GrokSurf's San Diego

Local observations on water, environment, technology, law & politics

The price of water doesn’t need to go up when you conserve

Posted by George J Janczyn on April 21, 2010

Consider this breaking water news headline:

U.S. urban residents cut water usage; utilities are forced to raise rates / Circle of Blue Water News.

That’s just one of many recent news reports about water rate increases caused, at least in part, by falling revenues due to conservation efforts by customers (it’s worth a serious read).

But things don’t have to be that way.

If a water utility keeps its operating expenses separate from the price of water, then when people use less water they don’t need to be charged more for it. As it says in the above article, “[e]xisting designs for deciding water rates are the culprits. A handful of cities are restructuring their billing systems to benefit conservation-minded consumers who deserve to be rewarded rather than penalized.”

The City of San Diego is set up so that customers pay a ‘fixed’ fee and a ‘water used’ fee. The ‘fixed’ fee goes to operating expenses. By law the ‘water used’ fee can reflect only the cost of the water itself and cannot be padded to generate extra revenue. Unfortunately, since the San Diego Water Department must import nearly all its water and buys it from the San Diego County Water Authority, which in turn gets its water from the Metropolitan Water District of Southern California, San Diego residents are affected by rate increases from those suppliers whose water prices ARE mingled with operating expenses.

Given that situation, it’s not going to help to get angry with the San Diego Water Department when they have to pass along increased water costs. Doing something about our supplier policies is another issue, though.

However, San Diego’s water pricing system has also been criticized for failing to encourage conservation and penalize waste, not least by the Voice of San Diego as well as the San Diego County Taxpayers Association (see the Voice’s article “City officials again accused of water misrepresentations“).

The Circle of Blue item cited above says that “[s]everal water utilities have figured out how to resolve the conflict between conservation and revenue…Irvine Ranch Water District in Orange County, Calif. pioneered a new model when it instituted an allocation-based rate structure in 1991…”.

Irvine is a very good example. Even I have written about it. Here’s a link to Irvine’s water pricing system that takes user needs into account, rewards conservation, and charges more for excessive use.

“There’s no reason why municipalities who implement conservation programs should have to raise their rates,” said Peter Gleick, president of the Pacific Institute. “If that happens it’s a failure of rate design.”

There are very good reasons for San Diego to revise its water pricing system, and we absolutely should get started on that, but don’t expect the result to be lower prices overall, because there’s another serious issue on the horizon, well stated in this On the Public Record post: “Deferred maintenance is coming due and many districts are facing the failure of systems installed in the fifties or before. Reliability must be paid for anew, and that’s why districts will need to charge more even as they’re asking people to use less water.”

Related water pricing blog posts:


One Response to “The price of water doesn’t need to go up when you conserve”

  1. John in San Carlos said

    With respect to the City of San Diego and the water rate increases, it’s a failure of rate design, combined with adding in costs of labor to the increases, according the Council Member Carl DeMaio. He alleges that the City is making money on the increases, in anticipation of salary increases and bonuses that were paid to Water Dept. employees for doing their job. The Water Dept. is an enterprise Fund that should be self-sustaining and this sneaky way of adding to their revenue should cease or residents will begin to default on their water bills. Some common sense is needed, but this is government after all.

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