A rate is either built from a study or adopted as a percentage increase without one. The question at the hearing is the same either way: what does the rate recover, and where is that written down?
How the study is built
We build the calculation from four documents: the audited financial statements, the adopted capital improvement plan, the billing and consumption records, and the bond ordinance or official statement.
From those we compute the revenue requirement for each year of the forecast, allocate it into cost pools, and distribute the pools to customer classes by a named method with the data behind it. Base cost by annual volume. Peaking capacity by maximum day and maximum hour factors read out of your production records. Customer cost by account count, meters and services by meter equivalents, public fire protection by hydrant count and required fire flow.
Then the rate structure. Fixed charge by meter size, volume charge by class, and where tiers are used, the cost calculation behind each differential, not the conservation objective behind it. Finally the bill impact: what each usage level and each class actually pays, before and after.
What arrives
The written study. The spreadsheet model, which is yours to keep and to re-run without us. A file supporting every figure in the study, indexed to the document it came from. Slides for the council or board meeting, and us at that meeting.
The study is a snapshot of one set of assumptions. The model lets a finance director change them and re-run it, so a question from the board can be answered at the meeting instead of at the next one.
| Class | Share of cost | Share of revenue today | Indicated change | What drives it |
|---|---|---|---|---|
| Residential | 61.4% | 66.9% | -4.2% | Peaking factor below the system average |
| Commercial | 18.0% | 15.1% | +9.8% | Peak-day demand carried by the whole base today |
| Industrial | 12.2% | 11.4% | +3.1% | Volume-weighted, low peaking |
| Irrigation | 6.9% | 4.1% | +31.0% | Peak-month use, currently priced at the residential tier |
| Wholesale | 1.5% | 2.5% | -18.6% | Contract predates the last two plant additions |
City of Ellery water fund, test year FY2028. Cost shares are base-extra capacity.
Illustrative — names, dates and figures invented.
The last column is there so that a councilmember who asks why irrigation moves 31% gets the cost driver behind it rather than the output of a model.
Where this stops
Where a cost was never allocated in a way anyone wrote down, the study records the gap. The alternative is to pick a method and present its result as though it had been measured, which leaves the utility defending an assumption it did not make at a hearing we do not attend.
Advice on issuing a bond is outside this. We calculate what your coverage and your covenant permit you to borrow; structuring and selling an issue is a separate regulated activity.
We are not lawyers. The memo explaining the cost basis is written to be handed to your attorney.
Who this is for
Best fit: a retail water or sewer utility with audited enterprise fund statements, a capital plan the council has adopted, and billing data that can be exported by class and by usage. The work is the same shape at 2,000 connections and at 200,000; only the number of classes and the complexity of the debt schedule change.
Also a good fit as the financial section of an engineering firm’s scope. The plant sizing and the capital cost are yours; the revenue requirement, the class rates, the bill impacts and the coverage forecast are the part that is frequently subcontracted.
Poor fit: if the billing system cannot produce consumption by account for a full year, the first project is getting that export working, and we will say so on the call instead of modeling around it.
The fee
The fee is set by the size of the system and by how much of the record is already published, and it covers the deliverables listed above.