NEVADA RURAL WATER ASSOCIATION

CHECKLIST FOR THE DETERMINATION OF WATER AND SEWER RATES

This worksheet will help to develop a basic, full-cost, budget-based rate.  For more detailed assistance, contact NvRWA.  We will train your Board and/or staff to use rate determination software developed at the Environmental Finance Center.

DEFINING DIRECT COSTS

a. cost of operation (labor) direct payroll excluding benefits________________________________

b. cost of power (electric) pumping, heating, lighting, security, etc.__________________________

c. cost of treatment chemicals-chlorination, flocculants, etc.________________________________

d. cost of equipment (pumps, motors, vehicles, etc)______________________________________

e. maintenance supplies (hand tools, small tools, lubricants, paints, expendables)_______________

f. repair costs (outside costs/contracts)_______________________________________________

g. replacement costs______________________________________________________________

h. material and inventory costs (pipe, valves, gauges, fire hydrants, manholes, meters, etc.)_____

i. miscellaneous/extraordinary costs (storm damage, vandalism etc.)________________________

j. sampling and analysis costs_______________________________________________________

Sub-total

DEFINING INDIRECT COSTS

a. administration___________________________________________________________________

b. labor overhead (insurance, retirement, etc.)___________________________________________

c. billing cost_____________________________________________________________________

d. office supplies, printing___________________________________________________________

e. office equipment________________________________________________________________

f. postage_______________________________________________________________________

g. engineering fees________________________________________________________________

h. vehicles used for administration only________________________________________________

i. legal costs (attorney fees, public notices)____________________________________________

j. debt service____________________________________________________________________

k. debt service interest_____________________________________________________________

l. cost of meetings________________________________________________________________

m. advertisement/public relations (promotional items)_____________________________________

n. association dues, membership fees, journal subscriptions, etc.___________________________

o. building rent/lease or depreciation__________________________________________________

p. general plant depreciation (actual for all existing capital improvements)____________________

q. reserve fund requirements________________________________________________________

r. required public notices (non-violation SDWA notification)_________________________________

s. Capital Improvements (from Master Plan - to be funded this year)__________________________

Sub-total ______________

RATE DETERMINATION

From the above direct and indirect costs, determine/estimate future requirements and set rate(s)

adequate to cover the next three years with provision for annual review and adjustment if necessary.

a. determine current annual income received from customers._____________________________

b. subtract all (direct and indirect) costs______________________________________________

c. DO NOT include any interest income or reserve fund requirements._______________________

d. Subtract plant depreciation and equipment replacement costs not included in depreciation figures.

e. Divide the NET figure by the number of equivalent residential units. Compare against current charges.

f. Estimate the current growth rate to the customer base.

g. Estimate increases in direct and indirect labor rates. (include retirement, insurance etc.)

h. Estimate reserve fund requirements.

i. Estimate any increases in costs of services. (power, engineering, fuel, etc.)

j. Estimate annual inflation and apply as a multiplier on all costs.

k. Estimate any anticipated future debt service requirements.

l. Sum up items g thru k. This represents total annual income required.

m. For Water Rates, determine the cost per thousand gallons produced by dividing the sum

of the costs by the amount of water produced(1,000 gallon units). Apply to water rate.

n. For Sewer rates, adjust rates to meet actual costs plus required increases between review periods.