Establishing cost-based rates, fees, and charges is an important component in a well managed and operated water utility. Cost-based rates provide sufficient funding to allow communities to build, operate, maintain, and reinvest in the water system that provides the community with safe and reliable drinking water and fire protection. Properly and adequately funded water systems also allow for the economic development and sustainability of the local community. The purpose of this manual is to discuss standard practices in financial planning and rate-making that a utility can use to establish cost-based rates, fees, and charges to recover the full costs associated with its water system.
Ivey, J. (Contributing author). "AWWA M1 Principles of Water Rates, Fees and Charges, 7th Edition. American Water Works Association, Denver, CO, 2017.