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Rate Analysis

If you provide water or sewer service and have not analyzed your rates and financial performance in the last two years, you need to. Likewise, if your costs have recently gone up, your revenues have gone down, you recently built or plan to soon build something, or you cannot demonstrate that your rates are fair and equitable; you need to examine your rates. North Dakota Rural Water Systems Association in conjunction with the state of Missouri’s Department of Natural Resources (DNR) is providing free analysis of system water and sewer rates. NDRWSA is utilizing a rate analysis software program, the Show-me Ratemaker, which was developed by the MODNR to bring this service to the state of North Dakota.

The Show-me Ratemaker software programs are Microsoft Excel based spreadsheet programs that make it easy for water and sewer systems to fix their finances and rates. Using the programs, systems can examine their rates, set new rates that are more equitable, convince their ratepayers to support new (usually higher) rates, and convince funding agencies or the bond market that their sewer or water project would be a good investment for the agency’s funds. The software produces a five-year projection of rates, costs, reserve balances and numerous financial condition indicators. It generates tables, and visual charts that make it much easier for decision-makers and ratepayers to understand what the analysis is telling them. Possibly best of all, since it is an electronic spreadsheet, the Show-me Ratemaker software makes it quick and easy to do "what if" scenarios by changing any inputs to see what the results would be.

A good rate analysis will do several things for you, including:

  • Show your current and future financial status under various scenarios
  • Help you develop new rates that are adequate, equitable and either proportional to use or proportional to cost to serve
  • Help you make grant and loan applications
  • Show your affordability index, operating ratio, coverage ratio and other important indicators
  • Show the rate effects of fixed and variable costs, repair and replacement costs, interest rates and inflation rates
  • Show the annual annuity needed for repair and replacement
  •  Give graphical illustrations for management decisions and public meetings

To examine your rates, you have options:

  • You can devise your own analysis
  • You can hire a financial consultant to analyze your system
  • You can purchase commercial analysis software
  • You can have us do your analysis

To begin your rate analysis you need the following information:

  • Customer billing records for the year you want to analyze
  • Your user charge rate schedule, hook up and other relevant fees
  • Financial records for the year that includes the income received and the costs incurred
  • Flow volume
  • Your equipment repair and replacement schedule
  • The annual median income of your customers

Contact us today to begin your own FREE rate analysis!

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