Tariffs

• Author: Michael Curley
• Pages: 37-41

37

Chapter 5—Tariffs

The two preceding chapters dealt with aordability a nd subsidies.

Both of t hese concepts play out in the rates, or taris, that utilities

charge their customers.

Ecient taris reduce the cost of providing environmental utility services

to customers. As the cost of maintaining environmental qualit y continues to

rise, it will be important to keep rates for existing services as low as possible.

is chapter will discuss the various ty pes of ta ris and how they can help

achieve the goal of lower cost services.

Characteristics of Good Tariffs

e following are some of the key characteristics of well-considered tari s for

water and wastewater systems:

• Revenue Suciency/Cost Recovery: taris produce revenue that is

equal to the real cost of supplying the water or waste water services.

• Fairness: equals must be treated equally—in other words, the prices

charged to customers are equal to the costs imposed on the s ystem by

those customers.

• Resource Conservation: pricing decisions should not promote the

unwise use of water resources.

• Net Revenue Stability: prices should allow the utility to have sucient

income to meet its operating costs, even when quantities demanded are

below a normal level.

• Transparency: pricing str uctures should be able to be understood by

every consumer.

• Ease of Implementation: the pricing structure should not impose sig-

nicant administrative costs on the utility.

• Aordability: the prices charged to customers should be within a stan-

dard limit of aordability.