Cost of service and cost allocation

A cost of service study is the essential first step of determining whether rates charged for service are equitable because it determines what cost differences, if any, exist between serving various customer classes of service.

Cost of Service Study

To ensure appropriate recovery of costs from different customer classes, we review existing customer classifications to ensure proportionality. We consider historical customer class usage and peaking characteristics, along with emerging demographic and water demand trends, to determine the cost of service for each customer class. We employ methodologies and standards endorsed by the American Water Works Association (AWWA), Water Environment Federation (WEF), and the National Association of Regulatory Utility Commissioners (NARUC) to allocate costs that are robust enough to withstand scrutiny under regulated rate cases and interjurisdictional disputes.

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