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The Tale of Two Water Meters – Customer Equity and Water Budget Rates Presented by: Greg Clumpner Senior Financial Man

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The Tale of Two Water Meters – Customer Equity and Water Budget Rates Presented by: Greg Clumpner Senior Financial Manager HDR Engineering, Inc. Discussion Topics. Overview of Water Rates in California Legal Framework of Water Rates Water Consumption Patterns

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The Tale of Two Water Meters – Customer Equity and Water Budget RatesPresented by:Greg ClumpnerSenior Financial ManagerHDR Engineering, Inc.

discussion topics
Discussion Topics
  • Overview of Water Rates in California
  • Legal Framework of Water Rates
  • Water Consumption Patterns
  • Empirical Data – City of Fresno
  • The Tale of Two Water Meters
  • Conclusions

HDR - A Tale of Two Meters

water rates in california
Water Rates in California
  • California is Facing Some Significant Challenges, such as:
    • Prolonged Drought
    • Water Supply Shortages
    • Costly Water Quality & Supply Projects
  • Current Economy Has Led to More Prop 218 Rejections of Rate Increases
  • Greater Attention on “Fairness and Equity” in New Water Rates

HDR - A Tale of Two Meters

water rates in california cont
Water Rates in California (cont.)
  • Many Cities are Moving Towards More Conservation-Oriented Water Rates:
    • Converting from Flat to Volumetric Rates
    • Converting from Uniform Volumetric (Single-Tier) Rates to Multi-Tiered Rates
    • Converting from Multi-Tiered Rates to Water Budget Based Rates

HDR - A Tale of Two Meters

water rates in california cont5
Water Rates in California (cont.)
  • Water Budget-Based Rates Appear to be the “Cutting Edge” in Conservation:
    • A Water Budget is Defined for Each Customer (Typically Just Residential)
    • Budgets Reflect Lot Size, Irrigable Area, Household Size, etc.
    • They Clearly Promote Conservation, but Raise Some Questions About Equity

HDR - A Tale of Two Meters

legal framework of water rates
Legal Framework of Water Rates
  • Prop 218* – The “Right to Vote on New Taxes” (1996)
  • AB 3030* – Inflation Adjustments and Wholesale Pass-throughs (2002)
  • AB 2572*– Requires Water Meters for Urban Water Suppliers (2004)
  • AB 2882*– Allocation-Based Conservation Water Pricing (2008)

*California law

HDR - A Tale of Two Meters

legal framework of water rates cont
Legal Framework of Water Rates (cont.)
  • AB 2882 – “Allocation-Based Conservation Water Pricing”
    • Aimed at two major water priorities in Calif.:
      • Preventing unreasonable waste of water
      • Ensuring costs are proportionally spread among customers
    • But the focus is on providing legal foundation for allocation-based conservation pricing:

“A basic use allocation is established for each customer account that provides a reasonable amount of water for the customer’s needs and property characteristics.” (Chapter 3.4, Section 372 (a) (2))

HDR - Re-Structuring Water Rates

legal framework of water rates cont8
Legal Framework of Water Rates (cont.)
  • AB 2882 – Additional Requirements for Allocation-Based Pricing:
    • Rates must be based on metered usage
    • Must use increasing blocks (tiers) to encourage conservation
    • Rates must be proportional to:
  • Water consumption
  • “Discretionary Allocation of incremental costs between tiers”
  • Customer classes
  • Basic use allocations
  • Meter size

HDR - Re-Structuring Water Rates

water consumption patterns
Water Consumption Patterns

HDR - A Tale of Two Meters

water consumption patterns10
Water Consumption Patterns

Typical Consumption Patterns by Customer Classes:

HDR - A Tale of Two Meters

water consumption patterns cont
Water Consumption Patterns (cont.)

Typical Peaking Patterns by Customer Classes:

HDR - A Tale of Two Meters

water consumption patterns cont12
Water Consumption Patterns (cont.)

Seasonal Averages – Single-Family Customers:

HDR - A Tale of Two Meters

water consumption patterns cont13
Water Consumption Patterns (cont.)

“Expected” Water Consumption by Lot Size:

We would expect proportional increases in consumption as lot sizes increase:

HDR - A Tale of Two Meters

water consumption patterns cont14
Water Consumption Patterns (cont.)

Water Consumption by Lot Size (City of Modesto)

HDR - A Tale of Two Meters

water consumption patterns cont15
Water Consumption Patterns (cont.)

Number of Lots by Size (Modesto)

HDR - A Tale of Two Meters

water consumption patterns cont16
Water Consumption Patterns (cont.)

Water Consumption (per 1,000 sf) by Lot Size (Modesto)

HDR - A Tale of Two Meters

empirical data city of fresno
Empirical Data –City of Fresno

HDR - A Tale of Two Meters

empirical data city of fresno18
Empirical Data – City of Fresno

Fresno Bee Article* (“How Will Meters affect Fresno Water Bills?”):

  • Analysis based on 6 months of meter data from 70 homes showed:
    • Highest consumption was 7x lowest
    • 25% to 50% appeared to have plumbing or irrigation leaks
    • Water use varied widely, even among homes with the same size lots

(*Fresno Bee, 8-30-09):

HDR - A Tale of Two Meters

empirical data city of fresno cont
Empirical Data – City of Fresno (cont.)

Fresno Bee Article (cont.):

  • Current flat rates are based on lot size; impacts of new metered rates vary by lot size:
    • Smaller lots (≤ 6,000 sf): 17 of 23 would see their bills increase
    • Medium-size lots (> 6,000 but ≤ 10,000 sf): 50% would have higher and 50% would have lower bills (i.e., 14 and 14)
    • Larger lots (> 10,000 sf): 16 of 19 would have smaller bills

HDR - A Tale of Two Meters

empirical data city of fresno cont20
Empirical Data – City of Fresno (cont.)

City of Fresno – Changes in Water Bills from Current Flat Rates to New Metered Rates:

HDR - A Tale of Two Meters

empirical data city of fresno cont21
Empirical Data – City of Fresno (cont.)

City of Fresno – Changes in Water Bills from Current Flat Rates to New Metered Rates

  • Data from 23 homes on lots ≤ 6,000 sf
  • 17 of 23 homes would pay more under metered rates

HDR - A Tale of Two Meters

empirical data city of fresno cont22
Empirical Data – City of Fresno (cont.)

Fresno Bee Article (8-30-09):

  • Analysis based on 6 months of meter data from 70 homes showed:
    • Highest consumption was 7x lowest
    • 25% to 50% appeared to have plumbing or irrigation leaks
    • Water use varied widely, even among homes with the same size lots.

HDR - A Tale of Two Meters

the tale of two water meters
The Tale of Two Water Meters

HDR - A Tale of Two Meters

the tale of two water meters24
The Tale of Two Water Meters:
  • Meter #1: Water Budget-Based Water Rate Structure
  • Meter #2: Multi-Tiered Conservation-Based Water Rate Structure

HDR - A Tale of Two Meters

the tale of two water meters cont
The Tale of Two Water Meters (cont.)
  • City of Aurora Metered Data (Summer Season) for 50,700 Residential Customers Was Used to Compared Monthly Bills Under These Two Rate Structures
  • Water Budget-Based Rates from Boulder, CO, Were Applied to Aurora’s Consumption Data for Lots of 5,000 to 9,000 sf

HDR - A Tale of Two Meters

the tale of two water meters cont26
The Tale of Two Water Meters (cont.)
  • Monthly Bills from Water Budget Rates Were Compared to Bills from More Typical Multi-Tiered Conservation Rates
  • Results indicate that Most Customers had Different Bills for Exactly the Same Level of Consumption

HDR - A Tale of Two Meters

the tale of two water meters cont27
The Tale of Two Water Meters (cont.)

Results: Water Bills for Water Budget Rates vs. Multi-Tiered Rates

HDR - A Tale of Two Meters

the tale of two water meters cont28
The Tale of Two Water Meters (cont.)

Results - Water Bills (for the same amount of water use):

HDR - A Tale of Two Meters

conclusions
Conclusions:
  • Residential consumption is typically highly variable within lots of the same size
  • Our analysis of water budget-based rate structures showed:
    • Water-budget based rates will result in some customers with higher water use paying lower water bills (for very similar size lots)
    • Rate Equity: will customers using less water but getting higher bills consider water budget-based rates to be equitable?
    • Water Agencies should carefully evaluate consumption patterns and know the rate impacts before adopting water budget rates

HDR - A Tale of Two Meters

questions
Questions?

HDR - A Tale of Two Meters