REVENUE PROTECTION: THE SEWER FLOW STABILIZATION FACTOR
Many wastewater utilities use an abbreviated period of the year upon which to base the calculation of customer account sewer charges. However, the recalculation of the actual charge usually does not occur for some time after the period of the rate calculations. The actual rate which will be used to calculate the charge is most often approved by the regulatory or rate setting authority at a period of time prior to the time of the calculation of the customer account charge. This rate is also frequently calculated using prior year system water use data since sewers are not metered. The time lapse between these two actions creates a gap whereby the actual charges when calculated will not generate the revenue upon which the rate was based.
The City of Phoenix has developed a concept and process through the implementation of a “Sewer Flow Stabilization Factor” that ensures that the rate approved will always generate the revenue needed or projected. The adjustment process is defined and included in the Phoenix City Code. The City has also built into its automated billing system an automatic recalculation that includes this adjustment process. Since its inception in 1993, the City has been able to project annual wastewater revenues to within 99% accuracy. This presentation will explore the reason for the original development, the process, and its benefits as could be applied to all utilities.
Having accurate customer sewer charges that can be adjusted to match as closely as possible the actual customer sewer flow benefits both the utility and the customer. Being able to safely adjust the sewer charge each year to match what is most appropriately matches the customers actual flow maintains a more accurate record to project sewer system and plant capacity. This, in turn, reduces the overall capital costs by helping the engineering staff of the utility better forecast needs. At the same time the customer is more satisfied that his or her sewer is being adjusted annually to better match their flow. The utility is benefited by the assurance that the revenues projected will be generated.
Any utility that uses water usage for a brief period of the year, such as December, January, and February, or any other time for that matter would benefit by considering this concept. For the process as described above, it totally eliminates the flaws inherent in customer sewer flow revenue projection.
Document Type: Research Article
Publication date: January 1, 2005
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