Calculating Sewer Rates For Wholesale Or Utside City Customers

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Worksheet #6, pg. 1 of 2
CALCULATING SEWER RATES
FOR WHOLESALE OR OUTSIDE CITY CUSTOMERS
The rates for wholesale or outside city customers can be computed using either of the two methods
presented below:
Method A - Retail or Inside City Multiple
1.
Determine revenue required from rates for retail users (Worksheet #4)
Fixed costs
$/yr
Volume charge
$/Mg
2.
Determine applicable multiple (typically in the
range of 115% - 135%)
Multiple
3.
Compute wholesale or outside city rate
x
=
(Fixed Charge-Inside)
(Multiple)
(Fixed Charge-Outside)
x
=
(Volume Charge-Inside)
(Multiple)
(Volume Charge-Outside)
Method B - Utility Basis
1.
Compute ratio of outside city billable volume to total billable volume
/
=
(Estimated Outside Volume)
(Total Billable Volume)
(Ratio)
2.
Allocate appropriate O&M costs to outside city customers (Line 36, Wksht #3)
x
=
(Total O&M costs)
(Ratio)
(Outside City Share of O&M)
3.
Allocate appropriate depreciation costs
x
=
(Total Depreciation)
(Ratio of Billable Volume)
(Outside City Share of Depreciation)
4.
Determine allocated return on rate base
A.
Determine Rate Base:
Gross Assets
Inventory
less: accumulated depreciation
less: contributions
Rate Base
B.
Determine reasonable rate of return as weighted
average cost of debt
page -23

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