The Ellijay-Gilmer County Water and Sewerage Authority saw its water demand grow nearly 50 percent between 1987 and 1997.  In the same period its wastewater demand doubled.  The Authority needed to invest in major water and sewerage expansions, and it needed to increase revenues to support the investment.  In addition, the Authority needed to respond to community concerns that its existing rate structure did not treat all customers equitably.

The Authority decided to authorize an interim rate design and hired Envirosmith to design new water and sewerage rates for the next two fiscal years.

In approaching the rate design, Envirosmith sought to meet four criteria.  First, provide a smooth transition from the current rate schedule.  Second, support the Authority's renewal and extension fund (to replace aging infrastructure and add new lines).  Third, provide for those near-term capital costs that could be forecasted.  And fourth, put the Authority on firm financial footing so it could finance additional water and sewerage capacity.

In conjunction with this study, the Authority asked Envirosmith to examine four other issues:

• Determine if industrial users were paying their full share of system costs.  

• Determine if the existing declining block rate structure recovered costs equitably.  

• Assess whether the existing rate schedule would provide for anticipated reinvestment in the water and sewerage systems.  

• Evaluate whether the Authority should adopt separate rate schedules for water and sewerage service, reflecting the differences in the costs of those services.

Envirosmith’s analysis showed that 1,500 water-only customers were subsidizing the sewerage system through the Authority’s existing rate structure.  Furthermore, the subsidy would grow as the Authority invested proportionally more into the sewerage system over the next few years.  The analysis also showed how the Authority’s existing declining block rate structure favored large industrial customers and discouraged water conservation.  

Envirosmith designed new separate water and sewage rates for the Authority, with particular attention to the cost of service attributable to each class of customers.  The Authority adopted Envirosmith's rate design.  Although sewage rates increased 18 percent, the water rates remained the steady.  Community response was uniformly positive because the Authority worked effectively with the local press to show how rates would be more equitable.  The new rates provided the financial basis needed to finance aggressive water and sewer expansions.  

Email: jimson@mindspring.com