Water Budgets and Rate Structures Innovative Management Tools

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Water Budgets and Rate Structures - Innovative
Management Tools

• William B. DeOreo, P.E., M.S.
• Aquacraft, Inc.
• Boulder, Colorado
• www.aquacraft.com

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Project Sponsors and Participants

• AwwaRF (tailored collaboration grant)
• EPA
• California Urban Water Conservation Council
• City of San Diego Water Dept.
• EBMUD
• Pinellas County Utilities, FL
• Scottsdale Water Res. Dept, AZ
• San Juan Capistrano, CA
• Jordan Valley WCD

• Irvine Ranch WD
• Otay WD
• LADWP
• Las Vegas Valley WD
• Portland, OR
• Scottsdale, AZ
• City of West Jordan, UT
• Town of Cary, NC
• Boulder, CO
• Centennial Valley WSD, CO
• Marco Island, FL
• City of Santa Barbara

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Project Team
Aquacraft, Inc. Peter Mayer, Bill DeOreo, Leslie
Martien AN Technical Services, Inc. Tom
Chesnutt, David Pekelney Lyle Summers
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Goals and Objectives

• Everything you always wanted to know about water
  budgets, but were afraid to ask.
• What are water budgets
• How do they work
• What are their advantages and disadvantages
• How they have been implemented
• Improved program designs that could be
  implemented in the future
• What information and billing technologies are
  required
• How they can be used to improve utility resource
  management
• How they can be used to help manage demand within
  a drought crisis

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Prevalence of rate structures in United States
Adapted from Raftelis, 2002
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What are Individualized Rates?

• AKA water budget-based, goal-based, and
  customer-specific rates
• A type of block rate where the block definition
  uses one or more customer characteristics
• Number of persons per household
• Lot size,
• Evapotranspiration needs of landscape
• A lower/higher rate is set for levels of water
  use less/more than the block definition

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What are Individualized Rates?
Rate/unit
Higher Rate
Lower Rate
Units
Water Budget
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Why use Individualized Rates?

• They have been implemented in communities facing
  limited supplies/shortages
• Seen as an equitable way to share limited supply
  while preserving choice
• Fairness cited as its greatest advantage
• When the basis for the individualized rate is
  communicated well, they are seen as intrinsically
  more equitable than rates that ignore customer
  characteristics

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Why use individualized rates?

• For the customer
• Improved linkage between who causes costs and who
  pays for them (Cost of Service)
• Better information to make consumptive decisions
• For the utility
• Practical method to handle supply limitations
• Dedicated funding for cost-effective conservation
• Decreased demands can lower future costs
• Lower costs reduce revenue requirements
• Improved cash flow stability

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Implemented Water Budget Programs
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Summary of Implemented Water Budget Rate
Structures
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Is Water Consumption Affected?
Landscape Water Budget-base rates pre-post
consumption
Irrigation Rate (inches/acre) Period Otay
Irvine Capistrano Valley pre 88-90
Average 28.71 52.16 28.35 post 90
Average 23.05 32.78 18.45 Difference -5.66 -19
.38 -9.90 Percent Change -20 -37 -35
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Is Water Consumption Affected?
Irvine Ranch Water District staff concluded
water budgets increased outdoor efficiency by
60. 1992 52.8 inches of water applied across
3,600 irrigable acres in service area. (Turf
grass requirement 48 inches). 2005 20.4
inches of water applied across 11,768 irrigable
acres in service area. 61 reduction.
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Is Water Consumption Affected?
Centennial Water and Sanitation District in
Colorado documented an average 25 reduction in
demand after implementing a water budget program.
Even though Centennial continues to add
customers, its demand has decreased 18 31
starting in 2003 when the water budget-based rate
structure was implemented.
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Are individualized rates perfect?

• Imperfect from a conservation/efficiency
  perspective
• By grandfathering existing landscape choices,
  water budgets can give insufficient incentives to
  change those choices over the long-term
• This imperfection increases the political
  implementation feasibility

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Designing Water Budgets

• Water budgets are useful in their own right for
  conservation program targeting
• Who are the inefficient users?
• Utilities that can identify customers most in
  need of assistance (targeting) will improve the
  cost-effectiveness of customer outreach

See Improved Program Targeting, Socioeconomic
Impacts of Conservation Programs, AwwaRF 2001,
Beecher et al., page 115.
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Water Budgets and Drought Response
Water budgets and water budget rate structures
offer water utilities powerful new tools for
reducing demand during drought and for monitoring
customer compliance with drought restrictions.
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Case Study San Juan Capistrano

• Lots under 7,000 sf given same allotment based on
  3,636 sf irrigable area.
• Lots greater than 7,000 sf given individualized
  water budget based landscape area.
• Single-family indoor allotment 9 ccf (6.7 kgal)
  per month
• Multi-family indoor budget is 6 ccf (4.5 kgal)
  per month.

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Case Study Centennial Valley Water and San.
District
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Case Study Centennial Valley Water and San.
District
Aerial photo analysis.
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Key Study Findings

• Water Budgets are Being Used Across the USA
• Water Budgets Can Meet Cost of Service
  Requirements
• Water Budget-Based Rate Structures, Like
  Utilities, are Unique
• Landscape Water Budgets Are Most Frequently
  Implemented
• Capable Utility Billing System and
• Customer Level Data REQUIRED

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Key Study Findings

• Implementation Costs Vary
• Water Budget-Based Rate Structures Spur
  Conservation Savings
• Most Water Budgets Are Seen As Fair
• Landscape Penalty Rate Structures Are Less
  Successful
• Water Budgets Offer Great Potential as a Drought
  Response Tool

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For More Information.
Published report from AwwaRF Fall 2007 Journal
article publication date unknown Contact -
Peter Mayer, or Bill DeOreo mayer_at_aquacraft.com bi
ll_at_aquacraft.com Thank you!