1. Las Cruces Utilities (LCU) Department Inviting YOU to the Utility Ratemaking Process

2. Vital services provided by LCU
LCU provides services. Customer pays bills.
YOUR tax dollars do not support LCU

3. History of Utility Ratemaking In Las Cruces Prior to 2009 – City Council Process
Rates were determined by City Council with staff input similar to tax rate setting process
Customers lacked effective input
Extended periods between rate increases caused “rate shock” to customers when new rates were finally approved
Rates did not necessarily reflect true cost of service

4. History of Utility Ratemaking 2009 to 2016 – RAC Process
Utility rates determined by methodology as established for regulated utility industry
Methodology was more professional and better reflected LCU’s actual cost of service to each customer group
City Council still maintained key role
“Arm’s Length” process similar to NM PRC ratemaking
Ratepayer Advisory Committee (RAC) represented residents and small businesses. Other customer groups could formally intervene
Process proved to be difficult, lengthy, and very costly

5. History of Utility Ratemaking 2017 – A More Cooperative Approach
Established industry methodology for rate review still the prime objective
Role of City Council remained unchanged
UCAG represents interest of all customer classes
“Arms Length” requirement was eliminated
LCU and UCAG share same technical consultants
Individual customers are still free to intervene

6. UCAG is an Ad-Hoc Committee comprised of volunteers appointed by Mayor and Council in May 2016

7. Like you, UCAG members are all LCU customers…
We volunteer our time to learn the utility rate review process,
Review extensive documents, and
Work with an independent consultant.

8. Reaching out to involve YOU
UCAG holds monthly meetings, and
Reaches out to educate and involve LCU customers in this process of ratemaking – at Farmer’s Market, the Mall, and speaking to community groups.

9. UCAG outreach events are published in local newspapers and online

10. YOUR input is most important in the ratemaking process
UCAG members are doing our part; we’ve committed to two-three years to review rates for all four utilities,
We are assisted by an experienced independent consultant chosen from a nationwide search, and
We ask that you attend
our monthly meetings
and provide your input.

11. Utility Rate Making Process
Utility Staff Determined Need for Rate Review
UCAG Committee created
Independent Consultant Hired By LCU Board
Formal Rate Study & Preliminary Report by Consultant
UCAG Gathers Public Input and Provides Recommendations to Consultant
Results Presented to LCU Board
Final Report By Consultant
Action By LCU Board
Action By City Council

12. Rates 101 Rates are determined separately for each utility.
When utility rates need to be changed it is usually done
via a highly technical three step process…
Revenue Requirement – determines how much the utility will need in total to continue to provide good service.
Cost of Service - divides the revenue requirement into fixed & variable charges appropriate to each Customer Class (residential, commercial, industrial etc.).
Rate Design – produces detailed “tariffs” that set the charges and conditions of service for each customer class.

13. Water Customer Classes
Residential
Small Commercial
Large Commercial
Industrial
Reclaimed Water
Bulk Water
Parks
Park Off-Peak
Parks Non-Potable

14. Probable Order of Rate Reviews
Water (currently underway)
Wastewater
Gas
Solid Waste
All rates reviews are expected to require 2-3 years to complete.

15. LCU must budget and meet expenses just like you do:
Revenues – income from your job, your spouse’s job;
Operating and maintenance expenses – groceries, rent, clothes, car maintenance;
Fund Balance – personal savings for emergencies;
Debt service – pay off loans for a home, car, education, or credit cards; and
Capital improvement projects – buy a home, add on to your home, upgrade bathroom or kitchen.

16. LCU revenue/expenses:
Revenues – monthly payments from customers for utility services provided;
Operating and maintenance expenses – staff payroll, office furniture and supplies, facilities maintenance, vehicle repair, fuel, electric bills, routine operational rehabilitation;
Fund Balance – mandatory reserve of 2 months worth of operation & maintenance expenses for emergencies;
(continued)

17. LCU revenue/expenses (continued):
Debt service – upgrade/replace water, gas, and sewer utility lines in conjunction with Public Works street projects, construction of the new Water Quality Laboratory at the wastewater treatment facility, and/or coordinated projects with NMDOT that require underground utilities to be upgraded; and
Capital improvement projects – LCU plans 5 years in advance for design and rehabilitation projects to the water system that will be sent out to bid, and upgrades to monitoring system.

18. Water Rate Proposal Highlights
The water utility needs to add $3.8 million to its revenues as soon as possible in order meet its obligations.

19. Operating Expenses

20. Debt Service

21. Average Residential Water Bill
Average Current Water Residential Bill
$26.88

22. You can reach the committee at UCAG@las-cruces.org
QUESTIONS?
All documents associated with the rate review process are located at
You can reach the committee at