Cost of Service for Water Rates and Wastewater Rate Studies

Cost of service studies for water rates and wastewater rate studies are our primary focus. The goal of each water and sewer rate study is to develop rates and charges that best meet the municipalities / utilities goals and objectives. The water rates and sewer rates we design are fair and equitable. Our studies include the funding of long term capital improvement plans, the changing demands of water consumption and other significant factors that impact utility rates. Each cost of service and water rate study we complete is designed for the specific needs and requirements of the client.

Since 1995 Pioneer Consulting Group, Inc. has completed more than 40 water and sewer cost of service and rate studies. Douglas Gardner has completed more than 100 water rate and wastewater rate studies during his 20 year career working with municipal government. Wesley Gardner, Jr, CPA has completed more than 250 sewer and water rate studies.

PCG’s methodology for conducting a rate study includes the following steps:

• Determine the revenue requirements and prepare a cost of service study based on the fully absorbed basis, i.e., direct costs, indirect costs, debt service and capital improvements.
• Determine equitable rates by class of customer, that include minimum charges, step rates, fire protection charges, cross connection charges and other related fees and charges.
• Analysis and design of alternative rate structures. Our computer model allows us to provide alternative rate structures as budgets and financing options change.

 
Billing Analysis

The billing analysis allows us to develop computerized trends of customer usage to aid us in determining the number of step rates and the amount of flow allowed in each of the blocks for water/sewer customers. We prepare a twelve-month billing analysis for each rate study.

Impact Analysis

Once the rate structure has been determined we prepare an impact analysis. The impact analysis provides a comparison of the total amount of a current water/sewer bill to the proposed water/sewer bill. This provides the opportunity to see the dollar effect on various consumption levels. It also helps to identify situations where rate shock could occur. This analysis provides officials an opportunity to see the dollar effect on a range of customers for each of the rate proposal.

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