RCAC provides rate studies to water and wastewater utilities to promote utility sustainability, rate stability and fairness to rate payers. While it can be challenging in tough economic times, setting an adequate rate structure is essential for the utility’s sustainability. Rates must recover the “true costs” of providing service, including all operational costs, funding of necessary reserve accounts and debt service, if applicable.
To conduct a rate study, RCAC will review a utility’s current rate structure, historic financial and use information, balance sheet obligations, equipment and planned improvements. From this information and factoring in inflation, a five-year annual cost estimate will be projected. Once the projected costs have been determined, an analysis of the current rate structure’s ability to produce adequate revenue to recover the costs for the five year period will be conducted. Depending on the analysis results, a rate adjustment or alternative rate structure may be recommended.