vice versa, you have to implement some kind of rate structure
to recover that revenue.”
STEP 3. DETERMINE FEES AND CHARGES
When it comes to determining fees and charges, utilities can
often base their rate structures on these predetermined revenue
requirements as well as their varying customer classes and distribution burdens. As such, a cost-of-service-based approach can
be a resourceful tool to ensure that rates are developed equitably while still covering costs appropriately. This regulatory activity of pricing and enacting rates, or ratemaking, seeks to establish the lowest potential costs for consumers while ensuring the
monetary stability of water plants (see “Calculating the Costs”
in the December issue of Water World). Further, “effectively determining fees and charges can help determine the feasibility of
the capital plan,” said Cuppett.
STEP 4. ASSESS THE IMPACT ON CUSTOMERS
LaFrance explained that utilities can beneft from “effec-
tively fguring out who is using the water system and allocat-
ing those costs back to the people using that system.” In this
way, they pay for what they use — and the payments are
spread over the life of the loan. “This gives you the chance to
improve what’s called your ‘intergenerational equity,’ which
means creating fairness across multiple generations who will
use the asset, as opposed to having current customers pay for
the current asset and have future customers beneft without
having to pay for it.”
Facilities can also assess the impact these programs have
on their customers and gauge who and how many are affect-
ed. This can help them formulate a capital plan conducive to
their customers’ needs as well as foster a healthy relationship
with ratepayers through clear communication. Further, “as-
sessing impact on customers can help optimize the objectives
of various stakeholders,” said Cuppett. Around 80 percent of
a facility’s revenue comes from water rates, and there have
been many hikes in these charges over the years. By informing
the public of the value of water along with the fundamentals
of the fnancial planning and ratemaking process, customers
can gain a better understanding of what’s involved and con-
sequently grow more comfortable with backing the proposal.
“Everything comes down to funding and fnance in the
end. Utilities are public servants. In order to do that and gain
the people’s trust, you have to be a good steward of your
dollars,” said Adam Krantz, managing director of government
and public affairs at the National Association of Clean Water
Agencies (NACWA). “You have to have a clear vision and be
able to communicate that vision in real dollars and cents to
your ratepayers or else you’ll lose that trust.” WW
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Fully Sealed
Bubble Tight 146 psi
Circle No. 13 on Reader Service Card
