Utility Rate Study
The City of Washougal is undertaking a utility rate study. Rate studies help create funding strategies for critical and mandated capital projects and allow cities to address questions about customer rate equity. The City of Washougal needs to adequately fund the three water utilities. Stay involved and learn about the process below!
- PROGRAMMATIC EVALUATION: In order to track with system changes and improvements, a rate study should be completed every 4-5 years. The last rate study was completed in 2018.
- REVENUE SUFFICIENCY: A rate study affords the City the ability to develop a long-term strategy to sustainably fund capital programs associated with providing water, wastewater, and stormwater utility services.
- KEEPING UP WITH COSTS: The City has a backlog of maintenance needs. The rate study serves to put into place a specific plan to address necessary system improvements.
- REGULATORY REQUIREMENTS: There are a number of new State and Federal regulatory requirements that the City must adhere to, many of which come at a cost. A rate study takes these costs into account.
- CONFORM TO STANDARDS: The City uses an independent third party consultant with specific experience in utility rate development to ensure transparency and consistency with industry standards.
- CUSTOMER CLASS EQUITY: In response to growth and development in the region, a rate study serves as an important opportunity to address rate proportionality among customer classes.
What is a Rate Study?
A rate study is a financial evaluation process by which the City establishes the amount required to fully fund the water, wastewater, and stormwater utility programs while also proportionally distributing those costs among various users in accordance with their impact on the total utility system.
1. EVALUATE SENSITIVE PRIORITIES
The City works to determine the goals and objectives of the study, mindful of fully funding the utility program and keeping rates affordable all while delivering safe, clean, and reliable utility services.
2. FISCAL POLICY REVIEW
The City evaluates its existing financial policies as a means to establish a foundation for the rate study.
3. REVENUE NEEDS ASSESSMENT
The City quantifies the cost of necessary system improvements, program operations, and routine maintenance. In other words, determining the size of the pie.
4. COST OF SERVICE ANALYSIS
The City distributes system users to various “customer classes” based on their usage and impacts. System costs are then allocated proportionate to their class, e.g., single family residential, mixed-use, commercial, etc. In other words, determining how to slice the pie.
5. RATE STRUCTURE DESIGN
Based on fiscal policies and revenue needs, the City establishes a means to carry-out other program priorities inclusive of maintaining rate affordability (keeping rates as affordable as possible), reserve funding, water conservation, and meeting debt obligations.
6. PUBLIC EDUCATION AND ENGAGEMENT
The City Council and Staff actively and transparently communicate the status of the rate study, including important decisions, to the public and impacted system stakeholders.