; project required the assignment of utility costs, including proposed capital improvements, to the various retail rate classes within each utility; Mr. Burnham served as the project manager and also assisted in the development of the electric cost of service analysis and subsequent electric rate design; also responsible for development of the associated summary report ■ Cost of Service and Rate Development — Farmington; New Mexico; R. W. Beck was chosen to develop a cost of service for electric retail service and a subsequent rate design for rate -payers; project required re-classification of various large energy users within the system from contract rates to tariff rates, as well as presentation of proposed rates before the City Council; Mr. Burnham was the lead analyst for the project and was responsible for development of the presentations and draft reports An SAIC Company SCOTT H. BURNHAM Feasibility Studies and Financial Analysis Mr. Burnham has developed financial models that provide clients with impacts associated with various technical and financial feasibility analyses. These analyses include impacts to projected net operating revenues from potential financings, investments, and other client actions. His efforts have involved assessing public versus private utility ownership, developing sales and revenue summaries, analyzing utility investment options, and reviewing firm and non -firm price trends. In addition, Mr. Burnham has developed and reviewed pro forma financial models to determine projected revenue and costs associated with various projects and financing approaches for power generation facilities. These financial models focus on the development of debt -service coverage ratios within the terms of a proposed financing effort. These models, and associated reports, are generally relied upon by the investment community to determine if a project is economically viable. Recent projects include: ■ Smart Grid Assistance — Duke Energy; North Carolina; Mr. Burnham assisted with the review of the successful U.S. Department of Energy (DOE) Loan Guarantee Program application for Funding Opportunity as a result of American Recovery and Reinvestment Act legislation; the Loan Guarantee Program was designed to assist utilities with existing and proposed smart grid systems with a demonstrated source of financing; reviewed the applicant's financial projections and structure and its emission reduction projections/calculations that would result from smart grid implementation; provided comment and recommendations on applications prior to their submission to DOE ■ Payment -In -Lieu of Tax Analysis — City of Colorado Springs; Colorado; R. W. Beck was retained to review the current payment -in -lieu of taxes paid by the municipally owned utility with respect to taxes, fees, and other payments made by investor -owned utilities in the State of Colorado; Mr. Burnham was responsible for development of the financial alternative analyses as well as development of the draft report ■ Solar Distributed Energy Study — Arizona Public Service Company; Arizona; R. W. Beck was retained to provide the methodology and analysis to determine the value associated with various distributed solar technologies; the study incorporated a stakeholder facilitation process, as well as technical and financial analysis associated with the distribution, transmission, and generation functions of the utility; Mr. Burnham assisted in the management of the project and development of the draft and final report, which was filed with the state regulatory agency ■ Dry Fork Consulting Engineering Report — Wyoming Municipal Power Agency; Wyoming; R. W. Beck provided engineering and financial support for financing a share of the Dry Fork Station, a 385-MW coal-fired facility in northwest Wyoming; Mr. Burnham led the project team, developed the projected operating results, and was responsible for preparing the Consulting Engineering Report and associated financing certificates ■ Oklaunion Power Station — Potential Purchase Analysis — Brownsville Public Utility Board; Texas; as consulting engineer, R. W. Beck assisted with a review and analysis associated with the potential purchase of an additional share of the Oklaunion Power Station; Mr. Burnham was responsible for developing the projections of the financial operating results for various ownership scenarios ■ Combined Utility Financial Pro Forma Model — Lafayette Consolidated Government; Louisiana; as consulting engineer, R. W. Beck developed a 10-year projection of financial operating results for the electric, water, wastewater, and fiber utilities for the client that incorporated average retail rate changes for each utility, as well as capital improvement expenses and associated debt issues; Mr. Burnham oversaw the development of the financial model and provided review during various stages ■ 2 James B. O'Neill II, CPPO, FNIGP October 29, 2010 Page 2 We have done this before. R. W. Beck has been involved at a strategic and technical level in numerous rate studies over the years. Members of our project team have testified dozens of times in regulatory proceedings. We have been key members of rate case teams working closely with utility staff and legal council in all phases of these projects. In addition, we have experience with the necessary stakeholder engagement work to support such efforts, as well as the institutional knowledge to dovetail with existing Utilities direction and align with important initiatives already underway. We are committed to business continuity and staff development. R. W. Beck's approach is grounded in providing work products that support clients' ability to adopt and integrate the processes and procedures developed during the project. One goal of this effort will be to create a platform for how the organization thinks about and acts on its financial direction well into the future. In short, we aim to provide a basis for sound and defensible financial decision making. On each assignment, we work hand - in -hand with staff to build capacity and capability, which also results in leveraging your dollars most wisely. We have a deep bench that is located nearby. As a multifaceted organization, R. W. Beck provides the resources of a large interdisciplinary group possessing financial, analytical, community involvement, and utility operations expertise. The majority of the assigned staff, including the Project Manager and task leads, operates from our Denver office, providing easy access and quick, personal response as needs arise. We deploy state-of-the-art techniques and are able to draw on other disciplines as needed. This includes experts in load forecasting, load research, customer behavior, smart grid and metering technologies, information systems, renewable energy technologies, and sustainability who can be drawn upon as needed during the study. Bottom line, R. W. Beck brings business and financial acumen across multiple utility service areas that many municipal utilities continue to rely on in this time of change. We look forward to continuing our relationship with Fort Collins Utilities on these important projects. If you have questions concerning this proposal or would like additional information, please contact me directly at imancinelli( ,rwbeck.com or 303.299.5233. Sincerely, :ip*� . WBECK, INC. e�e Joh Manci Ili Project ManagerNice President ' SCOTT H. BURNHAM ■ Project Alternative Siting Model — Black Hills Energy; Colorado; R. W. Beck was retained to assist in reviewing three potential locations for future generation facilities; Mr. Burnham worked with the project team to help develop a financial model that included the technical, financial, and economic input parameters to optimize value of various siting alternatives ■ Geothermal Generation Facility — Phase I Report — Merrill Lynch Capital Markets; Nevada; R. W. Beck provided technical and financial review (Phase I) for the purposes of securing project financing for a geothermal resource facility; Mr. Burnham led the development of the projected financial operating results utilized within the R. W. Beck Phase I report ■ Street Light Study / Intervener Support — City of Aurora; Colorado; R. W. Beck was retained to provide financial feasibility associated with municipal ownership of street lighting systems; the initial study recognized the criticality of obtaining an energy -only rate for such systems; subsequent engagements consisted of assisting a group of municipal governments with negotiations/rate case intervention with the incumbent utility ■ Empresa Electrica Ventanas S.A. — Fortis Capital Corporation; Santiago, Chile; R. W. Beck provided a technical and financial review (Phase I) for the purposes of securing project financing for a coal-fired generation facility located in Chile; Mr. Burnham led the development of the projected financial operating results utilized within the R. W. Beck Phase I report, which included analysis of various power purchase arrangements and financing alternatives ■ Competitive Assessment Study — Arizona Public Service; Phoenix, Arizona; the R. W. Beck team developed an analysis for Arizona Public Services' retail cost structure relative to potential municipal scenarios; Mr. Burnham was responsible for development of the financial impacts to potential rate- payers as a result of municipal ownership R. W. Beck, An SAIC Company 3 Timothy R. Corrigan, P.E. Since joining R. W. Beck in 1981, Timothy Corrigan has provided Iowa State University consulting services to clients in a variety of areas, including utility B.S. in Electrical Engineering operations and strategic planning; market assessments and competitive positioning; electric, natural gas, and water rates and cost of service analyses; and power supply, economic, and financial feasibility studies. Mr. Corrigan has been extensively involved in developing and evaluating strategies and addressing issues pertaining to electric utility finance and rate matters, including providing expert testimony before numerous state and federal regulatory bodies. He has examined utility rates, tariff provisions, and service conditions for industrial clients and has performed economic studies of alternatives to utility service purchases on their behalf. Mr. Corrigan has assisted utility clients in examining their competitive positions and has provided them with strategic guidance for issues such as retail wheeling, transmission access, competitive sales, and purchases of wholesale power and energy. Relevant Experience Electric Cost of Service and Rate Design Studies Mr. Corrigan has been involved in electric cost of service and rate design studies for various municipal clients. His studies include an evaluation of impacts to various rate structures when demand is reduced, and financial modeling of other relevant utility entities to forecast future rates and the economic effects the changes in the power supply and in the municipal utility's across-the-board costs can have on ratepayers. Economic and Financial Feasibility Analyses Mr. Corrigan has directed and managed many economic studies relative to the acquisition of utility properties. He has been responsible for designing valuation theories and methodologies that examine financing alternatives and analyzing power supply alternatives as part of the t analysis of utility acquisitions. Computer modeling of both fixed and variable utility costs are related to various power supply alternatives and serve as an integral part of the acquisition studies performed under his direction. Mr. Corrigan also has performed and directed economic analyses associated with municipal acquisitions and franchise reviews. The acquisition studies often have resulted in his providing expert testimony before regulatory commissions and local governing bodies. These studies have produced significant savings for ratepayers through regulatory action and franchise modifications. r I An SAIC Company TIMOTHY R. CORRIGAN, P.E. Electric Utility Resource Planning Mr. Corrigan has provided resource planning, including contract negotiation assistance, to electric utilities as well as electric utility customers, both wholesale and retail. Utility resource planning has included traditional least -cost supply-side planning, integrated resource planning which includes demand -side alternatives, and more recently resource portfolio analyses which accommodate market price volatility. Mr. Corrigan has assisted a number of municipal utility clients in contract negotiations for wholesale electric services relating to peaking baseload and time -of -use services. He has also provided analyses of power supply proposals from independent power producers. These negotiations also have been performed on behalf of mining companies, natural gas pipelines, and electric -powered transportation entities. Mr. Corrigan also has performed analyses of electric power costs and provided advice on other tariff provisions regarding character -of -service, facilities ownership, capital recovery period, and maintenance agreements. Electric Utility Restructuring Mr. Corrigan has significant experience in assisting electric utilities with repositioning themselves for success in a competitive environment. These activities have included directing and participating in strategic planning sessions, performing financial modeling of alternative expansion plans, economic analyses of improvements in cost structure, and debt restructuring studies as well as assisting in ratemaking matters, including unbundled and marginal cost rates. He has had significant involvement with utility customers, examining market -driven pricing, customer choice alternatives, and resulting costs of electricity to end users. Mr. Corrigan also worked directly for industrial customers, advising and assisting them in developing incentive rates and in negotiations with utility suppliers. He has prepared economic analyses of self - generation and cogeneration alternatives and marketplace alternatives to traditional electric utility service, including changes in character -of -service, such as time -of -use, seasonal, or interruptible service. Expert Witness and Litigation Support Mr. Corrigan has offered expert testimony regarding cost of service rate design and ratemaking issues before the Federal Energy Regulatory Commission and state and local regulatory bodies and courts. He has had national exposure providing litigation support regarding ratemaking matters at the wholesale and retail levels and has testified on the appropriateness of retail rate levels, transmission rates, and methodologies for determining rates. He also has testified on investigations into the effects and potential effects that proposed utility mergers and acquisitions can have on ratepayers. With respect to municipal utility operations, Mr. Corrigan's analyses have examined operational efficiencies, financing alternatives, and budgeting and accounting matters, as well as short- and long- term capital improvement plans. Mr. Corrigan is familiar with the modeling and presentation of such analyses to regulators, city councils, commissions, and utility staff members and has also provided expert testimony before regulatory bodies regarding the results of such analyses. 2 Thaddeus (Ted) Szymankiewicz Ted Szymankiewicz has over 37 years of experience in preparing and supervising the preparation of financial studies, cost of service studies, rate studies, and periodic utility system reports for municipal electric, Florida Technology University M.S. in Business Administration gas, water, wastewater, and stormwater utility systems. His experience B.S. in Business Administration includes financing studies to accompany major tax-exempt revenue bond issues and participating in the development of technical provisions for inclusion in bond resolutions governing the security of major tax-exempt revenue bond financings proposed by clients. He has rendered expert testimony before the U.S. District Court, the U.S. Bankruptcy Court, the Federal Energy Regulatory Commission, and other judicial forums in matters related to tariffs, rates, utility restructuring, electric operations, financings, and natural gas. His expertise includes rate studies, financing/consulting engineer's reports, periodic system reports, electric utility restructuring, acquisitions and sales, and expert testimony. Relevant Experience With regard to utility tariff and rate studies, Mr. Szymankiewicz has supervised multi -year electric, gas, water, and sewer studies that considered, among other things, the adequacy of revenues, compensatory return on investment, revenue stability, fairness, avoidance of undue discrimination, cost of service, economic price signals, regulatory precedent, and industry standards. Based on revenue requirement studies and projections of sales and requirements, Mr. Szymankiewicz has developed tariff language and has designed rate levels and rates structured to the extent practical to meet the overall objectives of the client, recover costs equitably, discourage wasteful use, and comply with industry or regulatory standards. As part of the rate design process, he has utilized comparisons to determine the impact on customer classes, as well as customers within a class resulting from changes in rate levels and rate structures. Mr. Szymankiewicz has evaluated the adequacy and supervised the development of the miscellaneous fees and charges levied by governmental utilities for various ancillary utility services including, but not limited to, fees and charges for initiation of service, reconnection after disconnection, fire hydrants, tapping, meter testing, and processing septage. Based on the client's overall objectives, Mr. Szymankiewicz has developed capital cost recovery fees or impact fees that, to the extent appropriate, reflect the American Water Works Association as well as certain criteria established by the courts. Electric Rate Study City of Tallahassee, Florida Project Manager. For more than 25 years, Mr. Szymankiewicz has guided 12 major electric cost of service and rate design studies. The most recent study (2006) identified unbundled electric costs, allocated costs, and designed revised rates to meet the City's near -term costs. Most studies were subject to review and approval by the Florida Public An SA1C Company THADDEUS (TED) SZYMANKIEWICZ Service Commission and address all relevant aspects of electric rate making including projections of loads, sales, and customers; test -year revenue requirements; allocation factors; allocated cost of service studies; traditional and innovative rate designs; and tariff language. Over time, the studies have developed tariff provisions and designed interruptible rates, incentive rates, time -of -use rates, standby rates, and cost -based fees and charges for various miscellaneous service charges. Another study in the winter of 2000 identified unbundled electric costs and reduced revenues from rates by approximately $22 million annually to enable the City to prepare for the eventual restructuring of the electric industry in Florida. The majority of studies have been subject to review and approval by the Florida Public Service Commission. The studies have addressed virtually all relevant aspects of electric rate making including the development of: (i) projections of loads, sales, and customers; (ii) test -year revenue requirements; (iii) allocation factors; (iv) allocated cost of service studies; (v) traditional and innovative rate designs; and (vi) tariff language including a fuel adjustment clause. Over time, the studies have developed tariff provisions and have designed interruptible rates, incentive rates, time -of -use rates, standby rates, and cost -based fees and charges for various miscellaneous service charges. Electric Transmission Cost of Service Study Brownsville Public Utilities Board (BPUB), Texas Project Manager. In 2006, BPUB retained R. W. Beck to prepare a cost of service study in support of raising its costs of transmission service in the state of Texas. In June 2006, the cost of service study was completed under the direction of Mr. Szymankiewicz, following the rules and regulatory precedents established by the Public Utility Commission of Texas (PUCT). In July 2006, the completed study, supporting workpapers, and testimony were submitted to the PUCT in Docket No. 32905. Following discovery and settlement discussions, new transmission rates for the City of Brownsville, Texas, were approved by the PUCT. Electric Rate Review South Carolina Public Service Authority (Santee Cooper), South Carolina Project Manager. Santee Cooper generates and purchases approximately 25,000 GWh annually to provide electricity to wholesale and retail customers in South Carolina. Santee Cooper is a governmentally owned, vertical integrated electric and water utility that owns and operates over 4,500 MW of installed generating capacity. In 2006, Santee Cooper retained R. W. Beck to prepare a review of its rate setting methodology to be sure that its rates and charges equitably recovered costs from its various customer classes. Working with the management and staff of Santee Cooper, a thorough review of the approach, methodology, sales forecast, near term costs, the allocation of such costs, and the design of the rates and charges was completed in the winter of 2006. During the comprehensive review, a few areas were identified where change may be warranted in the future; however, it was determined that Santee Cooper's existing rate and charges track cost causation and equitably recover costs from its customers. Cost of Service New Construction Study Imperial Irrigation District, California Mr. Szymankiewicz is currently designing a mandatory, cost -based, time -of -use rate as well as a corresponding time differentiated energy cost recovery clause and factor(s) for commercial customers having a metered demand in excess of 250 kW. The rate and the accompanying energy adjustment clause are being designed to match estimated time differentiated customer loads and the utility's production cost modeling results. 2 I ■ THADDEUS (TED) SZYMANKIEWICZ Water Rate Studies City of Tallahassee, Florida ■ Project Manager. Since 1982, Mr. Szymankiewicz has been project manager for nine multi -year water rate studies, the most recent of which was completed in 2005. In addition to the development of rates for metered water service, which were designed to recover the projected test year cost of service, these rate studies revised the level of fees and charges for initiation of service, reconnection after disconnection, fire hydrants, tapping, and meter testing. Included as a part of these studies was the development of impact fees which were generally designed in accordance with American Water Works Association guidelines as well as criteria established by the courts. In late 2007, Mr. Szymankiewicz was retained by the City to prepare a comprehensive Water Rate Study to make sure that equitable rates were in effect to finance planned capital expenditures, to develop rates and charges associated with the creation of a reclaimed water system, and to promote the conservation of potable water. Water Rate Studies Fort Pierce Utilities Authority, Fort Pierce, Florida Project Manager. In addition to performing the various tasks necessary to develop revised rates and charges for metered water service and miscellaneous traditional charges, the study also addressed changes to the Authority's line extension policies and the level of impact fees. Wastewater Rate Studies City of Tallahassee, Florida Project Manager. Since 1978, Mr. Szymankiewicz has been project manager for 10 multi -year wastewater rate studies. In addition to the development of rates for sewer service, which were based on metered water use and water meter size and were designed to recover the test year cost of service, the rate studies revised the level of fees and charges for the initiation of service, tapping fees, the construction of manholes, and the processing of septage. Included as a part of the studies was the development of impact fees which were generally designed in accordance with American Water Works Association guidelines as well as criteria established by the courts. In 2007, Mr. Szymankiewicz was retained by the City to prepare a comprehensive wastewater rate study ■ to make sure that equitable rates are in effect to finance a major capital improvement program. In addition to developing rates designed to recover the cost of providing wastewater service, the study addressed the rates for reclaimed water service, which were to be designed to recover an equitable portion of the costs associated with treating and distributing reclaimed water. Water Rate Studies South Carolina Public Service Authority, South Carolina Project Manager. Pursuant to state legislation, the Authority established a regional water system to treat, transmit, and sell potable water at wholesale to local units of government for distribution in a six county area. Mr. Szymankiewicz assisted the Authority in developing long-term contract(s) and rates for wholesale water service to the Lake Moultrie Water Agency, a joint municipal water agency. The contract between the Water Agency and Authority provides, among other things: (i) an initial term of 35 years with automatic successive renewal periods of five years each, unless the Water Agency elects to terminate the contract upon one year prior notice; (ii) the Water Agency will purchase all of its long-term water supply requirements from the Authority; and (iii) the Water Agency has entered into long-term contracts with its members whereby the members agree to purchase and pay for the Water Agency. R. W. Beck, An SAIC Company 3 I Lynn L. Adams Lynn Adams has more than 25 years of experience in the consulting/utility industry in both business and consumer sectors. She Cornell University provides a wide range of business management consulting services to her B.S. in Communications clients, integrating business strategies with operational demands. Her work encompasses strategic and business planning, leadership development, and marketing and strategy consulting. Ms. Adams solves client challenges by defining the core issues and outlining a clear path forward, applying a variety of best -in -class approaches. She utilizes tailored techniques and resources to develop a problem -solving approach to meet defined needs that result in high impact organizational change. As a master facilitator, Ms. Adams has led groups through the process of making effective decisions in an uncertain environment. Ms. Adams' book, The Art of Strategic Leadership, provides practical guidance and methodologies to address the most challenging aspects of organizational leadership. Her approach focuses on the identification of challenges and opportunities, using tested strategies and a clear leadership approach. Relevant Experience Ms. Adams manages numerous consulting projects with specific expertise on strategy development, planning, and stakeholder engagement. Most of her projects include these aspects to a significant degree as such elements are essential to project success. Stakeholder Engagement ■ Ms. Adams provides a broad array of services related to developing engagement strategies and designing implementation plans, which include specific stakeholder engagement methodologies such as: ■ ■ Customer segmentation ■ Customer research — quantitative and qualitative (e.g., focus groups) i■ Advisory panel design and facilitation ■ Technology -based customer connectivity programs ■ Communications planning ■ Message mapping and messaging development ■ Public meeting design ■ Workshop design and facilitation Ms. Adams is currently providing such services to support smart grid deployment. In addition, her background includes familiarity with ■ specific stakeholder engagement implementation tools and techniques (e.g., public relations, web site content mapping), so that the strategy is informed by actual implementation. An SAIC Company i LYNN L. ADAMS Business Consulting Ms. Adams has led many business consulting and leadership consulting efforts for infrastructure organizations, utilities, and other clients. ■ Implements proprietary processes —The Art of Strategic Leadership and The Art of Effective Communication —that address planning and communication needs specific to the infrastructure industry; applies practical knowledge of how to balance the need to think long-term while developing specific action plans designed for immediate implementation ■ Conducts assessment of organizational structure and alignment with strategy and recommends necessary modifications ■ Defines new customer segments and market directions, identifies emerging markets, and develops focused plans for exploration and development ■ As a master facilitator, leads cross -functional utility teams and works with executive teams and governing bodies Capital Program Optimization Colorado Springs Utilities, Colorado Project Lead. Ms. Adams led the organizational change and implementation phase of a comprehensive effort focused on optimizing dollars spent on capital projects. The scope included a long-term systemic change effort that created a business -based project management approach across the organization. Organization -Wide Strategic Initiative Fort Collins Utilities, Colorado Project Manager and Planning Process Lead Facilitator. Ms. Adams leads this key strategic planning effort that has guided this organization for over a decade. Based on customer research conducted by R. W. Beck, this planning project focuses on aligning the Utilities with customer needs while implementing internal organizational changes to accommodate a refined direction. Market Research and Marketing Plan Development Fort Collins Utilities, Colorado As part of her ongoing role with Fort Collins Utilities, Ms. Adams conducts bi-annual customer satisfaction research, designs and facilitates focus groups, and has set up an Internet -based survey panel in order to maintain world class performance levels. She has also emphasized a sustainability approach to align with market needs and utility mission. Strategic Planning Virgin Islands Water and Power Authority, U.S. Virgin Islands Process Co -Facilitator and Customer Focus Project Manager. Ms. Adams led this extensive strategic and business planning effort for the Virgin Islands Water and Power Authority. The range of activities in this 15-month effort included market research and planning, organizational team building and effectiveness, Board communication and briefings, and team -based strategic planning for organizational endorsement. Organizational Development Ms. Adams' experience in organizational development, both as an internal part of executive teams and in various client assignments, provides her with expertise on positively impacting change. She has assisted many clients in becoming more externally focused and responsive to the marketplace, a change that requires complete organizational alignment and focus. Her experience includes: 2 LYNN L. ADAMS ■ Incorporating organizational development principles into all planning work in order to create supported and sustainable change ■ Educating organizations on the value of connecting with clients/customers resulting in an externally focused, effective marketing organization ■ Focusing on creating dialog and building understanding through cross -functional teamwork ■ Training client staff in effective meeting participation and leadership ■ Balancing process and outcome, with a goal of systemic and sustainable change Sustainability Ms. Adams is focused on the development of an integrated Sustainability/Corporate Social Responsibility approach designed to move utility organizations from fragmentation to integration. Her thought leadership work in Enterprise Sustainability Management includes the management and facilitation of a focused process that results in new ways of improving a utility's Triple Bottom Line — defined as economic, environmental, and social impact —with the necessary stakeholder involvement for successful execution. This approach also includes the implementation of a baseline audit using a tool tailored for the utility industry and a subject matter expert review where Ms. Adams accesses R. W. Beck's technical and financial resources to analyze specific options and identify the "next best dollar spent." Integrated Sustainability Program Fort Collins Utilities, Colorado Project Manager. Ms. Adams led a comprehensive sustainability program for Fort Collins Utilities that featured facilitation of internal and external stakeholder groups, expert analysis of defined options, decision modeling, and integrated communications. The effort was developed as a result of market research that indicated a "green gap" between public perception and utility performance. R. W. Beck directed the development of Fort Collins' Sustainability Report which was the first municipal utility to file with Global Reporting Initiative. Ms. Adams identified key leadership metrics and provided regular briefings to the utility governing body due to the high degree of visibility and broad interest in the project. She has provided comprehensive stakeholder engagement services to support the Utilities for this and other efforts for the City and Utilities, including their current smart grid program. Integrated Sustainability Development City of Longmont, Colorado Project Manager. Ms. Adams led the development of a comprehensive sustainability program that featured facilitation of internal and external stakeholder groups, expert analysis of defined options, decision modeling, and integrated communications. This effort also featured strategy development in support of the City's American Recovery and Reinvestment Act Energy Efficiency and Community Block Grant application. Integrated Sustainability Development City of El Paso, Texas Project Manager. Ms. Adams led the effort to develop a sustainability program for the City of El Paso that identified focus areas for the City, assembled optimal staff teams, and worked with them to develop fundamental direction for the program including vision, mission, and goals. She evaluated potential programmatic responses to achieve defined goals and developed a framework for an implementation plan. R. W. Beck, An SAIC Company 3 Daniel D. Lanning, CEP Daniel Lanning is an accountant, auditor, and financial analyst with more Bentley College than 30 years of experience in electric, gas, water, and wastewater utility B.S. in Accounting financial and management matters. He has conducted numerous cost of service, asset valuation, and management studies for public and private electric, water, sewer, stormwater, reclamation districts, solid waste, gas, and telephone utilities. He has prepared studies, audits, and presented testimony before state regulatory agencies supporting positions on revenue requirement, cost of service, tariff/rate design, and electric and gas fuel adjustment clauses for Public Utilities Commissions, Consumer Advocate Organizations, and numerous electric, water, gas, and telephone public and private utilities. In addition, he has led staff in the procurement process for electric service under Texas deregulation laws for the cities of Dallas and Houston (total value over $150 million). Mr. Lanning has prepared and presented testimony before state regulatory agencies supporting positions on revenue requirement, cost of service, system development charges, and electric and gas fuel adjustment clauses in over 25 different proceedings. He has also assisted in preparing utility related legislative bills. Prior to becoming a consultant 20 years ago, Mr. Lanning was a member of the New Hampshire Public Utilities Commission staff where he held several positions including assistant finance director, chief auditor at the Seabrook Nuclear Power Plant, and a Public Utility Commission examiner assisting the Commission's compliance with the Public Utility Regulatory Policies Act. i Cost of Service and Rate Design For over 20 years, Mr. Lanning has been preparing studies of electric, gas, water, wastewater, solid waste, and stormwater revenue requirement; fully allocated cost of service analysis; rate design; and fuel adjustment clauses. He has generated these studies and offered testimony both as a staff member of the New Hampshire Public Utilities Commission and as a consultant working on domestic and international projects. These studies have been prepared for investor -owned and public utilities with annual revenues ranging from $10,000 to over $25 million. Most recent studies include a cost of service/rate adjustment and wholesale water rate for Ft. Worth, Texas, cost of service/rate design study for Brewer Water District, Maine, cost of service study for City of Harvey, Ill., project manager for a water and wastewater rate study and analysis of ancillary charges for the City of Lebanon, N.H., and a USAID sponsored Institutional and Financial Strengthening project for water and wastewater utilities (vodovods) located in Bosnia and Herzegovina. Mr. Lanning was a senior staff member on a lead team of consultants providing comprehensive rate and financial consulting services to DC Water and Sewer Authority (DCWASA). The scope of services included An SAIC Company o Section 1 I Project Understanding and Scope of Work Project Understanding E, Fort Collins Utilities is in a period of rapid change. The utility is facing challenges surrounding a new utility business model where growth in power and water sales is modest compared to historical levels. Changing growth patterns are due to a variety of issues including a strong bias of Fort Collins Utilities customers towards conservation of water and power, distributed renewable energy options, efficient use of resources, and a general economic slowdown. Low growth over the long run puts pressure on Fort Collins Utilities financial strength and vitality as the cost of operating, maintaining and investing in the system continues to rise. Traditional old world rate structures have been developed under assumptions of long term growth and the availability of new capacity at a reasonable cost. These assumptions are no longer valid necessitating a comprehensive reexamination of financial planning, cost of service methodologies, and rate design. Fort Collins Utilities is a nationally recognized leader and at the forefront of implementing systems that encourage conservation and efficient use of resources. Therefore, Fort Collins Utilities is seeking strategic financial services that span a broad array of issues ranging from financial planning, cost of service and rate design, financing options, business case evaluations, business process optimization, enterprise risk management, and risk mitigation. We recognize that these issues are extremely important for the electric, water, wastewater and stormwater utilities. At this time, Fort Collins Utilities has an immediate need to focus on a rate options study for its electric services. Although R.W. Beck can provide services across all four utility service areas, the focus of the scope of work below will be on financial strategy, cost of service, rate design, and stakeholder engagement related to the electric utility. R. W. Beck has the expertise and proven approaches to provide the broad array of services under consideration, as well as state -of -the art insight into dynamic pricing options. In addition, our approach fully addresses the related issues of rate stability, technology impacts and other factors necessary to support the various pricing mechanisms under consideration. If required and as with previous engagements, the proposed scope of services can be modified to meet the specific needs of Fort Collins Utilities. We will also endeavor to build on our institutional knowledge, current work in progress and work to be performed by others. In addition, we will seek every opportunity to work with staff. In fact, we view such collaboration as a standard in best consulting practices. The R. W. Beck approach will create alignment among the various work products and will result in more efficient use of R. W. Beck and Fort Collins Utilities project resources. 1-1 • R. W. BECK, AN SAIC COMPANY DANIEL D. LANNING, CEP analyzing the cost of service for water and wastewater services provided by the Authority, recommending proposed alternative retail rates structures based on this analysis, including fire protection, and assisting and supporting Authority staff in the development of its 10-year financial plan. Financial Evaluation and Planning A crucial component of utility management is master planning and developing capital improvement programs. Mr. Lanning has assisted in preparation of financial feasibility, affordability analysis, and financial planning for master plans and major capital improvement programs. Project experience includes developing and evaluating conventional and alternative financing opportunities, such as system development charges, state revolving fund, and U.S. Department of Agriculture Rural Economic Community Development financing. Financial evaluation and planning projects include water and wastewater facilities planning, management audits and strategic planning, construction cash flow audits, and impact fee studies. Asset Valuation With a growing call in the utility industry for valuation and determination of appropriate depreciation of assets, Mr. Lanning brings extensive experience in asset valuation used as a price basis for sales transactions, for depreciation and annual renewal and replacement reserves, for determining appropriate rate base for utility revenue requirement, and for accounting records. He has served as project manager and task leader for asset valuation and depreciation study projects in Hudson, N.H., Oro Valley, Ariz., Falls Church, Va., Massachusetts Water Resources Authority, Mass., and Worcester, Mass. More recently, Mr. Lanning has been involved in several PB Consults projects with confidential clients determining the feasibility of purchasing and selling water and water rights and building infrastructure to transport the water throughout Texas. Energy Consulting Since becoming a consultant, Mr. Lanning has served as project manager, task leader, and key staff person on numerous electric economic feasibility and management studies, as well as electric deregulation planning and energy commodity purchase procurement and negotiation support engagements. These projects include feasibility studies, electric service procurement, water and wastewater treatment energy efficiency capital projects, and electric utility evaluations for numerous clients throughout the United States. Relevant Experience Water and Wastewater Cost of Service and Rate Study DC Water and Sewer Authority, Washington, D.C. Senior Analyst. Mr. Lanning provided analysis for a cost of service and rate design alternative evaluation prepared for the DCWASA. The study evaluated current and projected water and wastewater rates and three rate design alternatives. The purpose of this cost of service study was to determine whether or not the existing rates recover costs from the various customer classes or groups in proportion to the cost of providing service to those classes or groups. The cost of service study concluded that the existing rates were not significantly understated and that the rate structure met most of the DCWASA Board criteria. Some improvements could be made by increasing the customer charge to recover the true cost of service for customer accounting and billing as well as developing a private fire protection fee and 2 F DANIEL D. LANNING, CEP an upfront contribution program for customers with special improvement requirements. Impervious Area Billing Study DC Water and Sewer Authority, Washington, D.C. Task Manager. Mr. Lanning was the task manager for rate development and establishing billing policies in a study prepared for DCWASA. The purpose of the study is to develop a billing mechanism that charges customers for DCWASA's CSO Long Term Control Plan based on property owner's impervious area. Modeled after typical stormwater ratemaking, the impervious area charge will reduce the volume rate currently used by DCWASA and shift costs to ratepayers based on their property stormwater run-off. Wholesale Rate Study City of Fort Worth, Texas Project Manager. Recently, Mr. Lanning lead a team of experts retained to prepare a wholesale rate study/cost of service analysis for the City of Fort Worth. As project manager, Mr. Lanning directed a team of experts in developing wholesale water rates for 29 customer communities served by the City's Water Department. This included projecting revenue requirements for the study period, taking into consideration a reasonable return on (i.e., weighted cost of capital) and of (i.e., depreciation) rate base, known and measurable changes in operation and maintenance costs, and changes in water demand. The team conducted five workshops with the City and wholesale customers disclosing project results and gathering input as each task of the project progressed. Water and Wastewater Impact Fee Update City of Fort Worth, Texas Project Manager. Mr. Lanning lead a team of experts selected by the City of Fort Worth's Water Department to update Water and Wastewater Impact Fee report for 2004 in accordance with Texas local government codes as mandated by state statute. Public acceptance of the new fee was a critical component of this project. The Water and Wastewater Impact Fee report consisted of the following components: land use assumptions (LUA); capital improvements plan (CIP); and impact fee schedule of charges. The project team updated the LAU and CIP, assisting department staff in conducting meetings with stakeholder groups (citizen advisory committee on impact fees, wholesale water and wastewater advisory committee/subcommittee on impact fees, the city council, and the public) by providing public relations support. The team prepared the requisite reports and assisted the City in implementing revised water and wastewater impact fees within the timeframe mandated by state statutes. Integrated Resource Plan — Wastewater Program City of Los Angeles, California Task Leader. Working with the facilities planning team, Mr. Lanning is the task leader for evaluation of financial impacts which will develop a fundability performance measure to be used to initially screen integrated resource plan (IRP) alternatives. Mr. Lanning is directing the development of a Financial Screening Tool that is being populated with existing and projected financial parameters. A preferred CIP alternative will be selected and working with City staff, the alternative financial assumptions will be incorporated into City's rate model for final analysis. In addition, Mr. Lanning has had a key role in assisting the financial team explore IRP funding options and prepare an affordability analysis. R. W. Beck, An SAIC Company ■ Sabine Bendenoun is a sustainability consultant with seven years of experience who assists clients in the energy and water resources industries with management consulting issues including risk analyses, strategic planning, and business process redesign. She conducts sustainability audits, directs performance measurement, and evaluates organizational structure. Ms. Bendenoun's experience lies in collaborating with organizations to identify company specific risks and opportunities (including examining market trends, benchmarking, conducting best practice, and SWOT analyses), identifying recommendations for improvement, facilitating strategy management sessions, developing implementation frameworks, and accompanying clients through the implementation phases. She has designed and developed sustainability management frameworks based on the "Balanced Scorecard" to support clients in the development of sustainable business strategy. In her professional career, Ms. Bendenoun has partnered with corporations across industries, from financial services to manufacturing to electricity providers, on a range of sustainability issues as well as quality, environmental, health, and safety management issues. Ms. Bendenoun has worked with senior executives and business managers to enhance their understanding of sustainability and corporate responsibility, brand and reputation, product and service offerings, operations, and ultimately their bottom line. Relevant Experience ■ A Utility for the 21st Century/Integrated Sustainability Leadership — Fort Collins Utilities; Colorado; supported development of the sustainability program, including baseline audit using a Utility tailored version of the Global Reporting Initiative (GRI), best practice benchmarking analyses, and designing and drafting the Utility's first Sustainability Report ■ Energy and Climate Change Strategy — PPG; Pennsylvania; worked with PPG's Energy and Climate Change Steering Committee to understand the impacts of climate change on its businesses, operations, products ■ and services; presented the Business Case for Sustainability and Climate Change Strategy; identified climate change related risks and opportunities raising awareness around varying stakeholder viewpoints; developed recommendations to enhance management of energy and climate change opportunities and risks; drafted PPG's Energy and Climate Change Position Statement endorsed by the Chief Executive Officer; and developed a life -cycle management framework to support transparent and accountable `green' product claims I Sabine D. Bendenoun C.E.S.I. Masters in Quality, Environmental, Health & Safety Management, Graduated with Honors George Washington University B.S. in Economics, Magna Cum Laude Awarded 2 Presidential Merit Scholarships An SAIC Company SABINE D. BENDENOUN ■ Quality, Environmental, Health and Safety Management — Electricity of France; France; the Metz plant sought to obtain ISO 9001 (Quality Management) and OHSAS 18001 (Health and Safety Management) certification and develop an integrated Quality, Environmental, Health and Safety Management system; led cross -functional project teams to restructure the hierarchal management system into a "process approach;" worked closely with process mangers to integrate QEHS principles into procedures and operations; performed internal QEHS audits to identify gaps and develop action/improvement plans; developed client and employee satisfaction surveys to identify areas for improvement; collaborated with external auditors during the ISO 9001 and OHSAS 18001 certification process; developed an integrated QEHS management system; evaluated performance of the QEHS management system by preparing a year-end review and developed subsequent recommendations for improvement to senior management; and worked with senior management to streamline the plant's vision, mission, and strategic goals ■ Sustainability Report — World Bank; Washington D.C.; World Bank requested strategic feedback on its draft Sustainable Development Report; conducted a strategic analysis of existing Sustainability Reports; completed benchmarking analyses of sustainability publications of other multi -lateral development banks and financial services organizations; and developed strategic feedback and recommendations for improvement ■ GHG Inventory — World Bank; Washington D.C.; committed to greenhouse gas (GHG) emissions reduction, the World Bank requested a comprehensive review of its GHG inventory; conducted an in- depth review of their GHG inventory; developed strategic recommendations towards achieving carbon neutrality (including identifying significant opportunities for GHG reductions in facilities); proposed processes and methodologies for progress towards an auditable GHG inventory; and developed recommendations to enable cost-effective purchase of required offsets to meet reduction goals ■ Corporate Responsibility Report and Opportunities and Risk Assessment — Chubb; New Jersey; worked with Chubb Corporate Responsibility Report Steering Committee to draft and publish Chubb's first Corporate Responsibility (CR) Report; developed the Chubb Business Case for sustainability; conducted an in-depth gap assessment of available data with GRI guidelines and indicators; engaged with key members of Chubb's executive team to formalize CR policy within the organization; developed initial drafts of the CR Report; conducted company -wide opportunities and risks assessment; and developed subsequent recommendations (including strategy maps and a two year implementation framework) to inform strategy management at Chubb ■ Sustainability Management System and Entrepreneurial Business Model for Third -World Development — State Street Coffee (SSC) Holdings; New York; as part of a company -wide restructuring and reorganization effort, SSC sought to leverage its commitment to sustainable development to streamline strategy, enhance stakeholder communication, and create opportunities for innovation and growth; designed a Sustainability Management System framework for their Nicaragua coffee growing and processing operations; streamlined company -wide sustainability strategy; and assisted in the development of an investor memorandum which focused on communicating the company's sustainable business strategy and impact on local communities 2 Scott Cochran A project analyst with R. W. Beck, Scott Cochran brings more than seven years of experience in finance and project management. He provides Belmont University valuation/appraisal services, rate design, and cost of service studies for M.B.A. electric, gas, and water utility clients. Mr. Cochran also develops Auburn University sales/demand forecasts, performs econometric studies of clients' service B.S. in Business Administration — Finance areas, and prepares economic feasibility studies for clients by making acquisition and project implementation decisions. In addition, he has Professional Affiliations served as lead analyst for numerous valuation analyses of gas/propane peak Member of American Society of Appraisers shaving plants, water and electric distribution systems, and power generation projects. Mr. Cochran offers comprehensive expertise in the areas of cost of service and rate design for electric, water, wastewater, and natural gas utilities. He has served in multiple roles working for utility management, boards, city councils, attorneys, and end -users. Mr. Cochran provides detailed analyses for each client, including a determination of the required revenue, creating a cost of service model for each project, and providing a study report which includes a rate design for each customer class. He has attended courses including Cost of Service Techniques for Electric Utilities and Introduction to Rate Design for Electric Utilities hosted by Electric Utility Consultants, Inc., a leading provider of education for the energy industry. He has also attended courses in Machinery and Technical Specialties appraisals taught by the American Society of Appraisers. Relevant Experience Mr. Cochran offers comprehensive expertise in the areas of cost of service and rate design for electric, water, wastewater, and natural gas utilities. He has served in multiple roles working for utility ■ management, boards, city councils, attorneys, and end -users. Mr. Cochran provides detailed analyses for each client, including a determination of the required revenue, creating a cost of service model for each project, and providing a study report which includes a rate design for each customer class. Rate Design and Cost of Service Study Frankfort Electric & Water Plant Board (FEWPB), Kentucky Project Manager. Mr. Cochran led an R. W. Beck project team in the preparation of an electric system cost of service and rate study for FEWPB. The project consisted of determining revenue requirements for the utility, then allocating the cost of service to the appropriate customer class. An SAIC Company Rate Design and Cost of Service City of Providence, Kentucky Project Manager. Mr. Cochran led R. W. Beck's project team in the preparation of a high-level electric system cost of service and rate study related to a wholesale power increase. The study consisted of determining revenue requirements for the utility, then developing proposed rates for the individual customer classes. Cost of Service and Rate Study City of Falmouth, Kentucky Project Manager. Mr. Cochran led R. W. Beck's project team in the preparation of a high-level electric system cost of service and rate study related to a wholesale power increase. The study consisted of determining revenue requirements for the utility, then developing proposed rates for the individual customer classes. Cost of Service and Rate Design State of Utah Department of Public Utilities, Utah Financial Analyst. As lead analyst for this project, Mr. Cochran assisted in the review of Rocky Mountain Power's 2008 and 2009 general rate cases for the state of Utah. The R. W. Beck project team evaluated and provided recommendations related to cost of service and rate design on behalf of the Department of Public Utilities for the state of Utah. Cost of Service and Rate Study Madisonville Municipal Water & Light Department, Kentucky Project Manager. Mr. Cochran prepared an evaluation of large power billing data for use in developing comparative rate guidelines. With this information, the client was able to identify areas for improving the existing large power rate structure. He also performed a comprehensive cost of service study related to wholesale power increases and general operation and maintenance expense increases. Casino Rate Review Confidential Client, New Jersey Project Manager. Mr. Cochran led R. W. Beck's project team in the development of contract rates for an electric distribution cooperative's largest client. The proposed rates were agreed to by the client and the customer, and R. W. Beck assisted in the negotiation and development of the contract. Water Rate Study Frankfort Electric Plant Board, Kentucky Financial Analyst. To address customer connection charges, future long-term financial planning, capital improvement plans, and higher than anticipated operating costs, Frankfort Electric Plant Board selected R. W. Beck to complete a water rate study. Phase 1 included a five-year financial forecast, cost of service analysis, and operating policy review. During Phase 2, the project team developed proposed rates for Frankfort's retail and wholesale customers, and a final written report was issued for Phase 3. Mr. Cochran was the lead analyst on the project. 2 Water and Sewer Rate Study Georgetown Municipal Water & Sewer Service (GMWSS), Kentucky Financial Analyst. R. W. Beck was selected by GMWSS to perform a water and sewer rate study which included a five-year financial forecast and cost of service model to reflect operating expenses, capital requirements, customers, and rates. The project team reviewed the cost of service rates and operating policies, and then made recommendations for specific changes. A report was issued that summarized the findings and listed the proposed changes to retail rates for customers. Mr. Cochran was the lead analyst on this project. Rate Study Harrison REMC, Indiana Financial Analyst. Harrison REMC hired R. W. Beck to perform a rate study to support adjustments to rates for customers. The R. W. Beck team reviewed operating results, capital improvements, and the current financial forecast and updated the cost of service model. The team prepared a final summary report with the proposed rate changes. Mr. Cochran was the lead analyst on this project. Cost -of -Service Study and Rate Design Henderson Municipal Power and Light, Kentucky Project Analyst. R. W. Beck performed an electric rate study and telecommunications rate design as a single combined effort. The project team reviewed the current rate structure and developed a five-year financial forecast, performed a cost of service analysis, and created a rate plan with alternative rate designs. An implementation plan was also developed for the client. Mr. Cochran was the lead analyst on the project. ■ Cost of Service and Rate Study Barbourville Utility Commission, Kentucky Financial Analyst. R. W. Beck performed a water and electric rate study for the city of Barbourville in response to an increase in wholesale expenses as well as a general increase in operation and maintenance expenses for the utilities. The project team reviewed historical operating data as well as forecasted operating expenses to determine the utilities cost of service revenue requirements for the test year. After completing the studies and making recommendation for proposed rates, the Barbourville Utilities Commission approved and implemented the rates as proposed by R. W. Beck. Mr. Cochran was the lead analyst on the project. Cost of Service and Impact Fee Study ■ Mt. Sterling Water & Sewer Company, Kentucky Financial Analyst. R. W. Beck performed a water and wastewater rate study for the city of Mt. Sterling in response to increasing operation and maintenance expenses for the utility. The project team reviewed historical operating data as well as forecasted operating expenses to determine the utilities' cost of service revenue requirements for the test year. R. W. Beck also analyzed plant records to develop an estimate of revised impact fees for the water and waste water departments. After completing the studies and making recommendation for proposed rates and impact fees the Utility approved and implemented the rates as proposed by R. W. Beck. Mr. Cochran was the lead analyst on the project. R. W. Beck, An SAIC Company 3 Art Griffith, P.E. Art Griffith is a registered professional engineer with 20 years of University of Wisconsin experience providing utility financing services to water, wastewater, M.S. in Civil and Environmental stormwater, and power utilities. Specific areas of expertise include Engineering utility ratemaking, financial planning, impact fee determination, University of Washington interlocal agreement preparation, fiscal policy, and level -of -service B.S. in Chemical Engineering definitions. He also assists municipal utilities develop capital funding alternatives. His electric utility experience includes revenue requirement projections, electric rate development, and financial evaluation of utility ownership alternatives. Mr. Griffith integrates his engineering and financial consulting experience to enhance the quality of the financial analysis and his ability to communicate the results. He also works closely with utility staff and elected officials to communicate utility finance issues with the public via citizens' advisory committees and public hearings. Relevant Experience Stormwater Impact Fee and Financial Plan City of Pueblo, Colorado Project Consultant. Over a three-year period, the City of Pueblo is completing several basin plans that will collectively result in a Master Plan for the City's entire corporate limits. In the first phase, Mr. Griffith prepared a financial plan to help the City identify stormwater planning standards and stormwater utility funding sources. Mr. Griffith also prepared an impact fee analysis so the City can equitably allocate its stormwater management costs. Financial Planning Services Regional Wastewater Treatment Plant Authority (RWTPA) and Adams, Denver, and Weld Counties, Colorado Project Manager. The RWTPA was formed in 2005 and at the time this work was completed, consisted of three member agencies in the Denver metropolitan area. R. W. Beck developed a cash flow model for the Autbority's proposed wastewater conveyance and treatment facilities that apportioned costs among the member agencies. The cash flow model also contained connection charge calculations to make sure that new development pays a proportionate share of the cost of new system capacity. Mr. Griffith developed the cash flow model and was the project manager for the RWTPA's subsequent management program and delivery analysis project. Water Utility Cost of Service Study City of San Bernardino, California Project Manager. Mr. Griffith is leading a water utility cost of service study to help manage the effect of decreased water consumption resulting from the economic downturn. The study is addressing An SAIC Company ■ ART GRIFFITH, P.E. implementing a conservation -oriented water rate structure, funding for additional basin recharge efforts, revision of pumping surcharges, and policy issues related to the sizing and timing of debt issuances to fund a $80 million six -year capital improvement program. Wastewater Rate Study and Long -Term Financial Analysis County of Kauai, Department of Public Works Wastewater Management Division, Hawaii Project Manager. The County of Kaua`i's Wastewater Management Division faces a significant challenge in upgrading its wastewater system while maintaining reasonable rates for its limited customer base. At stake is the County's ability to continue providing safe and reliable wastewater services, meet the wastewater treatment demands from growth, meet regulatory requirements, and protect the environment of the County. Mr. Griffith evaluated the utility's revenue requirements, performed a cost of service analysis, and designed new wastewater rates for customers. He also updated the Division's wastewater treatment capacity assessment which was done consistently with Hawai`i's Impact Fee statutes. Stormwater Fund Study City and County of Honolulu Department of Environmental Services, Hawaii (sub to AECOM Pacific) Project Manager. Mr. Griffith is leading a team to evaluate the feasibility of organizing the City's stormwater financial tracking in a manner that better reflects the full costs of conducting stormwater operations over several City departments. As a result of continued development and population growth on Oahu, the cost to provide these services is increasing. Additionally, the City will need to increase the level of certain activities to meet the conditions of its National Pollutant Discharge Elimination System Permit. These combined cost and regulatory pressures are driving the City to consider forming a Stormwater Fund in order to better manage its stormwater activities, costs, and revenues. This project includes developing a preliminary estimate, for the first time, of the City's costs for providing stormwater services. Fund options include an Enterprise Fund and a Governmental Fund, and the characteristics of these funds are reviewed. Also included is a discussion of the range of services that can be included in a Stormwater Fund and a description of the fund formation process within the City government. The study concludes with a summary of conclusions, recommendations, and next steps. Drainage Rate Design Assistance Seattle Public Utilities (SPU), Washington Project Manager. Mr. Griffith assisted SPU in evaluating its drainage rate structure to make sure that drainage costs remain equitably distributed among their drainage customers. This project included helping identify flow factors for various pervious surface types such as forests and landscaping, evaluating the cost allocation of combined sanitary and stormwater system costs, and updating SPU's drainage fixed asset schedule. A major component of this project included an update to the SPU's customer database, requiring extensive GIS-based analysis of surface characterization data for all commercial and many residential parcels within the City limits. This project also included building a spreadsheet -based cost of service model, and helping evaluate cost allocation alternatives. Additionally, a nationwide survey of leading stormwater utilities was completed to provide insight into cost allocation, rate credits, and rate structure characteristics. As a follow-up task, Mr. Griffith managed an evaluation of the drainage and infiltration characteristics of certain types of athletic fields with underdrain systems. N I ART GRIFFITH, P.E. Utility Valuation Services (Including Financial Planning Assistance) City of Rialto, California Project Manager. The City of Rialto investigated alternatives for procurement of water and wastewater capital delivery and operations services. As part of this investigation, R. W. Beck helped evaluate the potential financial impacts of policy choices. This financial planning work included preparation of water and wastewater pro forma projections. These projections incorporated changing capital costs; development of recycled water infrastructure; perchlorate treatment costs; post -retirement benefit costs; and other changing demographics, water consumption, and expense considerations. Water Master Plan and Rate Study County of Hawaii Department of Water Supply, Hawaii iTask Manager. Mr. Griffith completed water demand projections, a long-term financial plan, and an economic evaluation of service area extensions. In addition, Mr. Griffith evaluated several potential strategies to reduce energy costs, including taking advantage of time -of -use rates, reservoir sizing strategies, alternative well and booster pump locations, and leak detention efforts. Water Rate Study and Long -Term Financial Plan Development City and County of Honolulu Board of Water Supply (BWS), Hawaii Project Consultant. Mr. Griffith helped the BWS prepare a comprehensive rate study that resulted in a five-year rate proposal for the years 2003-2007. The study focused on the determination of revenue requirements to evaluate the impact of several BWS capital improvement spending scenarios. Other project components included a 20-year financial model, evaluation of an emergency interconnection standby charge, and evaluation of low-income bill payment assistance options. Stormwater User Fee Implementation City of Bellingham, Washington Project Consultant. Mr. Griffith performed financial analyses in support of the City's implementation of a stormwater user fee. Project components involving Mr. Griffith included detailed definition of stormwater utility level -of -service, estimating maintenance costs to provide the level -of -service, preparation of a financial plan, definition of a Stormwater user fee structure, development of user fee credits, and definition of fiscal policy options. The stormwater user fee structure consists of a three-tier residential rate to recognize differing sizes of residential properties, and non-residential user fees based on impervious area, with reduced fees for developed gravel areas and for properties retaining stormwater on -site. Stormwater Utility Impact Fee Provo City, Utah Technical Lead. This project provided Provo City with a means to equitably recover revenue from new development to offset the additional cost to the City of providing additional stormwater system capacity. The impact fee was developed consistent with Utah law. It included a reimbursement fee, to account for existing stormwater system infrastructure with available capacity for future development, and an improvement fee, to account for the cost of planned capital improvements required to provide capacity for future development. Because this was a new impact fee, Mr. Griffith worked with City staff to develop administrative procedures. R. W. Beck, An SAIC Company 3 I Section 1 1 Project Understanding and Scope of Work Scope of Work The following scope details the specifics of our proposed approach. We have followed the format set forth in the Request for Proposal and have divided the proposed scope of work into three Phases: ■ Phase I: Financial Strategy Development — in this phase of the Study we will work with Fort Collins Utilities' management and staff to develop a long term rate strategy that will move Fort Collins Utilities from the current rate structure to a future rate structure that maximizes the value of AMI metering and other benefits from a technology enhanced Smart Grid system. This phase will reaffirm Fort Collins Utilities strategic vision and assess the adequacy of supporting tools to meet future rate design objectives. ■ Phase II: Cost Analysis/Rate Design — using the information gathered in Phase I, to the extent possible working within the existing Fort Collins Utilities models framework, we will prepare embedded and marginal cost of service analyses that support the adopted rate design strategy. ■ Phase III: Stakeholder Engagement and Public Involvement Communications — the objective of this phase is to inform the public and engage and educate stakeholders with respect to significant changes in rate structure. The stakeholder engagement process may run parallel or subsequent to the Phase II scope of work. At the end of this section, we also provide an overview of other optional services as requested in the RFP, but which are not specifically scoped or priced at this time. Phase I: Financial Strategy Development Phase 1 will form the blueprint for rate design in the near- and long-term for Fort Collins Utilities. During this phase, we will develop an understanding of the current situation and policies, develop or refine plans for future conditions, and develop action plans to transition from the current situation to the contemplated future conditions. The following is a listing of the specific tasks to be performed during Phase I. Task 1: Data Request Immediately upon receiving authorization to proceed from Fort Collins Utilities, we will prepare and submit a comprehensive data request listing the information needed to evaluate the current cost of service and rate design analysis for the electric utility. This data request will include information related to the Fort Collins Utilities' ratemaking philosophy and policy objectives to serve as the foundation for the study. R. W. Beck will review the information and documents provided in response to the data request and work with Fort Collins Utilities staff and management to identify additional information or assumptions necessary to successfully analyze and design new base electric rates. 1-2 • R. W. BECK, AN SAIC COMPANY Fred E. Jennings Fred Jennings is a recognized authority within the energy and water Wharton School of Business resources industries, with 30 years of consulting experience in the areas M.B.A. of strategy and business planning, financial governance, operations improvement, and information technology integration within core Tufts University B.S. in Civil Engineering business processes. He is adept at maintaining currency in evolving industry challenges. Executive -level solutions include enterprise -wide financial governance, generation resource planning, performance management systems, enabling technologies, process effectiveness, and shareholder value enhancement. Prior to joining R. W. Beck, Mr. Jennings served as president of a multidisciplinary consulting firm providing business planning and strategy, enterprise governance, generation economics, and operations improvement. He also served as vice president for a premier consultancy devoted primarily to assisting clients in achieving strategic competitive advantage through the implementation of financial models integrated with budgeting and cost management tools and regulatory reporting solutions. Relevant Experience Capital Program Optimization Colorado Springs Utilities, Colorado Project Manager. Mr. Jennings served as project manager for the comprehensive effort to optimize dollars spent on capital projects. This included a long-term systemic change effort that created a business based project management approach across the organization. The study identified specific strategies for the organization to achieve its strategic directive to reduce the cost of the capital spending program by 20 percent. He focused on ways to achieve the objective through lowering costs and delivering higher value, not merely cutting the program size. Strategic Guidance in Metering and Customer Technology Investments Central Vermont Public Service Corporation, Vermont Project Manager. Central Vermont Public Service (CVPS) requested R. W. Beck to assist with its enterprise solution to implement Advanced Metering Infrastructure (AMI). As part of this important and far- reaching initiative, Mr. Jennings and his team worked with CVPS to develop an approach that will allow CVPS to gain the best value from its substantial AMI investment. The work with CVPS in this meter data management (MDM) system effort is a part of an overall AMI implementation that began several years ago. The current effort involves first understanding the company's strategic direction and future goals. With the leadership vision in focus, R. W. Beck is guiding CVPS to specify MDM requirements and to develop an MDM implementation plan. In these efforts, Mr. Jennings has worked with the client to develop An SAIC Company FRED E. JENNINGS "as -is" process descriptions and process maps that identify both the process steps and the current Information Systems touch points. This effort has been expanded to encompass the business processes that will beer may be —affected by AMI and MDM systems functionality. Electric System Master Plan Riverside Public Utilities, California Task Lead. Mr. Jennings led the data integration and technology roadmap development as part of management analysis to the comprehensive long-range Electric System Master Plan. The overall Plan addressed infrastructure replacement, organization effectiveness, and long range system and financial planning. His analysis helped evaluate the current processes involved in core financial and service processes, and specifically identify future process improvements resulting from enhancements in data integration, new application deployment, and existing systems improvements. The information technology focus on this study was in conjunction with an overall detailed condition assessment of the infrastructure and needed improvements to the engineering and operations processes. Development of an Enterprise -Wide Risk Management Program New York Power Authority (NYPA), New York Project Manager. Mr. Jennings assisted NYPA with the creation and development of an Enterprise - Wide Risk Management (EWRM) program. NYPA sought to bring together disparate risk management programs across various divisions and achieve an overarching EWRM program to manage ongoing risk identification, assessment, and mitigation. This project helped identify and prioritize key risks, and designed a risk oversight structure and associated program elements that would best enable NYPA to achieve a sustainable risk management program. Relevant Experience Prior to R. W. Beck Corporate Governance Process Development Xcel Energy, Minnesota Project Manager. One of the largest multi jurisdictional utilities in the country, Xcel Energy manages 24 jurisdictions across 12 states. Efficiently managing the portfolio of regulated entities was paramount to Xcel's decision to implement new financial modeling, forecasting, and budgeting management software. Xcel recognized that process change had to be included as an integral part of the systems implementation. Mr. Jennings led the major process redesign effort targeted at fundamentally altering core financial management processes to incorporate the capabilities afforded by newly implemented enabling technology. He worked for several months with company leaders and subject matter experts to refine the improved processes and test their viability against the new software functionality. Finally, an implementation plan was developed. A final step involved developing and integrating regulatory strategy into capital investment decision -making. Business Process Advisory Services Utilities International, Inc. Vice President/Business Practice Lead. Mr. Jennings provided value to Utility International clients through industry -specific technology tools for solving contemporary business issues. He was responsible for advisory services in support of operational and financial tools and processes. His ongoing advancement and unique approach for revamping financial management and governance integrated business planning, capital investment, and budgeting initiatives. I 2 James A. Lester James Lester is an environmental economics and policy specialist with a University of Colorado focus on clean energy and energy finance. He has technical expertise in M.A. in Economics carbon markets, energy efficiency, demand -side management, smart grid, wind power, solar power, biomass, and geothermal energy technologies. University of Kansas He is also experienced in financial and economic modeling, forecasting, B.A. in Economics and cost -benefit analysis. Mr. Lester is a versatile project manager, who has performed budget preparation, project planning, and performance reporting. Relevant Experience i Stratus Consulting Washington, DC Associate. Working as a consultant, Mr. Lester was involved in numerous projects involving energy and the environment. Mr. Lester developed and authored U.S. Environmental Protection Agency (EPA) publications targeted to state and local governments on acquiring and financing clean energy and energy efficiency technologies. He researched and co-authored literature directed at state policy makers designed to identify and quantify the multiple benefits of clean energy and to support the development and implementation of cost-effective clean energy initiatives. The guidance literature included methods to estimate energy and pollution savings and calculate the economic benefits of renewable technologies, energy efficiency, and demand -side management. Mr. Lester performed financial analysis of several renewable energy and energy efficiency programs for local governments, including Charlotte, N.C., and Oklahoma City, Okla., during the development of clean energy plans required by the Department of Energy's Block Grant program. He assisted city and county governments with land -use planning for sustainability plans and other smart growth and clean energy initiatives, including a triple bottom line cost -benefit analysis of an ambitious low - impact development project in Philadelphia, Pa. He monitored and analyzed federal and state energy and climate legislation and the development of related emissions markets. Mr. Lester provided updates and recommendations to clients through reports and presentations. He researched and analyzed international economic and financial mechanisms for climate change mitigation and adaptation efforts in developed and developing countries including China, India, and Mexico. Mr. Lester developed expertise in the electric and water utility sectors and their interaction with infrastructure planning, low -impact development, and climate change policies. He managed large contracts and subcontractors for federal and international agencies, which included developing budgets, project schedules, and performance reports. He iAn SAIC Company JAMES A. LESTER wrote and pitched project proposals and developed statements of work for federal and international projects. Mr. Lester also prepared and presented a research paper to leading economists on the use of cost -benefit analysis for climate change policies related to the estimated benefits of avoided climate change damages at an international climate economics conference. The paper has been published by the Pew Center on Global Climate Change. World Resources Institute Washington, D.C. Research Analyst. Mr. Lester performed financial and economic analysis for the Green Power Market Development Group Initiative, which has increased corporate purchasing of renewable energy in both the U.S. and Europe. He authored several corporate case studies and policy briefs, including an evaluation of the solar services model, an on -site wind farm, and issues surrounding climate policy, carbon taxes, renewable energy standards, and renewable electricity certificates. Mr. Lester utilized RETScreen and Excel -based models to evaluate the financial feasibility of corporate purchases of renewable energy, including the purchases of wind farms, on -site solar photovoltaic installations, and low -impact hydropower. He developed in-depth knowledge of mandatory greenhouse gas (GHG) trading programs such as the EU-ETS, RGGI, and California AB 32. Mr. Lester presented to Fortune 500 companies on the scope and structure of both RGGI and the EU-ETS. He provided analysis on the potential linkage between current international trading programs, domestic programs, and proposed federal economy -wide carbon trading programs. Mr. Lester researched and analyzed macroeconomic and general equilibrium models used to identify the economic effects of emissions markets and trading schemes. He developed a working expertise with the GHG Protocol, EPA Energy Star, and LEED building standards and developed technical expertise in wind power, solar power, biomass, and geothermal energy issues. He also analyzed and evaluated industry specific policies with respect to tax legislation and environmental regulation. United States Congressman Dennis Moore Washington, D.C. Legislative Fellowship. Mr. Lester researched economic and environmental legislative issues during the 108`h session of Congress. He briefed Congressman and staff on issues and provided guidance on development and implementation of environmental economic policy. Compass Financial Englewood, Colorado Investment Analyst. Mr. Lester researched and wrote a corporate financial newsletter distributed to a worldwide client base. Articles focused on investing, macroeconomic trends, and currency strategies. He assisted clients and internal sales staff on macro and international economics and exchange rate policy. University of Colorado, Department of Economics Denver and Boulder, Colorado Research Assistant. Mr. Lester researched economic analysis of environmental regulation and emission markets, cost -benefit analysis of proposed environmental policy, and non -market valuation of public and environmental goods. 2 i Ruben Moreno Ruben Moreno, a senior director with R. W. Beck, has 17 years of University of Texas experience in enterprise risk management, energy procurement, and M.S. in Economics quantitative analysis (statistics, economics and risk). Prior to joining Monterrey Institute of Technology and R. W. Beck, Mr. Moreno was director for risk management with SAIC. Higher Education (ITESM) — Mexico He has 12 years of experience in energy procurement risk management, M.B.A. in Finance specializing in exposures related to multiple fuels and power. Before B.A. in Business joining the SAIC companies, Mr. Moreno was responsible for all risk Instituto Tecnologico de Morelia — management consulting services for an underlying exposure worth $10 Mexico billion across large industrials and power producers. His experience in Technical Degree in Accounting risk management includes energy commodities, pricing, advisory, compliance and hedging programs (e.g., natural gas, power, heating oil, crude, renewable, and propane) for utilities, public authorities, municipalities, large industrials, and independent power producers. Before that, Mr. Moreno worked for six years in management consulting for industries in Mexico, Canada, and the United States. Mr. Moreno has college -level teaching experience that enables him to inform clients in how best to understand and manage risk exposures. He recently finished developing and implementing and presenting a model to highlight the value of compressed -air energy storage facility. Relevant Experience Enterprise Risk Management Confidential Client Commercial and Quantitative Risk Lead. Mr. Moreno conducted interviews to assess enterprise -wide risks and evaluated the materiality of the risks in the context of existing capabilities. He benchmarked the assessment of senior management to address enterprise -wide risks (including those associated with energy reliability) based on experience with other clients and industries. Mr. Moreno made specific recommendations for closing the gaps and the level of effort involved. He evaluated insurance to diminish the materiality of the exposure associated with energy risks, including energy reliability. He also recommended specific strategies to close the gaps in capabilities and contingency plans to diminish the aggregate impact of energy -related risks, including energy reliability. Energy Procurement Advisory Services Weatherford Utilities, Texas Corporate Governance and Risk Management Advisor. Mr. Moreno was responsible for corporate governance and risk management advisory. He evaluated existing policies and procedures and recommended a fuel procurement process to align with the utility's desire for budget certainty and to remain competitive in the Texas marketplace. Mr. Moreno is currently implementing the strategy in policy and procedures documents that will later be presented to City Council for approval. ' An SAIC Company 17 RUBEN MORENO Energy Assurance Plan Massachusetts Department of Energy Resources (DOER), Massachusetts Vulnerability Assessment Lead. R. W. Beck was selected as technical consultant to assist the Massachusetts DOER in accomplishing its Enhancing State Government Energy Assurance Capabilities and Planning for Smart Grid Resiliency Initiative (Energy Assurance Initiative) promulgated by the U.S. Department of Energy's American Recovery and Reinvestment Act (ARRA). For this first of its kind initiative, R. W. Beck's scope of services is highly specialized and unique to the combination of R. W. Beck and Beck Disaster Recovery, their parent company SAIC, and the advisory role and technical assistance from the National Association of State Energy Officials that fosters continuity in efforts at the state and local levels. R. W. Beck is assisting DOER to develop new and/or refine existing energy assurance plans including emergency preparedness plans, integrating new energy portfolios (e.g., renewables, biofuels, and smart grid), and new applications such as smart grid technology into the plans. Energy Assurance Plan Virginia Department of Mines, Minerals and Energy (DMME), Virginia Project Manager. R. W. Beck was selected as technical consultants to assist the Virginia DMME develop and implement its Energy Assurance Plan promulgated by the U.S. Department of Energy's ARRA. R. W. Beck's scope of services includes developing new and/or refining existing energy assurance plans including emergency preparedness plans, integrating new energy portfolios (e.g., renewables, biofuels, and smart grid), and new applications such as smart grid technology into the plans. Electric Power System Risk Assessment Confidential Client, California Risk Management Lead. Mr. Moreno conducted interviews to assess electricity -related risks and evaluated the risks in the context of existing contingency plans. He conducted anonymous interviews with peer companies to understand the materiality and contingency plans at other utilities. He then evaluated insurance to diminish the materiality of the exposure associated with energy risks, including energy reliability. Mr. Moreno recommended specific strategies to close gaps in capabilities and contingency plans to diminish the aggregate impact of energy -related risks, including energy reliability. He assisted the utility in understanding the categorizing and the risks associated with assets owned by the utility. Comprehensive Energy Consulting Services Metropolitan Transportation Authority (MTA) Deputy Project Manager. Mr. Moreno was the lead risk advisor to MTA on energy procurement process and energy management framework. He assisted MTA in developing strategy and process to address the price exposure of 38 million gallons of ultra -low sulfur diesel. At the request of New York Power Authority (NYPA), Mr. Moreno presented the ongoing energy procurement process, management framework, and challenges to other Southeastern New York (SENY) customers in the context of periodic meetings NYPA has with MTA and other customers such as the State University of New York. He developed and implemented a collaborative approach with NYPA's risk management procurement groups to focus on relevant issues surrounding the customer's interest for budget stability and long-term certainty of rates. Mr. Moreno negotiated with NYPA and other SENY customers and their consultants regarding cost of electricity provided by NYPA on behalf of MTA. He represented the interest of the Port Authority of New York and New Jersey and the MTA in the audit of NYPA's Risk Management function. At NYPA's RUBEN MORENO request, he presented cost of service and administrative issues involving NYPA and Long Island Power Authority in the context of the periodic meetings NYPA has with MTA and other customers, such as the State University of New York. He designed strategy to procure 38 million gallons of ultra -low sulfur diesel based on the alignment of market conditions with budget targets of the New York City Transit Authority (NYCTA) and Long Island Railroad (LIRR). Designed and conducted executive -level presentations of the strategy. Mr. Moreno anonymously surveyed the marketplace to understand limitations of implementing the strategy with existing physical and financial energy providers. The strategy was presented to staff from NYCTA and LIRR explaining the economic logic of the specific recommendation. The strategy was then adapted to fit NYCTA's restriction to use a physical supplier that had a dedicated ultra -low -sulfur diesel fleet. Mr. Moreno assisted the MTA and other SENY customers in understanding the risk properties of the variable component of NYPA's cost of services. He provided periodic price forecasts for electricity and fuels to support the budget process and advisory services associated with market dynamics and market timing of decisions associated with NYPA's cost of service and procurement of fuel. He managed the energy cost exposure for the MTA associated with NYPA. Fuel -related strategies to achieve significant (greater than 40 percent) savings to budget were identified. Mr. Moreno designed and implemented a process to move NYPA for a long-term perspective of cost of service and negotiated with the other SENY customers for its implementation. Mr. Moreno reviewed all energy adjustment charges submitted by NYPA as cost of service materialized. He audited NYPA's estimates of EACs and recommended changes. He assisted in negotiations with Long Island Power Authority to resolve a long-standing dispute on charges associated with a right-of- way. R. W. Beck, An SAIC Company ■ Jonathan P. Nunes University of Central Florida Jonathan Nunes has over 15 years of experience providing consulting M.A. in Applied Economics services in the areas of power supply resource planning, financial B.S. in Business Administration/Economics planning and analysis, and economic modeling. In particular, he has been responsible for numerous load forecasts in support of power supply resource and delivery facilities planning, wholesale and retail rate planning, budgeting, and certificate of need and other regulatory filings for a variety of electric utilities and regulatory agencies throughout the United States. Mr. Nunes has been involved in numerous resource planning efforts, evaluations of power supply options including joint power supply ® arrangements, and negotiations regarding power supply contracts and contract disputes. This work has incorporated the simulation of the utilities' power supply arrangements and typically uses scenario planning and probabilistic analytical techniques to assess the range of potential results and clients' risk exposure. Mr. Nunes has also provided consulting services related to electric utility cost of service, wholesale ® and retail rate studies, and the preparation of annual budgets. Although many of his clients include municipal and cooperative utilities and joint action agencies, Mr. Nunes has also provided consulting services to regulatory agencies, merchant power plant developers, solid waste collection agencies, local governments, and large industrial ® manufacturers. Relevant Experience Load Forecasting ® Mr. Nunes has been responsible for numerous long-term electric load forecasts and related analyses for various municipal utilities, joint -action agencies, and cooperative utilities. These efforts have included the development of forecasting processes from the ground up and the supervision of other staff, including client staff, in prosecuting portions ® of the analytical work. Mr. Nunes has taken a lead role in the development of forecasting techniques and historical data analyses to develop baseline and scenario -based and stochastic forecasts. Load Forecasting System Development Florida Municipal Power Agency (FMPA), Florida Project Manager. Mr. Nunes developed and implemented a load forecasting system for FMPA to prepare annual load forecasts for its All ® Requirements Project, consisting of 15 member utilities, spanning the Florida geography from Tallahassee in the north to Key West in the south. Using this system, Mr. Nunes has managed the preparation of FMPA's annual load forecast over several years. This forecast entails a separate forecast for each of the 15 members generally based on a regression analysis of energy usage by customer classification for each ® An SAMC Company I JONATHAN P. NUNES member system. Forecast results include several scenarios intended to represent a specific range of uncertainty for multiple variables. System Load Forecast Central Iowa Power Cooperative (CIPCO), Iowa Project Manager. Mr. Nunes was responsible for the preparation of a load forecast for CIPCO and its 12 member cooperatives. The forecast relied on both econometric and end -use methodologies to forecast customer counts and energy usage by major customer classification, system energy requirements, and peak demand for each member cooperative and in total. The results also included multiple scenarios to capture the uncertainty of major driving variables. System Load Forecast Pedernales Electric Cooperative, Texas Project Manager. Mr. Nunes was responsible for the preparation of a power requirements study for a cooperative utility in central Texas in support of a distribution system planning study. The projections relied on econometric models of customer counts and energy usage by major retail rate classification and included multiple scenarios related to uncertainty in population and economic growth and weather conditions. System Load Forecast Golden Valley Electric Association (GVEA), Alaska Lead Analyst. Mr. Nunes led the development of a 20-year econometric load forecast for this large electric cooperative, which serves the greater Fairbanks area. The forecast was driven primarily by population and employment growth, weather conditions, and energy prices. Results were adjusted to reflect various scenarios concerning the possible privatization of large military bases in the GVEA service area. Similar studies have been conducted for GVEA every three years for the past 15 years. System Load Forecast Piedmont Municipal Power Agency (PMPA), South Carolina Project Manager. Mr. Nunes led a team that developed econometric load forecasts for each of PMPA's 10 member municipal utilities. Results included forecasts of energy sales, non -coincident peak demands, and peak demands coincident with PMPA and the control area operator. Demand forecasts were also adjusted to reflect •the impact of PMPA's load -side generation resources and the contract demands of certain large industrial customers. System Load Forecast City of Gillette Municipal Power Department, Wyoming Project Manager. Mr. Nunes was responsible for the development of a system load forecast to support a distribution system planning study. The forecast was based on an econometric approach relating net energy requirements and residential customers to population and economic activity in the region and weather variables. Seasonal peak demand was projected on the basis of the resulting energy forecast and assumptions regarding load factor based on an analysis of historical load factors. An initial forecast was generated based on economic projections provided by a third party. However, based on an input from the utility staff and a review of information regarding expected developments, it was recognized that the economic projections did not reflect the resource extraction boom that was impacting the region. Accordingly, the forecast effort was expanded to allow for the development of independent projections of population and economic activity based on an econometric analysis of the impact of natural resource 4 ■ I JONATHAN P. NUNES extraction activity in the region and forecasts of extraction activity obtained from the Energy Information Administration. A revised forecast was then constructed, which resulted in significantly higher growth in the near -term, followed by much lower growth rates similar to the long-term historical growth trend. System Load Forecast Florida Keys Electric Cooperative, Florida Lead Analyst. Mr. Nunes was responsible for the preparation of a power requirements study for a cooperative utility in south Florida in support of a distribution system planning study. The study addressed several issues of special significance to the region, including a high proportion of seasonal residents, very restrictive growth management policies, and periodic threats from hurricane events. The projections relied on econometric models of customer counts and energy usage by major retail rate classification, and incorporated detailed models of weather's influence on load to generate ranges of load projections encompassing the range of potential weather. System Load Forecast Central Minnesota Municipal Power Agency (CMMPA), Minnesota Lead Analyst. Mr. Nunes was responsible for a load forecast for CMMPA, which was prepared to support a certificate of need filing for Big Stone II, a large coal-fired power project under development in South Dakota. In addition, Mr. Nunes assisted in the preparation of written testimony in a proceeding before the Minnesota Public Utilities Commission on behalf of CMMPA. Load Forecast Audit California Energy Commission (CEC), California Lead Analyst. Mr. Nunes provided a review and independent analysis of CEC's load forecasting methodology, assumptions, and overall forecasting process. The audit included a review of CEC's end use and econometric methodologies across several customer classes and all of the major utilities in California. Expert Witness and Litigation Support Cost of Service and Rate Design Utah State Public Utilities Department, Utah Expert Witness. Mr. Nunes served as an expert witness to the Division of Public Utilities in response to Rocky Mountain Power's (RMP) 2008 and 2009 General Rate Cases. He provided review and analysis of the results of RMP's load forecasts and load research program and recommendations regarding changes to these inputs into the cost of service and rate design portions of the proceedings. Mr. Nunes testimony in this provided written and oral proceeding. Expert Witness Southern California Edison (SCE), California Expert Witness. Mr. Nunes served as an expert witness to the California Public Utilities Commission, Department of Ratepayer Advocates in response to SCE's General Rate Case (GRC Test Year 2009). He provided a review and independent analysis of SCE's load forecasts and associated distribution and transmission capital projects and prepared written testimony. R. W. Beck, An SAIC Company 9 Section 1 1 Project Understanding and Scope of Work Task 2: Project Kick-off and Rate Design Strategy Meeting We anticipate a full day meeting with the Fort Collins Utilities management team and staff to review data and discuss strategy and policy with respect to electric utility rate design. We have assumed that the morning session will focus on data and project management details and the afternoon session will focus on policy and strategy. Fort Collins Utilities may wish to have different personnel attend each session; however, it is important that the Executive Management Team participate in the afternoon strategy session. Morning Session Following our receipt of the initial data from the Utilities, we will schedule a project kick-off meeting with the staff /management assigned to this project. The purpose of this meeting will be to: (1) review responses to our data request; (2) reaffirm project understanding; and (3) familiarize ourselves with the current Utilities' cost of service methodology and rate design philosophy. In addition, we will establish protocol, develop a detailed schedule and make assignments. During the kick-off meeting it is envisioned that discussions will address: (i) the existing state of Fort Collins' electric rates, (ii) current electric rate making trends in Colorado and the nation, (iii) policies, priorities and objectives, (iv) other related ongoing activities, and (v) available data and information and the preparation of supplemental data requests. One of our objectives throughout this effort will be to foster a collaborative working relationship with Utilities' staff such that there is a growing understanding of financial issues, rate making and related industry trends. We will also strive for endorsement and prioritization of goals and policies regarding meeting revenue requirements, balancing equity and fairness, considering consumer behavior modification and socio-political responsibility, and advancing simplicity and understanding. During the course of the project, we will participate in supplemental face-to-face meetings or conference calls to transfer knowledge among representatives of the Fort Collins Utilities and the R. W. Beck team, to share information, to coordinate activities and to address/resolve any issues that may arise. Afternoon Session The afternoon session will consist of an overview of the cost of service and rate making process, a discussion of Fort Collins Utilities current financial plan, including the implications with respect to projected rate levels, and rate design objectives. This raternaking discussion will provide management and staff with an understanding of the ratemaking process, how rate structures impact customers, and the key policy decisions that will impact study results. Two key objectives of this session will be to: ■ Gather management input on policy issues important to the development of rates ■ Define the end state with respect to rate design 1-3 • R. W. BECK, AN SAIC COMPANY Jeffrey L. Schulz, P.E. Jeffrey Schulz has over 24 years of experience in civil engineering and Montana State University consulting and provides technical guidance in hydrology and hydraulics, B.S. in Civil Engineering ■ water resources, urban drainage and flood control, and quality control. Mr. Schulz has extensive experience in water resources planning, management, and design including hydrologic and hydraulic analysis; design of hydraulic structures including preparation of construction plans and specifications; design of open channel systems, storm sewers, and flood control storage facilities; and development of water budget, rainfall -runoff analysis, river simulation, sediment transport, and reservoir operation computer models. In addition, he has experience in planning, analysis, and design of raw water conveyance and storage facilities, stormwater facilities for large transportation projects, and municipal water distribution and storage systems. Prior to joining R. W. Beck, Mr. Schulz was employed at CH2M Hill in Englewood, Colo., as a senior hydraulic engineer, project manager, and business development leader specifically focused on water resources, municipal infrastructure engineering, stormwater planning and design, and hydraulic engineering for transportation projects. Relevant Experience All American Canal Lining Project Review San Diego County Water Authority, California Senior Consultant. As a member of the owner's advisory team to San Diego County Water Authority, Mr. Schulz provided services to review and evaluate the design plans for the lining of the All American Canal, a major surface water conveyance facility that diverts Colorado River water for delivery to the Imperial and Coachella Valleys in southern California. Pueblo Freeway Environmental Impact Statement Pueblo, Colorado Lead Hydraulic Engineer. Mr. Schulz was responsible for floodplain evaluations for portions of both Fountain Creek and the Arkansas River in Pueblo, Colo., to determine impacts from proposed alternative highway improvements. The project involved extensive floodplain modeling and development of a Draft Environmental Impact Statement for the reconstruction of approximately 10 miles of I-25 through Pueblo, Colo., that required floodplain and floodway revisions and railroad relocation. An SAIC Company ■ JEFFREY L. SCHULZ, P.E. Environmental Assessment —1-25 Reconstruction through Colorado Springs Colorado Department of Transportation, Colorado Mr. Schulz provided an independent review of the floodplains, wetlands, and water quality evaluations performed for the Environmental Assessment of a seven -mile length of I-25 reconstruction through Colorado Springs, Colo., for the Colorado Department of Transportation. TREX: 1-25 Reconstruction Project Denver, Colorado Mr. Schulz provided independent review services to evaluate the drainage designs developed by a team of consultants for the TREX project, the $1.6 billion reconstruction of I-25 through Denver, Colo. The assignment involved conducting numerous design group meetings and one-on-one interviews with individual designers, as well as value engineering review of proposed stormwater management facilities for the project. 1-25/US50/SH47 Interchange Project Colorado Department of Transportation, Colorado Mr. Schulz was responsible for all aspects of preliminary and final design of stormwater and drainage facilities for this $63 million urban interchange reconstruction project. Project design features included a 70 acre-foot stormwater detention basin, a complex 4-basin interconnected stormwater detention facility, a triple 72-inch diameter 600-foot long culvert under I-25, several large diameter culverts under SH 47, extensive pavement storm drain systems including over 1,800 linear feet of 54-inch diameter storm drain trunkline, and a curvilinear alignment 16-foot span by 8-foot rise reinforced concrete box -culvert system over 650 feet long. Mr. Schulz led the drainage design staff, coordinating with other discipline leads to produce preliminary and final construction drawings and specifications for six separate construction packages, and provided services during construction. SH47 Bridge over Fountain Creek — Hydraulic Analysis and Design Improvements Pueblo, Colorado Mr. Schulz was responsible for hydraulic analysis and design of improvements to these 600-foot long parallel bridges over Fountain Creek in Pueblo, Colo. The project required development of a Corrected Effective Model for Fountain Creek and evaluation of project impacts to the existing floodplain and floodway. Extensive hydraulic model analyses using both HEC-2 and HEC-RAS were performed in support of an application to the Federal Emergency Management Agency (FEMA) for a Conditional Letter of Map Revision. The project also involved extensive evaluations to compute estimated limits of bridge scour for use in substructure design. Extensive research into new available methods of estimating scour in bedrock was required. Non -Project Specific Hydraulics, Surveying, Water Quality Colorado Department of Transportation (CDOT), Colorado Project Manager. Mr. Schulz oversaw all aspects of hydrologic, hydraulic, and environmental engineering services to CDOT for numerous on -call assignments for hydraulic analysis and design throughout the State of Colorado in all CDOT regions. In addition, this project included program development and preparation of Phase I and II National Pollutant Discharge Elimination System permits and associated program implementation for CDOT statewide. I ■ JEFFREY L. SCHULZ, RE Arkansas River Basin Study Colorado and Kansas Mr. Schulz was a member of the project team that performed hydrologic computer modeling and analyses of a 25,000-square-mile basin in southeastern Colorado and western Kansas to provide litigation support to the State of Colorado. Specific tasks that Mr. Schulz performed included computer model development and programming, data collection and evaluation, database and applications design, rainfall -runoff modeling, consumptive use analyses, and water budget analyses. This project also involved preparation of numerous technical memoranda and reports and coordination with experts in multiple disciplines. Union Pacific Railroad Bridge Replacement Program Western United States Mr. Schulz served as assistant program manager and site manager for over 60 Union Pacific Railroad bridge replacement projects. Duties included site reconnaissance and hydraulic cross-section surveying, hydrologic and hydraulic analyses and modeling, bridge replacement layouts, and coordination with local regulatory agencies in 17 western states. 88th Avenue at South Platte River Drop Structure Adams County, Colorado Mr. Schulz prepared preliminary and final design plans and specifications for this 350-foot long sloping grouted boulder drop structure on the South Platte River. Duties included development of a HEC-2 computer model based on the FEMA Effective Model for the site, modeling of alternative designs to floodplain impacts hydraulic documents. evaluate and performance, and preparation of construction Stormwater Management Plan Highlands Ranch, Colorado Design Engineer. Mr. Schulz developed the stormwater management plan for construction of this new interchange linking Highlands Ranch Parkway, a major suburban arterial, and C-470. Mr. Schulz designed stormwater best management practices to control erosion and sedimentation during construction activities to protect the primary water supply for Highlands Ranch, McLellan Reservoir, from construction -related water quality impacts. The project involved design, construction plans and specifications preparation, technical reports, and facilities field inspection. Bromley Park Master Plan Development Broomfield, Colorado Mr. Schulz was responsible for implementing G1S methods for the water, sewer, and stormwater master plans for this 1,350 acre planned development. GIS methods were used to develop sewer system loadings, water system demands, and basin parameters for stormwater modeling. This data was then used as input to simulation models to determine required system sizing and to quantify expected runoff volumes under existing and full development conditions. I I R. W. Beck, An SAIC Company 3 Rebecca Shiflea Rebecca Shiflea has more than 20 years of experience directing or University of Colorado contributing on a wide range of utility -related projects. Her background M.B.A. in Marketing includes project management, marketing research, and marketing. She has managed numerous market research projects and participated in Colorado State University benchmarking studies for a variety of clients. B.S. in Psychology Prior to joining R. W. Beck, Ms. Shiflea worked at KN Energy where she managed numerous quantitative research projects relating to value-added product and service offerings by an energy utility, product bundling, and customer satisfaction. Her previous work experience includes senior project management with Walker Research & Analysis, a division of Walker Information, a marketing research firm headquartered in Indianapolis; and research analysis with Talmey-Drake Research & Strategy, Inc., a Colorado -based public opinion and market research firm. Relevant Experience Customer Values Assessments, Market Planning, and Benchmarking Ms. Shiflea is involved in customer value determination processes, identifying target markets, assisting our clients in understanding their customers' needs, as well as identifying industry best practices and providing benchmarking analysis. She works directly with the client and its customers to gather data on their experiences. Customers' perceptions about service issues combined with identification of what customers value results in better understanding of the customer. It is the basis for the design of practical plans that will improve customer service and differentiate the client organization and its products and services from the competition. Her duties include designing studies and analyzing results using statistical techniques including cluster analysis and factor analysis. I ■ Customer Satisfaction and Awareness Study — Fort Collins Utilities; Colorado; primary research of electric, stormwater, water, and wastewater customers and their perception of the integrated utility ■ Customer Satisfaction Program — Salt River Project; Arizona; conducted customer interviews with developers to collect feedback regarding the utility's design and construction project; analyzed responses to identify service issues among five -subgroups of developer customers ■ Keys Customer Satisfaction and Loyalty Study — Utility Board of the City of Key West; Florida; survey of the utility's residential and commercial customers to ascertain current market position and customer loyalty; follow-up survey was conducted four years later to ■ track changes in customer satisfaction and update brand awareness results An SAIC Company REBECCA SHIFLEA ■ Natural Gas Operations Benchmarking — CPS Energy; Texas; primary and secondary research of natural gas financial operations among municipal and investor -owned peer utilities ■ Distribution Design Benchmarking - Salt River Project; Arizona; benchmarking survey of operational aspects of peer municipal utilities distribution design operations Marketing Research Ms. Shiflea acts primarily as a project director when conducting marketing research activities. Her duties include designing studies, analyzing results, and performing feasibility assessments. She conducts detailed analyses of a variety of geo-demographic and market segments to determine significant differences in buying propensity. Specifically, Ms. Shiflea has broad experience in utility and telecommunications conjoint studies in order to assess the perceived benefits of marketing a bundled package of value-added products and services. Ms. Shiflea has conducted market studies for a variety of utilities, including electric, natural gas, stormwater, water, wastewater, telephony, and integrated utilities. She has worked on a number of different customer satisfaction and loyalty surveys and projects involving strategic planning, branding, and new products. ■ Telecommunications Survey, Market Research, and Alliance Evaluation — Eugene Water & Electric Board; Oregon; provided market research, business planning, and financial analysis to evaluate potential customer satisfaction with current telecommunications services and willingness to obtain those same services from Eugene Water & Electric Board if made available ■ VolP Assessment — Cedar Falls Utilities (CFU); Iowa; served as the research manager and designed and implemented conjoint analysis primary research to determine customer purchase intent for Voice over Internet Protocol (VoIP) telecommunications services; these market penetration projections were used in the analysis of CFU's financial condition (pro forma) under a variety of scenarios ■ Utility Choice Study — City of Elberton; Georgia; primary research study to determine residential customers' likelihood of purchasing Internet, data, cable television, and telephony from alternative vendors ■ Telecommunications Market Research — Los Alamos County (LAC); New Mexico; provided telecommunications consulting services that focused on business planning, market research, and demand forecasting; this provided LAC with a quantitative assessment of constituents' satisfaction with current telecommunications services and willingness to obtain services from LAC or a public/private alliance' Engineering and Consulting Report Preparation Ms. Shiflea is involved in consulting engineer reports and associated ordinance required reviews for several municipal utilities. These reviews usually require an assessment of the utilities' financial and physical operations for the duration of the bond period, and typically include a determination of the condition of the physical assets of the utility, as well as a review of the utility's budgeting and planning process. Additionally, she also has been involved with report preparation for various client projects such as technology assessments and public involvement initiatives. ■ Consulting Engineer Report — Lafayette Utilities; Louisiana; annual consulting engineer's report prepared for revenue bond resolution covenants and requirements including review of electric, water, and wastewater utilities 2 Section 1 1 Project Understanding and Scope of Work Task 3: Review of Financial Planning and Cost of Service Models Based on direction given in Task 2, we will review Fort Collins Utilities' existing 2010 Financial Planning, Cost of Service, and Rate Design Models and other relevant analyses for consistency and reasonableness. Included in this task is a review of. (i) the sales forecast — including customers, energy sales (kWh), and demands (kW), (ii) the revenue requirements (costs and required margin), (iii) the basis for allocation factors, (iv) the development of customer billing units, and (v) other relevant elements of the existing 2010 Cost of Service Model. Based on our review, we will meet with Fort Collins Utilities' management and staff and make recommendations regarding model structure, allocation methodology, and the validity of certain key inputs. At this point in the Study, we will reevaluate the Phase 11 scope of work to determine if assumptions described below require adjustment. Task 4: Rate Policy Based on completion of Tasks 2 and 3 as described above, we will provide Fort Collins Utilities a rate policy document that will identify key strategies and supporting implementation specific to financial planning, cost of service, and rate design. We expect that the implementation plan will be multi -year containing several steps. To the extent possible, the document will clearly define key policy issues adopted by Fort Collins Utilities that will influence the underlying Study results. This document can be provided to the Fort Collins Utilities' Board and used as a tool to educate, inform, and gain endorsement from the Board with respect to the timing and magnitude of proposed rate changes and supporting policy. Phase I Deliverables ■ Full day project kick-off and strategy meeting ■ Critique of Fort Collins Utilities current financial planning and cost of service analytical tools ■ Rate design strategy and policy paper Phase II: Cost Analysis/Rate Design Based on the information gathered in Phase 1, we anticipate calculating cost of service for each major Fort Collins Utility rate class and design rates to meet the initial step of the long term rate plan. At this point our cost estimate has assumed that we will be able to work within Fort Collins Utilities' current model architecture, modified as suggested in Phase 1. The purpose of Phase 11 is to understand Fort Collins Utilities' unbundled and marginal cost by rate class, confirm (and revise if needed) near term "test year" revenue requirements, review the Cost of Service Analysis and the basis thereof, and design proposed rate options to equitably recover the cost of providing electric service according to the list provided as Attachment A in the RFP. This information 1-4 9 R. W. BECK, AN SAIC COMPANY