Tag: inflation

Water Rate Increases Among 1,961 Utilities in Six States in the Last Decade

Shadi Eskaf is a Senior Project Director for the Environmental Finance Center at the University of North Carolina, Chapel Hill.

Rising rates image

Our research shows that water rates have been rising faster than CPI inflation in the past few years for hundreds of utilities, particularly after the financial crisis. In some states, however, there were also many utilities whose rates failed to keep pace with inflation.

From a rate-setting perspective, utilities that raised rates more frequently had a double advantage over utilities that raised rates only occasionally or rarely. First: the average annual rate increase was lower than the one-time rate increases of utilities that occasionally raised rates, reducing the rate shock that customers experienced when rates rose. Second: despite the lower average rate increases, utilities that raised rates more frequently accumulated, on average, a larger total increase in rates in a five-year period than utilities that raised rates only occasionally.

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Using an Index to Help Project Capital Costs Into the Future

Update: This blog post and the graph were updated on February 10, 2021 to reflect more recent price index estimates and trends.

Sitting at your desk very late in the afternoon, your coffee going cold, staring at a spreadsheet, crunching numbers for a Capital Improvement Plan. You’re ready to call it a day, but decide to do “just one more quick calculation” (you tell yourself). You glance over to the next cell, and you see it. It’s a simple question, but hundreds of thousands of dollars, maybe millions, hinge on it. “At what annual rate are your capital costs inflated into the future?” Do you have a good answer off the top of your head?

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