Water and Sewer Rate Analysis Made Easy

By Carl E. Brown, Government Assistance Unit Chief

Missouri Department of Natural Resources' Technical Assistance Program

Article submitted by Steve Duerre

Most of the people and businesses in the United States get their water and sewer services from cities, towns or special purpose districts. These municipal entities pay for the costs of providing their services by collecting user charges and other fees from their customers. How do these entities know where to set their charges and fees? When and how do they decide to adjust them? Easy, they do a user charge analysis.

  Large districts and cities have been doing user charge analyses for decades. However, many small districts and towns have not implemented user charge analysis for a variety of reasons:

* Lack of money to hire consultants

* Lack of expertise to do their own analyses

* Fear of the consequences of trying to raise rates and more.

  In Missouri, small communities and districts have these same problems. The Missouri Department of Natural Resources' Technical Assistance Program (TAP) is responsible for helping communities find better ways of doing business so they can function as excellent stewards of our environment and health of our citizens. To that end, TAP developed spreadsheet software programs that communities can use to analyze their rates and fees, determine the affordability of their rates, set new rates, determine their grant and loan needs for construction projects, promote rate adjustments to their users and more. In fact, staff in TAP use this software to do analyses for the few Missouri communities that are unable to do their own analyses.

  These programs run on Microsoft Excel 95 or later versions. Community leaders, clerks, managers, consultants and others who have a reasonable understanding of Excel and budgeting can use these programs to produce excellent results. Doing electronic spreadsheets, practitioners can easily and quickly do "what if" scenarios. In that way they can determine the effects of setting their rates higher or lower, higher inflation, lower interest rates, changes in the mix of grant and loan money for construction projects, or just about any other contingency they can think of. The software does a five-year projection so communities can develop a clear picture of where they are headed. Best of all, this is public domain software so it is free to anyone who can download it form TAP's homepage.

The download address is www.dnr.state.mo.us/deq/tap/emiapps.htm. While you are at it, you should visit our Local Government Unit Web page at www.dnr.state.mo.us/deq/tap/lgov.htm. to see what else might be useful to you.

  Hundreds of Missouri communities and nearly 100 consultants and other assistance providers have already acquired this software. Communities across the United States with simpler rate structures should do the same.

Consultants can use the software to reduce their costs, enabling them to serve communities they otherwise could not afford to assist.

  If your community or district can hire staff or a consultant to produce a customized user charge analysis, our hats are off to you. You can download the software to verify that you are covering all the bases, but continue what you are doing. As for almost everyone else, TAP's user charge analysis software should work just fine.

  While we in TAP would like to train everyone in the finer points of doing analysis and using this software, we don't have the time, budget or the mandate from the State of Missouri to serve as the trainer and consultant to the entire United States. Therefore, we must limit our assistance and training to other state and federal agencies, planning commissions, associations and similar assistance providers. If your agency or association would like to receive training so you can support software users in your state, Email us at tap@mail.dnr.state.mo.us.