I recently ran across an article from a 1948 AWWA Journal where it was noted that significant future rate increases will be imperative unless utility managers abandon the practice of implementing rate increases only as a last resort and begin to implement rate increases adequate to address rising operational costs and capital requirements. It appears that utility managers and policy makers have been facing the challenge of minimizing the cost of services while balancing financial health of their utilities for more than half a century.
In 2002, AE2S initiated an annual utility rate survey for water, sewer, and stormwater systems to help communities as they work toward setting and maintaining affordable and competitive yet adequate and responsible rates.
Figure 1: illustrates the number of survey respondents each year since 2002, as well as the percentage of respondents that reported increasing water and wastewater rates. The graphic shows that greater than one-third of respondents have reported rate increases each year.
Figures 2 and 3 illustrate again the number of large survey and small survey respondents, respectively, each year, along with the average monthly charge for water and wastewater service for a residential account using 6,000 gallons of water per month. It is difficult to summarize a trend in the average rate change each year, as the variables change – number of respondents, repeat respondents, etc. However, it is interesting, yet not surprising, to note that the overall trend for the average water and wastewater rates for both the large and small surveys showed increasing utility rates. For the large system data, there appears to be a steeper slope for water, indicating that on average, water rates appear to be increasing at a greater rate than wastewater rates for respondents serving 5,000 or more people. For the small system data, it appears the rate of change to water and wastewater rates for survey respondents is, on average, slightly higher for wastewater rates than for water rates.
Figure 2: Historical Statistics for Survey Respondents Serving 5,000 or More People – Change in Average Monthly Charge for 6,000 Gallons.
Figure 3: Historical Statistics for Survey Respondents Serving Less than 5,000 People – Change in Average Monthly Charge for 6,000 Gallons.
If you participated in the 2012 Utility Rate Survey, you should receive your copy soon. If you are attending your municipal league annual conference in North Dakota, South Dakota, or Montana, please look for the AE2S / AE2S Nexus booth. We are excited to show you the rate survey, and we would be happy to discuss your utility rate/capital planning/funding questions.