Streamline - Summer 2013 - (Page 37)
Choosing a Rate Analyst
Editor’s NotE: Choosing a rate analyst is risky. Fortunately, the Virginia RATES Program incor-
BY CARL BROWN,
That is getting,
or failing to
rates that are
porates all of the fail-safe measures described in “Option B” below. You may access the Program
To get what we want, we have to make choices
and take action. You can apply the following principles to personal and professional aspects of your
life, but this article will focus on an important
aspect of your utility’s life. That is getting, or
failing to get, utility rates that are adequate, fairly
structured and appropriately simple or complex
– “great rates.”
Great rates are built upon good
mathematics, good assumptions and what
some call “salesmanship.”
Larry Wilson was a renowned theorist, practitioner, mentor and teacher in the field of “winning.”
He wrote the book, “Play to Win,” and others on
similar themes. He led individuals and Fortune 500
companies to success – “results” in his vocabulary.
The result called “great rates” never happens spontaneously. You have to work at it. Mr.
Wilson’s “results model” is useful for that.
To learn more about Larry Wilson’s ideas,
The results model starts with an “event.”
Consider this one: A group of your ratepayers
complain about their user rates. You interpret the
event through the filters of your intellect, experience and such, collectively called your “map.”
Filtering causes you to “make stuff up.” For a
while, you make up the story that the complainers are just…complainers. Eventually your “map”
becomes more accurate and you realize your rates
are out of whack. You then respond on an emotional level and perhaps by taking certain actions.
Let’s consider two of your possible actions:
A. You can read books and manuals, learn a
spreadsheet or database program thoroughly
and invest lots of time in analyzing rates on
your own, or
B. You can hire a rate analyst.
Your current “map” may tell you, “I’m smart
and I can do anything I set my mind to. I can
do Option A.” But that probably won’t happen.
You only have so much time and desire to learn
the special field of rate analysis, which you will
probably only use once every five years or so.
Non-rate analysts belong in rate setting, too.
Comprehensive rate analysis is needed only
infrequently. The rest of the time the Virginia
Rural Water Association and some other
organizations provide useful and usually free
rate setting assistance and training.
Option B can economically fix your rates, if
you approach it correctly. This is what you should
do to make Option B work:
Identify at least one rate analyst. (Do this
because you should not solicit rate analysis
service from someone who is not a rate analyst.
As good as they may be in their own fields, you
wouldn’t ask a lawyer to design a water tower or
a plumber to do your accounting, would you?)
Rate Analyst – One who makes more than
50 percent of their revenue from doing rate
Tell the prospective analyst your goal is
to end up with rates that are “adequate,
fairly structured and appropriately simple or
complex.” You will need to give them some
details so they can scope the project but you
don’t need to embellish on the goal statement.
Tell them that you want a proposal that demonstrates their ability to achieve this goal. You
should download the free two-page model
request for qualifications and proposals from
RFQModel.doc to make this step simple and
effective. (Do this because you want them to
prove to you their rate analysis prowess, or
Require a guarantee that says that if you
are not satisfied with their service for any
Table of Contents for the Digital Edition of Streamline - Summer 2013
From the President
From the Executive Director
Generators – Learning from the Past
Does the End Justify the Means?
Clean Out Your Medicine Cabinet!
How is Serving on a Board of an Organization like Owning a Car?
Monitoring Master Meters
2013 Conference Highlights
OilClean from EcoSolutions Naturally Separates Oil from Water
Choosing a Rate Analyst
Ergs, Joules and Other Stuff
Snug and Smug with Solar Power
Fresh Faces: Joey Fagan
Throwing My Loop
Do You Know What Your VRWA Benefits Are?
Welcome New Members
Board of Directors
Index to Advertisers/Ad.com
Streamline - Summer 2013