Alliance for Water Efficiency Forum
General Discussion Forum
Are rates the answer?
Long time listener, first time caller ....
It seems to me that a good and proper rate schedule would realize all of the goals of water conservation without implementing all the projects and programs. Is it not true that a multiple tier or allocation type rate schedule provides for basic needs while discouraging waste?
Then all these water conservation projects are a a bit daff, no? Why operate these water conservation projects if a rate schedule eliminates the waste?
I am a long time believer in proper rates being a part of any conservation program. I am also a long time member of the AWWA Rates Committee and have developed close to 400 rate studies in my 40 years of consulting. I have probably developed more or at least as many conservation rate rates as anyone else. However, I do not believe that rates can do it on their own or that (only) rates will cause a big decrease in sales.
I think that many of the reported drop in sales after rate changes are more likely due to (a) weather - more rain, less heat, etc., (b) the economy, (c) publicity ("your rates are going way up, conserve now" headlines), and (d) all of the above and more. I recall a near 100% increase in a large City that was followed by no change in water sales.
Water is just too cheap to cause such drops in use. Most people pay about $1 a day for water. Big deal -- it goes up 50% to $1.50 a day. It is still less than cell phone service, cable TV, a cup of coffee, or even a tiny bottle of plastic water (don't see those sales dropping!) It is far less than than a lawn service, a new lawn mower, or bags of fertilizer, weed killer, lime, etc.
I believe the real problem is that water is under priced -- we have done too good a job in making it universally available at absurdly low prices. The overall cost or price for water needs to increase to more closely reflect its true value. Government grant programs that subsidize water projects only make this problem worse. Until water more closely reflects its value, people will just not care about price or about water.
I mentioned somewhere else that Water Budget rates sound good and probably work, but for small utilities and customers that can barely understand block rates, I don't know.
As for water being priced too low, I agree. But, you can't artificailly price water high to foster conservation. Over the course of 400 cases, how many mayors, board presidents, senior citzens, newspaper reporters, legislators, and plain customers did you find that would agree with you? If a rate study is done well, then it reflects the cost of supplying water.
Adequately explaining the rate structure to the customers is essential whenever a utility implements new rates. This is true for inclining block rates, declining block rates, seasonal rates, water budget-based rates, and all the other forms out there.
In our AwwaRF study, we found a number of small utilities that have successfully implemented water budget-based rates. The idea can be communicated to customers, that is not a real barrier. The key is that the utility leadership and staff must understand and support the rate structure.
An option some utilties have taken with water budgets is to start small. Some agencies just do budgets for dedicated irrigation accounts. Some just do budgets for their single-family customers. Some take an interim step like this while they spend time developing budgets for other customer classes.
Communication is a key to the success of any rate structure implementation.