What is a Cost of Service Rate Study?

A Cost of Service Rate Study consists of a thorough review of methodologies used to allocate costs for customer classes. The study will be used to determine fair and defensible rates for water and wastewater services.

Background

Austin Water periodically conducts a Cost of Service Rate Study to review the methodologies of allocating costs and determining customer class rates for water and wastewater services. Each study involves an extensive analysis of costs, allocation, methodologies, and the design of rates. The study also includes a robust public involvement process.

The last Cost of Service Rate Study for Austin Water was conducted in 2017 and resulted in implementation of a 4.8% rate reduction which took effect in 2018. Since the 2018 rate reduction, Austin Water has kept rates flat with only a modest rate increase that took effect on November 1, 2023 to address rising operating costs.

As Austin Water seeks to improve system resiliency, keep pace with a growing population, and support operational optimization, water and wastewater rate increases may be needed in 2025.

A new Cost of Service Rate Study is being conducted with the assistance of NEWGEN Strategies and Solutions LLC. This study will develop updated water and wastewater rates.

Equity and Affordability

Austin Water remains an industry leader when it comes to affordability. It has been recognized with an Award of Excellence in Government Finance, specifically for its debt management strategies. Austin Water’s creative approach successfully balances two essential priorities: increasing affordability for customers, while improving and maintaining critical utility infrastructure for extreme weather and a growing population. The utility’s debt management strategies have saved customers $556 million in debt savings since 2016. These savings have been passed along to customers in the form of stable rates and improvements to infrastructure.

Austin Water remains committed to equity and affordability and will provide extensive public involvement opportunities throughout this Cost of Service Rate Study process. As a first step in this process, a Public Involvement Committee of subject matter experts representing all customer classes served by Austin Water, as well as representatives from organizations representing important environmental and business interests, will begin meeting with NEWGEN and Austin Water in January. This group will provide important input to the final Cost of Service Rate Study findings. These meeting are open to the public, and recordings of each meeting as well as backup materials will be posted here.

Contact Us

For more information or to send us a comment or question, please email AWCostofService@austintexas.gov. Comments and questions from the community will be posted and answered on the "questions and answers" tab on the top of this page. Recordings of each meeting and supporting documents are available on the sidebar under each meeting date.