The rapid proliferation of data centers, driven by AI and cloud computing advancements, presents significant opportunities and complex challenges for water utilities. These facilities often consume millions of gallons of water daily and can strain existing resources and infrastructure, necessitating thoughtful and equitable pricing strategies for water. This presentation explores various approaches utilities can consider for cost recovery, while promoting sustainability and fostering mutually beneficial relationships with these massive water users. In this session, Raftelis and Louisville Water Company present a comprehensive "toolbox" of rate strategies designed to ensure equitable cost recovery and utility financial stability. Using a detailed hypothetical scenario modeled for Louisville Water, the presenters will demonstrate how different financial mechanisms impact a utility's bottom line and capital payback period. The "Toolbox" explored includes: • System Development Fees (SDFs): Securing upfront funding for capacity-expanding infrastructure. • Stand-By Charges (Reservation Fees): Recovering fixed costs based on reserved capacity, ensuring revenue even if usage is gradual or volatile. • Capital Recovery Surcharges: Direct recoupment of site-specific infrastructure costs (e.g., main extensions) through fixed or volumetric billing. • Take-or-Pay Provisions: Contractual floors that shield utilities from the financial risk of underutilization. • High-Use Tiers: Consumption-based rates that capture the true marginal cost of serving ultra-high-volume customers. The Case Study Analysis: The presentation will dive into the comparative results of the Louisville Water analysis, which modeled the recovery of a $10 million capital project. Attendees will see a head-to-head comparison of three distinct approaches and their relative "pros and cons": 1. Take-or-Pay Only: Provided long-term stability but resulted in the longest payback period (8 years). 2. High-Use Tier: Offered the most aggressive cost recovery by capturing high-volume premiums (3-year payback). 3. Stand-By Charge: Balanced peak-flow reservation with stable monthly revenue (6-year payback). Attendees will leave with a practical framework for evaluating significant users, understanding how to transition from standard billing to sophisticated, risk-mitigating rate structures that protect their community’s financial integrity while supporting economic growth.