Denver Water is considering several possible rate changes designed to encourage conservation. The notion may initially annoy residents who have already done a good job of husbanding the arid West’s most precious natural resource. But if crafted carefully, the new rules should not only help ensure adequate water supplies for the future, they can hold down water bills in the long run.
The region’s largest water utility faces a projected $12.2 million revenue shortfall, in part because customers have installed more efficient appliances, such as low-flow toilets, and otherwise responded to pleas for conservation.
In addition to saving water, such conservation should and does save most customers some money. But because the large fixed costs of building and operating reservoirs, treatment plants and transmission facilities must still be recovered, conservation often forces utilities to charge more for each thousand gallons of water delivered, even if total billings drop modestly.
To oversimplify, assume a family is paying $1 per 1,000 gallons and uses 10,000 gallons, for a bill of $10. If it cuts back to 8,000 gallons, the utility may have to raise rates to $1.15 per thousand gallons. The new bill of $9.20 would still be 8 percent lower than the old $10 charge, even though the 15 percent per gallon increase means that a 20 percent reduction in water use is only rewarded with an 8 percent cut in the total bill.
One of the options now under review by the Denver Water Board would make just such a straightforward adjustment, upping rates about 3 to 5 percent a year for the average single-family home, or about $9 to $15. Alternative plans under review, however, would impose steeper rates on residential customers who use more than 200,000 gallons of water a year.
As it reviews its pricing options, we urge the water board to cushion the impact of any changes on low-income residents by allowing a low “lifeline” rate for minimal water use while providing incentives for conservation – especially during the summer, when yard watering sends water use soaring. Curbing summer demand can also reduce the need to build expensive treatment and transmission facilities needed to serve that peak demand but that are underused for the rest of the year.
As Penfield Tate, a member of the Water Board, said in an interview Friday, “Any rate structure has to be socially just so you don’t price renters and less affluent people out of a commodity they can’t live without.
“We need to generate enough revenue to maintain our existing facilities so we can can deliver water safely, reliably and efficiently. But we also need to be in a situation where we can invest in our system to accommodate the the growth and expansion we know will come. We have to balance the current needs of the system, the future needs of the region and the overriding need to conserve a scarce resource in the light of both growth in the state and global changes. It seems irrefutable that something is going on at the global level and it’s manifesting itself in eerier weather,” Tate said.
Incentives to conserve water obviously must be part of that policy mix. In the long run, saving water also saves money by reducing the need for expensive new water rights, dams and treatment facilities.
