Insights · Water
How to set water tariffs for a community scheme
How a community water scheme prepares a cost-based tariff proposal, tests example bills and checks the approval and notice process before changing rates.
Joseph Gitonga · 6 min read
On this page 8 sections
Start a water tariff proposal with the cost of providing the service, the volume you can bill and a realistic collection assumption. Then test what the proposed rates mean for different customers and follow the applicable approval process.
This is a planning exercise, not permission for a committee to change prices on its own. Check the scheme's regulatory position before publishing or applying new rates.
What a tariff has to do
A tariff isn't a number pulled from the air. It has to do several jobs at once, and they pull against each other:
| Job | What it means in practice |
|---|---|
| Keep the scheme running | Cover power, chemicals, repairs, staff and a reserve - every month, not just the good ones |
| Keep water affordable | A household using the basics shouldn't be priced out |
| Discourage waste | Heavy users pay more per unit, so a running hosepipe costs its owner |
| Be simple | A customer should be able to check their own bill |
| Be predictable | Prices change rarely, with notice, on a known date |
Confirm the approval route with WASREB, your county water department or the regulated provider responsible for your area. Community ownership alone does not establish an exemption. WASREB's model agreement for small-scale providers includes tariff-guideline compliance and approved adjustment processes.
Before changing rates. Prepare a proposal, then confirm the required review, consultation, approval and effective date for your scheme. Committee agreement alone may not be sufficient.
Step one: add up what the scheme costs
Start with a normal month and list every shilling that goes out. Use real receipts from the last six to twelve months, not memory.
- Power - the electricity or fuel the pumps use. Check the actual share in your own accounts.
- Chemicals - chlorine and any treatment.
- Repairs and maintenance - pipes, valves, fittings, meter replacements, the plumber's call-outs.
- Staff - operators, meter readers, the clerk, the caretaker.
- Admin - SMS, bank charges, stationery, the office.
- A reserve - money set aside every month for the pump that will fail, the tank that will crack, the line that will need replacing. Keep this separate from routine maintenance and check the replacement plan behind it.
Step two: turn costs into a price per unit
For revenue planning, distinguish the water you pump from the water you bill. But you only get paid for the water you bill, and only for the share of bills that actually gets collected.
Illustrative example. Jay's scheme costs KES 450,000 a month to run, reserve included. It bills 7,800 m³ a month across 640 connections and collects about 90% of what it bills. To end up with KES 450,000 in hand, it has to bill KES 500,000. A KES 100 standing charge on every connection bills KES 64,000 of that target. This assumes the same 90% collection across the combined charges. The remaining KES 436,000 has to come from water: KES 436,000 ÷ 7,800 m³ is about KES 56 per m³ on average.
This simplified example assumes stable volume, costs and collection, with no separate subsidy. It is not an approved tariff or a recommendation to pass all collection shortfalls to paying customers. Review efficiency and affordability alongside the proposal. Reducing non-revenue water and improving arrears collection may change the budget, but do not automatically produce a tariff reduction.
Step three: shape it into blocks
An average of KES 56 doesn't mean everyone should pay KES 56. One option is increasing blocks: each band of consumption is priced at its own rate, and the rate climbs as usage climbs.
The lifeline block
The first block covers basic needs - drinking, cooking, washing - and is priced low. A household that only uses the basics pays the least per unit. Check affordability using household circumstances, not consumption alone. A large household or shared connection may cross a block boundary while meeting basic needs.
The middle and top blocks
The next block covers ordinary household use at around your average price. The top block is priced well above it - it's where gardens, livestock and car washing sit, and where the scheme recovers what the lifeline block gives away.
Illustrative example. A domestic tariff: the first 6 m³ at KES 40, the next 14 at KES 60, everything above 20 m³ at KES 90, plus a KES 100 standing charge. A household using 15 m³ pays 6 × 40 + 9 × 60 = KES 780 for water, plus KES 100 standing - KES 880, itemised on the bill. A household using 25 m³ pays 240 + 840 + 450 + 100 = KES 1,630.
Check the blocks against real readings
Blocks are a guess until you test them. Take last month's real readings, price every account on the new blocks, and add it up. If the total lands well short of what step two said you need, move the boundaries or the rates and try again. In BillGrid, use Bill preview to check illustrative consumption figures. Review representative households, shared connections, shops and institutions before submitting a proposal.
Step four: the fixed parts of the bill
Not everything belongs in the price per unit.
- Standing charge. A fixed amount every connection pays every month, whatever it uses. It covers costs that don't change with usage - the reader's round, the bill, the meter. It also means an empty house still contributes something.
- Minimum bill. A floor on the bill for very low consumption. Use it carefully - set too high, it undoes the lifeline block.
- Levies. Apply only authorized levies or surcharges. Show each separately; the ability to configure a charge does not authorize it.
Step five: price each category on its own
Review the approved customer categories for your scheme. Possible structures to test include:
| Category | Typical approach |
|---|---|
| Domestic | Increasing blocks with a lifeline first block |
| Commercial | A flat rate per unit, usually above the domestic average |
| Institution | Schools, churches, clinics - often a flat rate close to the domestic average |
| Kiosk or standpipe | A flat rate per unit, priced so the vendor's selling price stays affordable |
In BillGrid each category has its own category default tariff, so every account in that category is priced by it unless it has a tariff of its own. A tariff can be tiered by usage, a flat rate per unit, or a fixed monthly charge with no meter. Landlords and estates use the same building blocks to put water and a service charge on one bill - see billing tenants for water and service charge.
Step six: change it the right way
A tariff change done badly can cost more in goodwill than it brings in.
- Show the working. Put the cost table and the arithmetic in front of the committee and the members. People accept a price rise they understand far more readily than one they don't.
- Give notice. Announce the new rates well before they apply - on the bills, by SMS, at the meeting.
- Pick an effective date. New prices apply from a set date, never backdated.
- Never re-price a bill that's already gone out. A bill issued at the old rate stays at the old rate.
In BillGrid, enter the approved rates with the appropriate effective date and preview the first affected billing period. Do not assume a mid-period change will be split as intended without checking. An ordinary price increase should not alter an existing bill; correcting a genuine billing error is a separate, recorded action.
Review it every year
A tariff isn't set once and forgotten. Once a year, put this year's costs next to what the tariff actually brought in. If the gap is growing, it's better to adjust by a little now than to wait for the pump to fail and ask for a lot.
A good tariff is boring: customers understand it, the committee can defend it, and the scheme quietly pays its bills and saves for the next breakdown. That's the whole point.
See how BillGrid prices every connection from your tariff on the water billing page.