(ACT) ACTION NEEDED
(INF) INFORMATION ONLY
(DIS) DISCRETIONARY
AGENDA
REGULAR MEETING OF THE CITY COUNCIL
NEEDLES PUBLIC UTILITY AUTHORITY
HOUSING AUTHORITY CITY OF NEEDLES
CITY OF NEEDLES, CALIFORNIA
COUNCIL CHAMBERS, 1111 BAILEY AVENUE.
TUESDAY, SEPTEMBER 9, 2025
COUNCIL EXECUTIVE SESSION – 5:00 PM
CITY COUNCIL MEETING – 6:00 PM
THE PUBLIC MAY ATTEND VIA TEAMS AND MAY SUBMIT ANY COMMENTS IN WRITING PRIOR TO NOON ON THE DAY OF THE MEETING BY EMAILING [email protected] TO JOIN THE LIVE TEAMS MEETING: log into the City of Needles website at www.cityofneedles.com to access the agenda and Click here to join the meeting If asked, enter the following: Meeting ID: 343 402 312# OR listen in and participate by calling Teams: 1-323-488-2227 - Meeting ID: 343 402 312# The meetings are being recorded.
CALL TO ORDER
ROLL CALL
PUBLIC COMMENTS PERTAINING TO THE EXECUTIVE SESSION ITEMS A three-minute time limit per person has been established.
RECESS TO EXECUTIVE SESSION
EXECUTIVE SESSION
a. Conference with Labor Negotiator pursuant to California Government Code §54957.6 - Personnel - Agency Representatives City Manager Patrick Martinez and Pamela Osteen - Employee Organization: Teamsters Local 1932-Unclassified
b. Conference with Labor Negotiator pursuant to California Government Code §54957.6 - Personnel - Agency Representatives City Manager Patrick Martinez and Pamela Osteen - Employee Organization: Teamsters Local 1932-Classified
c. Conference with Labor Negotiator Pursuant to Government Code Section 54957.6 Agency Negotiator: City Manager Patrick Martinez or his designee. Unrepresented Employee: Utility Manager
d. Conference with Legal Counsel Regarding Potential Initiation of Litigation Pursuant to Government Code Section 54956.9(d)(4). Re: Medical Investor Holdings, LLC (MIH) and MIH Related Entities
CALL TO ORDER
ROLL CALL
EXECUTIVE SESSION REPORT - by City Attorney
PLEDGE OF ALLEGIANCE
INVOCATION
APPROVAL OF AGENDA
CONFLICT OF INTEREST
CORRESPONDENCE
INTRODUCTIONS
CITY ATTORNEY – Parliamentary Procedures
As a courtesy to those in attendance, we would ask that cell phones be turned off or set in their silent mode. Thank you
PUBLIC APPEARANCE - Persons wishing to address the NPUA / HACN / City Council on subjects other than those scheduled are requested to do so at this time. When called by the Mayor, please announce your name and address for the record. In order to conduct a timely meeting, a three-minute time limit per person has been established by Municipal Code Section 2-18. Amendments to the California Government Code Section 54950 prohibits the City Council from taking action on a specific item until it appears on the agenda.
PRESENTATION
(A ten-minute time limit per presentation has been established per Municipal Code Section 2-18.)
1. Captain Jake Gault will introduce Kim Buckley from the County Behavioral Health Triage, Engagement and Support Team (TEST Program).
NPUA / COUNCIL CONSENT CALENDAR
All matters listed on the Consent Calendar are considered to be routine and will be enacted by one motion in the form listed. The Mayor or any member of the NPUA / City Council may pull an item from the Consent Calendar for discussion. Prior to NPUA / Council action, a member of the public may address the NPUA / City Council on matters scheduled on the Consent Calendar. A three-minute time limit per person applies. RECOMMENDED ACTION: Approve Items 2 through 4 on the Consent Calendar by affirmative roll call vote (ACT)
2. Waive full reading and adopt Ordinance 676-AC of the City of Needles, California Establishing a Procedure for Property Owner Objections to Proposed Water/Sewer Fees or Special Assessment. (2nd Read Adopt)
3. Accept the proposal of and authorize Lincus Incorporated to complete the 2025–2027 AB 32 Greenhouse Gas (GHG) Third Party Verification Services for a total cost not to exceed $26,014.
4. Approve Survalent providing Electric SCADA Software not to exceed $137,126 utilizing the Electric System Improvement Fund.
END OF NPUA CONSENT CALENDAR
REGULAR NPUA / COUNCIL ITEMS
5. Accept the Comprehensive Water and Wastewater Cost of Service Ratemaking Study dated August 2025 and initiate the Prop 218 45-Day Public Comment to Adopt the Proposed Water and Wastewater Rates for 2026 – 2030. (ACT)
6. Accept the Comprehensive Electric Service Ratemaking Study dated August 2025 (ACT)
7. Approve a 2.7% cost-of-living (COLA) increase in electric basic service charge rate as of October 1, 2025; approve an over-hydro rate of $0.1159 effective October 1, 2025; eliminate the $.0300 Power Cost Adjustment and approve the methodology to calculate the annual electric base rate and the power cost adjustment rate based on the rate calculation spreadsheets (ACT)
COUNCIL CONSENT CALENDAR
All matters listed on the Consent Calendar are considered to be routine and will be enacted by one motion in the form listed. The Mayor or any member of the City Council may pull an item from the Consent Calendar for discussion. Prior to Council action, a member of the public may address the City Council on matters scheduled on the Consent Calendar. A three-minute time limit per person applies. RECOMMENDED ACTION: Approve Items 8 through 17 on the Consent Calendar by affirmative roll call vote. (ACT)
8. Approve the Warrants Register through September 9, 2025
9. Approve the Minutes of August 12, 2025
10. Adopt Resolution No. 2025-36 authorizing destruction of certain city records pursuant to Government Code Section 34090
11. Waive full reading and Adopt Ordinance 677-AC of the City Council of the City Of Needles, California, Amending Chapter 18, Article 18-V, Entitled “Conduct On Public Property” in the Needles Municipal Code (2nd read Adopt)
12. Receive and file the Needles Short Range Transit Plan (SRTP) 2025-2030
13. Approve 2026 employee benefits plan for Medical, Dental and Vision
14. Adopt Resolution 2025-37 Approving the lease extension with the Tri-State Alano Club for the building at 801 Third Street until September 9, 2026, under the same terms and conditions
15. Authorize the annual seed purchase from Simplot Turf & Horticulture, Las Vegas, in the amount of $28,716
16. Authorize the purchase from SPS VAR for one (1) Power10 AS400/Naviline Server not to exceed $62,000, utilizing the adopted FY26 General Fund Budget
17. Adopt Resolution 2025-33 Measure I Five-Year Capital Improvement Plan for Fiscal Years 2025 Through 2030
END OF COUNCIL CONSENT CALENDAR
REGULAR COUNCIL ITEMS
18. Adopt ratified Memorandum of Understanding with the Teamsters Local 1932, Classified and Unclassified Units and the City of Needles for the three-year term (July 1, 2025, through June 30, 2028) (ACT)
19. 175th Anniversary of California Statehood Proclamation read by Mayor Jernigan (INF)
20. Adopt Resolution 2025-38 Approving the Off-Highway Motor Vehicle Master Plan and Pilot Project as outlined in the Technical Memorandum. Direct staff to proceed with implementation, including signage, public education, and coordination with law enforcement. Authorize staff to pursue state and regional funding opportunities to support the program. (ACT)
21. Adopt Resolution No. 2025-39 of the City Council of the City of Needles Approving a Lease between the City of Needles and 19th Hole Bar & Grill, LLC to Operate A Full-Service Restaurant in a City-Owned Facility at River’s Edge Golf Course and Authorizing the City Manager to Sign Documents on Behalf of the City of Needles (ACT)
22. Award bid to Precise Builders, Inc. for the 19th Hole Bar & Grill Kitchen Remodel Project in the amount of $416,699 plus 20% contingency for a total project cost of $500,039 and authorize staff to execute a Public Works Agreement with Precise Builders, Inc. and move forward with the Notice of Award and Notice to Proceed. (ACT)
23. Consider cancelling the November 25 and December 23, 2025, regular City Council / NPUA / HACN meetings. (ACT)
24. Adopt Resolution 2025-40 Approving a First Amendment to the Employment Agreement with Rainie Torrance for Utility Manager effective September 10, 2025, setting a salary of $196,100 in compliance with SB 1436 and incorporate into the salary schedule FY 2025-2026. (ACT)
25. Waive full reading and Adopt Ordinance 675-AC adding Chapter 11A, Camping, to the Needles Municipal Code, establishing regulations prohibiting camping on public property. (2nd Read - Adopt) (ACT)
CITY ATTORNEY REPORT
CITY CLERK REPORT
CITY MANAGER REPORT
City Manager's Reports for the weeks of August 22 and 29, 2025
COUNCIL REQUESTS
Council Member Ford
Council Member McCorkle
Vice Mayor Campbell
Council Member Pogue
Council Member Belt
Council Member Longbrake
Mayor Jernigan
ADJOURNMENT
INTERNET ACCESS TO CITY COUNCIL AGENDAS AND STAFF REPORT MATERIAL IS AVAILABLE PRIOR TO CITY COUNCIL MEETINGS AT: http://www.cityofneedles.com Posted: September 5, 2025
SB 343-DOCUMENTS RELATED TO OPEN SESSION AGENDAS -- Any public record, relating to an open session agenda item, that is distributed within 72 hours prior to the meeting is available for public inspection at the City Clerk’s Office, 817 Third Street, Needles, CA 92363.
In compliance with the American with Disabilities Act, if you need special assistance to participate in this meeting, please contact the City Clerk’s Office at (760) 326-2113 ext 133. Notification 48 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting (28 CFR 35.102-104 ADA Title II).
I hereby certify, under penalty of perjury under the laws of the State of California that the foregoing Agenda was posted at the front entrance of City Hall not less than 72 hours prior to the meeting.
Dated this 5th day of September 2025
/s/ Candace Clark, CPMC, CMC, City Clerk
City of Needles, California
Request for City Council Action
CITY COUNCIL NPUA Regular Special
Meeting Date: September 9, 2025
Title: Ordinance 676-AC, Approving an Ordinance of the City of Needles, California Establishing a Procedure for Property Owner Objections to Proposed Water/Sewer Fees or Special Assessment 2nd Read Adopt
Background: Ordinance 676-AC was introduced for approval at the August 12, 2025, Regular NPUA/HACN/City Council Meeting. A motion and a second were made, and the Ordinance was approved by a 6-0 vote in favor.
California recently enacted AB 2257, a bill sponsored by the ACWA and authored by Assemblymember Lori Wilson (D-Suisun City), which assists local agencies in defending against lawsuits under Proposition 218, which governs assessments, fees, and charges levied by local agencies. The bill establishes a formal objection procedure for ratepayers to raise concerns about proposed rate changes before litigation becomes an option. This process is designed to address disputes during the public participation stage, reducing the likelihood of surprise lawsuits after rates are approved. AB 2257 aligns with existing constitutional provisions and Proposition 218, which set standards for public notice, hearings, and protest procedures.
Justification/Analysis: This legislation mirrors the California Environmental Quality Act process, emphasizing transparency and early resolution of disputes. It does not bypass the public participation process mandated by Proposition 218 but enhances it by creating a parallel objection mechanism. By fostering communication between agencies and ratepayers, AB 2257 seeks to minimize litigation risks and promote collaborative problem solving in public rate-setting processes.
Fiscal Impact: This action does not necessitate additional budget adjustments or impose new costs. This action helps ensure long-term financial stability by implementing sound financial management practices and minimizing risks.
Recommendation: Adopt Ordinance 676-AC, Approving an Ordinance of the City of Needles, California Establishing a Procedure for Property Owner Objections to Proposed Water/Sewer Fees or Special Assessment
Submitted By: John Pinkney, City Attorney
City Manager Approval: Date:
Other Department Approval (when required): Date:
9/4/2025
Agenda Item 2.
1 ORDINANCE 676-AC
AN ORDINANCE OF THE CITY OF NEEDLES, CALIFORNIA
ESTABLISHING A PROCEDURE FOR PROPERTY OWNER OBJECTIONS
TO PROPOSED WATER/SEWER FEES OR SPECIAL ASSESSMENTS
WHEREAS, the City of Needles (“City”) is a charter city organized under the California Constitution and the laws of the State of California.
WHEREAS, California law requires that certain changes to water/sewer fees or special assessments must be adopted or approved in accordance with procedures outlined in Article XIII D, of the California Constitution, commonly referred to as “Proposition 218.” WHEREAS, Article XIII D, Section 4, establishes certain procedural requirements and substantive limitations a local public agency must follow to adopt a special benefit assessment.
WHEREAS, Article XIII D, Section 6, establishes certain procedural requirements and substantive limitations a local public agency must follow to adopt a property related fee for water/sewer service.
WHEREAS, the purpose of this ordinance is to provide a meaningful opportunity for a ratepayer to present an objection to a proposed new or amended water/sewer fee or special assessment before resorting to litigation after the new or amended fee or special assessment is approved.
WHEREAS, this ordinance is intended to provide a procedure for ratepayers to bring an objection regarding a new or amended water/sewer fee or special assessment to the City’s attention early in the fee consideration process, and to provide an opportunity for the City to address or resolve any objections before the City Council makes a final decision on whether to adopt a proposed water/sewer fee or special assessment pursuant to Proposition 218.
WHEREAS, this procedure will generally require the City to make available the proposed water/sewer fee or special assessment, post the written basis for the proposed water/sewer fee or special assessment on its internet website, provide 45 days for the property owner to review the proposed fee or assessment and timely submit to the City a written objection to the fee or assessment that specifies the grounds for alleging noncompliance, and require the City to consider and respond in writing to timely submitted objections prior to the close of the protest hearing or ballot tabulation hearing required under Section 4 or Section 6 of Article XIII D of the California constitution; and WHEREAS, for purposes of the proposed water/sewer fee or assessment adopted by the City pursuant to Section 4 or Section 6 of Article XIII D of the California Constitution, a person or entity shall be prohibited from bringing a judicial action or proceeding alleging noncompliance with Article XIII D of the California Constitution for any new, increased, or extended water/sewer fee or assessment, unless that person or entity has timely submitted to the City a written objection to that fee or assessment that specifies the grounds for alleging noncompliance; and
WHEREAS, the City Council hereby intends to adopt the exhaustion of administrative remedies, procedure as outlined in Government Code section 53759.1 and the administrative record principles contained in Government Code section 53759.2.
NOW, THEREFORE, BE IT ORDAINIED by the City Council of the City of Needles as follows:
SECTION 1. All of the above recitals are true and correct and are herein by reference.
SECTION 2. The City Council hereby adopts the exhaustion of administrative remedies procedure contained in Government Code section 53759.1.
SECTION 3. For purposes of any proposed water/sewer fee or assessment adopted by the City pursuant to Section 4 or Section 6 of Article XIII D of the California Constitution, a person or entity shall be prohibited from bringing a judicial action or proceeding alleging noncompliance with Article XIII D of the California Constitution for any new, increased, or extended water/sewer fee or assessment, unless that person or entity has timely submitted to the City a written objection to that fee or assessment that specifies the grounds for alleging noncompliance, in compliance with Government Code section 53759.1.
SECTION 4. The City hereby adopts the administrative record principles contained in Government Code section 53759.2.
Agenda Item 2.
2 SECTION 5. In the event of any conflict between the terms, provisions, conditions, or requirements of this ordinance and those of any other ordinance, regulation or policy of the City, the terms provisions, conditions, and requirements of this ordinance shall prevail and be deemed superior, except where preempted by state or federal law.
SECTION 6. The Mayor shall sign and the City Clerk shall certify to the passage and adoption of this Ordinance and shall cause the same, or the summary thereof, to be published and posted pursuant to the provisions of law and this Ordinance shall take effect thirty (30) days after passage.
SECTION 7. The City authorizes City staff to take such other and additional actions as may be reasonably necessary to implement the purpose of this ordinance and implement the exhaustion of administrative remedies procedure adopted herein.
NOW, THEREFORE, BE IT ORDAINED that the City Council of the City of Needles, California, approves an amendment to the City Code.
INTRODUCED AND READ for the first time and ordered posted at a regular meeting of the City Council of the City of Needles, California, held on the 12th day of August 2025, by the following roll call vote:
PASSED, APPROVED AND ADOPTED at a regular meeting of the City Council of the City of Needles, California, held on the 9th day of September 2025, by the following roll call vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
__________________________________
Janet Jernigan, Mayor
ATTEST: __________________________________
Candace Clark, City Clerk
Approved as to form:
_______________________________
Lena Wade, Deputy City Attorney
Janet Jernigan, Mayor
ATTEST:
Candace Clark, City Clerk
AYES:
NOES:
ABSENT:
ABSTAIN:
MEMBERS/COUNCIL MEMBERS FORD, MCCORKLE, MEMBER/VICE MAYOR CAMPBELL,
MEMBER/MAYOR JERNIGAN, MEMBERS/COUNCIL MEMBERS POGUE, BELT, LONGBRAKE NONE
NONE
NONE
Agenda Item 2.
City of Needles, California
Request for City Council Action
CITY COUNCIL NPUA Regular Special
Meeting Date: September 9, 2025
Title: Accept the proposal of and authorize Lincus Incorporated to complete the 2025- 2027 AB 32 Greenhouse Gas (GHG) Third Party Verification Services for a total cost not to exceed $26,014
Background: California Air Resources Board (CARB) has established and implemented a verification program to support mandatory greenhouse gas (GHG) reporting. Two primary components are an accreditation program for GHG verification bodies and individual verifiers, and a verifier performance oversight program. CARB is responsible for evaluating the verification services provided by CARBaccredited verification bodies and verifiers to ensure California's high-quality standards are achieved.
Only CARB-accredited verification bodies may provide verification services to reporting entities. Staff requested proposals from several verification bodies provided by CARB. The city received two responses:
from Lincus Incorporated and Carbon Verification Services, LLC. 2025 2026 2027 Total
Lincus 8,640.00 8,214.00 9,160.00 $ 26,014
Carb Verification 9,850.00 9,850.00 9,850.00 $ 29,550
WZI Inc. has completed the verification services for the past 5 years. CARB established a term limit and requires third-party verification providers to be switched every 5 years. The Board of Public Utilities approved the recommended action on September 2, 2025.
Fiscal Impact: Lincus Incorporated fiscal impact for FY 26 is $8,640, FY 27 is $8,214 and FY 28 is $9,160 to be funded by the adopted electric operations and maintenance budget.
Environmental Impact: Verification of greenhouse gases emitted.
Recommendation: Accept the proposal of and authorize Lincus Incorporated to complete the 2025– 2027 AB 32 Greenhouse Gas (GHG) Third Party Verification Services for a total cost not to exceed $26,014
Submitted By: Rainie Torrance, Utility Manager
City Manager Approval: Date:
Other Department Approval (when required): Date:
Agenda Item 3.
1178 Broadway, 3
rd Floor, #1123
New York, NY 10001
646-499-0083
www.CarbonVerificationService.com
City of Needles – GHG Report Verification Proposal
August 22, 2025
Rainie Torrance, Utility Manager
City of Needles
817 Third Street
Needles, CA 92363
Re: City of Needles
California Air Resources Board
GHG Report Verification – Reporting Years 2025, 2026 and 2027 Dear Ms. Torrance:
Carbon Verification Service appreciates the opportunity to submit a proposal to verify the City of Needles’s Greenhouse Gas Emission Report for the California Air Resources Board for reporting years 2025, 2026, and 2027. A scope of work, cost estimate and general terms and conditions are outlined below.
Scope of Work
Carbon Verification Service will conduct verification services in accordance with the following general verification principles:
Verification Criteria CARB Regulation for the Mandatory Reporting of Greenhouse Gas Emissions, 17 CCR 95100 to 95158
Boundaries of the Project The electricity transactions by City of Needles subject to reporting by 17 CCR 95111
GHGs to be Verified CO2e
Level of Assurance Reasonable assurance
Time Period Included GHG emissions during calendar year 2025, 2026 and 2027 Definition of Materiality
The materiality determination will be based on the following equation:
Percent error (emissions) =∑ [Discrepancies + Omissions + Misreporting] x 100% Total reported covered emissions
The result of this equation must be 5% or greater to find that there is a material misstatement of emissions.
Carbon Verification Service will use its best efforts to complete the project according to the following schedule:
Agenda Item 3.
1178 Broadway, 3
rd Floor, #1123
New York, NY 10001
646-499-0083
www.CarbonVerificationService.com
City of Needles – GHG Report Verification Proposal
Task # Task Deadline
1 Submit Conflict of Interest/Notice of Verification Service certification to CARB 5 Days after contract award
2 Issue Request for Information 5 days after CARB approval of COI/NOVS 3 Prepare Verification Plan and Sampling Plan 5 days after receipt of requested information.
4 Perform Site Visit at WAPA’s office in Phoenix, AZ (year 1 only) 15 days 5 Perform Data Review and Assessment 20 days
6 Prepare Verification Report 10 days
7 Conduct Independent Technical Review 5 days
8 Issue Verification Statement No later than August 11 of each year.
Carbon Verification Service will:
• Perform the services in an efficient, prompt, skillful and careful manner in accordance with current industry standards, practices and accredited procedures. • Provide at least one opportunity for City of Needles to respond to corrective action requests, if any, and verify any final version of the corrected emission report. • For each year, issue a Verification Report and Verification Statement substantially as defined in the Reporting Rule. City of Needles will:
• Make commercially reasonable efforts to cooperate with Carbon Verification Service to comply with the schedule set forth in this Proposal.
• Submit an Emission Report in the Cal-eGGRT reporting tool and provide access to the Report to Carbon Verification Service.
• Promptly and appropriately respond to requests from Carbon Verification Service for correct, accurate and complete background and supporting documentation, including e-tags. This includes making employees available for interviews in a timely fashion. Personnel to be interviewed include those who prepared the GHG Report, traders and data management personnel. • If feasible, provide read-only access to the City of Needles’s tagging agent (OATI) to review import and export e-tags and conduct data queries.
• Promptly correct all material misstatements and respond to any other corrective action requests from Carbon Verification Service.
• Pay the fee, as specified below.
Agenda Item 3.
1178 Broadway, 3
rd Floor, #1123
New York, NY 10001
646-499-0083
www.CarbonVerificationService.com
City of Needles – GHG Report Verification Proposal
Cost
The cost to complete the tasks identified above is $ 9,850 per year. Travel expenses for the site visit are estimated to be an additional $950. A deposit of $1,970 will be invoiced upon execution of the contract for year 1. The deposit for years 2 and 3 will be invoiced on or around June 1, 2027 and June 1, 2028 for the same amount as year 1.
Fees in addition to that specified above may be charged for tasks that are not identified in the proposal, for repeats of any or all the tasks that are identified, or for work required due to non-conformances with the Reporting Rule. The City of Needles will be notified in writing in advance if additional fees are necessary.
General Terms and Conditions
General Terms and Conditions applicable to this Verification Project are attached and are hereby incorporated into this Agreement.
Should this Proposal meet with your approval, please sign below to signify your agreement with the terms and conditions of this Agreement and return a fully executed original to me. Thank you for the opportunity to submit this Proposal. If you have any questions, please contact me at 916-208-9389.
Sincerely,
For Carbon Verification Service, LLC
James J. Groome
President
AGREED TO AND ACCEPTED:
City of Needles
By:
Title:
Date:
Attachment - General Terms and Conditions
Agenda Item 3.
1178 Broadway, 3
rd Floor, #1123
New York, NY 10001
646-499-0083
www.CarbonVerificationService.com
City of Needles – GHG Report Verification Proposal
General Terms and Conditions
This Verification Agreement (“Agreement”) is entered into by and between Carbon Verification Service, LLC, (hereinafter referred to as “the Verification Body” or “the VB”) and the City of Needles (the “Client”). The Verification Body and the Client to be referred to individually as a “Party” and collectively, when the context so permits, as the “Parties”. All capitalized terms not defined herein have the definition set forth in the Regulation for the Mandatory Reporting of Greenhouse Gas Emissions sections 95100 to 95158, Title 17, California Code of Regulations (The “Reporting Rule”) which is incorporated herein by reference, as applicable.
1. Scope of Agreement
1.1 The VB shall perform the Services in accordance with the Proposal dated August 22, 2025.
1.2 The Client recognizes that its compliance with the Deadlines identified in the Proposal and its timely cooperation is critical to receiving the Services from the VB in a timely manner. If the Client fails to meet its responsibilities as outlined in the Proposal, the VB provides no guarantees regarding completion of the Services, including submission of the final verification statement, by the schedule indicated in the Proposal and Client agrees that additional fees may be charged to Client to complete the Services.
1.3 The Services will be conducted in English unless otherwise agreed upon by both the VB and the Client. Language requirements include oral communication, written communication and
document review.
1.4 The VB retains authority and responsibility for its verification activities, decisions and Verification Statement.
2. Representations, Warranties, and Disclaimer
2.1. Any Services provided by VB will be provided pursuant to industry standards by competent and qualified personnel.
2.2. Each Party has entered into this Agreement as principal and for its own account (and not as advisor, agent, broker or in any other capacity, fiduciary or otherwise), with a full understanding of, and the ability to assume, the material terms and risks of the same.
2.3. Each Party represents and warrants that it is duly organized and validly existing under the laws of the jurisdiction of its organization or incorporation and, if relevant under such laws, in good standing and has the authority and power to execute this Agreement or other document relating hereto to which it is a party, to deliver this Agreement or other document relating hereto that it is required hereby to deliver, and to perform its obligations under this Agreement or other document relating hereto to which it is a party, and has taken all necessary action to authorize such execution, delivery and performance. Each Party further represents and warrants that the person executing this Agreement on behalf of each Party has full power and authority to enter into this Agreement.
2.4. This Agreement constitutes its legal, valid and binding obligation enforceable against it in accordance with its terms, except as the same may be limited by bankruptcy, insolvency or other similar laws affecting creditor’s rights generally.
2.5. The VB makes no further representations regarding the Services provided. ALL OTHER WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING ANY WARRANTY OF MERCHANTABILITY OR OF
FITNESS FOR ANY PARTICULAR PURPOSE, ARE DISCLAIMED.
3. Use of the Deliverable
3.1. The VB will provide the Deliverable set forth in the Proposal in its entirety to the Client. The Client may include the Deliverable in its annual report or may be issued by the Client in any separate report that it may publish or be provided to any other interested parties or entities. The name and/or logo of the VB may not appear in the report or publication without prior written consent of the VB. The VB reserves its right to seek legal remedies for unauthorized use of the VB name or logo.
3.2. Except as expressly permitted in this Agreement, the Client hereby represents and warrants that it will not publish, nor otherwise refer to, the Deliverable or any portion thereof unless the prior written consent of the VB is received.
4. Compensation and Payment
4.1. VB shall deliver to the Client, at the address provided below, invoices every month for the duration of the project, which invoices shall be calculated in accordance with the pricing terms set forth in the Proposal or as agreed to by the Parties from time to time. VB may require a deposit in the amount set forth on a separate invoice to be applied to the last invoice before performing the Services. Other than the deposit, the Client shall pay the amount specified on the invoice in US Dollars directly to the VB within thirty (30) calendar days from the date of Client’s receipt of such invoice (the “Due Date”). Any amounts not paid by the applicable Due Date shall accrue interest at a rate of 1.5% per month beginning the day after the Due Date, up to and including the date payment is actually received by the VB. The VB reserves the right to cease or suspend work for reason of unpaid fees and/or to seek legal remedies for unpaid fees. The Client shall pay all of the VB’s reasonable collection costs including reasonable attorney’s fees.
Invoicing Information (to be completed by the Client):
Client Contact Name:
Client Billing Address:
Contact Telephone:
P.O. Number:
Client Federal Tax ID (EIN):
Agenda Item 3.
City of Needles – GHG Report Verification Proposal
1178 Broadway, 3
rd Floor, #1123
New York, NY 10001
646-499-0083
www.CarbonVerificationService.com
4.2. All fees and charges payable to the VB shall be net of any and all taxes, sales or use taxes, fees, value added taxes, or other government charges (collectively "Taxes") charged or which may be imposed in the future in relation to the VB’s Services (other than VB's income taxes), directly in relation to the rendering of the Services, and Client agrees that it will be responsible for the payment of all such taxes. The Client shall pay all Taxes associated with the Services to VB as required by law.
4.3. Notwithstanding the dispute resolution provisions of Section 9.2 below, should the Client wish to dispute an invoice, it must do so in writing, within thirty (30) calendar days of receipt, and shall provide sufficient detail in the notice to fully describe the nature, detail, and evidence in support of the dispute along with the amount in dispute. Otherwise, invoices shall be deemed accurate and payable according to the terms thereof. If VB has received notice of such an invoice dispute, the Client will pay the full undisputed amount when due and shall not be entitled to retain or defer payment of any sums to the VB on account of any dispute, counter claim or set off which Client may allege against the VB. The VB may elect to bring action for the collection of unpaid fees in any court having competent jurisdiction, and upon a judgment in VB’s favor, the Client shall pay all of the VB’s collection costs, including attorneys’ fees and related expenses.
5. Marketing and Claims
5.1. Client may not state in marketing efforts and other publications that its Report was verified by VB without VB's express prior written consent.
5.2. Client may not use the Verification Statement, the mark of or the logo of Carbon Verification Service, LLC in marketing efforts and publications without express prior written consent of VB.
6. Term and Termination of the Agreement
6.1. Term. The Term of this Agreement shall commence on the Effective Date and terminate on the first anniversary date of the Effective Date. The Effective Date is the date both parties execute the contract.
6.2. Termination for Cause. Either Party may terminate this Agreement upon the other Party’s material breach of a material provision of this Agreement, if such breach is not cured within ten (10) calendar days of notice from the non-breaching Party, provided that if this Agreement is terminated by the VB, the VB shall be entitled to the pro rata portion of the fees agreed to for the Services under this Agreement for the Services performed by VB prior to the Client’s breach, and other than as stated in Section
6.3 (Conflict of Interest), no refunds will be due in the event of Termination of this Agreement.
6.3. Termination for Conflict of Interest. In the event that any applicable government agency determines that VB has a conflict of interest in performing the Services, which VB determines in its sole judgment and discretion cannot be mitigated or the cost of such mitigation is too expensive, then VB shall have the right to immediately terminate this Agreement without any penalty or further obligation. In such event, VB shall refund all fees received for Services not yet performed.
7. Limitation of Liability and Indemnification
7.1. LIMITATION OF LIABILITY. THE PARTIES CONFIRM THAT THE
EXPRESS REMEDIES AND MEASURES OF DAMAGES PROVIDED IN
THIS AGREEMENT SATISFY THE ESSENTIAL PURPOSES HEREOF. IF
NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY HEREIN
PROVIDED, THE LIABLE PARTY’S LIABILITY SHALL BE LIMITED TO
THE DIRECT ACTUAL DAMAGES (INCLUDING ANY FEES PREVIOUSLY
PAID UNDER THIS AGREEMENT) ONLY AND SUCH
DIRECT, ACTUAL DAMAGES SHALL BE THE SOLE AND EXCLUSIVE
REMEDY HEREUNDER, AND ALL OTHER REMEDIES OR DAMAGES
SHALL BE WAIVED. NOTWITHSTANDING ANY OTHER PROVISION
IN THIS AGREEMENT, NEITHER PARTY SHALL BE LIABLE TO THE
OTHER FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE, SPECIAL,
EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS OR REVENUES
OR LOSS OF USE OF EITHER, OR BUSINESS INTERRUPTION
DAMAGES, WHETHER BY STATUTE, IN TORT OR IN CONTRACT,
UNDER THIS AGREEMENT.
7.2. The VB shall not be liable for:
7.2.1. ANY DELAYED OR PARTIAL PERFORMANCE OF THE
SERVICES, OR ANY DAMAGES SUFFERED BY CLIENT AS
A RESULT OF SUCH DELAYED OR PARTIAL
PERFORMANCE OF THE SERVICES, ARISING DIRECTLY
OR INDIRECTLY FROM ANY EVENT OUTSIDE THE VB’S
CONTROL; OR
7.2.2. ANY PARTIAL OR TOTAL NON-PERFORMANCE OF THE
SERVICES OR ANY DAMAGES SUFFERED BY CLIENT AS A
RESULT OF SUCH PARTIAL OR TOTAL NONPERFORMANCE OF THE SERVICES, DIRECTLY OR
INDIRECTLY ARISING OUT OF AN ACT OR OMISSION BY
THE CLIENT.
7.3. Indemnity. Except for cases of proven negligence or fraud by Party, the other Party agrees to indemnify, defend and hold harmless such Party and its officers, directors, employees, agents, representatives and subcontractors against all claims (actual or potential) of any third party for loss, damage or expense of whatever nature, including all legal expenses and related costs arising from, related to or in connection with this Agreement.
7.4. Defense. VB shall: (i) give prompt written notice, in accordance with the provisions of Section 10.3, of any third-party claim, suit, expense or the like related to or in connection with this Agreement; (ii) permit the Client to control and direct the defense or settlement of any such claim, suit or the like, provided, however, that (a) the Client shall not enter into any settlement agreement that would result in any admission by VB or payment by VB without VB's prior written consent, (b) VB may at its election participate in the defense of such claim, suit or the like through separate counsel at its own expense, and (c) VB provides the Client all reasonable assistance (at the expense of Client) in connection with the defense or settlement of any such claim or suit.
Agenda Item 3.
City of Needles – GHG Report Verification Proposal
1178 Broadway, 3
rd Floor, #1123
New York, NY 10001
646-499-0083
www.CarbonVerificationService.com
8. Confidentiality
8.1. As used herein, “Confidential Information” shall include any and all oral and written information provided to a Party by the Other, provided, however, that Confidential Information shall not include any information which (i) is, or hereafter becomes (but not in violation of this Agreement), generally known to the public, (ii) was available to a Party on a non-confidential basis prior to the time it was disclosed by the other Party, (iii) is disclosed by an independent third party with a right (or apparent right) to make such disclosure. Unless required by law or upon request of a governmental authority with competent jurisdiction, neither Party shall disclose the Confidential Information to any person or entity except for its directors, employees or outside consultants retained by it in connection with this Agreement.
8.2. The VB agrees that any Confidential Information disclosed to it by the Client will not be used for any purpose other than in connection with the performance of its duties and obligations under this Agreement. The VB shall use its best efforts to prevent access by unauthorized persons to such Confidential Information, such efforts to reflect at least the same degree of security that the VB accords its own confidential information. The VB shall ensure that any outside consultant retained by the VB is made aware of, and is bound by, this Article 8.
8.3. In the event that a Party, or anyone to whom Confidential Information is disclosed pursuant to this Agreement, becomes legally compelled to disclose any of the Confidential Information, or such disclosure is requested by any governmental authority with jurisdiction over the subject of this Agreement or the Parties hereto (the “Compelled Party”), the Compelled Party shall provide the Party whose Confidential Information will be affected by such disclosure (the “Affected Party”) with prompt notice so that the Affected Party may seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this Section. In the event thatsuch protective order or other remedy is not obtained or in the event that the Affected Party waives compliance with the provisions of this Section, the Compelled Party will furnish only that portion of the Confidential Information which the Compelled Party is legally required or requested to disclose and will seek to obtain reliable assurance that confidential treatment will be accorded the Confidential Information so disclosed.
8.4. Notwithstanding the foregoing, except as required by witness assessments or other accreditation assessments by accreditation bodies or oversight authorities of GHG regimes and sector schemes, the VB will not disclose to a third party, without prior written consent from the Client, any information that comes into its possession, the possession of its employees, agents or others in the course of the engagement. Where disclosure is required by a relevant reporting program, the VB will give timely notification to the Client prior to any release of information to such reporting program. The Client acknowledges, understands and agrees that on occasion, a representative of the accreditation body or relevant GHG program may request to witness the VB’s
verification activities. Client agrees that granting access is an accreditation body requirement and therefore cannot be denied by the VB or the Client. The VB shall notify the Client in advance of granting such access.
8.5. The Parties acknowledge and agree that any breach of this Section 8 would cause irreparable harm to the nonbreaching party.
Therefore, the breaching party consents to injunctive relief in such event.
9. Governing Law and Jurisdiction; Dispute Resolution
9.1. Governing Law. This Agreement shall be governed by, and interpreted in accordance with the substantive laws of the State of California exclusive of any rules contained therein with respect to conflicts of laws.
9.2. Dispute Resolution. Prior to filing any action or suit, the Parties shall negotiate in good faith to amicably resolve the dispute.
10. Miscellaneous
10.1. Entire Agreement. The text of this Agreement shall constitute the entire agreement between the Parties with respect to its subject matter, all prior contracts, proposals, representations, negotiations and understandings, either orally or in writing, including any nondisclosure and use of information agreement as may have been signed by the Parties, being hereby expressly superseded, and is not intended to confer upon any person other than the Parties any rights or remedies hereunder.
10.2. Amendment / Change Orders. Changes in the scope of the Services, either by Client request or necessitated by other events or conditions (including, without limitation, changes in law or regulation) must be agreed to in writing by the Parties. The Parties may execute one or more change orders detailing any additional Services along with associated fees upon the mutual agreement of the Parties.
10.3. Notices. Any communications required or permitted to be given by one Party to another shall be sent to the other Party by personal delivery or by first class mail, or overnight courier, or facsimile at the address shown in the introduction to this Agreement or any other address subsequently notified by any Party to the other Party and deemed delivered 5 days after mailing or when received, whichever is earlier. Unless a particular method has been required by any provision of this Agreement, facsimile communications shall be accepted if there is
confirmation of the transmission and such communication is followed up by paper copy thereof sent by messenger, overnight or other express delivery service.
10.4. Assignment. Save as expressly provided for in this Agreement, no Party shall assign this Agreement in whole or in part without the prior written consent of the other Party, which shall not be unreasonably withheld. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns.
10.5. Independent Contractors. In performance of any services subject to this Agreement, each of the parties will operate as, and have the status of, an independent contractor.
Agenda Item 3.
City of Needles – GHG Report Verification Proposal
1178 Broadway, 3
rd Floor, #1123
New York, NY 10001
646-499-0083
www.CarbonVerificationService.com
10.6. Severability. If any provision of this Agreement is deemed invalid by a court of competent jurisdiction, then the invalid or unenforceable provision will be deemed superseded by a valid, enforceable provision that most closely matches the intent of the original provision and the remaining provisions of this Agreement shall govern. Client acknowledges and agrees that each provision of this Agreement that provides for a disclaimer of warranties or an exclusion or limitation of damages represents an express allocation of risk, and is part of the consideration of this Agreement. Invalidity of any provision of this Agreement shall not affect the validity of the remaining provisions of this Agreement.
10.7. Interpretation. This Agreement shall not be construed against any party by reason of the fact that such party drafted any particular provision so construed.
10.8. Force Majeure. Except as otherwise set forth in this Agreement, VB will not be deemed to have materially breached this
Agreement to the extent that performance of its obligations or attempts to cure any breach are delayed or prevented by reason of any act of God, fire, natural disaster, accident, act of government, shortage of materials or supplies beyond the reasonable control of VB, strike, labor dispute or walkout, or any other cause beyond the reasonable control of VB, provided that the VB resumes performance of its obligations as soon as practicable.
10.9. No Partnership. Neither Party’s employees shall be entitled to represent itself/themselves to any third parties, whether orally or on business cards or letterhead, as the agents of the other Party.
Nothing in this Agreement shall constitute or create or be deemed to constitute or create a partnership, joint venture, agency, fiduciary or trust relationship or other legal association of any kind. Neither Party has the authority under this Agreement to bind the other with respect to third parties. Neither Party will represent itself to third parties as the partner of or joint venturer with the other, nor as having the authority to bind the other, except as may be otherwise expressly agreed in writing. Under no circumstances shall the VB’s employees be deemed to be
employees of the Client or vice versa nor shall either Party be liable for any compensation or benefits for the other Party’s employees. In addition, neither Party shall use any of the other Party’s trademarks without the prior written approval of such other Party.
10.10. No Waiver. Nothing shall constitute, or have the effect of, a waiver except an instrument in writing signed by a duly authorized officer or representative of the Party against whom such waiver is sought to be enforced which expressly, and not impliedly, waives a right or rights under this Agreement. The failure of any Party hereto to enforce at any time any of the provisions of this Agreement or to exercise any right which is herein provided shall in no way be construed to be a waiver of such provisions nor in any way affect the validity of this Agreement or any part thereof or the right of any Party to enforce thereafter each and every such right or option. No waiver of any breach of this Agreement shall be considered or held to be a waiver of any other or subsequent breach.
10.11. Counterparts. This Agreement may be executed in any number of counterparts, each of which, when executed, shall be deemed to be an original, and such counterparts together shall constitute one and the same instrument.
10.12. Attorneys' Fees. The prevailing party in any action or lawsuit shall be entitled to receive its attorneys' fees and costs of suit from the nonprevailing party.
10.13. Duty to Comply with Applicable Laws. The Parties will comply with all applicable laws, regulations, and orders in connection with each of their obligations pursuant to this Agreement.
10.14. Document Retention and Record Keeping Requirements. Client shall establish and maintain procedures for document retention and record keeping for all documents relating to the design, development, and maintenance of the GHG inventory, in paper, electronic or other usable format, for a period of not less than ten years after the termination of this Agreement.
10.15. Survival. Sections 2 through 10 and any portion of the Proposal that by its terms should survive, shall survive for two (2) years after the termination of this Agreement.
Agenda Item 3.
Proposal to Provide:
Mandatory Reporting Regulation Verification Services
City of Needles
(RY 2025 – RY 2027 Data Reports)
(ARB ID#: 3047)
Prepared for:
Rainie Torrance
Utility Manager
City of Needles
Email: [email protected]
Prepared By:
Ramanujan Vetrivel
Project Manager
Lincus, Inc.
Ph: 626-550-5196
Email:[email protected]
August 20, 2025
Agenda Item 3.
Table of Contents
A. COVER LETTER.......................................................................................................................................................................2 B. COMPANY INFORMATION...................................................................................................................................................3 C. STATEMENT OF UNDERSTANDING AND APPROACH..................................................................................................5 c.1 Lincus’ Work Plan.................................................................................................................5 D. PROJECT SCHEDULE AND COST ESTIMATE..................................................................................................................9 d.1 Project Schedule....................................................................................................................9 d.2 Budget Estimate ....................................................................................................................9 E. INVOICING..............................................................................................................................................................................11 Appendix A: MRR Verification References................................................................................................12 Agenda Item 3.
Lincus, Inc. Page 2
A. COVER LETTER
Lincus, Inc. (“Lincus”) is pleased to respond to City of Needles (“Reporter”) request for a proposal for Greenhouse Gas Emissions verification services for reporting years 2025 to 2027 data reports under the Mandatory Reporting Regulation administered by the California Air Resources Board. It is Lincus’ understanding that City of Needles is responsible for submitting emissions reports for the following reporting entity.
Reporting Entity ARB ID# Industry Sector
City of Needles - EPE 3047 Electricity Transactions
Lincus is an ARB-accredited greenhouse gas verification body under Executive Order H-22-021.
The Lincus team has experience in providing GHG verification and consulting services to over two hundred electricity transactions, electricity generation, cogeneration, and stationary combustion facilities. Lincus also has a 100% track record of completing verification services before the ARB deadline and passing ARB audits for all selected projects with no/minimal comments.
The complete proposal, including the scope, verification cost, and schedule is attached for your review.
Thank You,
Ramanujan Vetrivel
Project Manager & ARB Lead Verifier
Agenda Item 3.
Lincus, Inc. Page 3
B. COMPANY INFORMATION
As a CPUC Clearinghouse certified Women Business Enterprise (“WBE"), Lincus serves its customers from four offices – Monrovia and San Francisco, California; Tulsa, Oklahoma; and Tempe, Arizona. Established in 2003, Lincus specializes in providing energy, carbon management, and information solutions to a client base that spans the commercial, industrial, governmental, utility, and design communities. Lincus is one of the very few companies in the United States which are accredited by the California Air Resource Board (ARB), Oregon DEQ, and Washington’s Department of Ecology to provide Greenhouse Gas (GHG) verification services. Our decarbonization services also include Low Carbon Fuel Standard (LCFS), Carbon Disclosure Project (CDP) reporting & verification, along with developing strategies for Building Electrification, Distributed Energy Resources, and EV infrastructure evaluation.
We have a total of six accredited lead and general verifiers who have successfully completed the ARB training and exam for general stationary combustion with three accredited for transactions and one for the oil & gas market sector. Our GHG verification services are conducted exclusively by ARB-accredited verifiers. Our clients have benefitted from our deep knowledge and understanding of the reporting and verification process. In assisting its customers, Lincus aims to provide individual attention to each GHG reporting or verification project along with excellent customer service. The table below shows the list of Lincus’ accredited GHG verifiers under MRR.
Verifier Name (EO#) ARB
Accredited
Lead
Verifier
Stationary
Combustion
Oil and
Gas Transactions
Hob Issa (H-24-049) ✓ ✓ ✓
Yeshpal Gupta (H-24-043) ✓ ✓ ✓ ✓ ✓
Cristalle Mauleon (H-24-122) ✓ ✓ ✓ ✓
Ramanujan Vetrivel (H-23-021) ✓
✓ ✓ ✓
Alyza Khan (H-24-175) ✓ ✓
Grecia Hernandez (H-24-166) ✓ ✓
The following picture and description provide Lincus’ overall services and capabilities.
Agenda Item 3.
Lincus, Inc. Page 4
Carbon Management Solutions
GHG Validation/Verification, Carbon Disclosure Project, Low Carbon Fuel Standard, Decarbonization strategies, Building Electrification, etc.
Energy Engineering
Strategic Energy Planning, Energy Simulation, ASHRAE Audits, Performance Contract Evaluation and Support, CX and RCx, M&V, New Construction Review and Compliance, Demand Response, and Smart Grid Integration
Program Design and Management
Prescriptive and Custom Program Development and Support; and Comprehensive Program Development (upstream, midstream, and downstream)
Software Solutions
Program Management Software, Commercial Energy Auditor, PM Tool, GGAAnalyzer, Home Energy and Carbon Analyzer, Lighting Calculator, and Power Pledge Evaluation Monitoring and Verification
Market Potential Studies, Program Process and Impact Evaluations, and EM&V Studies Agenda Item 3.
Lincus, Inc. Page 5
C. STATEMENT OF UNDERSTANDING AND APPROACH
The purposes of the GHG verification exercise are, by review of objective evidence, to independently verify that the submitted emissions data reports are:
• Free of material misstatement; and
• In full conformance with the requirements of the Regulation.
Lincus’ verification team follows a very well defined and tested approach to achieve these objectives. The diagram below shows the key steps in the verification process.
Here is the detailed description of various tasks involved in the verification process:
Task 1: COI/NOVS Evaluation – Prior to beginning any verification project, Lincus conducts an evaluation to identify any potential conflicts of interest (COI) as per the guidelines provided in the regulation section 95133. The Reporter may be asked to provide emissions information to Lincus in order to proceed with this evaluation. Once Lincus’ internal review is completed and approved for the verification services, Lincus will assign a Lead Verifier to coordinate various verification activities. The Lead Verifier will then select other verification team members based on their expertise. The lead verifier will have operational control over the verification team and will be the primary point of contact for all verification activities. After completion of the internal COI evaluation, Lincus will submit a COI form and a Notice of Verification Service (NOVS) form to ARB for each facility. After CARB approves the COI and NOVS, Lincus will begin verification services for the Reporter.
c.1 Lincus’ Work Plan
Agenda Item 3.
Lincus, Inc. Page 6
Task 2: Project Kickoff and Information Request – After receiving ARB’s approval, a kickoff meeting (or a conference call) with the Reporter will be held to discuss the scope of verification, and considerations for the verification including but not limited to verification activities, verification schedule, site access clearance/safety issues, and other applicable project details. Lincus will also request a point-of-contact to coordinate and follow up for information during verification. Copies of emissions-related information for the verification year, including a copy of the GHG monitoring plan, will also be requested to develop a complete understanding of the facility. Based on the reported transactions, the following documents and information will be required, at a minimum, to conduct the necessary document and data reviews:
• GHG monitoring/inventory plan
• Details of all transactions and calculations
• Sample NERC e-tags
• Accounting reports
• Lesser of analysis for applicable Sources
• Power contracts
• RECs tracking
Task 3: Verification Plan Development – Once the information outlined in Task 2 is obtained, Lincus will conduct strategic analysis and risk assessment based on the received data in concert with information regarding the Reporter’s operation to formally document the Verification Plan.
The Verification Plan will include dates of proposed meetings and site visits; a list of personnel to be interviewed; a list and types of document and data reviews; and an expected date for completing verification services.
Task 4: Sampling Plan Development – In this task, the verification team will develop a Sampling Plan based on a strategic analysis developed from initial document reviews and update the plan after conducting the site visit described in Task 5. The Sampling Plan will be created to assess the likely nature, scale, and complexity of the verification services and shows how the verifier plans to get to reasonable assurance with the submitted report. The Sampling Plan will also address the three types of uncertainty risk (inherent, control, and detection), and assesses the potential level of risk. The sampling plan will include:
1. Ranking of all emission sources by magnitude on a CO2e (Carbon Dioxide equivalent) basis;
Agenda Item 3.
Lincus, Inc. Page 7
2. Ranking of emission sources with the largest calculation uncertainty
3. Qualitative description of uncertainty risk assessment of • Data acquisition equipment
• Data sampling and frequency
• Data processing and tracking
• Emission calculations
• Data reporting
• Management policies or practices in developing emission data reports Task 5: Site visit – Once the verification plan is complete and agreed upon, in-person site visits will be scheduled/conducted to verify the facility’s emission sources, data management systems, and to interview personnel associated with their GHG emission program. Facility visits for each facility undergoing full verification are mandatory per AB 32 regulations. During less intensive verification years, online meetings will be held in lieu of the in-person site visit. During the site visit, Lincus will inspect facility operations, emissions-related documentation, data management systems, and other areas. The verification team will also interview key personnel involved in recording, storing, managing, and generating reports related to emissions reporting. Every effort will be made to schedule interviews with key personnel to minimize disruption to facility operations. Depending upon the pre-site visit data provided by the facility, Lincus verifiers will survey the facility for data gathering, inspection, and interview of various facility personnel.
Project status updates and follow-up site visits (if necessary) will be coordinated through the Lincus Lead Verifier assigned to that facility.
Task 6: Compliance Assessment/Data Checks – Based on the sampling plan, the verification team will conduct a thorough review of the Reporter’s submitted data to verify compliance with the regulation. The verification team will also verify the Reporter’s compliance with other nondata-driven portions of the regulation as specified in regulation sections 95103 to 95109. In essence, the verification team will verify that the submitted emission data report is “free of Agenda Item 3.
Lincus, Inc. Page 8
material misstatement” and is in “full conformance with the requirements of regulation”. In some cases, the verification team may re-create a part of the emission calculations to verify its accuracy. If required, the lead verifier may request additional documentation and/or explanations. If any errors/issues are found in the emission data report, the verification team will provide an Issues Log to the Reporter via email. The reporter will be provided up to ten business days to address the Issues Log. At the end of this step, the verification team will revise the sampling plan to describe in detail how the identified risks were addressed during verification.
Task 7: Internal Quality Control – Once the compliance assessment process is completed and the verification team makes a recommendation, all documentation will be submitted to independent Lead Verifier. The Independent Lead Verifier’s role is to ensure that all verification procedures have been properly followed and that the conclusions are well-supported. The Independent Lead Verifier will then decide to either approve or reject the verification team’s recommendation. In the case of rejection, the Verification Team will address the issues identified by the Independent Lead Verifier and resubmit.
Task 8: Verification Report & Verification Opinion – As an outcome of the verification process, Lincus will provide to the Reporter, a detailed verification report for each site. The verification report will include the verification plan, the detailed comparison of the data checks with the submitted emission data report, the log of issues identified in the course of verification activities and their resolution, and any qualifying comments on findings during verification services. The verification team will also provide a verification opinion to the Reporter. In the event of an adverse verification opinion, the Reporter will be provided at least ten working days to modify the emission data report to correct any material misstatement or nonconformance found by the verification team, per regulation section 95131(c)(4). If needed, Lincus verification team will conduct a meeting (online) to discuss the verification report and opinion with the Reporter staff. Once all issues are addressed and prior to the verification deadline, Lincus will submit the verification opinion to ARB (through Cale-GGRT) and a final copy of the verification report and verification opinion to the Reporter no later than by the ARB verification deadline for each year or mutually agreed upon date.
Agenda Item 3.
Lincus, Inc. Page 9
D. PROJECT SCHEDULE AND COST ESTIMATE
Lincus proposes to complete the verification activities anywhere between 6-8 weeks after receiving a notice to proceed and certification of emissions data report on the Cal-eGGRT website. Verification activities are assumed to start no later than the reporting deadline of June 1 st (or next business day) for power transactions but can be started as soon as reports are certified in Cal-eGGRT. Lincus is committed to completing all verifications on/before the ARB verification deadline for each year or mutually agreed upon date assuming a timely response from the Reporter to the Issues Log (maximum 10 business days). The Table below shows a tentative timeframe (in business days) for each task to be followed for this verification services.
Verification Tasks Estimated Timeframe
(business days)
Task 1: COI/NOVS Evaluation* 5 Days
Task 2: Project Kickoff and Coordination 1 Day
Task 3: Verification Plan Development 3 Days
Task 4: Sampling Plan Development 5 Days
Task 5: Site Visit 3 Days
Task 6: Compliance Assessment 5-10 Days
Task 7: Internal Quality Control 3 Days
Task 8: Verification Report & Verification Opinion** 5 - 10 Days* Total 30 – 40 Days
*COI/NOVS will be completed before the submission of the emissions data report. **Adverse opinion requires a minimum of ten days of notice to the Reporter.
The following fixed cost estimate has been prepared based on the GHG verification process outlined earlier in this document, as well as our understanding of transactions sources (including Specified Imports – primarily from EIM, Unspecified Imports, and Unspecified Exports). The scope of work for each task is detailed in the proposal. Costs cover the review of one set of revisions to the submitted data report. Reviews of any additional revisions will be billed on a time and materials basis.
d.1 Project Schedule
d.2 Budget Estimate
Agenda Item 3.
Lincus, Inc. Page 10
* Virtual site visits will be conducted during the expected less-intensive verification for RY 2026.
Work Not Included In This Proposal
This section includes the work not included in this proposal and additional reimbursable expenses (if applicable).
1. Additional site visits, presentations, meetings times outside this Scope of Work, if required, will be billed at $216/hr for RY 2025 data, $222/hr for RY 2026 data, and $229/hr for RY 2027 data.
2. More detailed verification services that exceed the standard set forth in MRR
3. Any work not specifically included in Tasks 1 through 8 (above)
4. Any verification work for the following verification years other than the years specified in this scope of work.
Task Description RY 2025 Cost RY 2026 RY 2027
Task 1: COI/NOVS Evaluation $216 $222 $229
Task 2: Project Kickoff and Coordination $432 $444 $458 Task 3: Verification Plan Development $864 $888 $916
Task 4: Sampling Plan Development $1,080 $1,110 $1,145
Task 5: Site Visit $1,296 $666 $1,374
Task 6: Compliance Assessment $3,456 $3,552 $3,664
Task 7: Internal Quality Control $432 $444 $458
Task 8: Verification Report & Verification Opinion $864 $888 $916 Total Price $8,640 $8,214 $9,160
Agenda Item 3.
Lincus, Inc. Page 11
E. INVOICING
Lincus will submit invoices after the site visit and after verification completion, as outlined in the Table below. The Reporter shall make payment net 30 days after receipt of an invoice.
Milestone % of the
Contract Amount RY 2025 RY 2026 RY 2027
After Site Visit 50.00% $4,320.00 $4,107.00 $4,580.00
After Verification
Completion 50.00% $4,320.00 $4,107.00 $4,580.00
Total 100.00% $8,640.00 $8,214.00 $9,160.00
Terms and Conditions
1. If the above-stated terms are agreeable, please sign and return one copy of this proposal to our office. If this agreement is not signed and returned and we are asked to proceed with the project, all conditions contained herein shall constitute a contract for services.
Lincus reserves the right to revise the fee stated herein if not accepted within a period of 30 days from the date of the proposal.
2. Your acceptance below will represent an agreement between us for MRR verification services for the facilities noted above. Any changes made to this agreement shall be initiated by both Lincus and the Reporter.
Thank you for the opportunity to offer our services.
Sincerely Yours,
Ramanujan Vetrivel, Project Manager & Accredited Lead Verifier ACCEPTED By: City of Needles (Reporter)
Authorized Person Name Authorized Person Title
Authorized Person Signature Date Signed
Agenda Item 3.
Lincus, Inc. Page 12
Appendix A: MRR Verification References
Customer Name Report Types Reporting
Years Verified
Contact Person
Pasadena Water &
Power
Power Generation,
Electricity Transactions 2018 - 2023
Christina Schieber
Email: [email protected]
City of Azusa Electricity Transactions 2017 - 2022
Tim Vuong
Ph: 626-812-5015
Email: [email protected]
Calpine Corporation
Power Generation,
Electricity Transactions,
Fuel Supplier
2022 - 2023
Betty Chu
Ph: (530) 821-5321
Email: [email protected]
OLS Energy Power Generation 2016 - 2021
Steve Bean
Ph: 909-597-0338
[email protected]
Los Angeles Department
of Water & Power
Power Generation,
Electricity Transactions 2017 - 2020
Cindy Parsons
Ph: 213-367-0636
Email: [email protected]
Agenda Item 3.
City of Needles, California
Request for City Council Action
CITY COUNCIL NPUA Regular Special
Meeting Date: September 9, 2025
Title: Approve Survalent providing Electric SCADA Software not to exceed $137,126 utilizing the Electric System Improvement Fund
Background: The electric department currently operates the city’s infrastructure manually.
There is a need for real-time monitoring and enhanced control over the electric processes and equipment.
SCADA maximizes the efficiency of power distribution system by providing the features like real-time view into the operations, data trending and logging, maintaining desired voltages, currents and power factors, generating alarms, etc.
City staff reached out to adjacent and sister utilities to determine what software was being utilized to provide SCADA, all recommended Survalent. City staff completed a tutorial of the software and determined they are able to provide the following benefits to the electric system: The proposed software will be installed on the two main substations, Eagle Pass and Yoney Substation.
Real-time monitoring of the system
- Ability to visually determine what circuits are open and the amps on each circuit in real-time - Open and close circuits
- Future ability for automatic switching capabilities
- Voltage and fault reporting
- Outage management
- Increased safety for linemen and apprentices
- Diagnostic reporting capabilities
The Board of Public Utilities approved the recommended action on September 2, 2025.
Fiscal Impact: The Electric System Improvement Fund has a balance of $1,414,370.06 as of 6/11/2025.
Environmental Impact: None
Recommended Action: Approve Survalent providing Electric SCADA Software not to exceed $137,126 utilizing the Electric System Improvement Fund.
Submitted By: Justin Scott, Linecrew Supervisor
Rainie Torrance, Utility Manager
City Manager Approval: Date:
Other Department Approval (when required): Date:
9/4/2025
Agenda Item 4.
Quotation:
City of Needles
SCADA
Quotation No. A25_7_611524
July 30, 2025
Agenda Item 4.
Item Qty
001 1
002 1
003 3
004 1
Description Price (USD)
System Material
SMS Remote Alarm Annunciation Modem (for Verizon Wireless) INCLUDED LTE Cat 4 Cellular Router compatible with AT Commands for SurvalentONE Remote Alarm Annunciation. The accessory kit includes a power supply with a US power plug, a cellular. antenna, and antenna cables.
Note: Please note that the brand and model are subject to change based on availability at the time the order is received.
SurvalentONE SCADA Licenses
SurvalentONE Base SCADA Software [Single Server] INCLUDED The base SCADA license includes data acquisition, data processing, alarm and event processing, and historical data management functions. It also includes the STC Explorer database editor which includes editing tools for database points, access control, control zones, system parameters, station cloning, point modelling, and setup of advanced applications. Other features include command sequencing, alarm suppression, event data recording and archiving, IED control panels, mapboard driver, and remote alarm annunciation.
Note: SurvalentONE SCADA software licenses are valid for up to 10,000 points.
SurvalentONE SmartVU (Concurrent Users) INCLUDED
SmartVU provides a modern, intuitive, user friendly user interface for managing the distribution network using high quality graphics driven by a powerful graphics engine. The SmartVU environment includes a tabbed interface that provides quick access to a large number of graphic displays including single-line diagrams, geographical maps, trend graphs, summary displays, operations log, and tabular views of the distribution network. The graphic displays support layers, panning, zooming, decluttering, dynamic line coloring, hyperlinks, and other dynamic display features as well as standard graphics formats such as JPG, BMP, PDF, etc.
One license is required for each concurrent user.
SurvalentONE Standard DNP3 Protocol INCLUDED
The DNP3 scan task is designed to communicate with one or more devices that use the DNP3 protocol over serial asynchronous or TCP/IP communication lines.
The scan task conforms to Level 2 of the DNP3 Application Layer protocol as specified in the Subset Definitions published by the DNP3 User's Group. This license is for the standard DNP3 protocol implementation, Secure DNP3 Protocol is also available under a separate license.
30-Jul-2025 [A25_7_611524_Final] PROPRIETARY AND CONFIDENTIAL Page 2 of 8 Agenda Item 4.
Item Qty Description Price (USD)
005 1
006 1
007 1
008 1
009 1 INCLUDED
Included:
Remote Service of Database and graphics generation for 2 substations SurvalentONE IED Wizard INCLUDED
IED Wizard is a tool that automates the creation of the database for an intelligent electronic device (IED). In just a few simple steps, the wizard creates the required points in the SCADA system database. All of the telemetry and control addresses are generated automatically. The IED Wizard completely eliminates the tedious error-prone data entry of telemetry addresses and mapping tables. The IED Wizard contains an extensive library of the most common IEDs available on the market, including SEL, Cooper, ABB, Beckwith, and PML.
SurvalentONE Network Topology Processor INCLUDED
The Network Topology Processor application calculates the energized/deenergized status of electric, gas and water line sections, and displays them on world maps. The calculation is based on the topology of the system and the current status of breakers and valves. For an electrical line section, the system supports 3-phase distribution, and computes the status of each phase independently, such that line sections that are downstream of non-ganged switching devices may contain a mix of energized and de-energized phases. The user can specify colors for “partially energized” or “partially looped” etc. The topology processor includes a feeder trace function that allows the user to select a trace color and have the extent of a feeder highlighted in the selected trace color. Multiple simultaneous traces in different colors are supported.
Survalent Professional Services
Project Management INCLUDED
Survalent will assign a Project Manager to coordinate the activities of the project including kickoff meeting, project schedule, project status report, managing resources, coordinating remote services, and coordinating on-site activities.
Remote Service of Workshops (Three Sessions) INCLUDED
1)Database conversion with the uƟlizaƟon of method of direct mapping or with the use of IED Wizard for building database with the following specification:
Remote Services for the design workshops including architectural workshop, database & graphics initial workshop and follow up workshops. This meeting is intended to explain the requirements from the Customer’s perspective, address any questions, and review the database and graphics design outlines for the Database & Graphics creation. It is typically conducted in three sessions, each lasting 2 hours.
30-Jul-2025 [A25_7_611524_Final] PROPRIETARY AND CONFIDENTIAL Page 3 of 8 Agenda Item 4.
Item Qty Description Price (USD)
010 1
011 1
e)CalculaƟons for max. 10 points
Note: The following services are not included:
a)Building new IED templates not in Survalent library . b)Building command sequence
c)CreaƟng calculated points
b)Applying network topology on substaƟon level for 2 substaƟons. b)Total DB points: max. 1000
c)Typical reports: 1
d)Historical datasets: for a max. 200 points
a)SubstaƟons: 2
INCLUDED
2)Graphics development:
a)Views: 4 (max)
-System overview (1)
-SubstaƟon SLD (2)
-CommunicaƟon view (1)
b)Trend Graphs: max. 15
c)ImplementaƟon of standard library or customized control panels for the devices in substation.
Remote Service of Network Topology Implementation for 2 substation SLDs Included:
a)PreparaƟon of resources for network topology implementaƟon (colors, color tables, fonts and pmacros);
Onsite System Installation, Commissioning and Operation Training INCLUDED Five consecutive days of on-site system engineering services for database and graphics, system installation, commissioning, testing, performance tuning, and/or training. Services purchased on a project order must be used before the end of system commissioning. Services purchased outside a project order will be invoiced on receipt of order, and must be used within 6 months unless mutually agreed by both parties. No refund will be provided for any unused hours. 30-Jul-2025 [A25_7_611524_Final] PROPRIETARY AND CONFIDENTIAL Page 4 of 8 Agenda Item 4.
Item Qty Description Price (USD)
012 1
013 1
End User: City of Needles
Shipping Terms: EXW Ontario, Canada
Shipment approximately 14 To 16 weeks from receipt of purchase order.
Please send purchase order to [email protected]
Unless otherwise noted, prices do not include applicable state, provincial, federal, withholding or other local taxes or tariffs. Applicable taxes will be included in each invoice. Should the purchaser claim an exemption from any applicable state, provincial, federal, withholding or other local taxes, the purchaser shall provide such exemption information to Survalent.
This quote is valid until September 28, 2025 and is based on Survalent (a) Standard Terms and Conditions of Sale, (b) Software License Agreement, and (c) Support and Maintenance Terms and Conditions, as applicable.
Note 1: SurvalentONE SCADA software licenses are valid for up to 10,000 points and includes 12 months warranty from date of operational use.
Note 2: Software licenses are non-refundable and cannot be exchanged.
Note 3: Survalent reserves the right to issue temporary licenses until payment has been received in full.
Onsite SCADA Training - System Administration – Level 1 INCLUDED This 5-day onsite course is designed for individuals who will be responsible for installation, configuration, and maintenance of the SCADA System. Topics covered include SCADA client/server architecture, database generation and maintenance, display generation and maintenance, SCADA attributes (alarm priorities, analog limits, etc.), historical data, trend graphs, topology processor, system backups, trouble-shooting techniques, maintenance procedures, and more. Note: Training is for up to 5 attendees.
Total Price $130,876
Optional Survalent Professional Services
Bronze SCADA Support Plan [1 Year] $6,250
The Bronze SCADA Support Plan provides the following:
a) Access to the latest software releases of the delivered software components, effectively providing an extended warranty on these software components and providing access to the latest product features.
b) Access to the Survalent Support Portal which includes the ability to create and track support cases, and provides access to software downloads, product documentation, knowledge base articles, and support forums. c) Access to technical support from the Survalent Support Desk during business hours. Cases will be treated on a first-come, first serve basis. 30-Jul-2025 [A25_7_611524_Final] PROPRIETARY AND CONFIDENTIAL Page 5 of 8 Agenda Item 4.
Item Qty Description Price (USD)
Nivedita Pandit, Proposal Team Lead
Prepared By:
Note 4: Survalent reserves the right to periodically audit the end user system configuration to ensure the software has been deployed in accordance with the Survalent Software License Agreement.
Note 5: Standard payment terms are 40% at the end of project kickoff, 30% on completion of database and graphics, 20% at the end of commissioning, and 10% on project closure.
Note 6: Hardware delivery time may vary based on availability from the manufacturer when receiving the order.
Note 7: Services will be scheduled at a mutually agreeable time. Customer changes to the agreed schedule may result in an additional charges.
Note 8: All Hardware will be provided by the customer, except for SMS modem. Refer to the recommended components of SCADA Host and Workstation.
Note 9: Packing and Shipping - Hardware will be packaged and shipped to the designated destination under EXW terms.
As such, Survalent will pack and label the equipment for shipment and provide notice to the Customer that the equipment is ready for pickup at our factory. Customer is responsible for all costs and risks from the point of pickup to the final destination. This includes loading the goods, arranging transportation, handling export and import procedures, paying export and import duties and taxes, and paying for all other associated costs.
Note 10: This quote assumes file-based licensing. If dongles are required, an additional cost will apply.
This quotation is not valid unless signed by an authorized representative of Survalent.
Weijun Ren, Proposal Specialist
Approved By:
30-Jul-2025 [A25_7_611524_Final] PROPRIETARY AND CONFIDENTIAL Page 6 of 8 Agenda Item 4.
Physical Hardware Recommendations
Production ADMS Server
DELL PowerEdge R660xs Rack Server (or equivalent)
1 x Intel® Xeon® Silver 4309Y 2.8G, 8C/16T
32GB RAM
2 x 480GB Solid State Drive (RAID-1)
Windows Server 2022 Standard Edition (16 Cores)
Accessories:
+ Dual, Hot-plug, Power Supply Fully Redundant (1+1), 1400W, Mixed Mode + Trusted Platform Module 2.0 V3
+ ReadyRails Sliding Rails With Cable Management Arm
Note: All the SSD should be SATA Mix 6Gbps, 2.5in Hot-plug, 3 DWPD.
Operator Workstation
DELL Precision T5860 Workstation (or equivalent)
1 x Intel Xeon W-2235 3.8GHz 6C/12T
16GB RAM
2 x 512GB Solid State Drive (RAID-1)
NVIDIA Quadro P400 (5820T)
Windows 11 Professional Edition
Accessories:
+ 1Gbit NIC add-in card (PCIe- Intel)
+ 8X DVD+/-RW
30-Jul-2025 [A25_7_611524_Final] PROPRIETARY AND CONFIDENTIAL Page 7 of 8 Agenda Item 4.
STI-Sales-TC2025.0 Page 1 of 4 March 6, 2025
SURVALENT TECHNOLOGY INC.
STANDARD TERMS AND CONDITIONS OF SALE
A) Acceptance – These standard Terms and Conditions of Sale ("Terms") form a part of and are incorporated into this Agreement ("Agreement") between SURVALENT TECHNOLOGY INC. ("Seller") and the Buyer or Licensee ("Buyer") for the sale, lease, license or provision of Seller's tangible and intangible products, software, equipment, services, samples and other matters subject to this Agreement from Seller to Buyer ("Products"), and they supersede any contrary provisions presented by Buyer, unless expressly agreed to in writing by Seller. Should the Buyer’s purchase order include changes or additions to specifications which are not included in Seller’s quotation or proposal, acceptance and acknowledgment of the order by Seller shall not be deemed a waiver of Seller’s right to charge and invoice for such changes or additions. In addition, in the event of Buyer’s changes or additions made after receipt of a purchase order, Seller shall charge and invoice for the work as necessary. Buyer's acceptance of and/or payment for Products, in whole or in part, shall constitute an acceptance of these Terms.
B) Prices – Unless stated differently in the Quote/Proposal, all prices for Products are ExWorks (Seller's point of shipment). Prices quoted are subject to change at any time and without notice. Prices do not include any Federal, Provincial, or Municipal taxes, including, but not limited to, excise, sales, goods and services, tariffs, use taxes, duties, or other fees imposed on any Product or in connection with this Agreement ("Taxes"). All such Taxes shall be added to the Buyer’s billing where applicable. If Seller delays shipment beyond the scheduled shipping date for any reason other than the Seller's fault, or if this Agreement includes Products obtained by the Seller from third parties, the Products shall be subject to any price increases in effect at the time of shipment. Prices quoted may be adjusted for inflation annually, effective on each January 1st of the calendar year ("Inflation Adjustment").
C) Payments – All invoices are due and payable thirty (30) days from the date of invoice. Seller may charge pro rata interest at the maximum rate permitted by law. No discount for early payment is authorized without Seller's written consent. Seller reserves the right at any time to (i) change terms of payment, (ii) withdraw credit or require full or partial payment in advance, should doubt arise as to the financial responsibilities of the Buyer. All holdbacks are limited to 10% of the purchase order value and up to ninety (90) days after delivery of the Products to the carrier. Holdbacks required for periods longer than 90 days carry an interest charge of 1.5% per month (18% per annum). Holdbacks do not apply to amounts invoiced for taxes, freight, spare parts, documentation and commissioning.
D) Security Interest – The title, ownership, and right of property of the applicable Products sold hereunder shall remain with Seller until all payments, including deferred payments, shall have been paid in full, and the Buyer shall do all that is necessary to maintain such right and title for the Seller. The Buyer shall assume all risk of loss or damage incurred once the applicable Products have been delivered.
E) Delivery – Unless stated differently in the Quote/Proposal, delivery shall be ExWorks (Seller's point of shipment), with the risk of loss passing to the Buyer once the Products are made available for pickup at the Seller’s point of shipment. The Seller, at its discretion, may make and invoice partial shipments.
Shipping dates are best estimates based on the Seller’s production schedule at the time of quotation, but are subject to change depending on adjustments to the production schedule after the Buyer’s purchase order is received, as well as the prompt receipt of all necessary information and specifications related to the Products. Upon receiving the Products, the Buyer is required to inspect them and either accept or reject them within thirty (30) days. If the Buyer does not notify the Seller in writing of any rejection, including the reasons for it, within this period, the Products will be considered accepted, and the Buyer waives any right to later reject the Products. The Seller reserves the right to make changes or improvements to the Products at any time, without liability or obligation to make such changes or improvements to Products already delivered.
Agenda Item 4.
STI-Sales-TC2025.0 Page 2 of 4 March 6, 2025
F) Force Majeure – Seller shall not be responsible for any failure or delay in the performance of any obligation hereunder if such failure or delay is due to a cause beyond Seller's control including, without limitation, acts of God, wars, riots, strikes, fires, storms, floods, embargoes, shortages of labor or materials, labor disputes and governmental acts, legislation and directives. In the event of any such failure or delay, the period of Seller's performance shall be extended, without liability for penalty, for the period of such failure or delay.
G) Intellectual Property & Confidential Information –
(a) Intellectual Property - Seller shall own all right, title and interest in and to all intellectual property, including without limitation all inventions, patents, patent applications, source code, firmware, copyrights, and trade secrets incorporated in any Products.
(b) Confidential Information - "Confidential Information" shall mean any trade secret or other competitively sensitive information or data (whether oral, written, electronic or otherwise) relating to Seller or its respective businesses or operations which is or was disclosed by Seller to Buyer in the course of developing, negotiating or performing this Agreement. With regard to (i) Confidential Information that does not constitute a trade secret under applicable law, during the term hereof and for five (5) years following the termination or expiration hereof; and (ii) Confidential Information that constitutes a trade secret under applicable law, for so long as such Confidential Information remains a "trade secret" under applicable laws Buyer shall not disclose any Confidential Information to any other third party, or use the Confidential Information for its own benefit, except for the purposes approved by Seller in writing. Buyer shall not decompose or reverse engineer all or any portion of the Confidential Information or analyze it for such purposes. Buyer shall use its best efforts to avoid unauthorized disclosure of the Confidential Information. All Confidential Information provided by Seller to Buyer shall be and remain the property of Seller, and any Confidential Information, and any copies thereof, shall be promptly returned to Seller upon written request, or destroyed at Seller's option.
H) Compliance with Laws – Except to the extent otherwise specifically agreed to in writing by the parties, Buyer shall be responsible for the receiving, installation, use and maintenance of all Products, and Seller shall have no obligation or responsibility of any kind with respect thereto. Buyer shall comply with all laws and regulations governing the purchase or license, installation or use of Products, including, without limitation, obtaining all licenses, permits and registrations and fulfilling all other requirements of governmental agencies.
I) Cancellation Or Delivery Deferment – Buyer’s purchase order may be canceled or delivery deferred only with Seller’s written consent with conditions for payment of cancellation charges which may include, without limitation: Seller's direct costs; sales, general and administrative overhead; reasonable contract profits and any other costs and expenses to which Seller has or will become obligated pursuant to this Agreement.
J) Patent, Trademark and Copyright Infringement – Seller shall indemnify and hold Buyer harmless from any damages awarded in a final non-appealable judgment against Buyer in any suit or proceeding to the extent such damages are based on a claim of direct infringement by any Products of a Canadian patent, trademark or copyright, provided that Buyer notifies Seller promptly in writing and gives Seller full authority, information and assistance for the defense or settlement of such claim. In the event the use of any Products are enjoined or restricted as a result of any such claim, at Seller's option and expense, it may: (1) procure for Buyer the right to continue using the Products; (2) replace the Products with non-infringing Products of comparable quality; (3) modify the Products so they become non-infringing; or (4) remove the Products and refund the purchase price of such Products. Seller shall have no liability for claims of infringement by any Products, if any Products are used for any purposes other than those specified by Seller. These provisions shall not apply to any Products manufactured by any party other than Seller or to any use thereof with any such Products or to any Products manufactured to Buyer's design or specifications, and Buyer agrees to indemnify Seller for any damages based on claims of patent, trademark and/or copyright infringement by any such Products. For software licenses, additional terms and conditions may apply for the grant of use, restriction, and copyright provided in the Seller’s Software Product License Agreement.
Agenda Item 4.
STI-Sales-TC2025.0 Page 3 of 4 March 6, 2025
K) Limited Warranty – Seller warrants that the Products furnished hereunder will, at the time of shipment, be free from defects of material and workmanship under normal use and service and will conform to Seller's applicable standard written specifications or, if appropriate, to the specifications accepted in writing by Seller, for the period specified in the contract. If no warranty period is specified in the contract, the warranty period shall be 60 days. Seller's obligation shall be limited to, at Seller's option and expense, replacing or repairing any Products within such warranty period, provided: (1) Seller receives written notice of any nonconformance or defect within thirty (30) days from the date such nonconformance or defect is first discovered; and (2) after Seller's written authorization, the Products are returned to Seller's factory of origin with all freight charges prepaid; and (3) Seller determines the Products have a nonconformance or defect covered under this warranty. Any such repair or replacement shall not extend the warranty period provided hereunder. Where this Agreement governs the sale, lease, license or provision of software, equipment, and services as Products from Seller to Buyer, Buyer's use of such Products is made expressly subject to the Seller's applicable terms and conditions of sale and/or license agreement for such Products, which are incorporated into these Terms for all purposes and a copy of which Buyer acknowledges as having received, and they shall supersede any contrary provisions herein. No rights, warranties or title to such Products are given to Buyer except as expressly set forth herein. All advice and recommendations of Seller are intended for use by persons having skill, at their own risk, and Seller, not controlling or supervising the installation or use of Products after sale, does not warrant or guarantee such advice or recommendations.
Seller assumes no responsibility, and Buyer waives all claims against Seller, for results obtained or damages incurred from the use of Seller's advice and recommendations. The warranties set forth herein may be asserted by Buyer only and shall not apply to any products manufactured by parties other than Seller or to any Products which, in the opinion of Seller, are damaged by or subjected to, without limitation, improper handling, storage, installation, use or maintenance; abnormal or undisclosed environmental conditions; tampering; unauthorized repairs or modifications; accidental or intentional damage or acts of God. THE WARRANTIES SET FORTH HEREIN ARE IN LIEU OF AND EXCLUDE ALL OTHER
WARRANTIES, GUARANTEES OR REPRESENTATIONS, WHETHER EXPRESSED, IMPLIED OR
STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. SELLER NEITHER ASSUMES NOR AUTHORIZES ANY
OTHER PARTY TO ASSUME FOR SELLER ANY OTHER OBLIGATIONS OR LIABILITIES IN CONNECTION WITH THIS AGREEMENT.
L) Limitation of Liability – Seller’s total aggregate liability on any claims for loss or liability arising out of or related to this Agreement (including, without limitation, loss or liability arising from negligence, warranty, contract, strict liability or operation of law) shall in no case exceed the purchase price paid for the affected Products. IN NO EVENT SHALL SELLER BE LIABLE FOR OR OBLIGATED IN ANY MANNER TO PAY
SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OF ANY KIND,
INCLUDING, WITHOUT LIMITATION, LOSS OF PROFITS OR PRODUCTION,
INSTALLATION/DEINSTALLATION COSTS, PLANT DOWNTIME, LOSS OF USE OF PRODUCTIVE
FACILITIES OR EQUIPMENT, RECORDS OR DATA, PROPERTY DAMAGE, PERSONAL INJURIES, OR GOVERNMENTAL FINES OR PENALTIES, WHETHER SUFFERED BY BUYER OR ANY THIRD PARTY.
M) Indemnification – Buyer shall indemnify, defend and hold harmless Seller, its affiliates and their respective directors, officers, members, employees, agents, contractors, successors and assigns from and against all losses, damages, expenses, claims, demands, suits, judgments, penalties, and costs of any kind whatsoever, including legal fees and expenses arising out of this Agreement or Buyer's use, acts or omissions in connection with any Products.
N) Assignment – Any assignment or attempted assignment of this Agreement, in whole or in part, without the prior written consent of Seller shall be void. Seller may assign any of its rights, liabilities and obligations arising out of this Agreement without prior written notice to Buyer and without Buyer's written consent.
O) Publicity – Unless otherwise instructed by the Buyer, required by law or regulation, Seller reserves the right to publish or make public the Buyer’s name and information of the Seller’s scope of work as related to this Agreement in presentations, conferences, press release, and other media.
P) Governing Law and Forum – This Agreement is made under and shall be governed in all respects by the Laws of the State of New York and the Laws of the United States of America applicable therein.
Buyer hereby agrees to the exclusive jurisdiction of the courts of New York for the purposes of resolving any dispute arising under or in connection with this Agreement and irrevocably waives, to the fullest Agenda Item 4.
STI-Sales-TC2025.0 Page 4 of 4 March 6, 2025
extent permitted by law, any objection which Buyer may now or hereafter have to any such proceedings.
Q) Entire Agreement – The headings in this Agreement are inserted for convenience only and shall not be used in the interpretation hereof. Any rule or principle of contractual construction that would otherwise require any aspect of this Agreement to be interpreted against the party primarily responsible for its drafting shall not be employed in the interpretation hereof. This Agreement may only be amended by a written document signed by Seller. No waiver of any provision of this Agreement, or of a breach hereof, shall be effective unless it is in writing and signed by Seller. No waiver of a breach of this Agreement (whether express or implied) shall constitute a waiver of a subsequent breach. All provisions of this Agreement are severable, and the unenforceability or invalidity of any of them, in whole or in part, shall not affect the validity or enforceability of the remaining provisions of this Agreement. This Agreement constitutes the entire understanding between the parties and supersedes all previous understandings, agreements, communications and representations, whether written or oral, concerning the Products.
R) English Language – The parties hereto agree that this Agreement and any related documents or notices be drafted and executed in the English language.
Agenda Item 4.
STI-License-TC2025.0 Page 1 of 3 March 6, 2025
Software License Agreement
IMPORTANT - YOU SHOULD READ THIS AGREEMENT CAREFULLY BEFORE USING THIS SOFTWARE. BY (i) PROCEEDING WITH AN ORDER FOR SOFTWARE, AND/OR INSTALLATION OR UPGRADE OF THE SOFTWARE, AFTER RECEIVING A COPY OF THIS DOCUMENT; OR (ii) CLICKING “I Accept the Terms of the License Agreement,” DURING INSTALLATION OF THE
SOFTWARE, YOU ACKNOWLEDGE THAT YOU HAVE READ AND UNDERSTAND THIS AGREEMENT AND AGREE TO ABIDE BY ITS TERMS AND CONDITIONS.
This is a software license agreement ('License Agreement') between you ('you’ or 'Licensee') and Survalent Technology Inc. ('Survalent') for use of the software provided by Survalent ('Software'). This is not an agreement for sale of the Software. This is a license agreement only. Please read the terms and conditions of this License Agreement before using the Software. By verifying and/or using the Software, you are agreeing to be legally bound by this License Agreement and the terms and conditions set out below.
This agreement incorporates by reference Survalent's Sales Terms and Conditions and Support and Maintenance Terms and Conditions (if applicable).
LICENSE: In consideration of the Licensee's payment of the relevant fees to Survalent, Survalent grants the Licensee a limited, non-exclusive, non-transferable license to use the Software, program copies, documentation, and related materials (collectively, the 'Licensed Material') developed by Survalent solely in accordance with the terms and conditions set out in this License Agreement. It does not give the Licensee the right to own the Licensed Material.
You acknowledge and agree that as between the parties, Survalent retains the title to its Licensed Material, and all intellectual or industrial property rights therein, including any updates, new releases, modifications or enhancements, whether or not made or authorised by Survalent. All rights not expressly granted to the Licensee are reserved and retained by Survalent.
BUNDLED SOFTWARE LICENSE INFORMATION: The Licensee might also receive Software produced by other companies as part of a 'bundle' of Software ('Bundled Software'). This Software might have been included in the Survalent product to enhance features and capabilities. Bundled Software is provided under license from the original manufacturer. In the absence of a discrete license from the manufacturer to the customer, the Licensee is permitted to use the Bundled Software under the same terms as this license from Survalent. The Licensee agrees to be legally bound by the provisions of this license for use of any and all Bundled Software included with the Software that does not have its own license included in its packaging. Under the provisions of this Survalent license agreement, ‘Bundled Software’ is included in the terms 'Licensed Material' and 'Software'.
USE LIMITATIONS:
This Software is designed to be used on a computer system and/or network. You may only:
a) Use the Software in the format specified in your purchase documents; b) Access the version of the Software provided by Survalent under this License Agreement on one (1) network.
You must not:
a) Copy, resell, distribute or transfer all or any part of the Software or Licensed Material; b) Provide access to the Software or Licensed Material to any person other than your personnel who reasonably require access to the Software and Licensed Material; c) Attempt to disassemble, decompile or otherwise reverse engineer or reverse compile the Software;
d) Alter, customize, modify or create derivative works of the Software or Licensed Material; or e) Remove, obliterate or alter any proprietary notice on the Software or Licensed Material.
You may make one (1) copy of the Software solely for system back-up, emergency start-up, disaster Agenda Item 4.
STI-License-TC2025.0 Page 2 of 3 March 6, 2025
recovery and security purposes. Such copy must be externally labelled as Licensed Material, and must contain all proprietary notices.
UNAUTHORISED USE: The Licensee shall notify Survalent immediately if the Licensee becomes aware of any unauthorised use of the whole or part of the Software by any person.
SERVICES: This License Agreement applies to any services provided by Survalent in connection with the Software, including deployment, installation, configuration or other services, and to any updates, new releases, modifications or enhancements to the Software provided by Survalent.
SOFTWARE MAINTENANCE SERVICES: Survalent will provide upgrades to the Software from time to time ('Software Maintenance Services'). These services will be provided free of charge for one (1) year from acquisition of the Software by the Licensee, and thereafter on an annual basis on payment by the Licensee of the relevant fee.
EFFECTIVE DATE AND TERMINATION: The license is effective on the date the Licensee acquires the Licensed Material, and will remain in force until terminated in accordance with its terms. Upon termination, all Licensed Material is to be destroyed or returned postage prepaid to Survalent.
Survalent may terminate this License Agreement immediately on written notice on the happening of one of the following events:
a) Your unremediable breach or threatened unremediable breach of any of your obligations under this License Agreement;
b) Your unremedied breach or threatened breach of any of your obligations under this License Agreement after having been given thirty (30) days written notice to remedy such breach; c) The occurrence of any of the following events with regard to your affairs: (i) any step is taken to enter into any scheme of arrangement with creditors,(ii) any step is taken to appoint a receiver or manager, a liquidator, an administrator or other like person, (iii) the suspension of debts generally, or (iv) you are deemed insolvent;
d) Your merger or takeover by another party.
Upon termination of this License Agreement for any reason, you must immediately cease using the Software and Licensed Materials and destroy or return to Survalent all copies of the Software and Licensed Materials in your possession or control.
RESPONSIBILITIES: Survalent guarantees that its Software, when correctly used, substantially comply with the technical specifications given in the documentation. The Licensee has nonetheless been notified and specifically agrees that with the present state of technology, it is impossible to guarantee that the Software is completely error-free, and that Survalent cannot guarantee that its Software will operate without interruption or is compatible with all equipment or configurations. The Licensee is therefore responsible for taking all appropriate steps to reduce, insofar as possible, the consequences of any incident or operating interruption, in particular by notifying Survalent of any problem in a timely fashion.
The Licensee is also responsible for the use of the Software, and the qualification and competence of its personnel.
LICENSEE AGREES TO BACKUP REGULARLY ALL FILES GENERATED BY THE LICENSED MATERIAL, TO ELIMINATE CATASTROPHIC LOSS OF DATA. Survalent shall not be responsible for any costs, loss or damage associated with loss of data, recreating data, substitute equipment or programs, claims by third parties or similar costs.
By using the Software the Licensee agrees to accept all risk associated with its use and agrees to indemnify Survalent against all and any recourse by any third party. Survalent and/or its associates, employees and agents will not be held responsible for any loss, whether direct, indirect or consequential, real or imagined, past, present or future, resulting from the use of the Software by the Licensee or by any person or entity related to the Licensee including their customers.
In no case shall the liability of Survalent exceed the amount of the purchase price of the Software. To the fullest extent permitted by law, Survalent's excludes:
Agenda Item 4.
STI-License-TC2025.0 Page 3 of 3 March 6, 2025
a) Any term, condition or warranty that may otherwise be implied by custom, law or statute; b) Any liability for loss caused by the negligence of Survalent; and c) Any liability for any loss or damage suffered by a party or any other person that is indirect or consequential, including but not limited to loss of revenue, loss of income, loss of business, loss of profits, loss of goodwill or credit, loss of business reputation, loss of use, loss of time, loss of interest, damage to credit rating or loss or denial of opportunity.
Some countries and states do not allow the exclusion of implied warranties, terms or conditions, so the above exclusions may not apply to you. In that case the following statements apply to the fullest extent permitted by law:
If Survalent is liable for a breach of a term, condition or warranty described above, its liability is, to the fullest extent permitted by law, limited to any one or more of the following as Survalent determines in its absolute discretion:
a) In relation to goods:
(i) replacing or repairing the goods;
(ii) supplying an equivalent item of the goods;
(iii) paying the cost of replacing or repairing the goods; or (iv) paying the cost of acquiring or hiring equivalent goods; and b) In relation to services:
(i) the re-supply of the services; or
(ii) the payment of the cost of having the services re-supplied.
PRIVACY & CONFIDENTIALITY OPT IN/OPT OUT: The Licensee acknowledges that Survalent may collect and store information relating to the Licensee’s Software database, graphics and configuration preferences. Survalent uses the information it collects for providing customer support services, upgrading Software, Software revisions and to improve Software quality and delivery, and staff training.
Survalent warrants that only authorised personnel will have access to this information Survalent supports the Licensee’s right to privacy and confidentiality. The Licensee may provide written notice to Survalent opting out of any information collection by Survalent. Upon receipt of such written notice, Survalent will remove the Licensee’s information from the database within ten (10) business days.
ADVERTISING: Unless the Licensee specifically objects in writing, Survalent has the right to give the Licensee’s name in its list of references of the Software and to publish this list.
GOVERNING LAW AND SEVERABILITY: The license shall be governed and construed in accordance with the laws of the United States of America and the State of New York. Furthermore it is understood that this agreement shall be treated as though it were executed in New York and the parties agree that any action relating to this agreement shall be instituted and prosecuted in the courts of the competent jurisdiction of the State of New York. If for any reason, a court of competent jurisdiction finds any provision or portion of this agreement unlawful, void, or for any reason unenforceable, it shall be deleted and shall in no way affect the enforceability of any other provisions of this agreement.
By (i) proceeding with an order for Software and/or installation or upgrade of the software, after receiving a copy of this document, or (ii) clicking “I Accept the Terms of the License Agreement,” during installation of the Software, you acknowledge that you have read and understand this License Agreement and agree to abide by its terms and conditions. You also agree that except as expressly stated this License Agreement is the complete and exclusive agreement between us concerning the Software and supersedes all prior agreements, proposals or communications, verbal or written between us relating to the subject matter in this License Agreement. This License Agreement may be amended only in writing signed by both parties.
Agenda Item 4.
STI-Support-TC2025.0 Page 1 of 11 March 6, 2025
SURVALENT TECHNOLOGY INC.
SUPPORT AND MAINTENANCE TERMS AND CONDITIONS
These Support and Maintenance Terms and Conditions, including the Service Level Agreement (“SLA”), set out the basis on which Survalent Technology Inc. (“Survalent”) shall provide support and maintenance services to the Client.
1 Definitions: The following terms have the meanings set forth below whenever they are used:
“Agreement” The Support and Maintenance Terms and Conditions “Contract” A contract for the supply by Survalent and purchase by Client of Support and Maintenance in accordance with this Agreement which shall become effective upon Survalent’s acceptance of an Order in accordance with Clause 2.1. The Contract shall be comprised of the Order Acknowledgement, this Agreement and the Order plus any other documents specifically referenced and incorporated therein.
“Documentation” The applicable end user manuals, training material and other information made available by Survalent to Client at its discretion in either printed or machine-readable form with respect to the Software.
“Hardware” The equipment used by the Client to operate the Software. “Hardware
Specification”
The minimum technical specification and configuration that must be met by the Hardware in order to ensure the correct operation of the Software, as set out in the Documentation.
“Hot fix” A software patch on a part of the Software containing a quick-fix remedy to an urgent Issue, and does not undergo the same quality procedures as a regular Update due to the time constraints involved.
“Issue” The failure of the Software to comply with a reasonable interpretation of its Documentation.
“License” The license under which the Client may use the Software granted under terms and conditions as applied at the time of such license grant. “License Fee” The fee paid by Client to Survalent in respect of its License to use the Software.
“Maintenance” The provision of Software Hot fix, Updates and Upgrades in accordance with the SLA
“Order” Client’s purchase order for Support and Maintenance, which references the applicable Quote and is subject to this Agreement.
“Order
Acknowledgement”
Survalent’s written (including email) acknowledgement of Client’s Order. “Quote” A written quotation for the provision of Support and Maintenance, as confirmed in the Order Acknowledgement, and which specifies: i) the name of the Software to be supported; and ii) the Support and Maintenance Fee “SLA” The service level agreement set out in Schedule A hereto.
Agenda Item 4.
STI-Support-TC2025.0 Page 2 of 11 March 6, 2025
“Software” The software licensed by Survalent to Client under the License and supported under the Contract, as set out in the Order Acknowledgement, and including all Hot fixes, Updates and Upgrades supplied to Client under the Contract. “Support” Those activities relating to the collection and evaluation of data relating to Issues, establishing the work-arounds and the provision of software fixes to resolve such Issues in accordance with the SLA.
“Support and
Maintenance Fee”
The fee payable by Client to Survalent in respect of the provision of Support and Maintenance for the Software, as set out in the Quote, or as calculated in accordance with Clause 3.2 and Clause 3.5.
“Third Party
Software”
Software that is developed and supplied by parties other than Survalent, and in conjunction with which the Software will operate, as set out in the Documentation.
“Update” A release of the Software containing fixes to one or more Issues, and potentially some minor enhancements to the Software functionality. “Upgrade” A release of the Software providing significant enhancements to the Software functionality.
“Working Day” A day from Monday to Friday excluding Canada’s statutory and bank holidays. 2 Contract:
2.1 Upon receipt of a Quote, Client may accept the Quote by submitting an Order referencing the Quote.
Survalent shall check the Order to ensure that it is consistent with the Quote and this Agreement, and shall issue an Order Acknowledgement. Survalent’s issue of an Order Acknowledgement shall create a binding Contract for the supply and purchase of Support and Maintenance, as set out in the Order Acknowledgement.
2.2 Any terms and conditions in addition to, or at variance with, this Agreement contained within Client’s Order shall be void and of no effect unless Survalent incorporates them expressly in the Special Conditions.
2.3 The Special Conditions (if any) shall take precedence over the provisions of this Agreement which they expressly amend or remove. Subject to the foregoing, in the event of any conflict, this Agreement shall take precedence over any Order Acknowledgement.
2.4 The order of precedence of the documents making up the Contract shall be as follows (highest first):
a) the Special Conditions; b) this Agreement; c) the remainder of the Order Acknowledgement relating to Support and Maintenance (other than the Special Conditions); and d) the Order.
2.5 In the event that Client does not wish to proceed with an Order subject to this Agreement, it may cancel the corresponding Contract without liability provided it notifies Survalent of such in writing (to include by email) within three (3) working days of receipt of the corresponding Order Acknowledgement. After this period, any Contract may only be terminated in accordance with the provisions of Clause 9.2.
2.6 Survalent may increase the annual Support and Maintenance Fee with at least thirty (30) days prior written notice to Client. Such increases shall apply to subsequent additional Support and Maintenance services purchased during an ongoing Support period as well as subsequent renewal of the Support and Maintenance Contract.
3 Support and Maintenance:
3.1 Subject to the terms and conditions of the Contract, and for the duration set out in the Order Acknowledgement, Survalent shall provide Support and Maintenance in respect of the Software.
Agenda Item 4.
STI-Support-TC2025.0 Page 3 of 11 March 6, 2025
3.2 The Support period Effective Date either begins (i) at the date the Software was purchased or (ii) at the date the Software license was activated or (iii) at the renewal date of the expiration of the previous Support period or (iv) at the renewal date of a multi-year Support Contract. Support must be purchased within one (1) month after expiration of the previous Support period. In the event the Support had expired beyond the one (1) month period, an additional out of compliance fee will be determined and charged to Client to bring Support level current to start the new Support period.
3.3 Survalent shall not be obliged to provide Support and Maintenance if undisputed payment of the Support and Maintenance Fee by Client is overdue.
3.4 In consideration for the payment of the Support and Maintenance Fee, Survalent shall:
a) Respond to Issues in accordance with the provisions of the SLA; b) Supply Support and Maintenance only to Client’s designated personnel; c) Promptly notify and make available to Client all new Updates of the Software (and associated Documentation) for use by Client only in accordance with the terms of the License Agreement;
d) Respond to reasonable queries from Client.
3.5 In the event that Client chooses to remain on an Upgrade release of the Software that is not current or not the immediately preceding Software version, Survalent may, at its discretion and subject to written agreement with Client, continue to provide Support and Maintenance on such older Software in consideration of an increased Support and Maintenance Fee to be determined.
3.6 Survalent shall advise Client through the support portal of all new Upgrades of the Software, and shall, at Client’s request and upon payment of the corresponding fee (if any), make such Upgrades (and associated Documentation) available for use by Client.
3.7 In order to permit delivery of Hotfixes, Updates and Upgrades, the Client should have access to the internet. Survalent accepts no liability for any loss or damage or delays in access to Updates and Upgrades arising from Client’s failure to obtain such access.
3.8 Upon request, Client shall ensure that Survalent’s support personnel are provided with the appropriate approvals, access information and remote electronic access to the Software, or physical access to the computer equipment on which the Software is installed if in Survalent’s reasonable opinion such physical access is necessary, for the purpose of investigating or rectifying reported Issues. In the event of Client providing such access but without the appropriate approvals, or in the event of Client not providing such access, Client shall not seek any action or remedy from Survalent in association with any loss or damage to Client arising from such unauthorised access or lack of access.
3.9 Survalent shall not be obliged to continue to provide Support in respect of the relevant Issue if Client cannot provide or obtain such approvals, information and access set out in Clause 3.8 above.
3.10 Survalent may supply Support and Maintenance itself or by its appointed agents. Survalent will remain fully responsible for the delivery of the Support and Maintenance to Client.
3.11 The provision of Support is limited to (i) the current version and (ii) the immediately preceding version of the Software. It is the Client’s responsibility to review Survalent’s customer support portal to determine whether the Client’s current Software version qualifies for Support. Furthermore, Client can get proactive notification of Updates and Upgrades by subscribing to Survalent’s support portal notification service.
3.12 Survalent shall be under no obligation to provide Support in respect of:
a) Issues resulting from any modifications or customisation of the Software not made by Survalent. b) Incorrect or unauthorised use of Software or operator error where such use or operation is not in Agenda Item 4.
STI-Support-TC2025.0 Page 4 of 11 March 6, 2025
accordance with the Documentation;
c) Recreation or re-entry of data lost for any reason whatsoever; d) Performance of the generalized duties of a network administrator; e) Any programs used in conjunction with the Software;
f) Faults in the Hardware;
g) Faults in the Third-Party Software; and
h) Use of the Software with computer hardware, operating systems or other supporting software other than the Hardware and the Third-Party Software.
3.13 Survalent shall notify Client in writing as soon as Survalent is aware that any Issue is not covered by Clause 3.4 and/or if such Issue is covered by Clause 3.12 and any time spent by Survalent investigating such Issues at Client’s request after such notification will be chargeable at Survalent’s labor and material rates at the time of the request. Survalent shall invoice such charges at Survalent’s discretion and such shall be paid within 30 days from the date of said invoice. 4 Client’s Cooperation and Obligations:
4.1 Client shall provide cooperation and support to Survalent in Survalent’s efforts to deliver the Support and Maintenance service. Such cooperation and support shall include, but not be limited to:
a) A reasonable level of responsiveness to Survalent’s requirements and communications; b) The timely transmittal and release to Survalent of appropriate and accurate documentation, information and materials in respect of reported Issues; c) Granting to Survalent remote access to the Hardware on which the Software is installed if required for the provision of effective Support;
d) Make available competent Client’s personnel to assist Survalent when and to the extent as is reasonably requested by Survalent;
e) The use of the Software only in accordance with the relevant Documentation and any License Agreement.
4.2 Client shall:
a) Ensure that the Software is managed in a proper manner and that all persons with administrative authority over the Software shall be competent trained employees or shall be persons under their supervision;
b) Use the latest Update or Upgrade of the Software made available to it by Survalent; and c) Copy and use the Software, Updates, Documentation and all other materials provided hereunder only in accordance with the terms of the Licence Agreement; d) Keep adequate backup copies of data, databases, and application programs and agrees that Client is solely responsible for any and all restoration and reconstruction of lost or altered files, data and programs.
4.3 Client agrees that if Client does not perform Client’s obligations under the Contract and such nonperformance affects Survalent’s ability to perform, Survalent shall not be considered in default under the Contract to the extent so affected.
5 Personnel:
5.1 In the event that Survalent visits Client’s premises, Client shall advise Survalent’s staff, agents or subcontractors of all rules, regulations and practices with which they should comply while on those premises. Survalent’s staff, agents and subcontractors shall comply with such rules and regulations Agenda Item 4.
STI-Support-TC2025.0 Page 5 of 11 March 6, 2025
whenever they are on Client’s premises. Client shall take reasonable precautions to ensure the health and safety of Survalent’s staff, agents and sub-contractors while they are on Client’s premises.
5.2 Without in any way restricting the right of an employee freely to accept employment and change employment, if either party (the “Hiring Party”) induces the other party’s employee engaged in the delivery of Support or Maintenance or the development or integration of the Client Software to enter its service at any time during the term of the Contract or during a period of six months thereafter then the Hiring Party shall pay to the other party an amount being equivalent to fifty percent (50%) of the employee’s net annual salary such sum being a genuine pre-estimate of the cost of the disruption that such inducement would cause to the efficient conduct of the affected party’s business. 6 Fees & Payment:
6.1 Survalent may invoice the Support and Maintenance Fee at least sixty (60) days before the Effective Date.
6.2 Payment from Client must be received by Survalent prior to the beginning of a renewal period to maintain continuous Support and Maintenance service.
6.3 Client shall be liable for any other agreed upon fees, any national, federal, value added, sales, excise, tariff, state, local or other taxes or customs duties applicable. For the avoidance of doubt, should Client be required by any law or regulation to make any deduction on account of tax including but not limited to Withholding Tax or otherwise on any sum payable under the Contract the sum payable shall be increased by the amount of such tax to ensure that Survalent receives a sum equal to the amount to be paid under the Contract.
6.4 Survalent may charge Client pro rata interest at the maximum rate permitted by law on any undisputed sum outstanding payable to Survalent. Client shall notify Survalent in writing within ten (10) days of receipt of an invoice that the invoice is in dispute.
6.5 In the event that Client purchases additional Software, including but not limited to the purchase of new Upgrades in accordance with Clause 3.6, the Support and Maintenance Fee may be adjusted to account for the additional Software support.
7 Warranty:
7.1 Subject to the limitations upon its liability in Clause 8, Survalent warrants to Client that all services supplied under the Contract will be carried out with reasonable skill and care by personnel whose qualifications and experience will be appropriate for the tasks to which they are allocated.
7.2 Save as expressly provided in Clause 7.1 of this Agreement, Survalent specifically excludes, and without limitation, all other conditions, warranties, representations or other terms relating to the Contract including any warranties that might otherwise be implied or incorporated into the Contract, such as those of satisfactory quality, fitness for a particular or any purpose, or ability to achieve any particular result.
7.3 In the event that Client believes the warranty in Clause 7.1 has not been met on any occasion, Client shall promptly notify Survalent according to the escalation process set out in the SLA, providing all details that may be necessary for Survalent to remedy the breach, and Survalent shall use all its reasonable endeavours to remedy such breach (either by itself or through a third party). 8 Limitation of Liability:
8.1 Survalent’s total maximum aggregate liability on any claims for loss or liability arising out of or related to the Contract (including, without limitation, (i) loss of, damage to or corruption of data, (ii) loss of use, (iii) loss or liability arising from negligence, warranty, contract, strict liability or operation of law) shall in no case exceed the Support and Maintenance Fee paid by Client during the twelve (12) month period immediately prior to Client’s claim in respect of the Support and Maintenance that is the subject of such claim.
Agenda Item 4.
STI-Support-TC2025.0 Page 6 of 11 March 6, 2025
8.2 Survalent hereby excludes all liability that Survalent has not expressly accepted in the Contract.
These limitations will apply regardless of the form of action, whether under statute, in contract, tort, including negligence, or any other form of action. For the purposes of this Clause 8, “Survalent” includes Survalent’s employees, sub-contractors, licensors and suppliers who shall therefore have the benefit of the limits and exclusions of liability set out in this Clause.
8.3 No action, regardless of form, arising out of transactions occurring under or contemplated under the Contract may be brought by either party more than one (1) years after the cause of action has accrued.
8.4 Client shall have no remedy in respect of any representation (whether written or oral) made upon which Client relied in entering into the Contract (“Misrepresentation) and Survalent shall have no liability to Client other than pursuant to the express terms of the Contract.
8.5 IN NO EVENT SHALL SURVALENT BE LIABLE FOR OR OBLIGATED IN ANY MANNER TO PAY
SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OF ANY KIND,
INCLUDING, WITHOUT LIMITATION, LOSS OF PROFITS OR PRODUCTION,
INSTALLATION/DEINSTALLATION COSTS, PLANT DOWNTIME, LOSS OF USE OF
PRODUCTIVE FACILITIES OR EQUIPMENT, RECORDS OR DATA, PROPERTY DAMAGE,
PERSONAL INJURIES, OR GOVERNMENTAL FINES OR PENALTIES, WHETHER SUFFERED BY CLIENT OR ANY THIRD PARTY.
9 Duration & Termination.
9.1 Each Contract shall become effective on the Effective Date and shall continue for a period of twelve (12) months, unless and until terminated in accordance with the provisions of Clauses 2.5 or 9.2.
9.2 Either party (“the Initiating Party”) may forthwith terminate the Contract at any time:
a) On giving written notice to the other party if the other party commits any material breach of any term of the Contract and in the case of a breach which is reasonably capable of remedy fails to remedy that breach to the reasonable satisfaction of the Initiating Party within thirty (30) days of a written request to remedy the same; or
b) On giving written notice to the other party if the other party has filed for bankruptcy. As used in this section 9.2 b), the term "bankruptcy" shall mean (i) apply for or consent to the appointment of, or the taking of possession by a receiver, custodian, trustee or liquidator of itself or of all or substantially all of its assets, (ii) commence a voluntary case under applicable bankruptcy laws (as now or hereafter in effect), (iii) be adjudicated as bankrupt or insolvent, (iv) file a petition seeking to take advantage of any other law providing for relief of debtors, or (v) acquiesce to, or fail to have dismissed within sixty (60) days, any petition filed against it in any involuntary case under such bankruptcy laws.
9.3 The expiry of the Contract or the termination thereof for whatever reasons shall be without prejudice to any other rights or remedies a party may be entitled to under law and shall not affect the respective rights and liabilities of either of the parties accrued prior to such termination. 10 Intellectual Property:
Survalent is the owner or licensee of the patent, copyright, trade secrets, trademarks and any other intellectual property rights which exists in the Hotfixes, Updates and Upgrades. Title to the Hotfixes, Updates and Upgrades shall remain vested in Survalent. For the avoidance of doubt title and all intellectual property rights to any design, new software, new protocol, new interface, enhancement, update, derivative works, revised screen text or any other items that Survalent creates shall remain vested in Survalent. Any rights not expressly granted herein are reserved to Survalent.
Agenda Item 4.
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11 Confidentiality:
11.1 Confidential Information shall be defined as any information (whether disclosed in oral, written or electronic form) belonging or relating to Survalent’s or Client’s business affairs or activities and which:
(i) has been marked as confidential or proprietary, (ii) has been identified orally or in writing as being of a confidential nature, or (iii) may reasonably be supposed to be confidential in the circumstances.
11.2 Each party undertakes that for a period of five years from the date of disclosure it will not, without the prior written consent of the other party, use, disclose, copy or modify the other party’s Confidential Information (or permit others to do so) other than is necessary for the performance of its rights and obligations under the Contract. Each party hereby agrees that it shall treat the other's Confidential Information with the same degree of care as it employs with regard to its own Confidential Information of a like nature and in any event in accordance with best current commercial security practices, disclosing such Confidential Information only to those of its employees, consultants and bona fide professional advisers who need to have such information for the purposes of the Contract, and ensuring that such employees, consultants and professional advisers shall be bound by the same confidentiality obligations as are set out in this clause.
11.3 The provisions of Clause 11.2 shall not apply to: a) any information in the public domain otherwise than by breach of the Contract; b) information lawfully in the possession of the receiving party thereof before disclosure by the disclosing party; c) information lawfully obtained without restriction from a third party; and d) information required to be disclosed by a court of competent jurisdiction, governmental body or applicable regulatory authority provided that the party under such duty to disclose shall use all reasonable endeavours to give the other party as much prior notice of such disclosure as is reasonably practicable and permitted by law.
11.4 Each party may publicize its involvement with the other party.
11.5 If the Contract is terminated, each party shall, at the other party’s option, return or destroy all Confidential Information of the other party.
12 Assignment:
Either party may assign the Contract or otherwise transfer any rights or obligations under the Contract with the other party’s prior written consent, such consent not to be unreasonably withheld. 13 Force Majeure:
Neither party is responsible for failure to fulfil its obligations hereunder due to causes beyond its reasonable control that directly or indirectly delay or prevent its timely performance hereunder. Dates or times by which each party is required to render performance under the Contract shall be postponed automatically to the extent that the party is delayed or prevented from meeting them by such causes. 14 Notices:
All notices made pursuant to any Contract must be made in writing. Any written notice to be given or made pursuant to the provisions of any Contract shall be sent postage prepaid by registered, or recorded mail, or reputable courier service, or by email, addressed to the other party's address or information stated above.
Unless otherwise provided in the Contract, all notices shall be deemed as given on the day of their receipt by the receiving party.
15 Entire Agreement:
The Contract constitutes the entire agreement between the parties with respect to the subject matter hereof and shall supersede all previous representations, agreements and other communications between the parties, both oral and written. The Contract shall prevail notwithstanding any variance with the terms and conditions of any order or purchase order submitted by Client.
Agenda Item 4.
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16 Survival:
The following clauses shall continue to be in effect after the termination or expiration of the Contract: 1, 5.2, 6, 7, 8, 9.3, 10, 11, and 14 - 18 inclusive.
17 General:
If any provision of the Contract is adjudged by a court of competent jurisdiction to be invalid, void, or unenforceable, the parties agree that the remaining provisions of the Contract shall not be affected thereby, and that the remainder of the Contract shall remain valid and enforceable. No waiver by either party of any term hereof shall constitute a waiver of any such term in any other case whether prior or subsequent thereto.
No single or partial exercise of any power or right by either party shall preclude any other or further exercise thereof or the exercise of any such power or right under the Contract. The Contract may not be changed, modified, amended, released or discharged except by a subsequent written agreement or amendment executed by duly authorised representatives of Survalent and Client.
Agenda Item 4.
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Schedule A
Service Level Agreement
A) Issue Reporting.
Clients must report Issues to Survalent in the following ways:
E-mail [email protected]
Customer Online
Support Portal
www.survalent.com (Click on Support)
• Login username & password will be provided to
Client by the Effective Date
Phone US/Canada: +1 (855) 402-2600
Colombia: +57 (04) 609-1224
Peru: +51 (01) 730-6751
International: +1 (905) 285-2247
All Issues will be logged as support cases and can be tracked by Client via the online support portal.
The response and resolution times set out below shall only apply to Issues logged via Survalent’s support e-mail, online customer support portal, or by phone numbers noted above. If any other methods of communication, not listed above, is used to communicate information relating to a support Issue, response and resolution times may be compromised.
B) Support Time / Hours.
Survalent will provide telephone support for reporting, correcting and resolving issues within the timeframes set forth herein. Survalent will maintain records of all reported Issues made by Client personnel.
Telephone support will be available to Client during business hours from Monday to Friday, between 08:00 hrs and 18:00 hrs (ET). Support will be available during non-business hours (NBH), including holidays, for Clients with NBH Support service option in their Contract.
Survalent observes Canadian and Ontario statutory and banking holidays. The list of Survalent’s holidays:
Family Day (3rd Monday of February)
Good Friday (Friday before Easter)
Victoria Day (Monday before May 25)
Canada Day (July 1)
Civic Holiday (First Monday in August)
Labour Day (First Monday in September)
Thanksgiving Day (Third Monday in October)
Christmas Eve (December 24)
Christmas Day (December 25)
Boxing Day (December 26)
New Year’s Eve (December 31)
New Year’s Day (January 1)
Agenda Item 4.
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C) Issue Categories / Response Time.
Issues will be categorised as set out below by Survalent in Survalent’s reasonable opinion at the time each Issue is reported:
Priority Description
Response Time
Business / Non-Business Hours
Urgent Classified as a serious issue that affects System functionality, performance, or stability that results in the loss or failure of the System or a significant component, and so impacts the overall operation of the System, and therefore must be addressed immediately
• Bronze – 6 hours / Not Applicable
• Silver – 4 hours / 6 hours
• Gold – 2 hours / 4 hours
• Platinum – 1 hour / 2 hours
High Classified as an important issue that affects System functionality, performance, or stability but does not impact the overall operation of the System, but nevertheless
must be addressed quickly
• Bronze – 12 hours / Not Applicable
• Silver – 8 hours / Not Applicable
• Gold – 4 hours / Not Applicable
• Platinum – 2 hours / Not Applicable
Medium Classified as a minor issue which affects a component of the System, but which does not affect the operations,
performance, or stability of the System, and so can be
addressed over a longer time period
• Bronze – 24 hours / Not Applicable
• Silver – 12 hours / Not Applicable
• Gold – 8 hours / Not Applicable
• Platinum – 4 hours / Not Applicable
Low Classified as an information request/documentation
issue, which does not affect System software/hardware
functionality, and so can be addressed over a longer time period
• Bronze – 48 hours / Not Applicable
• Silver – 24 hours / Not Applicable
• Gold – 12 hours / Not Applicable
• Platinum – 8 hours / Not Applicable
Severity Description Resolution Target
Critical Classified as a serious issue that affects System functionality, safety, performance, or stability that
seriously compromises the operation of the System.
Survalent will use best efforts to
resolve the Issue during and after
business hours to provide a resolution
or workaround. If the resolution
requires a software fix, the fix will be
provided in a subsequent Hot Fix,
Update, or Upgrade.
Major Classified as an important issue that affects System functionality, safety, performance, or stability but does not impact the overall operation of the System.
Survalent will use best efforts to
resolve the Issue during business
hours to provide a resolution or
workaround. If the resolution requires
a software fix, the fix will be provided
in a subsequent Hot Fix, Update, or
Upgrade.
Minor Classified as a minor issue that does not affect System functionality, performance, or stability, such as cosmetic issues that are considered important that do not affect operation of the System.
Survalent will provide initial response
during normal business hours.
Survalent will suggest a workaround if
appropriate. If the resolution requires
a software fix, the fix will be provided
in a subsequent Hot Fix, Update, or
Upgrade.
Note: Response time may rollover to next business day hours depending on time of received request.
Agenda Item 4.
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Survalent shall use its reasonable efforts to respond and resolve Issues during the timeframes noted. The current status of the Issue can be viewed via Survalent customer online support portal.
D) Escalation.
In the event that the Client has concerns regarding the Survalent’s progress with a particular issue or with any other matter regarding the delivery of Support and Maintenance, the Client may raise such concerns with Survalent according to the following escalation path:
a. Manager Customer Support – Rafael De La Fuente [email protected] (905) 285-9491 b. VP Customer Success – Ian MacCuaig [email protected] (905) 285-9497 c. President/CEO – Steve Mueller [email protected] (905) 285-2211 E) Upgrades, Updates and Hot fix process
Where an Upgrade, Update or Hot fix is used to remedy an Issue, it is the responsibility of the Client to ensure that this release resolves the Issue and that the Client is satisfied to continue with this release until a future Update, Upgrade or Hot fix is available. If the Client finds that the Upgrade, Update or Hot fix does not resolve the Issue to an acceptable level then the Client is free to revert back to their previous version of the software and shall notify Survalent of such. Survalent shall then create a new Issue, which shall be resolved in accordance to the Clause C above.
PURCHASER:
PRINT
NAME:
TITLE:
SELLER: SURVALENT TECHNOLOGY INC.
PRINT
NAME:
TITLE:
Agenda Item 4.
Agenda Item 4.
Confidential & Proprietary
SurvalentONE
Agenda Item 4.
Confidential & Proprietary
Jason Rohlfing
Director of Sales, Western US
Your Survalent Team
Zair Sajid
Presales Specialist
Agenda Item 4.
Confidential & Proprietary
Today’s Agenda
• Introductions
• Survalent Company Overview
• SurvalentONE Product Overview
• System Architecture Overview
• Product Demonstration
• SCADA
• Web Applications (optional)
Agenda Item 4.
Confidential & Proprietary
About Us
50+ years of
service in the
utility industry
97.8% customer
retention rate
since 1983
21% of top line
revenues invested
in R&D
Consistent
revenue growth
& profitability
Zero debt
Agenda Item 4.
Confidential & Proprietary
Tremendous Base of Experience
40 Countries Customers
60 Customers
400+
800+
Customers Worldwide
800+
Implementations 1,000,000+
Largest System
10,000,000+ meters
3 Largest Systems at PLN Indonesia
Agenda Item 4.
Confidential & Proprietary
▪ Common user interface for all roles for ease of operations ▪ Single hardware platform simplifies IT/OT maintenance & security ▪ Shared, as-operated network model & real-time database provides increased performance
SurvalentONE ADMS Platform
Agenda Item 4.
SurvalentONE SCADA
▪ Provides advanced supervisory control &
data acquisition capabilities
▪ Real-time, automated network control &
monitoring
▪ Improves network reliability
▪ Streamlines operations
▪ Offers advanced data collection capabilities
to manage remote assets
Agenda Item 4.
Benefits
▪ Greater network reliability & improved
performance indices
▪ Increased operational efficiency
▪ Improved situational awareness enables
faster, more informed decision-making
▪ Cost savings achieved through remote
monitoring & control of field devices
Agenda Item 4.
PHASE 2:
Connectivity required
▪ Fault Location, Isolation and
Service Restoration (FLISR)
& Loss of Voltage (LOV)
▪ Protection Settings
Manager (PSM)
PHASE 1:
No network model/connectivity required
▪ Load Management
▪ Power Factor Control
▪ Dynamic Voltage Regulation
(DVR)
▪ Voltage Reduction
▪ Load Curtailment
▪ Rotational Load Shedding
▪ Short-term Load Forecasting /
Load Estimation
PHASE 3:
Network model/connectivity required
▪ Distribution Power Flow
(DPF)/Distribution State
Estimation (DSE)
▪ FLISR with DPF
▪ Short-circuit analysis
▪ Contingency Analysis
▪ Fault Location
▪ Volt/VAR Optimization (VVO)
▪ Optimal Feeder
Reconfiguration (OFR)
DMS Application Deployment
Agenda Item 4.
Confidential & Proprietary 10
Offline Environments Available
Quality Assurance System
Allows users to:
▪ Test software
updates/patches
▪ Test configuration changes
▪ Perform hardware/software
tests
▪ Replicate your production
environment in a test setting
* Data forwarding license can be used with any of these four servers to update the servers with real-time data Operator Training Simulator
Allows users to:
▪ Train on the ADMS in an
offline environment
▪ Test or validate scenarios
(in testing phase)
▪ Take a snapshot of the
production system
▪ Save multiple snapshots of
DB into separate studies
▪ Global command sequence
manager available for all
studies
▪ Validate switch orders in
OTS, then import into the
production system
Operational Analysis
Allows users to:
▪ Investigate future
hypothetical states of the
network
▪ Offline power system
simulator available to see how
the network would react
▪ Available pool of VMs, allows
multiple users to run
separate studies at once
▪ Two modes available:
▪ Real-time
▪ What-if
▪ Optional licenses available:
▪ Historical playback
Project Development System
Allows users to:
▪ Edit in an offline environment
▪ Publish changes to
production once the user is
ready
▪ Project-based – multiple
concurrent projects can be
active at any time
▪ Multiple users can edit
concurrently as well
▪ Option to test changes in the
offline environment before
publishing to production
Agenda Item 4.
Confidential & Proprietary
SurvalentONE ADMS Value
11 Smallest
HW
Footprint;
Microsoft &
VM Support
Fastest
Project
Delivery
1M meter SCADA =
9 months
500K meter ADMS
= 18 months
Software
Upgrades
Included in
Support
Pricing
Self-deployed
Upgrades
Competitive
License &
Services
Pricing
Competitive
Support
Pricing
Lowest Total Cost of Ownership
Agenda Item 4.
12 Survalent Commitments
Easy to
Use, Operate,
Maintain
Security
by
Design
Resilient,
Redundant,
DRP
Reliability,
Power Quality,
Customer
Satisfaction
Renewable,
Grid
Modernization
Partnership Recognition
“Survalent customer
references gave the highest
overall satisfaction ratings of
any vendor covered in this
report, pointing in particular
to product value, service &
support.”
- Gartner, 2017
50+
years
Interoperability,
Digital
Transformation
Agenda Item 4.
Main SCADA (ADMS) System
13 Agenda Item 4.
Security Architecture – Web Portals
Agenda Item 4.
Confidential & Proprietary
SurvalentONE
A complete, fully integrated
ADMS platform that runs
on a single, easy-to-use
graphical user interface
Agenda Item 4.
City of Needles, California
Request for City Council Action
CITY COUNCIL NPUA Regular Special
Meeting Date: September 9, 2025
Title: Accept the Comprehensive Water and Wastewater Cost of Service Ratemaking Study dated August 2025 and initiate the Prop 218 45-Day Public Comment to Adopt the Proposed Water and Wastewater Rates for 2026 – 2030 Background: In October 2024 the Board of Public Utilities and Council awarded Raftelis to complete the 2025-2030 Comprehensive Electric, Water, and Wastewater Utility Cost of Service Ratemaking Study. The Board of Public Utilities Rate Study Ad Hoc Committee was created to work with staff to Complete the study. The Committee, staff and Raftelis have met on several occasions to review fiscal policies, financial models, and rate scenarios for each of the three utilities.
During July and August 2025, the Board of Public Utilities reviewed and provided comments to the proposed financial plans and rates for Water and Wastewater utilities.
Raftelis conducted a status quo cash flow analysis to evaluate whether existing water and wastewater rates can adequately fund the City’s projected expenses over the five-year period. Raftelis projects that with no rate increases over the five-year study period, the City will draw down reserves below the existing policy and below a zero balance by the end of FY 2028.
The proposed revenue adjustments were determined to provide financial sufficiency (including a financial reserve) for the City while minimizing impacts to rate payers.
Table 1: Proposed Water Revenue Adjustments
Description FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Effective Date October 1,
2025
October 1,
2026
October 1,
2027
October 1,
2028
October 1,
2029
Revenue Adjustment 3.0% 3.0% 3.0% 3.0% 3.0%
Table 2: Proposed Wastewater Revenue Adjustments
Description FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Effective Date October 1,
2025
October 1,
2026
October 1,
2027
October 1,
2028
October 1,
2029
Revenue Adjustment 6.0% 6.0% 6.0% 6.0% 6.0%
Key factors influencing the need for proposed revenue adjustments include:
Planned capital expenditures: CIP projects scheduled over the next five years total about $6.9 million (M) for water and $1.4 M for wastewater. Key infrastructure projects include the construction of a 1.5 million-gallon water reservoir, pipeline, main, and fire hydrant replacements, upsizing pumps and sewer lines, rehabbing manholes, and other treatment, transmission, storage, and distribution improvements.
Inflationary pressure: The City’s operating environment is not immune to the effects of inflation. The price of materials, chemicals, construction, professional services, energy, and other costs have increased at a historic pace over the last several years. The financial plan assumes continued pressure on both operating and capital costs, albeit at historic rates of change.
Staff are requesting the Board of Public Utilities to accept the final Comprehensive Water and Wastewater Cost of Service Report and recommend acceptance to the Needles Public Utility Authority and initiate the Prop 218 45-day public comment to adopt the proposed water and wastewater rates for five (5) years. Agenda Item 5.
The Board of Public Utilities accepted the Comprehensive Water and Wastewater Cost of Service Ratemaking Study on September 2, 2025.
Fiscal Impact: Increase in the cost to provide water and wastewater services Environmental Impact: N/A
Recommended Action: Accept the Comprehensive Water and Wastewater Cost of Service Ratemaking Study dated August 2025 and initiate the Prop 218 45-Day Public Comment to Adopt the Proposed Water and Wastewater Rates for 2026 – 2030 Submitted By: Rainie Torrance, Utility Manager
City Manager Approval: Date:
Other Department Approval (when required): Date:
9/4/2025
Agenda Item 5.
1 Water & Wastewater Rate Study Results
September 8, 2025
City of Needles
Agenda Item 5.
2 Needles Rate Study Goals and Objectives
Cost-of-Service Nexus
Develop a nexus between the
proposed rates and the cost to
provide service to each customer
class
Financial Sufficiency
To ensure sustainable and selfsufficient water and wastewater funds 2 Minimize Customer Impacts
So customers pay only what is
necessary and to maintain affordable
service
Agenda Item 5.
Rate Study Process
04 Rate Setting Framework
Identify financial goals, pricing objectives, and
alternative rate structures for evaluation
01 02
03 05
Financial Plan
Evaluate operating & capital costs against revenues;
conduct cash flow & scenario analysis
Rate Design
Conduct rate calculations & customer impact analyses
Study Documentation
Provide documentation & study report; review of
rates proposal by legal counsel
Rate Adoption
Notice customers, hold Public
Hearing, count protests, consider
adoption of rates & charges
3 Agenda Item 5.
Utility Costs Continue to Increase Faster than
General Inflation
4 Water Cost Index
CPI Cost Index
U.S. Bureau of Labor Statics is the source of both indices: CPI-U (U.S. City average of all items), Water and Sewerage Maintenance (U.S. City average) Agenda Item 5.
Financial Planning & Rate Projections
5 FINANCIAL PLAN
INPUTS
• Customer accounts
• Billed consumption
• Revenues
• Operating expenses
• Capital plan
• Beginning cash position
CAPITAL PROJECT FUNDING
Funding Mix
(Cash vs. Debt)
Debt
Covenants
ANNUAL CASH FLOW
FISCAL POLICIES AND TARGETS
Cash
Reserves
Debt Service
Coverage
ANNUAL REVENUE
REQUIREMENTS
FINANCIAL PLAN ELEMENTS
Agenda Item 5.
Financial Plan Results Detail
6 Water Results:
• All CIP cash funded
• 100% of planned CIP all 5 years
• Revenue Increases Required:
• 3.0% all 5 years
• Total Fund 502 and 582 balance ranges from $1.4
to $1.6 million through FY 2030
Wastewater Results:
• All CIP cash funded
• 25% of planned CIP year 1 and 2
• 50% of planned CIP year 3
• 75% of planned CIP year 4
• 100% of planned CIP years 5
• Revenue Increases Required:
• 6.0% revenue increases FY 2026 – FY 2030
• Projected cash balance low point of $170 thousand
in FY 2026, just above $250 thousand by FY 2030
Agenda Item 5.
Water
Results
7 Fiscal
Year
Rate
Increase
CIP to
Spend
2026 3.0% 100%
2027 3.0% 100%
2028 3.0% 100%
2029 3.0% 100%
2030 3.0% 100%
Agenda Item 5.
Wastewater
Results
8 Fiscal
Year
Rate
Increase
CIP to
Spend
2026 6.0% 25%
2027 6.0% 25%
2028 6.0% 50%
2029 6.0% 75%
2030 6.0% 100%
Agenda Item 5.
Defining Cost of Service (COS)
• An objective approach to fairly recover costs across user classes based on their specific requirements
• Examples: demand patterns, level of service, meter capacity, etc., • Allows for the matching of rates and charges to the costs incurred to serve customers
• Cost of service is an industry best practice and is required in California to align with Proposition 218
9 Agenda Item 5.
Proposed Water Rates
Meter Charges Current FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 5/8" & 3/4" $48.86 $48.78 $50.25 $51.76 $53.32 $54.92
1" $79.10 $75.75 $78.03 $80.38 $82.80 $85.29
1 1/2" $177.30 $143.17 $147.47 $151.90 $156.46 $161.16
2" $225.36 $224.07 $230.80 $237.73 $244.87 $252.22
3" $611.58 $439.82 $453.02 $466.62 $480.62 $495.04
4" $801.89 $682.54 $703.02 $724.12 $745.85 $768.23
6" $1,437.60 $1,356.76 $1,397.47 $1,439.40 $1,482.59 $1,527.07 8" $2,259.31 $2,165.82 $2,230.80 $2,297.73 $2,366.67 $2,437.68 10" $1,977.70 $5,671.75 $5,841.91 $6,017.17 $6,197.69 $6,383.63 Variable Rate Current FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 All Classes $3.07 $3.37 $3.48 $3.59 $3.70 $3.82
10 Agenda Item 5.
Proposed Wastewater Rates
Flat Rate Current FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 All Customers ($/EDU) $52.85 $56.03 $59.40 $62.97 $66.75 $70.76 11 Agenda Item 5.
Water FY 2026 Bill Impacts
Bill Impacts, 5/8" & 3/4" Meter Low Average High
Monthly Usage (hcf) 10 15 25
Current Bill $79.56 $94.91 $125.61
Proposed Bill $82.48 $99.33 $133.03
Difference ($) $2.92 $4.42 $7.42
Difference (%) 3.7% 4.7% 5.9%
12 Agenda Item 5.
Wastewater FY 2026 Bill Impacts
Bill Impacts Residential Hotel Gen. Com. Food Est.
# of Units 1 45 1 58
Current Bill $52.85 $1,664.78 $87.20 $551.75
Proposed Bill $56.03 $1,764.95 $92.45 $584.95
Difference ($) $3.18 $100.17 $5.25 $33.20
Difference (%) 6.0% 6.0% 6.0% 6.0%
13 Agenda Item 5.
Contact: Brian Bass
380 900 8163/ [email protected]
14 Contact: Lindsay Roth
213 262 9313 / [email protected]
Agenda Item 5.
15 END OF DECK –
BACK POCKET
SLIDES FOLLOW
Agenda Item 5.
Financial Assumptions
Escalators Affecting Revenues
16 Account Growth:
1.2%
Water Demand
Factor: 0%
Non-Rate Revenue
Inflation: 2.0%
Reserve Interest
Rates: 1.5%
Agenda Item 5.
17 General: 3% Salary: 2.5%
Other Benefits:
7%
Fuel, Utilities,
Chemicals: 4%
Contract
Services: 3%
Capital: 3.5%
Financial Assumptions
Escalators Affecting Expenses
Retirement:
1.5%
Health
Insurance: 10%
Agenda Item 5.
Water Status Quo Pro Forma – Fund 502
18 Cash Flow FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Beginning Balance - Fund 502 $891,681 $220,224 $227,765 $235,640 $243,867 $252,469 Sources of Funds
Rate Revenue $3,005,226 $3,036,511 $3,068,580 $3,100,851 $3,133,324 $3,166,001 Miscellaneous Revenue $85,476 $85,679 $85,886 $86,097 $86,313 $86,532 Interest Income $0 $7,311 $7,076 $6,820 $6,544 $6,245
Total - Sources of Funds $3,090,701 $3,129,501 $3,161,541 $3,193,768 $3,226,181 $3,258,778 Uses of Funds
O&M Expenses $2,202,235 $2,277,652 $2,356,396 $2,438,669 $2,524,687 $2,614,684 Debt Service $310,159 $310,159 $310,159 $310,159 $310,160 $310,160 Total - Uses of Funds $2,512,394 $2,587,811 $2,666,555 $2,748,828 $2,834,846 $2,924,844 Ending Balance Subtotal – Pre
Transfer $1,469,988 $761,914 $722,751 $680,580 $635,202 $586,403 Ending Balance Total – Post
Transfer $220,224 $227,765 $235,640 $243,867 $252,469 $261,468 Reserve Target
Operating Reserve $220,224 $227,765 $235,640 $243,867 $252,469 $261,468 $$$$$$
Agenda Item 5.
Water Status Quo Pro Forma – Fund 582
19 Cash Flow FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Beginning Balance - Fund 582 $614,073 $1,241,665 $1,137,448 $957,611 $697,160 $350,801 Sources of Funds
Revenue $280,395 $285,685 $291,080 $296,584 $302,197 $307,923 Interest Income $0 $10,107 $8,824 $6,944 $4,427 $1,231
Transfer from 502 $1,249,764 $534,148 $487,112 $436,713 $382,733 $324,934 Total - Sources of Funds $1,530,159 $829,940 $787,016 $740,241 $689,357 $634,089 Uses of Funds
O&M Expenses $62,724 $64,919 $67,191 $69,543 $71,977 $74,496 Rate Funded CIP $839,843 $869,238 $899,661 $931,149 $963,739 $997,470 Total - Uses of Funds $902,567 $934,157 $966,852 $1,000,692 $1,035,716 $1,071,967 Ending Balance - Fund 582 $1,241,665 $1,137,448 $957,611 $697,160 $350,801 -$87,077 Agenda Item 5.
Wastewater Status Quo Pro Forma – Fund 503
20 Cash Flow FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Beginning Balance - Fund 503 $936,801 $180,342 $158,595 $98,054 -$4,108 -$150,431 Sources of Funds
Rate Revenue $2,237,334 $2,276,144 $2,300,243 $2,324,977 $2,349,711 $2,374,445 Miscellaneous Revenue $12,475 $12,631 $12,789 $12,951 $13,115 $13,284 Interest Income $0 $2,523 $1,911 $699 $0 $0
Total - Sources of Funds $2,249,809 $2,291,298 $2,314,943 $2,338,627 $2,362,826 $2,387,728 Uses of Funds
O&M Expenses $1,803,424 $1,863,170 $1,925,608 $1,990,914 $2,059,275 $2,130,897 Debt Service $449,875 $449,875 $449,876 $449,875 $449,875 $449,875 Total - Uses of Funds $2,253,300 $2,313,045 $2,375,484 $2,440,789 $2,509,150 $2,580,771 Ending Balance Subtotal – Pre
Transfer $933,311 $158,595 $98,054 -$4,108 -$150,431 -$343,474 Ending Balance Total – Post
Transfer $180,342 $158,595 $98,054 -$4,108 -$150,431 -$343,474 Reserve Target
Operating Reserve $180,342 $186,317 $192,561 $199,091 $205,928 $213,090 Excess Reserves for Transfer $752968 $0 $0 $0 $0 $0
Agenda Item 5.
Wastewater Status Quo Pro Forma – Fund 583
21 Cash Flow FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Beginning Balance - Fund 583 $120,369 $322,766 -$210,830 -$367,153 -$480,851 -$498,930 Sources of Funds
Revenues $35,676 $35,676 $35,676 $35,676 $35,676 $35,676 Transfer from 503 $752,968 $0 $0 $0 $0 $0
Interest Income $0 $3,236 $0 $0 $0 $0
Total - Sources of Funds $788,644 $38,912 $35,676 $35,676 $35,676 $35,676 Uses of Funds
O&M Expenses $16,715 $17,300 $17,906 $18,533 $19,181 $19,853 Rate Funded CIP $449,163 $232,442 $384,923 $497,995 $515,424 $533,464 Total - Uses of Funds $465,878 $249,742 $402,829 $516,527 $534,606 $553,317 Ending Balance $322,766 -$210,830 -$367,153 -$480,851 -$498,930 -$517,641 Agenda Item 5.
CITY OF NEEDLES
Water & Wastewater Rate Study
FINAL REPORT / AUGUST 2025
Agenda Item 5.
This page intentionally left blank to facilitate two-sided printing.
Agenda Item 5.
611 Wilshire Boulevard, Suite 900, Los Angeles, CA 90017 www.raftelis.com
August 22, 2025
Ms. Rainie Torrance
Utility Manager
City of Needles
817 Third Street
Needles CA 92363
Subject: Water and Wastewater Cost of Service and Rate Design Study Dear Ms. Torrance,
Raftelis is pleased to provide this Water and Wastewater Cost of Service and Rate Design Study Report (Report) to the City of Needles (City). The study develops a five-year schedule of water and wastewater rates for the City for Fiscal Years (FY) 2026 through FY 2030 that are fair, equitable, fully recover the cost of providing service, and align with the legal requirements of Proposition 218.
The major tasks of the study were to:
» Develop a sustainable five-year financial plan to ensure financial sufficiency, meet operating costs, fund the long-term Capital Improvement Plan (CIP), and maintain prudent reserves. » Conduct a cost-of-service analysis to develop a nexus between proposed water and wastewater rates and the cost to provide service to customer classes.
» Review the City’s existing water and wastewater rate structures against alternatives. » Design cost-justified water and wastewater rates that fairly recover costs while considering other City policy objectives
» Document the study work in a comprehensive Report, walking the reader through the rate derivation from start to finish
This report summarizes key results and recommendations and details the development of the proposed financial plan, cost-of-service analysis, and water rate calculations. It has been a pleasure working with you, and we thank you and other City staff for the support you provided to Raftelis during this study.
Sincerely,
Todd Cristiano Brian Bass Lindsay Roth
Vice President Project Manager Senior Consultant
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report Contents
1. Executive Summary ..................................................................... 1
1.1. Study Overview .............................................................................................................1
1.2. Proposed Financial Plan...............................................................................................1
1.3. Cost of Service Analysis ..............................................................................................5
1.4. Proposed Water Rates..................................................................................................6
2. Introduction.................................................................................. 8
2.1. Agency Overview ..........................................................................................................8
2.2. Study Overview .............................................................................................................8
2.2.1. Key Changes Since Prior Study ....................................... Error! Bookmark not defined.
2.2.2. Objectives of the Study ................................................................................................... 8
3. Legal Requirements and Rate Setting Methodology................... 9
3.1. Legal Requirements......................................................................................................9
3.1.1. California Constitution – Article XIII D, Section 6 (Proposition 218) .Error! Bookmark not defined.
3.1.2. California Constitution Article X, Section 2 ....................... Error! Bookmark not defined.
3.2. Rate-Setting Methodology............................................................................................9
4. Key Inputs and Assumptions ..................................................... 11
4.1. Current Water Rates ...................................................................................................11
4.2. Financial Assumptions...............................................................................................12
4.3. Projected Service Connections .................................................................................13
4.4. Projected Water Use and Supply ...............................................................................14
5. Financial Plan............................................................................. 16
5.1. Revenues from Current Rates....................................................................................16
5.1.1. Calculated Water Rate Revenues ................................................................................. 16
5.1.2. Other Revenues ............................................................................................................ 17
5.2. Operations and Maintenance Expenses....................................................................18
5.3. Debt Service ................................................................................................................19
5.4. Infrastructure Improvement Plan...............................................................................20
5.5. Financial Policies ........................................................................................................22
5.5.1. Required Debt Coverage............................................................................................... 22 Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report
5.5.2. Reserve Targets............................................................................................................ 22
5.6. Status Quo Financial Plan..........................................................................................22
5.7. Proposed Financial Plan.............................................................................................26
6. Cost of Service Analysis ............................................................ 32
6.1. Methodology................................................................................................................32
6.2. Revenue Requirement ................................................................................................32
6.3. System Peaking Factors.............................................................................................33
6.4. Functionalization and Allocation of Expenses .........................................................34
6.5. O&M Expense Allocation............................................................................................34
6.6. Capital Allocation..........................................................................................................2
6.7. Preliminary Cost of Service Allocation .......................................................................3
6.8. Allocation of Public and Private Fire Protection Costs ............Error! Bookmark not defined.
6.9. Peaking Units of Service ..............................................Error! Bookmark not defined.
6.10.Reallocation of Recycled Water Costs........................Error! Bookmark not defined.
6.11.Adjusted Cost of Service Allocation ...........................Error! Bookmark not defined.
6.12.Unit Cost Development.................................................................................................4
6.12.1. Additional Units of Service.................................................................................. 4
6.12.2. Unit Costs........................................................................................................... 5
6.13.Customer Class Costs..................................................Error! Bookmark not defined.
7. Proposed Water Rates.................................................................. 7
7.1. Proposed FY 2026 Fixed Meter Charges.....................................................................7
7.1.1. Proposed FY 2026 Fixed Meter Charge Calculation......... Error! Bookmark not defined.
7.2. Proposed FY 2026 Commodity Charges .....................................................................7
7.2.1. CCWA Supply Unit Rates................................................. Error! Bookmark not defined.
7.2.2. Peaking Unit Rates .......................................................... Error! Bookmark not defined.
7.2.3. Conservation Unit Rates .................................................. Error! Bookmark not defined.
7.2.4. Revenue Offset Unit Rates............................................... Error! Bookmark not defined.
7.2.5. Proposed FY 2026 Commodity Charge Calculation.......... Error! Bookmark not defined.
7.3. Proposed Five-Year Rate Schedule.............................................................................8
7.4. Monthly Bill Impacts .....................................................................................................9
7.5. Monthly Bill Comparison..............................................Error! Bookmark not defined.
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report Tables
Table 1-1: Proposed Revenue Adjustments............................................................................................. 2 Table 1-2: Proposed Five-Year Water Rate Schedule.............................................................................. 6 Table 4-1: Current Water Rate Schedule .................................................. Error! Bookmark not defined.
Table 4-2: Inflationary Escalation ........................................................................................................... 13 Table 4-3: Additional Financial Assumptions.......................................................................................... 13 Table 4-4: Projected New Service Connections - Water Meters & Fire Lines ......................................... 13 Table 4-5: Projected Number of Water Meters ....................................................................................... 14 Table 4-6: Projected Number of Fire Lines................................................ Error! Bookmark not defined.
Table 4-7: Projected Water Use............................................................................................................. 15 Table 4-8: Projected Non-Recycled Water Supply Mix.............................. Error! Bookmark not defined.
Table 5-1: Projected Monthly Service Charge Revenues under Current Rates ...................................... 16 Table 5-2: Projected Commodity Charge Revenues under Current Rates ............................................. 17 Table 5-3: Projected Other Revenues .................................................................................................... 17 Table 5-4: Summary of Projected Revenues under Current Rates......................................................... 18 Table 5-5: Projected O&M Expenses by Cost Center................................ Error! Bookmark not defined.
Table 5-6: Schedule of Debt Service Payments ..................................................................................... 19 Table 5-7: Infrastructure Improvement Plan ........................................................................................... 21 Table 5-8: Existing Financial Policies ........................................................ Error! Bookmark not defined.
Table 5-9: Proposed Alternative Reserve Targets..................................... Error! Bookmark not defined.
Table 5-10: 2026 Proposed Reserves Summary....................................... Error! Bookmark not defined.
Table 5-11: Status Quo Financial Plan – Pro Forma .............................................................................. 24 Table 5-12: Proposed Revenue Adjustments ......................................................................................... 26 Table 5-13: Proposed Financial Plan – Pro Forma................................................................................. 27 Table 6-1: FY 2026 Revenue Required from Rates................................................................................ 33 Table 6-2: System Peaking Factor Allocations ....................................................................................... 34 Table 6-3: Allocation of Functional Categories to Cost Causation Components .......Error! Bookmark not defined.
Table 6-4: Functionalization of O&M by Cost Center.............................................................................. 35 Table 6-5: Summary of O&M Expenses by Functional Category.............................................................. 1 Table 6-6: Allocation of O&M Expenses to the Cost Causation Components ........................................... 2 Table 6-7: Summary of Capital Assets by Functional Category................................................................ 3 Table 6-8: Allocation of Functionalized Capital Assets to Cost Causation Components ........................... 3 Table 6-9: Preliminary Cost of Service Allocation..................................................................................... 4 Table 6-10: Equivalent Fire Demand......................................................... Error! Bookmark not defined.
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report Table 6-11: Public vs. Private Fire Protection............................................ Error! Bookmark not defined.
Table 6-12: Peaking Units by Customer Class .......................................... Error! Bookmark not defined.
Table 6-13: Peaking Units for Fire Protection............................................ Error! Bookmark not defined.
Table 6-14: Summary of Total Peaking Units ............................................ Error! Bookmark not defined.
Table 6-15: Recycled Water Contract Revenue Analysis .......................... Error! Bookmark not defined.
Table 6-16: Reallocation of Recycled Water Costs to Conservation.......... Error! Bookmark not defined.
Table 6-17: Adjusted Cost of Service Allocation........................................ Error! Bookmark not defined.
Table 6-18: Monthly Service Charge Units of Service .............................................................................. 5 Table 6-19: Development of Unit Costs.................................................................................................... 6 Table 6-20: Recovery of Cost Causation Components by Charge Type.... Error! Bookmark not defined.
Table 6-21: Cost to Serve by Customer Class .......................................... Error! Bookmark not defined.
Table 7-1: Monthly Service Charge Unit Costs.......................................... Error! Bookmark not defined.
Table 7-2: Proposed FY 2026 Monthly Service Charge Calculation ......................................................... 7 Table 7-3: Allocation of Unit Costs to Customer Classes .......................... Error! Bookmark not defined.
Table 7-4: Fixed CCWA Supply Unit Rates ............................................... Error! Bookmark not defined.
Table 7-5: Variable CCWA Supply Unit Rates........................................... Error! Bookmark not defined.
Table 7-6: Total CCWA Supply Unit Rates................................................ Error! Bookmark not defined.
Table 7-7: Peaking Unit Rates .................................................................. Error! Bookmark not defined.
Table 7-8: Single Family Residential Conservation Usage Allocations...... Error! Bookmark not defined.
Table 7-9: Single Family Residential Conservation Cost of Service Allocations .......Error! Bookmark not defined.
Table 7-10: Single Family Residential Conservation Public Outreach Allocation......Error! Bookmark not defined.
Table 7-11: Single Family Residential Conservation Program Cost Division ............Error! Bookmark not defined.
Table 7-12: Single Family Residential Conservation Program Cost Allocation .........Error! Bookmark not defined.
Table 7-13: Single Family Residential Public Outreach & Conservation Program Percent AllocationError! Bookmark not defined.
Table 7-14: Single Family Residential Conservation Capital, Contract Loss, and General Cost Allocation ................................................................................................................. Error! Bookmark not defined.
Table 7-15: Single Family Residential Conservation Unit Rate CalculationError! Bookmark not defined.
Table 7-16: Single Family Residential Revenue Offsets Unit Rates .......... Error! Bookmark not defined.
Table 7-17: Proposed FY 2026 Commodity Charge Calculation ............... Error! Bookmark not defined.
Table 7-18: Proposed FY 2026 Commodity Charges ............................................................................... 8 Table 7-19: Proposed Five-Year Water Rate Schedule............................................................................ 8 Table 7-20: Projected Rate Revenue by Customer Class ........................................................................ 9 Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report Figures
Figure 1-1: Infrastructure Improvement Plan............................................................................................ 3 Figure 1-2: Status Quo vs. Proposed Financial Plan................................................................................ 4 Figure 1-3: Proposed Financial Plan – Projected Ending Balances.......................................................... 5 Figure 1-4: Current vs. Proposed Cost of Service ..................................... Error! Bookmark not defined.
Figure 1-5: Single Family Residential Bill Comparison with Neighboring Agencies ..Error! Bookmark not defined.
Figure 4-1: Historical and Projected Annual Water Use............................. Error! Bookmark not defined.
Figure 5-1: CIP Financing Plan .............................................................................................................. 22 Figure 5-2: Status Quo Financial Plan – Projected Ending Balances ..................................................... 26 Figure 5-3: Proposed Financial Plan – Revenue Adjustments and Debt Coverage ................................ 29 Figure 5-4: Proposed Financial Plan – Projected Ending Balances........................................................ 30 Figure 5-5: Proposed vs. Status Quo Financial Plan .............................................................................. 31 Figure 6-1: Current vs. Proposed Cost of Service ..................................... Error! Bookmark not defined.
Figure 7-1: Single Family Residential Monthly Bill Impacts (FY 2026)....... Error! Bookmark not defined.
Figure 7-2: Multi Family Residential Monthly Bill Impacts (FY 2026)......... Error! Bookmark not defined.
Figure 7-3: Commercial Monthly Bill Impacts (FY 2026)............................ Error! Bookmark not defined.
Figure 7-4: Recreation Irrigation Monthly Bill Impacts (FY 2026)............... Error! Bookmark not defined.
Figure 7-5: Urban Agriculture Monthly Bill Impacts (FY 2026)................... Error! Bookmark not defined.
Figure 7-6: Goleta West Conduit Monthly Bill Impacts (FY 2026).............. Error! Bookmark not defined.
Figure 7-7: Recycled Monthly Bill Impacts (FY 2026)................................ Error! Bookmark not defined.
Figure 7-8: Single Family Residential Bill Comparison with Neighboring Agencies ..Error! Bookmark not defined.
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report
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Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 1 1. Executive Summary
1.1. Study Overview
Public water and wastewater agencies in California conduct cost-of-service studies roughly once every five years to establish a strong nexus between rates charged to customers and costs incurred to provide service, as required by Proposition 218. The City of Needles (City) last conducted a cost-of-service study in 2020, which established proposed water and wastewater rates over a five-year period from Fiscal Year (FY1) 2021 through FY 2025. The City engaged Raftelis in October 2024 to conduct a new Water and Wastewater Cost of Service and Rate Design Study to establish proposed water and wastewater rates over the next five-year period from FY 2026 to FY 2030. Note that the proposed rates presented in this study report may not be implemented until formally adopted by the City Council after a public hearing.
The major objectives of this study are to:
» Develop a sustainable five-year financial plan that sufficiently funds the City’s operations and maintenance (O&M) expenses, debt service payments, and Capital Improvement Plan (CIP) while adequately funding reserves and meeting debt coverage requirements.
» Conduct a cost-of-service analysis to develop a nexus between proposed rates and the cost to provide service to customer classes.
» Review the City’s existing rate structures against alternatives. » Design cost-justified water and wastewater rates that fairly recover costs while considering other City policy objectives.
» Document the study work in a comprehensive Report, walking the reader through the rate derivation from start to finish.
1.2. Proposed Financial Plans
Raftelis conducted a status quo cash flow analysis to evaluate whether existing water and wastewater rates can adequately fund the City’s projected expenses over the five-year financial forecast period. Annual projections of rate and non-rate revenues, O&M expenses, debt service payments, and capital expenditures through FY 2030 were developed with adopted budgets from City staff. Raftelis projects that with no rate increases over the five-year study period, the City will draw down reserves below the existing policy and below a zero balance by the end of FY 2028. This demonstrates a clear need for revenue adjustments2(i.e., rate revenue increases relative to the status quo). Raftelis worked with City staff to develop the following proposed revenue adjustments over the five-year study period (see Table 1-1 and Table 1-2). The proposed revenue adjustments were selected to provide financial sufficiency (including a more robust financial reserves policy) for the City while minimizing impacts on City customers.
1 Fiscal Year (FY) refers to the period beginning July 1 of a given year and ending June 30 of the following year, referred to using the last calendar year of the period (e.g. FY 2025 is the fiscal year beginning July 1, 2024 running through June 30, 2025)
2 The term revenue adjustment is used to describe the overall change to rate revenues required. Individual rates, and rate changes, are a combination of the revenue adjustments and updated cost of service analysis.
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 2 Table 1-1: Proposed Water Revenue Adjustments
Description FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Effective Date October 1, 2025 October 1, 2026 October 1, 2027 October 1, 2028 October 1, 2029 Revenue Adjustment 3.0% 3.0% 3.0% 3.0% 3.0%
Table 1-2: Proposed Wastewater Revenue Adjustments
Description FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Effective Date October 1, 2025 October 1, 2026 October 1, 2027 October 1, 2028 October 1, 2029 Revenue Adjustment 6.0% 6.0% 6.0% 6.0% 6.0%
Key factors influencing the need for proposed revenue adjustments include:
» Planned capital expenditures: CIP projects scheduled over the next five years total about $6.9 million (M) for water and $1.4 M for wastewater. Key infrastructure projects include the construction of a 1.5 milliongallon water reservoir, pipeline, main, and fire hydrant replacements, upsizing pumps and sewer lines, rehabbing manholes, and other treatment, transmission, storage, and distribution improvements. » Inflationary pressure: The City’s operating environment is not immune to the effects of inflation. The price of materials, chemicals, construction, professional services, energy, and other costs have increased at a historic pace over the last several years. The financial plan assumes continued pressure on both operating and capital costs, albeit at historic rates of change.
Figure 1-1 and Figure 1-2 show the proposed CIP financing plans for water and wastewater over the study period. Average CIP expenditures in FY 2026 through FY 2030 are $1.4 M per year for water and $280 thousand per year for wastewater. To maintain healthy wastewater reserve levels, annual CIP expenditures are scaled up over the five-year period. Years 1 and 2 represent 25% of the original CIP, year 2 is 50%, year 4 is 75%, and year 5 meets 100% of the original CIP schedule. The proposed financial plan assumes that most CIP over the study period will be cash-funded by rates or reserves, except for the water reservoir project, which is planned to be funded through grant proceeds.
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 3 Figure 1-1: Water Infrastructure Improvement Plan
Figure 1-2: Wastewater Infrastructure Improvement Plan
Figure 1-3 and Figure 1-4 show the status quo and proposed five-year water and wastewater financial plans.
Although current rates result in adequate recovery of O&M expenses and water debt service payments, revenue adjustments are required to generate sufficient revenue to cover cash-funded CIP over the study period and achieve the proposed future cash reserves. With the proposed financial plan, the City can fully recover costs, increase cash reserves to build resiliency and provide the ability to respond to unexpected events, maintain healthy debt coverage, and maintain a positive financial trajectory for the next rate cycle, which will include a new CIP for FY 2031-2035.
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 4 Figure 1-3: Water Status Quo vs. Proposed Financial Plan Figure 1-4: Wastewater Status Quo vs. Proposed Financial Plan Figure 1-5 and Figure 1-6 show projected ending balances over the study period relative to the City’s operating and total reserve targets under the proposed financial plan. The blue bars represent the operating fund balances, the green bars represent the capital fund balances, and the yellow bars represent the combined operating and capital fund balances. The dark blue line represents the operating reserve target. Reserves for Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 5 both utilities increase in FY 2026 through FY 2030. Although not displayed on the chart, the City is projected to meet its debt coverage requirement under the proposed financial plan in all years.
Figure 1-5: Water Proposed Financial Plan – Projected Ending Balances Figure 1-6: Wastewater Status Quo vs. Proposed Financial Plan
1.3. Cost-of-Service Analysis
The proposed financial plan determines the amount of revenue that must be recovered from water rates in each year over the study period. The purpose of the cost-of-service (COS) analysis is to objectively and fairly Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 6 allocate this total rate revenue requirement to the City’s various user groups. Raftelis performed a COS analysis for FY 2026 based on industry-standard principles outlined in the American Water Works Association Manual M1 for water and the Water Environment Federation (WEF) Manual of Practice No. 27, Financing and Charges for Wastewater (2018) for wastewater. Raftelis adheres to cost-of-service principles to yield cost-justified rates that align with California Proposition 218.
1.4. Proposed Water Rates
Table 1-3 and Table 1-4 show the proposed five-year water and wastewater rate schedules through FY 2030.
Proposed FY 2026 rates are calculated based on the results of the COS analysis. As a result of the financial plan, FY 2026 rates collect three percent more rate revenue for water and six percent more rate revenue for wastewater over current FY 2025 rates. FY 2026 rates, therefore, consider both the overall revenue adjustment and the COS results. Proposed rates for FY 2027 through FY 2030 are calculated by applying the proposed revenue adjustment in those years to the prior year rates. All rates are rounded up to the whole penny.
Table 1-3: Proposed Five-Year Water Rate Schedule
Description FY 2025
(Current)
FY 2026
(10/1/2025)
FY 2027
(10/1/2026)
FY 2028
(10/1/2027)
FY 2029
(10/1/2028)
FY 2030
(10/1/2029)
Proposed Revenue Adjustment 3.0% 3.0% 3.0% 3.0% 3.0%
Fixed Service Charges (per Month)
5/8 & 3/4-inch $48.86 $48.78 $50.25 $51.76 $53.32 $54.92 1-inch $79.10 $75.75 $78.03 $80.38 $82.80 $85.29
1.5-inch $177.30 $143.17 $147.47 $151.90 $156.46 $161.16 2-inch $225.36 $224.07 $230.80 $237.73 $244.87 $252.22
3-inch $611.58 $439.82 $453.02 $466.62 $480.62 $495.04
4-inch $801.89 $682.54 $703.02 $724.12 $745.85 $768.23
6-inch $1,437.60 $1,356.76 $1,397.47 $1,439.40 $1,482.59 $1,527.07 8-inch $2,259.31 $2,165.82 $2,230.80 $2,297.73 $2,366.67 $2,437.68 10-inch $1,977.70 $5,671.75 $5,841.91 $6,017.17 $6,197.69 $6,383.63 Commodity Charges (per hcf)
All Customers $3.07 $3.37 $3.48 $3.59 $3.70 $3.82
Table 1-4: Proposed Five-Year Wastewater Rate Schedule
Description FY 2025
(Current)
FY 2026
(10/1/2025)
FY 2027
(10/1/2026)
FY 2028
(10/1/2027)
FY 2029
(10/1/2028)
FY 2030
(10/1/2029)
Proposed Revenue Adjustment 6.0% 6.0% 6.0% 6.0% 6.0%
Fixed Service Charges (per Month)
All Customers ($/EDU) $52.85 $56.03 $59.40 $62.97 $66.75 $70.76 The proposed rate increases result in monthly bill changes to City customers. Note that monthly changes to customer water bills vary in FY 2026 because of the cost-of-service analysis; beyond FY 2026, estimated monthly bill increases in each year simply equal the proposed annual revenue adjustment of 3.0 percent.
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 7 Because the structure of the wastewater rates did not change, the bill increases are equal to the rate adjustment in each year.
Table 1-5 shows a comparison of sample water monthly bills. All bills are calculated using the most common meter size and show three levels of monthly water usage. Table 1-6 compares sample wastewater monthly bills for the four largest customer classes (based on number of accounts) using the average number of units for each class. Estimated monthly bills are based on both the City’s current FY 2025 and proposed FY 2026 rates.
Table 1-5: Water Sample Bill Impacts
Bill Impacts, 5/8" & 3/4" Meter Low Average High
Monthly Usage (hcf) 10 15 25
Current Bill $79.56 $94.91 $125.61
Proposed Bill $82.48 $99.33 $133.03
Difference ($) $2.92 $4.42 $7.42
Difference (%) 3.7% 4.7% 5.9%
Table 1-6: Wastewater Sample Bill Impacts
Bill Impacts Residential Hotel Gen. Com. Food Est.
# of Units 1 45 1 58
EDU Ratio 1.00 0.70 1.65 0.18
Units per account per room per account per seat
Current Bill $52.85 $1,664.78 $87.20 $551.75
Proposed Bill $56.03 $1,764.95 $92.45 $584.95
Difference ($) $3.18 $100.17 $5.25 $33.20
Difference (%) 6.0% 6.0% 6.0% 6.0%
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 8 2. Introduction
2.1. Agency Overview
The City of Needles (City) provides water and wastewater service to a population of approximately 5,000 people through about 1,900 metered water connections and sewer connections within 3,175 acres in San Bernardino County. The City delivers potable water entirely from two local groundwater wells through more than 60 miles of distribution pipeline and two booster pump stations. The City has four reservoir tanks with a total capacity of 4.6 million gallons (MG). The City’s wastewater system is comprised of more than 25 miles of sewer pipe, five lift stations, over 500 manholes, and a mechanical wastewater treatment plant. The treatment plant has an average daily flow capacity of 1.2 million gallons per day (MGD) and a peak instantaneous flow capacity of 3.0 MGD.
2.2. Study Overview
Public water agencies in California perform a cost-of-service analysis approximately every five years to ensure that customers are appropriately charged for water service commensurate with the cost to provide service. The City last conducted a cost-of-service study in 2020, which established proposed rates over a five-year period from FY 2021 through FY 2025. The City engaged Raftelis in October 2024 to conduct this Water and Wastewater Cost of Service and Rate Design Study to establish proposed water and wastewater rates for the City for FY 2026 through FY 2030. Note that proposed rates cannot be implemented until formally adopted by the City Council after a public hearing. Proposition 218 requires that City customers be mailed a public hearing notice detailing any proposed rate changes no fewer than 45 days before the public hearing.
2.2.1. Objectives of the Study
The major objectives and primary tasks of this study are to:
» Develop a five-year financial plan for each utility that sufficiently funds the City’s operations and maintenance (O&M) expenses, debt service payments, and CIP expenditures while adequately funding reserves and meeting debt coverage requirements.
» Conduct a cost-of-service analysis to establish a nexus between the cost to serve customers and the water and wastewater rates charged to customers, per Proposition 218 requirements. » Develop a five-year schedule of water and wastewater rates that are fair, equitable, and align with the requirements of Proposition 218.
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 9 3. Legal Requirements and Rate
Setting Methodology
3.1. Legal Requirements
Proposition 218, reflected in the California Constitution as Article XIII D, was enacted in 1996 to ensure that rates and fees are reasonable and proportional to the cost of providing service. The principal requirements, as they relate to public water and wastewater service, are as follows:
1. A property-related charge (such as water and wastewater rates) imposed by a public agency on a parcel shall not exceed the costs required to provide the property-related service.
2. Revenues derived by the charge shall not be used for any purpose other than that for which the charge was imposed.
3. The amount of the charge imposed upon any parcel shall not exceed the proportional cost of service attributable to the parcel.
4. No charge may be imposed for a service unless that service is actually used or immediately available to the property owner.
5. A written notice of the proposed charge shall be mailed to both the customer of record and owner of record of each parcel at least 45 days prior to the public hearing, when the agency considers all written protests against the charge.
As stated in the American Water Works Association’s (AWWA) Principles of Water Rates, Fees, and Charges:
Manual of Water Supply Practices - M1 Seventh Edition (Manual M1), “water rates and charges should be recovered from classes of customers in proportion to the cost of serving those customers.” Raftelis follows industry standard rate-setting methodologies set forth by the AWWA Manual M1 and Water Environment Federation (WEF) Manual of Practice No. 27, Financing and Charges for Wastewater (2018), to ensure this study meets Proposition 218 requirements and establishes rates that do not exceed the proportionate cost of providing water services on a parcel basis. The methodologies in the Manual M1 and the WEF Manual of Practice No. 27 are a nationally recognized industry ratemaking standard, which courts have recognized as consistent with Proposition 218.
3.2. Rate-Setting Methodology
This study was conducted using industry-standard principles outlined by the AWWA Manual M1 and WEF Manual of Practice No. 27. The process and approach Raftelis utilized in the study to determine water and wastewater rates is informed by the City’s policy objectives, the current water and wastewater system and rates, and the legal requirements in California (namely, Proposition 218). The resulting financial plan, cost of service analysis, and rate design process follows five key steps, outlined below, to determine proposed rates that fulfill the City’s objectives, meet industry standards, and comply with relevant regulations.
1. Financial Plan: The first study step is to develop a multi-year financial plan that projects the City’s revenues, expenses, capital project financing, annual debt service, and reserve funding. The financial plan is used to determine any adjustments to rate revenues so that the City may adequately fund projected expenses, cash reserves, and debt obligations.
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 10 2. Revenue Requirement Determination: After completing the financial plan, the rate-making process begins with determining the revenue requirement for the test year, also known as the rate-setting year. For this study, the test year is FY 2026. The revenue requirement should sufficiently fund the City’s operating costs, annual debt service (including coverage requirements), CIP, and reserve funding.
3. Cost-of-Service Analysis: The annual cost of providing water or wastewater service, or the revenue requirement, is then distributed to customer classes and tiers commensurate with their use of and burden on the water or wastewater system. A cost-of-service analysis involves the following steps:
o Functionalize costs – the different components of the revenue requirement are categorized into functions such as supply, treatment, storage, customer service, etc. o Allocate to cost causation components – the functionalized costs are then allocated to cost causation components such as supply, base delivery, extra-capacity, etc. o Develop unit costs – unit costs for each cost causation component are determined using units of service, such as total water use, peak water use, equivalent meters, number of customers, etc., for each component.
o Distribute cost components – the cost components are allocated to each customer class and tier using the unit costs in proportion to their demand and burden on the system.
A water cost of service analysis considers both the average water demand and peak demand using the best available data. Peaking costs are incurred during periods of peak consumption, most often coinciding with summer water use. Additional capacity-related costs are associated with designing, constructing, operating, maintaining, and replacing facilities to meet peak demands on the water system. Patterns of use impose additional costs on a water utility and are used to fairly apportion the cost burden on extra capacity-related facilities.
4. Rate Design: After allocating the revenue requirement to each customer class and tier, the rate design and calculation process can begin. Rates do more than simply recover costs; within the legal framework and industry standards, properly designed rates should support and optimize the City’s policy objectives. Rates also act as a public information tool in communicating these policy objectives to customers. This process also includes a rate impact analysis and sample customer bill impacts.
5. Administrative Record Preparation and Rate Adoption: The final step in a rate study is to develop the administrative record in conjunction with the rate adoption process. This report serves as the administrative record for this study. The administrative record documents the study results and presents the methodologies, rationale, justifications, and calculations used to determine the proposed rates. A thorough and methodological administrative record serves two important functions: maintaining defensibility in a stringent legal environment and communicating the rationale for revenue adjustments and proposed rates to customers and key stakeholders.
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 11 4. Key Inputs and Assumptions
Raftelis developed a water rate model in Microsoft Excel to project financial and rate calculations over a fiveyear study period through FY 2030. The City’s fiscal year spans from July 1 through June 30. Projections in future years are generally made based on actual or estimated FY 2024 or FY 2025 data using key assumptions outlined below. All assumptions and estimates were discussed with and reviewed by City staff to ensure that the City’s unique characteristics are accurately accounted for. Note that most table values shown throughout this report are rounded to the last digit shown and may therefore not add precisely to the totals shown.
4.1. Current Water and Wastewater Rates
Error! Reference source not found. and Table 4-2 show the current adopted rates developed during the prior rate study. Customers are subject to two charge components for water: 1) Monthly Service Charges and 2) Commodity Charges per hundred cubic feet (hcf)
3 of water delivered. The Monthly Service Charges vary
based on meter size. The Commodity Rate is a uniform rate for all customer classes. Wastewater customers are charged a Fixed Charge per equivalent dwelling unit (EDU) per month.
Table 4-1: Current Water Rates
Description FY 2025
(Current)
Fixed Service Charges (per Month)
5/8 & 3/4-inch $48.86
1-inch $79.10
1.5-inch $177.30
2-inch $225.36
3-inch $611.58
4-inch $801.89
6-inch $1,437.60
8-inch $2,259.31
10-inch $1,977.70
Commodity Rate (per hcf)
All Customers $3.07
3 One hcf equates to 748 gallons.
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 12 Table 4-2: Current Wastewater Rate
Description EDU Ratio Units FY 2025
(Current)
Fixed Service Charges (per Month)
All Customers ($/EDU) $52.85
Residential 1.00 per account $52.85
Hotel 0.70 per room $37.00
Hospitals 0.75 per bed $39.64
Multi-Family 1.00 per account $52.85
Garden & Nurseries 1.00 per account $52.85
Schools 0.23 per student $12.16
General Commercial 1.65 per account $87.20
Beauty Salon & Barber Shop 0.50 per sink $26.43
Needles Marina 0.55 custom $29.23
Religious Organizations 0.02 per seat $1.20
Seventh Day Adventist 0.01 custom $0.60
Food Establishments 0.18 per seat $9.51
Government 1.65 per employee $87.20
Gas Stations 2.90 per pump (side) $153.27
Shell/Dairy Queen 0.74 custom $38.93
Native Village 109 per account $5,760.65
4.2. Financial Projection - Estimates and Assumptions
Inflationary escalation assumptions shown in Table 4-3 are used to project annual non-rate revenues and operations and maintenance (O&M) expenses beyond FY 2025. All inflationary factors were determined with City staff based on historical and anticipated cost increases. Other miscellaneous revenues (excluding interest earnings on cash reserves) are increased by 2 percent annually.
For O&M expenses, a general inflation rate of 3 percent is consistent with long-term changes in the Consumer Price Index (CPI). Salary, Health Insurance, Retirement, and Other Benefits costs were inflated based on City staff input and recent cost-of-living adjustments. The inflationary factors shown below are used to project the O&M expenses over the study period.
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 13 Table 4-3: Inflationary Escalation
Inflationary Categories Annual
Escalation
Non-Rate Revenues
Miscellaneous 2.0%
Expenses
General 3.0%
Salary 2.5%
Health Insurance 10.0%
Retirement 1.5%
Other Benefits 7.0%
Fuel, Utilities, Chemicals 4.0%
Contract Services 3.0%
Capital 3.5%
Additional financial assumptions relating to interest earnings are shown in Table 4-4. Interest earnings on cash reserves are projected at a 1.5 percent annual rate.
Table 4-4: Additional Financial Assumptions
Description Value
Interest Earnings
Annual Interest Rate 1.5%
4.3. Projected Service Connections
Customer account growth projections are necessary to estimate water demand and rate revenues over the study period. City staff provided Raftelis with detailed customer billing data from which to derive the number of water meters by connection size and wastewater accounts and EDUs by customer class for FY 2024. To account for expected growth, the estimate is 1.2% growth for both utilities from FY 2025 through FY 2030.
Table 4-5 shows projected water connections over the study period.
Table 4-5: Projected Water Accounts
Water Accounts FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 All Customer Classes
5/8" & 3/4" 1,633 1,652 1,671 1,691 1,711 1,731 1,751
1" 111 112 113 114 115 116 117
1 1/2" 40 40 40 40 40 40 40
2" 102 103 104 105 106 107 108
3" 0 0 0 0 0 0 0
4" 10 10 10 10 10 10 10
6" 4 4 4 4 4 4 4
8" 1 1 1 1 1 1 1
10" 0 0 0 0 0 0 0
Total 1,901 1,922 1,943 1,965 1,987 2,009 2,031
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 14 Table 4-6 shows the projected number of wastewater accounts and EDUs by customer class over the study period.
Table 4-6: Projected Wastewater Accounts and EDUs
Wastewater Customer Data Actual
FY 2024
Projected
FY 2025
Projected
FY 2026
Projected
FY 2027
Projected
FY 2028
Projected
FY 2029
Projected
FY 2030
Wastewater Accounts
Residential 1,390 1,406 1,422 1,439 1,456 1,473 1,490
Hotel 14 14 14 14 14 14 14
Hospitals 1 1 1 1 1 1 1
Multi-Family 451 456 461 466 471 476 481
Garden & Nurseries 1 1 1 1 1 1 1
Schools 1 1 1 1 1 1 1
General Commercial 95 96 97 98 99 100 101
Beauty Salon & Barber Shop 1 1 1 1 1 1 1
Needles Marina 1 1 1 1 1 1 1
Religious Organizations 14 14 14 14 14 14 14
Seventh Day Adventist 1 1 1 1 1 1 1
Food Establishments 14 14 14 14 14 14 14
Government 22 22 22 22 22 22 22
Gas Stations 6 6 6 6 6 6 6
Shell/Dairy Queen 1 1 1 1 1 1 1
Native Village 1 1 1 1 1 1 1
Total 2,012 2,034 2,056 2,079 2,102 2,125 2,148
Wastewater EDUs
Residential 1,390 1,406 1,422 1,439 1,456 1,473 1,490
Hotel 405 409 413 417 422 427 432
Hospitals 20 20 20 20 20 20 20
Multi-Family 595 602 609 616 623 630 637
Garden & Nurseries 1 1 1 1 1 1 1
Schools 209 211 213 215 217 219 221
General Commercial 167 169 171 173 175 177 179
Beauty Salon & Barber Shop 1 1 1 1 1 1 1
Needles Marina 110 111 112 113 114 115 116
Religious Organizations 28 28 28 28 28 28 28
Seventh Day Adventist 3 3 3 3 3 3 3
Food Establishments 133 134 135 136 137 138 139
Government 203 205 207 209 211 213 215
Gas Stations 102 103 104 105 106 107 108
Shell/Dairy Queen 38 38 38 38 38 38 38
Native Village 110 111 112 113 114 115 116
Total 3,515 3,552 3,589 3,627 3,666 3,705 3,744
4.4. Projected Water Use
City staff provided Raftelis with total annual water use data by customer class for FY 2023 and FY 2024.
Water demand projections were kept stable at FY 2024 levels while accounting for population growth. Table 4-7 shows projected water use over the study period.
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 15 Table 4-7: Projected Water Use
Description Actual
FY 2024
Projected
FY 2025
Projected
FY 2026
Projected
FY 2027
Projected
FY 2028
Projected
FY 2029
Projected
FY 2030
Water Demand Factor N/A 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
WATER DEMAND (hcf)
All Classes 442,354 447,662 453,034 458,470 463,972 469,540 475,174 Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 16 5. Water Financial Plan
Section 5 details the development of a proposed five-year water financial plan for the City over the study period. The following subsections include estimates and projections of annual revenues, O&M expenses, debt service payments, capital expenditures, and reserve funding through FY 2030. The overall purpose of the financial plan is to determine the annual revenues required to achieve sufficient cash flow, maintain adequate reserves, and meet debt coverage requirements.
5.1. Revenues from Current Rates
The City’s water revenues consist of rate revenues, interest earnings on cash reserves, and other miscellaneous revenues. The rate revenue projections shown assume that current FY 2025 rates are effective throughout the study period; and therefore, represent estimated revenues in the absence of any revenue adjustments (i.e., rate increases). This status quo scenario provides a baseline from which Raftelis evaluates the need for revenue adjustments.
5.1.1. Calculated Water Rate Revenues
Raftelis projected water rate revenues from Monthly Service Charges and Commodity Rates for FY 2025 through FY 2030 based on current FY 2025 water rates, the current and projected number of water meters/private fire lines, and projected annual water use.
Table 5-1 shows projected Monthly Service Charge revenues under current rates over the study period.
Monthly Service Charge Revenues are calculated by connection size/type in each year as follows, based on current FY 2025 water rates (from Error! Reference source not found.), projected number of water meters (from Table 4-6), and the projected number of fire lines (from Error! Reference source not found.):
Annual Monthly Service Charge Revenue = [ FY 2025 monthly rate] × [Number of connections] × [12 Bills per year] Table 5-1: Projected Monthly Service Charge Revenues under Current Rates Meter Size Projected
FY 2025
Projected
FY 2026
Projected
FY 2027
Projected
FY 2028
Projected
FY 2029
Projected
FY 2030
5/8 & 3/4-inch $968,601 $979,741 $991,467 $1,003,194 $1,014,920 $1,026,646 1-inch $106,310 $107,260 $108,209 $109,158 $110,107 $111,056
1.5-inch $85,104 $85,104 $85,104 $85,104 $85,104 $85,104 2-inch $278,545 $281,249 $283,954 $286,658 $289,362 $292,067 3-inch $0 $0 $0 $0 $0 $0
4-inch $96,227 $96,227 $96,227 $96,227 $96,227 $96,227
6-inch $69,005 $69,005 $69,005 $69,005 $69,005 $69,005
8-inch $27,112 $27,112 $27,112 $27,112 $27,112 $27,112
10-inch $0 $0 $0 $0 $0 $0
Total $1,630,903 $1,645,697 $1,661,077 $1,676,457 $1,691,837 $1,707,217 Table 5-2 shows projected Commodity Charge revenues under current rates over the study period.
Commodity Charge revenues are calculated by customer class in each year as follows, based on current FY 2025 water rates (from Error! Reference source not found.) and projected water use (from Table 4-7):
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 17 Annual Commodity Charge Revenue = [FY 2025 rate per hcf] × [Annual Water Use in hcf] Table 5-2: Projected Commodity Charge Revenues under Current Rates Customer Class Projected
FY 2025
Projected
FY 2026
Projected
FY 2027
Projected
FY 2028
Projected
FY 2029
Projected
FY 2030
All Customers $1,374,322 $1,390,814 $1,407,503 $1,424,394 $1,441,488 $1,458,784
5.1.2. Other Revenues
Table 5-3 shows all other revenues. All FY 2024 other revenues are based on the City’s FY 2024 budget.
Other revenues from FY 2025 through FY 2030 were projected by Raftelis, relying on the assumptions detailed in Section 4. Beginning in FY 2026, interest revenue is estimated based on projected cash balances and the assumed interest rate (from Table 4-4). All other revenues are estimated by the miscellaneous inflation rate (from Table 4-3).
Table 5-3: Projected Other Revenues
Description Budgeted
FY 2024
Projected
FY 2025
Projected
FY 2026
Projected
FY 2027
Projected
FY 2028
Projected
FY 2029
Projected
FY 2030
Fund 502 - Water
Sales $69,209 $69,209 $69,209 $69,209 $69,209 $69,209 $69,209 Connect Fee $6,114 $6,114 $6,114 $6,114 $6,114 $6,114 $6,114 Establishment Fee $4,017 $4,097 $4,179 $4,262 $4,348 $4,435 $4,523 Miscellaneous $5,937 $6,056 $6,177 $6,300 $6,426 $6,555 $6,686 Interest Earnings Other $2,220 $0 $7,311 $7,076 $6,820 $6,544 $6,245 Reimburse Water Labor/Mat $1,829,976 $0 $0 $0 $0 $0 $0
Subtotal – Fund 502 $1,917,473 $85,476 $92,990 $92,962 $92,918 $92,857 $92,777 Fund 582 – NPUA Capital Water
SWRCB State Water Res Contr $5,973,969 $0 $0 $0 $0 $0 $0 Bureau of Reclamation $24,876 $0 $0 $0 $0 $0 $0
Transfers From Gen’l Fund $15,901 $15,901 $15,901 $15,901 $15,901 $15,901 $15,901 Water Asset Replacement $259,308 $264,494 $269,784 $275,180 $280,683 $286,297 $292,023 Subtotal – Fund 582 $6,274,054 $280,395 $285,685 $291,080 $296,584 $302,197 $307,923 Total $8,191,527 $365,870 $378,675 $384,042 $389,501 $395,054 $400,701 Table 5-4 summarizes projected revenues under current rates over the study period. It represents expected revenues in the absence of any rate increase over the study period.
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 18 Table 5-4: Summary of Projected Revenues under Current Rates Description FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Monthly Service Charges $1,399,519 $1,630,903 $1,645,697 $1,661,077 $1,676,457 $1,691,837 $1,707,217 Commodity Charges $1,371,887 $1,374,322 $1,390,814 $1,407,503 $1,424,394 $1,441,488 $1,458,784 Interest Earnings $2,220 $0 $7,311 $7,076 $6,820 $6,544 $6,245 Miscellaneous Revenue $8,191,527 $365,870 $378,675 $384,042 $389,501 $395,054 $400,701 Total $10,962,933 $3,371,096 $3,415,186 $3,452,622 $3,490,352 $3,528,379 $3,566,701
5.2. Operations and Maintenance Expenses
Error! Reference source not found. shows O&M expenses over the study period. All projections shown beyond FY 2024 were calculated based on inflationary assumptions (from Table 4-3) and any anticipated structural changes to the O&M budget due to either non-recurring expenses or future expenses not currently incurred.
Table 5-5: Projected Operating & Maintenance Expenses
Description Budgeted
FY 2024
Projected
FY 2025
Projected
FY 2026
Projected
FY 2027
Projected
FY 2028
Projected
FY 2029
Projected
FY 2030
Fund 502 - Water
Salaries $579,994 $594,493 $609,356 $624,590 $640,204 $656,209 $672,615 Overtime $59,688 $61,180 $62,710 $64,278 $65,885 $67,532 $69,220 FICA Soc Sec/M-Care Ins $43,608 $47,968 $52,765 $58,042 $63,846 $70,230 $77,253 Unemployment $1,913 $2,046 $2,190 $2,343 $2,507 $2,682 $2,870 Group Insurance $68,961 $75,858 $83,443 $91,788 $100,966 $111,063 $122,169 Workers’ Compensation $17,328 $18,541 $19,839 $21,228 $22,713 $24,303 $26,005 PERS/Retirement Contrib. $48,547 $49,275 $50,014 $50,764 $51,526 $52,299 $53,083 PERS-Unfunded Liability $52,832 $53,625 $54,429 $55,246 $56,074 $56,915 $57,769 Lwr Col Multi-SP Cons Pro $4,856 $5,001 $5,151 $5,306 $5,465 $5,629 $5,798 Engineering Services $693 $714 $735 $757 $780 $803 $828 Medical Exams $200 $220 $242 $266 $293 $322 $354
Educational Training $3,681 $3,791 $3,905 $4,022 $4,143 $4,267 $4,395 Audit Fees $13,307 $13,706 $14,117 $14,541 $14,977 $15,426 $15,889 Legal Fees-Water $76,618 $78,916 $81,284 $83,722 $86,234 $88,821 $91,486 Other Professional Svs. $21,416 $22,058 $22,720 $23,401 $24,103 $24,827 $25,571 Electric Utilities $83,489 $86,829 $90,302 $93,914 $97,670 $101,577 $105,640 Water Utilities $100 $104 $108 $112 $117 $121 $126
Vehicle Maint/Repair $3,246 $3,359 $3,477 $3,599 $3,725 $3,855 $3,990 Equipment Maint/Repair $432 $447 $463 $479 $496 $513 $531 Meter Maint/Repair $6,906 $7,148 $7,398 $7,657 $7,925 $8,202 $8,489 Wells Maint/Repair $1,400 $1,449 $1,500 $1,552 $1,607 $1,663 $1,721 Tools & Equipm Maint/Repl $8,514 $8,812 $9,120 $9,440 $9,770 $10,112 $10,466 Valves-Maint/Repair $14,140 $14,635 $15,148 $15,678 $16,226 $16,794 $17,382 Streets-Asphalt Materials $5,887 $6,093 $6,307 $6,527 $6,756 $6,992 $7,237 Liability Insurance $12,817 $13,714 $14,674 $15,701 $16,800 $17,976 $19,235 Blanket Bond Insurance $161 $172 $184 $197 $211 $226 $242 Property Insurance $24,348 $26,052 $27,876 $29,827 $31,915 $34,149 $36,540 Telephone/Cell $11,090 $11,423 $11,765 $12,118 $12,482 $12,856 $13,242 Postage $182 $187 $193 $199 $205 $211 $217
Advertising $503 $518 $534 $550 $566 $583 $601
Economic Dev. Consulting $11,435 $11,778 $12,132 $12,496 $12,871 $13,257 $13,654 Public Education $5,615 $5,784 $5,957 $6,136 $6,320 $6,510 $6,705 Travel Per Diem $1,623 $1,672 $1,722 $1,774 $1,827 $1,882 $1,938 Dues and Membership $3,027 $3,117 $3,211 $3,307 $3,406 $3,509 $3,614 Licensing $467 $481 $496 $511 $526 $542 $558
Utility Business Office $134,988 $139,038 $143,209 $147,505 $151,930 $156,488 $161,183 Central Purchasing Adm $63,264 $65,162 $67,117 $69,130 $71,204 $73,340 $75,541 Mgmt Info Sys/O&M $31,404 $32,346 $33,317 $34,316 $35,345 $36,406 $37,498 Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 19 Description Budgeted
FY 2024
Projected
FY 2025
Projected
FY 2026
Projected
FY 2027
Projected
FY 2028
Projected
FY 2029
Projected
FY 2030
Fleet Maintenance $43,692 $45,221 $46,804 $48,442 $50,138 $51,892 $53,709 Vehicle Replacement Fund $42,000 $43,470 $44,991 $46,566 $48,196 $49,883 $51,629 Finance Dept. Services $452 $466 $480 $494 $509 $525 $540 Lab Testing $11,133 $11,467 $11,811 $12,165 $12,530 $12,906 $13,293 Encroachment Permits $18,559 $19,116 $19,689 $20,280 $20,888 $21,515 $22,160 Lab Supplies $693 $714 $735 $757 $780 $803 $828
Back Flow Prevention $360 $371 $382 $393 $405 $417 $430 Boots $1,799 $1,853 $1,908 $1,966 $2,025 $2,085 $2,148
Chlorine/Chemical Supplies $43,336 $45,069 $46,872 $48,747 $50,697 $52,725 $54,834 Purchased Inventory $57,383 $59,104 $60,878 $62,704 $64,585 $66,523 $68,518 Office Supplies $641 $660 $680 $701 $722 $743 $766
Computer/Printer Supplies $5 $5 $5 $5 $6 $6 $6
Uniforms $4,171 $4,296 $4,425 $4,558 $4,695 $4,835 $4,980 Safety Equipment $3,479 $3,583 $3,691 $3,802 $3,916 $4,033 $4,154 Vehicle Fuel $23,277 $24,208 $25,176 $26,183 $27,231 $28,320 $29,453 Regulatory Fees $15,632 $16,101 $16,584 $17,082 $17,594 $18,122 $18,666 Employee Meals $25 $26 $27 $28 $28 $29 $30
Fair Share Allocations $145,564 $149,931 $154,429 $159,062 $163,834 $168,749 $173,811 Vac/Sl/Comp Accrual $9,529 $9,815 $10,110 $10,413 $10,725 $11,047 $11,378 Purchased Inventory $13,910 $14,327 $14,757 $15,200 $15,656 $16,125 $16,609 Bad Debts Expense $16,331 $16,331 $16,331 $16,331 $16,331 $16,331 $16,331 Transfer-O&M Reimb $1,829,976 $0 $0 $0 $0 $0 $0
Trf-Asset Replacement $259,308 $268,384 $277,777 $287,499 $297,562 $307,977 $318,756 Subtotal – Fund 502 $3,959,936 $2,202,235 $2,277,652 $2,356,396 $2,438,669 $2,524,687 $2,614,684 Fund 582 – NPUA Capital Water
Booster Pump Lift Station $440 $455 $471 $488 $505 $523 $541 Wells $58,903 $60,964 $63,098 $65,307 $67,592 $69,958 $72,407 Reservoirs $1,260 $1,304 $1,350 $1,397 $1,446 $1,496 $1,549 Transfer Expense $6,445,583 $0 $0 $0 $0 $0 $0
Subtotal – Fund 582 $3,959,936 $2,202,235 $2,277,652 $2,356,396 $2,438,669 $2,524,687 $2,614,684 Total $10,466,122 $2,264,959 $2,342,571 $2,423,587 $2,508,212 $2,596,664 $2,689,180
5.3. Debt Service
Table 5-6 shows the City’s existing debt service obligations associated with its 2016 Revenue Refunding Bonds. The 2016 Bond is scheduled to be fully repaid in FY 2031.
Table 5-6: Schedule of Debt Service Payments
Debt Service FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 2016 Revenue Refunding Bonds
Principal $239,622 $248,961 $258,664 $268,745 $279,218 $290,100 Interest $70,537 $61,198 $51,496 $41,415 $30,941 $20,059 Total Debt Service $310,159 $310,159 $310,159 $310,159 $310,160 $310,160 Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 20 5.4. Capital Improvement Plan
The City has approximately $8.1M in water Capital Improvement Plan (CIP) capital project costs from FY 2025 through FY 2030. These projects are shown in detail in Table 5-7 and amount to approximately $1.37M in average annual costs over the next five years, driven primarily by aging infrastructure. All projects listed are going to be funded through rate revenue and reserves except for the 1.5 MG water reservoir, which will be funded through grant proceeds.
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 21 Table 5-7: Capital Improvement Plan
Project Description Planned
FY 2025
Planned
FY 2026
Planned
FY 2027
Planned
FY 2028
Planned
FY 2029
Planned
FY 2030
Jet Vac / Trailer $83,333 $86,250 $89,269 $92,393 $95,627 $98,974 Construct 1.5 Million Gallon Water Reservoir $396,667 $410,550 $424,919 $439,791 $455,184 $471,116 Main replacement in the Vista Street area & new services $216,667 $224,250 $232,099 $240,222 $248,630 $257,332 Replace Deteriorating Pipe in Chestnut Street $32,528 $33,666 $34,844 $36,064 $37,326 $38,632 Replace Deteriorating Pipe in Chesney's Subdivision (Housing) $69,440 $71,870 $74,385 $76,989 $79,683 $82,472 Replace Deteriorating Pipe in Coronado Street area $230,278 $238,338 $246,680 $255,313 $264,249 $273,498 Replace Deteriorating Pipe in Casa Linda Street area $88,432 $91,527 $94,730 $98,046 $101,477 $105,029 Main replacement at Verde Shores under the pond and
Chesney development (Fire line into Verde Shores) $66,667 $69,000 $71,415 $73,915 $76,502 $79,179 Fire hydrant Replacements $2,500 $2,588 $2,678 $2,772 $2,869 $2,969 Well #15 Steel Building $50,000 $51,750 $53,561 $55,436 $57,376 $59,384 Total CIP Expenses $1,236,510 $1,279,788 $1,324,580 $1,370,941 $1,418,923 $1,468,586 Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 22 Figure 5-1 shows the proposed CIP over the study period. Total CIP expenditures in each year (from Table 5-7) are represented by the blue and yellow stacked bars below. The blue bars represent cash-funded CIP, and the yellow bars represent grant-funded CIP.
Figure 5-1: Capital Improvement Plan
5.5. Financial Policies
Agency-specific financial policies must be considered during the financial planning process. Financial policies typically define key financial metrics that an agency strives to meet or exceed.
5.5.1. Required Debt Coverage
The City must meet the minimum coverage requirements on its outstanding debt to ensure that it meets the associated debt covenants. The required debt coverage ratio is 1.2, which means the City’s net revenue from operations must amount to at least 1.2 times the annual debt service. Net revenues equal revenues less O&M expenses. Annual debt service includes annual principal and interest payments on all outside debt.
5.5.2. Reserve Targets
Prudent fiscal management requires that the City maintain reserve balances to provide sufficient working capital, maintain necessary cash on hand to efficiently award construction contracts, and provide funding during emergencies. The City’s current reserve policy consists of an operating target balance:
» Operating Reserve target: The target balance for the Operating Reserve is 10% of annual operating costs.
5.6. Status Quo Water Financial Plan
To evaluate the need for revenue adjustments (i.e., rate increases), Raftelis first developed a status quo financial plan. The status quo financial plan assumes that current FY 2025 water rates remain unchanged over the study period. Table 5-8 combines projected revenues (from Table 5-4), O&M expenses (from Table Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 23 5-5), debt service (from Table 5-6), CIP expenditures (from Table 5-7), and reserve targets to generate estimated cash flow, projected ending cash balance, and debt coverage projections under the status quo.
Under the status quo financial plan, net operating cash flow (revenue less O&M and debt service) is projected to be positive in all years throughout the study period. However, while current rates are sufficient to recover the City’s operating costs over the study period, it is insufficient to recover CIP expenditures and maintain target reserve levels. After cash-funded CIP is accounted for, net cash change is negative in all years except FY 2027, and reserves fall far below target by FY 2030. The status quo financial plan is thus insufficient to meet the City’s needs. This demonstrates a need for revenue adjustments over the study period to increase rate revenues to achieve full cost recovery of projected expenditures and achieve the City’s financial policies.
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 24 Table 5-8: Status Quo Financial Plan – Pro Forma
Line Description FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 REVENUE
2 Rate Revenue Under Existing Rates
3 Monthly Service Charges $1,630,903 $1,645,697 $1,661,077 $1,676,457 $1,691,837 $1,707,217 4 Commodity Charges $1,374,322 $1,390,814 $1,407,503 $1,424,394 $1,441,488 $1,458,784 5 Total Rate Revenue Under Existing Rates $3,005,226 $3,036,511 $3,068,580 $3,100,851 $3,133,324 $3,166,001 6 7 Additional Rate Revenue Required from Revenue Adjustments4 8 Fiscal Year Revenue Adjustment Month Effective
9 FY 2026 0.00% October $0 $0 $0 $0 $0
10 FY 2027 0.00% October $0 $0 $0 $0
11 FY 2028 0.00% October $0 $0 $0
12 FY 2029 0.00% October $0 $0
13 FY 2030 0.00% October $0
14 Total Revenue Adjustments $0 $0 $0 $0 $0 $0
15 16 Revenue Summary (including Revenue Adjustments)
17 Revenue from Rates [Line 5 +Line 14] $3,005,226 $3,036,511 $3,068,580 $3,100,851 $3,133,324 $3,166,001 18 Miscellaneous Revenue $807,761 $681,145 $783,606 $857,434 $639,633 $370,291 19 Interest Earnings $903,307 $921,374 $939,801 $958,597 $977,769 $997,324 20 Fund: 582 - NPUA Capital Water $280,395 $285,685 $291,080 $296,584 $302,197 $307,923 21 TOTAL REVENUE $3,371,096 $3,415,698 $3,453,845 $3,492,324 $3,531,135 $3,570,283 22 23 O&M EXPENSES
24 Fund 502 $2,202,235 $2,277,652 $2,356,396 $2,438,669 $2,524,687 $2,614,684 25 Fund 582 $62,724 $64,919 $67,191 $69,543 $71,977 $74,496 26 TOTAL O&M EXPENSES $2,264,959 $2,342,571 $2,423,587 $2,508,212 $2,596,664 $2,689,180 27 28 NET REVENUE [Line 21 – Line 26] $1,106,137 $1,072,615 $1,029,034 $982,140 $931,715 $877,521 29 4 The increase in rate revenues resulting from each year’s revenue adjustment is calculated individually in Lines 9-13. This is necessary to account for revenue increases resulting from prior year revenue adjustments. However, revenue adjustments equal zero dollars under the status quo, which assumes no revenue adjustments (i.e. rate increases) over the study period.
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 25 Line Description FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 30 DEBT SERVICE
31 Existing Debt Service $310,159 $310,159 $310,159 $310,159 $310,160 $310,160 32 Proposed Debt Service $0 $0 $0 $0 $0 $0
33 TOTAL DEBT SERVICE $310,159 $310,159 $310,159 $310,159 $310,160 $310,160 34 35 NET OPERATING CASH FLOW [Line 28 – Line 33] $795,978 $762,455 $718,875 $671,981 $621,555 $567,361 36 37 CAPITAL EXPENDITURES
38 Cash-Funded $839,843 $869,238 $899,661 $931,149 $963,739 $997,470 39 TOTAL CAPITAL EXPENDITURES $839,843 $869,238 $899,661 $931,149 $963,739 $997,470 40 41 UNRESTRICTED CASH BALANCE
42 Combined 502 and 582 Beginning Balance5
$1,505,754 $1,461,889 $1,365,213 $1,193,251 $941,027 $603,269 43 Net Cash Change [Line 35 – Line 39] -$43,865 -$106,782 -$180,786 -$259,168 -$342,184 -$430,109 44 Combined 502 and 582 ENDING BALANCE $1,461,889 $1,365,213 $1,193,251 $941,027 $603,269 $174,392 45 46 Operating Reserve Target $220,224 $227,765 $235,640 $243,867 $252,469 $261,468 47 48 DEBT COVERAGE
49 Projected Debt Coverage [Line 49 ÷ Line 54] 3.77 3.67 3.53 3.39 3.24 3.07 50 Required Debt Coverage 1.20 1.20 1.20 1.20 1.20 1.20
5 Beginning FY 2025 unrestricted cash balance of $891,681 for Fund 502 and $614,073 for Fund 582 was provided by District staff. All other beginning and ending balances shown are projections by Raftelis.
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 26 Figure 5-2 shows the City’s projected ending balances under the status quo (from Table 5-8Table 5-8). The existing reserve target is represented by the dark blue line. The blue bars represent the Fund 502 ending balance, the green bars represent the Fund 582 ending balance, and the yellow bars represent the combined ending balance. The City is projected to fall below its existing target in FY 2030, with the projected combined ending cash balance at only $174k.
Figure 5-2: Status Quo Financial Plan – Projected Ending Balances
5.7. Proposed Financial Plan
The status quo financial plan demonstrates that the City must increase its revenues from water rates over the study period to adequately fund its operating and capital expenditures and generate sufficient reserve funding.
Raftelis worked closely with City staff to select the proposed annual revenue adjustments shown in Table 5-9.
Revenue adjustments represent annual percent increases in rate revenue relative to the prior year. All CIP over the study period is assumed to be cash-funded (i.e., funded by water rates and cash reserves) except for the 1.5 MG water reservoir (Table 5-7), which is planned to be funded through grant proceeds; otherwise, no new debt is planned.
Table 5-9: Proposed Revenue Adjustments
Description FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Effective Date October 1, 2025 October 1, 2026 October 1, 2027 October 1, 2028 October 1, 2029 Revenue Adjustment 3.0% 3.0% 3.0% 3.0% 3.0%
Table 5-10 shows the proposed financial plan pro forma. This combines projected revenues (from Table 5-4), O&M expenses (from Error! Reference source not found.), debt service (from Table 5-6), CIP expenditures (from Table 5-7), and reserve targets to generate estimated cash flow, projected ending cash balances, and debt coverage projections under the proposed financial plan. Revenue adjustments over the study period Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 27 generate increases in rate revenues. This results in positive net cash flow beginning in FY 2028 and sufficient debt coverage in all years.
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 28 Table 5-10: Proposed Financial Plan – Pro Forma
Line Description FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 REVENUE
2 Rate Revenue Under Existing Rates
3 Monthly Service Charges $1,630,903 $1,645,697 $1,661,077 $1,676,457 $1,691,837 $1,707,217 4 Commodity Charges $1,374,322 $1,390,814 $1,407,503 $1,424,394 $1,441,488 $1,458,784 5 Total Rate Revenue Under Existing Rates $3,005,226 $3,036,511 $3,068,580 $3,100,851 $3,133,324 $3,166,001 6 7 Additional Rate Revenue Required from Revenue Adjustments6 8 Fiscal Year Revenue Adjustment Month Effective
9 FY 2026 3.00% October $68,322 $92,057 $93,026 $94,000 $94,980 10 FY 2027 3.00% October $71,114 $95,816 $96,820 $97,829 11 FY 2028 3.00% October $74,018 $99,724 $100,764
12 FY 2029 3.00% October $77,037 $103,787
13 FY 2030 3.00% October $80,176
14 Total Revenue Adjustments $0 $68,322 $163,172 $262,860 $367,581 $477,537 15 16 Revenue Summary (including Revenue Adjustments)
17 Revenue from Rates [Line 5 +Line 14] $3,005,226 $3,104,833 $3,231,751 $3,363,711 $3,500,905 $3,643,537 18 Miscellaneous Revenue $807,761 $681,145 $783,606 $857,434 $639,633 $370,291 19 Interest Earnings $903,307 $921,374 $939,801 $958,597 $977,769 $997,324 20 Fund: 582 - NPUA CAPITAL WATER $280,395 $285,685 $291,080 $296,584 $302,197 $307,923 21 TOTAL REVENUE $3,371,096 $3,484,020 $3,617,017 $3,755,184 $3,898,716 $4,047,819 22 23 O&M EXPENSES
24 Fund 502 $2,202,235 $2,277,652 $2,356,396 $2,438,669 $2,524,687 $2,614,684 25 Fund 582 $62,724 $64,919 $67,191 $69,543 $71,977 $74,496 26 TOTAL O&M EXPENSES $2,264,959 $2,342,571 $2,423,587 $2,508,212 $2,596,664 $2,689,180 27 28 NET REVENUE [Line 21 – Line 26] $1,106,137 $1,141,449 $1,193,430 $1,246,972 $1,302,052 $1,358,639 29 30 DEBT SERVICE
6 The increase in rate revenues resulting from each year’s revenue adjustment is calculated individually in Lines 9-13. This is necessary to account for revenue increases resulting from prior year revenue adjustments. However, revenue adjustments equal zero dollars under the status quo, which assumes no revenue adjustments (i.e. rate increases) over the study period.
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 29 Line Description FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 31 Existing Debt Service $310,159 $310,159 $310,159 $310,159 $310,160 $310,160 32 Proposed Debt Service $0 $0 $0 $0 $0 $0
33 TOTAL DEBT SERVICE $310,159 $310,159 $310,159 $310,159 $310,160 $310,160 34 35 NET OPERATING CASH FLOW [Line 28 – Line 33] $795,978 $831,289 $883,270 $936,812 $991,893 $1,048,479 36 37 CAPITAL EXPENDITURES
38 Cash-Funded $839,843 $869,238 $899,661 $931,149 $963,739 $997,470 39 TOTAL CAPITAL EXPENDITURES $839,843 $869,238 $899,661 $931,149 $963,739 $997,470 40 41 UNRESTRICTED CASH BALANCE
42 Combined 502 and 582 Beginning Balance7
$1,505,754 $1,461,889 $1,434,563 $1,428,750 $1,445,109 $1,484,248 43 Net Cash Change [Line 35 – Line 39] -$43,865 -$37,948 -$16,391 $5,663 $28,153 $51,009 44 Combined 502 and 582 ENDING BALANCE $1,461,889 $1,434,563 $1,428,750 $1,445,109 $1,484,248 $1,546,704 45 46 Operating Reserve Target $220,224 $227,765 $235,640 $243,867 $252,469 $261,468 47 48 DEBT COVERAGE
49 Projected Debt Coverage [Line 49 ÷ Line 54] 3.77 3.68 3.85 4.02 4.20 4.38 50 Required Debt Coverage 1.20 1.20 1.20 1.20 1.20 1.20
7 Beginning FY 2025 unrestricted cash balance of $891,681 for Fund 502 and $614,073 for Fund 582 was provided by District staff. All other beginning and ending balances shown are projections by Raftelis.
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 30 Figure 5-3 shows the debt coverage under the proposed financial plan. The required debt coverage ratio of
1.20 is denoted by the dark blue line, with projected debt coverage represented by the light blue line. The City is projected to exceed its required debt coverage requirement in all years of the study period.
Figure 5-3: Proposed Financial Plan –Debt Coverage
Figure 5-4 shows the proposed annual funding for the CIP. The grant-funded water reservoir project expenditures are shown in the yellow stacked bars. The rest of the CIP is planned to be funded through rate revenues and reserves, shown in the light blue stacked bars.
Figure 5-4: Proposed CIP Financing Plan
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 31 Figure 5-5 shows the City’s projected ending balances under the proposed financial plan. The light blue bars represent the Fund 502 ending balance, the green bars represent the Fund 582 ending balance, and the yellow bars represent the combined ending balance. The City is projected to maintain steady reserves through FY 2030. The proposed plan is advantageous in several ways including: reducing risk relative to the present day; providing flexibility in future CIP financing or cash-funding; and providing a sufficient revenue base to support any potential increases to the CIP in the next rate cycle (FY 2031-2035) given continued inflation and the amount of aging equipment projected to exceed its expected service life.
Figure 5-5: Proposed Financial Plan – Projected Ending Balances Figure 5-6 shows the proposed versus the status quo financial plan. Revenues under the proposed financial plan and the status quo financial plan are represented by the dashed and solid dark blue lines, respectively.
Revenue requirements, including O&M expenses, debt service, cash-funded CIP, and reserve funding, are represented by the various stacked bars. Although current rates result in adequate recovery of O&M expenses and debt service payments, revenue adjustments are required to generate sufficient revenue to cover cashfunded CIP and maintain reserves.
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 32 Figure 5-6: Proposed vs. Status Quo Financial Plan
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 33 6. Water Cost of Service Analysis
Section 6 details the COS analysis performed for the City for FY 2026. The COS analysis fairly allocates the overall rate revenue requirement to customer classes based on their proportion of use and burden on the City’s water systems. The COS provides the basis for the development of proposed FY 2026 water rates.
6.1. Methodology
The first step in the COS analysis is to determine the revenue required from rates. The total revenue requirement is determined by the financial plan and the proposed revenue adjustments in Section 5The framework and methodology utilized to develop the COS analysis and apportion the revenue requirement to each customer class and tier are informed by the processes outlined in the AWWA Manual M1.
COS analyses are tailored specifically to meet the unique needs of each water system. However, there are four distinct steps in every COS analysis to recover costs from customers in an accurate, equitable, and costjustified manner:
1. Cost functionalization: O&M expenses and capital assets are categorized by their function in the system.
Sample functions may include wells, treatment, distribution, meters, customer service, etc.
2. Cost causation component allocation: Functionalized costs are then allocated to cost causation components based on their burden on the system. The cost causation components include volume, meters, customers, etc. The revenue requirement is allocated to the cost causation components, resulting in the total revenue requirement for each cost causation component.
3. Unit cost development: The revenue requirement for each cost causation component is divided by the appropriate units of service to determine the unit cost for each cost causation component.
4. Revenue requirement distribution: The unit cost is utilized to distribute the revenue requirement for each cost causation component to customer classes based on each customer class’s individual service units and cost responsibility.
This method of functionalizing costs is consistent with the AWWA Manual M1 and is used in the water industry to perform COS analyses and align with Proposition 218's requirements.
6.2. Revenue Requirement
Table 6-1 shows the rate revenue requirement for FY 2026 (also referred to as the test year or rate-setting year). The revenue requirement is divided into operating and capital categories (Columns C and D), which are later allocated based on O&M expenses and capital assets, respectively. The revenue requirements (Lines 2-4) are equal to FY 2026 expenses. The revenue offsets (Lines 8-10) include Fund 582 revenue, interest earnings, and miscellaneous revenues that are applied as offsets to the final rate revenue requirement. The cash adjustment (Line 14) is equal to the FY 2026 positive net cash change to reserves less the operating expenses for Fund 582. The adjustment to annualize the rate increase (Line 15) represents the revenue that would have been collected if the rates were implemented for all 12 months of the fiscal year. All values are from the proposed financial plan pro forma (Table 5-10). The final rate revenue requirement (Line 18) is calculated as follows:
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 34 Total revenue required from rates (Line 18) = Revenue requirements (Line 5) - Revenue offsets (Line 11) - Adjustments (Line 16)
Table 6-1: FY 2026 Revenue Required from Water Rates
[A] [B] [C] [D] [E]
Line Description Operating Capital Total
1 Revenue Requirements
2 O&M Expenses $2,277,652 $2,277,652
3 Debt Service $310,159 $310,159
4 Cash Funded CIP $869,238 $869,238
5 Total Revenue Requirements $2,587,811 $869,238 $3,457,049 6 7 Less Revenue Offsets
8 Fund 582 Revenue $285,685 $285,685
9 Miscellaneous Revenue $85,679 $85,679
10 Interest Income $7,824 $7,824
11 Total Revenue Offsets $93,502 $285,685 $379,187
12 13 Less Adjustments
14 Cash from (to) Reserves -$26,971 -$26,971
15 Adjustment to Annualize Rate Increase -$23,705 -$23,705 16 Total Adjustments -$50,676 $0 -$50,676
17 18 Total Revenue Required from Rates $2,544,984 $583,553 $3,128,538
6.3. System Peaking Factors
A significant portion of the costs of the water system is based on the peaking characteristics of its customers.
Different facilities of a water system are designed to meet different extra-capacity (i.e., peaking) requirements.
The Max Day demand is the maximum amount of water required in a single day over a full year. For example, storage and treatment components of the water system are designed for system Max Day requirements.
Table 6-2 shows the system-wide peaking factors provided by City staff for the most recent year, FY 2024, which are used to derive the cost component allocation bases for Base Delivery (i.e., Average Day Demand (ADD), Max Day, and Max Hour costs. Base Delivery use is considered ADD over one year, which is normalized to a factor of 1.00 (Column C, Line 1). The Max Day peaking factor (Column C, Line 2) indicates that the Max Day demand is 1.42 times greater than the average daily demand. The allocation bases (Columns D to E) are calculated using the equations outlined below. Columns are represented in these equations as letters, and rows are represented as numbers. For example, Column D, Line 2 is shown as D2.
The Max Day allocations are calculated as follows:
» Base Delivery: C1 / C2 x 100% = D2
» Max Day: (C2 - C1) / C2 x 100% = E2
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 35 Table 6-2: Water System Peaking Factor Allocations
[A] [B] [C] [D] [E] [F]
Line Description Factor Base Max Day Total
1 Base 1.00 100.0% 0.0% 100.0%
2 Max Day 1.42 70.4% 29.6% 100.0%
6.4. Functionalization and Allocation of Expenses
After determining the revenue requirement and systemwide peaking allocation basis, the next step of the COS analysis is to allocate O&M expenses and capital assets to the following functional categories:
» Wells: costs of well maintenance, operations, and groundwater production » Treatment: costs associated with the City’s water treatment system » Distribution: costs related to the City’s water distribution system » Meters: costs of meter servicing, maintenance, and repair » Customer Service: costs of meter reading, billing, and other customer service-related activities » General: costs for general administration and operational expenses, or any other costs that do not clearly relate to a specific functional category
The functionalization of costs allows for the allocation of costs to cost causation components. Some cost causation components correspond directly to a functional category listed above. Other cost components do not directly correspond with one functional category but are spread among several. The cost causation components include:
» Volume: costs associated with providing water (supply, treatment, and distribution) » Meters: directly associated with the Meters functional category » Customer: directly associated with the Customer functional category Most functional categories are allocated entirely to the corresponding cost causation component. The only allocation basis for functional categories not allocated entirely to a single cost causation component is Distribution, which is allocated to Volume and Meter based on Base and Max Day, respectively.
6.5. O&M Expense Allocation
The next step of the COS analysis is to develop an allocation basis for the operating revenue requirement based on the functionalization of the City’s O&M expenses. Table 6-3 shows the City’s FY 2026 O&M expenses (from Error! Reference source not found.). Each line item is allocated to the most appropriate functional category.
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 36 Table 6-3: Functionalization of Water O&M by Cost Center Operating Expenses FY 2026 Wells Treatment Distribution Meter Customer Service General
Fund: 502 - Water
Salaries $609,356 13.00% 25.00% 30.00% 20.00% 2.00% 10.00% Overtime $62,710 13.00% 25.00% 30.00% 20.00% 2.00% 10.00% Fica Soc Sec/M-Care Ins $52,765 13.00% 25.00% 30.00% 20.00% 2.00% 10.00% Unemployment $2,190 13.00% 25.00% 30.00% 20.00% 2.00% 10.00% Group Insurance $83,443 13.00% 25.00% 30.00% 20.00% 2.00% 10.00% Workers' Compensation $19,839 13.00% 25.00% 30.00% 20.00% 2.00% 10.00% Pers/Retirement Contrib. $50,014 13.00% 25.00% 30.00% 20.00% 2.00% 10.00% Pers-Unfunded Liability $54,429 13.00% 25.00% 30.00% 20.00% 2.00% 10.00% Lwr Col Multi-Sp Cons Pro $5,151 13.00% 25.00% 30.00% 20.00% 2.00% 10.00% Engineering Services $735 13.00% 25.00% 30.00% 20.00% 2.00% 10.00% Medical Exams $242 13.00% 25.00% 30.00% 20.00% 2.00% 10.00% Educational Training $3,905 13.00% 25.00% 30.00% 20.00% 2.00% 10.00% Audit Fees $14,117 13.00% 25.00% 30.00% 20.00% 2.00% 10.00% Legal Fees-Water $81,284 13.00% 25.00% 30.00% 20.00% 2.00% 10.00% Other Professional Svs. $22,720 13.00% 25.00% 30.00% 20.00% 2.00% 10.00% Electric Utilities $90,302 50.00% 50.00%
Water Utilities $108 35.00% 65.00%
Vehicle Maint/Repair $3,477 10.00% 80.00% 10.00%
Equipment Maint/Repair $463 10.00% 15.00% 75.00%
Meter Maint/Repair $7,398 100.00%
Wells Maint/Repair $1,500 100.00%
Tools & Equipm
Maint/Repl $9,120 100.00%
Valves-Maint/Repair $15,148 100.00%
Streets-Asphalt Materials $6,307 100.00%
Liability Insurance $14,674 100.00%
Blanket Bond Insurance $184 100.00%
Property Insurance $27,876 100.00%
Telephone/Cell $11,765 20.00% 80.00%
Postage $193 100.00%
Advertising $534 100.00%
Economic Dev. Consulting $12,132 100.00%
Public Education $5,957 100.00%
Travel Per Diem $1,722 100.00%
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 37 Operating Expenses FY 2026 Wells Treatment Distribution Meter Customer Service General
Dues And Membership $3,211 100.00%
Licensing $496 100.00%
Utility Business Office $143,209 100.00%
Central Purchasing Adm $67,117 100.00%
Mgmt Info Sys/O & M $33,317 100.00%
Fleet Maintenance $46,804 100.00%
Vehicle Replacement Fund $44,991 100.00%
Finance Dept. Services $480 100.00%
Lab Testing $11,811 100.00%
Encroachment Permits $19,689 100.00%
Lab Supplies $735 100.00%
Back Flow Prevention $382 100.00%
Boots $1,908 100.00%
Chlorine/Chemical Supplie $46,872 100.00%
Purchased Inventory $60,878 25.00% 25.00% 25.00% 25.00% Office Supplies $680 100.00%
Computer/Printer Supplies $5 20.00% 80.00%
Uniforms $4,425 100.00%
Safety Equipment $3,691 100.00%
Vehicle Fuel $25,176 100.00%
Regulatory Fees $16,584 100.00%
Employee Meals $27 100.00%
Fair Share Allocations $154,429 100.00%
Vac/Sl/Comp Accrual $10,110 100.00%
Purchased Inventory $14,757 100.00%
Bad Debts Expense $16,331 100.00%
Trf-Asset Replacement $277,777 25.00% 25.00% 25.00% 25.00% Total $2,277,652 $269,885 $409,914 $599,812 $304,989 $130,730 $562,321 Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 1 Table 6-4 shows a summary of FY 2026 expenses by functional category based on the allocation of cost centers to functional categories (from Table 6-3). This intermediate step is necessary to allocate total O&M to the appropriate cost causation components.
Table 6-4: Summary of Water O&M Expenses by Functional Category [A] [B] [C]
Line Functional Category FY 2026 Expenses
1 Wells $269,885
2 Treatment $409,914
3 Distribution $599,812
4 Meter $304,989
5 Customer Service $130,730
6 General $562,321
7 Total O&M Expenses $2,277,652
Table 6-5 shows the allocation of FY 2026 O&M expenses by functional category to each cost causation component. The percentage allocation of each functional category (Columns C-E) to the various cost causation components was determined in Table 6-3. The total dollar amount allocated to each cost causation component (Line 7) is determined by multiplying the total expense associated with each functional category by the corresponding percentage allocation and then summing across all functional categories.
For example, 100 percent (Column C, Line 1) of Well costs (Column P, Line 1) are allocated to the Volume cost causation factor total (Column C, Line 17). The same calculation is performed for the remaining functional categories (i.e. Column C × Column F in Lines 2-16). The subtotals of Column C × Column F in Lines 1-6 are summed to determine the total dollar amount allocated to the Volume cost causation factor (Column C, Line 7). The same calculations are repeated for the remaining cost causation components (Columns D-E) to determine the allocation of O&M expenses to each cost causation component (Line 17).
The final O&M Allocation percentages (Line 9) represent the proportion of total O&M expenses allocated to each cost causation component (Line 7). These O&M allocation percentages are used to allocate the total operating revenue requirement. The total operating revenue requirement (Column F, Line 11) equals the operating revenue requirement (from Table 6-1, Column C, Line 5) less operating adjustments (from Table 6-1, Column C, Line 14). This total is allocated to each cost causation component (Columns C-E, Line 11) based on the final O&M allocation percentages (Columns C-E, Line 9). Note that the total operating revenue requirement (Line 11) simply equals total O&M (Line 7). This is because the total operating revenue requirement consists solely of O&M expenses.
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 2 Table 6-5: Allocation of Water O&M Expenses to the Cost Causation Components [A] [B] [C] [D] [E] [F]
Line Functional Category Volume Meter Customer FY 2026
Expense
1 Wells 100.00% $269,885
2 Treatment 100.00% $409,914
3 Distribution 29.58% 70.42% $599,812
4 Meter 100.00% $304,989
5 Customer Service 100.00% $130,730
6 General 49.97% 42.41% 7.62% $562,321
7 Total O&M $1,138,219 $965,847 $173,586 $2,277,652
8 9 O&M Allocation 49.97% 42.41% 7.62% 100.0%
10 11 Operating Revenue Requirement $1,318,541 $1,118,860 $201,086 $2,638,487
6.6. Capital Allocation
Capital assets are utilized in COS analyses to allocate the proportion of capital revenue requirement to the various cost causation components. The distribution of a short-term CIP can be heavily weighted to specific cost causation components based on the type of projects. Using short-term planned CIP to allocate capital costs may cause rates to fluctuate and cause customer confusion. Conversely, the overall capital asset base is considerably more stable in the long-term, and therefore is more representative of long-term capital reinvestment in a water system. Thus, functionalized capital assets are used to allocate capital costs.
City staff provided Raftelis with a detailed asset listing that included the original cost of each individual asset.
Raftelis calculated the estimated replacement cost of each asset based on original cost and acquisition year using the Engineering News-Record’s 20-City Average Cost Construction Index (CCI) to account for capital cost escalation. This financial reporting methodology does not reflect the true current replacement cost. This approach is to illustrate the asset base in present value terms, however, it does not represent an appraisal of the water system. Rather, the estimates are used to apportion capital costs across water system components in relation to the relative share of each. As part of the capital asset analysis, Raftelis assigned each individual asset to the most appropriate functional category. Total asset value, in estimated replacement cost dollars less depreciation, by functional category is shown in Table 6-6.
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 3 Table 6-6: Summary of Water Capital Assets by Functional Category [A] [B] [C]
Line Functional Category
Asset Value
(Replacement Cost less
Depreciation)
1 Wells $2,013,274
2 Treatment $486,649
3 Distribution $6,269,146
4 Meter $1,207,976
5 Customer Service $0
6 General $12,604
10 Total Asset Value8$9,989,650
Table 6-7 shows the allocation of capital assets by functional category to each cost causation component. The percentage allocation of each functional category (Columns C-E) to the various cost causation components was determined in Table 6-3. Total asset value associated with each functional category (Column F) was determined in Table 6-6. The Capital Revenue Requirement in Column F, Line 11 was determined in Table 6-1, Column D, Line 17 and is multiplied by the percent capital allocations in Line 9 to calculate the revenue requirement for each cost causation component in Columns C to E, Line 11.
Table 6-7: Allocation of Functionalized Water Capital Assets to Cost Causation Components [A] [B] [C] [D] [E] [F]
Line Functional Category Volume Meters Customer Asset Value 1 Wells 100.00% $2,013,274
2 Treatment 100.00% $486,649
3 Distribution 29.58% 70.42% $6,269,146
4 Meter 100.00% $1,207,976
5 Customer Service 100.00% $0
6 General 43.64% 56.36% 0.00% $12,604
7 Total Assets $4,359,679 $5,629,971 $0 $9,989,650
8 9 Capital Allocation 43.64% 56.36% 0.00% 100.00%
10 11 Capital Revenue Requirement $379,352 $489,885 $0 $869,238
6.7. Revenue Requirement Adjustment Allocation
Revenue offsets (from Table 6-1, Column E, Lines 8 and 9) are allocated to each cost causation factor based on either the Capital allocation or the Operating allocation. Fund 582 revenues are allocated based on the Capital allocation since those revenues contribute to funding capital expenditures. Miscellaneous revenues and interest income are allocated based the Operating allocation. The total adjustment allocations are shown in Table 6-8.
8 Total asset value in this study is based on escalating the original cost by historical construction cost inflation and is therefore an estimate of replacement cost. It does not represent an appraisal of system infrastructure or relate to the book value of the system documented in financial reports of the District.
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 4 Table 6-8: Water Adjustment Allocation
[A] [B] [C] [D] [E] [F]
Line Functional Category Volume Meters Customer Adjustment Value
1 Fund 582 Revenue 43.64% 56.36% 0.00% -$285,685
2 Miscellaneous Revenue 49.97% 42.41% 7.62% -$85,679
3 Interest Income 49.97% 42.41% 7.62% -$7,824
4 Total Adjustments -$171,405 -$200,656 -$7,126 -$379,187
6.8. Cost of Service Allocation
Table 6-9 shows the allocation of the total FY 2026 rate revenue requirement to the various cost causation components. The results shown in Table 6-9 are calculated as follows based on intermediate results developed in the preceding subsections:
1. Operating Revenue Requirement (Column C): The total operating revenue requirement consists of the City’s O&M expenses and debt service payments. The allocation of the total operating revenue requirement to each cost causation component was previously determined in Table 6-5, Columns C-E, Line 11.
2. Capital Revenue Requirement (Column D): The total capital revenue requirement consists solely of CIP expenditures. The allocation of the total capital revenue requirement to each cost causation component was previously determined in Table 6-7, Columns C-E, Line 11.
3. Revenue Offsets (Column E): Total revenue offsets (from Table 6-1, Column E, Line 10) are allocated to each cost causation factor based on the values in Table 6-8, Column C-E, Line 3.
Table 6-9: Water Cost of Service Allocation
[A] [B] [C] [D] [E] [F]
Line Revenue
Requirement Volume Meters Customer FY 2026 Total
1 Operating $1,318,541 $1,118,860 $201,086 $2,638,487
2 Capital $379,352 $489,885 $0 $869,238
3 Revenue Offsets -$171,405 -$200,656 -$7,126 -$379,187 4 Total $1,526,488 $1,408,089 $193,960 $3,128,538
6.9. Unit Cost Development
Units of service are used to convert total adjusted costs allocated to each cost causation component (from Table 6-9) into unit costs, which are directly incorporated into the proposed rate calculations for FY 2026 in Section 7. Units of service relating to water use were previously determined (see Table 4-7). However, additional units of service must be determined to develop the customer and meters unit costs.
6.9.1. Additional Units of Service
Table 6-10 shows the development of additional units of service needed to develop unit costs for Customer and Meters cost causation components. Customer unit costs are calculated on a per account basis, as these Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 5 costs do not vary based on connection type or size. Total accounts are approximated by summing total water meters in Column C, Lines 1-9 (from Table 4-5).
Meter unit costs are calculated per equivalent meter unit. Equivalent meter units are used to allocate meterrelated costs appropriately and equitably. Larger meters generally impose larger demands, are more expensive to install, maintain, and replace than smaller meters, and require greater capacity within the water system.
Equivalent meter units in this study are based on AWWA-rated hydraulic capacities and are calculated to represent the potential demand of a connection on the water system relative to a base meter size.
Capacity ratios are calculated by dividing larger meter capacities by the base meter capacity. The base meter in this study is a 3/4-inch meter, which is used to approximate the capacity of 5/8-inch and 3/4-inch meters.
AWWA capacity ratios (Column E) are calculated by dividing the capacity of each meter size (Column D) by the capacity of a 3/4-inch meter (Column D, Line 1). The projected number of meters (Column C) is multiplied by the AWWA capacity ratios (Column E) to determine equivalent meter units (Column F).
Table 6-10: Water Monthly Service Charge Units of Service [A] [B] [C] [D] [E] [F]
Line Water Meter Size Number of
Meters
AWWA
Capacity
(gpm)
AWWA
Capacity
Ratio
Equivalent
Meter Units
1 5/8" & 3/4" 1,671 30 1.0 1,671
2 1" 113 50 1.7 188
3 1 1/2" 40 100 3.3 133
4 2" 104 160 5.3 555
5 3" 0 320 10.7 0
6 4" 10 500 16.7 167
7 6" 4 1,000 33.3 133
8 8" 1 1,600 53.3 53
9 10" 0 4,200 140.0 0
10 Total 1,943 2,901
6.9.2. Unit Costs
Unit costs comprise the constituent parts from which proposed FY 2026 rates are calculated in Section 7.
Table 6-11 shows unit costs for each cost causation component (Column F), which are calculated by dividing the final COS allocation in Column C (Table 6-9, Line 4) by the relevant annual units of service (Line 2). The units of service vary by cost component and are based on either projected FY 2026 water use (from Table 4-7) or the number of accounts or equivalent meter units (from Table 6-10) multiplied by the number of bills per year (12).
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 6 Table 6-11: Development of Water Unit Costs
[A] [B] [C] [D] [E] [F]
Line Unit Cost Calculation FY 2026 Total Volume Meters Customer 1 Revenue Requirement $3,128,538 $1,526,488 $1,408,089 $193,960 2 Units of Service 453,034 34,808 23,316
3 Unit Cost $3.37 $40.45 $8.32
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 7 7. Proposed Water Rates
Section 7 details the proposed water rate calculations. Proposed FY 2026 rates are calculated directly from the results of the COS analysis (from Section 6). All proposed rates beginning in FY 2027 are calculated by increasing the prior year rate by the annual revenue adjustment (from Table 5-9).
7.1. Proposed FY 2026 Monthly Service Charges
Monthly Service Charges are designed to recover the portion of the revenue requirement allocated to the Customer and Meters cost causation components. Table 7-1 shows the detailed calculation of proposed FY 2026 Monthly Service Charges based on Customer, Meters, and Fire Protection unit rates. Customer costs do not vary by connection type or size. Therefore, the Customer unit rate (from Table 6-11, Column F, Line 3) is applied uniformly to all Monthly Service Charges (Column E). Because Meters costs vary by meter size based on hydraulic capacity, AWWA capacity ratios in Column C (from Table 6-10, Columns E) are used to differentiate the Meters unit rates by meter size. The Meters rate components (Column F) are calculated by multiplying the Meters unit rate (from Table 6-11, Column E, Lines 3) by the AWWA capacity ratio (Column C).
Table 7-1: Proposed FY 2026 Water Monthly Service Charge Calculation [A] [B] [C] [D] [E] [F] [G] [H] [I]
Line Water Meter
Size
AWWA
Capacity
Ratio
Meter Customer Proposed Current Difference
($)
Difference
(%)
1 5/8" & 3/4" 1.0 $40.45 $8.32 $48.78 $48.86 -$0.08 -0.2% 2 1" 1.7 $67.42 $8.32 $75.75 $79.10 -$3.35 -4.2%
3 1 1/2" 3.3 $134.84 $8.32 $143.17 $177.30 -$34.13 -19.2% 4 2" 5.3 $215.75 $8.32 $224.07 $225.36 -$1.29 -0.6%
5 3" 10.7 $431.50 $8.32 $439.82 $611.58 -$171.76 -28.1% 6 4" 16.7 $674.22 $8.32 $682.54 $801.89 -$119.35 -14.9% 7 6" 33.3 $1,348.43 $8.32 $1,356.76 $1,437.60 -$80.84 -5.6% 8 8" 53.3 $2,157.50 $8.32 $2,165.82 $2,259.31 -$93.49 -4.1% 9 10" 140.0 $5,663.43 $8.32 $5,671.75 $1,977.70 $3,694.05 186.8%
7.2. Proposed FY 2026 Commodity Rate
Commodity Charges are designed to recover the portion of the rate revenue requirement allocated to the Volume cost causation components. The City will maintain the same flat rate structure for all customers.
Because the commodity rate is uniformly charged to all customers, the proposed FY 2026 volumetric rate is equal to the unit rate (Table 6-11, Column D, Line 3).
Table 7-2 shows the difference between proposed FY 2026 Commodity Charges and current FY 2025 Commodity Charges (from Error! Reference source not found.). Distributional impacts to the various customer classes are a result of the cost of service analysis including changes to cost structure, water use patterns relative to the prior rate study, and due to refinements in methodology to ensure fair and objective cost recovery.
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 8 Table 7-2: Proposed FY 2026 Water Commodity Rate
[A] [B] [C] [D] [E] [F]
Line Customer Class
Proposed
Rate
($/hcf)
Current Rate
($/hcf)
Difference ($) Difference
(%)
1 All Classes $3.37 $3.07 $0.30 10%
7.3. Proposed Five-Year Rate Schedule
Table 7-3 shows the proposed five-year schedule of water rates through FY 2030. Proposed FY 2026 Monthly Service Charges (see Table 7-1) and Commodity Charges (see Table 7-2) were calculated in the preceding subsections. All proposed rates beginning in FY 2027 are calculated by increasing the prior year’s proposed rate by the proposed annual revenue adjustment (from Table 5-9). For example, the proposed FY 2027 5/8” & 3/4” Monthly Service Charge ($64.30) is calculated by increasing the proposed FY 2026 5/8” & 3/4” Monthly Service Charge ($62.64) by 3.0 percent. All proposed rates are rounded up to the nearest cent to ensure full cost recovery. Current FY 2025 water rates (from Table 4-1) are also shown.
Table 7-3: Proposed Five-Year Water Rate Schedule
Description FY 2025
(Current)
FY 2026
(7/1/2025)
FY 2027
(7/1/2026)
FY 2028
(7/1/2027)
FY 2029
(7/1/2028)
FY 2030
(7/1/2029)
Proposed Revenue Adjustment 3.0% 3.0% 3.0% 3.0% 3.0%
Monthly Service Charges
5/8" & 3/4" $48.86 $48.78 $50.25 $51.76 $53.32 $54.92
1" $79.10 $75.75 $78.03 $80.38 $82.80 $85.29
1 1/2" $177.30 $143.17 $147.47 $151.90 $156.46 $161.16
2" $225.36 $224.07 $230.80 $237.73 $244.87 $252.22
3" $611.58 $439.82 $453.02 $466.62 $480.62 $495.04
4" $801.89 $682.54 $703.02 $724.12 $745.85 $768.23
6" $1,437.60 $1,356.76 $1,397.47 $1,439.40 $1,482.59 $1,527.07 8" $2,259.31 $2,165.82 $2,230.80 $2,297.73 $2,366.67 $2,437.68 10" $1,977.70 $5,671.75 $5,841.91 $6,017.17 $6,197.69 $6,383.63 Commodity Charges (per hcf)
All Customers $3.07 $3.37 $3.48 $3.59 $3.70 $3.82
Table 7-4 shows projected rate revenues by charge and customer class over the next five years. Revenues beyond FY 2026 are calculated based on estimated units of service consistent with the growth assumptions outlined in Section 4. Note that total rate revenues slightly exceed projected rate revenues under the proposed financial plan in Section 5 due to rounding up of rates to the nearest whole penny.
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 9 Table 7-4: Projected Water Rate Revenue
Description FY 2025 FY 2026 Difference (%)
Monthly Service Charges
5/8" & 3/4" $979,741 $978,137 -0.2%
1" $107,260 $102,717 -4.2%
1 1/2" $85,104 $68,722 -19.2%
2" $281,249 $279,639 -0.6%
3" $0 $0 0.0%
4" $96,227 $81,905 -14.9%
6" $69,005 $65,124 -5.6%
8" $27,112 $25,990 -4.1%
10" $0 $0 0.0%
Commodity Charges (per hcf)
All Customers $1,390,814 $1,526,725 9.8%
Total $3,036,511 $3,128,958 3.0%
7.4. Monthly Bill Impacts
Table 7-5 shows sample monthly bills for customers with a 5/8-inch or 3/4-inch water meter at varying levels of water use. Note that approximately 86 percent of customers have either a 5/8-inch or 3/4-inch water meter. The three water use levels represent low, average, and high water users in the system.
Table 7-5: Water Bill Impacts
Bill Impacts, 5/8" & 3/4" Meter Low Average High
Monthly Usage (hcf) 10 15 25
Current Bill $79.56 $94.91 $125.61
Proposed Bill $82.48 $99.33 $133.03
Difference ($) $2.92 $4.42 $7.42
Difference (%) 3.7% 4.7% 5.9%
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 10 8. Wastewater Financial Plan
Section 8 details the development of a proposed wastewater five-year financial plan for the City over the study period. The following subsections include estimates and projections of annual revenues, O&M expenses, debt service payments, capital expenditures, and reserve funding through FY 2030. The overall purpose of the financial plan is to determine annual revenues required to achieve sufficient cash flow, maintain adequate reserves, and meet debt coverage requirements.
8.1. Revenues from Current Rates
The City’s wastewater revenues consist of rate revenues, interest earnings on cash reserves, and other miscellaneous revenues. The rate revenue projections shown assume that current FY 2025 rates are effective throughout the study period; and therefore, represent estimated revenues in the absence of any revenue adjustments (i.e., rate increases). This status quo scenario provides a baseline from which Raftelis evaluates the need for revenue adjustments.
8.1.1. Calculated Wastewater Rate Revenues
Raftelis projected wastewater rate revenues from Monthly Service Charges FY 2025 through FY 2030 based on current FY 2025 rates and the current and projected number of equivalent dwelling units (EDUs).
Table 8-1 shows projected Monthly Service Charge revenues under current rates over the study period.
Monthly Service Charge Revenues are calculated in each year as follows based on current FY 2025 wastewater rates (from Table 4-2) and the projected number of wastewater EDUs (from Table 4-6):
Annual Monthly Service Charge Revenue = [ FY 2025 monthly rate] × [Number of EDUs] × [12 Bills per year] Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 11 Table 8-1: Projected Monthly Service Charge Revenues under Current Rates Meter Size Projected
FY 2025
Projected
FY 2026
Projected
FY 2027
Projected
FY 2028
Projected
FY 2029
Projected
FY 2030
Residential $885,611 $901,832 $912,614 $923,395 $934,177 $944,958 Hotel $257,621 $261,925 $264,461 $267,632 $270,803 $273,974 Hospitals $12,598 $12,684 $12,684 $12,684 $12,684 $12,684 Multi-Family $379,188 $386,228 $390,667 $395,107 $399,546 $403,985 Garden & Nurseries $630 $634 $634 $634 $634 $634
Laundromats $0 $0 $0 $0 $0 $0
Schools $132,905 $135,085 $136,353 $137,621 $138,890 $140,158 General Commercial $106,450 $108,448 $109,717 $110,985 $112,253 $113,522 Beauty Salon & Barber Shop $630 $634 $634 $634 $634 $634 Needles Marina $69,917 $71,030 $71,665 $72,299 $72,933 $73,567 Religious Organizations $17,637 $17,758 $17,758 $17,758 $17,758 $17,758 Seventh Day Adventist $1,890 $1,903 $1,903 $1,903 $1,903 $1,903 Food Establishments $84,404 $85,617 $86,251 $86,885 $87,520 $88,154 Government $129,125 $131,279 $132,548 $133,816 $135,085 $136,353 Gas Stations $64,878 $65,957 $66,591 $67,225 $67,859 $68,494 Shell/Dairy Queen $23,935 $24,100 $24,100 $24,100 $24,100 $24,100 Native Village $69,917 $71,030 $71,665 $72,299 $72,933 $73,567 Total $2,237,334 $2,276,144 $2,300,243 $2,324,977 $2,349,711 $2,374,445
8.1.2. Other Revenues
Table 8-2 shows all other revenues. All FY 2024 other revenues are based on the City’s FY 2024 budget.
Other revenues from FY 2025 through FY 2030 were projected by Raftelis relying on the assumptions detailed in Section 4. Beginning in FY 2026, interest revenue is estimated based on projected cash balances and the assumed interest rate (from Table 4-4). All other revenues are estimated by the miscellaneous inflation rate (from Table 4-3).
Table 8-2: Projected Other Revenues
Description Budgeted
FY 2024
Projected
FY 2025
Projected
FY 2026
Projected
FY 2027
Projected
FY 2028
Projected
FY 2029
Projected
FY 2030
Fund 503 - Wastewater
Connect Fee $4,710 $4,710 $4,710 $4,710 $4,710 $4,710 $4,710 Establishment Fee $4,975 $5,075 $5,176 $5,280 $5,385 $5,493 $5,603 Miscellaneous $2,638 $2,691 $2,745 $2,800 $2,856 $2,913 $2,971 Interest Earnings Other $1,949 $0 $2,523 $1,911 $699 $0 $0 Reimburse Wastewater Labor/Mat $1,209,678 $0 $0 $0 $0 $0 $0 Subtotal – Fund 503 $1,223,950 $12,475 $15,154 $14,700 $13,650 $13,115 $13,284 Fund 583 – NPUA Capital
Wastewater
Wastewater Asset Replacement $35,676 $35,676 $35,676 $35,676 $35,676 $35,676 $35,676 Subtotal – Fund 583 $35,676 $35,676 $35,676 $35,676 $35,676 $35,676 $35,676 Total $1,259,626 $48,151 $50,830 $50,376 $49,326 $48,791 $48,960 Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 12 Table 8-3 shows a summary of projected revenues under current rates over the study period. This represents expected revenues in the absence of any rate increase over the study period.
Table 8-3: Summary of Projected Revenues under Current Rates Description FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Monthly Service Charges $2,179,180 $2,237,334 $2,276,144 $2,300,243 $2,324,977 $2,349,711 $2,374,445 Interest Earnings $1,949 $0 $2,523 $1,911 $699 $0 $0
Miscellaneous Revenue $1,257,677 $48,151 $48,307 $48,465 $48,627 $48,791 $48,960 Total $3,438,805 $2,285,485 $2,326,974 $2,350,619 $2,374,303 $2,398,502 $2,423,404
8.2. Operations and Maintenance Expenses
Table 8-4 shows O&M expenses over the study period. All projections shown beyond FY 2024 were calculated based on inflationary assumptions (from Table 4-3) and any anticipated structural changes to the O&M budget due to either non-recurring expenses or future expenses not currently incurred.
Table 8-4: Projected Operating & Maintenance Expenses
Description Budgeted
FY 2024
Projected
FY 2025
Projected
FY 2026
Projected
FY 2027
Projected
FY 2028
Projected
FY 2029
Projected
FY 2030
Fund 503 - Wastewater
Salaries $579,994 $594,493 $609,356 $624,590 $640,204 $656,209 $672,615 Overtime $59,688 $61,180 $62,710 $64,278 $65,885 $67,532 $69,220 Fica Soc Sec/M-Care Ins $43,608 $47,968 $52,765 $58,042 $63,846 $70,230 $77,253 Unemployment $1,913 $2,046 $2,190 $2,343 $2,507 $2,682 $2,870 Group Insurance $68,961 $75,858 $83,443 $91,788 $100,966 $111,063 $122,169 Workers' Compensation $17,328 $18,541 $19,839 $21,228 $22,713 $24,303 $26,005 Pers/Retirement Contrib. $48,547 $49,275 $50,014 $50,764 $51,526 $52,299 $53,083 Pers-Unfunded Liability $52,832 $53,625 $54,429 $55,246 $56,074 $56,915 $57,769 Lwr Col Multi-Sp Cons Pro $4,856 $5,001 $5,151 $5,306 $5,465 $5,629 $5,798 Engineering Services $693 $714 $735 $757 $780 $803 $828 Medical Exams $200 $220 $242 $266 $293 $322 $354
Educational Training $3,681 $3,791 $3,905 $4,022 $4,143 $4,267 $4,395 Audit Fees $13,307 $13,706 $14,117 $14,541 $14,977 $15,426 $15,889 Legal Fees-Ww $76,618 $78,916 $81,284 $83,722 $86,234 $88,821 $91,486 Other Professional Svs. $21,416 $22,058 $22,720 $23,401 $24,103 $24,827 $25,571 Sewer Operation Contract $83,489 $85,994 $88,574 $91,231 $93,968 $96,787 $99,690 Electric Utilities $100 $104 $108 $112 $117 $121 $126
Water Utilities $3,246 $3,376 $3,511 $3,651 $3,797 $3,949 $4,107 Plant Maint/Repair $432 $447 $463 $479 $496 $513 $531
Equipment Maint/Repair $6,906 $7,148 $7,398 $7,657 $7,925 $8,202 $8,489 Security Monitoring $1,400 $1,449 $1,500 $1,552 $1,607 $1,663 $1,721 Tools Maint/Repair $8,514 $8,812 $9,120 $9,440 $9,770 $10,112 $10,466 Usa Alert $14,140 $14,635 $15,148 $15,678 $16,226 $16,794 $17,382 Liability Insurance $5,887 $6,300 $6,741 $7,212 $7,717 $8,257 $8,835 Blanket Bond Insurance $12,817 $13,714 $14,674 $15,701 $16,800 $17,976 $19,235 Property Insurance $161 $172 $184 $197 $211 $226 $242
Telephone/Cell $24,348 $25,078 $25,831 $26,606 $27,404 $28,226 $29,073 Postage $11,090 $11,423 $11,765 $12,118 $12,482 $12,856 $13,242 Advertising $182 $187 $193 $199 $205 $211 $217
Economic Dev. Consulting $503 $518 $534 $550 $566 $583 $601 Travel Per Diem $11,435 $11,778 $12,132 $12,496 $12,871 $13,257 $13,654 Dues And Membership $5,615 $5,784 $5,957 $6,136 $6,320 $6,510 $6,705 Licensing $1,623 $1,672 $1,722 $1,774 $1,827 $1,882 $1,938 Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 13 Description Budgeted
FY 2024
Projected
FY 2025
Projected
FY 2026
Projected
FY 2027
Projected
FY 2028
Projected
FY 2029
Projected
FY 2030
Utility Business Office $3,027 $3,117 $3,211 $3,307 $3,406 $3,509 $3,614 Central Purchasing Adm $467 $481 $496 $511 $526 $542 $558 Mgmt Info Sys/O & M $134,988 $139,038 $143,209 $147,505 $151,930 $156,488 $161,183 Fleet Maintenance $63,264 $65,162 $67,117 $69,130 $71,204 $73,340 $75,541 Finance Dept. Services $31,404 $32,346 $33,317 $34,316 $35,345 $36,406 $37,498 Sludge Disposal $43,692 $45,003 $46,353 $47,743 $49,176 $50,651 $52,171 Lab Testing $42,000 $43,260 $44,558 $45,895 $47,271 $48,690 $50,150 Encroachment Permits $452 $466 $480 $494 $509 $525 $540 Boots $11,133 $11,467 $11,811 $12,165 $12,530 $12,906 $13,293 Chlorine/Chemical-Plant $18,559 $19,301 $20,073 $20,876 $21,711 $22,580 $23,483 Chlorine/Chemical-Lft Stn $693 $721 $750 $780 $811 $843 $877 Purchased Inventory $360 $371 $382 $393 $405 $417 $430
Office Supplies $1,799 $1,853 $1,908 $1,966 $2,025 $2,085 $2,148 Computer/Printer Supplies $43,336 $44,636 $45,975 $47,354 $48,775 $50,238 $51,745 Uniforms $57,383 $59,104 $60,878 $62,704 $64,585 $66,523 $68,518 Safety Equipment $641 $660 $680 $701 $722 $743 $766
New Tools $5 $5 $5 $5 $6 $6 $6
Vehicle Fuel $4,171 $4,338 $4,511 $4,692 $4,880 $5,075 $5,278 Regulatory Fees $3,479 $3,583 $3,691 $3,802 $3,916 $4,033 $4,154 Employee Meals $23,277 $23,975 $24,695 $25,435 $26,198 $26,984 $27,794 Buildings $15,632 $16,101 $16,584 $17,082 $17,594 $18,122 $18,666 Fair Share Allocations $25 $26 $27 $28 $28 $29 $30
Vac/Sl/Comp Accrual $6,212 $6,398 $6,590 $6,788 $6,992 $7,201 $7,417 Purchased Inventory $3,174 $3,269 $3,367 $3,468 $3,572 $3,679 $3,789 Bad Debts Expense $15,832 $15,832 $15,832 $15,832 $15,832 $15,832 $15,832 Transfer - O & M Reimb $1,209,678 $0 $0 $0 $0 $0 $0
Trf-Asset Replacement $35,676 $36,925 $38,217 $39,555 $40,939 $42,372 $43,855 Subtotal – Fund 502 $2,955,889 $1,803,424 $1,863,170 $1,925,608 $1,990,914 $2,059,275 $2,130,897 Fund 582 – NPUA Capital Water
Capital Equipment $16,150 $16,715 $17,300 $17,906 $18,533 $19,181 $19,853 Transfer Expense $145,913 $0 $0 $0 $0 $0 $0
Subtotal – Fund 582 $162,064 $16,715 $17,300 $17,906 $18,533 $19,181 $19,853 Total $3,117,952 $1,820,140 $1,880,470 $1,943,514 $2,009,447 $2,078,456 $2,150,749
8.3. Debt Service
Table 8-5 shows the City’s existing debt service obligations associated with its 2016 Revenue Refunding Bonds. The 2016 Bond is scheduled to be fully repaid in FY 2031.
Table 8-5: Schedule of Debt Service Payments
Debt Service FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 2016 Revenue Refunding Bonds
Principal $347,564 $361,109 $375,183 $389,805 $404,996 $420,779 Interest $102,311 $88,766 $74,693 $60,071 $44,879 $29,095 Total Debt Service $449,875 $449,875 $449,876 $449,875 $449,875 $449,875 Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 14 8.4. Capital Improvement Plan
The City has approximately $1.9 M in wastewater Capital Improvement Plan (CIP) capital project costs from FY 2025 through FY 2030. These projects are shown in detail in Table 8-6 and amount to approximately $280 thousand in average annual costs over the next five years, driven primarily by aging infrastructure. To ensure reserves remain stable and customers are not impacted by large rate adjustments, CIP expenditures are scaled up over the next five years. The first two years are 25 percent of planned expenditures, year three is 50 percent of planned, year four is 75 percent of planned, and year five is back to 100 percent of planned expenditures.
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 15 Table 8-6: Capital Improvement Plan
Project Description Planned
FY 2025
Planned
FY 2026
Planned
FY 2027
Planned
FY 2028
Planned
FY 2029
Planned
FY 2030
Railroad crossing at Bazoobuth lift station $15,455 $15,995 $16,555 $17,135 $17,734 $18,355 Upsize effluent pump $1,818 $1,882 $1,948 $2,016 $2,086 $2,159 Mini excavator & tilt trailer $10,909 $11,291 $11,686 $12,095 $12,518 $12,957 Jet Vac / Trailer $13,636 $14,114 $14,608 $15,119 $15,648 $16,196 Plant grit separator $27,273 $28,227 $29,215 $30,238 $31,296 $32,391 Upsize deficient sewer lines on 15 blocks of Front St. $134,975 $139,699 $144,588 $149,649 $154,887 $160,308 Upsize deficient sewer lines from T St. to Front St. $80,468 $83,284 $86,199 $89,216 $92,339 $95,570 Manhole rehab program (ongoing) $13,636 $14,114 $14,608 $15,119 $15,648 $16,196 Manhole replacement and upsize project $150,993 $156,277 $161,747 $167,408 $173,268 $179,332 Total Planned CIP $449,163 $464,883 $481,154 $497,995 $515,424 $533,464 Percent of planned CIP to spend 25% 25% 50% 75% 100%
Total Proposed CIP Expenses $449,163 $116,221 $120,289 $248,997 $386,568 $533,464 Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 16 Figure 8-1 shows the proposed CIP over the study period. Total CIP expenditures in each year (from Table 8-6) are represented by the blue stacked bars below. The blue bars represent cash-funded CIP.
Figure 8-1: Capital Improvement Plan
8.5. Financial Policies
Agency-specific financial policies must be considered during the financial planning process. Financial policies typically define key financial metrics that an agency strives to meet or exceed.
8.5.1. Required Debt Coverage
The City must meet the minimum coverage requirements on its outstanding debt to ensure it meets the associated debt covenants. The required debt coverage ratio is 1.2, which means the City’s net revenue from operations must amount to at least 1.2 times the annual debt service. Net revenues equal revenues less O&M expenses. Annual debt service includes annual principal and interest payments on all outside debt.
8.5.2. Reserve Targets
Prudent fiscal management requires that the City maintain reserve balances to provide sufficient working capital, maintain necessary cash on hand to award construction contracts, and provide funding during emergencies efficiently. The City’s current reserve policy consists of an operating target balance:
» Operating Reserve target: The target balance for the Operating Reserve is 10% of annual operating costs.
8.6. Status Quo Water Financial Plan
To evaluate the need for revenue adjustments (i.e., rate increases), Raftelis first developed a status quo financial plan. The status quo financial plan assumes that current FY 2025 wastewater rates remain unchanged over the study period. Table 8-7 combines projected revenues (from Table 8-3), O&M expenses (from Table 8-4), debt service (from Table 8-5), CIP expenditures (from Table 8-6), and reserve targets to Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 17 generate estimated cash flow, projected ending cash balance, and debt coverage projections under the status quo.
Under the status quo financial plan, net operating cash flow (revenue less O&M and debt service) is projected to be negative in all years throughout the study period, and total operating and capital reserves fall below zero by FY 2028. The status quo financial plan is thus insufficient to meet the City’s needs. This demonstrates a need for revenue adjustments over the study period to increase rate revenues to achieve full cost recovery of projected expenditures and achieve the City’s financial policies.
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 18 Table 8-7: Status Quo Financial Plan – Pro Forma
Line Description FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 REVENUE
2 Rate Revenue Under Existing Rates $2,237,334 $2,276,144 $2,300,243 $2,324,977 $2,349,711 $2,374,445 3 4 Additional Rate Revenue Required from Revenue Adjustments9 5 Fiscal Year Revenue Adjustment Month Effective
6 FY 2026 0.00% October $0 $0 $0 $0 $0
7 FY 2027 0.00% October $0 $0 $0 $0
8 FY 2028 0.00% October $0 $0 $0
9 FY 2029 0.00% October $0 $0
10 FY 2030 0.00% October $0
11 Total Revenue Adjustments $0 $0 $0 $0 $0 $0
12 13 Revenue Summary (including Revenue Adjustments)
14 Revenue from Rates [Line 2 +Line 11] $2,237,334 $2,276,144 $2,300,243 $2,324,977 $2,349,711 $2,374,445 15 Miscellaneous Revenue $12,475 $12,631 $12,789 $12,951 $13,115 $13,284 16 Interest Earnings $0 $2,523 $1,911 $699 $0 $0
17 Fund: 583 - NPUA Capital Wastewater $35,676 $35,676 $35,676 $35,676 $35,676 $35,676 18 TOTAL REVENUE $2,285,485 $2,326,974 $2,350,619 $2,374,303 $2,398,502 $2,423,404 19 20 O&M EXPENSES
21 Fund 503 $1,803,424 $1,863,170 $1,925,608 $1,990,914 $2,059,275 $2,130,897 22 Fund 583 $16,715 $17,300 $17,906 $18,533 $19,181 $19,853 23 TOTAL O&M EXPENSES $1,820,140 $1,880,470 $1,943,514 $2,009,447 $2,078,456 $2,150,749 24 25 NET REVENUE [Line 18 – Line 23] $465,345 $446,503 $407,105 $364,857 $320,046 $272,655 26 27 DEBT SERVICE
28 Existing Debt Service $449,875 $449,875 $449,876 $449,875 $449,875 $449,875 29 Proposed Debt Service $0 $0 $0 $0 $0 $0
9 The increase in rate revenues resulting from each year’s revenue adjustment is calculated individually in Lines 9-13. This is necessary to account for revenue increases resulting from prior year revenue adjustments. However, revenue adjustments equal zero dollars under the status quo, which assumes no revenue adjustments (i.e. rate increases) over the study period.
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 19 Line Description FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 30 TOTAL DEBT SERVICE $449,875 $449,875 $449,876 $449,875 $449,875 $449,875 31 32 NET OPERATING CASH FLOW [Line 25 – Line 30] $15,470 -$3,371 -$42,771 -$85,019 -$129,829 -$177,219 33 34 CAPITAL EXPENDITURES
35 Cash Funded $449,163 $116,221 $120,289 $248,997 $386,568 $533,464 36 TOTAL CAPITAL EXPENDITURES $449,163 $116,221 $120,289 $248,997 $386,568 $533,464 37 38 UNRESTRICTED CASH BALANCE
39 Combined 503 and 583 Beginning Balance10 $1,057,170 $503,109 $64,858 -$4,464 -$235,962 -$520,505 40 Net Cash Change [Line 35 – Line 39] -$433,692 -$119,592 -$163,059 -$334,016 -$516,397 -$710,684 41 Combined 502 and 582 ENDING BALANCE $503,109 $64,858 -$4,464 -$235,962 -$520,505 -$861,115 42 43 Operating Reserve Target $180,342 $186,317 $192,561 $199,091 $205,928 $213,090 44 45 DEBT COVERAGE
46 Projected Debt Coverage [Line 49 ÷ Line 54] 1.03 0.99 0.90 0.81 0.71 0.61 47 Required Debt Coverage 1.20 1.20 1.20 1.20 1.20 1.20
10 Beginning FY 2025 unrestricted cash balance of $936,801 for Fund 503 and $120,369 for Fund 583 was provided by District staff. All other beginning and ending balances shown are projections by Raftelis.
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 20 Figure 8-2 shows the City’s projected ending balances under the status quo (from Table 8-7Table 5-8). The dark blue line represents the existing reserve target. The blue bars represent the Fund 503 ending balance, the green bars represent the Fund 583 ending balance, and the yellow bars represent the combined ending balance. The City’s combined reserves are projected to fall to zero in FY 2028.
Figure 8-2: Status Quo Financial Plan – Projected Ending Balances
8.7. Proposed Financial Plan
The status quo financial plan demonstrates that the City must increase its revenues from water rates over the study period to adequately fund its operating and capital expenditures and generate sufficient reserve funding.
Raftelis worked closely with City staff to select the proposed annual revenue adjustments shown in Table 8-8.
Revenue adjustments represent annual percent increases in rate revenue relative to the prior year. All CIP over the study period is assumed to be cash funded (i.e., funded by wastewater rates and cash reserves) (Table 8-6).
Table 8-8: Proposed Revenue Adjustments
Description FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Effective Date October 1, 2025 October 1, 2026 October 1, 2027 October 1, 2028 October 1, 2029 Revenue Adjustment 6.0% 6.0% 6.0% 6.0% 6.0%
Table 8-9 shows the proposed financial plan pro forma. This combines projected revenues (from Table 8-3), O&M expenses (from Table 8-4), debt service (from Table 8-5), CIP expenditures (from Table 8-6), and reserve targets to generate estimated cash flow, projected ending cash balances, and debt coverage projections under the proposed financial plan. Revenue adjustments over the study period generate increases in rate revenues. This results in positive net cash flow beginning in FY 2027 and sufficient debt coverage starting in FY 2026.
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 21 Table 8-9: Proposed Financial Plan – Pro Forma
Line Description FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 REVENUE
2 Rate Revenue Under Existing Rates $2,237,334 $2,276,144 $2,300,243 $2,324,977 $2,349,711 $2,374,445 3 4 Additional Rate Revenue Required from Revenue Adjustments11 5 Fiscal Year Revenue Adjustment Month Effective
6 FY 2026 0.00% October $102,426 $138,015 $139,499 $140,983 $142,467 7 FY 2027 0.00% October $109,722 $147,869 $149,442 $151,015 8 FY 2028 0.00% October $117,555 $158,408 $160,076
9 FY 2029 0.00% October $125,934 $169,680
10 FY 2030 0.00% October $134,896
11 Total Revenue Adjustments $0 $102,426 $247,736 $404,923 $574,767 $758,133 12 13 Revenue Summary (including Revenue Adjustments)
14 Revenue from Rates [Line 2 +Line 11] $2,237,334 $2,378,570 $2,547,980 $2,729,900 $2,924,478 $3,132,578 15 Miscellaneous Revenue $12,475 $12,631 $12,789 $12,951 $13,115 $13,284 16 Interest Earnings $0 $3,291 $4,184 $5,154 $6,200 $7,327 17 Fund: 583 - NPUA Capital Wastewater $35,676 $35,676 $35,676 $35,676 $35,676 $35,676 18 TOTAL REVENUE $2,285,485 $2,430,168 $2,600,629 $2,783,680 $2,979,469 $3,188,864 19 20 O&M EXPENSES
21 Fund 503 $1,803,424 $1,863,170 $1,925,608 $1,990,914 $2,059,275 $2,130,897 22 Fund 583 $16,715 $17,300 $17,906 $18,533 $19,181 $19,853 23 TOTAL O&M EXPENSES $1,820,140 $1,880,470 $1,943,514 $2,009,447 $2,078,456 $2,150,749 24 25 NET REVENUE [Line 18 – Line 23] $465,345 $549,698 $657,115 $774,234 $901,013 $1,038,115 26 27 DEBT SERVICE
28 Existing Debt Service $449,875 $449,875 $449,876 $449,875 $449,875 $449,875 29 Proposed Debt Service $0 $0 $0 $0 $0 $0
30 TOTAL DEBT SERVICE $449,875 $449,875 $449,876 $449,875 $449,875 $449,875
11 The increase in rate revenues resulting from each year’s revenue adjustment is calculated individually in Lines 6-10. This is necessary to account for revenue increases resulting from prior year revenue adjustments.
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 22 Line Description FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 31 32 NET OPERATING CASH FLOW [Line 25 – Line 30] $15,470 $99,823 $207,239 $324,358 $451,138 $588,240 33 34 CAPITAL EXPENDITURES
35 Cash Funded $449,163 $116,221 $120,289 $248,997 $386,568 $533,464 36 TOTAL CAPITAL EXPENDITURES $449,163 $116,221 $120,289 $248,997 $386,568 $533,464 37 38 UNRESTRICTED CASH BALANCE
39 Combined 503 and 583 Beginning Balance12 $1,057,170 $503,109 $168,619 $273,608 $269,654 $265,152 40 Net Cash Change [Line 35 – Line 39] -$433,692 -$16,398 $86,951 $75,361 $64,569 $54,776 41 Combined 502 and 582 ENDING BALANCE $503,109 $168,619 $273,608 $269,654 $265,152 $261,949 42 43 Operating Reserve Target $180,342 $186,317 $192,561 $199,091 $205,928 $213,090 44 45 DEBT COVERAGE
46 Projected Debt Coverage [Line 49 ÷ Line 54] 1.03 1.22 1.46 1.72 2.00 2.31 47 Required Debt Coverage 1.20 1.20 1.20 1.20 1.20 1.20
12 Beginning FY 2025 unrestricted cash balance of $936,801 for Fund 503 and $120,369 for Fund 583 was provided by District staff. All other beginning and ending balances shown are projections by Raftelis.
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 23 Figure 8-3 shows the debt coverage under the proposed financial plan. The required debt coverage ratio of
1.20 is denoted by the dark blue line, with projected debt coverage represented by the light blue line. The City is projected to exceed its required debt coverage requirement in all years of the study period.
Figure 8-3: Proposed Financial Plan –Debt Coverage
Figure 8-4 shows the proposed annual funding for the CIP. The CIP is planned to be funded through rate revenues and reserves, shown in the light blue bars.
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 24 Figure 8-4: Proposed CIP Financing Plan
Figure 8-5 shows the City’s projected ending balances under the proposed financial plan. The light blue bars represent the Fund 503 ending balance, the green bars represent the Fund 583 ending balance, and the yellow bars represent the combined ending balance. The City is projected to build reserves from FY 2026 to FY 2027 and then maintain steady reserves through FY 2030. The proposed plan is advantageous in several ways including: reducing risk relative to the present day; providing flexibility in future CIP financing or cashfunding; and providing a sufficient revenue base to support any potential increases to the CIP in the next rate cycle (FY 2031-2035) given continued inflation and the amount of aging equipment projected to exceed its expected service life.
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 25 Figure 8-5: Proposed Financial Plan – Projected Ending Balances Figure 8-6 shows the proposed versus status quo financial plan. Revenues under the proposed financial plan and the status quo financial plan are represented by the dashed and solid dark blue lines, respectively.
Revenue requirements, including O&M expenses, debt service, cash-funded CIP, and reserve funding, are represented by the various stacked bars. Although current rates result in adequate recovery of O&M expenses and debt service payments, revenue adjustments are required to generate sufficient revenue to cover cashfunded CIP and maintain reserves.
Figure 8-6: Proposed vs. Status Quo Financial Plan
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 26 9. Wastewater Revenue
Requirement and Rate
Calculation
Section 9 details the revenue requirement and rate calculation for the proposed wastewater monthly service charges. Because the wastewater service charge is a flat monthly rate per EDU and the EDU ratios did not change during this study, the increase in the rate for FY 2026 will align with the overall revenue adjustment from Table 8-8. To calculate the FY 2026 rate, we will determine the revenue requirement and divide that by the projected number of EDUs.
9.1. Wastewater Revenue Requirement
Table 9-1 shows the rate revenue requirement for FY 2026 (also referred to as the test year or rate-setting year). The revenue requirements (Lines 2-4) are equal to FY 2026 expenses. The revenue offsets (Lines 8-10) include Fund 583 revenue, interest earnings, and miscellaneous revenues that are applied as offsets to the final rate revenue requirement. The cash adjustment (Line 14) is equal to the FY 2026 positive net cash change to reserves, less the operating expenses for Fund 583. The adjustment to annualize the rate increase (Line 15) represents the revenue that would have been collected if the rates were implemented for all 12 months of the fiscal year. All values are from the proposed financial plan pro forma (Table 8-9). The final rate revenue requirement (Line 18) is calculated as follows:
Total revenue required from rates (Line 18) = Revenue requirements (Line 5) - Revenue offsets (Line 11) - Adjustments (Line 16)
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 27 Table 9-1: FY 2026 Revenue Required from Wastewater Rates [A] [B] [C]
Line Description Total
1 Revenue Requirements
2 O&M Expenses $1,863,170
3 Debt Service $449,875
4 Cash Funded CIP $116,221
5 Total Revenue Requirements $2,429,265
6 7 Less Revenue Offsets
8 Fund 583 Revenue $35,676
9 Miscellaneous Revenue $12,631
10 Interest Income $3,291
11 Total Revenue Offsets $51,598
12 13 Less Adjustments
14 Cash from (to) Reserves -$903
15 Adjustment to Annualize Rate Increase -$34,142
16 Total Adjustments -$35,045
17 18 Total Revenue Required from Rates $2,412,712
9.2. Rate Calculation
Table 9-2 shows the FY 2026 rate per EDU calculation. The rate is calculated by dividing the FY 2026 revenue requirement (from Table 9-1) by the projected number of EDUs for FY 2026 (from Table 4-6).
Table 9-2: Wastewater Rate Calculation
[A] [B] [C]
Line Rate Calculation FY 2026
1 Revenue Requirement $2,412,712
2 Units of Service 43,068
3 Rate per EDU $56.02
4 Current Rate $52.85
5 Difference ($) $3.17
6 Difference (%) 6.0%
9.3. Proposed Five-Year Rate Schedule and Bill Impacts
Table 9-3 shows the proposed five-year wastewater rate schedule through FY 2030. Proposed rates for FY 2027 through FY 2030 are calculated by applying the proposed revenue adjustment in those years to the prior year rates. All rates are rounded up to the whole penny.
Agenda Item 5.
City of Needles / Water and Wastewater Rate Study Report 28 Table 9-3: Proposed Five-Year Wastewater Rate Schedule Description FY 2025
(Current)
FY 2026
(10/1/2025)
FY 2027
(10/1/2026)
FY 2028
(10/1/2027)
FY 2029
(10/1/2028)
FY 2030
(10/1/2029)
Proposed Revenue Adjustment 6.0% 6.0% 6.0% 6.0% 6.0%
Fixed Service Charges (per Month)
All Customers ($/EDU) $52.85 $56.03 $59.40 $62.97 $66.75 $70.76 Table 9-4 shows the proposed wastewater rates for each customer class based on their EDU ratios. Each customer class is charged the EDU rate multiplied by their respective EDU ratio and the number of units for their account.
Table 9-4: Proposed Five-Year Wastewater Rates by Customer Class Description EDU
Ratio Units FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Fixed Service Charges (per Month)
All Customers ($/EDU) $56.03 $59.40 $62.97 $66.75 $70.76 Residential 1.00 per account $56.03 $59.40 $62.97 $66.75 $70.76 Hotel 0.70 per room $39.22 $41.58 $44.08 $46.73 $49.53
Hospitals 0.75 per bed $42.02 $44.55 $47.23 $50.06 $53.07 Multi-Family 1.00 per account $56.03 $59.40 $62.97 $66.75 $70.76 Garden & Nurseries 1.00 per account $56.03 $59.40 $62.97 $66.75 $70.76 Schools 0.23 per student $12.89 $13.66 $14.48 $15.35 $16.27 General Commercial 1.65 per account $92.45 $98.01 $103.90 $110.14 $116.75 Beauty Salon & Barber Shop 0.50 per sink $28.02 $29.70 $31.49 $33.38 $35.38 Needles Marina 0.55 custom $30.99 $32.85 $34.82 $36.91 $39.13 Religious Organizations 0.02 per seat $1.27 $1.35 $1.43 $1.52 $1.61 Seventh Day Adventist 0.01 custom $0.64 $0.68 $0.72 $0.76 $0.80 Food Establishments 0.18 per seat $10.09 $10.69 $11.33 $12.02 $12.74 Government 1.65 per employee $92.45 $98.01 $103.90 $110.14 $116.75 Gas Stations 2.90 per pump (side) $162.49 $172.26 $182.61 $193.58 $205.20 Shell/Dairy Queen 0.74 custom $41.27 $43.75 $46.38 $49.16 $52.12 Native Village 109 per account $6,107.27 $6,474.60 $6,863.73 $7,275.75 $7,712.84 Table 9-5 compares sample wastewater monthly bills for the four largest customer classes (based on number of accounts) using the average number of units for each class. Estimated monthly bills are based on both the City’s current FY 2025 and proposed FY 2026 rates.
Table 9-5: Wastewater Sample Bill Impacts
Bill Impacts Residential Hotel Gen. Com. Food Est.
# of Units 1 45 1 58
EDU Ratio 1.00 0.70 1.65 0.18
Units per account per room per account per seat
Current Bill $52.85 $1,664.78 $87.20 $551.75
Proposed Bill $56.03 $1,764.95 $92.45 $584.95
Difference ($) $3.18 $100.17 $5.25 $33.20
Difference (%) 6.0% 6.0% 6.0% 6.0%
Agenda Item 5.
City of Needles, California
Request for City Council Action
CITY COUNCIL NPUA Regular Special
Meeting Date: September 9, 2025
Title: Accept the Comprehensive Electric Service Ratemaking Study dated August 2025 Background: In October 2024, the Board of Public Utilities and Council awarded Raftelis to complete the 2025-2030 Comprehensive Electric, Water, and Wastewater Utility Cost of Service Ratemaking Study. An Ad Hoc Committee was created to work with staff to complete the study. The Committee, staff, Raftelis and K.R. Saline & Associates, PLC have met on several occasions to review fiscal policies, financial models, and rate scenarios for each of the three utilities.
During July and August 2025, the Board of Public Utilities reviewed and provided comments to the proposed financial plans and rates for the electric utility.
To ensure fair, sustainable, and transparent electric rates, three-rate design options and a separate evaluation of street lighting charges were presented to the Alternative Rate Ad Hoc Committee for review and discussion.
1) Current Rate Structure – No Rate Change
2) Customer & Energy Charge Structure
3) Customer, Demand, and Energy Charge Structure
Following a review with the Alternative Rate Ad Hoc Committee, the rate structures were evaluated for equity across customer classes. The Committee’s feedback highlighted that the largest commercial customers are sharing the cost burden under the existing structure, effectively subsidizing residential customers. The recommendation is to continue the current rate structure and adopt increased street lighting rates.
The proposed financial plan for FY 2025 through FY 2030 maintains rate stability while meeting all operational, capital, and debt service obligations. No rate increases are proposed during the planning horizon.
The Board of Public Utilities accepted the Comprehensive Electric Cost of Service Ratemaking Study on September 2, 2025.
Fiscal Impact: Minimal increase in streetlight fees
Environmental Impact: N/A
Recommended Action: Accept the Comprehensive Electric Service Ratemaking Study dated August 2025 Submitted By: Rainie Torrance, Utility Manager
City Manager Approval: Date:
Other Department Approval (when required): Date:
9/4/2025
Agenda Item 6.
K. R. Saline
& Associates, PLC
Prepared For:
City of Needles
Electric Rate Study Results
September 8, 2025
Agenda Item 6.
K. R. Saline
& Associates, PLC
Goals & Objectives
Rate Study Results 2
Identify
• Cost to serve each
customer class
Evaluate
• Current rate structure so
that all costs are covered
Recommend
• Options for new rates
based on results
Agenda Item 6.
K. R. Saline
& Associates, PLC
Financial Plan Results
Rate Study Results 3
Revenue Increases
• 0.2% revenue increases FY 2026 – 2030
• $14.8 million in FY 2026, $15.0 million in FY 2030
Expense Increases
• $11.9 million in FY 2026, $13.3 million in FY 2030
• Purchased Power $6.0 million in FY 2026, $6.5 million in FY 2030 Debt Service Coverage
• Minimum required is 1.2x, FY 2026 is 4.2x and FY 2030 is 2.4x Agenda Item 6.
K. R. Saline
& Associates, PLC
Electric Results
Rate Study Results 4
$-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
2026 2027 2028 2029 2030
Operating Revenues vs Expenses
Operating Revenues Operating Expenses
Cost of
Purchased
Power
67%
Distribution
Expense -
Operation
1%
Distribution
Expense -
Customer
4%
Accounting
0%
Ab32 Surcharge
Rps/C&T
22%
Fairshare
Allocation
6%
EXPENSES
Agenda Item 6.
K. R. Saline
& Associates, PLC
Cost-of-Service Analysis
A Cost-of-Service analysis was performed to evaluate the cost causation/contributions of different customer groups compared to how revenue is being collected today under the existing over-hydro / under- hydro rate. Results showed that the current rate design collects sufficient revenues, but revenue collection may be uneven when compared to how different customer types use the system.
Cost-of-Service Study 5
Single Over/ Under Hydro
Rates VS.
Separate Customer Groups
Residential
Small Commercial (0-25kW)
Medium Commercial (25-100 kW)
Large Commercial (100kW +)
Street Lighting
Agenda Item 6.
K. R. Saline
& Associates, PLC
Rate Options Evaluated
Cost-of-Service Study 6
Energy Only Rates Total Residential
Small
Commercial
(0-25kW)
Medium
Commercial
(25kW100kW)
Large
Commercial
(100kW+) Street Lights
Customer Charge $53.17 $45.15 $69.63 $155.47 $346.08 $18.11 Delivery Charge Per kWh $0.0133 $0.0000 $0.0198 $0.0000 $0.0230 $0.0000 $0.0155 $0.0000 $0.0073 $0.0000 $0.0072 $0.0000 Power Charge Per kWh $0.1073 $0.1160 $0.1234 $0.0944 $0.1009 $0.0923 Energy+Demand Rates Total Residential
Small
Commercial
(0-25kW)
Medium
Commercial
(25kW100kW)
Large
Commercial
(100kW+) Street Lights
Customer Charge $53.17 $45.15 $69.63 $155.47 $346.08 $18.11 Delivery Charge Per kWh $0.0133 $0.0198 $0.0230 $0.0072 Delivery Charge Per kW $3.84 $2.75 $0.00
Power Capacity Charge Per kW $9.43 $0.00
Power Energy Charge Per kWh $0.1073 $0.1160 $0.1234 $0.0944 $0.0758 $0.0923 Option 1
Option 2
Option 3
Current rate structure
Agenda Item 6.
K. R. Saline
& Associates, PLC
Bill Impacts by Rate Option
Cost-of-Service Study 7
$185.41
$388.62
$248.94
$524.79
$248.94
$524.79
Residential
(1500 kWh)
Small Commercial
(0-25kW)
Residential / Small Commercial
Rate Design Proposals
Current (summer) Energy Only Demand
$4,638.74
$30,035.15
$4,193.56
$26,091.52
$3,982.99
$25,120.17
Medium Commercial
(25kW-100kW)
Large Commercial
(100kW+)
Medium / Large Commercial
Rate Design Proposals
Current (summer) Energy Only Demand
Agenda Item 6.
K. R. Saline
& Associates, PLC
Street Light Pricing
Proposed Rate Change
Cost-of-Service Study 8
Type Size KWh
Current
Rate Proposed Rate
Decorator 100 43 $11.74 $22.39
Sodium 100 43 $8.62 $22.39
Sodium 200 85 $14.58 $26.57
Sodium 400 171 $27.15 $35.12
LED 38 16 $4.24 $19.71
STREET LIGHTS
Agenda Item 6.
K. R. Saline
& Associates, PLC
Results
Cost-of-Service Study 9
• Detailed review
of all options
Ad Hoc
Committee
• Proceed with
current rates
• Update Street
Lighting costs
Decision
• Simplicity
• Equal Fairness
Reason
Agenda Item 6.
K. R. Saline
& Associates, PLC
Thank You!
Questions?
Written questions or comments
can be sent to
[email protected]
Prepared by:
KRSA District Services Team
Cost-of-Service Study 10
Utility Formation, Governance, Federal Power Systems,
Power Supply, Power Markets, Budgeting, Financing, Rates, Billing, Bookkeeping, Reporting, and More!
Kenneth Saline P.E.
Dennis Delaney P.E.
Jeffrey Woner
Kent Simer
Daniel Pritchard
Jennifer Torpey
Scott Saline
Maggie Bauer
Ashley Blank
Nicole Klinker
Agenda Item 6.
K. R. Saline
& Associates, PLC Cost-of-Service Study 11
END OF DECK –
SUPPORTING SLIDES
FOLLOW
Agenda Item 6.
K. R. Saline
& Associates, PLC
Financial Assumptions
Escalators Affecting Revenues
Cost-of-Service Study 12
Account Growth:
0.63%
Energy Sales:
0.25%
CPI Inflation:
2.6%
Agenda Item 6.
K. R. Saline
& Associates, PLC
Financial Assumptions
Escalators Affecting Expenses
Cost-of-Service Study 13
Health Insurance:
4.3%
Salaries & Wages:
3.8%
Retirement:
3.2%
Fuel, Utilities, Chemicals:
5.5%
Contract Services:
5.1%
Agenda Item 6.
K. R. Saline
& Associates, PLC
Revenue Requirements
No Rate Intervention
Cost-of-Service Study 14
Agenda Item 6.
K. R. Saline
& Associates, PLC
Revenue Requirements
No Rate Intervention
Cost-of-Service Study 15
Agenda Item 6.
K. R. Saline
& Associates, PLC
Unbundled Results
Cost-of-Service Study 16
Residential
Small
Commercial
(0-25kW)
Medium
Commercial
(25kW-100kW)
Large
Commercial
(100kW+)
Street
Lights
Unbundled
Metering & Billing $20.32 $20.88 $34.44 $170.89 $0.09
Service Connection $22.82 $45.63 $114.08 $159.71 $17.21 Delivery
Per MWh $36.00 $35.85 $6.85
Per kW $6.29 $5.51
Generation - Energy per MWh $28.79 $28.79 $28.80 $64.67 $64.67 Generation - Capacity Per MWh $64.99 $75.21 $50.78 $23.50 Generation - Capacity Per kW $9.01
Agenda Item 6.
`
Electric Cost-of-Service
and Rate Study
Prepared For:
City of Needles Public Utility Authority
Submitted By:
K. R. Saline & Associates, PLC.
160 N. Pasadena, Ste 101
Mesa, AZ 85201
+1.480.610.8741
August 22, 2025
K. R. Saline
& Associates, PLC
krsaline.com
Agenda Item 6.
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Agenda Item 6.
August 22, 2025
Ms. Rainie Torrance
Utility Manager
City of Needles
817 Third Street
Needles, CA 92363
Subject: NPUA 2025 Electric Rate Study Report
Dear Ms. Torrance,
K.R. Saline and Associates, PLC, is pleased to submit this 2025 Electric Rate Study Report to the Needles Public Utility Authority. This report documents the results and recommendations of the City of Needles’ electric rate study. The overall goal of the study was to develop a cost-of-service study and related rate options that would support Needles’ Public Utility Authority revenue requirements as well as rate options based off of the study results.
This study used standard rate-setting methods based on widely accepted industry principles, such as cost causation and fairness, and guidance from the City’s policymakers. Our team has a proven track record of developing fair and equitable electric rates for many public power agencies in Arizona over the past 30 years. We are confident in our ability to create effective electric rates that meet the City’s needs.
It has been our pleasure to assist the city, and we appreciate the support provided by yourself and other City staff over the course of the study.
Sincerely,
Ashley Blank
Project Manager
K. R. Saline
& Associates, PLC
160 N Pasadena, Ste 101
Mesa, AZ 85201-8764
+1.480.610.8741
Agenda Item 6.
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Agenda Item 6.
Forward
K.R. Saline and Associates, PLC (KRSA) prepared this report for the sole use of Needles Public Utility Authority (NPUA) for the intended purpose as stated in the agreement between NPUA and KRSA under which this work was completed. The report may not be relied upon by any other party without the expressed written agreement of KRSA or NPUA.
In conducting this report KRSA has exercised due and customary care but has not, save as specifically stated, independently verified information provided by others. No other warranty expressed or implied is made in relation to the conduct of KRSA or any specific content of this report. Therefore, KRSA assumes no liability for any loss resulting from errors, omissions, or misrepresentations made by others. This report was prepared at the request of NPUA. Use of this report by unauthorized third parties without written authorization from KRSA shall be at their own risk, and KRSA accepts no duty of care to any such third party.
Any recommendations, opinions, or findings stated in this report are based on circumstances and facts as they existed at the time KRSA performed the work. Any changes in such circumstances and facts upon which this report is based may adversely affect any recommendations, opinions, or findings contained in this report. No part of this report may be modified or deleted to change the context, without the expressed written permission of KRSA. KRSA does not have responsibility for updating this report for events occurring after the date of this report.
Acknowledgements
KRSA wishes to extend our appreciation to the city and its staff for their cooperation during the progress of this study. We would like to especially thank Ms. Rainie Torrance, Utility Manager, for her guidance and assistance with this project.
Agenda Item 6.
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Agenda Item 6.
© K.R. Saline & Associates, PLC. All Rights Reserved
For the sole benefit of the Needles Public Utility Authority K. R. Saline & Associates, PLC Electric Cost-of-Service and Rate Study