FG Solutions staff have completed rate studies and/or utility financial plans in 12 states across the country and the Pacific Rim, for water, wastewater, stormwater, and solid waste utilities. 

Cost-of-Service Analysis and Rate Design

We use industry-standard rate setting methodologies that work to support a defensible rate proposal. We recognize that utility rates also must reflect the culture and priorities of the community. Not only must the methodology be defensible, it must be explainable to customers. Our techniques include:

• Using American Water Works Association methodologies to isolate peaking costs in water systems.  
• Applying our engineering expertise to understand how to properly utility costs 
• Developing defensible strength-based wastewater rates
• Developing pumping surcharges by defining mass balances and isolating pumping costs for each pressure zone in a utility.
• Developing fees to cover the cost of additional source of supply to be used in aquifer recharge programs.
• Developing unit costs for each water supply source in a water system, and using these unit costs to develop increasing block rate structures. 

Budget-Based Water Rates

This increasingly common rate structure contains water rate tiers that are unique for each customer. Commonly, the water rate tiers are associated with indoor use, outdoor use, and excessive use. The indoor water tier is based on customer-specific data such as the number of people per household. The outdoor water tier is based on customer-specific landscape area, and weather data which is common to all customers. The excessive tier is all water use above the amounts in the indoor and outdoor water tiers. Customer surveys in utilities using budget-based rates show that customers believe budget-based rates are both understandable and fair.

Strength-Based Wastewater Rates

One of the most important aspects of a wastewater cost-of-service analysis is properly charging customers for the strength of their wastewater. This is done by disaggregating the wastewater treatment plant into its unit operations and allocating staffing, utility, chemical, and contracted services (such as solids handling) to wastewater strength characteristics such as biochemical oxygen demand and total suspended solids. We also rely on strength data for a utility’s customer classes—either by use of past data, regional data, or developing sampling regimens to generate utility specific strength data.

Stormwater Rate Structures and Rate Credits

FG Solutions staff are experts in defining stormwater rate structures. Stormwater rate structures are typically based on impervious surface in some form, but there is no standard and there are hundreds of variations in rate structures. Many utilities recognize that other surface types also contribute runoff and introduce flow factors for gravel surfaces. Some also consider land cover from compacted turf as well.  

Residential rate structures often balance the need to equitably charge customers with administrative simplicity. Many utilities choose to have one flat charge for each single-family residence. Other utilities recognize that not all single-family residences are the same, and develop rate structures with rate tiers for different property sizes or different footprints.

Rate Credits are an important part of a stormwater rate structures. One of the most common types of rate credits are those for residential subdivisions that use retention and/or detention basins to remove or detain stormwater runoff. Other types of rate credits are those associated with on-site stormwater treatment facilities and direct discharge parcels where stormwater runoff is conveyed to a receiving water without entering a municipally-owned conveyance system.