Fair and equitable rate setting is the goal of most community water and wastewater systems. However, as publicly owned water and wastewater facilities are not regulated by the Public Service Board, rate setting procedures may not have been as comprehensive as other privately owned systems. The revenue received from the various customer blocks should correlate to the costs attributable to those similar customers. This may dictate a uniform block rate, an ascending block rate or even a declining block rate. The rate setting process should be open and involve input from each customer class. Alternative rates should be modeled and scrutinized for fairness prior to adoption. The rate should include sinking funds for system component replacement and identified capital improvements.

Systems should also consider system development charges or SDC’s to insure that new customers do not unfairly benefit from the contributions made by existing customers over the previous decades. These SDC’s should be specifically earmarked for capital improvements and not used for operation and maintenance of the system.
Rate Setting Issues:

• Operation and Maintenance by now and in the future
• Long Term and Short term Debt
• Financing for New Capital Project
• Federal and State Grant Benefits
• Allocation of Cost of Service to Cost Components
• Distributing Costs to Customer Classes
• Growth
• Equipment Replacement
• Depreciation or Sinking Funds
• Rate Design (Uniform Block, Increasing Block, or Declining Block, Seasonal Rate)
• Fixed Costs Versus Variable Charges
• Wholesale Agreements
• Elasticity

Rate Setting Assistance has been provided to the following municipalities by Dufresne Group:

• Barre, Vermont
• Saint Johnsbury, Vermont
• Barnet, Vermont
• Manchester, Vermont
• Bennington, Vermont
• Woodsville, New Hampshire