September 22, 2022

People often think of utility rates as a function of the total amount of money the utility needs in order to cover its operating costs, capital costs, and, for investor-owned utilities, its profit margin. The more a utility spends to produce clean water and treat wastewater, the higher the rates will be—at least without funding from other, non-ratepayer sources, such as local taxes or state or federal grants. That’s all true, generally speaking, but it’s not the entire story.