28 | ROCKY MOUNTAIN WATER MAY 2020
determining the way the district recovers its respective costs
through its selected rate structure is vitally important to evaluating
impacts to the district’s customers. However, once again, a lack of
actual customer data proves problematic as the smaller sample size
can result in development and implementation of a rate structure
that isn’t necessarily representative of future customer usage and
community buildout. As the developer continues to build and
connect more homes to the system, actual usage and demand
characteristics will need to be reevaluated in addition to alternative
Regardless of a utility’s business lifecycle, from its infancy to the
oldest operating utility within a respective area, it is critically
important to regularly identify actual customer usage patterns
and demand characteristics. However, it is significantly
more challenging to evaluate these items when a utility and
community is in early stage development. It’s important to
understand the competing objectives of all stakeholders, while
considering the implications for selecting rate structures that
may require significant changes in the future. Collaborating
with each stakeholder and pulling from the expertise of
several different professionals within various areas will allow
implementation of a more pragmatic and agreeable rate
structure, one that is more equitable and considers the future
direction of the utility and its customers while being inclusive
of the relatively small sample size of real data.
Following are a few questions to use in evaluating the adequacy
of your rate structure:
• Have you recently changed the way your system operates
and delivers water to your customers?
• Has additional development and growth rendered your rate
structure inadequate for recovering your costs?
• Have your customers’ usage trends and demand characteristics
changed since your last rate study was conducted?
If you answered yes to any of these questions, it may be time
to reevaluate your rate structure and conduct a comprehensive
Cody Berg is an Associate Vice President with Carollo
and has 13 years of experience in municipal finance.
As a consultant and former employee at Denver Water,
Berg understands both sides of the utility business.
He routinely conducts multi-year financial planning,
impact fee, bond feasibility, and cost-of-service, rate, and charge
studies throughout the Western U.S. He is currently active in industry
associations including the AWWA Rates and Charges Committee. He
can be reached at 303.980.8260, or email@example.com.