Most WaterWorth customers are grappling with the challenge of getting their rates to where they should be to sustainably fund services, without drawing the ire of their Council, customers, or both. Having the right analytical tool in hand to make long-term financial realities transparent is critical to getting everyone on the same page. Developing policies to guide rate-setting processes is another important strategy that can help take the heat off when it comes to pursuing rate changes.
Initiating a discussion with elected officials about the principles your organization will use to manage services before proposed rate changes cross their desks will reinforce the big-picture implications of rate decisions. Capturing the resulting priorities in policy statements with clear rationales that are presented in tandem with rate proposal recommendations can help provide cover for elected officials and ensure good intentions are not lost in the mayhem of public backlash. Policies can also help ensure consistency over time despite political turnover, and can provide a basis for communications content used to support the implementation of rate changes.
Here are some examples of simplified statements to get your policy-making wheels turning:
- Rates will be set to fully cover costs of providing reliable services, including timely replacement of existing capital and maintenance of X, Y, and Z reserves (e.g., operating, contingency, capital).
- Rates will be set fairly and equitably for all customer classes by minimizing the use of cross-subsidies.
- Rates will be set to encourage efficient use of our limited water supply.
- Rates will be reviewed on an annual/bi-annual basis to ensure they remain predictable for customers and comply with our agency’s rate-setting policies.
For more on using policies to drive rate-setting, check out this thoughtful article by Greg Blumpner featured in the Nov. 16, 2016 edition of the California Society of Municipal Finance Officers Magazine: Setting the Stage for Water Rates: Policy Direction Should be a Priority.