You may have seen that Fort Collins-Loveland Water District is completing a rate study and wondered what that means or how it could affect you as a customer. Rate studies are a normal and important part of responsible water utility management. They help the District evaluate the real cost of providing reliable water service, maintaining critical infrastructure and planning for the future.
In other words, rates are not set arbitrarily. They are based on the cost of operating the water system, investing in needed projects and making sure the District can continue providing sustainable, high-quality, secure, reliable and cost-effective water.
A rate study helps the District answer an important question: Are rates structured fairly and responsibly to support reliable water service now and in the future?
TL;DR Summary
- Rate studies are a regular step in determining rates and take into account a wide variety of factors, including customer water use patterns, operating cost inflation, capital project costs, funding, fairness and sustainability.
- Capital projects play a large role in the rate study and future rate planning because construction costs have risen sharply, outpacing general inflation in recent years.
- FCLWD continues to believe that growth should pay its own way. However, it’s important to note that there are not separate “new customer” and “existing customer” water systems. There is one water system that must serve everyone in the District.
- We remain committed to transparency and invite ratepayers to attend the public rate hearing (timing TBD). Watch the FCLWD Board Meetings page for updates.
What is a rate study?
A rate study is a financial evaluation of what it costs to provide water service and how those costs should be paid for across different types of customers. That includes the cost of operating the system every day, maintaining infrastructure, funding major capital projects, meeting financial obligations and planning for long-term reliability. In simpler terms, a rate study helps the District understand whether current rates are keeping up with the cost of service, looking at the present, but also future revenue needs.
The study also helps evaluate whether different customer classes are paying their fair share based on the cost to serve them. Customer classes refer to residential (single-family and multi-unit), commercial, irrigation and wholesale customers. Each class has a different rate structure because they do not all use water in the same way. A rate study looks at those differences and helps determine how costs should be distributed.
What goes into a rate study?
MA rate study considers several factors simultaneously. Customer water use patterns matter because different types of customers use water differently and that varies throughout the year as well. Operating costs matter because the District pays for labor, materials, supplies, equipment and services needed to run the system.
Capital project costs are also a major factor. These are the larger infrastructure investments needed to maintain, replace or expand the system. They may include transmission lines, treatment capacity, raw water projects, pump stations, tanks and other improvements.
The study also considers how projects are funded, whether through cash, debt or a combination of both. It looks at financial stability, including appropriate reserves and debt requirements. Finally, it evaluates fairness to ensure costs are shared appropriately across customer classes, as mentioned above.
Why capital projects are such a big factor
Sometimes we hear customers comment that utility bill increases are higher than the general inflation rate. This seems like a fair and reasonable concern, but what the average customer doesn’t often see is how much higher construction costs are than other consumer inflation. We can see this difference in the construction cost index.
Labor, materials and equipment are more expensive than they were just a few years ago. Construction cost index data showed average year-over-year increases of 6.9% from 2020 to 2021 and 19.4% from 2021 to 2022. Those increases directly affect the cost of major infrastructure projects in the District’s Capital Improvement Plan.
The current rate study considers projects such as raw water acquisitions, Cobb Lake transmission lines, remaining phases of the Zone 5 Transmission Project, Soldier Canyon Filter Plant expansion and firming, and the Trilby Southeast Transmission. These projects may not all be visible to customers, but they are part of the system that makes reliable water service possible.
How projects are funded
We also commonly hear that customers are concerned that rate increases are being used to pay for growth. FCLWD continues to believe growth should pay its own way. Growth-related projects are generally funded through tap fees, which are typically paid when new development connects to the system. Maintenance, rehabilitation and replacement projects that support the existing system are generally funded through rates. Some projects benefit both existing customers and future customers, and the cost is shared accordingly.
This distinction matters. The District’s Capital Improvement Plan includes both operating projects and non-operating, growth-related projects. In the current planning period, growth-related capital projects represent a much smaller portion of the overall capital plan than the projects needed to operate, maintain and improve the existing system. However, at the end of the day, there is not a “new customer” water system and an “existing customer” water system. There is one water system that must serve everyone in the District.
The process: what’s happened so far and what’s next
The rate study process includes an independent third-party consultant, our staff, the Board of Directors and our ratepayers.
Past and upcoming steps include:
- Mar. – July 2026: Rate study evaluation was completed by an independent third party.
- July 2026: We hosted two HOA working sessions to provide early communication and transparency to HOA board members and property managers.
- July 21, 2026: Preliminary staff recommendations were presented to the Board of Directors at the regularly scheduled board meeting.
- Aug. 18, 2026: Final recommendations will be shared by staff and the consultant at this Board meeting. The Board may set the public hearing date for rates and fees for 2027 at this time.
- Date TBD: The public hearing date will be announced at least 30 days in advance of the hearing and published in the Coloradoan and on the District website.
- Dec. 8, 2026, or earlier: Rates and fees for 2027 will be approved by the Board and communicated across all of our communication channels.
Customers are encouraged to follow the process, review meeting materials and participate in the public hearing once it is scheduled.
The bottom line
Rate studies help FCLWD make thoughtful, data-informed decisions about the cost of providing water service. They account for day-to-day operations, major infrastructure needs, rising construction costs, financial stability and fairness across customer classes. They also help ensure the District can continue investing in the system before issues become emergencies.
Water service is essential, and maintaining that service requires ongoing planning. Rate studies are one of the tools FCLWD uses to make sure rates keep up with the real cost of providing sustainable, high-quality, secure, reliable and cost-effective water to the community. Learn more about the rate study process, read FAQs and view past rate studies at fclwd.com/rate-studies/.
