Formed as a joint partnership of five cities and two water districts in Washington State, Cascade Water Alliance (Cascade) is responsible for developing and implementing a long-term strategy to meet the water demand of its member agencies. A core element of Cascade’s strategy involves developing its own source of supply. Cascade took the first step in 2009 by acquiring Lake Tapps, but it would need to invest billions of dollars to construct a water treatment plant and regional transmission system before it can use Lake Tapps as a source of supply.
Given the impact that these investments would have on rate affordability in the region, another core element of Cascade’s strategy involves collaborating with other local utilities to optimize the use of existing supply sources. To that end, Cascade partnered with Tacoma Water (Tacoma) to secure the capacity needed to meet the projected demands of its member agencies while delaying the construction of Lake Tapps facilities until the early 2060s. Bowman wan engaged as a neutral third party to help shape a fair and resilient pricing structure capable of enduring various financial, operational and organizational changes that could occur over time.
Challenge: Balancing the Interests of Both Parties
As the buyer, Cascade’s core objective was to obtain an adequate amount of reliable supply capacity at the lowest possible price to minimize the rate impacts on its member agencies. Another core objective was flexibility in its reservation of capacity in the Tacoma system. Following the construction of the supply and transmission facilities at Lake Tapps, Cascade would need to reduce its use of Tacoma water to optimize the use of Lake Tapps.
As the seller, Tacoma’s core objective was to put idle capacity in its supply system to productive use at the highest possible price to maximize the benefits to its retail water customers. Given Tacoma’s expectations to add a variety of retail, industrial and wholesale customers over time, it also had a vested interest in a flexible long-term capacity commitment to Cascade.
Solution: Equitable Hybrid Pricing Model
Bowman worked closely with Tacoma staff to develop the pricing framework, identify the appropriate facilities and ensure that the cost allocation methodology was fair, transparent and aligned with industry best practices.
To achieve the mutual goal of a flexible long-term capacity commitment, Cascade and Tacoma agreed to divide Cascade’s capacity request into permanent and temporary capacity commitments. Cascade agreed to pay a system development charge to acquire a permanent capacity commitment averaging 12.0 million gallons per day (mgd), which will be priced at wholesale water service rates set by Tacoma based on its projected cash flow needs.
To meet its interim needs and delay investments in Lake Tapps, Cascade also obtained a temporary capacity commitment averaging 12.0 mgd. Bowman participated in stakeholder meetings and advised on technical and administrative issues, helping both parties establish a rental pricing model for the temporary capacity.
Impact: Financial Sustainability Through Efficient and Adaptable Use of Existing Resources
Approved in January 2025, the agreement enabled Cascade to meet its projected water demands while strategically deferring capital investments at Lake Tapps. By structuring the capacity into permanent and temporary components, both parties were able to achieve their core objectives—Cascade secured reliable supply at a fair and predictable cost, and Tacoma put its available capacity to beneficial use.
Bowman’s involvement ensured that the rental-based pricing model for the temporary capacity commitment was transparent, equitable and consistent with industry norms. This model created a flexible path forward, enabling Cascade to phase in long-term infrastructure development while continuing to meet ongoing service obligations to its member agencies.
Interested in how financial guidance can support complex utility partnerships and long-term infrastructure planning? From rate structure, capital planning and cost allocations, Bowman helps utilities make sound, data-driven decisions grounded in transparency and equity. Discover how Bowman can help you navigate financial challenges with confidence. Learn more about our financial and economic consulting services.
Tags:Case StudyFinancial & Economic Consulting
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