13

THE KANSAS LIFELINE

July 2018

would be added to the $2,445 for a total of $3,045. For this

scenario the price of a new benefit unit is less than paying

the past due amount by $45. 

Gary Hanson, JD with Stumbo Hanson, LLP wrote about

this legislation in the July 2017 issue of The Kansas

Lifeline. The link is at the following location.

https://krwa.net/portals/krwa/lifeline/1707/LegallyRelevant.

pdf 

.I’d suggest that RWDs print the article for each of the

board members and to also have it available for review at

their offices when reinstatement of membership or

forfeitures are involved. 

How do we adjust rates?

Other questions we receive deal with rates. Many times

boards and councils delay adjusting rates to the point where

the water fund is operating on a very thin and tight budget.

Some systems are barely generating enough revenue to pay

expenses. We hear a lot of times from system personnel that

we are “non-profit”. But being non-profit doesn't mean that

the utility cannot show a gain at the end of the year. Being

non-profit means that no one person shares in the profits or

receives a commission because of profits. 

Yes, water and wastewater systems are non-profit, but the

system is allowed and must generate enough revenue to pay

for operations and improvements. By operating with a very

small surplus revenue or a negative revenue is a recipe for

disaster when major problems arise. Another bad recipe is to

set rates based on neighboring systems. Having the lowest

rates in a geographic area will likely be more problematic

financially to the system. Board and council members

should adjust rates based on their needs alone.

Making a profit of 20 to 50 percent allows for more

effective operations and improvements when needed.

All things are relative.

Frequently, KRWA staff are approached by

systems with this question: “We are looking at

making some significant improvements to our

system and need to know how much we are going to

have to raise rates?” 

I can’t answer this question. If pressed I will say I

don’t know and neither will anyone else. There are

too many variables that must be answered first. What

are the improvements? Has there been a study

conducted? Is there an estimated cost? How long a

time period for paying back a loan is considered, e.g., 20

years, 40 years or any other time frame? When is the

projected completion date? When are payments required to

begin? These questions must be answered before an

informed answer can be formulated. 

Kansas Rural Water Association works with water

systems on determining costs to deliver water. At times

these can become very complicated very quickly. We may

suggest that you contact a company that performs rate

reviews. One such company is GettingGreatRate.com. Carl

Brown has worked with numerous utilities in Kansas and

many in other states to help systems get onto solid financial

footing. Although there will be costs with other companies

the Return on Investment (ROI) can usually be paid back

very quickly.

As with any of these questions there are resources

available to help obtain the best answers possible for your

water and wastewater utilities. These come from KRWA,

state agencies and associate members. The wheel does not

need to re-invented. You just need to find out where it has

already turned and use it to suit your needs and the needs of

the ratepayers. 

Greg Duryea has worked for KRWA since 1993 as

Technical Assistant. He holds a Class I water

certification and is the certified operator for

Sycamore Springs Resort in Brown County.

Frequently, KRWA staff are

approached by systems with this

question: “We are looking at

making some significant

improvements to our system and

need to know how much we are

going to have to raise rates?”