Appropriate rate setting is directly related to a clear understanding of system expenditures. You’ll find a straightforward worksheet for calculating the yearly expenditures associated with your water utility starting on page 8 of the Midwest Assistance Program’s North Dakota Small Community Water Systems Handbook on Developing and Setting Water Rates. This worksheet breaks down water system operational costs into subcategories, giving you a clear perspective of the many costs involved.
The Environmental Protection Agency (EPA) has created a handful of resources to assist you with Pricing and Affordability of Water Services. The following guide will walk you through the process of rate setting: Setting Small Drinking Water System Rates for a Sustainable Future. This guide will help you determine the rates for full cost pricing, meaning the rate that customers would have to pay in order to cover all costs of running the system and providing water service.
Here are some additional tools that you may find useful for rate setting:
- The University of North Carolina Environmental Finance Center has created useful financial tools for setting appropriate water rates:
- Utility Financial Sustainability and Rates Dashboards are offered for a number of states. These software tools help utility managers analyze water rates against multiple characteristics, including utility finances, system characteristics, customers’ economic conditions, geography and history.
- The water and wastewater residential rates affordability assessment tool guides the water utility on the use of census data to assess the affordability of its rates using multiple metrics. This resource requires a quick registration to access.
- The water and wastewater rates analysis model helps set rates by projecting the utility’s expenses, revenues from rates and fund balance for the next few years. Up to 12 different rate structures can be assessed. This resource requires a quick registration to access.
- The Missouri Department of Natural Resources has created a Drinking Water Project Resource webpage (look for the link near the bottom of the page) and a Drinking Water Rate Calculator available in Excel format.