AWWA M1-2017 Principles of Water Rates Fees and Charges (Seventh Edition).pdf

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1、Principles of Water Rates, Fees, and Charges Seventh Edition M1Printed on recycled paper Printed in the United States of America American Water Works Association 6666 West Quincy Avenue Denver, CO 80235-3098 awwa.org hours of work by your fellow water professionals. Revenue from the sales of this AW

2、WA material supports ongoing product development. Unauthorized distribution, either electronic or photocopied, is illegal and hinders AWWAs mission to support the water community. This AWWA content is the product of thousands of Manual of Water Supply PracticesM1, Seventh Edition Principles of Water

3、 Rates, Fees, and Charges Copyright 1954, 1972, 1983, 1991, 2000, 2012, 2017 American Water Works Association All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information or

4、 retrieval system, except in the form of brief excerpts or quotations for review purposes, without the written permission of the publisher. Disclaimer The authors, contributors, editors, and publisher do not assume responsibility for the validity of the content or any consequences of its use. In no

5、event will AWWA be liable for direct, indirect, special, incidental, or consequential damages arising out of the use of information presented in this book. In particular, AWWA will not be responsible for any costs, including, but not limited to, those incurred as a result of lost revenue. In no even

6、t shall AWWAs liability exceed the amount paid for the purchase of this book. Project Manager: Melissa Valentine Cover Art: Melanie Yamamoto Production: Glacier Publishing Services, Inc. Manuals Specialist: Sue Bach Library of Congress Cataloging-in-Publication Data Names: Woodcock, Chris, author. |

7、 Giardina, Rick, author. | Cristiano, Todd,author. Title: M1, water rates, fees, and charges / Chris Woodcock, Rick Giardina,Todd Cristiano. Description: Seventh Edition. | Denver, CO : American Water WorksAssociation, 2017 | Revised edition, 2012. | Includes bibliographicalreferences and index. Ide

8、ntifiers: LCCN 2016048760 | ISBN 9781625761910 (alk. paper) Subjects: LCSH: Water-supply-Rates. | Water utilities-Rates. Classification: LCC HD4456 .W66 2017 | DDC 363.6/10688-dc23 LC record available at https:/lccn.loc .gov/2016048760ISBN-13 978-1-62576-191-0 eISBN-13 978-1-61300-399-2iii AWWA Manu

9、al M1 Contents List of Figures, ix List of Tables, xi Preface, xv Acknowledgments, xvii Introduction, xix Section I Introduction, 1 Chapter I.1 Overview of Cost-Based Water Utility Rate-Making . 3 Objectives of Cost-Based Rate-Making, 4 Generally Accepted Rate-Sett ing Methodology, 4 Key Technical A

10、nalyses of Cost-Based Rate-Making, 5 Other Water Rate Issues and Considerations, 6 References, 6 Section II Revenue Requirements, 7 Chapter II.1 General Concepts for Establishing Revenue Requirements . 9 Adequacy of Revenues, 9 Approaches to Projecting Revenue Requirements, 10 Test Year, 11 Referenc

11、e, 18 Chapter II.2 Revenues . 19 Sources of Revenue, 19 Cash Versus Accrual Revenues, 21 Unbilled Revenues, 21 Projecting Revenue, 22 Example, 24 Chapter II.3 Operation and Maintenance Expenses 27 Classifying O&M Expenses, 28 Identifying Non-Recurring O&M Expenses, 28 Identifying Capitalized O&M Exp

12、enses, 29 Identifying Special Considerations for Government-Owned Utilities, 29 Estimating O&M Expenses, 30 Example, 30 Chapter II.4 Taxes 33 Local Taxes, 33 State Taxes, 34 Federal Taxes, 34 Tax Issues in Rate Cases, 35 Chapter II.5 Capital-Related Costs. 39 Cash-Needs Approach, 39 Utility-Basis Ap

13、proach, 42iv PRINCIPLES OF WATER RATES, FEES, AND CHARGES AWWA Manual M1 Rate of Return, 46 Capital Structure, 47 Chapter II.6 Examples of Revenue Requirements .51 Government-Owned Utilities, 51 Investor-Owned Utilities, 54 Section III Cost Allocation, 57 Chapter III.1 Allocating Revenue Requirement

14、s to Cost Components 59 Assigning Revenue Requirements to Functional Costs, 60 Allocating Functionalized Costs to Cost Components, 61 Special Considerations, 71 Chapter III.2 Distributing Costs to Customer Classes .73 Customer Classes, 73 Units of Service, 75 Distributing Cost Components to Customer

15、 Classes, 77 Unit Costs, 78 Distributing Costs by Base-Extra Capacity Method, 81 Distributing Costs by Commodity-Demand Method, 83 Chapter III.3 Emerging Trends in Water Rate-Making87 Revenues, 89 Reserves, 90 Revenue Requirements, 90 Cost Allocation, 92 Rate Design, 95 Summary and Conclusions, 99 R

16、eferences, 100 Section IV Rate Design, 101 Chapter IV.1 Selecting Rate Structures 103 Planning the Rate Structure Study, 103 Rate Structure Variables and Considerations, 106 Summary, 108 References, 108 Chapter IV.2 Uniform Rates . 109 General Considerations, 109 Historical Perspectives, 110 Advanta

17、ges and Disadvantages, 111 Determining a Uniform Rate, 112 Example, 112 Summary, 113 Chapter IV.3 Decreasing Block Rates 115 General Considerations, 115 Historical Perspectives, 116 Advantages and Disadvantages, 117 Determining Decreasing Block Rates, 119 Example, 119 Summary, 121CONTENTS v AWWA Man

18、ual M1 Chapter IV.4 Increasing Block Rates . 123 General Considerations, 123 Historical Perspectives, 124 Advantages and Disadvantages, 125 Setting Block Size and Pricing, 126 Examples, 127 Summary, 128 Chapter IV.5 Seasonal Rates . 129 General Considerations, 129 Historical Perspectives, 131 Advant

19、ages and Disadvantages, 132 Determining Seasonal Rates, 133 Examples, 135 Summary, 137 Chapter IV.6 Water-Budget Rates 139 General Considerations, 140 Historical Perspectives, 141 Advantages and Disadvantages, 141 Implementing Water-Budget Rates, 143 Example, 147 Summary, 148 References, 148 Chapter

20、 IV.7 Revenue StabilityFixed Charges and Other Considerations 149 General Considerations, 149 Fixed Charges, 151 Other Considerations, 153 Summary, 154 References, 155 Chapter IV.8 Rates for Fire Protection Service 157 General Considerations, 157 Historical Perspectives, 158 Public Versus Private Fi

21、re Protection, 161 Determining Fire Protection Costs, 162 Rate Design, 165 Emerging Issues, 169 References, 171 Section V Other Rate Issues, 173 Chapter V.1 Water Reuse Rates and Other Considerations .175 Background and Terminology, 176 Water Reuse Considerations, 176 Financial Analysis Versus Econo

22、mic Analysis, 178 Types of Water Reuse Customers, 178 Financial Planning for Reuse, 180 Cost Allocation of Water Reuse Rates, 182 Pricing Reuse Water, 188 References, 189 Chapter V.2 Standby Rates .191 General Considerations, 191 Historical Perspectives, 192vi PRINCIPLES OF WATER RATES, FEES, AND CH

23、ARGES AWWA Manual M1 Advantages and Disadvantages, 192 Example, 194 Summary, 194 Chapter V.3 Drought and Surcharge Rates 195 General Considerations, 195 Historical Perspectives, 197 Advantages and Disadvantages, 197 Determining Rate Surcharges, 198 Determining Drought Surcharges, 199 Drought Surchar

24、ge Considerations, 199 Drought Surcharge Example, 203 Summary, 205 Chapter V.4 Low-Income Affordability Programs . 207 Defining Affordability, 209 Affordability Programs, 212 Business Case for Creating Affordability Programs, 217 Funding for Affordability Program Assistance, 218 Summary and Future D

25、irection, 219 References, 220 Chapter V.5 Negotiated Contract and Economic Development Rates 223 General Considerations, 224 Historical Perspectives, 227 Advantages and Disadvantages, 228 Negotiated Contract Rate Example, 230 Economic Development Rate Example, 231 Summary, 233 Chapter V.6 Indexed Ra

26、tes . 235 General Considerations, 235 Advantages and Disadvantages, 236 Example, 237 Summary, 237 Chapter V.7 Price Elasticity . 239 General Considerations, 240 Historical Perspectives, 240 Examples, 242 Summary, 243 Chapter V.8 Marginal Cost Pricing . 245 General Considerations, 245 Practical Consi

27、derations, 246 Advantages, 248 Disadvantages, 249 Summary, 250 Reference, 251 Chapter V.9 Miscellaneous and Special Charges . 253 Definition of Service Charges, 254 Example, 255 Legal Authority for Service Charges, 255 Selecting and Implementing Service Charges, 255CONTENTS vii AWWA Manual M1 Cost B

28、asis and Rationale, 257 Determining the Cost of Providing Service, 258 Example Service Charges, 261 Summary, 272 Reference, 272 Section VI Outside Customer Rates, 273 Chapter VI.1 Overview of Outside Customer Rates 275 Benefits of Providing Outside Customer Service, 276 Nature of the Relationship, 2

29、76 Outside-Customer Rate Methodologies, 278 Implementation and Administration Considerations, 287 Stakeholder Involvement and Public Communications, 289 Summary, 290 Chapter VI.2 Outside Retail Rates . 291 Benefits of Providing Outside Retail Service, 291 Outside Retail Rate Methodologies, 292 Chapt

30、er VI.3 Outside Wholesale Rates . 297 Definition of Wholesale Service, 297 Types of Wholesale Service, 298 Benefits of Providing Outside Wholesale Service, 299 Wholesale Service Relationship and Financial Considerations, 299 Determining Wholesale Revenue Requirements, 301 Rate Design for Wholesale C

31、ustomers, 305 Implementation and Administration Considerations, 305 Stakeholder Involvement and Public Communications, 309 Summary, 309 Reference, 310 Section VII Capacity and Development Charges, 311 Chapter VII.1 Connection and Customer Facility Charges 313 Allocating Costs, 315 Capital Cost Compo

32、nent, 316 Calculating Connection and Customer Facility Charges, 317 Examples, 319 Chapter VII.2 System Development Charges 321 Financial Goals and Objectives, 322 Methodology and Legal Considerations, 323 Information and Documentation for Calculations, 326 New Customer Demands (Level of Service), 32

33、7 Approaches to Calculating SDCs, 328 Examples of SDC Methodologies, 330 Other SDC Technical and Administrative Issues, 340 Administrative and Accounting Policies and Procedures, 343 Best Management Practices, 345 Updates of the SDC Analysis, 346 References, 347 Chapter VII.3 Availability Charges 34

34、9viii PRINCIPLES OF WATER RATES, FEES, AND CHARGES AWWA Manual M1 Section VIII Implementation Issues, 351 Chapter VIII.1 Public Involvement in Rate-Making 353 General Considerations and Policy Issues, 353 Historical Perspectives, 354 Public Involvement Planning, 355 Communication Tools, 359 Evaluati

35、ng Communications, 360 Summary, 361 Reference, 361 Chapter VIII.2 Data Requirements . 363 Customer Records, 363 Plant Investment, 366 Operation and Maintenance Expenses, 367 Periodic Cash Flow for the Utility, 368 Customer Survey Information, 368 Summary, 368 Reference, 368 Appendixes, 371 Appendix

36、A Development of Peaking Factors by Customer Class 373 Appendix B Equivalent Meter Ratios 383 Appendix C Bill Tabulation Methods . 389 Appendix D Example of Citizens Advisory Committee Guidelines 397 Glossary, 399 Index, 409 List of AWWA Manuals, 417ix AWWA Manual M1 Figures I.1-1 Analytical steps o

37、f cost-based rate-making, 5 IV.2-1 Uniform rate by customer classifi cation, 110 IV.3-1 Decreasing block rate, 116 IV.4-1 Increasing block rate, 124 IV.5-1 Seasonal rate, 130 IV.6-1 Water-budget rates, 140 IV.8-1 Percentage of total revenue allocated as fi re protection costs, 159 IV.8-2 Maine Publi

38、c Utilities Commission fi re protection curve, 160 V.1-1 Evaluation of potential water reuse projects, 179 V.8-1 Typical average and marginal cost curves, 246 VII.1-1 Typical water system components, 314 VIII.1-1 10-step approach to public involvement, 355 A-1 Annual usage patt ern, 374 A-2 Peaks th

39、at occur at diff erent times, 375This page intentionally blank.xi AWWA Manual M1 Tables II.1-1 Normalization factors, 11 II.1-2 Summary of test-year revenue requirements, 17 II.2-1 Typical revenue classifi cations, 20 II.2-2 Number of customers and water consumption, 24 II.2-3 Water sales and miscel

40、laneous revenues, 25 II.3-1 O&M expenses, 31 II.4-1 Tax versus book depreciation, 37 II.5-1 Total (gross) plant in service Year end, 41 II.5-2 Test-year rate base, 47 II.6-1 Flow of fundsExisting rates, 52 II.6-2 Flow of fundsIncreased rates, 53 II.6-3 Calculation of cash-basis user charge revenue r

41、equirements, 54 II.6-4 Operating income statementExisting rates, 55 II.6-5 Operating income statementIncreased rates, 55 III.1-1 Allocation of rate baseBase-extra capacity method (test year), 64 III.1-2 Allocation of depreciation expenseBase-extra capacity method (test year), 65 III.1-3 Allocation o

42、f O&M expense and nonrate revenueBase-extra capacity method (test year), 66 III.1-4 Allocation of rate baseCommodity-demand method (test year), 68 III.1-5 Allocation of depreciation expenseCommodity-demand method (test year), 69 III.1-6 Allocation of O&M expense and nonrate revenueCommodity-demand m

43、ethod (test year), 70 III.1-7 Summary comparison of allocated costs, 71 III.2-1 Units of serviceBase-extra capacity method (test year), 77 III.2-2 Units of serviceCommodity-demand method (test year), 78 III.2-3 Unit costs of serviceBase-extra capacity method (test year), 79 III.2-4 Unit costs of ser

44、viceCommodity-demand method (test year), 82 III.2-5 Cost distribution to customer classesBase-extra capacity method (test year), 83 III.2-6 Cost distribution to customer classesCommodity-demand method (test year), 84 III.2-7 Allocated cost to customer classesBase-extra capacity and commodity-demand

45、comparison, 85 IV.2-1 Uniform rates for all customers, 112 IV.2-2 Uniform rates by customer class, 112 IV.3-1 Derivation of typical inside-city cost per 1,000 gallons by water-use blocks (test year), 119xii PRINCIPLES OF WATER RATES, FEES, AND CHARGES AWWA Manual M1 IV.3-2 Summary of customer water

46、use by rate block and application of proposed rates (test year), 120 IV.4-1 Increasing block rate designResidential class, 128 IV.4-2 Increasing block rate designResidential class marginal cost-based rate, 128 IV.5-1 Seasonal residential class ratesPeak and off-peak approach, 136 IV.5-2 Seasonal res

47、idential class ratesExcess-use approach, 136 IV.6-1 Water-budget rates, 148 IV.7-1 Fixed charges by meter size, 152 IV.7-2 Fixed chargesMinimum charge, 153 IV.8-1 Fire protection cost calculationBase-extra capacity method (test year), 162 IV.8-2 Allocation of fire service costs to public and private

48、 fire serviceBase-extra capacity method (test year), 163 IV.8-3 Customer class fire flow demands and unit costBase-extra capacity method (test year), 164 IV.8-4 Public fire protection cost distribution to customer classesBase-extra capacity method (test year), 165 IV.8-5 Public fire protection rate

49、designBase-extra capacity method (test year), 166 IV.8-6 Public fire protection rate design for municipalities per hydrantBase-extra capacity method (test year), 166 IV.8-7 Public fire protection for municipalities, inch-foot hydrant chargeBase-extra capacity method (test year), 168 IV.8-8 Private fire protection rate design for municipalities, per hydrantBase-extra capacity method (test year), 168 V.1-1 Evaluation of water supply resources, 178 V.1-2 Operation and maintenance expense, allocation to cost componentsCombined potable and reuse costs, 18