Read e-book online Developing Rates for Small Systems PDF

By American Water Works Association

Now, constrained facts or assets would not have to maintain your small software from constructing a fee constitution that recovers all of your expenditures and is reasonable on your shoppers.

This professional guide of perform grants the step by step advice you must ascertain your profit standards, study your charges for various consumer periods, enhance a financial statement, and layout a greater fee constitution -- whether you've constrained assets and knowledge

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Sample text

The resulting balance, line 4 of Table 4-2, is the revenue to be generated from the volume rate. 85 per 1,000 gal in year 5. Table 4-1 Illustration of projected revenue from fixed service charge Line No. 5% per year. 0% per year. Copyright © 2004 American Water Works Association, All Rights Reserved. 38 DEVELOPING RATES FOR SMALL SYSTEMS Table 4-2 Illustration of volumetric/usage charge calculation Line No. 2% 7 Annual percentage change in volume rate *Total revenue requirement amounts to revenues under existing rates plus nonoperating revenue (see appendix A, Table A-3).

Therefore, it is important for any utility and, as illustrated, the example utility to develop a plan of revenue adjustments to provide sufficient revenues to meet both its reserve and cash flow requirements over the projection period. The question facing utility management is, what are the revenue requirements for rate-setting purposes in each year that will provide sufficient revenues within an acceptable level of rate adjustments in terms of the impact on the utility’s customers? DETERMINING REVENUE REQUIREMENTS IN THE CONTEXT OF A PLAN OF RATE REVENUE ADJUSTMENTS ________________________ Utility managers often prefer a plan of revenue adjustments that minimizes the impact on their customers in any one year.

It is important to project these expenses separately from other expense elements that may remain relatively fixed over time or have some other pattern of change that is significantly different from inflationary growth. Contract payments, for example, are generally set by the terms of the contract and may or may not include an inflationary adjustment. Transfer payments to other city or municipal departments (if the water utility is part of a city or other larger entity) may also have a growth pattern that differs from inflation, and as such should be treated separately.

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