RateStudies has developed a unique financial model for water and wastewater systems. The model is constructed in such a way as to allow changing parameters such as capital improvements, administrative costs, operational costs, growth in the system, new debt, etc. to show the bottom line effects of changes in water and wastewater rates for each class of customer.

We use the past five years of audits to project the next five years of revenue and expenses, we integrate the utility’s five year capital improvement program, we include principal and interest payments, we give an analysis of amount of water treated or bought verses water sold and for wastewater systems we analyze the water bought verses wastewater transported and treated.  We also include charts and graphs to give a visual picture of critical elements affecting the financial outlook.  Also included is a graphical comparison of rates with other similar utility systems.

The model is flexible and can show the effect of a onetime rate adjustment or smaller multi-year increases.  Also, changes in the customer base such as a new industry locating within the system or one closing can easily be programmed into the model to show the effects of such changes.

We develop the rate study for the utility by analyzing data provided by the utility, meeting with key personnel and making a final presentation to the governing board. Although rate studies are not an exact science, the financial model can be a valuable tool for making financial decisions and setting water or wastewater rates.