Scott Miller of Umbaugh discusses municipal water rates. In this long-awaited segment (it’s been on my topic list for 4 years!), Scott delves into what elements of cost make up municipal rates. Scott also addresses some common issues encountered during the municipal rate-setting process, whether the utility is in a regulated or unregulated jurisdiction. This isn’t legal advice, however, and you should consult your attorney for guidance on the legal requirements in your jurisdiction before initiating the rate-setting process.
Also, Reese Tisdale returns with another Bluefield on Tap segment where he discusses the issue of mine tailing dams and the potential impact of the recently announced aluminum and steel tariffs on the water industry.
In this session, you’ll learn about:
- The basic cost elements recovered in water rates
- The common standards of fair, just, equitable, non-discriminatory and reasonable rates
- What a revenue requirement is
- What a test year is
- Why test years are adjusted
- The drivers in each category of expense
- How inflation fits into water rates
- What PILT is
- Strategies for using debt to pay for infrastructure (i.e., “wrapping” bonds versus paying principal up front)
- Strategies for increasing rates in a tiered fashion
Resources and links mentioned in or relevant to this session include:
- Scott’s email: miller at umbaugh dot com
- Scott’s bio on the Umbaugh website
- Small Utility Toolkit from the Indiana Utility Regulatory Commission
- Sample docket including testimony on rate-setting for regulated municipal rate case
- Handbook on Developing and Setting Water Rates for Small Community Water Systems (North Dakota, but applicable in other states)
- TWV #019: What Are the Important Issues in Water Finance? With Debra Coy
- TWV #107: Water Leadership with Pat Mulroy
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