Why utilities need to talk clearly about rate increases
October 20, 2010

The board at the Des Moines Water Works just approved an increase in rates of about 10% for many city customers. While there has been no news release issued yet by the utility, the story has already found its way to the local media, with a story about the rate increase appearing on the 10 o'clock news on KCCI-TV. The Des Moines Water Works, like virtually every other utility, has to raise its rates occasionally to keep up with inflation and to fund the maintenance and improvements required to keep up with changing regulations and customer expectations of quality. Unfortunately, the KCCI story is formulaic of most rate-increase stories, in that it features a single angry customer, defensive-sounding board members, and a couple of "person on the street" interviews with people who say they don't want their rates to rise. Of course they don't want their rates to rise -- nobody wants to pay more for anything -- but the average bill will only rise by about $2 a month. Most public utilities are woefully unprepared to explain why rates rise, how much value people receive for the price they pay, and the necessity of maintaining a reliable water infrastructure. It's an ongoing story that has to be repeated frequently -- particularly when rates aren't changing -- so that when increases are necessary, ratepayers already place a high value on what they're receiving.

This issue has been the subject of several presentations we have given at AWWA and WEA conferences.

October 2010
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last revised October 2010