Several factors should be considered when determining the rate schedule for water and sewer services:

• Operating and maintenance costs
• Depreciation
• Debt service (principal and interest)
• Capital needs (new lines, equipment, system upgrades, etc.).

Rates should be structured to cover these costs while also generating enough revenue to build cash reserves for emergencies and other financial obligations.

A critical aspect of managing a utility is keeping a close watch on the financial health of the water and sewer funds. Many cities delay raising rates until they are already in financial trouble, which often forces them to impose steep, sudden increases. Such jumps can frustrate customers and damage public confidence in the utility. A better approach is to adopt a planned program of smaller, gradual adjustments. This strategy ensures steady revenue growth, avoids financial crises, and maintains community trust.

MTAS consultants are available to help with rate issues and can perform a detailed rate study to determine the most appropriate water and sewer rates for your city.