AWWA CSC91075

This describes the development and use of a spreadsheet for financial planning and the analysis of water rates. The versatility of spreadsheets allow the customization of the analysis to suit each system and service condition. The procedure is based on the use of the commodity demand method of rate analysis. The actual spreadsheet also includes the determination of rates using the base-extra-capacity method. The concepts used are similar and the spreadsheet is set up in much the same way. Although the model requires some careful thought in its design and some to set up, the time saved in the long run and the benefits are worth the effort. Financial planning and rate analysis has three goals: determine the required revenue, design an equitable rate structure, and provide a defensible mechanism for supporting rate increases. This is accomplished in four steps: determine the total annual revenue; allocate the total annual revenue to the basic functional cost components; distribute the component costs to the various customer classes in accordance with their requirements for service; and design a rate schedule that will recover from each class of customer within practical limits the cost to serve that customer. This paper shows how the TEC rate analysis spreadsheet can be used to facilitate each step.