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Utilities Rate Study

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Improving the Water Utility Rate Structure

City utilities staff has worked with the Water Resources Advisory Board and the public to analyze water rate/fee structures to determine if they are producing intended outcomes. The study has also explored possible changes to the rate structures for the three utilities. This page provides information about the rate study, the project background, and next steps.

Project Background

In late 2014, Utilities Division staff met with customers to better understand the impacts of water, wastewater, and stormwater/flood management utility rate increases approved by council in the fall of 2014. During this outreach, staff learned that many customers did not understand the rate structures and/or the fee/charge calculations. These findings led staff to propose an analysis of the rate structure and fee/charge calculation methodology as part of the 2015 work plan. In order to properly scope the necessary analysis, feedback will be sought from a broad cross section of utilities customers to determine if the rate/fee structure is producing intended outcomes and to explore possible changes to the rate structures for the three utilities if necessary.

Project Guiding Principles

Following the preliminary public engagement process and discussion at its June 22 meeting, WRAB recommended rate structure guiding principles and their application across the three utilities as shown in the following table.

Guiding Principles  Water Utility  Wastewater Utility

Stormwater/Flood Management Utility

Discourage wasteful use, while promoting all justified types and amounts of use. x    
Be effective in yielding total revenue requirements. x x x
Provide revenue stability and predictability for the utilities. x x x
Fairly allocate the total cost of service across customer classes to attain equity. x x x
Be dynamic and proactive to address changing supply and demand conditions, as well as the city's sustainability and resilience goals. x    
Encourage low-impact development to decrease stormwater impacts.     x

Key Issues

In August-October 2016 WRAB was presented with preliminary analysis for the purpose of determining the most critical issues within the utility rate structures. WRAB and staff determined the key issues to address are:

Water Utility, including Water Budgets

1. Water budget rate structures do not work well for diverse commercial, industrial and institutional (CII) customers.

2. Blocks 1 and 2 could be combined into a single block to provide for more consistent monthly water budgets. Alternatively, a modified definition could be applied where, quite simply, block 1 is defined as the indoor budget and block 2 as the outdoor budget.

3. Residential indoor water allocations exceed recent indoor water use.

4. Reliance on revenue generated in Blocks 3, 4 and 5 results in a level of revenue instability that could adversely impact utility operations.

5. Block width and block pricing may not be aligned with city pricing objectives.

Wastewater Utility

1. The utility may suffer revenue insufficiency due to:

a. declining volume sales and

b. amount of revenue recovered through monthly service charge.

2. Industrial Pre-Treatment fees do not recover the costs incurred.

Stormwater/Flood Management Utility

1. The non-single family rate structure is unnecessarily complex.

2. The current rate structure penalizes individual large lot customers.

Rate Structure Alternatives / WRAB Recommendations

The Water Resources Advisory Board (WRAB) met on March 20, 2017, to consider a recommendation to City Council for changes to the Water, Wastewater, and Stormwater/Flood Management rate structures in the 2018 budget (see the related WRAB memo pdf). WRAB recommends implementing the following changes to the utility rate structures, to be effective Jan. 1, 2018:

  • Move Commercial/Industrial/Institutional customers with an Average Monthly Usage water budget to the existing “CII Indoor/Outdoor” budget methodology, which will be renamed “CII AWC.”
  • Reduce the single-family residential indoor water budget by 1,000 gallons per month.
  • Adjust the wastewater rate structure so that the fixed portion of the fee will account for 25 percent of billed revenues in the wastewater fund, and also adjust rates to account for declining wastewater usage.
  • Adjust the stormwater/flood management rate structure to include a fixed charge and a charge based on impervious area.

Council and Board Materials

Share Your Input

The city is seeking community input on water, wastewater, and stormwater/flood utility rate structures. The rates for these utilities are important in the calculation of customers' utility bills. You can share feedback via email, social media, telephone, online request, postal mail, or even in person.

View the results of the spring 2015 utility rates survey .


Utilities Division Administration
Email: [email protected]
Phone: 303-441-3200