The water rates set by GLWA are based on an annual forecast determined by historical data for water usage and estimated costs for water production and delivery services. GLWA uses the forecast to set a rate for each of its customers. By law, GLWA can only recover the cost of service, it cannot make a profit. If more water is sold than forecasted, the extra funds received must be used for the system and offset the need to increase wholesale water rates in the future.
The water rate formula that GLWA uses has 3 primary components:
- Usage or demand by each community
- The distance from water treatment plants
- The elevation of the community relative to the treatment plants.
These factors vary greatly in a service area as large as GLWA’s. All customers’ wholesale rates (i.e., the rate Canton pays to GLWA to buy water) are set by this formula.
In addition to the cost to purchase water from GLWA, Canton has costs to operate, maintain and replace the 380 miles of local water distribution system piping. Canton also has fixed costs to cover such as administration, water billing staff, meter reading and meter replacements.
The annual revenue requirements of the water system must be sufficient to cover both our costs and GLWA costs. The annual water rate increase needs to be passed through to the end customer, the Canton Township water and sewer user, in order that the water funds remain financially stable year-to-year.