Equitable rates are hard to come by. This is one fact that is becoming increasingly clear to utility managers. Rate making is the final step in budgetary studies that begin with matching sources and application of funds followed by separation of revenue requirements. The role of rate making as a means of recovering costs is of primary importance but the design of rates to satisfy incidental objectives such as efficient use of natural resources, efficient use of plant and disciplinary modification of the habits of water and wastewater utility customers requires an understanding of the effectiveness of pricing policies.