The first is what we call the “Five Year Financial Analysis”. Owners, operators, managers and the governing boards of water and/or wastewater systems should have an overall understanding of the financial soundness of their system and also have a good understanding of what their system would look like financially over the next five years, and this is what the Five Year Financial Analysis will provided.
Another reason is the “Project Driven Rate Analysis”. Most major capital improvement project require funding and a rate study is often a part of the documentation required to secure the funding.
Also, a water and/or wastewater system should consider a “Cost of Service Analysis”. This analysis is provided when a utility system has different classes of customers such a residential, commercial and industrial. The cost of service analysis is designed to allocate and distribute cost is such a way that a rate can be set such that each class of customers will be paying their fair share.