# Consolidation feasibility study

URL: https://municorn.us/services/consolidation-feasibility-study/
Updated: 2026-09-03
Tags: services, consolidation, funding, rates

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Whether two systems should combine. Interconnection cost, combined operating cost, combined coverage, and the rate effect on each community separately. State and federal programs fund these studies directly.

Start with the funding. The Drinking Water and Clean Water State Revolving Funds are administered by each state, and several states direct part of their allocation to consolidation and regionalization planning, some of it as principal forgiveness rather than as a loan. What your state offers is set by its own intended use plan and changes year to year, so start by reading that plan for the current cycle. A system that cannot fund a study out of rates may be able to have it funded by the program that would also fund the resulting project, and we will read the plan with you before anything is priced.

Finding the route is part of the work, and it happens before the study is scoped.

## What the study answers

**Apart.** Each system's current revenue requirement, debt service and coverage, rate structure and bill at the usage levels its own customers actually consume at. This is a rate study on each side, and it has to be done properly, because every comparison afterwards is measured against it.

**Together.** The capital cost of physically joining them, from the engineer's estimate. The combined operating cost, with the shared functions consolidated and the ones that cannot be shared left alone. The combined debt: both existing schedules, plus whatever the interconnection requires, tested against both existing covenants. Then the combined revenue requirement, and the rate that meets it.

**Separately again.** The rate effect on each community, stated on its own. A combined rate that averages two systems moves one community's bill down and the other's up, so an average on its own does not tell either council what it is voting on.

## What arrives

The written study, structured so each governing body can read its own community's section without reading the other's. The combined financial model, which is yours. The funding analysis: which programs the resulting project qualifies for, what each requires, and what the terms do to the rate. Bill impacts by usage level for each community. Slides for both bodies, and us at both meetings.

```exhibit invented
Two systems, apart and together, over the first ten years

| | Ellery alone | Fairholm alone | Combined |
| --- | --- | --- | --- |
| Connections | 9,140 | 1,880 | 11,020 |
| Residential bill at 5,000 gal | $47.10 | $71.40 | $52.05 |
| 10-year capital need | $22.4M | $9.1M | $26.8M |
| Debt service coverage, year 5 | 1.41x | 0.94x | 1.28x |
| Rate increase needed to hold 1.25x | 6.5% | 34.0% | 9.2% |

Illustrative pair, 10-year horizon from FY2028.
```

The combined column is not automatically the answer. Here Fairholm cannot hold its covenant alone and Ellery's bill rises to fix that, so each council is voting on a different row.

## Where this stops

We calculate what each option costs and what it does to each community's bills. The decision belongs to two elected bodies who answer to two sets of residents.

Operating savings go in only where they trace to a named position, a named contract or a named facility. Consolidation savings are frequently asserted and frequently smaller than asserted, and an unsourced efficiency assumption is the first thing the disadvantaged side attacks.

The engineering is somebody else's. An engineer produces the interconnection alignment, the hydraulic model and the capital cost estimate, and we take that figure as an input.

## Who this is for

Best fit: two adjacent retail systems where at least one has a capital or compliance obligation it cannot fund alone, and both governing bodies have agreed to look at the question. A regional authority or a state program office scoping the same question across several small systems is also a fit.

Poor fit: where one party has already decided and wants a document supporting the decision. That study exists and we are not the people to write it.

## The fee

The funding programs pay against a defined scope and a defined deliverable, so the fee is flat. It is set by the size of the two systems and by what state of record each is in.

_Municorn.us · https://municorn.us/services/consolidation-feasibility-study/ · CC BY 4.0 https://creativecommons.org/licenses/by/4.0/ · updated 2026-09-03_

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