Rhode Island General Laws Title 45. Towns and Cities § 45-39.1-5. Rates

(a) Adequacy. The rates of municipal water supplies shall be adequate to pay for all costs associated with the municipal water supply including, but not limited to, the costs of acquisition, treatment, transmission, distribution, and availability of water, and of system administration and overhead, including metering and billing, programs for the conservation and efficient use of water, including costs of developing, implementing, enforcing and evaluating such conservation programs and including conservation pricing as described in subsection (d), and the cost and/or value of any services or facilities provided by the city or town to the municipal water supply, testing, operation, maintenance, replacement, repair, debt service, and for sufficient operating reserves, revenue stabilization funds, debt service reserves and capital improvement/infrastructure replacement funds to implement water supply system management plans;

(b) Equitability. Except for service charges and other fixed fees and charges, rates:

(c) Revenue stabilization. Municipal water suppliers shall in the absence of other sufficient funds available for similar purposes, establish as part of their next rate adjustment a revenue stabilization account to provide for adequacy during periods when revenues decline as a result of implementing water conservation programs, or due to circumstances beyond the reasonable control of the water supplier, including, but not limited to, the weather and drought. A revenue stabilization account shall accumulate a maximum of ten percent (10%) of the annual operating expenses of the supplier and shall be used to supplement other revenues so that the supplier's reasonable costs are compensated;

(d) Conservation. Municipal water suppliers shall take effective action to reduce waste of water and to reduce non-agricultural seasonal increases in the use of water, and may adopt conservation pricing as part of a demand management program or otherwise revise their rates as a means to achieve their goals. For the purpose of encouraging conservation of water, suppliers are authorized to adopt increased rates based on quantity used either throughout the year or seasonally. Conservation pricing shall be designed to promote efficient water use, and to limit seasonal non-agricultural outdoor water use, and to the extent possible shall not increase prices for water users with no significant seasonal increase in water use. Revenues generated from the adoption of conservation rates shall be used to fund the revenue stabilization account established pursuant to subsection (c) above, operating reserves, debt service reserves or capital improvement/infrastructure replacement funds; and

(e) Billing. Billing shall be, at a minimum, quarterly by December 31, 2013.