Title
Financial and Rate Study (wet utilities)
Recommended Action
Briefing Only
Report
Issue:
Receive a financial and rate project update and a rate setting 101 briefing
Staff Contact:
Gary Franks, Public Works Water Resources Director, 360.753.8780
Mike Vessey, Public Works Drinking Water Utility Director, 360.753.8318
Susan Clark, Engineering and Planning Manager, Public Works Water Resources, 360.753.8321
Presenters:
Susan Clark, Engineering and Planning Manager
Shawn Koorn, Associate Vice President / Senior Professional Associate, HDR Consulting Inc.
Background and Analysis:
Project Background
On April 2, 2026, the UAC received a briefing on the scope of work for a comprehensive, multi-year Financial and Rate Project for the Drinking Water, the Wastewater and the Storm and Surface Water utilities. The project is designed to support long-range financial planning, rate setting and capital funding strategies.
Key project phases include:
• 2025 - June 2026 (Foundational Analysis):
Data collection, financial policy review, and development of baseline revenue requirements and GFC methodologies. Additional white papers will address affordability, customer assistance, and funding strategies for climate-related infrastructure (e.g., sea level rise).
• June - December 2026 (Alternatives & Draft Rates):
Development of revenue requirement scenarios, cost-of-service analysis, and draft rate designs. Updated GFCs and initial presentations to the Utility Advisory Committee (UAC), Finance Committee, and City Council.
• 2027 (Final Recommendations):
Refinement and adoption of final revenue requirements, cost-of-service analysis, rate designs, and GFCs. Final reports, decision-maker presentations, and delivery of rate and fee models with staff training.
During the April 2, 2026 meeting, staff heard support voiced from the UAC for continued involvement in the project, including for a June 2026 project briefing and a rate setting 101 session led by HDR Engineering, Inc.
June 4, 2026 Meeting Agenda
The June 4, 2026, financial and rate project briefing will include a high-level summary of the results of the foundational analysis phase of the project, including baseline revenue requirements, GFCs and draft financial policies and the rate setting 101 session will provide an overview of the utility rate setting process, including best management practices and policy considerations.
Following the financial and rate project and rate setting 101 presentations, the UAC will be asked to provide feedback on key topics and identify any additional information needed to help staff prepare for a future state of the Utility presentation. Over the last past year, the UAC has raised a number of important questions related to utility finances, long-range planning, capital investment needs, rates, and affordability. Many of these topics are expected to be addressed through the multi-year finance study and the accompanying financial policy discussions.
Staff will share a proposed outline and framework for a future state of the Utility presentation that attempts to answer questions previously raised by members of the UAC. Staff will seek feedback from the Committee on what additional information or topics would be most valuable to include as a future presentation is developed.
The UAC will be asked to consider the following question.
Taking into consideration that the Financial and Rate Project is a phased approach that includes the development of a 10-year financial program for each utility, issue papers focused on rate affordability metrics/expanded programs and recommended financial policies, and continued refinement of utility needs and funding gaps, what additional questions or topics would you like addressed in a future state of the Utility presentation?
Climate Analysis:
The study will evaluate funding strategies for climate-related infrastructure, including stormwater system demands and sea level rise protection for downtown Olympia. These considerations will be incorporated into long-term capital and financial planning.
Equity Analysis:
Equity and affordability are key components of the study. The analysis will evaluate rate impacts across customer classes, explore customer assistance program strategies, and support development of rate structures that balance financial sustainability with community affordability.
Financial Impact:
This is a multi-year professional services effort shared equally by the three wet utilities. Annual costs will be incorporated into each utility’s budget during the City’s annual budget process. The study will directly inform future rate adjustments, capital funding strategies, and financial policies for all three utilities.
Attachments:
None