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, PRESIDENT GETTINGGREATRATES.COM That is getting, or failing to get, utility rates that are adequate, fairly structured and appropriately simple or complex – “great rates.” porates all of the fail-safe measures described in “Option B” below. You may access the Program at 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, visit 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?) 1. Rate Analyst – One who makes more than 50 percent of their revenue from doing rate analyses. 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 lack thereof.) 2. 3. Require a guarantee that says that if you are not satisfied with their service for any 37 http://www.GETTINGGREATRATES.COM

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
Wastewater Math
Throwing My Loop
eLearning Benefits
Membership Application
Do You Know What Your VRWA Benefits Are?
VRWA Mailbag
Welcome New Members
Training Calendar
Board of Directors
VRWA Committees
Index to Advertisers/

Streamline - Summer 2013