AWWA SOURCES55573

Public water utilities formulate service rates to accomplish three major goals, among others: revenue stability, or the ability to generate revenue reliably; equity, or the degree to which rates reflect customers' cost of service; and, conservation, or the preservation and sustenance of natural resources. In many cases, utilities that have tried to improve the equity and/or conservation qualities of their rates have risked increased revenue volatility. Part of the answer to this dilemma might be fixed monthly rates tailored to reflect individual customers' usage patterns. By adopting cost of service fixed rates for each individual customer rather than classes of customers, utilities can achieve greater customer equity, enjoy a stable revenue base, and promote conservation. Employing data from Covington Water District in Washington State, this paper demonstrates how this tailored rate approach may help reconcile conservation aims with equity and revenue stability goals. Includes 11 references, tables, figures.