November 2006, Vol. 18, No.11

Water Volumes

Water Volumes Financing and Charges for Wastewater Systems, WEF Manual of Practice No. 27

Financing and Charges for Wastewater Systems Task Force of Water Environment Federation (2004). McGraw-Hill, Two Penn Plaza, New York, N.Y., 10121-2298, 300 pp., $85, hardcover, ISBN 0-07-145304-0.

This book covers the institutional and financial management framework for developing wastewater rates, cost-service based rates, and reclaimed-water rates. It also includes information on rate implementation, rate calculation, and low-income affordability issues.

The first part of the book outlines the spectrum of available institutional structures used to deliver wastewater services and presents financial management and accounting practices necessary for the successful operation of a wastewater utility, including financial planning, budgeting, cost accounting and reporting, and establishment of financial reserves. The authors also delve into the special issues involved in financing capital improvements.

The authors then discuss the determination of revenue requirements using the “cash-basis” and “utility-basis” approaches. Numerical examples are given for the design basis and functional cost-allocation methodologies. One chapter is devoted to customer classes, the process of allocating cost components to service characteristics, and the distribution of costs to defined customer classes. The “art” of rate design is discussed, including a review of rate design policy objectives, a review of alternative rate forms and structural components, and calculations of rates and associated customer bill effects under systemwide uniform rates and cost-of-service-based uniform rates by customer class.

The final part of the book provides a look at legal considerations involved in imposing system development charges. It also covers the fundamentals of effective implementation planning, the standards and thresholds promulgated by the U.S. Environmental Protection Agency, and opportunities to enhance affordability via alternative rate designs or programs.

Pio Lombardo is an environmental engineer–consultant at Lombardo Associates Inc. (Newton, Mass.).