Water Rates Case Studies
Some Massachusetts Public Water Suppliers (PWS) and Water Districts find it challenging to develop water prices and rate structures that encourage water use efficiency and conservation, while also trying to:
- Ensure the long-term sustainability of water supplies through appropriate cost recovery
- Promote equitable distribution of costs among rate payers
- Protect affordability of water for essential needs
DER and the Department of Conservation and Recreation (DCR) are partnering on a project to support PWS and Water Districts that are trying to restructure their rates to better meet all or some of the above goals. In August 2017, DER and DCR conducted a short survey of PWS and Water Districts in Massachusetts focused on whether suppliers have embarked on the process of restructuring their water rates, and the goals, successes, and obstacles encountered during the process. Results of the survey can be found under Reports, below.
As a follow up to the survey, interviews were conducted with 7 water supply communities to better understand the processes they have gone through to change their rate structures to better balance multiple goals. Lessons learned from both successes and setbacks were documented, and points of guidance were developed to aid other suppliers in their rate-setting processes.The lessons learned focus on four areas – communication, financial planning, governance, and data management.
As a follow up to the case studies, DER and DCR hosted a workshop in November 2018 with the Alliance for Water Efficiency on Financing Sustainable Water. The workshop addressed many of the challenges identified through the survey and case studies including effective rate modeling and aligning rates, revenues and resources.
The full report, a 2-page flier summarizing the key findings, and presentations from the workshop can be found under Reports and Presentations, below. We are sincerely grateful to the communities that participated in these interviews and those who responded to the initial survey.
Reports and Presentations
Effective Rate Modeling in an Uncertain World - presentation
Strategies for Aligning Rates, Revenue, and Resources - presentation
There are many additional resources that provide information helpful in setting water rates. Our suggestions:
- American Water Works Association (2017). Manual of Water Supply Practice M1: Principles of Water Rates, Fees and Charges 7th, edition (or most recent edition).
- American Water Works Association (2017). Manual of Water Supply Practice M54: Developing Rates for Small Systems, 2nd edition (or most recent edition).
- Alliance for Water Efficiency (2014). Handbook: Building Better Water Rates for an Uncertain World: Balancing Revenue Management, Resource Efficiency, and Fiscal Sustainability; and downloadable software tool and user guide: AWE Sales Forecasting and Rate Model and Rate Model User Guide.
- Wang et al., American Water Works Association (2005). Water Conservation-Oriented Rates:Strategies to Extend Supply, Promote Equity, and Meet Minimum Flow Levels.
- U.S. EPA Water and Wastewater Pricing Resources (manuals, tools, publications, case studies).