EFC Resources: Water Utility Revenue Risk Assessment Tool

Water Utility Revenue Risk Assessment Tool

Subject: Capital Planning, Costs, Financial Data, Management, Rates, Revenues
Program: Drinking Water and Wastewater
Tool type: Calculator
Date: 01/06/2014
Version: 1.0
File: Click to download (requires registration)   (MS Excel)

As part the Defining a Resilient Business Model for Water Utilities project, the EFC developed this tool to allow utilities and technical assistance providers to quickly determine the proportion of residential revenues from water sales that may be at risk of loss when residential customers change demand patterns. When residential customers reduce demand, utilities collect less revenue from customer sales than anticipated. Utilities often ask how much of their revenues are really and realistically at risk of loss if their customers lower their consumption. This tool allows utilities and their technical assistance providers to quickly determine these estimates based on the utility's own rate structure, customer demand profile and weather conditions.

The tool requires only minimal data input and uses simplifying assumptions as well as detailed models developed after analyzing hundreds of thousands of real customer water records to understand how water customers change demand patterns. 

This simplified tool is focused solely on revenue projections and assessment. Costs and revenue requirements based on customer classifications are not incorporated into this model. The tool allows the user to compare two different residential rate structures and determine which rate structure offers greater revenue resiliency.

To access the full report associated with these tools, visit the Water Research Foundation website.

To learn how to use the tool, download the example spreadsheet and watch the tutorial video below (series of 6 video tutorials):

Project page: Defining a Resilient Business Model for Water Utilities

management, water research foundation, revenue resiliency, pricing trends