Streamline - Spring 2015 - (Page 23)
The RATES Program
BY CARL BROWN, PRESIDENT, GETTINGGREATRATES.COM
than a year ago, five state rural water associations, including Virginia, started up
"RATES Programs." You can access the program's page by visiting gettinggreatrates.com/ and clicking
on the Virginia link.
A LITTLE MORE
For the un-initiated, "RATES" stands for Rate Analysis and
Training for Environmental Systems. Rate analysis determines
where utility rates should be set and periodically reset so they
will be both fairly structured and adequate to pay all costs for
a long period of time. Believe it or not, most water utilities'
rates, and those of many other utilities, are too low and they are
unfairly structured. The RATES Program solves that problem.
As the adjacent table shows, rate analyses have been completed for nine cities and districts so far. They have generated
some eye opening statistics. What have we learned from the
nine completed projects?
* hese systems averaged 1,592 connections.
* ost had both water and sewer analyzed, for which they paid
an average fee of $9,807. That fee varied a lot based upon the
simplicity or complexity of each project.
* n order to generate the net rate revenue increases indicated,
the average rate increase for each customer will be $21.78 per
month. That varies a lot, too.
RATES Program Project Status as of October 10, 2014
5-year Improvement in Cash Position
* pread over five years, the normal useful life of most rate
analyses, it will cost each customer of these systems an average of $0.10 extra per month to know that their rates are fairly
* he average five-year increase in net revenues will be
* he average return on investment rate will be 19,592 percent.
Beat that Wall Street!
* he average payback period; the time it will take these systems
to get their investments in analyst fees back from the extra net
revenues generated by rate increases, will be 1.72 days. That
varies a lot. The slowest payback was Chetopa, KS at 8.99 days
and the quickest was Prince George County, Va. at 0.75 days.
Numbers on a page are good, but it is easier to get a sense of
the scale of extra net revenues these systems will enjoy from the
following bar chart.
Note that two cities in the chart actually needed to lower
one of their utility's average rates. Rate analysis is not just
to CBC Investment
RATES Program Participants; Projected 5-year
Improvement in Cash Position Following Analysis
Ranchos De Placitas
Mountain View, WY
$5,839,950 $11,452,253 $88,261
Total Gains Over 5 Years:
Table of Contents for the Digital Edition of Streamline - Spring 2015
From the President: Power Failure
From the Executive Director: Highlights from 2014
The Sustainability Managed Utility
Communication… Say What?
Flushing Away the Ebola Threat
Hazard Communication Standards – Guidelines for OSHA Compliance
State Water Control Board Approves Controversial Permit
VRWA Said Goodbye to Past Executive Director
USDA Rural Development
The RATES Program
Adequate Rates versus Affordability
Debt Refinancing: An Alternate Source of Capital
How the Cloud is Revolutionizing the Future of Water Utility Management
Southern Corrosion Supports Victory Junction
Throwing My Loop: Call Me Anytime
Do You Know What Your VRWA Benefits Are?
Board of Directors
Index to Advertisers/ Ad.com
Streamline - Spring 2015