AWWA JAW64702

There are four identified policy criteria that water agencies may consider when designing their water rate structures. A rate structure should be financially sustainable, socially equitable, environmentally sound, and administratively manageable. However, there is no universal rate structure that meets all of the objectives of these criteria because the objectives tend to conflict with each other. In addition to considering these policy criteria, a water agency should also identify the following four key components when developing a rate structure: the revenue requirement; the classification of system cost; the allocation to customer classes; and, the design of the rate structure. Each water agency must prioritize these policy criteria and characteristics to determine the "correct" water rate structure for its specific community. Understanding your community's makeup and priorities, as well as the needs of the water utility, and clearly defining and documenting your rate structure process are the key to a positive result. Includes table, figures.