Cost of Service and Rate Study

In keeping with our mission to provide high-quality, competitively priced services, LUS initiated a Cost of Service and Rate Study in June 2021. For this study, LUS partnered with its engineer of record, Burns & McDonnell, a consulting engineering firm that provides engineering, architecture, construction, environmental, and consulting solutions worldwide.

The purpose of the cost of service was to analyze the current operation/maintenance and capital costs to provide electric, water, and wastewater services across the different customer classes and evaluate the capital improvements plan to manage system expansion and aging infrastructure. Additionally, LUS has an obligation to provide a cost of service rate study when applying to the State Bond Commission for the issuance of bonds and qualifying for state/federal grants.

LUS’s audited financials, adopted budget, and projected revenue requirements for operation/maintenance and capital costs were used in the study. Based on the results of the cost of service study, rate changes are needed for the electric, water, and wastewater system. The rate study was developed to align LUS’s costs and revenues across all rate classes, including an analysis on the average residential bill impacts.

To incentivize customers to consume energy when demand and costs are lower, a new rate structure of time-varying rates, or Time of Use (TOU), will be offered, resulting in more balanced energy demand throughout the day.