The City of Rugby was approached by All Seasons Water Users District (ASWUD) with a request for consecutive service to meet the rural water needs of ASWUD System V.  The anticipated service to ASWUD System V marked the first time that the City of Rugby would provide consecutive service.  In preparation, the City recognized both the need to analyze the cost of providing consecutive service to ASWUD System V at a rate of 200 gallons per minute (gpm) and the necessity of understanding this cost prior to negotiating an agreement for service.

To assist in the process of negotiating a fair and equitable cost for the sale of water to ASWUD System V, the City of Rugby retained AE2S to provide a comprehensive cost of service evaluation for the water supply/treatment components of the water system. 

To analyze the cost of providing consecutive water supply and treatment service to ASWUD System V, a standard methodology for determining the cost of water production based on the projected administrative, operation/maintenance, and depreciation expenses for 2002 was used.  The methodology applied in this analysis stemmed from information presented in the 1999 American Water Works Association document entitled “Financial Management: Cost of Service Rate-Making.”  Costs within the water utility budget that were deemed not applicable to operation of the water utility and the costs associated with operation and maintenance of the water distribution system were tracked but excluded from the results of this analysis.

The spreadsheet developed for this analysis is used by the City of Rugby to provide an updated estimate of the water supply and treatment cost of consecutive service on an annual basis by adjusting the water utility budget, the recorded water usage, and depreciation values.