Tariff design keeps infrastructure safe and healthy for the future

Setting the rates people pay for utilities has been the job of Las Cruces Utilities assistant business services manager Jose Provencio for more than 40 years. But it might have been different had he decided to take the job at the power plant instead of El Paso Electric’s new rate department.

“I was more curious about what they would do,” he said.

The rest was history. After graduating with an engineering degree from New Mexico State University, Provencio became EPE’s head of regulatory affairs. After his first retirement in 2008, he had the opportunity to join LCU, but from July 31, 2022, he will try his luck at retirement. In his final weeks at LCU, Provencio reflected on the time he spent digging into the community’s infrastructure needs and how those are being met by the rates paid by his customers.

“It’s our mandate: we must provide the services that our customers and developers demand,” Provencio said. “The challenges are to appropriately operate and finance a corporate fund, which is how the Utilities department is structured. Every utility operation – natural gas, water, sewage and solid waste – has tariff charges that recover revenue to cover operations and maintenance, salaries and benefits, and capital projects.

The rate design and setting process that has evolved at LCU focuses on each utility operation.

“The review process examines the financial position of an audited financial statement and the cash requirements to cover known and measurable operating and maintenance expenses, the cost of materials and supplies, salaries and benefits , construction and rehabilitation projects,” he said.

Provencio and his team not only review historical financial and operational data, but research the unique characteristics of each of the natural gas, water, wastewater and solid waste operations. He explained that, for example, water operations have huge equipment and infrastructure that pumps and treats water from the ground, stores water in huge reservoirs, and distributes and augments water throughout the city ​​to supply all customers.

“Wastewater operations also have huge infrastructure to collect and bring wastewater to treatment plants to clean and treat wastewater for safe disposal,” he said. “Solid waste operations, on the other hand, have specialized collection trucks that pick up and transfer waste to the transfer station for burial at the landfill. Each utility operation has different infrastructure, construction, and unique support to achieve its goal of serving our customers.”

Tariff revisions quantify the revenue needed by each utility to cover expenses, finance construction and pay debts to ensure that services will be provided to our customers.

“While reviewing solid waste operating rates several years ago, LCU realized that garbage trucks were not being replaced soon enough and were sitting in the repair shop and affecting garbage collection schedules,” Provencio said. “As such, the increase in solid waste service rates involved establishing a schedule to replace aging solid waste collection trucks to ensure reliable waste collection for our residential and commercial customers.”

“The primary responsibility of the Utilities Department is to provide reliable and quality utilities 24/7, and the LCU must have the infrastructure, trained personnel, field crews, technicians and engineers to pump and distribute water, collect and treat wastewater, procure and distribute natural gas, and collect and dispose of solid waste on demand and on schedule,” Provencio said. “My experience has been involved from financial and pricing side of a business model that is always online and planning for the long term so that our customers always have natural gas, water, sewage and waste services.”

LCU – Your utility connection. Customer Central can be reached at 575-541-2111 from 8 a.m. to 6 p.m. Monday through Friday. LCU provides clean, safe and reliable services to Las Cruces residents and businesses. Learn more about: las-cruces.org/180/Utilities. For emergencies, call the dispatcher at 575-526-0500.

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