What Is a Water Tariff?

Sometimes referred to as a water rate, a water tariff is the term used to identify the price or rate that a utility charges its customers in exchange for access to the water supply. This does not include the charges associated with the actual amount of water used, but simply the ability to have access to the utility. Even if the customer registers zero usage of the water during a billing period, the water tariff would still be due as long as the customer account remains open.

Depending on the setting, there may be more than one water tariff assessed for each customer. Some utility companies bundle both access to water for drinking and other household uses along with a charge for providing sewage services within the jurisdiction. Other companies will break down the two services separately, making it possible for consumers to determine the amount of each type of charge or fee. In general, the water tariff or tariffs helps to offset several expenses associated with the delivery of water-related service to customers, including transport costs, maintenance of sewage systems, treating wastewater and even the processes of invoicing and processing payments from customers.

The nature of a water tariff may also be impacted by the type of customer receiving the service. It is not unusual for utility company to structure different tariffs for residential customers, business customers, and public buildings owned and operated by local government agencies. Typically, a specific formula is applied to the calculation of the tariff based on the type of customer involved and the estimate of the type of expenses that are incurred as part of providing the services to the consumer.

It is important to note that a water tariff is different from the charges associated with the actual use of water during a given billing period. Utility companies often use a water meter to determine the level of use generated by a customer, then bill for that usage based on a specific rate formula. In other scenarios, the billing for the period will include an average usage amount based on historical data, allowing the customer to pay approximately the same amount from one billing period to the next. Unlike charges for actual usage, which may vary from one period to the next, the water tariff remains constant, at least until changes are made in the amount of that charge and the new tariff goes into effect.