National Drinking Water Clearinghouse
West Virginia University
PO Box 6893
Morgantown, WV
26506-6893



Show-me Ratemaker:
It's not just for the "Show-me State"

By Harriet Emerson • NDWC Contributing Writer

Nobody wants to raise water rates, especially elected officials. But if a town sets its water or sewer rates too low to cover all the costs associated with the plant, it may be living on borrowed time. How does a small community with no paid accountants, engineers, or lawyers deal with rate setting on top of broken pipes, new security fencing, and operator training?

Why should communities analyze their user rates?

To decide whether or not they need to analyze user rates, local officials in small communities should consider these
questions:
1. Do our rates cover current costs?
2. Will our rates cover future costs?
3. Will we have money to handle repairs, replacements, and
unexpected expenses?
4. Are our rates fair to our customers?
5. Are we able to build new facilities?
6. Are we going to apply for grants and loans?
7. What if the economy, inflation, and interest rates change?
8. Is our population growing or declining?

Help Is Here
The Missouri Department of Natural Resources (DNR) developed Show-me Ratemaker, a Microsoft Excel-based software program that can analyze a water or sewer utility’s finances and help management plan for the future by adjusting user rates. This easy-to-use spreadsheet program can not only generate a precise rate analysis but can also create a five-year financial projection that will help safeguard the future of your system—and, best of all, it’s free.

For the last six years, the Missouri DNR has presented Ratemaker as part of its EMI [Environmental Management Institute] workshop, unofficially nicknamed “Things you need to know but have no way of knowing.”

David Kindelspire, DNR environmental specialist, explains that the EMI workshop covers eight to 10 topics in each two-day session: drinking water, wastewater, solid waste, hazardous waste, Stormwater Phase II, Missouri’s sunshine law (Freedom of Information), Ratemaker, and more. For the last three years Missouri DNR has also presented Ratemaker as a stand-alone session.

“There are 2,400 small towns in Missouri, and 2,300 of them need to look at their rates. We attempt to assist these small towns through the maze of government funding requirements,” Kindelspire says. “Ninety percent of the towns [we help] are under 1,000 people, and 75 percent of those are under 500,” he said.

“Planning: that is what small towns across the country do not do. They tend to live almost day-by-day and pray nothing bad happens to jeopardize their infrastructure or services they provide to their communities,” says Kindelspire, adding that this software is designed for the “part-time mayor who drives a pickup truck and runs a meeting once a month, someone with little to no experience in government (i.e., environmental) regulatory processes.” Local government officials, water and sewer district managers, agency personnel, and technical assistance providers all benefit from Ratemaker.

What information is needed to perform a user charge analysis?

1. Current rates, charges, surcharges, hookup fees, other revenue sources, etc.
2. Actual operating and debt expenses for the past 12 months
3. Water losses or sewer system infiltration/inflow (I/I) for the past 12 months
4. Account balances at the start of the past 12-month period
5. Customer volume usage (billed amounts) for past 12 months, three winter months for sewer
6. Total actual water produced or sewage treated for past 12
months to determine water loss or I/I

Kindelspire said that earlier this year Missouri DNR tried a “hands-on” workshop; however, most attendees did not bring all the information needed to fully use the program. “The hard part is getting good, reliable data,” he said. “Garbage in, garbage out. But all attendees either learned more about the software’s capabilities or got a running start on completing an analysis.”

What’s the future for Ratemaker?
“We hope to put ourselves out of the user rate analysis business,” Kindelspire jokes. “We hope that communities around the country see the software as a tool to help them develop their infrastructure, plan for their financial future, and continue to protect public health and the environment. We think it’s a unique tool with capabilities that can apply to almost any community.

“We realize it’s not the definitive solution to all situations, but the adaptability of the program gives it the flexibility to be used to great advantage in most places,” he said. And what’s the secret to a great analysis? “Just do it. Then, do it some more.” The Show-me Ratemaker directions are straightforward, and it’s possible to print out pages and fill them in by hand if you’re not great with computers. With moderate computer literacy, you can set up your own files and perform the entire process on your own.

Harriet Emerson, MSJ, a West Virginia University writer and editor, was awarded a West Virginia Division of Culture and History Literary Fellowship in 1998. She has written about drinking water issues for nine years.

To obtain the Ratemaker program, go to the Missouri DNR’s Environmental Assistance EMI Software Suite at www.dnr.state. mo.us/oac/emiapps.htm. This site includes both the Show-me Sewer Ratemaker and Show-me Water Ratemaker user charge analysis software programs. The site also contains links to assistance resources, sample ordinances, and slide shows, including a full-day Ratemaker PowerPoint workshop. Other helpful slide shows include drinking water system issues, local government planning, and how to conduct public meetings.