[Revised Dec 15]
According to a [staff] study performed requested by the Water Planning Committee of the San Diego County Water Authority (SDCWA), “Historically, water pricing has not been a major driver in consumer decisions to use water” although “water demands can be responsive to the retail price consumers pay when the appropriate factors are in place.”
The study report was presented at today’s SDCWA Board of Directors meeting (contained in the agenda packet) [at the Planning Committee meeting preliminary to the full Board meeting].
Rather than price being the key factor [historically influencing] in water use, “it was the upswings and downturns in the local and national economy, population growth, weather, long term conservation programs, heightened messaging and imposition of water use restrictions that had the greatest effect on retail water demand” according to the study. In particular, “personal income is one of the major factors that can influence customer water usage.” Mandatory restrictions and extensive media coverage are also considered to be strong factors among the interacting variables.
On the surface, this report would seem to be at odds with a Metropolitan Water District Long Term Conservation Plan report (a different agenda item) which states “Price to the end user is a significant factor affecting conservation – as the price of water goes up many consumers will choose to use less. Significant research on retail price elasticity has already established this premise.”
The Planning Committee report does include a qualifier that “It must be emphasized that this is a very simplistic evaluation of water demand responsiveness due to price over the last few years. The results are unique to the rate increases and demand reductions experienced over the four-year time frame.”
In any event, Dana Friehauf, SDCWA Water Resources Specialist, told Directors that price adjustments “can be an effective strategy with the right pricing signals.”
Several Directors expressed concern about how to use this information to help explain price increases to the ratepayers, but the answer to that question remains elusive.
[later: Ms. Friehauf confirmed to me that there isn't really a conflict with the MWD report. The Met report isn't saying price is THE determining factor, just a significant factor, while the committee report doesn't say price is not a big factor. It just shows that many other variables also have considerable influence. She also pointed out that the committee report looked at both historic and near-term price elasticity and price does play a bigger role in the near-term analysis.]
