How these numbers are made

The one thing worth reading before citing anything here: this index does not report a pass or fail on a filed water balance, and no source it uses supports one. Texas derives water losses from system input minus authorized consumption, so the balance identity holds arithmetically on every filing and tests nothing. What a filing can get wrong is which of its numbers were measured, and that is what these pages report — a check that cannot fail is not a check.

Method

How the sources are read and what is computed from them.

• How the American water rate and finance benchmark is built — What the benchmark covers, how its figures are checked, and why a figure is sometimes blank.
• How a public water system is valued — Why the number on the balance sheet is not what the system is worth, what the three standard valuation approaches produce instead, and how a fair market value statute turns a sale price into a rate increase afterwards.
• How a published figure is produced — What is kept, what is checked, what is refused and what is never reported. The general statement of the standard every figure on this site is held to; the water loss index is the worked example of it.
• How the water loss index is built — Every source behind the index, what is computed from it, and where the index declines to publish a number.
• What a comparable water bill is — Why the benchmark prices a year rather than a month, what volume it prices, and why two bills for the same water are not comparable without both.
• What a rate has to be able to show — The evidence a utility charge is measured against when somebody challenges it, read out of the Michigan and California cases that set the standard, and what each one requires a rate study to have written down.
• What we do not publish — Missing filings and unavailable fields are marked in the data. The four cases where this record declines to state a conclusion, and the rule each follows from.
• Why historical records matter — Agencies replace files, utilities resubmit them, and one utility appears under different names at different agencies. What we retain, and why each of these only accumulates if it is in place from the start.

Definitions

The vocabulary a water audit uses, and why the distinctions matter.

• Additional bonds test — The condition a utility has to satisfy before issuing new debt on the same revenue pledge, and the reason a capital plan can be affordable in cash terms and still not be financeable.
• Apparent loss — Water that reached a customer and was never billed. The component of water loss that is recoverable revenue inside a budget year, and not a capital project.
• Cost causation — The principle that a charge should fall on the customer whose demand caused the cost, and the standard courts in several states use when asked whether a utility charge is a fee or an unauthorized tax.
• Cost of service — The step in a rate study that takes the revenue requirement apart into cost pools, assigns each pool a basis for allocation, and distributes it to customer classes according to what each class causes.
• Debt service coverage ratio — Net revenue divided by annual debt service, the figure a rate covenant is written against, and the arithmetic that decides whether a capital plan can be carried by the rate.
• Enterprise fund — The fund type a government uses to account for an activity financed by charges to the people who use it, and the reason a water utility's finances can be read separately from the general fund's.
• Equivalent residential unit (ERU) — A unit of measure that expresses every property's demand as a multiple of one typical single-family home, used where a charge has to be spread across properties that cannot be compared directly.
• Impact fee — A one-time charge on new development for the capacity it will use, distinguished from a rate by what it may fund and by the accounting the enabling statute requires around it.
• Lifeline rate — A reduced charge for a first block of consumption or for a qualifying household, and the structure where the cost-of-service principle and the affordability objective pull hardest against each other.
• Net book value — Original cost less accumulated depreciation, the number on a utility's own balance sheet, and the figure that understates a system whose assets are old and still working.
• Non-revenue water — Water a utility produced and paid to treat but never billed anyone for, split into the part that is a revenue problem and the part that is a cost problem.
• Rate base — The investment on which a regulated utility is allowed to earn a return, and the figure that decides what customers pay after a private company buys a public system.
• Rate covenant — The promise in a bond ordinance that the utility will set rates high enough to produce net revenue at a stated multiple of annual debt service, and the constraint that binds a rate study whether or not anyone mentions it.
• Real loss — Water that escaped the distribution system before reaching a customer, valued at what it cost to produce rather than at what it would have sold for.
• Revenue requirement — The total amount a utility must collect from rates in a year, built up from operating cost, debt service and capital funding rather than from last year's revenue plus a percentage.
• Tiered rate — A volume charge that rises in blocks as consumption increases, and the rate structure most exposed to challenge, because each tier's price has to be tied to a cost and not to a conservation objective.
• Unaccounted-for water (UAW) — The Massachusetts Water Management Act performance metric for distribution loss, and how it differs from the AWWA non-revenue water framework used elsewhere.

Where this goes next

What the index cannot tell you, and what does.

• Consolidation feasibility study — 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.
• Cost-of-service and rate study — The revenue requirement, the cost of serving each customer class, the rate structure that recovers it, and the bill at each usage level. Every figure tied to the record it came from. Flat fee, defined deliverable.
• Reporting sprint — One recurring report, a state submittal or a council packet or a grant draw, assembled from your own records once and delivered on schedule from then on. Three weeks, flat fee.
• Stormwater fee review — A stormwater charge has no meter. The link between a property and its bill has to be established some other way, usually measured impervious area. We review an existing fee and the basis underneath it.
• System valuation and options review — What the system is worth under each of the three standard approaches, the bill path under a sale, and a comparison against remaining independent or merging with a neighbor. We work for the utility and take no fee on a transaction.
• Water loss recovery snapshot — Three weeks, one flat fee. We reconcile your meter reads, billing records and production data and hand you a ranked list of specific accounts and zones with dollars against each.