With the Philadelphia Water Department proposing a rate change for 2013, we're running a series of informational posts to explain how water rates are set, the terminology behind the rate setting process, and the investments PWD is making in our city's infrastructure, health and environment.
We use the phrase "cost of service utility" often to describe the financial structure of the Philadelphia Water Department. It basically means that we are an organization that provides a critical resource for which we charge a price—but only enough of a price to pay for our expenses and the debts we have incurred to finance the construction and repair of our sewers, water lines, treatment plants and stormwater management improvements.
We can’t call ourselves a non-profit because that would imply that we are some kind of private company, which we are not. We are a part of the Philadelphia city government. (It's the Philadelphia Water Department, not the Philadelphia Water Company.) But essentially, we operate as a non-profit, which means we are entirely focused on delivering the highest quality service that we can at the lowest possible price, making our customers happy and protecting the local environment. This is in contrast with some privately owned utilities or companies which seek to charge the highest price they can in order to maximize profits and make investors happy.