Water Utility Rate Setting: Revenue Requirement, Tiered Tariffs & Affordability
Set the rates of a fictional municipal water utility: the revenue requirement (cash-needs approach), a demand forecast and water balance with non-revenue water, fixed charges by meter equivalents, increasing block bills, a revenue check with the rate needed, bill impacts with a chart, affordability by income group and drought surcharges: 8 graded labs with illustrative numbers.
The first lesson is free — no account needed.
About this course
A water utility rate setting course that sets next year's tariffs for one fictional municipal utility, Millbrook Water, in a spreadsheet, for utility finance and rates staff, public works and council members, consultants and public administration students. You build the revenue requirement from O&M, debt service and cash-funded capital and check debt service coverage, forecast billed volume and find non-revenue water with a water balance, split costs into fixed charges by meter equivalents and a volumetric rate, bill customers under an increasing block tariff with MIN and MAX, solve for the rate increase that recovers cost, chart typical bills before and after, measure the bill as a share of household income and cost a lifeline credit, and size drought surcharges that keep revenue stable. General cost-of-service concepts with illustrative numbers, and no affiliation with any water utility association. The first lab is free.
Lessons
- Revenue Requirement: O&M, Debt Service & Capital (Cash-Needs Approach)Free
- Demand Forecast & Non-Revenue Water: the Water Balance Pro
- Fixed vs Volumetric Split & Meter-Size Equivalents Pro
- Increasing Block Tariff: Bills by Usage with MIN & MAX Pro
- Revenue Check & the Rate Needed to Recover Cost Pro
- Customer Bill Impacts: Typical Bills Before & After (with a Chart) Pro
- Affordability: Bill as % of Household Income & a Lifeline Credit Pro
- Drought Surcharge & Revenue Stability Scenarios Pro