Water Rate Setting in Illinois

A Deliverable of the Water Rate Setting Study by the Government Finance Research Center at UIC

December 17, 2024

Water Rate Setting Study

In 2021, the Illinois General Assembly commissioned the Government Finance Research Center (GFRC) at the University of Illinois Chicago (UIC) to produce a “Water Rate Setting Study.” This three-year project led to the release of a series of deliverables including reports, papers, datasets, presentations, and other dissemination products, that can all be found on the   GFRC website  . The study examined:

  • The components of a water bill
  • Reasons for increases in water rates
  • The definition of affordability throughout the State and any variances to that definition
  • Evidence of rate-setting that utilizes inappropriate practices
  • The extent to which State or local policies drive cost increases or variations in rate-settings
  • Challenges within economically disadvantaged communities in setting water rates
  • Opportunities for increased intergovernmental coordination for setting equitable water rates

This webpage overviews the study's findings focused on the variation of water rates across Illinois.

Water Rate Structure

Information on rate structure for Northwestern, Central, and Southern Illinois (NCSI) was collected by the GFRC researchers for this study. In general, NCSI rate structures vary across the 595 municipalities for which the GFRC researchers were able to collect rates, with over 93% using a two-part rate structure and only 4% using a flat rate structure, followed by less than 3% solely using a volumetric rate structure.

In Northeastern Illinois, 240 municipalities use a two-part rate structure, 6 municipalities (including Chicago) use volumetric alone and 2 municipalities use flat rates.

Use the magnifying glass to search for a location and the map will automatically zoom to the relevant municipality. Click on the municipality to learn more about its water system.

Water Allowance/Base Charge

For municipalities using a two-part rate structure, the flat rate, more commonly known as a base charge, serves as a minimum bill that all customers pay regardless of the amount of water consumed. Depending on the municipality, the base charge sometimes includes a water consumption allowance so that households are not charged a volumetric component until they exceed the base charge consumption threshold. Over 18% of municipalities relying on a two-part rate structure in NCSI do not include a water allowance in the base charge. For these, the base charge ranges from $3 to $51, with a median of about $15. This map illustrates the water allowance included in the base charge for those municipalities that include this rate structure element, which for NCSI ranges from 8 to 12,000 gallons with the base charge ranging from $5 to $130, with a median of $22. In general, Northeastern Illinois has a higher water allowance in the base fee than elsewhere in the state. For Northeastern Illinois, base charges include a maximum of 8,000 gallons, offered by the Village of Hainesville. The regional median is 1,000 gallons and the regional average is 1,235 gallons.

Block Rates

Another element of rate structure is the inclusion of blocks among municipalities that use a volumetric or two-part rate. Using these blocks allows a municipality to charge a varying rate depending on a resident’s level of consumption. The vast majority of municipalities using a two-part rate structure do not incorporate blocks, while in municipalities using a volumetric rate, it is more common to use decreasing blocks than to not incorporate blocks. Notably, rate structure best practices do not recommend the use of decreasing blocks for residential consumption; these are instead usually used to provide price incentives for large commercial users. In contrast, increasing block rates are applied to spur conservation or to target irrigation, with best practices encouraging significant rate differentials across blocks as long as block sizes do not burden large families.

Standardized Water Bill

Given the variation in rate structures across Illinois municipalities, the GFRC researchers use a standardized water bill for analysis. This bill reflects what residents would pay for 5,000 gallons per month. The following map presents the distribution of water bills using this standard. For NCSI, The average monthly standardized water bill is about $48, and the median is $45, while the lowest and highest bills are $11 (Scales Mound) and $155 (Makanda), respectively. These standardized water bills are calculated from data collected from communities between July 2023 and March 2024 in downstate Illinois.

Water rates for the Northeastern region are from  CMAP’s data hub  and were collected in 2021. For Northeastern Illinois, the lowest residential water bill is offered by Bedford Park, which does not charge its residents for water. The next lowest is offered by Elwood Village at $11 while the highest is offered by Bannockburn Village at $136. The average water bill is about $45.

Data & Contact Info

To download data, learn about data sources, access the data dictionary, and much more, visit the   GFRC website  . For questions, please email    gfrc@uic.edu  .