What does the revenue collected from water and sewer rates pay for?

There are three main categories of expenditures for water and sewer rates:

• Operating expenses of each utility – personnel, materials, contract services, professional services.  This is the day-to-day running of the utility.
• Capital financing – projects such as recent sewer pump station upgrades and improvements to the water and wastewater treatment plants.  These projects are typically identified in facility plans years in advance of their need and can be cash funded or debt funded. 
• Contingency and capital reserves.  Contingency funds are set aside for unforeseen events or circumstances.  Capital reserves are a savings account for future major projects that would otherwise require taking out a loan.